Item 1.01
|
Entry into a Definitive Material Agreement.
|
Completion of Convertible Senior Notes Offering and
Resale Offering
On November 20, 2017, Everbridge, Inc. (the Company) completed its registered underwritten public offering of
$115.0 million aggregate principal amount of 1.5% convertible senior notes due 2022 (such notes, the Notes, and such offering, the Note Offering), including $15.0 million in principal amount of Notes issued upon
exercise in full of the Underwriters (as defined below) over-allotment option, pursuant to an underwriting agreement, dated November 15, 2017, with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse
Securities (USA) LLC as representatives of the underwriters listed in Schedule A thereto (the Underwriters), which is described in Item 8.01 below.
In addition, on November 20, 2017, Jaime Ellertson, the Companys Chief Executive Officer, completed a registered underwritten secondary public
offering of 650,000 shares of the Companys common stock (such shares, the Resale Shares, such offering, the Resale Offering and, together with the Note Offering, the Offerings) at a public offering price of
$26.97 per share, pursuant to an underwriting agreement, dated November 15, 2017, among the Company, Mr. Ellertson and the Underwriters, which is described in Item 8.01 below. Mr. Ellertson also granted the Underwriters an option
to purchase up to an additional 97,500 Resale Shares within 30 days of November 15, 2017.
The Notes and the Resale Shares were each offered and
sold in a public offering registered under the Securities Act of 1933, as amended (the Securities Act), pursuant to a registration statement on Form
S-3
filed with the Securities and Exchange
Commission on October 3, 2017, which became effective on October 13, 2017 (Registration
No. 333-220777),
including the prospectus supplements filed by the Company with the Securities and
Exchange Commission pursuant to Rule 424(b)(5) under the Securities Act, dated November 15, 2017, to the prospectus contained in the registration statement (the Registration Statement).
Base Indenture and Supplemental Indenture
The Company
issued the Notes under an indenture, dated as of November 20, 2017 (the Base Indenture), between the Company and U.S. Bank, National Association, as trustee (the Trustee), as supplemented by the First Supplemental
Indenture, dated as of November 20, 2017 (the Supplemental Indenture and, together with the Base Indenture, the Indenture), between the Company and the Trustee.
The Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.5% per year, payable semiannually in arrears on May 1 and
November 1 of each year, beginning on May 1, 2018. The Notes will mature on November 1, 2022, unless earlier repurchased, redeemed or converted. The Notes will be convertible into cash, shares of the Companys common stock or a
combination of cash and shares, at the Companys election. The conversion rate will initially be 29.6626 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $33.71 per share of
common stock), subject to customary adjustments. Prior to the close of business on the business day immediately preceding May 1, 2022, the Notes will be convertible at the option of holders only upon the satisfaction of certain conditions.
Thereafter, holders of the Notes may convert their Notes at their option at any time prior to the close of business on the second scheduled trading day immediately preceding maturity on November 1, 2022.
The Company may redeem for cash all or any portion of the Notes, at its option, on or after November 6, 2020 if the last reported sale price of the
Companys common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of
redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the
Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a fundamental change, holders of the Notes may require the Company to repurchase for cash all or any portion of their
Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
2
The Indenture contains customary events of default including: (1) the Companys default in any payment
of interest on any Note when due and payable and the default continues for a period of 30 days; (2) the Companys default in the payment of principal of any Note when due and payable; (3) the Companys failure to comply with its
obligation to convert the Notes in accordance with the Indenture upon exercise of a holders conversion right and such failure continues for five business days; (4) the Companys failure to give a fundamental change notice, a notice
of a make-whole fundamental change or notice of a specified corporate transaction, in each case when due and, except with respect to any notice of a specified corporate transaction, such failure continues for five business days; (5) the
Companys failure to comply with its obligations under the Indenture with respect to consolidation, merger or sale of assets of the Company; (6) the Companys failure, for a period of 60 days after written notice from the Trustee or
the holders of at least 25% in principal amount of the Notes then outstanding, to comply with any of the Companys other agreements contained in the Notes or Indenture; (7) a default by the Company or any of its subsidiaries with respect
to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $10.0 million in the aggregate of the Company and/or any such
subsidiary (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable (after the
expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and in the cases of clauses (i) and (ii), such acceleration shall not have been rescinded or annulled
or such failure to pay or default shall not have been cured or waived, or such indebtedness is not paid or discharged, as the case may be, within 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by holders
of at least 25% in aggregate principal amount of Notes then outstanding; (8) certain events of bankruptcy, insolvency or reorganization with respect to the Company or any of its significant subsidiaries; and (9) a final judgment or
judgments for the payment of $10.0 million or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any of its subsidiaries, which judgment is not discharged, bonded, paid, waived or stayed within 60
days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished.
If certain bankruptcy and insolvency-related events of defaults occur, the principal of, and accrued and unpaid interest on, all of the then outstanding Notes
shall automatically become due and payable. If an event of default other than certain bankruptcy and insolvency-related events of defaults occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal
amount of the outstanding Notes, by notice to the Company and the Trustee, may declare the principal of, and accrued and unpaid interest on, all of the then outstanding Notes to be due and payable. Notwithstanding the foregoing, the Indenture
provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with Section 314(a)(1) of the Trust Indenture Act or comply with certain reporting covenants in the
Indenture will, for the first 365 days after such event of default, consist exclusively of the right to receive additional interest on the Notes.
The
Indenture provides that the Company shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to, another person, unless (i) the resulting, surviving or transferee
person (if not the Company) is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such corporation (if not the Company) expressly assumes by supplemental indenture
all of the Companys obligations under the Notes and the Indenture; and (ii) immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the Indenture.
A copy of the Base Indenture is filed as Exhibit 4.1 to this Current Report and is incorporated herein by reference. A copy of the Supplemental Indenture,
including the form of Note, is filed as Exhibit 4.2 to this Current Report and is incorporated herein by reference. The description of the Notes and the Indenture in this Current Report is a summary and is qualified in its entirety by the terms of
the Indenture and the form of Note included therein.
Capped Call Transactions
On each of November 15, 2017, concurrently with the pricing of the Notes, and November 16, 2017, concurrently with the Underwriters exercise of
the over-allotment option to purchase additional Notes, the Company entered into call option transactions with respect to its common stock (the Capped Call Transactions) with affiliates of two of
3
the underwriters and an additional financial institution (the Counterparties). The Capped Call Transactions cover, subject
to anti-dilution
adjustments substantially identical to those in the Notes, approximately 3.4 million shares of the Companys common stock, which is equal to the number of shares of Common Stock
that will initially underlie the Notes, at an initial strike price of approximately $33.7125 per share. The Capped Call Transactions will expire upon the maturity of the Notes, if not earlier exercised or terminated. A copy of the form of
confirmation for the Capped Call Transactions is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The Capped Call Transactions
are expected generally to reduce the potential dilution to the Companys common stock upon any conversion of the Notes and/or offset any cash payments the Company is 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 initially equal to approximately $47.20 (which represents a premium of approximately 75% over the last reported sale price of the common stock on November 15, 2017). The Capped
Call Transactions are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Notes.
The Company
used approximately $12.9 million of the net proceeds from the offering of the Notes to pay the cost of the Capped Call Transactions.