On April 23, 2020 (the “Closing Date”), the Company issued convertible senior notes due 2025 (the “Notes”) in an aggregate principal amount of $330 million in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933 (the “Base Notes”). The Company also granted the initial purchasers an option to purchase up to an additional $50 million aggregate principal amount of the Notes. The net proceeds from the offering of the Base Notes were approximately $321.8 million after deducting the initial purchasers’ discounts and commissions.

The Notes are governed by an indenture (the “Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The Notes bear interest at a rate of 2.25% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. The Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted.

The Notes are the senior, unsecured obligations of the Company and are equal in right of payment with the Company’s senior unsecured indebtedness, senior in right of payment to the Company’s indebtedness that is expressly subordinated to the notes, effectively subordinated to the Company’s senior secured indebtedness, to the extent of the value of the collateral securing that indebtedness, and structurally subordinated to all indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The initial conversion rate for the Notes will be 35.3773 shares of the Company’s common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $28.27 per share of the Company’s common stock, and is subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture. Upon conversion, the Company will pay or deliver, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. Upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time.

In addition, upon the occurrence of a “fundamental change” (as defined in the Indenture), holders of the Notes may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any.

The Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 5, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice, and (ii) the trading day immediately before the date we send such notice. In addition, calling any Note for redemption will constitute a “make-whole fundamental change” with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if such Note is converted after it is called for redemption. No sinking fund is provided for the Notes.

In connection with the Base Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Transaction”) with certain counterparties. The Capped Call Transactions are expected to reduce potential dilution to the Company’s common stock upon any conversion of Base Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Base Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is initially $44.34 per share. The cost of the Capped Call Transactions was approximately $43.9 million. The Company expects to use a portion of the net proceeds from the sale of the additional notes pursuant to the overallotment option to enter into additional capped call transactions.

On the Closing Date, the Company used a portion of the proceeds from the sale of the Base Notes to repay in full all amounts outstanding, and discharge all obligations in respect of, the Term Loan. In connection with the extinguishment of the Term Loan, the Company expects to recognize a charge of approximately $12 million in the second quarter of 2020.

The Company intends to use the remaining net proceeds from the sale of the Base Notes for working capital or other general corporate purposes, which may include capital expenditures, potential acquisitions and strategic transactions.

On April 29, 2020, the initial purchasers exercised, in full, their option to purchase up to an additional $50.0 million aggregate principal amount of the notes. The closing of the sale of additional notes is expected to occur on May 1, 2020. The Company estimates net proceeds from the exercise of the overallotment option of approximately $48.8 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions and the remaining net proceeds for working capital or other general corporate purposes, which may include capital expenditures, potential acquisitions and strategic transactions.