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Item 1.01.
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Entry into a Material Definitive Agreement.
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Purchase Agreement
On November 14, 2017, Quotient Technology Inc. (the “
Company
”) entered into a purchase agreement (the
“
Purchase Agreement
”) with Morgan Stanley & Co. LLC, as representative of the several initial purchasers named therein (collectively, the “
Initial Purchasers
”), to issue and sell $175 million
aggregate principal amount of 1.75% Convertible Senior Notes due 2022 (the “
Notes
”), in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the
“
Securities Act
”). The Notes were issued to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. In addition, the
Company granted the Initial Purchasers a 13-day option to purchase up to an additional $25 million aggregate principal amount of the Notes on the same terms and conditions.
The net proceeds from the sale of the Notes were approximately $169.5 million, after deducting the Initial Purchasers’ discount and the
estimated offering expenses payable by the Company. The Company intends to use the net proceeds of the offering for general corporate purposes, including working capital, capital expenditures, repurchases of the Company’s common stock
(“
Common Stock
”) pursuant to its existing stock repurchase program, potential acquisitions and strategic transactions.
The Purchase Agreement includes customary representations, warranties and covenants by the Company and customary closing conditions. Under the
terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act.
The description of the Purchase Agreement contained herein is qualified in its entirety by reference to the Purchase Agreement that is
attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Indenture
On November 17, 2017, the Company entered into an indenture relating to the issuance of the Notes (the
“
Indenture
”), by and between the Company and U.S. Bank National Association, as trustee (the “
Trustee
”). The Notes will bear interest at a rate of 1.75% per year, payable semi-annually in arrears
on June 1 and December 1 of each year, beginning on June 1, 2018. The Notes will mature on December 1, 2022, unless earlier repurchased, redeemed, or converted in accordance with their terms.
The initial Conversion Rate (as defined in the Indenture) is 57.6037 shares of Common Stock per $1,000 principal amount of Notes (which is
equivalent to an initial Conversion Price (as defined in the Indenture) of approximately $17.36 per share). The Conversion Rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and
unpaid interest. In addition, upon the occurrence of a Make-Whole Fundamental Change (as defined in the Indenture), the Company will, in certain circumstances, increase the Conversion Rate by a number of additional shares for a holder that elects to
convert its Notes in connection with such Make-Whole Fundamental Change.
Prior to the close of business on the business day immediately
preceding September 1, 2022, the Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter),
if the last reported sale price of the Company’s common stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding
calendar quarter is greater than or equal to 130% of the applicable Conversion Price on each applicable Trading Day; (2) during the five consecutive business day period after any five consecutive Trading Day period (the “measurement
period”) in which the Trading Price (as defined in the Indenture) per $1,000 principal amount of notes for each Trading Day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common
stock and the applicable Conversion Rate on each such Trading Day; or (3) upon the occurrence of specified corporate events. On or after September 1, 2022 until the close of business on the scheduled Trading Day immediately preceding the
maturity date, holders may convert their notes at any time. The Notes are convertible into shares of the Common Stock, cash or a combination of cash and shares of Common Stock, at the Company’s election.
The Company may redeem the Notes, at its option, on or after December 5, 2020, at a redemption price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest if the last reported sale price of the Company’s Common Stock has been at least 130% of the Conversion Price then in effect for at least 20 Trading
Days (whether or not consecutive) during any 30 consecutive Trading Day period ending within not more than three Trading Days preceding the date on which the Company provides written notice of
redemption.
Upon the occurrence of a Fundamental Change (as defined in the Indenture), holders may require the Company to repurchase all
or a portion of their Notes for cash at a 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 (as defined in the Indenture).
The Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any indebtedness that is expressly
subordinated in right of payment to the Notes. The Notes will rank equal in right with all of the Company’s existing and future liabilities that are not subordinated in right of payment to the Notes. The Notes will also be effectively junior in
right of payment to all of the Company’s existing and future secured indebtedness (to the extent of the value of the assets securing such indebtedness) and structurally junior to all indebtedness and other liabilities (including trade payables)
of the Company’s current or future subsidiaries.
The following events are considered “Events of Default” under the
Indenture, which may result in the acceleration of the maturity of the Notes:
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(1)
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the Company defaults in any payment of interest on any Note when due and payable and the default continues for a period of 30 days;
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(2)
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the Company defaults in the payment of principal of, or premium, if any, on any Note when due and payable at its stated maturity, upon optional redemption, upon any required repurchase, upon declaration of acceleration
or otherwise;
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(3)
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failure by the Company to comply with its obligation to convert the Notes in accordance with the Indenture upon exercise of a holder’s conversion right and such failure continues for a period of three business
days;
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(4)
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failure by the Company to give a Fundamental Change notice or notice of a Specified Corporate Transaction (as defined in the Indenture) when due with respect to the Notes;
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(5)
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failure by the Company to comply with its obligations under the Indenture with respect to consolidation, merger and sale of assets of the Company;
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(6)
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failure by the Company to comply with any of its other agreements contained in the Notes or Indenture for a period of 60 days after written notice from the Trustee or the holders of at least 25% in principal amount of
the Notes then outstanding has been received;
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(7)
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default by the Company or any of its Significant Subsidiaries (as defined in the Indenture) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be
secured or evidenced, any indebtedness for money borrowed in excess of $25 million (or its foreign currency equivalent at the time) in the aggregate of the Company and/or any such subsidiary (i) resulting in such indebtedness becoming or being
declared due and payable prior to maturity or (ii) constituting a failure to pay the principal of any such indebtedness when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and,
in the case of clauses (i) and (ii) such acceleration shall not, after the expiration of any applicable grace period, have been rescinded or annulled or such failure to pay or default shall not have been cured or waived, or such
indebtedness is not paid or discharged, as the case may be, within 30 calendar days after written notice to the Company by the Trustee or to the Company and the Trustee by holders of at least 25% in aggregate principal amount of Notes then
outstanding in accordance with this Indenture; or
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(8)
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certain events of bankruptcy, insolvency, or reorganization of the Company or any of its Significant Subsidiaries (as defined in the Indenture).
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If such an Event of Default occurs and is continuing (other than an Event of Default described in clause (8) above), the Trustee by
notice to the Company, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may declare 100% of the principal of and accrued and unpaid interest, if any, on all the Notes to be due and
payable. In the event that an Event of Default of a type described in clause (8) shall occur and be continuing, 100% of the principal or and accrued and unpaid interest on the Notes will automatically become due and payable. Upon such a
declaration of acceleration or automatic acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.
The summary of the foregoing transactions is qualified in its entirety by reference to the text
of the Indenture and the Form of 1.75% Convertible Senior Notes due 2022, which are filed as Exhibit 4.1 and 4.2, respectively, hereto and are incorporated herein by reference.
Certain Initial Purchasers under the Purchase Agreement or their affiliates, have engaged in, and may in the future engage in, other
commercial dealings with the Company or its affiliates in the ordinary course of business. They have received, or may in the future receive, customary fees and commissions for those transactions.