Summary of HEADWATERS INC - Yahoo! Finance

Entry into a Material Definitive Agreement, Termination of a Material Definitive A

Item 1.01. Entry into a Material Definitive Agreement.

Offering of Notes. On October 20, 2009, Headwaters Incorporated (the "Company") entered into a purchase agreement (the "Purchase Agreement") under which it agreed to sell $328,250,000 aggregate principal amount of our 11 3/8% Senior Secured Notes due 2014 (the "Notes") to Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Bank of America Securities LLC, U.S. Bancorp Investments, Inc., Canaccord Adams Inc. and Stephens Inc. (collectively, the "Initial Purchasers"). The Notes are guaranteed (the "Guarantees") jointly and severally by all of our wholly-owned domestic subsidiaries (the "Guarantors"). The net proceeds from the offering, after deducting the initial discount (the Notes were sold at 99.067% of face value), the Initial Purchasers' discount and the estimated offering expenses payable by us, were approximately $317.0 million. A copy of the press release announcing the closing of the offering is attached hereto as Exhibit 99.1, is incorporated herein by reference, and is hereby filed.

The closing of the sale of the Notes and the related Guarantees (collectively, the "Securities") occurred on October 27, 2009. The Securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). We offered and sold the Securities to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(2) of the Securities Act. The Initial Purchasers then sold

the Securities to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. We relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement.

The Notes and the related Guarantees are governed by an indenture, dated as of October 27, 2009 (the "Indenture"), between the Company, the Guarantors and Wilmington Trust FSB, as trustee and collateral agent (the "Trustee"). A copy of the Indenture is attached hereto as Exhibit 4.1, is incorporated herein by reference, and is hereby filed; the descriptions of the Indenture, the Notes and the Guarantees in this report are summaries and are qualified in their entirety by the terms of the Indenture, Notes and the Guarantees, respectively.

The Notes bear interest at a rate of 11.375% per year, payable semiannually in arrears in cash on May 1 and November 1 of each year, beginning on May 1, 2010. The Notes mature on November 1, 2014.

The Notes and the Guarantees are secured by a first-priority lien on substantially all of our and our Guarantors' present and future assets located in the United States (other than the ABL Collateral (as defined below) in which the Notes and the Guarantees will have a second-priority lien and other excluded assets) including equipment, owned real property valued at $1 million or more and all present and future shares of capital stock or other equity interests of each of our and each Guarantor's directly owned domestic subsidiaries and 65% of the present and future shares of capital stock or other equity interests, of each of our and each Guarantor's directly owned foreign restricted subsidiaries, in each case subject to certain exceptions and customary permitted liens (such assets, the "Notes Collateral").

In addition, the Notes and the Guarantees will be secured by a second-priority lien on all of our Guarantors' present and future assets that secure our obligations under the ABL Revolver (as defined below), including receivables and inventory and related general intangibles, certain other related assets and proceeds thereof (such assets, the "ABL Collateral," and together with the Notes Collateral, the "Collateral"). This second priority lien will be subject to a first-priority lien securing the ABL Revolver and other customary liens permitted under such facility, until such facility and obligations are paid in full.

The Notes and Guarantees constitute senior secured debt of Headwaters Incorporated and the Guarantors. They rank:

• equally in right of payment with all of our and the Guarantors' existing and future senior debt including, with respect to us and the Guarantors party to the ABL Revolver, amounts outstanding under the ABL Revolver;

• senior in right of payment to all of our and the Guarantors' existing and future convertible subordinated debt, including our existing convertible senior subordinated notes;

• effectively subordinated in right of payment to all of our and the Guarantors' indebtedness and obligations that are secured by first-priority liens under the ABL Revolver to the extent of the value of the ABL Collateral;

• effectively senior to our and the Guarantors' obligations under the ABL Revolver, to the extent of the value of the Notes Collateral; and

• structurally subordinated to all existing and future indebtedness and other liabilities of our non-Guarantor subsidiaries (other than indebtedness and liabilities owed to us or one of our Guarantor subsidiaries).

Except as described below, we cannot redeem the Notes before November 1, 2012. Thereafter, we may redeem some or all of the Notes at the redemption prices set forth in this paragraph plus accrued and unpaid interest to the redemption date. At any time (which may be more than once) before November 1, 2012, we may redeem up to 35% of the aggregate principal amount of Notes issued with the net proceeds that we raise in one or more equity offerings, as long as: (a) we pay 111.375% of the face amount of the Notes, plus accrued interest to the date of redemption; (b) we redeem the Notes within 90 days of completing the

equity offering; and (c) at least 65% of the aggregate principal amount of Notes issued remains outstanding afterwards.

If a change of control occurs (as defined in the Indenture), we must give holders of the Notes the opportunity to sell us their Notes at 101% of their face amount, plus accrued and unpaid interest.

If we or our subsidiaries engage in asset sales, we generally must either invest the net cash proceeds from such asset sales in our business within a period of time, pre-pay senior debt or make an offer to purchase a principal amount of the Notes equal to the excess net cash proceeds. The purchase price of the Notes will be 100% of their principal amount, plus accrued and unpaid interest.

The Indenture, among other things, limits our ability and the ability of our restricted subsidiaries to: pay dividends or distributions, repurchase equity, prepay subordinated debt or make certain investments; incur additional debt or issue certain disqualified stock and preferred stock; incur liens on assets; merge or consolidate with another company or sell all or substantially all . . .

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On October 27, 2009, we issued $328,250,000 aggregate principal amount of the Notes. We offered and sold the Notes and the related Guarantees to the Initial Purchasers in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act. The Initial Purchasers then sold the Securities to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act.

Terms of the Notes and the Guarantees are contained in Item 1.01 and are incorporated herein by reference.

The Notes and the related Guarantees have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This report on Form 8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.

On October 27, 2009, the ABL Borrowers entered into the ABL Revolver. Terms of the ABL Revolver are contained in Item 1.01 and are incorporated herein by reference.