Notes payable are summarized as follows:



	December 31
	2014		2013
7.50% Convertible Notes, due 2016	$	55,481	$	55,500
7.50% Exchange Notes, due 2016	44,475		44,500
4.50% Convertible Senior Notes, due 2024 (a)	—		5,402
8.50% Senior Notes due 2019	200,000		—
Senior Secured Credit Facility	—		—
Total	$	299,956	$	105,402

(a) These Notes were tendered and repaid on April 1, 2014.

7.50% Senior Convertible Notes due 2016

On February 4, 2011, we completed an underwritten public offering for $100.0 million aggregate principal amount of our 7.50% Senior Convertible Notes due 2016 (the “7.50% Notes”). The 7.50% Notes mature on February 15, 2016 unless earlier converted, redeemed or repurchased. The 7.50% Notes are governed by the Indenture and the First Supplemental Indenture, each dated February 4, 2011 (collectively, the “First Supplemental Indenture”), between us and the trustee named therein. Interest on the 7.50% Notes is payable semi-annually in arrears in cash on February 15 and August 15 of each year. As of December 31, 2014, $55.5 million aggregate principal amount of the 7.50% Notes remain outstanding. The other $44.5 million of original principal balance was exchanged for other convertible notes as discussed below.

Conversion: Holders may convert the 7.50% Notes into shares of our common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of February 15, 2016. The 7.50% Notes are convertible at an initial conversion rate of 33.3333 shares of common stock per $1 principal amount of the 7.50% Notes (equivalent to an initial conversion price of approximately $30.00 per share). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances, including upon the occurrence of a “non-stock change of control” as such term is defined in the First Supplemental Indenture. Upon any conversion, subject to certain exceptions, holders will not receive any cash payment representing accrued and unpaid interest. Shares of our common stock, into which the 7.50% Notes are convertible, have been reserved for issuance.

Repurchase Right: Holders of the 7.50% Notes had the right to require us to repurchase the 7.50% Notes on February 15, 2014 or upon the occurrence of a “fundamental change” (as defined in the First Supplemental Indenture), in each case at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. Holders put $19 thousand of the 7.5% Notes to us on February 15, 2014.

Redemption Right: We may, at any time on or after February 15, 2014, at our option, redeem for cash all or any portion of the outstanding 7.50% Notes at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, but only if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the trading day before the date that we provide the notice of redemption to holders exceeds 130% of the conversion price in effect on each such trading day and certain other conditions described in the First Supplemental Indenture are met.

7.50% Senior Exchange Convertible Notes due 2016

In July 2012, we entered into exchange agreements under which we retired $44.5 million in aggregate principal amount of our 7.50% Notes, in exchange for the issuance of $44.5 million in aggregate principal of new 7.50% Senior Exchange Convertible Notes due 2016 (“7.50% Exchange Notes”). The 7.50% Exchange Notes mature on February 15, 2016 unless earlier converted, redeemed or repurchased. The 7.50% Exchange Notes are governed by the Indenture dated February 4, 2011 and the Second Supplemental Indenture dated July 25, 2012 between us and the trustee named therein (collectively, the “Second Supplemental Indenture”). Interest on the 7.50% Exchange Notes is payable semi-annually in arrears in cash on February 15 and August 15 of each year, commencing February 15, 2013. In conjunction with the issuance of the 7.50% Exchange Notes, we wrote off $1.1 million of deferred costs associated with the 7.50% Notes.

Conversion: The 7.50% Exchange Notes are convertible and have an initial conversion rate of 55.5555 shares of common stock per $1 principal amount of notes (equivalent to a conversion price of approximately $18.00 per share), subject to adjustment in certain events. We have the right, but not an obligation, to require holders to convert the 7.50% Exchange Notes in whole or in part if the closing price of our common stock equals or exceeds 130% of the conversion price then in effect for a specified period and certain other conditions are satisfied. Shares of our common stock, into which the 7.50% Exchange Notes are convertible, have been reserved for issuance.

Repurchase Right: Unlike the 7.50% Notes, the 7.50% Exchange Notes did not provide the holders the right to require us to repurchase the 7.50% Exchange Notes on February 15, 2014. However, holders of the 7.50% Exchange Notes have the right to require us to repurchase the 7.50% Exchange Notes upon the occurrence of a “fundamental change” (as defined in the Second Supplemental Indenture).

Redemption Right: We have the right to redeem the 7.50% Exchange Notes on or after February 15, 2015. Prior to that date, the 7.50% Exchange Notes are redeemable, on one occasion only, upon the occurrence of certain events and the satisfaction of certain conditions (as described in the Second Supplemental Indenture). In each case, the redemption price is equal to 100% of the principal amount, plus accrued and unpaid interest.

We have assessed the 7.50% Exchange Notes and concluded that the impact of any embedded derivative features are not material as of December 31, 2014, subject to further review over the life of the 7.50% Exchange Notes. As of December 31, 2014, $44.5 million aggregate principal amount of the 7.50% Exchange Notes remain outstanding. We were in compliance with all covenants of the 7.50% Notes and 7.50% Exchange Notes as of December 31, 2014.

8.50% Senior Notes due 2019

On June 30, 2014, we completed an underwritten offering for $200.0 million aggregate principal amount of our 8.50% Senior Notes due 2019 (the “8.50% Notes”). The 8.50% Notes mature on July 1, 2019 unless earlier converted, redeemed or repurchased. The 8.50% Notes are governed by the indenture dated June 30, 2014 between us, the subsidiary guarantors named therein, and the trustee named therein.

Interest: Interest on the 8.50% Notes is 8.50% per year, payable semi-annually in arrears in cash on January 1 and July 1 of each year, commencing January 1, 2015.

Optional redemption: The 8.50% Notes are redeemable at our option, in whole or in part, at any time on or after July 1, 2016, at certain redemption prices, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.


•	At any time prior to July 1, 2016, we may redeem up to 35% of the original principal amount of the 8.50% Notes with the proceeds of certain equity offerings at a redemption price of 108.50% of the principal amount of the 8.50% Notes, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.


•	At any time prior to July 1, 2016, we may also redeem some or all of the 8.50% Notes at a price equal to 100% of the principal amount of the notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.


•	On or after July 1, 2016, we may, at our option, redeem the 8.50% Notes, in whole or in part, at any time and from time to time, at the following redemption prices (expressed in percentages of the principal amount

thereof), plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date

falling prior to or on the redemption date), if redeemed during the 12-month period beginning on July 1 of each year indicated below:

Year Percentage

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106.375%

2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103.188%

2018 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%

Covenants: The indenture contains covenants that limit our and certain of our subsidiaries' ability to (i) pay dividends, or make other distributions or redeem or purchase our capital stock; (ii) prepay, redeem or repurchase certain debt; (iii) incur additional and guarantee indebtedness; (iv) issue certain preferred stock or similar equity securities; (v) make loans and investments; (vi) incur liens; (vii) sell assets; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting our subsidiaries' ability to pay dividends; (x) consolidate, merge or sell all or substantially all assets; and (xi) alter the business we conduct. These covenants are subject to certain exceptions and qualifications. We were in compliance with all covenants as of December 31, 2014.

If we experience specific kinds of changes in control, holders of the 8.50% Notes will be entitled to require us to purchase all or a portion of the 8.50% Notes at 101% of their principal amount, plus accrued and unpaid interest to but excluding the date of repurchase.

Exchange offer; registration rights: In connection with the issuance of the 8.50% Notes, we entered into an agreement with the initial purchasers obligating us to file a registration statement with the SEC within 360 days so that the initial purchasers can:


•	exchange the notes for registered notes having substantially the same terms as the 8.50% Notes and evidencing the same indebtedness as the 8.50% Notes, and


•	exchange the related 8.50% Note guarantees for registered guarantees having substantially the same terms as the original 8.50% Note guarantees.

Guarantors: Certain of our subsidiaries are guarantors of the 8.50% Notes. All of the subsidiary guarantors are 100% owned by us, and all of the guarantees are full, unconditional, and joint and several. We have no independent assets or operations, and our subsidiaries, other than the subsidiary guarantors, are minor.

We have assessed the 8.50% Notes and concluded that the impact of any embedded derivative features are not material as of December 31, 2014.

Senior Secured Credit Facility

On April 7, 2014, we entered into a $65.0 million senior secured credit facility with JPMorgan Chase Bank, N.A., as agent, a lender and a letter of credit issuer (the "Senior Secured Credit Facility"). The other original lenders and letter of credit issuers include Royal Bank of Canada and Credit Suisse AG. In August 2014, we increased the Senior Secured Credit Facility by $25.0 million with the addition of Citibank, N.A. as an additional lender. In December 2014, we increased the Senior Secured Credit Facility by $15.0 million with the addition of Deutsche Bank, A.G. as an additional lender.

The Senior Secured Credit Facility includes revolving credit and letter of credit facilities in an aggregate principal amount of up to$105.0 million, with an “accordion” feature that allows us, with the consent of the lenders, to increase the aggregate amount to $175.0 million. The Senior Secured Credit Facility also includes a swing line loan facility in an aggregate principal amount of up to $30.0 million. The maximum amount available under the Senior Secured Credit Facility is limited to 100% of cash maintained in a borrowing base account, to the extent it exceeds the interest reserve, escrowed deposits and funds payable to us following the sale of real property, plus the following, subject to certain limitations:



	•		85% of the appraised value of our real property that is under contract or under construction and is or is planned to be single-family residential housing units or model homes; plus



	•		65% of the appraised value of our finished lots and lots under development; plus



	•		50% of the appraised value of our entitled lands that are not finished lots or lots under development.

To be included in this borrowing base, the real property must be owned by us or one of our subsidiaries that guaranties the Senior Secured Credit Facility and it must be appraised, pledged as collateral and meet certain other criteria. At December 31, 2014, we had qualified assets in the amount of $82.4 million in the borrowing base and had no borrowings outstanding.

Interest will be payable on revolving credit borrowings at variable rates determined by the applicable LIBOR plus 3.25% or the prime rate plus 2.25%, at our election. We pay quarterly fees of 0.50% per annum on the unused portion of the Senior Secured Credit Facility to the lenders, 0.125% per annum on the aggregate undrawn amount of each letter of credit to the issuer of such letter of credit, and 3.25% per annum on the aggregate undrawn amount of all letters of credit to the lenders.

The Senior Secured Credit Facility expires in 2017. Upon expiration, all borrowings become due and payable. We may prepay the Senior Secured Credit Facility or reduce the commitments thereunder at our option, without any prepayment fee or penalty.

Certain of our subsidiaries are guarantors of the Senior Secured Credit Facility. All of the subsidiary guarantors are 100% owned by us and all of the guarantees are full, unconditional and joint and several. We have no independent assets or operations, and our subsidiaries other than the subsidiary guarantors are minor. The Senior Secured Credit Facility is secured by substantially all of our and our subsidiary guarantors’ assets. We have the option to add or remove guarantors from time to time, subject to certain limitations. The Senior Secured Credit Facility is also secured by all of the capital stock of the subsidiaries owned directly by us and our subsidiary guarantors.

The Senior Secured Credit Facility contains certain restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay cash dividends or make other distributions.

The Senior Secured Credit Facility also requires that we comply with the following financial covenants as of the end of each fiscal quarter beginning June 30, 2014:


•	our leverage ratio may not exceed 60%;


•	if our interest coverage ratio is less than 1.50 to 1.00, we must deposit to an interest reserve account an amount equal to the interest we have incurred on all indebtedness during the prior 12 months; and


•	our consolidated tangible net worth, excluding the tangible net worth of our subsidiaries that do not guaranty the Senior Secured Credit Facility, must be at least $228.9 million plus 50% of our cumulative consolidated net income since December 31, 2013 plus 50% of the net proceeds of any equity offerings.

We were in compliance with all financial covenants at December 31, 2014.

Maturities of notes payable at December 31, 2014 are as follows (in thousands):



	Total
2015	$	—
2016	99,956
2017	—
2018	—
2019	200,000
Thereafter	—
	$	299,956

We made interest payments of $7.6 million in 2014, $7.9 million in 2013, and $7.6 million in 2012.