Press release
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 1 5 June 2025 Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth) SAN FRANCISCO, California. Life360, Inc. (“ Life360” or the “ Company”) (NASDAQ: LIF, ASX: 360), recently announced its offering of US$320 million aggregate principal amount of 0.00% convertible senior notes due 2030 (the “Notes”) in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) ("Offer"). The Offer size represents the aggregate of both the previously announced, upsized offering of US$275 million, as well as the full exercise of the US$45 million option to purchase additional Notes granted by Life360 to the initial purchasers of the Notes. The Notes are expected to be issued on Friday, 6 June 2025. The Company gives this notice together with the attached offering memorandum (the “ Offering Memorandum”) to ASX as a notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth) (“Corporations Act”) as notionally inserted by ASIC Corporations (Sale Offers: Securities Issued on Conversion of Convertible Notes) Instrument 2016/82 (“ASIC Instrument 2016/82 ”) and ASIC Instrument 24-0838. The full terms of the Notes are set out in the attached Offering Memorandum. The Company confirms that: a) the Notes will be issued without disclosure under Part 6D.2 of the Corporations Act; b) this notice, together with the attached Offering Memorandum, comprises a notice under section 708A(12C)(e) of the Corporations Act in respect of the Notes, as notionally inserted by ASIC Instrument 2016/82 and ASIC Instrument 24-0838; and c) this notice complies with section 708A(12D) of the Corporations Act as notionally inserted by ASIC Instrument 2016/82 and ASIC Instrument 24-0838. No offer This notice does not constitute an offer of any Notes for issue or sale, or an invitation to subscribe for or purchase any Notes and is not intended to be used in connection with any such offer or invitation. Effect of the Offer on the Company The Notes will be debt obligations of the Company. The aggregate principal amount of the Notes to be issued is US$320 million. The effect of the issue on the Company will be to: • increase the total liabilities of the Company by US$320 million. Please refer to the “Capitalization” section of the Offering Memorandum which includes the Company's actual and adjusted cash and cash equivalents and its capitalisation as at 31 March 2025 assuming the Offer has occurred; and • if the Notes are converted into shares of common stock ( “Shares”), increase the number of Shares (and on any transmutation of those Shares to CHESS Depositary Interests ( “CDIs”), increase the number of CDIs) on issue at the time the Note converts to Shares in accordance For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 2 with the terms of the Note as further described in the “ Description of Notes ” section of the Offering Memorandum, with a corresponding decrease in the indebtedness of the Company by the aggregate face value of the Notes converted to Shares. Effect of the Offer on the Company's capital structure A table setting out the effect of the issue of the Notes on the capital structure of the Company is set out below. Number on issue immediately prior to issue of the Notes Number on issue immediately following issue of the Notes Number on issue on conversion of the Notes Shares1 76,853,272 76,853,272 80,805,304 Notes - US$320 million - Options 4,889,833 4,889,833 4,889,833 RSUs 5,824,133 5,824,133 5,824,133 Warrants 7,761 7,761 7,761 1. Share:CDI ratio is 1:3. Rights and liabilities attaching to Notes, Shares and CDIs The rights and liabilities attaching to the Notes are set out in the “ Description of Notes” section of the Offering Memorandum. A summary of the rights and liabilities attaching to Shares is contained in the “ Description of Capital Stock” section of the Offering Memorandum. The Shares are listed and tradeable on Nasdaq Global Select Market under the symbol “LIF.” The Shares issued on conversion of the Notes may be transmuted to CDIs which are quoted and tradable on the Australian Securities Exchange ("ASX") under the symbol "360" . A summary of the rights and liabilities attaching to the CDIs as at the date of this Cleansing Notice are set out in the Schedule to this notice. Rights and liabilities attaching to Notes, Shares and CDIs may also arise under the Company’s Bylaws and Certificate of Incorporation and other applicable laws and regulations. Compliance with disclosure obligations The Company is subject to certain regulatory disclosure obligations, including: • the Company is subject to regulatory reporting and disclosure obligations of the Nasdaq Listing Rules; and • the Company is subject to section 610CK of the Corporations Act which requires the Company to lodge with ASIC every calendar year a copy of its most recent balance sheet, cash flow statement and profit and loss statement, for its last financial year. For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 3 Copies of documents lodged with ASIC in relation to the Company are available to the public and may be purchased by calling the ASIC Customer Contact Centre on +61 1300 300 630, or via the ASIC Connect website and can be obtained from, or inspected at, an ASIC office. Certain of these documents can also be obtained from www.asx.com.au, www.sec.gov and the Company’s website https://investors.life360.com, together with other market announcements. In addition, a copy of the following documents may be obtained free of charge by any person upon their request: • the most recent balance sheet, cash flow statement and profit and loss statement lodged by the Company with ASIC under section 601CK of the Corporations Act for the financial year ended 31 December 2024; and • any notices given by the Company in accordance with its obligations under 1.15.2 of the ASX Listing Rules, as in force on 23 October 2024, after the lodgement of the most recent balance sheet, cash flow statement and profit and loss statement lodged by the Company with ASIC under section 601CK of the Corporations Act and before the lodgement of this notice with ASIC. Those announcements are recorded below. Date Announcement 4 June 2025 Convertible Notes Offering Investor Call 3 June 2025 Convertible Notes Offering Pricing 3 June 2025 SEC Forms 4 3 June 2024 SEC Form 4 3 June 2025 Convertible Notes Offering Launch 30 May 2025 SEC Forms 4 30 May 2025 AGM Results of Meeting 29 May 2025 SEC Form 4 14 May 2025 SEC Forms 4 13 May 2025 SEC Form 10-Q 13 May 2025 Q1'25 Investor Presentation 13 May 2025 Q1'25 Media Release 7 May 2025 Statement of CDIs on issue - 360 6 May 2025 SEC Form 4 30 April 2025 Additional Proxy Material For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 4 Date Announcement 29 April 2025 SEC Forms 4 23 April 2025 Becoming a substantial holder 22 April 2025 SEC Form 10-K/A 17 April 2025 SEC Form 4 17 April 2025 2024 Annual Report to Security Holders 17 April 2025 Additional Proxy Material 17 April 2025 Proxy Statement - Notice of Annual Meeting 16 April 2025 SEC Form 4 16 April 2025 SEC Form 4 15 April 2025 Investor Conference Call Details - Q1'25 Results 14 April 2025 SEC Forms 4 7 April 2025 Statement of CDIs on issue - 360 4 April 2025 SEC Form 4 1 April 2025 SEC Forms 4 1 April 2025 SEC Form 4 28 March 2025 Schedule 13G/A 28 March 2025 SEC Form 4 27 March 2025 SEC Forms 4 18 March 2025 SEC Form 4 14 March 2025 SEC Form 4 13 March 2025 SEC Form 4 13 March 2025 SEC Forms 4 12 March 2025 SEC Forms 4 12 March 2025 SEC Form 4 11 March 2025 SEC Forms 4 For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 5 Date Announcement 7 March 2025 S&P DJI Announces March 2025 Quarterly Rebalance 7 March 2025 SEC Form 4 7 March 2025 Statement of CDIs on issue - 360 5 March 2025 SEC Form 4 28 February 2025 SEC Form 4 28 February 2025 SEC Form 10-K All written requests for copies of the above documents should be addressed to the Company at the address set out in the directory at the end of the Offering Memorandum. These documents, and all other regular reporting and disclosure documents of the Company, are also available electronically on the websites of the ASX at www.asx.com.au, the SEC at www.sec.gov and the Company at https://investors.life360.com. Excluded information Other than as set out above or in this paragraph, as at the date of this notice, the Company advises that there is no information which the Company has excluded from any of its continuous disclosure notices given in accordance with the Rule 5250(b)(1) of the Nasdaq Listing Rules as in force on 23 October 2024 which would be reasonable for investors and their professional advisors to require for the purpose of making an informed assessment of: • the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; and • the rights and liabilities attaching to the Notes, Shares and CDIs, and which it would be reasonable for investors and their professional advisers to expect to find in this notice. DISCLAIMER THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO BUY, OR SOLICITATION OF AN OFFER TO SELL, ANY SECURITIES AND NO SUCH OFFER, SOLICITATION, PURCHASE OR SALE SHALL BE MADE IN THE UNITED STATES OR ANY JURISDICTION WHERE SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL. THE SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NO PUBLIC OFFERING OF ANY SECURITIES WILL BE MADE IN THE UNITED STATES. For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 6 Authorization Chris Hulls, Director, Co-Founder and Chief Executive Officer of Life360 authorized this announcement being given to ASX. About Life360 Life360, a family connection and safety company, keeps people close to the ones they love. The category-leading mobile app and Tile tracking devices empower members to stay connected to the people, pets, and things they care about most, with a range of services, including location sharing, safe driver reports, and crash detection with emergency dispatch. Life360 delivers peace of mind and enhances everyday family life in all the moments that matter, big and small. Contacts For U.S. investor inquiries: For U.S. media inquiries: Raymond (RJ) Jones Lynnette Bruno rjones@life360.com press@life360.com For Australian investor inquiries: For Australian media inquiries: Jolanta Masojada, +61 417 261 367 Giles Rafferty, +61 481 467 903 jmasojada@life360.com grafferty@firstadvisers.com.au Forward-looking statements This announcement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Life360 intends such forward -looking statements to be covered by the safe harbor provisions for forward -looking statements contained in Section 21E of the Securities Exchange Act of 1934, as amended. These forward -looking statements include, but are not limited to, statements regarding the completion of the offering, the initial purchasers’ option to purchase additional notes, the expected amount and intended use of the net proceeds and the effects of entering into the capped call transactions. The words “anticipate”, “believe”, “expect”, “potential”, “project”, “predict”, “will”, “forecast”, “estimate”, “likely”, “intend”, “outlook”, “should”, “could”, “may”, “target”, “plan” , variations of these terms or the negative of these terms and other similar expressions can generally be used to identify forward -looking statements. Investors and prospective investors are cautioned not to place undue reliance on these forward -looking statements as they involve inherent risk and uncertainty (bot h general and specific) and should note that they are provided as a general guide only and should not be relied on as an indication or guarantee of future performance. There is a risk that such predictions, forecasts, projections and other forward-looking statements will not be achieved. Subject to any continuing obligations under applicable law, Life360 does not undertake any obligation to publicly release the result of any revisions to these forward -looking statements to reflect events or circumstances after the date of this announcement, to reflect any change in expectations in relation to any forward -looking statements or any change in events, conditions or circumstances on which any such statements are based. Although Life360 believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, Life360 can give no assurance that such expectations and assumptions will prove to be correct and, actual results may vary in a materially positive or negative manner. Forward -looking statements are subject to known and unknown risks, uncertainty, assumptions and contingencies, many of which are outside Life360’s control, and are based on estimates and ass umptions that are subject to change and may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements. Factors that could cause actual results to differ materially f rom those implied by the forward-looking statements include market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Life360’s business, including those described in greater detail under the heading “Risk Factors” in Life360’s Australian Securities Exchange (“ ASX”) and United States Securities and Exchange Commission (“ SEC”) filings, including its Annual Report on Form 10-K filed with the SEC on February 27, 2025, Quarterly Reports on Form 10-Q, and other reports filed with the SEC. To the maximum extent permitted by law, responsibility for the accuracy or completeness of any forward-looking statements whether as a result of new information, future events or results or otherwise is disclaimed. This announcement should not be relied upon as a recommendation or forecast by Life360. Life360 may not consummate the offering described in this announcement and, if the offering is consummated, cannot provide any assurances regarding its ability to effectively apply the net proceeds as described above. Nothing contained in this document nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Life360 For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 7 Schedule – Terms of CDIs Voting rights If holders of CDIs wish to attend and vote at the Company’s general meeting, they will be able to do so. Under the ASX Listing Rules and the ASX Settlement Operating Rules, the Company as an issuer of CDIs must allow CDI holders to attend any meeting of the holders of Shares unless relevant U.S. law at the time of the meeting prevents CDI holders from attending those meetings. In order to vote at such meetings, CDI holders have the following options: • instructing CHESS Depositary Nominees Pty Limited ("CDN"), as the legal owner, to vote the Shares underlying their CDIs in a particular manner. A voting instruction form will be sent to CDI holders with the notice of meeting or proxy statement for the meeting and this must be completed and returned to the Company's Share Registry prior to the meeting; • informing the Company that they wish to nominate themselves or another person to be appointed as CDN's proxy with respect to their Shares underlying the CDIs for the purposes of attending and voting at the general meeting; or • converting their CDIs into a holding of Shares and voting these at the meeting (however, if thereafter the former CDI holder wishes to sell their investment on ASX it would be necessary to convert the Shares back to CDIs). In order to vote in person, the conversion must be completed prior to the record date for the meeting. As holders of CDIs will not appear on the Company's share register as the legal holders of the Shares, they will not be entitled to vote at Shareholder meetings unless one of the above steps is undertaken. As each CDI represents one -third of a Share, a CDI holder will be entitled to one vote for every three CDIs they hold. CDI voting instruction forms and details of these alternatives will be included in each notice of meeting sent to CDI holders by the Company. These voting rights exist only under the ASX Settlement Operating Rules, rather than the United States Securities Exchange Act of 1934 ("US Exchange Act") or the Delaware General Corporation Law ("DGCL"). Since CDN is the legal holder of applicable Shares, the holders of CDIs do not have any directly enforceable rights under the Company's Bylaws or Certificate of Incorporation. Dividends Any Shares issued on conversion of the Notes and that are subsequently transmuted to CDIs, participate in full for all dividends after the date of conversion only. Despite legal title to the Shares being vested in CDN, the ASX Settlement Operating Rules provide that CDI holders are to receive all economic benefits and other entitlements in relation to the underlying Shares, these include dividends and other entitlements which attach to the underlying Shares. These rights exist only under the ASX Settlement Operating Rules (which have the force of law by virtue of the Corporations Act), rather than under the US Exchange Act or the DGCL. Whilst the Company does not anticipate declaring any dividends in the foreseeable future, should it do so in the longer term, the Company will declare any dividends in USD as that is its main functional currency. In that event, the Company will pay any div idend in AUD or USD depending on the country of residence of the CDI holder. If the CDI holder in Australia wishes to receive For personal use only
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Life360, Inc. | ARBN 629 412 942 | 1900 South Norfolk St, Suite 310 San Mateo, CA 94403 | investors.life360.com 8 dividends in USD, they must complete an appropriate form and return it to the Company's Share Registry, no later than the close of business on the dividend record date. Rights on winding up In the event of the Company's liquidation, dissolution or winding up, a CDI holder will be entitled to the same economic benefit on their CDIs as holders of Shares. These rights exist only under the ASX Settlement Operating Rules, rather than under the US Exchange Act or the DGCL. Transfer of CDIs CDI holders who wish to trade their CDIs will be transferring the beneficial interest in the Shares rather than the legal title. The transfer will be settled electronically by delivery of the relevant CDI holdings through CHESS. In other respects, trading in CDIs is essentially the same as trading in other CHESS approved securities, such as shares in an Australian Company. CDI:Share ratio Three CDIs will represent one Share. Corporate Action Entitlements CDI holders receive all direct economic and other entitlements in relation to the underlying Shares. These include entitlements to participate in rights issues, bonus issues and capital reductions. These rights exist only under the ASX Settlement Operating Rules, rather than under the US Exchange Act or the DGCL. It is possible that marginal differences may exist between the resulting entitlement of a CDI holder and the entitlements that would have accrued if a CDI holder held their holding directly as Shares. As the ratio of CDIs to Shares is not one -to-one and an y entitlements will be determined on the basis of Shares rather than CDIs, a CDI holder may not always benefit to the same extent, for example, from the rounding up of fractional entitlements. The Company is required by the ASX Settlement Operating Rules to minimise such differences where legally permissible. Takeover Rights If a takeover bid or similar transaction is made in relation to the Shares of which CDN is the holder of legal title, under the ASX Settlement Operating Rules, CDN must not accept the offer made under the takeover bid unless acceptance of the relevant offer is authorised by the relevant CDI holder. CDN must ensure that the offeror processes the takeover acceptance of a CDI holder if such CDI holder instructs CDN to do so. These rights exist only under the ASX Settlement Operating Rules, rather than under the US Exchange Act or the DGCL. Notices and Announcements CDI holders are entitled to receive all notices and company announcements (such as annual reports) that shareholders are entitled to receive from the Company. This entitlement exists in the ASX Settlement Operating Rules, rather than under the US Exchange Act or the DGCL. For personal use only
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OFFERING MEMORANDUM Strictly Confidential $275,000,000 0.00% Convertible Senior Notes due 2030 ───────── We are offering $275,000,000 aggregate principal amount of our 0.00% convertible senior notes due 2030. In addition, we have granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional $45,000,000 aggregate principal amount of notes. MATURITY; NO REGULAR INTEREST The notes will not bear regular interest and the principal amount of the notes will not accrete. Special interest and additional interest will accrue on the notes in the circumstances and at the rates described in this offering memorandum. The notes will mature on June 1, 2030, unless earlier converted or redeemed or repurchased by us. CONVERSION Noteholders may convert their notes at their option only in the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter) commencing after the fiscal quarter ending on September 30, 2025, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in this offering memorandum; (4) if we call such notes for redemption; and (5) at any time from, and including, March 1, 2030 until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash and, if applicable, shares of our common stock, based on the applicable conversion rate(s). The initial conversion rate is 12.3501 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $80.97 per share, and is subject to adjustment as described in this offering memorandum. If a “make-whole fundamental change” (as defined in this offering memorandum) occurs, then we will in certain circumstances increase the conversion rate for a specified period of time. REDEMPTION AND REPURCHASE The notes will be redeemable, in whole or in part (subject to certain limitations described in this offering memorandum), at our option at any time, and from time to time, on or after June 5, 2028 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 special interest or additional interest, if any, to, but excluding, the redemption date, but only if (i) the notes are “freely tradable” (as defined in this offering memorandum) as of the date we send the related redemption notice and all accrued and unpaid additional interest, if any, has been paid in full as of the first interest payment date occurring on or before the date we send such notice; and (ii) the last reported sale price per share of our common stock exceeds 130% of the conversion price on (1) 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 such redemption notice; and (2) 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 it is converted after it is called for redemption. If a “fundamental change” (as defined in this offering memorandum) occurs, then, except as described in this offering memorandum, noteholders may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest or additional interest, if any. RANKING The notes will be our senior, unsecured obligations and will be equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the notes and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness. The notes will be structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. LISTING; COMMON STOCK No public market currently exists for the notes, and we do not intend to apply to list the notes on any securities exchange or for quotation on any inter-dealer quotation system. Our common stock is listed on the Nasdaq Global Select Market under the symbol “LIF.” On June 2, 2025, the last reported sale price of our common stock was $61.11 per share. TRANSFER RESTRICTIONS We have not registered the offer and sale of the notes and the shares of our common stock, if any, issuable upon conversion of the notes under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction, and we are offering the notes only to qualified institutional buyers as defined in Rule 144A under the Securities Act. We do not intend to file a registration statement for the resale of the notes or the shares of our common stock, if any, issuable upon conversion of the notes. Accordingly, you may resell your notes and shares of our common stock, if any, issuable upon conversion of the notes only in transactions that are exempt from registration under, or not subject to, the Securities Act and the applicable securities laws of any other jurisdiction. See “Transfer Restrictions.” OFFERING PRICE: 100% of principal amount An investment in the notes involves risks. See “Risk Factors” beginning on page 10. Neither the Securities and Exchange Commission nor any state or foreign securities commission or regulatory authority has approved or disapproved of the notes or the shares of our common stock, if any, issuable upon conversion of the notes or passed upon the adequacy or accuracy of this offering memorandum. Any representation to the contrary is a criminal offense. We expect to deliver the notes in book-entry form through the facilities of The Depository Trust Company on or about June 5, 2025. ───────── Book-Running Managers Goldman Sachs & Co. LLC UBS Investment Bank Evercore ISI Co-Managers Canaccord Genuity Citizens Capital Markets Stifel Loop Capital Markets Financial Advisor to Life360, Inc. J. Wood Capital Advisors ───────── Offering Memorandum dated June 2, 2025. For personal use only
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- i - TABLE OF CONTENTS Offering Memorandum Summary............................................................................................. 1 Risk Factors .............................................................................................................................. 10 Cautionary Note Regarding Forward-Looking Statements ...................................................... 22 Use of Proceeds......................................................................................................................... 23 Capitalization ............................................................................................................................ 24 Dividend Policy ........................................................................................................................ 26 Description of Notes ................................................................................................................. 27 Description of the Concurrent Capped Call Transactions ........................................................ 77 Description of Capital Stock ..................................................................................................... 78 Material U.S. Federal Income Tax Considerations ................................................................... 82 Plan of Distribution ................................................................................................................... 93 Transfer Restrictions ................................................................................................................. 104 Where You Can Find Additional Information .......................................................................... 106 Incorporation of Certain Documents by Reference .................................................................. 106 Legal Matters ............................................................................................................................ 108 Independent Registered Accounting Firm ................................................................................ 108 ───────── In deciding whether to purchase the notes, you should rely only on the information contained or incorporated by reference in this offering memorandum or any related pricing term sheet. Neither we nor any of the initial purchasers has authorized anyone to provide you with additional or different information. We and the initial purchasers take no responsibility for, and can provide no assurance as to the reliability of, any information that others may give to you. By purchasing the notes, you will be deemed to have made acknowledgements, representations, warranties and agreements set forth under the sections titled “Notice to Investors” and “Transfer Restrictions” in this offering memorandum. We and the initial purchasers are offering to sell the notes only in places where offers and sales are permitted. You should not assume that the information included or incorporated by reference in this offering memorandum is accurate as of any date other than the respective dates of the documents in which the information is contained. Our business, financial condition, results of operations and prospects could have changed since those dates. You should not consider any information included or incorporated by reference in this offering memorandum to be legal, tax or investment advice. You should consult your own counsel, accountant and other advisors for legal, tax, business, financial and related advice regarding any purchase of the notes. Neither we nor any of the initial purchasers makes any representation regarding the legality of an investment in the notes by any person under applicable investment or similar laws. This offering memorandum does not constitute an offer to sell or the solicitation of an offer to purchase any notes in any jurisdiction or to any person where the offer or solicitation is not permitted. For personal use only
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- 1 - OFFERING MEMORANDUM SUMMARY This summary highlights selected information contained or incorporated by reference in this offering memorandum. This summary may not contain all of the information that may be important to you and is qualified in its entirety by the more detailed information appearing elsewhere or incorporated by reference in this offering memorandum, including our financial statements and related notes thereto included in the our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (our “Annual Report”) and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 12, 2025 (our “Quarterly Report”). You should read the entire offering memorandum and the information incorporated by reference in this offering memorandum before making an investment decision. You should pay special attention to the “Risk Factors” section of this offering memorandum and the risk factors included in our Annual Report and Quarterly Report, which are incorporated by reference in this offering memorandum, to determine whether an investment in the notes and the underlying common stock is appropriate for you. Except as otherwise indicated and unless the context otherwise requires, we are referring to Life360, Inc. together with its subsidiaries when we use the terms “Life360,” the “Company,” “we,” “our” or “us.” When using the term “products,” we are generally referring to both our subscription services and term license software. Overview Life360 is a leading technology platform connecting millions of people throughout the world to the people, pets and things they care about most. We have created a new category at the intersection of family, technology, and safety to help keep families connected and safe. Our core offering, the Life360 mobile application, includes features like communications, driving safety, digital safety and location sharing. Beyond the everyday, Life360 also provides much-needed protection and saves lives, which is crucial for families in emergency situations such as natural disasters, vehicle collisions, physical property theft, and digital identity theft. The Life360 mobile application operates under a “freemium” model where its core offering is available to members at no charge, with additional membership subscription options that are available but not required. In addition to the Life360 mobile application, we also offer hardware tracking devices through the sale of Tile, Inc. (“Tile”) and Jio, Inc. (“Jiobit”) products to keep members close to the people, pets and things they care about most. Our suite of product and service offerings, including the Life360 and Tile mobile applications, and related third-party services, is system and platform-agnostic, allowing our products and services to work seamlessly for our members, regardless of the different devices they use. As of December 31, 2024, we had approximately 79.6 million Monthly Active Users (“MAUs”), and 2.3 million global Paying Circles on the Life360 Platform, as described below, representing a year-over-year increase of 30% and 25%, respectively. We define a Paying Circle as a group of Life360 members with a paying subscription who have been billed as of the end of period. Our revenue is primarily generated from the sale of subscriptions and hardware tracking devices used to access our services across our two major brands, Life360 and Tile. In addition, a portion For personal use only
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- 2 - of our revenue for the years ended December 31, 2024, 2023, and 2022 was generated indirectly from the sale of aggregated data (non-personally identifiable information) for the purposes of data insights from our member base to our partners and from the sale of third-party products and services, including through the placement of ads within our platform. Our Products Life360 Platform We currently offer four key product features that make up the Life360 Platform: (i) location coordination and safety, (ii) driving safety, (iii) digital safety, and (iv) emergency assistance. Each of these features keeps members connected to the important people in their lives by organizing them into groups called “Circles”. A member selects who to invite to their Circle and what information a Circle, or any individual member within that Circle, receives. Location coordination and safety features include real-time location, location history, and smart notifications such as location-specific alerts, driving alerts, and crime reports. Driving safety features include crash detection, roadside assistance, family driving summaries, and individual driver reports. Digital safety features include data breach alerts, identity theft protection, stolen funds reimbursement, and credit monitoring. Emergency assistance features include SOS with emergency dispatch, disaster response, medical assistance, and travel support. The Life360 mobile application operates under a “freemium” model where its core offering is available to members at no charge, with paid membership subscription options that are available but not required. Paid subscription options offer members a comprehensive suite of premium safety services. We expect that, from time to time, the prices of our membership plans in each country may change and that we may implement other plan and price variations. Hardware Products Our hardware products under the Tile brand seamlessly integrate with the Life360 Platform. The Tile Bluetooth® network leverages the installed base of Life360 members to scan for locations of devices, generating even higher confidence that we can locate lost devices of Tile customers. Tile devices are sold through online and brick and mortar retail channels as well as directly via Tile.com, and are available, in various shapes, sizes, and price points for different use cases. The Tile mobile application offers a free service as well as two paid subscription options: Premium and Premium Protect, which offer additional services such as warranties and item reimbursement. The Jiobit product line offers wearable location devices for young children, pets, and seniors. Customers purchase a Global Positioning System (“GPS”) enabled device and a monthly subscription to access location tracking services. Our Technology Platform To help families stay connected and safe, we have developed a scalable mobile-first technology platform that protects our members’ data and ensures operational integrity, security and performance. Highlights of our technology platform include a robust location engine design, scalable and modern technology infrastructure, and seamless third-party integration. For personal use only
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- 3 - We have designed an end-to-end technology location solution that allows us to deliver real-time location-based experiences and includes functionality such as storage, processing and communication of events, locations, drives, maps, places, networking, and visualization of device characteristics for people, pets and things. The Tile finding network has been integrated into the Life360 Platform. This integration allows members and Paying Circles to keep track of their things and connect with each other through the Life360 Platform. Through our strategic partnership with Hubble, we expect to expand our location tracking capabilities. We utilize third-party services for our backend platform and infrastructure to connect to our apps and the hardware devices running them. Using these services grants us access to a highly distributed, scalable, reliable, and secure architecture for global delivery of our mission critical services with potential to extend features and functionality-from dispatching tow trucks for roadside assistance to connecting calls for 24/7 SOS help. Corporate Information We were incorporated in Delaware in 2007 under the name of LReady, Inc. and subsequently changed our name to Life360, Inc. Our principal executive offices are located at 1900 South Norfolk Street, Suite 310, San Mateo, California 94403. Our telephone number is (415) 484-5244. Our website address is www.life360.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this offering memorandum, and you should not consider information on our website to be part of this offering memorandum. We have included our website address as an inactive textual reference only. The Life360 logo, and other trademarks, trade names or service marks of Life360, Inc. appearing in this offering memorandum are the property of Life360, Inc. All other trademarks, trade names and service marks appearing in this offering memorandum are the property of their respective owners. For personal use only
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- 4 - THE OFFERING The summary below describes the principal terms of the notes. Certain of the terms of the notes described below are subject to important limitations and exceptions that are described in more detail under the captions “Description of Notes” and “Transfer Restrictions.” As used in this section, “we,” “our” and “us” refer to Life360, Inc. and not to its subsidiaries. Issuer ......................................... Life360, Inc. Notes ......................................... $275,000,000 aggregate principal amount of 0.00% convertible senior notes due 2030 (or $320,000,000 aggregate principal amount if the initial purchasers exercise in full their option to purchase additional notes). Settlement Date ......................... June 5, 2025 (the “settlement date”), which is the second business day after the initial trade date for the notes (this settlement cycle being referred to as “T+2”). Under Rule 15c6- 1 under the Exchange Act, trades in the secondary market generally must settle in one business day, unless the parties to the trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes before the business day before the settlement date must, because the notes initially will settle T+2, specify an alternate settlement cycle at the time of such trade to prevent a failed settlement. Those purchasers should consult their advisors. Ranking ..................................... The notes will be our senior, unsecured obligations and will be: equal in right of payment with our existing and future senior, unsecured indebtedness; senior in right of payment to our existing and future indebtedness that is expressly subordinated to the notes; effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. As of March 31, 2025, we had no secured indebtedness, and our subsidiaries had no indebtedness. Maturity..................................... June 1, 2030, unless earlier repurchased, redeemed or converted. For personal use only
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- 5 - No Regular Interest; Special Interest and Additional Interest.................................... The notes will not bear regular interest, and the principal amount of the notes will not accrete. Special interest and additional interest will accrue on the notes in the circumstances described under the captions “Description of Notes—Events of Default— Special Interest as Sole Remedy for Certain Reporting Defaults” and “—No Registration Rights; Additional Interest,” respectively. If any special interest or additional interest accrues on the notes, then such interest will be payable semi-annually in arrears on the next June 1 or December 1, as applicable, to noteholders of record as of the close of business on the immediately preceding May 15 or November 15, respectively. Conversion Rights ..................... Noteholders may convert their notes at their option only in the following circumstances: during any fiscal quarter (and only during such fiscal quarter) commencing after the fiscal quarter ending on September 30, 2025, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; upon the occurrence of certain corporate events or distributions on our common stock, as described in this offering memorandum; if we call such notes for redemption; and at any time from, and including, March 1, 2030 until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash or a combination of cash and shares of our For personal use only
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- 6 - common stock, at our election, based on the applicable conversion rate. The consideration due upon conversion will be determined over an observation period consisting of 40 consecutive “VWAP trading days” (as defined in this offering memorandum). The initial conversion rate is 12.3501 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $80.97 per share, and is subject to adjustment as described in this offering memorandum. If a “make-whole fundamental change” (as defined in this offering memorandum) occurs, then we will in certain circumstances increase the conversion rate for a specified period of time. See “Description of Notes—Conversion Rights.” Optional Redemption ................ The notes will be redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after June 5, 2028 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 special interest or additional interest, if any, to, but excluding, the redemption date, but only if (i) the notes are “freely tradable” (as defined in this offering memorandum) as of the date we send the related redemption notice and all accrued and unpaid additional interest, if any, has been paid in full as of the most recent interest payment date occurring on or before the date we send such notice; and (ii) the last reported sale price per share of our common stock exceeds 130% of the conversion price on (1) 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 such redemption notice; and (2) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding notes unless at least $50.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time we send the related redemption 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 it is converted after it is called for redemption. See “Description of Notes—Optional Redemption.” For personal use only
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- 7 - Repurchase at the Option of the Noteholders After a Fundamental Change ............. If a “fundamental change” (as defined in this offering memorandum) occurs, then, except as described in this offering memorandum, noteholders may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest or additional interest, if any, to, but excluding, the fundamental change repurchase date. See “Description of Notes—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes.” Trustee, Paying Agent and Conversion Agent .................. U.S. Bank Trust Company, National Association. No Registration Rights; Transfer Restrictions .............. We have not registered the offer and sale of the notes or the shares of common stock, if any, issuable upon conversion of the notes under the Securities Act or the securities laws of any state or other jurisdiction. In addition, we do not intend to file a registration statement under the Securities Act to register the resale of the notes or the shares of our common stock, if any, issuable upon conversion of the notes. Accordingly, you may sell your notes and shares of our common stock, if any, issuable upon conversion of the notes only in transactions that are exempt from registration under, or not subject to, the Securities Act and the applicable securities laws of any other applicable jurisdiction. See “Transfer Restrictions.” However, if the notes are not freely tradable by a specified date, then we will pay additional interest on the notes in certain circumstances. See “Description of Notes—No Registration Rights; Additional Interest.” No Public Market ...................... The notes are a new class of securities for which no public market currently exists. We do not intend to apply to list the notes on any securities exchange or for quotation on any inter- dealer quotation system. Accordingly, a liquid market for the notes may never develop. Certain of the initial purchasers have advised us that they intend to make a market in the notes. However, they are not obligated to do so and may discontinue any market-making activity at any time and without notice. Nasdaq Global Select Market Symbol ................................... Our common stock is listed on the Nasdaq Global Select Market under the symbol “LIF.” On June 2, 2025, the last reported sale For personal use only
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- 8 - price of our common stock was $61.11 per share. Use of Proceeds......................... We estimate that the net proceeds to us from this offering will be approximately $265.2 million (or approximately $308.9 million if the initial purchasers exercise in full their option to purchase additional notes), after deducting the initial purchasers’ discounts and commissions and our estimated offering expenses. We intend to use approximately $29.0 million of the net proceeds to fund the cost of entering into the capped call transactions described below. We intend to use the remainder of the net proceeds for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses, products, services or technologies. If the initial purchasers exercise their option to purchase additional notes, then we intend to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below. See “Use of Proceeds.” Concurrent Capped Call Transactions ........................... In connection with the pricing of the notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers or their affiliates and certain other financial institutions (the “option counterparties”). The capped call transactions are expected to generally reduce potential dilution to our common stock upon any conversion of the notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their option to purchase additional notes, then we expect to enter into additional capped call transactions with the option counterparties. In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to our common stock and/or purchase shares of our 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 our common stock or the market value of the notes at that time. In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the For personal use only
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- 9 - pricing of the notes and prior to the maturity of the notes (and (x) are likely to do so during any observation period related to a conversion of notes or following any repurchase of notes by us in connection with any redemption or fundamental change and (y) are likely to do so following any repurchase of the notes by us other than in connection with any redemption or fundamental change if we elect to unwind a corresponding portion of the capped call transactions in connection with such repurchase). This activity could also cause or avoid an increase or decrease in the market price of our common stock or the market value of the notes, which could affect your ability to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that you will receive upon conversion of the notes. For a discussion of the potential impact of any market or other activity by the option counterparties or their respective affiliates in connection with these capped call transactions, see “Risk Factors—The capped call transactions may affect the value of the notes and our common stock” and “Plan of Distribution— Capped Call Transactions.” Risk Factors .............................. Investing in the notes involves risks. See “Risk Factors.” Material U.S. Federal Income Tax Considerations ................ For a description of material U.S. federal income tax considerations of purchasing, owning, converting and disposing of the notes and owning and disposing of shares of our common stock, if any, issuable upon conversion of the notes, see “Material U.S. Federal Income Tax Considerations.” Book-Entry Form ...................... We will initially issue the notes in the form of one or more global notes registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), without interest coupons, which we will deposit with the trustee as custodian for DTC. Beneficial interests in global notes will be shown on, and transfers of global notes will be effected only through, the records maintained by DTC. Except in limited circumstances, we will not issue certificated notes. See “Description of Notes— Book Entry, Settlement and Clearance.” For personal use only
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- 10 - RISK FACTORS Investing in the notes involves a high degree of risk. You should carefully consider the information included and incorporated by reference in this offering memorandum, including the matters addressed under “Cautionary Note Regarding Forward-Looking Statements,” the following risk factors and the risk factors set forth in our Annual Report and our Quarterly Report, which are incorporated by reference in this offering memorandum before deciding to purchase the notes. The occurrence of any of the risks discussed below and in the documents incorporated by reference in this offering memorandum may materially harm our business, results of operations and financial condition. As a result, the trading price of the notes and our common stock may decline, and you might lose part or all of your investment. As used in this section, “we,” “our” and “us” refer to Life360, Inc. and not to its subsidiaries. The notes will be effectively subordinated to our existing and future secured indebtedness and structurally subordinated to the liabilities of our subsidiaries. The notes will be our senior, unsecured obligations and will rank equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the notes and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness. In addition, because none of our subsidiaries will guarantee the notes, the notes will be structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. As of March 31, 2025, we had no secured indebtedness, and our subsidiaries had no indebtedness. The indenture governing the notes will not prohibit us or our subsidiaries from incurring additional indebtedness, including senior or secured indebtedness, in the future. If a bankruptcy, liquidation, dissolution, reorganization or similar proceeding occurs with respect to us, then the holders of any of our secured indebtedness may proceed directly against the assets securing that indebtedness. Accordingly, those assets would not be available to satisfy any outstanding amounts under our unsecured indebtedness, including the notes, unless the secured indebtedness is first paid in full. The remaining assets, if any, would then be allocated pro rata among the holders of our senior, unsecured indebtedness, including the notes. There may be insufficient assets to pay all amounts then due. If a bankruptcy, liquidation, dissolution, reorganization or similar proceeding occurs with respect to any of our subsidiaries, then we, as a direct or indirect common equity owner of that subsidiary (and, accordingly, holders of our indebtedness, including the notes), will be subject to the prior claims of that subsidiary’s creditors, including trade creditors and preferred equity holders. We may never receive any amounts from that subsidiary to satisfy amounts due under the notes. We conduct a portion of our operations through our subsidiaries and will rely in part on our subsidiaries to make payments under the notes. The notes are our obligations exclusively and are not guaranteed by any of our subsidiaries. A portion of our operations are conducted through, and a portion of our consolidated assets are held by, our subsidiaries. Accordingly, our ability to service our debt, including the notes, depends, in For personal use only
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- 11 - part, on the results of operations of our subsidiaries and upon the ability of such subsidiaries to provide us with cash, whether in the form of dividends, loans or otherwise, to pay amounts due on our obligations, including the notes. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to make payments on the notes or to make any funds available for that purpose. In addition, dividends, loans or other distributions to us from such subsidiaries may be subject to contractual and other restrictions and are subject to other business considerations. For these reasons, we may not have access to any assets or cash flows of our subsidiaries to make payments on the notes. Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the notes. As of March 31, 2025, we had $79.1 million of total liabilities. We will incur $275.0 million (or, if the initial purchasers exercise in full their option to purchase additional notes, $320.0 million) principal amount of additional indebtedness as a result of this offering. We may also incur additional indebtedness. Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: increasing our vulnerability to adverse economic and industry conditions; limiting our ability to obtain additional financing; requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; limiting our flexibility to plan for, or react to, changes in our business; diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the notes; and placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the notes, and our cash needs may increase in the future. In addition, future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full. For personal use only
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- 12 - We may be unable to raise the funds necessary to repurchase the notes for cash following a fundamental change or to pay any cash amounts due upon maturity or conversion of the notes, and our other indebtedness may limit our ability to repurchase the notes or to pay any cash amounts due upon their maturity or conversion. Noteholders may, subject to a limited exception described in this offering memorandum, require us to repurchase their notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest or additional interest, if any. See “Description of Notes—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes.” Upon maturity of the notes, we must pay their principal amount and accrued and unpaid interest in cash, unless they have been previously repurchased, redeemed or converted. In addition, all conversions of notes will be settled partially or entirely in cash. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the notes or pay any cash amounts due upon their maturity or conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the notes or to pay any cash amounts due upon their maturity or conversion. Our failure to repurchase notes or to pay any cash amounts due upon their maturity or conversion when required will constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the notes. The conversion rate of the notes may not be adjusted for all dilutive events. We will adjust the conversion rate of the notes for certain events, including: certain stock dividends, splits and combinations; the issuance of certain rights, options or warrants to holders of our common stock; certain distributions of assets, debt securities, capital stock or other property to holders of our common stock; cash dividends on our common stock; and certain tender or exchange offers. See “Description of Notes—Conversion Rights—Conversion Rate Adjustments.” We are not required to adjust the conversion rate for other events, such as third-party tender offers or an issuance of our common stock (or securities convertible into, or exercisable or exchangeable for, our common stock) for cash, that may adversely affect the trading price of the notes and our common stock. An event may occur that adversely affects the noteholders and the trading price of the notes and the underlying shares of our common stock but that does not result in an adjustment to the conversion rate. For personal use only
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- 13 - Some significant restructuring transactions will not constitute a fundamental change, in which case you will not have the right to require us to repurchase your notes for cash. If certain corporate events defined as “fundamental changes” occur, you will have the right to require us to repurchase your notes for cash. See “Description of Notes—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes.” However, the definition of “fundamental change” is limited to specific corporate events and does not include all events that may adversely affect our financial condition or the trading price of the notes. For example, a leveraged recapitalization, refinancing, restructuring or acquisition by us may not constitute a fundamental change that would require us to repurchase the notes. Nonetheless, these events could significantly increase the amount of our indebtedness, harm our credit rating or adversely affect our capital structure and the trading price of the notes. The increase to the conversion rate resulting from a make-whole fundamental change may not adequately compensate noteholders for the lost option value of their notes. In addition, a variety of transactions that do not constitute a make-whole fundamental change may significantly reduce the option value of the notes without a corresponding increase to the conversion rate. If certain corporate events that constitute a “make-whole fundamental change” occur, then we will, in certain circumstances, temporarily increase the conversion rate. See “Description of Notes— Conversion Rights—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change.” The amount of the increase to the conversion rate will depend on the date on which the make-whole fundamental change becomes effective and the applicable “stock price.” While the increase to the conversion rate is designed to compensate noteholders for the lost option value of their notes resulting from a make-whole fundamental change, the increase is only an approximation and may not adequately compensate noteholders for the loss in option value. In addition, if the applicable “stock price” is greater than $400.00 per share or less than $61.11 per share (in each case, subject to adjustment), then we will not increase the conversion rate for the make-whole fundamental change. Moreover, we will not increase the conversion rate pursuant to these provisions to an amount that exceeds 16.3639 shares of our common stock per $1,000 principal amount of notes, subject to adjustment. Furthermore, the definition of make-whole fundamental change is limited to certain specific transactions. Accordingly, the make-whole fundamental change provisions of the indenture will not protect noteholders from other transactions that could significantly reduce the option value of the notes. For example, a spin-off or sale of a subsidiary or business division with volatile earnings, or a change in our line of business, could significantly affect the trading characteristics of our common stock and reduce the option value of the notes without constituting a make-whole fundamental change that results in a temporary increase to the conversion rate. In addition, our obligation to increase the conversion rate in connection with a make-whole fundamental change could be considered a penalty, in which case its enforceability would be subject to general principles of reasonableness and equitable remedies. For personal use only
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- 14 - There is currently no trading market for the notes. If an active trading market for the notes does not develop, then noteholders may be unable to sell their notes at desired times or prices, or at all. The notes are a new class of securities for which no market currently exists. We do not intend to apply to list the notes on any securities exchange or for quotation on any inter-dealer quotation system. Although certain of the initial purchasers have advised us that they intend to make a market in the notes, they are not obligated to do so and may discontinue any market-making activity at any time and without notice. Accordingly, an active market for the notes may never develop, and, even if one develops, it may not be maintained. If an active trading market for the notes does not develop or is not maintained, then the market price and liquidity of the notes will be adversely affected and noteholders may not be able to sell their notes at desired times or prices, or at all. The liquidity of the trading market, if any, and future trading prices of the notes will depend on many factors, including, among other things, the trading price and volatility of our common stock, prevailing interest rates, financial condition, results of operations, business, prospects and credit quality relative to our competitors, the market for similar securities and the overall securities market. Many of these factors are beyond our control. Historically, the market for convertible debt has been volatile. Market volatility could significantly harm the market for the notes, regardless of our financial condition, results of operations, business, prospects or credit quality. The trading price of our common stock, the condition of the financial markets, prevailing interest rates and other factors could significantly affect the trading price of the notes. We expect that the trading price of our common stock will significantly affect the trading price of the notes, which could result in greater volatility in the trading price of the notes than would be expected for non-convertible securities. The trading price of our common stock will likely continue to fluctuate in response to the factors described or referred to elsewhere in this section and under the caption “Cautionary Note Regarding Forward-Looking Statements,” among others, many of which are beyond our control. In addition, the condition of the financial markets and changes in prevailing interest rates can have an adverse effect on the trading price of the notes. For example, prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, and we would expect an increase in prevailing interest rates to depress the trading price of the notes. The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock and the notes. We may conduct future offerings of common stock, preferred stock or other securities that are convertible into, or exercisable or exchangeable for, our common stock to finance our operations or fund acquisitions, or for other purposes. In addition, as of December 31, 2024, we have 12,815,029 shares available for issuance under the Life360 Amended and Restated 2011 Stock Plan (the “Plan”). The indenture for the notes will not restrict our ability to issue additional equity securities in the future. If we issue additional shares of our common stock or rights to acquire shares of our common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading For personal use only
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- 15 - price of our common stock and, accordingly, the notes may significantly decline. In addition, our issuance of additional shares of common stock will dilute the ownership interests of our existing common stockholders, including noteholders who have received shares of our common stock upon conversion of their notes. We will make only very limited covenants in the indenture, and these limited covenants may not protect your investment. Many debt instruments contain provisions that restrict the borrower’s activities and operations in a manner that is designed to preserve the borrower’s ability to make payments on the related indebtedness when due. These provisions include financial and operating covenants, and restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the borrower or any of its subsidiaries. The indenture for the notes will not contain any of these covenants or restrictions or otherwise place any meaningful restrictions on our ability to operate our business as management deems appropriate. As a result, your investment in the notes may not be as protected as an investment in an instrument that contains some or all of these types of covenants and restrictions. Regulatory actions, changes in market conditions and other events may adversely affect the trading price and liquidity of the notes and the ability of investors to implement a convertible note arbitrage trading strategy. We expect that many investors in the notes, including potential purchasers of the notes from investors in this offering, will seek to employ a convertible note arbitrage strategy. Under this strategy, investors typically short sell a certain number of shares of our common stock and adjust their short position over time while they continue to hold the notes. Investors may also implement this type of strategy by entering into swaps on our common stock in lieu of, or in addition to, short selling shares of our common stock. The SEC and other regulatory authorities have implemented various rules and taken certain actions, and may in the future adopt additional rules and take other actions, that may impact those engaging in short selling activity involving equity securities (including our common stock). These rules and actions include Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc., and the national securities exchanges of a “limit up-limit down” program, the imposition of market-wide circuit breakers that halt trading of securities for certain periods following specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Any governmental or regulatory action that restricts investors’ ability to effect short sales of our common stock or enter into equity swaps on our common stock could depress the trading price of, and the liquidity of the market for, the notes. In addition, the liquidity of the market for our common stock and other market conditions could deteriorate, which could reduce, or eliminate entirely, the number of shares available for lending in connection with short sale transactions and the number of counterparties willing to enter into an equity swap on our common stock with a note investor. These and other market events could make implementing a convertible note arbitrage strategy prohibitively expensive or infeasible. If investors in this offering or potential purchasers of the notes that seek to employ a convertible note For personal use only
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- 16 - arbitrage strategy are unable to do so on commercial terms, or at all, then the trading price of, and the liquidity of the market for, the notes may significantly decline. You may be subject to tax if we adjust, or fail to adjust, the conversion rate of the notes, even though you will not receive a corresponding cash distribution. We will adjust the conversion rate of the notes for certain events, including the payment of cash dividends on our common stock. If we adjust the conversion rate as a result of a dividend that is taxable to our common stockholders, such as a cash dividend, then you will generally be deemed, for U.S. federal income tax purposes, to have received a taxable dividend to the extent of our earnings and profits, without the receipt of any cash. In addition, if we do not adjust (or adjust adequately) the conversion rate after an event that increases your proportionate interest in us, then you could be treated as having received a deemed taxable dividend. If a make-whole fundamental change occurs prior to the maturity date, under some circumstances, we will increase the conversion rate for notes converted in connection with that make-whole fundamental change. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. If you are a non-U.S. holder (as defined in “Material U.S. Federal Income Tax Considerations”), then any deemed dividend would generally be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty. Any U.S. federal withholding tax or backup withholding may be withheld from or set off against payments of cash or the delivery of shares of our common stock, if any, in respect of the notes (or, in some circumstances, any payments on our common stock) or from any proceeds of any sale, exchange or other disposition of such notes (including the retirement of such notes) or such common stock by you or from your other funds or assets. The Internal Revenue Service has issued proposed regulations addressing the amount and timing of deemed distributions, obligations of withholding agents and filing and notice obligations of issuers, which, if adopted, could affect the U.S. federal income tax treatment of a holder of notes deemed to receive such a distribution. See “Description of Notes—Conversion Rights—Conversion Rate Adjustments” and “Material U.S. Federal Income Tax Considerations.” A rating agency may not rate the notes or may assign a rating that is lower than expected. We do not intend to seek to have the notes rated by any rating agency. However, if one or more rating agencies rate the notes and assign a rating that is lower than the rating that investors expect, or reduce their rating in the future, then the trading price of our common stock and the notes could significantly decline. In addition, market perceptions of our creditworthiness will directly affect the trading price of the notes. Accordingly, if a ratings agency rates any of our indebtedness in the future or downgrades or withdraws the rating, or puts us on credit watch, then the trading price of the notes will likely decline. Because we have not registered the offer and sale of the notes or the shares of our common stock, if any, issuable upon conversion of the notes, you will have a limited ability to sell them. We have not registered the offer and sale of the notes or the shares of common stock, if any, issuable upon conversion of the notes under the Securities Act or the securities laws of any state For personal use only
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- 17 - or other jurisdiction. In addition, we do not intend to file a registration statement under the Securities Act to register the resale of the notes or the shares. Accordingly, you may transfer or sell the notes or shares only in transactions that are exempt from, or not subject to, the Securities Act and other applicable securities laws. See “Transfer Restrictions” and “Description of Notes— No Registration Rights; Additional Interest.” Provisions in the indenture could delay or prevent an otherwise beneficial takeover of us. Certain provisions in the notes and the indenture could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then, except as described in this offering memorandum, noteholders will have the right to require us to repurchase their notes for cash. In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate. In either case, and in other cases, our obligations under the notes and the indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable. You may be unable to convert your notes before March 1, 2030, and the trading price of the notes could be less than the value of the consideration into which they could otherwise be converted. Before March 1, 2030, you may convert your notes only if specific conditions are met. If these conditions are not met, then you will not be able to convert your notes and receive the cash or combination of cash and shares, as applicable, into which the notes would otherwise be convertible. As a result, the notes may trade at prices that are less than the value of the consideration into which they would otherwise be convertible. Fluctuations in the trading price of our common stock after you elect to convert your notes may cause you to receive less valuable consideration than expected. The consideration due upon conversion of any note will be determined based on the volume- weighted average price of our common stock during the related “observation period,” which is defined under the caption “Description of Notes—Definitions” and will consist of 40 consecutive “VWAP trading days.” Except in certain circumstances, the observation period will begin after the related conversion date. Accordingly, a considerable amount of time may lapse between the time you elect to convert your notes and the time you receive the consideration due upon conversion, and if the trading price of our common stock declines during this time, then you may receive less consideration, or consideration that is less valuable, than expected. Your investment in the notes may be harmed if we redeem the notes. We will have the right to redeem the notes, in whole or in part, in certain circumstances on or after June 5, 2028 and on or before the 40th scheduled trading day immediately before the maturity date. See “Description of Notes—Optional Redemption.” If we redeem your notes, then you may not be entitled to benefit from potential future appreciation in the trading price of our common stock, and you may be unable to reinvest any proceeds from the redemption in comparable investments or at favorable interest rates. In addition, a redemption of less than all of the For personal use only
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- 18 - outstanding notes will likely harm the liquidity of the market for the unredeemed notes following the redemption. Accordingly, if your notes are not redeemed in a partial redemption, then you may be unable to sell your notes at the times you desire or at favorable prices, if at all, and the trading price of your notes may decline. Our management may spend the proceeds of this offering in ways with which you may disagree or that may not be profitable. Although we have described in this offering memorandum, under the caption “Use of Proceeds,” how we currently intend to use the proceeds to us from this offering, our management will have broad discretion to apply the net proceeds, and investors will rely on our judgment in spending the net proceeds. Our management may use the proceeds in ways that do not earn a profit or otherwise result in the creation of stockholder value. In addition, pending our use of the proceeds, we may invest the proceeds primarily in instruments that do not produce significant income or that may lose value. The accounting method for the notes could adversely affect our reported financial condition and results. The accounting method for reflecting the notes on our balance sheet, accruing amortized interest expense for the notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition. In accordance with applicable accounting standards, we expect that the notes we are offering will be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the notes, net of issuance costs. The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the notes. As a result of this amortization, the interest expense that we expect to recognize for the notes for accounting purposes will be greater than the cash interest payments we will pay on the notes, which will result in lower reported income. In addition, we expect that the shares underlying the notes will be reflected in our diluted earnings per share using the “if converted” method. Under that method, if the conversion value of the notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share assuming that all of the notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess. The after-tax interest expense associated with the notes will not be added back to the numerator of the diluted earnings per share calculation for these purposes. However, if reflecting the notes in diluted earnings per share in this manner is anti-dilutive, or if the conversion value of the notes does not exceed their principal amount for a reporting period, then the shares underlying the notes will not be reflected in our diluted earnings per share. The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share. Furthermore, if any of the conditions to the convertibility of the notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the notes as a current, rather than a long-term, liability. This reclassification could be required even if no For personal use only
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- 19 - noteholders convert their notes and could materially reduce our reported working capital. We have not reached a final determination regarding the accounting treatment for the notes, and the description above is preliminary. Accordingly, we may account for the notes in a manner that is significantly different than described above. The conversion of notes could impair our financial position and liquidity. Because we must settle at least a portion of our conversion obligation in cash, the conversion of notes could materially and adversely affect our financial position and liquidity. Before March 1, 2030, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after March 1, 2030, noteholders may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. See “Description of Notes—Conversion Rights.” However, many of the conditions that permit the conversion of notes before March 1, 2030 are beyond our control. We could be required to expend a significant amount of cash to settle conversions, which could significantly harm our financial position and liquidity. The capped call transactions may affect the value of the notes and our common stock. In connection with the pricing of the notes, we entered into privately negotiated capped call transactions with the option counterparties. The capped call transactions are expected to generally reduce the potential dilution to our common stock upon any conversion of the notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. If the initial purchasers exercise their option to purchase additional notes, then we expect to enter into additional capped call transactions with the option counterparties. In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to our common stock and/or purchase shares of our 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 our common stock or the market value of the notes at that time. In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and (x) are likely to do so during any observation period related to a conversion of notes or following any repurchase of notes by us in connection with any redemption or fundamental change and (y) are likely to do so following any repurchase of the notes by us other than in connection with any redemption or fundamental change if we elect to unwind a corresponding portion of the capped call transactions in connection with such repurchase). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the market value of the notes, which could affect your ability to convert the notes and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that you will receive upon conversion of the notes. For personal use only
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- 20 - In addition, if any such capped call transaction fails to become effective, whether or not this offering of notes is completed, the option counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which could adversely affect the value of our common stock and, if the notes have been issued, the value of the notes. The capped call transactions are separate transactions to be entered into by us with the option counterparties, are not part of the terms of the notes and will not change the holders’ rights under the notes. As a holder of the notes, you will not have any rights with respect to the capped call transactions. We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the notes or our common stock. In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. See “Description of the Concurrent Capped Call Transactions.” We are subject to counterparty risk with respect to the capped call transactions, and the capped call may not operate as planned. The option counterparties are, or are affiliates of, financial institutions, and we will be subject to the risk that they might default under the capped call transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that option counterparty. Our exposure will depend on many factors, but, generally, the increase in our exposure will be correlated with increases in the market price or the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any option counterparty. In addition, the capped call transactions are complex, and they may not operate as planned. For example, the terms of the capped call transactions may be subject to adjustment, modification or, in some cases, renegotiation if certain corporate or other transactions occur. Accordingly, these transactions may not operate as we intend if we are required to adjust their terms as a result of transactions in the future or upon unanticipated developments that may adversely affect the functioning of the capped call transactions. Because the notes will initially be held in book-entry form, noteholders must rely on DTC’s procedures to exercise their rights and remedies. We will initially issue the notes in the form of one or more “global notes” registered in the name of Cede & Co., as nominee of DTC. Beneficial interests in global notes will be shown on, and transfers of global notes will be effected only through, the records maintained by DTC. Except in limited circumstances, we will not issue certificated notes. See “Description of Notes—Book For personal use only
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- 21 - Entry, Settlement and Clearance.” Accordingly, if you own a beneficial interest in a global note, then you will not be considered an owner or holder of the notes. Instead, DTC or its nominee will be the sole holder of the notes. Payments of principal, special interest or additional interest, if any, and other amounts on global notes will be made to the paying agent, who will remit the payments to DTC. We expect that DTC will then credit those payments to the DTC participant accounts that hold book-entry interests in the global notes and that those participants will credit the payments to indirect DTC participants. Unlike persons who have certificated notes registered in their names, owners of beneficial interests in global notes will not have the direct right to act on our solicitations for consents or requests for waivers or other actions from noteholders. Instead, those beneficial owners will be permitted to act only to the extent that they have received appropriate proxies to do so from DTC or, if applicable, a DTC participant. The applicable procedures for the granting of these proxies may not be sufficient to enable owners of beneficial interests in global notes to vote on any requested actions on a timely basis. Holding notes will not, in itself, confer any rights with respect to our common stock. Noteholders will generally not be entitled to any rights with respect to our common stock (including voting rights and rights to receive any dividends or other distributions on our common stock). However, noteholders will be subject to all changes affecting our common stock to the extent the trading price of the notes depends on the market price of our common stock and to the extent they receive shares of our common stock upon conversion of their notes. For example, if we propose an amendment to our charter documents that requires stockholder approval, then a noteholder will not, as such, be entitled to vote on the amendment, although the noteholder will be subject to any changes implemented by that amendment in the powers, preferences or special rights of our common stock. For personal use only
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- 22 - CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This offering memorandum and the documents incorporated by reference herein contain forward- looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which are subject to risks and uncertainties. These forward-looking statements include statements concerning, among other things, (a) our expectations regarding our results of operations and key performance indicators, (b) key factors affecting our performance (c) our growth strategy, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, including risks related to our business, market risks, our need for additional capital, and the risk that our products and services may not perform as expected. The forward-looking statements included or incorporated by reference in this offering memorandum are based on information available to us as of the date such statements were made and our then-current expectations about future events, which are inherently subject to change and involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those expressed or implied by these statements due to various factors, including, but not limited to, the factors discussed under the heading “Item 1A. Risk Factors” in our Annual Report and our Quarterly Report which are incorporated by reference in this offering memorandum, and under the heading “Risk Factors” in this offering memorandum. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. All such forward-looking statements should be read as of the time the statements were made and with the recognition that these forward-looking statements may not be complete or accurate at a later date. For personal use only
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- 23 - USE OF PROCEEDS We estimate that the net proceeds to us from this offering will be approximately $265.2 million (or approximately $308.9 million if the initial purchasers exercise in full their option to purchase additional notes), after deducting the initial purchasers’ discounts and commissions and our estimated offering expenses. We intend to use approximately $29.0 million of the net proceeds to fund the cost of entering into the capped call transactions described in this offering memorandum. We intend to use the remainder of the net proceeds for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses, products, services or technologies. If the initial purchasers exercise their option to purchase additional notes, then we intend to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described in this offering memorandum. Pending any ultimate use of any portion of the proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, interest-bearing instruments such as corporate debt securities, U.S. government and agency debt securities, commercial paper, asset-backed securities and non-U.S. government securities, including state, municipal and foreign government securities. For personal use only
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- 24 - CAPITALIZATION The following table presents our cash and cash equivalents and our capitalization as of March 31, 2025: on an actual basis; and on an as adjusted basis to give effect to the issuance and sale of $275,000,000 aggregate principal amount of the notes we are offering, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by us, but before application of the net proceeds as described under “Use of Proceeds.” This table should be read in conjunction with the other information included or incorporated by reference in this offering memorandum, including our consolidated financial statements and related notes. As of March 31, 2025 Actual As adjusted (In thousands, except share and per share data) Cash and cash equivalents(1) $ 168,852 $ 434,072 Total long-term debt: Principal amount of 0.00% convertible senior notes due 2030 we are offering(2) ⸺ 275,000 Total long-term debt ⸺ 275,000 Stockholders’ equity: Common stock, $0.001 par value per share; 500,000,000 shares authorized, 76,418,660 shares outstanding, actual and as adjusted 76 76 Additional paid-in capital(3) 661,479 661,479 Accumulated deficit (285,320) (285,320) Accumulated other comprehensive income 45 45 Total stockholders’ equity (3) 376,280 376,280 Total capitalization(2)(3) $ 376,280 651,280 ————— (1) Does not reflect our expected use of approximately $29.0 million of the net proceeds from the offering of the notes to fund the cost of entering into the capped call transactions described in this offering memorandum. (2) The amounts shown in the table above for the notes we are offering represent their principal amount. However, we expect that the initial liability carrying amount of the notes for accounting purposes will be recorded net of issuance costs, which will be treated as a debt discount for accounting purposes and amortized into interest expense over the term of the notes. As a result of this amortization, the interest expense that we expect to recognize for the notes for accounting purposes will be greater than the cash interest payments we will pay on the notes, For personal use only
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- 25 - which will result in lower reported net income or larger reported net loss. (3) Does not reflect the capped call transactions described in this offering memorandum. We expect the cost of entering into the capped call transactions to be reflected as a reduction to additional paid-in capital in the stockholders’ equity section of our balance sheet. For personal use only
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- 26 - DIVIDEND POLICY We have never declared or paid cash dividends on our common stock or CHESS Depositary Interests (“CDIs”). We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Our ability to pay dividends on our common stock will not be restricted by the indenture for the notes. Any future determination as to the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant. For personal use only
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- 27 - DESCRIPTION OF NOTES We will issue the notes under an indenture (the “indenture”), to be dated as of the initial closing date of this offering, between us and U.S. Bank Trust Company, National Association, as trustee (the “trustee”). The following is a summary of certain provisions of the notes and the indenture. It is only a summary and is not complete. We qualify this summary by referring you to the indenture and the notes, because they, and not this summary, define your rights as a holder of the notes. We will provide you with a copy of the indenture, which includes the form of the notes, as provided under the caption “Where You Can Find Additional Information.” Certain terms used in this summary are defined below under the caption “—Definitions.” Certain other terms used in this summary are defined in the indenture. In this section, references to (i) “we,” “us” and “our” refer to Life360, Inc. only and not to any of its subsidiaries; and (ii) any “note” refers to any authorized denomination of a note, unless the context requires otherwise. For purposes of the description below, the term “including” means “including without limitation.” Generally The notes will: be our senior, unsecured obligations; initially be limited to an aggregate principal amount of $275,000,000 (or $320,000,000, if the initial purchasers exercise in full their option to purchase additional notes); not bear regular interest, and the principal amount of the notes will not accrete; bear additional interest and special interest in the circumstances described below under the captions “—No Registration Rights; Additional Interest,” and “—Events of Default— Special Interest as Sole Remedy for Certain Reporting Defaults” respectively; mature on June 1, 2030, unless earlier repurchased, redeemed or converted; be redeemable, in whole or in part (subject to certain limitations), at our option, at any time, and from time to time, on or after June 5, 2028 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 special interest or additional interest, if any, to, but excluding, the redemption date (subject to the right of noteholders on an interest record date to receive any related special interest or additional interest payment), but only if certain conditions are satisfied, as described below under the caption “—Optional Redemption”; be subject to repurchase by us at the noteholders’ option if a “fundamental change” (as defined below under the caption “—Definitions”) occurs, at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest or additional interest, if any, to, but excluding, the fundamental change repurchase For personal use only
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- 28 - date (subject to the right of noteholders on an interest record date to receive any related interest payment), as described, and subject to the limited exception set forth, below under the caption “—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes”; be convertible, at the noteholders’ option, into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 12.3501 shares per $1,000 principal amount of notes (which represents an initial conversion price of approximately $80.97 per share), under the conditions, and subject to the adjustments, described below under the caption “—Conversion Rights”; be issued in principal amount denominations of $1,000 or any integral multiple of $1,000 in excess thereof, which we refer to as an “authorized denomination”; and initially be represented by one or more registered notes in global form, but may, in certain circumstances, be exchanged for notes in definitive form, as described below under the caption “—Book Entry; Settlement and Clearance.” The indenture will not contain any financial covenants and will not limit us or our subsidiaries from incurring additional indebtedness, paying dividends or issuing or repurchasing any securities. Except to the extent described below under the captions “—Conversion Rights—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change,” “—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes” and “—Consolidation, Merger and Asset Sale,” the indenture will not contain any provisions designed to protect noteholders upon a highly leveraged transaction involving us or a decline in our credit rating as a result of a recapitalization, takeover, highly leveraged transaction or other restructuring involving us. Without the consent of any noteholder, we may issue additional notes under the indenture with the same terms as the notes we are offering (except for certain differences). However, such additional notes (and any notes that have been resold after they have been purchased or otherwise acquired by us or our subsidiaries) must be identified by a separate CUSIP number or by no CUSIP number if they are not fungible with other notes we issue under the indenture for purposes of federal income tax or federal securities laws or, if applicable, the “depositary procedures” (as defined below under the caption “—Definitions”). We do not intend to list the notes on any securities exchange or include them in any automated inter-dealer quotation system. Absent manifest error, a person in whose name a note is registered on the registrar’s books will be considered to be the holder of that note for all purposes, and only registered noteholders (which, in the case of notes held through DTC, will initially be DTC’s nominee, Cede & Co.) will have rights under the indenture as noteholders. Subject to applicable law, we or our subsidiaries may directly or indirectly repurchase notes in the open market or otherwise, whether through private or public tender or exchange offers, cash-settled swaps or other cash-settled derivatives. Any notes that we or our subsidiaries have purchased or otherwise acquired will be deemed to remain outstanding until such time as we deliver them to the trustee for cancellation. However, subject to the terms of the indenture, notes that we or any of our For personal use only
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- 29 - affiliates own will be deemed not to be outstanding for purposes of determining whether the noteholders have concurred in any direction, waiver or consent. Payments on the Notes We will pay (or cause the paying agent to pay) the principal of, and special interest or additional interest, if any, on, any global note by wire transfer of immediately available funds. We will pay (or cause the paying agent to pay) the principal of, and special interest or additional interest, if any, on, any physical note as follows: if the principal amount of such note is at least $5.0 million (or such lower amount as we may choose in our sole and absolute discretion) and the holder of such note entitled to such payment has delivered to the paying agent or the trustee, no later than the time set forth below, a written request to receive payment by wire transfer to an account of such holder within the United States, by wire transfer of immediately available funds to such account; and in all other cases, by check mailed to the address of such holder set forth in the note register. To be timely, a written request referred to in the first bullet point above must be delivered no later than the “close of business” (as defined below under the caption “—Definitions”) on the following date: (i) with respect to the payment of any special interest or additional interest due on an interest payment date, the immediately preceding interest record date; and (ii) with respect to any other payment, the date that is 15 calendar days immediately before the date such payment is due. If the due date for a payment on a note is not a “business day” (as defined below under the caption “—Definitions”), then such payment may be made on the immediately following business day with the same force and effect as if such payment were made on that due date, and no interest will accrue on such payment as a result of the related delay. Solely for purposes of the immediately preceding sentence, a day on which the applicable place of payment is authorized or required by law or executive order to close or be closed will be deemed not to be a “business day.” Registrar, Paying Agent and Conversion Agent We will maintain one or more offices or agencies in the continental United States where notes may be presented for registration of transfer or for exchange, payment and conversion, which we refer to as the “registrar,” “paying agent” and “conversion agent,” respectively. We have appointed the trustee as the initial registrar, paying agent and conversion agent and its office in the United States as a place where notes may be presented for payment. However, without prior notice to the noteholders, we may change the registrar, paying agent and conversion agent and we or any of our subsidiaries may choose to act in that capacity as well (except that the registrar, paying agent or conversion agent with respect to any global note must at all times be a person that is eligible to act in that capacity under the depositary procedures). Transfers and Exchanges A noteholder may transfer or exchange its notes at the office of the registrar in accordance with For personal use only
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- 30 - the indenture. We, the trustee and the registrar may require the noteholder to, among other things, deliver appropriate endorsements or transfer instruments, and such certificates or other documentation or evidence as we or they may reasonably require to determine that such transfer or exchange complies with applicable securities laws. The notes and any shares issued upon conversion of the notes are subject to transfer restrictions, which are described below under the caption “Transfer Restrictions.” In addition, we, the trustee and the registrar may refuse to register the transfer or exchange of any note that is subject to conversion, redemption or required repurchase. Interest The notes will not bear regular interest, and the principal amount of the notes will not accrete. However, special interest and additional interest will accrue on the notes in the circumstances described below under the captions “—Events of Default—Special Interest as Sole Remedy for Certain Reporting Defaults” and “—No Registration Rights; Additional Interest,” respectively. All references in this offering memorandum to interest on the notes refer to special interest, additional interest and default interest (as described below under the caption “—Events of Default—Default Interest”), in each case to the extent the same is payable on the notes. If any special interest or additional interest has accrued on any note, then such interest will be payable in arrears on the next “interest payment date” (as defined below under the caption “— Definitions”) to the holder of record of such note as of the close of business on the immediately preceding “interest record date” (as defined below under the caption “—Definitions”). Special interest and additional interest, if any, will accrue from, and including, the applicable date described below under the caption “—Events of Default—Special Interest as Sole Remedy for Certain Reporting Defaults” or “—No Registration Rights; Additional Interest,” as applicable. The amount of any such special interest or additional interest that is payable on any applicable interest payment date will be the amount of unpaid special interest or additional interest, as applicable, that has accrued from, and including, the last date as of which such interest has been paid or duly provided for (or, if later, the date as of which such interest has begun to accrue) to, but excluding, such interest payment date (or, if earlier, the date as of which such interest has ceased to accrue, as described below under the caption “—Events of Default—Special Interest as Sole Remedy for Certain Reporting Defaults” or “—No Registration Rights; Additional Interest,” as applicable). Additional interest or special interest, if any, will be computed on the basis of a 360-day year comprised of twelve 30-day months. Ranking The notes will be our senior, unsecured obligations and will be: equal in right of payment with our existing and future senior, unsecured indebtedness; senior in right of payment to our existing and future indebtedness that is expressly subordinated to the notes; effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and For personal use only
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- 31 - structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The indenture will not prohibit us from incurring additional indebtedness, including secured indebtedness, which would be effectively senior to the notes to the extent of the value of the collateral securing that indebtedness, or indebtedness that would rank equal in right of payment with the notes. The indenture will also not prohibit our subsidiaries from incurring any additional indebtedness or other liabilities that would be structurally senior to our obligations under the notes. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure any indebtedness will not be available to make payments under the notes unless all of that indebtedness is first paid in full. In the event of the bankruptcy, liquidation, reorganization or other winding up of any of our subsidiaries, we, as a common equity holder of that subsidiary, and, therefore, the noteholders, will rank behind that subsidiary’s creditors, including that subsidiary’s trade creditors, and (to the extent we are not a holder thereof) that subsidiary’s preferred equity holders. Even if we were a creditor of any of our subsidiaries, our rights as a creditor would be effectively subordinated to any security interest of others in the assets of that subsidiary, to the extent of the value of those assets, and would be subordinated to any indebtedness of that subsidiary that is senior in right of payment to that held by us. Our subsidiaries will have no obligations under the notes. The ability of our subsidiaries to pay dividends or make other payments to us is restricted by, among other things, corporate and other laws and by agreements to which our subsidiaries may become a party. Accordingly, we may be unable to gain access to the cash flow or assets of our subsidiaries to enable us to make payments on the notes. As of March 31, 2025, we had no secured indebtedness, and our subsidiaries had no indebtedness. See “Risk Factors—The notes will be effectively subordinated to our existing and future secured indebtedness and structurally subordinated to the liabilities of our subsidiaries.” Optional Redemption We may not redeem the notes at our option at any time before June 5, 2028. Subject to the terms of the indenture, we have the right, at our election, to redeem all, or any portion in an authorized denomination, of the notes, at any time, and from time to time, on a redemption date on or after June 5, 2028 and on or before the 40th “scheduled trading day” (as defined below under the caption “—Definitions”) immediately before the maturity date, for cash, but only if (1) the notes are “freely tradable” (as defined below under the caption “—Definitions”) as of the date we send the related redemption notice and all accrued and unpaid additional interest, if any, has been paid in full as of the most recent interest payment date occurring on or before the date we send such notice; and (2) the “last reported sale price” (as defined below under the caption “—Definitions”) per share of our common stock exceeds 130% of the “conversion price” (as defined below under the caption “— Definitions”) on (i) each of at least 20 “trading days” (as defined below under the caption “— Definitions”), whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send such redemption notice; and (ii) For personal use only
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- 32 - the trading day immediately before the date we send such notice. However, we will not call less than all of the outstanding notes for redemption unless the excess of the principal amount of notes outstanding as of the time we send the related redemption notice over the aggregate principal amount of notes set forth in such redemption notice as being subject to redemption is at least $50.0 million. In addition, calling any note for redemption will constitute a “make-whole fundamental change” (as defined below under the caption “—Definitions”) 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 it is converted after it is called for redemption. If we elect to redeem less than all of the outstanding notes, then the redemption will not constitute a make-whole fundamental change with respect to the notes not called for redemption, and holders of the notes not called for redemption will not be entitled to an increased conversion rate for such notes as described above on account of the redemption, except to the limited extent described further below. The redemption date will be a business day of our choosing that is no more than 65, nor less than 45, scheduled trading days after the date we send the related redemption notice, as described below. The redemption price for any note called for redemption will be the principal amount of such note plus accrued and unpaid special interest and additional interest, if any, on such note to, but excluding, the redemption date. However, if any payment of special interest or additional interest has accrued and would be payable in respect of any interest payment date and the redemption date is after the related interest record date and on or before such interest payment date, then (i) the holder of such note at the close of business on such interest record date will be entitled, notwithstanding such redemption, to receive, on or, at our election, before such interest payment date, such payment of special interest or additional interest, as applicable; and (ii) the redemption price will not include accrued and unpaid interest on such note to, but excluding, such redemption date. We will send to each applicable noteholder notice of the redemption containing certain information set forth in the indenture, including the redemption price and the redemption date. If only a portion of a note is subject to redemption and that note is converted in part, then the converted portion of that note will be deemed to be from the portion of that note that was subject to redemption. If we elect to redeem less than all of the outstanding notes, and the holder of any note, or any owner of a beneficial interest in any global note, is reasonably not able to determine, before the close of business on the 42nd scheduled trading day immediately before the relevant redemption date, whether such note or beneficial interest, as applicable, is to be redeemed pursuant to such redemption, then such holder or owner, as applicable, will be entitled to convert such note or beneficial interest, as applicable, at any time before the close of business on the second business day immediately before such redemption date, and each such conversion will be deemed to be of a note called for redemption for purposes of these redemption provisions and the provisions described below under the captions “—Conversion Rights—When the Notes May Be Converted— Conversion Upon Redemption” and “—Conversion Rights—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change.” For the avoidance of doubt, each reference in this offering memorandum to (i) any note that is called for redemption (or similar language) For personal use only
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- 33 - includes any note that is deemed to be called for redemption pursuant to the provision described in this paragraph; and (ii) any note that is not called for redemption (or similar language) excludes any note that is deemed to be called for redemption pursuant to the provision described in this paragraph. Notwithstanding anything to the contrary above, we may not redeem any notes if the principal amount of the notes has been accelerated and such acceleration has not been rescinded on or before the redemption date (including as a result of the payment of the related redemption price and any related interest described above on the redemption date). Conversion Rights Generally Noteholders will have the right to convert their notes (or any portion of a note in an authorized denomination), in the circumstances described below, into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 12.3501 shares per $1,000 principal amount of notes (which represents an initial conversion price of approximately $80.97 per share). Noteholders may convert their notes only in the circumstances described below under the caption “—When the Notes May Be Converted.” Treatment of Interest Upon Conversion We will not adjust the conversion rate to account for any accrued and unpaid special interest or additional interest on any note being converted, and, except as described below, our delivery of the consideration due in respect of the conversion will be deemed to fully satisfy and discharge our obligation to pay the principal of, and accrued and unpaid interest, if any, on, such note to, but excluding, the “conversion date” (as defined below under the caption “—Conversion Procedures”). As a result, except as described below, any accrued and unpaid interest on a converted note will be deemed to be paid in full rather than cancelled, extinguished or forfeited. In addition, if the consideration due upon conversion consists of both cash and shares of our common stock, then accrued and unpaid interest that is deemed to be paid therewith will be deemed to be paid first out of such cash. Notwithstanding anything to the contrary above, if any payment of special interest or additional interest has accrued and would be payable in respect of any interest payment date and the conversion date of a note is after the related interest record date and before such interest payment date, then: the holder of such note at the close of business on such interest record date will be entitled, notwithstanding such conversion, to receive, on or, at our election, before such interest payment date, such payment of special interest or additional interest, as applicable; and the noteholder surrendering such note for conversion must deliver, at the time it surrenders such note, cash in the amount of such payment of special interest or additional interest, as applicable. For personal use only
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- 34 - However, such noteholder need not deliver such cash: if we have specified a redemption date that is after such interest record date and on or before the second business day immediately after such interest payment date; if such conversion date occurs after the interest record date immediately before the maturity date; if we have specified a “fundamental change repurchase date” (as defined below under the caption “—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes”) that is after such interest record date and on or before the business day immediately after such interest payment date; or to the extent of any (x) overdue special interest or additional interest or (y) interest that has accrued on any overdue special interest or additional interest. Accordingly, for the avoidance of doubt, all noteholders as of the close of business on the interest record date immediately before the maturity date will receive the full amount of any special interest or additional interest payment that would have been due on the maturity date regardless of whether their notes have been converted after such interest record date. When the Notes May Be Converted Noteholders may convert their notes only in the circumstances set forth below. However, in no event may notes be converted after the close of business on the second scheduled trading day immediately before the maturity date. Conversion Upon Satisfaction of Common Stock Sale Price Condition A noteholder may convert its notes during any fiscal quarter (and only during such fiscal quarter) commencing after the fiscal quarter ending on September 30, 2025, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter. Conversion Upon Satisfaction of Note Trading Price Condition A noteholder may convert its notes during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the “trading price” (as defined below under the caption “—Definitions”) per $1,000 principal amount of notes, as determined following a request by a noteholder in accordance with the procedures described below, for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day. We refer to this condition as the “trading price condition.” The trading price will be determined by the bid solicitation agent as described below and in the For personal use only
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- 35 - definition of “trading price.” The bid solicitation agent (if not us) will have no obligation to determine the trading price of the notes unless we have requested such determination in writing, and we will have no obligation to make such request (or seek bids ourselves) unless a noteholder holding at least $5 million in aggregate principal amount of the notes provides us with reasonable evidence that the trading price per $1,000 principal amount of notes would be less than 98% of the product of the last reported sale price per share of our common stock and the conversion rate. If a noteholder provides such evidence, then we will instruct the bid solicitation agent to (or, if we are acting as the bid solicitation agent, we will) determine the trading price of the notes beginning on the next trading day and on each successive trading day until the trading price per $1,000 principal amount of notes is greater than or equal to 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day. If the trading price condition has been met as described above, then we will notify the noteholders of the same. If, on any trading day after the trading price condition has been met as described above, the trading price per $1,000 principal amount of notes is greater than or equal to 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day, then we will notify the noteholders of the same. We will act as the initial bid solicitation agent. However, we may change the bid solicitation agent, and we may appoint any of our subsidiaries to act in that capacity as well, without prior notice to the noteholders. Conversion Upon Specified Corporate Events Certain Distributions If, before March 1, 2030, we elect to: distribute, to all or substantially all holders of our common stock, any rights, options or warrants (other than rights issued pursuant to a stockholder rights plan, so long as such rights have not separated from our common stock and are not exercisable until the occurrence of a triggering event, except that such rights will be deemed to be distributed under this bullet point upon their separation from our common stock or upon the occurrence of such triggering event) entitling them, for a period of not more than 60 calendar days after the date such distribution is first publicly announced, to subscribe for or purchase shares of our common stock at a price per share that is less than the average of the last reported sale prices per share of our common stock for the 10 consecutive trading days ending on, and including, the trading day immediately before the date such distribution is announced (determined in accordance with the provisions described in the third paragraph of clause (2) under the heading “—Conversion Rate Adjustments—Generally” below); or distribute, to all or substantially all holders of our common stock, assets or securities of ours or rights to purchase our securities, which distribution per share of our common stock has a value, as reasonably determined by our board of directors, exceeding 10% of the last reported sale price per share of our common stock on the trading day immediately before the date such distribution is announced, then, in either case, we will send notice of such distribution, and of the related right to convert For personal use only
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- 36 - notes, to noteholders at least 45 scheduled trading days before the “ex-dividend date” (as defined below under the caption “—Definitions”) for such distribution (or, if later in the case of any such separation of rights issued pursuant to a stockholder rights plan or the occurrence of any such triggering event under a stockholder rights plan, as soon as reasonably practicable after we become aware that such separation or triggering event has occurred or will occur). Once we have sent such notice, noteholders may convert their notes at any time until the earlier of the close of business on the business day immediately before such ex-dividend date and our announcement that such distribution will not take place. However, the notes will not become convertible on account of such distribution (but we will still be required to send notice of such distribution as described above) if each noteholder participates, at the same time and on the same terms as holders of our common stock, and solely by virtue of being a noteholder, in such distribution without having to convert such noteholder’s notes and as if such noteholder held a number of shares of our common stock equal to the product of (i) the conversion rate in effect on the record date for such distribution; and (ii) the aggregate principal amount (expressed in thousands) of notes held by such noteholder on such record date. Certain Corporate Events If a fundamental change, make-whole fundamental change (other than a make-whole fundamental change pursuant to clause (ii) of the definition thereof) or “common stock change event” (as defined below under the caption “—Effect of Common Stock Change Event”) occurs (other than a merger or other business combination transaction that is effected solely to change our jurisdiction of incorporation and that does not constitute a fundamental change or a make-whole fundamental change), then, in each case, noteholders may convert their notes at any time from, and including, the effective date of such transaction or event to, and including, the 35th trading day after such effective date (or, if such transaction or event also constitutes a fundamental change (other than an “exempted fundamental change,” as defined below under the caption “—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes—No Repurchase Right in Certain Circumstances”), to, but excluding, the related fundamental change repurchase date). No later than the business day after such effective date, we will send notice to the noteholders of such transaction or event, such effective date and the related right to convert notes. If we do not provide such notice by the business day after the effective date, then the last day on which the notes are convertible will be extended by the number of business days from, and including, the business day after the effective date to, but excluding, the date we provide the notice. Conversion Upon Redemption If we call any note for redemption, then the holder of such note may convert such note at any time before the close of business on the second business day immediately before the related redemption date (or, if we fail to pay the redemption price due on such redemption date in full, at any time until such time as we pay such redemption price in full). Conversions During Free Convertibility Period A noteholder may convert its notes at any time from, and including, March 1, 2030 until the close of business on the second scheduled trading day immediately before the maturity date. For personal use only
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- 37 - Conversion Procedures To convert a beneficial interest in a global note, the owner of the beneficial interest must: comply with the depositary procedures for converting the beneficial interest (at which time such conversion will become irrevocable); if applicable, pay any interest payable on the next interest payment date, as described above under the caption “—Treatment of Interest Upon Conversion”; and if applicable, pay any documentary or other taxes as described below. To convert all or a portion of a physical note, the holder of such note must: complete, manually sign and deliver to the conversion agent the conversion notice attached to such note or a facsimile of such conversion notice; deliver such note to the conversion agent (at which time such conversion will become irrevocable); furnish any endorsements and transfer documents that we or the conversion agent may require; if applicable, pay any interest payable on the next interest payment date, as described above under the caption “—Treatment of Interest Upon Conversion”; and if applicable, pay any documentary or other taxes as described below. Notes may be surrendered for conversion during a period where the notes are convertible as described herein only after the “open of business” (as defined below under the caption “— Definitions”) and before the close of business on a day that is a business day. We will pay any documentary, stamp or similar issue or transfer tax or duty due on the issue or delivery of any shares of our common stock upon conversion, except any tax or duty that is due because the converting noteholder requests those shares to be registered in a name other than the noteholder’s name. We refer to the first business day on which the requirements described above to convert a note are satisfied as the “conversion date.” If a noteholder has validly delivered a “fundamental change repurchase notice” (as defined below under the caption “—Fundamental Change Permits Noteholders to Require Us to Repurchase Notes”) with respect to a note, then such note may not be converted, except to the extent (i) such notice is withdrawn in accordance with the procedures described below; or (ii) we fail to pay the related fundamental change repurchase price for such note. For personal use only
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- 38 - Settlement Upon Conversion Generally Upon conversion, we may choose to pay or deliver, as applicable, either cash (“cash settlement”) or a combination of cash and shares of our common stock (“combination settlement”), as described below. We refer to each of these settlement methods as a “settlement method.” The consideration due upon the conversion of any note will be determined based on the conversion rate, the “daily VWAPs” per share of our common stock over an “observation period” consisting of 40 consecutive “VWAP trading days” and, in the case of combination settlement, the “specified dollar amount” (as those terms are defined below under the caption “—Definitions”) that applies to the conversion. The applicable specified dollar amount will be determined in accordance with the provisions described below and will be an amount that is no less than $1,000 per $1,000 principal amount of notes being converted. Settlement Method We will have the right, as described below, to elect the settlement method applicable to the conversion of any notes. Except as described below, we must use the same settlement method for all conversions with the same conversion date, but we will not be obligated to use the same settlement method for conversions with different conversion dates. All conversions with a conversion date that occurs on or after March 1, 2030 will be settled using the same settlement method, and we will send notice of such settlement method to noteholders no later than the open of business on March 1, 2030. If we elect a settlement method for a conversion with a conversion date that occurs before March 1, 2030, then we will send notice of such settlement method to the converting noteholder no later than the close of business on the business day immediately after the conversion date. Notwithstanding anything to the contrary described above, if we call any notes for redemption, then (i) we will specify in the related redemption notice (and, in the case of a redemption of less than all outstanding notes, in a notice simultaneously sent to all holders of notes not called for redemption) the settlement method that will apply to all conversions with a conversion date that occurs on or after the date we send such redemption notice and on or before the second business day before the related redemption date; and (ii) if the related redemption date is on or after March 1, 2030, then such settlement method must be the same settlement method that applies to all conversions with a conversion date that occurs on or after March 1, 2030. If we do not timely elect a settlement method with respect to any conversion, then we will be deemed to have elected the “default settlement method” (as defined below). If we timely elect combination settlement with respect to a conversion but do not timely notify the converting noteholder of the applicable specified dollar amount, then the specified dollar amount for such conversion will be deemed to be $1,000 per $1,000 principal amount of notes. For the avoidance of doubt, our failure to timely elect a settlement method or specify the applicable specified dollar amount will not constitute a default under the indenture. The “default settlement method” will initially be combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of notes. However, we may, from time to time, change the default settlement method, to any settlement method that we are then permitted to elect, by sending notice of the new default settlement method to the noteholders. In addition, we may, For personal use only
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- 39 - by notice to the noteholders, elect to irrevocably fix the settlement method or to irrevocably eliminate any one or more (but not all) settlement methods (including eliminating combination settlement with a particular specified dollar amount or range of specified dollar amounts), provided we are then otherwise permitted to elect the settlement method so irrevocably elected or the settlement method(s) remaining after such irrevocable elimination, as applicable. If we make such an irrevocable election, then such election will apply to all note conversions with a conversion date that is on or after the date we send such notice and we will, if needed, simultaneously change the default settlement method to a settlement method that is consistent with such irrevocable election. However, in all cases, no such irrevocable election will affect any settlement method theretofore elected (or deemed to be elected) with respect to any note pursuant to the indenture, and in no event may we elect (whether directly or by eliminating all other settlement methods) combination settlement with a specified dollar amount that is less than $1,000 per $1,000 principal amount of notes. For the avoidance of doubt, such an irrevocable election, if made, will be effective without the need to amend the indenture or the notes, including pursuant to the provisions described in the seventh bullet point of the third paragraph under the caption “—Modification and Amendment” below. However, we may nonetheless choose to execute such an amendment at our option. If we change the default settlement method or irrevocably fix the settlement method pursuant to the provisions described above, then we will, substantially concurrently, either post the default settlement method or fixed settlement method, as applicable, on our website or disclose the same in a current report on Form 8-K (or any successor form) that is filed with, or furnished to, the SEC. Consideration Due Upon Conversion Subject to the other provisions described in this section, the consideration due upon conversion of each $1,000 principal amount of a note will be as follows: if cash settlement applies, cash in an amount equal to the sum of the “daily conversion values” (as defined below under the caption “—Definitions”) for each VWAP trading day in the observation period for such conversion; or if combination settlement applies, (i) a number of shares of our common stock equal to the sum of the “daily share amounts” (as defined below under the caption “—Definitions”) for each VWAP trading day in the observation period for such conversion; and (ii) an amount of cash equal to the sum of the “daily cash amounts” (as defined below under the caption “—Definitions”) for each VWAP trading day in such observation period. However, in lieu of delivering any fractional share of our common stock otherwise due upon conversion, we will pay cash based on the daily VWAP on the last VWAP trading day of the applicable observation period. If a noteholder converts more than one note on a conversion date, then the consideration due upon such conversion will (in the case of any global note, to the extent permitted by, and practicable under, the depositary procedures) be computed based on the total principal amount of notes converted on such conversion date by that noteholder. For personal use only
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- 40 - Delivery of the Conversion Consideration Except as described below under the captions “—Conversion Rate Adjustments” and “—Effect of Common Stock Change Event,” we will pay or deliver, as applicable, the consideration due upon conversion on the second business day immediately after the last VWAP trading day of the observation period for such conversion. When Converting Noteholders Become Stockholders of Record The person in whose name any share of our common stock is issuable upon conversion of any note will be deemed to become the holder of record of that share as of the close of business on the last VWAP trading day of the observation period for such conversion. Conversion Rate Adjustments Generally The conversion rate will be adjusted for the events described below. However, we are not required to adjust the conversion rate for these events (other than a stock split or combination or a tender or exchange offer) if each noteholder participates, at the same time and on the same terms as holders of our common stock, and solely by virtue of being a holder of notes, in such transaction or event without having to convert such noteholder’s notes and as if such noteholder held a number of shares of our common stock equal to the product of (i) the conversion rate in effect on the related record date; and (ii) the aggregate principal amount (expressed in thousands) of notes held by such noteholder on such date. (1) Stock Dividends, Splits and Combinations. If we issue solely shares of our common stock as a dividend or distribution on all or substantially all shares of our common stock, or if we effect a stock split or a stock combination of our common stock (in each case excluding an issuance solely pursuant to a common stock change event, as to which the provisions described below under the caption “—Effect of Common Stock Change Event” will apply), then the conversion rate will be adjusted based on the following formula: where: CR0 = the conversion rate in effect immediately before the open of business on the ex-dividend date for such dividend or distribution, or immediately before the open of business on the effective date of such stock split or stock combination, as applicable; CR1 = the conversion rate in effect immediately after the open of business on such ex-dividend date or effective date, as applicable; OS0 = the number of shares of our common stock outstanding immediately before 0 1 01 OS OSCRCR For personal use only
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- 41 - the open of business on such ex-dividend date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and OS1 = the number of shares of our common stock outstanding immediately after giving effect to such dividend, distribution, stock split or stock combination. If any dividend, distribution, stock split or stock combination of the type described in this paragraph (1) is declared or announced, but not so paid or made, then the conversion rate will be readjusted, effective as of the date our board of directors determines not to pay such dividend or distribution or to effect such stock split or stock combination, to the conversion rate that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced. (2) Rights, Options and Warrants . If we distribute, to all or substantially all holders of our common stock, rights, options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which the provisions described below in paragraph (3)(a) and under the caption “—Stockholder Rights Plans” will apply) entitling such holders, for a period of not more than 60 calendar days after the date such distribution is first publicly announced, to subscribe for or purchase shares of our common stock at a price per share that is less than the average of the last reported sale prices per share of our common stock for the 10 consecutive trading days ending on, and including, the trading day immediately before the date such distribution is announced, then the conversion rate will be increased based on the following formula: where: CR0 = the conversion rate in effect immediately before the open of business on the ex-dividend date for such distribution; CR1 = the conversion rate in effect immediately after the open of business on such ex-dividend date; OS = the number of shares of our common stock outstanding immediately before the open of business on such ex-dividend date; X = the total number of shares of our common stock issuable pursuant to such rights, options or warrants; and Y = a number of shares of our common stock obtained by dividing (x) the aggregate price payable to exercise such rights, options or warrants by (y) the average of the last reported sale prices per share of our common stock for the 10 consecutive trading days ending on, and including, the trading day immediately before the date such distribution is announced. YOS XOSCRCR 01 For personal use only
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- 42 - To the extent such rights, options or warrants are not so distributed, the conversion rate will be readjusted to the conversion rate that would then be in effect had the increase to the conversion rate for such distribution been made on the basis of only the rights, options or warrants, if any, actually distributed. In addition, to the extent that shares of our common stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options or warrants not being exercised), the conversion rate will be readjusted to the conversion rate that would then be in effect had the increase to the conversion rate for such distribution been made on the basis of delivery of only the number of shares of our common stock actually delivered upon exercise of such rights, options or warrants. For purposes of this paragraph (2) and the provisions described above under the caption “—When the Notes May Be Converted—Conversion Upon Specified Corporate Events— Certain Distributions,” in determining whether any rights, options or warrants entitle holders of our common stock to subscribe for or purchase shares of our common stock at a price per share that is less than the average of the last reported sale prices per share of our common stock for the 10 consecutive trading days ending on, and including, the trading day immediately before the date the distribution of such rights, options or warrants is announced, and in determining the aggregate price payable to exercise such rights, options or warrants, there will be taken into account any consideration we receive for such rights, options or warrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by us in good faith and in a commercially reasonable manner. (3) Spin-Offs and Other Distributed Property. (a) Distributions Other Than Spin-Offs . If we distribute shares of our “capital stock” (as defined below under the caption “—Definitions”), evidences of our indebtedness or other assets or property of ours, or rights, options or warrants to acquire our capital stock or other securities, to all or substantially all holders of our common stock, excluding: dividends, distributions, rights, options or warrants for which an adjustment to the conversion rate is required (or would be required without regard to the “deferral exception” (as defined below under the caption “—The Deferral Exception”)) pursuant to paragraph (1) or (2) above; dividends or distributions paid exclusively in cash for which an adjustment to the conversion rate is required (or would be required without regard to the deferral exception) pursuant to paragraph (4) below; rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extent provided below under the caption “—Stockholder Rights Plans”; spin-offs for which an adjustment to the conversion rate is required (or would be required without regard to the deferral exception) pursuant to paragraph For personal use only
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- 43 - (3)(b) below; a distribution solely pursuant to a tender offer or exchange offer for shares of our common stock, as to which the provisions described below in paragraph (5) will apply; and a distribution solely pursuant to a common stock change event, as to which the provisions described below under the caption “—Effect of Common Stock Change Event” will apply, then the conversion rate will be increased based on the following formula: where: CR0 = the conversion rate in effect immediately before the open of business on the ex-dividend date for such distribution; CR1 = the conversion rate in effect immediately after the open of business on such ex-dividend date; SP = the average of the last reported sale prices per share of our common stock for the 10 consecutive trading days ending on, and including, the trading day immediately before such ex-dividend date; and FMV = the fair market value (as determined by us in good faith and in a commercially reasonable manner), as of such ex-dividend date, of the shares of capital stock, evidences of indebtedness, assets, property, rights, options or warrants distributed per share of our common stock pursuant to such distribution. However, if FMV is equal to or greater than SP, then, in lieu of the foregoing adjustment to the conversion rate, each noteholder will receive, for each $1,000 principal amount of notes held by such noteholder on the record date for such distribution, at the same time and on the same terms as holders of our common stock, and without having to convert its notes, the amount and kind of shares of capital stock, evidences of indebtedness, assets, property, rights, options or warrants that such noteholder would have received in such distribution if such noteholder had owned, on such record date, a number of shares of our common stock equal to the conversion rate in effect on such record date. To the extent such distribution is not so paid or made, the conversion rate will be readjusted to the conversion rate that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually made or paid. (b) Spin-Offs. If we distribute or dividend shares of capital stock of any class or series, FMVSP SPCRCR 01 For personal use only
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- 44 - or similar equity interests, of or relating to an “affiliate” or “subsidiary” (as those terms are defined below under the caption “—Definitions”) or other business unit of ours to all or substantially all holders of our common stock (other than solely pursuant to (x) a common stock change event, as to which the provisions described below under the caption “—Effect of Common Stock Change Event” will apply; or (y) a tender offer or exchange offer for shares of our common stock, as to which the provisions described below in paragraph (5) will apply), and such capital stock or equity interests are listed or quoted (or will be listed or quoted upon the consummation of the transaction) on a U.S. national securities exchange (a “spin- off”), then the conversion rate will be increased based on the following formula: where: CR0 = the conversion rate in effect immediately before the close of business on the last trading day of the “spin-off valuation period” (as defined below) for such spin-off; CR1 = the conversion rate in effect immediately after the close of business on the last trading day of the spin-off valuation period; FMV = the product of (x) the average of the last reported sale prices per share or unit of the capital stock or equity interests distributed in such spin-off over the 10 consecutive trading day period (the “spin- off valuation period”) beginning on, and including, the ex-dividend date for such spin-off (such average to be determined as if references to our common stock in the definitions of “last reported sale price,” “trading day” and “market disruption event” were instead references to such capital stock or equity interests); and (y) the number of shares or units of such capital stock or equity interests distributed per share of our common stock in such spin-off; and SP = the average of the last reported sale prices per share of our common stock for each trading day in the spin-off valuation period. Notwithstanding anything to the contrary, if any VWAP trading day of the observation period for a note to be converted occurs during the spin-off valuation period for such spin-off, then, solely for purposes of determining the conversion rate for such VWAP trading day for such conversion, such spin-off valuation period will be deemed to consist of the trading days occurring in the period from, and including, the ex-dividend date for such spin-off to, and including, such VWAP trading day. To the extent any dividend or distribution of the type described above in this paragraph (3)(b) is declared but not made or paid, the conversion rate will be SP SPFMVCRCR 01 For personal use only
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- 45 - readjusted to the conversion rate that would then be in effect had the adjustment been made on the basis of only the dividend or distribution, if any, actually made or paid. (4) Cash Dividends or Distributions . If any cash dividend or distribution is made to all or substantially all holders of our common stock, then the conversion rate will be increased based on the following formula: where: CR0 = the conversion rate in effect immediately before the open of business on the ex-dividend date for such dividend or distribution; CR1 = the conversion rate in effect immediately after the open of business on such ex-dividend date; SP = the last reported sale price per share of our common stock on the trading day immediately before such ex-dividend date; and D = the cash amount distributed per share of our common stock in such dividend or distribution. However, if D is equal to or greater than SP, then, in lieu of the foregoing adjustment to the conversion rate, each noteholder will receive, for each $1,000 principal amount of notes held by such noteholder on the record date for such dividend or distribution, at the same time and on the same terms as holders of our common stock, and without having to convert its notes, the amount of cash that such noteholder would have received in such dividend or distribution if such noteholder had owned, on such record date, a number of shares of our common stock equal to the conversion rate in effect on such record date. To the extent such dividend or distribution is declared but not made or paid, the conversion rate will be readjusted to the conversion rate that would then be in effect had the adjustment been made on the basis of only the dividend or distribution, if any, actually made or paid. (5) Tender Offers or Exchange Offers . If we or any of our subsidiaries makes a payment in respect of a tender offer or exchange offer for shares of our common stock (other than solely pursuant to an odd-lot tender offer pursuant to Rule 13e-4(h)(5) under the Exchange Act), and the value (determined as of the expiration time by us in good faith and in a commercially reasonable manner) of the cash and other consideration paid or payable per share of our common stock in such tender or exchange offer exceeds the last reported sale price per share of our common stock on the trading day immediately after the last date (the “expiration date”) on which tenders or exchanges may be made pursuant to such tender or DSP SPCRCR 01 For personal use only
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- 46 - exchange offer (as it may be amended), then the conversion rate will be increased based on the following formula: where: CR0 = the conversion rate in effect immediately before the close of business on the last trading day of the “tender/exchange offer valuation period” (as defined below) for such tender or exchange offer; CR1 = the conversion rate in effect immediately after the close of business on the last trading day of the tender/exchange offer valuation period; AC = the aggregate value (determined as of the time (the “expiration time”) such tender or exchange offer expires by us in good faith and in a commercially reasonable manner) of all cash and other consideration paid or payable for shares of our common stock purchased or exchanged in such tender or exchange offer; OS0 = the number of shares of our common stock outstanding immediately before the expiration time (including all shares of our common stock accepted for purchase or exchange in such tender or exchange offer); OS1 = the number of shares of our common stock outstanding immediately after the expiration time (excluding all shares of our common stock accepted for purchase or exchange in such tender or exchange offer); and SP = the average of the last reported sale prices per share of our common stock over the 10 consecutive trading day period (the “tender/exchange offer valuation period”) beginning on, and including, the trading day immediately after the expiration date; provided, however, that the conversion rate will in no event be adjusted down pursuant to the provisions described in this paragraph (5), except to the extent provided in the immediately following paragraph. Notwithstanding anything to the contrary, if any VWAP trading day of the observation period for a note to be converted occurs during the tender/exchange offer valuation period for such tender or exchange offer, then, solely for purposes of determining the conversion rate for such VWAP trading day for such conversion, such tender/exchange offer valuation period will be deemed to consist of the trading days occurring in the period from, and including, the trading day immediately after the expiration date for such tender or exchange offer to, and including, such VWAP trading day. 0 1 01 OSSP OSSPACCRCR For personal use only
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- 47 - To the extent such tender or exchange offer is announced but not consummated (including as a result of being precluded from consummating such tender or exchange offer under applicable law), or any purchases or exchanges of shares of our common stock in such tender or exchange offer are rescinded, the conversion rate will be readjusted to the conversion rate that would then be in effect had the adjustment been made on the basis of only the purchases or exchanges of shares of our common stock, if any, actually made, and not rescinded, in such tender or exchange offer. We will not be required to adjust the conversion rate except as described above or below under the caption “—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change.” Without limiting the foregoing, we will not be required to adjust the conversion rate on account of: except as described above, the sale of shares of our common stock for a purchase price that is less than the market price per share of our common stock or less than the conversion price; the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in shares of our common stock under any such plan; the issuance of any shares of our common stock or options or rights to purchase shares of our common stock pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, us or any of our subsidiaries; the issuance of any shares of our common stock pursuant to any option, warrant, right or convertible or exchangeable security of ours outstanding as of the date we first issue the notes; solely a change in the par value of our common stock; or accrued and unpaid interest on the notes. Notice of Conversion Rate Adjustments Upon the effectiveness of any adjustment to the conversion rate pursuant to the provisions described above under the caption “—Conversion Rate Adjustments—Generally,” we will promptly send notice to the noteholders containing (i) a brief description of the transaction or other event on account of which such adjustment was made; (ii) the conversion rate in effect immediately after such adjustment; and (iii) the effective time of such adjustment. Voluntary Conversion Rate Increases To the extent permitted by law and applicable stock exchange rules, we, from time to time, may (but are not required to) increase the conversion rate by any amount if (i) our board of directors determines that such increase is in our best interest or that such increase is advisable to avoid or diminish any income tax imposed on holders of our common stock or rights to purchase our common stock as a result of any dividend or distribution of shares (or rights to acquire shares) of For personal use only
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- 48 - our common stock or any similar event; (ii) such increase is in effect for a period of at least 20 business days; and (iii) such increase is irrevocable during such period. Tax Considerations A holder or beneficial owner of the notes may, in some circumstances, including a cash distribution or dividend on our common stock, be deemed to have received a distribution that is subject to U.S. federal income tax as a result of an adjustment or the non-occurrence of an adjustment to the conversion rate. Applicable withholding taxes (including backup withholding) may be withheld from interest, if any, and payments upon conversion, repurchase, redemption or maturity of the notes. In addition, if any withholding taxes (including backup withholding) are paid on behalf of a holder or beneficial owner, then those withholding taxes may be withheld from or set off against payments of cash or the delivery of shares of our common stock, if any, in respect of the notes (or, in some circumstances, any payments on our common stock) or from any proceeds of any sale, exchange or other disposition of such notes (including the retirement of such notes) or such common stock, or other funds or assets of that holder or beneficial owner. For a discussion of the U.S. federal income tax treatment of an adjustment to the conversion rate, see “Material U.S. Federal Income Tax Considerations.” The Deferral Exception If an adjustment to the conversion rate otherwise required by the indenture would result in a change of less than 1% to the conversion rate, then we may, at our election, defer and carry forward such adjustment, except that all such deferred adjustments must be given effect immediately upon the earliest of the following: (i) when all such deferred adjustments would, had they not been so deferred and carried forward, result in a change of at least 1% to the conversion rate; (ii) the conversion date of, or any VWAP trading day of an observation period for, any note; (iii) the date a fundamental change or make-whole fundamental change occurs; (iv) the date we call any notes for redemption; and (v) March 1, 2030. We refer to our ability to defer adjustments as described above as the “deferral exception.” Special Provisions for Adjustments that Are Not Yet Effective and Where Converting Noteholders Participate in the Relevant Transaction or Event Notwithstanding anything to the contrary, if: a note is to be converted pursuant to combination settlement; the record date, effective date or expiration time for any event that requires an adjustment to the conversion rate pursuant to the provisions described above under the caption “— Conversion Rate Adjustments—Generally” has occurred on or before any VWAP trading day in the observation period for such conversion, but an adjustment to the conversion rate for such event has not yet become effective as of such VWAP trading day; the consideration due in respect of such VWAP trading day includes any whole or fractional shares of our common stock; and such shares are not entitled to participate in such event (because they were not held on the For personal use only
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- 49 - related record date or otherwise), then, solely for purposes of such conversion, we will, without duplication, give effect to such adjustment on such VWAP trading day. In such case, if the date we are otherwise required to deliver the consideration due upon such conversion is before the first date on which the amount of such adjustment can be determined, then we will delay the settlement of such conversion until the second business day after such first date. Notwithstanding anything to the contrary, if: a conversion rate adjustment for any dividend or distribution becomes effective on any ex- dividend date pursuant to the provisions described above under the caption “—Conversion Rate Adjustments—Generally”; a note is to be converted pursuant to combination settlement; any VWAP trading day in the observation period for such conversion occurs on or after such ex-dividend date and on or before the related record date; the consideration due in respect of such VWAP trading day includes any whole or fractional shares of our common stock based on a conversion rate that is adjusted for such dividend or distribution; and such shares would be entitled to participate in such dividend or distribution, then the conversion rate adjustment relating to such ex-dividend date will be made for such conversion in respect of such VWAP trading day, but the shares of our common stock issuable with respect to such VWAP trading day based on such adjusted conversion rate will not be entitled to participate in such dividend or distribution. Stockholder Rights Plans If any shares of our common stock are to be issued upon conversion of any note and, at the time of such conversion, we have in effect any stockholder rights plan, then the holder of that note will be entitled to receive, in addition to, and concurrently with the delivery of, the consideration otherwise due upon such conversion, the rights set forth in such stockholder rights plan, unless such rights have separated from our common stock at such time, in which case, and only in such case, the conversion rate will be adjusted pursuant to the provisions described above in paragraph (3)(a) under the caption “—Conversion Rate Adjustments—Generally” on account of such separation as if, at the time of such separation, we had made a distribution of the type referred to in such paragraph to all holders of our common stock, subject to potential readjustment pursuant to the provisions described in such paragraph. We currently do not have a stockholder rights plan in effect. Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change Generally If a make-whole fundamental change occurs and the conversion date for the conversion of a note For personal use only
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- 50 - occurs during the related “make-whole fundamental change conversion period” (as defined below under the caption “—Definitions”), then, subject to the provisions described below, the conversion rate applicable to such conversion will be increased by a number of shares (the “additional shares”) set forth in the table below corresponding (after interpolation as described below) to the “make- whole fundamental change effective date” (as defined below under the caption “—Definitions”) and the “stock price” (as defined below under the caption “—Definitions”) of such make-whole fundamental change: Stock Price Make-Whole Fundamental Change Effective Date $61.11 $70.00 $80.97 $90.00 $105.26 $125.00 $150.00 $200.00 $250.00 $300.00 $400.00 June 5, 2025........... 4.0138 3.1234 2.3489 1.8873 1.3366 0.8844 0.5425 0.2138 0.0811 0.0252 0.0000 June 1, 2026........... 4.0138 3.1234 2.3489 1.8873 1.3088 0.8386 0.4939 0.1779 0.0596 0.0145 0.0000 June 1, 2027........... 4.0138 3.1234 2.3315 1.8023 1.1956 0.7266 0.3989 0.1217 0.0310 0.0035 0.0000 June 1, 2028........... 4.0138 3.1234 2.1443 1.5904 0.9817 0.5414 0.2605 0.0560 0.0062 0.0000 0.0000 June 1, 2029........... 4.0138 2.8046 1.7194 1.1566 0.5999 0.2613 0.0898 0.0053 0.0000 0.0000 0.0000 June 1, 2030........... 4.0138 1.9356 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 If such make-whole fundamental change effective date or stock price is not set forth in the table above, then: if such stock price is between two stock prices in the table above or the make-whole fundamental change effective date is between two dates in the table above, then the number of additional shares will be determined by straight-line interpolation between the numbers of additional shares set forth for the higher and lower stock prices in the table above or the earlier and later dates in the table above, based on a 365- or 366- day year, as applicable; and if the stock price is greater than $400.00 (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above are adjusted, as described below under the caption “—Adjustment of Stock Prices and Number of Additional Shares”), or less than $61.11 (subject to adjustment in the same manner), per share, then no additional shares will be added to the conversion rate. Notwithstanding anything to the contrary, in no event will the conversion rate be increased to an amount that exceeds 16.3639 shares of our common stock per $1,000 principal amount of notes, which amount is subject to adjustment in the same manner as, and at the same time and for the same events for which, the conversion rate is required to be adjusted pursuant to the provisions described above under the caption “—Conversion Rate Adjustments—Generally.” For the avoidance of doubt, calling any notes for redemption will constitute a make-whole fundamental change only with respect to the notes called for redemption, and not with respect to the notes not called for redemption. Accordingly, if we elect to redeem less than all of the outstanding notes, then holders of the notes not called for redemption will not be entitled to an increased conversion rate for such notes as described above on account of the redemption, except to the limited extent described above under the caption “—Optional Redemption.” As set forth in the definition of “make-whole fundamental change conversion period” below under the caption “—Definitions,” if the conversion date for the conversion of a note occurs during a For personal use only
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- 51 - make-whole fundamental change conversion period relating to both a make-whole fundamental change resulting from our calling notes for redemption and another make-whole fundamental change, then, solely for purposes of that conversion, such conversion date will be deemed to occur only during the period relating to the make-whole fundamental change with the earlier make-whole fundamental change effective date. In that circumstance, the make-whole fundamental change with the later make-whole fundamental change effective date will be deemed not to occur for purposes of such conversion. Adjustment of Stock Prices and Number of Additional Shares The stock prices in the first row ( i.e., the column headers) of the table above will be adjusted in the same manner as, and at the same time and for the same events for which, the conversion price is adjusted as a result of the operation of the provisions described above under the caption “— Conversion Rate Adjustments—Generally.” The numbers of additional shares in the table above will be adjusted in the same manner as, and at the same time and for the same events for which, the conversion rate is adjusted pursuant to the provisions described above under the caption “— Conversion Rate Adjustments—Generally.” Notice of Make-Whole Fundamental Change We will notify noteholders of each make-whole fundamental change in accordance with the provisions described above under the captions “—When the Notes May Be Converted— Conversion Upon Specified Corporate Events—Certain Corporate Events” and “—Optional Redemption.” Enforceability Our obligation to increase the conversion rate as described above in connection with a make-whole fundamental change could be considered a penalty, in which case its enforceability would be subject to general principles of reasonableness and equitable remedies. Effect of Common Stock Change Event Generally If there occurs any: recapitalization, reclassification or change of our common stock, other than (x) changes solely resulting from a subdivision or combination of our common stock, (y) a change only in par value or from par value to no par value or no par value to par value or (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities; consolidation, merger, combination or binding or statutory share exchange involving us; sale, lease or other transfer of all or substantially all of the assets of us and our subsidiaries, taken as a whole, to any person; or other similar event, For personal use only
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- 52 - and, as a result of which, our common stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing (such an event, a “common stock change event,” and such other securities, cash or property, the “reference property,” and the amount and kind of reference property that a holder of one share of our common stock would be entitled to receive on account of such common stock change event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property), a “reference property unit”), then, notwithstanding anything to the contrary, from and after the effective time of such common stock change event, (i) the consideration due upon conversion of any note, and the conditions to any such conversion, will be determined in the same manner as if each reference to any number of shares of our common stock in the provisions described under this “—Conversion Rights” section (or in any related definitions) were instead a reference to the same number of reference property units; (ii) for purposes of the redemption provisions described above under the caption “— Optional Redemption,” each reference to any number of shares of our common stock in such provisions (or in any related definitions) will instead be deemed to be a reference to the same number of reference property units; and (iii) for purposes of the definitions of “fundamental change” and “make-whole fundamental change,” references to our “common stock” and “common equity” will be deemed to refer to the common equity (including depositary receipts representing common equity), if any, forming part of such reference property; if such reference property unit consists entirely of cash, then (i) each conversion of any note with a conversion date that occurs on or after the effective date of such common stock change event will be settled entirely in cash in an amount, per $1,000 principal amount of such note being converted, equal to the product of (x) the conversion rate in effect on such conversion date (including, for the avoidance of doubt, any increase to such conversion rate pursuant to the provisions described above under the caption “—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change,” if applicable); and (y) the amount of cash constituting such reference property unit; and (ii) we will settle each such conversion no later than the fifth business day after the relevant conversion date; and for these purposes, (i) the daily VWAP of any reference property unit or portion thereof that consists of a class of common equity securities will be determined by reference to the definition of “daily VWAP,” substituting, if applicable, the Bloomberg page for such class of securities in such definition; and (ii) the daily VWAP of any reference property unit or portion thereof that does not consist of a class of common equity securities, and the last reported sale price of any reference property unit or portion thereof that does not consist of a class of securities, will be the fair value of such reference property unit or portion thereof, as applicable, determined in good faith and in a commercially reasonable manner by us (or, in the case of cash denominated in U.S. dollars, the face amount thereof). If the reference property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the reference property unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per share of our common stock, by the holders of our common stock. We will notify the For personal use only
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- 53 - noteholders of such weighted average as soon as practicable after such determination is made. We will not become a party to any common stock change event unless its terms are consistent with the provisions described under this “—Effect of Common Stock Change Event” caption. Execution of Supplemental Indenture At or before the effective time of the common stock change event, we and the resulting, surviving or transferee person (if not us) of such common stock change event (the “successor person”) will execute and deliver to the trustee a supplemental indenture that (i) provides for subsequent adjustments to the conversion rate in a manner consistent with the provisions described above; and (ii) contains such other provisions, if any, that we reasonably determine are appropriate to preserve the economic interests of the noteholders and to give effect to the provisions described above. If the reference property includes shares of stock or other securities or assets (other than cash) of a person other than the successor person, then such other person will also execute such supplemental indenture and such supplemental indenture will contain such additional provisions, if any, that we reasonably determine are appropriate to preserve the economic interests of noteholders. Notice of Common Stock Change Event We will provide notice of each common stock change event to noteholders no later than the business day after the effective date of the common stock change event. Exchange in Lieu of Conversion Notwithstanding anything to the contrary, and subject to the terms of the indenture, if a note is submitted for conversion, we may elect to arrange to have such note exchanged in lieu of conversion by a financial institution we designate. To make such election, we must send notice of such election to the holder of such note before the close of business on the business day immediately following the conversion date for such note, and we must arrange for the financial institution to deliver the consideration due upon such conversion in the same manner and at the same time as we would have been required to do so. We will remain responsible to deliver such consideration if the financial institution fails to timely deliver the same. Equitable Adjustments to Prices Whenever the indenture requires us to calculate the average of the last reported sale prices, or any function thereof, over a period of multiple days (including to calculate the stock price or an adjustment to the conversion rate), or to calculate daily VWAPs over an observation period, we will, if appropriate, make appropriate adjustments, if any, to those calculations to account for any adjustment to the conversion rate pursuant to the provisions described above under the caption “— Conversion Rights—Conversion Rate Adjustments—Generally” that becomes effective, or any event requiring such an adjustment to the conversion rate where the ex-dividend date or effective date, as applicable, of such event occurs, at any time during such period or observation period, as applicable. For personal use only
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- 54 - Fundamental Change Permits Noteholders to Require Us to Repurchase Notes Generally If a fundamental change occurs, then each noteholder will have the right (the “fundamental change repurchase right”) to require us to repurchase its notes (or any portion thereof in an authorized denomination) for cash on a date (the “fundamental change repurchase date”) of our choosing, which must be a business day that is no more than 35, nor less than 20, business days after the date we send the related fundamental change notice, as described below. The repurchase price (the “fundamental change repurchase price”) for a note tendered for repurchase will be the principal amount of such note plus accrued and unpaid special interest and additional interest, if any, on such note to, but excluding, the fundamental change repurchase date. However, if any payment of special interest or additional interest has accrued and would be payable in respect of any interest payment date and the fundamental change repurchase date is after the related interest record date and on or before such interest payment date, then (i) the holder of such note at the close of business on such interest record date will be entitled, notwithstanding such repurchase, to receive, on or, at our election, before such interest payment date, such payment of special interest or additional interest, as applicable; and (ii) the fundamental change repurchase price will not include accrued and unpaid special interest or additional interest on such note to, but excluding, the fundamental change repurchase date. Notwithstanding anything to the contrary above, we may not repurchase any notes if the principal amount of the notes has been accelerated and such acceleration has not been rescinded on or before the fundamental change repurchase date (including as a result of the payment of the related fundamental change repurchase price and any related interest described above on the fundamental change repurchase date). Notice of Fundamental Change On or before the 20th calendar day after the effective date of a fundamental change, we will send to each noteholder notice of such fundamental change containing certain information set forth in the indenture, including the fundamental change repurchase date, the fundamental change repurchase price and the procedures noteholders must follow to tender their notes for repurchase. Procedures to Exercise the Fundamental Change Repurchase Right To exercise its fundamental change repurchase right with respect to a note, the holder thereof must deliver a notice (a “fundamental change repurchase notice”) to the paying agent before the close of business on the second business day immediately before the related fundamental change repurchase date (or such later time as may be required by law). The fundamental change repurchase notice must contain certain information set forth in the indenture, including the certificate number of any physical notes to be repurchased, or must otherwise comply with the depositary procedures in the case of a global note. A noteholder that has delivered a fundamental change repurchase notice with respect to a note may For personal use only
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- 55 - withdraw that notice by delivering a withdrawal notice to the paying agent at any time before the close of business on the business day immediately before the fundamental change repurchase date. The withdrawal notice must contain certain information set forth in the indenture, including the certificate number of any physical notes with respect to which the withdrawal notice is being delivered, or must otherwise comply with the depositary procedures in the case of a global note. Notes to be repurchased must be delivered to the paying agent (in the case of physical notes) or the depositary procedures must be complied with (in the case of global notes) for the holder of those notes to be entitled to receive the fundamental change repurchase price. Compliance with Securities Laws We will comply, in all material respects, with all federal and state securities laws in connection with a repurchase following a fundamental change (including complying with Rules 13e-4 and 14e-1 under the Exchange Act and filing any required Schedule TO, to the extent applicable) so as to permit effecting such repurchase in the manner described above. However, to the extent that our obligations to offer to repurchase and to repurchase notes pursuant to the provisions described above conflict with any law or regulation that is applicable to us and enacted after the date we initially issue the notes, our compliance with such law or regulation will not be considered to be a default of those obligations; rather, we will be deemed to be in compliance with those obligations if we comply with our obligation to repurchase notes upon a fundamental change in accordance with the indenture, modified as necessary by us in good faith to permit compliance with such law or regulation. Repurchase by Third Party Notwithstanding anything to the contrary, we will be deemed to satisfy our obligations to repurchase notes pursuant to the provisions described above if (i) one or more third parties conduct the repurchase offer and repurchase tendered notes in a manner that would have satisfied our obligations to do the same if conducted directly by us; and (ii) an owner of a beneficial interest in any note repurchased by such third party or parties will not receive a lesser amount (as a result of withholding or other similar taxes) than such owner would have received had we repurchased such note. No Repurchase Right in Certain Circumstances Notwithstanding anything to the contrary, we will not be required to send a fundamental change notice, or offer to repurchase or repurchase any notes, as described above, in connection with a common stock change event that constitutes a fundamental change pursuant to clause (ii)(2) of the definition thereof (regardless of whether such common stock change event also constitutes a fundamental change pursuant to any other clause of such definition), if: the reference property of such common stock change event consists entirely of cash in U.S. dollars; immediately after such fundamental change, the notes become convertible (pursuant to the provisions described above under the captions “—Conversion Rights—Effect of Common For personal use only
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- 56 - Stock Change Event” and, if applicable, “—Conversion Rights—Increase in Conversion Rate in Connection with a Make-Whole Fundamental Change”) into consideration that consists solely of U.S. dollars in an amount per $1,000 principal amount of notes that equals or exceeds the fundamental change repurchase price per $1,000 principal amount of notes (which fundamental change repurchase price will, if any special interest or additional interest on the notes has accrued but is unpaid as of the effective date of such fundamental change, be calculated assuming that such fundamental change repurchase price includes (a) such accrued and unpaid special interest or additional interest, as applicable, per $1,000 principal amount of notes, together, without duplication, with (b) special interest or additional interest, as applicable, that would have accrued, per $1,000 principal amount of notes, from, and including, such effective date to, but excluding, the latest possible fundamental change repurchase date for such fundamental change); and we timely send the notice relating to such fundamental change required pursuant to the provisions described above under the caption “—Conversion Rights—When the Notes May Be Converted—Conversion Upon Specified Corporate Events—Certain Corporate Events” and include, in such notice, a statement that we are relying on the provisions described in this “—No Repurchase Right in Certain Circumstances” section. We refer to any fundamental change with respect to which, in accordance with the provisions described above, we do not offer to repurchase any notes as an “exempted fundamental change.” Consolidation, Merger and Asset Sale We will not consolidate with or merge with or into, or (directly, or indirectly through one or more of our subsidiaries) sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of us and our subsidiaries, taken as a whole, to another person (a “business combination event”), unless: the resulting, surviving or transferee person is us or, if not us, is a “qualified successor entity” (as defined below under the caption “—Definitions”) (such qualified successor entity, the “successor entity”) duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that expressly assumes (by executing and delivering to the trustee, at or before the effective time of such business combination event, a supplemental indenture) all of our obligations under the indenture and the notes; and immediately after giving effect to such business combination event, no default or event of default will have occurred and be continuing. At the effective time of a business combination event that complies with the provisions described above, the successor entity (if not us) will succeed to, and may exercise every right and power of, us under the indenture and the notes, and, except in the case of a lease, the predecessor company will be discharged from its obligations under the indenture and the notes. Notwithstanding anything to the contrary above, the provisions described above will not apply to any transfer of assets between or among us and any one or more of our “wholly owned subsidiaries” (as defined below under the caption “—Definitions”) not effected by merger or For personal use only
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- 57 - consolidation. The definition of “business combination event” includes a reference to “all or substantially all” of our and our subsidiaries’ assets. There is no precise, established definition of the phrase “all or substantially all” under applicable law. Accordingly, there may be uncertainty as to whether the provisions described above would apply to a sale, lease or transfer of less than all of our and our subsidiaries’ assets. Events of Default Generally An “event of default” means the occurrence of any of the following: (1) a default in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption price or fundamental change repurchase price for, any note; (2) a default for 30 consecutive days in the payment when due of special interest or additional interest, if any, that has accrued on any note; (3) our failure to deliver, when required by the indenture, a fundamental change notice or a notice pursuant to the provisions described above under the caption “—Conversion Rights—When the Notes May Be Converted—Conversion Upon Specified Corporate Events,” if (in the case of any notice other than a notice pursuant to the provisions described above under the caption “—Conversion Rights—When the Notes May Be Converted— Conversion Upon Specified Corporate Events—Certain Distributions”) such failure is not cured within five days after its occurrence; (4) a default in our obligation to convert a note in accordance with the indenture upon the exercise of the conversion right with respect thereto, if such default is not cured within five days after its occurrence; (5) a default in our obligations described above under the caption “—Consolidation, Merger and Asset Sale”; (6) a default in any of our obligations or agreements under the indenture or the notes (other than a default set forth in paragraphs (1), (2), (3), (4) or (5) above) where such default is not cured or waived within 60 days after notice to us by the trustee, or to us and the trustee by holders of at least 25% of the aggregate principal amount of notes then outstanding, which notice must specify such default, demand that it be remedied and state that such notice is a “notice of default”; (7) a default by us or any of our “significant subsidiaries” (as defined below under the caption “—Definitions”) with respect to any one or more mortgages, agreements or other instruments under which there is outstanding, or by which there is secured or evidenced, any indebtedness for money borrowed of at least $80,000,000 (or its foreign currency equivalent) in the aggregate of us or any of our significant subsidiaries, whether such indebtedness exists as of the date we first issue the notes or is thereafter created, where For personal use only
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- 58 - such default: constitutes a failure to pay the principal of such indebtedness when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, in each case after the expiration of any applicable grace period; or results in such indebtedness becoming or being declared due and payable before its stated maturity, in each case where such default is not cured or waived within 30 days after notice to us by the trustee or to us and the trustee by holders of at least 25% of the aggregate principal amount of notes then outstanding; and (8) certain events of bankruptcy, insolvency and reorganization with respect to us or any of our significant subsidiaries. Acceleration If an event of default described in paragraph (8) above occurs with respect to us (and not solely with respect to a significant subsidiary of ours), then the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable without any further action or notice by any person. If an event of default (other than an event of default described in paragraph (8) above with respect to us and not solely with respect to a significant subsidiary of ours) occurs and is continuing, then, except as described below under the caption “—Special Interest as Sole Remedy for Certain Reporting Defaults,” the trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding to become due and payable immediately. Noteholders of a majority in aggregate principal amount of the notes then outstanding, by notice to us and the trustee, may, on behalf of all noteholders, rescind any acceleration of the notes and its consequences if (i) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (ii) all existing events of default (except the non-payment of principal of, or interest, if any, on, the notes that has become due solely because of such acceleration) have been cured or waived. No such rescission will affect any subsequent default or impair any right consequent thereto. If any portion of the amount payable on the notes upon acceleration is considered by a court to be unearned interest (through the allocation of the value of the instrument to the embedded warrant or otherwise), then the court could disallow recovery of any such portion. Waiver of Past Defaults An event of default pursuant to paragraph (1), (2), (4) or (6) above (that, in the case of paragraph (6) only, results from a default under any covenant that cannot be amended without the consent of each affected noteholder), and a default that could lead to such an event of default, can be waived only with the consent of each affected noteholder. Each other default or event of default may be waived, on behalf of all noteholders, by noteholders of a majority in aggregate principal amount of the notes then outstanding. For personal use only
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- 59 - Cure of Defaults; Ability to Cure or Waive Before Event of Default Occurs For the avoidance of doubt, and without limiting the manner in which any default can be cured, a default consisting of a failure to send a notice in accordance with the terms of the indenture will be cured upon the sending of such notice; a default in making any payment on (or delivering any other consideration in respect of) any note will be cured upon the delivery, in accordance with the indenture, of such payment (or other consideration) together, if applicable, with “defaulted amounts” (as defined below under the caption “—Default Interest”) thereon; and a default that is (or, after notice, passage of time or both, would be) a “reporting event of default” (as defined below under the caption “ —Special Interest as Sole Remedy for Certain Reporting Defaults”) will be cured upon the filing of the relevant report(s) giving rise to such default. In addition, for the avoidance of doubt, if a default that is not an event of default is cured or waived before such default would have constituted an event of default, then no event of default will result from such default. Notice of Defaults If a default or event of default occurs, then we will, within 30 days after its first occurrence, notify the trustee, setting forth what action we are taking or propose to take with respect thereto. We must also provide the trustee annually with a certificate as to whether any defaults or events of default have occurred or are continuing. If a default or event of default occurs and is continuing and is actually known to a responsible officer of the trustee, then the trustee must notify the noteholders of the same within 90 days after it occurs or, if it is not actually known to a responsible officer of the trustee at such time, promptly (and in any event within 10 business days) after it becomes actually known to a responsible officer of the trustee. However, except in the case of a default or event of default in the payment of the principal of, or interest, if any, on, any note, the trustee may withhold such notice if and for so long as it in good faith determines that withholding such notice is in the interests of the noteholders. Limitation on Suits; Absolute Rights of Noteholders Except with respect to the rights referred to below, no noteholder may pursue any remedy with respect to the indenture or the notes, unless: such noteholder has previously delivered to the trustee notice that an event of default is continuing; noteholders of at least 25% in aggregate principal amount of the notes then outstanding deliver a written request to the trustee to pursue such remedy; such noteholder(s) offer and, if requested, provide to the trustee security and indemnity For personal use only
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- 60 - satisfactory to the trustee against any loss, liability or expense to the trustee that may result from the trustee’s following such request; the trustee does not comply with such request within 60 calendar days after its receipt of such request and such offer of security or indemnity; and during such 60 calendar day period, noteholders of a majority in aggregate principal amount of the notes then outstanding do not deliver to the trustee a direction that is inconsistent with such request. However, notwithstanding anything to the contrary, but without limiting the provisions described under the caption “—Modification and Amendment” relating to amendments and supplements without the consent of any noteholder, the right of each holder of a note to bring suit for the enforcement of any payment or delivery, as applicable, of the principal of, or the fundamental change repurchase price or redemption price for, or any interest on, or the consideration due upon conversion of, such note on or after the respective due dates therefor, will not be impaired or affected without the consent of such holder. Noteholders of a majority in aggregate principal amount of the notes then outstanding may direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee or exercising any trust or power conferred on it. However, the trustee may refuse to follow any direction that conflicts with law, the indenture or the notes, or that, subject to the terms of the indenture, the trustee determines may be unduly prejudicial to the rights of other noteholders or may involve the trustee in liability, unless the trustee is offered (and, if requested, provided with) security and indemnity satisfactory to the trustee against any loss, liability or expense to the trustee that may result from the trustee’s following such direction. Default Interest Payments of any amounts due on any note that are not made when due (“defaulted amounts”) will not accrue interest except on those days, if any, when special interest or additional interest accrues on such note. If any special interest or additional interest accrues on such note on any day, then interest will accrue on such date on all outstanding defaulted amounts, if any, on such note at the combined rate at which special interest and additional interest accrues on such note on such day. Special Interest as Sole Remedy for Certain Reporting Defaults Notwithstanding anything to the contrary described above, we may elect that the sole remedy for any event of default (a “reporting event of default”) pursuant to paragraph (6) above arising from our failure to comply with our obligations described below under the caption “—Exchange Act Reports” will, for each of the first 365 calendar days on which a reporting event of default has occurred and is continuing, consist exclusively of the accrual of special interest on the notes. If we have made such an election, then (i) the notes will be subject to acceleration as described above on account of the relevant reporting event of default from, and including, the 366th calendar day on which a reporting event of default has occurred and is continuing or if we fail to pay any accrued and unpaid special interest when due; and (ii) special interest will cease to accrue on any notes from, and including, such 366th calendar day. For personal use only
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- 61 - Any special interest that accrues on a note will accrue at a rate per annum equal to 0.25% of the principal amount thereof for the first 180 days on which special interest accrues and, thereafter, at a rate per annum equal to 0.50% of the principal amount thereof. However, in no event will special interest, together with any additional interest (excluding any interest that accrues on any deferred additional interest, as described below under the caption “—No Registration Rights; Additional Interest”) that accrues pursuant to the provisions described below under the caption “—No Registration Rights; Additional Interest,” accrue on any day on a note at a combined rate per annum that exceeds 0.50%. For the avoidance of doubt, any special interest that accrues on a note will, subject to the preceding sentence, be in addition to any additional interest that accrues on such note. To make the election to pay special interest as described above, we must provide notice of such election to noteholders before the date on which each reporting event of default first occurs. The notice will also, among other things, briefly describe the periods during which and rate at which special interest will accrue and the circumstances under which the notes will be subject to acceleration on account of such reporting event of default. Modification and Amendment We and the trustee may, with the consent of holders of a majority in aggregate principal amount of the notes then outstanding, amend or supplement the indenture or the notes or waive compliance with any provision of the indenture or the notes. However, without the consent of each affected noteholder, no amendment or supplement to the indenture or the notes, or waiver of any provision of the indenture or the notes, may: reduce the principal, or change the stated maturity, of any note; reduce the redemption price or fundamental change repurchase price for any note or change the times at which, or the circumstances under which, the notes may or will be redeemed or repurchased by us; reduce the rate, or extend the time for the payment, of special interest or additional interest on any note; make any change that adversely affects the conversion rights of any note; impair the absolute rights of any holder of a note to bring suit for the enforcement of any payment or delivery, as applicable, of the principal of, or the fundamental change repurchase price or redemption price for, or any special interest or additional interest on, or the consideration due upon conversion of, such note on or after the respective due dates therefor; change the ranking of the notes; make any note payable in money, or at a place of payment, other than that stated in the indenture or the note; reduce the amount of notes whose holders must consent to any amendment, supplement, waiver or other modification; or make any direct or indirect change to any amendment, supplement, waiver or modification For personal use only
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- 62 - provision of the indenture or the notes that requires the consent of each affected noteholder. For the avoidance of doubt, pursuant to the first four bullet points above, no amendment or supplement to the indenture or the notes, or waiver of any provision of the indenture or the notes, may change the amount or type of consideration due on any note (whether on an interest payment date, redemption date, fundamental change repurchase date or the maturity date or upon conversion, or otherwise), or the date(s) or time(s) such consideration is payable or deliverable, as applicable, without the consent of each affected noteholder. Notwithstanding anything to the contrary above, we and the trustee may amend or supplement the indenture or the notes without the consent of any noteholder to: cure any ambiguity or correct any omission, defect or inconsistency in the indenture or the notes; add guarantees with respect to our obligations under the indenture or the notes; secure the notes; add to our covenants or events of default for the benefit of noteholders or surrender any right or power conferred on us; provide for the assumption of our obligations under the indenture and the notes pursuant to, and in compliance with, the provisions described above under the caption “— Consolidation, Merger and Asset Sale”; enter into supplemental indentures pursuant to, and in accordance with, the provisions described above under the caption “—Conversion Rights—Effect of Common Stock Change Event” in connection with a common stock change event; irrevocably elect or eliminate any settlement method or specified dollar amount; provided, however, that (1) no such election or elimination will affect any settlement method theretofore elected (or deemed to be elected) with respect to any note pursuant to the provisions described above under the caption “—Conversion Rights—Settlement Upon Conversion—Settlement Method”; and (2) such irrevocable election or elimination can in no event result in a specified dollar amount of less than $1,000 per $1,000 principal amount of notes applying to the conversion of any note; evidence or provide for the acceptance of the appointment of a successor trustee; conform the provisions of the indenture and the notes to the “Description of Notes” section of the preliminary offering memorandum for this offering, as supplemented by the related pricing term sheet; provide for or confirm the issuance of additional notes pursuant to the indenture; comply with any requirement of the SEC in connection with any qualification of the indenture, or any related supplemental indenture, under the Trust Indenture Act of 1939, as amended and then in effect; or make any other change to the indenture or the notes that does not, individually or in the aggregate with all other such changes, adversely affect the rights of noteholders, as such, For personal use only
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- 63 - in any material respect, as determined by us in good faith. Exchange Act Reports We will send to the trustee copies of all reports that we are required to file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act within 15 calendar days after the date that we are required to so file the same (after giving effect to all applicable grace periods under the Exchange Act). However, we need not send to the trustee any material for which we have received, or are seeking in good faith and have not been denied, confidential treatment by the SEC. Any report that we file with the SEC through the EDGAR system (or any successor thereto) will be deemed to be sent to the trustee at the time such report is so filed via the EDGAR system (or such successor). Upon the request of any noteholder, the trustee will provide to the noteholder a copy of any report that we have sent the trustee pursuant to the provisions described above, other than a report that is deemed to be sent to the trustee pursuant to the preceding sentence. The trustee need not determine whether we have filed any material via the EDGAR system (or such successor) and the sending or filing of such reports will not be deemed to constitute actual or constructive notice to the trustee of any information contained, or determinable from information contained, therein, including our compliance with any of our covenants under the indenture (as to which the trustee is entitled to conclusively rely on an officer’s certificate). Rule 144A Information If we are not subject to Section 13 or 15(d) of the Exchange Act at any time when any notes or shares of our common stock issuable upon conversion of the notes are outstanding and constitute “restricted securities” (as defined in Rule 144 under the Securities Act), then we (or our successor) will promptly provide, to the trustee and, upon written request, to any holder, beneficial owner or prospective purchaser of such notes or shares, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such notes or shares pursuant to Rule 144A under the Securities Act. No Registration Rights; Additional Interest We do not intend to file a registration statement for the resale of the notes or the shares of our common stock, if any, issuable upon conversion of the notes. Accordingly, you may resell the notes or shares of our common stock, if any, issued upon conversion of any notes only pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. If, at any time during the six-month period beginning on, and including, the date that is six months after the “last original issue date” (as defined below under the caption “—Definitions”) of any note, we fail to timely file any report (other than Form 8-K reports) that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (after giving effect to all applicable grace periods thereunder); or For personal use only
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- 64 - such note is not otherwise freely tradable, then additional interest will accrue on such note for each day during such period on which such failure is continuing or such note is not freely tradable. In addition, additional interest will accrue on a note on each day on which such note is not freely tradable on or after the “de-legending deadline date” (as defined below under the caption “— Definitions”) for such note. Except as described below, any additional interest that accrues on a note will accrue at a rate per annum equal to 0.25% of the principal amount thereof for the first 90 days on which additional interest accrues and, thereafter, at a rate per annum equal to 0.50% of the principal amount thereof. However, in no event will additional interest (excluding any interest that accrues on any deferred additional interest, as described below), together with any special interest that accrues pursuant to the provisions described above under the caption “—Events of Default—Special Interest as Sole Remedy for Certain Reporting Defaults,” accrue on any day on a note at a combined rate per annum that exceeds 0.50%. For the avoidance of doubt, any additional interest that accrues on a note will, subject to the preceding sentence, be in addition to any special interest that accrues on such note. Notwithstanding anything to the contrary, additional interest that accrues on any note for any period on or after the de-legending deadline date of such note will not be payable on any interest payment date occurring on or after such de-legending deadline date unless: a noteholder (or an owner of a beneficial interest in a global note) has delivered to us and the trustee, before the interest record date immediately before such interest payment date, a written notice (a “deferred additional interest demand request”) demanding payment of additional interest; or we, in our sole and absolute discretion, elect, by sending notice of such election (a “notice of election to pay deferred additional interest”) to noteholders before such interest record date, to pay such additional interest on such interest payment date. Any accrued and unpaid additional interest that, in accordance with the provision described in the preceding sentence, is not paid on such interest payment date is referred to as “deferred additional interest,” and interest will accrue on such deferred additional interest from, and including, such interest payment date at a rate per annum equal to the rate per annum at which additional interest and, if applicable, special interest accrues on the notes to, but excluding, the date on which such deferred additional interest, together with accrued interest thereon, is paid. Each reference in this offering memorandum to any accrued interest (including in the definitions of the redemption price and the fundamental change repurchase price for any note) or to any accrued additional interest includes, to the extent applicable, and without duplication, any deferred additional interest, together with accrued and unpaid interest thereon. Once any accrued and unpaid additional interest becomes payable on an interest payment date (whether as a result of the delivery of a written notice as described above or, if earlier, our election to pay the same), additional interest will thereafter not be subject to deferral as described above. For personal use only
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- 65 - For the avoidance of doubt, the failure to pay any accrued and unpaid additional interest on an interest payment date will not constitute a default or an event of default under the indenture or the notes if such payment is deferred in accordance with the provisions described above. Otherwise, such a failure to pay will be subject to the provision described in paragraph (2) under the caption “—Events of Default” above. Notwithstanding to the contrary in the indenture or the notes, if (i) any unpaid deferred additional interest exists on any notes as of the close of business on the record date immediately preceding the maturity date; (ii) no noteholder (or owner of a beneficial interest in a global note) has delivered a deferred additional interest demand request in the manner described above before such record date; and (iii) we have not sent a notice of election to pay deferred additional interest in the manner described above before such record date, then deferred additional interest on each note then outstanding will cease to accrue, and all deferred additional interest, together with interest thereon, on such note will be deemed to be extinguished on the following date: (a) if such note is to be converted, the conversion date for such conversion (it being understood, for the avoidance of doubt, that the conversion consideration therefor need not include, and the amount referred to in the first bullet point under the heading “—Conversion Rights—Treatment of Interest Upon Conversion” above need not include, the payment of any such deferred additional interest or any interest thereon); and (b) in all other cases, the later of (x) the maturity date; and (y) the first date on which we have repaid the principal of, and accrued and unpaid interest (other than such deferred additional interest and any interest thereon) on, such note in full. We will send notice to the holder of each note of the commencement and termination of any period in which additional interest accrues on such note, except that no such notice is required in respect of any additional interest that is deferred in accordance with the provisions described above. We will use commercially reasonable efforts to prevent any of our controlled affiliates from acquiring any note (or any beneficial interest therein). The accrual of additional interest will be the exclusive remedy available to noteholders for the failure of their notes to become freely tradable. Discharge Subject to the terms of the indenture, our obligations under the indenture will be discharged if we deliver all outstanding notes to the trustee for cancellation, or if all outstanding notes have become due and payable (including upon conversion, if the consideration due upon such conversion has been determined) and we have irrevocably deposited with the trustee, or caused to be delivered to noteholders, sufficient cash or other consideration to satisfy all amounts that have become due and payable. Calculations Except as otherwise provided in the indenture, we will be responsible for making all calculations called for under the indenture or the notes, including determinations of the last reported sale price, the daily conversion value, the daily cash amount, the daily share amount, the daily VWAP, the For personal use only
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- 66 - trading price, accrued interest on the notes, the redemption price, the fundamental change repurchase price and the conversion rate. We will make all calculations in good faith, and, absent manifest error, our calculations will be final and binding on all noteholders. We will provide a schedule of our calculations to the trustee, and the trustee will promptly forward a copy of each such schedule to any noteholder upon written request. Trustee The trustee under the indenture is U.S. Bank Trust Company, National Association. The trustee assumes no responsibility for the accuracy or completeness of the information contained in this offering memorandum or the related documents. The trustee and its affiliates have in the past provided and may from time to time in the future provide banking and other services to us in the ordinary course of business. Notices We will send all notices or communications to noteholders pursuant to the indenture in writing by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery, to the noteholders’ respective addresses shown on the register for the notes. However, in the case of global notes, we are permitted to send notices or communications to noteholders pursuant to the depositary procedures, and notices and communications that we send in this manner will be deemed to have been properly sent to such noteholders in writing. No Personal Liability of Directors, Officers, Employees and Stockholders No past, present or future director, officer, employee, incorporator or stockholder of ours, as such, will have any liability for any obligations of ours under the indenture or the notes or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting any note, each noteholder will be deemed to waive and release all such liability, and such waiver and release are part of the consideration for the issuance of the notes. Governing Law; Waiver of Jury Trial The indenture and the notes, and any claim, controversy or dispute arising under or related to the indenture or the notes, will be governed by and construed in accordance with the laws of the state of New York. The indenture will provide that we and the trustee will irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to the indenture, the notes or the transactions contemplated by the indenture or the notes. Submission to Jurisdiction Any legal suit, action or proceeding arising out of or based upon the indenture or the transactions contemplated by the indenture may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the State of New York, in each case located in the City of New York (collectively, the “specified courts”), and each party will be For personal use only
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- 67 - deemed to irrevocably submit to the non-exclusive jurisdiction of those courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail (to the extent allowed under any applicable statute or rule of court) to any party’s address as provided in the indenture will be effective service of process for any such suit, action or proceeding brought in any such court. Each of us, the trustee and each noteholder (by its acceptance of any note) will be deemed to irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the specified courts and to irrevocably and unconditionally waive and agree not to plead or claim any such suit, action or other proceeding has been brought in an inconvenient forum. Definitions “Affiliate” has the meaning set forth in Rule 144 under the Securities Act as in effect on the date we first issue the notes. “Bid solicitation agent” means the person who is required to obtain bids for the trading price in accordance with the provisions described under the caption “—Conversion Rights—When the Notes May Be Converted—Conversion Upon Satisfaction of Note Trading Price Condition” and in the definition of “trading price.” “Board of directors” means our board of directors or a committee of such board duly authorized to act on behalf of such board. “Business day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York or the place of payment is authorized or required by law or executive order to close or be closed. “Capital stock” of any person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such person, but excluding any debt securities convertible into, or exchangeable for, such equity. “Close of business” means 5:00 p.m., New York City time. “Conversion price” means, as of any time, an amount equal to (i) $1,000 divided by (ii) the conversion rate in effect at such time. “Conversion rate” initially means 12.3501 shares of our common stock per $1,000 principal amount of notes, which amount is subject to adjustment as described above under the caption “— Conversion Rights.” Whenever in this offering memorandum we refer to the conversion rate as of a particular date without setting forth a particular time on such date, such reference will be deemed to be to the conversion rate immediately after the close of business on such date. “Daily cash amount” means, with respect to any VWAP trading day, the lesser of (i) the applicable daily maximum cash amount; and (ii) the daily conversion value for such VWAP trading day. “Daily conversion value” means, with respect to any VWAP trading day, one-fortieth of the For personal use only
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- 68 - product of (i) the conversion rate on such VWAP trading day; and (ii) the daily VWAP per share of our common stock on such VWAP trading day. “Daily maximum cash amount” means, with respect to the conversion of any note, the quotient obtained by dividing (i) the specified dollar amount applicable to such conversion by (ii) 40. “Daily share amount” means, with respect to any VWAP trading day, the quotient obtained by dividing (i) the excess, if any, of the daily conversion value for such VWAP trading day over the applicable daily maximum cash amount by (ii) the daily VWAP for such VWAP trading day. For the avoidance of doubt, the daily share amount will be zero for such VWAP trading day if such daily conversion value does not exceed such daily maximum cash amount. “Daily VWAP” means, for any VWAP trading day, the per share volume-weighted average price of our common stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page “LIF <EQUITY> AQR” (or, if such page is not available, its equivalent successor page) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP trading day (or, if such volume-weighted average price is unavailable, the market value of one share of our common stock on such VWAP trading day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm we select, which may be any of the initial purchasers). The daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session. “De-legending deadline date” means, with respect to any note, the 15th day after the “free trade date” (as defined below) of such note; provided, however, that if the de-legending deadline date determined as aforesaid would be after an interest record date and before the fifth business day immediately after the next interest payment date, then the de-legending deadline date for such note will instead be the fifth business day immediately after such interest payment date. “Depositary procedures” means, with respect to any conversion, transfer, exchange or other transaction involving a global note or any beneficial interest therein, the rules and procedures of the depositary applicable to such conversion, transfer, exchange or transaction. “DTC” means The Depository Trust Company. “Ex-dividend date” means, with respect to an issuance, dividend or distribution on our common stock, the first date on which shares of our common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution (including pursuant to due bills or similar arrangements required by the relevant stock exchange). For the avoidance of doubt, any alternative trading convention on the applicable exchange or market in respect of our common stock under a separate ticker symbol or CUSIP number will not be considered “regular way” for this purpose. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. “Free trade date” means, with respect to any note, the date that is one year after the last original For personal use only
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- 69 - issue date of such note. “Freely tradable” means, with respect to any note, that such note would be eligible to be offered, sold or otherwise transferred pursuant to Rule 144 under the Securities Act or otherwise if held by a person that is not an affiliate of ours, and that has not been an affiliate of ours during the immediately preceding three months, without any requirements as to volume, manner of sale, availability of current public information or notice under the Securities Act (except that, during the six-month period beginning on, and including, the date that is six months after the last original issue date of such note, any such requirement as to the availability of current public information will be disregarded if the same is satisfied at that time); provided, however, that from and after the free trade date of such note, such note will not be “freely tradable” unless such note (x) is not identified by a “restricted” CUSIP or ISIN number; and (y) is not represented by any certificate that bears a restricted note legend. The indenture and the certificates initially representing each note issued in this offering will provide that if we send notice to the trustee that the restricted note legend affixed to such note no longer applies, then such legend will be deemed to be removed from such note and such note will be deemed to be identified by the “unrestricted” CUSIP and ISIN numbers that we have obtained for the notes in connection with this offering. However, if such note is a global note and DTC requires a mandatory exchange or other procedure to cause such global note to be identified by “unrestricted” CUSIP and ISIN numbers in its facilities, then (x) we will effect such exchange or procedure as soon as reasonably practicable; and (y) for purposes of this definition of “freely tradable” and the provisions described above under the caption “—No Registration Rights; Additional Interest,” such global note will not be deemed to be identified by “unrestricted” CUSIP and ISIN numbers until such time as the exchange or procedure is effected. “Fundamental change” means any of the following events: (i) a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than us or our “wholly owned subsidiaries” (as defined below), or any employee benefit plans of ours or our wholly owned subsidiaries, files any report with the SEC indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of shares of our common stock representing more than 50% of the voting power of all of our common stock; (ii) the consummation of: (1) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of us and our subsidiaries, taken as a whole, to any person, other than solely to one or more of our wholly owned subsidiaries; or (2) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of our common stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property; provided, however, that any merger, consolidation, share exchange or combination of us pursuant to which the persons that directly or indirectly “beneficially owned” (as defined below) all classes of our common equity immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than 50% of all classes of common equity of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction will be deemed not to be a fundamental change pursuant to this clause (ii); (iii) our stockholders approve any plan or proposal for our liquidation or dissolution; or For personal use only
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- 70 - (iv) our common stock ceases to be listed on any of the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market (or any of their respective successors); provided, however, that a transaction or event described in clause (i) or (ii) above will not constitute a fundamental change if at least 90% of the consideration received or to be received by the holders of our common stock (excluding cash payments for fractional shares or pursuant to dissenters rights), in connection with such transaction or event, consists of shares of common stock or other corporate common equity interests listed (or depositary receipts representing shares of common stock or other corporate common equity interests, which depositary receipts are listed) on any of the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market (or any of their respective successors), or that will be so listed when issued or exchanged in connection with such transaction or event, and such transaction or event constitutes a common stock change event whose reference property consists of such consideration. For the purposes of this definition, (x) any transaction or event described in both clause (i) and in clause (ii)(1) or (2) above (without regard to the proviso in clause (ii)) will be deemed to occur solely pursuant to clause (ii) above (subject to such proviso); and (y) whether a person is a “beneficial owner,” whether shares are “beneficially owned,” and percentage beneficial ownership, will be determined in accordance with Rule 13d-3 under the Exchange Act. For the avoidance of doubt, references to our “common stock” and “common equity” in this definition will be subject to the provision described in the fifth bullet point under the caption “— Conversion Rights—Effect of Common Stock Change Event—Generally” above. “Holder” and “noteholder” mean a person in whose name a note is registered in the register for the notes. “Interest payment date” means, in respect of any special interest or additional interest that shall have become payable on the notes, each June 1 and December 1 of each year. For the avoidance of doubt, the maturity date is an interest payment date. “Interest record date” has the following meaning with respect to an interest payment date: (i) if such interest payment date occurs on June 1, the immediately preceding May 15; and (ii) if such interest payment date occurs on December 1, the immediately preceding November 15. “Last original issue date” means, with respect to the notes we are offering pursuant to this offering memorandum, and any notes issued in exchange therefor or in substitution thereof, the later of (i) the date we first issue such notes; and (ii) the last date any notes are originally issued pursuant to the exercise of the initial purchasers’ option to purchase additional notes. If we issue any additional notes after the completion of this offering, then those notes will have a different last original issue date. “Last reported sale price” of our common stock for any trading day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of our common stock on such trading day as reported in For personal use only
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- 71 - composite transactions for the principal U.S. national or regional securities exchange on which our common stock is then listed. If our common stock is not listed on a U.S. national or regional securities exchange on such trading day, then the last reported sale price will be the last quoted bid price per share of our common stock on such trading day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If our common stock is not so quoted on such trading day, then the last reported sale price will be the average of the mid-point of the last bid price and the last ask price per share of our common stock on such trading day from a nationally recognized independent investment banking firm we select, which may be any of the initial purchasers. “Make-whole fundamental change” means (i) a fundamental change (determined after giving effect to the proviso immediately after clause (iv) of the definition thereof, but without regard to the proviso to clause (ii)(2) of such definition); or (ii) the sending of any notice of redemption pursuant to the provisions described above under the caption “—Optional Redemption”; provided, however, that the sending of any such notice of redemption will constitute a make-whole fundamental change only with respect to the notes called for redemption pursuant to such notice and not with respect to any other notes. “Make-whole fundamental change conversion period” has the following meaning: (i) in the case of a make-whole fundamental change pursuant to clause (i) of the definition thereof, the period from, and including, the make-whole fundamental change effective date of such make-whole fundamental change to, and including, the 35th trading day after such make-whole fundamental change effective date (or, if such make-whole fundamental change also constitutes a fundamental change (other than an exempted fundamental change), to, but excluding, the related fundamental change repurchase date); and (ii) in the case of a make-whole fundamental change pursuant to clause (ii) of the definition thereof, the period from, and including, the date we send the redemption notice for the related redemption to, and including, the second business day immediately before the related redemption date; provided, however, that if the conversion date for the conversion of a note that has been called for redemption occurs during the make-whole fundamental change conversion period for both a make- whole fundamental change occurring pursuant to clause (i) of the definition of “make-whole fundamental change” and a make-whole fundamental change resulting from such redemption pursuant to clause (ii) of such definition, then, solely for purposes of such conversion, (x) such conversion date will be deemed to occur solely during the make-whole fundamental change conversion period for the make-whole fundamental change with the earlier make-whole fundamental change effective date; and (y) the make-whole fundamental change with the later make-whole fundamental change effective date will be deemed not to have occurred. “Make-whole fundamental change effective date” means (i) with respect to a make-whole fundamental change pursuant to clause (i) of the definition thereof, the date on which such make- whole fundamental change occurs or becomes effective; and (ii) with respect to a make-whole fundamental change pursuant to clause (ii) of the definition thereof, the applicable “redemption notice date” (as defined below). For personal use only
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- 72 - “Market disruption event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which our common stock is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in our common stock or in any options contracts or futures contracts relating to our common stock. “Maturity date” means June 1, 2030. “Observation period” means, with respect to any note to be converted, (i) subject to clause (ii) below, if the conversion date for such note occurs before March 1, 2030, the 40 consecutive VWAP trading days beginning on, and including, the second VWAP trading day immediately after such conversion date; (ii) if such conversion date occurs on or after the date we have sent a redemption notice calling all or any notes for redemption and on or before the second business day before the related redemption date, the 40 consecutive VWAP trading days beginning on, and including, the 41st scheduled trading day immediately before such redemption date; and (iii) subject to clause (ii) above, if such conversion date occurs on or after March 1, 2030, the 40 consecutive VWAP trading days beginning on, and including, the 41st scheduled trading day immediately before the maturity date. “Open of business” means 9:00 a.m., New York City time. “Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. Any division or series of a limited liability company, limited partnership or trust will constitute a separate “person.” “Qualified successor entity” means, with respect to a business combination event, a corporation; provided, however, that a limited liability company, limited partnership or other similar entity will also constitute a qualified successor entity with respect to such business combination event if either (i) such business combination event is an exempted fundamental change; or (ii) both of the following conditions are satisfied: (1) either (x) such limited liability company, limited partnership or other similar entity, as applicable, is treated as a corporation or is a direct or indirect, wholly owned subsidiary of, and disregarded as an entity separate from, a corporation, in each case for U.S. federal income tax purposes; or (y) we have received an opinion of a nationally recognized tax counsel to the effect that such business combination event will not be treated as an exchange under Section 1001 of the Internal Revenue Code of 1986, as amended, for holders or beneficial owners of the notes; and (2) such business combination event constitutes a common stock change event whose reference property consists solely of any combination of cash in U.S. dollars and shares of common stock or other corporate common equity interests of an entity that is (x) treated as a corporation for U.S. federal income tax purposes; (y) duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; and (z) a direct or indirect parent of the limited liability company, limited partnership or similar entity. “Redemption notice date” means, with respect to a redemption, the date on which we send the For personal use only
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- 73 - related redemption notice pursuant to the provisions described above under the caption “— Optional Redemption.” “Scheduled trading day” means any day that is scheduled to be a trading day on the principal U.S. national or regional securities exchange on which our common stock is then listed or, if our common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock is then traded. If our common stock is not so listed or traded, then “scheduled trading day” means a business day. “Securities Act” means the U.S. Securities Act of 1933, as amended. “Significant subsidiary” of any person means any subsidiary of that person that constitutes a “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of that person. “Specified dollar amount” means, with respect to the conversion of a note to which combination settlement applies, the maximum cash amount per $1,000 principal amount of such note deliverable upon such conversion (excluding cash in lieu of any fractional share of common stock); provided, however, that in no event will the specified dollar amount be less than $1,000 per $1,000 principal amount of such note. “Stock price” has the following meaning for any make-whole fundamental change: (i) if the holders of our common stock receive only cash in consideration for their shares of our common stock in such make-whole fundamental change and such make-whole fundamental change is pursuant to clause (ii) of the definition of “fundamental change,” then the stock price is the amount of cash paid per share of our common stock in such make-whole fundamental change; and (ii) in all other cases, the stock price is the average of the last reported sale prices per share of our common stock for the five consecutive trading days ending on, and including, the trading day immediately before the make-whole fundamental change effective date of such make-whole fundamental change. “Subsidiary” means, with respect to any person, (i) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of the capital stock entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such person or one or more of the other subsidiaries of such person; and (ii) any partnership or limited liability company where (x) more than 50% of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such person or one or more of the other subsidiaries of such person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (y) such person or any one or more of the other subsidiaries of such person is a controlling general partner of, or otherwise controls, such partnership or limited liability company. For personal use only
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- 74 - “Trading day” means any day on which (i) trading in our common stock generally occurs on the principal U.S. national or regional securities exchange on which our common stock is then listed or, if our common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock is then traded; and (ii) there is no “market disruption event” (as defined above in this “— Definitions” section). If our common stock is not so listed or traded, then “trading day” means a business day. “Trading price” of the notes on any trading day means the average of the secondary market bid quotations, expressed as a cash amount per $1,000 principal amount of notes, obtained by the bid solicitation agent for $1,000,000 (or such lesser amount as may then be outstanding) in principal amount of notes at approximately 3:30 p.m., New York City time, on such trading day from three nationally recognized independent securities dealers we select, which may include any of the initial purchasers; provided, however, that, if three such bids cannot reasonably be obtained by the bid solicitation agent but two such bids are obtained, then the average of the two bids will be used, and if only one such bid can reasonably be obtained by the bid solicitation agent, then that one bid will be used. If, on any trading day, (i) the bid solicitation agent cannot reasonably obtain at least one bid for $1,000,000 (or such lesser amount as may then be outstanding) in principal amount of notes from a nationally recognized independent securities dealer; (ii) we are not acting as the bid solicitation agent and we fail to instruct the bid solicitation agent to obtain bids when required; or (iii) the bid solicitation agent fails to solicit bids when required, then, in each case, the trading price per $1,000 principal amount of notes on such trading day will be deemed to be less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day. “VWAP market disruption event” means, with respect to any date, (i) the failure by the principal U.S. national or regional securities exchange on which our common stock is then listed, or, if our common stock is not then listed on a U.S. national or regional securities exchange, the principal other market on which our common stock is then traded, to open for trading during its regular trading session on such date; or (ii) the occurrence or existence, for more than one half hour period in the aggregate, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in our common stock or in any options contracts or futures contracts relating to our common stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date. “VWAP trading day” means a day on which (i) there is no VWAP market disruption event; and (ii) trading in our common stock generally occurs on the principal U.S. national or regional securities exchange on which our common stock is then listed or, if our common stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock is then traded. If our common stock is not so listed or traded, then “VWAP trading day” means a business day. “Wholly owned subsidiary” of a person means any subsidiary of such person all of the outstanding capital stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such person or one or more wholly owned subsidiaries of such person. For personal use only
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- 75 - Book Entry, Settlement and Clearance Global Notes The notes will be initially issued in the form of one or more notes registered in the name of Cede & Co., as nominee of DTC, without interest coupons (the “global notes”), and will be deposited with the trustee as custodian for DTC. Only persons who have accounts with DTC (“DTC participants”) or persons who hold interests through DTC participants may own beneficial interests in a global note. We expect that, under procedures established by DTC: upon deposit of a global note with DTC’s custodian, DTC will credit portions of the principal amount of the global note to the accounts of the DTC participants designated by the initial purchasers; and ownership of beneficial interests in a global note will be shown on, and transfers of such interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global note). Book-Entry Procedures for Global Notes All interests in a global note will be subject to the operations and procedures of DTC. Accordingly, you must allow for sufficient time in order to comply with those operations and procedures if you wish to exercise any of your rights with respect to global notes. The operations and procedures of DTC are controlled by DTC and may be changed at any time. None of us, the trustee or any of the initial purchasers will be responsible for those operations or procedures. DTC has advised us that it is: a limited purpose trust company organized under the laws of the State of New York; a “banking organization” within the meaning of the New York State Banking Law; a member of the Federal Reserve System; a “clearing corporation” within the meaning of the Uniform Commercial Code; and a “clearing agency” registered under Section 17A of the Exchange Act. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and other organizations. Indirect access to DTC’s book-entry system is also available to other “indirect participants,” such as banks, brokers, dealers and trust companies, who directly or indirectly clear through or maintain a custodial relationship with a DTC participant. Purchasers of notes who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC. For personal use only
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- 76 - So long as DTC or its nominee is the registered owner of a global note, DTC or that nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global note: will not be entitled to have notes represented by the global note registered in their names; will not receive or be entitled to receive physical, certificated notes; and will not be considered the owners or holders of the notes under the indenture for any purpose. As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through whom the investor owns its interest) to exercise any rights of a noteholder under the indenture. Payments on any global notes will be made to DTC’s nominee as the registered holder of the global note. None of us, the trustee or any of the initial purchasers will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to, or payments made on account of, those interests by DTC or for maintaining, supervising or reviewing any records of DTC relating to those interests. Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC. Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds. Physical Notes A global note will be exchanged, pursuant to customary procedures, for one or more physical notes only if: DTC notifies us or the trustee that it is unwilling or unable to continue as depositary for such global note or DTC ceases to be a “clearing agency” registered under Section 17A of the Exchange Act and, in each case, we fail to appoint a successor depositary within 90 days of such notice or cessation; an event of default has occurred and is continuing and we, the trustee or the registrar has received a written request from DTC, or from a holder of a beneficial interest in such global note, to exchange such global note or beneficial interest, as applicable, for one or more physical notes; or we, in our sole discretion, permit the exchange of any beneficial interest in such global note for one or more physical notes at the request of the owner of such beneficial interest. For personal use only
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- 77 - DESCRIPTION OF THE CONCURRENT CAPPED CALL TRANSACTIONS In connection with the pricing of the notes, we entered into capped call transactions with the option counterparties. The capped call transactions will initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the notes, the number of shares of our common stock underlying the notes. We intend to use approximately $29.0 million of the net proceeds from this offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, then we expect to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with the option counterparties. The capped call transactions are expected to generally reduce the potential dilution to our common stock upon any conversion of the notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, upon conversion of the notes. If, however, the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions. We will not be required to make any cash payments to the option counterparties or their respective affiliates upon the exercise of the options that are a part of the capped call transactions, but we will be entitled to receive from them a number of shares of our common stock, an amount of cash or a combination thereof generally based on the amount by which the market price per share of our common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions during the relevant valuation period under the capped call transactions. However, if the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions during the relevant valuation period, the number of shares of our common stock and/or the amount of cash we expect to receive upon exercise of the capped call transactions will be capped based on the amount by which the cap price exceeds the strike price of the capped call transactions. The cap price of the capped call transactions will initially be $122.22 per share, which represents a premium of 100% above the closing price of our common stock on the Nasdaq Global Select Market on the date of this offering memorandum, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are separate transactions to be entered into by us with the option counterparties, are not part of the terms of the notes and will not change the holders’ rights under the notes. As a holder of the notes, you will not have any rights with respect to the capped call transactions. For a discussion of the potential impact of any market or other activity by the option counterparties or their respective affiliates in connection with these capped call transactions, see “Plan of Distribution—Capped Call Transactions” and “Risk Factors—The capped call transactions may affect the value of the notes and our common stock.” For personal use only
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- 78 - DESCRIPTION OF CAPITAL STOCK Our authorized capital stock consists of 500,000,000 shares of common stock, $0.001 par value. The following description of our common stock does not purport to be complete and is subject to, and qualified in its entirety by, our restated certificate of incorporation (our “Certificate of Incorporation”) and amended and restated bylaws (our “Bylaws”), each of which is incorporated by reference as an exhibit to our Annual Report, which is incorporated by reference in this offering memorandum. Common Stock The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of stockholders, except as otherwise expressly provided in our Certificate of Incorporation or required by applicable law. Holders of our CDIs are entitled to one vote for every three CDIs they hold. Subject to prior rights that may apply to shares of our common stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive ratably such dividends when, as and if declared by the board of directors out of funds legally available therefor. In the event we liquidate, dissolve or wind up, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. Holders of common stock have no preemptive, conversion or subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable. Our common stock is listed on the Nasdaq Global Select Market under the symbol “LIF.” In addition, our common stock is listed on the Australian Securities Exchange (the “ASX”) as an ASX Foreign Exempt Listing under the symbol “360” in the form of CDIs. Transfer Agent The transfer agent for our common stock is Computershare Trust Company, N.A. Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws Certain provisions of Delaware law, our Certificate of Incorporation and Bylaws could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, may have the effect of discouraging coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms. Limits on Ability of Stockholders to Call a Special Meeting . Our Bylaws provide that special meetings of the stockholders may be called only by the board of directors, chairperson of the board of directors, chief executive officer or president or the corporate secretary at the written request of one or more holders of record of at least ten percent (10%) of all then outstanding shares of capital stock of the Company entitled to vote at such meeting, but a special meeting may not be called by For personal use only
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- 79 - any other person or persons. These restrictions may delay the ability of our stockholders to force consideration of a proposal, including the removal of directors. Requirements for Advance Notification of Stockholder Nominations and Proposals . Bylaws establish advance notice procedures with respect to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive office not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting the preceding year. As a result, our Bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our Company. No Cumulative Voting . The Delaware General Corporation Law (the “DGCL”) provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless the certificate of incorporation specifically authorizes cumulative voting. Our Certificate of Incorporation does not grant stockholders the right to vote cumulatively. Board Composition and Filling Vacancies . Our board of directors is divided into three classes, with the number of directors in each class as nearly equal in size as is practicable. Each director shall be elected to hold office for a three-year term, one class being elected each year by our stockholders at the annual meeting of stockholders. Any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum, or by a sole remaining director. The limitations on treatment of vacancies have the effect of making it more difficult for stockholders to change the composition of our board of directors. No Written Consent of Stockholders. Our Certificate of Incorporation and Bylaws provide that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder actions and would prevent the amendment of our amended and restated bylaws or removal of directors by our stockholders without holding a meeting of stockholders. Amendment to Bylaws. Our Bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in our Certificate of Incorporation and our Bylaws; and may also be amended by the affirmative vote of a majority of the outstanding shares entitled to vote on the amendment. Exclusive Forum. Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or For personal use only
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- 80 - proceeding asserting a claim of breach of a fiduciary duty owed by any of our stockholders, directors, officers, employees or agents to us or our stockholders; (iii) any action or proceeding asserting a claim against us arising pursuant to any provision of the DGCL or our Certificate of Incorporation or Bylaws; or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (the “Delaware Forum Provision”). The Delaware Forum Provision will not apply to any actions brought to enforce a duty or liability created by the Securities Act or the Exchange Act, or any other claim for which the U.S. federal courts have exclusive jurisdiction. Further, our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”). The Delaware Forum Provision and the Federal Forum Provision may impose additional costs on stockholders, may limit our stockholders’ ability to bring a claim in a forum they find favorable, and the designated courts may reach different judgments or results than other courts. In addition, there is uncertainty as to whether the Federal Forum Provision for Securities Act claims will be enforced, which may impose additional costs on us and our stockholders. Section 203 of the Delaware General Corporation Law We are subject to the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions: before the stockholder became interested, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder. Section 203 defines a business combination to include: any merger or consolidation involving the corporation and the interested stockholder; any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation; For personal use only
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- 81 - subject to exceptions, any transaction that results in the issuance of transfer by the corporation of any stock of the corporation to the interested stockholder; subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person. For personal use only
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- 82 - MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of material U.S. federal income tax considerations generally applicable to the purchase, ownership, conversion and disposition of the notes and the ownership and disposition of shares of our common stock into which the notes may be converted, but does not purport to be a complete analysis of all potential tax considerations. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This summary is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect an investor in the notes or the shares of our common stock into which the notes may be converted. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance that the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the purchase, ownership, conversion and disposition of the notes and the ownership and disposition of shares of our common stock into which the notes may be converted. This summary addresses only holders that hold a note or share of common stock held as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment) by a beneficial owner who purchased the note on original issuance for cash at its “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the notes is sold for cash to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). This summary does not address all aspects of U.S. federal income taxation that may be relevant to holders of a note or common stock (including any alternative minimum tax or the potential application of the Medicare contribution tax), nor does it address all tax consequences that may be relevant to such holders in light of their personal circumstances or particular situations, such as: tax consequences to holders who may be subject to special tax treatment, including dealers in securities or currencies, banks, financial institutions, regulated investment companies, real estate investment trusts, tax-exempt entities or organizations, insurance companies, traders in securities that elect to use a mark-to-market method of tax accounting for their securities or persons subject to special tax accounting rules as a result of any item of gross income with respect to the notes or common stock being taken into account in an “applicable financial statement”; tax consequences to persons holding notes or common stock as a part of an integrated or conversion transaction or a straddle, or persons deemed to sell notes or common stock under the constructive sale provisions of the Code; tax consequences to U.S. holders (as defined below) whose “functional currency” is not the U.S. dollar; For personal use only
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- 83 - tax consequences to investors that hold notes or common stock through pass-through entities or arrangements; and tax consequences to “controlled foreign corporations” and “passive foreign investment companies.” If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds notes or common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. If you are an entity or arrangement treated as a partnership holding notes or common stock or a partner in such an entity or arrangement, you should consult your tax advisors. THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, CONVERSION AND DISPOSITION OF NOTES AND THE OWNERSHIP AND DISPOSITION OF COMMON STOCK ARISING UNDER OTHER U.S. FEDERAL TAX LAWS (INCLUDING ESTATE AND GIFT TAX LAWS), UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY. As used herein, a “U.S. holder” is a beneficial owner of a note or common stock received upon conversion of a note that is, for U.S. federal income tax purposes: an individual who is a citizen or resident of the United States; a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust, if it (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. A “non-U.S. holder” is a beneficial owner of a note or common stock received upon conversion of a note that is an individual, corporation (or any other entity treated as a corporation for U.S. federal income tax purposes), estate or trust that is not a U.S. holder. Special rules may apply to certain non-U.S. holders such as corporations that accumulate earnings to avoid U.S. federal income tax or, in certain circumstances, individuals who are U.S. expatriates. Non-U.S. holders should consult their tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances. For personal use only
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- 84 - U.S. Holders Additional Payments The notes will not bear regular interest. In certain circumstances, we may be obligated to pay special interest or additional interest on the notes. We believe and intend to take the position that these contingencies do not cause the notes to be treated as contingent payment debt instruments under the applicable U.S. Treasury regulations. Assuming such position is respected by the IRS, a U.S. holder would be required to include in income at ordinary income rates the amount of any such additional payments at the time such payments are received or accrued, in accordance with such U.S. holder’s method of accounting for U.S. federal income tax purposes and, upon a conversion or sale or other disposition of notes, a portion of the proceeds may be deemed to be attributable to accrued special interest or additional interest. Our position is binding on a U.S. holder, unless the U.S. holder discloses in the proper manner to the IRS that it is taking a different position. If the IRS successfully challenged our position, and the notes were treated as contingent payment debt instruments, a U.S. holder would generally be required to accrue interest income based upon a “comparable yield,” regardless of the U.S. holder’s method of tax accounting. Additionally, the U.S. holder would be required to treat as ordinary income, rather than capital gain, any gain recognized on a sale, exchange, retirement or redemption of a note (including all gain upon conversion, even if the U.S. holder receives shares of our common stock). This discussion assumes that the notes will not be considered contingent payment debt instruments and that no such additional payments will be due. U.S. holders are urged to consult their tax advisors regarding the potential application to the notes of the contingent payment debt instrument rules and the consequences thereof. Sale, Exchange, Redemption or Other Taxable Disposition of Notes Except as provided below under “—Conversion of Notes,” a U.S. holder generally will recognize gain or loss upon the sale, exchange, redemption or other taxable disposition of a note (including an exchange with a designated financial institution in lieu of conversion, as described in “Description of Notes—Conversion Rights—Exchange in Lieu of Conversion”) equal to the difference between the amount realized and such U.S. holder’s adjusted tax basis in the note. The amount realized by a U.S. holder will include the amount of any cash and the fair market value of any other property received for the note. A U.S. holder’s adjusted tax basis in a note generally will be equal to the amount that the U.S. holder paid for the note as adjusted for the amount of any constructive distribution included in income as described below under “—Constructive Distributions.” Any gain or loss recognized on a taxable disposition of a note generally will be capital gain or loss. If, at the time of the sale, exchange, redemption or other taxable disposition of a note, the U.S. holder’s holding period in the note exceeds one year, such gain or loss generally will be long-term capital gain or loss. Otherwise, such gain or loss will be short-term capital gain or loss. In the case of certain non-corporate U.S. holders (including individuals), long-term capital gains are generally eligible for a reduced rate of U.S. federal income tax. A U.S. holder’s ability to deduct capital losses is subject to limitations. For personal use only
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- 85 - Conversion of Notes If a U.S. holder presents a note for conversion, the U.S. holder may receive solely cash or a combination of cash and common stock in exchange for the note, depending upon our chosen settlement method. If a U.S. holder receives solely cash in exchange for a note upon conversion, the U.S. holder will generally recognize gain or loss upon such conversion, and such gain or loss will be determined in the same manner as if the U.S. holder disposed of the note in a taxable disposition (as described above under “—Sale, Exchange, Redemption or Other Taxable Disposition of Notes”). As described below, the tax treatment of a conversion of a note into cash and common stock (excluding an exchange with a designated financial institution in lieu of conversion, the consequences of which are described below in “—Exchange in Lieu of Conversion”) is uncertain and subject to different possible characterizations, and U.S. holders should consult their tax advisors regarding the consequences of such a conversion. Treatment as a Recapitalization. If a combination of cash and common stock is received by a U.S. holder upon conversion of a note, we intend to take the position that the notes are “securities” for relevant U.S. federal income tax purposes and to treat the conversion as a recapitalization for U.S. federal income tax purposes. However, this position is not free from doubt and there can be no assurance in this regard. Under this treatment, gain, but not loss, would be recognized by the U.S. holder equal to the excess of the fair market value of our common stock (including any fractional share deemed received) and cash received (other than any cash received in lieu of a fractional share) over the U.S. holder’s adjusted tax basis in the note, but in no event would the gain recognized exceed the amount of cash received (excluding any cash received in lieu of a fractional share). The amount of gain or loss recognized on the receipt of cash in lieu of a fractional share would be equal to the difference between the amount of cash received and the portion of the U.S. holder’s tax basis in our common stock received that is allocable to the fractional share, as described in the following paragraph. Any gain or loss recognized by a U.S. holder on conversion of a note generally would be capital gain or loss and generally would be long-term capital gain or loss if, at the time of the conversion, the U.S. holder’s holding period in the note exceeds one year. The tax basis of our common stock received upon such a conversion (including any fractional share deemed to be received by the U.S. holder) would equal the adjusted tax basis of the note that was converted, reduced by the amount of any cash received (excluding cash received in lieu of a fractional share), and increased by the amount of gain, if any, recognized (other than gain recognized on any cash received with respect to a fractional share). A U.S. holder’s holding period for common stock would include the period during which the U.S. holder held the note. Alternative Treatment as Part Conversion and Part Redemption . If the conversion of a note into cash and common stock were not treated as a recapitalization as discussed above, the cash payment received (excluding cash received in lieu of a fractional share) would be treated as proceeds from the redemption of a portion of the note and taxed in the manner described above under “—Sale, Exchange, Redemption or Other Taxable Disposition of Notes,” in which case our common stock (including any fractional share deemed received) received on such a conversion would be treated as received upon a conversion of the other portion of the note, which generally would not be For personal use only
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- 86 - taxable to a U.S. holder, except to the extent of any cash received in lieu of a fractional share. In that case, the U.S. holder’s adjusted tax basis in the note would generally be allocated pro rata among our common stock received (including any fractional share deemed received) and the portion of the note that is treated as redeemed for cash based on the fair market value of our common stock and the cash (other than cash received in lieu of fractional shares). The holding period for our common stock received in the conversion would include the holding period for the note. Constructive Distributions The conversion rate of the notes will be adjusted in certain circumstances. Adjustments (or failures to make adjustments) that have the effect of increasing a U.S. holder’s proportionate interest in our assets or earnings and profits may, in some circumstances, result in a deemed distribution to the U.S. holder for U.S. federal income tax purposes even though no cash or property is received. Adjustments to the conversion rate made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing the dilution of the interest of the holders of the notes, however, will generally not result in a deemed distribution to a U.S. holder. Certain of the conversion rate adjustments provided in the notes (including, without limitation, adjustments in respect of taxable dividends to holders of our common stock) will not qualify as being pursuant to a bona fide reasonable adjustment formula. If such adjustments are made, a U.S. holder will be deemed to have received a distribution even though the U.S. holder has not received any cash or property as a result of such conversion rate adjustment. In addition, an adjustment to the conversion rate in connection with a make-whole fundamental change may be treated as a deemed distribution. Any deemed distribution will be taxable as a dividend, to the extent of our current or accumulated earnings and profits, generally as described below under “—Distributions on Common Stock.” However, it is unclear whether a constructive dividend deemed paid to a non-corporate U.S. holder would be eligible for the lower applicable long-term capital gains rates as described below under “—Distributions on Common Stock.” It is also unclear whether corporate U.S. holders would be entitled to claim the dividends received deduction with respect to any such constructive dividends. Generally, a U.S. holder’s adjusted tax basis in a note will be increased to the extent any such constructive distribution is treated as a dividend. U.S. holders should consult their tax advisors regarding the tax treatment of a constructive distribution. We are currently required to report the amount of any deemed distributions on our website or to the IRS and to holders of notes not exempt from information reporting. The IRS has proposed regulations addressing the amount and timing of deemed distributions, obligations of withholding agents and filing and notice obligations of issuers in respect of such deemed distributions. If adopted as proposed, the regulations would generally provide that (i) the amount of a deemed distribution is the excess of the fair market value of the right to acquire stock immediately after the conversion rate adjustment over the fair market value of the right to acquire stock without the adjustment, (ii) the deemed distribution occurs at the earlier of the date the adjustment occurs under the terms of the note and the date of the actual distribution of cash or property that results in the deemed distribution, (iii) subject to certain limited exceptions, a withholding agent is required to impose any applicable withholding on deemed distributions and, if there is no associated cash For personal use only
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- 87 - payment, may withhold such amounts from or set off its withholding obligations against payments of cash or the delivery of shares of our common stock, if any, in respect of the notes (or, in some circumstances, any payments on our common stock) or from any proceeds of any subsequent sale, exchange or other disposition of such notes (including the retirement of such notes) or such common stock by an investor or from an investor’s other funds or assets and (iv) we are required to report the amount of any deemed distributions on our website or to the IRS and to all holders of notes (including holders of notes that would otherwise be exempt from information reporting). The regulations, if finalized, will be effective for deemed distributions occurring on or after the date of adoption by publication in the Federal Register, but holders and beneficial owners of notes and withholding agents may rely on them prior to that date under certain circumstances. Exchange in Lieu of Conversion If a U.S. holder surrenders notes for conversion and such notes are exchanged with a designated financial institution, as described under “Description of Notes—Conversion Rights—Exchange in Lieu of Conversion,” the U.S. holder will be required to recognize gain or loss as described under “—Sale, Exchange, Redemption or Other Taxable Disposition of Notes.” In such case, the U.S. holder’s tax basis in the common stock received will equal the fair market value of the common stock on the date of the exchange, and the U.S. holder’s holding period in the common stock received will begin on the day after the date of the exchange. Possible Effect of the Change in Conversion Consideration In certain situations, the notes may become convertible or exchangeable into shares of an acquirer or other consideration. Furthermore, we can undertake certain transactions (such as a merger or sale of assets) in connection with a change of control or other transaction. Depending on the circumstances, such an adjustment in conversion consideration or such transactions undertaken in connection with a change of control or other transaction could result in a deemed taxable exchange of the notes to a U.S. holder and the modified notes could be treated as newly issued at that time, potentially resulting in the recognition of taxable gain or loss. Furthermore, depending on the circumstances, the U.S. federal income tax consequences of the exchange or conversion of the notes as well as the ownership of the notes and the shares of the applicable acquirer or other consideration received upon conversion or exchange may be different from the U.S. federal income tax consequences addressed in this discussion. U.S. holders should consult their tax advisors regarding the consequences to them of such situations. Distributions on Common Stock Distributions, if any, made on our common stock, other than certain pro rata distributions of common shares, generally will be included in the income of a U.S. holder of our common stock as ordinary dividend income to the extent of our current or accumulated earnings and profits. Distributions in excess of our current and accumulated earnings and profits will be treated as a tax- free return of capital to the extent of a U.S. holder’s tax basis in our common stock and thereafter as capital gain from the sale or exchange of such common stock. Dividends received by a corporate U.S. holder may be eligible for a dividends received deduction, subject to applicable limitations. Dividends received by certain non-corporate U.S. holders (including individuals) are generally taxed at the lower applicable long-term capital gains rates, provided certain holding period and For personal use only
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- 88 - other requirements are satisfied. Sale, Certain Redemptions or Other Taxable Disposition of Common Stock Upon the sale, certain redemptions or other taxable disposition of our common stock, a U.S. holder generally will recognize gain or loss equal to the difference between the amount realized and the U.S. holder’s tax basis in our common stock. Any gain or loss recognized on a taxable disposition of common stock generally will be capital gain or loss. Such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period at the time of the sale, redemption or other taxable disposition of our common stock is more than one year. Long-term capital gains recognized by certain non-corporate U.S. holders (including individuals) are generally eligible for a reduced rate of U.S. federal income tax. The deductibility of capital losses is subject to limitations. Non-U.S. Holders Additional Interest or Special Interest on the Notes Subject to the discussion below under “Information Reporting and Backup Withholding— Non-U.S. Holders” and “Foreign Account Tax Compliance Act,” payments of additional interest or special interest (if any) on a note to a non-U.S. holder will generally not be subject to U.S. federal income or withholding tax provided that: the interest is not effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (or, under an applicable income tax treaty, is not attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States); the non-U.S. holder does not actually or constructively (pursuant to the conversion feature of their notes or otherwise) own 10% or more of the total combined voting power of all classes of our stock that are entitled to vote; the non-U.S. holder is not a controlled foreign corporation that is related to us (actually or constructively) through stock ownership; and (a) the non-U.S. holder provides its name and address, and certifies, under penalties of perjury, that it is not a U.S. person (which certification may be made on an IRS Form W-8BEN or W-8BEN-E (or other applicable form)) or (b) the non-U.S. holder holds the notes through certain foreign intermediaries and the non-U.S. holder and the foreign intermediaries satisfy the certification requirements of applicable U.S. Treasury regulations. If a non-U.S. holder cannot satisfy the requirements described above, payments of additional interest or special interest will be subject to U.S. federal withholding tax at a rate of 30%, unless the non-U.S. holder provides the applicable withholding agent with a properly executed (i) IRS Form W-8BEN or W-8BEN-E (or other applicable form) claiming an exemption from or reduction in withholding under an applicable income tax treaty or (ii) IRS Form W-8ECI (or other applicable form) stating that interest paid on the notes is not subject to withholding tax because it is effectively For personal use only
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- 89 - connected with the non-U.S. holder’s conduct of a trade or business in the United States. If a non-U.S. holder is engaged in a trade or business in the United States and additional interest or special interest on a note is effectively connected with the conduct of that trade or business (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. holder in the United States), then (although the non-U.S. holder will be exempt from the 30% withholding tax provided that the non-U.S. holder delivers an IRS Form W-8ECI (or other applicable form) as discussed in the immediately preceding paragraph) the non-U.S. holder will be subject to U.S. federal income tax on that interest on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. holder. In addition, if the non-U.S. holder is a foreign corporation, it may also be subject to a branch profits tax equal to 30% (or such lower rate as may be specified by an applicable income tax treaty) of its earnings and profits for the taxable year, subject to adjustments, that are effectively connected with its conduct of a trade or business in the United States. Dividends on Common Stock and Constructive Distributions Any dividends paid to a non-U.S. holder with respect to our common stock (and any deemed dividends resulting from certain adjustments, or failures to make adjustments, to the conversion rate of the notes, as described above under “U.S. Holders—Constructive Distributions”) will be subject to U.S. withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) are not subject to the withholding tax, but instead are subject to U.S. federal income tax on a net income basis at applicable individual or corporate rates. Certain certification and disclosure requirements must be complied with in order for effectively connected income to be exempt from withholding. Any such effectively connected income received by a foreign corporation also may, under certain circumstances, be subject to a branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. Any applicable withholding taxes (including backup withholding) with respect to deemed dividends may be withheld from interest, if any, and payments upon conversion, repurchase or maturity of the notes or if any withholding taxes (including backup withholding) are paid on behalf of a non-U.S. holder, those withholding taxes may be withheld from or set off against payments of cash or the delivery of shares of our common stock, if any, in respect of the notes (or, in some circumstances, any payments on our common stock) or proceeds of any sale, exchange, or other disposition of such notes (including the retirement of such notes) or such common stock or other funds or assets of such non-U.S. holder. A non-U.S. holder that wishes to claim the benefit of an applicable income tax treaty rate is required to satisfy applicable certification and other requirements. If a non-U.S. holder is eligible for an exemption from or a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, it may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. For personal use only
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- 90 - Sale, Exchange, Certain Redemptions, Conversion or Other Taxable Disposition of Notes or Common Stock Subject to the discussion below under “Information Reporting and Backup Withholding—Non- U.S. Holders” and “Foreign Account Tax Compliance Act,” any gain recognized by a non-U.S. holder on the sale, exchange (including an exchange with a designated financial institution in lieu of conversion, as described in “Description of Notes—Conversion Rights—Exchange in Lieu of Conversion”), certain redemptions, conversion or other taxable disposition of a note or common stock will not be subject to U.S. federal income tax unless: that gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States); the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain other conditions are met; or we are or have been a “United States real property holding corporation,” or USRPHC, for U.S. federal income tax purposes at any time during the shorter of the non-U.S. holder’s holding period and the five-year period ending on the date of disposition of the note or common stock, as the case may be, and certain other conditions are met. If you are a non-U.S. holder and you realize gain described in the first bullet point above, you will be subject to tax at regular U.S. federal income tax rates on the net gain derived from the sale, exchange, redemption, conversion or other taxable disposition of a note or common stock, generally in the same manner as if you were a U.S. holder, and, if you are a foreign corporation, you additionally may be subject to a branch profits tax equal to 30% of your effectively connected earnings and profits (subject to adjustments), or at such lower rate as may be specified by an applicable income tax treaty. If you are described in the second bullet point above, you will be subject to a flat 30% tax (or lower applicable income tax treaty rate) on the gain recognized on the sale, exchange, redemption, conversion or other taxable disposition of a note or common stock (which gain may be offset by certain U.S.-source capital losses), even though you are not considered a resident of the United States. We believe we are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. Any amounts (including common stock) that a non-U.S. holder receives on a sale, exchange, redemption, conversion or other taxable disposition of a note which are attributable to accrued but unpaid interest will be treated as interest and may be subject to U.S. federal income or withholding tax in accordance with the rules described above under “—Additional Interest or Special Interest on the Notes.” Information Reporting and Backup Withholding U.S. Holders Information reporting requirements generally will apply to payments of additional interest or special interest (if any) and to deemed distributions on the notes (if any), distributions on our For personal use only
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- 91 - common stock and the proceeds of a sale or other taxable disposition of a note or common stock paid to a U.S. holder unless the U.S. holder is an exempt recipient and, if requested, certifies as to that status. Backup withholding generally will apply to those payments if the U.S. holder fails to provide an appropriate certification with its correct taxpayer identification number or certification of exempt status. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. Non-U.S. Holders Generally, the amount of additional interest or special interest (if any) and deemed distributions on the notes (if any) and distributions on our common stock paid to non-U.S. holders and the amount of tax, if any, withheld with respect to those payments must be reported annually to the IRS and to the non-U.S. holders. Copies of the information returns reporting such interest, deemed distributions, distributions and withholding may also be made available to the tax authorities in a country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty. In general, a non-U.S. holder will not be subject to backup withholding with respect to payments of interest or deemed dividends on a note or dividends on our common stock, provided that (i) the statement described above in the last bullet point under “Non-U.S. Holders—Additional Interest or Special Interest on the Notes” has been received or (ii) the non-U.S. holder otherwise establishes an exemption from backup withholding. In addition, a non-U.S. holder will be subject to information reporting and, depending on the circumstances, backup withholding with respect to payments of the proceeds of the sale or other taxable disposition of a note or common stock conducted within the United States or through certain U.S.-related financial intermediaries, unless the statement described above has been received, or the non-U.S. holder otherwise establishes an exemption from backup withholding. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. Foreign Account Tax Compliance Act Sections 1471 through 1474 of the Code (commonly referred to as “FATCA”) generally impose withholding tax at a rate of 30% on interest and dividends (including deemed dividends) paid on debt obligations or stock of a United States corporation paid to (i) a foreign financial institution (an “FFI”), whether as a beneficial owner or intermediary, unless such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners), or qualifies for an exemption from these rules, and (ii) a foreign entity that is not a financial institution (whether as a beneficial owner or intermediary for another foreign entity that is not a financial institution) unless such entity provides the withholding agent or, in certain cases, U.S. tax authorities with a certification identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity, or qualifies for an exemption from these rules. A person that receives payments through one or more FFIs may receive reduced payments as a result of FATCA withholding taxes if (i) any such FFI does not enter into such an agreement with the U.S. government and does not otherwise establish an exemption, or (ii) such person is (a) a “recalcitrant account holder” or (b) itself an FFI For personal use only
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- 92 - that fails to enter into such an agreement or establish an exemption. FFIs located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. The applicable U.S. Treasury regulations and administrative guidance provide that the FATCA withholding rules will apply to payments of interest and dividends (including deemed dividends) regardless of when they are made (or deemed made). While existing U.S. Treasury regulations would also require withholding on payments of gross proceeds of the sale or other taxable disposition of notes or stock, proposed U.S. Treasury regulations eliminate FATCA withholding on payments of gross proceeds from sales or dispositions of notes or common stock entirely. The U.S. Treasury Department has indicated that taxpayers may rely on these proposed U.S. Treasury regulations until final U.S. Treasury regulations are issued. Holders are encouraged to consult with their tax advisors regarding the implications of the FATCA rules on their investment in the notes and common stock. For personal use only
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- 93 - PLAN OF DISTRIBUTION We entered into a purchase agreement with Goldman Sachs & Co. LLC, UBS Securities LLC and Evercore Group L.L.C. as representatives (the “Representatives”) of the several initial purchasers listed in the table below. Pursuant to the terms and conditions of the purchase agreement between us and the initial purchasers, we have agreed to sell to the initial purchasers, and each initial purchaser has severally agreed to purchase from us, the entire principal amount of the notes set forth opposite such initial purchaser’s name. Initial Purchasers Principal Amount of Notes Goldman Sachs & Co. LLC..................................................... $ 110,000,000 UBS Securities LLC................................................................ 68,750,000 Evercore Group L.L.C............................................................. 55,000,000 Canaccord Genuity LLC ......................................................... 11,000,000 Citizens JMP Securities, LLC................................................. 11,000,000 Stifel, Nicolaus & Company, Incorporated............................. 11,000,000 Loop Capital Markets LLC ..................................................... 8,250,000 Total..................................................................................................... $ 275,000,000 The purchase agreement provides that the initial purchasers will purchase all of the notes being sold pursuant to the purchase agreement if any of them are purchased. The obligations of the several initial purchasers under the purchase agreement are subject to satisfaction of certain conditions. The offering of the notes by the initial purchasers is subject to receipt and acceptance and subject to the initial purchasers’ right to reject any order in whole or in part. The initial purchasers initially propose to offer the notes for resale at the issue price that appears on the cover page of this offering memorandum. After the initial offering, the initial purchasers may change the offering price and any other selling terms. The initial purchasers may offer and sell notes through certain of their affiliates. We will indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, or contribute to payments that the initial purchasers may be required to make in respect of those liabilities. J. Wood Capital Advisors LLC is acting as our financial advisor for this transaction, for which we will pay an advisory fee. The initial purchasers have agreed to reimburse us for certain of our expenses in connection with the offering of notes. Option to Purchase Additional Notes If the initial purchasers sell more notes than the total principal amount of the notes set forth in For personal use only
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- 94 - the table above, the initial purchasers have an option to purchase up to an additional $45,000,000 principal amount of notes from us. The additional notes purchased pursuant to this option must settle during the thirteen-calendar day period beginning on, and including, the first date on which the notes are issued. If any notes are purchased pursuant to this option, the initial purchasers will severally purchase notes in approximately the same proportion as set forth in the table above and will offer such additional notes on the same terms as those on which the notes are being offered. No Sale of Similar Securities We have agreed that, during the period beginning from the date of this offering memorandum and continuing until the date that is 60 days after the date of this offering memorandum, not to, except with the prior written consent of Goldman Sachs & Co. LLC: i. offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to any securities of the Company that are substantially similar to the notes or the common stock, including but not limited to any options or warrants to purchase shares of common stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing; or ii. enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock or any such other securities, whether any such transaction described in clause (i) or (ii) is to be settled by delivery of common stock or such other securities, in cash or otherwise (other than the notes to be sold hereunder or pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this offering memorandum). Notwithstanding the above, the initial purchasers have agreed in the purchase agreement that the foregoing restrictions shall not apply to (A) the notes or the issuance of common stock upon conversion thereof; (B) the issuance by us of shares of common stock upon the exercise of an option or warrant, the vesting or settlement of restricted stock or restricted stock units or the conversion, exchange or reclassification of convertible preferred stock, common stock or exchangeable shares outstanding as of the date of this offering memorandum or pursuant to our equity plans described in this offering memorandum (or the documents incorporated by referenced herein) (including net exercise, conversion or settlement and in respect of tax withholding payments due upon the exercise of options or the vesting of equity-based awards); (C) the grant of stock options, restricted stock units or other equity awards pursuant to our equity plans described in the this offering memorandum (or the documents incorporated by referenced therein); (D) the issuance, offer or entry into an agreement providing for the issuance of shares of common stock or any security convertible into or exercisable for shares of common stock in connection with (x) an acquisition by us of the securities, business, technology, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by us in connection with such acquisition, and the issuance of any such securities pursuant to such agreement; or (y) joint ventures, commercial relationships, partnership or other strategic transactions, and the issuance of For personal use only
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- 95 - any such securities pursuant to any such agreement or (E) the entry into, exercise of rights and performance of obligations under, and termination of the capped call confirmations; provided, further, that, (i) in the case of clause (D), the aggregate number of shares of common stock that we may sell or issue or agree to sell or issue shall not exceed 10% of the total number of shares of stock outstanding immediately following the completion of the offering contemplated by this offering memorandum; (ii) in case of clauses (B), (C) and (D), we shall cause each recipient of such securities to execute and deliver to the initial purchasers, on or prior to the issuance of such securities, a lock-up agreement. Our officers and directors have agreed with the initial purchasers, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock (collectively, the “Lock-Up Securities”) during the period from the date of this offering memorandum continuing through the date 60 days after the date of this offering memorandum (“Lock-Up Period”), except with the prior written consent of Goldman Sachs & Co. LLC. The foregoing restrictions on our officers and directors do not apply to, among other things, and subject in certain cases to various conditions: i. transfers as bona fide gifts, charitable contributions, or for bona fide estate planning purposes; ii. transfers upon death by will, testamentary document, or the laws of intestate succession; iii. transfers to immediate family members or to any trust for the direct or indirect benefit of the holder or the immediate family of the holder or, if the holder is a trust, to a trustor or beneficiary of the trust or the estate of a beneficiary of such trust; iv. transfers to a corporation, partnership, limited liability company, or other entity of which the holder and the immediate family of the holder are the legal and beneficial owner of all of the outstanding equity securities or similar interests; v. transfers to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (iv) above; vi. transfers by a business entity (A) to an affiliated or controlled entity or (B) as part of a distribution to the holder’s securityholders, partners, members, or other equityholders or to the estate of any such securityholders, partners, members, or other equityholders; vii. transfers by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree, or separation agreement; viii. transfers to us (A) from one of our employees upon their death, disability, or termination of employment, in each case, of such employee or (B) pursuant to agreements under which we have (1) the option to repurchase such securities or (2) a right of first refusal with respect to transfers of such securities upon termination of service of the undersigned; ix. if the holder is not an officer or director, transfers of shares acquired in open market transactions after the closing of this offering; x. transfers to us in connection with the vesting, settlement, or exercise of RSUs, restricted stock, options, warrants, or other rights to purchase shares of our common stock (including, For personal use only
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- 96 - in each case, by way of “net” or “cashless” exercise), including any transfer to us for the payment of tax withholdings or remittance payments due as a result of the vesting, settlement or exercise of such RSUs, restricted stock, options, warrants or other rights, or in connection with the conversion or exchange or convertible or exchangeable securities of us or any of our subsidiaries, and any transfer necessary to generate such amount of cash needed for the payment of taxes, including estimated taxes, due as a result of the vesting or settlement of RSUs whether by means of a “net settlement” or otherwise, in all such cases pursuant to equity awards granted under a stock incentive plan or other equity award plan or arrangement, or pursuant to the terms of convertible or exchangeable securities, as applicable, each as described in this offering memorandum, provided that any securities received upon such vesting, settlement, exercise or conversion that are not transferred to cover any such tax obligations shall be subject to the terms of such lock-up agreement; xi. in connection with the sale or other transfer of shares of common stock to satisfy any tax obligations or payments due as a result of (A) the termination of employment with us, the exercise of stock options that will expire during the lock-up period or (B) the settlement of RSUs pursuant to awards granted under a stock incentive plan or other equity award plan or arrangement described in this offering memorandum, provided that, in each case, any securities received upon such exercise or settlement that are not transferred to cover any such tax obligations shall be subject to the terms of such lock-up agreement; xii. in connection with the termination of employment of our or our subsidiaries’ employees, including following the voluntary resignation of such employee, if the disposition of such securities is determined by us to be required under applicable law; xiii. transfers to us in connection with the conversion, exchange or reclassification of our outstanding equity securities into shares of common stock, or any reclassification, exchange or conversion of the common stock, in each case as described in this offering memorandum, provided that any such shares of common stock received upon such conversion, exchange or reclassification shall be subject to the terms of such lock-up agreement; and xiv. pursuant to a trading plan pursuant to Rule 10b5-1 under the Exchange Act in effect on the date of this offering memorandum. New Issue of Notes The notes have not been and will not be registered under the Securities Act or the securities laws of any other place. In the purchase agreement, each initial purchaser has agreed that it will sell the notes only to persons whom it reasonably believes are “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act. The notes are a new issue of securities, and there is currently no established trading market for the notes. In addition, the notes are subject to certain restrictions on resale and transfer as described under “Transfer Restrictions.” We do not intend to apply for the notes to be listed on any securities exchange or to arrange for the notes to be quoted on any quotation system. Certain of the initial purchasers have advised us that they intend to make a market in the notes, but they are not obligated to do so. The initial purchasers may discontinue any market making in the For personal use only
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- 97 - notes at any time in their sole discretion. Accordingly, we cannot assure you that a liquid trading market will develop for the notes, that you will be able to sell your notes at a particular time or that the prices that you receive when you sell will be favorable. You should be aware that the laws and practices of certain countries require investors to pay stamp taxes and other charges in connection with purchases of securities. Price Stabilization and Short Positions In connection with the offering of the notes, the initial purchasers may engage in overallotment, stabilizing transactions and syndicate covering transactions. Overallotment involves sales of the notes in excess of the offering size, which creates a short position for the initial purchasers. Stabilizing transactions involve bids to purchase the notes in the open market for the purpose of pegging, fixing or maintaining the price of the notes. Syndicate covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may have the effect of preventing or retarding a decline in the market price of the notes or cause the price of the notes to be higher than it would otherwise be in the absence of those transactions. If the initial purchasers engage in stabilizing or syndicate covering transactions, they may discontinue them at any time. Settlement We expect to deliver the notes in book-entry form through the facilities of The Depository Trust Company on or about June 5, 2025, which will be the second business day after the initial trade date for the notes (this settlement cycle being referred to as “T+2”). Under Rule 15c6-1 under the Exchange Act, trades in the secondary market generally are required to settle in one business day unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes before the business day before the settlement date must, because the notes initially will settle T+2, specify an alternate settlement cycle at the time of such trade to prevent a failed settlement. Those purchasers should consult their advisors. Other Relationships The initial purchasers and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the initial purchasers and their affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons an entities with relationships with the issuer, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the initial purchasers and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such For personal use only
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- 98 - investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The initial purchasers and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. To the extent that Goldman Sachs & Co. LLC is providing financial services in Australia, Goldman Sachs & Co. LLC is exempt from the requirement to hold an Australian financial services license for the financial services it provides in Australia. Goldman Sachs & Co. LLC is regulated by a non-Australian regulator under non-Australian laws which differ from Australian laws, specifically, Goldman Sachs & Co. LLC is regulated by the U.S. Securities and Exchange Commission under U.S. laws. Capped Call Transactions In connection with the pricing of the notes, we entered into privately negotiated capped call transactions with the option counterparties. The capped call transactions are expected generally to reduce potential dilution to our common stock upon any conversion of notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. We intend to use approximately $29.0 million of the net proceeds from this offering to fund the cost of entering into the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, then we intend to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions with the option counterparties. In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to our common stock and/or purchase shares of our 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 our common stock or the market value of the notes at that time. In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and (x) are likely to do so during any observation period related to a conversion of notes or following any repurchase of notes by us in connection with any redemption or fundamental change and (y) are likely to do so following any repurchase of the notes by us other than in connection with any redemption or fundamental change if we elect to unwind a corresponding portion of the capped call transactions in connection with such repurchase). This activity could also cause or avoid an increase or decrease in the market price of our common stock or the market value of the notes, which could affect your ability to convert the notes, and, to the extent the activity occurs during any observation period related to a conversion of notes, it could affect the amount and value of the For personal use only
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- 99 - consideration that you will receive upon conversion of the notes. For a discussion of the potential impact of any market or other activity by the option counterparties or their respective affiliates in connection with these capped call transactions, see “Risk Factors—The capped call transactions may affect the value of the notes and our common stock.” Selling Restrictions Notice to Prospective Investors in Canada The notes may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. If applicable, pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the initial purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering. Notice to Prospective Investors in the European Economic Area The notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended or superseded, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended or superseded, the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the notes or otherwise making them available to retail investors in the European Economic Area has been prepared and therefore offering or selling the notes or otherwise making them available to any retail investor in the For personal use only
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- 100 - European Economic Area may be unlawful under the PRIIPS Regulation. This offering memorandum has been prepared on the basis that any offer of notes in any Member State of the European Economic Area will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of notes. This offering memorandum is not a prospectus for the purposes of the Prospectus Regulation. Notice to Prospective Investors in the United Kingdom The notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No. 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000, as amended (the “FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No. 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No. 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. This offering memorandum may be communicated solely to (i) in the United Kingdom, persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order, (ii) persons who are outside the United Kingdom, or (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the notes may otherwise lawfully be communicated or caused to be communicated (all such persons being “relevant persons”). Any investment activity to which this offering memorandum relates will only be available to and will only be engaged with relevant persons. Any person who is not a relevant person should not act or rely on this offering memorandum or any of its contents. Persons into whose possession this offering memorandum may come are required by us and the initial purchasers to inform themselves about and to observe such restrictions. This offering memorandum has been prepared on the basis that any offer of notes in the United Kingdom will be made pursuant to an exemption under the UK PRIIPs Regulation from the requirement to publish a prospectus for offers of notes. This offering memorandum is not a prospectus for the purposes of the UK PRIIPs Regulation. For personal use only
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- 101 - Notice to Prospective Investors in Hong Kong The notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”), or (ii) to "professional investors" as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder. Notice to Prospective Investors in Japan The notes have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the notes nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time. Notice to Prospective Investors in Singapore This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA ) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA. Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person For personal use only
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- 102 - which is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the notes under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”). Notice to Prospective Investors in Switzerland The notes may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the “SIX”), or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the notes or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to the offering, us, or the notes have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of notes will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of notes has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the “CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of notes. Australia The notes may not be offered for sale or sold to investors in Australia in this offering. Notice to Prospective Investors in Dubai International Finance Centre This offering memorandum relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This offering memorandum is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this offering memorandum nor taken steps to verify the information set forth herein and has no responsibility for this offering memorandum. The notes to which this offering memorandum relates may be illiquid and/or subject to restrictions on their resale. For personal use only
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- 103 - Prospective purchasers of the notes offered should conduct their own due diligence on the notes. If you do not understand the contents of this offering memorandum you should consult an authorized financial advisor. Notice to Prospective Investors in Brazil THE OFFER AND SALE OF THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE BRAZILIAN SECURITIES COMMISSION (COMISSÃO DE VALORES MOBILIÁRIOS, OR "CVM") AND, THEREFORE, WILL NOT BE CARRIED OUT BY ANY MEANS THAT WOULD CONSTITUTE A PUBLIC OFFERING IN BRAZIL UNDER CVM RESOLUTION NO 160, DATED 13 JULY 2022, AS AMENDED ("CVM RESOLUTION 160”) OR UNAUTHORIZED DISTRIBUTION UNDER BRAZILIAN LAWS AND REGULATIONS. THE SECURITIES MAY ONLY BE OFFERED TO BRAZILIAN PROFESSIONAL INVESTORS (AS DEFINED BY APPLICABLE CVM REGULATION), WHO MAY ONLY ACQUIRE THE SECURITIES THROUGH A NON-BRAZILIAN ACCOUNT, WITH SETTLEMENT OUTSIDE BRAZIL IN NON-BRAZILIAN CURRENCY. THE TRADING OF THESE SECURITIES ON REGULATED SECURITIES MARKETS IN BRAZIL IS PROHIBITED. For personal use only
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- 104 - TRANSFER RESTRICTIONS The initial purchasers are offering the notes only to persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A under the Securities Act. As a purchaser of any notes, you will be deemed to have acknowledged, and represented to and agreed with us and the initial purchasers, as follows: You are purchasing the notes for your own account or for an account with respect to which you exercise sole investment discretion, and you and such account are a qualified institutional buyer and are aware that the sale to you and such account is being made in reliance on Rule 144A under the Securities Act. You acknowledge that the offer and sale of the notes and any shares of our common stock issuable upon conversion of the notes have not been registered under the Securities Act or the securities laws of any other jurisdiction, and the notes and any such shares of common stock are subject to the transfer restrictions set forth below. You acknowledge that neither we, nor the initial purchasers nor any person representing us or the initial purchasers has made any representation to you with respect to us or the offering and sale of the notes other than the information contained or incorporated by reference in this offering memorandum or in any supplement to this offering memorandum that we have approved. You also acknowledge that you have received a copy of this offering memorandum and acknowledge that you have had access to such financial and other information, including that incorporated by reference in this offering memorandum, and have been offered the opportunity to ask us questions, and have received answers to any such questions, as you deemed necessary in connection with your decision to purchase the notes. You are relying only on the information contained or incorporated by reference in this offering memorandum, or in any supplement to this offering memorandum that we have approved, in making your decision to purchase the notes. You will not offer to sell, sell, pledge or otherwise transfer any of the notes or any shares of our common stock issuable upon conversion of the notes except in accordance with the transfer restrictions set forth in the legends to be affixed on the notes and such shares and reproduced below. You are not an “affiliate” (within the meaning of Rule 144 under the Securities Act) of the Company. You understand that each note will bear a legend substantially to the following effect: THE OFFER AND SALE OF THIS NOTE AND THE SHARES OF COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER: (1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF For personal use only
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- 105 - RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT; AND (2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT ONLY: (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF; (B) PURSUANT TO A REGISTRATION STATEMENT THAT IS EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON REASONABLY BELIEVED TO BE A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; (D) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANY OTHER EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BEFORE THE REGISTRATION OF ANY SALE OR TRANSFER IN ACCORDANCE WITH (2)(D) OR (E) ABOVE, THE COMPANY, THE TRUSTEE AND THE REGISTRAR RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH CERTIFICATES OR OTHER DOCUMENTATION OR EVIDENCE AS THEY MAY REASONABLY REQUIRE IN ORDER TO DETERMINE THAT THE PROPOSED SALE OR TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. You understand that any shares of our common stock issued upon conversion of notes bearing the legend set forth above will bear or be subject to a legend that imposes substantially the same restrictions on such shares as the legend set forth above. You acknowledge that we, the initial purchasers and others will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. You agree that if any of the acknowledgments, representations or agreements you are deemed to have made by your purchase of notes is no longer accurate, you will promptly notify us and the initial purchasers. If you are purchasing any notes as a fiduciary or agent for one or more investor accounts, then you represent that you have sole investment discretion with respect to, and have full power to make the above acknowledgments, representations and agreements on behalf of, each of those accounts. For personal use only
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- 106 - WHERE YOU CAN FIND ADDITIONAL INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. The SEC’s website contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC. Our SEC filings are also available to the public free of charge on the investor relations section of our website at http://investors.life360.com.com. In addition, the ASX maintains a website that contains documents required under Australian securities laws and other information regarding our filings at www.asx.com.au. However, we have not incorporated by reference into this offering memorandum the information in, or that can be accessed through, these websites, and you should not consider it to be a part of this offering memorandum. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE We “incorporate by reference” into this offering memorandum certain information identified below contained in documents that we have filed with the SEC. This means that we disclose important information to you by referring you to our SEC filings that contain that information. The information incorporated by reference is considered to be a part of this offering memorandum. Any statement in a document that we have filed with the SEC before the date of this offering memorandum and that is incorporated by reference into this offering memorandum will be considered to be modified or superseded to the extent that a statement contained in this offering memorandum, or in any other subsequently filed document that is incorporated by reference into this offering memorandum, modifies or supersedes that statement. The modified or superseded statement will not be considered to be a part of this offering memorandum, except as modified or superseded. We incorporate by reference into this offering memorandum the information contained in the documents listed below, which is considered to be a part of this offering memorandum: our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (file no. 001-42120), as amended by Amendment No. 1 on Form 10-K/A, filed with the SEC on April 18, 2025 (file no. 001-42120) (our “Annual Report”); the portions of our definitive proxy statement on Schedule 14A, filed with the SEC on April 16, 2025 (file no. 001-42120), that are incorporated by reference into our Annual Report; our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 12, 2025 (file no. 001-42120) (our “Quarterly Report”); our Current Report on Form 8-K, filed with the SEC on May 29, 2025 (file no. 001-42120); the description of our common stock set forth in Item 1 to our Registration Statement on Form 8-A, filed with the SEC on June 3, 2024 (file no. 001-42120), and any amendment or report filed for the purpose of updating such description, including Exhibit 4.2 of our Annual Report; and future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the For personal use only
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- 107 - Exchange Act on or after the date of this offering memorandum but before the completion or other termination of the offering of notes covered by this offering memorandum. You may request a copy of these filings, at no cost, by contacting us at: Life360, Inc. 1900 South Norfolk Street, Suite 310 San Mateo, California (415) 484-5244 Attention: Secretary For personal use only
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- 108 - LEGAL MATTERS The validity of the notes will be passed upon for us by Sidley Austin LLP. The initial purchasers have been represented by Simpson Thacher & Bartlett LLP. INDEPENDENT REGISTERED ACCOUNTING FIRM The consolidated financial statements of Life360, Inc. and subsidiaries as of and for the years ended December 31, 2024 and 2023, incorporated by reference in this Offering Memorandum, and the effectiveness of internal control over financial reporting as of December 31, 2024, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports incorporated by reference herein. The consolidated financial statements as of December 31, 2022 and for the year then ended incorporated by reference in this offering memorandum have been so incorporated in reliance on the report of BDO USA, LLP (n/k/a BDO USA, P.C.), an independent registered public accounting firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting. For personal use only
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$275,000,000 0.00% Convertible Senior Notes due 2030 OFFERING MEMORANDUM Goldman Sachs & Co. LLC UBS Investment Bank Evercore ISI Canaccord Genuity Citizens Capital Markets Stifel Loop Capital Markets Financial Advisor to Life360, Inc. J. Wood Capital Advisors June 2, 2025 For personal use only