-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Go7N4F9nkgFEDgg9+2fqbBU9y3/KY396LQFV8ysL1VnCaq93SSioCLtUL8f5q5Q+ QGOkOUpLtjgl6wVhh7qZhQ== 0000101640-96-000032.txt : 19961113 0000101640-96-000032.hdr.sgml : 19961113 ACCESSION NUMBER: 0000101640-96-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961108 ITEM INFORMATION: Other events FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HOME CORP /DE/ CENTRAL INDEX KEY: 0000101640 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 210718930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05899 FILM NUMBER: 96658123 BUSINESS ADDRESS: STREET 1: 1800 WEST LOOP SOUTH CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138772311 MAIL ADDRESS: STREET 1: PO BOX 2863 CITY: HOUSTON STATE: TX ZIP: 77252 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES HOME & DEVELOPMENT CORP DATE OF NAME CHANGE: 19710713 8-K 1 FORM 8-K CURRENT REPORT 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 7, 1996 U.S. Home Corporation (Exact name of registrant as specified in its charter) Delaware 1-5899 21-0718930 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1800 West Loop South, Houston, Texas 77027 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 877-2311 Not Applicable (Former name or former address, if changed since last report.) 2 Item 5. Other Events. On November 7, 1996, the Board of Directors (the "Board of Directors") of U.S. Home Corporation (the "Company") declared a dividend distribution of one preferred stock purchase right ("Right") for each outstanding share of the Company's Common Stock, $.01 par value per share ("Common Stock"), and each outstanding share of the Company's Convertible Redeemable Preferred Stock, $.10 par value per share (the "Convertible Preferred Stock" and, collectively with the Common Stock, the "Stock"), held by stockholders of record on December 4, 1996. Each Right, when it becomes exercisable, entitles the registered holder to purchase from the Company at any time following the Distribution Date (as defined below) and prior to the occurrence of a Triggering Event (as defined below) a unit consisting of one one-hundredth of a share (a "Unit") of the Company's Series A Junior Non-Cumulative Preferred Stock, $.10 par value per share (the "Preferred Stock"), at a price of $80.00 per Unit, subject to adjustment (the "Purchase Price"). The description and terms of the Rights are set forth in a Rights Agreement, dated as of November 7, 1996 (the "Rights Agreement"), between the Company and First Chicago Trust Company of New York, as Rights Agent. Until the earlier to occur of (i) 10 days after the date on which there is a public announcement that (a) a person or group of affiliated or associated persons (other than a person who is and continues at all times to be eligible under Rule 13d-1 under the Securities Exchange Act of 1934 as in effect on the date of the Rights Agreement to file a Schedule 13G with respect to its ownership of the Common Stock (an "Institutional Stockholder")) has acquired, or has the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock or (b) an Institutional Stockholder, including its affiliates and associates, has acquired or has the right to acquire beneficial ownership of 20% or more of the outstanding shares of Common Stock (any person described in clause (a) or (b) being referred to as an "Acquiring Person"), or (ii) 10 business days (or such later date as the Board of Directors shall determine prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender or exchange offer the consummation of which would result in a person or group of affiliated persons beneficially owning 15% or more of the then outstanding shares of Common Stock (including any such date which is after the date of the Rights Agreement and prior to the issuance of the Rights; the earlier of such dates being called the "Distribution Date"), the Rights, with respect to any share of Stock outstanding as of the Record Date, will be attached to the certificate for such Stock and no separate Rights Certificates (as defined below) will be distributed. Until the Distribution Date (or earlier redemption or expiration of the Rights), (i) the Rights will be transferred with and only with the shares of Stock, (ii) new Stock certificates issued after the Record Date upon transfer or issuance of Stock will contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for 3 transfer of any certificates for Stock outstanding will also constitute the transfer of the Rights associated with the Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of the Stock as of the close of business on the Distribution Date and such separate Rights Certificates alone will represent the Rights. Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued. The Rights are not exercisable until the Distribution Date and will expire at the close of business on November 7, 2006 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. In the event that a person or group of affiliated persons becomes an Acquiring Person, each holder of a Right (the "Flip-In Right") will thereafter have the right to receive, upon exercise, the number of shares of Common Stock or of one-one-hundredths of a share of Preferred Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price. Notwithstanding any of the foregoing, following the occurrence of any such event, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person (or any affiliate or associate thereof) will be null and void. For example, at an exercise price of $80 per Right, each Right not owned by an Acquiring Person (or by any affiliate or associate thereof) following an event set forth in the preceding paragraph would entitle its holder to purchase $160 worth of Common Stock (or other consideration, as noted above) for $80. Assuming that the Common Stock had a per share value of $20 at such time, the holder of each valid Right would be entitled to purchase eight shares of Common Stock for $80. In the event that, at any time after a person or group of affiliated persons has become an Acquiring Person, (i) the Company is acquired in a merger or other business combination transaction or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) shall thereafter have the right (the "Flip-Over Right") to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price. The holder of a Right will continue to have the Flip-Over Right whether or not such holder exercises or surrenders the Flip-In Right. The events set forth in this paragraph and in the second preceding paragraph are referred to as the "Triggering Events." 4 The Purchase Price payable, and the number of Units of Preferred Stock, shares of Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Units will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. The number of outstanding Rights and the number of Units issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Stock or the Convertible Preferred Stock or a stock dividend on the Common Stock or the Convertible Preferred Stock payable in Common Stock or subdivisions, consolidations or combinations of the Common Stock or the Convertible Preferred Stock occurring, in any such case, prior to the Distribution Date. Shares of the Preferred Stock purchasable upon exercise of the Rights are not redeemable. Each share of Preferred Stock will entitle its holder to dividends as, when and if declared by the Board of Directors of $1 per share per quarter but will be entitled to an aggregate dividend of 100 times the dividend declared on a share of Common Stock. In the event of liquidation, the holders of the Preferred Stock will be entitled to a minimum preferential liquidation payment of $100 per share, plus accrued and unpaid dividends, but will be entitled to an aggregate payment of 100 times the payment made per share of Common Stock. Each share of Preferred Stock will have 100 votes, voting together with the Common Stock and Convertible Preferred Stock. Finally, in the event of any merger, consolidation or other transaction in which the Common Stock is exchanged, each share of the Preferred Stock will be entitled to receive 100 times the amount received per share of the Common Stock. These rights are protected by customary antidilution provisions. Because of the nature of the Preferred Stock's dividend, liquidation and voting rights, the value of the one one-hundredth interest in a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock. The shares of the Preferred Stock will rank, with respect to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up of the Company, junior to all other series of preferred stock of the Company, including, without limitation, the Convertible Preferred Stock, unless the Board of Directors should 5 specifically determine otherwise in fixing the powers, preferences and relative, participating, optional and other special rights of the shares of any such other series in the qualifications, limitations and restrictions thereof. At any time after any person or group of affiliated or associated persons becomes an Acquiring Person and prior to the acquisition by such person or group of beneficial ownership of 50% or more of the outstanding Common Stock, the Board of Directors may exchange the Rights (other than Rights owned by the Acquiring Person which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock or one Unit (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges) per Right (subject to adjustment). At any time prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person, the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price") (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors). Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company or for common stock of the acquiring company as set forth above. The terms of the Rights may be amended by the Board of Directors without the consent of the holders of Rights, except that from and after such time as any person or group of affiliated or associated persons becomes an Acquiring Person, no such amendment may adversely affect the interests of the holders of Rights. As of October 31, 1996, there were 11,448,205 shares of Common Stock and 122,863 shares of Convertible Preferred Stock outstanding, 122,863 shares of Common Stock issuable upon conversion of the shares of Convertible Preferred Stock, 2,253,521 shares of Common Stock issuable upon conversion of the Company's Convertible Subordinated Debentures due 2005, 1,884,773 shares of Common Stock issuable upon exercise of the Company's Class B Warrants and 537,500 shares issuable upon exercise of stock options. At such time, no shares of Common Stock were held in the Company's treasury. Each outstanding share of Common Stock and Convertible Preferred Stock on the Record Date will receive one Right. As long as the Rights are attached to shares of Stock, the Company will issue one Right for each share which becomes outstanding between the Record Date and the Distribution Date so that all shares will have attached Rights and, in 6 certain cases described in the Rights Agreement, the Company may issue one Right for each share which becomes outstanding after the Distribution Date. The Board of Directors has reserved for issuance upon exercise of the Rights 500,000 shares of Preferred Stock. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company in a manner or on terms not approved by the Board of Directors unless the offer is conditional on a substantial number of Rights being acquired. The Rights, however, should not affect any prospective offeror willing to make an offer at a fair price and otherwise in the best interests of the Company and its stockholders as determined by the Board of Directors or willing to negotiate with the Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of Directors since the Board of Directors may, at its option, at any time until a person or group of affiliated persons becomes an Acquiring Person, redeem all but not less than all the then outstanding Rights at the Redemption Price. The Rights Agreement between the Company and the Rights Agent specifying the terms of the Rights (which includes as Exhibit A the Certificate of Designations, Preferences and Rights, as Exhibit B the Form of Rights Certificate and as Exhibit C the Form of Summary of Rights to Purchase Preferred Stock) and the press release announcing the declaration of the Rights are attached hereto as exhibits and are incorporated herein by reference. The foregoing descriptions of the Rights does not purport to be complete and are qualified in its entirety by reference to such exhibits. Item 7. Financial Statements and Exhibits. Exhibits: 3 (ii) U.S. Home Corporation Amended and Restated By-Laws as of October 17, 1996 4 Rights Agreement, dated as of November 7, 1996, between U.S. Home Corporation and First Chicago Trust Company of New York, and exhibits thereto 10 Third Amendment to Credit Agreement, dated as of November 4, 1996, among U.S. Home Corporation, the Lenders party to the Credit Agreement and The First National Bank of Chicago, as Agent 99 Press Release, dated November 8, 1996 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. U.S. HOME CORPORATION Date: November 8, 1996 /s/ Chester P. Sadowski ----------------------- Name: Chester P. Sadowski Title: Vice President-Controller and Chief Accounting Officer 8 EXHIBIT INDEX Sequential Exhibit Page No. - ------- ----------- 3(ii) U.S. Home Corporation Amended and Restated By-Laws as of October 17, 1996 9 4 Rights Agreement, dated as of November 7, 1996, between U.S. Home Corporation and First Chicago Trust Company of New York, and exhibits thereto 24 10 Third Amendment to Credit Agreement, dated as of November 4, 1996, among U.S. Home Corporation, the Lenders party to the Credit Agreement and The First National Bank of Chicago, as Agent 88 99 Press Release, dated November 8, 1996 99 EX-3 2 EXHIBIT 3II AMENDED & RESTATED BY-LAWS 9 EXHIBIT 3(ii) U.S. HOME CORPORATION AMENDED AND RESTATED BY-LAWS AS OF OCTOBER 17, 1996 1. MEETINGS OF STOCKHOLDERS. 1.1 Annual Meeting. The annual meeting of the holders of the capital stock (the "Stockholders") of U.S. Home Corporation (the "Corporation") will be held within five calendar months after the end of each fiscal year of the Corporation and will be held at a place and time determined by the board of directors of the Corporation (the "Board of Directors"). The first annual meeting to be held after the effective date (the "Effective Date") of the plan of reorganization of the Corporation and certain of its affiliates (the "USH Plan") will be held no earlier than the date which is 9 months after the Effective Date and no later than the date which is 13 months and 15 days after the Effective Date. Any previously scheduled annual meeting of the Stockholders may be postponed by resolution of the Board of Directors upon informing the Stockholders, by any means reasonably calculated to so inform them of such postponement, on or prior to the date previously scheduled for such annual meeting of Stockholders; provided, that such means of informing the Stockholders of such postponement complies with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 1.2 Special Meetings. Special meetings of the Stockholders may be called only by a majority of the entire Board of Directors, and will be held at such time as may be fixed by the Board of Directors and stated in the notice of such meeting. Any previously scheduled special meeting of the Stockholders may be postponed by resolution of the Board of Directors upon informing the Stockholders, by any means reasonably calculated to so inform them of such postponement on or prior to the date previously scheduled for such special meeting of Stockholders; provided, that such means of informing the Stockholders of such postponement complies with all applicable requirements of the Exchange Act. The purpose or purposes of any special meeting of Stockholders will be set forth in the Corporation's notice of meeting, and, except as otherwise required by law or by the second restated certificate of incorporation of the Corporation (the "Certificate of Incorporation"), no business will be conducted at any special meeting of Stockholders other than the items of business stated in the Corporation's notice of meeting. 1.3 Place and Time of Meetings. Meetings of the Stockholders may be held in or outside Delaware at the place and time specified by the Board of Directors or the directors or Stockholders requesting the meeting. 10 1.4 Notice of Meetings; Waiver of Notice. Written notice of each meeting of Stockholders will be given to each Stockholder entitled to vote at the meeting, except that (i) it will not be necessary to give notice to any Stockholder who submits a signed waiver of notice before or after the meeting, or is deemed to waive notice, and (ii) no notice of an adjourned meeting need be given except when required under Section 1.5 or 1.12 of these By-Laws or by law. Each notice of a meeting will be given, personally or by mail, not less than 10 nor more than 60 days before the meeting and will state the time and place of the meeting, and unless it is the annual meeting, will state at whose direction or request the meeting is called and the purposes for which it is called. If mailed, notice will be considered given when mailed to a Stockholder at his address on the Corporation's records. The attendance of any Stockholder at a meeting, without protesting at the beginning of the meeting that the meeting is not lawfully called or convened, will constitute a waiver of notice by him. 1.5 Quorum. At any meeting of Stockholders, the presence in person or by proxy of the holders of the shares of capital stock of the Corporation having a majority of the votes which could be cast by the holders of all issued and outstanding shares of capital stock of the Corporation entitled to vote at the meeting will constitute a quorum for the transaction of any business. In the absence of a quorum, a majority in voting interest of those present or, if no Stockholders are present, any officer entitled to preside at or to act as secretary of the meeting, may adjourn the meeting until a quorum is present. At any adjourned meeting at which a quorum is present, any action may be taken which might have been taken at the meeting as originally called. No notice of an adjourned meeting need be given if the time and place are announced at the meeting at which the adjournment is taken except that, if adjournment is for more than 30 days or if, after the adjournment, a new record date is fixed for the meeting, notice of the adjourned meeting will be given pursuant to Section 1.4 hereof. 1.6 Voting; Proxies. Each Stockholder of record will be entitled to the number of votes set forth in the Certificate of Incorporation. Corporate action to be taken by Stockholder vote, other than the election of directors, will be authorized by a majority of the votes cast at a meeting of Stockholders, except as otherwise provided by law, the Certificate of Incorporation or by any provision of these By-Laws. Directors will be elected in the manner provided in Sections 2.1 and 2.2 hereof. Voting need not be by ballot unless requested by a Stockholder at the meeting or ordered by the chairman of the meeting; however, all elections of directors will be by written ballot, unless otherwise provided in the Certificate of Incorporation. Each Stockholder entitled to vote at any meeting of Stockholders may authorize another person to act for him or her by proxy. Every proxy must be signed by the Stockholder or his attorney-in-fact. No proxy will be valid after three years from its date unless it provides otherwise. 11 1.7 List of Stockholders. Not less than 10 days prior to the date of any meeting of Stockholders, the secretary of the Corporation will prepare a complete list of Stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each Stockholder and the number of shares registered in his or her name. For a period of not less than 10 days prior to the meeting, the list will be available during ordinary business hours for inspection by any Stockholder for any purpose germane to the meeting. During this period, the list will be kept either (i) at a place within the city where the meeting is to be held, if that place is specified in the notice of the meeting, or (ii) if not so specified, at the place where the meeting is to be held. The list will also be available for inspection by Stockholders at the time and place of the meeting. 1.8 No Action by Consent Without a Meeting. Action by written consent of Stockholders will be governed by Article FOURTH of the Certificate of Incorporation. 1.9 Organization. Meetings of the Stockholders will be presided over by the chairman, or if the chairman is not present, by the president, or, if neither of them is present, by a vice president, or, if neither the chairman, the president nor a vice president is present, by a chairman to be chosen at the meeting. The secretary of the Corporation, or in his absence, an assistant secretary, will act as secretary of the meeting, or, if neither the secretary nor an assistant secretary is present, then the meeting will choose its secretary. 1.10 Inspectors of Election. The Corporation may, and will if required by law, in advance of any meeting of Stockholders, appoint one or more inspectors of election, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of Stockholders, the person presiding at the meeting will appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, will take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated will (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors' count of all votes and ballots. Such certification and reports will specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of Stockholders, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for office at any election may serve as an inspector at such election. 12 1.11 Conduct of Meetings. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of Stockholders will have the right and authority to prescribe such rules, regulations and procedures, and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. 1.12 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of capital stock of the Corporation or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date will not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (i) in the case of determination of Stockholders entitled to vote at any meeting of Stockholders or adjournment thereof, will, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting and (ii) in the case of any other action, will not be more than 60 days prior to such other action. If no record date is fixed: (a) the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders will be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (b) the record date for determining Stockholders for any other purpose will be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders will apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 1.13 Business at Meetings. Only business which is properly brought before a meeting in accordance with the procedures set forth in these By-Laws shall be conducted at such meeting. At any meeting of Stockholders, only such business shall be conducted as shall have been brought before the meeting (a) pursuant to the Corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) in the case of any annual meeting only or as otherwise required by law, by any Stockholder who is a Stockholder of record at the time of the giving of notice hereinafter provided for in these By-Laws, who shall be entitled to vote at any such meeting and who complies with the notice and delivery procedures hereinafter set forth in these By-Laws. Except as otherwise required by law or by the Certificate of Incorporation, no business will be conducted at any special meeting of Stockholders other than the items of business stated in the Corporation's notice of meeting. 13 No person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in these By-Laws. If the chairman of the meeting shall determine either that a nomination was not made in accordance with the procedures prescribed by these By-Laws, that a nominee has not met the qualification requirements, if any, set forth in these By-Laws or otherwise, or that business was not properly brought before the meeting in accordance with the procedures prescribed by these By-Laws, he shall so declare to the meeting and the defective nomination shall be disregarded or such business shall not be conducted, as the case may be; such determination shall not be appealable by the Stockholders. 1.14 Nominations by Stockholders and Proposals by Stockholders Generally. Nominations by Stockholders and proposals by Stockholders for the conduct of any business shall be made pursuant to timely notice in writing to the secretary of the Corporation and timely delivery of the information provided for in these By-Laws to all of the Stockholders. To be timely, a Stockholder's notice shall be personally delivered to or mailed by certified mail and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days from such anniversary date or delayed by more than 60 days from such anniversary date, notice by the Stockholder to be timely must be so received not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of the meeting is first made (which may include the delivery of notice to the New York Stock Exchange, the mailing of notice of the date of the meeting to the Stockholders, any public filing with the Securities and Exchange Commission or a press release to Dow Jones & Company or any similar service) and (b) if otherwise permitted pursuant to these By-Laws or required by law, in the case of a special meeting, not later than the close of business on the 10th day following the day on which public announcement of the date of the meeting is first made (which may include the delivery of notice to the New York Stock Exchange, the mailing of notice of the date of the meeting to the Stockholders, any public filing with the Securities and Exchange Commission or a press release to Dow Jones & Company or any similar service). Such Stockholder's notice shall set forth, as the case may be, (i) as to each person whom the Stockholder proposes to nominate for election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A promulgated under the Exchange Act (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and information establishing such person's fulfillment of any qualification requirements set forth in these By-Laws or otherwise; (ii) as to each matter which the Stockholder proposes to bring before such meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such Stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the Stockholder giving the notice (A) the name and 14 address, as they appear on the Corporation's books, of such Stockholder, (B) the class and number of shares of the Corporation which are owned by such Stockholder and (C) a representation that such Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons whom such Stockholder specified in the notice or to propose the conduct of the business specified in the notice, as the case may be. Notwithstanding the forgoing provisions of this By-Law, a Stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to solicitation of proxies and the matters set forth in these By-Laws. In addition, and without limiting the generality of the foregoing, nothing in these By-Laws shall be deemed to affect any rights of a Stockholder to request inclusion of proposals in the Corporation's proxy statement pursuant to and in compliance with Rule 14a-8 under the Exchange Act. 1.15 Additional Procedures for Nominations by Stockholders and Proposals by Stockholders. In addition to the notice to the Corporation set forth in Section 1.14 of these By-Laws, in order for a Stockholder to properly nominate or elect a director, whether at a meeting or by consent of Stockholders (to the extent such action by Stockholders may be taken by consent without meeting in accordance with the Certificate of Incorporation), or propose the conduct of business at a meeting or by consent of Stockholders (to the extent such action by Stockholders may be taken by consent without meeting in accordance with the Certificate of Incorporation), such Stockholder shall mail, or otherwise cause to be delivered, to all of the Stockholders, as the case may be, (a) as to each person whom such Stockholder proposes to nominate for election as a director, the name of such person, together with all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A or Regulation 14C promulgated under the Exchange Act, and any other information required by the proxy rules promulgated under the Exchange Act, and (b) as to each matter which the Stockholder proposes to bring before the meeting or have acted on by consent, a brief description of the business desired to be brought before the meeting or have acted on by consent and the reasons for conducting such business at the meeting or by consent, together with all information relating to such proposal that is required to be disclosed in solicitations of proxies, or is otherwise required, in each case pursuant to Regulation 14A or by Regulation 14C promulgated under the Exchange Act, and any other information required by the proxy rules promulgated under the Exchange Act. To be timely, such information shall be mailed to all of the Stockholders not less than 30 days prior to the date of such meeting or, if later, the second day following the day on which public announcement of the date of the meeting is first made (which may include the delivery of notice to the New York Stock Exchange, the mailing of notice of the date of the meeting to the Stockholders, any public filing with the Securities and Exchange Commission or a press release to Dow Jones & Company or any similar service). Such Stockholder may request the Corporation to mail promptly such information to all of the Stockholders on such Stockholder's behalf, and the expense of 15 such mailing shall be borne by the Corporation. If, pursuant to the proxy rules promulgated under the Exchange Act, the Corporation is obligated to include such Stockholder's proposal in its own proxy statement, the provisions of this paragraph shall be deemed satisfied. 2. BOARD OF DIRECTORS. 2.1 Powers. (a) Subject to applicable law and the Certificate of Incorporation, the business and affairs of the Corporation will be managed by the Board of Directors; and all powers of the Corporation may be exercised by or under the authority of the Board of Directors. (b) Subject to applicable law and the Certificate of Incorporation, and in addition to all other matters requiring approval by the Board of Directors, approval by the Board of Directors will be required for the following matters: (i) the dismissal and appointment of the chairman, president or any vice president of the Corporation, (ii) the compensation of the chairman, president or any vice president of the Corporation, (iii) any material change in the business of the Corporation as of the Effective Date, (iv) any acquisition of unimproved real property or acreage by the Corporation which is material to the Corporation and its subsidiaries on a consolidated basis in any single transaction including, without limitation, option deposits, joint venture investments and forward commitments, involving an expenditure in excess of $5 million, (v) other than transactions covered by the preceding clause, material capital expenditures, borrowings (other than borrowings under a revolving credit facility if the Board of Directors has previously authorized the Corporation to enter into any such facility) and other commitments by the Corporation in excess of $5 million per transaction (excluding transactions involving housing inventory) and (vi) the annual business plan and budget of the Corporation. Approval by the Corporation, as shareholder, of any action taken by a subsidiary of U.S. Home of the type described in clauses (iii), (iv) or (v) will require prior approval by the Board of Directors. 2.2 Number and Election. The Board of Directors will consist of the number of directors as determined in accordance with paragraph 1 of Article SIXTH of the Certificate of Incorporation. Directors will be elected by a plurality of the votes cast in accordance with the provisions of Section 2.3 hereof, and subject to the provisions of Section 2.13 hereof. 2.3 Classes and Term. The classes and terms of the directors will be as set forth in Article SIXTH of the Certificate of Incorporation. 16 2.4 Quorum and Manner of Acting. A majority of the Board of Directors will constitute a quorum for the transaction of business at any meeting, except as provided in Section 2.13 hereof. Subject to Section 2.13 hereof and the Certificate of Incorporation, action of the Board of Directors will be authorized by the vote of a majority of the directors present at the time of the vote if there is a quorum, unless otherwise provided by law or these By-Laws. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum is present. 2.5 Place of Meetings. Meetings of the Board of Directors may be held in or outside Delaware. 2.6 Annual and Regular Meetings. Annual meetings of the Board of Directors, for the election of officers and consideration of other matters, will be held either (i) without notice immediately after the annual meeting of Stockholders and at the same place or (ii) as soon as practicable after the annual meeting of Stockholders, on notice as provided in Section 2.8 hereof. Regular meetings of the Board of Directors may be held without notice at such times and places as the Board of Directors determines. If the day fixed for a regular meeting is a legal holiday, the meeting will be held on the next business day. 2.7 Special Meetings. Special meetings of the Board of Directors may be called by the chairman, the president or by a majority of the directors. Only business related to the purposes set forth in the notice of meeting may be transacted at a special meeting. 2.8 Notice of Meetings; Waiver of Notice. Notice of the time and place of each special meeting of the Board of Directors, and of each annual meeting not held immediately after the annual meeting of Stockholders and at the same place, will be given to each director by mailing it to him at his or her residence or usual place of business at least three days before the meeting, or by delivering or telephoning or telecopying it to him or her at least two days before the meeting. Notice of a special meeting will also state the purpose or purposes for which the meeting is called. Notice need not be given to any director who submits a signed waiver of notice before or after the meeting or who attends the meeting without protesting at the beginning of the meeting the transaction of any business because the meeting was not lawfully called or convened. Notice of any adjourned meeting need not be given, other than by announcement at the meeting at which the adjournment is taken. 2.9 Board of Directors or Committee Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors or by any committee of the Board of Directors may be taken without a meeting if all of the members of the Board of Directors or of the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents by the members of the Board of Directors or the committee will be filed with the minutes of the proceeding of the Board of Directors or of the committee. 17 2.10 Participation in Board of Directors or Committee Meetings by Conference Telephone. Any or all members of the Board of Directors or of any committee of the Board of Directors may participate in a meeting of the Board of Directors or of the committee by means of a telephone conference or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means will constitute presence in person at the meeting. 2.11 Resignation. Subject to Article SIXTH of the Certificate of Incorporation, any director may resign at any time by delivering his resignation in writing to the president or secretary of the Corporation, to take effect at the time specified in the resignation; the acceptance of a resignation, unless required by its terms, will not be necessary to make it effective. 2.12 Removal. A director may only be removed from office in accordance with Article SIXTH of the Certificate of Incorporation. 2.13 Vacancies. Any vacancy in the Board of Directors will be filled in accordance with Article SIXTH of the Certificate of Incorporation. 2.14 Compensation. Directors will receive such compensation as the Board of Directors determines, together with reimbursement of their reasonable expenses in connection with the performance of their duties. A director may also be paid for serving the Corporation, its affiliates or subsidiaries in other capacities. 2.15 Nominations of Directors. Nominations of persons for election to the Board of Directors may only be made (a) by the Board of Directors in accordance with Article SIXTH of the Certificate of Incorporation or (b) other than nominations of persons for election to the Board of Directors due to expiring terms of directors, at any meeting of Stockholders (i) by or at the direction of the Board of Directors or (ii) by any Stockholder who is a Stockholder of record at the time of the giving of notice provided for in these By-Laws, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice and delivery procedures set forth in these By-Laws; provided that such nominations by Stockholders at a special meeting of Stockholders may only be made at any such meeting at which directors are to be elected pursuant to the Corporation's notice of meeting or as otherwise required by law or permitted by these By-Laws. 18 3. COMMITTEES. 3.1 Executive Committee. The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate an Executive Committee of two or more directors, which will include the chairman and president and which will have all the powers and authority of the Board of Directors, except as otherwise provided in such resolution, section 141(c) of the Delaware General Corporation Law, any other applicable law or Section 2.1(b) hereof. The members of the Executive Committee will serve at the pleasure of the Board of Directors. All actions of the Executive Committee will be reported to the Board of Directors at its next meeting. 3.2 Other Committees. The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate other committees of directors of one or more directors, which will serve at the pleasure of the Board of Directors and have such powers and duties as the Board of Directors determines. 3.3 Rules Applicable to Committees. The Board of Directors may designate one or more directors as alternate members of any committee who would otherwise qualify under Sections 3.1 and 3.2 hereof, who may replace any absent or disqualified member at any meeting of the committee. All action of a committee will be reported to the Board of Directors at its next meeting. Each committee will adopt rules of procedure and will meet as provided by those rules or by resolutions of the Board of Directors. 4. OFFICERS. 4.1 Classes. The officers of the Corporation will be divided into two classes: corporate officers who will be officers of the Corporation for all purposes with the powers and authority for their respective offices as set forth in Section 4.2 hereof, and division officers who will be officers of the Corporation for limited purposes and with limited authority for their respective offices as set forth in Section 4.3 hereof. 4.2 Corporate Officers. 4.2.1 Election. Corporate officers will be chosen by the Board of Directors and may include a chairman, president, senior vice president, vice president, chief financial officer, chief accounting officer, secretary, treasurer and controller. The Board of Directors may also choose additional senior vice presidents, vice presidents and one or more assistant secretaries and treasurers, and such other officers and agents as it deems necessary. Only the chairman and president need be a member of the Board of Directors. 19 4.2.2 Term; Powers. Corporate officers will hold their offices for such terms as determined by the Board of Directors and until their successors are chosen and qualified. Corporate officers will possess and may exercise all the powers and privileges granted to officers under the Delaware General Corporation Law, together with any powers incidental thereto, including, without limitation, the power and authority to execute and deliver by and on behalf of the Corporation all contracts, agreements, deeds, bills of sale, leases, mortgages, notes, releases, indentures, guaranties, certificates, instruments, satisfactions of mortgages and other documents. Corporate officers will perform such duties and have such responsibilities as are set forth in these By-Laws and as will be determined from time to time by the Board of Directors. The compensation of all corporate officers will be fixed by the Board of Directors. 4.2.3 Removal; Vacancies. Corporate officers may be removed and vacancies in corporate offices will be filled in accordance with Article SEVENTH of the Certificate of Incorporation. 4.2.4 Chairman. The chairman will be the chief executive officer of the Corporation, will have such powers as are set forth in Section 4.2.2 hereof, and will be responsible for the effective operation of the Board of Directors and coordinate its various activities and the activities of its several committees. The chairman will preside at each meeting of the Board of Directors and of the Stockholders and approve the agenda and guide the deliberations of all such meetings. The chairman may appoint, assign duties to, and discharge agents and employees, and will perform all the duties and have all the powers incident to his office or assigned or delegated to him by the Board of Directors. 4.2.5 President. The president will b e the chief operating officer of the Corporation and will have the powers as set forth in Section 4.2.2 hereof, and will have general supervision over the business of the Corporation and over its several officers with power to delegate authority and assign duties to them. The president will, in the absence of the chairman, preside at meetings of the Stockholders and of the Board of Directors. The president will perform such other duties and have such other powers incident to his office or assigned or delegated to him by the Board of Directors. 4.2.6 Senior Vice Presidents and Vice Presidents. The senior vice presidents and the vice presidents will have the powers as set forth in Section 4.2.2 hereof, and will, in the absence or disability of the chairman and the president, perform the duties and exercise the powers of the chairman and the president of the Corporation. They will perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 4.2.7 Chief Financial Officer. The corporate officer designated by the Board of Directors will be the chief financial officer of the Corporation and will perform such other duties and will have such other powers as the Board of Directors may from time to time prescribe. 20 4.2.8 Chief Accounting Officer. The vice president, controller will be the chief accounting officer of the Corporation and will perform such other duties and will have such other powers as the Board of Directors may from time to time prescribe. 4.2.9 Secretary and Assistant Secretaries. (a) The secretary will attend all meetings of the Board of Directors and all meetings of the Stockholders and record all the proceedings of the meetings of the Stockholders and of the Board of Directors in a book to be kept for that purpose and will perform like duties for the standing committees when required. The secretary will give, or cause to be given, notice of all meetings of the Stockholders and special meetings of the Board of Directors, and will perform such other duties as may be prescribed by the Board of Directors or the chief executive officer, under whose supervision he will be. The secretary will keep in safe custody the seal of the Corporation, and, when authorized by the Board of Directors, affix the same to any instrument requiring it and, when so affixed, it will be attested by his or her signature or by the signature of the treasurer or an assistant secretary. (b) The assistant secretaries in the order of their seniority, unless otherwise determined by the Board of Directors, will, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary. They will perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 4.2.10 Treasurer. (a) The treasurer will have the custody of the corporate funds and securities and will keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and will deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. (b) The treasurer will disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and will render to the president and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the Corporation. (c) If required by the Board of Directors, the treasurer will give the Corporation a bond (which will be renewed every six years) in such sum and with such surety or sureties as will be satisfactory to the Board of Directors for the faithful performance of the duties of the treasurer's office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under the treasurer's control belonging to the Corporation. 21 4.3 Division Officers. 4.3.1 Presidents of Operations; Division Chairmen and Division Presidents. There will be several areas of operation designated by the president of the Corporation, each of which will consist of one or more divisions of the Corporation. Each such area of operations may have a president, whose title will be president of operations, U.S. Home Corporation (name of area of operations), and who will be designated and appointed by the president of the Corporation. The president of the Corporation will also fix the compensation of each such president of operations. Each division within each area of operations will have a division president and if designated and appointed by the president of operations, a division chairman, whose respective titles will be president (name of division) and chairman (name of division), who will hold office for such term as will be determined by the president of operations in charge of such division. The president of operations will fix the compensation of each division chairman and division president within the area of operations of such president of operations. All designations and appointments of presidents of operations, division chairmen and division presidents will be made by the execution and delivery of a written certificate to such effect. A vice president of the Corporation designated by the president of the Corporation to be in charge of one or more divisions will have all the powers of a president of operations, in addition to the powers of an officer of the Corporation. 4.3.2 Other Officers. Each area of operations and each division of the Corporation may have such other officers as will be designated and appointed by a president of operations, division chairman or a division president by executing a written certificate to such effect and may include, without limitation, vice presidents, secretaries, controllers and such other officers and agents as the president of operations, division chairman or division president in his or her discretion will deem necessary and proper. Such officers will hold their offices for such terms as will be determined by the president of operations of such area of operations, the division chairman or the division president, from time to time and until their successors are chosen and qualified. Such officers will have such powers and perform such duties as set forth in Sections 4.3.3 and 4.3.4 hereof and may be removed at any time with or without cause by the president of operations of such area of operations, the division chairman or the division president, and vacancies in such division offices may be filled at any time as provided in this Section 4.3.2. 4.3.3 General Powers. Each president of operations, division chairman, division president and other officers of areas of operations and divisions will have the limited powers and authority as an officer of the Corporation subject to the further limitation in the next full sentence, to execute and deliver, by and on behalf of the Corporation, all contracts, agreements, deeds, bills of sales, mortgages, notes, releases, indentures, guaranties, leases, certifications, satisfactions of mortgage, and other documents which relate solely to the business, operations and properties of his or her area of operations or division and which require for valid execution, delivery and implementation under applicable law the 22 authorization of an officer of the Corporation; such officers will have the power and authority to affix the corporate seal to any such documents and any area of operations or division secretary or assistant secretary, or area of operations or division controller, may attest thereto by his or her signature. Notwithstanding the generality of the foregoing, only presidents of operations, division chairmen, division presidents or vice presidents of areas of operations or vice presidents of divisions will have the authority to approve, execute and deliver, in the name and on behalf of the Corporation, contracts for the sale and purchase of real property or interests therein, and to execute and approve any documents, including, without limitation, deeds, notes, mortgages and leases and take any action deemed necessary and proper by such officers in connection with such sale or purchase of real property, so long as such transactions or series of related transactions have been approved by the Asset Management Committee of the Corporation; provided, that no such transaction or series of related transactions will exceed $4,999,999 without the prior approval of the president of the Corporation or the Board of Directors; nor will any officer of an area of operations or a division therein be authorized to enter into any contract for the purchase of any permanent mortgage commitments which require the mandatory delivery of mortgages or any permanent mortgage commitment which provides for liability to the Corporation of more than 1 percent of the amount of the commitment without first having obtained the approval of the president of the Corporation or the chief financial officer of the Corporation or other senior officer of the Corporation. The authority of officers of areas of operations and divisions set forth in this Section 4.3.3 may be increased or reduced by subsequent resolution of the Board of Directors. 4.3.4 Bank Accounts. Each president of operations, each division chairman and each division president will have the authority on behalf of the Corporation and with respect to the funds of his area of operations or division to open, maintain and close depository, payroll, escrow, savings and other accounts with any commercial banks, savings and loan associations or other financial institutions, and, in connection therewith, to authorize other officers and employees of such area of operations or division to have such signatory and other authority with respect to any and all such accounts as such officer in his or her discretion deems necessary and proper, and to approve any and all resolutions required by such banks, savings and loan associations or other financial institutions for the opening and maintenance of any such accounts. 5. SHARES. 5.1 Certificates. The Corporation's shares will be represented by certificates in the form approved by the Board of Directors. Each certificate will be signed by the chairman, the president or a vice president and by the secretary or an assistant secretary, or the treasurer or an assistant treasurer, and will be sealed with the Corporation's seal or a facsimile of the seal. Any or all of the signatures on the certificate may be a facsimile. 23 5.2 Transfers. Subject to Article FIFTH of the Certificate of Incorporation, shares will be transferable only on the Corporation's books, upon surrender of the certificate for the shares, properly endorsed. The Board of Directors may require satisfactory surety before issuing a new certificate to replace a certificate claimed to have been lost or destroyed. 5.3 Determination of Stockholders of Record. The Board of Directors may fix, in advance, a date as the record date for the determination of Stockholders entitled to notice of or to vote at any meeting of the Stockholders, or to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action. The record date may not be more than 60 or less than 10 days before the date of the meeting or more than 60 days before any other action. 6. MISCELLANEOUS. 6.1 Seal. The Board of Directors will adopt a corporate seal, which will be in the form of a circle and will bear the Corporation's name and the year and state in which it is incorporated. 6.2 Fiscal Year. The Board of Directors may determine the Corporation's fiscal year from time to time. Until changed by the Board of Directors, the Corporation's fiscal year will be the 12-month period ending December 31 in each year. 6.3 Voting of Shares in Other Corporations. Shares in other corporations which are held by the Corporation may be represented and voted by the president or a vice president of the Corporation or by proxy or proxies appointed by one of them. The Board of Directors may, however, appoint another person to vote the shares. 6.4 Amendments. (a) These By-Laws may be amended, repealed or new By-Laws may be adopted by the Stockholders or by a majority of the Board of Directors. (b) Notwithstanding anything to the contrary contained in Section 6.4(a) hereof, until the annual meeting of Stockholders to be held in 1996, the amendment or repeal of Sections 1.8, 2.2, 2.3, 2.8, 2.9, 2.12, 2.13, 2.15 and 6.4(b) hereof will require the affirmative vote of the holders of the shares of capital stock of the Corporation having at least 75 percent of the votes which could be cast by the holders of all of the issued and outstanding shares of capital stock of the Corporation entitled to vote or by the affirmative vote of 75 percent of the Board of Directors. EX-4 3 EXHIBIT 4 RIGHTS AGREEMENT 24 EXHIBIT 4 U.S. HOME CORPORATION and FIRST CHICAGO TRUST COMPANY OF NEW YORK Rights Agent --------------- Rights Agreement Dated as of November 7, 1996 25 RIGHTS AGREEMENT RIGHTS AGREEMENT, dated as of November 7, 1996, between U.S. Home Corporation, a Delaware corporation (the "Company"), and First Chicago Trust Company of New York (the "Rights Agent"). W I T N E S S E T H WHEREAS, on November 7, 1996, the Rights Dividend Declaration Date (as hereinafter defined), the Board of Directors of the Company (the "Board of Directors") authorized and declared a dividend distribution of one Right (as hereinafter defined) for each share of the Company's Common Stock (as hereinafter defined) and Convertible Preferred Stock (as hereinafter defined) outstanding at the Close of Business (as hereinafter defined) on the Record Date (as hereinafter defined), and has authorized and directed the issuance of one such Right (as such number may hereinafter be adjusted) for each share of Stock (as hereinafter defined) that shall become outstanding between the Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date (as hereinafter defined), and in certain circumstances provided in Section 22 hereof, after the Distribution Date, each such Right initially representing the right to purchase one one-hundredth of a share of Series A Junior Non-Cumulative Preferred Stock of the Company, having the rights, powers and preferences set forth in the form of Certificate of Designations, Preferences and Rights attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the "Rights"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties, intending to be legally bound, hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any (i) Person (other than an Institutional Stockholder) who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of the Company's Common Stock then outstanding or was such a Beneficial Owner at any time after the date hereof, whether or not such Person continues to be the Beneficial Owner of 15% or more of the Company's then outstanding Common Stock, or (ii) Institutional Stockholder who or which, together with all Affiliates and Associates of such Institutional Stockholder, shall be the Beneficial Owner of 20% or more of the shares of the Company's Common Stock then outstanding or was such a Beneficial Owner at any time after the date hereof, whether or not such Institutional Stockholder continues to be the Beneficial Owner of 20% or more of the Company's then outstanding Common Stock, but shall not include (a) the Company, (b) any Subsidiary of the Company, (c) any employee benefit plan of the Company or of any Subsidiary of the Company or (d) any Person 26 organized, appointed or established by the Company for or pursuant to the terms of any such plan; provided, that "Acquiring Person" shall not include any Person who becomes an Acquiring Person solely as a result of a reduction in the number of shares of the Company's Common Stock outstanding due to the repurchase of shares of Common Stock by the Company, unless and until such Person or an Affiliate or Associate thereof shall purchase or otherwise become the Beneficial Owner of additional shares of Common Stock of the Company. Notwithstanding the foregoing, if the Board of Directors determines in good faith that a Person who would otherwise be an "Acquiring Person" as defined pursuant to the foregoing provisions of this Section 1.1, has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of shares of the Company's Common Stock so that such Person would no longer be an "Acquiring Person," as defined pursuant to this Section 1.1, then such Person shall not be deemed to be an "Acquiring Person" for any purposes of this Agreement. 1.2 "Act" shall mean the Securities Act of 1933, as amended. 1.3 "Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii) hereof. 1.4 "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement. 1.5 "Agreement" shall mean this Rights Agreement, as the same may be amended, supplemented or modified from time to time. 1.6 "Associate" shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement. 1.7 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (i) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 27 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights; (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 under the Exchange Act as in effect on the date hereof), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor schedule or report); or (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except as described in the proviso to the preceding subparagraph) or disposing of any voting securities of the Company; provided, however, that nothing in this subparagraph shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of, or to "beneficially own," any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition. Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase "then outstanding," when used with reference to a Person's Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to beneficially own hereunder. 1.8 "Board of Directors" shall have the meaning set forth in the WHEREAS clause hereof. 28 1.9 "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. 1.10 "Close of Business" on any given date shall mean 5:00 p.m., New York City time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 p.m., New York City time, on the next succeeding Business Day. 1.11 "Common Stock" when used with reference to the Company shall mean the common stock, $.01 par value per share, of the Company, or, in the event of a subdivision, combination or consolidation with respect to such shares of common stock, the shares resulting from such subdivision, combination or consolidation. "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such other Person, or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. 1.12 "Common Stock Equivalents" shall have the meaning set forth in Section 11(a)(iii) hereof. 1.13 "Company" shall have the meaning set forth in the introductory paragraph hereof. 1.14 "Convertible Preferred Stock" shall mean the convertible redeemable preferred stock, $.10 par value per share, of the Company, or, in the event of a subdivision, combination or consolidation with respect to such shares of convertible redeemable preferred stock, the shares resulting from such subdivision, combination or consolidation. 1.15 "Current Market Price" shall have the meaning set forth in Section 11(d)(i) hereof. 1.16 "Current Value" shall have the meaning set forth in Section 11(a) iii) hereof. 1.17 "Distribution Date" shall have the meaning set forth in Section 3(a) hereof. 1.18 "equivalent preferred shares" shall have the meaning set forth in Section 11(b) hereof. 1.19 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.20 "Exchange Ratio" shall have the meaning set forth in Section 24 hereof. 1.21 "Expiration Date" shall have the meaning set forth in Section 7(a) hereof. 1.22 "Final Expiration Date" shall have the meaning set forth in Section 7(a) hereof. 29 1.23 "Institutional Stockholder" shall mean any Person who is and continues to be eligible under Rule 13d-1 under the Exchange Act as in effect on the date hereof to file a Schedule 13G with respect to such Person's ownership of the Common Stock. 1.24 "NASDAQ" shall have the meaning set forth in Section 11(d)(i) hereof. 1.25 "Original Rights" shall have the meaning set forth in Section 1.7(i) hereof. 1.26 "Person" shall mean any individual, firm, corporation, partnership, trust, association, joint venture, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity. 1.27 "Preferred Stock" shall mean shares of Series A Junior Non-Cumulative Preferred Stock, $.10 par value per share, of the Company having the relative rights, preferences and limitations set forth in the Certificate of Designations attached to this Agreement as Exhibit A, and, to the extent that there are not a sufficient number of shares of Series A Junior Non-Cumulative Preferred Stock authorized to permit the full exercise of the Rights, any other series of Preferred Stock, $.10 par value per share, of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Non-Cumulative Preferred Stock. 1.28 "Principal Party" shall have the meaning set forth in Section 13(b) hereof. 1.29 "Purchase Price" shall have the meaning set forth in Section 4(a) hereof. 1.30 "Record Date" shall be December 4, 1996. 1.31 "Redemption Price" shall have the meaning set forth in Section 23(a) hereof. 1.32 "Rights" shall have the meaning set forth in the WHEREAS clause hereof. 1.33 "Rights Agent" shall have the meaning set forth in the introductory paragraph hereof. 1.34 "Rights Certificate" shall have the meaning set forth in Section 3(a) hereof. 1.35 "Rights Dividend Declaration Date" shall mean November 7, 1996. 1.36 "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii) hereof. 30 1.37 "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii) hereof. 1.38 "Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof. 1.39 "Spread" shall have the meaning set forth in Section 11(a)(iii) hereof. 1.40 "Stock" shall mean the shares of the Company's Common Stock and Convertible Preferred Stock. 1.41 "Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. 1.42 "Subsidiary" of any Person shall mean any corporation or other Person of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person or otherwise controlled by such Person. 1.43 "Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof. 1.44 "Summary of Rights" shall have the meaning set forth in Section 3(b) hereof. 1.45 "Trading Day" shall have the meaning set forth in Section 11(d)(i) hereof. 1.46 "Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event. Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. Section 3. Issue of Rights Certificates. (a) Until the earlier of (i) the Close of Business on the tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Close of Business on the tenth Business Day (or such later date as the Board of Directors shall determine prior to such time as any Person becomes an Acquiring Person) after the date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the 31 terms of any such plan) of, or of the first public announcement of the intention of any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) to commence, a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earlier of (i) and (ii) being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to Section 3(b) hereof) by the certificates for the Stock registered in the names of the holders thereof and not by separate Rights Certificates, and (y) the right to receive Rights Certificates will be transferable only in connection with the transfer of the underlying shares of Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent by first-class, postage-prepaid mail, to each record holder of the Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more right certificates, in substantially the form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for each share of Stock so held, subject to adjustment as provided herein. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. (b) On the Record Date or as promptly as practicable thereafter, the Company will send a copy of a Summary of Rights, in substantially the form of Exhibit C hereto (the "Summary of Rights"), by first-class, postage-prepaid mail, to each record holder of the Stock as of the Close of Business on the Record Date, at the address of such holder shown on the records of the Company. With respect to certificates for the Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for Stock registered in the names of the holders thereof and together with a copy of the Summary of Rights attached hereto, the registered holders of the Stock shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date, the surrender for transfer of any certificate for shares of Stock outstanding on the Record Date, with or without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with such shares of Stock represented thereby. (c) Certificates for Stock which become outstanding (including, without limitation, reacquired Stock referred to in the last sentence of this Section 3(c)) after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date, or, in certain circumstances provided in Section 22 hereof, after the Distribution Date shall be deemed to be certificates for Rights, and shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights 32 Agreement between U.S. Home Corporation (the "Company") and First Chicago Trust Company of New York (the "Rights Agent"), dated as of November 7, 1996 (as the same may be amended from time to time, the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associates thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the Stock represented thereby. In the event the Company purchases or acquires any Stock (including, without limitation, upon conversion or redemption of any share of Convertible Preferred Stock) after the Record Date but prior to the Distribution Date, any Rights associated with such Stock shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the Stock which is no longer outstanding. Section 4. Form of Rights Certificates. (a) The Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 22 hereof, the Rights Certificates shall entitle the holders thereof to purchase such number of one one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-hundredth of a share, the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. 33 (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights which are null and void pursuant to Section 7(e) of this Agreement, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement. Provisions of Section 7(e) of this Agreement shall be operative whether or not the foregoing legend is contained on any Rights Certificate. Section 5. Countersignature and Registration. (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any of its Vice Presidents, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof and shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the Person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any Person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such Person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of Rights Certificates issued hereunder or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 34 Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates (except as otherwise provided herein, including, without limitation, Rights Certificates representing Rights that have become null and void and nontransferable pursuant to Section 7(e) of this Agreement or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein), in whole or in part, at any time after the Distribution Date upon surrender of the Rights Certificate, with the form 35 of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price (as adjusted in accordance with the terms of this Agreement) with respect to the total number of one one-hundredths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are exercised, at or prior to the earlier of (i) the Close of Business on November 7, 2006 (the "Final Expiration Date"), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof or (iii) the time at which the Rights are exchanged as provided in Section 24 hereof (the earliest of (i), (ii) and (iii) being herein referred to as the "Expiration Date"). (b) The Purchase Price for each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $80.00, shall be subject to adjustment from time to time as provided in Section 11 or 13 or 24 hereof and shall be payable in accordance with Section 7(c) hereof. (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price for the shares to be purchased as set forth below and an amount equal to any applicable transfer tax required to be paid by the holder of such Rights Certificate, in accordance with Section 6 hereof by certified check, cashier's check or money order payable to the order of the Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company, in its sole discretion, shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) when appropriate, after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) or 24 hereof) shall be made in cash or by certified bank check or bank draft payable to the order of the Company. In the event that the Company is obligated or elects to issue other securities (including Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) or 24 hereof, the Company will make all arrangements necessary so 36 that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate. The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock would be issued. In addition, in the case of an exercise of Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented thereby no longer include the Rights provided by Section 11(a)(ii) of the Rights Agreement and if less than all the Rights represented by such Rights Certificate were so exercised, the Rights Agent shall indicate on the Rights Certificate the number of Rights represented thereby which continue to include the rights provided by Section 11(a)(ii). (d) In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14 hereof, or the Rights Agent shall place an appropriate notation on the Rights Certificate with respect to those Rights exercised. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. The Company may require (or cause the Rights Agent or any transfer agent of the Company to require) any Person who submits a Rights Certificate (or a certificate representing shares of Stock that evidences, or but for the provisions of this Section 7(e) would evidence, Rights) for transfer on the registry books or to exercise the Rights represented thereby to establish to the satisfaction of the Company in its sole discretion that such Rights have not become null and void pursuant to the provisions of this Section 7(e). 37 (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of Capital Stock. (a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and, following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities or out of its authorized and issued shares held in its treasury), the number of shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this Agreement, including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights. (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of the Company's Common Stock and/or other securities) issuable upon the exercise of the Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable (but only to the extent that it is reasonably likely that the Rights will be exercised), all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. 38 (c) If required by applicable law, the Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof or Rights are to be exchanged in accordance with Section 24 hereof, a registration statement under the Act, with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act and the rules and regulations thereunder) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. In addition, if the Company shall determine that a registration statement is required following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights until such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been obtained, the exercise thereof shall not be permitted under applicable law or a registration statement shall not have been declared effective. (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a share of Preferred Stock (and, following the occurrence of a Triggering Event, shares of the Company's Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares or securities. (e) The Company further covenants and agrees that it will pay when due and payable any and all U.S. federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one-hundredths of a share of Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of one one-hundredths of a share of Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) in a name other 39 than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise, or to issue or deliver any certificates or depositary receipts for a number of one one-hundredths of a share of Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for a number of one one-hundredths of a share of Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such fractional shares of Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or shares of the Company's Common Stock and/or other securities, as the case may be) transfer books of the Company are open. Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. The Purchase Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would 40 have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. (ii) Subject to Section 24 of this Agreement, in the event any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) alone or together with its Affiliates and Associates, shall become an Acquiring Person, unless the event causing such Person to become an Acquiring Person is a transaction set forth in Section 13(a) hereof, each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such event regardless of whether or not the Right was then exercisable, in accordance with the terms of this Agreement and in lieu of a number of one one-hundredths of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and dividing that product (which, following such first occurrence, shall thereafter be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by (y) 50% of the Current Market Price (determined pursuant to Section 11(d) hereof) per share of the Company's Common Stock on the date of such first occurrence (such number of shares, the "Adjustment Shares"). (iii) In the event that there shall not be sufficient treasury shares or authorized but unissued (and reserved) shares of the Company's Common Stock to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this Section ll(a), the Company shall (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right determined as set forth below (the "Current Value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right (subject to Section 7(e) hereof) make adequate provision to substitute for the Adjustment Shares, upon the exercise of a Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock, such as the Preferred Stock, which the Board of Directors has deemed to have essentially the same value or economic rights as shares of the Company's Common Stock (such shares of preferred stock being referred to as "Common Stock Equivalents")), (4) debt 41 securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current Value (less the amount of any reduction in the Purchase Price) where such aggregate value has been determined by the Board of Directors based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the occurrence of a Section 11(a)(ii) Event (the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of the Company's Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors determines in good faith that it is likely that sufficient additional shares of the Company's Common Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such thirty (30) day period, as it may be extended, is herein called the "Substitution Period"). To the extent that action is to be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and (2) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such stockholder approval for such authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the Current Value of each Adjustment Share shall be the Current Market Price per share of the Company's Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent shall be deemed to equal the Current Market Price per share of the Company's Common Stock on such date. (b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock ("equivalent preferred stock")) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less than the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which 42 shall be the number of shares of Preferred Stock outstanding on such record date plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (c) In case the Company shall fix a record date for a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one share of Preferred Stock and the denominator of which shall be such Current Market Price (as determined pursuant to Section 11(d) hereof) per share of the Preferred Stock; provided, however, that in no event shall the consideration paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed. 43 (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price (as defined below) per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days (as defined below) immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following such date; provided, however, that in the event that the Current Market Price per share of the Common Stock is determined during a period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights) or (B) any subdivision, combination or reclassification of such Common Stock, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification shall not have occurred prior to the commencement of the requisite 30 Trading Day or ten Trading Day period, as set forth above, then, and in each such case, the Current Market Price shall be appropriately adjusted to reflect the Current Market Price per share equivalent if such Common Stock take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined in good faith by the Board of Directors shall be used. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, Current Market Price per share shall mean the fair value per share as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 44 (ii) For the purpose of any computation hereunder, the Current Market Price per share of Preferred Stock (or any other security, for which the Current Market Price must be determined) shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than (solely in the case of the Preferred Stock) the last sentence thereof). If the Current Market Price per share of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the Current Market Price per share of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the Current Market Price per share of the Common Stock (as determined in accordance with Section 11(d)(i)). If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, Current Market Price per share of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive and binding for all purposes. For all purposes of this Agreement, the Current Market Price of one one-hundredth of a share of Preferred Stock shall be equal to the Current Market Price of one share of Preferred Stock divided by 100. (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date. (f) If as a result of an adjustment made pursuant to Section 11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares. 45 (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths of a share covered by a Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of one one-hundredths of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner 46 provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. (j) Irrespective of any adjustment or change in the Purchase Price or the number of one one-hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth of a share and the number of one one-hundredths of a share which were expressed in the initial Rights Certificates issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number of one one-hundredths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable such number of one one-hundredths of a share of Preferred Stock at such adjusted Purchase Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its sole discretion it shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such stockholders. (n) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, 47 assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation, merger, sale or transfer there are any charter or by-law provisions or any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. The Company shall not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such other Person shall have executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this Section 11(n). (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23, Section 24 or Section 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare or pay a dividend on its outstanding shares of Common Stock or Convertible Preferred Stock payable in shares of its Common Stock or (ii) subdivide, combine or consolidate its outstanding shares of Common Stock or Convertible Preferred Stock (by reclassification or otherwise other than by payment of dividends in its Common Stock), into a greater or smaller number of shares, then in any such case, the number of Rights associated with each share of its Common Stock or Convertible Preferred Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each such share following any such event shall equal the result obtained by multiplying the number of Rights associated with each such share immediately prior to such event by a fraction the numerator which shall be the total number of shares, in the case of the Common Stock, of Common Stock, and, in the case of the Convertible Preferred Stock, of Convertible Preferred Stock, outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of, in the case of the Common Stock, shares of Common Stock, and, in the case of the Convertible Preferred Stock, of Convertible Preferred Stock, outstanding immediately following the occurrence of such event. 48 (q) The exercise of Rights under Section 11(a)(ii) shall only result in the loss of rights under Section 11(a)(ii) to the extent so exercised and shall not otherwise affect the rights represented by the Rights under this Agreement, including the rights represented by Section 13. Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 and Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock, the Company's Common Stock and the Convertible Preferred Stock, a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of the Stock) in accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall not be deemed to have knowledge of such adjustment unless and until it shall have received such certificate. Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In the event that, directly or r indirectly, at any time after a Person has become an Acquiring Person, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of the Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions each of which complies with Section 11(o) hereof), then, and in each such case (except as provided by Section 13(d) hereof), proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price multiplied by the number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such event regardless of whether or not the Right was then exercisable, in accordance with the terms of this Agreement and in lieu of a number of one one-hundredths of a share of Preferred Stock, such number of validly authorized and issued, fully paid, non-assessable and freely tradeable shares of Common Stock of the Principal Party (as hereinafter defined, (including, without limitation, the Company as successor thereto or the surviving corporation)) not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one one-hundredths of a share of Preferred Stock for which a Right is 49 exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such one one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence), and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by (2) 50% of the Current Market Price (determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event. (b) "Principal Party" shall mean (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any such case, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another 50 Person the Common Stock of which is and has been so registered, "Principal Party" shall refer to such other Person; (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value; and (3) in case such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership having an interest in such joint venture as if such party were a "Subsidiary" of both or all of such joint venturers and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in Sections 13(a) and (b) and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in Section 13(a), the Principal Party will (i) prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; (ii) use its best efforts to qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate; and (iii) deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. 51 The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a). Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors. If on any such date no such market maker is making a market in the Rights the fair value of the Rights on such date as determined in good faith by the Board of Directors shall be used. (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-hundredth of a share of Preferred Stock may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided that such agreement shall provide that the holders of such depositary receipts shall have the rights, privileges and preferences to which they are entitled as beneficial owners 52 of the Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise. (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of its Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of its Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market value of one share of Common Stock shall be the closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. (d) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional share upon exercise of a Right, except as permitted by this Section 14 (except as provided above). Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement. Agreement of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: 53 (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Stock; (b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or a beneficial interest in a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or other distributions or be deemed for any purpose the holder of the number of one one-hundredths of a share of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or other distributions or to exercise any preemptive or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof. 54 Section 19. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the reasonable costs and expenses of defending against any claim of liability in the premises. The indemnity provided for herein shall survive the expiration of the Rights and the termination of this Agreement. (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the stock transfer or corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 55 (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes only those duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company) and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of "Current Market Price") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates) but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any change in the exercisability of Rights (including the Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required under the provisions of 56 Section 11 or Section 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. 57 (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company, and to each transfer agent of the Company's Common Stock, the Convertible Preferred Stock and the Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Company's Common Stock, the Convertible Preferred Stock and the Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of Delaware (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of New York) in good standing, having a principal office in the State of New York, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Company's Common Stock, the Convertible Preferred Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights 58 Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options, convertible securities, or warrants, including, without limitation, pursuant to the conversion of the Convertible Preferred Stock, the conversion of the Company's 4-7/8 Convertible Subordinated Debentures due 2005 and the Company's Class B Warrants, or under any employee plan or arrangement, granted or awarded as of the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. Section 23. Redemption and Termination. (a) The Board of Directors may, at its option, at any time prior to such time as any Person becomes an Acquiring Person, redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"). The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the Current Market Price, as defined in Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors. (b) Immediately upon the action of the Board of Directors ordering the redemption of the Rights pursuant to Section 23(a) hereof, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. The Company shall promptly give public notice of any such redemption; provided, however, that 59 the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors ordering the redemption of the Rights, the Company shall deliver a notice of such redemption to the Rights Agent and mail a notice of such redemption to all holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Company's Common Stock and the Convertible Preferred Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or Section 24 hereof, and other than in connection with the purchase of the Stock prior to the Distribution Date. Section 24. Exchange. (a) The Board of Directors may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of the Company's Common Stock at an exchange ratio of one share of the Company's Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Company's Common Stock then outstanding. (b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights pursuant to Section 24(a) and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of the Company's Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the shares of the Company's Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights. 60 (c) In the event that there shall not be sufficient shares of the Company's Common Stock issued but not outstanding or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional Common Stock for issuance upon exchange of the Rights. In the event the Company shall, after good faith effort, be unable to take all such action as may be necessary to authorize such additional Common Stock, the Company shall substitute, for each share of Common Stock that would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or fraction thereof such that the Current Market Price of one share of Preferred Stock multiplied by such number or fraction is equal to the Current Market Price of one share of Common Stock as of the date of issuance of such share of Preferred Stock or fraction thereof. (d) The Company shall not be required to issue fractions of a share of its Common Stock or to distribute certificates which evidence fractional shares. In lieu of such fractional shares, the Company shall pay to the registered holders of the Rights Certificate with regard to which such fractional shares would otherwise be issuable an amount in cash equal to the same fraction of the Current Market Value of a share of Common Stock. For the purposes of this Section 24(d), the Current Market Value of a share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. Section 25. Notice of Certain Events. (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action and file a certificate with the Rights Agent to that effect, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date 61 is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least ten (10) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least ten (10) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock whichever shall be the earlier. (b) In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in Section 25(a) to Preferred Stock shall be deemed thereafter to refer to the Company's Common Stock and/or, if appropriate, other securities of the Company. Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: U.S. Home Corporation 1800 West Loop South Houston, Texas 77027 Attention: Corporate Secretary Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: First Chicago Trust Company of New York Suite 4660, 525 Washington Boulevard Jersey City, New Jersey 07310 Attention: Tenders & Exchanges Administration Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder of certificates representing shares of Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 62 Section 27. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any holders of the Rights Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with respect to the Rights which the Company may deem necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent; provided, however, that from and after such time as any Person becomes an Acquiring Person, this Agreement shall not be amended in any manner which would adversely affect the interests of the holders of the Rights. Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 29. Determinations and Actions by the Board of Directors, etc. The Board of Directors shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend this Agreement and whether any proposed amendment adversely affects the interests of the holders of Rights Certificates). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board of Directors to any liability to the holders of the Rights. Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Stock). Section 31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 63 Section 32. Governing Law. This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. Section 33. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 34. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. U.S. HOME CORPORATION By: /s/ Kelly Somoza ---------------------- Name: Kelly Somoza Title: Vice President FIRST CHICAGO TRUST COMPANY OF NEW YORK By: /s/ James Kuzmich ------------------------ Name: James Kuzmich Title: Operations Officer 64 TABLE OF CONTENTS Page No. Section 1. Certain Definitions 1 Section 2. Appointment of Rights Agent 6 Section 3 Issue of Rights Certificates 7 Section 4. Form of Rights Certificates 8 Section 5. Countersignature and Registration 9 Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates 9 Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 10 Section 8. Cancellation and Destruction of Rights Certificates 12 Section 9. Reservation and Availability of Capital Stock 13 Section 10. Preferred Stock Record Date 14 Section 11 Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights 15 Section 12. Certificate of Adjusted Purchase Price or Number of Shares 23 Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 23 Section 14. Fractional Rights and Fractional Shares 25 Section 15. Rights of Action 27 Section 16. Agreement of Rights Holders 27 Section 17. Rights Certificate Holder Not Deemed a Stockholder 28 65 Section 18. Concerning the Rights Agent 28 Section 19. Merger or Consolidation or Change of Name of Rights Agent 28 Section 20. Duties of Rights Agent 29 Section 21. Change of Rights Agent 31 Section 22. Issuance of New Rights Certificates 32 Section 23. Redemption and Termination 32 Section 24. Exchange 33 Section 25. Notice of Certain Events 34 Section 26. Notices 35 Section 27. Supplements and Amendments 35 Section 28. Successors 36 Section 29. Determinations and Actions by the Board of Directors, etc. 36 Section 30. Benefits of this Agreement 36 Section 31. Severability 36 Section 32. Governing Law 36 Section 33. Counterparts 36 Section 34. Descriptive Headings 37 66 EXHIBIT 4-A FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A JUNIOR NON-CUMULATIVE PREFERRED STOCK of U.S. HOME CORPORATION Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, Robert J. Strudler, Chairman and Co-Chief Executive Officer, and Richard G. Slaughter, Vice President - Planning and Secretary, of U.S. Home Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Corporation's Board of Directors (the "Board of Directors") by the Restated Certificate of Incorporation, as amended, of the Corporation (the "Certificate of Incorporation"), the Board of Directors on November 7, 1996 adopted by resolution this Certificate of Designation creating a series of 500,000 shares of Preferred Stock designated as Series A Junior Non-Cumulative Preferred Stock: Pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Non-Cumulative Preferred Stock," $.10 par value per share, and the number of shares constituting such series shall be 500,000. Such number of shares may be increased or decreased by the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Junior Non-Cumulative Preferred Stock to a number less than the number of shares outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Junior Non-Cumulative Preferred Stock. 67 2. Dividends and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock, including specifically holders of shares of the Corporation's Convertible Redeemable Preferred Stock, $.10 par value per share (the "Convertible Preferred Stock"), ranking prior and superior to the shares of Series A Junior Non-Cumulative Preferred Stock with respect to dividends, holders of record of the Series A Junior Non-Cumulative Preferred Stock will be entitled to receive if, when, and as declared by the Board of Directors, but only out of funds legally available for the payment of cash dividends under the laws of the State of Delaware, quarterly dividends payable on the last day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Non-Cumulative Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock, $.01 par value per share ("Common Stock"), or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), to be declared on the Common Stock with respect to the immediately preceding Quarterly Dividend Payment Date, or, in the case of the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Non-Cumulative Preferred Stock. In the event the Corporation shall at any time after November 7, 1996 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Non-Cumulative Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Junior Non-Cumulative Preferred Stock as provided in paragraph (A) above immediately prior to the time when it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and at no other time. (C) Dividends on outstanding shares of Series A Junior Non-Cumulative Preferred Stock will not be cumulative. Dividends paid on the shares of Series A Junior Non-Cumulative Preferred Stock in an amount less than the total amount of such dividends at the time declared on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. Such dividends, if any, will be payable to holders of record on the date fixed for such purpose by the Board of Directors in advance of the payment of each such dividend. 68 3. Voting Rights. (A) The holders of the Series A Junior Non-Cumulative Preferred Stock, voting together as a single class (except as otherwise provided herein or by law) with the holders of the Convertible Preferred Stock and the holders of the Common Stock, will have the right to vote on all matters requiring action of the stockholders of the Corporation or submitted to such stockholders for action, except when otherwise required by law. (B) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Non-Cumulative Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Non-Cumulative Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (C) In the event the Board of Directors declares a dividend on the Series A Junior Non-Cumulative Preferred Stock, and the Corporation fails to pay such dividend for six consecutive fiscal quarters ("Unpaid Dividends") following the date of such declaration, the holders of the outstanding shares of Series A Junior Non-Cumulative Preferred Stock, voting as a single class, will be entitled, by written notice to the Corporation given by the holders of a majority of the Series A Junior Non-Cumulative Preferred Stock then outstanding or by ordinary resolution passed by the holders of a majority of the Series A Junior Non-Cumulative Preferred Stock then outstanding present in person or by proxy at a separate general meeting of such holders convened for the purpose, to elect two additional directors to the Board of Directors, to remove any such directors from office and to elect persons in place of such directors. No later than 30 days after such entitlement arises, if written notice by a majority of the holders of the Series A Junior Non-Cumulative Preferred Stock then outstanding has not been given as provided for in the preceding sentence, the Board of Directors, or an authorized committee thereof, will convene a separate general meeting for the foregoing purpose. In the event the Board of Directors or such authorized committee fails to convene such meeting within such 30-day period, the holders of 10 percent of the shares of the Series A Junior Non-Cumulative Preferred Stock then outstanding will be entitled to convene such meeting. The provisions of the Certificate of Incorporation relating to the convening and conduct of Special Meetings (as defined therein) will apply with respect to any such separate general meeting. Directors elected as aforesaid will serve until the next Annual Meeting (as defined in the Certificate of Incorporation). Upon the Corporation having paid all Unpaid Dividends in full, the term of any directors elected pursuant to this Section 3(C) will cease, and the number of directors of the Corporation will automatically be decreased by two. 69 (D) With respect to all matters upon which the holders of the Series A Junior Non-Cumulative Preferred Stock, the Convertible Preferred Stock and Common Stock may be entitled to vote, voting together as a single class, such matters will require the affirmative vote of the holders of a majority of the votes cast by the holders of the Series A Junior Non-Cumulative Preferred Stock, the Convertible Preferred Stock and Common Stock entitled to vote, voting together as a single class, except where a higher or lower vote is required by (i) the General Corporation Law of the State of Delaware, (ii) the provisions of the Certificate of Incorporation, (iii) the provisions of the Corporation's Amended and Restated By-Laws or (iv) the provisions of this Certificate of Designation, Preferences and Rights. (E) Except as set forth herein, holders of Series A Junior Non-Cumulative Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Convertible Preferred Stock and Common Stock as set forth herein) for taking any corporate action. 4. Certain Restrictions. For so long as any dividend declared on the Series A Junior Non-Cumulative Preferred Stock is unpaid, the Corporation shall not (i) declare or pay dividends on or make any other distributions on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Non-Cumulative Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Non-Cumulative Preferred Stock, except dividends paid ratably on the Series A Junior Non-Cumulative Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Non-Cumulative Preferred Stock; provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Non-Cumulative Preferred Stock; or 70 (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Junior Non-Cumulative Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Non-Cumulative Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. 5. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Non-Cumulative Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Non-Cumulative Preferred Stock shall have received $100 per share, plus an amount equal to declared and unpaid dividends and distributions thereon to the date of such payment; provided, that the holders of shares of Series A Junior Non-Cumulative Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment as hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock or (ii) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Non-Cumulative Preferred Stock, except distributions made ratably on the Series A Junior Non-Cumulative Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up (the "Series A Liquidation Preference"). (B) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the aggregate amount to which holders of shares of Series A Junior Non-Cumulative Preferred Stock were entitled immediately prior to such event under the proviso in clause (i) of Section 5(A) shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 71 (C) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Non-Cumulative Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. (D) For the purpose hereof, the voluntary sale, lease, exchange or transfer, whether for cash, stock, property or otherwise, of all or substantially all or part of the Corporation's property or assets to, or a consolidation or merger of the Corporation with or into, one or more other corporations or partnerships, or the reduction of the Corporation's capital stock, will not be deemed to be a liquidation, dissolution or winding up of the Corporation. 6. Ranking The Series A Junior Non-Cumulative Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock and senior to the Common Stock, as to the payment of dividends and the distribution of assets, unless the terms of any such other stock shall provide otherwise. 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Non-Cumulative Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Non-Cumulative Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 8. No Redemption. The shares of Series A Junior Non-Cumulative Preferred Stock shall not be redeemable. 9. Reacquired Shares. Any shares of Series A Junior Non-Cumulative Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares 72 of Preferred Stock and may be reissued as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designation creating a series of Preferred Stock of the Corporation or any similar stock or as otherwise required by law. 10. No Preemptive Rights Holders of Series A Junior Non-Cumulative Preferred Stock will have no preemptive rights to subscribe for or purchase additional shares of any class of stock or other security of the Corporation. 11. Legends In addition to any other legend required to be set forth on each certificate representing Series A Junior Non-Cumulative Preferred Stock pursuant to the Certificate of Incorporation or by law, each such certificate will bear the following legend: "U.S.HOME CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH HOLDER OF THE SERIES A JUNIOR NON-CUMULATIVE PREFERRED STOCK WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF U.S. HOME CORPORATION OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS." 12. Amendment. The Certificate of Incorporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Non-Cumulative Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Non-Cumulative Preferred Stock, voting separately as a class. 13. Fractional Shares. Series A Junior Non-Cumulative Preferred Stock may be issued in fractions of a share, which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Non-Cumulative Preferred Stock. 73 IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this ____ day of November, 1996. ---------------------------------- Robert J. Strudler Chairman and Co-Chief Executive Officer (Corporate Seal) Attest: - ------------------------ Richard G. Slaughter Vice President - Planning and Secretary 74 EXHIBIT 4-B [Form of Rights Certificate] Certificate No. R- ________ Rights NOT EXERCISABLE AFTER NOVEMBER 7, 2006 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.] Rights Certificate U.S. HOME CORPORATION This certifies that , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of November 7, 1996 (the "Rights Agreement"), between U.S. Home Corporation, a Delaware corporation (the "Company"), and First Chicago Trust Company of New York (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (New York City time) on November 7, 2006, unless the Rights evidenced hereby shall have been previously redeemed by the Company or exchanged, at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, nonassessable share of Series A Junior Non-Cumulative Preferred Stock, $.10 par value per share (the "Preferred Stock"), of the Company, at a purchase price of $80.00 per one one-hundredth of a share (the "Purchase Price"), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The Purchase Price may be paid in cash or by certified bank check or money order payable to the order of the Company. The number of Rights evidenced by this Rights Certificate (and the number of one one-hundredths of a share of Preferred Stock which may be purchased upon exercise hereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of November 7, 1996, based on the Preferred Stock as constituted at such date. 75 As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Preferred Stock or other securities, which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events. This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent. Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of an Acquiring Person (or any such Associate or Affiliate) who becomes a transferee after the Acquiring Person become such, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of an Acquiring Person (or any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event. This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-hundredths of a share of Preferred Stock or other securities as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights Certificate (i) may be redeemed by the Company at its option at a redemption price of $.01 per Right or (ii) may be exchanged in whole or in part for shares of Preferred Stock or the Company's Common Stock, $.01 par value per share. 76 No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term is defined in the Rights Agreement) that a number of Rights be exercised so that only whole shares of Preferred Stock will be issued. No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or, to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or other distributions or to exercise any preemptive or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. 77 WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _________ __, ____ ATTEST: U.S. HOME CORPORATION ______________________ By:______________________ Secretary Title: Countersigned: FIRST CHICAGO TRUST COMPANY OF NEW YORK By_______________________ Authorized Signature 78 [Form of Reverse Side of Rights Certificate] FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the Rights Certificate.) FOR VALUE RECEIVED ______________________________________________ hereby sells, assigns and transfers unto_________________________________ - ------------------------------------------------------ (Please print name and address of transferee) - --------------------------------------------------------------------------- this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution. Please insert social security or other identifying number ____________ - ------------------------------------------------------ (Please print name and address) - ------------------------------------------------------ Dated: ___________, __ --------------------- Signature Signature Guaranteed: Signatures must be guaranteed by a participant in a Securities Transfer Association recognized signature guarantee program. 79 Certificate The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being sold, assigned or transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Dated: __________, ___ _______________________ Signature Signature Guaranteed: Signature must be guaranteed by a participant in a Securities Transfer Association recognized signature guarantee program. NOTICE The signature on the foregoing Form of Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. In the event the certification set forth in the Form of Assignment is not completed, the Company and the Rights Agent will deem the Beneficial Owner (as such term is defined in the Rights Agreement) of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and, in case of an assignment, will affix a legend to that effect on any Rights Certificate issued in exchange for this Rights Certificate and any election to purchase Rights under such Rights Certificate will not be honored. 80 FORM OF ELECTION TO PURCHASE (To be executed by the registered holder if such holder desires to exercise Rights represented by the Rights Certificate.) To Rights Agent: The undersigned hereby irrevocably elects to exercise __________ Rights represented by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to: Please insert social security or other identifying number _________________________ - ------------------------------------------------------------------ (Please print name and address) - ------------------------------------------------------------------ If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number __________________ - ------------------------------------------------------------------ (Please print name and address) Dated: __________, ____ ------------------------------ Signature Signature Guaranteed: Signatures must be guaranteed by a participant in a Securities Transfer Association recognized signature guarantee program. 81 Certificate The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Dated: __________, ____ _______________________ Signature Signature Guaranteed: Signatures must be guaranteed by a participant in a Securities Transfer Association recognized signature guarantee program. 82 NOTICE The signature on the foregoing Form of Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. In the event the certification set forth above in the Form of Election to Purchase is not completed, the Company and the Rights Agent will deem the Beneficial Owner (as such term is defined in the Rights Agreement) of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and such Election to Purchase will not be honored. 83 EXHIBIT 4-C SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK On November 7 , 1996, the Board of Directors (the "Board of Directors") of U.S. Home Corporation (the "Company") adopted a rights plan. In connection with the rights plan, the Board of Directors declared a dividend distribution of one preferred stock purchase right ("Right") for each outstanding share of the Company's Common Stock, $.01 par value per share ("Common Stock"), and each outstanding share of the Company's Convertible Redeemable Preferred Stock, $.10 par value per share (the "Convertible Preferred Stock" and, collectively with the Common Stock, the "Stock"). The dividend is payable to holders of Stock of record on December 4, 1996 (the "Record Date"). Each Right, when it becomes exercisable, entitles the registered holder to purchase from the Company at any time following the Distribution Date (as defined below) and prior to the occurrence of a Triggering Event (as defined below) a unit consisting of one one-hundredth of a share (a "Unit") of the Company's Series A Junior Non-Cumulative Preferred Stock, $.10 par value per share (the "Preferred Stock"), at a price of $80.00 per Unit, subject to adjustment (the "Purchase Price"). The description and terms of the Rights are set forth in a Rights Agreement, dated as of November 7, 1996 (the "Rights Agreement"), between the Company and First Chicago Trust Company of New York, as Rights Agent. Until the earlier to occur of (i) 10 days after the date on which there is a public announcement that (a) a person or group of affiliated or associated persons (other than a person who is and continues at all times to be eligible under Rule 13d-1 under the Securities Exchange Act of 1934 as in effect on the date of the Rights Agreement to file a Schedule 13G with respect to its ownership of the Common Stock (an "Institutional Stockholder")) has acquired, or has the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock or (b) an Institutional Stockholder, including its affiliates and associates, has acquired or has the right to acquire beneficial ownership of 20% or more of the outstanding shares of Common Stock (any person described in clause (a) or (b) being referred to as an "Acquiring Person"), or (ii) 10 business days (or such later date as the Board of Directors shall determine prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender or exchange offer the consummation of which would result in a person or group of affiliated persons beneficially owning 15% or more of the then outstanding shares of Common Stock (including any such date which is after the date of the Rights Agreement and prior to the issuance of the Rights; the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any share of Stock outstanding as of the Record Date, by the certificate for such Stock with a copy of this Summary of Rights attached thereto. 84 Until the Distribution Date (or earlier redemption or expiration of the Rights), (i) the Rights will be transferred with and only with the shares of Stock, (ii) new Stock certificates issued after the Record Date upon transfer or issuance of Stock will contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Stock outstanding, even without such notation or copy of this Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of the Stock as of the close of business on the Distribution Date and such separate Rights Certificates alone will represent the Rights. Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued. The Rights are not exercisable until the Distribution Date and will expire at the close of business on November 7, 2006 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below. In the event that a person or group of affiliated persons becomes an Acquiring Person, each holder of a Right (the "Flip-In Right") shall thereafter have the right to receive, upon exercise, the number of shares of Common Stock or of one-one-hundredths of a share of Preferred Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price. Notwithstanding any of the foregoing, following the occurrence of any such event, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person (or any affiliate or associate thereof) will be null and void. For example, at an exercise price of $80 per Right, each Right not owned by an Acquiring Person (or by any affiliate or associate thereof) following an event set forth in the preceding paragraph would entitle its holder to purchase $160 worth of Common Stock (or other consideration, as noted above) for $80. Assuming that the Common Stock had a per share value of $20 at such time, the holder of each valid Right would be entitled to purchase eight shares of Common Stock for $80. In the event that, at any time after a person or group of affiliated persons has become an Acquiring Person, (i) the Company is acquired in a merger or other business combination transaction or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) shall thereafter have the right (the "Flip-Over Right") to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price. The holder of a Right will continue to have the Flip-Over Right whether or not such holder exercises 85 or surrenders the Flip-In Right. The events set forth in this paragraph and in the second preceding paragraph are referred to as the "Triggering Events." The Purchase Price payable, and the number of Units of Preferred Stock, shares of Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Units will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise. The number of outstanding Rights and the number of Units issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Stock or the Convertible Preferred Stock or a stock dividend on the Common Stock or the Convertible Preferred Stock payable in Common Stock or subdivisions, consolidations or combinations of the Common Stock or the Convertible Preferred Stock occurring, in any such case, prior to the Distribution Date. Shares of the Preferred Stock purchasable upon exercise of the Rights are not redeemable. Each share of Preferred Stock will entitle its holder to dividends as, when and if declared by the Board of Directors of $1 per share per quarter but will be entitled to an aggregate dividend of 100 times the dividend declared on a share of Common Stock. In the event of liquidation, the holders of the Preferred Stock will be entitled to a minimum preferential liquidation payment of $100 per share, plus accrued and unpaid dividends, but will be entitled to an aggregate payment of 100 times the payment made per share of Common Stock. Each share of Preferred Stock will have 100 votes, voting together with the Common Stock and Convertible Preferred Stock. Finally, in the event of any merger, consolidation or other transaction in which the Common Stock is exchanged, each share of the Preferred Stock will be entitled to receive 100 times the amount received per share of the Common Stock. These rights are protected by customary antidilution provisions. Because of the nature of the Preferred Stock's dividend, liquidation and voting rights, the value of the one one-hundredth interest in a share of Preferred Stock purchasable upon exercise of each Right should approximate the value of one share of Common Stock. 86 The shares of the Preferred Stock shall rank, with respect to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up of the Company, junior to all other series of preferred stock of the Company, including, without limitation, the Convertible Preferred Stock, unless the Board of Directors shall specifically determine otherwise in fixing the powers, preferences and relative, participating, optional and other special rights of the shares of any such other series in the qualifications, limitations and restrictions thereof. At any time after any person or group of affiliated or associated persons becomes an Acquiring Person and prior to the acquisition by such person or group of beneficial ownership of 50% or more of the outstanding Common Stock, the Board of Directors may exchange the Rights (other than Rights owned by the Acquiring Person which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock or one Unit (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges) per Right (subject to adjustment). At any time prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person, the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price") (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors). Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While it is expected that the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company or for common stock of the acquiring company as set forth above. The terms of the Rights may be amended by the Board of Directors without the consent of the holders of Rights, except that from and after such time as any person or group of affiliated or associated persons becomes an Acquiring Person, no such amendment may adversely affect the interests of the holders of Rights. As of October 31, 1996, there were 11,448,205 shares of Common Stock and 122,863 shares of Convertible Preferred Stock outstanding, 122,863 shares of Common Stock issuable upon conversion of the shares of Convertible Preferred Stock, 2,253,521 shares of Common Stock issuable upon conversion of the Company's Convertible Subordinated Debentures due 2005, 1,884,773 shares of Common Stock issuable upon exercise of the Company's Class B Warrants and 537,500 shares issuable upon exercise of stock options. At such time, no shares of Common Stock were held in the Company's treasury. Each outstanding share of Common Stock and Convertible Preferred 87 Stock on the Record Date will receive one Right. As long as the Rights are attached to shares of Stock, the Company will issue one Right for each share which becomes outstanding between the Record Date and the Distribution Date so that all shares will have attached Rights and, in certain cases described in the Rights Agreement, the Company may issue one Right for each share which becomes outstanding after the Distribution Date. The Board of Directors has reserved for issuance upon exercise of the Rights 500,000 shares of Preferred Stock. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company in a manner or on terms not approved by the Board of Directors unless the offer is conditional on a substantial number of Rights being acquired. The Rights, however, should not affect any prospective offeror willing to make an offer at a fair price and otherwise in the best interests of the Company and its stockholders as determined by the Board of Directors or willing to negotiate with the Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of Directors since the Board of Directors may, at its option, at any time until a person or group of affiliated persons becomes an Acquiring Person, redeem all but not less than all the then outstanding Rights at the Redemption Price. A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to the Company's Registration Statement on Form 8-A, dated November 7, 1996. A copy of the Rights Agreement is available free of charge from the Rights Agent. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is incorporated herein by reference. EX-10 4 EXHIBIT 10 THIRD AMENDMENT TO CREDIT AGREEMENT 88 EXHIBIT 10 THIRD AMENDMENT TO CREDIT AGREEMENT THIRD AMENDMENT TO CREDIT AGREEMENT ("Amendment"), dated as of November 4, 1996, among U.S. HOME CORPORATION, a Delaware corporation (the "Borrower"), the Lenders that are parties to the Credit Agreement (as hereinafter defined) and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"). RECITALS: A. The Borrower, the Lenders and the Agent have previously entered into that certain Credit Agreement, dated as of September 29, 1995, that certain Consent and First Amendment to Credit Agreement, dated as of February 9, 1996, and that certain Second Amendment to Credit Agreement, dated as of September 25, 1996 (such Credit Agreement, as so amended, being herein referred to as the "Credit Agreement"). B. The parties hereto desire to amend the Credit Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto, intending to be legally bound, agree as follows: 1. DEFINITIONS 1.1 In addition to the terms defined herein, capitalized terms used in this Amendment shall have the respective meanings ascribed thereto in the Credit Agreement. 2. AMENDMENT OF SECTION 7.2 2.1 Section 7.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "7.2. Use of Proceeds. Subject to the provisions of this Agreement, the Borrower will use the proceeds of the Advances for general corporate purposes (including payment of reimbursement obligations with respect to Facility Letters of Credit), and to repay outstanding Advances and to engage in the transactions otherwise permitted by this Agreement. Except as permitted by Sections 8.6, 8.9 and 8.11 and otherwise permitted by this Agreement, the Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U) or, except as otherwise permitted by this Agreement, to purchase any securities in any transaction that is subject to Sections 13 and 14 of the Securities Exchange Act of 1934, as amended. The 89 Borrower will not permit any Non-Borrowing Subsidiaries to receive, whether by loan or other Investment, or otherwise to use any proceeds of, any Advance if the effect thereof would be to increase the Investments of the Borrower or any Guarantor in any Non-Borrowing Subsidiaries to an amount (in the aggregate) in excess of such Investments as of August 31, 1995; provided that the Borrower and the Guarantors may (i) make advances or loans to or other Investments in Non-Borrowing Subsidiaries in an amount not to exceed the aggregate amount of all advances, loans or other Investments made by the Non-Borrowing Subsidiaries to the Borrower after August 31, 1995 which have not been repaid to such Non-Borrowing Subsidiaries and (ii) make Investments in the Non-Borrowing Subsidiaries permitted under Section 8.6." 3. AMENDMENT OF SECTION 8.1 3.1 Section 8.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "8.1. Dividends. The Borrower will not, nor will it permit any Significant Guarantor to, declare or pay any dividends on its capital stock (other than dividends payable in (a) its own capital stock or (b) rights to acquire its own capital stock or the capital stock of another Person), except that any Significant Guarantor may declare and pay dividends to the Borrower or to a Wholly-Owned Subsidiary." 4. AMENDMENT OF SECTION 8.6 4.1 Clause (xv) of Section 8.6 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "(xv) The purchase, repurchase, repayment, prepayment, redemption or other acquisition of (i) any of the Borrower's capital stock and Convertible Subordinated Notes involving expenditures (from and after the date hereof) not to exceed $20,000,000 in the aggregate and as otherwise permitted under Sections 8.9 and 8.11 hereof and (ii) rights issued by the Borrower under a rights plan (the "Rights Plan"); provided, that, the redemption price per right to be redeemed shall not exceed $.01." 5. AMENDMENT OF SECTION 8.9 5.1 Section 8.9 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "8.9 Redemption. The Borrower will not purchase or redeem any of its capital stock heretofore or hereafter issued, except that the Borrower may (x) purchase or redeem its capital stock (i) to the extent that the consideration for such redemption or purchase is limited to capital stock of the Borrower or (ii) if the 90 consideration for such purchase or redemption (A) is other than capital stock of the Borrower and (B) does not exceed, in the aggregate for all such purchases and redemptions, and all purchases, repurchases, repayments, prepayments, redemptions or other acquisitions of the Convertible Subordinated Notes, from and after the date hereof, $20,000,000 and (y) purchase or redeem the rights issued under the Rights Plan." 6. AMENDMENT OF SECTION 8.11 6.1 Section 8.11 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 8.11. Subordinated Indebtedness. The Borrower will not, nor will it permit any Significant Guarantor to, make any amendment or modification to the subordination provisions of any indenture, note or other agreement evidencing or governing any Subordinated Indebtedness, or directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness; provided, however, that the foregoing shall not prohibit (i) the conversion of the Convertible Subordinated Notes in accordance with the Indenture dated as of November 3, 1993 or an amendment permitting such conversion at a lower conversion price than is therein provided, (ii) the repayment or prepayment of Subordinated Indebtedness solely from the net proceeds of other Subordinated Indebtedness or from capital stock or (iii) the purchase, repurchase, repayment, prepayment, redemption or other acquisition of the Borrower's capital stock and Convertible Subordinated Notes involving expenditures (from and after the date hereof) not to exceed $20,000,000 in the aggregate. 7. ADDITIONAL REQUIREMENTS On or before the execution and delivery of this Amendment, the Borrower shall: 7.1 deliver to the Agent the Consent of the Guarantors in the form attached to this Amendment; 7.2 deliver to the Agent the favorable opinion of the Borrower's counsel, Kaye, Scholer, Fierman, Hays & Handler, LLP, substantially in the form of Exhibit "A" to this Amendment. 91 8. MISCELLANEOUS 8.1 This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Amendment by signing any such counterpart. 8.2 In all respects, including all matters of construction, validity and performance, this Amendment shall be construed in accordance with the internal laws (and not the laws of conflicts) of the State of Illinois, but giving effect to federal laws applicable to national banks. IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first above written. U.S. HOME CORPORATION By: /s/ Thomas A. Napoli -------------------------- Thomas A. Napoli Vice President - Finance and Chief Financial Officer LENDERS: THE FIRST NATIONAL BANK OF CHICAGO, Individually and as Agent By: /s/ James D. Benko -------------------------- Name: James D. Benko Title: Assistant Vice President GUARANTY FEDERAL BANK, F.S.B. By: /s/ Richard V. Thompson ---------------------------- Name: Richard V. Thompson Title: Vice President 92 CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Robert Ivosevich ------------------------- Name: Robert Ivosevich Title: Senior Vice President BANK ONE, ARIZONA, NA By: /s/ Rhonda R. Williams ---------------------------- Name: Rhonda R. Williams Title: Vice President COMERICA BANK, a Michigan corporation By: /s/ David J. Campbell --------------------------------- Name: David J. Campbell Title: Vice President 93 CONSENT OF GUARANTORS The undersigned, being the Guarantors under the above-referenced Credit Agreement, do hereby consent to the foregoing Third Amendment to Credit Agreement. CANTERBURY CORPORATION By: /s/ Thomas A. Napoli --------------------------- Thomas A. Napoli Vice President COUNTRYPLACE GOLF COURSE, INC. By: /s/ Thomas A. Napoli ---------------------------- Thomas A. Napoli Vice President HOMECRAFT CORPORATION By: /s/ Thomas A. Napoli ------------------------------ Thomas A. Napoli Vice President IMPERIAL HOMES CORPORATION By: /s/ Thomas A. Napoli ------------------------------ Thomas A. Napoli Vice President LODGE HOLDINGS CORP. By: /s/ Thomas A. Napoli ------------------------------ Thomas A. Napoli Vice President 94 OCEANPOINTE DEVELOPMENT CORPORATION By: /s/ Thomas A. Napoli ------------------------------- Thomas A. Napoli Vice President ORRIN THOMPSON CONSTRUCTION COMPANY By: /s/ Thomas A. Napoli ------------------------------ Thomas A. Napoli Vice President ORRIN THOMPSON HOMES CORP. By: /s/ Thomas A. Napoli ------------------------------ Thomas A. Napoli Vice President PAPARONE CONSTRUCTION CO. By: /s/ Thomas A. Napoli -------------------------------- Thomas A. Napoli Vice President RUTENBERG HOMES, INC. (FLORIDA) By: /s/ Thomas A. Napoli -------------------------------- Thomas A. Napoli Vice President RUTENBERG HOMES, INC. (TEXAS) By: /s/ Thomas A. Napoli --------------------------------- Thomas A. Napoli Vice President 95 STONEY CORPORATION By: /s/ Thomas A. Napoli ------------------------------------ Thomas A. Napoli Vice President USH CAPITAL CORPORATION By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President USH CROSSCREEK, INC. By: /s/ Thomas A. Napoli ------------------------------------- Thomas A. Napoli Vice President USH EQUITY CORPORATION By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President U.S. HOME CORPORATION OF NEW YORK By: /s/ Thomas A. Napoli ---------------------------------- Thomas A. Napoli Vice President U.S. HOME OF ARIZONA CONSTRUCTION CO. By: /s/ Thomas A. Napoli -------------------------------- Thomas A. Napoli Vice President 96 U.S. HOME OF COLORADO REAL ESTATE, INC. By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President U.S. HOME REALTY CORPORATION By: /s/ Thomas A. Napoli ------------------------------------ Thomas A. Napoli Vice President U.S. HOME REALTY, INC. (MARYLAND) By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President U.S. HOME REALTY, INC. (TEXAS) By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President U.S. HOME AND DEVELOPMENT CORPORATION By: /s/ Thomas A. Napoli ----------------------------------- Thomas A. Napoli Vice President U.S.H. CORPORATION OF NEW YORK By: /s/ Thomas A. Napoli --------------------------------- Thomas A. Napoli Vice President 97 U.S.H. LOS PRADOS, INC. By: /s/ Thomas A. Napoli --------------------------------- Thomas A. Napoli Vice President 98 Exhibit A [Kaye, Scholer, Fierman, Hays & Handler, LLP] __________ __, 1996 The First National Bank of Chicago, as Agent One First National Plaza Chicago, Illinois 60670 Ladies and Gentlemen: We have acted as counsel to U.S. Home Corporation, a Delaware corporation (the "Borrower"), in connection with the preparation, execution and delivery of the Third Amendment to Credit Agreement, dated as of __________ __, 1996 (the "Third Amendment"), among the Borrower, the lenders named therein and you, as agent (the "Agent"). Capitalized terms used but not defined herein have the meanings set forth in the Credit Agreement, dated as of September 29, 1995, among the Borrower, certain lenders and the Agent, as amended from time to time. We have examined such documents, instruments, records and certificates of public officials and officers of the Borrower, and have reviewed such questions of law, as we have deemed necessary or appropriate as a basis for the opinion set forth below. As to any facts material to our opinion, we have relied upon such documents, instruments, certificates and records. Based on the foregoing, and subject to the limitations, qualifications and exceptions set forth herein, in our opinion, the Third Amendment has been duly authorized, executed and delivered by the Borrower. The opinion set forth above is subject to the following assumptions and qualifications: We have assumed the Borrower is a corporation validly existing and in good standing under the laws of Delaware. We have also assumed the genuineness of all signatures, other than those of officers of the Borrower, the authenticity of all documents submitted to us as originals, and the conformity with the original documents of all documents submitted to us as reproduced copies, and the authenticity of all such latter documents. Our opinion is limited to the Delaware General Corporation Law. Our opinion is rendered solely for your information in connection with the foregoing, and may not be relied upon by any other person or for any other purpose without our prior written consent. Very truly yours, EX-99 5 NEWS RELEASE-STOCKHOLDERS RIGHTS PLAN 99 EXHIBIT 99 96-11 Kelly F. Somoza Vice President (713) 877-2391 http://www.ushome.com November 8, 1996 U.S. HOME CORPORATION ADOPTS STOCKHOLDERS RIGHTS PLAN Houston, Texas, November 8, 1996 - U.S. Home Corporation (NYSE - UH), announced that its Board of Directors, at a regularly scheduled meeting, adopted a Stockholders Rights Plan to assure shareholders fair value and equal treatment in the event of any proposed takeover of the Company. The Company added that the Plan was not adopted in response to any attempt to acquire the Company and that it is not aware of any such effort. Robert J. Strudler, Chairman of the Board and Co-Chief Executive Officer, stated "the Rights Plan does not, nor is it intended to, prevent a takeover, but rather is a measure to encourage anyone seeking to acquire the Company to negotiate with the Board, thus ensuring fair and equal treatment of all stockholders." The Plan established a non-taxable dividend distribution of one preferred stock purchase right (with an exercise price of $80), which becomes exercisable upon the occurrence of certain events, on each share of Common Stock and each share of Convertible Preferred Stock of the Company held of record as of the close of business on December 4, 1996. The Rights will expire on November 7, 2006. A summary of the Stockholder Rights Plan will be mailed to all of the Company's stockholders. The Rights are redeemable by the Board of Directors at $.01 per Right at any time until a person or group (other than an institutional stockholder) acquires 15% or more of the Company's Common Stock, or an institutional stockholder acquires 20% or more of the Common Stock. The name U.S. Home Corporation in housing is synonymous with quality. Since its organization in 1954, U.S. Home has been one of the leading home builders in the United States, delivering more than 264,000 homes. For more than two decades, the Company has been among the nation's ten largest single-family home builders. Today, U.S. Home builds and sells homes for the affordable, move-up and retirement and active adult home buyer in more than 200 communities in 32 metropolitan areas in 12 states. -----END PRIVACY-ENHANCED MESSAGE-----