As filed with the Securities and Exchange Commission on June 21, 2024

Registration No. 333-

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-3

 

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 

UNITED HOMES GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   85-3460766
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification Number)

 

917 Chapin Road

Chapin, South Carolina 29036
(844) 766-4663

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Erin Reeves McGinnis

General Counsel and Corporate Secretary

917 Chapin Road

Chapin, South Carolina 29036
Telephone: (844) 766-4663

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

Andrew M. Tucker

Nelson Mullins Riley & Scarborough LLP

101 Constitution Ave NW, Suite 900

Washington, DC 20001

Telephone: (202) 689-2800

 

Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.

 

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

 

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨

 

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or classes of additional securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨   Accelerated filer x
     
Non-accelerated filer ¨   Smaller reporting company x
     
    Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ¨

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

EXPLANATORY NOTE AND STATEMENT PURSUANT TO RULE 429

 

Pursuant to Rule 429 under the Securities Act of 1933, as amended (the “Securities Act”), the prospectus (the “Prospectus”) included herein is a combined prospectus which relates to: (i) the registration statement on Form S-1 (Registration No. 333-271515), which was originally filed by United Homes Group, Inc. (“UHG,” the “Company,” “we,” “us,” “our”) with the U.S. Securities and Exchange Commission (the “SEC”) on April 28, 2023 and declared effective on July 31, 2023 (“Registration Statement I”) relating to (x) the primary issuance by the Company of up to an aggregate of 11,591,664 shares of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), and (y) the offer and resale from time to time by the selling securityholders named in Registration Statement I of up to (a) 3,387,764 shares of Class A Common Stock and (b) 2,966,664 private placement warrants, which are exercisable at a price of $11.50 per share; (ii) the registration statement on Form S-1 (Registration No. 333-271527), which was originally filed with the SEC on April 28, 2023 and declared effective on July 31, 2023 (“Registration Statement II,” and, together with Registration Statement I, the “Prior Registration Statements”) relating to the offer and resale from time to time by the selling securityholders named in Registration Statement II of (x) up to 21,544,588 shares of Class A Common Stock and (y) five senior convertible promissory notes in an aggregate principal amount of $80,000,000; and (iii) the registration of 40,975,610 additional shares of the registrant’s Class A Common Stock for resale by the selling securityholders as set forth herein.

 

This registration statement is also being filed to convert the Prior Registration Statements into a Registration Statement on Form S-3 (the “S-3 Registration Statement”). Pursuant to Rule 429 under the Securities Act, this S-3 Registration Statement also constitutes a post-effective amendment to the Prior Registration Statements, and such post-effective amendment shall hereafter become effective concurrently with the effectiveness of this S-3 Registration Statement in accordance with Section 8(c) of the Securities Act.

 

 

 

 

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 21, 2024

 

 

 

Primary Offering of
Up to 11,591,664 shares of Class A Common Stock

 

Secondary Offering of
Up to 66,652,550 shares of Class A Common Stock

Up to 2,966,664 Warrants to purchase Class A Common Stock

$80,000,000 Senior Convertible Promissory Notes due 2028

 

The securities to be offered using this combined prospectus relate to the issuance by us of up to 11,591,664 shares of our Class A common stock, par value $0.0001 per share (“Class A Common Stock”). Of these shares:

 

·Up to 8,625,000 shares of Class A Common Stock are issuable upon the exercise of public warrants (the “Public Warrants”), which are exercisable at a price of $11.50 per share, and were originally sold as a part of the DHHC units (the “DHHC Units”) purchased by public investors in the initial public offering (the “IPO”) of United Homes Group, Inc. (f/k/a DiamondHead Holdings Corp.), a Delaware corporation (the “Company”) at a price of $10.00 per DHHC Unit, with each unit consisting of one share of DHHC Class A common stock (the “DHHC Class A Common Stock”) and one-fourth of one warrant; and

 

·Up to 2,966,664 shares of Class A Common Stock are issuable upon the exercise of private placement warrants (the “Private Placement Warrants”), which are exercisable at a price of $11.50 per share, and were originally issued in connection with the IPO, to DHP SPAC-II Sponsor LLC (the “Sponsor”), certain qualified institutional buyers or institutional accredited investors, including certain funds and accounts managed by subsidiaries of BlackRock, Inc. and Millennium Management LLC (each an “Anchor Investor”), at a price of $1.50 per warrant. The Private Placement Warrants and the Public Warrants are sometimes referred to collectively in this prospectus as the “Warrants.”

 

In addition, this prospectus also relates to the offer and sale from time to time in one or more offerings, by the selling securityholders named in this prospectus (including their permitted transferees, donees, pledgees and other successors-in-interest) (collectively, the “Selling Securityholders”) of up to 66,652,550 shares of our Class A Common Stock, of which:

 

·421,100 shares of Class A Common Stock were issued in a private offering to certain of the Selling Securityholders (the “Lock-Up Investors”);

 

·2,966,664 shares of Class A Common Stock are issuable upon exercise of the Private Placement Warrants;

 

·744,588 shares of Class A Common Stock were issued to certain of the Selling Securityholders in a private placement PIPE investment (the “PIPE Investment”), pursuant to a note purchase agreement entered into on March 21, 2023 (the “Note Purchase Agreement”), by and between the Company, Great Southern Homes, Inc., a South Carolina corporation (“GSH”), and such Selling Securityholders (the “Convertible Note Investors”);

 

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·Up to 21,699,139 shares of Class A Common Stock are issuable upon conversion or exchange, or otherwise in respect, of a series of five senior convertible promissory notes (the “Notes”), including any “make-whole amounts” with respect thereto;

 

·Up to 124,999 shares of Class A Common Stock were issued in a private offering to certain of the Selling Securityholders (the “Equity PIPE Investors”);

 

·Up to 3,722,184 shares of Class A Common Stock were issued in a private offering to certain of the Selling Securityholders that were initial investors in DHHC (the “Initial DHHC Investors”); and

 

·Up to 36,973,876 shares of Class A Common Stock are issuable upon conversion of shares of Class B common stock, par value $0.0001 per share (“Class B Common Stock,” and together with the Class A Common Stock, the “Common Stock”) that were issued in a private offering to certain of the Selling Securityholders as merger consideration in connection with the Business Combination.

 

The Selling Securityholders may also, from time to time in one or more offerings, offer and sell:

 

·Up to 2,966,664 Private Placement Warrants; and

 

·the Notes, which bear interest at a rate of fifteen percent (15.0%) per annum for the first four years following the Notes’ issue date of March 30, 2023 (the “Issue Date”), with the interest rate increasing by one percent (1.0%) annually beginning on the fourth anniversary of the Issue Date of the Notes. The Notes mature and the entire unpaid principal amount and unpaid accrued interest on the Notes become payable on the fifth anniversary of the Issue Date, March 30, 2028 (“the Maturity Date”).

 

Our registration of the shares of Class A Common Stock, the Private Placement Warrants, or the Notes covered by this prospectus does not mean that the Selling Securityholders will offer or sell any of the shares of Class A Common Stock, the Private Placement Warrants, or the Notes registered hereby. The Selling Securityholders may offer, sell or distribute all or a portion of their shares of Class A Common Stock, Private Placement Warrants, or Notes publicly or through private transactions at prevailing market prices or at negotiated prices. We provide more information about how the Selling Securityholders may sell the shares in the section entitled “Plan of Distribution.”

 

We will not receive any of the proceeds from the sale of the securities by the Selling Securityholders. We will receive proceeds from the exercise of the Public Warrants and the Private Placement Warrants if the Warrants are exercised for cash. The exercises of the Warrants and our potential receipt of cash proceeds in connection therewith are dependent on the market price of our Class A Common Stock. Following the closing of our Business Combination, the market price of our Class A Common Stock has fluctuated, and it may continue to fluctuate in the future. Fluctuations in the market price of our Class A Common Stock will affect the likelihood that holders of the Warrants will exercise the Warrants. As a result, the Warrants may not provide any additional capital. When the market price for our Class A Common Stock is less than $11.50 per share (i.e., the Warrants are “out of the money”) we believe the holders of the Warrants will be unlikely to exercise their Warrants. To the extent that the market price of the Class A Common Stock exceeds $11.50, holders of the Warrants may exercise their Warrants and sell the underlying Class A Common Stock, which may have negative impact on the market price of the Class A Common Stock. See “Risk Factors — There is no guarantee that the Warrants will be in the money, and they may expire worthless” for more information. In considering our capital requirements and sources of liquidity, we have not assumed or relied on the receipt of proceeds from the exercise of the Warrants.

 

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The Selling Securityholders will determine the timing, pricing and rate at which they sell the securities covered by this Registration Statement into the public market. While certain Selling Securityholders may experience a positive rate of return based on the current trading price of our Class A Common Stock, public investors may not experience a similar rate of return on the securities they purchased due to differences in the purchase prices and the current trading price of our Class A Common Stock. Even if the trading price is significantly below the Company’s initial public offering price or the market price as of the date of this prospectus, certain Selling Securityholders may have an incentive to sell their shares, because they will still profit on sales due to the lower prices at which they purchased their shares as compared to the public investors. The Public Warrants were sold as a part of the DHHC Units purchased in the IPO at a price of $10.00 per DHHC Unit, with each unit consisting of one share of DHHC Class A Common Stock and one-fourth of one Warrant. The Lock-Up Investors purchased shares in the open market at prevailing market prices which ranged from $10.08 to $10.12 per share. The Lock-Up Investors were entitled to purchase from the Company 0.25 additional bonus shares at a price of $0.01 per share for each share purchased on the open market. The bonus shares issued to such Lock-Up Investors may meaningfully lower the per share price the Lock-Up Investors paid for their shares to between $8.06 and $8.10 per share. Based on the closing price of the Class A Common Stock on June 14, 2024 of $7.06 per share, and assuming the resale by the Lock-Up Investors of all 421,100 shares of Class A Common Stock being registered for resale by such investors on the registration statement of which this prospectus forms a part, the Lock-Up Investors could receive a gain of approximately $3.0 million ($7.05 per share) from the resale of such shares. The Equity PIPE Investors purchased shares from the Company in a private placement at a price of $10.00 per share and were entitled to purchase from the Company 0.25 additional bonus shares at a price of $0.01 per share for each share purchased on the open market. The bonus shares issued to such Equity PIPE Investors lowered the per share price the Equity PIPE Investors paid for their shares to $8.00 per share. Based on the closing price of the Class A Common Stock on June 14, 2024 of $7.06 per share, and assuming the resale by the Equity PIPE Investors of all 124,999 shares of Class A Common Stock being registered for resale by such investors on the registration statement of which this prospectus forms a part, the Equity PIPE Investors would incur a loss of approximately $0.1 million ($0.94 per share) from the resale of such shares. The Private Placement Warrants were sold at a price of $1.50 per Warrant. The 2,966,664 shares issuable upon exercise of the Private Warrants will be issued at a price of $11.50 per share (the exercise price of the Private Warrants) and, therefore, based on the closing price of the Class A Common Stock on June 14, 2024, the Private Warrants are “out of the money” and unlikely to be exercised unless the trading price of the Class A Common Stock goes above $11.50 per share. If the Private Warrants are exercised when the trading price of the Class A Common Stock is below $11.50 per share, such holders will not receive any gain from the resale of such shares. The aggregate gross amount of the PIPE Investment was $75,000,000, in exchange for which the Convertible Note Investors received Notes in an aggregate principal amount of $80,000,000 and 744,588 shares of Class A Common Stock. No additional consideration was paid by the Convertible Note Investors for the Class A Common Stock. Based on the closing price of the Class A Common Stock on June 14, 2024, which was $7.06 per share, and assuming the resale by the Selling Securityholders of (i) all 744,588 shares of Class A Common Stock acquired in the PIPE Investment (ii) all 21,699,139 shares of Class A Common Stock that may be issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, and being registered on the registration statement of which this prospectus forms a part, the Selling Securityholders could earn approximately $158.5 million in aggregate proceeds from the resale of such shares. The 744,588 shares issued to the Convertible Note Investors in connection with the PIPE Investment were issued in exchange for the Convertible Note Investors agreeing to participate in the Convertible Note offering and were ascribed a value of $5.00 per share, which would result in a gain to the Selling Securityholders of approximately $1.5 million based on the closing price of the Class A Common Stock on June 14, 2024. The 21,699,139 shares of Class A Common Stock that may be issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, will be issued at a conversion price of $5.58 per share, which price was determined in accordance with the terms of the Notes. Based upon the conversion price of $5.58 per share, the Selling Securityholders would receive a gain of approximately $32.1 million based on the closing price of the Class A Common Stock on June 14, 2024.

 

Our Class A Common Stock and Public Warrants are listed on the Nasdaq Capital Market (the “Nasdaq”) under the symbols “UHG” and “UHGWW,” respectively. On June 14, 2024, the closing price of our Class A Common Stock was $7.06 per share and the closing price of our Public Warrants was $0.96 per Warrant.

 

The shares of Class A Common Stock that are being registered for resale under this prospectus, excluding the shares issuable upon conversion or exchange, or otherwise in respect, of the Private Placement Warrants, Notes, and Class B Common Stock, including any “make-whole amounts” with respect to the Notes (consisting of up to (i) 421,100 shares of Class A Common Stock issued in a private offering to the Lock-Up Investors, (ii) 744,588 shares of Class A Common Stock issued to the Convertible Note Investors, (iii) 124,999 shares of Class A Common Stock issued to the Equity PIPE Investors, and (iv) 3,722,184 shares of Class A Common Stock issued to the Initial DHHC Investors), represent approximately 44.0% of the total Class A Common Stock outstanding as of June 14, 2024, assuming no Warrants are exercised, no Notes are converted, and no Class B Common Stock is converted. The shares of Class A Common Stock that are being registered for resale on this registration statement represent approximately 81.6% of the total Class A Common Stock outstanding as of June 14, 2024, assuming that all Public Warrants and Private Placement Warrants are exercised, the Notes are converted, and the Class B Common Stock is converted. The sale of all the Class A Common Stock issuable upon exercise of the Warrants, conversion of the Notes, conversion of the Class B Common Stock, or the other Class A Common Stock registered hereunder, or the perception that such sales may occur, may cause the market prices of our securities to decline significantly.

 

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We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), and are subject to reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

 

We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

 

Investing in our securities involves a high degree of risk. You should carefully read and consider the risk factors set forth under the caption “Risk Factors” on page 14 of this prospectus, in any accompanying prospectus supplement and in the documents incorporated or deemed incorporated by reference into this prospectus and the accompanying prospectus supplement before you invest in our securities.

 

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

 

The date of this prospectus is [●], 2024.

 

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TABLE OF CONTENTS

 

About this Prospectus 6
Cautionary Note Regarding Forward-Looking Statements 7
Prospectus Summary 9
Risk Factors 14
Private Placement of Notes 18
Use of Proceeds 21
Description of Securities 22
Principal stockholders 45
Selling Securityholders 47
Plan of Distribution 50
Material U.S. Federal Income Tax Considerations 53
Legal Matters 61
Experts 61
Incorporation of Certain Information by Reference 62
Where You Can Find More Information 61

 

You should rely only on the information provided in this prospectus, as well as the information incorporated by reference into this prospectus and any applicable prospectus supplement. Neither we nor the Selling Securityholders have authorized anyone to provide you with different information. Neither we nor the Selling Securityholders are making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any applicable prospectus supplement is accurate as of any date other than the date of the applicable document. Since the date of this prospectus and the documents incorporated by reference into this prospectus, our business, financial condition, results of operations and prospects may have changed.

 

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ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-3 that we have filed with the Securities and Exchange Commission (the “SEC”) using a shelf registration process. Under this shelf registration process, the Selling Securityholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such Selling Securityholders of the securities offered by them described in this prospectus.

 

This prospectus relates to the primary issuance by us of up to an aggregate of 11,591,664 shares of Class A Common Stock, which consists of (i) up to 8,625,000 shares of Class A Common Stock issuable upon the exercise of the Public Warrants, and (ii) up to 2,966,664 shares of Class A Common Stock issuable upon the exercise of the Private Placement Warrants. This prospectus also relates to the offer and sale from time to time by the Selling Securityholders of up to (i) 421,100 shares of Class A Common Stock issued in a private offering to the Lock-Up Investors, (ii) 2,966,664 shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants, (iii) 744,588 shares of Class A Common Stock issued to the Convertible Note Investors, (iv) up to 21,699,139 shares of Class A Common Stock issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, (v) 124,999 shares of Class A Common Stock issued to the Equity PIPE Investors, (vi) 3,722,184 shares of Class A Common Stock issued to the Initial DHHC Investors, (vii) 36,973,876 shares of Class A Common Stock issuable upon conversion of shares of Class B Common Stock that were issued in a private offering to certain of the Selling Securityholders as merger consideration in connection with the Business Combination, (viii) up to 2,966,664 Private Placement Warrants, and (ix) the Notes themselves. We will not receive any proceeds from the sale of the Class A Common Stock, the Private Placement Warrants, or the Notes pursuant to this prospectus.

 

Neither we nor the Selling Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the Selling Securityholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the Selling Securityholders will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

 

You should carefully read this prospectus, any accompanying prospectus supplement and the documents incorporated by reference herein and therein as described below under the captions “Where You Can Find More Information” and “Incorporation by Reference” before making a decision to invest in our securities.

 

You should rely only on the information set forth in or incorporated by reference into this prospectus and any accompanying prospectus supplement. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.

 

We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

 

You should assume that the information in this prospectus, any prospectus supplement and the documents incorporated by reference herein and therein are accurate only as of the dates of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

This prospectus contains summaries of certain provisions contained in documents described in this prospectus. All of the summaries are qualified in their entirety by the actual documents, which you should review before making a decision to invest in our securities. Copies of the documents referred to herein have been filed, or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”

 

On March 30, 2023 (the “Closing Date”), the Company consummated the previously announced business combination pursuant to that certain Business Combination Agreement, dated as of September 10, 2022, by and among the Company, Hestia Merger Sub, Inc., a South Carolina corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”). Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into GSH (the “Business Combination”), with GSH surviving the merger as a wholly owned subsidiary of the Company. On the Closing Date, and in connection with the closing of the Business Combination (the “Closing”), the Company changed its name to “United Homes Group, Inc.”

 

Unless the context indicates otherwise, references in this prospectus to the “Company,” “United Homes Group,” “UHG,” “we,” “us,” “our” and similar terms refer to United Homes Group, Inc.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this prospectus, our future financial performance, strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “goal,” “outlook,” “forecast,” “possible,” “potential,” “predict,” “project” or the negative of such terms or other similar expressions. These forward- looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus. We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

 

These statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected or otherwise implied by the forward-looking statements. The following factors, among others, may cause actual results to differ materially from those expressed or implied in our forward-looking statements:

 

·disruption in the terms or availability of mortgage financing or an increase in the number of foreclosures in our markets;

 

·volatility and uncertainty in the credit markets and broader financial markets;

 

·a slowdown in the homebuilding industry or changes in population growth rates in our markets;

 

·shortages of, or increased prices for, labor, land or raw materials used in land development and housing construction, including due to changes in trade policies;

 

·material weaknesses in our internal control over financial reporting that we have identified, which, if not corrected, could affect the reliability of our Consolidated Financial Statements;

 

·our ability to execute our business model, including the success of our operations in new markets and our ability to expand into additional new markets;

 

·our ability to successfully integrate homebuilding operations that we acquire;

 

·delays in land development or home construction resulting from natural disasters, adverse weather conditions or other events outside our control;

 

·changes in applicable laws or regulations;

 

·the outcome of any legal proceedings;

 

·our ability to continue to leverage our land-light operating strategy;

 

·the ability to maintain the listing of our securities on Nasdaq or any other exchange; and

 

·the possibility that we may be adversely affected by other economic, business or competitive factors.

 

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Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Additional cautionary statements or discussions of risks and uncertainties that could affect our results or the achievement of the expectations described in forward-looking statements may also be contained in any accompanying prospectus supplement.

 

Should one or more of the risks or uncertainties described in this prospectus, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in the section entitled “Risk Factors” and in our periodic filings with the SEC. Our SEC filings are available publicly on the SEC’s website at www.sec.gov.

 

You should read this prospectus and any accompanying prospectus supplement completely and with the understanding that our actual future results, levels of activity and performance as well as other events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

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PROSPECTUS SUMMARY

 

This summary highlights selected information appearing elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that may be important to you. To understand this offering fully, you should read this entire prospectus carefully, including the information set forth under the heading “Risk Factors” and our financial statements.

 

The Company

 

UHG designs, builds and sells homes in high growth markets, including South Carolina, North Carolina, and Georgia. Prior to the Business Combination (discussed below), UHG’s business historically consisted of both homebuilding operations and land development operations. Recently, UHG separated its land development operations and its homebuilding operations across separate entities in an effort to adopt best practices in the homebuilding industry associated with ownership and control of land and lots and production efficiency. Following the separation of the land development business, which is now primarily conducted by the Land Development Affiliates (as defined and described elsewhere herein) that are outside of the corporate structure of UHG. UHG employs a land-light lot operating strategy, with a focus on the design, construction and sale of entry-level, first move up and second move up single-family houses. UHG principally builds detached single-family houses, and, to a lesser extent, attached single-family houses, including duplex houses and town houses.

 

Background

 

We were originally known as DiamondHead Holdings Corp (“DHHC”). On March 30, 2023, we consummated the Business Combination with Hestia Merger Sub, Inc., a South Carolina corporation and wholly owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc., a South Carolina corporation (“GSH”). Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into GSH (the “Business Combination”), with GSH surviving the merger as a wholly owned subsidiary of the Company. In connection with the Closing of the Business Combination, we changed our name to “United Homes Group, Inc.” GSH was deemed to be the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification 805. While the Company was the legal acquirer in the Business Combination, because GSH was deemed the accounting acquirer, the historical financial statements of GSH became the historical financial statements of the combined company, upon the consummation of the Business Combination.

 

On the Closing Date of the Business Combination, (i) certain investors (“PIPE Investors”) purchased from the Company an aggregate of (A) 471,500 shares of Class A Common Stock at a purchase price of $10.00 per share, and (B) 117,874 shares of Class A Common Stock at a purchase price of $0.01 per share for gross proceeds to the Company of approximately $4.7 million, pursuant to separate subscription agreements entered into on March 23, 2023 (the “PIPE Subscription Agreements”) and (ii) certain investors (“Lock-Up Investors”) purchased from the Company an aggregate of 421,100 shares of Class A Common Stock at a purchase price of $0.01 per share, pursuant to certain share lock-up and non-redemption agreements entered into on March 23, 2023 (the “Share Lock-Up Agreements,” and together with the PIPE Subscription Agreements, the “Subscription Agreements”). Also on the Closing Date of the Business Combination, certain investors (the “Convertible Note Investors”) purchased from the Company $80,000,000 in original principal amount of convertible promissory notes (the “Notes”) and, pursuant to the terms of share subscription agreements dated March 30, 2023, entered into between each Convertible Note Investor and the Company (the “Note Subscription Agreements”), an additional 744,588 shares of Class A Common Stock in a private placement PIPE investment (the “PIPE Investment”), pursuant to a note purchase agreement entered into on March 21, 2023 (the “Note Purchase Agreement”). The aggregate gross amount of the PIPE Investment was $75,000,000. The Class A Common Stock issued to the PIPE Investors, Lock-Up Investors, and Convertible Note Investors were issued pursuant to and in accordance with the exemption from registration under the Securities Act of 1933 (the “Securities Act”) under Section 4(a)(2) and/or Regulation D promulgated thereunder. See the section titled “Private Placement of Notes” for a description of the transactions contemplated by the Note Purchase Agreement.

 

Pursuant to our prior certificate of incorporation, each issued and outstanding share of DHHC Class B common stock, par value $0.0001 per share (the “DHHC Class B Common Stock”), converted into one share of Class A Common Stock, par value $0.0001 per share, at the Closing.

 

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Our Class A Common Stock and Public Warrants are currently listed on the Nasdaq under the symbols “UHG” and “UHGWW,” respectively.

 

The rights of holders of our Class A Common Stock and Warrants are governed by our Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), our Amended and Restated Bylaws (the “Bylaws”) and the Delaware General Corporation Law (the “DGCL”).

 

As of June 12, 2024, there were 11,400,203 shares of Class A Common Stock and (ii) 36,973,876 shares of Class B Common Stock (together with the Class A Common Stock, the “UHG Common Stock”) issued and outstanding.

 

We will not receive any of the proceeds from the sale by the Selling Securityholders of the securities described in this prospectus.

 

The Class A Common Stock that is being registered for resale under this prospectus represents approximately 81.6% of the total Class A Common Stock outstanding as of June 14, 2024 (assuming that all Public Warrants and Private Placement Warrants are exercised, the Notes are converted, and the Class B Common Stock is converted). We will receive proceeds from the exercise of the Public Warrants and the Private Placement Warrants if the Warrants are exercised for cash. The exercises of the Warrants and our potential receipt of cash proceeds in connection therewith are dependent on the market price of our Class A Common Stock. Following the closing of our Business Combination, the market price of our Class A Common Stock has fluctuated, and it may continue to fluctuate in the future. Fluctuations in the market price of our Class A Common Stock will affect the likelihood that holders of the Warrants will exercise the Warrants. As a result, the Warrants may not provide any additional capital. When the market price for our Class A Common Stock is less than $11.50 per share (i.e., the Warrants are “out of the money”) we believe the holders of the Warrants will be unlikely to exercise the Warrants. To the extent that the market price of the Class A Common Stock exceeds $11.50, holders of the Warrants may exercise their Warrants and sell the underlying Class A Common Stock, which may have negative impact on the market price of the Class A Common Stock.

 

While certain of the shares Class A Common Stock are subject to lock-ups that prevent them from being sold for certain amounts of time, once the applicable lock-up periods have lapsed, a significant portion of our total outstanding securities will be eligible to be sold into the market which could cause the market price of our Class A Common Stock to drop significantly. The Selling Securityholders will be able to sell their shares for so long as the Registration Statement of which this prospectus forms a part is available for use.

 

Emerging Growth Company

 

We are an “emerging growth company,” as defined under the JOBS Act. As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and the requirement to obtain stockholder approval of any golden parachute payments not previously approved.

 

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year of the Company following the fifth anniversary of the consummation of the Company’s initial public offering, which occurred on January 25, 2021, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in the Exchange Act, and (4) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period.

 

Corporate Information

 

The Company was incorporated in the State of Delaware on October 7, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company completed its initial public offering on January 28, 2021. On March 30, 2023, the Company consummated the Business Combination. In connection with the Business Combination, we changed our name to United Homes Group, Inc. Our principal executive offices are located at 917 Chapin Road, Chapin, South Carolina 29036 and our telephone number is (844) 766-4663. Our website address is www.unitedhomesgroup.com/. Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this prospectus or the registration statement of which it forms a part.

 

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THE OFFERING

 

Issuer   United Homes Group, Inc. (f/k/a DiamondHead Holdings Corp.)
     
Issuance of Class A Common Stock    
     
Shares of Class A Common Stock Offered by us   11,591,664 shares of Class A Common Stock, which consists of (i) up to 8,625,000 shares of Class A Common Stock that are issuable upon exercise of the Public Warrants, and (ii) up to 2,966,664 shares of Class A Common Stock that are issuable upon exercise of the Private Placement Warrants.
     
Class A Common Stock Outstanding Prior to Exercise of Warrants   11,400,203 shares (as of June 12, 2024).
     
Class A Common Stock Outstanding Assuming Exercise of the Warrants   22,991,867 shares (based on total shares outstanding as of June 12, 2024).
     
Exercise Price of Warrants   $11.50 per share, subject to adjustment as defined herein.
     
Use of Proceeds   We will receive up to an aggregate of approximately $133.3 million from the exercise of the Warrants, assuming the exercise in full of all of the Warrants for cash. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes. See “Use of Proceeds.”
     
Resale of Class A Common Stock, Warrants, and Notes    
     
Resale of Class A Common Stock    
     
Class A Common Stock offered by Selling Securityholders   66,652,550 shares of Class A Common Stock, which consists of (i) 421,100 shares of Class A Common Stock issued in a private offering to the Lock-Up Investors, (ii) 2,966,664 shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants, (iii) 744,588 shares of Class A Common Stock issued to the Convertible Note Investors, (iv) up to 21,699,139 shares of Class A Common Stock issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, (v) 124,999 shares of Class A Common Stock issued to the Equity PIPE Investors, (vi) 3,722,184 shares of Class A Common Stock issued to the Initial DHHC Investors, and (vii) 36,973,876 shares of Class A Common Stock issuable upon conversion of shares of Class B Common Stock that were issued in a private offering to certain of the Selling Securityholders as merger consideration in connection with the Business Combination.
     
Use of Proceeds   We will not receive any proceeds from the sale of the Class A Common Stock by the Selling Securityholders pursuant to this prospectus. See “Use of Proceeds.”
     
Lock-up Restrictions  

Certain of the shares of Class A Common Stock issued in connection with the Business Combination are subject to restrictions on transfer until the termination of applicable lock-up periods. See “Certain Relationships and Related Person Transactions” for further discussion.

     
Market for Class A Common Stock   Our Class A Common Stock is currently traded on Nasdaq under the symbol “UHG.”

 

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Resale of Warrants    
     
Warrants offered by Selling Securityholders   Up to 2,966,664 Private Placement Warrants.
     
Redemption   The Private Placement Warrants are redeemable in certain circumstances. See “Description of Securities—Warrants” for further discussion.
     
Use of Proceeds   We will not receive any proceeds from the sale of the Private Placement Warrants or of the Class A Common Stock by the Selling Securityholders pursuant to this prospectus. See “Use of Proceeds.”
     
Market for Public Warrants   Our Public Warrants are currently traded on Nasdaq under the symbol  “UHGWW.”
     
Resale of Notes    
     
Notes offered by the Selling Securityholders   Senior convertible promissory notes, up to a combined $80,000,000 in original principal amount
     
Conversion   The Notes are convertible. See the section titled “Description of Securities” for further discussion.
     
Maturity Date   The Notes mature on March 30, 2028.
     
Interest Payment   The Notes bear interest at the rate of fifteen percent (15.0%) per annum for the first four years following the Issue Date of the Notes. The interest rate increases by one percent (1.0%) annually beginning on the fourth anniversary of the Issue Date of the Notes. The Notes mature and the entire unpaid principal amount and unpaid accrued interest on the Notes become payable on the fifth anniversary of the Issue Date (the “Maturity Date”). See the section titled “Description of Securities” for further discussion.
     
Security   None. The Notes are the unsecured obligations of the Company.
     
Ranking   The Notes are our senior unsecured obligations.
     
Redemption   The Notes may be redeemed by the Company at any time prior to sixty (60) days before the Maturity Date by payment of all principal amounts and interest remaining outstanding at the time of redemption plus an additional amount to compensate the holder for the early repayment. The Notes are also subject to conversion at the option of the Company following the second anniversary of the closing of the Business Combination, but only if during a specified period following such second anniversary the Class A Common Stock trades at a price equal to or over $13.50 per share.

 

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Conversion   Each Note (or any portion of a Note) is convertible at a holder’s option into Class A Common Stock, at any time after the first anniversary of March 30, 2023 until the maturity date of such Note, at a per share price of $5.58 per share, which is equal to 80% of the value weighted average trading price per share of Class A Common Stock during the Measurement Period. The conversion price is subject to customary adjustments for certain corporate events as provided in the Notes. If any such event occurs, the number of shares of Class A Common Stock issuable upon conversion may be higher than implied by the initial conversion price.
     
Change of Control   If a Change of Control Transaction (as defined in the Note Purchase Agreement) occurs, then each holder may elect to be repaid in cash as of the closing of the Change of Control Transaction, convert the applicable Note into shares of the Company at the conversion price set forth in the Note, or have the Note remain outstanding following the closing of the Change of Control Transaction.
     
Use of Proceeds   We will not receive any proceeds from the sale of the Notes by the Selling Securityholders pursuant to this prospectus. See “Use of Proceeds.”
     
Risk Factors   See “Risk Factors” and other information included in this prospectus for a discussion of factors you should consider before investing in our securities.

 

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RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should carefully read and review the risk factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, the risk factors discussed under the caption “Risk Factors” in any accompanying prospectus supplement, and any risk factors discussed in our other filings with the SEC which are incorporated by reference into this prospectus and any accompanying prospectus supplement before investing in our securities. These risks and uncertainties are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us, or that we currently view as immaterial, may also materially and adversely affect us. If any of the risks or uncertainties described in our most recent Annual Report on Form 10-K, any accompanying prospectus supplement or our other filings with the SEC or if any additional risks and uncertainties actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that case, the trading price of our securities could decline, and you could lose all or part of your investment.

 

Resales of the Class A Common Stock could depress the market price of the Class A Common Stock of UHG.

 

There may be a large number of shares of Class A Common Stock that could be sold in the market. As of June 14, 2024, there were approximately 11.4 million shares of Class A Common Stock outstanding. Such sales of Class A Common Stock or the perception of such sales may depress the market price of the Class A Common Stock or Public Warrants. The Class A Common Stock that is being registered for resale under this prospectus represent approximately 81.6% of the total Class A Common Stock outstanding as of June 14, 2024 (assuming that all Public Warrants and Private Placement Warrants are exercised, the Notes are converted, and the Class B Common Stock is converted).

 

On June 14, 2024, the closing price of the Class A Common Stock was $7.06 per share. The initial public offering price of DHHC units was $10.00 per unit, with each unit consisting of one share of DHHC Class A Common Stock and one-quarter of one warrant to purchase one share of DHHC Class A Common Stock at an exercise price of $11.50 per share.

 

The Selling Securityholders will determine the timing, pricing and rate at which they sell the securities covered by this Registration Statement into the public market. While certain Selling Securityholders may experience a positive rate of return based on the current trading price of our Class A Common Stock, public investors may not experience a similar rate of return on the securities they purchased due to differences in the purchase prices and the current trading price of our Class A Common Stock. Even if the trading price is significantly below the Company’s initial public offering price or the market price as of the date of this prospectus, certain Selling Securityholders may have an incentive to sell their shares, because they will still profit on sales due to the lower prices at which they purchased their shares as compared to the public investors. The Public Warrants were sold as a part of the DHHC Units purchased in the IPO at a price of $10.00 per DHHC Unit, with each unit consisting of one share of DHHC Class A Common Stock and one-fourth of one Warrant. The Lock-Up Investors purchased shares in the open market at prevailing market prices which ranged from $10.08 to $10.12 per share. The Lock-Up Investors were entitled to purchase from the Company 0.25 additional bonus shares at a price of $0.01 per share for each share purchased on the open market. The bonus shares issued to such Lock-Up Investors may meaningfully lower the per share price the Lock-Up Investors paid for their shares to between $8.06 and $8.10 per share. Based on the closing price of the Class A Common Stock on June 14, 2024 of $7.06 per share, and assuming the resale by the Lock-Up Investors of all 421,100 shares of Class A Common Stock being registered for resale by such investors on the registration statement of which this prospectus forms a part, the Lock-Up Investors could receive a gain of approximately $3.0 million ($7.05 per share) from the resale of such shares. The Equity PIPE Investors purchased shares from the Company in a private placement at a price of $10.00 per share and were entitled to purchase from the Company 0.25 additional bonus shares at a price of $0.01 per share for each share purchased on the open market. The bonus shares issued to such Equity PIPE Investors lowered the per share price the Equity PIPE Investors paid for their shares to $8.00 per share. Based on the closing price of the Class A Common Stock on June 14, 2024 of $7.06 per share, and assuming the resale by the Equity PIPE Investors of all 124,999 shares of Class A Common Stock being registered for resale by such investors on the registration statement of which this prospectus forms a part, the Equity PIPE Investors would incur a loss of approximately $0.1 million ($0.94 per share) from the resale of such shares. The Private Placement Warrants were sold at a price of $1.50 per Warrant. The 2,966,664 shares issuable upon exercise of the Private Warrants will be issued at a price of $11.50 per share (the exercise price of the Private Warrants) and, therefore, based on the closing price of the Class A Common Stock on June 14, 2024, the Private Warrants are “out of the money” and unlikely to be exercised unless the trading price of the Class A Common Stock goes above $11.50 per share. If the Private Warrants are exercised when the trading price of the Class A Common Stock is below $11.50, such holders will not receive any gain from the resale of such shares. Based on the closing price of the Class A Common Stock on June 14, 2024 of $7.06 per share, and assuming the resale by the Selling Securityholders of the 744,588 shares of Class A Common Stock acquired in the PIPE Investment and being registered on the registration statement of which this prospectus forms a part, the Selling Securityholders could earn approximately $158.5 million in aggregate proceeds from the resale of such shares. The 744,588 shares issued to the Convertible Note Investors in connection with the PIPE Investment were issued in exchange for the Convertible Note Investors agreeing to participate in the Convertible Note offering and were ascribed a value of $5.00 per share, which would result in a gain to the Selling Securityholders of approximately $1.5 million based on the closing price of the Class A Common Stock on June 14, 2024. The 21,699,139 shares of Class A Common Stock that may be issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, will be issued at a conversion price of $5.58 per share, which price was determined in accordance with the terms of the Notes. Based on the conversion price of $5.58 per share, the Selling Securityholders would receive a gain of approximately $32.1 million based on the closing price of the Class A Common Stock on June 14, 2024.

 

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The shares held by the Company’s public stockholders are freely tradeable. The founder shares held by the Initial DHHC Investors, and the shares held by Michael Nieri and Nieri Trusts immediately following the Closing, were or are currently subject to a “Lock-Up Period” as follows, subject to certain customary exceptions: (A) first, for 50% of the shares, the period ending one year following the Closing (which lock-up has expired as of the date of this prospectus), and (B) second, for the remaining 50% of the shares, the period ending two years following the Closing. In addition, shares purchased pursuant to subscription agreements (“PIPE Subscription Agreements”) with the Equity PIPE Investors were or are currently subject to a Lock-Up Period as follows, subject to certain customary exceptions: (A) first, for 50% of such shares, the period ending one year following the Closing (which lock-up has expired as of the date of this prospectus), and (B) second, for the remaining 50% of such shares, the period ending two years following the Closing.

 

Other contractual lock-up periods expired upon the one-year anniversary of the Closing of the Business Combination, namely lock-ups with respect to shares held by the Anchor Investors and Convertible Note Investors. Once the applicable lock-up periods have lapsed, a significant portion of our total outstanding securities will be eligible to be sold into the market which could cause the market price of our Class A Common Stock to drop significantly.

 

Further, pursuant to the 2023 Plan, we grant stock-based awards to our officers, employees, directors, and consultants.

 

Any significant discretionary sales by the recipients of equity awards, including sales of shares received upon the exercise of options (or sell-to-cover transactions effected to address any associated tax liabilities or exercise prices of such options), would be very dilutive to existing stockholders. Any such sales may also result in trading volatility and reduce the market price of UHG’s Class A Common Stock.

 

UHG may not receive any proceeds from the exercise of Warrants, and if UHG does, it may be unable to invest the portion of the net proceeds from the exercise of Warrants on acceptable terms.

 

UHG will receive up to an aggregate of approximately $133.3 million from the exercise of the Warrants, assuming the exercise in full of all of the Warrants for cash. However, UHG will only receive proceeds to the extent holders of Warrants elect to exercise. The exercises of the Warrants and UHG’s potential receipt of cash proceeds in connection therewith are dependent on the market price of its Class A Common Stock. Following the closing of our Business Combination, the market price of the Class A Common Stock has fluctuated, and it may continue to fluctuate in the future. Fluctuations in the market price of the Class A Common Stock will affect the likelihood that holders of the Warrants will exercise the Warrants. As a result, the Warrants may not provide any additional capital. When the market price for UHG’s Class A Common Stock is less than $11.50 per share (i.e., the Warrants are “out of the money”) UHG believes the holders of the Warrants will be unlikely to exercise their Warrants. UHG can provide no assurances as to the amount of proceeds it will receive from the exercise of Warrants or whether it will receive any proceeds. UHG will have broad discretion in the use of any proceeds received from the exercise of Warrants. Delays in investing the net proceeds from the exercise of the Warrants may impair UHG’s performance. UHG cannot assure you that we will be able to identify uses of proceeds that meet its investment objectives or that any investment that UHG makes will produce a positive return. UHG may be unable to invest the net proceeds from the exercise of the Warrants on acceptable terms within the time period that it anticipates or at all, which could harm UHG’s financial condition and operating results.

 

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There is no guarantee that the Warrants will be in the money, and they may expire worthless.

 

The exercise price for the Warrants is $11.50 per share of Class A Common Stock, which is higher than the market price of the Class A Common Stock, which was $7.06 per share based on the closing price of the Class A Common Stock on June 14, 2024. Therefore, the Warrants are “out of the money” and unlikely to be exercised unless the trading price of the Class A Common Stock goes above $11.50 per share. There is no guarantee that the Warrants will be in the money at any given time prior to their expiration. If the trading price of the Class A Common Stock is below the exercise price of the Warrants, the Warrants may expire worthless. If all of the Warrants were exercised in full for cash, we would receive an aggregate of approximately $133.3 million. We do not expect the holders of the Warrants to exercise their Warrants and therefore, we do not expect to receive cash proceeds from any such exercise, for so long as the Warrants remain out of the money.

 

The exercise of Warrants for Class A Common Stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

 

DHHC issued 8,625,000 warrants to purchase Class A Common Stock as part of its IPO and, on the IPO closing date, DHHC issued 5,933,333 Private Placement Warrants to the Sponsor and Anchor Investors to purchase Class A Common Stock at $11.50 per share. The Class A Common Stock issued upon exercise of our Warrants will result in dilution to the then existing holders of Class A Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Class A Common Stock and Public Warrants of UHG.

 

The Private Placement Warrants are identical to the warrants sold as part of the units issued in DHHC’s IPO except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the Class A Common Stock issuable upon exercise of these warrants) were not, subject to certain limited exceptions, permitted to be transferred, assigned or sold by the Sponsor or Anchor Investors until 30 days after the completion of the Business Combination, (iii) they may be exercised by the holders on a cashless basis and (iv) they are subject to registration rights.

 

UHG may seek warrant holder approval to amend the terms of the Warrants in a manner that may be adverse to holders. As a result, the exercise price of the Warrants could be increased, the exercise period could be shortened and the number of hares of Class A Common Stock purchasable upon exercise of a Warrant could be decreased, all without your approval.

 

UHG’s Public Warrants were issued in registered form under a warrant agreement (the “warrant agreement”) between American Stock Transfer & Trust Company, LLC, as warrant agent, and us. The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. All other modifications or amendments, including any modification or amendment to increase the Warrant Price or shorten the Exercise Period (as defined in the warrant agreement) shall require the vote or written consent of the Registered Holders (as defined in the warrant agreement) of 50% of the number of the then outstanding Public Warrants and, solely with respect to any amendment to the terms of the Private Placement Warrants or Working Capital Warrants (as defined in the warrant agreement) or any provision of this Agreement with respect to the Private Placement Warrants or Working Capital Warrants, 50% of the number of then outstanding Private Placement Warrants and Working Capital Warrants. Although our ability to amend the terms of the Warrants with the consent of at least 50% of the then-outstanding Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of shares of Class A Common Stock purchasable upon exercise of a Warrant.

 

Warrants may be exercised for Class A Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

 

UHG issued 8,625,000 warrants to purchase Class A Common Stock as part of our IPO and, on the IPO closing date, UHG issued 5,933,333 Private Placement Warrants to the Sponsor and Anchor Investors to purchase Class A Common Stock at $11.50 per share. The Class A Common Stock issued upon exercise of the Warrants will result in dilution to the then existing holders of Class A Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of the Class A Common Stock and Public Warrants of UHG.

 

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The Private Placement Warrants are identical to the warrants sold as part of the units issued in UHG’s IPO except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by UHG, (ii) they may be exercised by the holders on a cashless basis, and (iii) they are subject to registration rights.

 

UHG has identified material weaknesses in its internal control over financial reporting. If remediation of these material weaknesses is not effective, or if UHG identifies additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, it may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence and, as a result, the value of the Class A Common Stock.

 

Prior to the Business Combination, GSH was not required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act, or Section 404. UHG has identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified generally relate ineffective tax review controls; lack of second level reviews in business processes; lack of formal control review and documentation required by COSO principles; ineffective Information Technology General Controls (“ITGCs”) related to certain systems, applications, and tools used for financial reporting; and UHG did not establish effective user access and segregation of duties controls across financially relevant functions. In order to remediate the material weaknesses, UHG is updating various processes and implementing certain changes to its internal processes.

 

UHG may not be able to fully remediate the identified material weakness until the steps described above have been completed and its internal controls have been operating effectively for a sufficient period of time. UHG believes it made progress in its remediation plan during the year ended December 31, 2023. If the steps UHG takes do not correct the material weaknesses in a timely manner, UHG will be unable to conclude that it maintains effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material misstatement of UHG’s financial statements would not be prevented or detected on a timely basis. UHG also may incur significant costs to execute various aspects of its remediation plan but cannot provide a reasonable estimate of such costs at this time.

 

In the future, it is possible that additional material weaknesses or significant deficiencies may be identified that UHG may be unable to remedy before the requisite deadline for these reports. UHG’s ability to comply with the annual internal control reporting requirements will depend on the effectiveness of its financial reporting and data systems and controls across the company. Any weaknesses or deficiencies or any failure to implement new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm UHG’s operating results and cause it to fail to meet its financial reporting obligations, or result in material misstatements in its consolidated financial statements, which could adversely affect its business and reduce its stock price.

 

If UHG is unable to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404, UHG’s independent registered public accounting firm may not issue an unqualified opinion as to the effectiveness of UHG’s internal controls over financial reporting, as required by Section 404 when UHG no longer qualifies as an emerging growth company. If UHG is unable to conclude that it has effective internal control over financial reporting, investors could lose confidence in its reported financial information, which could have a material adverse effect on the trading price of UHG Common Stock. Failure to remedy any material weakness in its internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict UHG’s future access to the capital markets.

 

17

 

 

PRIVATE PLACEMENT OF NOTES

 

Note Purchase Agreement

 

On March 30, 2023, the Convertible Note Investors purchased from the Company $80,000,000 in original principal amount of convertible promissory notes and, pursuant to the terms of share subscription agreements dated March 30, 2023, entered into between each Convertible Note Investor and the Company (the “Note Subscription Agreements”), an additional 744,588 shares of Class A Common Stock in the PIPE Investment, pursuant the Note Purchase Agreement. The obligation to consummate the transaction contemplated by the Note Purchase Agreement was conditioned upon customary closing conditions, including the consummation of the transactions contemplated by the Business Combination Agreement, including the Business Combination.

 

The Note Purchase Agreement also requires that for so long as the Class A Common Stock and Notes held by the Convertible Note Investors, together with their affiliates and permitted transferees, comprise at least 5% of the outstanding Class A Common Stock of the Company on an as-converted basis, the Company will be required to obtain the prior written consent of Convertible Note Investors holding at least 75% of the Notes outstanding at the applicable time for any of the following actions: materially changing the principal business of the Company and its subsidiaries or entering into new lines of business or exiting the Company’s and its subsidiaries’ current line of business; entering into an agreement with respect to a change of control transaction involving the Company; consummating any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company or any of its subsidiaries or filing a petition under bankruptcy or insolvency law; changing the governing documents or capital structure of the Company or any of its subsidiaries in a manner that adversely affects the Convertible Note Investors; authorizing, creating, or issuing any class or series of equity securities or other capital stock of the Company that ranks senior to the shares underlying the Notes with respect to payment of dividends or distribution of assets by the Company; incurring or guarantying any indebtedness, other than (i) pursuant to the Company’s existing Wells Fargo Facility or (ii) pursuant to any line of credit similar to the Wells Fargo Facility and utilized for financing the operation of the Company’s business, so long as (A) the amount outstanding under any such similar line of credit cannot, at any time, exceed a ratio of Indebtedness (as defined in the Note Purchase Agreement) to stockholders equity of the Company and its subsidiaries on a consolidated basis of 2.5 to 1 for the period from the date of the Note Purchase Agreement through December 31, 2023 and 2.25 to 1 thereafter and (B) in the case of any line of credit entered into in addition to the Wells Fargo Facility, such similar line of credit that does not permit the aggregate value of the total borrowing base that is attributable to “Speculative Housing Units” and “Model Housing Units” (each as defined in the Wells Fargo Facility) to exceed 70% of the aggregate value of the total borrowing base and excludes any value of “Speculative Housing Units” and “Model Housing Units” in excess of the 70% limitation from the calculation of the aggregate value of the total borrowing base; paying or agreeing to pay any distribution or declaring any dividend on equity securities of the Company or any of its subsidiaries other than repurchases of any options or other securities from employees upon the end of their employment; entering into an agreement with respect to any acquisition of another business or person that requires payment of consideration greater than 400% of such business’s or person’s earnings before interest, tax, depreciation and amortization during the previous year; amending, modifying or supplementing any existing equity incentive plan or entering into a new equity incentive plan unless the new plan or supplement does not increase the number of shares issuable pursuant to all equity incentive plans to more than 10% of the then outstanding shares of the Company on a fully-diluted basis; entering into any agreement that would restrict the Convertible Note Investors’ consent rights under the Note Purchase Agreement or would require the Company or any of its subsidiaries to breach its obligations to the Convertible Note Investors under the Note Purchase Agreement; making any material tax decisions, elections or other determinations with respect to the Company or any of its subsidiaries; dissolving, liquidating, merging or selling the Company or substantially all of its assets; issuing, selling or otherwise transferring equity securities of any subsidiary of the Company to a person other than the Company or a wholly-owned subsidiary of the Company; selecting or changing the independent auditor to an auditor other than a nationally recognized accounting firm; and making any changes or modifications to the Company’s or any of its subsidiaries’ fiscal year.

 

18

 

 

For so long as any Notes remain outstanding, each Convertible Note Investor will have certain pre-emptive rights with respect to any issuance of any equity securities of the Company or any subsidiary of the Company that are issued after the closing of the Note Purchase Agreement, subject to certain exceptions, including for (i) securities issued as a dividend or distribution on a pro rata basis in accordance with the dividend and distribution provisions of the applicable entity’s governing documents, (ii) issuances of securities pursuant to any acquisition by the Company whereby the Company’s securities comprise, in whole or in part, the consideration paid by the Company in such transaction and which transaction has been approved by the Board of Directors of the Company (the “Board of Directors”), (iii) issuances of securities or options or rights to management, employees, independent directors, service providers and consultants on terms approved by the Board of Directors, (iv) issuances of securities issued as additional yield or return in respect of institutional indebtedness that is not issued to raise additional equity capital of the Company, (v) issuances of securities that are “debt-like”, (vi) issuances as a result of a stock split or reverse split, (vii) securities issued in connection with strategic partnerships or joint ventures approved by the Board of Directors, (viii) issuances of shares of Class A Common Stock upon conversion of Class B Common Stock, (ix) issuances of “Earn out Shares” as defined in the Business Combination Agreement, (x) securities issued pursuant to a firm commitment underwritten public offering registered pursuant to the Securities Act and (xi) any issuance by any subsidiary of the Company to the Company or another wholly-owned subsidiary of the Company.

 

Registration Rights

 

Pursuant to the Note Purchase Agreement, the Company was obligated to file a registration statement to register the resale of the Notes, the Class A Common Stock underlying the Notes, and any other securities of the Company that are issuable pursuant to the conversion or exercise of the Notes. See “Explanatory Note and Statement Pursuant to Rule 429.”

 

Convertible Notes

 

In connection with the closing of the PIPE Investment, the Company and the Convertible Note Investors entered into the Notes. The Notes bear interest at the rate of fifteen percent (15.0%) per annum for the first four years following the Notes’ Issue Date. The interest rate increases by one percent (1.0%) annually beginning on the fourth anniversary of the Issue Date of the Notes. The Notes mature and the entire unpaid principal amount and unpaid accrued interest on the Notes become payable on the fifth anniversary of the Issue Date.

 

Each Note (or any portion of a Note) is convertible at a holder’s option into Class A Common Stock, at any time after the first anniversary of the Closing Date of the Business Combination until the maturity date of such Note, at a per share price of $5.58, which is equal to 80% of the value weighted average trading price per share of Class A Common Stock during the Measurement Period. The conversion price is subject to customary adjustments for certain corporate events as provided in the Notes. If any such event occurs, the number of shares of Class A Common Stock issuable upon conversion may be higher than implied by the initial conversion price.

 

If a Change of Control Transaction (as defined in the Note Purchase Agreement) occurs, then each Convertible Note Investor may elect to be repaid in cash as of the closing of the Change of Control Transaction (with an additional premium payable if the closing is scheduled to occur before the end of the Measurement Period), convert the applicable Note into shares of the Company at the conversion price set forth in the Note, or have the Note remain outstanding following the closing of the Change of Control Transaction.

 

The Notes may be redeemed by the Company at any time prior to sixty (60) days before the Maturity Date by payment of all principal amounts and interest remaining outstanding at the time of redemption plus an additional amount to compensate the Convertible Note Investors for the early repayment. The Notes are also subject to conversion at the option of the Company following the second anniversary of the closing of the Business Combination, but only if during a specified period following such second anniversary the Class A Common Stock trades at a price equal to or over $13.50 per share.

 

Note Subscription Agreements

 

In connection with the closing of the PIPE Investment, each Convertible Note Investor entered into a Note Subscription Agreement with the Company in respect of the Class A Common Stock to be acquired by that Convertible Note Investor. Pursuant to the Note Subscription Agreements, the Convertible Note Investors have agreed, subject to certain exceptions, not to lend, offer, pledge, transfer or dispose of the Class A Common Stock until the first anniversary of the closing of the Note Purchase Agreement. The Class A Common Stock purchased in the PIPE Investment are treated as having been issued for $5.00 per Share for U.S. federal, state and local income tax purposes.

 

19

 

 

The principal amount of each Note and the number of Class A Shares subscribed by each Convertible Note Investor, pursuant to each Note Subscription Agreement is set forth next to the name of each Convertible Note Investor below:

 

Name  Address  Purchase
Price
(A)		   Initial
Principal
Amount of
Note
(B)		   Number of
Issuer Class
A Shares
Subscribed		   Value of
Issuer Class
A Shares
Subscribed
(C)		   Aggregate
Original
Issue
Discount
Percentage
((B+C-A)/​
(B+C))		 
Conversant Opportunity Master Fund LP  c/o Conversant Capital LLC,
25 Deforest Avenue, Summit,
New Jersey 07901		  $32,812,500   $35,000,000    535,173   $2,675,865    12.9%
Dendur Master Fund Ltd.  c/o Maples Corporate Services
Limited, PO Box 309, Ugland
House, Grand Cayman
KY1-1104, Cayman Islands		  $28,125,000   $30,000,000    139,610   $698,050    8.4%
Jasper Lake Ventures One LLC  930 Sylvan Ave, Suite 115,
Englewood Cliffs, NJ 07632.		  $9,375,000   $10,000,000    46,537   $232,685    8.4%
Hazelview Securities Inc.  1133 Yonge Street, 4th Floor.
Toronto ON, M4T 2Y7		  $4,687,500   $5,000,000    23,268   $116,340    8.4%
Total  ​  $75,000,000   $80,000,000    744,588   $3,722,940    10.4%

 

Lock-Up

 

Pursuant to each Subscription Agreement entered into by the Company and each Convertible Note Investor, subject to certain exceptions, the Convertible Note Investors were subject to certain lock-up restrictions on their ability to lend, sell, or transfer, or take certain other actions with respect to the shares of Class A Common Stock subscribed for. Such contractual lock-up expired upon the first anniversary of the Closing Date.

 

Conversant Note Subscription Agreement

 

Under the Note Subscription Agreement entered into by Conversant Opportunity Master Fund LP, a Cayman Islands exempted limited partnership (the “Conversant Investor”) and the Company (the “Conversant Subscription Agreement”), the Conversant Investor has the right to designate one (1) member of the Board of Directors as long as fifty percent (50%) of the original principal amount of the Notes is outstanding and has not been converted or cash settled. For so long as the Conversant Investor is entitled to designate a member of the Board of Directors, the Company will not, without the prior written approval of the Conversant Investor’s designee to the board, increase the size of the Board of Directors in excess of eleven (11) members or reduce the size of the Board of Directors to fewer than eleven (11) members or to a size that would require the resignation of the Conversant Investor’s designee.

 

Pursuant to the Conversant Subscription Agreement the Conversant Investor is granted certain pre-emptive rights on substantially similar terms to those granted to the Convertible Note Investors under the Convertible Notes, for so long as any Notes remain outstanding. The Conversant Subscription Agreement also gives the Conversant Investor certain rights to consent to actions of the Company until the later of (i) the first anniversary of the closing of the transactions contemplated by the Note Purchase Agreement and (ii) such time as the total Class A Common Stock and Notes held by the Conversant Investor, together with its affiliates and permitted transferees, falls below 5% of the outstanding Class A Common Stock if all Notes held by the Conversant Investor had been converted into Class A Common Stock at such time. These consent rights are substantially similar to those granted to the Investors under the Convertible Notes.

 

20

 

 

USE OF PROCEEDS

 

All of the Class A Common Stock, Private Placement Warrants, and Notes offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. We will not receive any of the proceeds from these sales.

 

We will receive up to an aggregate of approximately $99.2 million from the exercise of the Public Warrants, assuming the exercise in full of all of the Public Warrants for cash. We will receive up to an aggregate of approximately $34.1 million from the exercise of the Private Placement Warrants, assuming the exercise in full of all of the Private Placement Warrants for cash. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes. We will have broad discretion over the use of proceeds from the exercise of the Warrants. There is no assurance that the holders of the Warrants will elect to exercise any or all of the Warrants, which could impact our liquidity position. To the extent that the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease. We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Class A Common Stock. If the market price for our Class A Common Stock is less than the applicable exercise price of $11.50, subject to adjustment as described herein, we believe such holders will be unlikely to exercise their Warrants.

 

21

 

 

DESCRIPTION OF SECURITIES

 

The following summary of the material terms of our securities is not intended to be a complete summary of the rights and preferences of such securities and is qualified by reference to our Amended and Restated Certificate of Incorporation, our Bylaws and the Warrant- and Note-related documents described herein, which were previously filed as exhibits to certain of our SEC filings. We urge you to read each of our Amended and Restated Certificate of Incorporation, the Bylaws and the Warrant- and Note-related documents described herein in their entirety for a complete description of the rights and preferences of our securities. The summary below is also qualified by reference to the provisions of the General Corporation Law of the State of Delaware (the “DGCL”), as applicable.

 

Authorized and Outstanding Stock

 

Our Amended and Restated Certificate of Incorporation authorizes the issuance of a total of 450,000,000 shares of capital stock, each with par value $0.0001 per share, consisting of (a) 410,000,000 shares of Common Stock including (i) 350,000,000 shares of Class A Common Stock and (ii) 60,000,000 shares of Class B Common Stock and (b) 40,000,000 shares of preferred stock. As of June 12, 2024, there were 11,400,203 shares of Class A Common Stock and 36,973,876 shares of Class B Common Stock issued and outstanding and no shares of preferred stock issued or outstanding.

 

Common Stock

 

Voting Power

 

Except as otherwise required by law or as otherwise provided in any preferred stock designation, the holders of Common Stock will possess all voting power for the election of UHG directors and all other matters submitted to a vote of shareholders of UHG. Generally, each holder of Class A Common Stock is entitled to one vote per share, and each holder of Class B Common Stock is entitled to two votes per share, voting together as a single class.

 

Except as otherwise required by law, holders of Common Stock, as such, will not be entitled to vote on any amendment to the Amended and Restated Certificate of Incorporation (including any preferred stock designation) that relates solely to the rights, powers, preferences (or the qualifications, limitations or restrictions thereof) or other terms of one or more outstanding series of UHG preferred stock if the holders of such affected series of UHG preferred stock are entitled to vote on such amendment pursuant to the Amend and Restated Certificate of Incorporation (including any preferred stock designation) or pursuant to the DGCL.

 

Dividends

 

Subject to applicable law and the rights and preferences of any holders of any outstanding class or series of preferred stock of UHG, holders of Common Stock will be entitled to receive dividends when, as and if declared by Board of Directors, payable in cash or otherwise out of the assets of UHG legally available therefor. All Common Stock shall be of equal rank and shall be identical with respect to rights to such dividends.

 

Liquidation, Dissolution and Winding Up

 

Upon UHG’s voluntary or involuntary liquidation, dissolution or winding up and after payment in full of the debts and other liabilities of UHG and to any holders of UHG preferred stock having liquidation preferences, if any, the holders of Common Stock shall be entitled to receive all the remaining assets of UHG available for distribution to its shareholders, ratably in proportion to the number of shares of Common Stock then issued and outstanding.

 

Conversion of Class B Common Stock

 

Each outstanding Class B Common Share may at any time, at the option of the holder thereof, be converted into one fully paid and nonassessable Class A Common Share upon written notice to UHG. Outstanding Class B Common Stock will automatically be converted into Class A Common Stock upon the transfer of such shares, subject to exceptions for certain “Permitted Transfers” as described in the Amended and Restated Certificate of Incorporation.

 

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Preemptive or Other Rights

 

Subject to applicable law and the preferential rights of any other class or series of stock, all Common Stock has equal dividend, distribution, liquidation and other rights, and have no preference or appraisal rights, except for any appraisal rights provided by the DGCL. Furthermore, subject to applicable law, holders of Common Stock have no preemptive rights and there are no sinking fund or redemption rights, or rights to subscribe for any of UHG’s securities. The rights, powers, preferences and privileges of holders of Common Stock are subject to those of the holders of any shares of UHG Company preferred stock that the Board of Directors may authorize and issue in the future.

 

Election of Directors

 

The Board of Directors is divided into three classes, with the classes to be as nearly equal in number as possible, and with each director serving a three-year term. As a result, approximately one-third of Board of Directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of Board of Directors. Directors are generally elected by a majority of votes cast at a meeting of the shareholders at which a quorum is present, and there is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.

 

Preferred Stock

 

The Amended and Restated Certificate of Incorporation provides that shares of preferred stock may be issued from time to time in one or more classes or series. The Board of Directors is authorized to establish the voting rights, if any, designations, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof, applicable to the shares of each series of preferred stock. The Board of Directors can, without shareholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of Common Stock and could have anti-takeover effects. The ability of the Board of Directors to issue preferred stock without shareholder approval could have the effect of delaying, deferring or preventing a change of control of UHG or the removal of existing management.

 

UHG has no preferred stock outstanding as of the date of this prospectus.

 

Warrants

 

As of June 12, 2024, there were 11,591,664 Warrants to purchase Class A Common Stock, consisting of 8,625,000 Public Warrants and 2,966,664 Private Placement Warrants.

 

Public Warrants

 

Each whole warrant entitles the registered holder to purchase one whole Class A Common Share at a price of $11.50 per share, subject to adjustment as discussed below. Pursuant to the warrant agreement by and between American Stock Transfer & Trust Company, as warrant agent, and DHHC (the “warrant agreement”), a warrant holder may exercise its warrants only for a whole number of shares of Class A Common Stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The warrants will expire five years after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

 

UHG will not be obligated to deliver any Class A Common Stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A Common Stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to UHG’s satisfying its obligations described below with respect to registration. No warrant will be exercisable and UHG will not be obligated to issue Class A Common Stock upon exercise of a warrant unless Class A Common Stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will UHG be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a Unit containing such warrant will have paid the full purchase price for the Unit solely for the Class A Common Share underlying such Unit.

 

23

 

 

UHG agreed that as soon as practicable after the closing of the Business Combination, UHG would use its reasonable best efforts to file, and within 60 business days following the Business Combination to have declared effective, a registration statement for the registration, under the Securities Act, of the Class A Common Stock issuable upon exercise of the warrants. UHG will use its reasonable best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A Common Stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, UHG may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event UHG so elects, UHG will not be required to file or maintain in effect a registration statement, but UHG will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

 

UHG is not required to notify warrant holders of the eligibility of the warrants for redemption; however, in the event that UHG elects to redeem all of the Warrants, in accordance with the terms of the warrant agreement, a notice of redemption shall be mailed by first class mail, postage prepaid, by UHG not less than thirty (30) days prior to the redemption date to the registered holders of the Public Warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided in the warrant agreement shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

 

Redemption of Warrants when the price per share of the Class A Common Stock equals or exceeds $18.00. Once the warrants become exercisable, UHG may call the warrants for redemption (except as described herein with respect to the Private Placement Warrants):

 

·in whole and not in part;

 

·at a price of $0.01 per warrant;

 

·upon a minimum of 30 days’ prior written notice of redemption, which UHG refers to as the 30-day redemption period; and

 

·if, and only if, the last reported sale price (the “closing price”) of UHG’s Class A Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which UHG sends the notice of redemption to the warrant holders

 

UHG will not redeem the warrants as described above unless a registration statement under the Securities Act covering the Class A Common Stock issuable upon exercise of the warrants is effective and a current prospectus relating to the Class A Common Stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by UHG, UHG may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

 

UHG established the last redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and UHG issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A Common Stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.

 

24

 

 

Redemption of Warrants when the price per share of the Class A Common Stock equals or exceeds $10.00. Once the warrants become exercisable, UHG may redeem the outstanding warrants:

 

·in whole and not in part;

 

·at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares to be determined by reference to the table set forth herein based on the redemption date and the “fair market value” of the Class A Common Stock except as otherwise described herein;

 

·if, and only if, the closing price of the Class A Common Stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within the 30-trading day period ending three trading days before UHG sends the notice of redemption to the warrant holders; and

 

·if the closing price of the Class A Common Stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which UHG sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants as described above.

 

The “fair market value” of the Class A Common Stock for the above purpose shall mean the volume weighted average price of the Class A Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. This redemption feature differs from the typical warrant redemption features used in other blank check offerings. UHG will provide its warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends. In no event will the warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 shares of Class A Common Stock per warrant (subject to adjustment).

 

The numbers in the table below represent the “redemption prices,” or the number of shares of Class A Common Stock that a warrant holder will receive upon redemption by UHG pursuant to this redemption feature.

 

The stock prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant is adjusted as set forth in the first three paragraphs under the heading “— Anti-dilution Adjustments” below. The adjusted stock prices in the column headings will equal the stock prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted. The number of shares in the table below shall be adjusted in the same manner and at the same time as the number of shares issuable upon exercise of a warrant.

 

Redemption Date
(period		  Fair Market Value of the Class A Common Stock 
to expiration of warrants)   ≤$10.00   $11.00   $12.00   $13.00   $14.00   $15.00   $16.00   $17.00    ≥$18.00 
60 months   0.261    0.281    0.297    0.311    0.324    0.337    0.348    0.358    0.361 
57 months   0.257    0.277    0.294    0.310    0.324    0.337    0.348    0.358    0.361 
54 months   0.252    0.272    0.291    0.307    0.322    0.335    0.347    0.357    0.361 
51 months   0.246    0.268    0.287    0.304    0.320    0.333    0.346    0.357    0.361 
48 months   0.241    0.263    0.283    0.301    0.317    0.332    0.344    0.356    0.361 
45 months   0.235    0.258    0.279    0.298    0.315    0.330    0.343    0.356    0.361 
42 months   0.228    0.252    0.274    0.294    0.312    0.328    0.342    0.355    0.361 
39 months   0.221    0.246    0.269    0.290    0.309    0.325    0.340    0.354    0.361 
36 months   0.213    0.239    0.263    0.285    0.305    0.323    0.339    0.353    0.361 
33 months   0.205    0.232    0.257    0.280    0.301    0.320    0.337    0.352    0.361 
30 months   0.196    0.224    0.250    0.274    0.297    0.316    0.335    0.351    0.361 
27 months   0.185    0.214    0.242    0.268    0.291    0.313    0.332    0.350    0.361 
24 months   0.173    0.204    0.233    0.260    0.285    0.308    0.329    0.348    0.361 
21 months   0.161    0.193    0.223    0.252    0.279    0.304    0.326    0.347    0.361 
18 months   0.146    0.179    0.211    0.242    0.271    0.298    0.322    0.345    0.361 
15 months   0.130    0.164    0.197    0.230    0.262    0.291    0.317    0.342    0.361 
12 months   0.111    0.146    0.181    0.216    0.250    0.282    0.312    0.339    0.361 
9 months   0.090    0.125    0.162    0.199    0.237    0.272    0.305    0.336    0.361 
6 months   0.065    0.099    0.137    0.178    0.219    0.259    0.296    0.331    0.361 
3 months   0.034    0.065    0.104    0.150    0.197    0.243    0.286    0.326    0.361 
0 months   —    —    0.042    0.115    0.179    0.233    0.281    0.323    0.361 

 

25

 

 

The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of shares of Class A Common Stock to be issued for each warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365- or 366-day year, as applicable. For example, if the volume weighted average price of the Class A Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $11 per share, and at such time there are 57 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.277 shares of Class A Common Stock for each whole warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume weighted average price of the Class A Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.298 shares of Class A Common Stock for each whole warrant. In no event will the warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 shares of Class A Common Stock per warrant (subject to adjustment). Finally, as reflected in the table above, if the warrants are out of the money and about to expire, they cannot be exercised on a cashless basis in connection with a redemption by UHG pursuant to this redemption feature, since they will not be exercisable for any Class A Common Stock.

 

This redemption feature differs from the typical warrant redemption features used in many other blank check offerings, which typically only provide for a redemption of warrants for cash (other than the Private Placement Warrants) when the trading price for the Class A Common Stock exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding warrants to be redeemed when the Class A Common Stock are trading at or above $10.00 per share, which may be at a time when the trading price of the Class A Common Stock is below the exercise price of the warrants. UHG established this redemption feature to provide UHG with the flexibility to redeem the warrants without the warrants having to reach the $18.00 per share threshold set forth above under “ — Redemption of Warrants When the Price Per Share of the Class A Common Stock Equals or Exceeds $18.00.” Holders choosing to exercise their warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed volatility input. This redemption right provides UHG with an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to (i) UHG’s capital structure as the warrants would no longer be outstanding and would have been exercised or redeemed and (ii) the amount of cash provided by the exercise of the warrants and available to use, and also provides a ceiling to the theoretical value of the warrants as it locks in the amount of shares UHG would pay to warrant holders that exercise if UHG chooses to redeem the warrants in this manner. UHG will be required to pay the applicable redemption price to warrant holders if UHG chooses to exercise this redemption right and it will allow UHG to quickly proceed with a redemption of the warrants if UHG determines it is in its best interest to do so. As such, UHG would redeem the warrants in this manner when UHG believes it is in its best interest to update its capital structure to remove the warrants and pay the redemption price to the warrant holders.

 

As stated above, UHG can redeem the warrants when the Class A Common Stock is trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to UHG’s capital structure and cash position while providing warrant holders with the opportunity to exercise their warrants on a cashless basis for the applicable number of shares. If UHG chooses to redeem the warrants when the Class A Common Stock is trading at a price below the exercise price of the warrants, this could result in the warrant holders receiving fewer shares of Class A Common Stock than they would have received if they had chosen to wait to exercise their warrants for Class A Common Stock if and when such Class A Common Stock was trading at a price higher than the exercise price of $11.50.

 

26

 

 

No fractional shares of Class A Common Stock will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, UHG will round down to the nearest whole number of shares of Class A Common Stock to be issued to the holder.

 

Redemption Procedures and Cashless Exercise. If UHG calls the warrants for redemption for $0.01 as described above, UHG’s management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis”. In determining whether to require all holders to exercise their warrants on a “cashless basis”, UHG’s management will consider, among other factors, UHG’s cash position, the number of warrants that are outstanding and the dilutive effect on UHG’s stockholders of issuing the maximum number of shares of Class A Common Stock issuable upon the exercise of its warrants. If UHG’s management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average last reported sale price of the Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If UHG’s management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A Common Stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. UHG believes this feature is an attractive option to it if it does not need the cash from the exercise of the warrants. If UHG calls its warrants for redemption and UHG’s management does not take advantage of this option, the Sponsor, the Anchor Investors and their permitted transferees would still be entitled to exercise their Private Placement Warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.

 

A holder of a warrant may notify UHG in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.8% or 9.8% (or such other amount as a holder may specify) of the Class A Common Stock outstanding immediately after giving effect to such exercise.

 

Anti-Dilution Adjustments. If the number of outstanding shares of Class A Common Stock is increased by a stock dividend payable in Class A Common Stock, or by a split-up of Class A Common Stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Class A Common Stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding Class A Common Stock. A rights offering to holders of Class A Common Stock entitling holders to purchase Class A Common Stock at a price less than the fair market value will be deemed a stock dividend of a number of shares of Class A Common Stock equal to the product of (i) the number of shares of Class A Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A Common Stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Class A Common Stock paid in such rights offering divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for shares of Class A Common Stock, in determining the price payable for Class A Common Stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Class A Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A Common Stock on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

 

27

 

 

In addition, if UHG, at any time while the warrants are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to the holders of Class A Common Stock on account of such Class A Common Stock (or other shares of UHG’s capital stock into which the warrants are convertible), other than (a) as described above or (b) certain ordinary cash dividends, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of the Class A Common Stock in respect of such event.

 

If the number of shares of outstanding Class A Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of Class A Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A Common Stock issuable on exercise of each warrant will be decreased in proportion to such decrease in the number of shares of outstanding Class A Common Stock.

 

Whenever the number of shares of Class A Common Stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A Common Stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A Common Stock so purchasable immediately thereafter.

 

In case of any reclassification or reorganization of the outstanding Class A Common Stock (other than those described above or that solely affects the par value of such Class A Common Stock), or in the case of any merger or consolidation of UHG with or into another corporation (other than a consolidation or merger in which UHG is the continuing corporation and that does not result in any reclassification or reorganization of outstanding Class A Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of UHG as an entirety or substantially as an entirety in connection with which UHG is dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the Class A Common Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. If less than 70% of the consideration receivable by the holders of Class A Common Stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within 30 days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes value (as defined in the warrant agreement) of the warrant. The warrants will be issued in registered form under a warrant agreement between American Stock Transfer & Trust Company, as warrant agent, and UHG. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision but requires the approval by the holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.

 

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to UHG, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A Common Stock or any voting rights until they exercise their warrants and receive Class A Common Stock. After the issuance of Class A Common Stock upon exercise of the warrants, each holder will be entitled to one (1) vote for each share held of record on all matters to be voted on by stockholders.

 

No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, UHG will, upon exercise, round down to the nearest whole number of shares of Class A Common Stock to be issued to the warrant holder.

 

28

 

 

Private Placement Warrants

 

The Private Placement Warrants (including the warrants that may be issued upon conversion of working capital loans and the Class A Common Stock issuable upon exercise of the Private Placement Warrants) are not redeemable by UHG so long as they are held by the Sponsor, Anchor Investors or their permitted transferees (except for a number of shares of Class A Common Stock as described under “ — Public Warrants — Redemption of warrants when the price per share of the Class A Common Stock equals or exceeds $10.00”). Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period. If the Private Placement Warrants are held by holders other than the Sponsor, Anchor Investors or their permitted transferees, the Private Placement Warrants will be redeemable by UHG and exercisable by the holders on the same basis as the Public Warrants. Each of the warrants that may be issued upon conversion of working capital loans shall be identical to the Private Placement Warrants.

 

If holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average last reported sale price of the Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that UHG has agreed that these warrants will be exercisable on a cashless basis so long as they are held by the Sponsor, Anchor Investors or their permitted transferees is because it was not known at the time such warrants were sold whether they would be affiliated with UHG following an initial business combination. So long as they remain affiliated with UHG, their ability to sell UHG’s securities in the open market will be significantly limited. UHG has policies in place that prohibit insiders from selling its securities except during specific periods of time. Even during such periods of time when insiders are permitted to sell UHG’s securities, an insider cannot trade in UHG’s securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could sell the Class A Common Stock issuable upon exercise of the warrants freely in the open market, the insiders could be significantly restricted from doing so. As a result, UHG believes that allowing the holders to exercise such warrants on a cashless basis is appropriate.

 

The Sponsor and Anchor Investors agreed not to transfer, assign or sell any of the Private Placement Warrants (including the Class A Common Stock issuable upon exercise of any of these warrants) until the date that was 30 days after the Closing of the Business Combination, except for, among other limited exceptions, transfers made to UHG’s officers and directors and other persons or entities affiliated with or related to the Sponsor or Anchor Investors.

 

Convertible Notes

 

Maturity and Interest

 

In connection with the closing of the PIPE Investment, the Company and the Convertible Note Investors entered into the Notes. The entire unpaid principal amount and all unpaid accrued interest (collectively, the “Obligations”) shall become fully due and payable the Maturity Date, which is the fifth anniversary of the Issue Date, unless earlier repurchased, redeemed or converted pursuant to the terms of the Note. The Notes bear interest at the rate of fifteen percent (15.0%) per annum for the first four years following the Notes’ Issue Date. The interest rate increases by one percent (1.0%) annually beginning on the fourth anniversary of the Issue Date of the Notes. Interest shall be payable monthly in arrears on the last calendar day of each month (each, an “Interest Payment Date”). The Notes mature and the entire unpaid principal amount and unpaid accrued interest on the Notes become payable on the Maturity Date. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Note.

 

All interest on these Notes shall be paid in cash; provided, that on any Interest Payment Date during the term of the Note, the Company shall have the option to pay a portion of the accrued and unpaid interest on the Note on such Interest Payment Date that has accrued at the rate in excess of ten percent (10.00%) per annum either (i) in cash or (ii) by capitalizing such interest and adding it to the then outstanding principal amount of the Note (“PIK Interest”). Interest on the Notes shall be computed based on a 360-day year of twelve 30-day months and all PIK Interest on the Notes will be compounded quarterly on the last day of each quarter (each, a “PIK Interest Payment Date”).

 

29

 

 

Principal Amounts

 

The principal amount of each Note and the number of shares of Class A Common Stock initially subscribed by each Convertible Note Investor, pursuant to each Note Subscription Agreement is set forth next to the name of each Convertible Note Investor below:

 

Name  Address  Purchase
Price
(A)		   Initial
Principal
Amount of
Note
(B)		   Number of
shares of
Issuer
Class A
Common
Stock
Subscribed		   Value of
shares of
Issuer Class
A Common Stock
Subscribed
©		   Aggregate
Original
Issue
Discount
Percentage
((B+C-A)/
(B+C))		 
Conversant Opportunity Master Fund LP  c/o Conversant Capital LLC, 25 Deforest Avenue, Summit, New Jersey 07901  $32,812,500   $35,000,000    535,173   $2,675,865    12.9%
Dendur Master Fund Ltd.  c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands  $28,125,000   $30,000,000    139,610   $698,050    8.4%
Jasper Lake Ventures One LLC  930 Sylvan Ave, Suite 115, Englewood Cliffs, NJ 07632.  $9,375,000   $10,000,000    46,537   $232,685    8.4%
Hazelview Securities Inc.  1133 Yonge Street, 4th Floor. Toronto ON, M4T 2Y7  $4,687,500   $5,000,000    23,268   $116,340    8.4%
Total     $75,000,000   $80,000,000    744,588   $3,722,940    10.4%

 

Conversion

 

Each Note (or any portion of a Note) is convertible at a holder’s option into Class A Common Stock, at any time after the first anniversary of the Closing Date of the Business Combination until the Maturity Date of such Note, at a per share price equal to $5.58 per share, which price was determined in accordance with the terms of the Notes. The conversion price is subject to customary adjustments for certain corporate events as provided in the Notes. If any such event occurs, the number of shares of Class A Common Stock issuable upon conversion may be higher than implied by the initial conversion price.

 

Each Note is convertible by the Company if at any time after (but not including) the date that is the second (2nd) anniversary of the Issue Date, the VWAP of the Class A Common Stock as traded on the principal securities exchange or securities market on which the Class A Common Stock is then traded equals or exceeds thirteen U.S. dollars and fifty cents ($13.50) for twenty (20) trading days in any Qualifying Trading Period (as defined in the Note).

 

The Company may deliver to the Holder up to fifty percent (50%) of the outstanding balance of the Obligations under the Note in a cash payment equal to the VWAP of the Company Class A Stock during the five (5) consecutive Trading Day period ending on, and including, the last Trading Day prior to the Conversion Date into which the Note would be convertible on such Conversion Date in lieu of the issuance of that number of Conversion Shares.

 

Ranking

 

The Notes are general senior obligations of the Company.

 

30

 

 

Adjustment of Conversion Rate

 

The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Class A Common Stock and solely as a result of holding the Notes, in any of the transactions described in the Note, without having to convert their Notes, as if they held a number of shares of Class A Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder.

 

If the Company issues Class A Common Stock as a dividend or distribution on the Class A Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Record Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;
CR1 = the Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution or immediately after the open of business on the effective date of such share split or share combination, as the case may be;
OS0 = the number of shares of Class A Common Stock outstanding immediately prior to the close of business on the Record Date for such dividend or distribution or immediately prior to the open of business on the effective date of such share split or share combination, as the case may be (before giving effect to any such dividend, distribution, split or combination); and
OS1 = the number of shares of Class A Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination, as the case may be.

 

Any adjustments made pursuant to the above calculation shall become effective immediately after (i) the close of business on the Record Date for such dividend or distribution or (ii) the open of business on the effective date of such split or combination, as applicable. If any dividend or distribution is declared but not so paid or made, effective as of the date the Board of Directors determines not to pay such dividend or distribution, or not to split or combine the outstanding Class A Common Stock, as the case may be, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or such share split or combination had not been announced.

 

If the Company issues to all or substantially all holders of the Class A Common Stock any rights, options or warrants entitling them, for a period of not more than forty-five (45) calendar days after the announcement date for such issuance, to subscribe for or purchase Class A Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Class A Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the announcement date for such issuance, the Conversion Rate shall be adjusted based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Record Date for such issuance;
CR1 = the Conversion Rate in effect immediately after the open of business on such Record Date;

 

31

 

 

OS0 = the number of shares of Class A Common Stock outstanding immediately prior to the open of business on such Record Date;
X = the total number of shares of Class A Common Stock issuable pursuant to such rights, options or warrants; and
Y = the number of shares of Class A Common Stock equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants

 

In determining whether any rights, options or warrants entitle the Holder to subscribe for or purchase Class A Common Stock at less than the average of the Last Reported Sale Prices of the Class A Common Stock for the applicable ten (10) consecutive Trading Day period, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise thereof, with the value of such consideration if other than cash, to be determined by the Board of Directors.

 

Any adjustment made pursuant to the above calculation shall be made successively whenever any such rights, options or warrants are distributed and shall become effective immediately after the close of business on the Record Date for such distribution. To the extent that shares of Class A Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the adjustment with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Class A Common Stock actually delivered. If such rights, options or warrants are not so distributed, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if the Record Date for such distribution had not occurred.

 

If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities of the Company, to all or substantially all holders of the Class A Common Shares, excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to the Note, (ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to the Note, (iii) dividends or distributions that constitute Reference Property following an event described in Section 4.10 of the Note and (iv) Spin-Offs as to which the provisions set forth below in Section 4.04 of the Note shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Record Date for such distribution;
CR1 = the Conversion Rate in effect immediately after the open of business on such Record Date;
SP0 = the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Record Date for such distribution; and
FMV = the fair market value (as determined by the Board of Directors in good faith) of the Distributed Property with respect to each outstanding share of the Class A Common Stock on the Record Date for such distribution.

 

Any adjustment made under this prior calculation shall become effective immediately after the close of business on the Record Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

Notwithstanding the foregoing, if “FMV” as set forth above is equal to or greater than “SP0” as set forth above, in lieu of the foregoing adjustment, the Holder shall receive, in respect of each $1,000 principal amount of the Note, at the same time and upon the same terms as holders of Class A Common Stock receive the Distributed Property, the amount and kind of Distributed Property the Holder would have received if the Holder owned a number of shares of Class A Common Stock equal to the Conversion Rate in effect immediately prior to the close of business on the Record Date for the distribution.

 

32

 

 

If the Board of Directors determines the “FMV” (as defined above) of any distribution for purposes of this section by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.

 

With respect to an adjustment where there has been payment of a dividend or other distribution on the Class A Common Stock or shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate shall be adjusted based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect immediately prior to the end of the Valuation Period;
CR1 = the Conversion Rate in effect immediately after the end of the Valuation Period;
FMV0 = the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Class A Common Stock applicable to one share of the Class A Common Stock (determined by reference to the definition of Last Reported Sale Price as if references therein to Class A Common Stock were to such Capital Stock or similar equity interest) over the first ten (10) consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (such period, the “Valuation Period”); and
MP0 = the average of the Last Reported Sale Prices of the Class A Common Stock over the Valuation Period.

 

Such adjustment shall occur at the close of business on the last Trading Day of the Valuation Period; provided, that for purposes of determining the Conversion Rate in respect of any conversion during the Valuation Period, references within the previous paragraph to “ten” shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, and including, the Conversion Date. If any such dividend or distribution described in the preceding paragraph of this section is declared but not paid or made, the new Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

For purposes of this section (and subject in all respects to Section 4.13 of the Note), rights, options or warrants distributed by the Company to all holders of the Class A Common Stock entitling them to subscribe for or purchase shares of the Company’s Capital Stock, including Class A Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”):

 

  (i) are deemed to be transferred with such Class A Common Stock;

 

  (ii) are not exercisable; and

 

  (iii) are also issued in respect of future issuances of the Class A Common Stock,

 

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shall be deemed not to have been distributed for purposes of this section (and no adjustment to the Conversion Rate under this section will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this section. If any such rights, options or warrants, including any such existing rights, options or warrants distributed prior to the date of the Note Purchase Agreement, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event of the type described in the immediately preceding sentence with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this section was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (A) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (B) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Class A Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Class A Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.

 

For purposes of Section 4.02, 4.03 and Section 4.04, and subject to Section 4.10 of the Note, if any dividend or distribution to which Section 4.04 of the Note is applicable also includes one or both of:

 

  (i) a dividend or distribution of Class A Common Stock to which Section 4.02 of the Note is applicable (the “4.02 Distribution”); or

  (ii) a dividend or distribution of rights, options or warrants to which Section 4.03 of the Note is applicable (the “4.03 Distribution”),

 

then, in either case,

 

  (1) such dividend or distribution, other than the 4.03 Distribution and the 4.04 Distribution, shall be deemed to be a dividend or distribution to which this section is applicable (the “4.04 Distribution”) and any Conversion Rate adjustment required by this section with respect to such 4.04 Distribution shall then be made, and

  (2) the 4.02 Distribution and 4.03 Distribution shall be deemed to immediately follow the 4.04 Distribution and any Conversion Rate adjustment required by Section 4.02 and Section 4.03 of the Note with respect thereto shall then be made, except that, if determined by the Company (I) the “Record Date” of the 4.02 Distribution and the 4.03 Distribution shall be deemed to be the Record Date of the 4.05 Distribution and (II) any Class A Common Stock included in the 4.02 Distribution or 4.03 Distribution shall be deemed not to be “outstanding immediately prior to the close of business on the Record Date for such dividend or distribution or immediately prior to the open of business on the effective date of such share split or share combination, as the case may be” within the meaning of Section 4.02 of the Note or “outstanding immediately prior to the close of business on the Record Date for such distribution” within the meaning of Section 4.03 of the Note.

 

If any cash dividend or distribution is made to all or substantially all holders of the Class A Common Stock, the Conversion Rate shall be adjusted based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect immediately prior to the open of business on the Record Date for such dividend or distribution;
CR1 = the Conversion Rate in effect immediately after the open of business on the Record Date for such dividend or distribution;
SP0 = the Last Reported Sale Price of the Class A Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
C = the amount in cash per share the Company distributes to all or substantially all holders of the Class A Common Stock.

 

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An adjustment to the Conversion Rate made pursuant to this section shall become effective immediately after the close of business on the Record Date for the applicable dividend or distribution. If any dividend or distribution described in this section is declared but not so paid or made, the new Conversion Rate shall be readjusted, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

Notwithstanding the foregoing, if “C” as set forth above is equal to or greater than “SP0” as set forth above, in lieu of the foregoing adjustment, the Holder shall receive, for each $1,000 principal amount of the Note, at the same time and upon the same terms as holders of Class A Common Stock, the amount of cash that the Holder would have received if the Holder owned a number of shares of Class A Common Stock equal to the Conversion Rate in effect on the Record Date for such cash dividend or distribution.

 

If the Company or any of its Subsidiaries makes a payment in respect of a tender or exchange offer for the Class A Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Class A Common Stock exceeds the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), the Conversion Rate shall be adjusted based on the following formula:

 

Graphic

 

where,

 

CR0 = the Conversion Rate in effect in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date;
CR1 = the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date;
AC = the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for Class A Common Stock purchased in such tender or exchange offer;
OS0 = the number of shares of Class A Common Stock outstanding immediately prior to time (the “Expiration Time”) such tender or exchange offer expires (prior to giving effect to the purchase of all Class A Common Stock accepted for purchase or exchange in such tender offer or exchange offer);
OS1 = the number of shares of Class A Common Stock outstanding immediately after the Expiration Time (after giving effect to the purchase of all Class A Common Stock accepted for purchase or exchange in such tender offer or exchange offer); and
SP1 = the average of the Last Reported Sale Prices of the Class A Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date.

 

The adjustment to the Conversion Rate under this section shall become effective immediately following the close of business on the tenth (10th) Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date; provided, that in respect of any conversion of the Note, if the relevant Conversion Date occurs during the ten (10) Trading Days immediately following, and including, the Trading Day next succeeding the Expiration Date, references to “10” or “10th” in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the Expiration Date to, and including, the Conversion Date in determining the Conversion Rate.

 

For purposes of Article 4 of the Note, the number of shares of Class A Common Stock at any time outstanding shall not include Class A Common Stock held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on Class A Common Stock held in the treasury of the Company, but shall include Class A Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Class A Common Stock.

 

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All calculations and other determinations under Article 4 of the Note shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share.

 

If the application of the foregoing formulas in Article 4 of the Note would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate shall be made (except on account of share combinations).

 

Notwithstanding anything to the contrary in Article 4 of the Note, the Conversion Rate shall not be adjusted:

 

  (i) upon the issuance of any Class A Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in Class A Common Stock under any plan;

  (ii) upon the issuance of any Class A Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Company’s Subsidiaries;

  (iii) upon the issuance of any Class A Common Stock in connection with an acquisition of the equity or assets of another entity or issued in connection with any financing to a lender as part of the financing transaction;

  (iv) upon the issuance of any Class A Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in Section 4.07(d)(ii) of the Note, including the conversion of any Company Class B Common Stock into Class A Common Stock, and outstanding as of the date the Note was first issued;

  (v) solely for a change in the par value of the Class A Common Stock;

  (vi) for the issuance of the Earn Out Shares as defined in the Business Combination Agreement; or

  (vii) for accrued and unpaid interest.

 

Effect of Recapitalization

 

If any of the following events occurs:

 

  (i) any recapitalization, reclassification or change of the Class A Common Stock (other than changes resulting from a subdivision or combination),

  (ii) any consolidation, merger or combination involving the Company,

  (iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety, or

  (iv) any statutory share exchange,

 

in each case, as a result of which holders of the Class A Common Stock would be entitled to receive stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the right of the Holder to convert each $1,000 principal amount of Note shall be changed into a right of the Holder to convert such principal amount of Note into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Class A Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property”, with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Class A Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute a supplement to the Note (each, a “Note Supplement”) providing for such change in the right to convert each $1,000 principal amount of Note; provided, however, that at and after the effective time of the Merger Event (1) any amount payable in cash upon conversion of the Note in accordance with Article 3 of the Note shall continue to be payable in cash and (2) any Class A Common Stock that the Company would have been required to deliver upon conversion of the Note in accordance with Article 3 of the Note shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Class A Common Stock would have received in such Merger Event.

 

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If the Merger Event causes the Class A Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then (A) the Reference Property into which the Note will be convertible shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of Class A Common Stock, and (B) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (A) attributable to one share of Class A Common Stock. If the holders of Class A Common Stock receive only cash in such Merger Event, then for all conversions for which the relevant Conversion Date occurs after the effective date of such Merger Event (I) the consideration due upon conversion of each $1,000 principal amount the Note shall be solely cash in an amount equal to the Conversion Rate in effect on the Conversion Date, multiplied by the price paid per share of Class A Common Stock in such Merger Event and (II) the Company shall satisfy the conversion obligations hereunder by paying cash to converting Holders on the second Business Day immediately following the relevant Conversion Date. The Company shall notify the Holder in writing of such weighted average as soon as practicable after such determination is made but in no event later than the third (3rd) Business Day following the effective date of the Merger Event.

 

The Note Supplement shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in Article 4 of the Note. Notwithstanding any failure by the Company or a successor or purchasing Person to execute and deliver the Note Supplement, the Note shall be deemed to provide for such change in convertibility. If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, then an assumption of the Note shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including the provisions providing for the purchase rights set forth in Article 5 of the Note.

 

When the Note is modified or amended pursuant to Section 4.10(a) of the Note, the Company shall promptly provide to the Holder a notice briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a unit of Reference Property after any such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with. Failure to deliver such notice shall not affect the legality or validity of such modification or amendment to the Note.

 

None of the foregoing provisions shall affect the right of the Holder to convert the Note into cash, Class A Common Stock or a combination of cash and Class A Common Stock, as applicable, as set forth in Article 3 of the Note prior to the effective date of such Merger Event.

 

The above provisions of this section shall similarly apply to successive Merger Events.

 

Upon the consummation of any Merger Event, references to “Class A Common Stock” shall be deemed to refer to any Reference Property that constitutes capital stock after giving effect to such Merger Event.

 

Redemption

 

Subject to the terms, conditions and limitations set forth in Article 5 of the Note, at any time prior to the date that is sixty (60) days prior to the Maturity Date, the Company shall have the right to repurchase (an “Optional Redemption”) all or any portion of the remaining principal amount of the Note then outstanding by paying the Make Whole Amount payable in respect of the principal amount that is the subject of the Optional Redemption (such Make Whole Amount, the “Redemption Price”), by providing a notice of repurchase to the Holder (an “Optional Redemption Notice”).

 

Notwithstanding the foregoing or anything else to the contrary contained herein, the Company may not deliver an Optional Redemption Notice unless (i) the Optional Redemption applies to all of the Notes issued under the Note Purchase Agreement on a pro rata basis (based on the principal amounts thereof), (ii) the Company shall not have delivered an Optional Redemption Notice with respect to which the Pending Redemption Period as provided in Section 5.05 of the Note has not expired, (iii) at least thirty (30) days shall have elapsed since the expiration of the then most recent Pending Redemption Period, and (iv) the principal amount of the Notes being redeemed pursuant to such Optional Redemption Notice is not less than the lesser of $10,000,000 and the aggregate principal amount of all Notes issued under the Note Purchase Agreement then outstanding.

 

The Optional Redemption Notice shall be irrevocable and, upon delivery of an Optional Redemption Notice, the Optional Redemption Price, less the sum of all Redemption Period Conversion Amounts (as defined below), together with accrued and unpaid interest thereon through the date of payment thereof (and any other amounts payable thereon under the Notes, including, if applicable, the Make Whole Amount), shall become due and payable on the Optional Redemption Date. The failure to pay in full the amount payable to the Holder on the Optional Redemption Date shall constitute an Event of Default under the Note. The principal amount of Notes to be converted pursuant to each Conversion Notice delivered by a Holder during the Pending Redemption Period (a “Redemption Period Conversion Amount”) shall reduce, on a dollar-for-dollar basis, the principal amount to be converted until all of such principal amount shall have been converted.

 

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Upon surrender of the portion of the Note that is to be redeemed only in part in accordance with Section 5.01 of the Note, and promptly after the Optional Redemption Date, the Company shall execute and deliver to the Holder, without any charges, a New Note, of such authorized denomination or denominations as may be requested by the Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that has not been repurchased.

 

Default

 

The occurrence of any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under the Note:

 

(a)the Company fails to pay when due any Obligations hereunder (including, when due, the principal of the Note on the Maturity Date, any amounts payable in connection with an Optional Redemption, upon exercise of a repurchase right hereunder, or otherwise);

 

(b)any representation or warranty of the Company or the Company under the Note or the Note Purchase Agreement, as applicable, is untrue, inaccurate or incorrect in any material respect as of the date made;

 

(c)the Company breaches any covenant set forth in the Note or the Note Purchase Agreement, taking into account applicable periods of notice and cure, if any; provided, however, that in the event no grace or cure period is so provided, the Company shall have a period of (a) three (3) days after the earlier of the Company’s actual knowledge thereof and written notice of non-compliance to cure such non-compliance to the extent it relates to any monetary default and (b) twenty (20) days after the earlier of the Company’s actual knowledge thereof and written notice of non-compliance to cure any other non-compliance;

 

(d)any default occurs under the Existing Credit Agreement and the Agent or the requisite percentage of lenders thereunder have declared all obligations thereunder due and payable;

 

(e)any default occurs in respect of any debt of the Company, the Company or any of their respective Subsidiaries (other than under the Existing Credit Agreement);

 

(f)any Bankruptcy or Insolvency Proceeding occurs;

 

(g)an involuntary proceeding is commenced or an involuntary petition is filed in a court of competent jurisdiction against any of the Company, the Company, or their respective Subsidiaries, seeking: (i) relief under the Bankruptcy Code, as now constituted or hereafter amended, or any other Bankruptcy Law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for itself or for a substantial part of its property or assets; or (iii) winding-up or liquidation; and such proceeding or petition shall continue undismissed and unstayed for thirty (30) days or an order or decree approving or ordering any of the foregoing shall be entered; or

 

(h)one or more judgments is rendered against any of the Company, the Company, or their respective Subsidiaries, and the same remains undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action is legally taken by a judgment creditor to levy upon assets or properties of any of the Company, the Company, or their respective Subsidiaries, or to enforce any such judgment and such judgment either (i) is for the payment of money in an aggregate amount in excess of $250,000 or (ii) is for injunctive relief and could reasonably be expected to result in an Company Material Adverse Effect or a Company Material Adverse Effect;

 

38

 

 

(i)if any of the Company, the Company, or their respective Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

 

 

(j)the Company fails to comply with any applicable listing and corporate governance rules and regulations of Nasdaq or loses its status as a member in good standing with Nasdaq, unless it has chosen to list its securities on the New York Stock Exchange; or

 

(k)the occurrence of any event (financial or otherwise) resulting in, or which will likely result in, an Company Material Adverse Effect or a Company Material Adverse Effect, as determined by the Holder in his reasonable discretion, and remains uncured for a period of fifteen (15) days following the earlier of the Company’s or the Company’s knowledge of such event, as the case may be, and written notice of such event by the Holder to the Company or the Company, as the case may be, (or, such longer period of time as reasonable given the circumstances if such occurrence is not reasonably curable within such fifteen- (15-) day period and provided that the Company or the Company is taking steps to cure such occurrence during such fifteen- (15-) day period and thereafter diligently pursues to completion).

 

Subject to the Existing Credit Agreement, if any Event of Default occurs for any reason, whether voluntary or involuntary, and continues beyond the expiration of any applicable cure period:

 

(a)upon notice or demand, the Holder may declare the outstanding indebtedness under the Note (which shall be equal to the Make Whole Amount, together with all accrued and unpaid interest thereon prior to the date of such declaration) and other obligations under the Note, to be due and payable, whereupon each of the foregoing shall be and become immediately due and payable, and the Company shall immediately pay to the Holder all such indebtedness, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Company, anything contained herein or in the Note Purchase Agreement to the contrary notwithstanding; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any of the Company, the Company, or their respective Subsidiaries under the Bankruptcy Code, then all indebtedness under the Note, together with all other amounts due or owing to the Holder pursuant to the Note and the Note Purchase Agreement, shall automatically be due immediately without notice of any kind; or

 

(b)the Holder may (i) pursue any available remedy by proceeding at Law or in equity to collect the payment of principal of, or interest on, the Note or to enforce the performance of any provision of the Note or the Note Purchase Agreement and (ii) exercise on behalf of itself all rights and remedies available to it under the Note or the Note Purchase Agreement.

 

The Company agrees to pay the Holder all out-of-pocket costs and expenses reasonably incurred by the Holder and the Holder in any effort to collect indebtedness under the Note and to exercise remedies under the Note Purchase Agreement, including reasonable attorneys’ fees, and to pay interest at the Default Rate on such costs and expenses to the extent not paid when demanded. The Holder may exercise any and all of its remedies under the Note and the Note Purchase Agreement contemporaneously or separately from the exercise of any other remedies hereunder or under applicable Law.

 

Upon any default pursuant to the Note or the Note Purchase Agreement, the Note and all overdue obligations thereunder shall bear interest at the rate of the lesser of (i) two percent (2%) in excess of the rate otherwise applicable to the Note pursuant to Section 2.01 of the Note and (ii) such maximum rate of interest allowable under the Laws of the State of New York (the “Default Rate”).

 

The Holder may waive an existing Default or Event of Default. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Note; provided, however, that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

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Change of Control

 

In the event of a Change of Control Transaction occurring prior to the repayment or conversion of the Obligations under the Note pursuant to its terms, the Note, including all Obligations thereunder (calculated at the Make Whole Amount), shall be, at the option of the Holder, (i) repaid in cash as of the closing of such Change of Control Transaction (which election, if made, shall be irrevocable), or (ii) subject to applicable Nasdaq listing rule limitations (including, if applicable, approval by the Company’s stockholders), converted into Conversion Shares at the Conversion Price, to be issued to the Holder immediately prior to, but contingent upon, the closing of such Change of Control Transaction, or (iii) remain outstanding following the closing of such Change of Control Transaction; provided, however, that if the Change of Control Transaction is scheduled to close prior to the end of the Measurement Period, the Holder may, in its sole discretion, by notice in writing to the Company delivered no later than three (3) days prior to the scheduled closing of the Change of Control Transaction (A) elect to convert the Note into a number of Conversion Shares equal to the quotient of (1) the Forced Conversion Amount divided by (2) a Conversion Price of five U.S. dollars ($5.00) per share by delivery of an Company Conversion Notice, or (B) elect to be repaid in cash in an amount equal to the Make Whole Amount as of the closing of such Change of Control Transaction (which election, if made, shall be irrevocable), or (C) elect that the Note will remain outstanding following the closing of such Change of Control Transaction. The Company shall provide at least twenty (20) Business Days’ notice to the Holder of the closing of a Change of Control Transaction.

 

Prior to or concurrently with the Company consummating any Change of Control Transaction (i) after which the Note will remain outstanding and (ii) in which (A) the Company is not the surviving entity, or (B) the Class A Common Stock does not remain “equity securities” (as defined under the Exchange Act), or (C) the Class A Common Stock does not continue to be listed on a “national securities exchange” (as defined under the Exchange Act), the Company shall require the acquiring or successor entity of such Change of Control Transaction (the “Successor Entity”) to agree in writing to assume (or where the Company continues to exist, guarantee) the payment obligations hereunder and to honor the conversion terms and all of the obligations of the Company under the Note related thereto. At the option of the Holder, the Successor Entity (and, where the Company continues to exist, the Company) shall deliver to the Holder in exchange for the Note a security of the Successor Entity (and, where the Company continues to exist, the Company) evidenced by a written instrument substantially similar in form and substance to the Note that is convertible into shares (or equivalent) of the Successor Entity in exchange for the Reference Property with a conversion rate that applies the Conversion Rate hereunder to such Reference Property (but taking into account the relative value of Class A Common Stock, the Successor Entity shares (or equivalent) and the Conversion Price, in each case, for the purpose of protecting the economic value of the Note immediately prior to the consummation of such Change of Control Transaction).

 

Governing Law

 

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

 

Dividends

 

UHG has not paid any cash dividends on the Common Stock to date and does not currently intend to pay cash dividends in the future. The payment of cash dividends in the future will be dependent upon UHG’s revenue and earnings, if any, capital requirements and general financial condition, and will be within the discretion of the Board of Directors. UHG’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing agreements.

 

Listing of Securities

 

UHG’s Class A Common Stock and Public Warrants are currently listed on Nasdaq, under the symbols “UHG” and “UHGWW,” respectively.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for the Common Stock is Equiniti Trust Company, LLC.

 

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Certain Anti-Takeover Provisions of Delaware Law

 

Classified Board of Directors

 

The Amended and Restated Certificate of Incorporation provides that the Board of Directors is to be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with each director serving a three-year term. As a result, approximately one-third of the Board of Directors will be elected each year. The classification of directors will have the effect of making it more difficult for shareholders to change the composition of the Board of Directors. Amending the classified Board of Directors provisions requires approval by two-thirds (2/3) of the then outstanding voting power; provided, however, that for so long as the holders of the Class B Common Stock hold at least a majority in voting power of the outstanding Common Stock, the required threshold for such an amendment shall be the affirmative vote of the holders of not less than a majority of the outstanding shares of capital stock of UHG entitled to vote thereon.

 

Authorized but Unissued Shares

 

The authorized but unissued Common Stock and shares of UHG’s preferred stock are available for future issuance without shareholder approval, subject to any limitations imposed by the listing standards of The Nasdaq Capital Market. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and preferred stock could make more difficult or discourage an attempt to obtain control of UHG by means of a proxy contest, tender offer, merger or otherwise.

 

Shareholder Action; Special Meetings of Shareholders

 

The Amended and Restated Certificate of Incorporation provides that, subject to the rights of the holders of any series of preferred stock, (i) for so long as the holders of Class B Common Stock hold at least a majority in voting power of the outstanding shares of common stock, any action required or permitted to be taken by the shareholders may be effected by consent in lieu of a meeting, and (ii) if the holders of Class B Common Stock no longer hold at least a majority in voting power of the outstanding Common Stock, any action required or permitted to be taken by the shareholders must be effected at a duly called annual or special meeting of the shareholders and may not be effected by any consent by such shareholders. As a result, at any time at which the holders of Class B Common Stock do not hold a majority of the outstanding voting power, a holder controlling a majority of UHG capital stock would not be able to amend the Bylaws or remove directors without holding a meeting of shareholders called in accordance with the Bylaws. This restriction does not apply to actions taken by the holders of any series of preferred stock of UHG to the extent expressly provided in the applicable preferred stock designation.

 

Further, the Amended and Restated Certificate of Incorporation provides that, subject to any special rights of the holders of preferred stock of UHG, (i) for so long as the holders of Class B Common Stock hold at least a majority in voting power of the outstanding shares of common stock, special meetings of the shareholders may be called only by: (a) the UHG; or (b) the Secretary, following receipt of one or more written demands to call a special meeting of the shareholders from shareholders of record who own, in the aggregate, at least 51% in voting power of the outstanding shares of capital stock entitled to vote on the matter or matters to be brought before the proposed special meeting that complies with the procedures for calling a special meeting of the shareholders as may be set forth in the Bylaws, and (ii) from and after the time the holders of Class B Common Stock no longer hold at least a majority in voting power of the outstanding Common Stock, special meetings of the shareholders of UHG may only be called by the Board of Directors.

 

Advance Notice Requirements for Shareholder Proposals and Director Nominations

 

The Bylaws provide that shareholders seeking to bring business before UHG’s annual meeting of shareholders, or to nominate candidates for election as directors at its annual meeting of shareholders, must provide timely notice. To be timely, a shareholder’s notice must be received by the Secretary at the principal executive offices of UHG not later than the close of business on the 90th day nor earlier than the close of business on the 120th day before the anniversary date of the immediately preceding annual meeting of shareholders. However, in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date (or if there has been no prior annual meeting), notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting is first made by UHG. The Bylaws also specify certain requirements as to the form and content of a shareholders’ notice. These provisions may preclude UHG’s shareholders from bringing matters before its annual meeting of shareholders or from making nominations for directors.

 

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Amendment of Charter or Bylaws

 

The Bylaws may be amended or repealed by the Board of Directors or by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the shares of the capital stock of UHG entitled to vote in the election of directors, voting as one class. If the holders of Class B Common Stock no longer hold at least a majority in voting power of the outstanding shares of common stock, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of the then outstanding shares of capital stock of UHG entitled to vote generally in the election of directors, voting together as a single class, will be required to amend certain provisions of the Amended and Restated Certificate of Incorporation related to the classified Board of Directors and limitation of liabilities. For so long as the holders of Class B Common Stock hold at least a majority in voting power of the outstanding shares of common stock, the requisite threshold shall be the affirmative vote of the holders of not less than a majority of the outstanding shares of capital stock of UHG entitled to vote thereon.

 

Board Vacancies

 

Any vacancy on the Board of Directors may be filled by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director, subject to any special rights of the holders of preferred stock of UHG. Any director chosen to fill a vacancy will hold office until the expiration of the term of the class for which he or she was elected and until his or her successor is duly elected and qualified or until their earlier resignation, removal from office, death or incapacity. Except as otherwise provided by law, in the event of a vacancy in the Board of Directors, the remaining directors may exercise the powers of the full Board of Directors until the vacancy is filled.

 

Preferred Directors

 

Under the Amended and Restated Certificate of Incorporation, during any period when the holders of one or more series of preferred stock have the separate right to elect additional directors, the then otherwise total authorized number of directors will automatically be increased by such number of directors that the holders of any series of preferred stock have a right to elect. Whenever the holders of one or more series of preferred stock having a separate right to elect additional directors cease to have such right, the terms of office of all preferred stock directors elected by the holders of such series of preferred stock, and the total authorized number of directors, will be automatically reduced accordingly.

 

Conversant Director

 

Pursuant to that certain Conversant Subscription Agreement, dated March 30, 2023, by and among the Company and Conversant Opportunity Master Fund LP (“Conversant”), for so long as 50% of the original principal amount of convertible notes issued by the Company to Conversant and certain other investors are outstanding and have not been converted or cash settled, Conversant shall have the right to designate one member of the Board of Directors. To fulfill its obligations under the Conversant Subscription Agreement, the Company expanded the size of the Board of Directors to eleven (11) directors.

 

Exclusive Forum Selection

 

The Amended and Restated Certificate of Incorporation provides that (A) (i) any derivative action or proceeding brought on behalf of UHG, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or shareholder of UHG to UHG or UHG’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Amended and Restated Certificate of Incorporation or the Bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Under the Amended and Restated Certificate of Incorporation, these provisions may be waived by UHG at its discretion.

 

42

 

 

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision in the Amended and Restated Certificate of Incorporation will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

 

Although UHG believes these provisions benefit UHG by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that these provisions are unenforceable, and to the extent they are enforceable, the provisions may have the effect of discouraging lawsuits against UHG’s directors and officers, although UHG shareholders will not be deemed to have waived its compliance with federal securities laws and the rules and regulations thereunder.

 

Section 203 of the Delaware General Corporation Law

 

The Amended and Restated Certificate of Incorporation provides that UHG is not subject to Section 203 of the DGCL. In general, Section 203 prohibits a Delaware corporation that is listed on a national securities exchange or held of record by more than 2,000 shareholders from engaging in a “business combination” with an “interested shareholder” for a three-year period following the time that such shareholder becomes an interested shareholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, certain mergers, asset or stock sales or other transactions resulting in a financial benefit to the interested shareholder. An “interested shareholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested shareholder status, 15% or more of the corporation’s outstanding voting stock. Accordingly, UHG is not subject to any anti-takeover effects of Section 203.

  

Limitation on Liability

 

The Amended and Restated Certificate of Incorporation provides that a UHG director or officer shall not be personally liable to UHG or its shareholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.

 

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Indemnification and Advancement of Expenses

 

The Bylaws provide that UHG’s directors and officers will be indemnified and advanced expenses by UHG to the fullest extent authorized or permitted by the DGCL as it now exists or may in the future be amended. In addition, the Bylaws provide that UHG’s directors will not be personally liable to UHG or its shareholders for monetary damages for breaches of their fiduciary duty as directors to the fullest extent permitted by the DGCL.

 

The Bylaws also permit UHG to purchase and maintain insurance on behalf of any officer, director, employee or agent of UHG for any liability arising out of his or her status as such, regardless of whether the DGCL would permit indemnification.

 

These provisions may discourage shareholders from bringing a lawsuit against UHG directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit UHG and its shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent UHG pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. DHHC believes that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced directors and officers.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to UHG directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, DHHC has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

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PRINCIPAL STOCKHOLDERS

 

Overview

 

The table below provides information concerning beneficial ownership of our common stock as of June 12, 2024 by each stockholder, or group of affiliated stockholders, as of June 12, 2024, by:

 

·each person who is known to be the beneficial owner of more than 5% of our Class A common stock and Class B common stock;

 

·each of our named executive officers;

 

·each of our directors; and

 

·all of our current executive officers and directors as a group.

 

The following table is based upon information supplied by directors, executive officers and principal stockholders; and Schedule 13G, Schedule 13D and Section 16 filings filed with the SEC through June 12, 2024. The column in each table entitled “% of Class” is based upon 11,400,203 shares of Class A common stock and 36,973,876 shares of Class B common stock issued and outstanding as of June 12, 2024.

 

Explanation of Certain Calculations in the Table of Certain Beneficial Owners

 

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Except as described in the footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed above has sole voting and investment power with respect to such shares.

 

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them. Unless otherwise noted, the business address of each of the following entities or individuals is 917 Chapin Road, Chapin, South Carolina 29036.

 

Name and Address of Beneficial Owner  Number of
Class A Shares
Beneficially
Owned		   % of
Class(1)		     Number of
Class B Shares
Beneficially
Owned		   % of
Class(1)		 
Directors and Named Executive Officers                      
Michael Nieri (2)    39,968,069    82.3 %    36,973,876    100%
James P. Clements   50,239      *    —    —%
Robert Dozier   70,568      *    —    —%
Jason Enoch   48,739      *    —    —%
Robert Grove   —      *    —    —%
Nikki R. Haley   65,906      *    —    —%
Jamie Pirrello   —    —      —    —%
Alan Levine (2)    909,239    8.0 %    —    —%
Tom O’Grady (3)    779,657    6.4 %    —    —%
Jack Micenko   78,504      *    —    —%
All executive officers and directors as a group (17 individuals)   42,924,214    85.6 %    36,973,876    100%
Greater than Five Percent Holders:                      
Maigan Lincks (2)    6,061,895    34.9 %    5,975,576    16%
Patrick Nieri (2)    6,061,895    34.9 %    5,975,576    16%
Pennington Nieri (2)    8,831,256    48.6 %    6,700,791    18%
David Hamamoto (2)(3)    3,134,826    25.1 %    —    —%
Martha Hamamoto (2)    942,413    7.9 %    —    —%
Antara Capital Return SPAC Master Fund LP (3)(4)    1,245,999    9.85 %    —    —%
The Conversant Opportunity Master Fund LP(5)    1,193,827    9.9 %    —    —%
Dendur Master Fund Ltd.(6)    1,237,290    9.9 %    —    —%
Jasper Lake Ventures One LLC (7)    942,594    7.7 %    —    —%
Liminality Partners RV LP (8)    896,057    7.3 %    —    —%
Hazelview Securities Inc. (9)    919,325    7.5 %    —    —%

 

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  *  Less than 1%.
  (1)  The percentage of beneficial ownership of the Company is calculated based on (i) 11,400,203 shares of Class A common stock and (ii) 36,973,876 shares of Class B common stock issued and outstanding as of June 12, 2024.
  (2)  Includes shares which the identified holder may be deemed to beneficially own and/or share voting and/or dispositive power, including shares held in or by trusts for the benefit of family members, or trusts in which the identified holder is a trustee.
  (3)  Includes shares issuable upon the exercise of warrants held by the investor.
  (4)  The business address of Antara Capital is 55 Hudson Yards, 47th Floor, Suite C, New York, New York 10001. Voting and dispositive control of the securities is held by Himanshu Gulati, as managing member of Antara Capital GP LLC, a Delaware limited liability company which is the general partner of Antara Capital LP, a Delaware limited partnership which is the investment manager of Antara Capital.
  (5)  Includes shares that may be issued upon the conversion of a convertible note held by the investor. The business address of Conversant Opportunity Master Fund LP is c/o Conversant Capital LLC, 25 Deforest Ave., Summit, New Jersey 07901.
  (6)  Includes shares that may be issued upon the conversion of a convertible note held by the investor. The business address of Dendur Master Fund Ltd. is c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands.
  (7)  Includes shares that may be issued upon the conversion of a convertible note held by the investor. The business address of Jasper Lake Ventures One LLC is 930 Sylvan Ave, Suite 115, Englewood Cliffs, NJ 07632.
  (8)  Consists of shares that may be issued upon the conversion of a convertible note held by the investor.  The business address of Liminality Partners RV LP is 11 Arlington Street, Boston, MA, 02116.
  (9)  Includes shares that may be issued upon the conversion of a convertible note held by the investor. The business address of Hazelview Securities Inc. is 1133 Yonge Street, 4th Floor. Toronto ON, M4T 2Y7.

 

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SELLING SECURITYHOLDERS

 

This prospectus relates to the resale by the Selling Securityholders from time to time of (i) up to 66,652,550 shares of Class A Common Stock (including (a) 421,100 shares of Class A Common Stock issued in a private offering to Lock-Up Investors, (b) 2,966,664 shares of Class A Common Stock are issuable upon exercise of the Private Placement Warrants, (c) 744,588 shares of Class A Common Stock issued to the Convertible Note Investors, (d) up to 21,699,139 shares of Class A Common Stock issuable upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, (e) 124,999 shares of Class A Common Stock issued to the Equity PIPE Investors, (f) 3,722,184 shares of Class A Common Stock issued to the Initial DHHC Investors, and (g) 36,973,876 shares of Class A Common Stock issuable upon conversion of shares of Class B Common Stock that were issued in a private offering to certain of the Selling Securityholders as merger consideration in connection with the Business Combination), (ii) up to 2,966,664 Private Placement Warrants, and (iii) the Notes themselves.

 

The Selling Securityholders may from time to time offer and sell any or all of the Class A Common Stock, Private Placement Warrants, and Notes set forth below pursuant to this prospectus and any accompanying prospectus supplement. As used in this prospectus, the term “Selling Securityholders” includes the persons listed in the table below, together with any additional Selling Securityholders listed in a subsequent amendment to this prospectus, and their pledgees, donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling Securityholders’ interests in the Class A Common Stock, Private Placement Warrants, or Notes, other than through a public sale.

 

The table below lists the Selling Securityholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the Class A Common Stock, Private Placement Warrants, and Notes held by each of the Selling Securityholders.

 

Except as set forth in the footnotes below, the following table sets forth certain information as of June 12, 2024 regarding the beneficial ownership of the Class A Common Stock, Private Placement Warrants, and Notes being offered by the Selling Securityholders. The applicable percentage ownership of the Private Placement Warrants is based on 2,966,664 Private Placement Warrants outstanding as of June 12, 2024. The applicable percentage ownership of Class A Common Stock is based on 11,400,203 shares of Class A Common Stock outstanding as of June 12, 2024, plus shares of Class A Common Stock issuable upon the conversion of shares of Class B Common Stock outstanding as of June 12, 2024, but does not include the shares of Class A Common Stock issuable upon exercise of outstanding stock options, exercise of the Warrants, or the conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto. Information with respect to the Class A Common Stock, Private Placement Warrants, and Notes owned beneficially after the offering assumes the sale of all of the Class A Common Stock, Private Placement Warrants, and Notes registered hereby. The Selling Securityholders may offer and sell some, all or none of their Class A Common Stock, Private Placement Warrants, and Notes.

 

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, a person is a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the security, or has the right to acquire such powers within 60 days.

 

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned Class A Common Stock, Private Placement Warrants, and Notes.

 

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Selling Securityholders

 

Selling Securityholders – Class A Common Stock and Private Placement Warrants  

  

Securities Beneficially
Owned Prior to this
Offering

 

Maximum Number of
Securities to be Sold
Pursuant to this
Offering(1)

 

Securities to be Beneficially
Owned After this Offering

 
Selling Securityholder 

Common
Stock(2)

 

Private
Placement
Warrants(3)

  Common
Stock		   

Private
Placement
Warrants(3)

  Common
Stock		  %   Private
Placement
Warrants		  % 
Michael Nieri(4)(5)   39,968,069   —   39,804,518     —   163,551   *    —   — 
MPN Grandchildren’s Trust 2023 dated 9/12/2023(4) (6)   1,705,215   —   1,705,215     —   —   —    —   — 
David T. Hamamoto 2020 Irrevocable Trust(7)   2,192,413   548,240   942,413(8)    548,240   1,250,000   2.6%   —   — 
Martha M. Hamamoto 2020 Irrevocable Trust  942,413   548,240   942,413(8)    548,240   —   —    —   — 
Neil Hamamoto 2011 GST Trust  394,173   —   394,173     —   —   —    —   — 
Mia Hamamoto 2011 GST Trust  394,173   —   394,173     —   —   —    —   — 
Keith Feldman(9)   394,571   149,519   335,693(8)    149,519   58,878   *    —   — 
Antara Capital Return SPAC Master Fund LP(10)   1,245,999   1,245,999   1,245,999(8)    1,245,999   —   —    —   — 
The Obsidian Master Fund  62,753   45,093   45,093(8)    45,093   17,660   *    —   — 
BlackRock Credit Alpha Master Fund LP  191,563   137,653   137,653(8)    137,653   53,910   *    —   — 
HC NCBR Fund  75,965   54,586   54,586(8)    54,586   21,379   *    —   — 
Riverview Group LLC  305,313   237,333   237,333(8)    237,333   67,980   *    —   — 
Jack Nieri  80,822   —   7,500     —   73,322   *    —   — 
Eric Bland(11)   136,250   —   24,750     —   111,500   *    —   — 
Erica Bland Lear  75,000   —   15,000     —   60,000   *    —   — 
Gillian Bland  75,000   —   15,000     —   60,000   *    —   — 
Jamie Flaum  75,000   —   15,000     —   60,000   *    —   — 
Jason Brown  75,000   —   15,000     —   60,000   *    —   — 
Rob Lapin  12,375   —   2,475     —   9,900   *    —   — 
Alan Levine Revocable Trust(12)   909,239(13)   —   175,000     —   734,239   1.5%   —   — 
Vicki Levine Revocable Trust  437,500   —   87,500     —   350,000   *    —   — 
Elizabeth Levine Irrevocable Trust  125,000   —   25,000     —   100,000   *    —   — 
Victoria Levine Irrevocable Trust  125,000   —   25,000     —   100,000   *    —   — 
Garrett Levine Irrevocable Trust  125,000   —   25,000     —   100,000   *    —   — 
Robert Dozier(11)   70,568   —   1,250     —   69,318   *    —   — 
Bhavna Vasudeva  12,500   —   2,500     —   10,000   *    —   — 
James Clements(11)   50,239   —   4,000     —   46,239   *    —   — 
Jason Enoch(11)   48,739   —   2,500     —   46,239   *    —   — 
PWN Trust 2018 dated 7/17/2018(4)(14)   6,058,908   —   6,025,575     —   33,333   *    —   — 
MEN Trust 2018 dated 7/17/2018(4)(15)   6,058,908   —   6,025,575     —   33,333   *    —   — 
PMN Trust 2018 dated 7/17/2018(4)(16)   6,058,908   —   6,025,576     —   33,332   *    —   — 
Chris Morris  2,500   —   500     —   2,000   *    —   — 
Michael Goldberg  62,500   —   12,500     —   50,000   *    —   — 
Mickey Goldberg  25,000   —   5,000     —   20,000   *    —   — 
Eric Rubin  12,500   —   2,500     —   10,000   *    —   — 
Jon Attard  3,125   —   625     —   2,500   *    —   — 
Tom Donev  81,250   —   16,250     —   65,000   *    —   — 
Bob Beesburg  6,250   —   1,250     —   5,000   *    —   — 
Diane Hanson  12,500   —   2,500     —   10,000   *    —   — 
Two Blue Stallions, LLC(17)   400,000   —   400,000     —   —   —    —   — 
White Rock Capital, LLC(17)   579,318   —   579,318     —   —   —    —   — 
Conversant Opportunity Master Fund LP  535,173   —   535,173     —   —   —    —   — 
Dendur Master Fund Ltd.  139,610   —   139,610     —   —   —    —   — 
Jasper Lake Ventures One LLC  46,537   —   46,537     —   —   —    —   — 
Hazelview Securities Inc.  23,268   —   23,268     —   —   —    —   — 

 

48

 

 

 

* Represents beneficial ownership of less than 1%.

 

(1) The amounts set forth in this column are the number of shares of Class A Common Stock that may be offered for sale from time to time by each Selling Securityholder using this prospectus. These amounts do not represent any other of our Class A Common Stock, warrants, or other securities that the Selling Securityholder may own beneficially or otherwise.
(2) Represents Class A Common Stock, including the Class A Common Stock to be issued upon the exercise of Warrants held by the Selling Securityholder.
(3) Represents certain Warrants held by the Selling Securityholders.
(4) Includes shares of Class A Common Stock issuable upon conversion of shares of Class B Common Stock.
(5) Includes an aggregate of 20,861,257 shares held by (i) trusts established for the benefit of family members of Mr. Nieri, and (ii) entities controlled by Mr. Nieri.  Mr. Nieri may be deemed to have or share beneficial ownership with respect to the shares held by the these family trusts and entities.
(6) Voting and dispositive control of the securities is held by Pennington Nieri, UHG’s Co-Executive VP – Construction Services, as trustee. Pennington Nieri is the son of Michael Nieri, who is Chairman, Chief Executive Officer, and a Director of UHG.
(7) David T. Hamamoto, the beneficiary of the David T. Hamamoto 2020 Irrevocable Trust, was formerly a director of UHG.
(8) Assumes that each Warrant held by the Selling Securityholder is exercised in full for Class A Common Stock.
(9) Keith Feldman is the Chief Financial Officer of UHG.
(10) Antara Capital Return SPAC Master Fund LP is an affiliate of the former sponsor of DHHC.
(11) The Selling Securityholder is a director of UHG.
(12) Alan Levine, the beneficiary and trustee of the Alan Levine Revocable Trust, is a director of UHG.
(13) Includes 437,500 shares held by the Vicki Levine Revocable Trust. Mr. Levine is the spouse of the trustee of the Vicki Levine Revocable Trust, and may be deemed to have or share beneficial ownership with respect to the shares held by the Vicki Levine Revocable Trust.
(14) Pennington Nieri is the beneficiary of the PWN Trust dated 7/17/2018.
(15) Maigan Nieri, the beneficiary of the MEN Trust dated 7/17/2018, is the daughter of Michael Nieri, who is Chairman, Chief Executive Officer, and a Director of UHG.
(16) Patrick Nieri, the beneficiary of the PMN Trust dated 7/17/2018, is the son of Michael Nieri, who is Chairman, Chief Executive Officer, and a Director of UHG.
(17) Voting and dispositive control of the securities is held by Pennington Nieri, as Manager.

 

Selling Securityholders – Notes  
Name of Selling Securityholder       Principal Amount
of Notes
Beneficially
Owned Prior to
this Offering(1) 		       Principal
Amount of Notes
to be Registered
in this Offering		       Class A
Common Stock
Issuable Upon
Conversion of the
Notes
That May be
Sold(1) 		       Notes
Beneficially
Owned
After
this Offering		       %  
The Conversant Opportunity Master Fund LP     $ 35,000,000      $ 35,000,000       9,493,374        —       —  
Dendur Master Fund Ltd.     $ 30,000,000      $ 30,000,000       8,137,177        —       —  
Jasper Lake Ventures One LLC     $ 5,000,000      $ 5,000,000       1,356,196        —       —  
Liminality Partners RV LP     $ 5,000,000      $ 5,000,000       1,356,196        —       —  
Hazelview Securities Inc.     $ 5,000,000      $ 5,000,000       1,356,196        —       —  

 

 

(1) Calculated based on a conversion price of $5.58 per share, which price was determined in accordance with the terms of the Notes.

 

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PLAN OF DISTRIBUTION

 

We are registering the Class A Common Stock, the Class A Common Stock issuable upon the exercise of the Private Placement Warrants, the Class A Common Stock upon conversion or exchange, or otherwise in respect, of the Notes, including any “make-whole amounts” with respect thereto, the Class A Common Stock issuable upon conversion of the Class B Common Stock, the Private Placement Warrants, and the Notes themselves by the Selling Securityholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Securityholders of the Class A Common Stock, Private Placement Warrants or Notes, although we will receive the exercise price of any Warrants not exercised by the Selling Securityholders on a cashless exercise basis. We will bear all fees and expenses incident to our obligation to register the Class A Common Stock, Private Placement Warrants and Notes.

 

The Selling Securityholders may sell all or a portion of the Class A Common Stock, Private Placement Warrants or Notes held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Class A Common Stock, Private Placement Warrants or Notes are sold through underwriters or broker-dealers, the Selling Securityholders will be responsible for underwriting discounts or commissions or agent’s commissions. The Class A Common Stock, Private Placement Warrants or Notes may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:

 

·on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

 

·in the over-the-counter market;

 

·in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

·through the writing or settlement of options, whether such options are listed on an options exchange or otherwise;

 

·ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

·block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

·in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales agents;

 

·purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

·an exchange distribution in accordance with the rules of the applicable exchange;

 

·privately negotiated transactions;

 

·short sales made after the date the Registration Statement is declared effective by the SEC;

 

·broker-dealers may agree with a Selling Securityholder to sell a specified number of such shares at a stipulated price per share;

 

·a combination of any such methods of sale; and

 

·any other method permitted pursuant to applicable law.

 

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The Selling Securityholders may also sell the Class A Common Stock, Private Placement Warrants and Notes under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under this prospectus. In addition, the Selling Securityholders may transfer the Class A Common Stock, Private Placement Warrants and Notes by other means not described in this prospectus. If the Selling Securityholders effect such transactions by selling Class A Common Stock, Private Placement Warrants or Notes to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Securityholders or commissions from purchasers of the Class A Common Stock, Private Placement Warrants and Notes for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Class A Common Stock or otherwise, the Selling Securityholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Class A Common Stock in the course of hedging in positions they assume. The Selling Securityholders may also sell Class A Common Stock short and deliver Class A Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Securityholders may also loan or pledge Class A Common Stock, Private Placement Warrants and Notes to broker-dealers that in turn may sell such warrants and shares.

 

The Selling Securityholders may pledge or grant a security interest in some or all of the Class A Common Stock, Private Placement Warrants and Notes owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Class A Common Stock, Private Placement Warrants and Notes from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of Selling Securityholders to include the pledgee, transferee or other successors in interest as Selling Securityholder under this prospectus. The Selling Securityholders also may transfer and donate the Class A Common Stock, Private Placement Warrants and Notes in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

To the extent required by the Securities Act and the rules and regulations thereunder, the Selling Securityholders and any broker-dealer participating in the distribution of the Class A Common Stock, Private Placement Warrants and Notes may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Class A Common Stock, Private Placement Warrants and Notes is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of Class A Common Stock, Private Placement Warrants and Notes being offered and the terms of the offering, including the name or names of any underwriters, broker-dealers or agents, the purchase price paid by any underwriter, any discounts, commissions and other terms constituting compensation from the Selling Securityholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.

 

Under the securities laws of some states, the Class A Common Stock, Private Placement Warrants and Notes may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Class A Common Stock, Private Placement Warrants and Notes may not be sold unless such securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance that any Selling Securityholder will sell any or all of the Class A Common Stock, Private Placement Warrants or Notes registered pursuant to the registration statement, of which this prospectus forms a part.

 

The Selling Securityholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Class A Common Stock, Private Placement Warrants or Notes by the Selling Securityholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the Class A Common Stock, Private Placement Warrants and Notes to engage in market-making activities with respect to the Class A Common Stock, Private Placement Warrants or Notes. All of the foregoing may affect the marketability of the Class A Common Stock, Private Placement Warrants or Notes and the ability of any person or entity to engage in market-making activities with respect to the Class A Common Stock, Private Placement Warrants or Notes.

 

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We will pay all expenses of the registration of the Class A Common Stock, Private Placement Warrants and Notes pursuant to the applicable agreements containing registration rights, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a Selling Securityholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the Selling Securityholders against liabilities, including some liabilities under the Securities Act in accordance with the applicable agreements containing registration rights or the Selling Securityholders will be entitled to contribution. We may be indemnified by the Selling Securityholders against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the Selling Securityholders specifically for use in this prospectus, in accordance with the applicable agreements containing registration rights or we may be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a part, the Class A Common Stock, Private Placement Warrants and Notes will be freely tradable in the hands of persons other than our affiliates.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

The following discussion is a summary of certain material U.S. federal income tax considerations generally applicable to the ownership and disposition of our Class A Common Stock, Warrants, and Notes, which we refer to collectively as our securities. This summary is based upon U.S. federal income tax law as of the date of this prospectus, which is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, dealers or traders in securities, tax-exempt organizations, taxpayers that have elected mark-to-market accounting, S corporations, regulated investment companies, real estate investment trusts, passive foreign investment companies, controlled foreign corporations, U.S. Holders (as defined below) that will hold Class A Common Stock, Warrants, or Notes as part of a straddle, hedge, conversion, or other integrated transaction for U.S. federal income tax purposes, expatriates or former long-term residents of the United States, or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ materially from those summarized below. This summary does not discuss other U.S. federal tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax considerations, or the Medicare tax or alternative minimum tax. In addition, this summary is limited to investors that will hold our securities as “capital assets” (generally, property held for investment) under the Internal Revenue Code of 1986, as amended (the “Code”) and that acquire our Class A Common Stock, Warrants, and Notes for cash pursuant to this prospectus. No ruling from the Internal Revenue Service, (the “IRS”) has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain a position contrary to, any of the tax aspects set forth below.

 

For purposes of this summary, a “U.S. Holder” is a beneficial holder of securities who or that, for U.S. federal income tax purposes is:

 

·an individual who is a United States citizen or resident of the United States;

 

·a corporation (or other entity taxable as a corporation) created in, or organized under the law of, the United States or any state or political subdivision thereof;

 

·an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or

 

·a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a United States person.

 

A “Non-U.S. Holder” is a beneficial holder of securities who or that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

 

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our securities, the tax treatment of a partner, member, or other beneficial owner in such partnership will generally depend upon the status of the partner, member, or other beneficial owner, the activities of the partnership, and certain determinations made at the partner, member, or other beneficial owner level. If you are a partner, member, or other beneficial owner of a partnership holding our securities, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our securities.

 

THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE HOLDERS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF OUR SECURITIES, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE, AND OTHER TAX CONSIDERATIONS.

 

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U.S. Holders

 

Taxation of Distributions

 

If we pay distributions or make constructive distributions (other than certain distributions of our stock or rights to acquire our stock) to U.S. Holders of shares of our Class A Common Stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in our Class A Common Stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Class A Common Stock and will be treated as described under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock” below.

 

 

Dividends we pay to a U.S. Holder that is a taxable corporation will generally qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder will generally constitute “qualified dividends” that will be subject to tax at the preferential tax rate accorded to long-term capital gains. If the holding period requirements are not satisfied, a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at ordinary income tax rates instead of the preferential rates that apply to qualified dividend income.

 

Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock

 

A U.S. Holder generally will recognize gain or loss on the sale, taxable exchange or other taxable disposition of our Class A Common Stock. Any such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period for the Class A Common Stock so disposed of exceeds one year. The amount of gain or loss recognized will generally be equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S. Holder’s adjusted tax basis in its Class A Common Stock disposed. A U.S. Holder’s adjusted tax basis in its Class A Common Stock will generally equal the U.S. Holder’s acquisition cost for such Class A Common Stock (or, in the case of Class A Common Stock received upon exercise of a Warrant, the U.S. Holder’s initial basis for such Class A Common Stock, as discussed below), less any prior distributions treated as a return of capital. The deductibility of capital losses is subject to limitations. Long-term capital gains recognized by non-corporate U.S. Holders are generally eligible for reduced rates of tax. If the U.S. Holder’s holding period for the Class A Common Stock so disposed of is one year or less, any gain on a sale or other taxable disposition of the shares would be subject to short-term capital gain treatment and would be taxed at ordinary income tax rates. The deductibility of capital losses is subject to limitations.

 

Exercise of a Warrant

 

Except as discussed below with respect to the cashless exercise of a Warrant, a U.S. Holder generally will not recognize taxable gain or loss upon the exercise of a Warrant for cash. The U.S. Holder’s initial tax basis in the share of our Class A Common Stock received upon exercise of the Warrant will generally be an amount equal to the sum of the U.S. Holder’s acquisition cost of the Warrant and the exercise price of such Warrant. It is unclear whether a U.S. Holder’s holding period for the Class A Common Stock received upon exercise of the Warrant would commence on the date of exercise of the Warrant or the day following the date of exercise of the Warrant; however, in either case the holding period will not include the period during which the U.S. Holder held the Warrants.

 

The tax consequences of a cashless exercise of a Warrant are not clear under current tax law. A cashless exercise may be nontaxable, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder’s initial tax basis in the Class A Common Stock received generally should equal the holder’s adjusted tax basis in the Warrant. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. Holder’s holding period for the Class A Common Stock would commence on the date of exercise of the Warrant or the day following the date of exercise of the Warrant; in either case, the holding period would not include the period during which the U.S. Holder held the Warrant. If, instead, the cashless exercise were treated as a recapitalization, the holding period of the Class A Common Stock generally would include the holding period of the Warrant.

 

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It is also possible that a cashless exercise of a Warrant could be treated in part as a taxable exchange in which gain or loss is recognized. In such event, a U.S. Holder could be deemed to have surrendered a portion of the Warrants being exercised having a value equal to the exercise price of such Warrants in satisfaction of such exercise price. Although not free from doubt, such U.S. Holder generally should recognize capital gain or loss in an amount equal to the difference between the fair market value of the Warrants deemed surrendered to satisfy the exercise price and the U.S. Holder’s adjusted tax basis in such Warrants. In this case, a U.S. Holder’s initial tax basis in the Class A Common Stock received would equal the sum of the exercise price and the U.S. holder’s adjusted tax basis in the Warrants exercised. It is unclear whether a U.S. Holder’s holding period for the Class A Common Stock would commence on the date of exercise of the Warrant or the day following the date of exercise of the Warrant; in either case, the holding period would not include the period during which the U.S. Holder held the Warrant. Due to the uncertainty and absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. Holder’s holding period would commence with respect to the Class A Common Stock received, U.S. Holders are urged to consult their tax advisors regarding the tax consequences of a cashless exercise.

 

Sale, Exchange, Redemption or Expiration of a Warrant

 

Upon a sale, exchange (other than by exercise), redemption (other than a redemption for Class A Common Stock), or expiration of a Warrant, a U.S. Holder will recognize taxable gain or loss in an amount equal to the difference between (1) the amount realized upon such disposition or expiration and (2) the U.S. Holder’s adjusted tax basis in the Warrant. A U.S. Holder’s adjusted tax basis in its Warrants will generally equal the U.S. Holder’s acquisition cost, increased by the amount of any constructive distributions included in income by such U.S. Holder (as described below under “U.S. Holders — Possible Constructive Distributions”). Such gain or loss generally will be treated as long-term capital gain or loss if the Warrant is held by the U.S. Holder for more than one year at the time of such disposition or expiration. If a Warrant is allowed to lapse unexercised, a U.S. Holder will generally recognize a capital loss equal to such holder’s adjusted tax basis in the Warrant. The deductibility of capital losses is subject to certain limitations.

 

A redemption of Warrants for Class A Common Stock described in this prospectus under “Description of Securities — Warrants” should be treated as a “recapitalization” for U.S. federal income tax purposes. Accordingly, you should not recognize any gain or loss on the redemption of Warrants for shares of our Class A Common Stock. Your aggregate initial tax basis in the Class A Common Stock received in the redemption should equal your aggregate adjusted tax basis in your Warrants redeemed and your holding period for the Class A Common Stock received in redemption of your Warrants should include your holding period for your surrendered Warrants. However, there is some uncertainty regarding this tax treatment and, accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences of a redemption of Warrants for Class A Common Stock.

 

Possible Constructive Distributions

 

The terms of each Warrant provide for an adjustment to the number of Class A Common Stock for which the Warrant may be exercised or to the exercise price of the Warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Warrants.” An adjustment which has the effect of preventing dilution generally should not be a taxable event. Nevertheless, a U.S. Holder of Warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A Common Stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of shares of our Class A Common Stock which is taxable to such holders as a distribution. Such constructive distribution would be subject to tax as described above under “U.S. Holders — Taxation of Distributions” in the same manner as if such U.S. Holder received a cash distribution from us on Class A Common Stock equal to the fair market value of such increased interest.

 

Certain Tax Consequences to U.S. Note Holders of Notes

 

Payments of Interest on Notes

 

Unless the original issue discount or “OID” rules otherwise require, stated interest on the Notes will generally be taxable to you as ordinary income at the time it is paid or accrued in accordance with your method of accounting for U.S. federal income tax purposes.

 

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OID is a form of interest that generally exists when a debt instrument’s stated redemption price at maturity exceeds its issue price. If OID were to exist, under the OID rules, the excess of total payments on a Note, including interest that is not unconditionally payable at least annually throughout the term of the Note, will be currently deductible by the issuer and currently includible in income by the holder, under the constant yield method. Under the constant yield method, you generally would be required to include in income increasingly greater amounts of OID in successive accrual periods. Holders of Notes should consult with their tax or other professionals regarding the existence and impact, if any, of OID on their investment and taxes. A cash method holder of a Note may be taxed differently than an accrual method holder of a Note.

 

Market Discount

 

If you purchase a Note for an amount that is less than its principal amount, the amount of the difference will be treated as “market discount” for U.S. federal income tax purposes, unless that difference is less than a specified de minimis amount. Under the market discount rules, you will be required to treat any principal payment on, or any gain on the sale, exchange, retirement or other disposition of, a Note as ordinary income to the extent of the market discount that you have not previously included in income and are treated as having accrued on the Note at the time of its payment or disposition.

 

In addition, you may be required to defer, until the maturity of the Note or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness attributable to the Note. You may elect, on a note-by-note basis, to deduct the deferred interest expense in a tax year prior to the year of disposition. You should consult your own tax advisors before making this election.

 

Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the Note, unless you elect to accrue on a constant interest method. You may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest deductions will not apply.

 

Amortizable Bond Premium

 

If you purchase a Note for an amount in excess of its principal amount, you will be considered to have purchased the Note at a “premium.” You generally may elect to amortize the premium over the remaining term of the Note on a constant yield method as an offset to interest when includible in income under your regular accounting method. If you have elected to amortize the premium, the amortizable bond premium will reduce interest income. If you do not elect to amortize bond premium, that premium will decrease the gain or increase the loss you would otherwise recognize on disposition of the Note.

 

Sale, Exchange, Retirement, or Other Taxable Disposition of Notes

 

Upon the sale, exchange, retirement, or other taxable disposition of a Note, you generally will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition (less an amount equal to any accrued but unpaid interest, which will be taxable as interest income as discussed above to the extent not previously included in income by you) and the adjusted tax basis of the Note. Your adjusted tax basis in a Note will, in general, be your cost for that Note increased by market discount previously included in income and reduced by any amortized premium.

 

Any gain or loss will be capital gain or loss. Capital gains of noncorporate U.S. holders (including individuals) derived in respect of capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

 

Information Reporting and Backup Withholding.

 

In general, information reporting requirements may apply to dividends paid to a U.S. Holder and to the proceeds of the sale or other disposition of our Class A Common Stock, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).

 

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In general, information reporting requirements will apply to certain payments of principal and interest (including the OID) paid on the Notes and to the proceeds of the sale or other disposition of a Note paid to you (unless you are an exempt recipient such as a corporation). Backup withholding may apply to such payments if you fail to provide a taxpayer identification number or a certification that you are not subject to backup withholding.

 

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS.

 

Non-U.S. Holders

 

Taxation of Distributions

 

In general, any distributions (including constructive distributions) we make to a Non-U.S. Holder of shares of our Class A Common Stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend (as described below under “Non-U.S. Holders — Possible Constructive Distributions”), it is possible that this tax would be withheld from any amount owed to a Non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from Warrants or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. Holder’s adjusted tax basis in its Class A Common Stock and, to the extent such distribution exceeds the Non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Class A Common Stock, which will be treated as described under “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below. In addition, if we determine that we are likely to be classified as a “United States real property holding corporation” (see “Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.

 

Dividends we pay to a Non-U.S. Holder that are effectively connected with such Non-U.S. Holder’s conduct of a trade or business within the United States (or if a tax treaty applies are attributable to a U.S. permanent establishment or fixed base maintained by the Non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such Non-U.S. Holder complies with certain certification and disclosure requirements (generally by providing an IRS Form W-8ECI). Instead, such dividends generally will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders. If the Non-U.S. Holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).

 

Exercise of a Warrant

 

The U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a Warrant will generally correspond to the U.S. federal income tax treatment of the exercise of a Warrant by a U.S. Holder, as described under “U.S. Holders — Exercise of a Warrant” above, although to the extent a cashless exercise results in a taxable exchange, the tax consequences to the Non-U.S. Holder would be the same as those described below in “Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”

 

Redemption of Warrants for Class A Common Stock

 

A redemption of Warrants for Class A Common Stock described in this prospectus under “Description of Securities — Warrants” should be treated as a “recapitalization” for U.S. federal income tax purposes. Accordingly, you should not recognize any gain or loss on the redemption of Warrants for shares of our Common Stock. Your aggregate initial tax basis in the Class A Common Stock received in the redemption should equal your aggregate adjusted tax basis in your Warrants redeemed and your holding period for the Class A Common Stock received in redemption of your Warrants should include your holding period for your surrendered Warrants. However, there is some uncertainty regarding this tax treatment and, accordingly, Non-U.S. Holders should consult their tax advisors regarding the tax consequences of a redemption of Warrants for Class A Common Stock.

 

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Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants

 

A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A Common Stock or Warrants or an expiration or redemption of our Warrants, unless:

 

·the gain is effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the Non-U.S. Holder);

 

·the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or

 

·we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. Holder held our Class A Common Stock, Warrants, or Notes and, in the case where shares of our Class A Common Stock are regularly traded on an established securities market, the Non-U.S. Holder has owned, directly or constructively, more than 5% of our common stock at any time within the shorter of the five-year period preceding the dis-position or such Non-U.S. Holder’s holding period for the shares of our common stock. There can be no assurance that our Class A Common Stock will be treated as regularly traded on an established securities market for this purpose.

 

Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. Holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. Holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. Holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties.

 

If the third bullet point above applies to a Non-U.S. Holder and applicable exceptions are not available, gain recognized by such holder on the sale, exchange or other disposition of our Common Stock or Warrants will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Common Stock or Warrants from such holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. Non-U.S. Holders are urged to consult their tax advisors regarding the application of these rules.

 

Possible Constructive Distributions

 

The terms of each Warrant provide for an adjustment to the number of shares of Class A Common Stock for which the Warrant may be exercised or to the exercise price of the Warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Warrants.” An adjustment which has the effect of preventing dilution generally should not be a taxable event. Nevertheless, a Non-U.S. Holder of Warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A Common Stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of our Class A Common Stock which is taxable to such holders as a distribution. A Non-U.S. Holder would be subject to U.S. federal income tax withholding as described above under “Non-U.S. Holders — Taxation of Distributions” under that section in the same manner as if such Non-U.S. Holder received a cash distribution from us on Class A Common Stock equal to the fair market value of such increased interest.

 

Taxation of Interest on Notes

 

Generally, if you are a nonresident alien individual or a non-U.S. corporation and do not hold Notes in connection with a United States trade or business, interest paid and OID accrued on the Notes will be treated as “portfolio interest” and therefore will be exempt from a 30% United States withholding tax. In that case, you will be entitled to receive interest payments on the Notes free of United States federal income tax provided that you periodically provide a statement on applicable IRS forms certifying under penalty of perjury that you are not a United States person and provide your name and address. In addition, in that case you will not be subject to United States federal income tax on gain from the disposition of a Note unless you are an individual who is present in the United States for 183 days or more during the taxable year in which the disposition takes place and certain other requirements are met. Interest paid and accrued OID paid to a non-U.S. person are not subject to withholding if they are effectively connected with a United States trade or business conducted by that person and we are provided a properly executed IRS Form W-8ECI. They will, however, generally be subject to the regular United States income tax. If you are a non-U.S. corporation, that portion of your earnings and profits that is effectively connected with your U.S. trade or business also may be subject to a “branch profits tax” at a 30% rate, although an applicable income tax treaty may provide for lower rate.

 

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Foreign Account Tax Compliance Act

 

Provisions of the Code and Treasury Regulations and administrative guidance promulgated thereunder commonly referred as the “Foreign Account Tax Compliance Act” (“FATCA”) generally impose withholding at a rate of 30% in certain circumstances on dividends (including constructive dividends) in respect of our securities which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which our securities are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of our securities held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners” or (2) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S. Department of Treasury. Withholding under FATCA was scheduled to apply to payments of gross proceeds from the sale or other disposition of property that produces U.S.-source interest or dividends, however, the IRS released proposed regulations that, if finalized in their proposed form, would eliminate the obligation to withhold on such gross proceeds. Although these proposed Treasury Regulations are not final, taxpayers generally may rely on them until final Treasury Regulations are issued. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our securities.

 

Information Reporting and Backup Withholding

 

Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of our shares of Class A Common Stock and Warrants. A Non-U.S. Holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty generally will satisfy the certification requirements necessary to avoid the backup withholding as well.

 

With respect to the Notes, generally, we must report to the IRS and to the holder the amount of interest (including OID) paid to the holder and the amount of tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which the holder resides under the provisions of an applicable income tax treaty.

 

In general, holders will not be subject to backup withholding with respect to payments of interest (including OID) on the notes that we make to each holder, provided that we do not have actual knowledge or reason to know that the holder is a United States person as defined under the Code, and we have received from the holder the required certification that the holder is a non-U.S. Holder.

 

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition (including a redemption) of notes within the United States or conducted through certain United States-related financial intermediaries, the holder certifies to the payor under penalties of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the holder is a United States person as defined under the Code), or the holder otherwise establishes an exemption.

 

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Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a Non-U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

 

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE IMPORTANT TO YOU. EACH PROSPECTIVE PURCHASER SHOULD CONSULT ITS TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF AN INVESTMENT IN OUR CLASS A COMMON STOCK, WARRANTS AND NOTES BASED ON THE INVESTOR’S CIRCUMSTANCES.

 

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LEGAL MATTERS

 

The validity of any securities offered by this prospectus will be passed upon for us by Nelson Mullins Riley & Scarborough LLP.

 

EXPERTS

 

The consolidated financial statements of United Homes Group, Inc. as of December 31, 2023 and 2022 and for the fiscal years then ended have been audited by Forvis Mazars, LLP, independent registered public accounting firm, as set forth in their report thereon, included in United Homes Group, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and incorporated herein by reference. Such consolidated financial statements have been incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the securities offered by this prospectus. This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. For further information pertaining to us and the securities offered in this prospectus, reference is made to that registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available for free to the public over the Internet on the SEC’s website at www.sec.gov. Our Class A Common Stock and our Public Warrants are listed on Nasdaq under the symbols “UHG” and “UHGWW,” respectively. General information about our company, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website at www.unitedhomesgroup.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information on, or that can be accessed through, our website is not incorporated into this prospectus or other securities filings and is not a part of these filings.

 

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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

 

The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. Because we are incorporating by reference future filings with the SEC, this prospectus and the accompanying prospectus supplement are continually updated and those future filings may modify or supersede some of the information included or incorporated by reference in this prospectus and the accompanying prospectus supplement. This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus, the accompanying prospectus supplement or in any document previously incorporated by reference have been modified or superseded. Our periodic reports are filed with the SEC under SEC File Number 001-39936.

 

We hereby incorporate by reference the following documents:

 

·our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 15, 2024;

 

·our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 filed with the SEC on May 10, 2024;

 

·our Current Reports on Form 8-K filed with the SEC on January 29, 2024, February 23, 2024, March 14, 2024, April 23, 2024, May 10, 2024, and May 16, 2024 in each case only to the extent filed and not furnished;

 

·those portions of our for our Definitive Proxy Statement on Schedule 14A for our 2024 Annual Meeting of Stockholders filed with the SEC on April 5, 2024 that are incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2023; and

 

·the description of our securities contained in Exhibit 4.4 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 15, 2024 and any amendment or report filed with the SEC for the purpose of updating the description.

 

We incorporate by reference any additional filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than the portions of those made pursuant to Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC, including any related exhibits under Item 9.01 of Form 8-K) after the filing of the initial registration statement (including all such documents that we may file with the SEC after the date the registration statement was initially filed and prior to the effectiveness of the registration statement) and before the filing of a post-effective amendment to the registration statement of which this prospectus is a part that indicates that all securities offered hereunder have been sold or that deregisters all securities then remaining unsold (other than information furnished and not filed with the SEC). These documents may include periodic reports, like Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements. Any material that we subsequently file with the SEC will automatically update and replace the information previously filed with the SEC.

 

Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

 

We will provide each person to whom a prospectus is delivered, including any beneficial owner, a copy of all of the information that has been incorporated by reference in this prospectus but not delivered with the prospectus. You may obtain copies of these filings, at no cost, through the “Investors” section of our website at www.unitedhomesgroup.com and you may request a copy of these filings (other than an exhibit to any filing unless we have specifically incorporated that exhibit by reference into the filing), at no cost, by writing or telephoning us at the following address:

 

Corporate Secretary

United Homes Group, Inc.

917 Chapin Road

Chapin, South Carolina 29036 

(844) 776-4663

 

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PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 14. Other Expenses of Issuance and Distribution

 

The following is an estimate of the expenses (all of which are to be paid by the registrant) that we may incur in connection with the securities being registered hereby.

 

SEC registration fee   $ 40,340.16  
Legal fees and expenses     *  
Accounting fees and expenses     *  
Miscellaneous     *  
Total   $ 40,340.16  

 

  * These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be defined at this time.

 

Item 15. Indemnification of Directors and Officers

 

Section 145 of the Delaware General Corporation Law (the “DGCL”) provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the registrant. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaws, agreement, vote of stockholders or disinterested directors or otherwise. The registrant’s certificate of incorporation and bylaws provide for indemnification by the registrant of its directors and officers to the fullest extent permitted by the DGCL.

 

Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions or (4) for any transaction from which the director derived an improper personal benefit. The registrant’s amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated bylaws (the “Bylaws”) provides for such limitation of liability to the fullest extent permitted by the DGCL.

 

The registrant has entered into indemnification agreements with each of its directors and executive officers to provide contractual indemnification in addition to the indemnification provided in its Amended and Restated Certificate of Incorporation. Each indemnification agreement provides for indemnification and advancements by the registrant of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to the registrant as officers or directors to the maximum extent permitted by applicable law.

 

The registrant also maintains standard policies of insurance under which coverage is provided (1) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, while acting in their capacity as directors and officers of the registrant, and (2) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to any indemnification provision contained in the registrant’s Amended and Restated Certificate of Incorporation and Bylaws or otherwise as a matter of law.

 

The foregoing summaries are necessarily subject to the complete text of the statute, the registrant’s Amended and Restated Certificate of Incorporation and Bylaws, as amended to date, and the arrangements referred to above and are qualified in their entirety by reference thereto.

 

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Item 16. Exhibits

 

Exhibit No.    Description
2.1†   Business Combination Agreement, dated September 10, 2022, by and between DiamondHead Holdings Corp., Merger Sub and Great Southern Homes, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 filed on February 9, 2023).
4.1   Warrant Agreement, dated January 25, 2021, by and between American Stock Transfer & Trust Company and DiamondHead Holdings Corp. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 25, 2021).
4.2   Senior Convertible Promissory Note, dated March 30, 2023, by and between the Company and Conversant Opportunity Master Fund LP (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 filed on April 28, 2023).
4.3   Senior Convertible Promissory Note, dated March 30, 2023, by and between the Company and Dendur Master Fund Ltd. (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 filed on April 28, 2023).
4.4   Description of Securities (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K filed on March 15, 2024).
5.1*   Opinion of Nelson Mullins Riley & Scarborough LLP
23.1*   Consent of Forvis Mazars, LLP, independent registered public accounting firm
23.2*   Consent of Nelson Mullins Riley & Scarborough LLP (included in Exhibit 5.1)
24.1*   Power of Attorney (included on the signature page of this registration statement)
107*   Filing Fees

 

  * Filed herewith.
  †

Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

Certain instruments defining rights of holders of long-term debt of the company and its consolidated subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Upon request, the company agrees to furnish to the SEC copies of such instruments.

 

Item 17. Undertakings

 

(a) The undersigned Registrant hereby undertakes:

 

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

 

(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;

 

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provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement.

 

(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4) that, for the purpose of determining liability under the Securities Act to any purchaser:

 

(i) If the registrant is relying on Rule 430B:

 

(A) each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

(B) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

 

(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(5) that, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

 

(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

 

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(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

 

(iv) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

 

(6) that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the indemnification provisions described herein, or otherwise, the Registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Chapin, South Carolina on June 21, 2024.

 

  Unites Homes Group, Inc.
   
  By: /s/ Keith Feldman
  Name: Keith Feldman
  Title: Chief Financial Officer

 

POWER OF ATTORNEY

 

Each of the undersigned officers and directors of United Homes Group, Inc. constitutes and appoints Keith Feldman and Erin Reeves McGinnis, and each of them singly, his true and lawful attorney-in-fact and agent, with full power to act separately and full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

 

 

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Michael Nieri   Chief Executive Officer and Director   June 21, 2024
Michael Nieri   (Principal Executive Officer)    
         
/s/ Keith Feldman   Chief Financial Officer   June 21, 2024
Keith Feldman   (Principal Financial and Accounting Officer)    
         
/s/ Tom O’Grady   Director   June 21, 2024
Tom O’Grady        
         
/s/ James P. Clements   Director   June 21, 2024
James P. Clements        
         
/s/ Robert Dozier   Director   June 21, 2024
Robert Dozier        
         
/s/ Jason Enoch   Director   June 21, 2024
Jason Enoch        
         
/s/ Nikki R. Haley   Director   June 21, 2024
Nikki R. Haley        
         
/s/ Alan Levine   Director   June 21, 2024
Alan Levine        
         
/s/ Robert Grove   Director   June 21, 2024
Robert Grove        
         
/s/ James M. Pirrello   Director   June 21, 2024
James M. Pirrello        

 

 

 

Exhibit 5.1

 

 

NELSON MULLINS RILEY & SCARBOROUGH LLP

ATTORNEYS AND COUNSELORS AT LAW

 

 

 

 

 

101 Constitution Avenue, NW | Suite 900

Washington, DC 20001

T 202.712.2800 F 202.712.2860

nelsonmullins.com

 

June 19, 2024

 

United Homes Group, Inc.

917 Chapin Road

Chapin, SC 29036

 

Re:     Registration Statement on Form S-3

 

We have acted as counsel to United Homes Group, Inc., a Delaware corporation (the “Company”), in connection with the registration of (i) the issuance by the Company of up to 11,591,664 shares (the “Warrant Shares”) of Class A common stock, $0.0001 par value per share (the “Class A Common Stock”) that are issuable from time to time upon exercise of outstanding warrants, including up to (a) 8,625,000 shares of Class A Common Stock issuable upon the exercise of public warrants (the “Public Warrants”), and (b) up to 2,966,664 shares of Class A Common Stock issuable upon the exercise of private placement warrants (the “Private Placement Warrants,” together with the Public Warrants, the “Warrants”), and (ii) the offer and sale by certain selling stockholders (the “Selling Stockholders”) named in the Registration Statement (defined below) of (a) up to 66,652,550 shares of Class A Common Stock (the “Resale Shares”) including (w) 5,012,871 shares issued in private placements to Selling Stockholders, (x) 2,966,664 shares issuable upon exercise of the Private Placement Warrants, (y) up to 21,699,139 shares issuable from time to time upon conversion or exchange, or otherwise in respect, of outstanding senior convertible promissory notes, including any “make-whole” amounts with respect thereto (the “Convertible Note Shares”) and (z) up to 36,973,876 shares issuable upon conversion of shares of Class B common stock (the “Class B Common Stock”), par value $0.0001 of the Company (the “Conversion Shares”), (b) the offer and resale by the Selling Stockholders of up to 2,966,664 Private Placement Warrants (the “Resale Warrants”), and (c) the offer and resale by the Selling Stockholders of up to $80,000,000 of outstanding senior convertible promissory notes (the “Resale Convertible Notes”).

 

The Warrant Shares, Resale Shares, Resale Warrants, and Resale Convertible Notes are included in a registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Act”), filed with the Securities and Exchange Commission (the “Commission”) on the date hereof (the “Registration Statement”). This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related prospectus or prospectus supplement (collectively, the “Prospectus”), other than as expressly stated herein.

 

 

California | Colorado | District of Columbia | Florida | Georgia | Maryland | Massachusetts | New York

North Carolina | South Carolina | Tennessee | West Virginia

 

 

United Homes Group, Inc.

June 19, 2024

Page 2

 

As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified such factual matters. We are opining herein as to General Corporation Law of the State of Delaware, and we express no opinion with respect to any other laws.

 

Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof:

 

1. The Resale Shares have been duly authorized by all necessary corporate action of the Company and are validly issued, fully paid and nonassessable.

 

2. The Resale Warrants are the legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

 

3. The Resale Convertible Notes are the legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

 

4. When the Warrant Shares initially issuable upon exercise of the Warrants shall have been duly registered on the books of the transfer agent and registrar therefor in the name of or on behalf of the Warrant holders, and have been issued by the Company against payment therefor (not less than par value) in the circumstances contemplated by the Warrants, the Warrant Shares will have been duly authorized by all necessary corporate action of the Company, and will be validly issued, fully paid and nonassessable. In rendering this opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the General Corporation Law of the State of Delaware.

 

5. When the Convertible Note Shares initially issuable upon conversion or exchange, or otherwise in respect, of the Resale Convertible Notes, including any “make-whole” amounts with respect thereto, in accordance with their terms shall have been duly registered on the books of the transfer agent and registrar therefor in the name of or on behalf of the Resale Convertible Note holders, and have been issued by the Company against payment therefor (not less than par value) in the circumstances contemplated by the Resale Convertible Notes, the Convertible Note Shares will have been duly authorized by all necessary corporate action of the Company, and will be validly issued, fully paid and nonassessable. In rendering this opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the General Corporation Law of the State of Delaware.

 

6. When the Conversion Shares initially issuable upon conversion of shares of Class B Common Stock of the Company in accordance with the terms of the Company's Amended and Restated Certificate of Incorporation shall have been duly registered on the books of the transfer agent and registrar therefor in the name of or on behalf of the holders of the Conversion Shares, and have been issued by the Company against payment therefor (not less than par value) in the circumstances contemplated by the Company's Amended and Restated Certificate of Incorporation, the Conversion Shares will have been duly authorized by all necessary corporate action of the Company, and will be validly issued, fully paid and nonassessable. In rendering this opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the General Corporation Law of the State of Delaware.

 

 

 

United Homes Group, Inc.

June 19, 2024

Page 3

 

Our opinion set forth in numbered paragraphs 2 and 3 is subject to: (i) the effect of bankruptcy, insolvency, reorganization, preference, fraudulent transfer, moratorium or other similar laws relating to or affecting the rights and remedies of creditors; (ii) the effect of general principles of equity, whether considered in a proceeding in equity or at law (including the possible unavailability of specific performance or injunctive relief), concepts of materiality, reasonableness, good faith and fair dealing, and the discretion of the court before which a proceeding is brought; (iii) the invalidity under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy; and (iv) we express no opinion as to (a) any provision for liquidated damages, default interest, late charges, monetary penalties, make-whole premiums or other economic remedies to the extent such provisions are deemed to constitute a penalty, (b) consents to, or restrictions upon, governing law, jurisdiction, venue, arbitration, remedies, or judicial relief, (c) waivers of rights or defenses, (d) any provision requiring the payment of attorneys’ fees, where such payment is contrary to law or public policy, (e) the creation, validity, attachment, perfection, or priority of any lien or security interest, (f) advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements, statutes of limitation, trial by jury or at law, or other procedural rights, (g) waivers of broadly or vaguely stated rights, (h) provisions for exclusivity, election or cumulation of rights or remedies, (i) provisions authorizing or validating conclusive or discretionary determinations, (j) grants of setoff rights, (k) proxies, powers and trusts, (l) provisions prohibiting, restricting, or requiring consent to assignment or transfer of any right or property, and (m) the severability, if invalid, of provisions to the foregoing effect.

 

With your consent, we have assumed (a) that the Warrants and the Resale Convertible Notes have been or will be duly authorized, executed and delivered by the parties thereto other than the Company, (b) that such securities constitute or will constitute legally valid and binding obligations of the parties thereto other than the Company, enforceable against each of them in accordance with their respective terms and (c) that the status of the Warrants and Resale Convertible Notes as legally valid and binding obligations of the parties will not be affected by any (i) breaches of, or defaults under, agreements or instruments, (ii) violations of statutes, rules, regulations or court or governmental orders or (iii) failures to obtain required consents, approvals or authorizations from, or to make required registrations, declarations or filings with, governmental authorities.

 

We express no opinion as to any matter other than as set forth herein, and no opinion may be inferred or implied herefrom. We assume no obligation to advise you of any changes in the foregoing subsequent to the date of this opinion.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption “Legal Matters” in the prospectus which forms a part of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

 

  Very truly yours,
   
  /s/ Nelson Mullins Riley & Scarborough LLP
   
  Nelson Mullins Riley & Scarborough LLP

 

 

 

 

Exhibit 23.1

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in this Registration Statement on Form S-3 of United Homes Group, Inc. for the registration of Class A Common Shares, Warrants and Senior Convertible Promissory Notes, of our report dated March 15, 2024, with respect to the consolidated financial statements of United Homes Group, Inc., included in its Annual Report on Form 10-K for the year ended December 31, 2023. We also consent to the reference to our firm under the caption “Experts” in this registration statement.

 

/s/ Forvis Mazars, LLP

Tysons, Virginia

June 20, 2024

 

 

 

 

Exhibit 107

Calculation of Filing Fee Table

 

FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

(Form Type)

 

United Homes Group, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered Securities

 

    Security
Type		   Security Class
Title		   Fee
Calculation
 or Carry
Forward Rule		   Amount
Registered (1)		   Proposed
Maximum
Offering Price
Per Share		     Maximum
Aggregate
Offering
Price		     Fee Rate     Amount of
Registration
Fee		  
Fees to Be Paid   Equity   Class A Common Stock, $0.0001 par value per share (2)   Other (3)   40,975,610   $ 6.67 (3)    $ 273,307,318.70       0.00014760     $ 40,340.16  
            Total Offering Amount     $ 273,307,318.70             $ 40,340.16  
          Total Fees Previously Paid                     $ -  
            Total Fee Offsets                     $ -  
            Net Fees Due                     $ 40,340.16  

 

Table 3: Combined Prospectuses

 

  Security
Type		   Security Class
Title		     Amount of
Securities
Previously
Registered (1)		       Maximum
Aggregate
Offering
Price of Securities
Previously Registered		       Form Type   File Number   Initial Effective
Date
  Equity   Primary Offering Class A Common Stock (4)(5)     11,591,664         -       Form S-1   333-271515   07/31/2023
  Equity   Secondary Offering Class A Common Stock (5)(6)     2,966,664         -       Form S-1   333-271515   07/31/2023
  Equity   Secondary Offering Warrants to purchase Class A Common Stock (5) (7)     2,966,664         -       Form S-1   333-271515   07/31/2023
  Equity   Secondary Offering of Class A Common Stock (5)(8)     421,100         -       Form S-1   333-271515   07/31/2023
  Debt Convertible into Equity   Secondary Offering Convertible Notes (9)(10)   $ 80,000,000       $ 80,000,000       Form S-1   333-271527   07/31/2023
  Equity   Secondary Offering Class A Common Stock (9)(11)     21,544,588         -       Form S-1   333-271527   07/31/2023

 

 

 

 

(1) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement covers an undetermined number of shares of Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), of United Homes Group, Inc. (f/k/a DiamondHead Holdings Corp.) (the “Company”) that may become issuable to prevent dilution from stock splits, stock dividends or similar transactions with respect to the shares registered hereunder.
(2) Consists of 40,975,610 shares of the Class A Common Stock, registered for sale by the selling stockholders named in this registration statement, comprised of (i) 3,847,183 shares of Class A common stock that are held by certain of the selling stockholders, (ii) 36,973,876 shares of Class A common stock that may be issued upon conversion of shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), of the Company held by certain of the selling stockholders, which shares of Class B Common Stock are convertible into shares of Class A Common Stock on a 1:1 basis, and (iii) 154,551 additional shares of Class A Common Stock that may be issuable in connection with the conversion of the Convertible Notes (as defined below) which were not included on Registration Statement II (as defined below).
(3) Pursuant to Rule 457(c) under the Securities Act, and solely for the purpose of calculating the registration fee, the proposed maximum offering price per share is $6.67, which is the average of the high and low prices for the registrant’s Class A Common Stock on Nasdaq Global Market on June 18, 2024, which date is within five business days prior to filing this registration statement.
(4) Consists of up to 11,591,664 shares of the Class A Common Stock, comprised of (i) up to 8,625,000 shares of Class A Common Stock that are issuable upon the exercise of the public warrants of the Company originally issued in the Company’s initial public offering, and (ii) up to 2,966,664 shares of Class A Common Stock that are issuable upon the exercise of the private warrants of the Company.
(5) No registration fee is payable in connection with the securities that were previously registered on the registrant’s registration statement on Form S-1 (File No. 333-271515), which was originally filed with the SEC on April 28, 2023 and declared effective by the SEC on July 31, 2023 (“Registration Statement I”) because such shares are being transferred from Registration Statement I to this registration statement pursuant to Rule 429 under the Securities Act. Pursuant to Rule 429(b) under the Securities Act, this registration statement, upon effectiveness, will constitute a post-effective amendment to Registration Statement I, which post-effective amendment will become effective concurrently with the effectiveness of this registration statement in accordance with Section 8(c) of the Securities Act.
(6) Consists of 2,966,664 shares of Class A Common Stock registered for sale by certain of the selling stockholders named in this registration statement, comprised of shares of Class A Common Stock that are issuable upon the exercise of the private warrants of the Company.
(7) Represents the resale of up to 2,966,664 private warrants of the Company.
(8) Consists of 421,100 shares of Class A Common Stock registered for resale by certain of the selling stockholders named in this registration statement.
(9) No registration fee is payable in connection with the securities that were previously registered on the registrant’s registration statement on Form S-1 (File No. 333-271527), which was originally filed with the SEC on April 28, 2023 and declared effective by the SEC on July 31, 2023 (“Registration Statement II”) because such shares are being transferred from Registration Statement II to this registration statement pursuant to Rule 429 under the Securities Act. Pursuant to Rule 429(b) under the Securities Act, this registration statement, upon effectiveness, will constitute a post-effective amendment to Registration Statement II, which post-effective amendment will become effective concurrently with the effectiveness of this registration statement in accordance with Section 8(c) of the Securities Act.
(10) Consists of up to $80,000,000 aggregate principal amount of Senior Convertible Promissory Notes due 2028 (the “Convertible Notes”).
(11) Consists of 21,544,588 shares of Class A Common Stock registered for sale by the selling stockholders named in this registration statement, comprised of (i) 20,800,000 shares of Class A Common Stock that may be issued in connection with the conversion of the Convertible Notes, and (ii) 744,588 shares of Class A Common Stock that are held by certain of the selling stockholders.
 

 

 

 

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