Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK
OF
KB HOME
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Jeffrey T. Mezger, President, and Wendy C. Shiba, Secretary, of KB Home (the
“
Corporation
”), organized and existing under the General Corporation Law of the State of Delaware,
in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
FIRST: Pursuant to the authority conferred upon the Board of Directors by Article FOURTH of
the Restated Certificate of Incorporation of the Corporation, the Board of Directors at a meeting
held on January 22, 2009 adopted the following resolutions authorizing the creation of a series of
up to 2,900,000 shares of Preferred Stock designated as Series A Participating Cumulative Preferred
Stock with such voting, dividend, liquidation and other rights, preferences and terms and
limitations substantially as set forth below, which resolutions are in full force and effect on the
date hereof:
RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation
in accordance with the provisions of its Restated 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:
Section 1.
Designation and Amount
. There shall be a series of Preferred Stock
designated as “Series A Participating Cumulative Preferred Stock” (the “
Rights Preferred Stock
”)
and the initial number of shares constituting such series shall be 2,900,000.
Section 2.
Rank
. The Rights Preferred Stock shall, with respect to dividend rights
and rights on liquidation, winding up and dissolution, rank prior to all classes of common stock of
the Corporation. The Rights Preferred Stock shall rank junior with respect to payment of dividends
and on liquidation to all other series of the Corporation’s Preferred Stock outstanding on the date
hereof and to all such other series that specifically provide that they shall rank senior to the
Rights Preferred Stock. Each share of the Rights Preferred Stock shall rank equally in all
respects. All equity securities of the Corporation to which the Rights Preferred Stock ranks or
shall rank prior (whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise), including the Common Stock, $1.00 par value per share (the “
Common Stock
”), and
the Special Common Stock, $1.00 par value per share, of the Corporation are collectively
referred
to herein as the “
Junior Securities
.” All equity securities of the Corporation with which the
Rights Preferred Stock ranks or shall rank on a parity (whether with respect to dividends or upon
liquidation, dissolution, winding up or otherwise) are collectively referred to herein as the
“
Parity Securities
.” All equity securities of the Corporation to which the Rights Preferred Stock
ranks or shall rank junior (whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise) are collectively referred to herein as the “
Senior Securities
.”
Section 3.
Dividends and Distributions
.
(A) Subject to the prior and superior rights of the holders of any Senior Securities, the
holders of shares of Rights Preferred Stock, in preference to the shares of Common Stock and any
other Junior Securities shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds at the time legally available for payment of dividends, quarterly dividends
payable in cash on March 31, June 30, September 30 and December 31 (each, a “
Quarterly Dividend
Payment Date
”) in each year (unless any such day is not a business day, in which event on the next
succeeding business day), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Rights 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 or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common
Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share
of Rights Preferred Stock. If the Corporation shall at any time (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 Rights 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 Rights Preferred Stock as
provided in paragraph (A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided that, if no
dividend or distribution shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share on the Rights Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Rights
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Rights Preferred Stock, unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue and be cumulative from the date of issue of such shares, or unless the
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date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Rights Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Dividends in
arrears may be declared and paid at any time without reference to any regular Quarterly Dividend
Payment Date. Each dividend shall be paid to the holders of record of shares of the Rights
Preferred Stock as they appear on the stock books of the Corporation on such date, not more than 60
nor less than 10 days preceding the payment date thereof, as may be fixed by the Board of Directors
or a duly authorized committee thereof.
(D) The Corporation shall not declare, pay or set apart for payment any dividend on any Junior
Securities or make any distribution in respect thereof, either directly or indirectly, in cash,
obligations or shares of the Corporation or other property (all such dividends and distributions
being hereinafter referred to as “
Junior Securities Distributions
”) unless all accrued and unpaid
cumulative dividends or other dividends or distributions have been paid or declared and set apart
for payment on or in respect of the Rights Preferred Stock through the then most recent Quarterly
Dividend Payment Date. As long as any dividend on the Rights Preferred Stock is in arrears, the
Corporation shall not, and shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to, redeem, purchase or otherwise acquire for value any Junior
Securities or make any payment on account of or set apart for payment money for a sinking or other
similar fund for the purchase, redemption or other retirement of, any Junior Securities.
Notwithstanding the foregoing, this Section 3(D) shall not prohibit the payment or declaration and
setting aside of a dividend payable solely in shares of Junior Securities or a redemption, purchase
or acquisition of Junior Securities solely with shares of Junior Securities.
(E) The corporation shall not declare, pay or set apart for payment by the Corporation any
full dividend on any Parity Securities for any period unless and until all accrued and unpaid
cumulative dividends have been or contemporaneously are declared and paid or declared and a sum set
apart sufficient for such payment on the Rights Preferred Stock through the then most recent
Quarterly Dividend Payment Date. If any dividend is not paid in full upon the shares of the Rights
Preferred Stock, the Corporation shall not declare, pay or set apart for payment any dividend on
any Parity Securities or make any distribution in respect thereof, either directly or indirectly,
in cash, obligations or shares of the Corporation or other property (all such dividends and
distributions being hereinafter referred to as “
Parity Securities Distributions
”) unless dividends
and distributions are declared and paid on the Exchangeable Preferred Stock pro rata with any
Parity Securities Distribution declared and paid on any Parity Securities so that the amount of
dividends and distributions declared and paid per share of the Rights Preferred Stock and such
Parity Securities shall in all cases bear to each other the same ratio that accrued dividends per
share on the Rights Preferred Stock and the Parity Securities bear to each other. Any dividend or
distribution paid on the shares of Rights Preferred Stock shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
(F) Except as otherwise provided in Section 3(D), as long as any dividend on the Rights
Preferred Stock is in arrears, the Corporation shall not, and shall not permit any corporation or
other entity directly or indirectly controlled by the Corporation to, redeem,
purchase or otherwise acquire for value any Rights Preferred Stock or Parity Securities or
make any payment on account of or set apart for payment money for a sinking or other similar fund
for the purchase, redemption or other retirement of, any Rights Preferred Stock or Parity
Securities.
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(G) No interest, or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or any other payment in respect of the Rights Preferred Stock or any Parity
Securities which may be in arrears.
Section 4.
No Redemption
. The shares of Rights Preferred Stock shall not be
redeemable.
Section 5.
Liquidation or Dissolution
.
(A) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Rights Preferred Stock then outstanding shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter set forth and
subject to any greater amount as may be provided in Section 5(B) hereof, equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock. If the Corporation shall
at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Rights Preferred Stock were entitled immediately prior to such event
under 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. After the payment to the holders of shares of the Rights
Preferred Stock of the full preferential amounts provided for in this Section 5(A) and in Section
5(B), the holders of the Rights Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(B) Before any payment shall be made to the holders of any Junior Securities, in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders
of Rights Preferred Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, an amount equal to $100.00 per share
(plus an amount equal to unpaid cumulative dividends thereon accrued to the date of liquidation,
dissolution or winding up, whether or not declared and whether or not such date is a regular
quarterly dividend payment date), without interest.
(C) A merger or consolidation of the Corporation with or into any other corporation or a
voluntary sale, exchange, transfer or conveyance of all or any part of the assets of the
Corporation (which shall not in fact result in the liquidation of the Corporation and the
distribution of assets to stockholders) shall not be deemed to be a voluntary or involuntary
liquidation or dissolution or winding up of the Corporation within the meaning of this Section 5.
(D) If the assets of the Corporation available for distribution to the holders of shares of
the Rights Preferred Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which
such
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holders are entitled pursuant to Sections 5(A) and 5(B) above, no such distribution shall be
made on account of any Parity Securities upon such dissolution, liquidation or winding up unless
amounts shall be paid on account of the shares of Rights Preferred Stock pro rata in proportion to
the full amounts to which holders of all the Rights Preferred Stock and such Parity Securities are
respectively entitled upon such dissolution, liquidation or winding up.
Section 6.
No Sinking Fund
. The shares of Rights Preferred Stock shall not be subject
to the operation of a purchase, retirement or sinking fund.
Section 7.
Voting Rights
. In addition to any other voting rights required by law, the
holders of shares of Rights Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment set forth in this Section 7(A), holders of Rights
Preferred Stock shall be entitled to 100 votes per share with respect to all matters submitted to a
vote of the holders of the Common Stock as well as with any other class or series of stock of the
Corporation then having the right to vote with the Common Stock concerning any matter being voted
upon by holders of the Common Stock. If the Corporation shall at any time (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 Rights 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.
Holders of shares of Rights Preferred Stock, holders of shares of Common Stock and holders of
shares of such other series or class of stock shall vote together as one class except as provided
in this Section 7 and the Certificate of Incorporation of the Corporation and as provided by law.
Shares of the Rights Preferred Stock shall at no time be entitled, as a series, class or otherwise,
to cumulate their votes in the election of directors or be entitled to any additional, other or
special or restrictive voting rights of any kind whatsoever, except as provided in this Section 7
and as provided by law.
(B) If at any time cumulative dividends on the outstanding shares of Rights Preferred Stock
shall be accrued and unpaid in an aggregate amount per share equal to or exceeding six quarterly
dividends thereon, then the number of directors constituting the Board of Directors without further
action shall be increased by two, and the holders of shares of Rights Preferred Stock voting
separately as a class together with holders of all other shares of Preferred Stock of the
Corporation that are either Senior Securities or Parity Securities and that have substantially
similar voting rights with respect to the election of directors which have fully vested by the
terms of such stock as a result of the occurrence of substantially similar or greater arrearages of
dividends (such other series of Preferred Stock being herein referred to as “
Other Voting Preferred
Stock
”), shall thereupon have the right (exercisable only at the time, in the manner and subject to
the conditions and during the period hereinafter stated) to elect two members of the Board of
Directors, the remaining directors to be elected by the class or classes of stock entitled to vote
therefor, including the Rights Preferred Stock, at each meeting of stockholders held for
the purpose of electing directors. Each share of Rights Preferred Stock and Other Voting
Preferred Stock shall have one vote per share with respect to the election of directors pursuant to
this Section 7(B).
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(C) Whenever the voting right described in Section 7(B) shall have vested, such right may be
exercised initially either at a special meeting of the holders of Rights Preferred Stock and Other
Voting Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders
held for the purpose of electing directors, and thereafter at such annual meetings. Such voting
right shall continue until such time as all accrued dividends on the Rights Preferred Stock shall
have been paid in full at which time such voting right of the holders of Rights Preferred Stock
shall terminate, subject to revesting in the event of each and every subsequent failure of the
Corporation of the character described in Section 7(B).
(D) At any time when the voting right described in Section 7(B) shall have vested in the
holders of Rights Preferred Stock and if such right shall not already have been exercised in full
by Other Voting Preferred Stock, a proper officer of the Corporation shall, upon the written
request of any holder of record of Rights Preferred Stock then outstanding, addressed to the
Secretary of the Corporation, call a special meeting of holders of Rights Preferred Stock and
holders of Other Voting Preferred Stock. Such meeting shall be held at the earliest practicable
date upon the notice required for annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at a place designated by the Secretary of
the Corporation. If such meeting shall not be called by the proper officer of the Corporation
within 30 days after the personal service of such written request upon the Secretary of the
Corporation, or within 30 days after mailing the same within the United States, by registered mail,
addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced
by the registry receipt issued by the postal authorities), then the holders of record of 10% of the
shares of Rights Preferred Stock then outstanding may designate in writing any holder of such stock
to call such meeting at the expense of the Corporation, and such meeting may be called by such
person so designated upon the notice required for annual meetings of stockholders and shall be held
at the same place as is elsewhere provided in this Section 7(D). Any holder of Rights Preferred
Stock which would be entitled to vote at such meeting shall have access to the stock books of the
Corporation for the purpose of causing a meeting of holders of shares of Rights Preferred Stock and
Other Voting Preferred Stock to be called pursuant to the provisions of this Section 7(D).
Notwithstanding the provisions of this Section 7(D), however, no such special meeting shall be
called during a period within 90 days immediately preceding the date fixed for the next annual
meeting of stockholders. Holders of Rights Preferred Stock shall be entitled to receive notice of,
participate in and vote at any meeting of holders of Other Voting Preferred Stock with respect to
the election of directors to the same extent as provided in Sections 7(B) through 7(G).
(E) At any meeting held for the purpose of electing directors at which the holders of Rights
Preferred Stock shall have the right, voting together as a class with holders of shares of Other
Voting Preferred Stock, to elect directors as provided in Section 7(B), the presence in person or
by proxy of the holders of at least 10% of the then outstanding aggregate number of shares of
Rights Preferred Stock and Other Voting Preferred Stock shall be required and be sufficient to
constitute a quorum of such class for the election of directors by such class. At any such meeting
or adjournment thereof (i) the absence of a quorum of the holders of shares of
Rights Preferred Stock and Other Voting Preferred Stock shall not prevent the election of
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directors other than those to be elected by the holders of stock of such class and the absence of a
quorum or quorums of the holders of capital stock entitled to elect such other directors shall not
prevent the election of directors to be elected by the holders of shares of Rights Preferred Stock
and, if applicable, Other Voting Preferred Stock and (ii) in the absence of a quorum of the holders
of any class of stock entitled to vote for the election of directors, a majority of the holders
present in person or by proxy of such class shall have the power to adjourn the meeting for the
election of directors which the holders of such class are entitled to elect, from time to time,
without notice (except as required by law) other than announcement at the meeting, until a quorum
shall be present.
(F) The term of office of all directors elected by the holders of shares of Rights Preferred
Stock and Other Voting Preferred Stock pursuant to Section 7(B) or such substantially similar
provisions of Other Voting Preferred Stock who are in office at any time when the voting right
described in Section 7(B) is vested in the holders of Rights Preferred Stock shall terminate upon
the election of their successors at any meeting of holders of Rights Preferred Stock and, if
applicable, Other Voting Preferred Stock for the purpose of electing directors. Except to the
extent otherwise provided by the terms of the Other Voting Preferred Stock, upon any termination of
such voting rights in accordance with Section 7(C), the term of office of all directors elected
pursuant to Section 7(B) then in office shall thereupon terminate and upon such termination the
number of directors constituting the Board of Directors shall, without further action, be reduced
by two, subject always to the increase of the number of directors pursuant to Section 7(B) in case
of the future right of the holders of Rights Preferred Stock to elect directors as provided
therein.
(G) In case of any vacancy occurring among the directors elected pursuant to Section 7(B), the
remaining director who shall have been so elected may appoint a successor to hold office for the
unexpired term of the director whose place shall be vacant. If both directors so elected shall
cease to serve as directors before their terms shall expire, the holders of shares of Rights
Preferred Stock and shares of any Other Voting Preferred Stock then outstanding may, at a special
meeting of the holders called as provided above, elect successors to hold office for the unexpired
terms of such directors whose places shall be vacant.
Section 8.
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 Rights 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. If the Corporation shall at any time (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
Rights 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.
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Section 9.
Reacquired Shares
. Shares of Rights Preferred Stock which have been issued
and reacquired in any manner, including shares purchased, shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation and upon compliance
with any applicable provisions of the laws of the State of Delaware have the status of authorized
and unissued shares of Preferred Stock of the Corporation undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock.
Section 10.
Notice of Certain Actions
. If the Corporation consolidates or merges
with, or transfers all or substantially all of its assets to, another corporation, and stockholders
of the Corporation must approve the transaction or there is a dissolution or liquidation of the
Corporation, then the corporation shall mail to holders of the Rights Preferred Stock a notice
stating the proposed record date or, in the case of transactions for which no record date need be
determined, the effective date. The Corporation shall mail the notice at least 10 days before such
date. Failure to mail the notice or any defect in such notice shall not affect the validity of any
transaction referred to in this Section 10.
Section 11.
No Implied Limitations
. Except as otherwise provided by express
provisions of this Certificate of Designation, nothing herein shall limit, by inference or
otherwise, the discretionary right of the Board of Directors to classify and reclassify and issue
any shares of Preferred Stock and to fix or alter all terms thereof to the full extent provided in
the Certificate of Incorporation of the Corporation.
Section 12.
General Certificate of Incorporation Provisions
. In addition to the above
provisions with respect to the Rights Preferred Stock, such Rights Preferred Stock shall be subject
to, and shall be entitled to the benefits of, the provisions set forth in the Corporation’s
Certificate of Incorporation.
Section 13.
Amendments
. So long as any shares of the Rights Preferred Stock are
outstanding, the Corporation shall not without the written consent or the affirmative vote of
holders of at least a majority of the Rights Preferred Stock at the time outstanding amend or
change any terms of the Rights Preferred Stock or other provisions of the Certificate of
Incorporation (by merger or otherwise) so as to affect materially and adversely the Rights
Preferred Stock.
Section 14.
Fractional Shares
. Rights 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 Rights Preferred Stock.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed in
its name and on its behalf on this 22
nd
day of January, 2009 by an officer of the
Corporation who acknowledges that this Certificate of Designation is the act of the Corporation and
that to the best of his knowledge, information and belief and under penalties for perjury, all
matters and facts contained in this Certificate of Designation with respect to authorization and
approval thereof are true in all material respects.
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KB HOME
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By:
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/s/ Jeffrey T. Mezger
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Name:
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Jeffrey T. Mezger
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Title:
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President
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Attest:
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/s/ Wendy C. Shiba
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Name:
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Wendy C. Shiba
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Title:
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Executive Vice President, General
Counsel and Corporate Secretary
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Exhibit 4.1
SECOND AMENDMENT TO RIGHTS AGREEMENT
Second Amendment, dated as of January 22, 2009 (this “
Amendment
”), to the Rights Agreement,
dated as of February 4, 1999, as amended (the “
Rights Agreement
”), by and between KB Home (formerly
Kaufman and Broad Home Corporation), a Delaware corporation (the “
Company
”), and Mellon Investor
Services LLC (formerly ChaseMellon Shareholder Services, L.L.C.), as rights agent (the “
Rights
Agent
”).
RECITALS
WHEREAS, the Board of Directors of the Company has determined that it is in the best interests
of the Company to amend the Rights Agreement as set forth in this Amendment;
WHEREAS, pursuant to Section 27 of the Rights Agreement, prior to the Distribution Date, the
Company may, and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of the Rights Agreement in any respect whatsoever without the approval of any holders of
certificates representing shares of Common Stock or Special Common Stock, provided that such
supplement or amendment does not change or increase the Rights Agent’s duties, liabilities or
obligations; and
WHEREAS, pursuant to the terms of the Rights Agreement and in accordance with Section 27
thereof, the Company has directed that the Rights Agreement be amended as set forth in this
Amendment, and by its execution and delivery hereof, directs the Rights Agent to execute this
Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth in the
Rights Agreement and in this Amendment, the parties hereby amend the Rights Agreement as follows:
1. The definition of “
Acquiring Person
” in Section 1 of the Rights Agreement is hereby amended
and restated in its entirety as follows:
““
Acquiring Person
” means any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any
entity organized, appointed or established for or pursuant to the terms of any such plan,
any Exempt Shareholder, or any Permitted Shareholder) who or which, together with all
Affiliates and Associates of such Person, is or becomes the Beneficial Owner of 4.9% or more
of the then-outstanding Common Stock and the Special Common Stock, taken as a whole,
provided
,
however
, that (i) any Person who would otherwise be an Acquiring
Person as of 4:00 p.m., New York City time, on January 22, 2009 (such date and time, the
“Amendment Date”) (including any Person that would otherwise qualify as an Acquiring Person
but for being an Exempt Shareholder on such date) will not be deemed to be an Acquiring
Person for any purpose of this Agreement prior to or after such date unless and until such
time as (A) such Person or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of any additional shares of Common Stock or Special Common Stock, other
than (1) pursuant to any agreement or
regular-way purchase order for Common Stock or Special Common Stock that is in effect
on or prior to the Amendment Date and consummated in accordance with its terms after
the Amendment Date or (2) as a result of a stock dividend, rights dividend, stock split or
similar transaction effected by the Company in which all holders of Common Stock or Special
Common Stock, as the case may be, are treated equally, or (B) any other Person who is the
Beneficial Owner of shares of Common Stock or Special Common Stock becomes an Affiliate or
Associate of such Person,
provided
that the exclusion in this clause (i) shall cease
to apply with respect to any Person at such time as such Person, together with all
Affiliates and Associates of such Person, ceases to Beneficially Own 4.9% or more of the
then-outstanding shares of Common Stock and Special Common Stock, taken as a whole, (ii) a
Person will not be deemed to have become an Acquiring Person solely as a result of a
reduction in the number of shares of Common Stock or Special Common Stock outstanding unless
and until such time as (A) such Person or any Affiliate or Associate of such Person
thereafter becomes the Beneficial Owner of any additional shares of Common Stock or Special
Common Stock, other than as a result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of shares of Common Stock or Special Common
Stock, as the case may be, are treated equally, or (B) any other Person who is the
Beneficial Owner of shares of Common Stock or Special Common Stock thereafter becomes an
Affiliate or Associate of such Person, and (iii) a Person will not be deemed to have become
an Acquiring Person solely as a result of an Exempt Transaction unless and until such time
as (A) such Person or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of any additional shares of Common Stock or Special Common Stock, other
than as a result of a stock dividend, rights dividend, stock split or similar transaction
effected by the Company in which all holders of shares of Common Stock or Special Common
Stock, as the case may be, are treated equally, or (B) any other Person who is the
Beneficial Owner of shares of Common Stock or Special Common Stock thereafter becomes an
Affiliate or Associate of such Person. Notwithstanding the foregoing, if (1) the Board of
Directors of the Company determines that a Person who would otherwise be an “Acquiring
Person” as defined pursuant to the foregoing provisions of this definition has become such
inadvertently and that the exemption of such Person from the definition of “Acquiring
Person” is in the best interests of the Company, and (2) such Person divests as promptly as
practicable or agrees in writing with the Company to divest, a sufficient number of shares
of Common Stock or Special Common Stock so that such Person would no longer be an “Acquiring
Person” as defined pursuant to the foregoing provisions of this definition, then such Person
shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement.”
2. The definitions of “Affiliate” and “Associate” set forth in Section 1 of the Rights
Agreement are hereby amended and restated in their entirety as follows:
““
Affiliate
” and “
Associate
” shall have the respective meanings ascribed to such terms
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and to the extent
not included within the foregoing clause, will also include, with respect to any Person, any
other Person (other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any entity organized, appointed or
established for or pursuant to the terms of any such plan,
an Exempt Shareholder or a Permitted Shareholder) whose Common Stock and/or Special
Common Stock would be deemed constructively owned by such first Person,
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owned by a single
“entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise
aggregated with shares of Common Stock and/or Special Common Stock owned by such first
Person pursuant to the provisions of the Code or the Treasury Regulations.”
3. The definition of “
Beneficial Owner
” in Section 1 of the Rights Agreement is hereby amended
by adding the following sentence at the end thereof:
“Notwithstanding anything in this Agreement to the contrary, to the extent not within the
foregoing provisions of this definition of “
Beneficial Owner
,” a Person shall be deemed the
“Beneficial Owner” of, and shall be deemed to “beneficially own” or have “beneficial
ownership” of, any securities which such Person would be deemed to constructively own or
which otherwise would be aggregated with securities owned by such Person pursuant to Section
382 of the Code, or any successor provision or replacement provision.”
4. The definition of “
Person
” in Section 1 of the Rights Agreement is hereby amended and
restated in its entirety as follows:
““
Person
” shall mean any individual, firm, corporation, partnership, limited liability
company, limited liability partnership, trust or other legal entity, group of persons making
a “coordinated acquisition” of shares or otherwise treated as an entity within the meaning
of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and includes any
successor (by merger or otherwise) of such entity.”
5. Section 1 of the Rights Agreement is hereby further amended by adding the following
definitions thereto:
““
Code
” means the Internal Revenue Code of 1986, as amended.
“
Exempt Transaction
” means any transaction that the Board of Directors of the Company
determines, in its sole discretion, is exempt for purposes of this Agreement.
“
Permitted Shareholder
” means a Person whose Beneficial Ownership (together with all
Affiliates and Associates of such Person) of 4.9% or more of the then-outstanding shares of
Common Stock and Special Common Stock, taken as a whole will not, as determined by the
Company’s Board of Directors in its sole discretion, jeopardize or endanger the availability
to the Company of any Tax Benefit,
provided
,
however
, that such a Person
will cease to be a Permitted Shareholder if the Board makes a contrary determination in its
sole discretion with respect to the effect of such Person’s Beneficial Ownership (together
with all Affiliates and Associates of such Person) of Common Stock and/or Special Common
Stock, regardless of the reason therefor.
“
Tax Benefits
” means the net operating loss carry-overs, capital loss carry-overs,
general business credit carry-overs, alternative minimum tax credit carry-overs and foreign
tax credit carry-overs, as well as any “net unrealized built-in loss” within the
meaning of Section 382 of the Code or any successor provision or replacement provision,
of the Company or any direct or indirect subsidiary thereof.
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“
Treasury Regulations
” means final, temporary and proposed income tax regulations
promulgated under the Code, including any amendments thereto.”
6. Section 29 of the Rights Agreement is hereby amended and restated in its entirety as
follows:
“Section 29.
Determinations and Actions by the Board of Directors, etc.
For
all purposes of this Agreement, any calculation of the number of shares of Common Stock or
Special Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock or Special
Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with,
as the Board of Directors deems to be applicable, the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act or the provisions of Section 382
of the Code, or any successor provision or replacement provision. The Board of Directors of
the Company shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board 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, without limitation, any determination contemplated by the definition
of “Acquiring Person” or any determination as to whether particular Rights shall have become
void and any determination to redeem or not redeem the Rights or to amend the Agreement).
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 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 of the Company to any liability to any Person, including without limitation the
Rights Agent and the holders of Rights. The Rights Agent is entitled always to assume the
Company’s Board of Directors acted in good faith and shall be fully protected and incur no
liability in reliance thereon.”
7. Exhibit B to the Rights Agreement is hereby deemed amended in a manner consistent with this
Amendment.
8. Capitalized terms used without other definition in this Amendment will be used as defined
in the Rights Agreement.
9. This Amendment 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 to be made and performed entirely within such State,
provided
,
however
, that all provisions regarding the rights, duties and obligations
of the Rights Agent shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such State.
10. The Rights Agreement will not otherwise be supplemented or amended by virtue of this
Amendment, but will remain in full force and effect.
-4-
11. This Amendment 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 one and the same instrument.
12. The undersigned officer of the Company, being duly authorized on behalf of the Company,
hereby certifies in his or her capacity as an officer on behalf of the Company to the Rights Agent
that (a) this Amendment is in compliance with the terms of Section 27 of the Rights Agreement, and
(b) this Amendment does not change or increase the Rights Agent’s duties, liabilities or
obligations.
13. By its execution and delivery hereof, the Company directs the Rights Agent to execute this
Amendment.
[Signatures on Following Page]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as
of the day and year first above written.
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KB HOME
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By:
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/s/ Wendy C. Shiba
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Name:
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Wendy C. Shiba
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Title:
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Executive Vice President, General
Counsel and Corporate Secretary
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MELLON INVESTOR SERVICES LLC
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By:
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/s/ James Kirkland
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Name:
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James Kirkland
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Title:
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Assistant Vice President and Relationship Manager
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