Document:

Exhibit
4.3

 

DESCRIPTION
OF SECURITIES

 

General

 

In
this Exhibit 4.3, “we”, “us”, “our”, “MREIC” or “the Company”, refers
to Monmouth Real Estate Investment Corporation, together with its predecessors and subsidiaries, unless the context requires otherwise.

 

Our
authorized stock consists of 404,439,750 shares, classified as 188,039,750 shares of common stock, par value $0.01 per share,
200,000,000 shares of excess stock, par value $0.01 per share, and 16,400,000 shares of 6.125% Series C Cumulative Redeemable
Preferred Stock, par value $.01 per share, or Series C Preferred Stock. The excess stock is intended to, among other purposes,
assist us in preserving our status as a REIT under the Code. See “—Restrictions on Ownership and Transfer.”
Under the Maryland General Corporation Law (the “MGCL”) and our charter, a majority of our entire board of directors
has the power, without action by our common stockholders, to increase or decrease the aggregate number of shares of stock or the
number of shares of stock of any class or series that we have the authority to issue. Our board of directors is also authorized
under the MGCL and our charter to classify and reclassify any unissued shares of our stock into other classes or series of stock.
Before we issue shares of each class or series, our board of directors is required by the MGCL and our charter to set, subject
to restrictions in our charter on ownership and transfer of our stock, the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for each
class or series. Under Maryland law, stockholders generally are not liable for a corporation’s debts or obligations.

 

As
of September 30, 2019, 96,398,796 shares of common stock were issued and outstanding, no shares of excess stock were issued and
outstanding, and 13,907,122 shares of Series C Preferred Stock were issued and outstanding.

 

Common
Stock

 

The
shares of common stock have no preferences, conversion, sinking fund, redemption (except with respect to shares of excess stock,
described above) or preemptive rights to subscribe for any of our securities.

 

Subject
to the provisions of our charter regarding restrictions on transfer and ownership of our stock and the terms of any other class
or series of our stock, our common stockholders will have one vote per share on all matters submitted to a vote of our common
stockholders, including the election of directors. Except as provided with respect to any other class or series of stock (including
the Series C Preferred Stock), the holders of our common stock will possess the exclusive voting power.

 

There
is generally no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding
shares of our common stock generally can elect all of the directors then standing for election, and the holders of the remaining
shares of our common stock, if any, will not be able to elect any directors, except as otherwise provided by the terms of any
other class or series of our stock, including the Series C Preferred Stock.

 

Subject
to any preferential rights granted to any class or series of our stock (including the Series C Preferred Stock), and to the provisions
of our charter regarding restrictions on ownership and transfer of our stock, holders of our common stock will be entitled to
receive dividends or other distributions if, as and when declared by us out of funds legally available for dividends or other
distributions to stockholders. Subject to the provisions of our charter regarding restrictions on ownership and transfer of our
stock, all shares of our common stock have equal distribution rights. In the event of the liquidation, dissolution or winding
up of the affairs of our company, after payment of any preferential amounts to any class of preferred stock which may be outstanding
(including the Series C Preferred Stock) and after payment of, or adequate provision for, all of our known debts and liabilities,
holders of our common stock will be entitled to share ratably in all assets that we may legally distribute to our stockholders.

 

    	 	 	 

    	 

    

 

Our
common stock is traded on the NYSE under the symbol “MNR.” The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.

 

6.125%
Series C Cumulative Redeemable Preferred Stock. 

 

Ranking.
The Series C Preferred Stock will rank, with respect to the payment of dividends and the distribution of assets upon our liquidation,
dissolution or winding up:

 

	 	(1)	senior
    to all classes and series of our common stock and to all other stock issued by us, the terms of which expressly provide that
    such securities rank junior to the Series C Preferred Stock with respect to payment of dividends and the distribution of assets
    upon our liquidation, dissolution or winding up;
	 	 	 
	 	(2)	on
    a parity with any class or series of stock classified by our board of directors in the future, the terms of which specifically
    provide that such stock ranks on a parity with the Series C Preferred Stock with respect to payments of dividends and the
    distribution of assets upon our liquidation, dissolution or winding up; 
	 	 	 
	 	(3)	junior
    to any class or series of stock classified by our board of directors in the future, the terms of which specifically provide
    that such class or series ranks senior to the Series C Preferred Stock with respect to payment of dividends and the distribution
    of assets upon our liquidation, dissolution or winding up; and
	 	 	 
	 	(4)	effectively
    junior to all of our existing and future indebtedness (including indebtedness convertible to common stock or preferred stock)
    and the indebtedness of our existing subsidiaries and any future subsidiaries.

 

Dividends.
Holders of Series C Preferred Stock will be entitled to receive, when, as and if authorized by our board of directors and
declared by us, out of funds legally available for the payment of dividends, cumulative cash dividends in the amount of $1.53125
per share, which is equivalent to 6.125% of the $25.00 liquidation preference per share, per year. Dividends on the Series C Preferred
Stock will be payable quarterly in arrears in the amount of $0.3828125 on the 15th day of September, December, March and June
(each, a “dividend payment date”) to holders of record as of the close of business on the applicable record date;
except that, if any dividend payment date is not a business day, as defined in the articles supplementary setting forth the terms
of the Series C Preferred Stock, then the dividend which would otherwise have been payable on that dividend payment date may be
paid or set aside for payment on the next succeeding business day and no interest, additional dividends or other sums will accrue
on the amount so payable for the period from that dividend payment date to the next succeeding business day.

 

Any
dividend payable on the Series C Preferred Stock, including for any partial dividend period, will be computed on the basis of
a 360-day year consisting of twelve 30-day months. Dividends are payable to holders of record of Series C Preferred Stock as they
appear in the transfer agent’s records at the close of business on the applicable record date, which will be the date that
our board of directors designates as the record date for the payment of a dividend that is not more than 31 nor fewer than ten
days before the applicable dividend payment date.

 

    	2

    	 

    

 

Our
board of directors will not authorize, and we will not pay or set apart for payment, any dividend on the Series C Preferred Stock
at any time that:

 

	 	●	the
    terms and conditions of any of our agreements, including any agreement relating to our indebtedness, prohibit such authorization,
    payment or setting apart for payment;
	 	 	 
	 	●	the
    terms and conditions of any of our agreements, including any agreement relating to our indebtedness, provide that such authorization,
    payment or setting apart for payment would constitute a breach of, or a default under, such agreement; or
	 	 	 
	 	●	the
    law restricts or prohibits the authorization, payment or setting apart for payment.

 

Notwithstanding
the foregoing, dividends on the Series C Preferred Stock will accumulate whether or not:

 

		●	the
    terms and conditions of any law or any of our agreements, including any agreement relating to our indebtedness, prohibit the
    current payment of dividends on the Series C Preferred Stock; 
	 	 	 
		●	we
    have earnings; 
	 	 	 
		●	there
    are funds legally available for the payment of the dividends; or
	 	 	 
		●	the
    dividends are declared by us.

 

No
interest, or sum in lieu of interest will be payable in respect of any accumulated and unpaid dividends on the Series C Preferred
Stock which may be in arrears, and holders of the Series C Preferred Stock will not be entitled to any dividends in excess of
full cumulative dividends described above. Any dividend payment made on the Series C Preferred Stock will first be credited against
the earliest accumulated but unpaid dividend due with respect to such shares which remains payable.

 

Except
as described below, we will not declare or pay or set aside for payment any dividends or declare or make any other distribution
of cash or other property on or with respect to our common stock or any other class or series of stock that ranks junior to or
on a parity with the Series C Preferred Stock with respect to the payment of dividends or redeem, purchase or otherwise acquire
for any consideration, or make any funds available for a sinking fund for the redemption of, any shares of common stock or any
other class or series of stock that ranks junior to or on a parity with the Series C Preferred Stock with respect to the payment
of dividends, unless we also have paid in cash full cumulative dividends on the Series C Preferred Stock for all past dividend
periods.

 

Except
as described below, if we do not declare and either pay in cash, or set aside a sum sufficient for payment of, full cumulative
dividends on the Series C Preferred Stock and any other class or series of stock that ranks on a parity, with respect to the payment
of dividends, with the Series C Preferred Stock, the amount which we have declared will be allocated pro rata to the holders of
Series C Preferred Stock and each such other class or series of stock, so that the amount declared for each share of Series C
Preferred Stock and for each share of such other class or series of stock is proportionate to the accumulated and unpaid dividends
on those shares (which shall not include any amount in respect of unpaid dividends on such other class or series of stock for
prior Series C dividend periods if such other class or series of stock does not have a cumulative dividend).

 

    	3

    	 

    

 

Notwithstanding
the foregoing restrictions, and regardless of whether we have paid full cumulative dividends on the Series C Preferred Stock or
any other class or series of our stock that ranks on a parity with the Series C Preferred Stock with respect to the payment of
dividends for any dividend period, we will not be prohibited or limited from:

 

	 	●	paying
    dividends on any shares of our stock in shares of our common stock or any other class or series of our stock ranking junior
    to the Series C Preferred Stock as to the payment of dividends and the distribution of assets upon our liquidation, dissolution
    or winding up; 
	 	 	 
	 	●	converting
    or exchanging any shares of our stock for shares of our common stock or any other class or series of our stock ranking junior
    to the Series C Preferred Stock as to the payment of dividends and the distribution of assets upon our liquidation, dissolution
    or winding up; 
	 	 	 
	 	●	redeeming,
    purchasing or otherwise acquiring any shares of our stock pursuant to the provisions of our charter relating to the restrictions
    upon ownership and transfer of stock or permitting us to redeem shares of our stock to assist us in preserving our status
    as a REIT; or
	 	 	 
	 	●	purchasing
    or acquiring shares of Series C Preferred Stock or shares of any other class or series of our stock ranking on a parity with
    the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation,
    dissolution or winding up pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares
    of Series C Preferred Stock.

 

If,
for any taxable year, we elect to designate as “capital gain dividends” (as defined in Section 857 of the Code) a
portion, which we refer to as the Capital Gains Amount, of the dividends not in excess of our earnings and profits that are paid
or made available for such taxable year to the holders of all classes and series of stock, or the total dividends, then the portion
of the Capital Gains Amount that will be allocable to the holders of the Series C Preferred Stock will be the Capital Gains Amount
multiplied by a fraction, the numerator of which will be the total dividends (within the meaning of the Code) paid or made available
to the holders of the Series C Preferred Stock for the year and the denominator of which will be the total dividends.

 

Liquidation
Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of the then-outstanding
shares of Series C Preferred Stock will be entitled to be paid out of our assets legally available for distribution to our stockholders,
subject to the payment of or provision for our debts and other liabilities and the preferential rights of the holders of any class
or series of stock that we may issue ranking senior to the Series C Preferred Stock with respect to the distribution of assets
upon our liquidation, dissolution or winding up, a liquidation preference of $25.00 per share plus an amount equal to any accumulated
and unpaid dividends thereon (whether or not declared) to, but not including, the date of payment, before any distribution or
payment may be made to holders of our common stock or any other class or series of our stock ranking junior to the Series C Preferred
Stock with respect to distributions upon our liquidation, dissolution or winding up. If, upon our voluntary or involuntary liquidation,
dissolution or winding up, our available assets are insufficient to pay the full amount of the liquidating distributions on all
outstanding shares of Series C Preferred Stock and the corresponding amounts payable on all outstanding shares of each other class
or series of our stock ranking on a parity with the Series C Preferred Stock in the distribution of assets upon our liquidation,
dissolution or winding up, then the holders of Series C Preferred Stock and each such other class or series of stock ranking on
a parity with the Series C Preferred Stock as to rights upon our liquidation, dissolution and winding up will share ratably in
any distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.
Holders of the Series C Preferred Stock will be entitled to notice of any voluntary or involuntary liquidation, dissolution or
winding up no fewer than 30 days and no more than 60 days before the first payment date of any such liquidating distribution.
After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the Series C Preferred
Stock will have no right or claim to any of our remaining assets. Our consolidation, merger or conversion with or into any other
entity or the sale, lease, transfer or conveyance of all or substantially all of our property or business will not be deemed to
constitute our liquidation, dissolution or winding up.

 

    	4

    	 

    

 

In
determining whether a distribution (other than upon voluntary or involuntary dissolution) by dividend, redemption or other acquisition
of shares of our stock or otherwise is permitted under the MGCL, amounts that would be needed, if we were to be dissolved at the
time of the distribution, to satisfy the preferential rights upon dissolution of the holders of the Series C Preferred Stock will
not be added to our total liabilities.

 

Optional
Redemption. The Series C Preferred Stock is not redeemable by us before September 15, 2021, except under the circumstances
described in the next paragraph below, pursuant to the provisions of our charter relating to restrictions on ownership and transfer
of our stock and under the circumstances described under “ – Special Optional Redemption.”

 

We
may redeem any or all of the outstanding shares of Series C Preferred Stock at any time, whether before or after September 15,
2021, for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not
declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of
a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount
of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice,
as provided below, if our board of directors determines that such redemption is necessary to assist us in preserving our status
as a REIT.

 

On
and after September 15, 2021, we will have the option to redeem the Series C Preferred Stock, in whole or in part, from time to
time, for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not
declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of
a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount
of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice,
as provided below.

 

Special
Optional Redemption. During any period of time (whether before or after September 15, 2021) that both (i) the Series C Preferred
Stock is not listed on the NYSE, the NYSE American or the NASDAQ, or listed or quoted on an exchange or quotation system that
is a successor to the NYSE, the NYSE American or the NASDAQ, and (ii) we are not subject to the reporting requirements of the
Exchange Act, and any shares of Series C Preferred Stock are outstanding (which we refer to collectively as a Delisting Event),
we will have the option to redeem the Series C Preferred Stock, in whole or in part, within 90 days after the date of the Delisting
Event, for a cash redemption price per share equal to $25.00, plus any accumulated and unpaid dividends thereon (whether or not
declared) to, but not including, the redemption date (unless the redemption date is after a record date set for the payment of
a dividend on the Series C Preferred Stock and on or before the corresponding dividend payment date, in which case the amount
of such accrued and unpaid dividend will not be included in the redemption price), without interest, upon the giving of notice,
as provided below.

 

    	5

    	 

    

 

Upon
the occurrence of a Change of Control (as defined below), we will have the option to redeem the Series C Preferred Stock, in whole
or in part, and within 120 days after the first date on which such Change of Control occurred, for a cash redemption price per
share equal to $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared) to, but not including, the redemption
date (unless the redemption date is after a record date set for the payment of a dividend on the Series C Preferred Stock and
on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not be
included in the redemption price), without interest, upon the giving of notice, as provided below.

 

A
“Change of Control” occurs when, after the original issuance of the Series C Preferred Stock, the following have occurred
and are continuing:

 

	 	●	the
    acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of
    the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction
    or series of purchases, mergers or other acquisition transactions, of shares of our stock entitling that person to exercise
    more than 50% of the total voting power of all outstanding shares of our stock entitled to vote generally in the election
    of directors (and such a person will be deemed to have beneficial ownership of all securities that such person has the right
    to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition);
    and
	 	 	 
	 	●	after
    the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity (or,
    if in connection with such transaction holders of common stock receive consideration consisting of common equity securities
    of another entity, such other entity) has a class of common securities (or American Depository Receipts representing such
    securities) listed on the NYSE, the NYSE American or the NASDAQ, or listed or quoted on an exchange or quotation system that
    is a successor to the NYSE, the NYSE American or the NASDAQ.

 

If,
before the date fixed for conversion of Series C Preferred Stock in connection with a Delisting Event or Change of Control, as
described more fully below, we provide notice of redemption of shares of Series C Preferred Stock (whether pursuant to our optional
redemption right or our special optional redemption rights), holders of such shares of Series C Preferred Stock will not be entitled
to convert their shares as described below under “– Conversion Rights.”

 

Procedures
for Redemption. We will mail to the address of a record holder, as shown on our share transfer books, a notice of redemption
no less than 30 days nor more than 60 days before the redemption date and before the date fixed for conversion as described under
“– Conversion Rights” below. In addition to any information required by law or the rules of any exchange on
which the Series C Preferred Stock is listed, quoted or admitted to trading, each notice must state the following:

 

	 	●	the
    date for redemption, or the redemption date; 
	 	 	 
	 	●	the
    redemption price; 
	 	 	 
	 	●	the
    total number of shares of Series C Preferred Stock to be redeemed (and, if fewer than all shares held by any holder are to
    be redeemed, the number of shares to be redeemed from such holder); 

 

    	6

    	 

    

 

	 	●	the
    place or places where the shares of Series C Preferred Stock are to be surrendered for payment, together with the certificates,
    if any, representing such shares (duly endorsed for transfer) and any other documents or procedures that we require in connection
    with such redemption; 
	 	 	 
	 	●	if
    Series C Preferred Stock is being redeemed pursuant to our special optional redemption right, that the Series C Preferred
    Stock is being redeemed in connection with the occurrence of a Delisting Event or a Change of Control, as applicable, and,
    if in connection with the occurrence of a Change of Control, a brief description of the transaction or transactions constituting
    such Change or Control; 
	 	 	 
	 	●	if
    a Delisting Event or Change of Control has occurred, that holders of the shares of Series C Preferred Stock to which the notice
    relates will not be entitled to tender such shares for conversion in connection with the Delisting Event or Change of Control,
    as applicable, and each share of Series C Preferred Stock tendered for conversion that is selected, before the date fixed
    for such conversion, for redemption will be redeemed on the related redemption date instead of converted on the applicable
    conversion date; and
	 	 	 
	 	●	that
    dividends on the shares of Series C Preferred Stock designated for redemption will cease to accumulate on the redemption date.

 

A
failure to give such notice or any defect in the notice or in its mailing will not affect the sufficiency of notice or validity
of the proceedings for redemption of shares of Series C Preferred Stock called for redemption except as to the holder to whom
notice was defective or not given. A redemption notice that has been mailed in the manner provided above will be presumed to be
given on the date it is mailed whether or not the stockholder receives the redemption notice. The redemption price of the shares
of Series C Preferred Stock to be redeemed will then be paid to or on the order of the person whose name appears in our stock
ledger as the record owner of such shares.

 

If
we have given a notice of redemption, we have set aside the funds necessary for the redemption of the shares of Series C Preferred
Stock called and we have given irrevocable instructions to pay the redemption price and all accumulated and unpaid dividends payable
on the applicable redemption date, then, from and after the redemption date:

 

	 	●	all
    dividends on the shares of Series C Preferred Stock designated for redemption in the notice will cease to accumulate; 
	 	 	 
	 	●	all
    rights of the holders of the shares of Series C Preferred Stock designated for redemption will cease and terminate, except
    the right to receive the redemption price (including all accumulated and unpaid dividends up to, but not including, the redemption
    date, that are payable in connection with the payment of the redemption price), without interest; 
	 	 	 
	 	●	the
    shares of Series C Preferred Stock designated for redemption may not thereafter be transferred except with our consent; and
	 	 	 
	 	●	the
    shares of Series C Preferred Stock designated for redemption will not be outstanding for any purpose whatsoever.

 

    	7

    	 

    

 

The
holders of shares of Series C Preferred Stock as of the close of business on a record date fixed for the payment of a dividend
on the Series C Preferred Stock will be entitled to receive such dividend on the corresponding payment date, notwithstanding the
redemption of the Series C Preferred Stock between such record date and the corresponding payment date.

 

If
less than all of the outstanding shares of Series C Preferred Stock are to be redeemed pursuant to either the optional redemption
right or the special redemption rights discussed above (except for redemption necessary to assist us in preserving our status
as a REIT), the shares of Series C Preferred Stock to be redeemed will be determined pro rata (as nearly as practicable without
creating fractional shares) or by lot. If the redemption is to be by lot, and if, as a result of the redemption, any holder of
Series C Preferred Stock would own, or be deemed by virtue of certain attribution provisions of the Code to own, in excess of
9.8% in value or in number of shares (whichever is more restrictive) of our issued and outstanding stock (which includes the Series
C Preferred Stock but does not include any shares of excess stock), or violate any other restriction or limitation of our stock
set forth in our charter, then, except as otherwise permitted in our charter, we will redeem the requisite number of shares of
Series C Preferred Stock of that holder such that the holder will not own or be deemed by virtue of certain attribution provisions
of the Code to own, subsequent to the redemption, in excess of 9.8% in value or in number of shares (whichever is more restrictive)
of our issued and outstanding stock or violate any other restriction or limitation of our stock set forth in our charter.

 

Notwithstanding
the foregoing, unless full cumulative dividends on all outstanding shares of Series C Preferred Stock have been or contemporaneously
are paid, or declared and set apart for payment, for all past dividend periods, no shares of Series C Preferred Stock may be redeemed
unless all outstanding shares of Series C Preferred Stock are simultaneously redeemed, and we will not purchase or otherwise acquire
directly or indirectly any Series C Preferred Stock, except by (i) conversion or exchange for shares of our common stock or any
other class or series of our stock ranking junior to the Series C Preferred Stock as to the payment of dividends and the distribution
of assets upon our liquidation, dissolution or winding up, (ii) redemption, purchase or other acquisition of shares of stock pursuant
to the provisions of our charter relating to the restrictions on ownership and transfer of our stock, or (iii) purchase or other
acquisition of shares of the Series C Preferred Stock or shares of any other class or series of our stock ranking on a parity
with the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation,
dissolution or winding up pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares
of Series C Preferred Stock.

 

All
shares of the Series C Preferred Stock that we redeem or repurchase will be retired and restored to the status of authorized but
unissued shares of common stock, without designation as to class or series.

 

Conversion
Rights. Upon the occurrence of a Delisting Event or a Change of Control, unless, before the date fixed for such conversion,
we provide notice of redemption of such shares of Series C Preferred Stock as described above under “- Optional Redemption”
or “– Special Optional Redemption” and subject to the restrictions on ownership and transfer of our stock set
forth in our charter, then, unless holders of the Series C Preferred Stock will receive the Alternative Form Consideration as
described below, each holder of Series C Preferred Stock will have the right to convert all or part of the Series C Preferred
Stock held by such holder into a number of shares of common stock per share of Series C Preferred Stock to be so converted, or
the Common Share Conversion Consideration, equal to the lesser of:

 

	 	●	the
    quotient obtained, which we refer to as the Conversion Rate, by dividing (i) the sum of $25.00 plus the amount of any accumulated
    and unpaid dividends thereon (whether or not declared) to, but not including, the applicable date fixed for conversion (unless
    the applicable conversion date is after a record date set for the payment of a dividend on the Series C Preferred Stock and
    on or before the corresponding dividend payment date, in which case the amount of such accrued and unpaid dividend will not
    be included in this sum), by (ii) the Common Share Price (as defined below); and
	 	 	 
	 	●	3.41997,
    the Share Cap, subject to certain adjustments described below.

 

    	8

    	 

    

 

The
“Common Share Price” for any Change of Control will be (i) if the consideration to be received in the Change of Control
by holders of shares of common stock is solely cash, the amount of cash consideration per share of common stock, and (ii) if the
consideration to be received in the Change of Control by holders of shares of common stock is other than solely cash, the average
of the closing sales price per share of common stock on the NYSE, the NYSE American or the NASDAQ, or an exchange or quotation
system that is a successor to the NYSE, the NYSE American or the NASDAQ, for the ten consecutive trading days immediately preceding,
but not including, the effective date of the Change of Control. The “Common Share Price” for any Delisting Event will
be the average of the closing sale prices per share of common stock on the NYSE, the NYSE American or the NASDAQ, or an exchange
or quotation system that is a successor to the NYSE, the NYSE American or the NASDAQ, for the ten consecutive trading days immediately
preceding, but not including, the effective date of the Delisting Event.

 

The
Share Cap will be subject to pro rata adjustments for any stock splits (including those effected pursuant to a distribution of
common stock), subdivisions or combinations with respect to our common stock as follows: the adjusted Share Cap as the result
of such an event will be the number of shares of common stock that is equivalent to the product of (i) the Share Cap in effect
immediately before such event multiplied by (ii) a fraction, the numerator of which is the number of shares of common stock outstanding
after giving effect to such event and the denominator of which is the number of shares of common stock outstanding immediately
before such event.

 

In
the case of a Delisting Event or Change of Control pursuant to, or in connection with, which shares of common stock will be converted
into cash, securities or other property or assets (including any combination thereof), or the Alternative Form Consideration,
a holder of shares of Series C Preferred Stock will receive upon conversion of a share of Series C Preferred Stock the kind and
amount of Alternative Form Consideration which such holder would have owned or been entitled to receive had such holder held a
number of shares of common stock equal to the Common Share Conversion Consideration immediately before the effective time of the
Delisting Event or Change of Control.

 

If
the holders of shares of common stock have the opportunity to elect the form of consideration to be received in connection with
the Delisting Event or Change of Control, the form of consideration that holders of the Series C Preferred Stock will receive
will be in the form of consideration elected by the holders of a plurality of the shares of common stock held by stockholders
who participate in the election and will be subject to any limitations to which all holders of shares of common stock are subject,
including, without limitation, pro rata reductions applicable to any portion of the consideration payable in connection with the
Delisting Event or Change of Control.

 

We
will not issue fractional shares of common stock upon the conversion of the Series C Preferred Stock. Instead, we will pay the
cash value of any such fractional share based on the Common Share Price.

 

    	9

    	 

    

 

Within
15 days after the occurrence of a Delisting Event or Change of Control, we will provide to holders of record of outstanding shares
of Series C Preferred Stock, at the addresses for such holders shown on our share transfer books, a notice of the occurrence of
the Delisting Event or Change of Control. This notice will state the following:

 

	 	●	the
    events constituting the Delisting Event or Change of Control;
	 	 	 
	 	●	the
date of the Delisting Event or Change of Control; 
	 	 	 
	 	●	the
    last date on which the holders of shares of Series C Preferred Stock may exercise their conversion rights in connection with
    the Delisting Event or Change of Control, as applicable; 
	 	 	 
	 	●	the
    method and period for calculating the Common Share Price; 
	 	 	 
	 	●	the
    date fixed for conversion in connection with the Delisting Event or Change of Control, or the conversion date, which will
    be a business day fixed by our board of directors that is not fewer than 20 and not more than 35 days after the date of the
    notice; 
	 	 	 
	 	●	that
    if, before the applicable conversion date, we provide notice of our election to redeem all or any portion of the shares of
    Series C Preferred Stock, holders of the Series C Preferred Stock will not be able to convert the shares of Series C Preferred
    Stock so called for redemption, and such shares of Series C Preferred Stock will be redeemed on the related redemption date,
    even if they have already been tendered for conversion in connection with the Delisting Event or Change of Control, as applicable;
    
	 	 	 
	 	●	if
    applicable, the type and amount of Alternative Conversion Consideration entitled to be received per share of Series C Preferred
    Stock converted; 
	 	 	 
	 	●	the
    name and address of the paying agent and the conversion agent; and
	 	 	 
	 	●	the
    procedures that the holders of shares of Series C Preferred Stock must follow to exercise their conversion rights in connection
    with the Delisting Event or Change of Control, as applicable.

 

A
failure to give such notice or any defect in the notice or in its mailing will not affect the sufficiency of the notice or validity
of the proceedings for conversion of shares of Series C Preferred Stock in connection with a Delisting Event or Change of Control,
as applicable, except as to the holder to whom notice was defective or not given. A notice that has been mailed in the manner
provided herein will be presumed to be given on the date it is mailed whether or not the stockholder receives such notice.

 

We
will issue a press release for publication on the Dow Jones & Company, Inc., Business Wire, PR Newswire or Bloomberg Business
News (or, if these organizations are not in existence at the time of issuance of the press release, such other news or press organization
as is reasonably calculated to broadly disseminate the relevant information to the public) containing the information stated in
such a notice, and post such a notice on our website, in any event before the opening of business on the first business day after
any date on which we provide the notice described above to the holders of record of Series C Preferred Stock.

 

    	10

    	 

    

 

To
exercise conversion rights in connection with a Delisting Event or Change of Control, as applicable, a holder of record of Series
C Preferred Stock will be required to deliver, on or before the close of business on the applicable conversion date, the certificates,
if any, representing any certificated shares of Series C Preferred Stock to be converted, duly endorsed for transfer, together
with a completed written conversion notice and any other documents we reasonably require in connection with such conversion, to
our conversion agent. The conversion notice must state:

 

	 	●	the
    relevant conversion date; and
	 	 	 
	 	●	the
    number of shares of Series C Preferred Stock to be converted.

 

A
holder of Series C Preferred Stock may withdraw any notice of exercise of such holder’s conversion rights in connection
with a Delisting Event or Change of Control, as applicable, in whole or in part, by a written notice of withdrawal delivered to
our conversion agent before the close of business on the business day before the applicable conversion date. The notice of withdrawal
must state:

 

	 	●	the
    number of withdrawn shares of Series C Preferred Stock; 
	 	 	 
	 	●	if
    certificated shares of Series C Preferred Stock have been tendered for conversion and withdrawn, the certificate numbers of
    the withdrawn certificated shares of Series C Preferred Stock; and
	 	 	 
	 	●	the
    number of shares of Series C Preferred Stock, if any, which remain subject to the conversion notice.

 

Notwithstanding
the foregoing, if the Series C Preferred Stock is held in global form, the conversion notice and/or the notice of withdrawal,
as applicable, must comply with applicable procedures of DTC.

 

Shares
of Series C Preferred Stock as to which the holder’s conversion right has been properly exercised and for which the conversion
notice has not been properly withdrawn will be converted into the applicable form of consideration on the applicable conversion
date unless, before the applicable conversion date, we provide notice of our election to redeem such shares of Series C Preferred
Stock, whether pursuant to our optional redemption right or our special optional redemption rights. If we elect to redeem shares
of Series C Preferred Stock that would otherwise be converted into the applicable form of consideration on a conversion date,
such shares of Series C Preferred Stock will not be so converted and the holders of such shares will be entitled to receive on
the applicable redemption date the redemption price for such shares.

 

We
will deliver amounts owed upon conversion no later than the third business day after the applicable conversion date.

 

In
connection with the exercise of conversion rights in connection with any Delisting Event or Change of Control, we will comply
with all U.S. federal and state securities laws and stock exchange rules in connection with any conversion of shares of Series
C Preferred Stock into shares of common stock. Notwithstanding any other provision of the terms of the Series C Preferred Stock,
no holder of Series C Preferred Stock will be entitled to convert such Series C Preferred Stock into shares of common stock to
the extent that receipt of such shares of common stock would cause such holder (or any other person) to violate the restrictions
on ownership and transfer of our stock contained in our charter. See “—Restrictions on Ownership and Transfer.”

 

The
conversion and redemption features of the Series C Preferred Stock may make it more difficult for a party to take over our company
or discourage a party from taking over our company.

 

    	11

    	 

    

 

Except
as provided above in connection with a Delisting Event or Change of Control, the Series C Preferred Stock is not convertible into
or exchangeable for any other property or securities, except that shares of Series C Preferred Stock may be exchanged for shares
of our excess stock pursuant to the provisions of our charter relating to restrictions on ownership and transfer of our stock.

 

Voting
Rights. Except as described below, holders of Series C Preferred Stock will generally have no voting rights. On any matter
in which the Series C Preferred Stock may vote (as expressly provided in our charter), each share of Series C Preferred Stock
shall be entitled to cast one vote.

 

If
dividends on the Series C Preferred Stock are in arrears, whether or not declared, for six or more quarterly dividend periods,
whether or not these quarterly dividend periods are consecutive, the holders of the Series C Preferred Stock and the holders of
all other classes and series of our preferred stock ranking on a parity with the Series C Preferred Stock with respect to the
payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, upon which like voting rights
have been conferred and are exercisable, or voting preferred stock, and with which the holders of Series C Preferred Stock are
entitled to vote together as a single class, voting together as a single class, will have the exclusive power to elect two additional
directors, or the preferred directors, to serve on our board of directors, until all dividends accumulated on the outstanding
shares of Series C Preferred Stock for all past dividend periods and the then-current dividend period shall have been fully paid.
Unless the number of our directors has previously been increased pursuant to the terms of any class or series of voting preferred
stock with which the holders of the Series C Preferred Stock are entitled to vote together as a single class in the election of
preferred directors (and has not subsequently been decreased), the number of our directors will automatically increase by two
at such time as holders of the Series C Preferred Stock become entitled to vote in the election of preferred directors. Unless
shares of voting preferred stock remain outstanding and entitled to vote in the election of preferred directors, the term of office
of preferred directors will terminate, and the number of our directors will automatically decrease by two, when all accumulated
dividends on the Series C Preferred Stock for all past dividend periods and the then-current dividend period have been fully paid.
If the right of holders of the Series C Preferred Stock to elect the preferred directors terminates after the record date for
the determination of holders of shares of Series C Preferred Stock entitled to vote in any election of preferred directors but
before the closing of the polls in such election, holders of the Series C Preferred Stock outstanding as of such record date will
not be entitled to vote in such election of preferred directors. The right of the holders of the Series C Preferred Stock to elect
preferred directors will again vest if and whenever dividends are in arrears for six quarterly periods, as described above. In
no event will the holders of the Series C Preferred Stock be entitled to nominate or elect an individual as a preferred director,
and no individual shall be qualified to be nominated for election or to serve as a preferred director, if the individual’s
service as a director would cause us to fail to satisfy a requirement relating to director independence of any national securities
exchange on which any class or series of our stock is listed or quoted.

 

At
any time that holders of Series C Preferred Stock have the right to elect preferred directors, but such preferred directors have
not been elected, we must call a special meeting of our stockholders for the purpose of electing preferred directors upon the
written request of the holders of record of at least 10% of the outstanding shares of the Series C Preferred Stock and any other
class or series of voting preferred stock with which the holders of the Series C Preferred Stock are entitled to vote together
as a single class in the election of preferred directors, unless such request is received fewer than 90 days before the date fixed
for the next annual or special meeting of our stockholders, in which case, the election of preferred directions will be held at
the earlier of the next annual or special meeting of our stockholders. The preferred directors will be elected by a plurality
of the votes cast in the election of preferred directors, and each preferred director will serve until the next annual meeting
of our stockholders and until his or her successor is duly elected and qualifies, or until such preferred director’s term
of office terminates as described above. Preferred directors will not be classified with respect to the terms for which they hold
office. Any preferred director elected by the holders of the Series C Preferred Stock and any class or series of voting preferred
stock may be removed, with or without cause, by a vote of the holders of record of a majority of the outstanding shares of Series
C Preferred Stock and all classes and series of voting preferred stock then entitled to vote in the election of preferred directors,
voting together as a single class. Holders of common stock will not be entitled to vote in the election or removal of preferred
directors.

 

    	12

    	 

    

 

So
long as any shares of Series C Preferred Stock are outstanding, the approval of the holders of at least two-thirds of the outstanding
shares of Series C Preferred Stock and any equally-affected class or series of voting preferred stock with which the holders of
Series C Preferred Stock are entitled to vote as a single class on such matters (voting together as a single class), is required:

 

	 	●	to
    authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to
    the Series C Preferred Stock with respect to the payment of dividends or the distribution of assets upon our liquidation,
    dissolution or winding up, the reclassification of any of our authorized stock into any such senior stock or the creation,
    authorization or issuance of any obligation or security convertible or exchangeable into or evidencing the right to purchase
    any such senior stock; or
	 	 	 
	 	●	except
    as described below, to amend, alter or repeal any provision of our charter, including the articles supplementary setting forth
    the terms of the Series C Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially
    all of our assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power
    of the Series C Preferred Stock.

 

The
following actions will not materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred
Stock, and the holders of the Series C Preferred Stock will not be entitled to vote on:

 

	 	●	any
    increase in the number of authorized or issued shares of common stock, excess stock or preferred stock without further designation
    as to class or series, or the creation or issuance of any class or series of our stock ranking junior or on a parity with
    the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon our liquidation,
    dissolution or winding up; or
	 	 	 
	 	●	any
    amendment, alteration or repeal of any provision of our charter, including the articles supplementary setting forth the terms
    of the Series C Preferred Stock, as a result of a merger, consolidation, transfer or conveyance of all or substantially all
    of our assets or other business combination, if (i) the Series C Preferred Stock (or the securities into which the Series
    C Preferred Stock has been converted in any successor person or entity to us) remains outstanding with the terms thereof unchanged
    in all material respects or is exchanged for securities of the successor person or entity with substantially identical rights
    (taking into account that, upon the occurrence of such an event, we may not be the surviving entity) or (ii) if the holders
    of the Series C Preferred Stock receive in connection with such event an amount of cash per share of Series C Preferred Stock
    equal to the liquidation preference of $25.00 plus any accumulated and unpaid dividends thereon (whether or not declared)
    to, but not including, the date of such event (unless such date of such event is after a record date set for the payment of
    a dividend on the Series C Preferred Stock and before the corresponding dividend payment date, in which case the amount of
    such accrued and unpaid dividend will not be included in such sum).

 

    	13

    	 

    

 

The
voting provisions above will not apply if, at or before the time when the act with respect to which the vote would otherwise be
required would occur, we have duly redeemed or called for redemption upon proper notice and sufficient funds, in cash, shall have
been deposited in trust to effect such redemption of all outstanding shares of Series C Preferred Stock.

 

No
Maturity, Sinking Fund, Mandatory Redemption or Preemptive Rights. The Series C Preferred Stock has no stated maturity date,
will not be subject to any sinking fund or mandatory redemption provisions and will have no preemptive rights to subscribe for
any of our securities.

 

Ownership
Limits and Restrictions on Transfer. In order to assist us in maintaining our qualification as a REIT, ownership by any person
of our outstanding stock, including the Series C Preferred Stock, is restricted under our charter. Any certificates representing
shares of Series C Preferred Stock will include a legend regarding restrictions on transfer. For further information regarding
restrictions on ownership and transfer of the Series C Preferred Stock, see “Restrictions on Ownership and Transfer”.

 

Information
Rights. During any period during which we are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act and any shares of Series C Preferred Stock are outstanding, we will (i) transmit by mail or other permissible means under
the Exchange Act to all holders of Series C Preferred Stock as their names and addresses appear in our record books and without
cost to such holders, copies of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto
(other than any exhibits that would have been required) within 15 days after the respective dates by which we would have been
required to file such reports with the SEC if we were subject to Section 13 or 15(d) of the Exchange Act, in each case, based
on the dates on which we would be required to file such periodic reports if we were an “accelerated filer” within
the meaning of the Exchange Act, and (ii) within 15 days after written request, supply copies of such reports to any prospective
holder of the Series C Preferred Stock

 

Listing;
Transfer Agent; Distributions Disbursing Agent. Our Series C Preferred Stock is traded on the NYSE under the symbol “MNRprC.”
The registrar, transfer agent and distributions disbursing agent for the Series C Preferred Stock is American Stock Transfer &
Trust Company.

 

Restrictions
on Ownership and Transfer

 

To
qualify as a REIT under the Code, we must satisfy a number of statutory requirements, including a requirement that no more than
50% in value of our outstanding shares of stock may be owned, actually or constructively, by five or fewer individuals (as defined
by the Code to include certain entities) during the last half of a taxable year. In addition, if we, or an actual or constructive
owner of 10% or more of us, actually or constructively owns 10% or more of a tenant of ours (or a tenant of any partnership in
which we are a partner), the rent we receive (either directly or through any such partnership) from such tenant will not be qualifying
income for purposes of the REIT gross income tests of the Code. Our stock must also be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of twelve months or during a proportionate part of a shorter taxable year.

 

    	14

    	 

    

 

Our
charter prohibits any transfer of shares of our stock or any other change in our capital structure that would result in:

 

	 	●	any
    person directly or indirectly acquiring beneficial ownership of more than 9.8%, in value or number of shares, whichever is
    more restrictive, of the outstanding shares of our stock (other than shares of excess stock); 
	 	 	 
	 	●	outstanding
    shares of our stock (other than shares of excess stock) being constructively or beneficially owned by fewer than 100 persons;
    
	 	 	 
	 	●	our
    being “closely held” within the meaning of Section 856 of the Code; or
	 	 	 
	 	●	our
    otherwise failing to qualify as a REIT under the Code.

 

We
refer to these restrictions, collectively, as the “ownership limits.” Subject to certain limitations, our board of
directors may, in its sole discretion, exempt one or more persons from the ownership limits, on such terms and subject to such
conditions as our board of directors may require, including a ruling from the Internal Revenue Service or an opinion of counsel
that such exemption will not cause us to fail to qualify as a REIT.

 

Our
charter requires that any person who acquires or attempts to acquire shares of our stock (other than shares of excess stock) in
violation of the ownership limits give immediate, or in the event of a proposed or attempted transfer, at least 15 days’
prior, written notice to us. If any person attempts to transfer shares of our stock, or attempts to cause any other event to occur
that would result in a violation of the ownership limits, then:

 

	 	●	any
    proposed transfer will be void ab initio, the purported transferee of such shares will acquire no interest in the shares and
    the shares that were subject to the attempted transfer or other event will, effective as of the close of business on the business
    day before the date of the attempted transfer or other event, automatically, without action by us or any other person, be
    converted into and exchanged for an equal number of shares of excess stock;
	 	 	 
	 	●	we
    may redeem any shares of excess stock and, before the attempted transfer or other event that results in a conversion into
    and exchange for shares of excess stock, any shares of our stock of any other class or series that are attempted to be owned
    or transferred in violation of the ownership limits, at a price equal to the lesser of the price per share paid in the attempted
    transfer or other event that violated the ownership limits and the last reported sale price of shares of such class of our
    stock on the NYSE on the day we give notice of redemption or, if shares of such class of our stock are not then traded on
    the NYSE, the market price of such shares determined in accordance with our charter; and
	 	 	 
	 	●	our
    board of directors may take any action it deems advisable to refuse to give effect to, or to prevent, any such attempted transfer
    or other event.

 

Shares
of excess stock will be held in book entry form in the name of a trustee appointed by us to hold the shares for the benefit of
one or more charitable beneficiaries appointed by us and a beneficiary designated by the purported transferee, which we refer
to as the designated beneficiary, whose ownership of the shares of our stock that were converted into and exchanged for shares
of excess stock does not violate the ownership limits. The purported transferee may not receive consideration in exchange for
designating the designated beneficiary in an amount that exceeds the price per share that the purported transferee paid for the
shares of our stock converted into and exchanged for shares of excess stock or, if the purported transferee did not give value
for such shares, the market price of the shares on the date of the purported transfer or other event resulting in the conversion
and exchange. Any excess amounts received by the purported transferee as consideration for designating the designated beneficiary
must be paid to the trustee for the benefit of the charitable beneficiary. Upon the written designation of a designated beneficiary
and the waiver by us of our right to redeem the shares of excess stock, the trustee will transfer the shares of excess stock to
the designated beneficiary and, upon such transfer, the shares of excess stock will automatically be converted into and exchanged
for the same number and class or series of shares of our stock as were converted into and exchanged for such shares of excess
stock. Shares of excess stock are not otherwise transferable. If the purported transferee attempts to transfer shares of our stock
before discovering that the shares have been converted into and exchanged for shares of excess stock, the shares will be deemed
to have been sold on behalf of the trust, and any amount received by the purported transferee in excess of what the purported
transferee would have been entitled to receive as consideration for designating a designated beneficiary will be paid to the trustee
on demand.

 

    	15

    	 

    

 

Holders
of shares of excess stock are not entitled to vote on any matter submitted to a vote at a meeting of our stockholders. Upon the
voluntary or involuntary liquidation, dissolution or winding up of the affairs of our company, the trustee must distribute to
the designated beneficiary any amounts received as distributions on the shares of excess stock that do not exceed the price per
share paid by the purported transferee in the transaction that created the violation or, if the purported transferee did not give
value for such shares, the market price of the shares of our stock that were converted into and exchanged for shares of excess
stock, on the date of the purported transfer or other event that resulted in such conversion and exchange. Any amount received
upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of our company not payable to the designated
beneficiary, and any other dividends or distributions paid on shares of excess stock, will be distributed by the trustee to the
charitable beneficiary.

 

Every
holder of more than 5% of the number or value of outstanding shares of our stock must give written notice to us stating the name
and address of such owner, the number of shares of stock beneficially or constructively owned and a description of the manner
in which the shares are owned. Our board of directors may, in its sole and absolute discretion, exempt certain persons from the
ownership limitations contained in our charter if ownership of shares of stock by such persons would not disqualify us as a REIT
under the Code.

 

The
Board of Directors

 

Our
board of directors is currently comprised of twelve directors. Our charter and bylaws provide that the board may alter the number
of directors to a number not more than 15 or less than three. Our charter provides that the directors shall be divided, as evenly
as possible, into three classes, with approximately one-third of the directors elected by the stockholders annually. Each director
will serve for a three year term and until his or her successor is duly elected and has qualified. Holders of shares will have
no right to cumulative voting in the election of directors. Our directors are elected by a plurality of the votes cast; however,
our Corporate Governance Guidelines require that a director will offer to resign if the director receives a greater number of
votes “withheld” than votes “for” such election in an uncontested election of directors.

 

Business
Combinations

 

Under
the Maryland Business Combination Act, business combinations between a Maryland corporation and an interested stockholder or an
affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder
becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances
specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is
defined as:

 

	 	●	any
    person who beneficially owns 10% or more of the voting power of the corporation’s shares; or
	 	 	 
	 	●	an
    affiliate or associate of the corporation who, at any time within the two-year period before the date in question, was the
    beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

 

    	16

    	 

    

 

A
person is not an interested stockholder under the statute if the board of directors approves in advance the transaction by which
the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors
may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined
by the board.

 

After
the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must
be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

 

	 	●	80%
    of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
	 	 	 
	 	●	two-thirds
    of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder
    with whom or with whose affiliate the business combination is to be effected or shares held by an affiliate or associate of
    the interested stockholder.

 

These
supermajority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined
under the MGCL, for their shares of common stock in the form of cash or other consideration in the same form as previously paid
by the interested stockholder for its shares.

 

The
MGCL permits various exemptions from its provisions, including business combinations that are exempted by the board of directors
before the time that the interested stockholder becomes an interested stockholder. Pursuant to the act, our charter exempts any
business combination between us and UMH Properties, Inc., or UMH. Consequently, the five-year prohibition and the supermajority
vote requirements will not apply to business combinations between us and UMH.

 

Control
Share Acquisitions

 

The
provisions of the Maryland Control Share Acquisition Act provide that a holder of control shares of a Maryland corporation acquired
in a control share acquisition has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds
of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of
the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated
with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise
of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power:

 

	 	●	one-tenth
    or more but less than one-third;
	 	 	 
	 	●	one-third
    or more but less than a majority; or
	 	 	 
	 	●	majority
    or more of all voting power.

 

    	17

    	 

    

 

Control
shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder
approval or shares acquired directly from the corporation. A control share acquisition means, subject to certain exceptions, the
acquisition of issued and outstanding control shares.

 

A
person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call
a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to
compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay
the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders’
meeting.

 

If
voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required
by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting
rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and
limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of
the last control share acquisition by the acquiror or, if a meeting of stockholders at which the voting rights of the shares are
considered and not approved, as of the date of that meeting. If voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise
appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest
price per share paid by the acquiror in the control share acquisition.

 

The
control share acquisition statute does not apply to (a) shares acquired in a merger, consolidation or share exchange if the corporation
is a party to the transaction or (b) acquisitions approved or exempted by the charter or bylaws of the corporation.

 

Our
bylaws contain a provision exempting from the provisions of the Control Share Acquisition Act any and all acquisitions by any
person of shares of our stock. There can be no assurance that our board of directors will not eliminate this provision at any
time in the future.

 

Unsolicited
Takeovers Act

 

Subtitle
8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and
at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board
of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions:

 

	 	●	a
    classified board; 
	 	 	 
	 	●	a
    two-thirds vote requirement for removing a director; 
	 	 	 
	 	●	a
    requirement that the number of directors be fixed only by vote of the directors; 
	 	 	 
	 	●	a
    requirement that a vacancy on the board be filled only by the affirmative vote of a majority of the remaining directors in
    office and for the remainder of the full term of the class of directors in which the vacancy occurred; and
	 	 	 
	 	●	a
    requirement for the calling of special meeting of stockholders may occur if a majority of stockholders request such in writing.

 

    	18

    	 

    

 

Through
provisions in our charter and bylaws unrelated to Subtitle 8, we already (a) have a classified board, (b) require a two-thirds
vote for the removal of any director from the board, (c) vest in the board the exclusive power to fix the number of directors
and (d) require, unless called by our president, the chairman of the board or a majority of the board of directors, the request
of stockholders entitled to cast a majority of the votes entitled to be cast at such meeting to call a special meeting of stockholders.
We have elected to be governed by the provision of Subtitle 8 providing that a vacancy on our board of directors may be filled
only by the remaining directors, for the remainder of the full term of the class of directors in which the vacancy occurred.

 

Advance
Notice of Director Nominations and New Business 

 

Our
bylaws provide that, with respect to an annual meeting of our stockholders, nominations of individuals for election to our board
of directors and the proposal of business to be considered by stockholders at an annual meeting may be made only (i) by or at
the discretion of our board of directors or a duly authorized committee thereof or (ii) by any stockholder of record as of the
date of the notice required by our bylaws, the record date for the meeting and the meeting date and who has provided the information
required pursuant to the advance notice procedures of the bylaws. With respect to special meetings of our stockholders, only the
business specified in the notice of the meeting may be brought before the meeting. Nominations of individuals for election to
our board of directors at a special meeting of our stockholders may be made only (i) by our board of directors or a duly authorized
committee thereof or (ii) provided that directors or a duly authorized committee thereof will be elected at the meeting, by a
stockholder of record as of the date of the notice required by our bylaws, the record date for the meeting and the meeting date
and who has provided the information required pursuant to the advance notice provisions of the bylaws.

 

Meetings
of Stockholders

 

Under
our bylaws, annual meetings of stockholders are to be held each year at a date and time as determined by our board of directors.
Special meetings of stockholders may be called only by a majority of the directors then in office, by the chairman of our board
of directors or by the president and must be called by the secretary upon the written request of stockholders entitled to cast
a majority of the votes entitled to be cast at the meeting.

 

Amendment
of Charter and Bylaws

 

Our
charter generally may be amended only if advised by the board of directors and approved by the affirmative vote of stockholders
entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter. Under the MGCL, certain charter
amendments may be effected by the board of directors, without stockholder approval, such as an amendment changing the name of
the corporation or an amendment increasing or decreasing the number of authorized shares of our stock. Our bylaws may be amended
only by vote of a majority of the board of directors.

 

Extraordinary
Transactions

 

We
may merge or consolidate with another entity, convert into another form of entity, engage in a statutory share exchange or sell
all or substantially all of our assets generally only if advised by our board of directors and approved by the affirmative vote
of stockholders entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter. Maryland law also
permits a Maryland corporation to transfer all or substantially all of its assets without the approval of its stockholders to
an entity owned, directly or indirectly, by the corporation. Because our operating assets may be held by our wholly owned subsidiaries,
these subsidiaries may be able to merge or transfer all or substantially all of their assets without the approval of our stockholders.

 

    	19

    	 

    

 

Dissolution

 

Our
dissolution must be advised by a majority of our entire board of directors and approved by the affirmative vote of stockholders
entitled to cast not less than two-thirds of all of the votes entitled to be cast on the matter.

 

Removal
of Directors

 

Our
charter provides that a director may be removed only for cause, as defined in the charter, and only by the affirmative vote of
stockholders entitled to cast not less than two-thirds of the votes entitled to be cast in the election of directors, generally.
This provision, when coupled with the Subtitle 8 election vesting in our board of directors the sole power to fill vacant directorships,
precludes stockholders from removing incumbent directors except for cause and by a substantial affirmative vote and from filling
the vacancies created by the removal with their own nominees.

 

Exclusive
Forum

 

Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City,
Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore
Division, will be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action
asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders,
(c) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision
of the MGCL or our charter or bylaws or (d) any action asserting a claim against us or any of our directors, officers or other
employees that is governed by the internal affairs doctrine.

 

Indemnification
and Limitations on Liability

 

We
are incorporated under the laws of the State of Maryland. The MGCL permits a Maryland corporation to include in its charter a
provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages, except
for liability resulting from (i) actual receipt of an improper benefit or profit in money, property or services or (ii) active
and deliberate dishonesty that was established by a final judgment and was material to the cause of action. Our charter contains
a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law.

 

The
MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director
or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a
party by reason of his or her service in that capacity. The MGCL permits a Maryland corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred
by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities
unless it is established that (i) the act or omission of the director or officer was material to the matter giving rise to the
proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the director or
officer actually received an improper personal benefit in money, property or services or (iii) in the case of any criminal proceeding,
the director or officer had reasonable cause to believe that the act or omission was unlawful.

 

    	20

    	 

    

 

However,
under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or on behalf of the corporation
or for a judgment of liability on the basis that personal benefit was improperly received. A court may order indemnification if
it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer
did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received.
However, indemnification for an adverse judgment in a suit by or on behalf of the corporation, or for a judgment of liability
on the basis that personal benefit was improperly received, is limited to expenses.

 

In
addition, Maryland law permits a Maryland corporation to advance reasonable expenses to a director or officer upon receipt of
(a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay
the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

 

Our
charter requires us, to the fullest extent permitted by Maryland law as in effect from time to time, to indemnify and advance
expenses to our directors and officers, whether serving us or at our request any other entity, who were or are parties or are
threatened to be made parties to any threatened or actual suit, investigation or other proceeding, including administrative actions,
as a result of their status or actions as directors or officers of us. Our charter authorizes us to provide the same indemnification
and advancement of expenses to our employees and agents.

 

    	21Exhibit

Exhibit 4.17

DESCRIPTION OF THE REGISTRANT’S SECURITIES 
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

As of the date of the Annual Report on Form 10-K of which this exhibit is a part, D.R. Horton, Inc. (the “Company”) has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) our common stock, $.01 par value per share, and (2) our 5.750% Senior Notes due 2023.

Description of Common Stock

The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation, as amended (the “charter”) and our Amended and Restated Bylaws (the “bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part. We encourage you to read our charter, our bylaws and the applicable provisions of Delaware General Corporation Law for additional information.

Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The vote of the holders of a majority of the stock represented at a meeting at which a quorum is present is generally required to take stockholder action, unless a greater vote is required by law. The holders are not entitled to cumulative voting in the election of directors. Directors are elected by the affirmative vote of the majority of votes cast at a meeting at which a quorum is present, except that if the number of nominees exceeds the number of directors to be elected, the directors are elected by a plurality of the shares represented in person or by proxy at the meeting and entitled to vote. A majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director.

Holders of common stock have no preemptive rights. They are entitled to such dividends as may be declared by our board of directors out of funds legally available for such purpose. The common stock is not entitled to any sinking fund, redemption or conversion provisions. On our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in our net assets remaining after the payment of all creditors and liquidation preferences of preferred stock, if any. The outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable.

The transfer agent and registrar for the common stock is American Stock Transfer & Trust Company, LLC, which currently serves as trustee for certain of our senior notes.

The following provisions in our charter or bylaws may make a takeover of our company more difficult:

		
	•
	an article in our charter prohibiting stockholder action by written consent;

		
	•
	an article in our charter requiring the affirmative vote of the holders of two-thirds of the outstanding shares of common stock to remove a director;

		
	•
	an article in our charter and a bylaw limiting the persons who may call special meetings of stockholders to our board of directors or a committee authorized to call a meeting by the board or the bylaws; and

		
	•
	bylaws establishing an advance written notice procedure for stockholders seeking to nominate candidates for election to the board of directors or for proposing matters which can be acted upon at stockholders’ meetings.

These provisions may delay stockholder actions with respect to business combinations and the election of new members to our board of directors. As such, the provisions could discourage open market purchases of our common stock because a stockholder who desires to participate in a business combination or elect a new director may consider them disadvantageous. Additionally, the issuance of preferred stock could delay or prevent a change of control or other corporate action.

Delaware Anti-Takeover Statute. As a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prevents an “interested stockholder” from engaging in a “business combination” with us for three years following the date that person became an interested stockholder, unless:
 
		
	•
	before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;

		
	•
	upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding stock held by persons who are both directors and officers of our corporation or by certain employee stock plans; or

		
	•
	on or following the date on which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock excluding shares held by the interested stockholder.

An “interested stockholder” is generally a person owning 15% or more of our outstanding voting stock. A “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder.

Description of 5.750% Senior Notes due 2023

The following description of our 5.750% Senior Notes due 2023 (the “Notes”) is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the Indenture, dated as of May 1, 2012 (the “Base Indenture”), between the Company and American Stock Transfer & Trust Company, LLC, as trustee (the “Trustee”), as supplemented by the Sixth Supplemental Indenture, dated as of August 5, 2013 (the “Sixth Supplemental Indenture”), the Tenth Supplemental Indenture, dated as of December 5, 2017 (the “Tenth Supplemental Indenture”), and the Eleventh Supplemental Indenture, dated as of October 10, 2019 (the Base Indenture, as supplemented by the Sixth Supplemental Indenture, Tenth Supplemental Indenture and Eleventh Supplemental Indenture, the “Indenture”), which are incorporated by reference as exhibits to the Annual Report on Form 10-K of which this exhibit is a part. The Notes are traded on The New York Stock Exchange under the bond trading symbol of “DHI 23A”.

Definitions of certain terms are set forth under “Certain Definitions” and throughout this description. Capitalized terms that are used but not otherwise defined herein have the meanings assigned to them in the Indenture, and those definitions are incorporated herein by reference. We encourage you to read the above referenced Indenture for additional information.

General

The Notes were initially issued in an aggregate principal amount of $400 million.

The Notes bear interest from August 5, 2013, payable semi-annually on February 15 and August 15 of each year (each, an “Interest Payment Date”), commencing February 15, 2014, to Holders of record at the close of business on February 1 or August 1, as the case may be, immediately preceding each such interest payment date. The Notes bear interest at 5.750% per annum and mature on August 15, 2023.

Additional Notes (the “Additional Notes”) in an unlimited amount may be issued in one or more series from time to time on the same terms and conditions, except for issue date, and in certain cases the issue price and the first interest payment, either of which may differ from the respective terms of the previously issued Notes of the same series, and with the same CUSIP numbers as the Notes (to the extent permissible under applicable law) without the consent of Holders of the Notes.

The Notes are guaranteed by each of the Guarantors pursuant to the guarantees of the Notes (the “Guarantees”) described below. The Guarantors do not include Forestar Group Inc. or, in general, our subsidiaries that are engaged in the financial services segment or the insurance, energy or mineral business. These subsidiaries do not guarantee our other senior notes or our revolving credit facility. In addition, the Notes are not guaranteed by several of our insignificant subsidiaries.

Ranking

The Notes are general unsecured obligations of the Company and rank senior in right of payment to any future Indebtedness of the Company that is, by its terms, expressly subordinated in right of payment to the Notes and pari passu in right of payment with all existing and future unsecured Indebtedness of the Company that is not so subordinated, including our revolving credit facility. The Guarantees described below are general unsecured obligations of the Guarantors and rank senior in right of payment to any future Indebtedness of the Guarantors that is, by its terms, expressly subordinated in right of payment to the Guarantees and rank pari passu in right of payment with all existing and future unsecured Indebtedness of the Guarantors that is not so subordinated, including our revolving credit facility.

Secured creditors of the Company and the Guarantors have a claim on the assets that secure the obligations of the Company and the Guarantors to such creditors prior to claims of Holders of the Notes against those assets, to the extent of the value of such assets. Our revolving credit facility provides for the issuance of letters of credit under the facility that are secured by cash collateral.

Optional Redemption

The Company may, at its option, redeem the Notes in whole at any time or in part from time to time, as set forth below. The Company must mail to registered holders of the Notes notice of redemption at least 30 but not more than 60 days prior to the proposed date of redemption.

If we redeem the Notes prior to three months of the final maturity of the Notes, the redemption price for the Notes being redeemed will equal the greater of the following amounts:
 
		
	•
	100% of their principal amount; and

		
	•
	the present value of the Remaining Scheduled Payments on the Notes being redeemed on the redemption date, discounted to the redemption date, on a semiannual basis, at the Treasury Rate plus 50 basis points (0.50%), 

plus, in each case, accrued and unpaid interest on such Notes to the redemption date.

If we redeem the Notes within three months of the final maturity of the Notes, the redemption price will equal 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest on the Notes to the redemption date.

In determining the redemption price and accrued interest, interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

If money sufficient to pay the redemption price of and accrued interest on the Notes to be redeemed is deposited with the Trustee on or before the redemption date, on and after the redemption date interest will cease to accrue on the Notes (or such portions thereof) called for redemption and such Notes will cease to be outstanding.

On or before the redemption date, we will deposit with the paying agent (or the Trustee) money sufficient to pay the redemption price of and accrued interest on the Notes to be redeemed on that date. Selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of The Depository Trust Company), unless such method is otherwise prohibited.

The Guarantees

The Notes are guaranteed by each of the Guarantors pursuant to the Guarantees. The Guarantors do not include Forestar Group Inc. or, in general, our subsidiaries that are engaged in the financial services segment or the insurance, energy or mineral business. These subsidiaries do not guarantee our other senior notes or our revolving credit facility. In addition, the Notes are not guaranteed by several of our insignificant subsidiaries. Under the circumstances described under “Certain Covenants-Additional Guarantees,” we are required to cause subsidiaries that are not Guarantors to become Guarantors.

Each of the Guarantors unconditionally guarantees on a joint and several basis all of the Company’s obligations under the Notes, including its obligations to pay principal, premium, if any, and interest, if any, with respect to the Notes. The Guarantees are general unsecured obligations of the Guarantors and rank pari passu with all existing and future unsecured Indebtedness of the Guarantors that is not, by its terms, expressly subordinated in right of payment to the Guarantees. The obligations of each Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in an amount pro rata, based on the “adjusted net assets” of each Guarantor, as defined in the Indenture.

The Indenture provides that, in the event of (i) the sale or other disposition of Capital Stock of any Guarantor if as a result of such disposition, such Person ceases to be a Subsidiary of the Company, (ii) a sale or other disposition of all or substantially all of the assets of any Guarantor (other than to the Company or another Guarantor), (iii) a merger or consolidation of a Guarantor with a Person other than the Company or another Guarantor, or (iv) a Guarantor ceasing to guarantee any (a) Indebtedness of the Company outstanding under any of the Credit Facilities and (b) Publicly Traded Debt Securities, then such Guarantor (in the case of clauses (i), (ii) and (iv) above) will be automatically and unconditionally released and discharged from all obligations under the Indenture and the Notes and the Person acquiring such assets (in the case of clauses (ii) and (iii) above) shall not be required to assume the Guarantor’s obligations under the Indenture and the Notes, or otherwise become a Guarantor, in each case without any further action required on the part of the Trustee, any Holder, the Company or any Guarantor; provided that such sale, disposition or other transaction is otherwise in compliance with the Indenture.

Except as provided in the covenants described under “Certain Covenants” below, the Indenture does not prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, nor does it prevent any sale, lease, conveyance or other disposition of all or substantially all of the assets of a Guarantor to the Company or another Guarantor. Upon any such consolidation, merger, or disposition, the Guarantee given by such Guarantor will no longer have any force or effect.

Certain Covenants

The following is a summary of certain covenants contained in the Indenture. Such covenants are applicable (unless waived or amended as permitted by the Indenture) so long as any of the Notes are outstanding and are not defeased or discharged pursuant to provisions described under “Defeasance” below.

Restrictions on Secured Debt

The Indenture provides that the Company will not, and will not cause or permit any Guarantor to, create, incur, assume or guarantee any Secured Debt unless the Notes are secured equally and ratably with (or prior to) such Secured Debt, provided that the foregoing does not prohibit the creation, incurrence, assumption or guarantee of:

(1) Secured Debt which is secured by Liens on model homes, homes held for sale, homes that are under construction or under contract for sale, contracts for the sale of homes, land (improved or unimproved), contracts for the sale of land, project club houses, amenity centers and common areas, manufacturing plants, warehouses, distribution facilities or office buildings, and fixtures and equipment located at or on any of the foregoing or leasehold or other interests in any of the foregoing;

(2) Secured Debt which is secured by a Lien on property at the time of its acquisition by the Company or a Guarantor, which Lien secures obligations assumed by the Company or a Guarantor, or on the property of a corporation or other entity at the time it is merged into or consolidated with the Company or a Guarantor or becomes a Guarantor as a result of the acquisition of its Capital Stock by the Company or a Guarantor (other than Secured Debt created in contemplation of the acquisition of such property or the consummation of such a merger or consolidation or acquisition where the Lien attaches to or affects the property of the Company or a Guarantor prior to such transaction);

(3) Secured Debt which is secured by Liens arising from conditional sales agreements or title retention agreements with respect to property acquired by the Company or a Guarantor;

(4) Secured Debt which is secured by Liens securing Indebtedness of a Guarantor owing to the Company or to another Guarantor;

(5) Indebtedness secured by a Permitted Lien; and

(6) any amendment, restatement, supplement, renewal, replacement, extension, refinancing or refunding, in whole or in part (“Refinanced Debt”), of Secured Debt that was permitted to be created, incurred, assumed or guaranteed pursuant to clauses (1) through (5) above at the time of the original creation, incurrence, assumption or guarantee thereof, or by this clause (6), provided, in each case, that the principal amount of the Refinanced Debt does not exceed the principal amount of the Secured Debt being refinanced, extended, renewed or replaced (plus accrued interest thereon and expenses of refinancing, extension, renewal or replacement) and such Refinanced Debt is not secured by any additional properties of the Company or any Guarantor (other than accessions and proceeds).

In addition, the Company and the Guarantors may create, incur, assume or guarantee Secured Debt, without equally or ratably (or on a senior basis) securing the Notes, if immediately thereafter the sum of (1) the aggregate principal amount (or the accreted value thereof, in the case of any Secured Debt issued with original issue discount) of all Secured Debt outstanding (excluding Secured Debt permitted under clauses (1) through (6) above and any Secured Debt in relation to which the Notes have been secured equally and ratably (or on a senior basis)) and (2) all Attributable Debt in respect of Sale and Leaseback Transactions (excluding Attributable Debt in respect of Sale and Leaseback Transactions satisfying the conditions set forth in clauses (1) and (2) and if the 365 day period referenced therein shall have expired, also clause (3) under “Restrictions on Sale and Leaseback Transactions”) as of the date of determination would not exceed 20% of Consolidated Adjusted Tangible Assets.

Restrictions on Sale and Leaseback Transactions

The Indenture provides that the Company will not, and will not cause or permit any Guarantor to, enter into any Sale and Leaseback Transaction, unless:

(1) notice is promptly given to the Trustee of the Sale and Leaseback Transaction;

(2) fair value is received by the Company or a Guarantor for the property sold (as determined in good faith pursuant to a resolution of the board of directors of the Company delivered to the Trustee); and

(3) the Company or a Guarantor, within 365 days after the completion of the Sale and Leaseback Transaction, applies an amount equal to the net proceeds therefrom either:

(A) to the redemption, repayment or retirement of (a) debt securities of any series under the Indenture (other than a series that, pursuant to the applicable supplemental indenture or authorizing resolution, does not have the benefit of this covenant or its equivalent), including the cancellation by the Trustee of any securities of any such series delivered by the Company to the Trustee, or (b) any other Indebtedness of the Company or any Guarantor (other than Indebtedness which by its terms or the terms of the instrument by which it was issued is subordinate in right of payment to the Notes or any such other series of debt securities), or

(B) to the purchase by the Company or a Guarantor of property substantially similar to the property sold or transferred.

Without regard to the foregoing, the Company and the Guarantors may enter into a Sale and Leaseback Transaction if immediately thereafter the sum of (1) the aggregate principal amount of all Secured Debt outstanding (excluding Secured Debt permitted under clauses (1) through (6) described in “Restrictions on Secured Debt” above or Secured Debt in relation to which the Notes have been secured equally and ratably (or on a senior basis)) and (2) all Attributable Debt in respect of Sale and Leaseback Transactions (excluding Attributable Debt in respect of Sale and Leaseback Transactions satisfying the conditions set forth in clauses (1) and (2) and if the 365 day period referenced therein shall have expired, also clause (3) above) as of the date of determination would not exceed 20% of Consolidated Adjusted Tangible Assets.

Repurchase of Notes upon Change of Control Triggering Event

In the event that there shall occur a Change of Control Triggering Event, except as otherwise provided below, the Company shall make an offer to each Holder of the Notes (the “Change of Control Offer”) to purchase all or any part of such Holder’s Notes at 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase (the “Change of Control Purchase Price”) in accordance with the procedures set forth below.

On or before the thirtieth day after any Change of Control Triggering Event, or, at the Company’s option, prior to any Change of Control, but after the public announcement of the Change of Control, the Company shall be obligated to make the Change of Control offer by mailing, or causing to be mailed, to all Holders of Notes, with a copy to the Trustee, a notice regarding the Change of Control Triggering Event and the Change of Control Offer. The notice shall state the payment date for the repurchase of the Notes, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice may, if mailed prior to the date of consummation of the Change of Control, also state that the offer to purchase is conditioned on a Change of Control or Change of Control Triggering Event occurring on or prior to the payment date specified in the notice.

The Company will comply with applicable law, including Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control or Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Triggering Event provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control Triggering Event provisions of the Indenture by virtue of such conflict.

The Company will not be required to make a Change of Control Offer after a Change of Control Triggering Event if (1) a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer, (2) the Company has given notice to redeem all Notes in accordance with the redemption provisions of the Indenture as described above under the caption “-Optional Redemption,” unless and until there is a default in payment of the applicable redemption price or (3) in connection with or in contemplation of any Change of Control for which a definitive agreement is in place, the Company or a third party has made an offer to purchase (an “Alternate Offer”) any and all Notes properly tendered at a cash price equal to or higher than the Change of Control Purchase Price and has purchased all Notes properly tendered and not withdrawn in accordance with the terms of such Alternate Offer.

With respect to any disposition of assets, the phrase “all or substantially all” as used in the Indenture (including as set forth under “-Limitations on Mergers, Consolidations and Sales of Assets” below) varies according to the facts and circumstances of the subject transaction, has no clearly established meaning under New York law (which governs the Indenture) and is subject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Company, and therefore it may be unclear as to whether a Change of Control, and by extension, Change of Control Triggering Event, has occurred.

None of the provisions relating to a repurchase upon a Change of Control Triggering Event is waivable by the Board of Directors of the Company. The Company could, in the future, enter into certain transactions, including certain recapitalizations of the Company, that would not result in a Change of Control Triggering Event, but would substantially increase the amount of Indebtedness outstanding at such time.

The Indenture requires the payment of money for Notes or portions thereof validly tendered to and accepted for payment by the Company pursuant to a Change of Control Offer. In the event that a Change of Control Triggering Event has occurred under the Indenture, a change of control may have also occurred under the agreements governing other Indebtedness of the Company or its subsidiaries. If a Change of Control Triggering Event were to occur, there can be no assurance that the Company would have sufficient funds to pay the purchase price for all Notes and amounts due under other Indebtedness that the Company may be required to repurchase or repay. In the event that the Company were required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would need to seek third-party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing.

Failure by the Company to purchase the Notes when required upon a Change of Control Triggering Event will result in an Event of Default with respect to the Notes.

These provisions could have the effect of deterring hostile or friendly acquisitions of the Company where the Person attempting the acquisition views itself as unable to finance the purchase of the principal amount of Notes which may be tendered to the Company upon the occurrence of a Change of Control Triggering Event.
Amendment or waiver of the provisions described in this covenant will require consent of Holders of a majority of the outstanding principal amount of Notes.

Limitations on Mergers, Consolidations and Sales of Assets

The Indenture provides that neither the Company nor any Guarantor will consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets (including by way of liquidation or dissolution), to any Person (in each case other than in a transaction in which the Company or a Guarantor is the survivor of a consolidation or merger, or the transferee in a sale, lease, conveyance or other disposition) unless:

(1) the Person formed by or surviving such consolidation or merger (if other than the Company or the Guarantor, as the case may be), or to which such sale, lease, conveyance or other disposition will be made (collectively, the “Successor”), is a corporation or other legal entity organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form reasonably satisfactory to the Trustee all of the obligations of the Company or the Guarantor, as the case may be, under the Notes or a Guarantee, as the case may be, and the Indenture, and

(2) immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing.

The foregoing provisions shall not apply to:

(a) the consolidation or merger of a Guarantor, or the sale, lease, conveyance or other disposition of all or substantially all of the assets of a Guarantor, that in any such case results in such Guarantor being released from its Guarantee or the Successor not being required to become a Guarantor, as the case may be, as provided under “The Guarantees” above, or

(b) a transaction the purpose of which is to change the state of incorporation of the Company or any Guarantor.

Upon any such consolidation, merger, sale, lease, conveyance or other disposition, the Successor will be substituted for the Company or the relevant Guarantor under the Indenture. The Successor may then exercise every power and right of the Company or the relevant Guarantor under the Indenture, and except in the case of a lease, the Company or the relevant Guarantor will be released from all of its liabilities and obligations in respect of the Notes, the Guarantee and the Indenture. If the Company or a Guarantor leases all or substantially all of its assets, the Company or such Guarantor will not be released from its obligations to pay the principal of and premium, if any, and interest, if any, on the Notes or the Guarantee, as applicable.

Additional Guarantees

If (a) any Subsidiary that is not a Guarantor shall guarantee any (i) Indebtedness of the Company outstanding under any of the Credit Facilities or (ii) Publicly Traded Debt Securities, or (b) the Company elects to add any Subsidiary as a Guarantor, then such Subsidiary shall (i) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee all of the Company’s obligations under the Notes and under the Indenture on the terms set forth in the Indenture and (ii) deliver to the Trustee an opinion of counsel that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a legal, valid, binding and enforceable obligation of such Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all purposes of the Indenture until it is released from its obligations as a Guarantor pursuant to the provisions of the Indenture.
 

Events of Default

The following are Events of Default in respect of the Notes under the Indenture:

(1) the failure by the Company to pay interest on any such Note when the same becomes due and payable and the continuance of any such failure for a period of 30 days;

(2) the failure by the Company to pay the principal or premium of any such Note when the same becomes due and payable at maturity, upon acceleration or otherwise;

(3) the failure by the Company or any Guarantor to comply with any of its agreements or covenants in, or provisions of, such Notes, the Guarantees (as relating to the Notes) or the Indenture (as relating to the Notes) and such failure continues for the period and after the notice specified below (except in the case of a default under the covenants described under “Repurchase of Notes upon Change of Control Triggering Event” and “Limitations on Mergers, Consolidations and Sales of Assets,” which will constitute an Event of Default with notice but without passage of time);

(4) the acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any Guarantor that has an outstanding principal amount of $50 million or more, individually or in the aggregate, and such acceleration does not cease to exist, or such Indebtedness is not satisfied, in either case within 30 days after such acceleration;

(5) the failure by the Company or any Guarantor to make any principal or interest payment in an amount of $50 million or more, individually or in the aggregate, in respect of Indebtedness (other than Non-Recourse Indebtedness) of the Company or any Guarantor within 30 days of such principal or interest becoming due and payable (after giving effect to any applicable grace period set forth in the documents governing such Indebtedness);

(6) the Company or any Guarantor that is a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(A) commences a voluntary case,

(B) consents to the entry of an order for relief against it in an involuntary case,

(C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or

(D) makes a general assignment for the benefit of its creditors;

(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against the Company or any Guarantor that is a Significant Subsidiary as debtor in an involuntary case,

(B) appoints a Custodian of the Company or any Guarantor that is a Significant Subsidiary or a Custodian for all or substantially all of the property of the Company or any Guarantor that is a Significant Subsidiary, or

(C) orders the liquidation of the Company or any Guarantor that is a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 days; or

(8) any Guarantee of a Guarantor that is a Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Guarantee and the Indenture) or is declared null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor from its Guarantee in accordance with the terms of the Indenture and the Guarantee).

A Default as described in subclause (3) above will not be deemed an Event of Default until the Trustee notifies the Company, or the Holders of at least 25 percent in principal amount of the then outstanding Notes notify the Company and the Trustee, of the Default and (except in the case of a default with respect to the covenants described under “Repurchase of Notes upon Change of Control Triggering Event” and “Limitations on Mergers, Consolidations and Sales of Assets”) the Company does not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default.” If such a Default is cured within such time period, it ceases to exist, without any action by the Trustee or any other Person.

If an Event of Default (other than an Event of Default with respect to the Company resulting from subclauses (6) or (7) above), shall have occurred and be continuing under the Indenture, the Trustee by notice to the Company, or the Holders of at least 25 percent in principal amount of the Notes then outstanding by notice to the Company and the Trustee, may declare all such Notes to be due and payable immediately. Upon such declaration of acceleration, the amounts due and payable on such Notes will be due and payable immediately. If an Event of Default with respect to the Company specified in subclauses (6) or (7) above occurs, such an amount will ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee and the Company or any Holder.

The Holders of a majority in principal amount of the Notes then outstanding by written notice to the Trustee may waive an existing Default or Event of Default and its consequences with respect to the Notes, other than any Default or Event of Default in payment of principal or interest. Holders of a majority in principal amount of the then outstanding Notes may rescind an acceleration and its consequence (except an acceleration due to nonpayment of principal or interest on such Notes) if the rescission would not conflict with any judgment or decree and if all existing Events of Default (other than the non-payment of accelerated principal) have been cured or waived.

The Holders may not enforce the provisions of the Indenture, the Notes or the Guarantees except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power, provided, however, that such direction does not conflict with the terms of the Indenture. The Trustee may withhold from the Holders notice of any continuing Default or Event of Default (except any Default or Event of Default in payment of principal or interest on the Notes or that resulted from the failure to comply with the covenant entitled “Repurchase of Notes upon Change of Control Triggering Event”) if the Trustee determines that withholding such notice is in the Holders’ interest.

The Company is required to deliver to the Trustee an annual officers’ certificate stating whether or not the signers know of any continuing Default by the Company in performing any of its obligations under the Indenture. In addition, the Company is required to deliver to the Trustee written notice of the occurrence of any Default or Event of Default within 30 days after a senior officer of the Company obtains knowledge of such Default or Event of Default.

Defeasance

The Indenture permits us and the Guarantors to terminate all our respective obligations under the Indenture as they relate to the Notes, other than the obligation to pay interest, if any, on and the principal of the Notes and certain other obligations, at any time by: 
		
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	depositing in trust with the Trustee, under an irrevocable trust agreement, money or U.S. government obligations in an amount sufficient to pay principal of and interest, if any, on the Notes to their maturity or redemption; and

		
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	complying with other conditions, including delivery to the Trustee of an opinion of counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of our exercise of such right and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case otherwise.

The Indenture also permits us and the Guarantors to terminate all of our respective obligations under the Indenture as they relate to the Notes, including the obligations to pay interest, if any, on and the principal of the Notes and certain other obligations, at any time by: 
		
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	depositing in trust with the Trustee, under an irrevocable trust agreement, money or U.S. government obligations in an amount sufficient to pay principal of and interest, if any, on the Notes to their maturity or redemption; and

		
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	complying with other conditions, including delivery to the Trustee of an opinion of counsel to the effect that (A) we have received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date the Notes were originally issued, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall state that, Holders will not recognize income, gain or loss for federal income tax purposes as a result of our exercise of such right and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case otherwise.

In addition, the Indenture permits us and the Guarantors to terminate substantially all our respective obligations under the Indenture as they relate to the Notes by depositing with the Trustee money or U.S. government obligations sufficient to pay all principal and interest on the Notes at their maturity or redemption date if the Notes will become due and payable at maturity within one year or are to be called for redemption within one year of the deposit.

Amendment, Supplement and Waiver

Without notice to or the consent of any Holder, we and the Trustee may amend or supplement the Indenture or the Notes to: 
		
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	cure any ambiguity, omission, defect or inconsistency;

		
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	comply with the provisions of the Indenture regarding the consolidation, merger, sale, lease, conveyance or other disposition of all or substantially all of the assets of us or any Guarantor of the Notes;

		
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	provide that specific provisions of the Indenture shall not apply to a series of debt securities not previously issued or to make a change to specific provisions of the Indenture that only applies to any series of debt securities not previously issued or to additional debt securities of a series not previously issued;

		
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	create a series and establish its terms;

		
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	provide for uncertificated Notes in addition to or in place of certificated Notes;

		
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	delete a Guarantor which, in accordance with the terms of the Indenture, ceases to be liable on its Guarantee of the Notes;

		
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	add a Guarantor in respect of the Notes;

		
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	comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; or

		
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	make any change that does not adversely affect the rights of any Holder.

With the exceptions discussed below, we and the Trustee may amend or supplement the Indenture or the Notes with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding. In addition, the Holders of a majority in principal amount of the Notes then outstanding may waive any existing default under, or compliance with, any provision of the Notes or of the Indenture relating to the Notes, other than any event of default in payment of interest or principal. These consents and waivers may be obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes.

Without the consent of each Holder affected, we and the Trustee may not: 
		
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	reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver;

		
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	reduce the rate of or change the time for payment of interest, including defaulted interest;

		
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	reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to redemptions of the Notes;

		
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	modify the ranking or priority of the Notes or any Guarantee;

		
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	release any Guarantor from any of its obligations under its Guarantee or the Indenture except in accordance with the Indenture;

		
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	make any change to any provision of the Indenture relating to the waiver of existing defaults, the rights of Holders to receive payment of principal and interest on the Notes, or to the provisions regarding amending or supplementing the Indenture or the Notes with the written consent of the Holders of such Notes;

		
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	waive a continuing default or event of default in the payment of principal of or interest on the Notes; or

		
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	make any Note payable at a place or in money other than that stated in the Note, or impair the right of any Holder of a Note to bring suit as permitted by the Indenture.

The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture, and our obligation to obtain any such consent otherwise required from such Holder, may be subject to the requirement that such Holder shall have been the Holder of record of Notes with respect to which such consent is required or sought as of a record date fixed by us in accordance with the Indenture.

Concerning the Trustee

In the ordinary course of its business, the Trustee provides, and may continue to provide, service to us as transfer agent for our common stock and trustee under indentures relating to our senior notes. The Indenture contains limitations on the rights of the Trustee, should it become our creditor, to obtain payment of claims in specified cases or to realize on property received in respect of any such claim as security or otherwise. The Indenture permits the Trustee to engage in other transactions; however, if it acquires any conflicting interest, it must eliminate such conflict or resign.

The Indenture provides that in case an event of default occurs and is not cured, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of such person’s own affairs. The Trustee may refuse to perform any duty or exercise any right or power under the Indenture, unless it receives indemnity satisfactory to it against any loss, liability or expense.

Governing Law

The laws of the State of New York govern the Indenture, the Notes and the Guarantees.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all terms used in the Indenture.

“Additional Notes” has the meaning set forth in “-General.”

“Attributable Debt” means, in respect of a Sale and Leaseback Transaction, the present value (discounted at the weighted average effective interest cost per annum of the outstanding debt of the Company, compounded semiannually) of the obligation of the lessee for rental payments during the remaining term of the lease included in such transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended or, if earlier, until the earliest date on which the lessee may terminate such lease upon payment of a penalty (in which case the obligation of the lessee for rental payments shall include such penalty), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water and utility rates and similar charges.

“Bankruptcy Law” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of or in such Person’s capital stock or other equity interests.

“Capitalized Lease Obligations” of any Person means, at the time any determination thereof is to be made, the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligations will be the capitalized amount thereof determined in accordance with GAAP.

“Change of Control” means:

(1) any sale, lease or other transfer (in one transaction or a series of transactions) of all or substantially all of the consolidated assets of the Company and its Subsidiaries to any Person (other than a Subsidiary of the Company); provided, however, that a transaction where the holders of all classes of Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, Voting Stock representing more than 50% of the voting power of all Voting Stock of such Person immediately after such transaction shall not be a Change of Control;

(2) a “person” or “group” (within the meaning of Section 13(d) of the Exchange Act (other than (x) the Company or (y) Donald R. Horton, Terrill J. Horton, or their respective wives, children, grandchildren and other descendants, or any trust or other entity formed or controlled by any of such individuals (each an “Excluded Person”))) publicly discloses, including, without limitation, by filing a Schedule 13D or Schedule TO, or the Company or any of its Subsidiaries publicly discloses, including without limitation, by filing any other schedule, form or report under the Exchange Act (including, without limitation, a Current Report on Form 8-K) disclosing facts indicating that such person or group has become the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of Voting Stock of the Company representing more than 50% of the voting power of the Voting Stock of the Company; or

(3) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; provided, however, that a liquidation or dissolution of the Company which is part of a transaction that does not constitute a Change of Control under the proviso contained in clause (1) above shall not constitute a Change of Control.

Any person or group whose acquisition of beneficial ownership constitutes a Change of Control under clause (2) of the foregoing definition in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Excluded Person.

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Ratings Downgrade Event.

“Comparable Treasury Issue” means the United States Treasury security selected by at least two Reference Treasury Dealers as having a maturity comparable to the remaining term of the Notes that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

“Comparable Treasury Price” means, with respect to any redemption date, (a) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (b) if such release (or any successor release) is not published or does not contain such price on such business day, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Consolidated Adjusted Tangible Assets” of the Company as of any date means the Consolidated Tangible Assets of the Company and the Guarantors at the end of the fiscal quarter immediately preceding such date less (a) the book value of any assets securing any Non-Recourse Indebtedness, and (b) all short term liabilities of the Company and the Guarantors, except for liabilities payable by their terms more than one year from the date of determination (or renewable or extendible at the option of the obligor to a maturity date more than one year after such date) and liabilities in respect of retiree benefits other than persons for which the Company or the Guarantors are required to accrue pursuant to Accounting Standards Codification 715-60 (or any successor provision), in each case as determined in accordance with GAAP.

“Consolidated Tangible Assets” of the Company as of any date means the book value of the total assets of the Company and the Guarantors (less applicable reserves) on a consolidated basis at the end of the fiscal quarter immediately preceding such date, less (1) Intangible Assets and (2) appropriate adjustments on account of minority interests of other Persons holding equity investments in Guarantors, in each case as determined in accordance with GAAP.

“Credit Facilities” means, collectively, each of the credit facilities and lines of credit of the Company or one or more Guarantors in existence on the date of the Indenture and one or more future facilities or lines of credit among or between the Company or one or more Guarantors and one or more lenders pursuant to which the Company or any Guarantor may incur indebtedness for working capital and general corporate purposes (including acquisitions), as any such facility or line of credit may be amended, restated, supplemented or otherwise modified from time to time, and includes any agreement extending the maturity of, increasing the amount of, or restructuring, all or any portion of the Indebtedness under such facility or line of credit or any successor facilities or lines of credit and includes any facility or line of credit with one or more lenders refinancing or replacing all or any portion of the Indebtedness under such facility or line of credit or any successor facility or line of credit; provided, in each case, that such credit facility shall provide for commitments, or there shall be loans or other extensions of credit outstanding thereunder, in each case in excess of $50 million.

“Currency Agreement” of any Person means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in currency values.

“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“Default” means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default.

“Event of Default” has the meaning set forth in “-Events of Default.”

“Fitch” means Fitch Ratings.

“GAAP” means generally accepted accounting principles set forth in the accounting standards codification of the Financial Accounting Standards Board or in such other statements by such or any other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“Guarantee” means the guarantee of the Notes by each Guarantor under the Indenture.

“Guarantors” means (i) the Existing Guarantors and Additional Guarantors as defined in the Eleventh Supplemental Indenture and (ii) each of the Company’s Subsidiaries that becomes a guarantor of the Notes pursuant to the provisions of the Indenture, in each case until subsequently released from its Guarantee pursuant to the provisions of the Indenture.

“Holder” means the Person in whose name a Note is registered in the books of the registrar for the Notes.

“Indebtedness” of any Person means, without duplication,

(1) any liability of such Person (a) for borrowed money or under any reimbursement obligation relating to a letter of credit or other similar instruments (other than any standby letter of credit or similar instrument issued for the account of, or any surety, performance, completion or payment bond, earnest money note or similar purpose undertaking or indemnification agreement issued or entered into by or for the account of, such Person in the ordinary course of business), (b) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind or with services incurred in connection with expenditures that constitute capital expenditures in accordance with GAAP (other than any obligation to pay a contingent purchase price as long as such obligation remains contingent), or (c) in respect of Capitalized Lease Obligations,

(2) any Indebtedness of others described in clause (1) above that such Person has guaranteed to the extent of the guarantee, and

(3) all Indebtedness of others described in clause (1) above secured by a Lien on any property of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of the Indebtedness of such Person shall be the lesser of (a) the fair market value of such property; and (b) the amount of such Indebtedness of such other Persons;

provided, that Indebtedness shall not include accounts payable, liabilities to trade creditors of such Person or other accrued expenses arising in the ordinary course of business or obligations under Currency Agreements or Interest Protection Agreements.

“Intangible Assets” means with respect to the Notes, all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, write-ups of assets over their prior carrying value (other than write-ups which occurred prior to the Issue Date and other than, in connection with the acquisition of an asset, the write-up of the value of such asset (within one year of its acquisition) to its fair market value in accordance with GAAP) and all other items which would be treated as intangibles on the consolidated balance sheet of the Company and the Guarantors prepared in accordance with GAAP.

“Interest Protection Agreement” of any Person means any interest rate swap agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person or any of its Subsidiaries against fluctuations in interest rates with respect to Indebtedness.

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and the equivalent investment grade credit rating from any replacement Rating Agency or Rating Agencies selected by the Company.

“Issue Date” means the date on which the Notes are originally issued under the Indenture.

“Lien” means, with respect to any property, any mortgage, deed of trust, lien, pledge, charge, hypothecation, security interest or encumbrance of any kind in respect of such property. For purposes of this definition, a Person shall be deemed to own, subject to a Lien, any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property.

“Moody’s” means Moody’s Investors Service, Inc.

“Non-Guarantor Subsidiary” means any Subsidiary that is not a Guarantor.

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person for which (1) the sole legal recourse for collection of principal and interest on such Indebtedness is against the specific property identified in the instruments evidencing or securing such Indebtedness (and any accessions thereto and proceeds thereof) and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 180 days after the acquisition of such property and (2) no other assets of such Person may be realized upon in collection of principal or interest on such Indebtedness. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its character as Non-Recourse Indebtedness because there is recourse to the borrower, any guarantor or any other Person for (a) environmental or tax warranties and indemnities and such other representations, warranties, covenants and indemnities as are customarily required in such transactions, or (b) indemnities for and liabilities arising from fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance and condemnation proceeds and other sums actually received by the borrower from secured assets to be paid to the lender, waste and mechanics’ liens.

“Permitted Liens” means any Lien:

(1) incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, development obligations, progress payments, government contracts, utility services, developer’s or other obligations to make on-site or off-site improvements and other obligations of like nature (exclusive of obligations for the payment of borrowed money but including the items referred to in the parenthetical in clause (1)(a) of the definition of “Indebtedness”), in each case incurred in the ordinary course of business of the Company and the Guarantors,

(2) constituting attachment or judgment liens,

(3) securing Non-Recourse Indebtedness of the Company or any Guarantor; provided, that it applies only to the property financed out of the net proceeds of such Non-Recourse Indebtedness (and any accessions thereto and proceeds thereof),

(4) securing Purchase Money Indebtedness; provided, that it applies only to the property acquired, constructed or improved with the proceeds of such Purchase Money Indebtedness (and any accessions thereto and proceeds thereof),

(5) constituting purchase money Liens (including Capitalized Lease Obligations); provided, that it applies only to the property acquired (and any accessions thereto and proceeds thereof) and the related Indebtedness is incurred within 180 days after the acquisition of such property,

(6) constituting the right of a lender or lenders to which the Company or a Guarantor may be indebted to offset against, or appropriate and apply to the payment of such, Indebtedness any and all balances, credits, deposits, accounts or money of the Company or a Guarantor with or held by such lender or lenders or its affiliates,

(7) constituting the pledge or deposit of cash or other property in conjunction with obtaining surety, performance, completion or payment bonds and letters of credit or other similar instruments or providing earnest money obligations, escrows or similar purpose undertakings or indemnifications in the ordinary course of business of the Company and the Guarantors,

(8) incurred in connection with pollution control, industrial revenue, water, sewage or other public improvement bonds or any similar bonds,

(9) statutory Liens of landlords and carriers’, warehousemen’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other Liens imposed by law and arising in the ordinary course of business,

(10) leases or subleases granted to others not materially interfering with the ordinary course of business of the Company and the Guarantors taken as a whole,

(11) Liens securing community development district bonds or similar bonds issued by any governmental authority to accomplish similar purposes,

(12) Liens on assets and properties of joint ventures or limited partnerships that are not wholly-owned Subsidiaries of the Company or any of the Guarantors, and

(13) Liens securing the Company’s or the Guarantors’ obligations to third parties, in connection with joint development agreements with such third parties, to perform and/or pay for or reimburse the costs of construction and/or development related to or benefiting Company’s or the Guarantors’ property and property belonging to such third parties.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Publicly Traded Debt Securities” means any issue of debt securities of the Company or any of the Guarantors originally issued in a public offering registered with the SEC or in an offering pursuant to Rule 144A under the Securities Act and of which issue at least $50.0 million aggregate principal amount is outstanding.

“Purchase Money Indebtedness” means Indebtedness of the Company or any Guarantor incurred for the purpose of financing all or any part of the purchase price, or the cost of construction or improvement, of any property to be used in the ordinary course of business by the Company and the Guarantors; provided, however, that (1) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost and (2) such Indebtedness shall be incurred no later than 180 days after the acquisition of such property or completion of such construction or improvement.

“Rating Agency” means (1) each of Moody’s, Fitch and S&P; or (2) if any of Moody’s, Fitch or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available (for reasons outside of the Company’s control), a “nationally recognized statistical rating organization” as defined under Section 3(a)(62) of the Exchange Act, selected by the Company (as certified by a resolution of the Company’s Board of Directors) as a replacement Rating Agency for Moody’s, Fitch or S&P, or all three, as the case may be.

“Ratings Downgrade Event” means the rating on the Notes is lowered independently by each of the Rating Agencies and the Notes are rated below Investment Grade by all three Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Ratings Downgrade Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Ratings Downgrade Event for purposes of the definition of Change of Control Triggering Event) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at the Company’s request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Ratings Downgrade Event).

“Reference Treasury Dealers” means (a) Deutsche Bank Securities Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities, LLC (or any of their respective affiliates which are Primary Treasury Dealers), and their respective successors; provided, however that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in the United States of America (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer, and (b) any other Primary Treasury Dealer(s) selected by the Company.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date.

“Remaining Scheduled Payments” means, with respect to any Note, the remaining scheduled payments of the principal thereof to be redeemed and interest thereon that would be due after the related redemption date but for such redemption; provided however that if such redemption date is not an Interest Payment Date with respect to such Note, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to the date of such redemption.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“Sale and Leaseback Transaction” means a sale or transfer made by the Company or a Guarantor of any property which is either (a) a manufacturing facility, project club house, amenity center and common area, office building, warehouse or distribution facility whose book value equals or exceeds 1% of Consolidated Adjusted Tangible Assets as of the date of determination or (b) another property which exceeds 5% of Consolidated Adjusted Tangible Assets as of the date of determination, if such sale or transfer is made with the agreement, commitment or intention of leasing such property to the Company or a Guarantor, provided that “Sale and Leaseback Transaction” shall not include (1) a sale and leaseback transaction relating to a property entered into within 180 days after the later of (i) the date of acquisition of such property by the Company or a Guarantor and (ii) the date of the completion of construction or commencement of full operations on such property, whichever is later, (2) a sale and leaseback transaction which has a lease of no more than three years in length or (3) a sale or transfer made to the Company or another Guarantor.

“Secured Debt” means any Indebtedness of the Company or any Guarantor which is secured by (a) a Lien in any property of the Company or a Guarantor (other than property excluded in clause (b)) or (b) a Lien on Capital Stock owned directly or indirectly by the Company or a Guarantor in a corporation or other entity (other than a Non-Guarantor Subsidiary) or in the rights of the Company or a Guarantor in respect of Indebtedness of a corporation or other entity (other than a Non-Guarantor Subsidiary) in which the Company or a Guarantor owns Capital Stock. The securing in the foregoing manner of any such Indebtedness which immediately prior thereto was not Secured Debt shall be deemed to be the creation of Secured Debt at the time security is given. For the avoidance of doubt, cash collateralized letters of credit under our revolving credit facility will not constitute Secured Debt.

“SEC” means the Securities and Exchange Commission or any successor agency performing the duties now assigned to it under the Trust Indenture Act.

“Significant Subsidiary” means any Subsidiary of the Company which would constitute a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X under the Securities Act and the Exchange Act.

“Subsidiary” of any Person means any corporation or other entity of which a majority of the Capital Stock having ordinary voting power to elect a majority of the board of directors of such entity or other persons performing similar functions is at the time directly or indirectly owned or controlled by such Person.

“Successor” has the meaning set forth in “-Certain Covenants-Limitations on Mergers, Consolidations and Sales of Assets.”

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Trustee” means the party named as such above until a successor replaces such party in accordance with the applicable provisions of the Indenture and thereafter means the successor serving hereunder.

“Voting Stock” of any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.

Book Entry, Delivery and Form

The Notes were issued in the form of a fully registered Global Note (the “Global Note”). The Global Note was delivered on or about the Issue Date with the Trustee, on behalf of The Depository Trust Company (the “Depositary”) and registered in the name of Cede & Co., as nominee of the Depositary (such nominee being referred to herein as the “Global Note Holder”).

The Depositary is a limited-purpose trust company which was created to hold securities for its participating organizations (collectively, the “Participants” or the “Depositary’s Participants”) and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary’s Participants include securities brokers and dealers (including the underwriters), banks and trust companies, clearing corporations and certain other organizations. Access to the Depositary’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants” or the “Depositary’s Indirect Participants”) that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of the Depositary only through the Depositary’s Participants or the Depositary’s Indirect Participants.

So long as the Global Note Holder is the registered owner of any Notes, the Global Note Holder will be considered the sole owner or Holder of such Notes outstanding under the Indenture. Except as provided below, beneficial owners of Notes will not be entitled to have Notes registered in their names, will not receive or be entitled to receive physical delivery of Notes in definitive form, and will not be considered the Holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the Trustee thereunder. As a result, the ability of a Person having a beneficial interest in Notes represented by the Global Note to pledge such interest to Persons or entities that do not participate in the Depositary’s system or to otherwise take actions in respect of such interest may be affected by the lack of a physical certificate evidencing such interest.

None of the Company, the Trustee, the paying agent and the registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to such Notes.

Payments in respect of the principal, premium, if any, and interest on any Notes registered in the name of a Global Note Holder on the applicable record date will be payable by the paying agent to such Global Note Holder in its capacity as the registered Holder under the Indenture.

Under the terms of the Indenture, the Company and the Trustee may treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither the Company nor the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of Notes (including principal, premium, if any, and interest).

The Company believes, however, that it is currently the policy of the Depositary to immediately credit the accounts of the relevant Participants with such payment, in amounts proportionate to their respective holdings in principal amount of beneficial interests in the relevant security as shown on the records of the Depositary. Payments by the Depositary’s Participants and the Depositary’s Indirect Participants to the beneficial owner of Notes will be governed by standing instructions and customary practice and will be the responsibility of the Depositary’s Participants or the Depositary’s Indirect Participants.

As long as the Notes are represented by a Global Note, the Depositary’s nominee will be the Holder of the Notes and therefore will be the only entity that can exercise a right to repayment or repurchase of the Notes. Notice by Participants or Indirect Participants or by owners of beneficial interests in a Global Note held through such Participants or Indirect Participants of the exercise of the option to elect repayment of beneficial interests in Notes represented by a Global Note must be transmitted to the Depositary in accordance with its procedures on a form required by the Depositary and provided to Participants. In order to ensure that the Depositary’s nominee will timely exercise a right to repayment with respect to a particular Note, the beneficial owner of such Note must instruct the broker or the Participant or Indirect Participant through which it holds an interest in such Note to notify the Depositary of its desire to exercise a right to repayment. Different firms have cut-off times for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other Participant or Indirect Participant through which it holds an interest in a Note in order to ascertain the cut-off time by which such an instruction must be given in order for timely notice to be delivered to the Depositary. The Company will not be liable for any delay in delivery of notices of the exercise of the option to elect repayment.

Certificated Securities

Subject to certain conditions, any Person having a beneficial interest in a Global Note may, upon request to the Company or the Trustee, exchange such beneficial interest for Notes in the form of certificated securities. Upon any such issuance, the Trustee is required to authenticate and deliver such Notes to such Person or Persons (or the nominee of any thereof). In addition, if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Global Note and a successor depository is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the registrar has received a request from the Depositary to issue certificated securities, then, upon surrender by the relevant Global Note Holder of its Global Note, certificated Notes will be issued to each Person that such Global Note Holder and the Depositary identify as the beneficial owner of such Notes.

Neither the Company nor the Trustee shall be liable for any delay by the related Global Note Holder or the Depositary in identifying the beneficial owners of Notes and each such Person may conclusively rely on and shall be protected in relying on, instructions from the Global Note Holder or of the Depositary for all purposes (including with respect to the registration and delivery, and the respective principal amounts of the Notes to be issued).

Same-day Settlement and Payment

Payments in respect of the Notes (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Global Note Holders. The Company expects that secondary trading in the certificated Notes also will be settled in immediately available funds.

Transfer and Exchange

A Holder may transfer or exchange the Notes in accordance with the procedures set forth in the Indenture. The registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the Indenture. The registrar is not required to transfer or exchange any Note selected for redemption. Also, the registrar is not required to transfer or exchange any Note for a period of 15 days before a selection of the Notes to be redeemed.

The registered Holder of a Note will be treated as the owner of it for all purposes.

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