The notes will
be our unsecured senior obligations and will rank equally with all of our other unsecured senior indebtedness. The notes will be fully and unconditionally guaranteed jointly and severally on an unsecured senior basis by each of our existing and
future material restricted subsidiaries, subject to customary release provisions. The notes and the guarantees will be effectively junior to our secured obligations to the extent of the value of the collateral securing those obligations. Upon the
occurrence of certain specified changes of control, the holders of the notes will have the right to require us to purchase all or a part of their notes at a repurchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid
interest, if any, to, but excluding, the repurchase date.
Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new notes. A broker-dealer who acquired original notes as a result of market-making or other trading activities may use this prospectus, as supplemented or amended from time to time, in connection
with any resales of the new notes.
RISK FACTORS
An investment in the new notes offered hereby involves a high degree of risk. You should carefully consider the following risk factors
before you decide whether to participate in the exchange offer. We urge you to carefully read this prospectus and the documents incorporated by reference herein. You should review all of the risks attendant to being an investor in the new notes
prior to making an investment decision. The following is not intended as, and should not be construed as, an exhaustive list of relevant risk factors. There may be other risks that a prospective investor should consider that are relevant to its own
particular circumstances or generally. You should also consider the risks, uncertainties and assumptions discussed under the caption Risk Factors included in our most recent Annual Report on Form 10-K, which is incorporated by
reference in this prospectus, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended (the Exchange Act).
Risks Related to the Notes and the Exchange Offer
Certain of our existing debt instruments impose significant restrictions and obligations on us that could adversely affect our liquidity, limit our growth
and make it more difficult for us to satisfy our debt obligations.
Certain of our secured and unsecured indebtedness and revolving
credit and letter of credit facilities, including the indenture governing the notes, impose certain restrictions and obligations on us. Under certain of these instruments, we must comply with defined covenants which limit our ability to, among other
things, incur additional indebtedness, engage in certain asset sales, make certain types of restricted payments, engage in transactions with affiliates and create liens on our assets. Failure to comply with certain of these covenants could result in
an event of default under the applicable instrument. Any such event of default could negatively impact other covenants or lead to cross-defaults under certain of our other debt. There can be no assurance that we will be able to obtain any waivers or
amendments that may become necessary in the event of a future default situation without significant additional cost or at all.
As of
March 31, 2014, we had total outstanding indebtedness of approximately $1.5 billion, net of unamortized discount of approximately $4.8 million and unamortized accretion of $46.1 million. Our substantial indebtedness could have
important consequences to us and the holders of our securities, including, among other things:
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causing us to be unable to satisfy our obligations under our debt agreements;
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making us more vulnerable to adverse general economic and industry conditions;
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making it difficult to fund future working capital, land purchases, acquisitions, share repurchases, general corporate purposes or other purposes; and
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causing us to be limited in our flexibility in planning for, or reacting to, changes in our business.
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In addition, subject to restrictions in our existing debt instruments and the indenture governing the notes, we may incur additional
indebtedness. If new debt is added to our current debt levels, the related risks that we now face could intensify. Our growth plans and our ability to make payments of principal or interest on, or to refinance, our indebtedness, will depend on our
future operating performance and our ability to enter into additional debt and/or equity financings. If we are unable to generate sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our
existing debt, to sell assets or to obtain additional financing. We may not be able to do any of the foregoing on terms acceptable to us, if at all.
Despite our substantial indebtedness, we may still be able to incur significantly more debt. This could intensify the risks described herein.
We and our subsidiaries may be able to incur substantial indebtedness in the future. Although the terms of certain of the agreements governing
our indebtedness contain restrictions on our ability to incur additional
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indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. If
new debt is added to our current debt levels, the related risks that we now face could intensify.
We may not be able to generate sufficient cash to
service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.
Our ability to satisfy our debt obligations will depend upon, among other things, our future financial and operating performance, which will be
affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control. In addition, as of March 31, 2014, approximately $1.0 billion of our existing senior notes (including
the 9.125% senior notes due 2018 which were redeemed on April 23, 2014) had a maturity date (or put right) earlier than the maturity date of the notes offered hereby, and we will be required to repay or refinance such indebtedness prior to when
the notes offered hereby come due.
We cannot assure you that our business will generate cash flow from operations in an amount sufficient
to fund our liquidity needs. If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our
indebtedness, including the notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital
markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of
existing or future debt agreements may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or
operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet
our debt service obligations then due.
Repayment of our debt, including required principal and interest payments on the notes, is dependent in part on
cash flow generated by our subsidiaries.
Our subsidiaries own a significant portion of our assets and conduct a significant portion of
our operations. Accordingly, repayment of our indebtedness, including the notes, is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt
repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. Each subsidiary is a distinct legal entity with no
obligation, other than the guarantees of the guarantor subsidiaries, to provide us with funds for our repayment obligations, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our
subsidiaries. While the indenture governing the notes limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain
qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the notes.
If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the notes.
Any default under the agreements governing our indebtedness that is not waived by the required lenders, and the remedies sought by the holders
of such indebtedness, could leave us unable to pay principal, premium, if any, or interest on the notes and could substantially decrease the market value of the notes. If we are unable to generate sufficient cash flow and are otherwise unable to
obtain funds necessary to meet required payments of
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principal, premium, if any, or interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments
governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and
payable, together with accrued and unpaid interest, the lenders under our revolving credit facility could elect to terminate their commitments, cease making further letters of credit or loans available and institute foreclosure proceedings against
our assets, and we could be forced into bankruptcy or liquidation. Any default could also constitute a cross-default under our other indebtedness, including the notes.
If our operating performance declines, we may in the future need to seek waivers from the required lenders under our revolving credit facility
to avoid being in default. If we breach our covenants under the revolving credit facility and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our revolving credit facility,
the lenders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation.
The notes are structurally
subordinated to all liabilities of our subsidiaries that are not guarantors.
The notes are structurally subordinated to indebtedness
and other liabilities of our non-guarantor subsidiaries and joint ventures, and the claims of creditors of these subsidiaries and joint ventures, including trade creditors, have priority as to the assets of these subsidiaries and joint ventures. In
the event of a bankruptcy, liquidation, reorganization or similar proceeding of any non-guarantor subsidiaries and joint ventures, these entities will pay the holders of their debts, holders of preferred equity interests and their trade creditors
before they will be able to distribute any of their assets to us. As of March 31, 2014, our non-guarantor subsidiaries had liabilities (excluding intercompany liabilities) of $1.0 million. In addition, the indenture governing the notes
permits, subject to certain limitations, these subsidiaries and joint ventures to incur additional indebtedness and does not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred by these entities.
See note 13 to the unaudited condensed consolidated financial statements for the quarter ended March 31, 2014, incorporated by reference in this prospectus, for financial information regarding our non-guarantor subsidiaries.
Our revolving credit facility and indentures governing our currently outstanding notes contain significant operating and financial restrictions which may
limit our and our subsidiary guarantors ability to operate our and their businesses.
Our revolving credit facility and the
indentures governing our currently outstanding notes contain significant operating and financial restrictions on us and our subsidiaries. These restrictions limit our and our subsidiaries ability to, among other things (not all restrictions
are included in each indenture, including the indenture governing the notes):
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incur additional indebtedness or issue certain preferred shares;
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create liens on certain assets to secure debt;
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pay dividends or make other equity distributions;
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purchase or redeem capital stock;
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make certain investments; and
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These restrictions could limit our and our subsidiaries ability
to finance our and their future operations or capital needs, make acquisitions or pursue available business opportunities. In addition, our revolving credit facility requires us to maintain specified financial ratios and to satisfy certain financial
covenants. We may be required to take action to reduce our debt or act in a manner contrary to our business objectives to meet these
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ratios and satisfy these covenants. Events beyond our control, including changes in economic and business conditions in the markets in which we operate, may affect our ability to do so. We may
not be able to meet these ratios or satisfy these covenants and we cannot assure you that the lender under our revolving credit facility will waive any failure to do so. A breach of any of the covenants in, or our inability to maintain the required
financial ratios under, our debt could result in a default under such debt, which could lead to that debt becoming immediately due and payable and, if such debt is secured, foreclosure on our assets that secure that obligation. A default under a
debt instrument could, in turn, result in default under other obligations and result in other creditors accelerating the payment of other obligations and foreclosing on assets securing such debt, if any. Any such defaults could materially impair our
financial conditions and liquidity.
The notes and the guarantees are not secured by any of our assets and therefore are effectively subordinated to
our existing and future secured indebtedness.
The notes and any guarantees thereof are general unsecured obligations ranking
effectively junior in right of payment to our and the guarantors existing and future secured indebtedness to the extent of the collateral securing such indebtedness. As of March 31, 2014, we and the guarantors had approximately $346.2
million of secured indebtedness. The indenture governing the notes permits the incurrence of additional indebtedness, some of which may be secured. See Description of the Notes. In the event that we or a guarantor are declared bankrupt,
become insolvent or are liquidated or reorganized, creditors whose indebtedness is secured by our assets or assets of the applicable guarantor will be entitled to the remedies available to secured holders under applicable laws, including the
foreclosure of the collateral securing such indebtedness, before any payment may be made with respect to the notes or the affected guarantees. As a result, there may be insufficient assets to pay amounts due on the notes and holders of the notes may
receive less, ratably, than holders of secured indebtedness.
Federal and state statutes allow courts, under specific circumstances, to void a
guarantors guarantee and require note holders to return payments received in respect thereof.
If any guarantor becomes a debtor
in a case under the U.S. Bankruptcy Code or encounters other financial difficulty, under federal or state fraudulent transfer law, a court may void, subordinate or otherwise decline to enforce such guarantors guarantee. A court might do so if
it found that when such guarantor issued the guarantee, or in some states when payments became due under the guarantee, the guarantors received less than reasonably equivalent value or fair consideration and:
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was insolvent or rendered insolvent by reason of such incurrence;
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was left with inadequate capital to conduct its business; or
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believed or reasonably should have believed that it would incur debts beyond its ability to pay.
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The court might also void a guarantee, without regard to the above factors, if the court found that the applicable guarantor made its
guarantee with actual intent to hinder, delay or defraud its creditors.
A court would likely find that a guarantor did not receive
reasonably equivalent value or fair consideration for its guarantee, if such guarantor did not substantially benefit directly or indirectly from the issuance of the notes. If a court were to void the issuance of the notes or any guarantee, you may
no longer have any claim directly against the applicable guarantor. Sufficient funds to repay the notes may not be available from other sources, including the remaining obligors, if any. In addition, the court might direct you to repay any amounts
that you already received from a guarantor.
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The measures of insolvency for purposes of these fraudulent transfer laws will vary depending
upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred and upon the valuation assumptions and methodology applied by the court. Generally, however, a guarantor would be considered insolvent if:
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the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;
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if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature;
or
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it could not pay its debts as they become due.
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On the basis of historical financial
information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee and rights of contribution it has against other guarantors, will not be insolvent, will not have unreasonably small capital
for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would
agree with our conclusions in this regard. The guarantees could be subject to the claim that, since the guarantees were incurred for our benefit, and only indirectly for the benefit of the other guarantors, the obligations of the guarantors
thereunder were incurred for less than reasonably equivalent value or fair consideration.
Certain of our subsidiaries are not subject to the
restrictive covenants in the indenture governing the notes.
Certain of our subsidiaries are not subject to the restrictive covenants
in the indenture governing the notes. This means that these entities are able to engage in many of the activities that we and our restricted subsidiaries are prohibited from doing, such as incurring substantial additional debt, securing assets in
priority to the claims of the holders of the notes, paying dividends, making investments, selling substantial assets and entering into mergers or other business combinations. These actions could be detrimental to our ability to make payments of
principal and interest when due and to comply with our other obligations under the notes, and could reduce the amount of our assets that would be available to satisfy your claims should we default on the notes. In addition, the initiation of
bankruptcy or insolvency proceedings or the entering of a judgment against these subsidiaries, or their default under their other credit arrangements, will not result in a cross-default on the notes.
We may not be able to repurchase the notes upon a change of control.
Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at
101% of the principal amount thereof plus, without duplication, accrued and unpaid interest and additional interest, if any, to the date of repurchase. However, it is possible that we will not have sufficient funds at the time of the change of
control to make the required repurchase of all notes delivered by holders seeking to exercise their repurchase rights, particularly as that change of control may trigger a similar repurchase requirement for, or result in an event of default under or
the acceleration of, other indebtedness, or that restrictions in our revolving credit facility will not allow such repurchases. Any failure by us to repurchase the notes upon a change of control would result in an event of default under the
indenture and may also constitute a cross-default on other indebtedness existing at that time. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not
constitute a Change of Control under the indenture. See Description of the Notes Certain Covenants Change of Control.
The market value of the notes may be exposed to substantial volatility.
A number of factors, including factors specific to us and our business, financial condition and liquidity, the price of our common stock,
economic and financial market conditions, interest rates, unavailability of capital and financing sources, volatility levels and other factors could lead to a decline in the value of the notes and a lack of
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liquidity in any market for the notes. As previously disclosed, in an effort to accelerate our path to profitability, we may seek to expand our business through acquisitions, which may be funded
through additional debt. Our existing senior notes are thinly traded, and because the notes offered hereby similarly may be thinly traded, it may be difficult to sell or accurately value the notes. Moreover, if one or more of the rating agencies
rates the notes and assigns a rating that is below the expectations of investors, or lowers its or their rating(s) of the notes, the price of the notes would likely decline.
An active trading market may not develop for the new notes.
There is no established public trading market for the notes, and an active trading market may not develop. We do not intend to apply for the
notes to be listed on any securities exchange. As a result, there may be limited liquidity of any trading market that does develop for the notes. In addition, the liquidity of the trading market in the notes and the market prices quoted for the
notes may be adversely affected by changes in the overall market for this type of security and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a consequence, an active trading
market may not develop for the notes, holders of notes may not be able to sell their notes, or, even if they can sell their notes, they may not be able to sell them at an acceptable price.
The liquidity of any trading market that develops for the notes may be adversely affected by future repurchases by us of notes through exchange offers,
open market repurchases, privately negotiated transactions or otherwise.
We have in the past repurchased our securities and may in the
future repurchase the notes, through exchange offers, open market repurchase, privately negotiated transactions or otherwise. If a significant percentage of the notes were repurchased or exchanged in any such transaction, the liquidity of the
trading market for the notes, if any, may be substantially reduced. Any notes repurchased or exchanged will reduce the amount of notes outstanding. As a result, the notes may trade at a discount to the price at which they would trade if the
applicable transaction was not consummated, subject to prevailing interest rates, the market for similar securities and other factors. A smaller outstanding amount of the notes may also make the trading prices of the notes more volatile. If a
portion of the notes were repurchased or exchanged in the future, there might not be an active market in the notes and the absence of an active market could adversely affect your ability to trade the notes and the prices at which the notes may be
traded.
If you fail to exchange your original notes, you will face restrictions that will make the sale or transfer of your original notes more
difficult.
If you do not exchange your original notes for new notes in the exchange offer, you will continue to be subject to the
restrictions on transfer of your original notes described in the legend on your original notes. In general, you may only offer or sell the original notes if they are registered under the Securities Act and applicable state securities laws, or
offered and sold under an exemption from those requirements. To the extent other original notes are tendered and accepted in the exchange offer and you elect not to exchange your original notes, the trading market, if any, for your original notes
would be adversely affected because your original notes will be less liquid than the new notes. See The Exchange Offer Consequences of Failure to Exchange.
Some holders that exchange their original notes may be required to comply with registration and prospectus delivery requirements in connection with the
sale or transfer of their new notes.
If you exchange your original notes in the exchange offer for the purpose of participating in a
distribution of the new notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale
transaction. If you are required to comply with the registration and prospectus delivery requirements, then you may face additional burdens on the transfer of your notes and could incur liability for failure to comply with applicable requirements.
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THE EXCHANGE OFFER
Terms of the Exchange Offer
Purpose of the Exchange Offer
We sold $325,000,000 in principal amount of the original notes on April 8, 2014, in a transaction exempt from the registration
requirements of the Securities Act. The initial purchasers of the original notes subsequently resold the original notes in reliance on Rule 144A and Regulation S under the Securities Act.
In connection with the sale of original notes to the initial purchasers pursuant to a purchase agreement, dated April 3, 2014, among us
and the initial purchasers named therein, the holders of the original notes became entitled to the benefits of a registration rights agreement dated April 8, 2014, among us, the guarantors named therein and the initial purchasers named therein.
The registration rights agreement provides that, unless the exchange offer would violate applicable law or any applicable interpretation
of the staff of the SEC, we:
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will file an exchange offer registration statement for the notes with the SEC;
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will use our commercially reasonable efforts to cause the SEC to declare the exchange offer registration statement effective under the Securities Act;
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will use our commercially reasonable efforts to, on or prior to 180 days after April 8, 2014, complete the exchange of the new notes for all original notes tendered prior thereto in the exchange offer; and
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will keep the registered exchange offer open for not less than 20 business days (or longer if required by applicable law or otherwise extended by us, at our option) after the date notice of the registered exchange offer
is mailed to the holders of the original notes.
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The exchange offer being made by this prospectus, if consummated within the
required time periods, will satisfy our obligations under the registration rights agreement.
Upon the terms and subject to the conditions
set forth in this prospectus and in the accompanying letter of transmittal, we will accept all original notes properly tendered and not withdrawn prior to the expiration date. We will issue $1,000 principal amount of new notes in exchange for each
$1,000 principal amount of outstanding original notes accepted in the exchange offer. Holders may tender some or all of their original notes pursuant to the exchange offer in denominations of $2,000 and multiples of $1,000 in excess thereof.
Based on no-action letters issued by the staff of the SEC to third parties we believe that holders of the new notes issued in exchange for
original notes may offer for resale, resell and otherwise transfer the new notes, other than any holder that is an affiliate of ours within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus
delivery provisions of the Securities Act. This is true as long as (i) the new notes are acquired in the ordinary course of the holders business, (ii) the holder is not engaging in or intending to engage in a distribution of the new
notes, and (iii) the holder has no arrangement or understanding with any person to participate in the distribution of the new notes. A broker-dealer that acquired original notes directly from us cannot exchange the original notes in the
exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the new notes cannot rely on the no-action letters of the staff of the SEC and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives new notes for its
own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of
such new notes. See Plan of Distribution for additional information.
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We will accept validly tendered original notes promptly following the expiration of the exchange
offer by giving written notice of the acceptance of such notes to the exchange agent. The exchange agent will act as agent for the tendering holders of original notes for the purposes of receiving the new notes from the issuer and delivering new
notes to such holders.
If any tendered original notes are not accepted for exchange because of an invalid tender or the occurrence of the
conditions set forth under The Exchange Offer Conditions without waiver by us, certificates for any such unaccepted original notes will be returned, without expense, to the tendering holder of any such original notes promptly
after the expiration date or the termination of the exchange offer, as applicable.
Holders of original notes who tender in the exchange
offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes, pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes in connection with the exchange offer. See The Exchange Offer Fees and Expenses.
Shelf Registration Statement
Pursuant to the registration rights agreement, we have agreed to file a shelf registration statement if:
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we are not permitted to file the exchange offer registration statement or consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy;
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the exchange offer is not consummated within 180 days after the issue date of the original notes; or
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any holder (other than the initial purchasers) is prohibited by law or the applicable interpretations of the SEC from participating in the exchange offer.
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A holder that sells original notes pursuant to the shelf registration statement generally must be named as a selling securityholder in the
related prospectus and must deliver a prospectus to purchasers, because a seller will be subject to civil liability provisions under the Securities Act in connection with these sales. A seller of the original notes also will be bound by applicable
provisions of the applicable registration rights agreement, including indemnification obligations. In addition, each holder of original notes must deliver information to be used in connection with the shelf registration statement and provide
comments on the shelf registration statement in order to have its original notes included in the shelf registration statement and benefit from the provisions regarding any liquidated damages in the registration rights agreement.
We have agreed to file a shelf registration statement with the SEC as promptly as practicable, but in any event within 45 days after being so
required, and thereafter use our commercially reasonable efforts to cause a shelf registration statement to be declared effective by the SEC within 90 days after being so required (
provided
that in no event shall such effectiveness be
required prior to 180 days following the issue date of the original notes). In addition, we agreed to use our commercially reasonable efforts to keep that shelf registration statement continually effective, supplemented and amended for a period of
two years following the date the shelf registration statement is declared effective (or for a period of one year from the date the shelf registration statement is declared effective and such shelf registration statement is filed at the request of
the initial purchasers), or such shorter period which terminates when all notes covered by that shelf registration statement have been sold under it.
Additional Interest in Certain Circumstances
If any of the following, each a registration default, occurs:
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the exchange offer is not completed on or before the 180th calendar day following the issue date of the original notes or, if that day is not a business day, then the next succeeding day that is a business day; or
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the shelf registration statement is required to be filed but is not filed or declared effective within the time periods required by the registration rights agreement or is declared effective but thereafter ceases to be
effective or usable (subject to certain exceptions),
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the interest rate borne by the notes as to which the registration default has occurred
will be increased by 0.25% per annum upon the occurrence of a registration default. This rate will continue to increase by 0.25% each 90-day period that the liquidated damages (as defined below) continue to accrue under any such circumstance.
However, the maximum total increase in the interest rate will in no event exceed one percent (1.0%) per annum. We refer to this increase in the interest rate on the notes as liquidated damages. Such interest is payable in addition
to any other interest payable from time to time with respect to the notes in cash on each interest payment date to the holders of record for such interest payment date. After the cure of registration defaults, the accrual of liquidated damages will
stop and the interest rate will revert to the original rate.
Under certain circumstances, we may delay the filing or the effectiveness of
the exchange offer, registration statement or the shelf registration statement and shall not be required to maintain its effectiveness or amend or supplement it for a period of up to 60 days during any 12-month period. Any delay period will not
alter our obligation to pay liquidated damages with respect to a registration default.
The sole remedy available to the holders of the
original notes will be the immediate increase in the interest rate on the original notes as described above. Any amounts of additional interest due as described above will be payable in cash on the same interest payment dates as the original notes.
Expiration Date; Extensions; Amendment
We will keep the exchange offer open for not less than 20 business days, or longer if required by applicable law, after the date on which
notice of the exchange offer is mailed to the holders of the original notes. The term expiration date means the expiration date set forth on the cover page of this prospectus, unless we extend the exchange offer, in which case the term
expiration date means the latest date to which the exchange offer is extended.
In order to extend the expiration date, we
will notify the exchange agent of any extension by written notice and will issue a public announcement of the extension, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Any such
announcement will include the number and principal amount of original notes tendered for exchange as of such date.
We reserve the right:
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to delay accepting any original notes and to extend the exchange offer or to terminate the exchange offer and not accept original notes not previously accepted if any of the conditions set forth under
Conditions shall have occurred and shall not have been waived by us, if permitted to be waived by us, by giving written notice of such delay, extension or termination to the exchange agent; or
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to amend the terms of the exchange offer in any manner deemed by us to be advantageous to the holders of the original notes. (We are required to extend the offering period for certain types of changes in the terms of
the exchange offer, for example, a change in the consideration offered or percentage of original notes sought for tender.)
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All conditions set forth under The Exchange Offer Conditions must be satisfied or waived prior to the expiration date.
Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice. If the exchange
offer is amended in a manner determined by us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the original notes of such amendment. In the event of a material
change in the exchange offer, including the waiver
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of a material condition by us, we will extend the exchange offer, if necessary, so that at least five business days remain prior to the expiration date following the notice of the material
change.
Without limiting the manner in which we may choose to make a public announcement of any extension, amendment or termination of
the exchange offer, we will not be obligated to publish, advertise, or otherwise communicate any such announcement, other than by making a timely release to an appropriate news agency.
Exchange Offer Procedures
To tender in
the exchange offer, a holder must complete, sign and date the letter of transmittal, or a facsimile thereof, have the signatures on the letter of transmittal guaranteed if required by instruction 2 of the letter of transmittal, and mail or otherwise
deliver the letter of transmittal or such facsimile or an agents message in connection with a book entry transfer, together with the original notes and any other required documents. To be validly tendered, such documents must reach the
exchange agent before 5:00 p.m., New York City time, on the expiration date. Delivery of the original notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be
received by the exchange agent prior to the expiration date.
The term agents message means a message, transmitted by a
book-entry transfer facility to, and received by, the exchange agent, forming a part of a confirmation of a book-entry transfer, which states that such book-entry transfer facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the original notes that such participant has received and agrees to be bound by the terms of the letter of transmittal and that we may enforce such agreement against such participant.
The tender by a holder of original notes will constitute an agreement between such holder and us in accordance with the terms and subject to
the conditions set forth in this prospectus and in the letter of transmittal.
Delivery of all documents must be made to the exchange
agent at its address set forth below. Holders may also request their respective brokers, dealers, commercial banks, trust companies or nominees to effect such tender for such holders.
Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See Plan of Distribution.
The method of delivery of original notes and the letter of transmittal and all other required documents to the exchange agent is at the
election and risk of the holders. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery to the exchange agent before 5:00
p.m., New York City time, on the expiration date. No letter of transmittal or original notes should be sent to us.
Only a holder of
original notes may tender original notes in the exchange offer. The term holder with respect to the exchange offer means any person in whose name original notes are registered or any other person who has obtained a properly completed
bond power from the registered holder.
Any beneficial holder whose original notes are registered in the name of its broker, dealer,
commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on its behalf. If such beneficial holder wishes to tender on its own behalf, such
registered holder must, prior to completing and executing the letter of transmittal and delivering its original notes, either make appropriate arrangements to register ownership of the original notes in such holders name or obtain a properly
completed bond power from the registered holder. The transfer of record ownership may take considerable time.
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Signatures on a letter of transmittal or a notice of withdrawal, must be guaranteed by an
eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act unless the original notes are tendered:
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by a registered holder who has not completed the box entitled Special Issuance Instructions or Special Delivery Instructions on the letter of transmittal; or
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for the account of an eligible guarantor institution.
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In the event that signatures on a
letter of transmittal or a notice of withdrawal are required to be guaranteed, such guarantee must be by an eligible guarantor institution.
If a letter of transmittal is signed by a person other than the registered holder of any original notes listed therein, such original notes
must be endorsed or accompanied by appropriate bond powers and a proxy which authorizes such person to tender the original notes on behalf of the registered holder, in each case signed as the name of the registered holder or holders appears on the
original notes.
If a letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by us, evidence satisfactory to us of their authority so to act must
be submitted with such letter of transmittal.
All questions as to the validity, form, eligibility, including time of receipt, and
withdrawal of the tendered original notes will be determined by us in our reasonable discretion, which determination will be final and binding,
provided
,
however
, that such determination may be challenged in a court of competent
jurisdiction. We reserve the absolute right to reject any and all original notes not properly tendered or any original notes our acceptance of which, in the opinion of our counsel, would be unlawful. We also reserve the absolute right to waive any
irregularities or defects as to the original notes. If we waive any condition of the notes for any note holder, we will waive such condition for all note holders. Our interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all parties,
provided
,
however
, that such determination may be challenged in a court of competent jurisdiction. Unless waived, any defects or irregularities in
connection with tenders of original notes must be cured within such time as we shall determine. None of us, the exchange agent or any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of
original notes, nor shall any of them incur any liability for failure to give such notification. Tenders of original notes will not be deemed to have been made until such irregularities have been cured or waived. Any original notes received by the
exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders of original notes without cost to such holder, unless otherwise
provided in the relevant letter of transmittal, promptly following the expiration date.
In addition, we reserve the absolute right in our
sole discretion to:
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purchase or make offers for any original notes that remain outstanding subsequent to the expiration date or, as set forth under The Exchange Offer Conditions, to terminate the exchange offer in
accordance with the terms of the registration rights agreement; and
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to the extent permitted by applicable law, purchase original notes in the open market, in privately negotiated transactions or otherwise.
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The terms of any such purchases or offers may differ from the terms of the exchange offer.
By tendering, each holder will represent to us that, among other things:
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such holder or other person is not our affiliate, as defined under Rule 405 of the Securities Act, or, if such holder or other person is such an affiliate, will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable;
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the new notes acquired pursuant to the exchange offer are being obtained in the ordinary course of business of such holder or other person;
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neither such holder or other person has any arrangement or understanding with any person to participate in the distribution of such new notes in violation of the Securities Act; and
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neither such holder nor such other person is engaged in or intends to engage in a distribution of the new notes.
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We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the
original notes at The Depository Trust Company (DTC) for the purpose of facilitating the exchange offer, and subject to the establishment of such accounts, any financial institution that is a participant in DTCs system may make
book-entry delivery of original notes by causing DTC to transfer such original notes into the exchange agents account with respect to the original notes in accordance with DTCs procedures for such transfer. Although delivery of the
original notes may be effected through book-entry transfer into the exchange agents account at DTC, a letter of transmittal properly completed and duly executed with any required signature guarantee, or an agents message in lieu of a
letter of transmittal, and all other required documents must in each case be transmitted to and received or confirmed by the exchange agent at its address set forth below on or prior to the expiration date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such procedures. Delivery of documents to DTC does not constitute delivery to the exchange agent.
Guaranteed Delivery Procedures
Holders
who wish to tender their original notes and:
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whose original notes are not immediately available; or
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who cannot deliver their original notes, the letter of transmittal or any other required documents to the exchange agent prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer; or
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who cannot complete the procedures for delivery by book-entry transfer prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer,
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may effect a tender if:
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the tender is made by or through an eligible guarantor institution;
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prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer, the exchange agent receives from such eligible guarantor institution a properly completed and duly executed Notice of
Guaranteed Delivery, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the original notes, the certificate number or numbers of such original notes and the principal amount of original notes
tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the expiration date, a letter of transmittal, or facsimile thereof or agents message in lieu of such letter of transmittal,
together with the certificate(s) representing the original notes to be tendered in proper form for transfer and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange
agent; and
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a properly completed and duly executed letter of transmittal (or facsimile thereof) together with the certificate(s) representing all tendered original notes in proper form for transfer or an agents message in the
case of delivery by book-entry transfer and all other documents required by the letter of transmittal are received by the exchange agent within three business days after the expiration date.
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Withdrawal of Tenders
Except as otherwise provided in this prospectus, tenders of original notes may be withdrawn at any time prior to 5:00 p.m., New York City time,
on the expiration date.
To withdraw a tender of original notes in the exchange offer, a written or facsimile transmission notice of
withdrawal must be received by the exchange agent at its address set forth in this prospectus prior to 5:00 p.m., New York City time, on the expiration date. Any such notice of withdrawal must:
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specify the name of the depositor, who is the person having deposited the original notes to be withdrawn;
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identify the original notes to be withdrawn, including the certificate number or numbers and principal amount of such original notes or, in the case of original notes transferred by book-entry transfer, the name and
number of the account at DTC to be credited;
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be signed by the depositor in the same manner as the original signature on the letter of transmittal by which such original notes were tendered, including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the original notes register the transfer of such original notes into the name of the depositor withdrawing the tender; and
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specify the name in which any such original notes are to be registered, if different from that of the depositor.
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All questions as to the validity, form and eligibility, including time of receipt, of such withdrawal notices will be determined by us in our
reasonable discretion, and our determination shall be final and binding on all parties,
provided
,
however
, that such determination may be challenged in a court of competent jurisdiction. Any original notes so withdrawn will be deemed
not to have been validly tendered for purposes of the exchange offer and no new notes will be issued with respect to the original notes withdrawn unless the original notes so withdrawn are validly retendered. Any original notes which have been
tendered but which are not accepted for exchange will be returned to its holder without cost to such holder promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn original notes may be retendered by
following one of the procedures described above under The Exchange Offer Exchange Offer Procedures at any time prior to the expiration date.
Conditions
Notwithstanding any other
term of the exchange offer, we will not be required to accept for exchange, or exchange, any new notes for any original notes, and may terminate or amend the exchange offer before the expiration date, if:
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in the opinion of our counsel, the exchange offer or any part thereof contemplated herein violates any applicable law or interpretation of the staff of the SEC;
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any action or proceeding shall have been instituted in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer or any material adverse development shall have
occurred in any such action or proceeding with respect to us;
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any governmental approval has not been obtained, which approval we shall deem necessary for the consummation of the exchange offer as contemplated hereby;
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any cessation of trading on any securities exchange, or any banking moratorium, shall have occurred, as a result of which we are unable to proceed with the exchange offer; or
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a stop order shall have been issued by the SEC or any state securities authority suspending the effectiveness of the registration statement or proceedings shall have been initiated for that purpose.
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If any of the foregoing conditions exist, we may, in our reasonable discretion:
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refuse to accept any original notes and return all tendered original notes to the tendering holders promptly following the expiration date or the termination of the exchange offer, as applicable;
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extend the exchange offer and retain all original notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders who tendered such original notes to withdraw their tendered
original notes; or
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waive such condition, if permissible, with respect to the exchange offer and accept all properly tendered original notes which have not been withdrawn. If such waiver constitutes a material change to the exchange offer,
we will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the holders, and we will extend the exchange offer, if necessary, so that at least five business days remain prior to the expiration date following
the date of such prospectus supplement.
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Exchange Agent
We have appointed U.S. Bank National Association as exchange agent for the exchange offer. Please direct questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to U.S. Bank National Association addressed as follows:
By Mail, Overnight Courier or Hand Delivery:
U.S. Bank National Association
111 Fillmore Avenue
St. Paul, MN
55107-1402
Attention: Specialized Finance Department
Reference: Beazer Homes USA, Inc. Exchange
By Facsimile:
(651)
466-7372
Attention: Specialized Finance Department
Reference: Beazer Homes USA, Inc. Exchange
To Confirm by Telephone or for Information:
(800) 934-6802
Reference: Beazer
Homes USA, Inc. Exchange
U.S. Bank National Association is the trustee under the indenture governing the original notes and the new
notes.
Fees and Expenses
We will
pay the expenses of soliciting original notes for exchange. The principal solicitation is being made by mail by U.S. Bank National Association as exchange agent. However, additional solicitations may be made by telephone, facsimile or in person by
our officers and regular employees and our affiliates and by persons so engaged by the exchange agent.
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We will pay U.S. Bank National Association as exchange agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the trustee under the indenture, filing fees, blue sky fees and printing and
distribution expenses.
We will pay all transfer taxes, if any, applicable to the exchange of the original notes in connection with the
exchange offer. If, however, certificates representing the new notes or the original notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered
holder of the original notes tendered, or if tendered original notes are registered in the name of any person other than the person signing the letter of transmittal, or if a transfer tax is imposed for any reason other than the exchange of the
original notes in this exchange offer, then the amount of any such transfer taxes, whether imposed on the registered holder or any other person, will be payable by the tendering holder.
Accounting Treatment
The new notes will
be recorded at the same carrying value as the original notes as reflected in our accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized by us.
Consequences of Failure to Exchange
Holders of original notes who are eligible to participate in the exchange offer but who do not tender their original notes will not have any
further registration rights, and their original notes will continue to be subject to restrictions on transfer of the original notes as described in the legend on the original notes as a consequence of the issuance of the original notes under
exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the original notes may not be offered or sold, unless registered under the Securities Act,
except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws.
Regulatory Approvals
We do not believe that the receipt of any material federal or state regulatory approval will be necessary in connection with the
exchange offer, other than the effectiveness of the exchange offer registration statement under the Securities Act.
Other
Participation in the exchange offer is voluntary and holders of original notes should carefully consider whether to accept the terms and
conditions of this exchange offer. Holders of the original notes are urged to consult their financial and tax advisors in making their own decisions on what action to take with respect to the exchange offer.
Neither our affiliates nor the affiliates of the guarantors have any interest, direct or indirect, in the exchange offer.
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DESCRIPTION OF THE NOTES
Definitions for certain defined terms may be found under Certain Definitions appearing below. References in this
Description of the Notes to the
Company
refer to Beazer Homes USA, Inc. only and not to any of its subsidiaries unless the context otherwise requires, and references to the
Notes
in this section are
references to the original 5.750% Senior Notes due 2019 and the new 5.750% Senior Notes due 2019 offered hereby, collectively.
The Notes
are issued as a series of securities under an Indenture dated as of April 8, 2014 (the
Indenture
), among the Company, the Subsidiary Guarantors, and U.S. Bank National Association, as trustee (the
Trustee
).
The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms
therein. Wherever particular sections or defined terms of the Indenture not otherwise defined herein are referred to, such sections or defined terms shall be incorporated herein by reference. A copy of the Indenture is available to any holder of the
Notes upon request to the Company.
General
The Notes are senior unsecured obligations of the Company. The maximum aggregate principal amount of the Notes now outstanding is $325.0
million. The Company may issue additional Notes (
Additional Notes
) from time to time. The Notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the
Indenture. Unless the context requires otherwise, references to Notes for all purposes of the Indenture and this Description of the Notes include any Additional Notes that are actually issued. The Notes are guaranteed by each
of the Subsidiary Guarantors pursuant to the guarantees (the
Subsidiary Guarantees
) described below.
The Notes bear
interest at the rate of 5.750% per annum from the Issue Date or, if interest has already been paid, from the date it was most recently paid, payable on June 15 and December 15 of each year, commencing on December 15, 2014, to
holders of record (the
Holders
) at the close of business on June 1 or December 1, as the case may be, immediately preceding the respective interest payment date. The Notes will mature on June 15, 2019. Interest is
computed on the basis of a 360-day year of twelve 30-day months.
Principal, premium, if any, and interest on the Notes is payable, and
the Notes may be presented for registration of transfer or exchange, at the offices of the Trustee. At the option of the Company, payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in
the register of Holders;
provided
that all payments of principal, premium, if any, and interest with respect to Notes represented by one or more permanent global notes registered in the name of or held by DTC or its nominee will be made by
wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof. The Company may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable in connection with certain
transfers or exchanges of the Notes. Initially, the Trustee will act as the Paying Agent and the Registrar under the Indenture. The Company may subsequently act as the Paying Agent and/or the Registrar and the Company may change any Paying Agent
and/or any Registrar without prior notice to the Holders.
Ranking
The Notes are senior unsecured obligations of the Company and rank (i) senior in right of payment to all existing and future Indebtedness
of the Company that is, by its terms, expressly subordinated in right of payment to the Notes (or to all senior indebtedness), (ii) pari passu in right of payment with all existing and future Indebtedness of the Company that is not so
subordinated and (iii) effectively subordinate to all Secured Indebtedness and Non-Recourse Indebtedness to the extent of the value of the assets securing such obligations.
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The Subsidiary Guarantees are senior unsecured obligations of the Subsidiary Guarantors and rank
(i) senior in right of payment to all existing and future Indebtedness of the Subsidiary Guarantors that is, by its terms, expressly subordinated in right of payment to the Subsidiary Guarantees (or to all senior indebtedness), (ii) pari
passu in right of payment with all existing and future Indebtedness of the Subsidiary Guarantors that is not so subordinated and (iii) effectively subordinate to all Secured Indebtedness and Non-Recourse Indebtedness of the Subsidiary
Guarantors to the extent of the value of the assets securing such obligations.
As of March 31, 2014, the Company and the Subsidiary
Guarantors had approximately $300.0 million of Secured Indebtedness outstanding and approximately $46.2 million of Non-Recourse Indebtedness outstanding.
In addition, the Notes and the Subsidiary Guarantees are structurally subordinated to all existing and future liabilities of the
Companys Subsidiaries that do not guarantee the Notes. As of March 31, 2014, the Companys non-guarantor Subsidiaries had approximately $1.0 million of liabilities (excluding intercompany obligations) in the aggregate.
Optional Redemption
The Company may
redeem all or any portion of the Notes at any time and from time to time on or after March 15, 2019 (three months prior to the maturity date) and prior to maturity at a redemption price equal to 100% of the principal amount of the Notes to be
redeemed, together, with accrued and unpaid interest to the date fixed for redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date).
In addition, on or prior to June 15, 2017, the Company may, at its option, redeem up to 35% of the aggregate principal amount of Notes
issued under the Indenture with the net proceeds of an Equity Offering at 105.750% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for redemption (subject to the rights of Holders of Notes on the relevant
record date to receive interest on the relevant interest payment date);
provided
that at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture remain outstanding after such redemption. Notice of any
such redemption must be given within 60 days after the date of the closing of the relevant Equity Offering.
At any time, or from time to
time, prior to March 15, 2019 (three months prior to the maturity date), the Company may at its option redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the
Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date). Notice of such redemption must be sent to
each Holder not less than 30 nor more than 60 days prior to the redemption date.
Applicable Premium
means, with
respect to a Note at any redemption date, the greater of (i) 1.00% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption date of (1) the principal amount of such note plus
(2) all required remaining scheduled interest payments due on such Note through the maturity date (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 0.50% per
annum, over (B) the principal amount of such Note on such redemption date.
Treasury Rate
means, as of any
redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to
the maturity date;
provided
,
however
, that if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity
of one year will be used.
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In the event less than all of the Notes are to be redeemed at any time, selection of the Notes to
be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted by the Indenture, unless otherwise required by law or regulatory requirements. Notice of redemption will be sent at
least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed. On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption.
Mandatory Offers to Purchase the Notes
The Indenture requires the Company to offer to purchase all of the outstanding Notes upon a Change of Control of the Company. See
Certain Covenants Change of Control. The provisions relating to an offer to purchase upon a Change of Control is not waivable by the Board of Directors of the Company. If an offer to purchase upon a Change of Control were to be
required, there can be no assurance that the Company would have sufficient funds to pay the purchase price for all Notes that the Company is required to purchase. In addition, the Companys ability to finance the purchase of Notes may be
limited by the terms of its then existing borrowing agreements. Failure by the Company to purchase the Notes when required will result in an Event of Default with respect to the Notes.
If an offer is made to purchase Notes as a result of a Change of Control, the Company will comply with applicable law, including, without
limitation, Section 14(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) and Rule 14e-1 thereunder, if applicable.
The Change of Control feature of the Notes may in certain circumstances make more difficult or discourage a takeover of the Company and, thus,
the removal of incumbent management. The Change of Control feature, however, is not the result of managements knowledge of any specific effort to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions.
The Subsidiary Guarantees
Each of the Subsidiary Guarantors shall (so long as it remains a Subsidiary of the Company) fully and unconditionally guarantee, subject to
customary release provisions, on a joint and several basis, all of the Companys obligations under the Notes, including its obligations to pay principal, premium, if any, and interest with respect to the Notes. Each of the Subsidiary Guarantees
are senior unsecured obligations of the applicable Subsidiary Guarantor. The Indenture provides that the obligations of each Subsidiary Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer or obligation under
federal or state law. However, there can be no assurance that this provision will be effective to ensure that any Subsidiary Guarantee does not constitute a fraudulent conveyance or fraudulent transfer obligation under applicable law. Each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary Guarantee shall be entitled to a contribution from each other Subsidiary Guarantor in an amount
pro rata
, based on the net assets of each Subsidiary Guarantor,
determined in accordance with GAAP. Except as provided in Certain Covenants below, the Company is not restricted from selling or otherwise disposing of any of the Subsidiary Guarantors.
The Indenture provides that each existing and future Restricted Subsidiary (other than, in the Companys discretion, any Restricted
Subsidiary the assets of which have a Book Value of not more than $5.0 million) be a Subsidiary Guarantor and, at the Companys discretion, any Unrestricted Subsidiary may be a Subsidiary Guarantor.
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The Indenture provides that if all or substantially all of the assets of any Subsidiary
Guarantor, or all (or a portion sufficient to cause such Subsidiary Guarantor to no longer be a Subsidiary of the Company) of the Capital Stock of any Subsidiary Guarantor, is sold (including by consolidation, merger, issuance or otherwise) or
disposed of (including by liquidation, dissolution or otherwise) by the Company or any of its Subsidiaries, or, unless the Company elects otherwise, if any Subsidiary Guarantor is designated an Unrestricted Subsidiary in accordance with the terms of
the Indenture, then such Subsidiary Guarantor (in the event of a sale or other disposition of all of the Capital Stock of such Subsidiary Guarantor or a designation as an Unrestricted Subsidiary) or the Person acquiring such assets (in the event of
a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) shall be deemed automatically and unconditionally released and discharged from any of its obligations under the Indenture without any further action
on the part of the Trustee or any Holder of the Notes, subject in each case to compliance with the covenants set forth below under Certain Covenants Limitations on Mergers and Consolidations.
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.
Attributable Debt
means, in respect of a Sale and Leaseback Transaction, the present value (discounted at the weighted
average effective interest rate per annum of the outstanding debt securities of all series outstanding under the applicable indenture at the date of determination, 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.
Book Value
means, with respect to any asset of the Company or
any of its Subsidiaries, the book value thereof as reflected in the most recent consolidated financial statements of the Company filed with the SEC (or if such asset has been acquired after the date of such financial statements, the then-current
book value thereof as reasonably determined by the Company consistent with recent practices).
Business Day
means any
day other than a Legal Holiday.
Capital Stock
of any Person means any and all shares, rights to purchase, warrants or
options (whether or not currently exercisable), participations, or other equivalents of or interests in (however designated and whether voting or non-voting) the equity (which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt securities that are convertible into, or exchangeable for, such equity).
Capitalized Lease Obligations
of any Person means 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 obligation will be the capitalized amount thereof determined in accordance with GAAP.
Change of Control
means any of the following:
(i) the sale, transfer, lease, conveyance or other disposition (in one transaction or a series of transactions) of all or
substantially all of the Companys assets as an entirety or substantially as an entirety
34
to any Person or group (within the meaning of Section 13(d)(3) of the Exchange Act);
provided
that a transaction where the holders of all classes of Common Equity of the
Company immediately prior to such transaction own, directly or indirectly, 50% or more of the aggregate voting power of all classes of Common Equity of such Person or group immediately after such transaction will not be a Change of Control;
(ii) the liquidation or dissolution of the Company;
provided
that a liquidation or dissolution of the Company which is
part of a transaction or series of related transactions that does not constitute a Change of Control under the provided clause of clause (i) above will not constitute a Change of Control under this clause (ii);
(iii) any transaction or a series of related transactions (as a result of a tender offer, merger, consolidation or otherwise)
that results in, or that is in connection with, any Person, including a group (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring beneficial ownership (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company or of any Person that possesses beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company;
(iv) a majority
of the Board of Directors of the Company not being comprised of Continuing Directors; or
(v) a change of control shall
occur as defined in the instrument governing any publicly traded debt securities of the Company which requires the Company to repay or repurchase such debt securities.
Common Equity
of any Person means all Capital Stock of such Person that is generally entitled to (i) vote in the
election of directors of such Person, or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person.
Consolidated Tangible Assets
of the Company as of any date means the total amount of assets of the Company and its
Restricted Subsidiaries (less applicable reserves) on a consolidated basis at the end of the fiscal quarter immediately preceding such date, as determined in accordance with GAAP, less: (i) Intangible Assets and (ii) appropriate
adjustments on account of minority interests of other Persons holding equity investments in Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above, as reflected on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the end of the fiscal quarter immediately preceding such date.
Continuing Director
means
at any date a member of the Board of Directors of the Company who:
(i) was a member of the Board of Directors of the
Company on the Issue Date; or
(ii) was nominated for election or elected to the Board of Directors of the Company with the
affirmative vote of at least a majority of the directors who were Continuing Directors at the time of such nomination or election.
Custodian
means any receiver, trustee, assignee, liquidator 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.
Disqualified Stock
means any Capital Stock that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part,
on or prior to the final maturity date of the Notes;
provided
that any Capital Stock which would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to
35
require the Company to repurchase or redeem such Capital Stock upon the occurrence of a change of control occurring prior to the final maturity of the Notes will not constitute Disqualified Stock
if the change of control provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the Change of Control covenant set forth in the Indenture and such Capital Stock specifically provides
that the Company will not repurchase or redeem (or be required to repurchase or redeem) any such Capital Stock pursuant to such provisions prior to the Companys repurchase of Notes pursuant to the Change of Control covenant set
forth in the Indenture.
Equity Offering
means a public or private equity offering or sale after the Issue Date by the
Company for cash of Capital Stock, other than an offering or sale of Disqualified Stock.
Event of Default
has the
meaning set forth in Description of the Notes Events of Default.
Exchange Notes
means any notes
issued in exchange for the Notes pursuant to the Registration Rights Agreement or similar agreement.
Fair Market Value
means with respect to any asset or property the sale value that would be obtained in an arms length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy.
Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a board resolution (certified by the Secretary or Assistant Secretary of the Company) or an officers certificate of
the principal financial officer of the Company delivered to the Trustee.
GAAP
means generally accepted accounting
principles set forth in the opinions and interpretations of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and interpretations of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect from time to time. At any time after the Issue Date, the Company may elect to apply International Financial
Reporting Standards (
IFRS
) accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in the Indenture);
provided
that any such election, once made, shall be irrevocable;
provided
,
further
, any calculation or determination in the Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the
Companys election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. The Company shall give notice of any such election made in accordance with this definition to the Trustee and the Holders of Notes.
Hedging Obligations
of any Person means the obligations of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement relating to interest rates or foreign exchange rates.
Holder
means a Person in whose name a Note is registered in the Security Register.
Incur
(and derivatives thereof) means to, directly or indirectly, create, incur, assume, guarantee, extend the maturity of,
or otherwise become liable with respect to any Indebtedness;
provided
,
however
, that neither the accrual of interest (whether such interest is payable in cash or kind) nor the accretion of original issue discount shall be considered an
Incurrence of Indebtedness.
Indebtedness
of any Person at any date means, without duplication,
(i) all indebtedness of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof);
36
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments (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 capital expenditures (other than any
obligation to pay a contingent purchase price which, as of the date of incurrence thereof, is not required to be recorded as a liability in accordance with GAAP);
(iii) all fixed obligations of such Person in respect of letters of credit or other similar instruments or reimbursement
obligations with respect thereto (other than standby letters of credit or similar instruments issued for the benefit of, or surety, performance, completion or payment bonds, earnest money notes or similar purpose undertakings or indemnifications
issued by, such Person in the ordinary course of business (as determined in good faith by the Company));
(iv) all
obligations of such Person with respect to Hedging Obligations (other than those that fix or cap the interest rate on variable rate Indebtedness otherwise permitted by the Indenture or that fix the exchange rate in connection with Indebtedness
denominated in a foreign currency and otherwise permitted by the Indenture);
(v) all Capitalized Lease Obligations of such
Person;
(vi) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person;
(vii) all Indebtedness of others guaranteed by, or otherwise the liability of, such Person to the
extent of such guarantee or liability; and
(viii) all Disqualified Stock issued by such Person (the amount of Indebtedness
represented by any Disqualified Stock will equal the greater of the voluntary or involuntary liquidation preference plus accrued and unpaid dividends);
provided
that Indebtedness shall not include accrued expenses, trade payables, liabilities related to inventory not owned, customer deposits or
deferred income taxes arising in the ordinary course of business (as determined in good faith by the Company). The amount of Indebtedness of any Person at any date will be:
(a) the outstanding balance at such date of all unconditional obligations as described above;
(b) the maximum liability of such Person for any contingent obligations under clause (vii) above; and
(c) in the case of clause (vi) (if the Indebtedness referred to therein is not assumed by such Person), the lesser of the
(A) Fair Market Value of all assets subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (B) amount of the Indebtedness secured.
Intangible Assets
of the Company means all unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights and all other items which would be treated as intangibles on the consolidated balance sheet of the Company and its Restricted Subsidiaries prepared in accordance with GAAP.
Issue Date
means April 8, 2014.
Legal Holiday
means Saturday, Sunday or a day on which banking institutions in New York, New York, Atlanta, Georgia or at a
place of payment are authorized or obligated by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment shall be made at that place on the next succeeding day that is not a Legal
Holiday.
Lien
means, with respect to any asset, any mortgage, deed of trust, lien, pledge, charge, security interest
or other similar encumbrance of any kind upon or in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including, without limitation, any conditional sale or other title retention agreement).
37
Material Subsidiary
means any Subsidiary of the Company which accounted for 5%
or more of the Consolidated Tangible Assets of the Company on a consolidated basis for the fiscal year ending immediately prior to any Default or Event of Default.
Non-Recourse Indebtedness
with respect to any Person means Indebtedness of such Person for which (i) 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 such property was acquired (directly or indirectly, including through
the purchase of Capital Stock of the Person owning such property) with the proceeds of such Indebtedness or such Indebtedness was Incurred within 90 days after the acquisition (directly or indirectly, including through the purchase of Capital Stock
of the Person owning such property) of such property and (ii) 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 warranties, covenants and indemnities, (b) indemnities for and liabilities arising from
fraud, misrepresentation, misapplication or non-payment of rents, profits, deposits, 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,
breach of separateness covenants, and other customary exceptions or (c) in the case of the borrower thereof only, other obligations in respect of such Indebtedness that are payable solely as a result of a voluntary or collusive non-voluntary
bankruptcy filing (or similar filing or action) by such borrower.
Obligations
means, with respect to any Indebtedness,
all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant
to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the
commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation, whether or not the
claim for such interest is allowed as a claim in such case or proceeding.
Officer
means the chairman, the chief
executive officer, the president, the chief financial officer, the chief operating officer, the chief accounting officer, the treasurer, or any assistant treasurer, the controller, the secretary, any assistant secretary or any vice president of a
Person.
Officers Certificate
means a certificate signed by two Officers, one of whom must be the Persons
chief executive officer, chief operating officer, chief financial officer or chief accounting officer.
Paying Agent
means any office or agency where Notes and the Subsidiary Guarantees may be presented for payment.
Person
means any
individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or
other entity of any kind.
Publicly Traded Debt Securities
means any issue of debt securities by the Company 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 at least $20.0 million is outstanding.
Registrar
means an office or agency where Notes may be presented for registration of transfer or for exchange.
Registration Rights Agreement
means the Registration Rights Agreement related to the Notes, dated the Issue Date, among the
Company, the Subsidiary Guarantors and the initial purchasers of the Notes.
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Restricted Subsidiary
means each of the Subsidiaries of the Company which is a
restricted subsidiary under any Publicly Traded Debt Securities.
Sale and Leaseback Transaction
means a sale or
transfer made by the Company or a Restricted Subsidiary (except a sale or transfer made to the Company or another Restricted Subsidiary) of any property which is either (a) a manufacturing facility, office building or warehouse whose book value
equals or exceeds 1% of the Companys Consolidated Tangible Assets as of the date of determination or (b) another property or group of properties (not including model homes) whose book value exceeds 5% of the Companys Consolidated
Tangible Assets as of the date of determination, in each case if such sale or transfer is made with the agreement, commitment or intention of leasing such property to the Company or a Restricted Subsidiary.
SEC
means the Securities and Exchange Commission.
Secured Indebtedness
means any Indebtedness which is secured by (i) a Lien on any property of the Company or any
Restricted Subsidiary or (ii) a Lien on shares of stock owned directly or indirectly by the Company or a Restricted Subsidiary in a corporation or on equity interests owned by the Company or a Restricted Subsidiary in a partnership or other
entity not organized as a corporation or in the Companys rights or the rights of a Restricted Subsidiary in respect of Indebtedness of a corporation, partnership or other entity in which the Company or a Restricted Subsidiary has an equity
interest;
provided
that Secured Indebtedness shall not include Non-Recourse Indebtedness. The securing in the foregoing manner of any such Indebtedness which immediately prior thereto was not Secured Indebtedness shall be deemed
to be the creation of Secured Indebtedness at the time security is given.
Securities Act
means the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
Security Register
is a register of
the Notes and of their transfer and exchange kept by the Registrar.
Subsidiary
of any Person means any
(i) corporation of which at least a majority of the aggregate voting power of all classes of the Common Equity is directly or indirectly beneficially owned by such Person and (ii) any entity other than a corporation of which such Person,
directly or indirectly, beneficially owns at least a majority of the Common Equity;
provided
that in each of case (i) and (ii), such Person is required to consolidate such entity in accordance with GAAP.
Subsidiary Guarantee
means the guarantee of the Notes by each Subsidiary Guarantor under the Indenture.
Subsidiary Guarantors
means (i) each of the Companys Restricted Subsidiaries in existence on the Issue Date,
other than The Ridings Development LLC and (ii) each of the Companys Subsidiaries that becomes a guarantor of the Notes pursuant to the provisions of the Indenture.
Trust Indenture Act
or
TIA
means the Trust Indenture Act of 1939, as amended.
Trustee
means the party named as such until a successor replaces such party in accordance with the applicable provisions of
the Indenture and thereafter means the successor trustee serving under the Indenture.
Unrestricted Subsidiary
means
any Subsidiary of the Company which is not a Restricted Subsidiary.
U.S. Government Obligations
means securities which
are (i) direct obligations of the United States of America, for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United
States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, are not
39
callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt;
provided
that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
Wholly Owned Subsidiary
of any Person means (i) a
Subsidiary of which 100% of the Common Equity (except for directors qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by such Person or through one or more other Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a corporation in which such Person, directly or indirectly,
owns all of the Common Equity of such entity.
Certain Covenants
The following is a summary of certain covenants that are 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 or until the Notes are defeased pursuant to provisions described under Discharge and Defeasance of Indenture.
Change of Control
The Indenture provides that, following the occurrence of any Change of Control, the Company will so notify the Trustee in writing by delivery
of an Officers Certificate and will offer to purchase (a
Change of Control Offer
) from all Holders, and will purchase from Holders accepting such Change of Control Offer on the date fixed for the closing of such Change of
Control Offer (the
Change of Control Payment Date
), the outstanding principal amount of Notes at an offer price (the
Change of Control Price
) in cash in an amount equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control Payment Date in accordance with the procedures set forth in the Change of Control covenant of the Indenture.
In addition, the Indenture provides that, within 30 days after the date on which a Change of Control occurs, the Company (with Notice to the
Trustee) or the Trustee at the Companys request (and at the expense of the Company) will send or cause to be sent to all Persons who were Holders on the date of the Change of Control at their respective addresses appearing in the Security
Register, a notice of such occurrence and of such Holders rights arising as a result thereof. Such notice shall specify, among other items, the Change of Control Payment Date, which shall be no earlier than 45 days nor later than 60 days from
the date such notice is sent.
The Indenture also provides that:
(a) In the event of a Change of Control Offer, the Company will only be required to accept Notes in minimum denominations of
$2,000 and integral multiples of $1,000 in excess thereof.
(b) Not later than one Business Day after the Change of Control
Payment Date in connection with which the Change of Control Offer is being made, the Company will (i) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent money
sufficient, in immediately available funds, to pay the purchase price of all Notes or portions thereof so accepted and (iii) deliver to the Paying Agent an Officers Certificate identifying the Notes or portions thereof accepted for
payment by the Company. The Paying Agent will promptly mail or deliver to Holders of Notes so accepted payment in an amount equal to the Change of Control Price of the Notes purchased from each such Holder, and the Company will execute and, upon
receipt of an Officers Certificate of the Company, the Trustee will promptly authenticate and mail or deliver to such Holder a new Note equal in
40
principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be promptly mailed or delivered by the Paying Agent at the Companys expense to the Holder
thereof. The Company will publicly announce the results of the Change of Control Offer promptly after the Change of Control Payment Date.
(c) Any Change of Control Offer will be conducted by the Company in compliance with applicable law, including, without
limitation, Section 14(e) of the Exchange Act and Rule 14e-1 thereunder.
The Company may enter into other arrangements or Incur
other Indebtedness with similar change of control obligations. There can be no assurance that sufficient funds will be available at the time of a Change of Control to make any required repurchases. The Companys failure to make any required
repurchases in the event of a Change of Control Offer will create an Event of Default under the Indenture.
No quantitative or other
established meaning has been given to the phrase all or substantially all (which appears in the definition of Change of Control) by courts which have interpreted this phrase in various contexts. In interpreting this phrase, courts make a
subjective determination as to the portion of assets conveyed, considering such factors as the value of the assets conveyed and the proportion of an entitys income derived from the assets conveyed. Accordingly, there may be uncertainty as to
whether a Holder of Notes can determine whether a Change of Control has occurred and exercise any remedies such Holder may have upon a Change of Control. In addition, in a recent decision, the Chancery Court of Delaware raised the possibility that a
change of control as a result of a failure to have continuing directors comprising a majority of the Board of Directors may be unenforceable on public policy grounds.
Limitations on Secured Indebtedness
The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or guarantee
any Secured Indebtedness unless the Notes are equally and ratably secured with (or on a senior basis to, if the Secured Indebtedness is subordinated Indebtedness) the Secured Indebtedness. This restriction does not prohibit the creation, incurrence,
assumption or guarantee of Secured Indebtedness which is secured by:
(i) Liens on model homes, homes held for sale, homes
that are under contract for sale, or any option, contract or other agreement to sell an asset;
(ii) Liens on property
acquired by the Company or a Restricted Subsidiary and Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary or becomes a Restricted Subsidiary; provided
that in each case such Liens (a) were in existence prior to the contemplation of such acquisition, merger or consolidation and (b) do not extend to any asset other than those of the Person merged with or into or consolidated with the
Company or the Restricted Subsidiary or the property acquired by the Company or the Restricted Subsidiary;
(iii) Liens
arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries in the ordinary course of business (as determined in good faith by the Company);
(iv) purchase money mortgages (including, without limitation, Capitalized Lease Obligations and purchase money security
interests); or
(v) Liens on property or assets of any Restricted Subsidiary securing Indebtedness of such Restricted
Subsidiary owing to the Company or one or more Restricted Subsidiaries.
Any Lien created for the benefit of the Holders of the Notes
pursuant to the preceding paragraph shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Lien securing such other obligations.
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Additionally, such permitted Secured Indebtedness includes any amendment, restatement,
supplement, renewal, replacement, extension or refunding in whole or in part of Secured Indebtedness permitted at the time of the original incurrence thereof.
In addition, the Company and its Restricted Subsidiaries may create, incur, assume or guarantee Secured Indebtedness, without equally or
ratably securing the Notes, if immediately thereafter the sum of (a) the aggregate principal amount of all Secured Indebtedness outstanding (excluding (x) Secured Indebtedness permitted under clauses (i) through (v) above and
(y) any Secured Indebtedness in relation to which the Notes have been equally and ratably secured) and (b) 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), (2) and (3) of the first sentence, or meeting the requirements set forth in the second sentence, under Restrictions on Sale and Leaseback Transactions) as
of the date of determination would not exceed the greater of (i) $700.0 million and (ii) 40% of Consolidated Tangible Assets.
The provisions described above with respect to limitations on Secured Indebtedness are not applicable to Non-Recourse Indebtedness by virtue
of the definition of Secured Indebtedness and will not restrict the Companys or any Restricted Subsidiaries ability to create, incur, assume or guarantee any unsecured Indebtedness.
Restrictions on Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not cause or permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction after the date of the Indenture, unless:
(1) notice is promptly given to the Trustee of the Sale and Leaseback Transaction;
(2) the Company or the relevant Restricted Subsidiary receive fair value for the property sold (as determined in good faith pursuant to a
resolution of the Board of Directors delivered to the Trustee); and
(3) the Company or such Restricted Subsidiary, within 365 days after
the completion of the Sale and Leaseback Transaction, applies, or enters into a definitive agreement to apply within such 365-day period, an amount equal to the net proceeds therefrom either:
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to the redemption, repayment or retirement of (a) any Notes outstanding under the Indenture, (b) any of the Companys Indebtedness that is for borrowed money or is evidenced by a bond, note, debenture or
similar instrument (other than a trade payable or a current liability arising in the ordinary course of business) and which Indebtedness ranks equally in right of payment with the Notes issued under the Indenture, or (c) any Indebtedness of any
Subsidiary Guarantor that is for borrowed money or is evidenced by a bond, note, debenture or similar instrument (other than a trade payable or a current liability arising in the ordinary course of business) and which Indebtedness ranks equally in
right of payment with the Subsidiary Guarantee of such Subsidiary Guarantor, and/or
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to the purchase by the Company or any Restricted Subsidiary of property used in its respective trade or business.
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These provisions will not apply to a Sale and Leaseback Transaction if, at the time such Sale and Leaseback Transaction is entered into, the
term of the related lease to the Company or the applicable Restricted Subsidiary of the property being sold pursuant to such transaction is three years or less. In addition, these provisions will not apply to a Sale and Leaseback Transaction that
the Company and its Restricted Subsidiaries enter into if immediately thereafter the sum of (a) the aggregate principal amount of all Secured Indebtedness outstanding (excluding Secured Indebtedness permitted under clauses (i) through
(v) of the first paragraph under Limitations on Secured Indebtedness above and any Secured Indebtedness in relation to which the Notes have been secured equally and ratably (or prior to)) and (b) all Attributable Debt in
respect of Sale and Leaseback
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Transactions (excluding Attributable Debt in respect of Sale and Leaseback Transactions satisfying the conditions set forth in clauses (1), (2) and (3) of the first sentence, or meeting
the requirements set forth in the second sentence, under this caption Restrictions on Sale and Leaseback Transactions) as of the date of determination would not exceed the greater of (i) $700.0 million and (ii) 40% of
Consolidated Tangible Assets.
Limitations on Mergers and Consolidations
The Indenture provides that neither the Company nor any Subsidiary Guarantor will consolidate or merge with or into, or sell, lease, convey or
otherwise dispose of all or substantially all of its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its obligations under the Notes, the Guarantees or the Indenture (as an entirety or substantially in
one transaction or series of related transactions), to any Person (in each case other than with the Company or another Wholly Owned Restricted Subsidiary) unless:
(i) the Person formed by or surviving such consolidation or merger (if other than the Company or such Subsidiary Guarantor, as
the case may be), or to which such sale, lease, conveyance or other disposition or assignment will be made (collectively, the
Successor
), is a solvent 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 such Subsidiary Guarantor, as the case may
be, under the Notes or such Subsidiary Guarantors Subsidiary Guarantee, as the case may be, and the Indenture; and
(ii) 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 transaction involving the consolidation or merger of a Subsidiary Guarantor with or into another
Person, or the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Subsidiary Guarantor, that results in such Subsidiary Guarantor being released from its Subsidiary Guarantee as provided under
The Subsidiary Guarantees above.
No quantitative or other established meaning has been given to the phrase all or
substantially all by courts which have interpreted this phrase in various contexts. In interpreting this phrase, courts make a subjective determination as to the portion of assets conveyed, considering such factors as the value of the assets
conveyed and the proportion of an entitys income derived from the assets conveyed. Accordingly, there may be uncertainty as to whether a Holder of Notes can determine whether the Company has sold, leased, conveyed or otherwise disposed of all
or substantially all of its assets and exercise any remedies such Holder may have upon the occurrence of any such transaction.
Events of Default
The following are Events of Default under the Indenture:
(i) the failure by the Company to pay interest on any Note when the same becomes due and payable and the continuance of any
such failure for a period of 30 days;
(ii) the failure by the Company to pay the principal or premium of any Note when the
same becomes due and payable at maturity, upon acceleration or otherwise (including the failure to make payment pursuant to a Change of Control Offer);
(iii) the failure by the Company or any of its Subsidiaries to comply with any of its agreements or covenants in, or provisions
of, the Notes, the Subsidiary Guarantees or the Indenture and such failure continues for the period and after the notice specified below;
(iv) the acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any of its Subsidiaries that
has an outstanding principal amount of $25.0 million or more in the aggregate;
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(v) the failure by the Company or any of its Subsidiaries to make any principal
or interest payment in respect of Indebtedness (other than Non-Recourse Indebtedness) of the Company or any of its Subsidiaries with an outstanding aggregate amount of $25.0 million or more within five days of such principal or interest payment
becoming due and payable (after giving effect to any applicable grace period set forth in the documents governing such Indebtedness);
provided
that if such failure to pay shall be remedied, waived or extended, then the Event of Default
hereunder shall be deemed likewise to be remedied, waived or extended without further action by the Company;
(vi) a final
judgment or judgments that exceed $25.0 million or more in the aggregate, for the payment of money, having been entered by a court or courts of competent jurisdiction against the Company or any of its Subsidiaries and such judgment or judgments is
not satisfied, stayed, annulled or rescinded within 60 days of being entered;
(vii) the Company or any Material 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;
(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(a) is for relief against the Company or any Material Subsidiary as debtor in an involuntary case;
(b) appoints a Custodian of the Company or any Material Subsidiary or a Custodian for all or substantially all of the property
of the Company or any Material Subsidiary; or
(c) orders the liquidation of the Company or any Material Subsidiary and the
order or decree remains unstayed and in effect for 60 days; or
(ix) any Subsidiary Guarantee ceases to be in full force
and effect (other than in accordance with the terms of such Subsidiary Guarantee and the Indenture) or is declared null and void and unenforceable or found to be invalid or any Subsidiary Guarantor denies its liability under its Subsidiary Guarantee
(other than by reason of release of a Subsidiary Guarantor from its Subsidiary Guarantee in accordance with the terms of the Indenture and the Subsidiary Guarantee).
A Default as described in sub-clause (iii) above will not be deemed an Event of Default until the Trustee notifies the Company, or the
Holders of at least 25% in principal amount of the then outstanding Notes notify the Company and the Trustee, of the Default and 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.
If an Event of Default (other than an Event of Default specified in sub-clauses (vii) and (viii) above) shall have occurred and be
continuing under the Indenture, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Notes then outstanding by notice to the Company and the Trustee, may declare all Notes to be due and payable immediately.
Upon such declaration of acceleration, the amounts due and payable on the Notes, as determined pursuant to the provisions of the Acceleration section of the Indenture, will be due and payable immediately. If an Event of Default with
respect to the Company specified in sub-clauses (vii) and (viii) 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 and the Company may waive such Default or Event of Default (other than any Default or Event of Default in payment of
principal or interest) on the Notes under the Indenture. Holders of a majority in principal amount of the then outstanding
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Notes may rescind an acceleration and its consequence (except an acceleration due to nonpayment of principal or interest on the Notes) if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived.
The Holders may not enforce the provisions of the Indenture, the
Notes or the Subsidiary 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 Change of Control) if the Trustee determines that withholding such notice is in the Holders interest.
The Company is required to deliver to the Trustee a quarterly statement regarding compliance with the Indenture, and include in such
statement, if any Officer of the Company is aware of any Default or Event of Default, a statement specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. In addition, the Company is
required to deliver to the Trustee prompt written notice of the occurrence of any Default or Event of Default and any other development, financial or otherwise, which might materially affect its business, properties or affairs or the ability of the
Company to perform its obligations under the Indenture.
Reports
The Indenture provides that, as long as any of the Notes are outstanding, the Company will deliver to the Trustee and mail to each Holder
within 15 days after the filing of the same with the SEC copies of the quarterly and annual reports and of the information, documents and other reports with respect to the Company and the Subsidiary Guarantors, if any, which the Company and the
Subsidiary Guarantors may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further provides that, notwithstanding that neither the Company nor any of the Subsidiary Guarantors may be required
to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will continue to file with the SEC and provide the Trustee and Holders with such annual and quarterly reports and such information,
documents and other reports with respect to the Company and the Subsidiary Guarantors as are required under Sections 13 and 15(d) of the Exchange Act. If filing of documents by the Company with the SEC as aforementioned in this paragraph is not
permitted under the Exchange Act, the Company shall promptly upon written notice supply copies of such documents to any prospective Holder. The Company and each Subsidiary Guarantor will also comply with the other provisions of Section 314(a)
of the Trust Indenture Act. For the avoidance of doubt, this covenant shall not require the Company to file any such reports, information or documents with the SEC within any specified time period and the obligation to deliver such reports,
information or documents to the Trustee and Holders shall only arise after (and only to the extent) such reports, information or documents are filed with the SEC.
Discharge and Defeasance of Indenture
The Company and the Subsidiary Guarantors may discharge their obligations under the Notes, the Subsidiary Guarantees and the Indenture by
irrevocably depositing in trust with the Trustee money or U.S. Government Obligations sufficient to pay principal of, premium and interest on the Notes to maturity or redemption and the Notes mature or are to be called for redemption within one
year, subject to meeting certain other conditions.
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The Indenture permits the Company and the Subsidiary Guarantors to terminate all of their
respective obligations under the Indenture with respect to the Notes and the Subsidiary Guarantees, other than the obligation to pay interest on and the principal of the Notes and certain other obligations (
legal defeasance
), at
any time by:
(i) depositing in trust with the Trustee, under an irrevocable trust agreement, cash or U.S. Government
Obligations in an amount sufficient to pay principal of, premium and interest on the Notes to their maturity or redemption, as the case may be, and
(ii) complying with certain other conditions, including delivery to the Trustee of an opinion of counsel or a ruling received
from the Internal Revenue Service, to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Companys 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, which opinion of counsel is based upon a change in the applicable federal tax law since the Issue Date.
In addition, the Indenture permits the Company and the Subsidiary Guarantors to terminate all of their obligations under the Indenture with
respect to certain covenants and Events of Default specified in the Indenture, and the Subsidiary Guarantees will be released (
covenant defeasance
), at any time by:
(i) depositing in trust with the Trustee, under an irrevocable trust agreement, cash or U.S. Government Obligations in an
amount sufficient to pay principal of, premium and interest on the Notes to their maturity or redemption, as the case may be, and
(ii) complying with certain other conditions, including delivery to the Trustee of an opinion of counsel or a ruling received
from the Internal Revenue Service, to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Companys 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.
Notwithstanding the foregoing, no discharge,
legal defeasance or covenant defeasance described above will affect the following obligations to, or rights of, the Holders of the Notes:
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rights of registration of transfer and exchange of Notes;
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rights of substitution of mutilated, defaced, destroyed, lost or stolen Notes;
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rights of Holders of the Notes to receive payments of principal thereof, premium, if any, and interest thereon, upon the original due dates therefor, but not upon acceleration;
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rights, obligations, duties and immunities of the Trustee;
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rights of Holders of Notes that are beneficiaries with respect to property so deposited with the Trustee payable to all or any of them; and
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obligations of the Company to maintain an office or agency in respect of the Notes.
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The
Company or the Subsidiary Guarantors may exercise the legal defeasance option with respect to the Notes notwithstanding the prior exercise of the covenant defeasance option with respect to the Notes. If the Company or the Subsidiary Guarantors
exercise the legal defeasance option with respect to the Notes, payment of the Notes may not be accelerated due to an Event of Default with respect to the Notes. If the Company or the Subsidiary Guarantors exercise the covenant defeasance option
with respect to the Notes, payment of the Notes may not be accelerated due to an Event of Default with respect to the covenants to which such covenant defeasance is applicable. However, if acceleration were to occur by reason of another Event of
Default, the realizable value at the acceleration date of the cash and U.S. Government Obligations in the defeasance trust could be less than the principal of, premium, if any, and interest then due on the Notes, in that the required deposit in the
defeasance trust is based upon scheduled cash flow rather than market value, which will vary depending upon interest rates and other factors.
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Transfer and Exchange
A Holder will be able to transfer or exchange Notes only in accordance with the provisions of 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.
Amendment, Supplement and Waiver
Subject
to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing Default or Event of Default (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes) under, or compliance with any provision of, the
Indenture may be waived with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any
Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Notes or waive any provision thereof to cure any ambiguity, defect or inconsistency; to comply with the Limitations on Mergers and
Consolidations section set forth in the Indenture; to provide for uncertificated Notes in addition to or in place of certificated Notes; to provide for any Subsidiary Guarantee of the Notes; to add security to or for the benefit of the Notes
and/or to confirm and evidence the release, termination or discharge of any Subsidiary Guarantee of the Notes when such release, termination or discharge is permitted by the Indenture; to add covenants or new events of default for the protection of
the Holders of the Notes; to make any change that does not adversely affect the legal rights under the Indenture of any Holder; or to comply with or qualify the Indenture under the Trust Indenture Act.
Without the consent of each Holder affected, the Company may not:
(i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note;
(iii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to redemption under
the Optional Redemption section set forth in the Indenture;
(iv) make any Note payable in money other than
that stated in the Note;
(v) make any change in the Waiver of Past Defaults and Compliance with Indenture
Provisions, Rights of Holders to Receive Payment or, in part, the With Consent of Holders sections set forth in the Indenture;
(vi) modify the ranking or priority of the Notes or any Subsidiary Guarantee;
(vii) modify any of the provisions with respect to mandatory offers to repurchase Notes pursuant to the Change of
Control covenant set forth in the Indenture after the obligation to make such mandatory offer to repurchase has arisen;
(viii) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture otherwise
than in accordance with the terms of the Indenture; or
(ix) waive a continuing Default or Event of Default in the payment
of principal of or interest on the Notes.
The right of any Holder to participate in any consent required or sought pursuant to any
provision of the Indenture (and the obligation of the Company 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 any Notes with respect to which
such consent is required or sought as of a date identified by the Trustee in a notice furnished to Holders in accordance with the terms of the Indenture.
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No Personal Liability of Incorporators, Shareholders, Officers, Directors or Employees
The Indenture provides that no recourse for the payment of the principal of, premium, if any, or interest on any of the Notes, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company or any Subsidiary Guarantor in the Indenture or in any of the Notes or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator, shareholder, officer, director, employee or controlling person of the Company, any Subsidiary Guarantor or any successor Person thereof. Each Holder, by accepting such Notes, waives and
releases all such liability.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest (as defined in
the Indenture), it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if the Indenture has been qualified under the TIA) or resign.
Holders of a majority in principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. 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 his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any
Holder, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to the Trustee.
Governing Law
The Indenture, the Notes and the Subsidiary Guarantees will be governed by the laws of the State of New York.
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BOOK-ENTRY SETTLEMENT AND CLEARANCE
Except as set forth below or in the Description of the Notes, the new notes will be issued in registered, global form (the
Global Notes) in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. Notes will be issued at the closing of this exchange offer.
Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in registered certificated form (Certificated Notes) except in the limited circumstances described below. See Exchange of
Global Notes for Certificated Notes. Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.
Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect
participants (including, if applicable, those of Euroclear and Clearstream, Luxembourg), which may change from time to time.
The notes
may be presented for registration of transfer and exchange at the corporate trust office of the trustee.
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg is provided solely as a matter of
convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Neither we, the trustee, nor the paying agent take any responsibility for these operations and
procedures and urge investors to contact the system or their participants directly to discuss these matters.
DTC has advised us that DTC
is a limited-purpose trust company organized under the laws of the State of New York, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation
within the meaning of the New York Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations
(collectively, the Participants) and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTCs system is also available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the Indirect Participants). Persons who are not Participants may beneficially own securities held by
or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
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upon deposit of the Global Notes, DTC will credit the accounts of the Participants designated by the initial purchasers with portions of the principal amount of the Global Notes; and
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ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).
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Investors in the Global Notes who are Participants may hold their interests therein directly
through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream, Luxembourg) that are Participants. All interests in a Global Note, including
those held through Euroclear or Clearstream, Luxembourg, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream, Luxembourg may also be subject to the procedures and requirements of such
systems. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons that do not
participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical
delivery of notes in certificated form and will not be considered the registered owners or holders thereof under the indenture for any purpose.
Payments in respect of the principal of, and interest and premium, if any, and additional interest, if any, on a Global Note registered in the
name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the indenture. Under the terms of the indenture, we and the trustee will treat the persons in whose names the notes, including the Global Notes, are
registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither we, the trustee, the paying agent, nor any agent of ours or the trustee has or will have any responsibility or liability
for:
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any aspect of DTCs records or any Participants or Indirect Participants records relating to, or payments made on account of, beneficial ownership interests in the Global Notes or for maintaining,
supervising or reviewing any of DTCs records or any Participants or Indirect Participants records relating to the beneficial ownership interests in the Global Notes; or
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any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.
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DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and
interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount
proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed
by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be our responsibility or the responsibility of DTC or the trustee. Neither we nor the trustee will be
liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the notes, and we and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Except for trades involving only participants in Euroclear and Clearstream, Luxembourg, interests in the Global
Notes will trade in DTCs Same-Day Funds Settlement System and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its
participants.
Transfers between the Participants will be effected in accordance with DTCs procedures and will be settled in
same-day funds, and transfers between participants in Euroclear and Clearstream, Luxembourg will be effected in the ordinary way in accordance with their respective rules and operating procedures.
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Cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream,
Luxembourg participants, on the other hand, will be effected through DTC in accordance with DTCs rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its respective depositary. However, such cross-market transactions
will require delivery of instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system.
Euroclear or Clearstream, Luxembourg, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or
receiving interests in the relevant Global Note from DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream, Luxembourg participants may not
deliver instructions directly to the depositories for Euroclear or Clearstream, Luxembourg.
DTC has advised us that it will take any
action permitted to be taken by a holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the
notes as to which such Participant or Participants has or have given such direction. However, if there is an event of default under the notes, DTC reserves the right to exchange the Global Notes for notes in certificated form and to distribute such
notes to its Participants.
Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to facilitate
transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither
we nor the trustee nor any paying agent nor the initial purchasers nor any of our or their agents will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes in registered form if:
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DTC (1) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (2) has ceased to be a clearing agency registered under the Exchange Act and, in either case, we fail to
appoint a successor depositary; or
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we, at our option, notify the trustee in writing that we elect to cause the issuance of the notes in certificated form (provided that under current industry practices, DTC would notify Participants of our determination,
but would only withdraw beneficial interests from a Global Note at the request of Participants); or
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there has occurred and is continuing a default or an event of default with respect to the notes.
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In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by
or on behalf of DTC in accordance with the indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary procedures).
Same Day Settlement and Payment
We will make payments in respect of the new notes represented by the Global Notes (including principal, premium, if any, interest and
Additional Interest, if any) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. We will make all payments of principal, interest and premium, if any,
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and additional interest, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no
such account is specified, by mailing a check to each such holders registered address. The new notes represented by the Global Notes are expected to be eligible to trade in DTCs Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. We expect that secondary trading in any Certificated Notes will also be settled in immediately available funds.
Because of time-zone differences, credits of interests in the Global Notes received in Clearstream, Luxembourg or Euroclear as a result of a
transaction with a DTC Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions involving interests in such Global Notes settled during
such processing will be reported to the relevant Clearstream, Luxembourg or Euroclear participants on such business day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales of interests in the Global Notes by or through a
Clearstream, Luxembourg participant or a Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream, Luxembourg or Euroclear cash account only as of the
business day following settlement in DTC.
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