Item 1.01.
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Entry into a Material Definitive Agreement.
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Indenture
On June 3, 2019,
InterDigital, Inc. (the Company) entered into an indenture (the Indenture), by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the Trustee). Pursuant to the Indenture, the
Company issued $400 million in aggregate principal amount of 2.00% Senior Convertible Notes due 2024 (the Notes). The Notes bear interest at a rate of 2.00% per year, payable semi-annually in arrears in cash on June 1 and
December 1 of each year. The Notes will mature on June 1, 2024, unless earlier converted or repurchased.
The Notes will be
convertible into cash, shares of the Companys common stock (Common Stock) or a combination thereof, at the Companys election, at an initial conversion rate of 12.3018 shares of Common Stock per $1,000 principal amount of
Notes (which is equivalent to an initial conversion price of approximately $81.29 per share). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances, including in connection with conversions made following
fundamental changes and under other circumstances as set forth in the Indenture.
Prior to 5:00 p.m., New York City time, on the business
day immediately preceding March 1, 2024, the Notes will be convertible only under the following circumstances: (1) on any date during any calendar quarter (and only during such calendar quarter) beginning after September 30, 2019 if
the closing sale price of the Common Stock was more than 130% of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the
last trading day of the immediately preceding calendar quarter; (2) if the Company distributes to all or substantially all holders of the Common Stock any rights, options or warrants (other than in connection with a stockholder rights plan
prior to separation of such rights from the shares of the Common Stock) entitling them to purchase, for a period of 45 calendar days or less from the issuance date for such distribution, shares of Common Stock at a price per share less than the
average closing sale price for the ten consecutive trading day period ending on, and including, the trading day immediately preceding the declaration date for such distribution; (3) if the Company distributes to all or substantially all holders
of the Common Stock any cash or other assets, debt securities or rights to purchase the Companys securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of the Common
Stock on the trading day immediately preceding the declaration date for such distribution; (4) if the Company engages in certain corporate transactions as described in the Indenture; (5) during a specified period if a fundamental change
(as defined in the Indenture) occurs; or (6) during the five consecutive business day period following any five consecutive trading day period in which the trading price for the Notes for each day during such five trading day period was less
than 98% of the closing sale price of the Common Stock multiplied by the applicable conversion rate on each such trading day. Commencing on March 1, 2024, the Notes will be convertible in multiples of $1,000 principal amount, at any time prior
to 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date of the Notes.
The Company
may not redeem the Notes prior to their maturity date.
If a fundamental change (as defined in the Indenture) occurs, holders may require
the Company to purchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase
date.
The Notes are the Companys senior unsecured obligations and rank equally in right of payment with any of the Companys
current and any future senior unsecured indebtedness, including its 1.50% senior convertible notes due 2020 (the 2020 notes). The Notes are effectively subordinated to all of the Companys future secured indebtedness to the extent
of the value of the related collateral, and the Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of the Companys subsidiaries.
The events of default, which may result in the acceleration of the maturity of the Notes, include, among other things, failure to pay the
principal on the Notes when due at maturity, failure to pay the fundamental change repurchase price payable when due, failure to pay interest on the Notes when due and the continuance of such default for a period of 30 days, failure by the Company
to comply with its obligations under the Notes or the Indenture for a period of 60 days, failure to pay when due any indebtedness for borrowed money of the Company or any significant subsidiary (as defined in Rule
1-02(w)
of Regulation
S-X)
in excess of $25 million, certain judgments and certain events of bankruptcy or insolvency involving the Company or any significant subsidiary.
If an event of default involving bankruptcy or insolvency occurs and is continuing with respect to the Company, the principal amount of
the Notes and accrued and unpaid interest on the outstanding Notes will be automatically due and payable. If any other event of default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Notes may declare the principal amount of the Notes and accrued and unpaid interest on the outstanding Notes to be due and payable.