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la-tsla-fan

09/30/16 8:54 PM

#412193 RE: la-tsla-fan #412192

I like the fact that the exhibit has a scenario where the stock price is $200 or higher!

olddog967

09/30/16 10:13 PM

#412194 RE: la-tsla-fan #412192

Ia-idcc-fan: The initial "Conversion Price" is $72.37. According to the last 10-K:

"The 2020 Notes will be convertible into cash, shares of our common stock or a combination thereof, at our election, at an initial conversion rate of 13.8172 shares of common stock per $1,000 principal amount of 2020 Notes (which is equivalent to an initial conversion price of approximately $72.37 per share)."

That comment is based on the following definition in Section 1.01 Definitions, of the Note:

“Conversion Rate” shall initially be 13.8172 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as provided in Article 10.

(therefore $1000 / 13.8172 = $72.37"

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The adjustments to the Conversion rate are much more complicated. Based on Sections 10.03 and 10.04 of the Note there seven (7) different conditions that can result in a Conversion Price adjustment, each with their own method of calculating an adjustment price. Except for a dividend payment adjustment under 10.04(e), (see highlighted below) the adjustments would only happen in unusual circumstances. The following are the Note introductions to the potential adjustments:

SECTION 10.03. Adjustment to Conversion Rate Upon a Non-Stock Change of Control. If and only to the extent a Holder elects to convert its Notes in connection with a transaction described under clauses (1), (4) or (5) of the definition of Fundamental Change pursuant to which 10% or more of the consideration for the Common Stock (other than cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) in such Fundamental Change transaction consists of cash or other securities or property that are not shares of common stock traded or scheduled to be traded immediately following such transaction on the NASDAQ Global Select Market, the NASDAQ Global Market or The New York Stock Exchange (or any of their respective successors) (a “Non-Stock Change of Control”), the Conversion Rate shall be increased by an additional number of shares of Common Stock (the “Additional Shares”).
The number of Additional Shares shall be determined by reference to the table below, based on the date on which the Non-Stock Change of Control becomes effective (the “Effective Date”) and the Stock Price paid (or deemed paid) per share for the Common Stock in such Non-Stock Change of Control.

SECTION 10.04. Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company as follows:

(a) If the Company shall issue shares of Common Stock to all or substantially all holders of Common Stock as a dividend or distribution on shares of Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:


(b) If the Company shall distribute to all or substantially all holders of its Common Stock any rights, options or warrants entitling them to purchase, for a period of 45 calendar days or less from the issuance date for such distribution, shares of the Common Stock at a price per share less than the average Closing Sale Price of the Common Stock for the ten Trading Day period ending on, and including, the Trading Day immediately preceding the declaration date for such distribution, the Conversion Rate shall be increased based on the following formula:


(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness or other of its assets or property to all or substantially all holders of Common Stock, excluding:
(i) dividends or distributions as to which adjustment is required to be effected pursuant to clause (a) or (b) above;
(ii) dividends or distributions paid exclusively in cash as to which adjustment is required to be effected pursuant to clause (d) below; and
 
(iii) Spin-Offs described below in the second paragraph of this clause (c),

then the Conversion Rate shall be increased based on the following formula:
 
(d) If the Company pays any cash dividends or distributions paid exclusively in cash to all or substantially all holders of its Common Stock (other than dividends or distributions made in connection with the Company’s liquidation, dissolution or winding-up or upon a merger, consolidation or sale, conveyance, transfer, lease or other disposition resulting in a change in the conversion consideration as described under Section 10.05), other than a regular quarterly cash dividend that does not exceed $0.20 per share (the “Dividend Threshold Amount”), the Conversion Rate shall be increased based on the following formula:

(e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the Closing Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), the Conversion Rate shall be increased based on the following formula:

(f) To the extent permitted by law and any applicable stock exchange rules (including, if necessary, in compliance with any applicable stock exchange shareholder approval requirement), the Company (i) may increase the Conversion Rate by any amount for a period of at least 20 Business Days and (ii) may (but is not required to) increase the Conversion Rate to avoid or diminish income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Conversion Rate is increased pursuant to the preceding sentences, the Company shall deliver a notice of the increase to the Trustee and Holders, which notice shall state the increased Conversion Rate and the period during which it shall be in effect.