Rapid7 Announces Pricing of $200 Million Convertible Senior Notes Offering - Seite 2

In connection with the pricing of the notes, Rapid7 entered into capped call transactions with certain initial purchasers or their respective affiliates and other financial institutions (the “option counterparties”). The capped call transactions are expected to offset the potential dilution to Rapid7’s common stock as a result of any conversion of notes, with such reduction subject to a cap initially equal to $93.88 (which represents a premium of 100% over the last reported sale price of Rapid7’s common stock on April 28, 2020). If the initial purchasers exercise their option to purchase additional notes, Rapid7 expects to enter into additional capped call transactions with the option counterparties.

Rapid7 expects that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties and/or their respective affiliates may enter into various derivative transactions with respect to Rapid7’s common stock and/or purchase shares of Rapid7’s common stock concurrently with or shortly after the pricing of the notes, including with or from certain investors of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Rapid7’s common stock or the notes at that time.

In addition, Rapid7 expects that the option counterparties and/or their respective affiliates may modify or unwind their hedge positions by entering into or unwinding various derivative transactions and/or purchasing or selling Rapid7’s common stock or other securities of Rapid7 in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each exercise date for the capped call transactions, which are expected to be scheduled to occur during the observation period relating to the conversion of the notes on or after November 1, 2024 that is not in connection with a redemption). This activity could also cause or prevent an increase or a decrease in the market price of Rapid7’s common stock or the notes, and to the extent the activity occurs during any observation period related to a conversion of notes, this could affect the amount and value of the consideration that a noteholder will receive upon conversion of its notes.