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.
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 6.750% Senior Notes due 2025 and the new 6.750% Senior Notes due 2025 offered hereby, collectively.
The Notes under that certain Indenture, dated as of March 14, 2017 (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 $250.0 million. The Company may issue additional Notes (
Additional Notes
) from time to time subject to the limitations
set forth under Certain Covenants Limitations on Additional Indebtedness. 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 6.750% per annum from the Issue Date, or, if interest has already been paid, from the date it was most recently paid, payable on March 15 and September 15 of each year, commencing on September 15, 2017, to
holders of record (the
Holders
) at the close of business on March 1 or September 1, as the case may be, immediately preceding the respective interest payment date. The Notes will mature on March 15, 2025, and are
issued in minimum denominations of $2,000 and $1,000 integral multiples in excess thereof. 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.
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.
28
As of March 31, 2017, the Company and the Subsidiary Guarantors had approximately $14.9
million of Non-Recourse Indebtedness outstanding and no Secured 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, 2017, the Companys non-guarantor Subsidiaries had approximately $0.4
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, 2020 and prior to maturity
at the following redemption prices (expressed in percentages of the principal amount thereof) together, in each case, with accrued and unpaid interest to the date fixed for redemption (subject to the rights of Holders on the relevant record date to
receive interest on the relevant interest payment date), if redeemed during the 12-month period beginning on of each year indicated below:
|
|
|
|
|
Year
|
|
Percentage
|
|
2020
|
|
|
105.063
|
%
|
2021
|
|
|
103.375
|
%
|
2022
|
|
|
101.688
|
%
|
2023 and thereafter
|
|
|
100
|
%
|
In addition, on or prior to March 15, 2020, the Company may, at its option, redeem up 35% of the
aggregate principal amount of Notes issued under the Indenture with the net proceeds of an Equity Offering at 106.750% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for redemption (subject to the rights
of Holders 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.
Prior to March 15, 2020, 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 15 nor more than 60 days prior to the redemption date.
Furthermore, at any time prior to the maturity of the Notes, if at least 90% of the principal amount of the Notes have previously been
repurchased and cancelled in connection with a Change of Control Offer, the Company may redeem all of the remaining Notes, upon not less than 15 nor more than 60 days notice, at a redemption price equal to 101% of the principal amount of the
Notes redeemed, plus accrued and unpaid interest to the date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment 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 redemption price of such Note on March 15, 2020 (such redemption price being described in the first paragraph of this
Optional Redemption section exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Note through March 15, 2020 (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.
29
Treasury Rate
means, with respect to 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 March 15, 2020;
provided
,
however
, that if the period from the redemption date to March 15, 2020 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.
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 15 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 will (so long as it remains a Restricted 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.
30
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.
The Indenture will provide 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.
Acquired Indebtedness
means Indebtedness of any Person and its Subsidiaries existing at the time such Person became
a Subsidiary of the Company (or such Person is merged with or into the Company or one of the Companys Subsidiaries) or assumed in connection with the acquisition of assets from any such Person, including, without limitation, Indebtedness
Incurred in connection with, or in contemplation of (a) such Person being merged with or into or becoming a Subsidiary of the Company or one of its Subsidiaries (but excluding Indebtedness of such Person which is extinguished, retired or repaid
in connection with such Person being merged with or into or becoming a Subsidiary of the Company or one of its Subsidiaries) or (b) such acquisition of assets from any such Person.
Adjusted Consolidated Tangible Net Worth
of the Company means Consolidated Tangible Net Worth plus the amount of any
Mandatory Convertible Notes and any other instrument that is mandatorily convertible into Capital Stock.
Adjusted
Indebtedness
of the Company means the Indebtedness of the Company and its Restricted Subsidiaries minus the amount of any Mandatory Convertible Notes.
Affiliate
of any Person means any other Person directly or indirectly controlling or controlled by, or under direct
or indirect common control with, such Person. For purposes of the Indenture, each executive officer and director of the Company and each Subsidiary of the Company will be an Affiliate of the Company. In addition, for purposes of the Indenture,
control of a Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, the term
Affiliate will not include, with respect to the Company or any Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company, any Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company.
Asset Sale
for any Person means the sale, transfer, lease, conveyance or other disposition (including, without
limitation, by merger, consolidation or sale and leaseback transaction, and whether by operation of law or otherwise) of any of that Persons assets (including, without limitation, the sale or other disposition of Capital Stock of any
Subsidiary of such Person, whether by such Person or such Subsidiary), whether owned on the date of the Indenture or subsequently acquired in one transaction or a series of related transactions, in which such Person and/or its Subsidiaries receive
cash and/or other consideration (including, without limitation, the unconditional assumption of Indebtedness of such Person and/or its Subsidiaries) having an aggregate Fair Market Value of $5.0 million or more as to each such transaction or series
of related transactions;
provided
,
however
, that none of the following transactions that otherwise satisfy the above requirements shall constitute an Asset Sale:
31
(i) a transaction or series of related transactions that results in a Change of
Control;
(ii) sales of homes or land, including sales of real estate assets in bulk, regardless of value, in the ordinary
course of business (as determined in good faith by the Company);
(iii) sales, leases, conveyances or other dispositions,
including, without limitation, exchanges or swaps, of real estate or other assets, in each case in the ordinary course of business (as determined in good faith by the Company), for development or disposition of the Companys or any of its
Subsidiaries projects;
(iv) sales, leases, sale-leasebacks or other dispositions of amenities, model homes and other
improvements at the Companys or its Subsidiaries projects in the ordinary course of business (as determined in good faith by the Company);
(v) transactions between the Company and any of its Restricted Subsidiaries which are Wholly Owned Subsidiaries, or among such
Restricted Subsidiaries which are Wholly Owned Subsidiaries of the Company;
(vi) any disposition of Cash Equivalents or
obsolete or worn out equipment, in each case, in the ordinary course of business (as determined in good faith by the Company);
(vii) the sale or other disposition of assets, including real property, no longer used or useful in the conduct of business of
the Company or any of its Restricted Subsidiaries;
(viii) the making of any Restricted Payment or Permitted Investment
that is permitted to be made, and is made, under the covenant described under the heading Limitations on Restricted Payments; and
(ix) a transaction involving the sale of Capital Stock of, or the disposition of assets in, an Unrestricted Subsidiary.
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.
Cash Equivalents
means any of the following:
(i) direct obligations of the United States or any agency thereof or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year of the date of acquisition thereof;
32
(ii) certificates of deposit, time deposits, bankers acceptances and other
obligations placed with commercial banks organized under the laws of the United States of America or any state thereof, or branches or agencies of foreign banks licensed under the laws of the United States of America or any state thereof, having a
short-term rating of not less than A- by each of Moodys and S&P at the time of acquisition, and having a maturity of not more than one year;
(iii) commercial paper rated at least P-1, A-1 or the equivalent thereof by Moodys or S&P, respectively, and in each
case and maturing not more than one year from the date of the acquisition thereof;
(iv) repurchase agreements or
money-market accounts which are fully secured by direct obligations of the United States or any agency thereof; and
(v)
investments in money market funds (x) substantially all of the assets of which consist of investments described in the foregoing clauses (i) through (iv) or (y) which (A) have total net assets of at least $2 billion,
(B) have investment objectives and policies that substantially conform with the Companys investment policy as in effect from time to time, (C) purchase only first-tier or U.S. government obligations as defined by Rule 2a-7 of the SEC
promulgated under the Investment Company Act of 1940 and (D) otherwise comply with such Rule 2a-7.
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 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, (a) 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 (b) 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 Cash Flow Available
for Fixed Charges
of the Company and its Restricted Subsidiaries means for any period, the sum of the amounts for such period of:
33
(i) Consolidated Net Income, plus
(ii) Consolidated Income Tax Expense (without regard to income tax expense or credits attributable to extraordinary and
nonrecurring gains or losses on Asset Sales), plus
(iii) Consolidated Interest Expense, plus
(iv) all depreciation, and, without duplication, amortization (including, without limitation, capitalized interest amortized to
cost of sales), plus
(v) all other non-cash items reducing Consolidated Net Income during such period, minus
(vi) all other non-cash items increasing Consolidated Net Income during such period; all as determined on a consolidated basis
for the Company and its Restricted Subsidiaries in accordance with GAAP.
Consolidated Fixed Charge Coverage
Ratio
of the Company means, with respect to any determination date, the ratio of (i) Consolidated Cash Flow Available for Fixed Charges of the Company for the prior four full fiscal quarters for which financial results have been
reported immediately preceding the determination date, to (ii) the aggregate Consolidated Interest Incurred of the Company for the prior four full fiscal quarters for which financial results have been reported immediately preceding the
determination date;
provided
that:
(1) with respect to any Indebtedness Incurred during, and
remaining outstanding at the end of, such four full fiscal quarter period, such Indebtedness will be assumed to have been incurred as of the first day of such four full fiscal quarter period;
(2) with respect to Indebtedness repaid (other than a repayment of revolving credit obligations repaid solely out of operating
cash flows) during such four full fiscal quarter period, such Indebtedness will be assumed to have been repaid on the first day of such four full fiscal quarter period;
(3) with respect to the Incurrence of any Acquired Indebtedness, such Indebtedness and any proceeds therefrom will be assumed
to have been Incurred and applied as of the first day of such four full fiscal quarter period, and the results of operations of any Person and any Subsidiary of such Person that, in connection with or in contemplation of such Incurrence, becomes a
Subsidiary of the Company or is merged with or into the Company or one of the Companys Subsidiaries or whose assets are acquired, will be included, on a pro forma basis, in the calculation of the Consolidated Fixed Charge Coverage Ratio as if
such transaction had occurred on the first day of such four full fiscal quarter period; and
(4) with respect to any other
transaction pursuant to which any Person becomes a Subsidiary of the Company or is merged with or into the Company or one of the Companys Subsidiaries or pursuant to which any Persons assets are acquired, such Consolidated Fixed Charge
Coverage Ratio shall be calculated on a pro forma basis as if such transaction (and the change in Consolidated Cash Flow Available for Fixed Charges resulting therefrom) had occurred on the first day of such four full fiscal quarter period.
Consolidated Income Tax Expense
of the Company for any period means the income tax expense of the Company and its
Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
Consolidated
Interest Expense
of the Company for any period means the Interest Expense of the Company and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
Consolidated Interest Incurred
of the Company for any period means the Interest Incurred of the Company and its
Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
34
Consolidated Net Income
of the Company for any period means the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP;
provided
that there will be excluded from such net income (to the extent
otherwise included therein), without duplication:
(i) the net income (or loss) of any Person (other than a
Restricted Subsidiary) in which any Person (including, without limitation, an Unrestricted Subsidiary) other than the Company or any Restricted Subsidiary has an ownership interest, except to the extent that any such income has actually been
received by the Company or any Restricted Subsidiary in the form of cash dividends or similar cash distributions during such period, or in any other form but converted to cash during such period;
(ii) except to the extent includable in Consolidated Net Income pursuant to the foregoing clause (i), the net income (or loss)
of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged with or into or consolidated with the Company or any of its Restricted Subsidiaries or (b) the assets of such Person are
acquired by the Company or any of its Restricted Subsidiaries;
(iii) the net income of any Restricted Subsidiary to the
extent that (but only so long as) the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period;
(iv) in the
case of a successor to the Company by consolidation, merger or transfer of its assets (other than as a result of a holding corporation reorganization), any earnings of the successor prior to such merger, consolidation or transfer of assets; and
(v) the gains (but not losses) realized during such period by the Company or any of its Restricted Subsidiaries resulting from
(a) the acquisition of securities issued by the Company or extinguishment of Indebtedness of the Company or any of its Restricted Subsidiaries, (b) Asset Sales by the Company or any of its Restricted Subsidiaries and (c) other
extraordinary items realized by the Company or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, in calculating
Consolidated Net Income, the Company will be entitled to take into consideration the tax benefits associated with any loss described in clause (v) of the preceding sentence, but only to the extent such tax benefits are actually recognized by
the Company or any of its Restricted Subsidiaries during such period;
provided
,
further
, that there will be included in such net income, without duplication, the net income of any Unrestricted Subsidiary to the extent such net income
is actually received by the Company or any of its Restricted Subsidiaries in the form of cash dividends or similar cash distributions during such period, or in any other form but converted to cash during such period.
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 after giving effect to any transaction occurring after the last day of
the most recently ended fiscal quarter pursuant to which any Person becomes a Subsidiary of the Company or is merged with or into the Company or one of the Companys Subsidiaries or pursuant to which any Persons assets are acquired, on a
pro forma basis as if such transaction had occurred as of the last day of the most recently ended fiscal quarter, 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.
Consolidated Tangible Net Worth
of the Company as of any date means the
stockholders equity (including any Preferred Stock that is classified as equity under GAAP, other than Disqualified Stock) of the Company and its Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter immediately
preceding such date, as determined in accordance with GAAP, plus any amount of unvested deferred compensation included, in accordance with GAAP, as an offset to stockholders equity, less the amount of Intangible Assets reflected on the
consolidated
35
balance sheet of the Company and its Restricted Subsidiaries as of the end of the fiscal quarter immediately preceding such date; provided that solely for purposes of calculating the ratio of
Adjusted Indebtedness to Adjusted Consolidated Tangible Net Worth pursuant to the covenant described herein under Limitations on Additional Indebtedness, Consolidated Tangible Net Worth shall be calculated after giving effect to (i) the
issuance of any Capital Stock occurring after the last day of the most recently ended fiscal quarter, on a pro forma basis assuming such Capital Stock had been issued and remains outstanding as of the last day of the most recently ended fiscal
quarter; (ii) any redemption or repurchase of any Capital Stock occurring after the last day of the most recently ended fiscal quarter, on a pro forma basis assuming such Capital Stock had been redeemed or repurchased as of the last day of the
most recently ended fiscal quarter; and (iii) any other transaction occurring after the last day of the most recently ended fiscal quarter pursuant to which any Person becomes a Subsidiary of the Company or is merged with or into the Company or
one of the Companys Subsidiaries or pursuant to which any Persons assets are acquired, on a pro forma basis as if such transaction had occurred as of the last day of the most recently ended fiscal quarter.
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.
Credit
Facilities
means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities or other financing arrangements (including, without limitation, commercial paper or letter of credit facilities or indentures)
providing for revolving credit loans, term loans, letters of credit or other Indebtedness (including our Revolving Credit Facility), including any notes, mortgages, deeds of trust, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures, credit facilities, letter of credit facilities or commercial paper facilities that
replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount permitted to be borrowed
thereunder or alters the maturity thereof (
provided
that such increase in borrowings is permitted by the covenant described under Certain Covenants Limitation on Additional Indebtedness) or adds Restricted
Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.
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
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.
Disqualified Stock Dividend
of any Person means, for any dividend payable with regard to Disqualified Stock issued
by such Person, the amount of such dividend multiplied by a fraction, the numerator of which is one and the denominator of which is one minus the maximum statutory combined federal, state and local income tax rate (expressed as a decimal number
between 1 and 0) then applicable to such Person.
36
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.
Existing Indebtedness
means all of the Indebtedness of the Company and its Restricted Subsidiaries that is
outstanding on the date of the Indenture.
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);
(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));
37
(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.
Interest Expense
of any Person for any period means, without duplication, the aggregate amount of
(i) interest which, in conformity with GAAP, would be set opposite the caption interest expense or any like caption on an income statement for such Person (including, without limitation, imputed interest included on Capitalized
Lease Obligations, all commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers acceptance financing, the net costs associated with Hedging Obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment obligation, amortization of discount or premium, if any, and all other non-cash interest expense other than interest and other charges amortized to cost of sales) and
includes, with respect to the Company and its Restricted Subsidiaries, without duplication (including duplication of the foregoing items), all interest amortized to cost of sales for such period, and (ii) the amount of Disqualified Stock
Dividends recognized by the Company on any Disqualified Stock whether or not paid during such period.
Interest
Incurred
of any Person for any period means, without duplication, the aggregate amount of (i) interest which, in conformity with GAAP, would be set opposite the caption interest expense or any like caption on an income
statement for such Person (including, without limitation, imputed interest included on Capitalized Lease Obligations, all commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and
bankers acceptance financing, the net costs associated with Hedging Obligations,
38
amortization of other financing fees and expenses, the interest portion of any deferred payment obligation, amortization of discount or premium, if any, and all other noncash interest expense
other than interest and other charges amortized to cost of sales) and includes, with respect to the Company and its Restricted Subsidiaries, without duplication (including duplication of the foregoing items), all interest capitalized for such
period, all interest attributable to discontinued operations for such period to the extent not set forth on the income statement under the caption interest expense or any like caption, and all interest actually paid by the Company or a
Restricted Subsidiary under any guarantee of Indebtedness (including, without limitation, a guarantee of principal, interest or any combination thereof) of any other Person during such period and (ii) the amount of Disqualified Stock Dividends
recognized by the Company on any Disqualified Stock whether or not declared during such period.
Investments
of
any Person means all (i) investments by such Person in any other Person in the form of loans, advances or capital contributions, (ii) guarantees of Indebtedness or other obligations of any other Person by such Person, (iii) purchases
(or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iv) other items that would be classified as investments on a balance sheet of such Person determined in
accordance with GAAP. For all purposes of the Indenture, the amount of any such Investment shall be the fair market value thereof (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent
changes in value). The making of any payment in accordance with the terms of a guarantee or other contingent obligation permitted under the Indenture shall not be considered an Investment.
Issue Date
means March 14, 2017.
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).
Mandatory Convertible Notes
means any Indebtedness of a Person, the principal
amount of which is payable at maturity solely in Capital Stock of such Person (provided that a requirement to pay accrued, but unpaid interest on such Indebtedness in cash at maturity or a requirement to pay cash fees, expenses or premiums as a
result of the acceleration of payment, early redemption or otherwise with respect to such Indebtedness shall not disqualify such Indebtedness as Mandatory Convertible Notes).
Material Subsidiary
means any Subsidiary of the Company which accounted for 5% or more of the Consolidated Tangible
Assets or Consolidated Cash Flow Available for Fixed Charges of the Company on a consolidated basis for the fiscal year ending immediately prior to any Default or Event of Default.
Moodys
means Moodys Investors Service, Inc. or any successor to its debt rating business.
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.
39
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.
Permitted Investments
of any Person means any Investments of such Person that are not Restricted
Investments.
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.
Preferred Stock
of any Person means all Capital Stock of such Person which has a preference in liquidation or with
respect to the payment of dividends.
Refinancing Indebtedness
means Indebtedness that refunds,
refinances or extends any Existing Indebtedness or other Indebtedness, including Acquired Indebtedness, permitted to be incurred by the Company or its Restricted Subsidiaries pursuant to the terms of the Indenture, but only to the extent that:
(i) the Refinancing Indebtedness is subordinated in right of payment to the Notes or the Subsidiary Guarantees, as the
case may be, to the same extent as the Indebtedness being refunded, refinanced or extended, if at all;
(ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being refunded, refinanced or extended, or (b) after the maturity date of the Notes;
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the
Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Indebtedness being refunded, refinanced or extended that
is scheduled to mature on or prior to the maturity date of the Notes;
(iv) such Refinancing Indebtedness is in an
aggregate amount that is equal to or less than the aggregate amount then outstanding (including accrued interest) under the Indebtedness being refunded, refinanced or extended plus an amount necessary to pay any reasonable fees and expenses,
including premiums and defeasance costs, related to such refinancing; and
40
(v) such Refinancing Indebtedness is Incurred by the same Person that initially
Incurred the Indebtedness being refunded, refinanced or extended, except that the Company may Incur Refinancing Indebtedness to refund, refinance or extend Indebtedness of any Restricted Subsidiary.
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
March 14, 2017, among the Company, the Subsidiary Guarantors and the initial purchasers of the Notes.
Restricted Investment
means an Investment in joint ventures or Unrestricted Subsidiaries having an aggregate fair
market value (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value), taken together with all other Investments made pursuant to this definition that are at the time
outstanding, net of any amounts paid to the Company or any Restricted Subsidiary as a return of, or on, such Investments, in excess of 5% of Consolidated Tangible Assets.
Restricted Payment
means any of the following:
(i) the declaration of any dividend or the making of any other payment or distribution of cash, securities or other
property or assets in respect of the Capital Stock of the Company or any Restricted Subsidiary (other than (a) dividends, payments or distributions payable solely in Capital Stock (other than Disqualified Stock) of the Company or a Restricted
Subsidiary and (b) in the case of a Restricted Subsidiary, dividends, payments or distributions payable to the Company or to another Restricted Subsidiary and
pro rata
dividends, payments or distributions payable to minority stockholders
of such Restricted Subsidiary);
(ii) the purchase, redemption, retirement or other acquisition for value of any
Capital Stock of the Company or any Restricted Subsidiary (other than Capital Stock held by the Company or a Restricted Subsidiary);
(iii) any Restricted Investment; and
(iv) any principal payment, redemption, repurchase, defeasance or other acquisition or retirement of any Subordinated
Indebtedness (other than (a) Indebtedness permitted under clause (vii) of the second paragraph of the covenant described under Limitations on Additional Indebtedness or (b) the payment, redemption, repurchase, defeasance
or other acquisition or retirement of such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase,
defeasance or other acquisition or retirement);
provided
,
however
, that Restricted Payments will not include any purchase, redemption,
retirement or other acquisition for value of Indebtedness or Capital Stock of the Company or a Restricted Subsidiary if the consideration therefor consists solely of Capital Stock (other than Disqualified Stock) of the Company or a Restricted
Subsidiary.
Restricted Subsidiary
means each of the Subsidiaries of the Company which is not an Unrestricted
Subsidiary.
Revolving Credit Facility
means the Second Amended and Restated Credit Agreement, dated as of
September 24, 2012, among the Company, the lenders and letter of credit issuers party thereto, and Credit Suisse AG, Cayman Island Branch, as agent, as amended on November 10, 2014, November 6, 2015 and October 13, 2016, and as
such facility may be amended, restated, supplemented or otherwise modified from time to time.
S&P
means Standard and Poors Ratings Service, a division of McGraw Hill, Inc., a New York corporation, or any successor to its debt rating business.
SEC
means the Securities and Exchange Commission.
41
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.
Subordinated Indebtedness
means any Indebtedness which is subordinated in right of payment to the Notes or the Subsidiary
Guarantees, as the case may be.
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
United Home Insurance Corporation, a Vermont corporation, Security Title Insurance Company, Inc., a Vermont corporation, and, to the extent considered a Subsidiary of the Company, Beazer Homes Capital Trust I, and each of the Subsidiaries of the
Company (including any newly formed or acquired Subsidiary) so designated by a resolution adopted by the Board of Directors of the Company as provided below and provided that:
(a) neither the Company nor any of its other Subsidiaries (other than Unrestricted Subsidiaries) (1) provides any direct
or indirect credit support for any Indebtedness of such Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of such Subsidiary;
(b) the creditors with respect to Indebtedness for borrowed money of such Subsidiary have agreed in writing that they have no
recourse, direct or indirect, to the Company or any other Subsidiary of the Company (other than Unrestricted Subsidiaries or the Capital Stock of Unrestricted Subsidiaries), including, without limitation, recourse with respect to the payment of
principal or interest on any Indebtedness of such Subsidiary; and
(c) no default with respect to any Indebtedness of such
Subsidiary (including any right which the holders thereof may have to take enforcement action against such Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company and of its other
Subsidiaries (other than other Unrestricted Subsidiaries), to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity.
42
The Board of Directors of the Company may designate an Unrestricted Subsidiary to be a Restricted
Subsidiary;
provided
that:
(i) any such designation will be deemed to be an Incurrence by the Company and its
Restricted Subsidiaries of the Indebtedness (if any) of such designated Subsidiary for purposes of the Limitations on Additional Indebtedness covenant set forth in the Indenture as of the date of such designation;
(ii) immediately after giving effect to such designation and the Incurrence of any such additional Indebtedness, the Company
and its Restricted Subsidiaries could incur $1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio or the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible
Net Worth contained in the Limitations on Additional Indebtedness covenant set forth in the Indenture; and
(iii) the Liens on the property and assets of such Unrestricted Subsidiary could then be incurred in accordance with the
Limitations on Secured Indebtedness covenant set forth in the Indenture as of the date of such designation.
Subject to the
foregoing, the Board of Directors of the Company also may designate any Restricted Subsidiary to be an Unrestricted Subsidiary;
provided
that (a) the Restricted Subsidiary to be so designated has total consolidated assets of $1,000 or
less at the time of designation, or (b) with respect to any other Restricted Subsidiary, at the time of such designation:
(i) all previous Investments by the Company and its Restricted Subsidiaries in such Restricted Subsidiary (net of any returns
previously paid on such Investments) will be deemed to be Investments at the time of such designation and such Investments must be permitted at such time under the Limitations on Restricted Payments covenant set forth in the Indenture;
(ii) immediately after giving effect to such designation and such Investment, either (x) the Company and its
Restricted Subsidiaries could incur $1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio or the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth
contained in the Limitations on Additional Indebtedness covenant set forth in the Indenture or (y) either the Consolidated Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries or the ratio of Adjusted
Indebtedness of the Company and the Restricted Subsidiaries to Adjusted Consolidated Tangible Net Worth would be greater than such ratio immediately prior to such designation, in each case on a pro forma basis taking into account such designation;
and
(iii) no Default or Event of Default shall have occurred or be continuing.
Any such designation by the Board of Directors of the Company will be evidenced to the Trustee by the filing with the Trustee of a certified
copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers Certificate certifying that such designation complied with the foregoing conditions and setting forth the underlying
calculations.
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 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.
43
Weighted Average Life to Maturity
means, when applied to any
Indebtedness or portion thereof, at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required
payment of principal, including, without limitation, payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by
(ii) the sum of all such payments described in clause (a) above.
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.
Limitations on Restricted Payments
The Indenture also provides that the Company will not, and will not cause or permit any of its Restricted Subsidiaries to, make any Restricted
Payment, directly or indirectly, after the date of the Indenture if at the time of such Restricted Payment:
(i) the amount
of such proposed Restricted Payment (the amount of such Restricted Payment, if other than in cash, will be determined in good faith by a majority of the disinterested members of the Board of Directors of the Company), when added to the aggregate
amount of all Restricted Payments (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (vi) and (vii) of the next succeeding paragraph) declared or made after the Issue Date exceeds the sum of:
(1) $200.0 million, plus
(2) 50% of the Companys Consolidated Net Income accrued during the period (taken as a single period) commencing on the
Issue Date and ending on the last day of the fiscal quarter immediately preceding the fiscal quarter in which the Restricted Payment is to occur (or, if such aggregate Consolidated Net Income is a deficit, minus 100% of such aggregate deficit), plus
(3) the net cash proceeds derived from the issuance and sale of Capital Stock of the Company and its Restricted
Subsidiaries (or any capital contribution to the Company or a Restricted Subsidiary) that is not Disqualified Stock (other than a sale to, or a contribution by, a Subsidiary of the Company) after the Issue Date, plus
(4) 100% of the principal amount of, or, if issued at a discount, the accreted value of, any Indebtedness of the Company or a
Restricted Subsidiary which is issued (other than to a Subsidiary of the Company) after the Issue Date that is converted into or exchanged for Capital Stock of the Company that is not Disqualified Stock, plus
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(5) 100% of the aggregate amounts received by the Company or any Restricted
Subsidiary from the sale, disposition or liquidation (including by way of dividends) of any Investment (other than to any Subsidiary of the Company and other than to the extent sold, disposed of or liquidated with recourse to the Company or any of
its Subsidiaries or to any of their respective properties or assets) but only to the extent (x) not included in clause (2) above and (y) that the making of such Investment constituted a Permitted Investment or Restricted Investment,
plus
(6) 100% of the principal amount of, or if issued at a discount, the accreted value of, any Indebtedness or other
obligation that is the subject of a guarantee by the Company which is released (other than due to a payment on such guarantee) after the Issue Date, but only to the extent that such guarantee constituted a permitted Restricted Payment, plus
(7) with respect to any Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary in accordance with the
definition of Unrestricted Subsidiary (so long as the designation of such Subsidiary as an Unrestricted Subsidiary was treated as a Restricted Payment made after the Issue Date, and only to the extent not included in clause
(2) above), an amount equal to the lesser of (x) the proportionate interest of the Company or a Restricted Subsidiary in an amount equal to the excess of (I) the total assets of such Subsidiary, valued on an aggregate basis at the
lesser of Book Value and Fair Market Value thereof, over (II) the total liabilities of such Subsidiary, determined in accordance with GAAP, and (y) the amount of the Restricted Payment deemed to be made upon such Subsidiarys designation
as an Unrestricted Subsidiary; or
(ii) the Company would be unable to incur $1.00 of additional Indebtedness under the
Consolidated Fixed Charge Coverage Ratio contained in the Limitations on Additional Indebtedness covenant set forth in the Indenture; or
(iii) a Default or Event of Default has occurred and is continuing or occurs as a consequence thereof.
Notwithstanding the foregoing, the provisions of the Limitation on Restricted Payments covenant set forth in the Indenture does
not prevent:
(i) the payment of any dividend within 60 days after the date of declaration thereof if the payment thereof
would have complied with the limitations of the Indenture on the date of declaration;
(ii) the purchase, repayment,
redemption, repurchase, defeasance or other acquisition or retirement of shares of the Companys Capital Stock or the Companys or a Restricted Subsidiarys Indebtedness for, or out of the net proceeds of a substantially concurrent
sale (other than a sale to a Subsidiary of the Company) of, other shares of its Capital Stock (other than Disqualified Stock),
provided
that the proceeds of any such sale will be excluded in any computation made under clause (3) above;
(iii) the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of
Indebtedness, including premium, if any, with the proceeds of Refinancing Indebtedness;
(iv) payments or distributions
pursuant to or in connection with a merger, consolidation or transfer of assets that complies with the provisions of the Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property and assets of the
Company or any Subsidiary Guarantor;
(v) any purchase, redemption, retirement or other acquisition for value of Capital
Stock of the Company or any Subsidiary held by officers or employees or former officers or employees of the Company or any Subsidiary (or their estates or beneficiaries under their estates) not to exceed $500,000 in any calendar year and $5.0
million in the aggregate since the Issue Date;
(vi) repurchases of Capital Stock deemed to occur upon the exercise of
stock options, warrants or similar instruments if such Capital Stock represents a portion of the exercise price of such options, warrants or similar instruments;
45
(vii) the payment by the Company of cash in lieu of the issuance of fractional
shares upon the exercise of options, warrants or similar instruments or upon the conversion or exchange of Capital Stock of the Company;
(viii) the payment of dividends on Preferred Stock and Disqualified Stock up to an aggregate amount of $10.0 million in any
fiscal year;
provided
that immediately after giving effect to any declaration of such dividend, the Company could incur at least $1.00 of Indebtedness under the Consolidated Fixed Charge Coverage Ratio contained in the Limitations on
Additional Indebtedness covenant set forth in the Indenture;
(ix) payments not to exceed $40.0 million in the
aggregate for the purchase, repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of the Companys junior subordinated notes due July 30, 2036 (or the related trust preferred securities issued by Beazer
Homes Capital Trust I), as such securities may be amended or modified from time to time; or
(x) other Restricted Payments
made after the Issue Date in an amount not to exceed $100.0 million in the aggregate.
For purposes of determining compliance with this
Limitations on Restricted Payments covenant, in the event a Restricted Payment meets the criteria to be made pursuant to more than one of the above clauses of this covenant, the Company, in its sole discretion, shall classify such
Restricted Payment in any manner that complies with this covenant and may from time to time reclassify such Restricted Payment in any manner in which such Restricted Payment could be made at the time of such reclassification.
Limitations on Additional Indebtedness
The Indenture provides that the Company will not, and will not cause or permit any of its Restricted Subsidiaries, directly or
indirectly, to, Incur any Indebtedness including Acquired Indebtedness;
provided
that the Company and the Subsidiary Guarantors may Incur Indebtedness, including Acquired Indebtedness, if, after giving effect thereto and the application of
the proceeds therefrom, either (i) the Companys Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or (ii) the ratio of Adjusted Indebtedness of the Company and the Restricted Subsidiaries to
Adjusted Consolidated Tangible Net Worth is less than 7.5 to 1.
Notwithstanding the foregoing, the provisions of the
Indenture does not prevent:
(i) the Company or any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness
or (B) Non-Recourse Indebtedness;
(ii) the Company from Incurring Indebtedness evidenced by the Notes issued on
the Issue Date or any Exchange Notes issued in exchange therefor;
(iii) the Company or any Subsidiary Guarantor from
Incurring Indebtedness under Credit Facilities not to exceed the greater of $200.0 million and 15% of Consolidated Tangible Assets;
(iv) any Subsidiary Guarantee of Indebtedness of the Company under the Notes or any Exchange Notes issued in exchange therefor;
(v) the Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance
of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money);
(vi) any Subsidiary Guarantor from guaranteeing Indebtedness of the Company or any other Subsidiary Guarantor, or the Company
from guaranteeing Indebtedness of any Subsidiary Guarantor, in each case permitted to be Incurred under the Indenture (other than Non-Recourse Indebtedness);
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(vii) (a) any Restricted Subsidiary from Incurring Indebtedness owing to the
Company or any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary;
provided
that
(I) such Indebtedness is subordinated to any Subsidiary Guarantee of such Restricted Subsidiary, if any, and
(II) such Indebtedness shall only be permitted pursuant to this clause (vii)(a) for so long as the Person to whom such
Indebtedness is owing is the Company or a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and
(b) the Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a
Restricted Subsidiary;
provided
that
(I) such Indebtedness is subordinated to the Companys obligations under
the Notes and the Indenture, and
(II) such Indebtedness shall only be permitted pursuant to this clause (vii)(b) for so
long as the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is both a Wholly Owned Subsidiary and a Restricted Subsidiary;
(viii) the Company and any Restricted Subsidiary from Incurring Indebtedness under Capitalized Lease Obligations or purchase
money obligations, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Company or such Restricted
Subsidiary, as the case may be, in an aggregate amount at any time outstanding not to exceed $50.0 million;
(ix) the
Company or any Restricted Subsidiary from Incurring obligations for, pledge of assets in respect of, and guaranties of, bond financings of political subdivisions or enterprises thereof in the ordinary course of business (as determined in good faith
by the Company);
(x) the Company or any Restricted Subsidiary from incurring Indebtedness owed to a seller of entitled
land, lots under development or finished lots under the terms of which the Company or such Restricted Subsidiary, as obligor, is required to make a payment upon the future sale of such land or lots; and
(xi) the Company or any Restricted Subsidiary from Incurring Indebtedness in an aggregate principal amount at any time
outstanding not to exceed $100.0 million.
The Company shall not, and the Company will not cause or permit any Subsidiary Guarantor that
is a Restricted Subsidiary to, directly or indirectly, in any event Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of
such Subsidiary Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary Guarantee of such Subsidiary
Guarantor, as the case may be, at least to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.
For purposes of determining compliance with this Limitations on Additional Indebtedness covenant, in the event an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness described in the above clauses of this covenant, the Company, in its sole discretion, shall classify such item of Indebtedness in any manner that complies with this
covenant and may from time to time reclassify such item of Indebtedness in any manner in which such item could be Incurred at the time of such reclassification.
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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 termination
of such Change of Control Offer (the
Change of Control Termination 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 Termination 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 Termination Date, which shall be no earlier than 30 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
Termination 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 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 Termination 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.
48
Limitations on Secured Indebtedness
The Indenture provides that, notwithstanding any Indebtedness that may be incurred as described above under Certain Covenants
Limitations on Additional Indebtedness, 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.
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 aggregate principal amount of all Secured Indebtedness outstanding (excluding
(a) Secured Indebtedness permitted under clauses (i) through (v) above and (b) any Secured Indebtedness in relation to which the Notes have been equally and ratably secured) 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, if such Indebtedness is permitted as described above under Certain Covenants Limitations on Additional Indebtedness.
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:
49
(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;
(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;
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(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 of a Material Subsidiary
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 that is a Material
Subsidiary 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 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.
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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, 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.
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:
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(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.
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
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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.
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.
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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 is 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 is 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 is 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 is 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
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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.
Subject to compliance with the transfer restrictions applicable to the notes described herein, 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
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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 legended 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 Rule
144A Global Notes and the Regulation S 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).
Exchange of Certificated Notes for Global Notes
Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the trustee a
written certificate (in the form provided in the indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes. See Notice to Investors.
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, 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.
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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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