Purchase Agreement
On January 11, 2018, the Company entered into a Purchase Agreement (the Purchase Agreement) with Morgan Stanley & Co.
LLC, J.P. Morgan Securities LLC, and Goldman Sachs & Co. LLC, as representatives (the Representatives) of the purchasers named therein (collectively, the Initial Purchasers), relating to the Companys sale of
$230 million aggregate principal amount of its 0.375% Convertible Senior Notes due 2023 (the 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), and for initial resale by the Initial Purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from
registration based in part on representations made by the Initial Purchasers. To the extent that any shares of the Companys common stock (Common Stock) are issued upon conversion of the Notes, they will be issued in transactions
anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof. A maximum of 6,847,261 shares of common stock may be issued upon conversion of the Notes, subject to adjustment.
Indenture
The Notes were issued pursuant
to an Indenture, dated as of January 17, 2018 (the Indenture), between the Company and Wilmington Trust, National Association, as trustee. The Notes are senior, unsecured obligations of the Company, and interest is payable
semiannually in cash at a rate of 0.375% per annum on each January 15 and July 15, beginning on July 15, 2018. The Notes mature on January 15, 2023 unless redeemed, repurchased or converted in accordance with their terms
prior to such date.
The Indenture includes customary terms and covenants, including certain events of default after which the Notes may
be due and payable immediately. The following events are considered events of default, which may result in acceleration of the maturity of the Notes:
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1)
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default by the Company in any payment of interest on any of the Notes when due and payable, and such default continues for a period of 30 days;
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2)
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default by the Company in the payment of principal of any of the Notes when the same becomes due and payable at the maturity date, 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 the exercise of a holders conversion right, and such failure continues for three business days;
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4)
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failure by the Company to give a fundamental change notice or a notice of a specified corporate transaction at the time and in the manner provided in the Indenture;
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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 agreements under the Notes or the Indenture (other than a covenant or agreement in respect of which a default or breach is specifically addressed in Clauses
(1) through (5) above) and such breach continues for a period of 60 days after written notice of such failure is delivered to the Company by the trustee or by holders of 25% or more in aggregate principal amount of the Notes then outstanding;
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7)
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an event of default by the Company or any of its significant subsidiaries, as defined in Rule
1-02(w)
of Regulation
S-X
under 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 $25,000,000 (or its foreign currency equivalent) of the Company and/or any such
significant subsidiary, and such default
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a.
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results in such indebtedness becoming due and payable, or
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b.
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constitutes a failure to pay when due and payable (after the expiration of all applicable grace periods), at its stated maturity, upon required repurchase, acceleration or otherwise, the principal of any such
indebtedness, if such default or acceleration is not cured, waived or rescinded, as applicable; 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 occurs.
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The Notes are convertible at an initial conversion rate of 22.4685 shares of Common Stock per $1,000 principal amount of the Notes, which is
equal to an initial conversion price of approximately $44.51 per share of Common Stock subject to adjustment. Prior to the close of business on the business day immediately preceding October 15, 2022, such conversion is subject to the
satisfaction of certain conditions set forth below. On or after October 15, 2023, holders may convert all or a portion of their notes at any time prior to close of business on the second scheduled trading day immediately preceding
January 15, 2023. Upon conversion, holders will receive cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Companys election.
Holders of the Notes who convert their Notes in connection with a make-whole fundamental change (as defined in the Indenture) are, under
certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase all or a portion of their Notes at a
price equal to 100% of the principal amount of Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date.
Holders of the Notes may convert all or a portion of their Notes prior to the close of business on the business day immediately preceding
October 15, 2022, in multiples of $1,000 principal amount, only under the following circumstances:
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during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days
(whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price for the Notes on each
applicable trading day;
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during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day of that five day consecutive trading day period was less
than 98% of the product of the last reported sale price of Common Stock and the conversion rate of the Notes on each such trading day;
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after the Companys issuance of a notice of redemption and prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
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upon the occurrence of specified corporate events.
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A copy of the Indenture is attached hereto
as Exhibit 4.1 and is incorporated herein by reference. The description of the Notes contained in this Form
8-K
is qualified in its entirety by reference to the Indenture.
Capped Call Transactions
On
January 11, 2018, in connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (the Base Capped Call Transactions) with each of Morgan Stanley & Co. LLC, Goldman
Sachs & Co. LLC, Royal Bank of Canada and/or their respective affiliates (the Capped Call Counterparties). On January 16, 2018, in connection with the Initial Purchasers exercise of their option to purchase additional
Notes, the Company entered into privately negotiated additional capped call transactions (the Additional Capped Call Transactions, and together with the Base Capped Call Transactions, the Capped Call Transactions) with the
Capped Call Counterparties. The Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of Common Stock that initially underlie the Notes, including the Notes purchased pursuant to the option to
purchase additional Notes. The cap price of the Capped Call Transactions is initially $63.821 per share of Common Stock, representing a premium of 90% above the last reported sale price of $33.59 per share of Common Stock on January 11, 2018,
and is subject to certain adjustments under the terms of the Capped Call Transactions. The Capped Call Transactions are expected generally to reduce or offset potential dilution to holders of Common Stock upon conversion of the Notes and/or offset
the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price.
In connection with establishing their initial hedge of the Capped Call Transactions, the Capped Call Counterparties have advised the Company
that they and/or their respective affiliates expect to enter into various derivative transactions with respect to Common Stock and/or purchase Common Stock concurrently with, or shortly after, the pricing of the Notes. This activity could increase
(or reduce the size of any decrease in) the market price of Common Stock or the Notes concurrently with, or shortly after, the pricing of the Notes.
In addition, the Capped Call Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding
various derivatives with respect to Common Stock and/or purchasing or selling Common Stock in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes. This activity could decrease (or avoid an
increase) in the market price of Common Stock or the Notes, which could affect noteholders ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of the Notes, it could affect
the amount and value of the consideration that noteholders will receive upon conversion of such Notes.
The Capped Call Transactions are
separate transactions entered into by the Company with the Capped Call Counterparties, are not part of the terms of the Notes, and will not affect any holders rights under the Notes. Holders of the Notes will not have any rights with respect
to the Capped Call Transactions.
Forms of the Base Capped Call Transaction confirmation (the Base Capped Call Confirmations)
and the Additional Capped Call Transaction confirmation (the Additional Capped Call Confirmations) are attached hereto as Exhibits 99.1 and 99.2 and is incorporated herein by reference. The description of the Base Capped Call
Confirmations and the Additional Capped Call Confirmations contained in this Form 8-K is qualified in its entirety by reference to Exhibits 99.1 and 99.2.
On January 17, 2018, the Company issued a press release announcing the closing of its offering of the Notes. A copy of the press release
is attached as Exhibit 99.3.