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pay off outstanding indebtedness under its prior term loan with SVB and transaction fees associated with the Amendment, and
approximately $20 million was used as part of the acquisition of privately-held microDATA. The 2012 Term Loan was paid in full
with funds borrowed under the new Term Loan A Facility, as discussed above.
The Credit Agreement was amended on February 28, 2014. The Amendment modified certain financial covenants applicable to
2014 and 2015, and changed the availability of the Delayed Draw Term Loan Facility, so that $14.6 million of the Delayed Draw
Term Loan Facility is available until November 2014 to refinance the 4.5% Convertible Senior Notes, and the remaining $18.9 million
of Delayed Draw Term Loan Facility will be available to us from March 31, 2015 to April 30, 2015 subject to our meeting certain
financial covenants. Any amount of the Delayed Draw Term Loan Facility not drawn on April 30, 2015 will expire unused. The
Amendment also provides that the banks will hold at least $35 million of the Company’s cash and marketable securities until our
leverage ratio is below a specified level. No changes were made to the pricing of any of the loans or the amount we may borrow under
the existing $30 million Revolving Loan Facility.
7.75% Convertible Notes: On May 8, 2013, we completed privately-negotiated exchange agreements with note holders and
retired $50 million of our outstanding 4.5% Convertible Senior Notes due 2014 issued in 2009 (“2014 Notes”) in exchange for $50
million of new 7.75% Convertible Senior Notes due 2018 (“2018 Notes”). The 2018 Notes were issued pursuant to an indenture, dated
as of May 8, 2013 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the
“Trustee”). We offered the 2018 Notes to certain holders of the 2014 Notes in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended. The 2018 Notes bear interest at a rate of 7.75% per year, payable semiannually
in arrears in cash on June 30 and December 30 of each year, beginning on December 30, 2013. Holders may convert the 2018 Notes at
their option prior to June 30, 2018. The 2018 Notes have the same conversion rate as the 2014 Notes, which is 96.637 shares of
Class A common stock per one thousand dollars principal amount of 2018 Notes, equivalent to a conversion price of $10.348 per
share of Class A common stock. Shares of the Company’s Class A common stock into which the 2018 Notes are convertible have
been reserved for issuance by the Company. We may redeem some or all of the 2018 Notes at any time on or after June 30, 2014 at the
redemption prices set forth in the Indenture plus accrued and unpaid interest to the redemption date. In addition, subject to certain
exceptions, holders may require us to repurchase, for cash, all or part of their 2018 Notes upon a “fundamental change” (as defined in
the Indenture) at a price equal to the purchase prices set forth in the Indenture, plus accrued and unpaid interest to, but excluding, the
fundamental change purchase date. The Indenture contains customary terms and covenants, including that upon certain events of
default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2018
Notes then outstanding may declare the entire principal amount of all the 2018 Notes plus accrued interest, if any, to be immediately
due and payable.
4.5% Convertible Notes: In 2009, we sold $103.5 million aggregate principal amount of 4.5% Convertible Senior Notes due
November 2014. In the fourth quarter of 2012, we repurchased $10 million of the outstanding 2014 Notes, plus accrued and unpaid
interest and recorded a gain on the early retirement of $0.4 million. On May 8, 2013, we retired $50 million of the 4.5% Convertible
Senior Notes by exchanging them for $50 million of 2018 Notes. In the second half of 2013, we repurchased $28.9 million of the
outstanding 2014 Notes, plus accrued and unpaid interested and recorded a loss of $0.2 million. At December 31, 2013, the principal
amount outstanding of the 4.5% Convertible Senior Notes was $14.6 million. The 2014 Notes are not registered and were offered
under Rule 144A of the Securities Act of 1933. Concurrent with the issuance of the 2014 Notes, we entered into convertible note
hedge transactions and warrant transactions, also detailed below, that are expected to reduce the potential dilution associated with the
conversion of the 2014 Notes. Holders may convert the 2014 Notes at their option on any day prior to the close of business on the
second “scheduled trading day” (as defined in the Indenture) immediately preceding November 1, 2014. The conversion rate is
initially be 96.637 shares of Class A common stock per one thousand principal amount of 2014 Notes, equivalent to an initial
conversion price of approximately $10.35 per share of Class A common stock. The effect of the convertible note hedge and warrant
transactions, described below, is an increase in the effective conversion premium of the 2014 Notes to $12.74 per share.
The convertible note hedge and the warrant transactions are separate transactions, each entered into by the Company with the
counterparties, which are not part of the terms of the 2014 Notes and will not affect the holders’ rights under the 2014 Notes. The cost
of the convertible note hedge transactions to the Company was approximately $23.8 million, and has been accounted for as an equity
transaction in accordance with ASC 815-40, Contracts in Entity’s own Equity. The Company received proceeds of approximately $13
million related to the sale of the warrants, which has also been classified as equity as the warrants meet the classification criteria under
ASC 815-40-25, in which the warrants and the convertible note hedge transactions require settlements in shares and provide the
Company with the choice of a net cash or common shares settlement. As the convertible note hedge and warrants are indexed to our
common stock, we recognized them in permanent equity in Additional paid-in capital, and will not recognize subsequent changes in
fair value as long as the instruments remain classified as equity. As a result of the repurchase and exchange of $88.9 million of the
outstanding 2014 Notes, the convertible note hedge was adjusted to reflect the reduced amount of outstanding 2014 Notes. The
convertible note hedge transactions’ originally covering 10 million shares was adjusted to cover proportionally fewer shares of
Class A common stock. The warrants are not affected by the retirements of 2014 Notes.
Seller Notes: On July 6, 2012, we issued $14.3 million in promissory notes as part of the consideration paid for the acquisition
of microDATA bearing simple interest at 6%. The promissory notes are due in two installments: $7.5 million plus interest due
