As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/18/16  Orbital Atk, Inc.                 424B3                  1:985K                                   Merrill Corp-MD/FA
          Alliant Techsystems Operations LLC
          ATK Space Systems Inc.
          ATK Launch Systems Inc.
          Orbital Sciences Corp/DE

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                          HTML    657K 

Table of Contents

 

	Filed Pursuant to Rule 424(b)3
	Registration No. 333-210649

 

PROSPECTUS

 

Orbital ATK, Inc.

Offer to Exchange

$400,000,000 5.50% Senior Notes due 2023 and the related guarantees

For

$400,000,000 5.50% Senior Notes due 2023 and the related guarantees,

that have been registered under the Securities Act of 1933, as amended

 

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT

5:00 P.M., NEW YORK CITY TIME, MAY 16, 2016 UNLESS EXTENDED.

 

We hereby offer, on the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal, to exchange up to $400,000,000 of our outstanding, unregistered 5.50% Senior Notes due 2023, which we refer to as the “original notes” for a like principal amount of our 5.50% Senior Notes due 2023 that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), which we refer to as the “exchange notes.” Unless we specify otherwise or the context indicates otherwise, we refer to the exchange notes and the original notes together as the “notes.”

 

Terms of the exchange offer:

 

·                  The exchange notes are being registered with the Securities and Exchange Commission (“SEC”) and are being offered in exchange for the original notes that were previously issued in an offering exempt, pursuant to Rule 144A under the Securities Act, from the SEC’s registration requirements. The terms of the exchange offer are summarized below and are more fully described in this prospectus.

 

·                  We will exchange all original notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer. The exchange offer will expire at 5:00 p.m., New York City time, on May 16, 2016, unless extended by us.

 

·                  You may withdraw tenders of original notes at any time prior to the expiration of the exchange offer.

 

·                  The terms of the exchange notes are substantially identical to the original notes, except that the exchange notes are registered under the Securities Act and the transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes.

 

·                  We believe that the exchange of original notes generally will not be a taxable event for U.S. federal income tax purposes, but you should review “Certain U.S. Federal Income Tax Considerations,” in this prospectus for more information.

 

·                  We will not receive any proceeds from the exchange offer.

 

·                  The exchange notes will be guaranteed on a senior unsecured basis by Alliant Techsystems Operations LLC, ATK Launch Systems Inc., ATK Space Systems Inc. and Orbital Sciences Corporation (collectively, the “guarantors”).

 

·                  We do not intend to list the exchange notes on any securities exchange or to have them approved for any automated quotation system.

 

Investments in these securities involve risks. See Risk Factors beginning on page 11.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

This prospectus and the letter of transmittal are first being mailed to all holders of the original notes on April 18, 2016.

 

The date of this prospectus is April 18, 2016.

 

Table of Contents

 

TABLE OF CONTENTS

 

		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		ii
SUMMARY		1
SELECTED CONSOLIDATED FINANCIAL DATA		9
EARNINGS RATIOS		10
RISK FACTORS		11
USE OF PROCEEDS		18
THE EXCHANGE OFFER		18
DESCRIPTION OF THE NOTES		25
BOOK-ENTRY; DELIVERY AND FORM		69
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS		72
PLAN OF DISTRIBUTION		77
LEGAL MATTERS		77
EXPERTS		77
WHERE YOU CAN FIND MORE INFORMATION		78
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		78

 

Each broker-dealer that receives exchange notes pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such securities. If the broker-dealer acquired the original notes as a result of market-making or other trading activities, such broker-dealer may use the prospectus for the exchange offer, as supplemented or amended, in connection with resales of the exchange notes. Broker-dealers who acquired the original notes directly from us in the initial offering must, in the absence of an exemption, comply with the registration and prospectus delivery requirements of the Securities Act in connection with the secondary resales and cannot rely on the position of the staff of the SEC enunciated in Exxon Capital Holdings Corp., SEC No-Action Letter (April 13, 1988).

 

This prospectus incorporates important business and financial information about us that is not included or delivered with this prospectus. We will provide without charge, upon written or oral request, to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of all documents referred to below which have been or may be incorporated by reference into this prospectus excluding exhibits to those documents unless such exhibits are specifically incorporated by reference into those documents.

 

In order to obtain timely delivery, you must request the information no later than May 9, 2016, which is five business days before the expiration date of the exchange offer. Any such request should be directed to us at:

 

Orbital ATK, Inc.

45101 Warp Drive

Dulles, Virginia 20166

(703) 406-5000

Attn: Investor Relations

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended, or the Securities Act. Forward-looking statements give the Company’s current expectations or forecasts of future events. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue,” and similar expressions are used to identify forward-looking statements. From time to time, we also may provide oral or written forward-looking statements in other materials released to the public. Any or all forward-looking statements in this prospectus and in any public statements we make could be materially different. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Any change in the following factors may impact the achievement of results:

 

·                  reductions or changes in NASA or U.S. Government military spending, timing of payments and budgetary policies, including impacts of sequestration under the Budget Control Act of 2011, and sourcing strategies;

 

·                  intense competition for U.S. Government contracts and programs;

 

·                  increases in costs, which we may not be able to react to due to the nature of our U.S. Government contracts;

 

·                  changes in cost and revenue estimates and/or timing of programs;

 

·                  the potential termination of U.S. Government contracts and the potential inability to recover termination costs;

 

·                  other risks associated with U.S. Government contracts that might expose us to adverse consequences;

 

·                  government laws and other rules and regulations applicable to us, including procurement and import-export control;

 

·                  reduction or change in demand and manufacturing costs for commercial ammunition;

 

·                  the manufacture and sale of products that create exposure to potential product liability, warranty liability or personal injury claims and litigation;

 

·                  risks associated with expansion into new and adjacent commercial markets;

 

·                  results of the Merger (as defined below) or other acquisitions or transactions, including our ability to successfully integrate acquired businesses and realize anticipated synergies, cost savings and other benefits, and costs incurred for pursuits and proposed acquisitions;

 

·                  greater risk associated with international business, including foreign currency exchange rates and fluctuations in those rates;

 

·                  federal and state regulation of defense products and ammunition;

 

·                  costs of servicing our debt, including cash requirements and interest rate fluctuations;

 

·                  actual pension and other postretirement plan asset returns and assumptions regarding future returns, discount rates, service costs, mortality rates, and health care cost trend rates;

 

·                  security threats, including cybersecurity and other industrial and physical security threats, and other disruptions;

 

·                  supply, availability, and costs of raw materials and components, including commodity price fluctuations;

 

·                  performance of our subcontractors;

 

·                  development of key technologies and retention of a qualified workforce;

 

·                  the performance of our products;

 

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·                  fires or explosions at any of our facilities;

 

·                  government investigations and audits;

 

·                  environmental laws that govern past practices and rules and regulations, noncompliance with which may expose us to adverse consequences;

 

·                  impacts of financial market disruptions or volatility to our customers and vendors;

 

·                  unanticipated changes in the tax provision or exposure to additional tax liabilities; and

 

·                  the costs and ultimate outcome of litigation matters, government investigations and other legal proceedings.

 

This list of factors is not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact our business performance, including factors and risks included in other sections of this prospectus. For a detailed discussion of these and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements, see the section entitled “Risk Factors” beginning on page 11 of this prospectus and under Item 1A, “Risk Factors,” in our Transition Report on Form 10-K for the transition period beginning April 1, 2015 and ending December 31, 2015 and in other documents that we may file from time to time in the future with the SEC. All such risk factors are difficult to predict, contain material uncertainties that may affect actual results, and may be beyond our control.

 

All forward-looking statements included in this prospectus are based on information available at the time the statement is made. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDERS OF ORIGINAL NOTES FOR EXCHANGE NOTES FROM, HOLDERS IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.

 

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SUMMARY

 

The following summary is qualified in its entirety by the more detailed information included elsewhere in this prospectus. Because this is a summary, it may not contain all the information that may be important to you. You should read the entire prospectus before making an investment decision. Unless otherwise indicated or required by the context, references in this prospectus to “we,” “our,” “us” and the “Company” refer to Orbital ATK, Inc. (“Orbital ATK”) and its subsidiaries, collectively.

 

Orbital ATK, Inc.

 

We are an aerospace and defense systems company and supplier of related products to the U.S. Government, allied nations, prime contractors and other customers. Our main products include launch vehicles and related propulsion systems; satellites and associated components and services; composite aerospace structures; tactical missiles, subsystems and defense electronics; and precision weapons, armament systems and ammunition. We are headquartered in Dulles, Virginia and have operating locations throughout the United States. We were incorporated in Delaware in 1990.

 

On February 9, 2015, we completed a tax-free spin-off and distribution of our former Sporting Group to our stockholders (the “Distribution”) as a new public company called Vista Outdoor Inc. (“Vista Outdoor”). Immediately following the Distribution, we combined with Orbital Sciences Corporation (“Orbital”) through the merger of a Company subsidiary with Orbital (the “Merger”). Following the Distribution and Merger, we changed our name from Alliant Techsystems Inc. (“ATK”) to Orbital ATK, Inc.

 

We conduct business in three segments: Flight Systems Group, Defense Systems Group and Space Systems Group, which are described in greater detail below. These Groups are further comprised of smaller operating units that we refer to as “divisions.”

 

Our Flight Systems Group is well-positioned in its markets, as follows:

 

·                              leading provider of small- and medium-class space launch vehicles for civil, military and commercial missions,

 

·                              major supplier of interceptor boosters and target vehicles for missile defense applications,

 

·                              premier producer of solid rocket propulsion systems and specialty energetic products, and

 

·                              manufacturer of composite structures for commercial and military aircraft and launch vehicles.

 

Our Defense Systems Group is also well-positioned in its markets, as follows:

 

·                              leader in propulsion and controls for air-, sea- and land-based tactical missiles and missile defense interceptors as well as fuzing and warheads for tactical missiles and munitions,

 

·                              supplier of advanced defense electronics for next-generation strike weapon systems, missile-warning and aircraft survivability systems, and special-mission aircraft,

 

·                              leading producer of medium- and large-caliber ammunition, medium-caliber gun systems and precision munitions guidance kits, and

 

·                              leading U.S. producer of small-caliber ammunition.

 

Our Space Systems Group is also well-positioned in its markets, as follows:

 

·                              leading provider of small- and medium-class commercial satellites used for global communications and high-resolution Earth imaging,

 

·                              leading provider of small- and medium-class spacecraft that perform scientific research and national security missions for government customers,

 

·                              provider of commercial cargo delivery services to the International Space Station and developer of advanced space systems, and

 

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·                              premier provider of spacecraft components and subsystems and specialized technical services.

 

In March 2015, we changed our fiscal year from the period beginning on April 1 and ending on March 31 to the period beginning on January 1 and ending on December 31. As a result, the period covered by our most recent Form 10-K is a nine-month transition period covering the period beginning April 1, 2015 to December 31, 2015.

 

Sales; Income from continuing operations, before interest, income taxes and noncontrolling interest; Total assets; and other financial data for each segment for the nine month transition period ended December 31, 2015 and the fiscal years ended March 31, 2015 and 2014 are set forth in Note 16 to the consolidated financial statements, included in Item 8 of our Transition Report on Form 10-K for the transition period ended December 31, 2015.

 

Our principal executive offices are located at 45101 Warp Drive, Dulles, Virginia 20166, and our main telephone number is (703) 406-5000. We maintain our general corporate website at http://www.orbitalatk.com. Information on or connected to our website is neither part of nor incorporated into this prospectus.

 

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The Exchange Offer

 

On September 29, 2015, we completed the offering of $400,000,000 aggregate principal amount of 5.50% Senior Notes due 2023. The offering was made in reliance upon the Rule 144A exemption from the registration requirements of the Securities Act. As part of the offering, we entered into a registration rights agreement with the initial purchasers of the original notes in which we agreed, among other things, to deliver this prospectus and to complete an exchange offer for the original notes. Below is a summary of the exchange offer.

 

Securities Offered		Up to $400,000,000 aggregate principal amount of exchange 5.50% Senior Notes due 2023 which have been registered under the Securities Act. The form and terms of these exchange notes are identical in all material respects to those of the original notes. The exchange notes, however, will not contain the transfer restrictions and registration rights applicable to the original notes.
The Exchange Offer		We are offering to exchange $1,000 principal amount of our 5.50% Senior Notes due 2023, which have been registered under the Securities Act and which we refer to as the “exchange notes,” for each $1,000 principal amount of our outstanding, unregistered 5.50% Senior Notes due 2023, which we issued on September 29, 2015, and which we refer to as the “original notes” (the “Exchange Offer”). No notes of principal amount of $2,000 or less shall be exchanged in part. Unless we specify otherwise or the context indicates otherwise, we refer to the exchange notes and the original notes together as the “notes.”
		In order to be exchanged, an original note must be properly tendered and accepted. All original notes that are validly tendered and not withdrawn will be exchanged. As of the date of this prospectus, there are $400,000,000 principal amount of 5.50% original notes outstanding. We will issue exchange notes promptly after the expiration of the Exchange Offer.
Resales		Based on interpretations by the staff of the SEC, as detailed in a series of no-action letters issued to third parties, we believe that the exchange notes issued in the Exchange Offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act as long as:
		·                  you are acquiring the exchange notes in the ordinary course of your business;
		·                  you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate, in a distribution of the exchange notes; and
		·                  you are not our affiliate.
		Rule 405 under the Securities Act defines “affiliate” as a person that, directly or indirectly, controls or is controlled by, or is under common control with, a specified person. In the absence of an exemption, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the exchange notes. If you fail to comply with these requirements you may incur liabilities under the Securities Act, and we will not indemnify you for such liabilities.

 

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		Each broker or dealer that receives exchange notes for its own account in exchange for original notes that were acquired as a result of market-making or other trading activities must acknowledge that it will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any offer to resell, resale, or other transfer of the exchange notes issued in the Exchange Offer.
Expiration date		5:00 p.m., New York City time, on May 16, 2016, unless we extend the expiration date.
Withdrawal rights		You may withdraw tenders of the original notes at any time prior to 5:00 p.m., New York City time, on the expiration date. For more information, see the section entitled “Expiration Date; Extensions; Termination” under the heading “The Exchange Offer.”
Conditions to the Exchange Offer		The Exchange Offer is subject to certain customary conditions, which we may waive in our sole discretion. For more information, see the section entitled “The Exchange Offer” under the heading “Conditions to the Exchange Offer.” The Exchange Offer is not conditioned upon the exchange of any minimum principal amount of original notes.
Procedures for tendering original notes		If you wish to accept the Exchange Offer, you must (i) complete, sign and date the accompanying letter of transmittal, or a facsimile copy of such letter, in accordance with its instructions and the instructions in this prospectus, and (ii) mail or otherwise deliver the executed letter of transmittal, together with the original notes and any other required documentation to the exchange agent at the address set forth in the letter of transmittal. If you are a broker, dealer, commercial bank, trust company or other nominee and you hold original notes through The Depository Trust Company, or DTC, and wish to accept the Exchange Offer, you must do so pursuant to DTC’s automated tender offer program.
		If you are a beneficial owner whose original notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your original notes in the Exchange Offer, we urge you to promptly contact the person or entity in whose name your original notes are registered and instruct that person or entity to tender on your behalf. If you wish to tender your original notes in the Exchange Offer on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your original notes, either make appropriate arrangements to register ownership of your original notes in your name or obtain a properly completed bond power from the person or entity in whose name your original notes are registered. The transfer of registered ownership may take considerable time.
Taxation		We believe the exchange pursuant to the Exchange Offer generally will not be a taxable event for U.S. federal income tax purposes. For more details, see the section entitled “Certain U.S. Federal Income Tax Considerations.”
Consequences of failure to exchange		If you do not exchange the original notes, they will remain entitled to all the rights and preferences and will continue to be subject to the

 

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		limitations contained in the indenture governing the notes. However, following the Exchange Offer, all outstanding original notes will still be subject to the same restrictions on transfer, and we will have no obligation to register outstanding original notes under the Securities Act.
Use of proceeds		We will not receive any proceeds from the Exchange Offer. For more details, see the “Use of Proceeds” section.
Exchange agent		The Bank of New York Mellon Trust Company, N.A. is serving as the exchange agent in connection with the Exchange Offer. The address, telephone number and facsimile number of the exchange agent are listed in the section entitled “The Exchange Offer” under the heading “Exchange Agent.”

 

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The Notes

 

Unless specifically indicated, the summary below describes the principal terms of the notes (including the exchange notes). This summary is not intended to be complete. For a more complete understanding of the notes, please refer to the section entitled “Description of the Notes” in this prospectus. Other than the restrictions on transfer, registration rights and special interest provisions, the exchange notes will have the same financial terms and covenants as the original notes, which are summarized as follows

 

Issuer	Orbital ATK, Inc.
Notes Offered	$400,000,000 aggregate principal amount of 5.50% senior notes due 2023.
Maturity Date	October 1, 2023.
Interest	Interest on the notes accrues at a rate of 5.50% per year, payable semi-annually in cash, in arrears, on April 1 and October 1 of each year, with the next interest payment being October 1, 2016.
Guarantees	The notes are jointly and severally guaranteed on a general unsecured and unsubordinated basis by each of our restricted subsidiaries that from time to time guarantees our indebtedness under our senior credit facility (the “Senior Credit Facility”) or any of our capital markets debt securities, which consists of substantially all of our wholly-owned domestic subsidiaries. Any guarantor may be released from its guarantee under certain circumstances as described under the caption “Description of the Notes—The Subsidiary Guarantees.”
Ranking	The notes and the guarantees are our and the guarantors’ general unsecured senior obligations and:
		·	rank equally in right of payment with all of our and the guarantors’ existing and future unsecured and unsubordinated debt, including our 5.25% Senior Notes due 2021 and the guarantors’ guarantees thereof;
		·	rank senior in right of payment to all existing and future indebtedness of Orbital ATK and the guarantors that is subordinated in right of payment to the notes and the guarantees, respectively;
		·	are effectively subordinated to all of our and our guarantors’ existing and future secured debt, including our, and the guarantors’ guarantee of, debt under the Senior Credit Facility and guarantees thereof, to the extent of the value of the assets securing such debt; and
		·	are structurally subordinated to all existing and future debt and other liabilities, including trade payables and preferred stock, of any non-guarantor subsidiary.
	The non-guarantor subsidiaries generated a de minimis portion of our sales for the nine months ended December 31, 2015 and held a de minimis portion of our consolidated assets as of December 31, 2015.

 

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	As of December 31, 2015, Orbital ATK and the guarantors had total indebtedness of $1,490 million (of which $790 million was secured indebtedness).
Redemption	The notes are redeemable, in whole or in part, at any time on or after October 1, 2018 at the redemption prices specified under “Description of the Notes—Optional Redemption.” Prior to October 1, 2018 we may redeem some or all of the notes at a price of 100% of the principal amount, plus accrued and unpaid interest, if any, plus a “make-whole” premium. We may redeem up to 35% of the notes prior to October 1, 2018 with the proceeds from one or more qualified equity offerings.
Change of Control	If we experience a change of control (as defined in “Description of the Notes—Change of Control”), we must give holders the opportunity to sell their notes, in whole or in part, to us at 101% of their principal amount thereof plus accrued and unpaid interest thereon, if any, to the purchase date. See “Description of the Notes—Change of Control.”
Certain Covenants	The covenants contained in the indenture governing the notes, among other things, limit our ability and the ability of our restricted subsidiaries to:
		·	incur or guarantee more debt;
		·	pay dividends and make distributions or repurchase shares or subordinated debt;
		·	make investments;
		·	create liens;
		·	enter into restrictions on the ability of our restricted subsidiaries to make distributions, loans or advances to us;
		·	sell assets;
		·	engage in certain types of transactions with affiliates; and
		·	merge or consolidate with other companies or sell substantially all of our assets.
	These covenants are subject to a number of important exceptions, limitations and qualifications that are described under “Description of the Notes—Certain Covenants.”
	During any period in which we achieve an investment grade rating for the notes from both Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”) and in which no default or event of default has occurred and is continuing under the indenture, most of these covenants will be suspended. However, such suspended covenants will be reinstituted if and when the notes cease to have investment grade ratings by either Moody’s or S&P. See “Description of the Notes—Covenant Suspension When Notes Rated Investment Grade.”

 

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No Public Trading Market	The exchange notes are a new issue of securities for which there is currently no public trading market. We do not intend to list the exchange notes on any national securities exchange or automated quotation system. Accordingly, there can be no assurances that an active market will develop upon completion of the Exchange Offer or, if it develops, that such market will be sustained, or as to the liquidity of any such market.
Risk Factors	Investing in the exchange notes involves certain risk. See “Risk Factors” and other information included or incorporated by reference into this prospectus for a discussion of factors you should carefully consider before deciding whether to participate in the Exchange Offer.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

 

		Nine Months Ended			Years Ended March 31,
(Amounts in thousands except per share data)		December 31, 2015			2015			2014			2013			2012
		(1)			(2)									(3)
Results of Operations:
Sales		$	3,399,089		$	3,173,967		$	2,925,237		$	3,206,096		$	3,610,579
Cost of sales		2,729,898			2,469,865			2,277,939			2,521,277			2,820,492
Gross profit		669,191			704,102			647,298			684,819			790,087
Operating expenses:
Research and development		83,209			49,349			48,536			55,958			58,906
Selling		88,177			89,941			87,554			90,219			106,065
General and administrative		225,418			298,559			209,251			200,568			234,922
Goodwill impairment		—			34,300			—			—			—
Gain on settlement		50,000			—			—			—			—
Income from continuing operations, before interest, income taxes and noncontrolling interest		322,387			231,953			301,957			338,074			390,194
Interest expense, net		(57,163		)	(88,676		)	(79,792		)	(65,386		)	(88,620		)
Loss on extinguishment of debt		—			(26,626		)	—			(11,773		)	—
Income from continuing operations, before income taxes and noncontrolling interest		265,224			116,651			222,165			260,915			301,574
Income taxes		83,659			39,117			62,542			73,746			107,321
Income from continuing operations, before noncontrolling interest		181,565			77,534			159,623			187,169			194,253
Less net income attributable to noncontrolling interest		143			99			171			436			592
Income from continuing operations of Orbital ATK, Inc.		$	181,422		$	77,435		$	159,452		$	186,733		$	193,661
Basic earnings per common share from continuing operations		$	3.06		$	2.18		$	5.03		$	5.76		$	5.89
Basic weighted-average number of common shares outstanding		59,358			35,469			31,671			32,447			32,874
Diluted earnings per common share from continuing operations		$	3.03		$	2.14		$	4.87		$	5.73		$	5.85
Diluted weighted-average number of diluted common shares outstanding		59,915			36,140			32,723			32,608			33,112
Other Data:
Depreciation and amortization of intangible assets (3)		$	123,878		$	85,027		$	72,304		$	80,935		$	84,302
Capital expenditures (3)		104,634			112,704			105,730			73,494			100,820
Cash dividends per common share		$	0.78		$	1.28		$	1.10		$	0.92		$	0.80
Gross margin (gross profit as a percentage of sales) (3)		19.7		%	22.2		%	22.1		%	21.4		%	21.9		%
Financial Position:
Net current assets (4)		$	1,273,463		$	1,292,122		$	518,679		$	877,572		$	715,917
Net property, plant and equipment (4)		806,187			807,057			508,455			478,716			486,273
Total assets (4)		5,353,556			5,504,402			3,423,521			3,575,256			3,785,219
Long-term debt (including current portion) (4)		1,490,000			1,588,501			2,092,978			1,073,877			1,302,002
Total Orbital ATK, Inc. stockholders’ equity		1,937,140			1,776,998			1,911,575			1,502,169			1,226,795

 

(1)	In the nine months ended December 31, 2015, the Company recorded a $50.0 million gain on settlement of a dispute with a supplier pertaining to the Antares rocket used in the CRS I contract.
(2)	In fiscal 2015, we recorded $34.9 million of transaction fees for advisory, legal and accounting services in connection with the Distribution and Merger, and a $25.0 million litigation charge pertaining to a Raytheon lawsuit settlement.
(3)	In fiscal 2012, we recorded a $36.5 million litigation charge pertaining to a LUU flares lawsuit settlement.
(4)	Presented for continuing operations only.

 

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EARNINGS RATIOS

 

The following table shows our historical ratio of earnings to fixed charges for each of the five most recent fiscal years. For the purposes of calculating the ratio of earnings to fixed charges, “earnings” represents income from continuing operations before income taxes, plus fixed charges. “Fixed charges” consist of interest expense, including amortization of debt issuance costs and that portion of rental expense considered to be a reasonable approximation of interest.

 

		Nine Months Ended December 31,		Years Ended March 31
		2015		2015		2014		2013		2012
Ratio of earnings to fixed charges		4.89		2.16		3.45		4.38		4.02

 

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RISK FACTORS

 

An investment in the exchange notes involves risks. Before deciding whether to participate in the Exchange Offer, you should consider the risks discussed below and elsewhere in this prospectus, including those set forth under the heading “Special Note Regarding Forward-Looking Statements,” together with all other information contained in this prospectus and the documents incorporated by reference herein. You should also consider the risks set forth in our Transition Report on Form 10-K for the transition period ended December 31, 2015 and other documents that we file with the SEC and that are incorporated by reference in this prospectus.

 

Any of the risks discussed below or elsewhere in this prospectus or in our SEC filings incorporated by reference in this prospectus, and other risks we have not anticipated or discussed, could have a material adverse impact on our business, financial condition or results of operations. In that case, our ability to pay interest on the notes when due or to repay the notes at maturity could be adversely affected, and the trading price of the notes could decline substantially.

 

Risks Related to the Notes

 

Risks Related to this Exchange Offer

 

If an active trading market does not develop for the exchange notes, the holder may be unable to sell them or to sell them at a price the holder deems sufficient.

 

The exchange notes are a new issue of securities for which there is currently no public trading market. We do not intend to list the exchange notes on any national securities exchange or automated quotation system. Accordingly, there can be no assurances that an active market will develop upon completion of the Exchange Offer or, if it develops, that such market will be sustained, or as to the liquidity of any such market. If an active market does not develop or is not sustained, the market price and the liquidity of the exchange notes may be adversely affected. In addition, the liquidity of the trading market for the exchange notes, if it develops, and the market price quoted for the exchange notes, may be adversely affected by changes in the overall market for those securities and by changes in our financial performance or prospects or in the prospects for companies in our industry generally.

 

Any original notes that are not exchanged will continue to be restricted securities and may become less liquid.

 

Original notes that are not tendered or that we do not accept for exchange will, following this offer, continue to be restricted securities, and the holder may not offer to sell them except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We will issue exchange notes in exchange for the original notes pursuant to this offer only following the satisfaction of the procedures and conditions set forth in “The Exchange Offer—Procedures for Tendering.” Such procedures and conditions include timely receipt by the exchange agent of such original notes (or a confirmation of book entry transfer) and of a properly completed and duly executed letter of transmittal (or an agent’s message from DTC). Because we anticipate that most holders of original notes will elect to exchange their original notes, we expect that the liquidity of the market for the original notes remaining after the completion of the Exchange Offer will be substantially limited. Any original notes tendered and exchanged in this offer will reduce the aggregate principal amount of original notes outstanding. Following the Exchange Offer, original notes generally will not have any further registration rights, and such original notes will continue to be subject to certain transfer restrictions. Accordingly, the liquidity of the market for the original notes could be adversely affected.

 

Risks Related to the Notes

 

We have significant indebtedness that involves significant debt service obligations, limits our operational and financial flexibility, exposes us to interest rate fluctuations and exposes us to the risk of default under our debt obligations.

 

We have a significant amount of indebtedness and debt service requirements. As of December 31, 2015, we had:

 

·

$1,490 million of total indebtedness outstanding, consisting of $790 million of indebtedness under the Senior Credit Facility (not including letters of credit) and $700 million of the original notes;

 

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	·	$146.5 million of outstanding but undrawn letters of credit issued under our revolving credit facility (the “Revolving Facility”); and
	·	taking into account these letters of credit, an additional $853.5 million of availability under the Revolving Facility.

 

Our substantial indebtedness could have important consequences to you, including the following:

 

	·	it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, acquisitions, debt service requirements and general corporate or other purposes;
	·	a substantial portion of our cash flows from operations will be dedicated to the payment of principal and interest on our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including to finance our working capital, capital expenditures, acquisitions and general corporate or other purposes;
	·	it could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and place us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged;
	·	it could make us more vulnerable to downturns in general economic or industry conditions or in our business, or prevent us from carrying out activities that are important to our growth;
	·	it could increase our interest expense if interest rates in general increase because a portion of our indebtedness, including all of our indebtedness under the Senior Credit Facility, bears interest at floating rates;
	·	we may be limited in our ability to take advantage of strategic business opportunities; and
	·	it could make it more difficult for us to satisfy our obligations with respect to our indebtedness, including under the notes, and any failure to comply with the obligations of any of our debt instruments, including any financial and other restrictive covenants, could result in an event of default under the indenture governing the notes or under the agreements governing our other indebtedness which, if not cured or waived, could result in the acceleration of our indebtedness under the Senior Credit Facility and under the notes.

 

Any of the above listed factors could materially affect our business, cash flows, financial condition and results of operations.

 

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

 

A significant portion of our cash flow from operations is dedicated to paying principal and interest on outstanding debt. Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund our operations, working capital, capital expenditures and any future acquisitions, will principally depend upon our ability to generate cash flow from our operations. To a certain extent, our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control. Moreover, a portion of our indebtedness, as well as any future indebtedness under the Senior Credit Facility, bears interest at floating rates, and, therefore, if interest rates increase, our debt service requirements will increase.

 

We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Senior Credit Facility or from other debt financing, in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs.

 

If we do not generate sufficient cash flow from operations to satisfy our debt service obligations, including payments on the notes, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital, including by issuing equity securities or securities convertible into equity securities. Our ability to restructure or

 

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refinance our indebtedness will depend on the capital markets and our financial condition at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. Our inability to generate sufficient cash flow to satisfy our debt service requirements, including the inability to service the notes, or to refinance our obligations on commercially reasonable terms, would have an adverse effect, which could be material, on our business, financial position and results of operations, as well as on our ability to satisfy our obligations in respect of the notes.

 

Despite our substantial indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above.

 

Subject to the restrictions set forth in the credit agreement governing the Senior Credit Facility and the indentures governing the notes and the 2021 Notes, we and our subsidiaries may incur significant additional indebtedness, including unused availability under the Revolving Facility.

 

As of December 31, 2015, taking into account $146.5 million of outstanding but undrawn letters of credit, we had $853.5 million available for additional borrowing under the Revolving Facility. Although the terms of the Senior Credit Facility and the notes limit our ability and the ability of our subsidiaries incur indebtedness, there are a number of exceptions to these limitations that will allow us and our subsidiaries to incur significant amounts of indebtedness, whether or not secured, without equally and ratably securing the notes. In addition, neither the credit agreement governing the Senior Credit Facility nor the indenture governing the notes will prevent us from incurring obligations that do not constitute indebtedness (as defined in those documents) or prevent our subsidiaries from incurring certain obligations. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our substantial leverage described above, including our possible inability to service our debt, would increase.

 

The terms of the credit agreement governing the Senior Credit Facility and the indenture governing the notes include covenants that could restrict or limit our financial and business operations.

 

The credit agreement governing the Senior Credit Facility and the indenture governing the notes include restrictive covenants that, subject to certain exceptions and qualifications, restrict or limit our ability and the ability or our subsidiaries to, among other things:

 

	·	incur or guarantee additional indebtedness;
	·	pay dividends on capital stock, redeem or repurchase capital stock or subordinated indebtedness or make certain investments and other restricted payments;
	·	create liens;
	·	sell assets;
	·	create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make loans or other distributions to us;
	·	engage in transactions with our affiliates; and
	·	consolidate or merge with or into other companies or sell all or substantially all of our assets.

 

In addition, the credit agreement governing the Senior Credit Facility includes financial covenants that require us to maintain a minimum consolidated interest coverage ratio, a maximum consolidated senior secured leverage ratio and a maximum consolidated total leverage ratio.

 

These covenants and restrictions could affect our ability to operate our business, and may limit our ability to react to market conditions or take advantage of potential business opportunities as they arise. Additionally, our ability to comply with these covenants may be affected by events beyond our control, including general economic and credit conditions and industry downturns, and the other factors described or incorporated by reference in these “Risk Factors.” If we fail to comply with the covenants applicable to the Senior Credit Facility and are unable to obtain a waiver or amendment, an event of default would result, and the lenders could, among other things, declare

 

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outstanding amounts due and payable, refuse to lend additional amounts to us and require deposit of cash collateral in respect of outstanding letters of credit, which may trigger a cross-default on the notes and other agreements containing cross-default provisions. If we are unable to repay or pay the amounts due under the Senior Credit Facility, the lenders could, among other things, proceed against the collateral granted to them to secure such indebtedness, which would reduce the amount of cash-generating assets available to service interest payments on the notes or pay the principal thereon when due or reduce the pool of assets available to holders of the notes in a bankruptcy situation.

 

Many of the restrictive covenants in the indenture governing the notes will not apply if the notes are rated investment grade by Moody’s and S&P and no event of default has occurred and is continuing.

 

Many of the restrictive covenants in the indenture governing the notes will not apply if the notes are rated investment grade (as defined in such indenture) by Moody’s and S&P, if at that time no default or event of default with respect to the notes has occurred and is continuing. We cannot assure you that the notes will ever be rated investment grade or that if they are rated investment grade, that the notes will maintain such ratings. Termination of these covenants would allow us to engage in certain transactions that would not be permitted while these covenants were in force, subject to the restrictions set forth in the credit agreement governing the Senior Credit Facility. See “Description of the Notes—Covenant Suspension When Notes Rated Investment Grade.” If, after these covenants are suspended, either Moody’s or S&P were to downgrade its rating of the notes to a non-investment grade level, such covenants would be reinstated and the holders of the notes would again have the protection of these covenants. However, any indebtedness incurred or other transactions consummated during the time that the notes were rated investment grade would be permitted to remain in effect and would not constitute an event of default under the indenture.

 

We may not be able to repurchase the notes upon a change of control, which would result in a default under the indenture governing the notes and would adversely affect our business and financial condition.

 

Upon the occurrence of specific kinds of change of control events, we must offer to purchase the notes at 101% of the principal amount thereof plus accrued and unpaid interest to the purchase date. In addition, the indenture governing the 2021 Notes contains a change of control provision that gives the holders thereof the right to require us to repurchase their notes at a purchase price specified therein. We may not have sufficient funds available to make any required repurchases of the notes or the 2021 Notes. If we fail to repurchase the notes or the 2021 Notes in that circumstance, we will be in default under the indenture, and, in turn, under the Senior Credit Facility. In addition, certain change of control events will constitute an event of default under the Senior Credit Facility. A default under the Senior Credit Facility would result in an event of default under the indenture if the administrative agent or the lenders accelerate our debt. Upon the occurrence of a change of control, we could seek to refinance the indebtedness under the Senior Credit Facility and the notes or obtain a waiver from the lenders or you as a holder of the notes. We cannot assure you, however, that we would be able to obtain a waiver or refinance our indebtedness on commercially reasonable terms, if at all. Any future debt that we incur may also contain restrictions on repayment of the notes upon a change of control. See “Description of the Notes—Change of Control.”

 

The ability of holders of notes to require us to repurchase the notes as a result of a disposition of “substantially all” assets may be uncertain.

 

The definition of change of control in the indenture governing the notes includes a phrase relating to the sale of “all or substantially all” of our assets. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require us to repurchase such notes as a result of a sale of less than all of our assets to another person or group may be uncertain.

 

Not all of our subsidiaries will guarantee the notes and, therefore, the notes are structurally subordinated in right of payment to the indebtedness and other liabilities of our non-guarantor subsidiaries.

 

The claims of creditors of our non-guarantor subsidiaries will be required to be paid before any assets of our non-guarantor subsidiaries will be available to satisfy claims of the holders of the notes. Therefore, if there was a dissolution, bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, the holders of notes

 

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would not receive any amounts with respect to the notes from the assets of such non-guarantor subsidiary until after the payment in full of the claims of the creditors of such non-guarantor subsidiary. As of December 31, 2015, our non-guarantor subsidiaries of Orbital ATK had de minimis liabilities to third parties all of which would be structurally senior to the notes and the guarantees thereof.

 

Our ability to repay our indebtedness, including the notes, is largely dependent on cash flow generated by our operating subsidiaries and their ability to make distributions to us.

 

Our ability to repay our indebtedness, including the notes, is largely dependent on the generation of cash flow by our operating subsidiaries and their ability to make such cash available to us by dividend, intercompany debt repayment or otherwise. In addition, our subsidiaries may not be able to, or be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. The limitations on the making of dividends, distributions and other restricted payments under the indenture governing the 2021 Notes, the credit agreement governing the Senior Credit Facility and the indenture governing the notes, have exceptions to such limitations, in each case, for the making of dividends, distributions and other restricted payments for purposes other than servicing our indebtedness. As of December 31, 2015, we estimate that we would have been permitted to distribute no less than $526.3 million under the cumulative “builder basket” (measured using 50% of consolidated net income, proceeds from certain equity issuances, and other components, with respect to the credit agreement, since October 7, 2010, and with respect to the indentures, since April 1, 2001) of such indentures and such credit agreement for purposes other than servicing our indebtedness. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.

 

The notes are unsecured, and consequently the notes and guarantees thereof are effectively subordinated to all of our and the guarantors’ existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

 

The notes are unsecured, and consequently the notes and the guarantees thereof are effectively subordinated to all of our and the guarantors’ existing and future secured indebtedness (including our and the guarantors’ indebtedness under the Senior Credit Facility), to the extent of the value of the assets securing such indebtedness. As a result, upon any distribution to our creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, the holders of secured debt, including the lenders under the Senior Credit Facility, will be entitled to exercise the remedies available to a secured lender under applicable law and to be paid in full from the assets securing that secured indebtedness before any payment may be made with respect to the notes. In that event, because the notes are not secured by any of our or the guarantors’ assets, it is possible that there will be no assets from which claims of holders of the notes can be satisfied or, if any assets remain, that the remaining assets will be insufficient to satisfy those claims in full. If the value of such remaining assets is less than the aggregate outstanding principal amount of the notes and all other debt ranking pari passu with the notes, we may be unable to fully satisfy our obligations under the notes. In addition, if we fail to meet our payment or other obligations under our secured indebtedness, the holders of that secured debt would be entitled to foreclose on our assets securing such indebtedness and liquidate those assets. Accordingly, we may not have sufficient funds to pay amounts due on the notes. As a result, you may lose a portion of or the entire value of your investment in the notes.

 

Our obligations under the Senior Credit Facility are jointly and severally guaranteed by substantially all of our wholly owned domestic subsidiaries. Such obligations and guarantees are secured by perfected first-priority liens and security interests in substantially all of our and the guarantors’ assets, subject to certain exceptions. As of December 31, 2015, taking into account $146.5 million of outstanding but undrawn letters of credit, the notes were effectively subordinated to approximately $790 million of senior secured indebtedness and approximately $853.5 million would have been available for borrowing under the Revolving Facility, which if borrowed would also be effectively senior to the notes. In addition, the Senior Credit Facility provides for uncommitted incremental facilities in an aggregate amount not to exceed the greater of (x) $750.0 million and (y) an amount that would not cause our consolidated senior secured leverage ratio to exceed 2.50 to 1.00, all of which would be secured indebtedness. Further, the terms of the notes permit us to incur additional secured indebtedness pursuant to other credit facilities or otherwise, subject to the restrictions on debt incurrence and liens provided for in the indenture governing the notes and the credit agreement governing the Senior Credit Facility. The notes will be effectively subordinated to any such additional secured indebtedness.

 

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Fraudulent conveyance laws may void the notes or the guarantees or subordinate the notes and/or the guarantees.

 

The issuance of the notes and the guarantees may be subject to review under applicable bankruptcy law or relevant fraudulent conveyance laws if a bankruptcy lawsuit is commenced by or on behalf of our or the guarantors’ creditors. Under U.S. federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, if in such a lawsuit a court were to find that, at the time the notes and the guarantees were issued, (1) we issued the notes or any guarantor incurred its guarantee with the intent of hindering, delaying or defrauding current or future creditors or (2) we or any guarantor received less than reasonably equivalent value or fair consideration in return for issuing the notes or incurring the guarantee, respectively, and, in the case of clause (2) only,

 

	·	we or such guarantor, as applicable, was insolvent or was rendered insolvent by reason of the related financing transactions;
	·	we or such guarantor, as applicable, was engaged, or about to engage, in a business or transaction for which our or such guarantor’s remaining assets constituted unreasonably small capital to carry on business; and
	·	we or such guarantor, as applicable, intended to incur, or believed that we or it would incur, debts beyond our or such guarantor’s ability to pay these debts as they mature, as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes,

 

then the court could void the notes or such guarantee or subordinate the notes or such guarantee to our or such guarantor’s presently existing or future indebtedness or take other actions detrimental to you.

 

We cannot assure you as to what standard a court would apply in order to determine whether we or any guarantor were “insolvent” as of the date the notes were issued or the guarantee incurred, and we cannot assure you that, regardless of the method of valuation, a court would not determine that we or such guarantor were insolvent on that date. We also cannot assure you that a court would not determine, regardless of whether we or any guarantor were insolvent on the date the notes were issued or the guarantee incurred, that the payments constituted fraudulent transfers on another ground.

 

The guarantees may also be subject to review under various laws for the protection of creditors. The analysis set forth above would generally apply, except that the guarantees could also be subject to the claim that, since the guarantees were incurred for our benefit and only indirectly for the benefit of the guarantors, the obligations of the guarantors thereunder were incurred for less than reasonably equivalent value or fair consideration. A court could void a guarantor’s obligation under its guarantee, subordinate the guarantee to the other indebtedness of a guarantor, direct that holders of the notes return any amounts paid under a guarantee to the relevant guarantor or to a fund for the benefit of its creditors, or take other action detrimental to the holders of the notes.

 

The indenture limits the liability of each guarantor with respect to its guarantee to the maximum amount that such guarantor can incur without risk that its guarantee will be subject to avoidance as a fraudulent transfer. We cannot assure you that this limitation will protect such guarantees from fraudulent transfer challenges or, if it does, that the remaining amount due and collectible under the guarantees would suffice, if necessary, to pay the notes in full when due.

 

In a recent Florida bankruptcy case, this kind of provision was found to be unenforceable and, as a result, the subsidiary guarantees in that case were found to be fraudulent conveyances. The United States Court of Appeals for the Eleventh Circuit affirmed the liability findings of the Florida Bankruptcy Court without ruling directly on the enforceability of these types of provisions generally. If the Florida Bankruptcy Court’s decision is followed by other courts, the risk that the note guarantees would be deemed fraudulent conveyances would be significantly increased. If a guarantee of the notes is avoided as a fraudulent conveyance or is found to be unenforceable for any other reasons, you will not have a claim against the guarantor.

 

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A downgrade, suspension or withdrawal of the rating assigned by a rating agency to the notes, if any, could cause the liquidity or market value of the notes to decline.

 

Our debt currently has a non-investment grade rating, and there can be no assurance that any rating assigned by the rating agencies will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency, if in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any lowering or withdrawal of a rating by a rating agency could reduce the liquidity or market value of the notes.

 

Our defined benefit pension plans are underfunded and could adversely affect our ability to satisfy our obligations under the notes.

 

We have underfunded obligations under our defined benefit pension plans. The funded status of our pension plans is dependent upon many factors, including changes in the value of plan assets, the actual rate of return on plan assets, discount rates, the rate of increase in future compensation levels and other assumptions used in actuarial valuations. These valuations are based on assumptions made relating to financial market and other economic conditions. Changes in key economic indicators can result in changes in these assumptions. The funded status of our defined benefit pension plans can also be affected by legislation or other regulatory actions. Under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Pension Benefit Guaranty Corporation (“PBGC”) has the authority to petition a court to terminate an underfunded defined benefit pension plan under limited circumstances. In the event our pension plans are terminated by the PBGC, we could be liable to the PBGC for the entire amount of the underfunding, as calculated by the PBGC based on its own assumptions (which likely would result in a larger obligation than that based on the assumptions we have used to fund such plans), and, under certain circumstances, such liability could be senior to the notes.

 

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USE OF PROCEEDS

 

We will not receive any cash proceeds from the issuance of the exchange notes in the Exchange Offer. In consideration for issuing the exchange notes, we will receive the original notes of like principal amount. The form and terms of the exchange notes are identical in all material respects to the form and terms of the original notes, except for certain transfer restrictions and registration rights relating to the original notes and except for certain provisions providing for an increase in the interest rate on the original notes under certain circumstances relating to the timing of the Exchange Offer. The original notes surrendered in exchange for the exchange notes will be retired and canceled and cannot be reissued.

 

THE EXCHANGE OFFER

 

Purpose of the Exchange Offer

 

The Exchange Offer is designed to provide holders of original notes with an opportunity to acquire exchange notes which, unlike the original notes, will not be restricted securities and will be freely transferable at all times, subject to any restrictions on transfer imposed by state “blue sky” laws.

 

In connection with the issuance and sale of the original notes on September 29, 2015, we entered into a registration rights agreement with the initial purchasers for the benefit of the holders of the original notes. Under the registration rights agreement, we agreed, among other things, to use our reasonable best efforts to file and to have declared effective an exchange offer registration statement under the Securities Act and to consummate an exchange offer. We are conducting this Exchange Offer to satisfy these obligations under the registration rights agreement.

 

We are making the Exchange Offer in reliance on the position of the SEC as set forth in certain no-action letters. However, we have not sought our own no-action letter. Based upon these interpretations by the SEC, we believe that a holder of exchange notes who received such exchange notes in exchange for original notes in the Exchange Offer, generally may offer the exchange notes for resale, sell the exchange notes and otherwise transfer the exchange notes without further registration under the Securities Act and without delivery of a prospectus that satisfies the requirements of Section 10 of the Securities Act. This does not apply, however, to a holder who is our “affiliate” within the meaning of Rule 405 of the Securities Act. We also believe that a holder may offer, sell or transfer the exchange notes only if the holder acknowledges that the holder is acquiring the exchange notes in the ordinary course of its business and is not participating, does not intend to participate and has no arrangement or understanding with any person to participate in a distribution of the exchange notes.

 

Any holder of the original notes using the Exchange Offer to participate in a distribution of exchange notes cannot rely on the no-action letters referred to above. Any broker-dealer who holds original notes acquired for its own account as a result of market-making activities or other trading activities and who receives exchange notes in exchange for such original notes pursuant to the Exchange Offer may be a statutory underwriter, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of exchange notes and must acknowledge such delivery requirement. See “Plan of Distribution.”

 

Except as described above, this prospectus may not be used for an offer to resell, resale or other transfer of exchange notes.

 

The Exchange Offer is not being made to, nor will we accept tenders for exchange from, holders of original notes in any jurisdiction in which the Exchange Offer or the acceptance of tenders would not be in compliance with the securities or blue sky laws of such jurisdiction.

 

Terms of the Exchange Notes

 

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all original notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date. Subject to the minimum denomination requirements of the exchange notes, the exchange notes are being offered in exchange for a like principal amount of original notes. Original notes may be exchanged only in

 

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integral multiples of $1,000 principal amount. Holders may tender some or all of their original notes pursuant to the Exchange Offer. No notes of principal amount of $2,000 or less shall be exchanged in part.

 

The form and terms of the exchange notes will be identical in all material respects to the form and terms of the original notes except that (i) the exchange notes will be registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof, and (ii) holders of the exchange notes will not be entitled to certain rights of holders of original notes under the registration rights agreement. The exchange notes will evidence the same debt as the original notes and will be entitled to the benefits of the indenture. The exchange notes will be treated as a single class under the indenture with any original notes that remain outstanding and entitled to participate in any Subsidiary Guarantee (as such term is defined in the indenture). The Exchange Offer is not conditioned upon any minimum aggregate principal amount of original notes being tendered for exchange.

 

As of December 31, 2015, $400,000,000 aggregate principal amount of original 5.50% notes were outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of original notes as of April 18, 2016. Tendering holders will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes pursuant to the Exchange Offer. We will pay all charges and expenses, other than certain transfer taxes that may be imposed, in connection with the Exchange Offer. See “—Payment of Expenses.”

 

Expiration Date; Extensions; Termination

 

The Exchange Offer will expire at 5:00 p.m., New York City time, on May 16, 2016. We reserve the right to extend the Exchange Offer at our discretion, in which event the term expiration date shall mean the time and date on which the Exchange Offer as so extended shall expire. We shall notify the exchange agent of any extension by oral or written notice and shall mail to the registered holders of original notes an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

 

We reserve the right to extend or terminate the Exchange Offer and not accept for exchange any original notes if any of the events set forth below under the caption “Conditions to the Exchange Offer” occur and are not waived by us, by giving oral or written notice of such delay or termination to the exchange agent. See “—Conditions to the Exchange Offer.” The rights reserved by us in this paragraph are in addition to our rights set forth below under the caption “—Conditions to the Exchange Offer.”

 

Procedures for Tendering

 

The tender to us of original notes by a holder pursuant to one of the procedures set forth below and the acceptance thereof by us will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth herein and in the letter of transmittal.

 

Except as set forth below, a holder who wishes to tender original notes for exchange pursuant to the Exchange Offer must transmit an agent’s message or a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, to the exchange agent at the address set forth below under “Exchange Agent” on or prior to the expiration date. In addition, either (i) certificates for such original notes must be received by the exchange agent along with the letter of transmittal, or (ii) a timely confirmation of a book-entry transfer (a book-entry confirmation) of such original notes, if such procedure is available, into the exchange agent’s account at DTC pursuant to the procedure of book-entry transfer described below, must be received by the exchange agent prior to the expiration date. LETTERS OF TRANSMITTAL AND ORIGINAL NOTES SHOULD NOT BE SENT TO US.

 

The term agent’s message means a message, transmitted by DTC to and received by the exchange agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgement from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by the letter of transmittal and that we may enforce such letter of transmittal against such participant.

 

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Signatures on a letter of transmittal must be guaranteed unless the original notes tendered pursuant thereto are tendered (i) by a registered holder of original notes who has not completed the box entitled “Special Issuance and Delivery Instructions” on the letter of transmittal or (ii) for the account of any firm that is a member of a registered national securities exchange or a commercial bank or trust company having an office in the United States, each an eligible institution. In the event that signatures on a letter of transmittal are required to be guaranteed, such guarantee must be by an eligible institution.

 

The method of delivery of original notes and other documents to the exchange agent is at the election and risk of the holder, but if delivery is by mail it is suggested that the mailing be made sufficiently in advance of the expiration date to permit delivery to the exchange agent before the expiration date.

 

If the letter of transmittal is signed by a person other than a registered holder of any original notes tendered therewith, such original notes must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name of the registered holder appears on the original notes.

 

If the letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by us, proper evidence satisfactory to us of their authority to so act must be submitted.

 

All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tendered original notes will be resolved by us, and our determination will be final and binding. We reserve the absolute right to reject any or all tenders that are not in proper form or the acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any irregularities or conditions of tender as to particular original notes. Our interpretation of the terms and conditions of the Exchange Offer (including the instructions in the letter of transmittal) will be final and binding. Unless waived, any irregularities in connection with tenders must be cured within such time as we shall determine. Neither we nor the exchange agent shall be under any duty to give notification of defects in such tenders or shall incur liabilities for failure to give such notification. Tenders of original notes will not be deemed to have been made until such irregularities have been cured or waived. Any original notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

 

Our acceptance for exchange of original notes tendered pursuant to the Exchange Offer will constitute a binding agreement between the tendering person and us upon the terms and subject to the conditions of the Exchange Offer.

 

Book-Entry Transfer

 

The exchange agent will make a request to establish an account with respect to the original notes at DTC for purposes of the Exchange Offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC’s book-entry transfer facility systems may make book-entry delivery of original notes by causing DTC to transfer those original notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. However, although delivery of original notes may be effected through book-entry transfer into the exchange agent’s account at DTC, an agent’s message or a duly executed letter of transmittal, including all other documents required by such letter of transmittal, must in any case, be transmitted to and received by the exchange agent at one of the addresses set forth below under the caption “Exchange Agent” on or prior to the expiration date.

 

DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC’S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

 

Conditions to the Exchange Offer

 

Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any original notes and may terminate the Exchange Offer (whether or not any original notes have been accepted for exchange) or may waive any

 

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conditions to or amend the Exchange Offer, if any of the following conditions have occurred or exists or have not been satisfied:

 

·                       there is threatened, instituted or pending any action or proceeding before, or any statute, rule, regulation, injunction, order or decree issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission:

 

(i)      seeking to restrain or prohibit the making or completion of the Exchange Offer or any other transaction contemplated by the Exchange Offer, or assessing or seeking any damages as a result of this transaction; or

 

(ii)     resulting in a material delay in our ability to accept for exchange or exchange some or all of the original notes in the Exchange Offer; or

 

·                       any action has been taken, proposed or threatened, by any governmental authority, domestic or foreign, that in our sole judgment might directly or indirectly result in any of the consequences referred to in clauses (i) or (ii) above or, in our sole judgment, might result in the holders of exchange notes having obligations with respect to resales and transfers of exchange notes which are greater than those described in the interpretation of the SEC referred to above, or would otherwise make it inadvisable to proceed with the Exchange Offer; or

 

·                       the following has occurred:

 

(i)      any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market; or

 

(ii)     any limitation by a governmental authority, which may adversely affect our ability to complete the transactions contemplated by the Exchange Offer; or

 

(iii)    a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit; or

 

(iv)    a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the preceding events existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening of these calamities; or

 

·                       any change, or any development involving a prospective change, has occurred or been threatened in our business, financial condition, operations or prospects and those of our subsidiaries taken as a whole that is or may be adverse to us, or we have become aware of facts that have or may have an adverse impact on the value of the original notes or the exchange notes, which in our sole judgment, in any case makes it inadvisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange; or

 

·                       there shall occur a change in the interpretations by the staff of the SEC which permits the exchange notes issued pursuant to the Exchange Offer in exchange for original notes to be offered for resale, resold and otherwise transferred by holders thereof (other than broker-dealers and any such holder which is an “affiliate” of ours within the meaning of Rule 405 promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such exchange notes are acquired in the ordinary course of such holders’ business and such holders have no arrangement or understanding with any person to participate in the distribution of such exchange notes; or

 

·                       any law, statute, rule or regulation shall have been adopted or enacted which, in our judgment, would reasonably be expected to impair our ability to proceed with the Exchange Offer; or

 

·                       a stop order shall have been issued by the SEC or any state securities authority suspending the effectiveness of the registration statement of which this prospectus forms a part, or proceedings shall have been initiated or, to our knowledge, threatened for that purpose, or any governmental approval has not been obtained, which approval we shall, in our sole discretion, deem necessary for the consummation of the Exchange Offer as contemplated hereby; or

 

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·                       we have received an opinion of counsel experienced in such matters to the effect that there exists any actual or threatened legal impediment (including a default or prospective default under an agreement, indenture or other instrument or obligation to which we are a party or by which we are bound) to the consummation of the transactions contemplated by the Exchange Offer.

 

If we determine in our sole and absolute discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied, we may, subject to applicable law, terminate the Exchange Offer (whether or not any original notes have been accepted for exchange) or may waive any such condition or otherwise amend the terms of the Exchange Offer in any respect. If such waiver or amendment constitutes a material change to the Exchange Offer, we will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the original notes and will extend the Exchange Offer to the extent required by Rule 14e-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

These conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to any of these conditions, or we may waive them, in whole or in part, in our sole discretion. Any determination made by us concerning an event, development or circumstance described or referred to above will be final and binding on all parties.

 

Acceptance of Original Notes for Exchange; Delivery of Exchange Notes

 

Upon the terms and subject to the conditions of the Exchange Offer, we will accept all original notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date. We will issue exchange notes in exchange for original notes promptly following the expiration date.

 

Subject to the conditions set forth under the caption “—Conditions to the Exchange Offer,” issuance of exchange notes in exchange for original notes tendered and accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the exchange agent of certificates for original notes or a book-entry confirmation of a book-entry transfer of original notes into the exchange agent’s account at DTC, including an agent’s message if the tendering holder does not deliver a letter of transmittal, a completed letter of transmittal, or, in the case of a book-entry transfer, an agent’s message in lieu of the letter of transmittal and any other documents required by such letter of transmittal. Accordingly, the delivery of exchange notes might not be made to all tendering holders at the same time, and will depend upon when certificates for original notes, book-entry confirmations with respect to original notes and other required documents are received by the exchange agent.

 

Subject to the terms and conditions of the Exchange Offer, we will be deemed to have accepted for exchange, and thereby to have exchanged, original notes validly tendered and not withdrawn as, if and when we give oral or written notice to the exchange agent of our acceptance of such original notes for exchange pursuant to the Exchange Offer. The exchange agent will act as agent for us for the purpose of receiving tenders of original notes, letters of transmittal and related documents, and as agent for tendering holders for the purpose of receiving original notes, letters of transmittal and related documents and transmitting exchange notes which will not be held in global form by DTC or a nominee of DTC to validly tendered holders. Such exchange will be made promptly after the expiration date. If for any reason whatsoever, acceptance for exchange or the exchange of any original notes tendered pursuant to the Exchange Offer is delayed (whether before or after our acceptance for exchange of original notes) or we extend the Exchange Offer or are unable to accept for exchange or exchange any original notes tendered pursuant to the Exchange Offer, then, without prejudice to our rights set forth herein, the exchange agent may, nevertheless, on our behalf and subject to Rule 14e-l promulgated under the Exchange Act, retain tendered original notes and such original notes may not be withdrawn except to the extent tendering holders are entitled to withdrawal rights as described under the caption “—Withdrawal Rights.”

 

Pursuant to an agent’s message or a letter of transmittal, a holder of original notes will represent, warrant and agree in the letter of transmittal that it has full power and authority to tender, exchange, sell, assign and transfer original notes, that we will acquire good, marketable and unencumbered title to the tendered original notes, free and clear of all liens, restrictions, charges and encumbrances, and the original notes tendered for exchange are not subject to any adverse claims or proxies. The holder also will warrant and agree that it will, upon request, execute and deliver any

 

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additional documents deemed by us or the exchange agent to be necessary or desirable to complete the exchange, sale, assignment and transfer of the original notes tendered pursuant to the Exchange Offer.

 

If any tendered original notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, any such unaccepted original notes will be returned, at our expense, to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer.

 

Withdrawal Rights

 

Tenders of original notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at the address, or in the case of eligible institutions, at the facsimile number, set forth below under the caption “—Exchange Agent” before 5:00 p.m., New York City time, on the expiration date.

 

Any notice of withdrawal must specify the name of the person having tendered the original notes to be withdrawn, identify the original notes to be withdrawn (including the certificate number or numbers and the principal amount of the original notes), and (where certificates for original notes have been transmitted) specify the name in which such original notes are registered, if different from that of the withdrawing holder. If certificates for original notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If original notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn original notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by us, and our determination shall be final and binding on all parties. Any original notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any original notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or in the case of original notes tendered by book-entry transfer into the exchange agent’s account at DTC pursuant to the book-entry transfer procedures described above, such original notes will be credited to an account maintained with DTC for the original notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn original notes may be retendered by following one of the procedures described above under the caption “—Procedures for Tendering” at any time on or prior to the expiration date.

 

Exchange Agent

 

We have appointed The Bank of New York Mellon Trust Company, N.A as the exchange agent for the Exchange Offer. You should direct all executed letters of transmittal to the exchange agent at the address indicated below. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal to the exchange agent addressed as follows:

 

The Bank of New York Mellon Trust Company, N.A.

c/o The Bank of New York Mellon

111 Sanders Creek Parkway

East Syracuse, NY 13057

Attn: Corporate Trust Reorg — Dacia Brown-Jones

Phone: 315-414-3349

Fax: 732-667-9408

 

If you deliver the letter of transmittal to an address other than any address indicated above or transmit instructions by facsimile to a facsimile number other than any facsimile number indicated above, then your delivery or transmission will not constitute a valid delivery of the letter of transmittal.

 

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Payment of Expenses

 

We have not retained any dealer-manager or similar agent in connection with the Exchange Offer. We will not make any payment to brokers, dealers or others for soliciting acceptances of the Exchange Offer. However, we will pay the reasonable and customary fees and reasonable out-of-pocket expenses to the exchange agent in connection therewith. We will also pay the cash expenses to be incurred in connection with the Exchange Offer, including accounting, legal, printing and other related fees and expenses.

 

Consequences of Failure to Exchange

 

Upon consummation of the Exchange Offer, certain rights under the Registration Rights Agreement, including registration rights and the right to receive the contingent increases in the interest rate, will terminate. The original notes that are not exchanged for exchange notes pursuant to the Exchange Offer will remain restricted securities within the meaning of Rule 144 promulgated under the Securities Act. Accordingly, such original notes may be resold only:

 

·                       to us or our subsidiaries;

 

·                       under a registration statement that has been declared effective under the Securities Act;

 

·                       for so long as the notes are eligible for resale under Rule 144A promulgated under the Securities Act, to a person the seller reasonably believes is a qualified institutional buyer that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A;

 

·                       through offers and sales to non-U.S. persons that occur outside the United States within the meaning of Regulation S under the Securities Act;

 

·                       to an accredited investor (within the meaning of Rule 501(a) under the Securities Act) that is not a qualified institutional buyer and that is purchasing for its own account or for the account of another accredited investor, in each case in a minimum principal amount of notes of $250,000; or

 

·                       under any other available exemption from the registration requirements of the Securities Act.

 

The liquidity of the original notes could be adversely affected by the Exchange Offer.

 

Accounting Treatment

 

The exchange notes will be recorded at the same carrying value as the original notes, as reflected in our accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized.

 

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DESCRIPTION OF THE NOTES

 

The Company issued the original notes and will issue the exchange notes pursuant to an indenture, dated as of the September 29, 2015, among the Company, the Subsidiary Guarantors (as defined below) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”). The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the “Trust Indenture Act”). You should refer to the Indenture and the Trust Indenture Act for a complete statement of the terms applicable to the notes. Copies of the Indenture are available upon request from the Company.

 

The following is a summary of material provisions of the Indenture. The following summary of the terms of the notes and the Indenture is not complete and is subject to, and is qualified by reference to, the notes and the Indenture, including the definitions therein of certain capitalized terms used but not defined in this Description of the Notes. We urge you to read the entire Indenture, because it, and not this description, defines your rights as holders of the notes. For the definitions of certain capitalized terms, see “Certain Definitions” below.

 

For purposes of this section, the term “Company” refers only to Orbital ATK, Inc. and not to any of its subsidiaries. Certain of the Company’s subsidiaries guarantee the notes and are subject to many of the provisions described in this section. Each subsidiary that guarantees the notes is referred to in this section as a “Subsidiary Guarantor.” Each such guarantee is referred to as a “Subsidiary Guarantee.”

 

Overview of the Notes and the Subsidiary Guarantees

 

The notes are:

 

·                       general senior unsecured obligations of the Company;

 

·                       equal in right of payment with all of the Company’s existing and future Indebtedness that is not subordinated in right of payment to the notes, including the Company’s obligations in respect of its 5.25% Senior Notes due 2021;

 

·                       senior in right of payment to all of the Company’s existing and future Indebtedness that is subordinated in right of payment to the notes;

 

·                       effectively subordinated to all Secured Indebtedness (as defined below) of the Company and its Subsidiaries, including Indebtedness under the Credit Agreement, to the extent of the value of the assets securing such Indebtedness;

 

·                       structurally subordinated to all liabilities, including Trade Payables, and Preferred Stock of each Subsidiary of the Company that is not a Subsidiary Guarantor; and

 

·                       guaranteed on a general senior unsecured basis by the Subsidiary Guarantors.

 

The Subsidiary Guarantors

 

The notes are guaranteed by each Restricted Subsidiary of the Company that from time to time guarantees Indebtedness of the Company under the Credit Agreement or any capital markets debt securities of the Company.

 

The Subsidiary Guarantee of each Subsidiary Guarantor:

 

·                       is a general senior unsecured obligation of such Subsidiary Guarantor;

 

·                       is equal in right of payment with all of such Subsidiary Guarantor’s existing and future Indebtedness that is not subordinated in right of payment to such Subsidiary Guarantee, including its guarantee of the Company’s Obligations in respect of the 5.25% Senior Notes due 2021;

 

·                       is senior in right of payment to all of such Subsidiary Guarantor’s existing and future Indebtedness that is subordinated in right of payment to such Subsidiary Guarantee; and

 

·                       is effectively subordinated to all Secured Indebtedness of such Subsidiary Guarantor and its Subsidiaries, including their guarantees of Indebtedness under the Credit Agreement, to the extent of the value of the

 

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assets securing such Indebtedness.

 

Not all of our Subsidiaries will guarantee the notes. The non-guarantor subsidiaries of Orbital ATK:

 

·                       generated a de minimis portion of our sales and Adjusted EBITDA for the nine months ended December 31, 2015 and held a de minimis portion of our consolidated assets as of December 31, 2015; and

 

·                       had de minimis liabilities to third parties as of December 31, 2015.

 

Principal, Maturity and Interest

 

The Indenture provides for the issuance by us of notes with an unlimited principal amount, of which $400.0 million were issued on September 29, 2015 and remain outstanding. We may issue additional notes (the “Additional Notes”) from time to time after this offering. Any offering of Additional Notes is subject to the covenant described below under the caption “—Certain Covenants—Limitation on Indebtedness.” Additional Notes that are not fungible with other notes for U.S. federal income tax purposes may trade under a separate CUSIP and may be treated as a separate class for purposes of transfers and exchanges. Nevertheless, the notes and any Additional Notes subsequently issued under the Indenture would be treated as a single class for all other purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. We will issue notes in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The notes will mature on October 1, 2023.

 

Each note bears interest at a rate of 5.50% per annum from the Closing Date, or from the most recent date on which interest has been paid or provided for. We pay interest semi-annually to Holders of record at the close of business on March 15 or September 15 immediately preceding the interest payment date on April 1 and October 1 of each year. The next interest payment date is October 1, 2016. We will pay interest on overdue principal at 1% per annum in excess of the interest rate, and we will pay interest on overdue installments of interest at this higher rate to the extent lawful.

 

Interest is computed on the basis of a 360-day year composed of twelve 30-day months.

 

Paying Agent and Registrar

 

We will pay the principal of, premium, if any, and interest on the notes at any office of ours or any agency designated by us. We have designated the corporate trust office of the trustee to act as the agent of the Company in these matters. The location of the corporate trust office is 2 North LaSalle Street, Suite 1020, Chicago, Illinois 60602. We reserve the right to pay interest to Holders by check mailed directly to Holders at their registered addresses.

 

Transfer and Exchange

 

A Holder of outstanding notes may transfer or exchange notes. Upon any transfer or exchange, the registrar and the trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and we may require a Holder to pay any taxes required by law or permitted by the Indenture. We are not required to transfer or exchange any outstanding note selected for redemption or purchase or to transfer or exchange any outstanding note for a period of 15 days prior to the delivery of a notice of redemption or purchase of notes to be redeemed or purchased or within 15 days of an interest payment date. The notes were issued in registered form and the Holder is treated as the owner of such note for all purposes.

 

Form, Denomination and Registration

 

The notes are transferable and exchangeable at the office of the Registrar or any co-registrar and have been issued in fully registered form, without coupons, in denominations of $2,000 and any whole multiple of $1,000 in excess thereof. We may require payment of an amount sufficient to cover any tax or other governmental charge payable in connection with certain transfers and exchanges.

 

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Optional Redemption

 

Except as set forth in the following paragraphs, we may not redeem the notes prior to October 1, 2018. At any time on or after October 1, 2018, we may redeem the notes, in whole or in part, on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices, expressed as percentages of principal amount, plus accrued and unpaid interest thereon to the redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12 month period commencing on October 1 of the years set forth below:

 

Year		Redemption Price
2018		104.125	%
2019		102.750	%
2020		101.375	%
2021 and thereafter		100.000	%

 

In addition, at any time prior to October 1, 2018, we may redeem, on one or more occasions, up to a maximum of 35% of the original aggregate principal amount of the notes, calculated after giving effect to any issuance of Additional Notes, with the Net Cash Proceeds of one or more Qualified Equity Offerings at a redemption price equal to 105.50% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date; provided, however, that after giving effect to any such redemption:

 

(1)     at least 65% of the original aggregate principal amount of the notes remains outstanding immediately after such redemption; and

 

(2)     any such redemption by us must be completed within 90 days of completion of such Qualified Equity Offering and must be made in accordance with the procedures set forth in the Indenture.

 

At any time prior to October 1, 2018, we may redeem all or part of the notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) the Applicable Premium as of the date of redemption, plus (iii) accrued and unpaid interest to the date of redemption, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date.

 

Any notice of redemption in connection with any Qualified Equity Offering or other securities offering or any other financing, or in connection with a transaction (or series of related transactions) that constitute a Change of Control, may, at our discretion, be given prior to the completion thereof and be subject to one or more conditions precedent, including completion of the related Qualified Equity Offering, securities offering, financing or Change of Control.

 

Selection

 

If we redeem less than all of the notes, the applicable depositary will select the notes to be redeemed on a pro rata basis, by lot or by such other method as is required by or in accordance with the procedures of the applicable depositary, although no note of $2,000 in original principal amount or less may be redeemed in part. If we redeem any note in part only, the notice of redemption relating to that note will state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion of the note will be issued in the name of the Holder upon cancellation of the original note. On and after the redemption date, interest will cease to accrue on notes or portions thereof called for redemption so long as we have deposited with the paying agent or Trustee funds sufficient to pay the principal of, plus accrued and unpaid interest on, the notes to be redeemed.

 

Ranking

 

The notes are general senior unsecured obligations of the Company; equal in right of payment with all of the Company’s existing and future Indebtedness that is not subordinated in right of payment to the notes, including the

 

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Company’s obligation in respect of its 5.25% Senior Notes due 2021, and senior in right of payment to all of the Company’s existing and future Indebtedness that is subordinated in right of payment to the notes. The notes are effectively subordinated to all Secured Indebtedness of the Company and its Subsidiaries, including Indebtedness under the Credit Agreement, to the extent of the value of the assets securing such Indebtedness.

 

The Subsidiary Guarantees are the general senior unsecured obligations of each Subsidiary Guarantor equal in right of payment with all of such Subsidiary Guarantor’s existing and future Indebtedness that is not subordinated in right of payment to such Subsidiary Guarantee, including its guarantee of the Company’s obligation in respect of its 5.25% Senior Notes due 2021, and senior in right of payment to all of such Subsidiary Guarantor’s existing and future Indebtedness that is subordinated in right of payment to such Subsidiary Guarantee. The Subsidiary Guarantees also are effectively subordinated to all Secured Indebtedness of the applicable Subsidiary Guarantor and its Subsidiaries, including their guarantees of Indebtedness under the Credit Agreement, to the extent of the value of the assets securing such Indebtedness.

 

To the extent a Subsidiary is not a Subsidiary Guarantor, creditors of the Subsidiary, including trade creditors, and preferred stockholders, if any, of the Subsidiary generally have priority with respect to the assets and earnings of the Subsidiary over the claims of creditors of the Company, including Holders. The notes, therefore, are structurally subordinated to the claims of creditors, including trade creditors, and preferred stockholders, if any, of Subsidiaries of the Company that are not Subsidiary Guarantors.

 

As of December 31, 2015, we had:

 

(1)

$790.0 million of senior obligations, all of which was secured Indebtedness, of the Company, but not including $146.5 million of outstanding but undrawn letters of credit, and, after taking into account these letters of credit, we had an additional $853.5 million of availability under the revolving portion of the Credit Agreement, all of which would be secured debt if drawn;

 

(2)	$700 million of senior unsecured Indebtedness of the Company, consisting of the notes;

 

(3)	no senior secured Indebtedness of the Subsidiary Guarantors, exclusive of the Subsidiary Guarantees and guarantees of Indebtedness under the Credit Agreement; and

 

(4)	no senior unsecured Indebtedness of the Subsidiary Guarantors, other than the guarantees of the Company’s obligations in respect of the notes.

 

Although the Indenture limits the Incurrence of Indebtedness by the Company and the Restricted Subsidiaries (including the issuance of Preferred Stock by the Restricted Subsidiaries), this limitation is subject to a number of significant qualifications. The Company and its Subsidiaries may be able to Incur substantial amounts of Indebtedness in certain circumstances. See “—Certain Covenants—Limitation on Indebtedness” below.

 

Subsidiary Guarantees

 

All of the Company’s Restricted Subsidiaries (other than Foreign Subsidiaries) that from time to time guarantee Indebtedness of the Company under the Credit Agreement or any capital markets debt securities of the Company will jointly and severally irrevocably and unconditionally Guarantee as primary obligors and not merely as sureties, on an unsecured senior basis, the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Company under the Indenture, including obligations to the trustee, and the notes, whether for payment of principal of, or premium or interest on the notes, expenses, indemnification or otherwise (all such obligations Guaranteed by such Subsidiary Guarantors being herein called the “Guaranteed Obligations”). Each Subsidiary Guarantee is limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Subsidiary Guarantor without rendering the Subsidiary Guarantee, as it relates to that Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. In a Florida bankruptcy case, subsidiary guarantees containing this kind of provision were found to be fraudulent conveyances and thus unenforceable and the court stated that this kind of limitation is ineffective. The Company does not know if that case will be followed if there is litigation on this point under the Indenture. However, if it is followed, the risk that the Subsidiary Guarantees will be found to be fraudulent conveyances will be significantly increased. See “Risk

 

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Factors—Fraudulent conveyance laws may void the notes or the guarantees or subordinated the notes and/or the guarantees.” The Company will cause each future Restricted Subsidiary that guarantees Indebtedness of the Company under the Credit Agreement or any capital markets debt securities of the Company to execute and deliver to the trustee a supplemental indenture pursuant to which the Subsidiary will Guarantee payment of the notes. See “—Certain Covenants—Future Subsidiary Guarantors” below.

 

Each Subsidiary Guarantee is a continuing guarantee and shall, except as set forth in the four immediately succeeding paragraphs, (a) remain in full force and effect until payment in full of all the Guaranteed Obligations, (b) be binding upon each Subsidiary Guarantor and its successors and (c) inure to the benefit of, and be enforceable by, the trustee, the Holders and their successors, transferees and assigns.

 

In the event the Capital Stock of a Subsidiary Guarantor is sold by the Company or a Restricted Subsidiary and the sale complies with the provisions set forth in the covenant “—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock,” if as a result of such sale, such Subsidiary Guarantor ceases to be a Restricted Subsidiary, such Subsidiary Guarantor shall be automatically and unconditionally released from its Subsidiary Guarantee at the time of such sale (it being understood that only such portion of the Net Cash Proceeds as is or is required to be applied on or before the date of such release in accordance with the terms of the Indenture needs to be so applied before such release).

 

Upon the designation of any Subsidiary Guarantor to be an Unrestricted Subsidiary in compliance with the definition of “Unrestricted Subsidiary,” such Subsidiary Guarantor will be automatically and unconditionally released from its Subsidiary Guarantee.

 

Upon legal defeasance or satisfaction and discharge of the notes in compliance with the provisions of the Indenture described under “—Defeasance” or “—Satisfaction and Discharge,” the Subsidiary Guarantors shall be automatically and unconditionally released from their Subsidiary Guarantees.

 

If any Subsidiary Guarantor shall have been released from its guarantees of Indebtedness of the Company under the Credit Agreement and all capital markets debt securities of the Company, such Subsidiary Guarantor shall be automatically and unconditionally released from its Subsidiary Guarantee.

 

Change of Control

 

Upon the occurrence of any of the following events (each a “Change of Control”), each Holder will have the right to require the Company to purchase all or any part of such Holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date; provided, however, that notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to purchase the notes pursuant to this section in the event that it has exercised its right to redeem all the notes under the terms of the section titled “—Optional Redemption”:

 

(1)

any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (for the purposes of this clause (1), a person shall be deemed to beneficially own any Voting Stock of an entity held by any other entity (the “parent entity”), if such person is the beneficial owner (as defined in this clause (1)), directly or indirectly, of more than 50% of the voting power of the Voting Stock of the parent entity);

 

(2)	the adoption of a plan relating to the liquidation or dissolution of the Company; or

 

(3)

the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company or the sale of all or substantially all the assets of the Company to another Person and, in the case of any such merger, consolidation or sale, the securities of the Company that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the Voting Stock of the Company are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving Person or transferee that represent, immediately after such

 

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transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving Person or transferee.

 

Within 45 days following any Change of Control, the Company shall send a notice to each Holder with a copy to the trustee (the “Change of Control Offer”) stating:

 

(1)

that a Change of Control has occurred and that such Holder has the right to require the Company to purchase all or a portion of such Holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

 

(2)	the material circumstances and relevant facts regarding such Change of Control;

 

(3)	the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is sent; and

 

(4)	the instructions determined by the Company, consistent with this covenant, that a Holder must follow in order to have its notes purchased.

 

The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not withdrawn under such Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, with the obligation to pay and the timing of payment conditioned upon the consummation of the Change of Control, if a definitive agreement to effect a Change of Control is in place at the time of the Change of Control Offer.

 

The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

 

The Change of Control purchase feature is a result of negotiations between the Company and the initial purchasers. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Company’s capital structure or credit ratings. Restrictions on the ability of the Company to Incur additional Indebtedness are contained in the covenants described under “—Certain Covenants—Limitation on Indebtedness.” Such restrictions can only be waived with the consent of the Holders of a majority in principal amount of the notes then outstanding. Except for the limitations contained in that covenant and the covenant described under “—Merger and Consolidation,” however, the Indenture does not contain any covenants or provisions that may afford Holders protection in the event of a highly leveraged transaction.

 

The occurrence of a Change of Control would constitute a default under the Credit Agreement. In addition, future Indebtedness of the Company could contain prohibitions of certain events that would constitute a Change of Control or require such Indebtedness to be repurchased or repaid upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Company to purchase the notes could cause a default under such Indebtedness, even if the Change of Control itself does not, due to the financial effect of the repurchase on the Company. Finally, the Company’s ability to pay cash to the Holders upon a purchase may be limited by the Company’s then existing financial resources. We cannot assure you that sufficient funds will be available when necessary to make any required purchases. Even if sufficient funds were otherwise available, the terms of the Credit Agreement may prohibit, subject to limited exceptions, the Company’s prepayment of notes prior to their scheduled maturity. If the Company is not able to prepay Indebtedness outstanding under the Credit Agreement and any other Indebtedness containing similar restrictions or obtain requisite consents, the Company will not be able to fulfill its repurchase

 

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obligations upon holders of notes exercising their purchase rights following a Change of Control, and such failure will result in a default under the Indenture and, in turn, constitute a default under the Credit Agreement. Furthermore, the Change of Control provisions may in some circumstances make more difficult or discourage a takeover of the Company and the removal of incumbent management.

 

The definition of Change of Control includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of notes to require the Company to repurchase such notes as a result of a sale, transfer, conveyance or other disposition of less than all of the assets of the Company and the Restricted Subsidiaries taken as a whole to another Person or group may be uncertain.

 

Covenant Suspension When Notes Rated Investment Grade

 

If on any date (the “Suspension Date”) following the date of the Indenture:

 

(1)

the notes are rated Baa3 or better by Moody’s and BBB- or better by S&P (or, if either such entity ceases to rate the notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act selected by the Company as a replacement agency); and

 

(2)	no Default or Event of Default shall have occurred and be continuing (the occurrence of the events described in the foregoing clause (1) and this clause (2) being collectively referred to as a “Covenant Suspension Event”),

 

then, beginning on that day and subject to the provisions of the following paragraph, the covenants under the Indenture described under the following captions will be suspended (such suspended covenants, collectively, the “Suspended Covenants”):

 

(1)	“—Certain Covenants—Limitation on Indebtedness”;

 

(2)	“—Certain Covenants—Limitation on Restricted Payments”;

 

(3)	“—Certain Covenants—Limitation on Restrictions on Distributions from Restricted Subsidiaries”;

 

(4)	“—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock”;

 

(5)	“—Certain Covenants—Limitation on Transactions with Affiliates”; and

 

(6)	clause (3) of the covenant described above under the caption “—Merger and Consolidation.”

 

Upon the occurrence of a Covenant Suspension Event, the amount of Net Available Cash that has not been applied as provided under “—Limitation on Sales of Assets and Subsidiary Stock” shall be set at zero. During the period of time commencing on and after the Suspension Date and ending prior to the Reversion Date (as defined below) (such period, the “Suspension Period”), the Company’s Board of Directors may not designate any of its Subsidiaries as Unrestricted Subsidiaries pursuant to the definition of “Unrestricted Subsidiary.”

 

Notwithstanding the foregoing, if on any date (the “Reversion Date”) subsequent to any Suspension Date, the rating on the notes assigned by either such rating agency should subsequently decline to below Baa3 or BBB-, respectively, the Suspended Covenants will be reinstituted as of and from the Reversion Date. On the Reversion Date, all Indebtedness Incurred during the Suspension Period will be classified as having been incurred in compliance with clause (a) of “—Certain Covenants—Limitation on Indebtedness” or, to the extent such Indebtedness would not be so permitted to be Incurred in compliance with clause (a) of “—Certain Covenants—Limitation on Indebtedness,” such Indebtedness will be deemed outstanding on the Closing Date, so that it is classified as permitted under clause (b)(3)(B) of “—Certain Covenants—Limitation on Indebtedness.” On the Reversion Date, the amount of Net Available Cash that has not been applied as provided under “— Limitation on Sales of Assets and Subsidiary Stock” shall be set at zero. Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under the reinstated “—Certain Covenants—Limitation on Restricted Payments” covenant will be made as if the “—Certain Covenants —Limitation on Restricted Payments” covenant

 

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had been in effect since the date of the Indenture. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of “—Certain Covenants—Limitation on Restricted Payments” to the extent set forth in such covenant; provided, however, that the amount available to be made as a Restricted Payment on any payment date shall not be reduced to below zero solely as a result of such Restricted Payments, but may be reduced to below zero as a result of the Consolidated Net Income being a deficit during the Suspension Period for the purposes of clause (a)(4)(C)(i) of “—Certain Covenants—Limitation on Restricted Payments”, and (y) the items specified in clause (a)(4)(C)(i) through (v) of “—Certain Covenants—Limitation on Restricted Payments” shall increase the amount available to be made as Restricted Payments under clause (a)(4)(C) of “—Certain Covenants—Limitation on Restricted Payments.”

 

In addition, for purposes of the reinstated “—Certain Covenants—Limitation on Transactions with Affiliates” covenant, all agreements and arrangements entered into by the Company or any Restricted Subsidiary with an Affiliate of the Company during the Suspension Period will be deemed to have been existing as of the Closing Date. Also, any encumbrance or restriction of the type referred to in the covenant described under “—Certain Covenants—Limitation on Restrictions on Distributions from Restricted Subsidiaries” incurred during the Suspension Period will be deemed to have been in effect on the Closing Date. Notwithstanding the reinstatement of the Suspended Covenants, no Default or Event of Default will be deemed to have occurred solely as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or upon termination of the Suspension Period or thereafter based solely on events that occurred during the Suspension Period). We cannot assure you that the notes will ever achieve an investment grade rating or that any such rating will be maintained.

 

Certain Covenants

 

The Indenture contains covenants including, among others, the following:

 

Limitation on Indebtedness. (a) The Company will not, and will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company or any Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence and after giving effect thereto and to the application of the net proceeds therefrom the Consolidated Coverage Ratio would be greater than 2.0:1.0.

 

(b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness:

 

(1) Indebtedness under Credit Facilities in an aggregate principal amount not to exceed $2,710 million, less the aggregate amount of all Net Available Cash from Asset Dispositions applied by the Company or any Restricted Subsidiary thereof to permanently repay any such Indebtedness pursuant to the covenant described under the caption “— Certain Covenants — Limitation on Sales of Assets and Subsidiary Stock;”

 

(2) Indebtedness of the Company owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Company or any other Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the issuer thereof not permitted by this clause (2), (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to all obligations with respect to the notes and (C) if a Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to all obligations of such Subsidiary Guarantor with respect to its Subsidiary Guarantee;

 

(3) Indebtedness (A) represented by the notes (not including any Additional Notes) and the Subsidiary Guarantees (including the exchange notes and any Guarantees thereof) or (B) outstanding on the Closing Date (other than the Indebtedness described in clause (1) or (2) above) after giving effect to the use of proceeds from the notes;

 

(4) the Incurrence by the Company or any Restricted Subsidiary of the Company of Refinancing Indebtedness in exchange for, or the net proceeds of which are used to Refinance Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be Incurred under paragraph (a) of this covenant or clause (3) (including the exchange notes and any Guarantees thereof), (4), (6), (7), (11), (12), (16) or (17) of this paragraph (b);

 

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(5) Indebtedness (A) in respect of workers’ compensation claims, self-insurance obligations, performance bonds, bankers’ acceptances, letters of credit, surety or appeal bonds, completion guarantees or similar arrangements provided by the Company and the Restricted Subsidiaries in the ordinary course of their business, and (B) under Hedging Obligations entered into for bona fide hedging purposes of the Company and its Restricted Subsidiaries in the ordinary course of business and not for speculation;

 

(6) Purchase Money Indebtedness and Capitalized Lease Obligations in an aggregate principal amount at any one time outstanding, including any Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred pursuant to this clause (6), not to exceed of the greater of (A) $350.0 million and (B) 12.0% of Consolidated Tangible Assets;

 

(7) Indebtedness of the Company or any of its Restricted Subsidiaries arising from (A) agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees, letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries, in each case incurred or assumed in connection with the disposition of any business or assets, other than Guarantees of Indebtedness by, or other credit support provided by, the Company or any of its Restricted Subsidiaries in contemplation of, in connection with, as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, such transaction; provided, that the maximum aggregate liability in respect of all such Indebtedness permitted by this clause (7) shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries from the sale of such business or assets; and (B) agreements providing for indemnification, adjustment of purchase price or earnout or similar obligations, in each case incurred or assumed in connection with the acquisition of any business or assets;

 

(8) Indebtedness consisting of Guarantees by the Company or any Restricted Subsidiary of Indebtedness of the Company or any Restricted Subsidiary otherwise permitted under this covenant;

 

(9) Indebtedness of the Company or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within 30 days of its Incurrence;

 

(10) Indebtedness of the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business; provided that, upon the drawing of such letters of credit or the Incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or Incurrence;

 

(11) Indebtedness of the Company (and Guarantees thereof by any Subsidiary Guarantor) to the extent that the net proceeds thereof are promptly deposited to defease, redeem or to satisfy and discharge the notes or repurchase notes tendered in an offer made in connection with a Change of Control pursuant to “— Change of Control”;

 

(12) the Incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse (other than pursuant to representations, warranties, covenants, indemnities and performance guarantees customarily entered into in connection with a Receivables financings) to the Company or to any of its Restricted Subsidiaries or its assets (other than such Receivables Subsidiary and its subsidiaries and assets), in an amount not to exceed $200.0 million in aggregate principal amount at any one time outstanding;

 

(13) Indebtedness in respect of netting services, automated clearinghouse arrangements, employee credit card programs and other cash management and similar arrangements Incurred in the ordinary course of business;

 

(14) Indebtedness of the Company or any Restricted Subsidiary consisting of financing of insurance premiums incurred in the ordinary course of business;

 

(15) customer deposits and advance payments received from customers in the ordinary course of business;

 

(16) the Incurrence of Acquired Indebtedness by the Company or any Restricted Subsidiary in connection with the acquisition of any Person (whether by merger, consolidation, acquisition of Capital Stock or otherwise) or asset acquisition by the Company or any of its Restricted Subsidiaries; provided, that any

 

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Person that is so acquired (including pursuant to an asset acquisition) is primarily engaged in a Permitted Business and becomes, upon such acquisition, a Restricted Subsidiary or is merged into the Company or a Restricted Subsidiary and any assets so acquired are used or useful in a Permitted Business; provided, further, that, immediately after giving effect to such acquisition and the Incurrence of such Acquired Indebtedness, no Event of Default shall have occurred and be continuing (or would result therefrom) and either (i) the Consolidated Coverage Ratio would be greater than the Consolidated Coverage Ratio immediately prior to such transactions, or (ii) the Company would be permitted to incur at least $1.00 of additional Indebtedness under paragraph (a) of this covenant;

 

(17) Indebtedness with respect of (i) taxes, assessments, governmental charges or levies and (ii) claims for labor, materials and supplies Incurred in the ordinary course of business by the Company or any of its Restricted Subsidiaries;

 

(18) Indebtedness of Foreign Subsidiaries in an aggregate principal amount at any one time outstanding not to exceed the greater of (x) $75.0 million and (y) 3.0% of Consolidated Tangible Assets; and

 

(19) Indebtedness (other than Indebtedness permitted to be Incurred pursuant to the foregoing paragraph (a) or any other clause of this paragraph (b)) in an aggregate principal amount on the date of Incurrence that, when added to all other Indebtedness Incurred pursuant to this clause (19) and then outstanding, will not exceed the greater of (i) $250.0 million and (ii) 9% of Consolidated Tangible Assets.

 

(c) Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies. For purposes of determining the outstanding amount of any particular Indebtedness Incurred pursuant to this covenant:

 

(1) Indebtedness Incurred pursuant to the Credit Agreement prior to or on the Closing Date shall be treated as Incurred pursuant to clause (1) of paragraph (b) above;

 

(2) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness;

 

(3) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount will not be included; and

 

(4) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant, the Company, in its sole discretion, shall classify (and, except as provided in clause (1) of this paragraph (c), may later reclassify) such Indebtedness and only be required to include the amount of such Indebtedness in one of such clauses.

 

(d) The amount of any Indebtedness of any Person outstanding as of any date will be:

 

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

 

(2) the principal amount of the Indebtedness, in the case of any other Indebtedness;

 

(3) in the case where the Indebtedness of a Person arises by reason of such Person having Guaranteed Indebtedness of another Person and the maximum amount payable under such Guarantee is limited to an amount less than the entire amount of the Indebtedness so Guaranteed, then the amount of the Indebtedness represented by such Guarantee shall be limited to the maximum amount payable under such Guarantee.

 

The Company will not Incur any Indebtedness if such Indebtedness is subordinate or junior in ranking in any respect to any other Indebtedness unless such Indebtedness is expressly subordinated in right of payment to the notes to the same extent. No Subsidiary Guarantor will Incur any Indebtedness if such Indebtedness is subordinate or junior in ranking in any respect to any other Indebtedness of such Subsidiary Guarantor unless such Indebtedness is expressly subordinated in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor to the same extent. For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Company or any Subsidiary Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or created in respect of such other Indebtedness of the Company or any Subsidiary Guarantor or

 

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by virtue of the fact that the holders of any Secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.

 

Limitation on Liens.

 

The Company will not, and will not permit any Subsidiary Guarantor to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness on any property or asset now owned or hereafter acquired by the Company or such Subsidiary Guarantor, except Permitted Liens, without making effective provision whereby any and all notes and Subsidiary Guarantees then or thereafter outstanding will be secured by a Lien equally and ratably with or prior to any and all other obligations thereby secured for so long as any such Indebtedness shall be so secured.

 

Any Lien created for the benefit of Holders pursuant to the preceding paragraph shall be deemed automatically and unconditionally released and discharged upon the release and discharge of the Lien securing such other Indebtedness.

 

Limitation on Restricted Payments. (a) The Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to:

 

(1)

declare or pay any dividend, make any distribution on or in respect of its Capital Stock or make any similar payment (including any payment in connection with any merger or consolidation involving the Company or any Subsidiary of the Company) to the direct or indirect holders of its Capital Stock, except (x) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and (y) dividends or distributions payable to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or other Restricted Subsidiaries, to its other shareholders on a pro rata basis or on a basis more favorable to the Company and its Restricted Subsidiaries than pro rata);

 

(2)	purchase, repurchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company held by Persons other than the Company or a Restricted Subsidiary;

 

(3)

purchase, repurchase, redeem, retire, defease or otherwise acquire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than the purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations acquired in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date thereof or intercompany Subordinated Indebtedness between or among the Company and any of the Subsidiary Guarantors); or

 

(4)	make any Investment (other than a Permitted Investment) in any Person

 

(any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, retirement, other acquisition or Investment being herein referred to as a “Restricted Payment”) if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

 

(A)	a Default shall have occurred and be continuing (or would result therefrom);

 

(B)	the Company could not Incur at least $1.00 of additional Indebtedness under paragraph (a) of the covenant described under “—Limitation on Indebtedness;” or

 

(C)

the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Company, whose determination will be conclusive) declared or made subsequent to April 1, 2001 (other than Restricted Payments excluded pursuant to paragraph (b) below) would exceed the sum, without duplication, of:

 

(i)

50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from April 1, 2001, to the end of the most recent fiscal quarter for which financial statements are publicly available prior to the date of such Restricted Payment (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit);

 

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(ii)

the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to April 1, 2001 (other than an issuance or sale to (x) a Restricted Subsidiary of the Company or (y) an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries);

 

(iii)

the aggregate Fair Market Value of any assets or property received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to March 15, 2006 (other than an issuance or sale to (x) a Restricted Subsidiary of the Company or (y) an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries);

 

(iv)

the amount by which Indebtedness of the Company or its Restricted Subsidiaries issued after April 1, 2001 is reduced on the Company’s consolidated balance sheet upon the conversion or exchange of such Indebtedness for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); and

 

(v)

with respect to Investments (other than Permitted Investments) made by the Company and its Restricted Subsidiaries after April 1, 2001, an amount equal to the net reduction in such Investments in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income), from dividends or other distributions or payments on such Investments, or from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of such Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary after April 1, 2001.

 

The Company would have had approximately $946.1 million available for restricted payments as of December 31, 2015 under clause (C) above.

 

(b)	The provisions of the foregoing paragraph (a) will not prohibit:

 

(1)

any dividend or distribution in respect of, or any purchase, repurchase, redemption, retirement or other acquisition for value of, Capital Stock of the Company or Subordinated Obligations of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Restricted Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); provided, however, that:

 

(A)	such dividend, distribution, purchase, repurchase, redemption, retirement or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments, and

 

(B)	the Net Cash Proceeds or the Fair Market Value of any assets or property received from such sale applied in the manner set forth in this clause (1) will be excluded from the calculation of amounts under clause (4)(C)(ii) or 4(C)(iii), as applicable, of paragraph (a) above;

 

(2)

any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Refinancing Indebtedness; provided, however, that such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments;

 

(3)

the payment of dividends or distributions in respect of, or making repurchases of, Capital Stock of the Company in an aggregate amount not to exceed $100.0 million in any fiscal year; provided that such payments and repurchases shall be excluded from the calculation of the amount of Restricted Payments;

 

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(4)

the payment of any dividend, the making of any distribution or the redemption of any securities within 60 days after the date of declaration thereof or the giving of formal notice by the Company of such redemption if, at such date of declaration or notice, such payment, distribution or redemption would have complied with this covenant; provided, however, that such payment, distribution or redemption (without duplication) will be included in the calculation of the amount of Restricted Payments;

 

(5)

any purchase, repurchase, redemption, retirement or other acquisition for value of shares of, or options to purchase shares of, Capital Stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors, or consultants or former consultants of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors, consultants or former consultants), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such purchases, repurchases, redemptions, retirements and other acquisitions for value will not exceed $20.0 million in any calendar year; provided further, however, that such purchases, repurchases, redemptions, retirements and other acquisitions for value shall be excluded in the calculation of the amount of Restricted Payments;

 

(6)

the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof or any withholding or similar taxes payable in connection with such exercise; provided, however, that such repurchases shall be excluded from the calculation of the amount of Restricted Payments;

 

(7)

the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary of the Company issued on or after the Closing Date in accordance with the “—Limitation on Indebtedness” covenant; provided, however, that such payment shall be excluded from the calculation of the amount of Restricted Payments;

 

(8)

payments or distributions to dissenting stockholders or dissenting holders of other Capital Stock of the Company pursuant to applicable law pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of the Indenture described below under “— Merger and Consolidation”; provided, however, that such repurchases shall be excluded from the calculation of the amount of Restricted Payments;

 

(9)

the payment of cash (A) in lieu of the issuance of fractional shares of Capital Stock upon exercise, conversion, redemption or exchange of securities exercisable or convertible into or exchangeable for Capital Stock of the Company and (B) in lieu of the issuance of whole shares of Capital Stock upon conversion or exchange of securities convertible into or exchangeable for Capital Stock of the Company; provided, however, that such repurchases shall be excluded from the calculation of the amount of Restricted Payments;

 

(10)

the repayment, defeasance, redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness or Disqualified Stock of the Company or any of the Restricted Subsidiaries (a) at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness or 101% of the stated or liquidation value of such Disqualified Stock (plus, in each case, accrued and unpaid interest or dividends, as the case may be) pursuant to a required offer to purchase (or similar offer) arising from a Change of Control (or similarly defined term relating to such Subordinated Indebtedness) or (b) at a purchase price not greater than 100% of the principal amount of such Subordinated Indebtedness or 100% of the stated or liquidation value of such Disqualified Stock (plus, in each case, accrued and unpaid interest or dividends, as the case may be) pursuant to a required offer to purchase (or similar offer) arising from an Asset Disposition (or similarly defined term relating to such Subordinated Indebtedness or Disqualified Stock), as the case may be; provided, that such repayment, defeasance, repurchase, redemption, acquisition or retirement occurs after the Company has made a related offer to purchase under the Indenture and all notes tendered by Holders

 

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in connection with such related offer to purchase have been repurchased, redeemed or acquired for value in accordance with the applicable provisions of the Indenture; provided, however, that such repurchases shall be excluded from the calculation of the amount of Restricted Payments;

 

(11)

other Restricted Payments, if, at the time of the making of such Restricted Payment, and after giving effect thereto (including, without limitation, the incurrence of any Indebtedness to finance such Restricted Payment), the Consolidated Net Leverage Ratio of the Company would not exceed 3.50 to 1.00; provided that such payments shall be included in the calculation of the amount of Restricted Payments; and

 

(12)	other Restricted Payments in an aggregate amount not to exceed $175.0 million; provided, however, that such Restricted Payments shall be excluded from the calculation of the amount of Restricted Payments.

 

The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

 

Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

 

(1)	pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company;

 

(2)	make any loans or advances to the Company; or

 

(3)	transfer any of its property or assets to the Company, except:

 

(A)	any encumbrance or restriction pursuant to applicable law, rule, regulation or order or an agreement in effect at or entered into on the Closing Date;

 

(B)

any encumbrance or restriction with respect to a Restricted Subsidiary, or assets of a Restricted Subsidiary, pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by or merged with the Company or any Restricted Subsidiary or the date the assets were acquired by the Company or any Restricted Subsidiary (other than Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by or merged with the Company) and outstanding on such date;

 

(C)	in the case of clause (3), any encumbrance or restriction

 

(i)	that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license or similar contract;

 

(ii)	contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages;

 

(iii)

existing under, by reason of or with respect to (x) Purchase Money Indebtedness for property acquired in the ordinary course of business or (y) Capitalized Lease Obligations or operating leases that impose encumbrances or restrictions on the property so acquired or covered thereby; or

 

(iv)

arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that does not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary thereof in any manner material to the Company or any Restricted Subsidiary thereof;

 

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(D)	any encumbrance or restriction on cash or other deposits or net worth imposed by customers or lessors or required by insurance, surety or bonding companies, in each case under contracts entered into in the ordinary course of business;

 

(E)	with respect to a Restricted Subsidiary, any encumbrance or restriction imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

 

(F)

provisions limiting the disposition or distribution of assets or property in joint venture, partnership or operating agreements, asset sale agreements, construction, service or supply agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business;

 

(G)

any encumbrance or restriction existing under, by reason of or with respect to Indebtedness Incurred by any Restricted Subsidiary permitted to be Incurred under the “—Limitation on Indebtedness” covenant, provided that the Company determines in good faith at the time such Indebtedness is Incurred that such encumbrance or restriction would not impair the ability of the Company to make payments of interest and principal on the notes when due;

 

(H)

any encumbrance or restriction in any agreement or instrument of a Receivables Subsidiary governing or in connection with a Qualified Receivables Transaction; provided that such restrictions apply only to such Receivables Subsidiary or the Receivables that are subject to such Qualified Receivables Transaction;

 

(I)	any encumbrance or restriction existing under or by reason of Permitted Liens;

 

(J)

any encumbrance or restriction with respect to a Restricted Subsidiary which was previously an Unrestricted Subsidiary pursuant to or by reason of an agreement that such Subsidiary is a party to or entered into before the date on which such Subsidiary became a Restricted Subsidiary; provided, that such agreement was not entered into in anticipation of an Unrestricted Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction does not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property of such Subsidiary;

 

(K)	any encumbrance or restriction contained in any license, permit or other accreditation with a regulatory authority entered into in the ordinary course of business;

 

(L)	any encumbrance or restriction which prohibits the payment or making of dividends or other distributions other than on a pro rata basis;

 

(M)	existing under, by reason of or with respect to Indebtedness Incurred by Foreign Subsidiaries permitted to be Incurred under the “—Limitation on Indebtedness” covenant; or

 

(N)

any encumbrance or restriction in connection with and pursuant to permitted refinancings, extensions, renewals or replacements of any encumbrance or restriction imposed pursuant to clauses (A) through (M) of this covenant; provided, however, that the encumbrances and restrictions contained in any such refinancings, extensions, renewals or replacements, taken as a whole, are not materially less favorable to the Holders than the encumbrances and restrictions contained in such predecessor agreements.

 

Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless:

 

(1)

the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the Fair Market Value of the shares and assets subject to such Asset Disposition;

 

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(2)

at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash, Temporary Cash Investments, assets useful in a Permitted Business or Permitted Securities; provided, that the amount of any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Disposition shall be deemed to be cash for the purposes of this provision (but for no other purpose) so long as such amount, taken together with the Fair Market Value when received of all other Designated Noncash Consideration that is at that time outstanding (i.e., that has not been sold for or otherwise converted into cash or Permitted Securities), does not exceed $50.0 million; provided further, that, with respect to the sale of one or more properties up to 75% of the consideration may consist of Indebtedness of the purchaser of such properties so long as such Indebtedness is secured by a first priority Lien on the properties sold; and

 

(3)	an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) within 540 days after the later of the date of such Asset Disposition and the receipt of such Net Available Cash:

 

(A)

to prepay, repay, purchase, repurchase, redeem, retire, defease or otherwise acquire for value Secured Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor, in each case other than Indebtedness owed to the Company or an Affiliate of the Company;

 

(B)	to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) or make one or more capital expenditures; or

 

(C)

(i) redeem the notes or make open market purchases thereof at a price not less than 100% of the principal amount thereof or (ii) to make an Offer (as defined in paragraph (b) of this covenant below) to purchase notes pursuant to and subject to the conditions set forth in paragraph (b) of this covenant; provided, however, that if the Company elects (or is required by the terms of any Pari Passu Indebtedness), such Offer may be made ratably (determined based upon the respective principal amounts of the notes and such Pari Passu Indebtedness being purchased or repaid) to purchase the notes and to purchase or otherwise repay such Pari Passu Indebtedness;

 

provided that pending final application of any such Net Available Cash in accordance with clause (A), (B) or (C) above, the Company and the Restricted Subsidiaries may temporarily reduce revolving Indebtedness outstanding under the Credit Agreement or otherwise invest such Net Available Cash in any manner not prohibited by the Indenture.

 

To the extent of the balance of such Net Available Cash after application in accordance with clauses (A), (B) and (C) above, the Company or such Restricted Subsidiary, as the case may be, may use such balance for any general corporate purpose not prohibited by the terms of the Indenture. In connection with any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Indebtedness pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary, as the case may be, will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid, purchased, repurchased, redeemed, retired, defeased or otherwise acquired for value.

 

Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this covenant exceeds $50.0 million.

 

For the purposes of this covenant, the following are deemed to be cash:

 

·                    the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; and

 

·                       securities received by the Company or any Restricted Subsidiary from the transferee that are converted by

 

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the Company or such Restricted Subsidiary into cash or Temporary Cash Investments within 180 days.

 

(b) In the event of an Asset Disposition that requires the purchase of notes pursuant to clause (a)(3)(C)(ii) of this covenant, the Company will be required (i) to purchase notes tendered pursuant to an offer by the Company for the notes (the “Offer”) at a purchase price of 100% of their principal amount plus accrued and unpaid interest thereon to the date of purchase (subject to the right of Holders of record on the relevant date to receive interest due on the relevant interest payment date) in accordance with the procedures, including prorating in the event of oversubscription, set forth in the Indenture, and (ii) to purchase or otherwise repay Pari Passu Indebtedness of the Company on the terms and to the extent contemplated thereby at the purchase price set forth in the relevant documentation (including accrued and unpaid interest to the date of acquisition, the “purchase price”), provided that to the extent the purchase price of any such Pari Passu Indebtedness exceeds 100% of the principal amount thereof, plus accrued and unpaid interest thereon to the date of acquisition, the Company shall not use any Net Available Cash to pay such purchase price, except as permitted by the next sentence. If the aggregate purchase price of notes and Pari Passu Indebtedness tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of the notes and other Pari Passu Indebtedness, the Company will apply the remaining Net Available Cash for any general corporate purpose not prohibited by the terms of the Indenture. The Company will not be required to make an Offer for notes and Pari Passu Indebtedness pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (a)(3)(A), (B) and (C)(i)) is less than $50.0 million for any particular Asset Disposition (which lesser amount will be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). Upon consummation of any Offer, the Net Available Cash in respect of any Asset Disposition(s) shall be reduced to zero.

 

(c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

 

Limitation on Transactions with Affiliates. (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) involving an aggregate amount in excess of $10.0 million unless such transaction is on terms:

 

(1)	that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm’s length dealings with a Person who is not such an Affiliate; and

 

(2)	that, in the event such Affiliate Transaction involves an aggregate amount in excess of $50 million, have been approved by a majority of the members of the Board of Directors having no personal stake in the Affiliate Transaction.

 

(b) The provisions of the foregoing paragraph (a) will not prohibit:

 

(1)	any Permitted Investment or any Restricted Payment permitted to be paid or made pursuant to the covenant described under “Limitation on Restricted Payments;”

 

(2)

any employment, consulting, severance or termination agreements, employee benefit plans or arrangements (including pension plans, health and life insurance plans, retiree medical plans, deferred compensation plans, indemnification agreements, stock options and restricted stock and stock ownership plans) or related trust agreements or similar arrangements, and any grant or issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, any of the foregoing;

 

(3)	loans or advances to employees in the ordinary course of business of the Company, but in any event not to exceed $5.0 million in the aggregate at any one time outstanding;

 

(4)	the payment of reasonable fees to directors of the Company or its Subsidiaries;

 

(5)	any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries;

 

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(6)	the provision by Persons who may be deemed Affiliates of the Company of investment advisory services to the Company or its Restricted Subsidiaries with respect to the Company’s or its Restricted Subsidiaries’ employee benefit plans;

 

(7)

transactions pursuant to any contract, agreement or instrument in effect on the Closing Date, as amended, modified or replaced from time to time, so long as the amended, modified or new agreements, taken as a whole, are no less favorable to the Company and the Restricted Subsidiaries than those in effect on the Closing Date;

 

(8)	sales, contributions, conveyances and other transfers of Receivables and related assets of the type specified in the definition of Qualified Receivables Transaction to a Receivables Subsidiary or any other similar transactions in connection with any Qualified Receivables Transaction;

 

(9)	transactions with customers, clients, suppliers or purchasers or sellers of goods or services in the ordinary course of business and consistent with past business practices;

 

(10)	any transaction with any Person who is not an Affiliate immediately before the consummation of such transaction that becomes an Affiliate as a result of such transaction;

 

(11)	any transaction with a joint venture, partnership, limited liability company or other entity that would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in such joint venture, partnership, limited liability company or other entity;

 

(12)	any merger, consolidation or reorganization of the Company or a Restricted Subsidiary (otherwise permitted by the Indenture) with a Restricted Subsidiary solely for the purpose of changing the domicile of the Company or a Restricted Subsidiary; or

 

(13)	pledges of Equity Interests of Unrestricted Subsidiaries.

 

SEC Reports. For so long as any notes are outstanding, if the Company is subject to Section 13 or 15(d) of the Exchange Act or any successor provision, the Company will provide the trustee and Holders and prospective Holders (upon request) within 15 days after it files them with the SEC, copies of its annual report and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act, provided that for purposes of this covenant, such information, documents and other reports shall be deemed to have been furnished to the trustee, Holders and prospective Holders if they are electronically available via the SEC’s EDGAR System. If the Company is not subject to Section 13 or 15(d) of the Exchange Act or any successor provision, and for so long as any notes are outstanding, the Company will deliver to the trustee the quarterly and annual financial statements that would be required to be contained in annual reports on Form 10-K and quarterly reports on Form 10-Q required to be filed with the SEC if the Company was subject to Section 13 or 15(d) of the Exchange Act or any successor provision, within 15 days of the filing date that would be applicable to the Company at that time pursuant to applicable SEC rules and regulations. The Company also will comply with the other provisions of Section 314(a) of the TIA.

 

Notwithstanding anything herein to the contrary, the Company will not be deemed to have failed to comply with any of its obligations under this covenant for purposes of clause (5) under “—Defaults” until 90 days after the date any report hereunder is due.

 

Future Subsidiary Guarantors. The Company will cause each Restricted Subsidiary (other than Foreign Subsidiaries) which guarantees any Indebtedness of the Company under the Credit Agreement or any capital markets debt securities of the Company to become a Subsidiary Guarantor and, if applicable, execute and deliver to the trustee a supplemental indenture in the form set forth in the Indenture pursuant to which such Subsidiary will Guarantee payment of the notes. Each Subsidiary Guarantee will be limited to an amount not to exceed the maximum amount that can be Guaranteed by that Subsidiary Guarantor, without rendering the Subsidiary Guarantee, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

 

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Merger and Consolidation

 

The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets and its Subsidiaries’ assets (taken as a whole) to, any Person, unless:

 

(1)

the resulting, surviving or transferee Person (the “Successor Company”) will be a corporation, limited partnership or limited liability company organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Company) will expressly assume, by a supplemental indenture, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all the obligations of the Company under the notes, the Indenture and the Registration Rights Agreement; provided that in the case where the Successor Company is not a corporation, a co-obligor on the notes is a corporation;

 

(2)

immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

 

(3)

immediately after giving effect to such transaction, the Successor Company would have a Consolidated Coverage Ratio equal to or greater than the Consolidated Coverage Ratio of the Company immediately prior to such transaction or would be able to Incur an additional $1.00 of Indebtedness under paragraph (a) of the covenant described under “Certain Covenants—Limitation on Indebtedness”, provided that this clause (3) will not be applicable to any merger with a Subsidiary solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction; and

 

(4)	the Company shall have delivered to the trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

 

The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the notes, the Indenture and the Registration Rights Agreement, and the predecessor Company (except in the case of a lease of all or substantially all its assets) will be released from the obligation to pay the principal of and interest on the notes.

 

In addition, the Company will not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any Person unless:

 

(1)

immediately after giving effect to such transaction (and, in the case of clause (2)(x) below, treating any Indebtedness that becomes an obligation of the Successor Guarantor or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Guarantor or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

 

(2)

either:

 

(x)

the resulting, surviving or transferee Person (the “Successor Guarantor”) will be a corporation, limited partnership or limited liability company organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and, other than in the case of a transaction as part of which the Subsidiary Guarantee is being released as otherwise permitted by the Indenture, such Person (if not such Subsidiary Guarantor) will expressly assume, by a supplemental indenture, executed and delivered to the trustee, in form reasonably satisfactory to the trustee, all the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee; or

 

(y)	such consolidation, merger, conveyance or transfer complies with the provisions set forth under “—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock;” and

 

(3)	the Company shall have delivered to the trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

 

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In the case of clause (2)(x) above, the Successor Guarantor will succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under the notes, the Indenture and the Registration Rights Agreement, and the predecessor Subsidiary Guarantor (except in the case of a lease of all or substantially all its assets) will be released from the obligation to pay the principal of and interest on the notes.

 

Notwithstanding the foregoing, any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or any Subsidiary Guarantor and any Subsidiary Guarantor may (i) convert into a corporation, partnership, limited partnership, limited liability company or trust organized under the laws of the jurisdiction of organization of such Subsidiary Guarantor or (ii) engage in a merger or transaction the principal purpose of which is to change the state of domicile of the Subsidiary Guarantor.

 

Defaults

 

Each of the following is an Event of Default:

 

(1)	a default in any payment of interest on any note when due and payable continued for 30 days;

 

(2)	a default in the payment of principal of any note when due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise;

 

(3)	the failure by the Company or any Subsidiary Guarantor to comply with its obligations under the covenant described under “Merger and Consolidation” above;

 

(4)

the failure by the Company or any Restricted Subsidiary to comply for 45 days after receipt of the written notice referred to below with any of its obligations under the covenants described under “Change of Control” or “Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock” above (in each case other than a failure to purchase notes);

 

(5)	the failure by the Company or any Restricted Subsidiary to comply for 60 days after receipt of the written notice referred to below with its other agreements contained in the notes or the Indenture;

 

(6)

the failure by the Company or any Restricted Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $50.0 million or its foreign currency equivalent (the “cross acceleration provision”) and such failure continues for 10 days after receipt of the written notice referred to below;

 

(7)	specified events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the “bankruptcy provisions”);

 

(8)

the rendering of any judgment or decree for the payment of money in excess of $50.0 million or its foreign currency equivalent (in excess of the amount for which liability for payment is covered by enforceable insurance policies issued by solvent third party insurers) against the Company or a Restricted Subsidiary if:

 

(A)	an enforcement proceeding thereon is commenced by any creditor or

 

(B)	such judgment or decree remains outstanding for a period of 90 days following such judgment and is not paid, discharged, waived or stayed (the “judgment default provision”); or

 

(9)

any Subsidiary Guarantee of a Subsidiary Guarantor holding more than 5% of the Company’s Consolidated assets or generating more than 5% of the Company’s Consolidated sales or net income as of and for the twelve months ended on the end of the most recent fiscal quarter for which financial statements are publicly available ceases to be in full force and effect (except as contemplated by the terms thereof) or any such Subsidiary Guarantor or Person acting by or on behalf of any such Subsidiary Guarantor denies or disaffirms such Subsidiary Guarantor’s obligations under the Indenture or any Subsidiary Guarantee and such Default continues for 10 days after receipt of the notice specified in the Indenture.

 

The foregoing Events of Default will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

 

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If a Default occurs and is continuing and is known to the trustee, the trustee must send to each Holder of the notes notice of the Default within the earlier of 90 days after it occurs and 30 days after it is actually known to a trust officer or written notice of it is received by the trustee. Except in the case of a default in the payment of principal of, premium, if any, or interest on any note, including payments pursuant to the redemption provisions of such note, the trustee may withhold notice if and so long as a committee of its trust officers in good faith determines that withholding such notice is in the interests of the Holders. In addition, the Company will be required to deliver to the trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the officers signing such certificate on behalf of the Company know of any Default that occurred during the previous year. The Company will also be required to deliver to the trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute an Event of Default, the status and what action the Company is taking or proposes to take in respect thereof.

 

A Default under clause (4), (5) or (6) above will not constitute an Event of Default until the trustee notifies the Company or the Holders of at least 25% in principal amount of the outstanding notes notify the Company and the trustee of the Default and the Company or the Subsidiary Guarantor, as applicable, does not cure such Default within the time specified in clause (4), (5) or (6) above after receipt of such notice.

 

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the trustee or the Holders of at least 25% in principal amount of the outstanding notes by notice to the Company may declare the principal of and accrued but unpaid interest on all the notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to specified events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the notes will become immediately due and payable without any declaration or other act on the part of the trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding notes may rescind any such acceleration with respect to the notes and its consequences.

 

In case an Event of Default shall occur and be continuing, the trustee shall not be under any obligation to exercise any of the trusts or powers vested in it by the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to such trustee security or indemnity reasonably satisfactory to it. The Holders of a majority in aggregate principal amount of the debt securities of each series affected and then outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee under the Indenture or exercising any trust or power conferred on the trustee with respect to the notes; provided that the trustee may refuse to follow any direction that is in conflict with any law or the Indenture or that the trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the trustee in personal liability.

 

Except to enforce the right to receive payment of principal, premium, if any, or interest with respect to the notes when due, no Holder may pursue any remedy with respect to the Indenture or the notes unless:

 

(1)	such Holder has previously given the trustee notice that an Event of Default is continuing;

 

(2)	Holders of at least 25% in principal amount of the outstanding notes of such series have requested the trustee in writing to pursue the remedy;

 

(3)	such Holders have offered the trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense;

 

(4)	the trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

 

(5)	the Holders of a majority in principal amount of the outstanding notes have not given the trustee a direction inconsistent with such request within such 60-day period.

 

Amendments and Waivers

 

Subject to certain exceptions, the Indenture or the notes may be amended with the written consent of the Holders of a majority in principal amount of the notes then outstanding and any past default or compliance with any provision

 

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may be waived with the consent of the Holders of a majority in principal amount of the notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for the notes). However, without the consent of each Holder of an outstanding note affected, no amendment may:

 

(1)	reduce the amount of notes whose Holders must consent to an amendment;

 

(2)	reduce the rate of or extend the time for payment of interest on any note;

 

(3)	reduce the principal of or extend the Stated Maturity of any note;

 

(4)	reduce the premium payable upon the redemption of any note or change the time at which any note may be redeemed as described under “—Optional Redemption” above;

 

(5)	make any note payable in money other than that stated in the note;

 

(6)	impair the right of any Holder to receive payment of principal of, and interest on, such Holder’s notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s notes;

 

(7)	make any change in the amendment provisions which require each Holder’s consent or in the waiver provisions; or

 

(8)	modify any Subsidiary Guarantee in any manner materially adverse to the Holders.

 

Without the consent of any Holder, the Company, the Subsidiary Guarantors and the trustee may amend the Indenture, notes (including the Exchange Notes) and Subsidiary Guarantees to:

 

(a)	convey, transfer, assign, mortgage or pledge any property or assets to the trustee as security for the notes;

 

(b)

evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company or any Subsidiary Guarantor under the Indenture, the notes or the Subsidiary Guarantees pursuant to the provisions described under the caption “—Merger and Consolidation”;

 

(c)	add to the covenants of the Company and the Subsidiary Guarantors such further covenants, restrictions, conditions or provisions for the protection of the Holders of notes;

 

(d)	cure any ambiguity or correct or supplement any provision contained in the Indenture, the notes (including the Exchange Notes) or the Subsidiary Guarantees that may be defective or inconsistent with any other provision contained in the Indenture;

 

(e)	make such other provisions in regard to matters or questions arising under the Indenture as the Company may deem necessary or desirable and that shall not materially and adversely affect the interests of the Holders of notes;

 

(f)

evidence and provide for the acceptance of appointment under the Indenture by a successor trustee with respect to the notes and add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts under the Indenture by more than the one trustee pursuant to the requirements of the Indenture;

 

(g)

provide for uncertificated notes in addition to or in place of certificated notes (provided, however, that the uncertificated notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated notes are described in Section 163(f)(2)(B) of the Code);

 

(h)	add additional Guarantees with respect to the notes and release any Subsidiary Guarantor in accordance with the Indenture;

 

(i)	provide for the issuance of Additional Notes;

 

(j)	conform the text of the Indenture, the notes (including the Exchange Notes) or the Subsidiary Guarantees to any provision of this Description of the Notes; or

 

(k)	comply with any requirement of the SEC in connection with the qualification of the indenture under the TIA;

 

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(l)	to make any change that provides for additional rights or benefits to the Holders of the notes or does not adversely affect the rights of any Holder in any material respect;

 

(m)

to make any amendment to the provisions of the Indenture relating to the transfer and legending of notes; provided, however, that (i) compliance with the Indenture as so amended would not result in notes being transferred in violation of the Securities Act or any other applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer notes;

 

(n)	to supplement any of the provisions of the Indenture to the extent necessary to permit or facilitate defeasance and discharge of the notes; provided, that the action shall not adversely affect the interests of the Holders of notes in any material respect;

 

(o)	to provide for a reduction in the minimum denominations of the notes; or

 

(p)	to comply with the rules of any applicable securities depositary.

 

The consent of the Holders will not be necessary to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment.

 

After an amendment becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.

 

Defeasance

 

The Company may at any time terminate all its obligations under the notes and the Indenture (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and to maintain a registrar and paying agent in respect of the notes.

 

In addition, the Company may at any time terminate:

 

(1)	its obligations and the obligations of the Restricted Subsidiaries under the covenants described under “—Change of Control” and “—Certain Covenants,” and

 

(2)

the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision and the provisions regarding the offer to repurchase notes in connection with a Change of Control or Asset Disposition described under “—Defaults” above and the limitations contained in clauses (3) and (4) under the first paragraph of “—Merger and Consolidation” above (“covenant defeasance”).

 

In the event that the Company exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor will be released from all of its obligations with respect to its Subsidiary Guarantee.

 

The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the notes may not be accelerated because of an Event of Default specified in clause (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8) (with respect only to Restricted Subsidiaries) or (9) under “—Defaults” above or because of the failure of the Company to comply with clause (3) or (4) under the first paragraph of “—Merger and Consolidation” above.

 

In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the “defeasance trust”) with the trustee money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which will be sufficient, or a combination thereof sufficient, to pay the principal of, premium, if any, and interest on the notes to redemption or maturity, as the case may be, and must comply with specified other conditions, including

 

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delivery to the trustee of an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable U.S. federal income tax law.

 

Satisfaction and Discharge

 

The Indenture (including the Subsidiary Guarantees) will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of notes, as expressly provided for in the Indenture) as to all notes issued thereunder when:

 

(1)              all outstanding notes (other than notes replaced or paid) have been canceled or delivered to the trustee for cancellation; or

 

(2)              all outstanding notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption, or will become due and payable within one year, and the Company irrevocably deposits with the trustee funds in an amount sufficient or U.S. Government Obligations, the principal of and interest on which will be sufficient, or a combination thereof sufficient, in the written opinion of a nationally recognized firm of independent public accountants delivered to the trustee (which opinion shall only be required to be delivered if U.S. Government Obligations have been so deposited), to pay the principal of and interest on the outstanding notes when due at maturity or upon redemption of, including interest thereon to maturity or such redemption date (other than notes replaced or paid); and, in either case

 

(3)              the Company pays all other sums payable under the Indenture by it.

 

Concerning the Trustee

 

The Bank of New York Mellon Trust Company, N.A. is the trustee under the Indenture and has been appointed by the Company as registrar and paying agent with regard to the notes. The Company and its subsidiaries may maintain accounts and conduct other banking transactions with affiliates of the trustee.

 

No Personal Liability of Directors, Officers, Employees and Stockholders

 

No director, officer, employee, incorporator, stockholder, member, manager or partner of the Company or any Subsidiary Guarantor, as such, will have any liability for any obligations of the Company or the Subsidiary Guarantors under the notes, the Indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

 

Governing Law

 

The Indenture and the notes are governed by, and construed in accordance with, the laws of the State of New York.

 

Certain Definitions

 

“2021 Notes” means the 5.25% Senior Notes due 2021.

 

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary or that is assumed in connection with an asset acquisition from such Person by a Restricted Subsidiary; provided, however, that Indebtedness of such Person that is redeemed, defeased, retired or otherwise repaid at the time of or immediately upon consummation of the transactions by which such Person becomes a Restricted Subsidiary or such asset acquisition shall not be Acquired Indebtedness. Acquired Indebtedness shall be deemed to have been Incurred on the date such Person becomes a Restricted Subsidiary or on the date of consummation of such asset acquisition or other acquisition of assets.

 

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“Additional Assets” means:

 

(1)              any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Permitted Business;

 

(2)              the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or

 

(3)              Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

 

provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Permitted Business.

 

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any 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; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Applicable Premium” means, with respect to a note at any date of redemption, the greater of (i) 1.0% of the principal amount of such note and (ii) the excess of (A) the present value at such date of redemption of (1) the redemption price of such note at October 1, 2018 (such redemption price being described under “—Optional Redemption”) plus (2) all remaining required interest payments due on such note through October 1, 2018(excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such note. The applicable premium shall be determined by the Company.

 

“Asset Disposition” means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

 

(1)              any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);

 

(2)              all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or

 

(3)              any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary, other than:

 

(A)            any disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;

 

(B)            for purposes of the provisions described under “—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock” only, a disposition subject to (and permitted by) the covenant described under “—Certain Covenants—Limitation on Restricted Payments;”

 

(C)            a disposition of assets or issuance or sale of Capital Stock of any Restricted Subsidiary with a Fair Market Value of less than $25.0 million;

 

(D)            any disposition of surplus, discontinued or worn-out equipment or other immaterial assets no longer used in the ongoing business of the Company and its Restricted Subsidiaries;

 

(E)             (A) any disposition of cash or Temporary Cash Investments or readily marketable securities or (B) any disposition resulting from the liquidation or dissolution of any Restricted Subsidiary to the extent made ratably in accordance with the relative equity interests held by, or capital accounts of, the owners thereof;

 

(F)              any transaction that constitutes a Permitted Investment;

 

(G)            the creation of any Permitted Lien or a Lien permitted by the Indenture;

 

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(H)           the unwinding of any Hedging Obligation;

 

(I)                any disposition arising from foreclosure, condemnation or similar action with respect to any property or other assets, or under any lease, license, concession or other agreement or eminent domain;

 

(J)                a sale, contribution, conveyance or other transfer of Receivables and related assets of the type specified in the definition of Qualified Receivables Transaction by or to a Receivables Subsidiary in a Qualified Receivables Transaction;

 

(K)            any disposition of securities of any Unrestricted Subsidiary;

 

(L)             dispositions of accounts receivable in connection with the compromise, settlement or collection thereof;

 

(M)         the grant of licenses to third parties in respect of intellectual property in the ordinary course of business of the Company or any of its Restricted Subsidiaries, as applicable; and

 

(N)            concurrently with the acquisition of any fixed or capital assets, a Sale/Leaseback Transaction with respect to such asset, so long as such lease is an operating lease and such acquisition and Sale/Leaseback Transaction was entered into to obtain favorable government pricing of such assets.

 

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value, discounted at the interest rate implicit in such transaction determined in accordance with GAAP, compounded annually, of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction including any period for which such lease has been extended. For purposes hereof such present value shall be calculated using a discount rate equal to the rate of interest implicit in such Sale/Leaseback Transaction, determined by lessee in good faith on a basis consistent with comparable determinations of Capitalized Lease Obligations under GAAP; provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations.”

 

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing:

 

(1)              the sum of the products of (x) the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or scheduled redemption or similar payment with respect to such Preferred Stock multiplied by (y) the amount of such payment by

 

(2)              the sum of all such payments.

 

“Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of the Board of Directors of the Company.

 

“Business Day” means each day that is not a Legal Holiday.

 

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in, however designated, equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

 

“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

 

“Closing Date” means the date the notes were originally issued.

 

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“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commodity Agreement” means, with respect to any Person, any contract designed to protect the Company or any Restricted Subsidiary against fluctuations in commodity prices.

 

“Consolidated Coverage Ratio” as of any date of determination means the ratio of:

 

(1)              the aggregate amount of Consolidated EBITDA for the period of the most recent four consecutive fiscal quarters for which financial statements are then publicly available to

 

(2)              Consolidated Interest Expense for such four fiscal quarters;

 

provided, however, that:

 

(A)            if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination, other than Indebtedness Incurred under any revolving credit facility or similar arrangement to finance seasonal fluctuations in working capital needs, or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; provided, however, that with respect to Indebtedness Incurred pursuant to a revolving credit or similar arrangement referred to above, calculations shall be made using the average daily balance of such Indebtedness for such period unless such Indebtedness is projected, in the reasonable judgment of senior management of the Company, to remain outstanding for a period in excess of 12 months from the date of Incurrence of such Indebtedness, in which case such calculations will be made on a pro forma basis as if such Indebtedness had been Incurred on the first day of such period;

 

(B)            if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility or similar arrangement to finance seasonal fluctuations in working capital needs, unless such Indebtedness has been permanently repaid and the related commitment has been terminated and not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period;

 

(C)            if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA, if positive, directly attributable to the assets that are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale;

 

(D)            if since the beginning of such period the Company or any Restricted Subsidiary, by merger or otherwise, shall have made an Investment in any Restricted Subsidiary or any Person that becomes a Restricted Subsidiary or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto, including the Incurrence of any Indebtedness as if such Investment or acquisition occurred on the first day of such period; and

 

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