Option Notes
On June 19, 2017, in accordance with that certain Purchase Agreement (the Purchase Agreement), dated as of May 23, 2017,
with Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC, as representatives (the Representatives) of the purchasers named therein (collectively, the Initial Purchasers), the Initial
Purchasers notified the Company of the partial exercise of their option to purchase additional 0% Convertible Senior Notes due 2022 of the Company (the Notes). On June 22, 2017, the Company issued an additional $32.5 million in
aggregate principal amount of Notes (the Option Notes) to the Initial Purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act). The Option Notes have
the same terms as, and are issued under the same indenture as, the $750 million aggregate principal amount of Notes the Company issued on May 30, 2017 that are described in the Companys Current Report on Form
8-K
filed on May 30, 2017.
Additional Convertible Note Hedge Transactions
In connection with the partial exercise by the Initial Purchasers of their option to purchase the Option Notes, on June 19, 2017, the
Company entered into additional convertible note hedge transactions with respect to its Common Stock (the Purchased Options) with each of Morgan Stanley & Co. International plc, JPMorgan Chase Bank, National Association, London
Branch, Goldman Sachs & Co. LLC and Citibank, N.A (collectively, the Counterparties). The Purchased Options cover, subject to anti-dilution adjustments substantially identical to those in the Option Notes, approximately
0.24 million shares of Common Stock in the aggregate and are exercisable upon conversion of the Option Notes. The Purchased Options have an initial strike price that corresponds to the initial conversion price of the Option Notes, subject to
anti-dilution adjustments substantially similar to those in the Option Notes. The Purchased Options will expire upon the maturity of the Option Notes, if not earlier exercised. The form of confirmation for the Purchased Options is attached hereto as
Exhibits 99.1 and is incorporated herein by reference. The Purchased Options are intended to reduce potential dilution to the Common Stock upon any conversion of the Option Notes and/or offset any cash payments the Company is required to make in
excess of the principal amount of converted Option Notes, as the case may be, in the event that the market value per share of the Common Stock, as measured under the Purchased Options, at the time of exercise is greater than the strike price of the
Purchased Options, which initially corresponds to the conversion price of the Option Notes. The Purchased Options are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Option Notes.
Holders of the Option Notes will not have any rights with respect to the Purchased Options.
The Company used approximately
$3.1 million of the net proceeds from the offering of the Option Notes to pay the cost of the Purchased Options (after such cost was partially offset by the proceeds to the Company of the Warrants (as defined below)).
Additional Warrant Transactions
Separately from the Purchased Options, on June 19, 2017, the Company entered into additional warrant transactions to sell to the
Counterparties warrants (the Warrants) to acquire, subject to anti-dilution adjustments, up to approximately 0.24 million shares of Common Stock in the aggregate at a strike price of $203.40 per share. The Company offered and sold
the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. Neither the Warrants nor the underlying shares of Common Stock issuable upon conversion of the
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Warrants have been registered under the Securities Act and neither may be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The
form of confirmation for the Warrants is attached hereto as Exhibit 99.2 and is incorporated herein by reference. If the market value per share of Common Stock, as measured under the Warrants, at the time of exercise exceeds the strike price of the
Warrants, the Warrants will have a dilutive effect on the Companys earnings per share. The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Option Notes. Holders of
the Option Notes will not have any rights with respect to the Warrants. The Warrants will expire in 2022.