Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The Notes were issued pursuant to an Indenture entered into on August 16, 2019 (the "Indenture"), between the Company and U.S. Bank National Association, as trustee (“Trustee”).
The Notes will mature on August 15, 2026, unless earlier converted, redeemed or repurchased. The Notes will bear interest from August 16, 2019 at a rate of 1.125% per year payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2020. The Notes are senior unsecured obligations of the Company.
The conversion rate for the Notes will initially be 12.4756 shares of our Class A common stock, par value $0.001 per share (the “Common Stock”), per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $80.16 per share of Common Stock. The initial conversion price of the Notes represents a premium of approximately 42.5% over the $56.25 per share public offering price in the concurrent Equity Offering (as defined below). The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.
Following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case may be. Holders may convert their Notes at their option at any time prior to the business day immediately preceding May 15, 2026 only upon the satisfaction of certain conditions and during certain periods. On or after May 15, 2026 until the close of business on the business day immediately preceding the maturity date, holders may convert their Notes at any time. Upon conversion, we will
pay or deliver, as the case may be, cash, shares of our Common Stock or a combination of cash and shares of our Common Stock, at our election.
We may redeem for cash all or any portion of the Notes, at our option, on or after August 21, 2023 if the last reported sale price of our 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 on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If the Company undergoes a fundamental change, holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date or, in certain circumstances, at a make-whole price.
The Indenture includes customary terms and covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable.
The descriptions of the Indenture and the Notes contained herein are qualified in their entirety by reference to the text of the Indenture and the Form of 1.125% Convertible Senior Notes due 2026, which are attached as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.