comScore Annual Report 2018

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549___________________________________________________________________ Form 10-K___________________________________________________________________ (Mark One)þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018OR¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 001-33520________________________________________________________________ COMSCORE, INC.(Exact Name of Registrant as Specified in its Charter)Delaware 54-1955550 11950 Democracy Drive, Suite 600Reston, Virginia 20190 (703) 438-2000(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification Number) (Address of Principal Executive Offices) (Registrant’s Telephone Number,Including Area Code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act:None._________________________________________________________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes þ No ¨Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large accelerated filer þ Accelerated filer ¨Non-accelerated filer o Smaller reporting company ¨ Emerging growth company ¨If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þThe aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant, as of June 29, 2018, the last business day of theregistrant’s most recently completed second fiscal quarter, was approximately $824.6 million (based on the closing price of the registrant’s common stock on the Nasdaq GlobalSelect Market on that date). Solely for purposes of this disclosure, shares of the registrant’s common stock held by executive officers and directors and each person who owned10% or more of the outstanding common stock of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is notnecessarily a conclusive determination for other purposes.Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of February 25, 2019, there were 59,466,150shares of the registrant’s common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCESpecified portions of the registrant’s Proxy Statement with respect to its 2019 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission no laterthan 120 days following the end of the registrant’s fiscal year ended December 31, 2018, are incorporated by reference in Part III of this Annual Report on Form 10-K. Table of ContentsCOMSCORE, INC.ANNUAL REPORT ON FORM 10-KFOR THE PERIOD ENDED DECEMBER 31, 2018TABLE OF CONTENTSCautionary Note Regarding Forward-Looking Statements iExplanatory Note ii PART I Item 1. Business 1Item 1A. Risk Factors 10Item 1B. Unresolved Staff Comments 26Item 2. Properties 26Item 3. Legal Proceedings 27Item 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 28Item 6. Selected Financial Data 30Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47Item 8. Financial Statements and Supplementary Data 50Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 106Item 9A. Controls and Procedures 106Item 9B. Other Information 111 PART III Item 10. Directors, Executive Officers and Corporate Governance 112Item 11. Executive Compensation 112Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 112Item 13. Certain Relationships and Related Transactions, and Director Independence 112Item 14. Principal Accounting Fees and Services 112PART IV Item 15. Exhibits, Financial Statement Schedules 113Item 16. Form 10-K Summary 118SIGNATURES 119 Table of ContentsCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSWe may make certain statements, including in this Annual Report on Form 10-K, or 10-K, including the information contained in Item 7,“Management’sDiscussion and Analysis of Financial Condition and Results of Operations” of this 10-K, and the information incorporated by reference in this 10-K, thatconstitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal and state securitieslaws. Forward-looking statements are all statements other than statements of historical fact. We attempt, whenever possible, to identify these forward-looking statements by words such as “may,” “will,” “should,” “could,” "might," “expect,” “plan,” “anticipate,” “believe,” “estimate,” "target," "goal,""predict,” “intend,” “potential,” “continue,” “seek” and other comparable words. Similarly, statements that describe our business strategy, goals,prospects, opportunities, outlook, objectives, plans or intentions are also forward-looking statements. These statements may relate to, but are not limited to,expectations of future operating results or financial performance, macroeconomic trends that we expect may influence our business, plans for financing orcapital expenditures, expectations regarding liquidity and compliance with financing covenants, expectations regarding the introduction of new products,effects of restructuring actions, regulatory compliance and expected changes in the regulatory landscape affecting our business, internal controlimprovements, expected impact of litigation and regulatory proceedings, plans for growth and future operations, effects of acquisitions, divestitures andpartnerships, as well as assumptions relating to the foregoing.Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These statements are basedon expectations and assumptions as of the date of this 10-K regarding future events and business performance and involve known and unknown risks,uncertainties and other factors that may cause actual events or results to be materially different from any future events or results expressed or implied bythese statements. These factors include those set forth in the following discussion and within Item 1A, “Risk Factors” of this 10-K and elsewhere within thisreport, and the risk factors identified in other documents that we file from time to time with the U.S. Securities and Exchange Commission, or SEC, as well asfactors that cannot be predicted or quantified.We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able toaccurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.You should not place undue reliance on forward-looking statements, which apply only as of the date of this 10-K. You should carefully review the riskfactors described in this 10-K and in other documents that we file from time to time with the SEC. Except as required by applicable law, including the rulesand regulations of the SEC, we undertake no obligation, and expressly disclaim any duty, to publicly update or revise any forward-looking statements,whether as a result of any new information, future events or otherwise. Although we believe that the expectations reflected in the forward-lookingstatements are reasonable as of the date of this 10-K, our statements are not guarantees of future results, levels of activity, performance, or achievements,and actual outcomes and results may differ materially from those expressed in, or implied by, any of our statements.iTable of ContentsEXPLANATORY NOTEUnless the context requires otherwise, references in this 10-K to “Comscore,” “we,” “us,” the “Company” and “our” refer to comScore, Inc. and itsconsolidated subsidiaries. We have registered trademarks around the globe, including Unified Digital Measurement®, UDM®, vCE®, Metrix®, Essentials®,Box Office Essentials®, OnDemand Essentials®, OnDemand Everywhere®, and TV Essentials®. This 10-K also contains additional trademarks and tradenames of our Company and our subsidiaries. We file and maintain trademark protection for our products and services. All trademarks and trade namesappearing in this 10-K are the property of their respective holders.Certain Information Included in this 10-KThis 10-K includes selected consolidated financial data as of, and for the year ended, December 31, 2015. This data has been derived from our auditedConsolidated Financial Statements, which were adjusted from the unaudited information previously furnished in our Current Report on Form 8-K onFebruary 17, 2016. This 10-K also includes selected consolidated financial data as of, and for the year ended, December 31, 2014, which has been derivedfrom our unaudited Consolidated Financial Statements, which were prepared on the same basis as our audited financial statements and reflect adjustments toour previously filed Consolidated Financial Statements. Item 6, "Selected Financial Data" of our Annual Report on Form 10-K for the year ended December31, 2017 (the "2017 10-K") sets forth information regarding the applicable adjustments or restatements of our financial results for 2015 and 2014. Footnote 1,Organization, of the Notes to Consolidated Financial Statements contained in the 2017 10-K sets forth information regarding the applicable adjustments andrestatement of our stockholders' equity as of January 1, 2015.We have not filed and do not intend to file amendments to any of our previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q forthe periods affected by the restatements of our Consolidated Financial Statements. Accordingly, as disclosed in our Current Reports on Form 8-K filedSeptember 15, 2016 and November 23, 2016, the Company's (i) previously issued, unaudited quarterly and year-to-date Consolidated Financial Statementsfor the quarters ended March 31, June 30 and September 30, 2015 filed on Quarterly Reports on Form 10-Q on May 5, August 7, and November 6, 2015,respectively, (ii) previously issued, audited Consolidated Financial Statements for the years ended December 31, 2014 and 2013 filed on Annual Reports onForm 10-K on February 20, 2015 and February 18, 2014, respectively (including the interim periods within those years) and (iii) preliminary unauditedConsolidated Financial Statements for the quarter and year ended December 31, 2015 included as an exhibit to our Current Report on Form 8-K furnished onFebruary 17, 2016, should no longer be relied upon, nor should any related reports of our independent registered public accounting firm be relied upon.Investors should rely only on the financial information and other disclosures, including the adjusted or restated financial information, included in the2017 10-K and subsequent filings, as applicable, and should not rely on any previously furnished or filed reports, earnings releases, guidance, investorpresentations, or similar communications, including regarding the Company's customer count and validated Campaign Essentials (or vCE) products,regarding these periods.Background of Audit Committee Investigation and Subsequent Management ReviewIn February 2016, the Audit Committee ("Audit Committee") of the Comscore Board of Directors ("Board") commenced an internal investigation, with theassistance of outside advisors, into matters related to the Company's revenue recognition practices, disclosures, internal controls, corporate culture andcertain employment practices. As a result of the issues identified in the investigation and management's subsequent review, on September 12, 2016, the AuditCommittee concluded that the Company could no longer support the prior accounting for non-monetary contracts recorded by the Company during 2013,2014 and 2015. As a result, the Company concluded that the Consolidated Financial Statements and related financial information contained in thepreviously filed or furnished reports listed above should no longer be relied upon.On November 23, 2016, in a Current Report on Form 8-K, the Company reported that the Audit Committee's investigation was complete and had concludedthat, as a result of certain instances of misconduct and errors in accounting determinations, adjustments to the Company's accounting for certain non-monetary and monetary transactions were required. As a result of the Audit Committee's conclusions and observations, the Company began a process ofreviewing substantially all of its accounting policies, significant accounting transactions, related party transactions, and other financial, internal control anddisclosure matters. In addition to the above-referenced adjustments related to revenue and expenses associated with non-monetary transactions, we alsoconcluded that the accounting treatment for certain monetary transactions, certain business and asset acquisitions, our deferred tax assets and otheraccounting matters required adjustments. The Audit Committee's investigation and this review also identified various material weaknesses in internal control,including in our entity level controls and in certain accounting practices, all as described under Item 9A, "Controls and Procedures," in the 2017 10-K. Forfurther information regarding the specific adjustments resulting from the investigation and subsequent management review, refer to Item 6, "SelectedFinancial Data," in the 2017 10-K.iiTable of ContentsPART IITEM 1.BUSINESSOverviewWe are a global information and analytics company that measures consumer audiences and advertising across media platforms. We create our products usinga global data platform that combines information about content and advertising consumption on digital platforms (smartphones, tablets and computers),television ("TV") and movie screens with demographics and other descriptive information. We have developed proprietary data science that enablesmeasurement of person-level and household-level audiences, removing duplicated viewing across devices and over time. This combination of data andmethods helps companies across the media ecosystem better understand and monetize their audiences and develop marketing plans and products to moreefficiently and effectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide accredited audience ratings,advertising verification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include buyers and sellers ofadvertising including digital publishers, television networks, content owners, advertisers, agencies and technology providers.The platforms we measure include televisions, smartphones, computers, tablets, over-the-top ("OTT") devices and movie theaters. The information we analyzecrosses geographies, types of content and activities, including websites, mobile applications ("apps"), video games, television and movie programming,electronic commerce ("e-commerce") and advertising.We are a Delaware corporation headquartered in Reston, Virginia with principal offices located at 11950 Democracy Drive, Suite 600, Reston, VA 20190. Ourtelephone number is 703-438-2000.Key Developments in 2018Leadership ChangesOn April 23, 2018, we announced the appointment of Bryan J. Wiener as our Chief Executive Officer ("CEO"), effective May 30, 2018. Upon the effectivedate of the CEO appointment, our President and Executive Vice Chairman William Livek stepped down as President and assumed the role of Vice Chairmanand special advisor to the CEO. On September 5, 2018, we announced the appointment of Sarah Hofstetter as President, effective October 4, 2018.Relisting on NASDAQOn May 30, 2018, The Nasdaq Stock Market LLC approved our application for relisting on The Nasdaq Global Select Market ("Nasdaq") and the Company'scommon stock, par value $0.001 per share ("Common Stock") began trading on Nasdaq effective June 1, 2018.2018 Convertible Notes FinancingIn January 2018, we entered into certain agreements with funds affiliated with or managed by Starboard Value LP ("Starboard") pursuant to which we (i)issued $150.0 million in senior secured convertible notes to Starboard in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock, (ii)granted Starboard the option to acquire up to an additional $50.0 million of convertible notes, (iii) agreed to grant Starboard warrants to purchase 250,000shares of Common Stock and (iv) have the right to conduct a rights offering, open to all our stockholders, for up to an additional $150.0 million inconvertible notes. On May 17, 2018, Starboard exercised its option to purchase an additional $50.0 million of convertible notes in exchange for $15.0million in cash and 1,400,000 shares of Common Stock. In August and November 2018, we issued an aggregate of $4.0 million in convertible notes toStarboard, bringing the total principal balance of convertible notes held by Starboard as of December 31, 2018 to $204.0 million.The convertible notes contain certain affirmative and restrictive covenants with which we must comply, including (i) covenants with respect to limitations onadditional indebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances and (v) the timelyfiling of certain disclosures with the SEC.For additional information about the terms of the convertible notes, refer to Footnote 5, Long-term Debt. For additional information about our relationshipwith Starboard, refer to Footnote 16, Related Party Transactions.Background and MarketWe were founded in 1999 on the belief that digital technology would transform the interactions between people, media and brands in ways that wouldgenerate substantial demand for data and analytics about that interaction. The growing adoption of digital1Table of Contentstechnologies also allowed measurement of the behavior of consumers' online activities. Based on this vision, we built a global opt-in panel of over twomillion individuals that provided insight into online activities. In 2002, we acquired Media Metrix, an internet ratings brand with its own panel ofconsumers. Anticipating that mobile would become a key digital platform in the future, we acquired mobile measurement specialist M:Metrics in 2008. In2009, we introduced our proprietary Unified Digital Measurement ("UDM") methodology, which allowed us to unite consumer panel data with census-leveldata from tags that we implemented on websites and their content and, later from software development kits on mobile apps.To expand our global presence in Latin America and Europe, respectively, we acquired Certifica in 2009 and NedStat in 2010. To enhance our productofferings and expand our presence in certain markets, we acquired ARS in 2010, M.Labs, LLC in 2014, Proximic, Inc. in 2015, and Compete, Inc.("Compete") in 2016. As consumer media consumption and the availability of television and video programming expanded across a myriad of consumerdevices, the ability to measure this dynamic cross-platform world became more important for buyers and sellers of advertising. In response, we partnered withESPN and Arbitron to pioneer a cross-platform measurement solution, and in 2015 launched Xmedia, a syndicated cross-platform measurement product.Arbitron was later acquired by Nielsen Holdings N.V. ("Nielsen"), and we continue to have access to legacy Arbitron data through a 2013 license agreementwith Nielsen. This cross-platform measurement strategy led to our 2015 strategic alliance with WPP plc (together with its affiliates, "WPP"), one of the largestcommunications services businesses in the world, and the 2016 merger with Rentrak Corporation ("Rentrak"), a global media measurement and advancedconsumer targeting company serving the entertainment, television, video and advertising industries. Following the Rentrak merger, we now have access tomillions of television and video on demand ("VOD") screens and the ability to measure box office results from movie screens across the world. We also havean opt-in Total Home Panel, which enables measurement of household devices that use a home’s internet connection, whether traditional mobile andcomputer devices, streaming media devices, gaming consoles or Internet of Things ("IOT") devices, which may include devices such as smart speakers,thermostats, and appliances.Our Approach to Media MeasurementOur approach to measuring media consumption addresses the ubiquitous nature of media content and the fragmentation caused by the variety of platformsand technologies used to access such content. We believe this fragmentation presents major challenges to using legacy measurement systems that arecomprised of relatively small panels of cooperating consumers or limited to specific media platforms. Our products and services are built on measurement andanalytic capabilities comprised of broad-based data collection, proprietary databases, internally developed software and a computational infrastructure tomeasure, analyze and report on digital, television and movie activity at the level of granularity that we believe the media and advertising industries need. Wehave more than 100 patents covering various aspects of our data collection and data processing systems.Data CollectionThe following collection methods illustrate our extensive data sourcing:•We collect data from proprietary consumer panels that measure the use of computers, tablets and smartphones that access the internet. Thesepanelists have agreed to install our passive metering software on their devices, home network or both.•We collect data from our near-census digital network whereby content publishers implement our software code (referred to as "tagging") on theirwebsites, in mobile applications and video players to provide us usage information.•We license certain demographic and behavioral mobile and panel data from third-party data providers.•We obtain U.S. television viewership information from satellite, telecommunications and cable operators covering millions of television and VODscreens.•We measure gross receipts and attendance information from movie screens across the world.•We integrate our digital and television viewership information with other third-party datasets that include consumer demographic characteristics,attitudes, lifestyles and purchase behavior.•We integrate many of our services with ad serving platforms.•We utilize knowledgeable in-house industry analysts that span verticals such as pharmaceuticals, media, finance, consumer packaged goods andpolitical information to add value to our data.•We have created an opt-in Total Home Panel which can capture data that run through a home’s internet connection. This expands our intelligence toinclude such activity as game console and IOT device usage.Data Science and ManagementThe ability to integrate, manage and transform massive amounts of data is core to our company. We continue to invest in technologies to enable large-scalemeasurement with protection of consumer privacy and attractive economics. Our systems contain multiple redundancies and advanced distributed processingtechnologies. We have created innovations such as:•Our UDM methodology, which allows us to combine person-centric panel data with website server data. We believe this gives our customers greateraccuracy, granularity and relevance in audience measurement.2Table of Contents•An ability to de-duplicate audiences across platforms, which is based on direct observations within our consumer panel and census data combinedwith proprietary data science. This de-duplication allows us to measure the reach and frequency of advertising and content exposure across platformsand over time.•An ability to validate advertising delivery and detect fraud through our Invalid Traffic and Sophisticated Invalid Traffic filtration methods. Thesemethods have been accredited by the Media Rating Council, which provides our customers with added assurances of validity and reliability.•An ability to capture the full content of a website or app session, which allows us to measure activity beyond page views such as purchasetransactions, application submissions and product configurations.•An ability to intelligently categorize massive amounts of web content, which allows us to inform targeted and brand-safe advertising.Product DeliveryWe deliver our products and services through diverse methods to meet the needs of our customers. These include Software-as-a-Service delivery platforms,application programming interface and other data feeds that integrate directly with customer systems, and integrations with advertising technology providerssuch as data management platforms and demand-side platforms that enable data management, ad management and programmatic ad trading.Our Products and ServicesOur products and services help our customers measure audiences and consumer behavior across media platforms, while offering validation of advertisingdelivery and its effectiveness. Our customers include:•Local and national television broadcasters and content owners;•Network operators including cable companies, mobile operators and internet service providers;•Digital content publishers and internet technology companies;•Advertising agencies;•Movie studios;•Hardware device and component manufacturers;•Financial service companies, including buy and sell-side investment firms, consumer banks and credit card issuers;•Manufacturers and retailers of consumer products such as consumer packaged goods, pharmaceuticals, automotive and electronics; and•Political campaigns and related organizations.Our products and services are organized around three solution groups that address customer needs:•Ratings and Planning products and services that provide measurement of the behavior and characteristics of audiences of content and advertisingacross television and digital platforms including computers, tablets, smartphones, and other connected devices;•Analytics and Optimization products and services that include activation, lift and survey-based analytics products; and•Movies Reporting and Analytics products and services that measure movie viewership and box office results by capturing movie ticket sales in realtime or near real time and include box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide.We categorize our revenue along these three solution groups; however, our shared cost structure is defined and tracked by function and not by our solutiongroups. These shared costs include employee costs, operational overhead, data centers and our technology that supports our product offerings.For a discussion of our change to these three solution groups (from our previous four offerings) during 2018, refer to Item 2, "Management's Discussion andAnalysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the period ended September 30, 2018.3Table of ContentsRatings and Planning products and services are designed to help customers find the most relevant viewing audience, whether that viewing is linear, timeshifted/recorded, online or on-demand. These products and services include:•Media Metrix and Mobile Metrix, which measure websites and apps on computers, smartphones and tablets across dozens of countries, are leadingcurrencies for online media planning and enable customers to analyze audience size, reach, engagement, demographics and other characteristics.Publishers use Media Metrix and Mobile Metrix to demonstrate the value of their audiences and understand market dynamics, and advertisers andtheir agencies use Media and Mobile Metrix to plan and execute effective marketing and content campaigns. These products also providecompetitive intelligence such as cross-site visiting patterns, traffic source/loss reporting and local market trends.•Video Metrix, which delivers unduplicated measurement of digital video consumption across computer, smartphone, tablet and OTT devices andprovides TV-comparable reach and engagement metrics, as well as audience demographics.•Plan Metrix, which provides an understanding of consumer lifestyle, buying and other consumption habits, online and offline, by integratingattitudes and interests with online behavior and provides customers with insight into patterns and trends needed to develop and execute advertisingand marketing campaigns.•validated Campaign Essentials ("vCE"), which validates whether digital ad impressions are visible to humans, identifies those that are fraudulent(e.g., delivered to automated bots or requested by malware), and verifies that ads are shown in brand safe content and delivered to the right audiencetargets. Advertisers and their agencies use vCE as the basis for negotiating and evaluating campaign performance against their contracts with, andpayments to, digital publishers for ad campaigns.•Campaign Ratings, which expands upon vCE’s verification of mobile and desktop campaigns with the addition of advertising delivered via OTTand TV and provides unduplicated reporting that enables ad buyers and sellers to negotiate and evaluate campaigns across media platforms.•TV Essentials, which combines TV viewing information with marketing segmentation and consumer databases for enhanced audience intelligence.TV Essentials data is also used in analytical applications to help customers better understand the performance of network advertising campaigns.•StationView Essentials, which allows customers to better understand consumer viewing patterns and characteristics across local TV stations andcable channels in their market(s) to promote viewership of a particular station and negotiate inventory pricing based on the size, value and relevanceof the audience.•OnDemand Essentials, which provides multichannel video programming distributors and content providers with transactional tracking and reportingbased on millions of television screens and incorporates our advanced audience descriptor, enabling our customers to plan advertising campaignsthat more precisely target consumers watching on-demand video content.•Cross-Platform Suite, including XMedia and Extended TV (currently in development), which provides the integration of person-level linear TVviewership with digital audience data and enables the creation of cross-platform media plans based on an analysis of de-duplicated reach,engagement and audience overlap across TV and digital platforms using a self-service tool. Customers can simulate cross-platform media planningand share scenarios, understand incremental reach and frequency that digital provides compared to that of linear TV media buys, and simulatevarious media-mix scenarios to better understand the optimal mix.Analytics and Optimization products and services provide end-to-end solutions for planning, optimization and evaluation of advertising campaigns andbrand protection. These products are primarily a part of customized data services. These products and services include:•Comscore Marketing Solutions, which provide analytics that integrate online visitation and advertising data, TV viewing, purchase transactions,attitudinal research and other Comscore information assets. These custom deliverables are designed to meet client needs in specific industries suchas automotive, financial services, media, retail, travel, telecommunications and technology. Applications include path-to-purchase analyses,competitive benchmarking, and market segmentation studies.•Lift Models, which measure the impact of advertising on a brand across multiple behavioral and attitudinal dimensions such as brand awareness,purchase intent, online visitation, online and offline purchase behavior and retail store visitation, enabling customers to fine tune campaign strategyand execution.•Branded Entertainment Analytics, which measure the impact and value of brand integrations into content such as TV programs.•Survey analytics, which measure various types of consumer insights including brand health metrics.•Activation Solutions, which use Comscore-collected data about media characteristics and consumption to help our clients enhance their customerinteractions, enable clients to ensure that their advertisements appear only in brand-safe, relevant environments, or enrich client databases for use inadvanced analytic and media planning applications.4Table of ContentsMovies Reporting and Analytics products and services measure movie viewership and box office results by capturing movie ticket sales in real time or nearreal time and include box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide. These products and servicesinclude:•Box Office Essentials, which provides detailed measurement of domestic and international theatrical gross receipts and attendance, with movie-specific information across the globe.•Box Office Analytics, which provides release-date optimization using predictive analytics to estimate the gross revenue potential for future films,long-lead measurement to help gauge the health of a movie’s marketing campaign before theatrical release, and post-release reports of audiencedemographics and the aspects of each movie that trigger interest and attendance.•Swift, which is an electronic box office reporting system that facilitates the flow of reconciled theater-level ticket transactions.•Hollywood Software, which provides movie theater distributors and exhibitors with software and infrastructure to manage and control end-to-endprocesses and equipment for digital cinema exhibition and enables customers to plan releases, program theater screens, and manage payments acrossmultiple theaters.Research and DevelopmentOur research and development activities span our business of media and cross-platform measurement, encompassing data collection, data science, analyticalapplication development and product delivery. We continue to focus on expanding our coverage and scale, precision and granularity across diverse types ofmedia, devices and geographies using our census, panel and other data assets.Examples of our research and development initiatives include:•Enhancing our recruiting methods and software applications;•Developing new technologies to manage, stage and deliver cross-platform data and analytics through traditional web-based user interfaces and viaintegration with customer systems;•Creating new methodologies to measure person-level TV and digital consumption at scale and across platforms; and•Continuing to develop expertise in combining our data assets with those of partner companies, which allows us to enhance existing services andcreate new audience rating products and insight into audience behavior.Intellectual PropertyOur intellectual property assets are important to protect our business. We protect our innovations and products with numerous patents, trademarks,copyrights, trade secrets, and other intellectual property. In particular, we file for, and seek to acquire patent rights for our innovations and we continue toseek to enhance our patent portfolio through targeted and strategic patent filings and licensing opportunities. We believe that we own the materialtrademarks used in connection with the marketing, distribution and sale of our products, both domestically and internationally. We will continue to pursueintellectual property opportunities in areas and technologies that we deem to be strategic and appropriate for our business.PatentsOur patents extend across our data capture and processing techniques and include the following:•Data Collection - metering such as biometrics and audio fingerprinting, tagging such as video viewability, browser optimization, IP obfuscation andTV-off measurement methodology.•Data Processing - traffic and content categorization, demographic attribution, ad effectiveness measurement, data overlap and fusion, invalid trafficdetection, data weighting, projection and processing of return path data.TrademarksWe file and maintain trademark protection for our products and services. We rely on trademarks and service marks to protect our intellectual property assetsand believe these are important to our marketing efforts and the competitive value of our products and services. We have registered trademarks around theglobe, including Unified Digital Measurement®, UDM®, vCE®, Metrix®, Essentials®, Box Office Essentials®, OnDemand Essentials®, OnDemandEverywhere®, and TV Essentials®. This 10-K also contains additional trademarks and trade names of our Company and our subsidiaries. All trademarks andtrade names appearing in this 10-K are the property of their respective holders.5Table of ContentsLicensesWe license data from third-party providers across the media platforms that we measure. Our licenses include a 2013 agreement with Nielsen to license certainArbitron data used in our cross-platform solutions, as well as licenses with satellite, telecommunications and cable operators covering television and VODviewership data, third-party scheduling datasets and data matching partners, and agreements with providers of demographic and behavioral mobile and paneldata. See "Our Approach to Media Measurement - Data Collection" above for a discussion of our data sourcing.CompetitionThe market for audience and advertising measurement products is highly competitive and is evolving rapidly. We compete primarily with other providers ofmedia intelligence and related analytical products and services. We also compete with providers of marketing services and solutions, with full-service surveyproviders and with internal solutions developed by customers and potential customers. Our principal competitors include:•Full service market research firms, including Nielsen, Ipsos and GfK;•Companies that provide audience ratings for TV, radio and other media that have extended or may extend their current services, particularly incertain international markets, to the measurement of digital media, including Nielsen Audio (formerly Arbitron) and TiVo Corporation;•Online advertising companies that provide measurement of online ad effectiveness and ad delivery used for billing purposes, including Nielsen,Google and Facebook;•Companies that provide digital advertising technology point solutions, including DoubleVerify, Integral Ad Science, Moat (owned by Oracle), andWhiteOps;•Companies that provide audience measurement and competitive intelligence across digital platforms, including Nielsen, SimilarWeb, and AppAnnie;•Analytical services companies that provide customers with detailed information about behavior on their own websites, including Adobe Analytics,IBM Digital Analytics and WebTrends Inc.;•Companies that report Smart TV data such as Vizio, Alphonso, VideoAmp and Samba TV; and•Companies that provide consumers with TV and digital services such as AT&T and Comcast.We compete based on the following principal factors:•The ability to provide accurate measurement of digital audiences across multiple digital platforms;•The ability to provide TV audience measurement based on near-census data that increases accuracy and reduces variability;•The ability to provide de-duplicated audience measurement across platforms;•The ability to provide actual, accurate and reliable data regarding audience behavior and activity in a timely manner, including the ability tomaintain large and statistically representative panels;•The ability to provide reliable and objective third-party data that, as needed, is able to receive industry-accepted accreditation;•The ability to adapt product offerings to emerging digital media technologies and standards;•The breadth and depth of products and their flexibility and ease of use;•The availability of data across various industry verticals and geographic areas and expertise across these verticals and in these geographic areas; and•The ability to offer products that meet the changing needs of customers.We believe we compete favorably on these factors and that our vision and investments in the future of media measurement across platforms will deliverproducts and services that our customers will continue to trust and value.Government Regulation and PrivacyU.S. and international data security and privacy laws apply to our various businesses. We have programs in place to detect, contain and respond to datasecurity incidents; however, increasing technology risks or unauthorized users who successfully breach our network security could misappropriate or misuseour proprietary information or cause interruptions in our services. Many countries have data protection laws with different requirements than those in the U.S.and this may result in inconsistent requirements and differing interpretations across jurisdictions. Governments, privacy advocates and class action attorneysare increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data. New laws such as the California Consumer PrivacyAct ("CCPA"), Brazil's General Data Protection Law ("LGPD") and the General Data Protection Regulation ("GDPR") in Europe and industry self-regulatorycodes have been enacted, and more are being considered that will affect our ability (and our customers’ ability) to reach current and prospective customers, torespond to individual customer requests under the laws, and6Table of Contentsto implement our business models effectively. Both the CCPA and LGPD will come into effect in 2020. Similarly, the ePrivacy Regulation, which focuses oncertain uses of electronic technologies, is expected to be adopted. The GDPR took effect in May 2018 and includes additional requirements regarding thecollection and handling of individuals’ personal data. Failure to meet the GDPR requirements, or privacy requirements in other jurisdictions, could result insubstantial penalties.We participate in the EU-U.S. Privacy Shield Framework and the Swiss-U.S. Privacy Shield Framework as set forth by the U.S. Department of Commerceregarding the collection, use, and retention of personal information transferred from the European Economic Area and Switzerland to the U.S. We alsomonitor actions by the Federal Communications Commission and the Federal Trade Commission, including regulatory developments affecting InternetService Providers.Where we receive data from third-party service providers, our contracts with such providers obligate them to meet privacy and data security standards setforth therein, including a requirement to obtain appropriate consent or provide another appropriate legal basis for collection. Our policies and protocols aredesigned to be consistent with the American Institute of Certified Public Accountants, Inc. ("AICPA") and the Canadian Institute of Chartered Accountants("CICA") Trust Service Principles criteria for online privacy.EmployeesAs of January 31, 2019, we had approximately 1,800 employees. We believe our employee relations are good. Our employees are not represented by laborunions outside of those few countries where union representation is a mandatory practice for doing business.Locations and Geographic AreasWe are located around the globe with employees in 21 countries. Our primary geographic market is the United States, followed by Europe, Latin America,Canada and Asia. For information with respect to our geographic markets, refer to Footnote 15, Geographic Information, of the Notes to ConsolidatedFinancial Statements.Executive Officers and DirectorsExecutive Officers and Executive DirectorBryan J. Wiener has served as our Chief Executive Officer since May 2018 and as a director since October 2017. He served as Executive Chairman of 360i, adigitally led advertising agency, from 2014 to 2018 and previously served as CEO from 2005 to 2013. From 2014 through 2015, Mr. Wiener concurrentlyserved as chairman of Expion, a social content marketing software company. Prior to that, he was Co-CEO of Innovation Interactive, the privately held parentcompany of 360i and digital media SaaS provider IgnitionOne, from 2004 until it was acquired by Dentsu in 2010. Mr. Wiener holds an M.B.A. from theStern School of Business at NYU and a B.A. from Syracuse University.Carol DiBattiste has served as our General Counsel & Chief Privacy and People Officer since January 2017 and as our Chief Compliance Officer since April2017. Ms. DiBattiste previously held positions at the U.S. Department of Veterans Affairs with the Board of Veterans’ Appeals as Executive in Charge andVice Chairman from August 2016 to January 2017, and Senior Advisor for Appeals Modernization, Office of the Secretary, from May 2016 to August 2016.Prior to that, Ms. DiBattiste served as Executive Vice President, Chief Legal, Privacy, Security, and Administrative Officer of Education ManagementCorporation, an operator of for-profit post-secondary educational institutions, from March 2013 through March 2016. She also served as Executive VicePresident, General Counsel and Chief Administrative Officer of Geeknet, Inc., an online retailer, from April 2011 through March 2013. Ms. DiBattiste holdsan L.L.M., Law from the Columbia University School of Law, a J.D. from Temple University School of Law, and a B.A., Sociology-Criminal Justice fromLaSalle University.Gregory A. Fink has served as our Chief Financial Officer and Treasurer since October 2017 and previously served as our Executive Vice President, Financesince joining the Company earlier in October 2017. Prior to joining the Company, Mr. Fink was the Senior Vice President, Controller and Chief AccountingOfficer at Fannie Mae, a government-sponsored enterprise in the mortgage industry, since 2011. Mr. Fink holds a B.S. in Business Administration with anaccounting emphasis from San Diego State University and is a Certified Public Accountant.Daniel Hess has served as our Chief Product Officer since January 2018. Mr. Hess previously served as our Executive Vice President, Products fromSeptember 2016 to December 2017. Prior to joining the Company, Mr. Hess served as an investor in and advisor to start-ups in digital media and marketing,software service and e-commerce. Previously, Mr. Hess served as Chief Corporate Development Officer of Rewards Network, a loyalty marketing and financialservices company, from January 2014 to December 2014. Prior to that, Mr. Hess was Chief Executive Officer, Director and Co-Founder of Local OfferNetwork, Inc., a technology and marketing services company, from January 2010 to October 2013. Mr. Hess holds a B.A., Psychology from the University ofRochester.7Table of ContentsSarah Hofstetter has served as our President since October 2018. She previously served as Chairwoman of 360i, a digitally led advertising agency, from May2018 to October 2018 and as Chief Executive Officer of 360i from October 2013 to April 2018. She concurrently served as a director of the AmericanAssociation of Advertising Agencies. Before becoming CEO of 360i, Ms. Hofstetter was that company’s President (2010 to 2013) and Senior Vice Presidentof Brand Strategy & Emerging Media (2006 to 2010). Ms. Hofstetter holds a B.A. from Queens College, City University of New York.Joseph Rostock has served as our Chief Information Officer since September 2017, and as our Chief Information and Technology Officer since January 2018.Mr. Rostock is also the Principal and Founder of AllosLogic, an advisory and executive management services provider founded in 2017. Prior to joining theCompany, Mr. Rostock served as Chief Technology Officer of Inovalon, Inc., a cloud-based analytics platform provider, from 2013 to 2017. Mr. Rostockholds a B.A., Radio, Television and Film from Temple University and also completed graduate studies in Computer Science at St. Joseph’s University.Non-Executive DirectorsBrent D. Rosenthal has served as Chairman of the Board since April 2018 and as a director since January 2016. Mr. Rosenthal is the Founder of MountainHawk Capital Partners, LLC., an investment fund focused on small and microcap equities in the technology, media, telecom (TMT) and food industries. Mr.Rosenthal has been the Non-Executive Chairman of the board of directors of RiceBran Technologies, a food company, since July 2016. He also served on theboard of directors of SITO Mobile, Ltd., a mobile location-based media platform, from August 2016 to July 2018, and as Non-Executive Chairman of itsboard of directors from June 2017 to July 2018. Previously, Mr. Rosenthal was a Partner in affiliates of W.R. Huff Asset Management where he worked from2002 to 2016. Mr. Rosenthal served as the Non-Executive Chairman of Rentrak Corporation from 2011 to 2016. He was Special Advisor to the board ofdirectors of Park City Group from November 2015 to February 2018. Mr. Rosenthal earned his B.S. from Lehigh University and M.B.A. from the S.C. JohnsonGraduate School of Management at Cornell University. He is an inactive Certified Public Accountant.William (Bill) Livek has served as our Vice Chairman since January 2016 and was our President from January 2016 through May 2018. Mr. Livek previouslyserved as Vice Chairman and Chief Executive Officer of Rentrak Corporation, a media measurement and consumer targeting company, from June 2009 untilthe Company’s acquisition of Rentrak in January 2016. Prior to Rentrak, Mr. Livek was founder and Chief Executive Officer of Symmetrical Capital, aninvestment and consulting firm; Senior Vice President, Strategic Alliances and International Expansion, of Experian Information Solutions, Inc., a provider ofinformation, analytical and marketing services; and co-President of Experian’s subsidiary Experian Research Services. He holds a B.S. degree inCommunications Radio/Television from Southern Illinois University.Dale Fuller has served as a director since March 2018. Mr. Fuller has served as Chairman of the Board of Directors of MobiSocial, Inc., a Stanford-basedtechnology startup, since January 2013 and as a director of Symantec Corp., a cyber security company, since September 2018. He previously served on theBoard of Directors of Quantum Corporation, a data storage and systems manufacturer, from 2014 to 2016; Chairman of the Supervisory Board of AVGTechnologies N.V., an Internet security and privacy software company, from 2009 to 2016; and President and Chief Executive Officer of MokaFive, aventure-backed software company, from 2008 to 2013.Jacques Kerrest has served as a director since June 2017. Mr. Kerrest has served as Executive Vice President and CFO of Intelsat S.A., a communicationssatellite services provider, since February 2016. Prior to his appointment at Intelsat, he held executive-level roles at numerous leading technology andcommunications companies, including ActivIdentity Corporation, Virgin Media Inc., Harte-Hanks Corporation and Chancellor Broadcasting Company.Previously, Mr. Kerrest served on the boards of directors of several public companies. Mr. Kerrest received his Master of Science Degree from Faculté desSciences Économiques in Paris, France, and an M.B.A. from Institut D’Etudes Politiques De Paris in Paris, France as well as the Thunderbird School of GlobalManagement in Glendale, Arizona.Michelle McKenna has served as a director since October 2017. Ms. McKenna has served as Senior Vice President and Chief Information Officer of theNational Football League since September 2012. She has served on the board of directors of RingCentral, Inc., a leading provider of global enterprise cloudcommunications and collaboration solutions, since March 2015, and Quotient Technology, a digital promotions and media company, since October 2017.She previously served on the board of directors of Insperity, Inc., a professional employer organization, from April 2015 to August 2017. Ms. McKenna holdsa B.S. in Accounting from Auburn University and an MBA from the Crummer Graduate School of Business at Rollins College. She was formerly licensed as aCertified Public Accountant in the State of Georgia.Robert Norman has served as a director since April 2018. Mr. Norman currently serves as a freelance marketing consultant. From 2013 to 2017, Mr. Normanserved as Chief Digital Officer of GroupM Worldwide, a global buyer of advertising media, where he oversaw digital strategy and was a member of the GlobalExecutive Committee. He previously served as CEO of GroupM North America from 2011 to 2013. Prior to that, he served in various senior managementpositions at GroupM and its subsidiaries, including serving as a director at Tempus Group PLC at the time of its acquisition by WPP plc in 2001. Mr. Normancurrently serves as a non-executive director of BBC Global News Limited and is a governor of the Center for the Digital Future at USC’s Annenberg School.8Table of ContentsPaul Reilly has served as a director since October 2017. Mr. Reilly served as an Executive Vice President of Arrow Electronics, Inc. through his retirement inJanuary 2017, and previously had served as its Executive Vice President, Finance and Operations, and Chief Financial Officer from 2001 through May 2016,and Head of Global Operations from 2009 through May 2016. He has served as a director of Cabot Microelectronics Corporation, a chemical mechanicalplanarization company, since March 2017, and Assurant, Inc., an insurance company, since June 2011. He has a B.S. in Accounting from St. John’s Universityand is a Certified Public Accountant.Available InformationWe make our periodic and current reports along with amendments to such reports available, free of charge, on our website as soon as reasonably practicableafter such material is electronically filed with the SEC. Our website address is www.comscore.com, and such reports are filed under "SEC Filings" on theInvestor Relations section of our website. Information contained on our website is not part of this 10-K and is not incorporated herein by reference.You can read our SEC filings, including this 10-K as well as our other periodic and current reports, on the SEC’s website at www.sec.gov.9Table of ContentsITEM 1A.RISK FACTORSAn investment in our Common Stock involves a substantial risk of loss. You should carefully consider these risk factors, together with all of the otherinformation included herewith, before you decide whether to invest in shares of our Common Stock. The risks identified below could materially andadversely affect our business, financial condition and operating results. In that case, the trading price of our Common Stock could decline, and you maylose part or all of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us orthat we currently deem to be immaterial also may materially and adversely affect our business, financial condition and operating results, and may result inthe loss of part or all of your investment.Risks Related to Our Audit Committee Investigation and Subsequent Management Review, Consolidated Financial Statements, Internal Controls andRelated MattersWe are currently subject to an SEC investigation, the resolution of which could require significant management time and attention, result in significantlegal expenses, and result in government enforcement actions, any of which could have a material and adverse impact on our results of operations,financial condition, liquidity and cash flows.As previously disclosed, the SEC is investigating allegations with respect to the Company regarding revenue recognition, internal controls, non-GAAPdisclosures, tone at the top and whistleblower retaliation. We continue to cooperate fully with the SEC. To date, we have incurred significant costs inconnection with the SEC investigation, and we expect these costs to continue into 2019. Any related legal proceedings, if decided adversely to us, couldresult in significant monetary damages, penalties and reputational harm, and will likely involve significant defense and other costs. We cannot predict whatlosses we may incur in these matters.We have entered into indemnification agreements with our current and former directors and certain of our officers, and our amended and restated certificate ofincorporation requires us to indemnify each of our directors and officers, to the fullest extent permitted by Delaware law, who was or is a party or is threatenedto be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director or officer of theCompany. Although we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our operations, our insurancecoverage may not cover all claims that may be brought against us or our current and former directors and officers, and insurance coverage may not continueto be available to us at a reasonable cost. As a result, we have been and may continue to be exposed to substantial uninsured liabilities, including pursuant toour indemnification obligations, which could materially and adversely affect our business, prospects, results of operations and financial condition.We cannot guarantee that we will not receive additional inquiries from the SEC, Nasdaq or other regulatory authorities regarding our restated financialstatements or matters relating thereto, or that we or our current and former directors and officers will not be subject to future claims, investigations orproceedings. Any future inquiries from the SEC, Nasdaq or other regulatory authority, or future claims or proceedings as a result of the restatement or anyrelated regulatory investigation will, regardless of the outcome, likely consume a significant amount of our internal resources and result in additional costs.Matters relating to or arising from the restatement and the Audit Committee's investigation, including adverse publicity and potential concerns from ourcustomers, have had and could continue to have an adverse effect on our business and financial condition.We have been and could continue to be the subject of negative publicity focusing on the restatement and adjustment of our financial statements, and we maybe adversely impacted by negative reactions from our customers or others with whom we do business. Concerns include the perception of the effort requiredto address our accounting and control environment, the impact of the SEC investigation, and the ability for us to be a long-term provider to our customers.The continued occurrence of any of the foregoing could harm our business and have an adverse effect on our financial condition.We have identified deficiencies in our revenue accounting controls that resulted in a material weakness in our internal control over financial reportingand have concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31,2018. If we fail to properly remediate these or any future deficiencies or material weaknesses or to maintain proper and effective internal controls,material misstatements in our financial statements could occur and impair our ability to produce accurate and timely financial statements and couldadversely affect investor confidence in our financial reports, which could negatively affect our business.We have concluded that our internal control over financial reporting was not effective as of December 31, 2018 due to the existence of a material weakness inrevenue accounting controls, and we also concluded that our disclosure controls and procedures were not effective as of December 31, 2018 due to thematerial weakness in our control over financial reporting, as described in Item 9A, "Controls and Procedures" of this 10-K. While we completed meaningfulremediation efforts during 2017 and 2018 to address10Table of Contentsthe identified weakness, we were not able to fully remediate it as of December 31, 2018, and we cannot provide assurance that our remediation efforts will beadequate to allow us to conclude that our controls are effective as of December 31, 2019. We also cannot provide assurance that the material weaknesses anddeficiencies identified in the past will not recur, or that additional material weaknesses in our internal control over financial reporting will not arise or beidentified in the future. We intend to continue our control remediation activities and to continue to improve our operational, information technology,financial systems, compliance and infrastructure procedures and controls, as well as to continue to expand, train, retain and manage our personnel who areessential to effective internal control and compliance. In doing so, we will continue to incur expenses and expend management time.If our remediation measures are insufficient to address the identified deficiencies, or if additional deficiencies in our internal control over financial reportingare discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate ourfinancial results. Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented ordetected on a timely basis, or at all. If we are unable to provide reliable and timely financial reports in the future, our business and reputation may be furtherharmed. Restated financial statements and failures in internal control may also cause us to fail to meet reporting obligations, negatively affect investorconfidence in our management and the accuracy of our financial statements and disclosures, or result in adverse publicity and concerns from investors, any ofwhich could have a negative effect on the price of our common stock, subject us to further regulatory investigations and penalties or shareholder litigation,and materially and adversely impact our business and financial condition.The filing of our 2017 10-K may not make us "current" in our Exchange Act filing obligations, which means we retain certain potential liability and maynot be eligible to use certain forms or rely on certain rules of the SEC.On March 23, 2018, we filed the 2017 10-K, which constituted a "comprehensive" Annual Report on Form 10-K, or "Super 10-K," and which contained ouraudited consolidated balance sheets as of December 31, 2017 and 2016 and the related audited consolidated statements of operations and comprehensiveloss, stockholders' equity and cash flows for the years ended December 31, 2017, 2016 and 2015, along with selected unaudited condensed consolidatedfinancial data for the years ended December 31, 2014 (restated) and 2013 (restated). Concurrently with filing our 2017 10-K, we filed unaudited quarterly andyear to date condensed consolidated financial statements and quarterly reports for each of the quarters ended March 31, June 30 and September 30, 2017(collectively, the "2017 10-Qs"). We followed previously issued guidance from the staff of the SEC's Division of Corporation Finance (the "Staff") withrespect to filing a comprehensive annual report on Form 10-K where issuers have been delinquent in meeting their periodic reporting requirements with theSEC. In accordance with such guidance, our filing of the 2017 10-K does not necessarily mean that the Staff will conclude that the Company has compliedwith all applicable financial statement requirements or complied with all reporting requirements of the Securities Exchange Act of 1934 ("Exchange Act"),nor does it foreclose any enforcement action by the SEC with respect to the Company's disclosure, filings or failures to file reports under the Exchange Act.We have not amended, and do not intend to amend, our previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periodsaffected by the restatements of our consolidated financial statements. We also do not intend to file separate Annual Reports on Form 10-K for the years endedDecember 31, 2015 and December 31, 2016 or Quarterly Reports for the 2016 interim periods. Without the missing reports, investors may not be able toreview certain financial and other disclosures that would have been contained in those reports. We have been current in our periodic reporting requirementssince the filing of the 2017 10-K.Risks Related to Our Business and Our TechnologiesThe market for media measurement and analytics products is highly competitive, and if we cannot compete effectively, our revenues could decline and ourbusiness could be harmed.The market for audience and advertising measurement products is highly competitive and is evolving rapidly. We compete primarily with providers of mediaintelligence and related analytical products and services. We also compete with providers of marketing services and solutions, with full-service surveyproviders, and with internal solutions developed by customers and potential customers.Some of our competitors have longer operating histories, access to larger customer bases and substantially greater resources than we do. As a result, thesecompetitors may be able to devote greater resources to marketing and promotional campaigns, panel retention, panel development or development of systemsand technologies than we can. In addition, some of our competitors may adopt more aggressive pricing policies or have started to provide some services at nocost.Furthermore, large software companies, internet portals and database management companies may enter our market or enhance their current offerings, eitherby developing competing services or by acquiring our competitors, and could leverage their significant resources and pre-existing relationships with ourcurrent and potential customers. Finally, consolidation of our competitors could make it difficult for us to compete effectively.11Table of ContentsIf we are unable to compete successfully against our current and future competitors, we may not be able to retain and acquire customers, and we mayconsequently experience a decline in revenues, reduced operating margins, loss of market share and diminished value from our products.The market for cross-platform products is developing, and if it does not develop further, or develops more slowly than expected, our business could beharmed.The market for cross-platform products is still developing, and it is uncertain whether these products will achieve or maintain high levels of demand andincreased market acceptance. Our success will depend to a substantial extent on the willingness of companies to increase their use of such products and tocontinue use of such products on a long-term basis. Factors that may affect market acceptance include:•the reliability of cross-platform products;•decisions of our customers and potential customers to develop cross-platform solutions internally rather than purchasing such products from third-party suppliers like us;•decisions by industry associations in the U.S. or in other countries that result in association-directed awards of measurement contracts to one or alimited number of competitive vendors;•the rate of growth in e-commerce and mobile commerce ("m-commerce"), cross-platform focused advertising and continued growth in television anddigital media consumption; and•public and regulatory concern regarding privacy and data security.The adoption of advertising across television and digital platforms, particularly by advertisers that have historically relied on traditional offline media,requires the acceptance of new approaches to conducting business and a willingness to invest in such new approaches. Moreover, the decision to adopt across-platform approach to buying advertisement campaigns requires a change to buying approaches and a willingness to adopt new data analytics to assistin evaluating such approaches by advertisement buyers who traditionally focus on buying advertising campaigns through one medium. Advertisers mayperceive such new approaches to advertising or understanding advertising to be less effective than traditional methods for marketing their products. Theymay also be unwilling to pay premium rates for advertising that is targeted at specific segments of validated users based on their demographic profile orinternet behavior across digital media platforms. The digital media advertising and e-commerce markets may also be adversely affected by privacy issuesrelating to such targeted advertising, including that which makes use of personalized information or online behavioral information. Because of the foregoingfactors, among others, the market for cross-platform focused digital media advertising and e-commerce may not continue to grow at significant rates. If thesemarkets do not continue to develop, or if they develop more slowly than expected, our business could suffer.If we are unable to provide cross-platform analytics, or if our cross-platform analytics are incomplete, our ability to maintain and grow our business maybe harmed.As the media and advertising industries increasingly evaluate advertising campaigns across various forms of media, such as television, online, and mobile,the ability to measure the combined size and composition of audiences across platforms is increasingly important and in demand.If we are unable to gain or maintain access to information measuring a media component or type, or if we are unable to do so on commercially reasonableterms, our ability to meet our customers' demands and our business and financial performance may be harmed. Furthermore, even if we do have access tocross-platform data, if we have insufficient technology, encounter challenges in our methodological approaches or inadequate source materials to parse theinformation across such media components to avoid duplications or to do so in a cost-effective manner, our products may be inferior to other offerings, andwe may be unable to meet our customers' demands. In such event, our business and financial performance may be harmed.In particular, our acquisition of television data may be reliant on companies that have historically held a dominant market position measuring television toproduce industry-accepted measurement across a combination of media platforms. Our competitors, such as Nielsen (with whom we have an agreement,scheduled to expire in 2021, to license certain Arbitron data used in our cross-platform solutions), or other providers may have more leverage with dataproviders and may be unable or unwilling to provide us with access to quality data to support our cross-platform products. Likewise, our acquisition ofdigital data may be reliant on large digital publishers that may technologically or legally prevent access to their proprietary platforms for research ormeasurement purposes. Moreover, as mobile devices and technology continue to proliferate, gaining cost-effective access to mobile data will becomeincreasingly critical, and the difficulty in accessing these forms of data will continue to grow. If we are unable to acquire data effectively and efficiently, or ifthe cost of data acquisition increases, our business, financial condition and results of operations may be harmed.We depend on third parties for data that is critical to our business, and our business could suffer if we cannot continue to obtain reliable data from thesesuppliers or if third parties place additional restrictions on our use of such data.12Table of ContentsWe rely on third-party data sources for information usage across the media platforms that we measure, as well as demographics about the people that use suchplatforms. The availability and accuracy of this data is important to the continuation and development of our products and the performance of ourobligations to customers. These suppliers of data may increase restrictions on our use of such data, undertake audits (at either our or their expense) of our useof such data, require us to implement new processes with respect to such data, fail to adhere to our quality control, privacy or security standards or otherwisesatisfactorily perform services, increase the price they charge us for the data or refuse to license the data to us. Additional restrictions on third-party datacould limit our ability to include that data in certain products, which could lead to decreased commercial opportunities for certain products as well as loss ofcustomers, sales credits, refunds or liability to our customers. To comply with any additional restrictions, we may be required to implement certain additionaltechnological and manual controls that could put pressure on our cost structure and could affect our pricing. Supplier consolidation and increased pricing foradditional use cases could also put pressure on our cost structure and our ability to meet obligations to our customers. We may be required to enter intovendor relationships, strategic alliances, or joint ventures with some third parties in order to obtain access to the data sources that we need. If our partners donot apply rigorous standards to their data collection methodology and actions, notwithstanding our best efforts, we may receive third-party data that isinaccurate, defective, or delayed. If third-party information is not available to us on commercially reasonable terms, or is found to be inaccurate, it could harmour products, our reputation, and our business and financial performance.If we fail to respond to technological developments or evolving industry standards, our products may become obsolete or less competitive.Our future success will depend in part on our ability to develop new and modify or enhance our existing products and services, including without limitation,our data collection technologies and approaches, in order to meet customer needs, add functionality and address technological advancements. For example, ifcertain proprietary hand-held mobile devices become the primary mode of receiving content and conducting transactions on the internet, and we are unableto adapt to collect information from such devices, then we would not be able to report on digital usage activity. To remain competitive, we will need todevelop new products that address these evolving technologies and standards across the universe of digital media including television, online, and mobileusage. However, we may be unsuccessful in identifying new product opportunities, developing or marketing new products in a timely or cost-effectivemanner, or obtaining the necessary access to data or technologies needed to support new products, or we may be limited in our ability to operate due topatents held by others. In addition, our product innovations may not achieve the market penetration or price levels necessary for profitability. If we areunable to develop timely enhancements to, and new features for, our existing methodologies or products or if we are unable to develop new products andtechnology that keep pace with rapid technological developments or changing industry standards, our products may become obsolete, less marketable andless competitive, and our business will be harmed.Furthermore, the market for our products is characterized by changes in protocols and evolving industry standards. For example, industry associations such asthe Advertising Research Foundation, the Council of American Survey Research Organizations, the Internet Advertising Bureau ("IAB"), and the MediaRating Council ("MRC") as well as internationally-based industry associations have independently initiated efforts to either review market researchmethodologies across the media that we measure or develop minimum standards for such research. Failure to achieve accreditation may adversely impact themarket acceptance of our products. Meanwhile, successful accreditation may lead to costly changes to our procedures and methodologies.Our business may be harmed if we deliver, or are perceived to deliver, inaccurate information products.The metrics contained in our products may be viewed as an important measure of the success of certain businesses, especially those that utilize our metrics toevaluate a variety of investments ranging from their internal operations to advertising initiatives. If the information that we provide to our customers, themedia, or the public is inaccurate, or perceived to be inaccurate, whether due to inadequate methodological approaches, errors, biases towards certainavailable data sources or partners, defects or errors in data collection and processing (conducted by us or by third parties) or the systems used to collect,process or deliver data, our business may be harmed.Any inaccuracy or perceived inaccuracy in the data reported by us could lead to consequences that could adversely impact our operating results, including:•loss of customers;•sales credits, refunds or liability to our customers;•the incurrence of substantial costs to correct any material defect or error;•increased warranty and insurance costs;•potential litigation;•interruptions in the availability of our products;•diversion of development resources;•lost or delayed market acceptance and sales of our products; and•damage to our brand.13Table of ContentsOur business may be harmed if we change our methodologies or the scope of information we collect.We have in the past and may in the future change our methodologies, the methodologies of companies we acquire, or the scope of information we collect.Such changes may result from identified deficiencies in current methodologies, development of more advanced methodologies, changes in our businessplans, changes in technology used by websites, browsers, mobile applications, servers, or media we measure, integration of acquired companies or expressedor perceived needs of our customers, potential customers or partners. Any such changes or perceived changes, or our inability to accurately or adequatelycommunicate to our customers and the media such changes and the potential implications of such changes on the data we have published or will publish inthe future, may result in customer dissatisfaction, particularly if certain information is no longer collected or information collected in future periods is notcomparable with information collected in prior periods. As a result of future methodology changes, some of our customers that may also supply us with datamay decide not to continue buying products or services from us or may decide to discontinue providing us with their data to support our products. Suchcustomers may elect to publicly air their dissatisfaction with the methodological changes made by us, which may damage our brand and harm our reputation.If we are not able to maintain panels of sufficient size and scope, or if the costs of establishing and maintaining our panels materially increase, ourbusiness could be harmed.We believe that the quality, size and scope of our research panels are critical to our business. There can be no assurance, however, that we will be able tomaintain panels of sufficient size and scope to provide the quality of marketing intelligence that our customers demand from our products. We anticipate thatthe cost of panel recruitment will increase with the proliferation of proprietary and secure media content delivery platforms, and that the difficulty incollecting these forms of data will continue to grow, which may require significant hardware and software investments, as well as increases to our panelincentive and panel management costs.We have historically established and/or acquired new panels. We plan to continue to make significant investments in our panels in the future. Our panel costsmay significantly increase our cost of revenues in the future. To the extent that such additional expenses are not accompanied by increased revenues, ouroperating margins may be reduced and our financial results could be adversely affected.We derive a significant portion of our revenues from sales of our subscription-based products. If our customers terminate or fail to renew theirsubscriptions, our business could suffer.We currently derive a significant portion of our revenues from our syndicated products, which are generally one-year subscription-based products. This hasgenerally provided us with recurring revenue due to high renewal rates. If our customers terminate their subscriptions for our products, do not renew theirsubscriptions, delay renewals of their subscriptions or renew on terms less favorable to us, our revenues could decline and our business could suffer.Our customers have no obligation to renew after the expiration of their initial subscription period, and we cannot be assured that current subscriptions will berenewed at the same or higher dollar amounts, if at all. Furthermore, our newer subscription products, for which revenue is recognized based on impressionsused, may be subject to higher fluctuations in revenue.Our customer renewal rates may decline or fluctuate due to a number of factors, including customer satisfaction or dissatisfaction with our products, the costsor functionality of our products, the prices or functionality of products offered by our competitors, the health of the advertising marketplace, mergers andacquisitions affecting our customer base, general economic conditions or reductions in our customers’ spending levels.Our growth depends upon our ability to retain existing large customers and add new large customers. To the extent we are not successful in doing so, ourability to attain profitability and positive cash flow may be impaired.Our success depends in part on our ability to sell our products to large customers and on the renewal of these subscriptions and contracts to these customers insubsequent years. For the years ended 2018 and 2017, we derived 24% and 27%, respectively, of our total revenues from our top 10 customers. Uncertaineconomic conditions or other factors, such as the failure or consolidation of large customer companies, internal reorganization or changes in focus, ordissatisfaction with our products, may cause certain large customers to terminate or reduce their subscriptions and contracts with us. The loss of any one ormore of these customers could decrease our revenues and harm our current and future operating results. The addition of new large customers or increases insales to existing large customers may require particularly long implementation periods and other significant upfront costs, which may adversely affect ourprofitability. To compete effectively, we have in the past been, and may in the future be, forced to offer significant discounts to maintain existing customersor acquire other large customers. In addition, we may be forced to reduce or withdraw from our relationships with certain existing customers or refrain fromacquiring certain new customers in order to acquire or maintain relationships with important large customers. As a result, new large customers or increasedusage of our products by large customers may cause our profits to decline, and our ability to sell our products to other customers could be adversely affected.14Table of ContentsIf we are unable to effectively persuade customers to buy our products in substitution for those of an incumbent services provider, our revenue growth maysuffer.Some of our newer products require that we persuade prospective customers, or customers of our existing products, to buy our newer products in substitutionfor those of an incumbent service provider. In some instances, the customer may have built their systems and processes around the incumbent provider'sproducts. Persuading such customers to switch service providers may be difficult and require longer sales cycles, affecting our ability to increase revenue inthese areas. Moreover, the incumbent service provider may have the ability to significantly discount its services or enter into long-term agreements, whichcould further impede our ability to persuade customers to switch service providers, and accordingly, our ability to increase our revenues.We may expand through investments in, acquisitions of, or the development of new products with assistance from, other companies, any of which may notbe successful and may divert our management's attention.In the past, we completed several strategic acquisitions. We also may evaluate and enter into discussions regarding an array of potential strategic transactions,including acquiring complementary products, technologies or businesses.An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounterdifficulties integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of theacquired company choose not to be employed by us, and we may have difficulty retaining the customers of any acquired business due to changes inmanagement and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention thatwould otherwise be available for ongoing development of our business. Moreover, we cannot assure you that the anticipated benefits of any acquisition,investment or business relationship would be realized timely, if at all, or that we would not be exposed to unknown liabilities. In connection with any suchtransaction, we may:•encounter difficulties retaining key employees of the acquired company or integrating diverse business cultures;•incur large charges or substantial liabilities, including without limitation, liabilities associated with products or technologies accused or found toinfringe on third-party intellectual property rights or violate existing or future privacy regulations;•issue shares of our capital stock as part of the consideration, which may be dilutive to existing stockholders;•become subject to adverse tax consequences, legal disputes, substantial depreciation or deferred compensation charges;•use cash that we may otherwise need for ongoing or future operation of our business;•enter new geographic markets that subject us to different laws and regulations that may have an adverse impact on our business;•experience difficulties effectively utilizing acquired assets;•encounter difficulties integrating the information and financial reporting systems of acquired businesses, particularly those that operated underaccounting principles other than those generally accepted in the U.S. prior to the acquisition by us; and•incur debt, which may be on terms unfavorable to us or that we are unable to repay.We also have entered into relationships with certain third-party providers to expand our product offerings, and we may enter into similar arrangements in thefuture. These or other future relationships or transactions may involve preferred or exclusive licenses, discount pricing or investments in other businesses toexpand our sales capabilities. These transactions could be material to our financial condition and results of operations, and though these transactions mayprovide additional benefits, they may not be profitable immediately or in the long term. Negotiating any such transactions could be time-consuming,difficult and expensive, and our ability to close these transactions may be subject to regulatory or other approvals and other conditions that are beyond ourcontrol. Consequently, we can make no assurances that any such transactions, investments or relationships, if undertaken and announced, would becompleted or successful.The impact of any one or more of these factors could materially and adversely affect our business, financial condition or results of operations.System failures, security breaches or delays in the operation of our computer and communications systems may harm our business.Our success depends on the efficient and uninterrupted operation of our computer and communications systems and the third-party data centers we use. Ourability to collect and report accurate data may be interrupted by a number of factors, including the failure of our network or software systems, computerviruses, security breaches, or variability in user traffic on customer websites. A failure of our network or data gathering procedures, or those of our third-partydata suppliers, could impede the processing of data, cause the corruption or loss of data, prevent the timely delivery of our products, or damage our brand andreputation.In the future, we may need to expand our network and systems at a more rapid pace than we have in the past. Our network or systems may not be capable ofmeeting the demand for increased capacity, or we may incur additional expenses to accommodate15Table of Contentsthese capacity demands. In addition, we may lose valuable data or be unable to obtain or provide data on a timely basis or our network may temporarily shutdown if we fail to adequately expand or maintain our network capabilities to meet future requirements. Any lapse in our ability to collect or transmit datamay decrease the value of our products and prevent us from providing the data requested by our customers and partners. Any disruption in our networkprocessing or loss of internet user data may damage our reputation and result in the loss of customers, partners and vendors and the imposition of penalties orother legal or regulatory action, and our business, financial condition and results of operations could be materially and adversely affected.We rely on a small number of third-party service providers to host and deliver our products, and any interruptions or delays in services from these thirdparties could impair the delivery of our products and harm our business.We host our products and serve our customers from data center facilities located throughout the U.S. and Europe. While we operate our equipment insidethese facilities, we do not control the operation of these facilities, and, depending on service level requirements and costs, we may not continue to operate ormaintain redundant data center facilities for all of our products or for all of our data, which could increase our vulnerability. These facilities are vulnerable todamage or interruption from earthquakes, hurricanes, floods, fires, power loss, telecommunications failures and similar events. They are also subject to break-ins, computer viruses, security breaches, sabotage, intentional acts of vandalism and other misconduct. A natural disaster or an act of terrorism, a decision toclose the facilities without adequate notice, or other unanticipated problems could result in lengthy interruptions in availability of our products. We may alsoencounter capacity limitations at our third-party data centers. Additionally, our data center facility agreements are of limited durations, and our data centerfacilities have no obligation to renew their agreements with us on commercially reasonable terms, if at all. We believe that we have good relationships withour data center facility vendors and believe that we will be able to renew, or find alternative data center facilities, on commercially reasonable terms,although there can be no guarantee of this. If we are unable to renew our agreements with the owners of the facilities on commercially reasonable terms, or ifwe migrate to a new data center, we may experience delays in delivering our products until an agreement with another data center facility can be arranged orthe migration to a new facility is completed.If we or the third-party data centers that we use were to experience a major power outage, we would have to rely on back-up generators, which may notfunction properly, and their supply may be inadequate. Such a power outage could result in the disruption of our business. Additionally, if our currentfacilities fail to have sufficient cooling capacity or availability of electrical power, we would need to find alternative facilities and could experience delays indelivering our products.We currently leverage a large content delivery network ("CDN"), to provide services that allow us to offer a more efficient tagging methodology. If thatnetwork faced an outage or breach or the service became unavailable, an alternate CDN provider or additional capacity in our data centers would need to beestablished to support the large volume of tag requests that we currently manage, which would either require additional investments in equipment andfacilities or a transition plan. This could unexpectedly raise our costs and could contribute to delays or losses in tag data that could affect the quality andreputation of our Media Metrix, vCE, cross-platform and other products that involve the measurement of a large amount of digitally transmitted activityacross multiple providers.Further, we depend on access to the internet through third-party bandwidth providers to operate our business. If we lose the services of one or more of ourbandwidth providers for any reason, we could experience disruption in the delivery of our products or be required to retain the services of a replacementbandwidth provider. It may be difficult for us to replace any lost bandwidth on a timely basis, on commercially reasonable terms, or at all, due to the largeamount of bandwidth our operations require.Any errors, defects, breaches, disruptions or other performance problems related to our products or the delivery of our services caused by third parties couldreduce our revenues, harm our reputation, result in the loss of customers, partners and vendors and the imposition of penalties or other legal or regulatoryactions and otherwise damage our business. Interruptions in the availability of our products and the delivery of our services may reduce our revenues due toincreased turnaround time to complete projects, cause us to issue credits or refunds to customers, cause customers to terminate their agreements or adverselyaffect our renewal rates. Our business, financial condition and results of operations would be materially and adversely affected if there were errors or delays indelivering our products or services, including for reasons beyond our control, and our reputation would be harmed if our customers or potential customersbelieve our products and services are unreliable.We rely on our management team, many of whom are recent hires, and may need additional personnel to operate and grow our business. The loss of one ormore key employees, the inability to attract and retain qualified personnel, or the failure to integrate new personnel could harm our business.Our success and future growth depend to a significant degree on the skills and continued services of our management team, many of whom are recent hires.Our future success also depends on our ability to retain, attract and motivate highly skilled technical, managerial, marketing and customer service personnel,including members of our management team. We may experience a loss of productivity due to the departure of key personnel and the associated loss ofinstitutional knowledge, or while new personnel integrate into our business and transition into their respective roles. This transition may not ultimately besuccessful.16Table of ContentsA substantial majority of our U.S. employees work for us on an at-will basis. We continually evaluate our personnel needs in all areas of our business,particularly in our sales, marketing, finance and technology development areas, both domestically and internationally, which could increase our recruitingand hiring costs in the foreseeable future. Competition for these types of personnel is intense, particularly in the internet and software industries. Our inabilityto retain and attract the necessary personnel could adversely affect our business.Risks Related to Our Results of OperationsOur revenues and results of operations may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of securities analysts orinvestors, which could cause our stock price to decline.Our results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control. If our revenues or results of operations donot meet or exceed the expectations of securities analysts or investors, the price of our Common Stock could decline substantially. Factors that may causefluctuations in our revenues or results of operations include:•our ability to increase sales to existing customers and attract new customers;•the potential loss or reduction in spending by significant customers;•changes in our customers' subscription renewal behaviors and spending on projects;•the impact of our contract renewal rates caused by our customers' budgetary constraints, competition, customer dissatisfaction, customer corporaterestructuring or change in control, or our customers' actual or perceived lack of need for our products;•the timing of contract renewals, delivery of products and duration of contracts and the corresponding timing of revenue recognition;•variations in the demand for our products and the implementation cycles of our products by our customers;•the challenges of persuading existing and prospective customers to switch from incumbent service providers;•the timing of revenue recognition for usage-based or impression-based products;•the effect of revenues generated from significant one-time projects or the loss of such projects;•the timing and success of new product introductions by us or our competitors;•changes in our pricing and discounting policies or those of our competitors;•the impact of our decision to discontinue certain products;•our failure to accurately estimate or control costs - including those incurred as a result of investments, other business or product developmentinitiatives, litigation, investigations, and the integration of acquired businesses;•the cost and availability of data from third-party sources;•adverse judgments or settlements, or increased legal fees, in legal disputes or government investigations;•changes in interest rates under the Notes or other financing vehicles;•the amount and timing of capital expenditures and operating costs related to the maintenance and expansion of our operations and infrastructure;•service outages, other technical difficulties or security breaches;•limitations relating to the capacity of our networks, systems and processes;•maintaining appropriate staffing levels and capabilities relative to projected growth, or retaining key personnel;•the cost and timing of organizational restructuring;•the risks associated with operating in countries in which we may have little or no previous experience and with maintaining or reorganizingcorporate entity structures in international jurisdictions;•the extent to which certain expenses are deductible for tax purposes, such as share-based compensation that fluctuates based on the timing of vestingand our stock price;•the timing of any changes to our deferred tax valuation allowance;•adoption of new accounting pronouncements;•changes in the fair value of our financing derivatives related to market volatility or management assumptions; and•general economic, political, regulatory, industry and market conditions and those conditions specific to internet usage and online businesses.We believe that our revenues and results of operations on a year-over-year and sequential quarter-over-quarter basis may vary significantly in the future andthat period-to-period comparisons of our operating results may not be meaningful. Investors are cautioned not to rely on the results of prior periods as anindication of future performance.Our financial condition and results of operations could suffer and be adversely affected if we incur an impairment of goodwill or other intangible assets.We are required to test intangible assets and goodwill, annually and on an interim basis if an event occurs or there is a change in circumstance that wouldmore likely than not reduce the fair value of our reporting unit below its carrying values or indicate that17Table of Contentsthe carrying value of such intangibles is not recoverable. When the carrying value of a reporting unit exceeds its fair value, a charge to operations, up to thetotal amount of goodwill, is recorded. If the carrying amount of an intangible asset is not recoverable, a charge to operations is recognized. Either eventwould result in incremental expenses for that period, which would reduce any earnings or increase any loss for the period in which the impairment wasdetermined to have occurred.Our impairment analysis is sensitive to changes in key assumptions used in our analysis, such as expected future cash flows, the degree of volatility in equityand debt markets and our stock price. Additionally, changes in our strategy or significant technical developments could significantly impact therecoverability of our intangible assets. If the assumptions used in our analysis are not realized, it is possible that an impairment charge may need to berecorded in the future. There were no impairment charges taken during the years ended 2018, 2017 and 2016. We cannot predict the amount and timing ofany future impairment of goodwill or other intangible assets.Changes in the fair value of our derivative financial instruments or equity security investment could adversely affect our financial condition and results ofoperations.Our financing derivatives, including the interest rate reset feature and change of control redemption feature of our senior secured convertible notes ("Notes"),are classified as liabilities in our consolidated financial statements. We use various models and assumptions to determine the fair value of these liabilities,including assumptions with respect to market rates, the price and volatility of our Common Stock, the probability of occurrence of certain events, and term.Any change in our assumptions could result in a change in the fair value of our derivative liabilities, which would be recorded to earnings and couldsignificantly affect our financial condition and results of operations. We also hold an equity security investment that is subject to market risk. Changes in thefair value of this investment, which represents shares of common stock of a company listed on a foreign stock exchange, are also recorded to earnings andcould affect our financial condition and results of operations.We may encounter difficulties managing our costs, which could adversely affect our results of operations.We believe that we will need to continue to effectively manage our organization, operations and facilities in order to accommodate changes in our businessand to successfully integrate acquired businesses. If we continue to grow or change, either organically or through acquired businesses, our current systemsand facilities may not be adequate and may need to be expanded or reduced. For example, we may be required to enter into leases for additional facilities orcommit to significant investments in the build out of current or new facilities, or we may need to renegotiate or terminate leases to reflect changes in ourbusiness. If we are unable to effectively forecast our facilities needs or if we are unable to sublease or terminate leases for unused space, we may experienceincreased and unexpected costs. Moreover, our need to effectively manage our operations and cost structure requires that we continue to assess and improveour operational, financial and management controls, reporting systems and procedures.From time to time, as a result of acquisition integration initiatives, or through efforts to improve or streamline our operations, we have reduced our workforceor reassigned personnel, and we may do so in the future. Such actions may expose us to disruption by dissatisfied employees or employee-related claims,including claims by terminated employees who believe they are owed more compensation than we believe these employees are due under our compensationand benefit plans, or claims maintained internationally in jurisdictions whose laws and procedures differ from those in the U.S.If we are not able to efficiently and effectively manage our cost structure and resolve employee-related claims, or if we are unable to find appropriate space tosupport our needs, our business may be impaired.We have a history of significant net losses, may incur significant net losses in the future and may not achieve profitability.We incurred net losses of $159.3 million, $281.4 million and $117.2 million for the years ended 2018, 2017 and 2016 respectively. We cannot makeassurances that we will be able to achieve profitability in the future. As of December 31, 2018, we had an accumulated deficit of $769.1 million. Because alarge portion of our costs are fixed, we may not be able to adequately reduce our expenses in response to any decrease in our revenues, which wouldmaterially and adversely affect our operating results. In addition, our operating expenses may increase as we implement certain growth initiatives, whichinclude, among other things, the development of new products and enhancements of our infrastructure. If our revenues do not increase to offset theseincreases in costs and operating expenses, our operating results would be materially and adversely affected.Our net operating loss carryforwards may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.We have experienced “changes in control” that have triggered the limitations of Section 382 of the Internal Revenue Code on a significant portion of our netoperating loss carryforwards. As a result, we may be limited in the amount of net operating loss carryforwards that we can use in the future to offset taxableincome for U.S. federal income tax purposes.18Table of ContentsAs of December 31, 2018, we estimate our U.S. federal and state net operating loss carryforwards for tax purposes are $563.6 million and $1,318.5 million,respectively, subject to limitation as described above. These net operating loss carryforwards will begin to expire in 2022 for federal income tax reportingpurposes and started to expire in 2018 for state income tax reporting purposes. The federal and certain state net operating losses generated during the yearended December 31, 2018 will have an indefinite carryforward period as a result of the enactment of the Tax Cuts and Jobs Act (the "TCJA").As of December 31, 2018, we estimate our aggregate net operating loss carryforwards for tax purposes related to our foreign subsidiaries are $12.1 million,which will begin to expire in 2019.We apply a valuation allowance to our deferred tax assets when management does not believe that it is more-likely-than-not that they will be realized. Inassessing the need for a valuation allowance, we consider all sources of taxable income, including potential opportunities for loss carrybacks, the reversal ofexisting temporary differences associated with our deferred tax assets and liabilities, tax planning strategies and future taxable income. We also considerother evidence such as historical pre-tax book income in making the determination.As a result of the material changes to our Consolidated Financial Statements following the Audit Committee investigation and related management review,we re-evaluated the valuation allowance determinations made in prior years. Our analysis was updated to consider the changes to our historical operatingresults following the investigation and management review, with revised projections of our future taxable income in order to assess the realizability of ourdeferred tax assets. In that process, we evaluated the weight of all evidence, including the decline in earnings and the resulting impact on our projections offuture taxable income beginning in 2012 and for each subsequent period through 2018. We concluded that as of December 31, 2013, our U.S. federal andstate net deferred tax assets were no longer more-likely-than-not to be realized and that a valuation allowance was required.As of December 31, 2018, we continue to have a valuation allowance recorded against the net deferred tax assets of our U.S. entities and certain foreignsubsidiaries, including net operating loss carryforwards.We have limited experience with respect to our pricing model for our new offerings, and if the fees we charge for our products are unacceptable tocustomers, our revenues and operating results will be harmed.Many of our customers purchase specifically tailored contracts that are priced in the aggregate. Due to the level of customization of such contracts, thepricing of contracts or individual product components of such packages may not be readily comparable across customers or periods. Existing and potentialcustomers may have difficulty assessing the value of our products and services when comparing them to competing products and services. As the market forour products matures, or as new competitors introduce new products or services that compete with ours, we may be unable to renew our agreements withexisting customers or attract new customers with the fees we have historically charged. As a result, it is possible that future competitive dynamics in ourmarket may require us to reduce our fees, which could have an adverse effect on our revenues, profitability and operating results.Risks Related to Legal and Regulatory Compliance, Litigation and Tax MattersConcern over privacy violations and data breaches could lead to public relations problems, regulatory scrutiny and class action lawsuits, which couldharm our business.We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of proprietary information andpersonally identifiable information. The regulatory environment surrounding information security and data privacy varies from jurisdiction to jurisdictionand is constantly evolving and increasingly demanding. The restrictions imposed by such laws continue to develop and may require us to incur substantialcosts and fines or adopt additional compliance measures, such as notification requirements and corrective actions in the event of a security breach.Any perception of our practices, products or services as a violation of individual privacy rights may subject us to public criticism, loss of customers, partnersor vendors, class action lawsuits, reputational harm, or investigations or claims by regulators, industry groups or other third parties, all of which couldsignificantly disrupt our business and expose us to increased liability. (Refer to Footnote 10, Commitments and Contingencies, of the Notes to ConsolidatedFinancial Statements for a discussion of certain legal proceedings in which we are involved.) Additionally, laws regulating privacy and third-party productspurporting to address privacy concerns could negatively affect the functionality of, and demand for, our products and services, thereby resulting in loss ofcustomers, partners and vendors and harm to our business.We also rely on contractual representations made to us by customers, partners, vendors and other third-party data providers that their own use of our servicesand the information they provide to us do not violate any applicable privacy laws, rules and regulations or their own privacy policies. As a component of ourclient contracts, we obligate customers to provide their consumers the opportunity to obtain the appropriate level of consent (including opt outs) for theinformation collection associated with our services, as applicable, or provide another appropriate legal basis for collection. If these representations are false orinaccurate, or if our customers, partners, vendors and other third-party data providers do not otherwise comply with applicable privacy laws, we could faceadverse publicity and possible legal or regulatory action.19Table of ContentsOutside parties may attempt to fraudulently induce our employees or users of our solutions to disclose sensitive information via illegal electronic spamming,phishing or other tactics. Unauthorized parties may also attempt to gain physical access to our information systems. Any breach of our security measures orthe accidental loss, inadvertent disclosure or unauthorized dissemination of proprietary information or sensitive, personal or confidential data about us, ouremployees or our customers, partners or vendors, including the potential loss or disclosure of such information or data as a result of hacking, fraud, trickery orother forms of deception, could expose us, our employees, our customers or the individuals affected to risks of loss or misuse of this information. Any actualor potential breach of our security measures may result in litigation and potential liability or fines, governmental inquiry or oversight or a loss of customerconfidence, any of which could harm our business and damage our brand and reputation, possibly impeding our present and future success in retaining andattracting new customers and thereby requiring time and resources to repair our brand.Domestic or foreign laws, regulations or enforcement actions may limit our ability to collect and incorporate media usage information in our products,which may decrease their value and cause an adverse impact on our business and financial results.Our business could be adversely impacted by existing or future laws, regulations or actions by domestic or foreign regulatory agencies. For example, privacy,data protection and personal information, intellectual property, advertising, data security, data retention and deletion, protection of minors, consumerprotection, economic or other trade prohibitions or sanctions concerns could lead to legislative, judicial and regulatory limitations on our ability to collect,maintain and use information about consumers’ behavior or media consumption in the U.S. and abroad. State and federal laws within the U.S. and foreignlaws and regulations are varied, and at times conflicting, resulting in higher risk related to compliance. A number of new laws coming into effect and/orproposals pending before federal, state and foreign legislative and regulatory bodies will likely affect our business. For example, the European Union’s("EU") General Data Protection Regulation, or GDPR, became effective in May 2018, imposing more stringent EU data protection requirements andproviding for greater penalties for noncompliance. Additionally, the European Commission continues to evaluate changes to the ePrivacy Regulation, acompanion regulation to GDPR that will likely have a significant impact on our solutions. Adding further uncertainty is the United Kingdom's ("UK")decision to leave the EU, commonly referred to as Brexit. Among other things, it is unclear whether the UK will enact legislation similar to the GDPR afterBrexit, and how data transfers to and from the UK will be regulated. As another example, Brazil recently enacted the General Data Protection Law, and theState of California recently enacted the California Consumer Privacy Act ("CCPA"), both of which will come into effect in 2020. The CCPA expands thescope of what is considered “personal information” and creates new data access and opt-out rights for consumers, which will likely create new requirementsfor Comscore and other companies that operate in California. These U.S. federal and state and foreign laws and regulations, which in some cases can beenforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.We have implemented policies and procedures to comply with the GDPR and other laws, and we continue to evaluate and implement processes andenhancements and monitor changes in laws and regulations. However, the application, interpretation, and enforcement of these laws and regulations are oftenuncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from country tocountry and inconsistently with our current policies and practices. Additionally, the costs of compliance with, and the other burdens imposed by, these andother laws or regulatory actions may prevent us from selling our products or increase the costs associated with selling our products, and may affect our abilityto invest in or jointly develop products in the U.S. and in foreign jurisdictions. In addition, failure to comply with these and other laws and regulations mayresult in, among other things, administrative enforcement actions and significant fines, class action lawsuits, significant legal fees, and civil and criminalliability. Any regulatory or civil action that is brought against us, even if unsuccessful, may distract our management’s attention, divert our resources,negatively affect our public image or reputation among our panelists, customers, partners and vendors, and harm our business.An assertion from a third party that we are infringing its intellectual property rights, whether such assertion is valid or not, could subject us to costly andtime-consuming litigation or expensive licenses.The media measurement, software and technology industries are characterized by the existence of a large number of patents, copyrights, trademarks and tradesecrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights, domestically or internationally. Aswe grow and face increasing competition, the probability that one or more third parties will make intellectual property rights claims against us increases. Insuch cases, our technologies may be found to infringe on the intellectual property rights of others. Additionally, many of our agreements may require us toindemnify our customers for third-party intellectual property infringement claims, which would increase our costs if we have to defend such claims and mayrequire that we pay damages and provide alternative services if there were an adverse ruling in any such claims. Intellectual property claims could harm ourrelationships with our customers, deter future customers from buying our products or expose us to litigation, which could be expensive and divertconsiderable attention of our management team from the normal operation of our business. Even if we are not a party to any litigation between a customerand a third party, an adverse outcome in any such litigation could make it more difficult for us to defend against intellectual property claims by the thirdparty in any20Table of Contentssubsequent litigation in which we are a named party. Any of these results could adversely affect our brand, business and results of operations.With respect to any intellectual property rights claim against us or our customers, we may have to pay damages or stop using technology found to be inviolation of a third party’s rights. We may have to seek a license for the technology, which may not be available on reasonable terms or at all, maysignificantly increase our operating expenses or may significantly restrict our business activities in one or more respects. We may also be required to developalternative non-infringing technology, which could require significant effort and expense. Any of these outcomes could adversely affect our business andresults of operations. Even if we prove successful in defending ourselves against such claims, we may incur substantial expenses and the defense of suchclaims may divert considerable attention of our management team from the normal operation of our business.The success of our business depends in large part on our ability to protect and enforce our intellectual property rights.We rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractualrestrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We endeavor to enter into agreements with ouremployees and contractors and with parties with whom we do business in order to limit access to and disclosure of our proprietary information. We cannot becertain that the steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. We cannot makeassurances that any additional patents will be issued with respect to any of our pending or future patent applications, nor can we assure that any patent issuedto us will provide adequate protection, or that any patents issued to us will not be challenged, invalidated, circumvented, or held to be unenforceable inactions against alleged infringers. Also, we cannot make assurances that any future trademark or service mark registrations will be issued with respect topending or future applications or that any of our registered trademarks and service marks will be enforceable or provide adequate protection of ourproprietary rights.We are subject to taxation in multiple jurisdictions. Any adverse development in the tax laws of any of these jurisdictions or any disagreement with our taxpositions could have a material and adverse effect on our business, financial condition or results of operations.We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and ourcorporate entity structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow offunds among our companies. Adverse developments in these laws or regulations, or any change in position regarding the application, administration orinterpretation thereof, in any applicable jurisdiction, could have a material and adverse effect on our business, financial condition or results of operations. Inaddition, the tax authorities in any applicable jurisdiction, including the U.S., may disagree with the positions we have taken or intend to take regarding thetax treatment or characterization of any of our transactions. If any applicable tax authorities, including U.S. tax authorities, were to successfully challenge thetax treatment or characterization of any of our transactions, it could have a material and adverse effect on our business, financial condition or results ofoperations.Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and wecould be subject to liability with respect to past or future sales, which could adversely affect our results of operations.In certain cases, we have concluded that we do not need to collect sales and use, value added and similar taxes in jurisdictions in which we have sales. Salesand use, value added and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert thatsuch taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future. Such taxassessments, penalties and interest or future requirements may adversely affect our financial condition and results of operations.Our annual effective income tax rate can change materially as a result of changes in our mix of U.S. and foreign earnings and other factors, includingchanges in tax laws and changes made by regulatory authorities.Our overall effective rate is equal to our total tax expense as a percentage of total earnings before tax. However, income tax expense and benefits are notrecognized on a global basis but rather on a jurisdictional or legal entity basis. Losses in one jurisdiction may not be used to offset profits in otherjurisdictions and may cause an increase in our tax rate. Changes in statutory tax rates and laws, as well as audits by domestic and international authorities,could affect the amount of income taxes and other taxes paid by us. Changes in the mix of earnings (or losses) between jurisdictions and assumptions used inthe calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate.We have incurred and will continue to incur costs and demands upon management as a result of complying with the laws and regulations affecting apublic company, which could adversely affect our operating results.21Table of ContentsAs a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we would not otherwise incur if wewere a private company. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rulesimplemented by the SEC and the securities exchanges, require certain corporate governance practices for public companies. Our management and otherpersonnel have devoted and expect to continue to devote a substantial amount of time to public reporting requirements and corporate governance,particularly following the Audit Committee investigation. These rules and regulations have significantly increased our legal and financial compliance costsand made some activities more time-consuming and costly. We also have incurred and expect to continue to incur substantial additional costs associatedwith internal control requirements, as described under “Risks Related to Our Audit Committee Investigation and Subsequent Management Review,Consolidated Financial Statements, Internal Controls and Related Matters” above. If these costs are not offset by increased revenues and improved financialperformance, our financial condition and results of operations will be materially and adversely affected. These rules and regulations, together with ongoingregulatory and litigation matters, also make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may berequired to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage if these costs continue to rise.As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board of Directors or as executive officers.Risks Related to International OperationsOur business could become increasingly susceptible to risks associated with international operations.In the past, we acquired various businesses with substantial presence or clientele in multiple Latin American, European and Asian countries. Prior to theseacquisitions, we otherwise had limited experience operating in markets outside of the U.S. Our inexperience in operating our business outside of the U.S. mayincrease the risk that the international businesses in which we are engaged will not be successful. In addition, conducting international operations subjects usto risks that we have not generally faced in the U.S. These risks include:•recruitment and maintenance of a sufficiently large and representative panel both globally and in certain countries;•difficulties and expenses associated with tailoring our products to local markets as may be required by local customers and joint industrycommittees or similar industry organizations;•difficulties in expanding the adoption of our server- or census-based web beacon data collection in international countries or obtaining access toother necessary data sources;•differences in customer buying behaviors;•the complexities and expense of complying with a wide variety of foreign laws and regulations, including the GDPR, LGPD, other privacy and dataprotection laws and regulations, and foreign anti-corruption laws, as well as the U.S. Foreign Corrupt Practices Act;•difficulties in staffing and managing international operations, including complex and costly hiring, disciplinary, and termination requirements;•the complexities of foreign value-added taxes and the repatriation of earnings, particularly following the enactment of the TCJA;•reduced or varied protection for intellectual property rights in some countries;•political, social and economic instability abroad, terrorist attacks and security concerns;•fluctuations in currency exchange rates; and•increased accounting and reporting burdens and complexities.Additionally, operating in international markets requires significant additional management attention and financial resources. We cannot be certain that theinvestments and additional resources required to establish and maintain operations in other countries will hold their value or produce desired levels ofrevenues or profitability. We cannot be certain that we will be able to comply with laws, rules, regulations or local guidelines to maintain and increase thesize of the user panels that we currently have in various countries, that we will be able to recruit a representative sample for our audience measurementproducts or that we will be able to enter into arrangements with a sufficient number of website and mobile app content providers, and/or television operatorsto allow us to collect information for inclusion in our products. In addition, there can be no assurance that internet usage and e-commerce will continue togrow in international markets. In addition, governmental authorities in various countries have different views regarding regulatory oversight of the internet,data protection and consumer privacy.The impact of these risks could negatively affect our international business and, consequently, our financial condition and results of operations.Export controls and economic and trade sanctions laws could impair our ability to compete in international markets and subject us to liability if we arenot in full compliance with applicable laws.22Table of ContentsOur business activities include the collection of survey data from panelists around the world, and such activities are subject to various restrictions under U.S.export controls and economic and trade sanctions laws, including the U.S. Commerce Department’s Export Administration Regulations and sanctionsadministered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). If we fail to comply with these laws and regulations, we could besubject to civil or criminal penalties and reputational harm.Although we take precautions to prevent the collection of survey data from panelists in embargoed countries that are subject to export controls and economicand trade sanctions under these laws and regulations, we have collected such data in the past, and there is a risk that we could collect such data in the futuredespite such precautions. We have implemented a number of additional screening and other measures designed to prevent such transactions with embargoedcountries and other U.S. sanctions targets. Changes in the list of embargoed countries and regions or prohibited persons may require us to modify theseprocedures in order to comply with governmental regulations. Our failure to screen potential panelists properly could result in negative consequences to us,including government investigations, penalties and reputational harm, any of which could materially and adversely affect our business, financial conditionor results of operations.Changes in foreign currencies could have a significant effect on our operating results.We operate in several countries in Latin America, Europe and Asia. A portion of our revenues and expenses from business operations in foreign countries arederived from transactions denominated in currencies other than the functional currency of our operations in those countries. As such, we have exposure toadverse changes in exchange rates associated with revenues and operating expenses of our foreign operations, but we do not currently enter into any hedginginstruments that hedge foreign currency exchange rate risk. If we grow our international operations, or acquire companies with established business ininternational regions, our exposure to foreign currency risk could become more significant.The UK's decision to withdraw from the EU, commonly known as Brexit, and the risk that other countries may follow suit could adversely affect ourbusiness.The British government began negotiating the terms of Brexit with the EU in 2017. Although certain separation issues have been resolved, there is stillsignificant uncertainty with respect to the terms of the future relationship between the EU and the UK. Given the status of Brexit at this time, we are unable topredict the impact that it may have on our business. Among other things, we could experience lower growth in the region, increased foreign currency risk,greater restrictions on business with UK customers and data providers, and increased regulatory complexity. Brexit has also created uncertainty with regard tothe regulation of data protection in the UK and data transfers to and from the UK. A change in such regulations, or other regulations, could increase our costsof doing business, or in some cases our ability to do business, and adversely impact our operations and financial results. There is also a risk that othercountries may decide to leave the EU. We cannot predict the impact that any additional countries leaving the EU may have on our business, but any suchimpact could adversely affect us.Risks Related to Our Capital Structure and FinancingsRestrictive covenants in the agreements governing our current and future indebtedness could restrict our operating flexibility.The agreements governing our existing debt, and debt we may incur in the future, contain, or may contain, affirmative and negative covenants that materiallylimit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain investments and otherpayments, enter into certain mergers and consolidations, and encumber and dispose of assets. Our Notes also require us to maintain certain minimum cashbalances, which may restrict our ability to invest in our business or may require us to invest less than we otherwise would. The minimum cash balancerequirement under the Notes is scheduled to increase from $20.0 million to $40.0 million on the earlier of August 9, 2019 or the date we file our Form 10-Qfor the quarter ending June 30, 2019, subject to certain limitations.We may require additional capital to support our business, and this capital may not be available on acceptable terms or at all.We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including theneed to develop new products or enhance our existing products, enhance our operating infrastructure and acquire complementary businesses andtechnologies.Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equityor convertible debt securities, our existing stockholders could suffer significant dilution, and any new securities we issue could have rights, preferences andprivileges superior to those of holders of our Common Stock. Any financing secured by us in the future could include restrictive covenants relating to ourcapital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursuebusiness opportunities, including potential acquisitions.23Table of ContentsIn addition, due to the delayed filing of our periodic reports with the SEC, we are not currently eligible to use a registration statement on Form S-3 to registerthe offer and sale of securities, which could delay potential financings. As a result, we may not be able to obtain additional financing within a timetable, oron terms, favorable to us or at all. Our limited reporting and trading history following the relisting of our Common Stock on Nasdaq may also delay ourability to obtain additional financing.Capital and credit market conditions, adverse events affecting our business or industry, the tightening of lending standards, rising interest rates, negativeactions by regulatory authorities or rating agencies, or other factors also could negatively impact our ability to obtain future financing or to refinance ouroutstanding indebtedness on terms acceptable to us or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when werequire it, our ability to support our business growth and to respond to business challenges could be significantly limited. In addition, the terms of anyadditional equity or debt issuances may adversely affect the value and price of our Common Stock, our results of operations, financial condition and cashflows.The interest rate reset feature of our Notes subjects us to interest rate risk, which has caused our debt service obligations to increase in 2019 and maycontinue to result in increased interest charges in future years.We are subject to interest rate risk as a result of the interest rate reset feature of our $204.0 million aggregate principal amount of Notes outstanding. Theinterest rate on our Notes is currently 12.0% per year (increased from 6.0% per year effective January 30, 2019) and resets at each of January 30, 2020 andFebruary 1, 2021 (each an "Interest Reset Date"), based on the then-applicable conversion premium, which is calculated by dividing the conversion price ofthe Notes (set at $31.29 per share) by the arithmetic average of the volume-weighted average trading prices of our Common Stock on each of the tenconsecutive trading days immediately preceding the applicable Interest Reset Date. Generally, as the conversion premium increases, the interest rateincreases, and as the conversion premium decreases, the interest rate decreases. We have the ability, subject to certain conditions, to pay interest on the Notesthrough the issuance of additional shares of Common Stock ("PIK Interest Shares") rather than cash. If we elect to pay increased interest on the Notes in cash,our cash flow will be negatively affected, which could have a material and adverse effect on our liquidity and financial condition. If we elect to pay intereston the Notes in PIK Interest Shares, our existing stockholders could suffer significant dilution.Based on the $204.0 million aggregate principal amount of Notes outstanding, each 1.0% increase in the interest rate on the Notes increases our annualinterest expense by $2.0 million. The current interest rate of 12.0% is expected to result in an approximately $12.2 million increase in interest expense fromJanuary 30, 2019 through the next Interest Reset Date and, assuming that the interest rate remains at 12.0% for each future Interest Reset Date, approximately$37.8 million through the maturity date of the Notes, which is January 16, 2022. We are unable to forecast with any certainty the conversion premium as ofany future Interest Reset Date and as a result, there can be no assurances that the interest rate on the Notes will decrease in future years.The issuance of shares of Common Stock upon conversion of, or payment of interest on, our Notes and the exercise of warrants to purchase our CommonStock could substantially dilute your investment and could impede our ability to obtain additional financing.Our Notes are convertible into, and our warrants are exercisable for, shares of our Common Stock and give the holders thereof an opportunity to profit from arise in the market price of our Common Stock such that conversion or exercise thereof will result in dilution of the equity interests of our stockholders.Further, the issuance of shares of our Common Stock, at our election, in lieu of cash, in payment of interest on the Notes, would result in dilution of the equityinterests of our other stockholders. We have no control over whether the holders of Notes and warrants will exercise their right, in whole or in part, to converttheir Notes or exercise their warrants. For these reasons, we are unable to forecast or predict with any certainty the total number of shares of Common Stockthat may be issued under the Notes and warrants. The existence and potentially dilutive impact of the Notes and our warrants may prevent us from obtainingadditional financing in the future on acceptable terms, or at all.The terms of our Notes, our warrants and our registration rights agreement with certain investors could impede our ability to enter into corporatetransactions or obtain additional financing and could result in our paying premiums or penalties to the holders of the Notes and warrants.The terms of our Notes and our warrants require us, upon the consummation of any “Fundamental Transaction” (as defined in the Notes), to cause anysuccessor entity resulting from such Fundamental Transaction to assume all of our obligations under the Notes and warrants and the associated transactiondocuments. Further, the terms of the Notes and the warrants could impede our ability to enter into certain transactions or obtain additional financing in thefuture.The Notes and the warrants require us to deliver the number of shares of our Common Stock issuable upon conversion or exercise within a specified timeperiod. If we are unable to deliver the shares of Common Stock within the timeframe required, we may be obligated to reimburse the holders for the cost ofpurchasing the shares of our Common Stock in the open market or pay them the profit they would have realized upon the conversion or exercise and sale ofsuch shares.24Table of ContentsOur registration rights agreement with Starboard provides that in the event that the registration statement required to be filed under the Starboard registrationrights agreement ceases to be effective and available to the selling stockholders party thereto under certain circumstances, we must pay to the sellingstockholders on the 121st day after the occurrence of each such event and on every 30th day thereafter until the applicable event is cured, an amount equal to1.0% of the Conversion Amount (as defined in the Notes), subject to a maximum of 3.0% of the aggregate principal amount outstanding under the Notes forany 30-day period.The payments we may be obligated to make to the holders of the Notes and our warrants described above may adversely affect our financial condition,liquidity and results of operations.We may be obligated to redeem our Notes at a premium upon the occurrence of an Event of Default (as defined in the Notes) or a Change of Control (asdefined in the Notes).If we fail to comply with the various covenants in our Notes, including the financial covenants, we could be in default. Upon an Event of Default under theNotes, we could be required to redeem the Notes at a premium. In addition, upon the occurrence of specific kinds of Change of Control events, we will berequired to offer to redeem the Notes at a premium as set out in the Notes.In either event, the source of funds for any such redemption would be our available cash or, possibly, other financing. We may not be able to redeem theNotes pursuant to the terms thereof because we may not have the financial resources to do so, and no assurances can be provided as to our ability to obtainother requisite financing in amounts, or at times, as may be needed. Our failure to repurchase the Notes upon a Change of Control in accordance with theterms thereof would also result in an Event of Default under the Notes. In the event the holders of the Notes exercised their rights thereunder and we wereunable to redeem the Notes, it could have important consequences including, potentially, forcing us into bankruptcy or liquidation.Risks Related to the Securities Markets and Ownership of Our Common StockThe trading price of our Common Stock may be subject to significant fluctuations and volatility, and our stockholders may be unable to resell their sharesat a profit.The stock markets, in general, and the markets for technology stocks in particular, have experienced high levels of volatility. The market for technologystocks has been extremely volatile and frequently reaches levels that bear no relationship to the past or present operating performance of those companies.These broad market fluctuations may adversely affect the trading price of our Common Stock. In addition, our Common Stock has been subject to low tradingvolumes and significant fluctuations in price, even following our relisting on Nasdaq, and may continue to experience fluctuations or declines.The price of our Common Stock in the market may be higher or lower, depending on many factors, some of which are beyond our control and may not berelated to our operating performance. It is possible that, in future quarters, our operating results may be below the expectations of analysts or investors. As aresult of these and other factors, the price of our Common Stock may decline, possibly materially. These fluctuations could cause an investor to lose all orpart of their investment in our Common Stock.The Company's outstanding securities, the stock or securities that we may become obligated to issue under existing or future agreements, and certainprovisions of those securities, may cause immediate and substantial dilution to our existing stockholders.Our existing stockholders may experience substantial dilution as a result of our obligations to issue shares of Common Stock. The total principal amount of convertible notes held by Starboard as of December 31, 2018 was $204.0 million. The Notes are convertible, at the option ofStarboard, into shares of Common Stock at a conversion price of $31.29 per share. Interest on the Notes is payable, at our option, in cash or through theissuance of PIK Interest Shares. Any PIK Interest Shares so issued would be valued at the arithmetic average of the volume-weighted average trading prices ofour Common Stock on each trading day during the ten consecutive trading days ending immediately preceding the applicable interest payment date.Pursuant to the agreements, we also granted Starboard warrants to purchase 250,000 shares of Common Stock.In addition, we have the right to conduct a rights offering (the “Rights Offering”) for up to $150.0 million in senior secured convertible notes (the “RightsOffering Notes”). The Rights Offering Notes would be substantially similar to the Notes, except with respect to, among other things, the conversion pricethereof, which would be equal to 130% of the closing price of our Common Stock on the last trading day immediately prior to the commencement of theRights Offering (subject to a conversion price floor of $28.00 per share). Interest on the Rights Offering Notes would also be payable, at our option, in cash orthrough the issuance of PIK Interest Shares.As of December 31, 2018, 1,132,163 shares of Common Stock were reserved for issuance pursuant to outstanding stock options and stock appreciation rightsunder our equity incentive plans, 1,466,135 shares of Common Stock were reserved for issuance pursuant to outstanding restricted stock unit awards underour equity incentive plans, and 6,585,928 shares of Common Stock were available for future equity awards under our 2018 Equity and IncentiveCompensation Plan.25Table of ContentsThe issuance of shares of Common Stock (i) upon the conversion of the Notes or the Rights Offering Notes (if issued), (ii) as payment-in-kind of interest onany such notes through the issuance of PIK Interest Shares, (iii) upon the exercise of warrants, (iv) pursuant to outstanding and future equity awards, or (v)upon the conversion of other existing or future convertible securities, may result in substantial dilution to each of our stockholders by reducing thatstockholder’s percentage ownership of our outstanding Common Stock. Provisions in our certificate of incorporation, bylaws and under Delaware law might discourage, delay or prevent a change of control of our company orchanges in our management and, therefore, depress the trading price of our Common Stock.Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our Common Stock by acting to discourage, delay orprevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous.These provisions:•provide for a classified board of directors so that not all members of our Board are elected at one time;•authorize "blank check" preferred stock that our Board could issue to increase the number of outstanding shares to discourage a takeover attempt;•prohibit stockholder action by written consent, which means that all stockholder actions must be taken at a meeting of our stockholders;•prohibit stockholders from calling a special meeting of our stockholders;•provide that the Board is expressly authorized to make, alter or repeal our bylaws; and•provide for advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholdersat stockholder meetings.In addition, we are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any of a broadrange of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an“interested” stockholder and which may discourage, delay or prevent a change of control of our company.Shareholder activists could cause a disruption to our business.We have been and may in the future be subject to legal and business challenges in the operation of our company due to actions instituted by activistshareholders or others, such as shareholder proposals, media campaigns, proxy contests and other such actions. Responding to proxy contests or such otheractions has been and could continue to be costly and time-consuming, disrupt our operations and divert the attention of our Board and senior managementfrom the pursuit of business strategies, which could adversely affect our results of operations and financial condition. Additionally, perceived uncertainties asto our future direction as a result of shareholder activism or potential changes to the composition of our Board may lead to the perception of a change in thedirection of the business, loss of potential business opportunities, instability or lack of continuity. This may be exploited by our competitors, cause concernto our current or potential customers, and make it more difficult to attract and retain qualified personnel. In addition, actions of activist shareholders maycause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect theunderlying fundamentals and prospects of our business.ITEM 1B.UNRESOLVED STAFF COMMENTSNone.ITEM 2.PROPERTIESOur corporate headquarters is located in Reston, Virginia, where we occupy approximately 111,000 square feet of office space. On May 30, 2018, weamended our corporate headquarters lease to reduce the space occupied to approximately 84,000 square feet effective May 2019 and extend the lease termthrough July 31, 2027. We also lease space in various locations throughout North America, South America, Europe, and Asia Pacific for sales and otherpersonnel. If we require additional space, we believe that we would be able to obtain such space on commercially reasonable terms.Our other material locations, all of which are leased under operating leases, include the following:•Portland, Oregon•New York, New York26Table of Contents•Chicago, Illinois•Amsterdam, NetherlandsAs of December 31, 2018, we lease facilities in 44 locations worldwide, including approximately 36,000 square feet of subleased space in four properties.For additional information regarding our obligations under operating leases, refer to Footnote 10, Commitments and Contingencies of the Notes toConsolidated Financial Statements.ITEM 3.LEGAL PROCEEDINGSFor a discussion of material legal proceedings in which we are involved, please refer to Footnote 10, Commitments and Contingencies of the Notes toConsolidated Financial Statements included in Part II, Item 8 of this 10-K, which is incorporated herein by reference.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.27Table of ContentsPART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESPRICE RANGE OF COMMON STOCKAs a result of our delay in filing our periodic reports with the SEC, our Common Stock was suspended from trading on The Nasdaq Global Select Market("Nasdaq") on February 8, 2017 and delisted effective May 30, 2017. Following the suspension of trading, our Common Stock was trading on the OTC PinkTier under the symbol "SCOR." On May 30, 2018, The Nasdaq Stock Market LLC approved our application for relisting on Nasdaq and our common stockbegan trading on Nasdaq effective June 1, 2018 under the symbol "SCOR". The following table sets forth, for the periods indicated, the high and low salesprices and bid quotations of our Common Stock as reported by Nasdaq and the OTC Pink Tier, as applicable. The OTC Pink Tier quotations reflect inter-dealer prices, without retail mark-up, mark down or commission and may not represent actual transactions. 2018 2017Fiscal Period High Low High LowFirst Quarter $29.10 $21.00 $33.99 $20.81Second Quarter $25.38 $19.65 $27.25 $21.60Third Quarter $22.65 $18.04 $30.40 $26.00Fourth Quarter $18.67 $13.19 $31.00 $27.25HOLDERSAs of February 25, 2019, there were 99 stockholders of record of our Common Stock, although we believe that there are a significantly larger number ofbeneficial owners of our Common Stock. We derived the number of stockholders by reviewing the listing of outstanding Common Stock recorded by ourtransfer agent as of February 25, 2019. STOCK PERFORMANCE GRAPHThe following graph compares the cumulative total stockholder return on our Common Stock between December 31, 2013 and December 31, 2018 to thecumulative total returns of the Nasdaq Composite Index, the S&P MidCap 400 Index and the Nasdaq Computer Index over the same period. This graphassumes the investment of $100 at the closing price of the markets on December 31, 2013 in our Common Stock, the Nasdaq Composite Index, the S&PMidCap 400 Index and the Nasdaq Computer Index, and assumes the reinvestment of dividends, if any. The comparisons shown in the following graph arebased upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended toforecast, the potential future performance of our Common Stock.28Table of ContentsCOMPARISON OF CUMULATIVE TOTAL RETURN*among comScore, Inc., The Nasdaq Composite Index, The S&P MidCap 400 Indexand The Nasdaq Computer Index ________________*$100 invested upon market close of The Nasdaq Global Select Market on December 31, 2013, including reinvestment of dividends.The preceding Stock Performance Graph is not deemed filed with the SEC and shall not be incorporated by reference in any of our filings under the SecuritiesAct of 1933, as amended, or the Exchange Act, as amended whether made before or after the date hereof and irrespective of any general incorporationlanguage in any such securities filing.EQUITY COMPENSATION PLANSOur stockholders approved the 2018 Equity and Incentive Compensation Plan ("2018 Plan") at our 2018 Annual Meeting of Stockholders. Under the 2018Plan, we may grant option rights, appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units up to10,650,000 shares of Common Stock. The aggregate number of shares of Common Stock available will be reduced by: (i) one share of Common Stock forevery one share of Common Stock subject to an award of option rights or appreciation rights granted under the 2018 Plan and (ii) two shares of CommonStock for every one share of Common Stock subject to an award other than option rights or appreciation rights granted under the 2018 Plan. If any awardgranted under the 2018 Plan (in whole or in part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject tosuch award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share ofCommon Stock for every one share of Common Stock subject to awards of option rights or appreciation rights and two shares of Common Stock for every oneshare of Common Stock subject to awards other than of option rights or appreciation rights. Additionally, if, after December 31, 2017, any shares of CommonStock subject to an award granted under our 2007 Equity Incentive Plan (the "2007 Plan") are forfeited, or an award granted under the 2007 Plan (in whole orin part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of suchcancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2018 Plan at a rate of one share for every one sharesubject to such award. We registered the securities issuable under the 2018 Plan with the SEC on June 1, 2018.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUnregistered Sales of Equity Securities during the Year Ended December 31, 2018The information required by Item 701 of Regulation S-K was previously included in Quarterly Reports on Form 10-Q filed on May 10, August 10, andNovember 9, 2018 and Current Reports on Form 8-K filed on January 16, May 18, June 13, August 9, October 12, and November 13, 2018.Use of Proceeds from Sale of Registered Equity SecuritiesNone.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSNone.29Table of ContentsITEM 6.SELECTED FINANCIAL DATAThe selected Consolidated Statement of Operations data and Consolidated Balance Sheets data displayed below is derived from our audited ConsolidatedFinancial Statements for the four-year period ended December 31, 2018. The selected financial data as of and for the year ended December 31, 2014 isunaudited, was derived from our unaudited Consolidated Financial Statements, which were prepared on the same basis as our audited Consolidated FinancialStatements, and reflects the impact of adjustments to, or restatement of, our previously filed financial information. The selected financial data set forth belowis not necessarily indicative of results of future operations, and should be read in conjunction with Item 7, Management’s Discussion and Analysis ofFinancial Condition and Results of Operations, and the Consolidated Financial Statements and related Notes thereto included in this 10-K under the captionItem 8, Financial Statements and Supplementary Data. Years Ended December 31,(In thousands, except share and per share data) 2018 2017 2016 (1) 2015 2014(Unaudited)Consolidated Statementof Operations and ComprehensiveLoss Data: Revenues (2) $419,482 $403,549 $399,460 $270,803 $304,275Total expenses from operations 558,418 699,052 531,302 345,898 327,750Loss from operations (138,936) (295,503) (131,842) (75,095) (23,475)Non-operating (expenses) income, net (16,626) 11,393 10,662 (2,643) (504)Income tax (provision) benefit (3,706) 2,717 4,007 (484) (4,794)Net loss $(159,268) $(281,393) $(117,173) $(78,222) $(28,773)Net loss per common share: Basic and diluted $(2.76) $(4.90) $(2.10) $(2.07) $(0.85)Weighted-average number of shares used in per share calculations - Common Stock: Basic and diluted 57,700,603 57,485,755 55,728,090 37,879,091 33,689,660(1) Due to the Rentrak merger in January 2016, 2016 results include 11 months of activity as compared to full year's results in the consecutive years. Refer to Footnote 3, BusinessCombinations and Acquisitions.(2) As discussed in Footnote 2, Summary of Significant Accounting Policies, revenue for the years ended December 31, 2014, 2015, 2016, and 2017 is not comparable to revenue forthe year ended December 31, 2018 due to our adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606"). As of December 31,(In thousands) 2018 2017 2016(1) 2015 (2)(Unaudited) 2014(Unaudited)Consolidated Balance Sheets Data: Cash, cash equivalents, restricted cash and marketablesecurities $50,198 $45,125 $116,753 $146,986 $43,015Total current assets 145,779 179,554 232,433 247,263 148,245Total assets 954,143 1,022,439 1,120,792 446,196 315,344Capital lease obligations and software license arrangements,current and long-term (3) 5,417 13,162 28,578 32,299 26,428Senior secured convertible notes (4) 177,342 — — — —Financing derivatives (4) 26,100 — — — —Total liabilities 402,576 365,947 215,939 184,018 182,612Stockholders’ equity 551,567 656,492 904,853 262,178 132,732(1) As discussed in Footnote 3, Business Combinations and Acquisitions, we completed the Rentrak merger in January 2016.(2) The financial data as of December 31, 2015 is adjusted from our unaudited financial information for the year ended December 31, 2015 previously included as an exhibit to ourCurrent Report on Form 8-K furnished on February 17, 2016. Our audited Consolidated Financial Statements for the year ended December 31, 2015, were not previously issued orfiled.(3) Amounts for December 31, 2018, 2017, and 2016 include software license obligations in the amount of $1.8 million, $4.8 million, and $7.7 million respectively. Amounts for 2015and 2014 include capital lease obligations only.(4) We entered into new financing arrangements in 2018. Refer to Footnote 5, Long-term Debt, for additional details.30Table of ContentsITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated FinancialStatements and the related Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, or 10-K. In additionto historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties andassumptions. Our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed under Item 1A, “Risk Factors," and elsewhere in this 10-K. See also "CautionaryNote Regarding Forward-Looking Statements" at the beginning of this 10-K.OverviewWe are a global information and analytics company that measures consumer audiences and advertising across media platforms. We create our products usinga global data platform that combines information about content and advertising consumption on digital (smartphones, tablets and computers), TV and moviescreens with demographics and other descriptive information. We have developed proprietary data science that enables measurement of person-level andhousehold-level audiences, removing duplicated viewing across devices and over time. This combination of data and methods helps companies across themedia ecosystem better understand and monetize their broad range of audiences and develop marketing plans and products to more efficiently andeffectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide accredited audience ratings, advertisingverification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include buyers and sellers of advertisingincluding digital publishers, television networks, content owners, advertisers, agencies and technology providers.The platforms we measure include televisions, smartphones, computers, tablets, OTT devices and movie theaters, and the information we analyze crossesgeographies, types of content and activities, including websites, mobile apps, video games, television and movie programming, e-commerce and advertising.Results of OperationsThe following table sets forth selected Consolidated Statements of Operations and Comprehensive Loss data as a percentage of revenues for each of theperiods indicated. Years Ended December 31, 2018 2017 2016(In thousands) Dollars % of Revenue Dollars % of Revenue Dollars % of RevenueRevenues (1) $419,482 100.0 % $403,549 100.0 % $399,460 100.0 %Cost of revenues 200,220 47.7 % 193,605 48.0 % 173,080 43.3 %Selling and marketing 108,395 25.8 % 130,509 32.3 % 126,311 31.6 %Research and development 76,979 18.4 % 89,023 22.1 % 86,975 21.8 %General and administrative 84,535 20.2 % 74,651 18.5 % 97,517 24.4 %Investigation and audit related 38,338 9.1 % 83,398 20.7 % 46,617 11.7 %Amortization of intangible assets 32,864 7.8 % 34,823 8.6 % 31,896 8.0 %Gain on asset dispositions — — — — (33,457) (8.4)%Settlement of litigation, net 5,250 1.3 % 82,533 20.5 % 2,363 0.6 %Restructuring 11,837 2.8 % 10,510 2.6 % — —Total expenses from operations 558,418 133.1 % 699,052 173.2 % 531,302 133.0 %Loss from operations (138,936) (33.1)% (295,503) (73.2)% (131,842) (33.0)%Interest expense, net (16,465) (3.9)% (661) (0.2)% (478) (0.1)%Other (expense) income, net (1,464) (0.3)% 15,205 3.8 % 12,371 3.1 %Gain (loss) from foreign currency transactions 1,303 0.3 % (3,151) (0.8)% (1,231) (0.3)%Loss before income taxes (155,562) (37.1)% (284,110) (70.4)% (121,180) (30.3)%Income tax (provision) benefit (3,706) (0.9)% 2,717 0.7 % 4,007 1.0 %Net loss $(159,268) (38.0)% $(281,393) (69.7)% $(117,173) (29.3)%31Table of Contents(1) As discussed in Footnote 2, Summary of Significant Accounting Policies, revenues for the years ended December 31, 2017 and 2016 are not comparable to the year endedDecember 31, 2018 due to our adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606"). Refer to our reconciliation ofas-reported revenue to compare the periods presented.RevenuesOur products and services are organized around solution groups that address customer needs. We evaluate revenues around three solution groups:•Ratings and Planning provides measurement of the behavior and characteristics of audiences of content and advertising across TV and digitalplatforms including computers, tablets, smartphones, and other connected devices. These products and services are designed to help customers findthe most relevant viewing audience, whether that viewing is linear, time shifted/recorded, online or on-demand.•Analytics and Optimization includes activation and survey-based products that provide end-to-end solutions for planning, optimization andevaluation of advertising campaigns and brand protection.•Movies Reporting and Analytics measures movie viewership and box office results by capturing movie ticket sales in real time or near real time andincludes box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide. We categorize our revenue along these solution groups; however, our cost structure is tracked at the corporate level and not by our solution groups. Thesecosts include employee costs, operational overhead, data centers and our technology that supports multiple solution groups.For a discussion of our change to these solution groups (from our previous four offerings) during 2018, refer to Item 2, "Management's Discussion andAnalysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the period ended September 30, 2018.Revenues for the years ended 2018 and 2017 are as follows: Years Ended December 31, (In thousands)2018(1) % of Revenue 2017 % of Revenue $ Change % ChangeRatings and Planning$285,355 68.0% $278,081 68.9% $7,274 2.6%Analytics and Optimization92,380 22.0% 86,765 21.5% 5,615 6.5%Movies Reporting and Analytics41,747 10.0% 38,703 9.6% 3,044 7.9%Total revenues$419,482 100.0% $403,549 100.0% $15,933 3.9%(1) As discussed in Footnote 2, Summary of Significant Accounting Policies, the revenue for the year ended December 31, 2017 is not comparable to the year ended December 31, 2018due to our adoption of ASC 606. Refer to our reconciliation of as reported revenue to compare the periods presented.Total revenues increased by $15.9 million, or 3.9%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017, with increasesacross all three of our solution groups. Revenues for the year ended December 31, 2018 include $1.0 million related to adoption of ASC 606, primarilyincluded in Analytics and Optimization.Ratings and Planning revenue increased $7.3 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increasewas primarily from our TV products, which made up 34% of Ratings and Planning revenue in 2018 compared to 27% in 2017, due to increases in existingcustomer contract values as well as the establishment of stand-alone selling price over certain distinct performance obligations in arrangements that includethe purchase and sale of services. The increase also included approximately $2.8 million related to the delivery of cross-platform products in certaininternational markets. These increases were offset by lower revenue from our syndicated digital products, which decreased from 61% of Ratings and Planningrevenue in 2017 to 55% in 2018, as these products continued to be negatively impacted by ongoing industry changes in ad buying and consolidation.Analytics and Optimization revenue increased by $5.6 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017.Revenue increased primarily due to increases in our emerging products, including Activation, which experienced significant growth, primarily in the latterpart of 2018. This increase was partially offset by lower revenue from our digital custom marketing solutions products.Movies Reporting and Analytics revenue increased by $3.0 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017.Revenue increased as our global footprint remained strong and our products continued to result in higher contract pricing. As we continued to collect datafrom box office locations worldwide, our customers continued to expand and renew agreements.32Table of ContentsRevenues for the years ended 2017 and 2016 are as follows: Years Ended December 31, (In thousands)2017 % of Revenue 2016 % of Revenue $ Change % ChangeRatings and Planning$278,081 68.9% $280,837 70.3% $(2,756) (1.0)%Analytics and Optimization86,765 21.5% 84,661 21.2% 2,104 2.5 %Movies Reporting and Analytics38,703 9.6% 32,662 8.2% 6,041 18.5 %Digital Analytix ("DAx")(1)— — 1,300 0.3% (1,300) (100.0)%Total revenues$403,549 100.0% $399,460 100.0% $4,089 1.0 %(1) On January 21, 2016, the sale of DAx was completed, and this revenue was excluded from our three solution groups.Revenues increased by $4.1 million, or 1.0%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016, with increases in ourAnalytics and Optimization and Movies Reporting and Analytics solution groups offset by a decrease in our Ratings and Planning solution group. OnJanuary 29, 2016, we completed the Rentrak merger, and as a result, our revenues for 2017 included a full year of Rentrak revenue versus 11 months in 2016,which was slightly offset by the inclusion of one month of DAx revenue in 2016.Ratings and Planning revenue decreased $2.8 million in the year ended December 31, 2017 as compared to the year ended December 31, 2016. The decreasewas primarily due to lower revenue from our syndicated digital products as these products continued to be negatively impacted by ongoing industry changesin ad buying and consolidation and declining vCE sales.Analytics and Optimization revenue increased by $2.1 million for the year ended December 31, 2017 as compared to the year ended December 31, 2016. Theincrease was primarily attributable to Activation products, Branded Entertainment content, and our custom marketing solutions products.Movies Reporting and Analytics revenue increased $6.0 million for the year ended December 31, 2017 as compared to the year ended December 31, 2016. Inaddition to having 12 months of revenue included in 2017, versus only 11 months in 2016, there was an increase in product pricing during 2017.Revenues by Geographic LocationWe generate the majority of our revenues from the sale and delivery of our products within the United States. For information with respect to our geographicmarkets, refer to Footnote 15, Geographic Information, of the Notes to Consolidated Financial Statements. Our chief operating decision maker (our CEO)does not evaluate the profit or loss from any separate geography.We anticipate that revenues from our U.S. sales will continue to constitute a substantial and increasing portion of our revenues in future periods. We expectour international revenues to continue to decline as a percentage of our total revenues as a result of growth in our domestic product offerings.WPP Related Party RevenueWe provide WPP and its affiliates, in the normal course of business, services relating to our different product lines and receive various services from WPP andits affiliates in supporting our data collection efforts. For the years ended 2018, 2017 and 2016, related party revenues with WPP and its affiliates were $11.6million, $13.2 million and $9.7 million, respectively.Cost of RevenuesCost of revenues consists primarily of expenses related to operating our network infrastructure, producing our products, amortization of capitalizedfulfillment costs and the recruitment, maintenance, and support of our consumer panels. Expenses associated with these areas include employee costsincluding salaries, benefits, stock-based compensation and other related personnel costs of network operations, survey operations, custom analytics andtechnical support, all of which are expensed as they are incurred. Cost of revenues also includes costs to obtain, process and cleanse our panel and census-based data used in our products as well as operational costs associated with our data centers, including depreciation expense associated with computerequipment and internally developed software that supports our panels and systems, allocated overhead, which is comprised of rent and other facilities relatedcosts; and depreciation expense generated by general purpose equipment and software.Cost of revenues for the years ended 2018 and 2017 are as follows:33Table of Contents Years Ended December 31, (In thousands)2018 % of Revenue 2017 % of Revenue $ Change % ChangeEmployee costs$57,490 13.7% $63,143 15.6% $(5,653) (9.0)%Data costs53,248 12.7% 40,324 10.0% 12,924 32.1 %Systems and bandwidth costs27,033 6.4% 20,803 5.2% 6,230 29.9 %Panel costs22,670 5.4% 23,966 5.9% (1,296) (5.4)%Rent and depreciation12,753 3.0% 17,479 4.3% (4,726) (27.0)%Technology licenses and maintenance6,492 1.5% 5,369 1.3% 1,123 20.9 %Sample and survey costs6,295 1.5% 5,845 1.4% 450 7.7 %Professional fees5,470 1.3% 6,053 1.5% (583) (9.6)%Royalties and resellers3,389 0.8% 3,271 0.8% 118 3.6 %Other5,380 1.3% 7,352 1.8% (1,972) (26.8)%Total cost of revenues$200,220 47.7% $193,60548.0% $6,615 3.4 %Cost of revenues increased by $6.6 million, or 3.4%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increasewas largely attributable to increases in data and systems and bandwidth costs, offset by decreases in employee costs, rent and depreciation, panel costs, andother costs.Data costs increased $12.9 million primarily due to costs associated with the acquisition of data for distinct services provided under certain arrangements thatinclude the purchase and sale of services and increases in our long-term contracts with multichannel video programming distributors ("MVPD"). Wecontinued to invest in product solution offerings through the acquisition of additional TV data, as well as in our digital platform through the acquisition ofadditional mobile data during 2018. We believe this investment is necessary to support our products and expand our offerings. Systems and bandwidth costsincreased $6.2 million primarily as a result of our ongoing technology transformation to reduce complexity, increase capacity and transition to a cloud-basedenvironment from data centers.These increases in expenses were offset by decreases in employee costs, rent and depreciation, and other costs. Employee costs declined $5.7 million,primarily due to the capitalization of payroll costs for internal-use software development in 2018 ($3.7 million) compared with no amounts capitalized in2017. In addition, employee costs decreased due to reduced headcount and restructuring efforts as discussed in Footnote 17, Organizational Restructuring,offset by an increase in stock-based compensation expense. Rent and depreciation expense decreased $4.7 million due to assets fully depreciating in 2018.Other cost of revenues decreased $2.0 million primarily due to reduced activity under our DAx transition services agreement as related contracts wind down.Cost of revenues for the years ended 2017 and 2016 are as follows: Years Ended December 31, (In thousands)2017 % of Revenue 2016 % of Revenue $ Change % ChangeEmployee costs$63,143 15.6% $57,704 14.4% $5,439 9.4 %Data costs40,324 10.0% 28,922 7.2% 11,402 39.4 %Panel costs23,966 5.9% 20,091 5.0% 3,875 19.3 %Systems and bandwidth costs20,803 5.2% 17,581 4.4% 3,222 18.3 %Rent and depreciation17,479 4.3% 17,241 4.3% 238 1.4 %Professional fees6,053 1.5% 6,207 1.6% (154) (2.5)%Sample and survey costs5,845 1.4% 5,334 1.3% 511 9.6 %Technology licenses and maintenance5,369 1.3% 4,510 1.1% 859 19.0 %Compete transition services— — 5,909 1.5% (5,909) (100.0)%Royalties and resellers3,271 0.8% 2,944 0.7% 327 11.1 %Other7,352 1.8% 6,637 1.7% 715 10.8 %Total cost of revenues$193,605 48.0% $173,080 43.3% $20,525 11.9 %Cost of revenues increased by $20.5 million, or 11.9%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016. Theincrease in cost of revenues was largely attributable to increases in data cost from MVPDs, a higher34Table of Contentsnumber of employees, and additional panel and systems and bandwidth costs. During 2017, we invested in product solution offerings through the acquisitionof additional TV data as well as purchasing additional mobile data and panels. These increases were offset by a reduction in expenses associated withengineering services provided by Compete pursuant to a transition services agreement.Selling and MarketingSelling and marketing expenses consist primarily of employee costs, including salaries, benefits, commissions, stock-based compensation and other relatedcosts paid to our direct sales force as well as costs related to online and offline advertising, industry conferences, promotional materials, public relations,other sales and marketing programs and allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense generatedby general purpose equipment and software. All selling and marketing costs are expensed as they are incurred. Commission plans are developed for ouraccount managers with criteria and size of sales quotas that vary depending upon the individual’s role.Selling and marketing expenses for the years ended 2018 and 2017 are as follows: Years Ended December 31, (In thousands)2018 % of Revenue 2017 % of Revenue $ Change % ChangeEmployee costs$87,591 20.9% $100,236 24.8% $(12,645) (12.6)%Rent and depreciation7,670 1.8% 10,304 2.6% (2,634) (25.6)%Travel4,780 1.1% 6,926 1.7% (2,146) (31.0)%Professional fees3,311 0.8% 6,551 1.6% (3,240) (49.5)%Other5,043 1.2% 6,492 1.6% (1,449) (22.3)%Total selling and marketing expenses$108,395 25.8% $130,509 32.3% $(22,114) (16.9)%Selling and marketing expenses decreased by $22.1 million, or 16.9%, for the year ended December 31, 2018 as compared to the year ended December 31,2017. The decrease was primarily the result of a decrease in employee costs, professional fees and rent and depreciation. Employee costs decreased $12.6million, primarily due to reduced headcount and restructuring efforts as discussed in Footnote 17, Organizational Restructuring and lower salescommissions, offset by an increase in stock-based compensation. Rent and depreciation expense decreased $2.6 million due to assets fully depreciating in2018. The decrease in professional fees of $3.2 million was mainly due to the decreased use of outside consultants in 2018 compared with 2017.Selling and marketing expenses for the years ended 2017 and 2016 are as follows: Years Ended December 31, (In thousands)2017 % of Revenue 2016 % of Revenue $ Change % ChangeEmployee costs$100,236 24.8% $93,480 23.4% $6,756 7.2 %Rent and depreciation10,304 2.6% 10,425 2.6% (121) (1.2)%Travel6,926 1.7% 7,555 1.9% (629) (8.3)%Professional fees6,551 1.6% 6,729 1.7% (178) (2.6)%Compete transition services— — 1,682 0.4% (1,682) (100.0)%Other6,492 1.6% 6,440 1.6% 52 0.8 %Total selling and marketing expenses$130,509 32.3% $126,311 31.6% $4,198 3.3 %Selling and marketing expenses increased by $4.2 million, or 3.3%, for the year ended December 31, 2017 as compared to the year ended December 31, 2016.The increase in selling and marketing expenses was a result of an increase in employee costs that was largely attributable to increased headcount to supportour global marketing needs. This increase was offset by a decrease associated with the Compete transition services agreement, and our reduction in outsideprofessional fees.Research and DevelopmentResearch and development expenses include new product development costs, consisting primarily of employee costs including salaries, benefits, stock-basedcompensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products andthird-party data costs and allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense generated by generalpurpose equipment and software.35Table of ContentsResearch and development expenses for the years ended 2018 and 2017 are as follows: Years Ended December 31, (In thousands)2018 % of Revenue 2017 % of Revenue $ Change % ChangeEmployee costs$60,490 14.4% $71,527 17.7% $(11,037) (15.4)%Rent and depreciation7,057 1.7% 7,729 1.9% (672) (8.7)%Technology licenses and maintenance5,057 1.2% 4,736 1.2% 321 6.8 %Professional fees2,668 0.6% 2,351 0.6% 317 13.5 %Other1,707 0.4% 2,680 0.7% (973) (36.3)%Total research and development expenses$76,979 18.4% $89,023 22.1% $(12,044) (13.5)%Research and development expenses decreased by $12.0 million, or 13.5%, for the year ended December 31, 2018 as compared to the year ended December31, 2017. The decrease was primarily attributable to lower employee costs due to the capitalization of $5.1 million of payroll costs for internal-use softwaredevelopment in 2018 compared with no amount capitalized in 2017. In addition, employee costs decreased due to reduced headcount and restructuringefforts as discussed in Footnote 17, Organizational Restructuring, offset by an increase in stock-based compensation.Research and development expenses for the years ended 2017 and 2016 are as follows: Years Ended December 31, (In thousands)2017 % of Revenue 2016 % of Revenue $ Change % ChangeEmployee costs$71,527 17.7% $66,972 16.8% $4,555 6.8 %Rent and depreciation7,729 1.9% 7,453 1.9% 276 3.7 %Technology licenses and maintenance4,736 1.2% 3,792 0.9% 944 24.9 %Professional fees2,351 0.6% 2,962 0.7% (611) (20.6)%Compete transition services— — 3,622 0.9% (3,622) (100.0)%Other2,680 0.7% 2,174 0.5% 506 23.3 %Total research and development expenses$89,023 22.1% $86,975 21.8% $2,048 2.4 %Research and development expenses increased by $2.0 million, or 2.4%, for the year ended December 31, 2017 as compared to 2016. The increase wasprimarily attributable to increases in employee costs and technology costs as we increased focus on new product offerings. These increases were offset by adecrease in Compete transition services agreement expenses and a reduction in professional fees which were higher in 2016 due to the development of aplatform following the acquisition of Compete assets. General and AdministrativeGeneral and administrative expenses consist primarily of employee costs including salaries, benefits, stock-based compensation and other related costs, andrelated expenses for executive management, finance, accounting, human capital, legal and other administrative functions, as well as professional fees,overhead, including allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense related to general purposeequipment and software, and expenses incurred for other general corporate purposes.General and administrative expenses for the years ended 2018 and 2017 are as follows: Years Ended December 31, (In thousands)2018 % of Revenue 2017 % of Revenue $ Change % ChangeEmployee costs$38,094 9.1% $30,362 7.5% $7,732 25.5 %Professional fees21,528 5.1% 17,383 4.3% 4,145 23.8 %DAx transition services agreement9,035 2.2% 11,004 2.7% (1,969) (17.9)%Rent and depreciation3,711 0.9% 3,148 0.8% 563 17.9 %Bad debt expense966 0.2% 983 0.2% (17) (1.7)%Other11,201 2.7% 11,771 2.9% (570) (4.8)%Total general and administrative expenses$84,535 20.2% $74,651 18.5% $9,884 13.2 %36Table of ContentsGeneral and administrative expenses increased by $9.9 million, or 13.2%, for the year ended December 31, 2018 as compared to the year ended December 31,2017. Employee costs increased $7.7 million, primarily as a result of an increase in stock-based compensation expense of $6.7 million related to awardsgranted under our 2018 Equity and Incentive Compensation Plan, which was approved by our stockholders in May 2018. We did not grant any stock-basedawards in 2017. Professional fees increased $4.1 million primarily due to our increased costs of audit, compliance and legal services. These increased costswere offset by a $2.0 million decrease in the DAx transition services agreement costs due to the wind down of contracts in 2018 compared with 2017.General and administrative expenses for the years ended 2017 and 2016 are as follows: Years Ended December 31, (In thousands)2017 % of Revenue 2016 % of Revenue $ Change % ChangeEmployee costs$30,362 7.5% $47,265 11.8% $(16,903) (35.8)%Professional fees17,383 4.3% 21,279 5.3% (3,896) (18.3)%DAx transition services agreement11,004 2.7% 12,395 3.1% (1,391) (11.2)%Rent and depreciation3,148 0.8% 3,595 0.9% (447) (12.4)%Office expenses2,065 0.5% 2,272 0.6% (207) (9.1)%Other10,689 2.6% 10,711 2.7% (22) (0.2)%Total general and administrative expenses$74,651 18.5% $97,517 24.4% $(22,866) (23.4)%General and administrative expenses decreased by $22.9 million, or 23.4%, for the year ended December 31, 2017 as compared to 2016, largely attributableto a decrease in employee costs. The decrease primarily resulted from a reduction in stock-based compensation expense, which was primarily attributable tothe acceleration of equity awards held by certain Rentrak executives upon consummation of the merger during 2016. In addition, professional fees decreasedfrom lower merger and integration costs and expenses associated with the DAx transition services agreement.Investigation and Audit RelatedInvestigation and audit related expenses were $38.3 million, $83.4 million, and $46.6 million for the years ended December 31, 2018, 2017, and 2016,respectively. Investigation expenses include professional fees associated with legal and forensic accounting services rendered as part of the internalinvestigation described earlier. Audit related expenses consist of professional fees associated with accounting related consulting services and external auditorfees associated with the audit of our Consolidated Financial Statements for the prior years. Litigation related expenses include legal fees associated withvarious lawsuits or investigations, including those initiated either directly or indirectly as a result of the Audit Committee's investigation. We will continueincurring these costs during 2019 but expect them to be significantly lower than in 2018 as the financial statement aspects of these costs have ceased, leavingonly ongoing legal costs.Amortization of Intangible AssetsAmortization expense consists of charges related to the amortization of intangible assets associated with acquisitions, primarily our Rentrak merger in whichwe acquired $170.3 million definite-lived intangible assets.Amortization of intangible assets decreased by $2.0 million, or 5.6%, for 2018 as compared to 2017 as a portion of these assets became fully amortized.Amortization of intangible assets increased by $2.9 million, or 9.2%, for 2017 as compared to 2016 as we only incurred eleven months of amortization ofthese intangibles acquired in the Rentrak merger.Gain on Asset DispositionsDuring 2016, we sold our DAx business to Adobe and realized a gain on disposition of $33.5 million. There were no asset dispositions in 2018 or 2017.Settlement of Litigation, NetSettlement of litigation, net consists of losses from the settlement of various litigation matters. The $5.3 million net settlement of litigation expense for theyear ended December 31, 2018 relates to the settlement and final resolution of the federal securities class action and the derivative actions. The $82.5 millionnet settlement of litigation expenses for the year ended December 31, 2017 primarily relates to the settlement of the federal securities class action litigation,derivative actions, and the Rentrak merger litigation.37Table of ContentsSettlement of litigation, net, increased $80.2 million for 2017 as compared to 2016. The increase in the net settlement of litigation expensesfor 2017 primarily relates to the settlement of the federal securities class action litigation for which we had reserved a total of $110.0 million in accruedlitigation settlements for the gross settlement amount and recorded $37.2 million in insurance recoverable on litigation settlements on our ConsolidatedBalance Sheets as of December 31, 2017.Organizational RestructuringIn December 2017, we announced that we were implementing an organizational restructuring to reduce staffing levels by approximately 10% and exit certaingeographic regions in order to enable us to decrease our global costs and more effectively align our resources to business priorities. The majority of theemployees impacted by the restructuring exited in the fourth quarter of 2017 and the remainder exited in 2018.During 2018, our Board of Directors authorized management to implement further reductions in headcount (less than 10%) and rationalize our portfolio ofleased properties which resulted in the termination of one operating lease, the extension of the lease related to our headquarters, and the sublease of threeoperating leases of office space in various locations. In connection with the restructuring plans, we incurred expenses of $11.8 million for the year endedDecember 31, 2018, related to employee termination benefits, lease terminations and other direct costs compared with $10.5 million during 2017.Interest Expense, NetInterest expense, net, consists of interest income and interest expense. Interest income consists of interest earned from our cash and cash equivalent balances,marketable securities and imputed interest on the minimum commitment agreements entered into with WPP and its affiliates. Interest expense relates tointerest on the Notes, our capital leases pursuant to several equipment loan and security agreements on financing of equipment, software and hardwarepurchases.Interest expense, net, increased $15.8 million during 2018 to $16.5 million as compared to $0.7 million in 2017 as a result of the issuance of the Notes. Theincrease is comprised of $11.0 million of interest, $1.0 million of amortization of deferred financing costs and $4.8 million from the amortization of thediscount on the Notes, offset by a decrease of $1.0 million in interest recognized on capital leases.Interest expense, net, increased during 2017 as compared to 2016 as result of a decrease in interest income from a lower balance in marketable securities andlower imputed interest income on the minimum commitment agreements with WPP and its affiliates. The decrease in interest income was partially offset bylower interest expense from our capital lease agreements.We expect our interest expense to increase in 2019 as a result of the interest rate reset feature on the Notes. For additional information, refer to Item 7A,Quantitative and Qualitative Disclosures About Market Risk. Interest is payable, at our option, in cash, or, subject to certain conditions, through the issuanceby us of shares of Common Stock.Other (Expense) Income, NetOther (expense) income, net represents income and expenses incurred that are generally not recurring in nature or are not part of our normal operations.Income from transition services represents Adobe Inc.'s ("Adobe") reimbursement of costs incurred under the DAx transition services agreement ("TSA") andare offset as expense in general and administrative expenses.38Table of ContentsThe following is a summary of other (expense) income, net: Years Ended December 31,(In thousands)2018 2017 2016TSA income from the DAx disposition$9,029 $11,080 $12,395Change in fair value of financing derivatives(14,226) — —Gain on forgiveness of obligation— 4,000 —Other3,733 125 (24)Total other (expense) income, net$(1,464) $15,205 $12,371The shift to other expense, net of $1.5 million for the year ended December 31, 2018 from other income, net of $15.2 million for the year ended December 31,2017 was driven primarily by the $14.2 million loss recorded as a result of changes in the fair value of the interest rate reset liability, notes option derivativeliability, and change of control derivative liability in 2018. Additionally, we had a $2.1 million reduction of income related to the DAx transition servicesagreement due to the wind down of managed contracts, as well as debt forgiveness of $4.0 million in 2017. These decreases in other (expense) income, netwere partially offset by a $1.4 million increase in 2018 due to a change in the fair value of equity securities and $2.0 million increase in patent incomereceived in 2018.The decrease in TSA income from the DAx disposition for the year ended December 31, 2018 compared to the year ended December 31, 2017 primarilyrelates to reduced activity in the third year of the TSA. On August 8, 2018, we signed an amendment with Adobe to extend the TSA for an additional twomonths (through March 21, 2019) and to obtain a license to certain software for a period of one year (through January 21, 2020). The decrease in 2017compared to 2016 for the TSA income relates to reduced activity in the second year of the DAx transaction services agreement.In September 2017, we and Adobe agreed to terminate the Strategic Partnership Agreement and Adobe released us from our remaining $4.0million obligation. For the year ended December 31, 2017, the relief from the obligations is reflected in other (expense) income, net.Gain (Loss) from Foreign Currency TransactionsOur foreign currency transactions are recorded as a result of fluctuations in the exchange rate between the transactional currency and the functional currencyof foreign subsidiary transactions.For the year ended December 31, 2018, gain from foreign currency transactions was $1.3 million. The 2018 gain was primarily related to fluctuations in theaverage U.S. Dollar to Euro, Canadian Dollar and Chilean Peso exchange rates. For 2017 and 2016, the loss from foreign currency transactions was $3.2million and $1.2 million, respectively, and related to differences in the U.S. Dollar to Euro exchange rates.(Provision) Benefit for Income TaxesA valuation allowance has been established against our net U.S. federal and state deferred tax assets, and certain foreign jurisdictions deferred tax assets,including net operating loss carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for taxdeductible goodwill and other indefinite-lived liabilities.During the years ended December 31, 2018, 2017, and 2016, we recorded an income tax (provision) benefit of $(3.7) million, $2.7 million, and $4.0 million,respectively, resulting in an effective tax rate of (2.4)%, 1.0%, and 3.3%, respectively. These effective tax rates differ from the U.S. federal statutory rateprimarily due to the effects of certain permanent items, foreign tax rate differences, and increases in the valuation allowance against our domestic deferred taxassets. More specifically, included within the total tax expense is an unfavorable $19.0 million related to the increase in valuation allowance recordedagainst our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $19.7million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibilityof certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Thesetax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S. federalstatutory rate, are the primary drivers of the annual effective income tax rate.For the year ended December 31, 2018, we assessed the potential impact of TCJA provisions, including the reduction in the corporate tax rate from 35% to21%, on our US deferred taxes and concluded that there was no material impact on our US deferred taxes.We recognized an income tax benefit of $2.7 million during the year ended December 31, 2017 which is comprised of current tax expense of $0.5million primarily related to foreign taxes and a deferred tax benefit of $3.2 million related to temporary differences39Table of Contentsbetween the tax treatment and financial reporting treatment for certain items. Included within the total tax benefit is an income tax benefit of $8.3million related to the impact of the TCJA provisions on our U.S. deferred taxes, including the reduction in the corporate tax rate from 35% to 21% and achange in our valuation allowance assessment. Also included is income tax expense of $126.1 million related to the increase in valuation allowance recordedagainst our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions.We recognized an income tax benefit of $4.0 million during the year ended 2016 which is comprised of a current tax benefit of $0.8 million related to federaland state taxes, current tax expense of $0.8 million related to foreign taxes, and a deferred tax benefit of $4.0 million related to temporary differences betweenthe tax treatment and financial reporting treatment for certain items. Included within total tax benefit is income tax expense of $54.9 million related to theincrease in valuation allowance recorded against our deferred tax assets, to offset the tax benefit of our operating losses in the U.S. and certain foreignjurisdictions.Non-GAAP Financial MeasuresTo provide investors with additional information regarding our financial results, we are disclosing herein Adjusted EBITDA and non-GAAP net loss, each ofwhich are non-GAAP financial measures used by our management to understand and evaluate our core operating performance and trends. We believe thatthese non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, as they permitour investors to view our core business performance using the same metrics that management uses to evaluate our performance.EBITDA is defined as GAAP net income (loss) plus or minus interest, taxes, depreciation and amortization of intangible assets. We define Adjusted EBITDAas EBITDA plus or minus stock-based compensation expense as well as other items and amounts that we view as not indicative of our core operatingperformance, specifically: charges for matters relating to the Audit Committee investigation, such as litigation and investigation-related costs, costsassociated with tax projects, audits, consulting and other professional fees; other legal proceedings specified in the Notes; settlement of certain litigation;restructuring costs; and non-cash changes in the fair value of financing derivatives and investments in equity securities.We define non-GAAP net loss as GAAP net income (loss) plus or minus stock-based compensation expense and amortization of intangible assets, as well asother items and amounts that we view as not indicative of our core operating performance, specifically: charges for matters relating to the Audit Committeeinvestigation, such as litigation and investigation-related costs, costs associated with tax projects, audits, consulting and other professional fees; other legalproceedings specified in the Notes; settlement of certain litigation; restructuring costs; and non-cash changes in the fair value of financing derivatives andinvestments in equity securities. We changed our definition of non-GAAP net loss in 2018 to adjust for amortization of intangible assets, a change that isintended to better reflect our core operating performance.Our use of these non-GAAP financial measures has limitations as an analytical tool, and investors should not consider these measures in isolation or as asubstitute for analysis of our results as reported under GAAP. The limitations of such non-GAAP measures include the following:•Adjusted EBITDA does not reflect tax or interest payments that represent a reduction in cash available to us;•Depreciation and amortization are non-cash charges and the assets being depreciated may have to be replaced in the future. Adjusted EBITDA doesnot reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;•Adjusted EBITDA and non-GAAP net loss do not reflect cash payments relating to litigation and the Audit Committee investigation, such aslitigation and investigation-related costs, costs associated with tax projects, restructuring costs, audits and other professional, consulting or otherfees incurred in connection with our prior-year audits and certain legal proceedings, all of which represent a reduction in cash available to us;•Adjusted EBITDA and non-GAAP net loss do not consider the impact of stock-based compensation and similar arrangements;•Adjusted EBITDA and non-GAAP net loss do not consider amortization of intangible assets;•Adjusted EBITDA and non-GAAP net loss do not consider possible cash gains or losses related to our financing derivatives or investment in equitysecurities; and•Other companies, including companies in our industry, may calculate any of these non-GAAP financial measures differently, which reduces theirusefulness as comparative measures.Because of these and other limitations, you should consider Adjusted EBITDA and non-GAAP net loss alongside GAAP-based financial performancemeasures, including GAAP revenue and various cash flow metrics, net income (loss) and our other GAAP financial results. Management addresses theinherent limitations associated with using non-GAAP financial measures through disclosure of such limitations, presentation of our financial statements inaccordance with GAAP and a reconciliation of Non-GAAP revenue, Adjusted EBITDA and non-GAAP net loss to the most directly comparable GAAPmeasures, GAAP revenue40Table of Contentsand net loss, respectively. Consolidated EBITDA, as defined for purposes of the Notes, was the same as Adjusted EBITDA as presented below.The following table presents a reconciliation of net loss (GAAP) to Adjusted EBITDA for each of the periods identified: Years Ended December 31,(In thousands)201820172016Net loss (GAAP)$(159,268)$(281,393)$(117,173)Income tax provision (benefit)3,706(2,717)(4,007)Interest expense, net16,465661478Depreciation17,25923,33925,439Amortization of intangible assets32,86434,82331,896EBITDA(88,974)(225,287)(63,367)Adjustments:Stock-based and expected awards compensation expense(1)37,15134,26146,495Investigation and audit related38,33883,39846,617Settlement of litigation, net5,25082,5332,363Gain on asset disposition——(33,457)Restructuring costs11,83710,510—Post-merger integration costs (2)——15,772Acquisition costs (3)——10,351Adjustments related to dispositions (4)——(293)Other expense (income), net (5)12,783(4,125)24Adjusted EBITDA$16,385 $(18,710) $24,505(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.(2) Post-merger integration costs consist of third-party costs incurred following our merger with Rentrak and acquisition of Compete in 2016.(3) Acquisition costs are comprised of third-party costs incurred related to our merger with Rentrak and acquisition of Compete in 2016.(4) Dispositions consist of costs attributable to DAx, which was disposed in 2016.(5) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense)income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to otherexpense (income), net reflects items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other incomeassociated with the transition services agreement for the DAx disposition. Our change to the calculation of Adjusted EBITDA for 2018 is intended to conform Adjusted EBITDA to theConsolidated EBITDA definition under the Notes.The following table presents a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified: Years Ended December 31,(In thousands)2018 2017 2016Net loss (GAAP)$(159,268)$(281,393)$(117,173)Adjustments:Stock-based and expected awards compensation expense(1)37,15134,26146,495Investigation and audit related38,33883,39846,617Amortization of intangible assets(2)32,86434,82331,896Settlement of litigation, net5,25082,5332,363Gain on asset disposition——(33,457)Restructuring costs11,83710,510—Post-merger integration costs (3)——15,772Acquisition costs (4)——10,351Adjustments related to dispositions (5)——(293)Other expense (income), net (6)12,783(4,125)24Non-GAAP net (loss) income$(21,045) $(39,993) $2,595(1) 2017 includes $16.9 million related to a stock-based retention program that was settled in cash for employees who departed prior to issuance of equity.41Table of Contents(2) In 2018, amortization of intangible assets was added as an adjustment in our calculation of non-GAAP net loss. Prior year non-GAAP net loss has been recast to include thisadjustment, which is intended to better reflect our core operating performance.(3) Post-merger integration costs consist of third-party costs incurred following our merger with Rentrak and acquisition of Compete in 2016.(4) Acquisition costs are comprised of third-party costs following our merger with Rentrak and acquisition of Compete in 2016.(5) Dispositions consist of costs attributable to DAx, which was disposed in 2016.(6) In 2018, adjustments to other expense (income), net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other (expense)income, net on our Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to otherexpense (income), net reflects items classified as other (expense) income, net on our Consolidated Statements of Operations and Comprehensive Loss, excluding the other incomeassociated with the transition services agreement for the DAx disposition.Liquidity and Capital ResourcesThe following table summarizes our cash flows: Years Ended December 31,(In thousands) 2018 2017 2016Consolidated Statements of Cash Flow Data: Net cash used in operating activities $(72,575) $(56,405) $(55,912)Net cash (used in) provided by investing activities $(13,814) $18,254 $47,820Net cash provided by (used in) financing activities $93,119 $(7,518) $(51,329)Effect of exchange rate changes on cash, cash equivalents and restricted cash $(1,657) $2,453 $776Net increase (decrease) in cash, cash equivalents and restricted cash $5,073 $(43,216) $(58,645)Our principal uses of cash historically consisted of cash paid for payroll and other operating expenses and payments related to investments in equipment,primarily to support our consumer panels and technical infrastructure required to deliver our products and services and support our customer base. We haveincurred significant professional fees primarily consisting of legal, forensic accounting and related advisory services as a result of our Audit Committee'sinvestigation, subsequent audit and compliance efforts relating to the filing of our 2015, 2016 and 2017 consolidated financial statements.As of December 31, 2018, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $50.2 million, including $6.1million in restricted cash.Our principal sources of liquidity have historically been our cash and cash equivalents, as well as cash flow generated from our operations. Our recentoperating losses, including the significant costs associated with the investigation and completing the audit of our prior years' consolidated financialstatements, resulted in a need to secure long-term financing. In January 2018, we issued $150.0 million in Notes in exchange for $85.0 million in cash and2,600,000 shares of Common Stock in order to support our anticipated liquidity requirements and provide capital for future investment. In May 2018, weissued an additional $50.0 million in Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock. In addition, on July 9, 2018, theVirginia Circuit Court dismissed certain derivative litigation in which we were a party, resulting in $10.1 million of insurance proceeds held in escrow beingreleased to us.We believe that our sources of funding are sufficient to satisfy our currently anticipated requirements for at least the next twelve months. We continue to befocused on maintaining flexibility in terms of sources, amounts and the timing of any potential transaction in order to best position us for future success. Ourliquidity could be negatively affected by a decrease in demand for our products and services or additional losses from operations, including ongoing costsrelating to compliance and legal proceedings. Our liquidity could also be negatively affected by the interest rate reset feature of the Notes, which increasedthe interest rates for the Notes from 6.0% to 12.0%, effective January 30, 2019 through January 30, 2020. For additional information on the interest rate resetfeature, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk. Interest on the Notes is payable, at our option, in cash, or, subject tocertain conditions, through the issuance by us of shares of Common Stock.Restricted cash represents our requirement to collateralize outstanding letters of credit, certain operating lease obligations, international payroll processingexposures and lines of credit related to certain of our corporate credit card programs. As of December 31, 2018 and 2017, we had $6.1 million and $7.3million of restricted cash, respectively.Credit FacilityIn 2013, we entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as the administrative agent and lead lender, and certainother lenders for a five-year revolving credit facility of $100.0 million, which included a $10.0 million sublimit for issuance of standby letters of credit(subsequently reduced to $3.6 million in September 2017), a $10.0 million sublimit for swing line loans and a $10.0 million sublimit for alternative currencylending. The maturity date for the revolving credit facility was September 26, 2018. On January 11, 2018, we voluntarily terminated the Credit Agreementand the Security and Pledge Agreement between the Company and Bank of America, N.A.. At the time of termination, $3.5 million in letters of creditremained42Table of Contentsoutstanding and were cash collateralized. As of December 31, 2018, no letters of credit remain outstanding under the Credit Agreement.On June 1, 2018, we entered into a Security Agreement with Wells Fargo Bank, N.A. to issue standby letters of credit on our behalf. As of December 31, 2018,$3.5 million in letters of credit are outstanding and are cash collateralized under the Security Agreement with Wells Fargo Bank, N.A.Issuance and Sale of Senior Secured Convertible NotesOn January 16, 2018, we entered into certain agreements with Starboard, pursuant to which we issued and sold to Starboard $150.0 million in Notes inexchange for $85.0 million in cash and 2,600,000 shares of Common Stock. We also agreed to issue to Starboard warrants to purchase 250,000 shares ofCommon Stock at a price of $0.01 per share. The warrants were issued on October 12, 2018 and are exercisable for five years from the date of issuance. OnMay 17, 2018, we issued and sold to Starboard $50.0 million of Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock. Later in2018 we issued an aggregate of $4.0 million in Notes to Starboard, bringing the total balance of Notes as of December 31, 2018 to $204.0 million.The Notes contain certain affirmative and restrictive covenants with which we must comply, including (i) covenants with respect to limitations on additionalindebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances (currently at $20.0 million)and (v) the timely filing of certain disclosures with the SEC. We were in compliance with the debt covenants as of December 31, 2018. Based on our currentplans, we do not currently anticipate any breach of these covenants that would result in an event of default under the Notes. Our liquidity could be negativelyaffected in the event of a default under the Notes.For additional information about the terms of the Notes, refer to Footnote 5, Long-term Debt.Operating ActivitiesOur primary source of cash provided by operating activities is revenues generated from sales of our Ratings and Planning, Analytics and Optimization, andMovies Reporting and Analytics products and services. Our primary uses of cash from operating activities include personnel costs, data and infrastructure todevelop our products and services and support the anticipated growth in our business and customers using our products. We have also incurred significantprofessional fees relating to the Audit Committee's investigation, subsequent audit and compliance efforts and related litigation.Cash used in operating activities is calculated by adjusting our net loss for changes in working capital, as well as to exclude non-cash items such as:depreciation, amortization of intangible assets, provision for bad debts, stock-based compensation, deferred tax provision (benefit), change in the fair valueof financing derivatives and equity securities, accretion of debt discount, amortization of deferred financing costs, gain on forgiveness of obligation, andlitigation accrual settled in common stock.Net cash used in operating activities in 2018 was $72.6 million compared to net cash used of $56.4 million in 2017. The increase in cash used in operatingactivities during the year ended December 31, 2018 as compared to the year ended December 31, 2017 was primarily attributable to a $90.0 million increasein payments of our outstanding liabilities, driven by investigation and audit related expenses, interest payments on the Notes and settlement of compensationliabilities.Net cash used in operating activities in 2017 was $56.4 million compared to net cash used of $55.9 million in 2016. The increase in cash used in operatingactivities was primarily attributable to an increase in the net loss of $164.2 million, partially offset by an increase in changes in operating assets andliabilities of $72.1 million and a decrease of $91.7 million in non-cash expenditures in 2017 as compared to 2016. The increase in our net loss and thechange in operating assets and liabilities was primarily attributable to the significant increase in accrued expenses related to our investigation and audit aswell as the accrual associated with the proposed settlement of the federal securities class action litigation. The 2017 increase in non-cash expenditures waslargely attributable to the accrual of certain litigation settlements to be settled in Common Stock and was partially offset by a decrease in stock-basedcompensation expense as a result of the 2016 acceleration of equity awards held by certain Rentrak executives upon consummation of the merger, and as aresult of the 2016 gain on asset dispositions of $33.5 million.Investing ActivitiesCash used in investing activities primarily consists of payments related to purchases of computer network equipment to support our technical infrastructure,furniture and equipment, and capitalized internal-use software costs. The extent of these investments will be affected by our ability to expand relationshipswith existing customers, grow our customer base and introduce new digital formats.Net cash used in investing activities in 2018 was $13.8 million compared to net cash provided by investing activities of $18.3 million in 2017. The shiftfrom cash provided by investing activities to cash used in investing activities was mainly attributable to the sales of marketable securities in 2017 comparedwith the increase in cash used for the development of internal-use software in 2018. We did not capitalize any internal-use software costs in 2017.43Table of ContentsNet cash provided by investing activities in 2017 was $18.3 million compared to net cash provided by investing activities of $47.8 million in 2016. Thisdecrease in cash provided by investing activities was largely attributable to $37.1 million acquired in 2016 as result of our merger with Rentrak, and $43.0million in net cash received from the disposition of the DAx assets, offset by $27.3 million of net cash used to acquire certain assets of Compete in 2016.These decreases were partially offset by $26.2 million of cash provided by the sale of marketable securities during 2017.Financing ActivitiesNet cash provided by financing activities in 2018 was $93.1 million compared to net cash used in financing activities of $7.5 million in 2017. The changewas largely due to the cash proceeds of $100.0 million from the issuance of the Notes. These proceeds were offset by debt issuance costs of $5.1 million andthe use of $5.3 million of cash to cover minimum statutory withholding taxes due upon the vesting of certain restricted stock and restricted stock unit awardsand exercise of stock options in 2018.We used $7.5 million of cash in financing activities in 2017 compared to $51.3 million in 2016. The decrease in cash used was largely attributable to a $27.3million reduction in cash used to repurchase shares under our share repurchase program, which was suspended indefinitely in March 2016. We alsoused $16.8 million less in cash to cover minimum statutory withholding taxes due upon the vesting of certain restricted stock and restricted stock unit awardsin 2017 compared to 2016. In addition, we received $4.1 million less in proceeds from the exercise of employee stock options in 2017 and we used $1.8million less to make principal payments on capital lease obligations. These decreases were partially offset by the receipt of $2.1 million more in proceedsfrom the minimum commitment agreements with WPP during 2017 compared to 2016.Contractual Payment ObligationsWe are subject to certain contractual arrangements that are long-term in nature.On May 30, 2018, we entered into an amendment with the landlord of our corporate headquarters, extending the lease term which was scheduled to expire onJuly 31, 2022. Pursuant to the terms of the extension, the new lease term will begin on August 1, 2022 and will expire on July 31, 2027. Refer to Footnote 10,Commitments and Contingencies.On June 1, 2018, we entered into a new multi-year agreement with an MVPD, extending the term of our agreement through December 2023. Refer to Footnote10, Commitments and Contingencies.The information set forth below summarizes our contractual obligations as of December 31, 2018 that are fixed and determinable.(In thousands) Total Less Than1 Year 1-3 Years 3-5Years MoreThan 5YearsOperating lease obligations $90,585 $14,780 $25,286 $19,044 $31,475Capital lease obligations 3,863 2,582 1,161 120 —Software license arrangements 1,843 1,843 — — —Long-term debt obligations 204,000 — — 204,000 —Unconditional purchase obligations with MVPDs 141,955 39,422 64,829 37,704 —Other purchase obligations 706 706 — — —Total $442,952 $59,333 $91,276 $260,868 $31,475Future Capital RequirementsOur ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors, including expenses from ongoingcompliance efforts and related to various legal proceedings. To the extent that our existing cash, cash equivalents, operating cash flow and the proceeds fromthe 2018 issuance and sale of Notes (offset by cash interest on such Notes) are insufficient to fund our future activities and requirements, we may need to raiseadditional funds through public or private equity or debt financing. If we issue additional equity securities in order to raise additional funds or pay intereston the Notes, further dilution to existing stockholders may occur. The delayed filing of our periodic reports with the SEC prior to our filing of the 2017 10-Kmay impair our ability to obtain additional financing and access the capital markets. As a result of our delayed filings, we will not be eligible to register theoffer and sale of our securities using a registration statement on Form S-3 until after we have timely filed all periodic reports required under the Exchange Actfor twelve months, which we expect to be April 1, 2019.44Table of Contents2018 Equity and Incentive Compensation PlanOur stockholders approved the 2018 Equity and Incentive Compensation Plan (the "2018 Plan") at our 2018 Annual Meeting of Stockholders. Under the2018 Plan, we may grant option rights, appreciation rights, restricted stock, restricted stock units, performance shares and performance units up to 10,650,000shares of Common Stock. The aggregate number of shares of Common Stock available will be reduced by: (i) one share of Common Stock for every one shareof Common Stock subject to an award of option rights or appreciation rights granted under the 2018 Plan and (ii) two shares of Common Stock for every oneshare of Common Stock subject to an award other than of option rights or appreciation rights granted under the 2018 Plan. If any award granted under the2018 Plan (in whole or in part) is canceled or forfeited, expires, is settled for cash, or is unearned, the shares of Common Stock subject to such award will, tothe extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share of Common Stock forevery one share of Common Stock subject to awards of Option Rights or Appreciation rights and two shares of Common Stock for every one share ofCommon Stock subject to awards other than of Option Rights or Appreciation Rights. Additionally, if, after December 31, 2017, any shares of Common Stocksubject to an award granted under the 2007 Equity Incentive Plan (the "2007 Plan") are forfeited, or an award granted under the 2007 Plan (in whole or inpart) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of suchcancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2018 Plan at a rate of one share for every one sharesubject to such award.During 2018, our Compensation Committee approved and awarded 2,612,457 time-based restricted stock units ("RSUs"), 191,800 performance-based RSUs,and 68,151 market-based RSUs under the 2018 Plan to our employees, directors and consultants . Of the time-based RSUs, 1,493,288 vested immediatelyupon grant. The remaining time-based RSUs generally vest after three to four years contingent on continued service, and performance-based RSUs generallyvest after three years based on achievement of pre-established revenue and adjusted EBITDA goals. Market-based awards generally vest after three yearsbased on the attainment of certain stock price hurdles. Refer to Footnote 12, Stockholders' Equity.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) other than operating lease obligations and other purchase obligations.Critical Accounting PoliciesOur discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have beenprepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"). The preparation of these financial statements requires us to makeestimates, assumptions and judgments that affect the amounts reported in our Consolidated Financial Statements and the accompanying Notes toConsolidated Financial Statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable underthe circumstances. Actual results may differ from these estimates.While our significant accounting policies are described in more detail in the Notes to Consolidated Financial Statements included in Item 8 of this 10-K, webelieve the following accounting policies to be the most critical to the judgments and estimates used in the preparation of our Consolidated FinancialStatements.Revenue RecognitionWe apply the provisions of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers and all related appropriate guidance.We recognize revenue under the core principle of depicting the transfer of promised goods and services to our customers in an amount that reflects theconsideration to which we expect to be entitled. In order to achieve that core principle, we apply the following five-step approach: (1) identify the contractwith a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to theperformance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.Our contracts with customers may include multiple promised goods and services, consisting of the various services we offer. Contracts with multipleperformance obligations typically consist of a mix of subscriptions to online products, our online database and custom products and services. At contractinception, we identify performance obligations by evaluating whether the promised goods and services are capable of being distinct within the context of thecontract. Promised goods and services that are not distinct are combined until the combined bundle of goods and services is distinct.In general, transaction price is determined by estimating the fixed amount of consideration to which we are entitled to for transfer of goods and services andall relevant sources and components of variable consideration. Variable consideration is estimated based on the most likely amount or expected valueapproach. Once we select a method to estimate variable consideration for a particular type of performance obligation, we will apply that method consistently.We will constrain estimates of variable consideration only to the extent that it is probable that significant reversal in the amount of cumulative revenuerecognized will not occur.45Table of ContentsSignificant judgment is required to determine the stand-alone selling price (“SSP") for each performance obligation. We allocate transaction price to eachperformance obligation based on relative SSP.For the majority of our products and services, we apply an adjusted market assessment approach for the determination of SSP for identified performanceobligations. In general, we bundle multiple products and very few are sold on a standalone basis. We use rate cards and pricing calculators that areperiodically reviewed and updated to reflect the latest sales data and observable inputs by industry, channel, geography, customer size, and other relevantgroupings. Certain products are sold on a standalone basis in a narrow band of prices. If a product is sold outside of the narrow band of prices, it will beassigned the midpoint of the narrow band for purposes of allocating transaction price on a relative SSP basis.We recognize revenue when (or as) we satisfy a performance obligation by transferring promised goods or services to a customer. Customers may obtain thecontrol of promised goods or services over time or at a point in time.We enter into a limited number of monetary contracts that involve both the purchase and sale of services with a single counterparty. We assess each contractto determine if the revenue and expense should be presented gross or net. We recognize revenue for these contracts to the extent that SSP is established fordistinct services provided. Any excess consideration above the established standalone selling price of services is presented as an offset to cost of revenues inthe Consolidated Statements of Operations and Comprehensive Loss.The impact of adopting ASC 606 on our Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2018 was areduction of $1.9 million. See Footnote 2, Summary of Significant Accounting Policies for further details.Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed when a business is acquired.The valuation of intangible assets and goodwill involves the use of management's estimates and assumptions; and can have a significant impact on futureoperating results. We initially record our intangible assets at fair value. Intangible assets with finite lives are amortized over their estimated useful lives whilegoodwill is not amortized but is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to its carryingvalue including goodwill recorded by the reporting unit.We adopted Accounting Standards Update ("ASU") 2017-04, Simplifying the Test for Goodwill Impairment effective September 30, 2018, which eliminatesthe requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the impairment test. The adoption did not have animpact on the Consolidated Financial Statements.We have one reporting unit. As such, we perform the impairment assessment for goodwill at the enterprise level. Goodwill is reviewed for possible impairmentbetween annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below the carryingvalue. We initially assess qualitative factors to determine if it is necessary to perform the goodwill impairment review. We review the goodwill for impairmentif, based on our assessment of the qualitative factors, we determine that it is more likely than not that the fair value of its reporting unit is less than thecarrying value, or we decide to bypass the qualitative assessment. We review the carrying value of our reporting unit utilizing a discounted cash flow model,and, where appropriate, a market value approach is also utilized to supplement the discounted cash flow model. We make assumptions regarding estimatedfuture cash flows, discount rates, long-term growth rates and market values to determine the estimated fair value of its reporting unit.A discounted cash flow analysis requires the use of various assumptions, including, expectations of future cash flows, growth rates, tax rates, and discountrates in developing the present value of projected cash flows. The following assumptions are significant to our discounted cash flow analysis:Projected Financial Performance: expected future cash flows and growth rates are based upon assumptions of our future revenue growth andoperating costs. Actual results of operations and cash flows will likely differ from those utilized in our discounted cash flow analysis, and it ispossible that those differences could be material. We monitor for events and circumstances that could negatively impact the key assumptions indetermining fair value, including long-term revenue growth projects, profitability, discount rates, volatility in our market capitalization, generalindustry, micro and macro-economic conditions.Long-term growth rate: the long-term growth rate represents the rate at which our single reporting unit's earnings are expected to grow or losses todecrease. Our assumed long-term growth rate was based on projected long-term inflation and gross domestic product growth estimates for thecountries in which we operate and a long-term growth estimate for our business and the industry in which we operate. The long-term growth rateutilized in the 2018 analysis was 3.0%.Discount rate: our reporting unit's future cash flows are discounted at a rate that is consistent with our average weighted cost of capital that is likelyto be utilized by market participants. The weighted-average cost of capital is our estimate of the overall returns required by both debt and equityinvestors, weighted by their respective contributions of capital. We used a 10.0% discount rate in 2018.46Table of ContentsIn addition, we also use a market-based approach to estimate the value of our reporting unit. The market value is estimated by comparing it to publicly-tradedcompanies and/or to publicly-disclosed business mergers and acquisitions in similar lines of business. The value of the business entity is based on pricingmultiples of certain financial parameters observed in the comparable companies.Goodwill allocated to our single reporting unit as of December 31, 2018 was $641.2 million. The results of the October 1, 2018 annual impairment testresulted in the fair value of our reporting unit exceeding the carrying value by over 100%. We monitor for events and circumstances that could negativelyimpact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, volatility in our marketcapitalizations, and general industry, market and macro-economic conditions. It is possible that future changes in such circumstances, or in the variablesassociated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require us to record a non-cashimpairment charge.Derivative Financial InstrumentsWe have derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments areimmediately recorded in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Loss.The fair value of our interest rate reset derivative liability is determined using a with-and-without approach, using a standard binomial tree convertible bondmodel. The fair value estimate is determined using an estimate for the Company's credit rating, the premium attributable to the payment-in-kind feature of theNotes, and premium estimates for company-specific risk factors. The valuation is derived from techniques which utilize unobservable Level 3 inputs.The fair value of our change of control redemption derivative liability is determined using a probability adjusted binomial lattice model. The fair valueestimate is determined using management's estimate for the probability of change of control, risk-free rate, and remaining term of the redemption feature.These estimates represent Level 3 inputs within the fair value hierarchy.The fair values of our financing derivatives are estimated using forward projections and are discounted back at rates commensurate with the remaining term ofthe related derivative. The primary sensitivity in the interest rate reset derivative liability is driven by our Common Stock price at the measurement date, theobservable volatility of the Common Stock, and the discount rate used to determine the present value of the instrument. The primary sensitivity for thechange of control redemption derivative liability is driven by the probability of the change of control.Refer to Footnote 6, Fair Value Measurements for the significant unobservable inputs used to determine the fair value of the derivatives as of December 31,2018.ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKMarket risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are subject tointerest rate risk in connection with the Starboard Notes, and we hold equity securities and derivative financial instruments which are subject to market risk.We also have foreign currency exchange rate risk from our global operations, although we do not believe this risk to be significant.Interest rate riskAs a result of having $204.0 million aggregate principal amount of Notes outstanding, which are convertible into shares of Common Stock at a conversionprice of $31.29 per share (the "Conversion Price"), we are subject to interest rate risk. As of December 31, 2018, the interest rate on the Notes was 6.0% peryear. The interest rate resets at each of January 30, 2019, January 30, 2020 and February 1, 2021 (each an "Interest Reset Date") based on the then-applicableConversion Premium, which is calculated by dividing the Conversion Price by the arithmetic average of the volume-weighted average trading prices of ourCommon Stock on each of the ten consecutive trading days immediately preceding the applicable Interest Reset Date (the "VWAP"). The interest rate is thendetermined in accordance with the table below, which includes theoretical VWAP calculations:47Table of ContentsIf the Conversion Premium(as of the applicable Interest Reset Date) is: Implied VWAP Then the Interest Rate fromthe applicable Interest ResetDate until the nextsubsequent Interest ResetDate shall be:1.0 or less $31.29 or higher 4.0%1.05 $29.80 4.3%1.10 $28.45 4.7%1.15 $27.21 5.0%1.20 $26.08 5.3%1.25 $25.03 5.7%1.30 $24.07 6.0%1.35 $23.18 8.0%1.40 $22.35 10.0%1.45 or higher $21.58 or less 12.0%If the Conversion Premium is between two Conversion Premium amounts in the table above, the interest rate is determined by straight-line interpolationbetween the interest rates for the higher and lower Conversion Premium amounts.The interest rate reset feature of the Notes increases the risk that interest charges could increase materially in future years as compared to 2018. Based on the$204.0 million aggregate principal Notes outstanding as of December 31, 2018, each 1.0% increase in the interest rate on the Notes would increase ourannual interest expense by $2.0 million. On January 30, 2019, the interest rate reset to 12.0%, which we expect to result in an approximately $12.2 millionincrease in interest expense from January 30, 2019 to the next Interest Reset Date and, assuming that the interest rate remains at 12.0% for each successiveInterest Reset Date, approximately $37.8 million through the maturity date of the Notes, which is January 16, 2022. As discussed in Footnote 5, Long-termDebt, we have the ability, subject to certain conditions, to pay interest on the Notes through the issuance of additional shares of our Common Stock.Derivative financial instrumentThe interest rate reset feature of the Notes represents a complex derivative financial instrument, which is classified as a liability in the Consolidated BalanceSheets. This derivative is not considered a hedging instrument. We determine the fair value of our derivative financial instrument, relying in part on the workof an independent valuation firm engaged by us to provide inputs as to the fair value of the liability, including the valuation models and assumptions used todetermine its fair value. For additional information on the determination of fair value, including the assumptions used in those determinations, refer to Footnote 5, Long-term Debt and Footnote 6, Fair Value Measurements. As of December 31, 2018, the fair value of our interest rate reset derivative financialinstrument of $23.3 million was recorded in financing derivatives within the Consolidated Balance Sheets. Any changes in fair value of financing derivativesare recorded to earnings and could affect our financial position and results of operations. A change in fair value of the interest rate reset derivative liability of10% in either direction would result in a $2.3 million gain or loss recorded in earnings in our consolidated financial statements.The fair value of our interest rate reset derivative liability relates to the interest rate reset feature of the Notes. Changes in the fair value of the interest ratereset derivative liability are primarily driven by changes in the price and volatility of a share of our Common Stock. Generally, as our stock price decreases,the fair value of the derivative liability will increase, although not in a linear relationship. Similar to an option, over time, and at each of the Interest ResetDates, the value of the interest rate reset derivative liability will decrease as the time to maturity shortens and each Interest Reset Date passes.Equity price riskWe hold an equity security investment that is subject to market risk. As of December 31, 2018, the fair value of this investment, which represents shares ofcommon stock of a company listed on a foreign stock exchange, was $6.1 million. Any changes in the fair value of this investment are recorded to earningsand could affect our financial position and results of operations. A change in fair value of 10% in either direction would result in a $0.6 million gain or lossrecorded within other income (loss), net in our consolidated financial statements.48Table of ContentsForeign currency riskWe operate globally, and we predominantly generate revenues and expenses in local currencies. We operate in several countries in South America, as well ascountries throughout Europe and Asia Pacific. As such, we have exposure to adverse changes in exchange rates associated with revenues and operatingexpenses of our foreign operations, but we believe this exposure is not material at this time. We have not engaged in any transactions that hedge foreigncurrency exchange rate risk.There can be no guarantee that exchange rates will remain constant in future periods. In addition to the impact from the U.S. Dollar to Euro exchange ratemovements, we are also impacted by the movements in the exchange rates between the U.S. Dollar and various South American, Asia Pacific and otherEuropean currencies. We have evaluated and assessed the potential effect of this risk and believe that near-term changes in currency rates should notmaterially affect our financial position, results of operations or cash flows. We performed a sensitivity analysis, assuming a 10% decrease in the value offoreign currencies in which we operate. Our analysis has determined that a 10% decrease in value would have resulted in approximately $5 million decreaseto our operating loss for 2018 and a 10% increase in value would have resulted in approximately $4 million increase to our operating loss for the year endedDecember 31, 2018.As of December 31, 2018, of the total $44.1 million in cash and cash equivalents, $15.7 million was held by foreign subsidiaries. Of this amount, we believe$3.9 million could be subject to income tax withholding of 5% to 15% if the funds were repatriated to the U.S.49Table of ContentsITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PagecomScore, Inc. Consolidated Financial Statements REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS51CONSOLIDATED BALANCE SHEETS53CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS54CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY56CONSOLIDATED STATEMENTS OF CASH FLOWS57NOTES TO CONSOLIDATED FINANCIAL STATEMENTS5950Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors of comScore, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of comScore, Inc. and subsidiaries (the "Company") as of December 31, 2018 and 2017,the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the periodended December 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cashflows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United Statesof America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issuedby the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2019, expressed an adverse opinion onthe Company's internal control over financial reporting because of material weaknesses.Change in Accounting PrincipleAs discussed in Note 2 to the financial statements, the Company has changed its method of accounting for revenue recognition as of January 1, 2018 dueto adoption of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. The Company adopted ASC 606 using themodified retrospective method.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits includedperforming procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing proceduresthat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Deloitte & Touche LLPMcLean, VirginiaFebruary 28, 2019We have served as the Company's auditor since 2017.51Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of comScore, Inc.We have audited the accompanying consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows of comScore, Inc. forthe year ended December 31, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of comScore, Inc.’s operations andcash flows for the year ended December 31, 2016, in conformity with U.S. generally accepted accounting principles./s/ Ernst & Young LLPTysons, VirginiaMarch 23, 201852Table of ContentsCOMSCORE, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share data) As of As of December 31, 2018December 31, 2017AssetsCurrent assets:Cash and cash equivalents$44,096$37,859Restricted cash6,1027,266Accounts receivable, net of allowances of $1,597 and $1,991, respectively ($4,024 and $2,899 ofaccounts receivable attributable to related parties, respectively)75,60982,029Prepaid expenses and other current assets ($484 and $- attributable to related parties)19,97215,168Insurance recoverable on litigation settlements—37,232Total current assets145,779179,554Property and equipment, net27,33928,893Other non-current assets ($65 and $- attributable to related parties)8,8987,259Deferred tax assets3,9914,532Intangible assets, net126,945159,777Goodwill641,191642,424Total assets$954,143$1,022,439Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable ($1,878 and $2,715 attributable to related parties, respectively)$29,836$27,889Accrued expenses ($4,478 and $5,857 attributable to related parties, respectively)58,14086,031Accrued litigation settlements3,50027,718Other current liabilities2,2782,998Customer advances6,688 —Contract liability ($2,521 and $2,755 attributable to related parties, respectively)64,18998,367Deferred rent1,8841,239Capital lease obligations2,4216,248Total current liabilities168,936250,490Financing derivatives (related parties)26,100—Senior secured convertible notes (related parties)177,342—Deferred rent10,3049,394Deferred tax liabilities5,5273,641Capital lease obligations1,1822,103Accrued litigation settlements—90,800Other non-current liabilities ($251 and $- attributable to related parties)13,1859,519Total liabilities402,576365,947Commitments and contingenciesStockholders’ equity:Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at December 31, 2018 and 2017;no shares issued or outstanding as of December 31, 2018 or 2017——Common stock, $0.001 par value per share; 150,000,000 shares authorized as of December 31, 2018 and100,000,000 shares authorized as of December 31, 2017; 66,154,626 shares issued and 59,389,830 sharesoutstanding as of December 31, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding asof December 31, 20175960Additional paid-in capital1,561,2081,407,717Accumulated other comprehensive loss(10,621)(6,224)Accumulated deficit(769,095)(609,091)Treasury stock, at cost, 6,764,796 and 2,764,796 shares as of December 31, 2018 and 2017, respectively(229,984)(135,970)Total stockholders’ equity551,567656,492Total liabilities and stockholders’ equity$954,143$1,022,439See accompanying Notes to Consolidated Financial Statements.53Table of ContentsCOMSCORE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(In thousands, except share and per share data) Years Ended December 31,20182017 2016Revenues (1)$419,482$403,549 $399,460 Cost of revenues (1) (2) (3)200,220193,605 173,080Selling and marketing (1) (2) (3)108,395130,509 126,311Research and development (1) (2) (3)76,97989,023 86,975General and administrative (1) (2) (3)84,53574,651 97,517Investigation and audit related (1)38,33883,398 46,617Amortization of intangible assets32,86434,823 31,896Gain on asset dispositions—— (33,457)Settlement of litigation, net5,25082,533 2,363Restructuring (2)11,83710,510 —Total expenses from operations558,418699,052 531,302Loss from operations(138,936)(295,503) (131,842)Interest expense, net (1)(16,465)(661) (478)Other (expense) income, net(1,464)15,205 12,371Gain (loss) from foreign currency transactions1,303(3,151) (1,231)Loss before income taxes(155,562)(284,110) (121,180)Income tax (provision) benefit(3,706)2,717 4,007Net loss$(159,268)$(281,393) $(117,173)Net loss per common share: Basic and diluted$(2.76)$(4.90) $(2.10)Weighted-average number of shares used in per share calculation - CommonStock: Basic and diluted57,700,60357,485,755 55,728,090Comprehensive loss: Net loss$(159,268)$(281,393) $(117,173)Other comprehensive (loss) income: Foreign currency cumulative translation adjustment(4,397)6,168 (1,170)Other— 28 188Total comprehensive loss$(163,665)$(275,197) $(118,155) (1) Transactions with related parties are included in the line items above as follows (refer to Footnote 16, Related PartyTransactions, of the Notes to Consolidated Financial Statements for additional information): Years Ended December 31,20182017 2016Revenues$12,662$13,181 $9,688 Cost of revenues11,23912,956 15,695Selling and marketing158157 1,743Research and development186119 3,662General and administrative650777 633Investigation and audit related—16,844 2,563 Interest (expense) income, net(16,023)672 1,106 (2) Stock-based compensation expense is included in the line items above as follows: 54Table of Contents Years Ended December 31,20182017 2016Cost of revenues$6,349$1,766 $4,841Selling and marketing9,4525,247 10,967Research and development6,5802,270 5,902General and administrative14,7708,031 24,785Restructuring 468 — —Total stock-based compensation expense$37,619$17,314 $46,495 (3) Excludes amortization of intangible assets, which is presented separately in the Consolidated Statements of Operations andComprehensive Loss. See accompanying Notes to Consolidated Financial Statements.55Table of ContentsCOMSCORE, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except share data) Common Stock AdditionalPaid-InCapital AccumulatedOtherComprehensiveLoss AccumulatedDeficit Treasurystock, atcost TotalStockholders’EquityShares Amount Balance as of December 31, 201538,975,069 $41 $593,055 $(11,438) $(210,802) $(108,678) $262,178Adoption of ASU 2016-09— — — 277 — 277Net loss— — — — (117,173) — (117,173)Foreign currency translation adjustment— — — (1,170) — — (1,170)Unrealized gain on marketable securities,net of tax— — — 188 — — 188Subscription Receivable— — (5,521) — — — (5,521)Exercise of Common Stock options, net225,088 — 4,139 — — — 4,139Issuance of restricted stock214,010 — — — — — —Restricted stock canceled(1,750) — — — — — —Restricted stock units vested405,031 1 (1) — — — —Payments for taxes related to net sharesettlement of equity awards(279,301) — (18,292) — — — (18,292)Issuance of common stock for Rentrakacquisition18,303,796 18 753,400 — — — 753,418Repurchase of Common Stock(675,672) — — — — (27,292) (27,292)Other6,326 — — — — — —Stock-based compensation— — 54,101 — — — 54,101Balance as of December 31, 201657,172,597 $60 $1,380,881 $(12,420) $(327,698) $(135,970) $904,853Net loss— — — — (281,393)— (281,393)Foreign currency translation adjustment— — — 6,168 — — 6,168Unrealized gain on marketable securities,net of tax— — — 28 — — 28Subscription Receivable— — 11,012 — — — 11,012Restricted stock units vested185,754 — — — — — —Payments for taxes related to net sharesettlement of equity awards(69,304) — (1,514) — — — (1,514)Stock-based compensation— — 17,338 — — — 17,338Balance as of December 31, 201757,289,047 $60 $1,407,717 $(6,224) $(609,091) $(135,970) $656,492Adoption of ASC 606— — — — (736) — (736)Net loss— — — — (159,268) — (159,268)Foreign currency translation adjustment— — — (4,397) — — (4,397)Subscription Receivable— — 10,254 — — — 10,254Common Stock warrants issued— — 5,545 — — — 5,545Exercise of Common Stock options, net222,229 — 2,855 — — — 2,855Shares issued in connection withsettlement of litigation4,024,115 4 90,764 — — — 90,768Repurchase of Common Stock inexchange for senior secured convertiblenotes(4,000,000) (7) — — — (94,014) (94,021)Restricted stock units vested2,077,253 2 15,816 — — — 15,818Payments for taxes related to net sharesettlement of equity awards(222,814) — (5,263) — — — (5,263)Stock-based compensation— — 33,520 — — — 33,520Balance as of December 31, 201859,389,830 $59 $1,561,208 $(10,621) $(769,095) $(229,984) $551,567See accompanying Notes to Consolidated Financial Statements.56Table of ContentsCOMSCORE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Years Ended December 31,201820172016Operating activities:Net loss$(159,268)$(281,393)$(117,173)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation17,25923,33925,439Amortization of intangible assets32,86434,82331,896Provision for bad debts9669831,507Stock-based compensation37,61917,31446,495Deferred tax provision (benefit)2,019(3,203)(3,997)Gain on asset dispositions——(33,457)Change in fair value of financing derivatives14,226——Change in fair value of investment in equity securities(1,443)——Accretion of debt discount4,812——Amortization of deferred financing costs955——Gain on forgiveness of obligation—(4,000)—Accrued litigation settlements to be settled in Common Stock—90,800—Other568192700Changes in operating assets and liabilities, net of effect of acquisitions:Accounts receivable4,70714,5294,009Prepaid expenses and other assets(4,456)4,067(3,928)Insurance recoverable on litigation settlements10,000 (37,232) —Accounts payable, accrued expenses, and other liabilities(4,955)85,001(12,972)Contract liability and customer advances(30,013) (2,638)5,962Deferred rent1,565 1,013(393)Net cash used in operating activities(72,575)(56,405)(55,912)Investing activities:Net cash received from disposition of assets——42,980Acquisitions, net of cash acquired——37,086Acquisitions, net of cash acquired (related party)——(27,328)Sales of marketable securities—28,4362,188Purchases of property and equipment(4,206)(10,182)(7,106)Capitalized internal-use software costs(9,608)——Net cash (used in) provided by investing activities(13,814)18,25447,820Financing activities:Proceeds from borrowings on senior secured convertible notes (related party)100,000——Debt issuance costs(5,146)——Financing proceeds received on subscription receivable (related party)9,67911,0128,954Proceeds from the exercise of stock options2,855—4,139Payments for taxes related to net share settlement of equity awards(5,263)(1,514)(18,292)Repurchase of common stock (treasury shares)——(27,292)Principal payments on capital lease and software license arrangements(9,006)(17,016)(18,838)Net cash provided by (used in) financing activities93,119(7,518)(51,329)Effect of exchange rate changes on cash, cash equivalents and restricted cash(1,657)2,453776Net increase (decrease) in cash, cash equivalents and restricted cash5,073(43,216)(58,645)Cash, cash equivalents and restricted cash at beginning of period45,12588,341146,986Cash, cash equivalents and restricted cash at end of period$50,198$45,125$88,34157Table of ContentsAs of December 31,201820172016Cash and cash equivalents$44,096$37,859$84,111Restricted cash6,1027,2664,230Total cash, cash equivalents and restricted cash$50,198$45,125$88,341 Supplemental cash flow disclosures: Interest paid ($7,484 of 2018 interest paid attributable to related party)$8,136 $1,691 $1,962Income taxes paid, net of refunds1,260 497 1,717 Supplemental non-cash activities: Stock issued in connection with WPP arrangements$— $— $753,418Assets acquired through capital lease and software obligations1,737 191 14,842Change in accrued capital expenditures1,149 336 3,060Repurchase of Common Stock in exchange for senior secured convertible notes94,021 — —Shares issued in connection with settlement of litigation90,768 — —Insurance recovery on litigation settlement27,232 — —Common Stock warrants issued with senior secured convertible notes5,733 — —Fair value of financing derivatives issued with senior secured convertible notes17,574 — —Notes Option derivative liability settlement5,700 — —Modification of debt in consideration for the reduction of the senior secured convertible noteminimum cash balance requirement4,000 — —Settlement of restricted stock unit liability15,818 — —See accompanying Notes to Consolidated Financial Statements.58Table of ContentsCOMSCORE, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.OrganizationcomScore, Inc., together with its consolidated subsidiaries (collectively, "Comscore" or the “Company”), headquartered in Reston, Virginia, is a globalinformation and analytics company that measures audiences, consumer behavior and advertising across media platforms.On April 23, 2018, the Company announced the appointment of Bryan J. Wiener as its Chief Executive Officer ("CEO"), effective May 30, 2018. Upon theeffective date of the CEO's appointment, the Company's President and Executive Vice Chairman William P. Livek stepped down as President and assumedthe role of Vice Chairman and special advisor to the CEO. On September 5, 2018, the Company announced the appointment of Sarah Hofstetter as President,effective October 4, 2018.Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is availablethat is evaluated on a regular basis by the chief operating decision maker ("CODM"). The Company’s CODM is its principal executive officer, who decideshow to allocate resources and assess performance. The Company has one operating segment. A single management team reports to the CODM, who managesthe entire business. The Company’s CODM reviews consolidated results of operations to make decisions, allocate resources and assess performance and doesnot evaluate the profit or loss from any separate geography or product line. The Company's CEO assumed the role of CODM following his appointment.On May 30, 2018, The Nasdaq Stock Market LLC approved the Company's application for relisting on The Nasdaq Global Select Market ("Nasdaq") and theCompany's common stock, par value $0.001 per share ("Common Stock") began trading on Nasdaq effective June 1, 2018.Uses and Sources of Liquidity and Management’s PlansThe Company’s primary need for liquidity is to fund working capital requirements of its businesses, capital expenditures and for general corporate purposes.The Company incurred significant investigation and audit related expenses with respect to the completion of its restatement and audit process, whichsignificantly reduced working capital during 2017. In response to this reduction, in December 2017, the Company implemented an organizationalrestructuring to reduce staffing levels by approximately 10% and exit certain geographic regions, which enabled the Company to decrease its global costsand more effectively align resources to business priorities. During 2018, the Company's Board of Directors authorized additional headcount reductions (lessthan 10%) and rationalization of its leased properties. For additional information, refer to Footnote 17, Organizational Restructuring.The Company continued to incur investigation and audit related expenses during the year ended December 31, 2018. To increase the Company’s availableworking capital, on January 16, 2018, the Company entered into certain agreements with funds affiliated with or managed by Starboard Value LP(collectively, “Starboard”), pursuant to which the Company issued and sold to Starboard $150.0 million of senior secured convertible notes in exchange for$85.0 million in cash and 2,600,000 shares of Common Stock. The convertible notes contain certain affirmative and restrictive covenants with which theCompany must comply, including covenants with respect to limitations on additional indebtedness and liens and maintenance of certain minimum cashbalances. Interest on the convertible notes is payable, at the option of the Company, in cash or, subject to certain conditions, through the issuance by theCompany of additional shares of Common Stock.On May 17, 2018, Starboard exercised an option to purchase an additional $50.0 million of convertible notes, in exchange for $15.0 million in cash and1,400,000 shares of Common Stock. On August 8, 2018, the Company and Starboard amended the outstanding convertible notes in order to reduce theminimum cash balance required to be maintained by the Company from $40.0 million to $20.0 million through March 31, 2019, subject to certainlimitations. In connection with this modification, the Company issued to Starboard $2.0 million in additional aggregate principal amount of convertiblenotes. On November 13, 2018, the Company and Starboard further amended the outstanding convertible notes to extend the applicable period for the $20.0million minimum cash balance until the earlier of August 9, 2019 or the date the Company files its Form 10-Q for the quarterly period ended June 30, 2019,subject to certain limitations. In connection with this amendment, the Company issued to Starboard $2.0 million in additional aggregate principal amount ofconvertible notes. The total principal amount of convertible notes held by Starboard as of December 31, 2018 was $204.0 million. For additionalinformation, refer to Footnote 5, Long-term Debt.As of December 31, 2018, the Company was in compliance with its covenants under the convertible notes. Based on management’s current plans, includingactions within management’s control, the Company does not anticipate any breach of these covenants that would result in an event of default under theconvertible notes.Under the agreements with Starboard, the Company has the right to conduct and fully implement a rights offering, which would be open to all stockholders ofthe Company, for up to $150.0 million in senior secured convertible notes. Starboard is obligated to backstop up to $50.0 million in aggregate principalamount of rights offering notes. If undertaken, the rights offering would59Table of Contentsprovide at least $35.0 million in cash if not fully subscribed (assuming that any convertible notes purchased by Starboard pursuant to the backstopobligation would be issued on the same terms as the rights offering notes), and at least $105.0 million in cash if fully subscribed. The Company is notobligated to undertake the rights offering, and there is no assurance that the rights offering will occur.On June 21, 2018, in connection with the Company's settlement of the federal securities class action litigation and the derivative litigation discussed belowin Footnote 10, Commitments and Contingencies, the Company issued a total of 4,024,115 shares of Common Stock to a settlement fund for the benefit ofauthorized claimants in the federal securities class action and plaintiffs' lead counsel in the derivative litigation. On July 9, 2018, the Virginia Circuit Courtdismissed the final derivative actions related to the settlement of the derivative litigation, and $10.1 million of insurance funds held in escrow were releasedto the Company.The Company continues to be focused on maintaining flexibility in terms of sources, amounts, and the timing of any potential financing transaction in orderto best position the Company for future success. The Company continues to explore all potential available alternatives and has not committed to any specificfinancing transaction, including the rights offering. The Company believes that the financing actions discussed above, or other sources of financing, areprobable of occurring and satisfying the Company’s estimated liquidity needs within one year after the date that the financial statements are issued. However,the Company cannot predict, with certainty, the outcome of its actions to generate liquidity, including the availability of additional debt financing, orwhether such actions would generate the expected liquidity as currently planned.2.Summary of Significant Accounting PoliciesBasis of Presentation and ConsolidationThe accompanying Consolidated Financial Statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. Allintercompany transactions and balances are eliminated upon consolidation.ReclassificationCertain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Deferred revenue (non-current), hasbeen aggregated within other non-current liabilities on the Consolidated Balance Sheets. Unrealized gain on marketable securities, net and reclassification ofrealized loss on the sale of marketable securities, net have been aggregated within the Other line item on the Consolidated Statements of Operations andComprehensive Loss. Adjustments to reconcile net loss to net cash used in operating activities related to loss from equity method investment, realized loss onmarketable securities and loss on asset disposition of property and equipment, net have been aggregated within other adjustments on the ConsolidatedStatements of Cash Flows.Use of Estimates and Judgments in the Preparation of the Consolidated Financial StatementsThe preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expense during the reporting periods.Significant estimates and judgments are inherent in the analysis and the measurement of: management's standalone selling price ("SSP"), principal versusagent revenue recognition, determination of performance obligations, determination of transaction price, including the determination of variableconsideration and allocation of transaction price to performance obligations, deferred tax assets and liabilities, including the identification andquantification of income tax liabilities due to uncertain tax positions, the valuation and recoverability of goodwill and intangible assets, the assessment ofpotential loss from contingencies, the valuation of assets and liabilities acquired in a business combination, the fair value determination of financing-relatedliabilities and derivatives, the allowance for doubtful accounts, valuation of options, and performance-based and market-based stock awards. Managementbases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due tothe inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Companyevaluates its estimates and assumptions on an ongoing basis.Fair Value MeasurementsThe Company evaluates the fair value of certain assets and liabilities using the fair value hierarchy. Fair value is an exit price representing the amount thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-basedmeasurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for consideringsuch assumptions, the Company applies the three-tier GAAP value hierarchy which prioritizes the inputs used in measuring fair value as follows:60Table of ContentsLevel 1 - observable inputs such as quoted prices in active markets;Level 2 - inputs other than the quoted prices in active markets that are observable either directly or indirectly;Level 3 - unobservable inputs of which there is little or no market data, which require the Company to develop its own assumptions.Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measure. The Company'sassessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilitiesbeing measured and their placement within the fair value hierarchy.For assets that are measured using quoted prices in active markets, the total fair value is the published market price per unit multiplied by the number of unitsheld, without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are primarily valued byreference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability.Assets and liabilities that are measured at fair value on a non-recurring basis include property and equipment, intangible assets and goodwill. The Companyrecognizes these items at fair value when they are considered to be impaired or upon initial recognition. The fair value of these assets and liabilities aredetermined with valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cashflow models.Fair Value of Financial InstrumentsDue to their short-term nature, the carrying amounts reported in the Company’s Consolidated Financial Statements approximate the fair value for cash andcash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, the current portion of contract liability and customeradvances. The carrying values of capitalized lease obligations approximate their fair value as the terms and interest rates approximate market rates (Level 2).The fair values of the Company's financing derivatives are estimated using forward projections and are discounted back at rates commensurate with theremaining term of the related derivative. The fair value of the interest reset liability is determined based on the Company's Common Stock price atmeasurement date, the observable volatility of the Common Stock and risk-free rate. The fair value of the change in control redemption derivative liability isdetermined based on the probability of change of control and risk-free rate. The fair value of long-term debt is determined based on the credit adjusteddiscount rate at the valuation date, the Company's Common Stock price at the valuation date, risk-free rate and volatility commensurate with the remainingterm of the senior secured convertible notes.Cash and Cash EquivalentsThe Company considers highly liquid investments with an original maturity of three months or less at the time of purchase and qualifying money-marketfunds as cash equivalents. Cash and cash equivalents are maintained with several financial institutions domestically and internationally. The combinedaccount balances held on deposit at each institution typically exceed Federal Deposit Insurance Corporation ("FDIC") insurance coverage and, as a result,there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company monitors this credit risk and makesadjustments to the concentrations as necessary.Restricted CashRestricted cash represents the Company's requirement to collateralize letters of credit, certain operating lease obligations, international payroll processingexposures, as well as its corporate credit card obligations. As of December 31, 2018 and 2017, the Company had $6.1 million and $7.3 million of restrictedcash, respectively.Allowance for Doubtful AccountsThe Company generally grants uncollateralized credit terms to its customers and maintains an allowance for doubtful accounts to reserve for uncollectiblereceivables. Allowances are based on management's judgment, which considers historical collection experience, a specific review of all significantoutstanding receivables and an assessment of company specific credit conditions and general economic conditions.61Table of ContentsThe following is a summary of the allowance for doubtful accounts: Years Ended December 31,(In thousands) 2018 2017 2016Beginning Balance $(1,991) $(2,100) $(2,689)Additions (966) (983) (1,507)Recoveries (225) (147) (97)Write-offs 1,585 1,239 2,193Ending Balance $(1,597) $(1,991) $(2,100)Property and Equipment, netProperty and equipment is recorded at cost, net of accumulated depreciation, and is depreciated on a straight-line basis over the estimated useful lives of theassets, ranging from 3 to 5 years. Assets under capital leases are recorded at their net present value at the inception of the lease. Assets under capital leases andleasehold improvements are amortized over the shorter of the related lease terms or their useful lives. Replacements and major improvements are capitalized;maintenance and repairs are expensed as incurred.Capitalized SoftwareCapitalized software, which is included in property and equipment, net, consists of costs to purchase and develop internal-use software, which the Companyuses to provide various services to clients. The costs are capitalized from the time that the preliminary project stage is completed and considered probablethat the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Internal-use software costsare capitalized during the application development stage, which is when the preliminary project stage is complete, and management has committed to aproject to develop software that will be used for its intended purpose. Any costs incurred during subsequent efforts to significantly upgrade and enhance thefunctionality of the software are also capitalized. Once this software is ready for use in the Company's products, these costs are amortized on a straight-linebasis over the estimated useful life of the software, which is typically assessed to be 3 to 5 years. During 2018, the Company capitalized $9.6 million ininternally developed software costs. During the year ended December 31, 2017, the Company did not capitalize any internally developed software costs.During the year ended December 31, 2016, the Company capitalized $0.3 million in internally developed software costs. The Company depreciated $1.3million, $0.0 million, and $0.3 million in capitalized internal-use software costs during the years ended December 31, 2018, 2017, and 2016.Business CombinationsThe Company recognizes all of the assets acquired, liabilities assumed and contractual contingencies at their fair value on the acquisition date. TheCompany uses its best estimates and assumptions as a part of the purchase accounting process to accurately value assets acquired and liabilities assumed atthe business combination date, however, its estimates and assumptions are inherently uncertain and subject to refinement. As a result, during themeasurement period, which may be up to one year from the business combination date, adjustments may be made to initial values. Acquisition-related costsare expensed as incurred. Restructuring costs incurred in periods subsequent to the acquisition date are expensed when incurred. Subsequent changes to thepurchase price (i.e. working capital adjustments) or other fair value adjustments determined during the measurement period are recorded as an adjustment togoodwill.Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed when a business is acquired.The valuation of intangible assets and goodwill involves the use of management's estimates and assumptions, and can have a significant impact on futureoperating results. The Company initially records its intangible assets at fair value. Intangible assets with finite lives are amortized over their estimated usefullives while goodwill is not amortized but is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to itscarrying value including goodwill recorded by the reporting unit.62Table of ContentsIn January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, Simplifying the Test forGoodwill Impairment, which eliminates the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of thegoodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fairvalue of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds thereporting unit’s fair value; however, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Earlyadoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company adopted the standard as of September30, 2018 and the adoption did not have an impact on the Consolidated Financial Statements.The Company has a single reporting unit. Accordingly, the impairment assessment for goodwill is performed at the enterprise level. Goodwill is reviewed forpossible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reportingunit below its carrying value. The Company initially assesses qualitative factors to determine if it is necessary to perform the goodwill impairment review.Goodwill is reviewed for impairment if, based on an assessment of the qualitative factors, it is determined that it is more likely than not that the fair value ofits reporting unit is less than its carrying value, or the Company decides to bypass the qualitative assessment. The carrying value of the reporting unit isreviewed utilizing a discounted cash flow model, and a market value approach is utilized to supplement the discounted cash flow model. The estimated fairvalue of a reporting unit is determined based on assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values.The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-termrevenue growth projections, profitability, discount rates, volatility in the Company's market capitalization, and general industry, market and macro-economicconditions. It is possible that future changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used inassessing the fair value of the reporting unit, would require the Company to record a non-cash impairment charge.The Company completed its analyses for each of the years ended December 31, 2018, 2017, and 2016 and determined that there was no impairment ofgoodwill.Intangible assets with finite lives are generally amortized using the straight-line method over the following useful lives: Useful Lives(Years)Acquired methodologies/technology2 to 7Strategic alliance10Acquired software3Customer relationships3 to 7Intellectual property2 to 13Panel1 to 7Trade Names2 to 6Other6 to 8Impairment of Long-Lived AssetsThe Company's long-lived assets consist of property and equipment and finite-lived intangible assets. The Company evaluates its long-lived assets forimpairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. If an indication of impairment ispresent, the Company compares the estimated undiscounted future cash flows to be generated by the asset group to its carrying amount. Recoverabilitymeasurement and estimation of undiscounted cash flows are grouped at the lowest level for which identifiable cash flows are largely independent of the cashflows of other assets and liabilities. If the undiscounted future cash flows are less than the carrying amount of the asset group, the Company records animpairment loss equal to the excess of the asset group's carrying amount over its fair value. The fair value is determined based on valuation techniques suchas a comparison to fair values of similar assets or using a discounted cash flow analysis. Although the Company believes that the carrying values of its long-lived assets are appropriately stated, changes in strategy or market conditions, significant technological developments or significant changes in legal orregulatory factors could significantly impact these judgments and require adjustments to recorded asset balances. There were no impairment chargesrecognized during the years ended December 31, 2018, 2017 or 2016.63Table of ContentsLeasesThe Company leases its facilities and meets the requirements to account for these leases as operating leases. For facility leases that contain rent escalations orrent concession provisions, the Company records its lease expense during the lease term on a straight-line basis over the term of the lease. The Companyrecords the difference between the rent paid and the straight-line rent as a deferred rent liability. Leasehold improvements funded by landlords or allowancesare recorded as leasehold improvement assets and a deferred rent liability which is amortized as a reduction of rent expense over the lesser of the term of thelease or life of the asset.The Company subleases four of its current locations. For subleases entered into by the Company, the Company records a lease exit liability, calculated as thepresent value of the remaining minimum lease payments due under the original lease and executory costs; reduced by the present value of the estimatedsublease income. The corresponding loss is recorded to rent expense included in general and administrative expenses or restructuring in the ConsolidatedStatements of Operations and Comprehensive Loss at the cease-use date.The Company leases computer equipment and automobiles that meet the requirements to account for these as capital leases. The Company records capitalleases as an asset and an obligation at an amount equal to the present value of the minimum lease payments as determined at the beginning of the lease term.Depreciation of capitalized leased assets is computed on a straight-line basis over the term of the lease and is included in depreciation expense.The Company has entered into certain software license arrangements. The Company records these software license arrangements as an intangible asset,acquired software, and an obligation to an amount equal to the present value of the minimum lease payments. These obligations are reflected in other currentliabilities in the Company's Consolidated Balance Sheets. Amortization of these intangible assets is computed on a straight-line basis over the term of thelease and is included in amortization of intangible assets in the Company's Consolidated Statements of Operations and Comprehensive Loss.Foreign CurrencyGenerally, the functional currency of the Company's foreign subsidiaries is the local currency. In those cases where the transaction is not denominated in thefunctional currency, the Company revalues the transaction to the functional currency and records the translation gain or loss in gain (loss) from foreigncurrency transactions in the Company's Statements of Operations and Comprehensive Loss. Assets and liabilities are translated at the current exchange rate asof the end of the year, and revenues and expenses are translated at average exchange rates in effect during the year. The gain or loss resulting from the processof translating a foreign subsidiaries functional currency financial statements into U.S. Dollars is reflected as foreign currency cumulative translationadjustment and reported as a component of accumulated other comprehensive loss. The translation adjustment for intercompany foreign currency loans thatare permanent in nature are also recorded as accumulated other comprehensive loss. Translation adjustments on intercompany accounts that are short term innature are recorded as gain (loss) from foreign currency transactions. For foreign entities where U.S. dollars is the functional currency, re-measurement ofgains and losses related to deferred tax assets and liabilities are reflected in income tax provision in the Company’s Statements of Operations andComprehensive Loss.Revenue RecognitionThe Company applies the provisions of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), and allrelated appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amountreflecting the consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach:(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate thetransaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.The Company’s contracts with customers may include multiple promised goods and services, consisting of the various services the Company offers.Contracts with multiple performance obligations typically consist of a mix of: subscriptions to the Company’s online database, customized data services, anddelivery of periodic custom reports based on information obtained from the database. In such cases, the Company identifies performance obligations byevaluating whether the promised goods and services are capable of being distinct and distinct within the context of the contract at contract inception.Promised goods and services that are not distinct at contract inception are combined as one performance obligation. Once the Company identifies theperformance obligations, the Company will determine the transaction price based on contractually fixed amounts and an estimate of variable consideration.The Company allocates the transaction price to each performance obligation based on relative standalone selling price ("SSP"). Judgment is exercised todetermine the SSP of each distinct performance obligation. The Company will constrain estimates of variable consideration based on its expectation ofrecovery from the customer. Some sources of variable consideration like refunds, penalties, or allowances will reduce transaction price. In some instances, theCompany may have non-cash consideration or elements of consideration payable to the customer, which will also be included in the transaction price. These64Table of Contentssources of variable consideration are relatively infrequent and not significant. The Company recognizes revenue when (or as) it satisfies a performanceobligation by transferring promised goods or services to a customer. Customers may obtain the control of promised goods or services over time or at a pointin time. The Company recognizes revenue net of sales taxes remitted to government authorities. In general, transaction price is determined by estimating thefixed amount of consideration to which the Company is entitled for transfer of goods and services and all relevant sources and components of variableconsideration. Variable consideration is estimated based on the most likely amount or expected value approach, depending on which method the Companyexpects to better predict the amount of consideration to which it will be entitled. Once the Company elects one of the methods to estimate variableconsideration for a particular type of performance obligation, the Company will apply that method consistently.Subscription-based revenues are typically recognized on a straight-line basis over the access period, which ranges from three to thirty-six months. Revenuefor validated Campaign Essentials ("vCE") is recognized over time, either on a time-elapsed basis, as the Company is providing services that the customer iscontinuously consuming and receiving benefit from, or on an output method, such as volume of impressions processed. Activation products vary in nature,and can be recognized over time, generally on an input method time-elapsed basis, as the Company provides continuous tracking of activity. Otheractivation products are delivered at a point in time, based on custom attributes agreed upon by customers and the Company. The Company believes thatrecognizing revenue evenly mirrors the even depiction of the transfer of control and benefit of goods and services to customers, particularly for subscription,vCE and activation products.The Company’s customized data services are delivered in the form of custom recurring reports or ad hoc reports. Custom report performance obligations, ingeneral, are transferred at a point in time once the product has been delivered to the customer.Revenues are also generated through survey services under contracts ranging in term from two months to one year. Survey revenue is recognized at a point intime, in general, once the final report has been delivered to the customer. Survey services consist of survey design with subsequent data collection, analysisand reporting.For performance obligations satisfied at a point in time, the Company evaluates a number of factors to determine whether control of goods and services hasbeen transferred. The Company considers whether there is a present right to payment and whether the customer has accepted the asset. In many instances theCompany has objective evidence of the acceptance criteria, while in other cases the acceptance provisions are substantive, and the customer mustaffirmatively signal acceptance. The preceding two factors are not the only factors that may be considered. Other considerations include, but are not limitedto, whether risks and rewards of ownership have been transferred for a particular product.For the majority of its products and services, the Company applies an adjusted market assessment approach for the determination of SSP for identifiedperformance obligations. In general, the Company bundles multiple products and very few are sold on a standalone basis. The Company uses rate cards andpricing calculators that are periodically reviewed and updated to reflect the latest sales data and observable inputs by industry, channel, geography, customersize, and other relevant groupings. Certain products are sold on a standalone basis in a narrow band of prices. If a product is sold outside of the narrow bandof prices, it will be assigned the midpoint of the narrow band for purposes of allocating transaction price on a relative SSP basis.Generally, customers have the right to cancel their contracts by providing a written notice of cancellation, although most subscription-based contracts arenon-cancelable. If a customer cancels its contract, the customer is generally not entitled to a refund for prior services. In the event a portion of a contract isrefundable, revenue recognition is delayed until the refund provision lapses. For multi-year contracts with annual price increases and no opt out clauses, thetotal consideration for each of the years included in the contract term will be summed up and recognized on a straight-line basis over the term of the contract.The Company may enter into multiple contracts with a single counterparty at or near the same time. The Company will combine contracts and account forthem as a single contract when one or more of the following criteria are met: (i) the contracts are negotiated as a package with a single commercial objective,(ii) consideration to be paid in one contract depends on the price or performance of the other contract, and (iii) goods or services promised are a singleperformance obligation.For transactions that involve third parties, the Company evaluates whether the Company is the principal, in which case the Company recognizes revenue on agross basis. If the Company is an agent, the Company recognizes revenue on a net basis. In certain countries, the Company may use third-party resellers tosell its products and services. In these transactions, the Company is generally the principal as the Company controls the products and services and isprimarily responsible for providing them to the end user. The Company also has certain revenue share arrangements that involve the use of partner data in itssales to end users or the use of its data in partner sales to end users. In these arrangements, the Company assesses which party controls the specified goods orservices before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, anddiscretion in establishing price. The Company enters into a limited number of monetary contracts with multichannel video programming distributors ("MVPDs") that involve both thepurchase and sale of services with a single counterparty. The Company assesses each contract to determine if the revenue and expense should be presentedgross or net. The Company recognizes revenue for these contracts to the extent that SSP is established for distinct services provided. Any excessconsideration above the established SSP of services is presented as an offset to cost of revenues in the Consolidated Statements of Operations andComprehensive Loss.65Table of ContentsNonmonetary transactions represent data exchanges, which may consist of digital usage and general demographic data. The data obtained throughnonmonetary transactions differs from the data provided by the Company in the exchange. Under ASC 606, the transaction price of a nonmonetary exchangethat has commercial substance is based on the fair value of the non-cash consideration received. If an entity cannot reasonably estimate the fair value of thenon-cash consideration received, then it uses the estimated selling price of the promised goods or services. None of the nonmonetary transactions entered intoby the Company met the requirements to recognize revenue or expense. Therefore, these nonmonetary transactions are not reflected in the ConsolidatedFinancial Statements.Nature of Products and ServicesIn the third quarter of 2018, the CODM determined that the Company should review its revenue results around solution groups that address customer needs.Accordingly, the Company changed its disaggregated revenue presentation from the previous four pillars to the following three solution groups:I.Ratings and PlanningRatings and Planning products and services provide measurement of the behavior and characteristics of audiences of content and advertising acrosstelevision ("TV") and digital platforms including computers, tablets, smartphones, and other connected devices. These products and services are designed tohelp customers find the most relevant viewing audience, whether that viewing is linear, time shifted/recorded, online or on-demand. These products andservices are primarily subscription-based, for which the accounting policy is described above. Certain contracts may contain custom solutions.II.Analytics and OptimizationAnalytics and Optimization products and services include activation and survey-based products. These products and services provide end-to-end solutionsfor planning, optimization and evaluation of advertising campaigns and brand protection. These products and services are primarily a part of customized dataservices, for which the accounting policy is described above.III.Movies Reporting and AnalyticsMovies Reporting and Analytics products and services measure movie viewership and box office results by capturing movie ticket sales in real time or nearreal time and include box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide. Movies Reporting andAnalytics products and services are generally subscription-based, for which the accounting policy is described above. The services provided undersubscription-based agreements consist of a single performance obligation, access to the Company's portal, and generally result in transfer of control over timeas services are rendered. Certain contracts may contain custom solutions.Disaggregation of RevenueIn the following table, revenue is disaggregated by solution group, geographical market and timing of transfer of products and services. The Company hasone reportable segment in accordance with ASC 280, Segment Reporting; as such, the disaggregation of revenue below reconciles directly to its uniquereportable segment. The change in disaggregated revenue presentation did not result in any changes in the Company's reportable segment.66Table of Contents(In thousands) Year EndedDecember 31, 2018By Solution group: Ratings and Planning $285,355Analytics and Optimization 92,380Movies Reporting and Analytics 41,747Total $419,482By Geographical markets: United States $359,379Europe 34,623Latin America 13,179Canada 7,882Other 4,419Total $419,482Timing of revenue recognition: Products and services transferred at a point in time $113,583Products and services transferred over time 305,899Total $419,482Contract BalancesThe following table provides information about receivables, contract assets, contract liabilities and customer advances from contracts with customers: As of As of(In thousands) December 31, 2018 January 1, 2018Accounts receivable, net $75,609 $81,914Current and non-current contract assets 2,438 612Current and non-current contract costs 1,402 500Current contract liability 64,189 85,938Current customer advances 6,688 13,948Non-current contract liability 508 1,975Accounts receivable are billed and unbilled amounts related to the Company's rights to consideration as performance obligations are satisfied when the rightsto payment become unconditional but for the passage of time.Contract assets (current) are included in prepaid expenses and other current assets, and contract assets (non-current) are included in other non-current assetswithin the Consolidated Balance Sheets. Contract assets represent the Company's right to consideration in exchange for goods and other services transferredto the customer prior to the either receipt of consideration or before payment is due.Contract payments are generally due in advance for subscription-based services or upon delivery of custom reports. If a contract exists under ASC 606,advance payments are recorded as a contract liability or as customer advances until services are delivered or obligations are met, and revenue is earned.Contract liabilities primarily relate to amounts billed in advance or advance consideration received from customers, for which transfer of control of the goodor service occurs at a later point in time. Customer advances relate to amounts billed in advance or advance considerations received from customers forcontracts with termination rights, for which transfer of control of the good or service occurs at a later point in time. Contract liabilities and customer advancesto be recognized in the succeeding twelve-month period are classified as current and the remaining amounts are classified as non-current liabilities in theCompany's Consolidated Balance Sheets.67Table of ContentsSignificant changes in the contract assets and the contract liability balances during the year ended December 31, 2018 are as follows:(In thousands) Contract liability(current)Revenue recognized that was included in the contract liability balance at thebeginning of period $(75,162)Cash received or amounts billed in advance and not recognized as revenue 60,040Transaction Price Allocated to the Remaining Performance ObligationsAs of December 31, 2018, approximately $280 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied(or partially unsatisfied) for non-cancelable contracts. The Company expects to recognize revenue on approximately 60% of these remaining performanceobligations through December 31, 2019, and approximately 30% through December 31, 2020, with the remaining balance recognized thereafter.The Company applies the optional exemptions and does not disclose: a) information about remaining performance obligations that have an originalexpected duration of one year or less and b) transaction price allocated to unsatisfied performance obligations for which variable consideration is allocatedentirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a singleperformance obligation in accordance with the series guidance. Variable consideration relates to usage-based revenue which is generally part of the Ratingsand Planning and Analytics and Optimization solution groups.Costs to Obtain or Fulfill a ContractApplying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortizationperiod of the assets is one year or less. These costs include commission programs to compensate employees for obtaining new contracts and are included inselling and marketing expenses.The Company has incurred incremental costs to obtain contracts that meet the criteria for capitalization and are not subject to the practical expedient as theamortization period is over one year. These costs are amortized based on the pattern of transfer of goods or services to which the assets relate. The typicalamortization period for capitalized costs to obtain a contract is twenty-four months, and such costs are included in selling and marketing expenses in theConsolidated Statements of Operations and Comprehensive Loss.Certain costs to fulfill are capitalized in relation to long-term contracts wherein the transfer of goods and services will occur at a point in time. These costsinclude dedicated employees, subcontractors, and other third-party costs. The Company will assess capitalized costs to fulfill at each reporting period forrecoverability. These costs are generally included in costs of revenues and are recognized in the same manner as the corresponding performance obligation(s).As of December 31, 2018, the Company had $1.4 million in capitalized contract costs. For the year ended December 31, 2018, $2.3 million in contract costshave been amortized or expensed.Changes in Accounting PoliciesExcept for the changes below, the Company has consistently applied accounting policies to all periods presented in the Consolidated Financial Statements.The Company adopted ASC 606 with a date of initial application of January 1, 2018, using the modified retrospective transition method, and hence appliedTopic 606 to contracts with customers that were not completed as of the date of initial application. Comparative information has not been adjusted andcontinues to be reported under ASC 605, Revenue Recognition ("ASC 605"). Details of the significant changes and quantitative impact of the changes are setout below:•As of the date of initial application of January 1, 2018, and under the commission plan in place until then, costs to obtain a contract (generallycommissions) qualified for the practical expedient allowing such costs to be expensed as incurred, consistent with ASC 605. Therefore, there was nochange in accounting as of the date of initial application. Effective January 1, 2018, the Company implemented a new commission plan wherebysome costs to obtain a contract continue to qualify for the practical expedient, however certain commissions costs meet the criteria for capitalizationas the amortization period is over one year.•Certain fulfillment costs meet the criteria for capitalization as they relate directly to a contract, generate or enhance a resource being used insatisfying the Company's performance obligation, and are expected to be recovered. 68Table of ContentsThe adoption of the standard related to revenue recognition impacted the Company's previously reported results as follows:(In thousands) As previously reportedas of December 31,2017 New revenue standardadjustments As adjusted as ofJanuary 1, 2018 Accounts receivable, net $82,029 $(115) $81,914Current and non-current contract assets — 612 612Current and non-current contract costs — 500 500Current contract liability 98,367 (12,429) 85,938Current customer advances — 13,948 13,948Other current liabilities 2,998 292 3,290Non-current contract liability 2,053 (78) 1,975Stockholders' equity 656,492 (736) 655,756The following tables summarize the impact of adopting ASC 606 on the Company’s Consolidated Financial Statements as of and for the period endedDecember 31, 2018 (amounts in thousands, except share and per share data):I.Impact on Consolidated Balance SheetsImpact of changes in accounting policiesAs of December 31, 2018 As reported Adjustments Balance withoutadoption of Topic 606Accounts receivable, net $75,609 $1,873 $77,482Current and non-current contract assets 2,438 (2,438) —Current and non-current contract costs 1,402 (1,402) —Total assets $954,143 $(1,967) $952,176 Current contract liability $64,189 $6,393 $70,582Current customer advances 6,688 (6,688) —Other current liabilities 2,278 (462) 1,816Other non-current liabilities 13,185 (14) 13,171Accumulated deficit (769,095) (1,196) (770,291)Total liabilities and stockholders' equity $954,143 $(1,967) $952,17669Table of ContentsII.Impact on Consolidated Statements of Operations and Comprehensive LossImpact of changes in accounting policiesFor the Year Ended December 31, 2018 As reported Adjustments Balance withoutadoption of Topic 606Revenues $419,482 $(1,030) $418,452Cost of revenues 200,220 730 200,950Selling and marketing 108,395 172 108,567Income tax provision (3,706) — (3,706)Net loss $(159,268) $(1,932) $(161,200)Net loss per common share: Basic and diluted $(2.76) $(2.79)Weighted-average number of shares used in per share calculation - Common Stock: Basic and diluted 57,700,603 57,700,603III.Impact on Consolidated Statements of Cash FlowsImpact of changes in accounting policiesFor the Year Ended December 31, 2018 As reported Adjustments Balance withoutadoption of Topic 606Operating activities Net loss $(159,268) $(1,932) $(161,200)Adjustments to reconcile net loss to net cash used in operating activities 109,845 1,932 111,777Net cash used in operating activities $(72,575) $— $(72,575)Investing activities $(13,814) $— $(13,814)Financing activities $93,119 $— $93,119Effect of exchange rate changes on cash, cash equivalents, and restricted cash (1,657) — (1,657)Net increase in cash, cash equivalents and restricted cash $5,073 $— $5,073Cash, cash equivalents and restricted cash at beginning of period 45,125 — 45,125Cash, cash equivalents and restricted cash at end of period $50,198 $— $50,198Cash and cash equivalents 44,096 — 44,096Restricted cash 6,102 — 6,102Total cash, cash equivalents and restricted cash $50,198 $— $50,198Cost of RevenuesCost of revenues consists primarily of expenses related to consumer panels, which are used to collect data on PC, tablet, smartphone and other digital devicesas well as network and survey operations, custom analytics and technical support departments, which consists largely of employee related expenses includingsalaries, stock-based compensation and benefits. Other costs include third-party data collection costs and data center costs, including depreciation expenseassociated with computer equipment that supports the panels and systems. In addition, we allocate a portion of overhead costs including rent anddepreciation expense generated by general purpose equipment and software.Selling and MarketingSelling and marketing expenses consist primarily of salaries, stock-based compensation, benefits, commissions and bonuses paid to the direct sales force andindustry analysts, as well as costs related to online and offline advertising, product management, seminars, promotional materials, public relations, other salesand marketing programs, and allocated overhead, including rent and other facilities related costs, and depreciation.70Table of ContentsResearch and DevelopmentResearch and development expenses consist primarily of salaries, stock-based compensation, benefits and related costs for personnel associated with researchand development activities and allocated overhead, including rent and other facilities related costs, and depreciation.General and AdministrativeGeneral and administrative expenses consist primarily of salaries, stock-based compensation, benefits and related costs for executive management, finance,accounting, human capital, legal, information technology and other administrative functions, as well as professional fees, and allocated overhead, includingrent and other facilities related costs, depreciation and expenses incurred for other general corporate purposes.Investigation and Audit RelatedInvestigation expenses are professional fees associated with legal and forensic accounting services rendered as a result of the Audit Committee's investigationthat began in the first quarter of 2016. Audit related expenses consist of professional fees associated with accounting related consulting services and externalauditor fees associated with the audit of the Company's financial statements. Also included are litigation related expenses, which include legal feesassociated with various lawsuits or investigations that were initiated either directly or indirectly as a result of the Audit Committee's investigation.Advertising CostsAdvertising costs include expenses associated with direct marketing but does not include the cost of attendance at events or trade shows. Advertising costs,all of which are expensed as incurred, included in selling and marketing expense, were $0.1 million, $0.1 million, and $0.2 million for the years endedDecember 31, 2018, 2017, and 2016, respectively.Other (Expense) Income, NetThe following is a summary of other (expense) income, net: Years Ended December 31,(In thousands)2018 2017 2016Transition services agreement income from the Digital Analytix ("DAx")disposition$9,029 $11,080 $12,395Change in fair value of financing derivatives(14,226) — —Gain on forgiveness of obligation— 4,000 —Other3,733 125 (24)Total other (expense) income, net$(1,464) $15,205 $12,371Concentration of Credit RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash andaccounts receivable. The Company maintains cash deposits with financial institutions that, from time to time, exceed applicable insurance limits. TheCompany reduces this risk by maintaining such deposits with high quality financial institutions that management believes are creditworthy. With respect toaccounts receivable, credit risk is mitigated by the Company's ongoing credit evaluation of its customers' financial condition.Debt Issuance CostsThe Company reflects debt issuance costs in the Consolidated Balance Sheets as a direct deduction from the gross amount of debt, consistent with thepresentation of a debt discount. Debt issuance costs are amortized to interest expense, net over the term of the underlying debt instrument, utilizing theeffective interest method for the Notes.Derivative Financial InstrumentsThe Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of theseinstruments are recorded in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Loss.71Table of ContentsStock-Based CompensationThe Company estimates the fair value of stock-based awards on the date of grant. The fair value of stock options with only service conditions is determinedusing the Black-Scholes option pricing model. The fair value of restricted stock units and restricted stock awards is based on the closing price of theCompany's Common Stock on the date of grant. The Company amortizes the fair value of awards expected to vest on a straight-line basis over the requisiteservice periods of the awards, which is generally the period from the grant date to the end of the vesting period. The determination of the fair value of theCompany's stock option awards is based on a variety of factors, including, but not limited to, the Company's Common Stock price, risk-free rate, expectedstock price volatility over the expected life of awards, dividend yield and actual and projected exercise behavior. Additionally, the Company has estimatedforfeitures for stock-based awards at the dates of grant based on historical experience and adjusted for future expectation. The Company performs a review ofthe forfeiture rate assumption at least annually or as deemed necessary if there are changes that could potentially significantly impact the future rate offorfeiture of its stock-based awards. The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates.The Company issues restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting), achieving performancetargets, fulfillment of market conditions or some combination. For those restricted stock unit awards with only service vesting, the Company recognizescompensation cost on a straight-line basis over the service period. For awards with performance conditions only, or both performance and service conditions,the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. Stockawards that contain performance vesting conditions are excluded from diluted earnings per share computations until the contingency is met as of the end ofthat reporting period.For awards with both market and service conditions, the Company starts recognizing compensation cost over the remaining service period, with the effect ofthe market condition reflected in the calculation of the award's fair value at grant date. The Company values awards with market and service conditions usingcertain valuation techniques, such as the binomial lattice model. The Company determines the requisite service period based on the longer of the explicitservice period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflectingthe number of shares that would be issued based on the current market price at the end of the period being reported on, if their effect is dilutive. If thecondition is based on an average of market prices over some period of time, the corresponding average for the period is used.Under the Company's annual incentive compensation plan, the Company may grant immediately vesting restricted stock to certain employees. Under thisplan, stock-based compensation expense is recognized over the requisite service period, which generally precedes the grant date. The Company accruesstock-based compensation expense for these liability classified awards until the date of grant.The Company's stockholders approved the 2018 Equity and Incentive Compensation Plan (the "2018 Plan") at the Company's 2018 Annual Meeting ofStockholders (the "2018 Annual Meeting"), held on May 30, 2018. Refer to Footnote 12, Stockholders' Equity, for additional information.Income TaxesIncome taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certainincome, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the differencebetween the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enactedstatutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. Excess tax benefits and taxdeficiencies are recognized in the income tax provision in the period in which they occur.The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is more-likely-than-not that someportion or all of its deferred tax assets will not be realized. The Company determines the realizability of its deferred tax assets primarily based on the reversalof existing taxable temporary differences and projections of future taxable income (exclusive of reversing temporary differences and carryforwards). Inevaluating such projections, the Company considers its history of profitability, the competitive environment, and general economic conditions. In addition,the Company considers the time frame over which it would take to utilize the deferred tax assets prior to their expiration.For certain tax positions, the Company uses a more-likely-than-not threshold based on the technical merits of the tax position taken. Tax positions that meetthe more-likely-than-not recognition threshold are measured at the largest amount of tax benefits determined on a cumulative probability basis, which aremore-likely-than-not to be realized upon ultimate settlement in the financial statements. The Company's policy is to recognize interest and penalties relatedto income tax matters in income tax expense.On December 22, 2017, U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. As of December 31, 2018, theCompany's accounting for the TCJA has been completed. The Company has determined the effects of certain provisions, including but not limited to: areduction in the corporate tax rate from 35% to 21%, a limitation of the deductibility72Table of Contentsof certain officers' compensation, a limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income, a limitation ofnet operating losses generated after 2018 to 80% of taxable income, an incremental tax (base erosion anti-abuse or “BEAT”) on excessive amounts paid toforeign related parties, and a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (global intangible low-taxed income or “GILTI”). As part of its GILTI review, the Company has determined that it will account for GILTI income as it is generated (i.e., treat it as aperiod expense). Given the Company’s loss position in the U.S. and the valuation allowance recorded against its U.S. net deferred tax assets, the Companydoes not believe these provisions will have a material impact on its financial statements.In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118 (SEC Update). The update was issued to provide guidance on the income tax accounting implications of the TCJA. This includes the filing of financialstatements with provisional amounts if companies are unable to finalize accounting provisions due to the changes enacted by the TCJA. In addition,subsequent changes to provisional amounts and disclosures are addressed in the ASU. The Company adopted the guidance. Refer to Footnote 11, IncomeTaxes, for additional information.Loss Per ShareBasic net loss per common share excludes dilution for potential Common Stock issuances and is computed by dividing net loss by the weighted-averagenumber of shares of Common Stock outstanding for the period. 250,000 shares of Common Stock issuable upon the exercise of warrants ("penny warrants")are included in the number of outstanding shares used for the computation of basic loss per share. In periods where the Company reports a net loss, the effectof anti-dilutive stock options, stock appreciation rights, restricted stock units and senior secured convertible notes are excluded and diluted loss per share isequal to basic loss per share.The following is a summary of the Common Stock equivalents for the securities outstanding during the respective periods that have been excluded from thecomputation of diluted net loss per common share, as their effect would be anti-dilutive: Year Ended December 31, 2018 2017 2016Stock options, stock appreciation rights, restricted stock units andsenior secured convertible notes8,392,748 2,837,872 3,083,668Comprehensive LossComprehensive loss consists of net loss, foreign currency translation adjustments and the unrealized gains on investments in marketable securities.Accounting Standards Recently AdoptedIn January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10), that substantially revises the recognition, measurementand presentation of financial assets and financial liabilities. The new guidance, among other things (i) requires equity investments (except those accountedfor under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair valuerecognized in net loss, with some exceptions, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values byrequiring a qualitative assessment to identify impairment, (iii) requires public business entities to use the exit price notion when measuring the fair value offinancial instruments for disclosure purposes, (iv) requires separate presentation of financial assets and financial liabilities by measurement category and formof financial asset on the balance sheet or the accompanying notes to the financial statements, and (v) clarifies that an entity should evaluate the need for avaluation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Companyadopted the standard effective January 1, 2018. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to FinancialInstruments-Overall (Subtopic 825-10), which clarifies certain aspects of the guidance issued in ASU 2016-01. The technical corrections and improvementsdid not have an effect on the Company's adoption of the guidance.Prior to adoption of ASU 2016-01, the Company had one cost-method investment in preferred stock of an entity. The $4.7 million value of the cost-methodinvestment was included in other non-current assets in the Consolidated Balance Sheets as of December 31, 2017. Upon adoption, the Company did not havea cumulative adjustment related to the fair value of the investment. During the year ended December 31, 2018, the entity completed an initial public offeringand the preferred stock was converted to common stock. As of December 31, 2018, the $6.1 million fair value of the investment is included in other non-current assets in the Consolidated Balance Sheets. Gains or losses related to the change in the fair value of the security are recorded in other (expense)income, net within the Consolidated Statements of Operations and Comprehensive Loss.73Table of ContentsIn August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments. Theobjective of ASU 2016-15 is to reduce the diversity in practice related to the classification of certain cash receipts and cash payments in the statement of cashflows, by adding or clarifying guidance on eight specific cash flow issues. The Company adopted ASU 2016-15 effective January 1, 2018. The adoption ofthe guidance did not have an impact on the Consolidated Statements of Cash Flows.In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-basedpayment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would berequired to apply modification accounting under ASC 718, Compensation - Stock Compensation. For all entities, ASU 2017-09 is effective for annualreporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The adoption of the guidance did nothave an impact on the Consolidated Financial Statements.Recently Issued Accounting PronouncementsIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 supersedes the lease requirements in ASC Topic 840. ASU 2016-02requires, among other things, a lessee to recognize a right-of-use asset representing an entity's right to use the underlying asset for the lease term and aliability for lease payments on its balance sheet, regardless of classification of a lease as operating or financing. ASU 2016-02 also requires expandeddisclosure regarding the amounts, timing and uncertainties of cash flows related to a company's lease portfolio. Further, in July 2018, the FASB issued ASU2018-11, Leases (Topic 842): Targeted Improvements, which, among other things, allows companies to elect an optional transition method to apply the newlease standard through a cumulative-effect adjustment in the period of adoption.The Company will adopt the new standard as of January 1, 2019 using the modified retrospective approach with optional transition method and will notrestate comparative periods. The Company is electing the package of practical expedients, which, among other things, allows the Company to carry forwardits prior lease classifications under Topic 840. This includes the assessment of whether contracts contain or are leases, classification of leases and remaininglease terms. The Company is electing not to recognize, on the balance sheet, leases that have an expected lease term of 12 months or less. Based on theCompany's portfolio of leases as of December 31, 2018, the Company estimates approximately $60 million of lease assets and liabilities will be recorded onthe balance sheet upon adoption, primarily related to real estate leases. The Company is evaluating the new disclosure requirements and incorporating thecollection of relevant data into its processes in preparation for disclosure in 2019.In July 2017, the FASB issued ASU 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity; Derivatives and Hedging. This update was issuedto address complexities in accounting for certain equity-linked financial instruments containing down round features. The amendments in ASU 2017-11change the classification analysis of these financial instruments (or embedded features) so that equity classification is no longer precluded. The amendmentsin ASU 2017-11 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annualreporting periods. Early adoption is permitted. The Company is evaluating the impact to its Consolidated Financial Statements.In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based PaymentAccounting. This update was issued to allow companies to account for share-based payment transactions with non-employees in the same way as share-basedpayment transactions with employees with the main differences being the accounting for attribution and a contractual term election for valuing non-employee equity share options. The amendments in ASU 2018-07 are effective for annual reporting periods beginning after December 15, 2018, includinginterim reporting periods within those annual reporting periods. Per ASU 2018-07, this update should be applied on a modified retrospective basis via acumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Early adoption is permitted only if the Company hasadopted ASC 606, Revenue from Contracts with Customers. The Company is evaluating the impact to its Consolidated Financial Statements.In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which removes and modifies certain disclosure requirements underTopic 820. The amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. An entity ispermitted to early adopt any removed or modified disclosures upon issuance of the update and to delay adoption of the additional disclosures until theireffective date. The Company is evaluating the impact to its Consolidated Financial Statements.In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting forImplementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This update was issued to align the requirements forcapitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costsincurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in ASU 2018-15 are effective for annual periods beginning after December 15, 2019, including interim reporting periods within those annual periods. Early adoption is74Table of Contentspermitted. The Company early adopted this standard, effective January 1, 2019, on a prospective basis. The adoption did not have an impact on theConsolidated Financial Statements.3.Business Combinations and AcquisitionsRentrak MergerOn January 29, 2016, the Company completed a merger (the "Merger") with Rentrak for total consideration of $753.4 million. Pursuant to the Agreement andPlan of Merger and Reorganization, dated as of September 29, 2015, Rum Acquisition Corporation, an Oregon corporation and a wholly-owned subsidiary ofthe Company, merged with and into Rentrak with Rentrak surviving the Merger as a wholly-owned subsidiary of the Company. The key economic driversunderlying the Merger include Rentrak’s complementary proprietary technology and services in the television market, the ability to combine the Company’sdigital information with Rentrak’s television information to provide cross-media products and services, as well as the opportunities to cross-sell to eachother’s customer base.As a result of the Merger, each share of Rentrak common stock, par value $0.001 per share, that was outstanding prior to the effective time of the Merger (the"Effective Time") was converted into the right to receive 1.15 shares of Common Stock, par value $0.001 per share. No fractional shares of Common Stockwere issued in the Merger, and holders of shares of Rentrak common stock received cash in lieu of any fractional shares. At the Effective Time, the Companyassumed all restricted stock units ("RSUs") representing the right to receive shares of Rentrak common stock (each an "Assumed Unit") that were outstandingimmediately prior to the Effective Time. Each Assumed Unit was converted into 1.15 RSUs of the Company, each such RSU representing the right to receiveone share of Common Stock. Each Assumed Unit is otherwise subject to the same terms and conditions (including as to vesting and issuance) as wereapplicable under the respective Rentrak RSU immediately prior to the Effective Time.A portion of the outstanding Rentrak equity awards vested simultaneously with the closing of the Merger based upon certain change-in-control provisionsthat had been recently added to the applicable award terms, and as a result, the Company recorded stock-based compensation expense of $21.9 millionimmediately following the Merger. Also, at the Effective Time, the Company assumed outstanding options and outstanding stock appreciation rights ("SAR")to purchase shares of Rentrak common stock, including options/SARs held by the Rentrak directors and executive officers. These options/SARs wereautomatically converted into 1.15 options/SARs to purchase the number of shares of Common Stock of the Company, with such product rounded down to thenearest whole share of Common Stock. The as-converted exercise price per share for each assumed Rentrak option/SAR is equal to the exercise/base price pershare of the Rentrak option/SAR divided by 1.15, with such quotient rounded up to the nearest whole cent.Each assumed Rentrak option/SAR is otherwise subject to the same terms and conditions (including vesting and exercisability) as were applicable under therespective Rentrak option/SAR immediately prior to the Effective Time.The total consideration paid by the Company related to the Merger was $753.4 million. A summary of the consideration is as follows:(in thousands except for share and per share amounts):Total ConsiderationTotal Common Stock shares issued upon consummation of the Merger17,963,677Share price of Common Stock upon consummation of the Merger$39.65Fair value of Common Stock shares issued upon consummation of the Merger$712,260Fair value of vested Rentrak RSUs, stock options and SAR assumed39,111Fair value of unvested Rentrak stock options assumed1,077Fair value of unvested Rentrak RSUs assumed962Cash paid in lieu of fractional shares8Total purchase consideration$753,418The Company identified and evaluated the fair values of the assets being acquired and liabilities assumed, relying in part on the work of an independentvaluation firm engaged by the Company to provide input as to the fair value of the assets acquired and liabilities assumed, including the valuationmethodology most relevant to the transactions described herein, and to assist in the related calculations, analysis and allocations. The fair value of thedefinite-lived intangible assets acquired was determined based upon a forecast of the economic benefits of the Merger using discount rates appropriate to thespecific assets acquired and liabilities assumed, ranging from 4.1% - 8.0%.75Table of ContentsA summary of the total purchase consideration for Rentrak to the estimated relative fair value of the assets and liabilities as of the date of acquisition is asfollows:(In thousands)Fair ValueCash and cash equivalents$37,086Marketable securities30,431Accounts receivable21,931Other current assets3,135Property and equipment9,190Goodwill510,229Definite-lived intangible assets170,283Other assets5,355Subscription Receivable14,475Deferred revenue(7,780)Accounts payable and accrued expenses(32,640)Deferred tax liabilities(7,247)Other liabilities(1,030)Total purchase consideration$753,418The goodwill and intangible assets recorded as a result of this acquisition are not deductible for income tax purposes. The goodwill represents the residualamount of the total purchase price after determining the fair value for the net assets and identifiable intangible assets acquired. The goodwill includes thevalue of the Rentrak workforce, the expected cost synergies to be realized by the Company following the Merger as well the opportunity to combine theCompany’s digital information with Rentrak’s television information to provide cross-media products and services and the opportunities to sell Rentrakproducts to the Company's customer base.Included in the assets acquired were two contracts with wholly owned subsidiaries of WPP plc (together with its affiliates, "WPP"), reflected in the openingbalance sheet as Subscription Receivable at the net present value of $4.2 million and $10.3 million, respectively, and following the consummation of theMerger were classified as contra equity within additional paid-in capital on the Company's Consolidated Statements of Stockholders' Equity. As cash isreceived on the Subscription Receivable, the Subscription Receivable is reduced by the amount of cash received and results in an increase to additional paid-in capital.The following table outlines the fair value of the definite-lived intangible assets and the useful life for each type of intangible asset acquired. The intangibleassets are amortized using a straight-line method over the respective useful life of the intangible asset.(In thousands)Fair ValueUseful Lives (Years)Customer relationships$29,0007Acquired methodologies/technology139,8837Other1,4006 - 8 $170,283 The Company determined the fair value of Rentrak's customer relationships using a "costs to recreate" and "lost-profits" methodology of the cost approachand includes customers from both television and movie industries. The Company determined the fair value of the acquired methodologies/technology usinga forecast of after-tax cash flows attributable to the methodologies and technology. These developed platforms include a proprietary analytics platform,which processes and repackages television viewership data, and an additional platform that has the ability to capture and report expected and actual boxoffice results based on hundreds of millions of movie-going transactions per year. Key assumptions made in these forecasts include a sustained marketadvantage over the Company's competitors, continuation of customer acquisitions, and price increases as customers receive greater utility from theCompany's products and services.The Company incurred professional fees directly attributable to the Merger, primarily consisting of legal and investment banker fees totaling $8.5 million for2016. These fees are reflected in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.The financial results of Rentrak were included in the Company's Consolidated Financial Statements from the date of acquisition, January 29, 2016. For theyear ended December 31, 2016, Rentrak contributed revenues of $110.4 million and a loss before income tax provision of $53.1 million. This loss includes$21.9 million in stock-based compensation recognized immediately following the consummation of the Merger.76Table of ContentsThe unaudited pro forma summary presented in the table below displays consolidated information of the Company as if the Merger had occurred onJanuary 1, 2015 for all periods presented. The pro forma financial information is presented for informational purposes only and does not necessarily reflectthe results that would have occurred had the Merger taken place on January 1, 2015, nor is it necessarily indicative of future results. No effect has been givento cost reductions or operating synergies relating to the integration of Rentrak into the Company's operations. In addition, there is no tax adjustmentnecessary for the pro forma adjustments as a result of the Company's tax valuation allowance position. For the year ended December 31, 2016, the results ofRentrak operations for the period subsequent to the Merger are included in the "As reported" column for the period January 29, 2016 through December 31,2016. Year Ended December 31, 2016(Amounts in thousands, except share and per share amounts)As reported Pro formaadjustment Pro formaRevenues$399,460 $8,116(1)$407,576Operating expenses531,302 (18,872)(2)512,430Net (loss) income(117,173) 26,988 (90,185) Basic and diluted net loss per common share$(2.10) $(1.58)Weighted-average number of shares used in per share calculation -Common Stock: Basic and diluted55,728,090 1,450,301(3)57,178,391(1) The Rentrak pro forma adjustment for revenue for the year ended December 31, 2016 relates to the unaudited results of Rentrak for the period January 1,2016 through January 28, 2016.(2) The Rentrak pro forma adjustments for operating expenses for the year ended December 31, 2016 consist of the following (in thousands):Add:Unaudited results for the period January 1, 2016 through January 28, 2016, excluding expenses incurreddirectly attributable to the Merger$9,472Amortization of acquired Rentrak intangibles for the period January 1, 2016 through January 28, 20162,028Less: One-time stock-based compensation expense associated with accelerated equity awards upon consummationof the Merger(21,866)Transaction fees (8,506)$(18,872)(3) The Comscore pro forma adjustment to the weighted-average number of shares used in the basic and diluted per share calculations is to show the effect ofthe Common Stock issued upon consummation of the Merger as if the Merger occurred on January 1, 2015 instead of January 29, 2016.77Table of Contents Year Ended December 31, 2015(Amounts in thousands, except share and per share amounts)As reported Pro formaadjustment Pro formaRevenues$270,803 $108,854(4)$379,657Operating expenses345,898 178,222(5)524,120Net loss(78,222) (69,368) (147,590) Basic and diluted net loss per common share$(2.07) $(2.63)Weighted-average number of shares used in per share calculation -Common Stock: Basic and diluted37,879,091 18,303,796(6)56,182,887(4) The Rentrak pro forma adjustment for revenue for the year ended December 31, 2015 relates to the unaudited results of Rentrak for the year endedDecember 31, 2015, excluding the revenue and operating expenses associated with Rentrak's discontinued operations.(5) The Rentrak pro forma adjustments for operating expenses the year ended December 31, 2015 consist of the following (in thousands):Unaudited results for the year ended December 31, 2015 $124,926Additional amortization of acquired Rentrak intangibles for the year ended December 31, 2015 22,924One-time stock-based compensation expense associated with accelerated equity awards upon consummation ofthe Merger 21,866Transaction fees 8,506 $178,222(6) The Comscore pro forma adjustment to the weighted-average number of shares used in the basic and diluted per share calculations is attributable to theunaudited weighted-average shares of Rentrak common stock for the year ended December 31, 2015, adjusted based on the conversion ratio of 1.15 appliedto each Rentrak share which converted into Common Stock as stipulated upon consummation of the Merger.Acquisition of CompeteOn April 28, 2016, the Company closed an asset purchase agreement to acquire certain assets of Compete, Inc. ("Compete"), a wholly-owned subsidiary ofWPP, a related party to the Company at the time of the acquisition. The Compete assets were acquired for $27.3 million in cash, net of a working capitaladjustment of $1.4 million. The Company acquired the Compete assets to expand its presence in certain verticals, such as the auto industry and financialservices, with improved solution offerings regarding digital performance, including robust path to purchase, advertising impact analysis and shoppingconfiguration analysis. The Company entered into an agreement for Compete to provide transition services, including engineering, financial, humanresources, business contract support, marketing and training services to the Company through December 31, 2016. The Company determined that theacquired assets from Compete were not significant under applicable accounting requirements and therefore has not included pro forma adjustments pursuantto ASC 805.The Company identified and evaluated the fair values of the assets being acquired and liabilities assumed, relying in part on the work of an independentvaluation firm engaged by the Company to provide input as to the fair value of the assets acquired and liabilities assumed, including the valuationmethodology most relevant to the transactions described herein, and to assist in the related calculations, analysis and allocations.Total purchase consideration for the Compete assets to the relative estimated fair value of the assets and liabilities as of the date of acquisition is as follows:(In thousands)Fair ValueAccounts receivable and other$2,162Definite-lived intangible assets6,400Goodwill21,466Deferred revenue(2,700)Total purchase price$27,32878Table of ContentsThe acquisition of the Compete assets resulted in goodwill of $21.5 million, the majority of which is deductible for tax purposes. This represents the residualamount of the total purchase price after determining the fair value for the net assets and identifiable intangible assets acquired. The goodwill representsexpected cost synergies to be realized by the Company following the purchase and the transfer of Compete’s sales and service staff and the migration ofcustomers from the Compete panel and technology platform.The following table outlines the fair value of the definite-lived intangible assets and the useful life for each type of intangible asset acquired. The intangibleassets are amortized using a straight-line method over the respective useful life of the asset.(In thousands)Fair Value Useful Lives (Years)Customer relationships$5,000 5Acquired methodologies/technology1,400 2 $6,400 The fair value of definite-lived intangible assets above was determined utilizing a discounted cash flow method of the Company’s estimated future revenuesof the acquired business. The discounted cash flow model utilized a discount rate of 19.0%.During 2016, the Company recognized revenue of approximately $10.9 million attributable to the Compete assets acquisition and incurred $11.8 million inexpenses associated with the transition services agreement with Compete. As of December 31, 2016, the Company was owed $3.7 million from Competeassociated with billing and collections that were to be remitted to the Company from the acquired customer contracts. The amounts due from Compete areincluded in total related party accounts receivable on the Consolidated Balance Sheets. The amounts due were received during the year ended December 31,2017. The Company incurred professional fees directly attributable to the acquisition, primarily consisting of legal and investment banker fees totaling $0.4million for 2016. These fees are reflected in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.4.Asset DispositionsDisposition of Digital Analytix and Adobe Strategic Partnership AgreementOn November 5, 2015, the Company executed a definitive agreement to sell and exclusively license certain assets, rights and properties primarily related tothe business operations of the Company’s DAx solution, including certain exclusively DAx-related agreements with customers and certain intellectualproperty (the “Disposed Assets”) to Adobe. On January 21, 2016, the sale was completed and in consideration for the Disposed Assets, Adobe paid $45.0million in cash to the Company and provided the Company a license agreement (the "Holdback License") valued at $2.0 million. The Holdback Licenseallowed the Company to service, for one-year, certain non-DAx customers using the proprietary technology sold to Adobe as the Company developed analternative platform.On February 10, 2016, the Company and Adobe signed an agreement referred to as a Strategic Partnership Agreement ("SPA"). The Company has determinedthat the SPA represents a contemporaneous agreement with the DAx disposition through which no value would be obtained by the Company. As a result, theCompany has accounted for this agreement as part of the sale of the DAx business rather than as a separate executory contract. As part of the SPA, theCompany agreed to pay Adobe $8.0 million, in three installments. The initial payment of $4.0 million was made upon execution of the SPA and theremaining two payments were to be due on the first and second anniversary dates of the SPA. The SPA was recorded as a liability at the closing of the SPAand reduced the gain on the DAx disposition.The Company agreed to continue to employ certain personnel needed to operate the Disposed Assets and to provide support to Adobe pursuant to atransition services agreement ("TSA") for a three-year term. The Company’s expenses related to the TSA are recorded as general and administrative expensesas incurred and Adobe's payment of these costs is reflected in other (expense) income, net in the same period as the expenses are incurred. Pursuant to theTSA, the Company recognized in other (expense) income, net $9.0 million, $11.1 million and $12.4 million for the years ended December 31, 2018, 2017and 2016, respectively.In September 2017, the Company and Adobe agreed to terminate the SPA and Adobe released the Company from its remaining $4.0 million obligation. TheCompany agreed to pay $2.0 million to Adobe to extend the term of the Holdback License through December 31, 2017. For the year ended December 31,2017, the relief from the obligations is reflected in other (expense) income, net.79Table of ContentsThe following table summarizes the gain on disposition for the year ended December 31, 2016:(In thousands)Allocated ValueConsideration received: Cash received$45,000Holdback License2,000Consideration received$47,000 Carrying value of net assets disposed: Relief from customer obligations$(10,232)Accounts receivable, net7,698Intangible assets, net3,415Goodwill2,642Net assets disposed3,523 SPA installment payments(8,000)Transaction fees(2,020)Gain on disposition$33,4575.Long-term DebtIssuance and Sale of Initial NotesOn January 16, 2018, the Company entered into certain agreements with Starboard, pursuant to which, among other things, the Company issued and sold toStarboard $150.0 million of senior secured convertible notes (the "Initial Notes") in exchange for $85.0 million in cash and 2,600,000 shares of CommonStock valued at $65.0 million. Based upon the fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16, 2018, which was$24.45 per share, the difference of $1.4 million was recorded as an issuance discount to the Initial Notes. The Company also granted to Starboard an option(the "Notes Option") to acquire up to an additional $50.0 million in senior secured convertible notes (the "Option Notes"), and together with the Initial Notes,the "Notes") and agreed to grant Starboard warrants to purchase 250,000 shares of Common Stock.The conversion price for the Notes (the "Conversion Price") is equal to a 30% premium to the volume weighted average trading prices of the Common Stockon each trading day during the 10 consecutive trading days commencing on January 16, 2018, subject to a Conversion Price floor of $28.00 per share. Inaccordance with the foregoing, the Conversion Price was set at $31.29 per share.The Notes mature on January 16, 2022. Based upon the determination of the Conversion Price, interest on the Notes accrued at 6.0% per year throughJanuary 30, 2019. On January 30, 2019, the interest rate reset to 12.0% through January 30, 2020. On each of January 30, 2020 and February 1, 2021, theinterest rate on the Notes will reset, and interest will thereafter accrue at a minimum of 4.0% per year and a maximum of 12.0% per year, based upon the then-applicable conversion premium in accordance with the terms of the Notes. The interest rate reset feature of the Initial Notes was determined by managementto be a derivative instrument that qualifies for liability treatment. The derivative instrument is initially measured at fair value and classified as a liability onthe balance sheet, with subsequent changes in fair value being recorded in earnings. To determine the fair value of the interest rate reset feature, managementutilized a "with-and-without" convertible bond model, modified to incorporate the interest rate reset feature, using the following key assumptions:•Credit Adjusting Discount Rate: The Company estimated a market-based discount rate of 25%.•Stock Price: The stock price was measured using the fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16,2018, which was $24.45 per share.•Risk Free Rate: Assumed to be 2.2% based on the Federal Reserve bond yield.•Volatility: Based on the historical volatility of the Company's Common Stock, determined to be 41.3% as of the valuation date.•Term: Based on the time period of the Notes maturity, 4 years.80Table of ContentsBased upon the modified convertible bond model utilized by management, the fair value of the interest rate reset feature was determined to be $6.4 million asof January 16, 2018 and was recognized as an issuance discount for the Initial Notes at inception.Interest on the Initial Notes is payable on a quarterly basis in arrears beginning on April 1, 2018, at the option of the Company, in cash, or, subject to certainconditions, through the issuance by the Company of additional shares of Common Stock (the "PIK Interest Shares"). Any PIK Interest Shares so issued will bevalued at the arithmetic average of the volume-weighted average trading prices of the Common Stock on each trading day during the 10 consecutive tradingdays ending immediately preceding the applicable interest payment date.Management evaluated the Notes Option and determined that it met the definition of a derivative as it represented a written option. The Notes Optionqualified for liability treatment and was initially measured at fair value, with subsequent changes in fair value being recorded in earnings. To determine thefair value of the Notes Option, management utilized an option pricing model as the option represents a put option that gains value as the underlying asset(Common Stock) decreases in value. The following key assumptions were utilized in the Company's estimate of the fair value of the Notes Option derivative:•Stock Price: The stock price was measured using the fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16,2018, which was $24.45 per share.•Risk Free Rate: Assumed to be 1.6% based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.•Volatility: Based on the historical volatility of the Company's Common Stock, determined to be 38.4% as of the valuation date.•Term: Based on the time period of the Notes Option, 6 months.Based upon the option pricing model utilized, management estimated the fair value of the Notes Option as of January 16, 2018 to be $2.1 million. The fairvalue was recognized as an issuance discount for the Initial Notes at inception.The Initial Notes contain redemption provisions whereby, upon the occurrence of certain change of control transactions, a holder would have the right torequire the Company to redeem all or any portion of such holder's outstanding Initial Notes for cash at a price determined in accordance with the terms of theInitial Notes. Management evaluated this change of control redemption feature and determined that it represented an embedded derivative that must bebifurcated and accounted for separately from the Initial Notes. The change of control derivative is treated as a liability, initially measured at fair value withsubsequent changes in fair value recorded in earnings. Management utilized a probability-adjusted binomial lattice model to determine the fair value of thechange of control derivative, with the following key assumptions:•Risk Free Rate: Assumed to be 2.2% based on the U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of thechange of control derivative.•Probability: The Company utilized a range between 0% and 10% to estimate the likelihood of occurrence.•Term: Based on the time period of the feature, 4 years.Based on the binomial lattice model, the Company determined the fair value as of January 16, 2018 to be $4.4 million. The fair value was recognized as anissuance discount of the Initial Notes at inception.The Notes contain certain affirmative and restrictive covenants with which the Company must comply, including (i) covenants with respect to limitations onadditional indebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances (currently at $20.0million) and (v) the timely filing of certain disclosures with the SEC. The Company is in compliance with its debt covenants as of December 31, 2018.In connection with the issuance of the Initial Notes, the Company also agreed to issue to Starboard warrants to purchase 250,000 shares of Common Stock ata price of $0.01 per share. The warrants were issued on October 12, 2018 and are exercisable for five years from the date of issuance. The Company valued thewarrants using the Black-Scholes model, with the following key assumptions:•Stock Price: The stock price was measured using fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16, 2018,which was $24.45 per share.•Volatility: The Company determined volatility to be 39.6% based on the historical volatility of its Common Stock daily volume weighted averageprice with a look-back period commensurate with the term of the warrants.•Dividend Yield: Assumed to be zero based on the historical payout history of the Company.•Risk Free Rate: Assumed to be 2.4% based on U.S. Treasury bonds on the valuation date with a 5-year term.Based on the Black-Scholes model, the Company determined that the fair value of the warrants as of January 16, 2018 was $6.1 million. The Companyrecorded the warrants at allocated proceeds of $5.7 million, less allocated issuance costs of $0.2 million, as additional paid-in capital.81Table of ContentsThe cash proceeds and Common Stock received by the Company in exchange for the Initial Notes were net of a $20.1 million issuance discount and $4.6million in third party debt issuance costs.As noted in Footnote 1, Organization, on August 8, 2018, the Company and Starboard entered into an amendment to the outstanding Notes to reduce therequirement to maintain certain minimum cash balances. In connection with and as consideration for this modification, the Company issued to Starboard $2.0million in additional aggregate principal amount of senior secured convertible notes, $1.5 million of which was classified as additional Initial Notes. Theterms of the additional notes are identical to the terms of the Initial Notes, except with regard to the date from which interest began to accrue thereon, which isAugust 8, 2018. The amendment is treated as a modification to the debt agreements and the costs related to the issuance of the additional notes werecombined with the existing unamortized discount of the Initial Notes on the modification date and will be amortized to interest expense over the remainingterm of the modified debt.On November 13, 2018, the Company and Starboard entered into an agreement whereby the applicable period for the $20.0 million minimum cash balancerequired to be maintained by the Company was extended until the earlier of August 9, 2019 or the date the Company files its Form 10-Q for the quarterlyperiod ended June 30, 2019, subject to certain limitations. The agreement also modified the provisions of the Notes and the Registration Rights Agreementbetween the Company and Starboard by revising the grace periods during which the Company would not be obligated to keep applicable registrationstatements available for use by Starboard. In connection with, and as consideration for these amendments, the Company issued to Starboard $2.0 million inadditional aggregate principal amount of senior secured convertible notes, the terms of which are identical to the terms of the Initial Notes, except with regardto the date from which interest began to accrue thereon, which is November 13, 2018. In connection with this modification, the Company recorded $0.2million in additional derivative liabilities.Issuance and Sale of Option NotesOn May 17, 2018, the Notes Option was exercised by Starboard, pursuant to which the Company issued and sold to Starboard $50.0 million of Option Notesin exchange for $15.0 million in cash and 1,400,000 shares of Common Stock valued at $35.0 million. Based upon the fair value of the Common Stock onthe closing date of the Option Notes issuance, May 17, 2018, which was $21.75 per share, the difference of $4.6 million was recorded as an issuance discountto the Option Notes. The Option Notes have the same terms, including maturity, interest rate, convertibility, and security, as the Initial Notes, except withregard to the date from which interest began to accrue thereon, which was May 17, 2018. Upon the exercise of the Notes Option, the derivative liabilityrecorded for the Notes Option at inception was settled. Management determined the fair value of the Notes Option immediately prior to settlement utilizingan option pricing model using the following key assumptions:•Stock Price: The stock price was measured using the fair value of the Common Stock on the closing date of the Option Notes, May 17, 2018, whichwas $21.75 per share.•Risk Free Rate: Assumed to be 1.8% based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.•Volatility: Based on the historical volatility of the Company's Common Stock, determined to be 26.3% as of the valuation date.•Term: Based on the time period of the expected exercise of the Notes Option, 0.16 years.Based upon the option pricing model utilized, management estimated the fair value of the Notes Option as of May 17, 2018 to be $5.7 million. The lossrelated to the change in fair value of $1.6 million was recorded in other (expense) income, net on the Consolidated Statement of Operations andComprehensive Loss. The fair value of the Notes Option was recognized as an issuance premium for the Option Notes at inception.The interest rate reset feature of the Option Notes was determined by management to be a derivative instrument that qualifies for liability treatment. Thederivative instrument is initially measured at fair value and classified as a liability on the balance sheet, with subsequent changes in fair value being recordedin earnings. To determine the fair value of the interest rate reset feature, management utilized a "with-and-without" convertible bond model, modified toincorporate the interest rate reset feature, using the following key assumptions:•Credit Adjusting Discount Rate: The Company estimated a market-based discount rate of 24%.•Stock Price: The stock price was measured using the fair value of the Common Stock on the closing date of the Option Notes issuance, May 17,2018, which was $21.75 per share.•Risk Free Rate: Assumed to be 2.8% based on the Federal Reserve bond yield.•Volatility: Based on the historical volatility of the Company's Common Stock, determined to be 42.6% as of the valuation date.•Term: Based on the time period of the Option Notes maturity, 3.7 years.82Table of ContentsBased upon the modified convertible bond model utilized by management, the fair value of the interest rate reset feature was determined to be $3.0 million asof May 17, 2018 and was recognized as an issuance discount for the Option Notes at inception.The Option Notes contain redemption provisions whereby, upon the occurrence of certain change of control transactions, a holder would have the right torequire the Company to redeem all or any portion of such holder's outstanding Option Notes for cash at a price determined in accordance with the terms of theOption Notes. Management evaluated this change of control redemption feature and determined that it represented an embedded derivative that must bebifurcated and accounted for separately from the Option Notes. The change of control derivative is treated as a liability, initially measured at fair value withsubsequent changes in fair value recorded in earnings. Management utilized a probability-adjusted binomial lattice model to determine the fair value of thechange of control derivative, with the following key assumptions:•Risk Free Rate: Assumed to be 2.8% based on U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of thechange of control derivative.•Probability: The Company utilized a range between 0% and 10% to estimate the likelihood of occurrence.•Term: Based on the time period of the feature, 3.7 years.Based on the binomial lattice model, the Company determined the fair value as of May 17, 2018 to be $1.2 million. The fair value was recognized as anissuance discount of the Option Notes at inception.The cash proceeds and Common Stock received by the Company in exchange for the Option Notes were net of a $3.1 million issuance discount and $0.2million in third-party debt issuance costs.As noted in Footnote 1, Organization, on August 8, 2018, the Company and Starboard entered into an amendment to the outstanding Notes to reduce therequirement to maintain certain minimum cash balances. In connection with the modification, the Company issued to Starboard $2.0 million in additionalaggregate principal amount of senior secured convertible notes, $0.5 million of which was classified as additional Option Notes. The terms of the additionalnotes are identical to the terms of the Option Notes, except with regard to the date from which interest began to accrue thereon, which is August 8, 2018. Theamendment is treated as a modification to the debt agreements and the costs related to the issuance of the additional notes were combined with the existingunamortized discount of the Option Notes on the modification date and will be amortized to interest expense over the remaining term of the modified debt. Inconnection with the modification of the Notes, the Company recorded $0.2 million in additional derivative liabilities.The Company did not have any outstanding long-term debt as of December 31, 2017. The Company's long-term debt as of December 31, 2018 was asfollows: As of December 31, 2018(In thousands, except interest rates)Stated InterestRate EffectiveInterest Rate Face Value OriginalIssuanceDiscount DeferredFinancingCosts Net CarryingValueInitial Notes, due January 16, 20226.0% 12.0% $153,500 $(19,627) $(3,724) $130,149Option Notes, due January 16, 20226.0% 8.5% 50,500 (3,096) (211) 47,193Total $204,000 $(22,723) $(3,935) $177,342The Company amortized $1.0 million in debt issuance costs related to the total outstanding long-term debt during the year ended December 31, 2018. TheCompany accreted $4.8 million in issuance discount related to the total outstanding long-term debt during the year ended December 31, 2018.The estimated fair value of the Initial Notes and Option Notes, using Level 3 inputs based on interest rates available for debt with terms and maturities similarto the Company's outstanding debt, was $180.5 million as of December 31, 2018.Potential Rights OfferingUnder the January 16, 2018 agreements with Starboard, the Company has the right to conduct a rights offering (the "Rights Offering") for up to $150.0million in senior secured convertible notes (the "Rights Offering Notes"). Subject to the terms of the Rights Offering, if undertaken, the Company woulddistribute to all of the Company's stockholders rights to acquire Rights Offering Notes. Stockholders who elect to participate in the Rights Offering couldelect to have up to 30% of the Rights Offering Notes they acquire pursuant thereto delivered through the sale to or exchange with the Company of shares ofCommon Stock, with the per share value thereof equal to the closing price of the Common Stock on the last trading day immediately prior to thecommencement of the Rights Offering. The Rights Offering Notes would be substantially similar to the Notes, except, among other things, with respect to: (i)the date from which interest thereon would begin to accrue and the maturity date thereof (which would be 4 years from the date of issuance of the RightsOffering Notes) and (ii) the conversion price thereof, which would be83Table of Contentsequal to 130% of the closing price of the Common Stock on the last trading day immediately prior to the commencement of the Rights Offering (subject to aconversion price floor of $28.00 per share). Starboard also agreed to enter into one or more backstop commitment agreements, pursuant to which Starboardwould backstop up to $100.0 million in aggregate principal amount of Rights Offering Notes through the purchase of additional Notes, with such backstopobligation reduced by the amount of Option Notes purchased ($50.0 million). The Company is not obligated to undertake the Rights Offering, and there is noassurance that the Rights Offering will be commenced or completed.Guarantee and Security of NotesThe Notes are guaranteed by certain of the Company’s direct and indirect wholly-owned domestic subsidiaries (the “Guarantors”) and are secured by asecurity interest in substantially all of the assets of the Company and the Guarantors, pursuant to a Guaranty, dated as of January 16, 2018, entered into by theGuarantors, and a Pledge and Security Agreement, dated as of January 16, 2018, among the Company, the Guarantors and Starboard Value and OpportunityMaster Fund Ltd. as collateral agent.Registration of Underlying SharesPursuant to the Registration Rights Agreement with Starboard, the Company filed a registration statement on Form S-1 with the SEC allowing for the resale ofthe shares of Common Stock underlying the Notes, potential PIK Interest Shares, and warrants. In conjunction with this registration, WPP exercised its right tohave its shares of Common Stock included in the registration statement. The registration statement on Form S-1 was declared effective as of October 16, 2018.For additional information, refer to Footnote 16, Related Party Transactions.Revolving Credit FacilityOn September 26, 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) with several banks with a maturity date of September 26,2018. Bank of America, N.A. was the administrative agent and lead lender of this revolving credit facility. The Credit Agreement provided for a five-yearrevolving credit facility of $100.0 million, which included a $10.0 million sublimit for issuance of standby letters of credit (subsequently reduced to $3.6million in September 2017), a $10.0 million sublimit for swing line loans and a $10.0 million sublimit for alternative currency lending. On January 11, 2018,the Company voluntarily terminated the Credit Agreement and the Security and Pledge Agreement between the Company and Bank of America, N.A.. At thetime of termination of the Credit Agreement, $3.5 million in letters of credit remained outstanding and were cash collateralized. As of December 31, 2018, noletters of credit remain outstanding under the Credit Agreement.On June 1, 2018, the Company entered into a Security Agreement with Wells Fargo Bank, N.A. to issue standby letters of credit. As of December 31, 2018,$3.5 million in letters of credit are outstanding and are cash collateralized under the Security Agreement with Wells Fargo Bank, N.A.Capital LeasesFuture minimum payments under capital leases with initial terms of one year or more were as follows: (In thousands)2019$2,58220207442021417202276202344Total minimum lease payments3,863Less amount representing interest260Present value of net minimum lease payments3,603Less current portion2,421Capital lease obligations, long-term$1,182During the year ended December 31, 2018, the Company acquired $1.7 million in computer hardware and automobiles through the issuance of capital leases.Assets acquired under the equipment leases secure the obligations.84Table of ContentsSoftware License ArrangementsThe Company has obligations of $1.8 million for certain software license arrangements. These obligations are reflected in Other Current Liabilities in theConsolidated Balance Sheets and will end in 2019.6.Fair Value MeasurementsFair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants. The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used inmeasuring fair value as follows:Level 1 — observable inputs such as quoted prices in active markets;Level 2 — inputs other than the quoted prices in active markets that are observable either directly or indirectly; andLevel 3 — unobservable inputs of which there is little or no market data, which require the Company to develop its ownassumptions.Assets and Liabilities Measured on a Recurring BasisA financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Thefinancial instruments measured at fair value in the accompanying Consolidated Balance Sheets on a recurring basis consist of the following: As of As of December 31, 2018 December 31, 2017(In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalAssets: Money market funds (1) $6,037 $— $— $6,037 $860 $— $— $860Investment in equity securities (2) 6,100 — — 6,100 — — — —Total $12,137 $— $— $12,137 $860 $— $— $860Liabilities: Financing derivatives: no hedgingdesignation Interest rate reset (3) $— $— $23,300 $23,300 $— $— $— $—Change of control redemption (4) — — 2,800 2,800 — — — —Total $— $— $26,100 $26,100 $— $— $— $—(1) Level 1 cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $1.00 per share by investing in liquid, high quality U.S. Dollar-denominated money market instruments with maturities less than three months.(2) The Company's investment in common stock of an entity, which is included in other non-current assets, is valued using a market approach based on the quoted market price of thesecurity. Prior to adoption of ASU 2016-01, this investment was classified as a cost-method investment and was measured at historical cost in 2017.(3) The fair value of the Company's interest rate reset derivative liability is determined using a with-and-without approach, using a standard binomial tree convertible bond model. Thefair value estimate is determined using an estimate for the Company's credit rating, the premium attributable to the payment-in-kind feature of the Notes, and premium estimates forcompany-specific risk factors. The valuation is derived from techniques which utilize unobservable Level 3 inputs.(4) The fair value of the Company's change of control redemption derivative liability is determined using a probability adjusted binomial lattice model. The fair value estimate isdetermined using an estimate for the probability of change of control of the Company, risk-free rate, and remaining term of the redemption feature. These estimates represent Level 3inputs within the fair value hierarchy.The Company did not have any transfers between fair value measurement levels during the periods presented.There were no changes to the Company's valuation methodologies during the year ended December 31, 2018 or 2017, respectively.The following table presents the changes in the Company's Level 3 fair valued instruments for the year ended December 31, 2018:(In thousands) Financing Derivative LiabilitiesBalance as of January 1, 2018 $—Issuances 17,574Total losses included in other (expense) income, net (1) 14,226Settlement (2) (5,700)Balance as of December 31, 2018 $26,10085Table of Contents(1) Represents change in fair value of interest rate reset derivative liability $13.6 million loss, Notes Option derivative liability $3.3 million loss, and change of control derivative liabilityof $2.7 million gain. All changes in fair value were recorded in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Loss.(2) Represents settlement of the Notes Option derivative liability through the issuance of the Option Notes on May 17, 2018. The derivative was net settled with the Option Notes andrecorded as an issuance premium. Refer to Footnote 5, Long-term Debt, for further information.The following table displays valuation techniques and the significant unobservable inputs for the Company's Level 3 liabilities measured at fair value as ofDecember 31, 2018: Fair value measurements as of December 31, 2018 Significant valuation technique Significant unobservable inputs InputInterest rate reset derivative liabilityDiscounted Cash Flow Discount rate 25.0% Stock price $14.43 Risk-free rate 2.5% Volatility 43.9% Term 3.04 years Change of control redemption derivative liabilityOption pricing model Probability 0-10% Risk-free rate 2.5%The fair values of the Company's financing derivatives are estimated using forward projections and are discounted back at rates commensurate with theremaining term of the related derivative. The primary sensitivity in the interest rate reset derivative liability is driven by the Company's Common Stock priceat the measurement date, the observable volatility of the Common Stock, and the discount rate used to determine the present value of the instrument. Theprimary sensitivity for the change of control redemption derivative liability is driven by the probability of the change of control.7.Property and EquipmentProperty and equipment, including equipment under capital lease obligations, consists of the following: December 31, December 31,(In thousands) 2018 2017Computer equipment (including capital leases of $76,859 and $77,606, respectively) $107,405 $106,433Computer software (including internally-developed software of $9,608 and $-, respectively) 18,317 8,061Office equipment and furniture 4,877 5,478Automobiles (including capital leases of $925 and $838, respectively) 925 838Leasehold improvements 16,430 15,036Total (including capital leases of $77,784 and $78,444, respectively) 147,954 135,846Less: accumulated depreciation and amortization (including capital leases of $74,762 and $70,530,respectively) (120,615) (106,953)Total property and equipment, net $27,339 $28,893For the years ended December 31, 2018, 2017, and 2016, depreciation expense was $17.3 million, $23.3 million, and $25.4 million respectively.8.Goodwill and Intangible AssetsThe change in the carrying value of goodwill is as follows:(In thousands)Balance as of December 31, 2016$639,897Translation adjustments2,527Balance as of December 31, 2017$642,424Translation adjustments(1,233)Balance as of December 31, 2018$641,19186Table of ContentsThe carrying values of the Company’s amortizable acquired intangible assets are as follows: December 31, 2018 December 31, 2017(In thousands) GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmountAcquired methodologies/technology $148,374 $(66,690) $81,684 $148,404 $(46,095) $102,309Strategic alliance 30,100 (11,288) 18,812 30,100 (8,270) 21,830Customer relationships 40,127 (20,338) 19,789 40,259 (14,954) 25,305Intellectual property 14,366 (11,905) 2,461 14,377 (10,953) 3,424Panel 3,107 (3,107) — 3,134 (3,134) —Trade names 775 (636) 139 790 (589) 201Acquired software 9,287 (5,531) 3,756 9,251 (2,949) 6,302Other 600 (296) 304 600 (194) 406Total intangible assets $246,736 $(119,791) $126,945 $246,915 $(87,138) $159,777Amortization expense related to intangible assets was $32.9 million, $34.8 million, and $31.9 million for the year ended December 31, 2018, 2017, and2016, respectively. There were no impairment charges recognized during the years ended December 31, 2018, 2017, and 2016.The weighted-average remaining amortization period by major asset class as of December 31, 2018 is as follows: (In years)Acquired methodologies/technology3.4Strategic alliance6.3Customer relationships3.6Intellectual property5.7Trade names2.2Acquired software1.6Other2.3The estimated future amortization of intangible assets is as follows: (In thousands)2019$31,582202030,231202128,048202227,57720235,455Thereafter4,052Total$126,94587Table of Contents9.Accrued Expenses As of December 31, (In thousands) 2018 2017Payroll and payroll-related $18,972 $20,821Expected retention awards — 16,947Accrued data costs 14,617 14,445Professional fees 8,477 14,456Short-term restructuring accrual 5,479 9,184Amounts due to Adobe 634 5,395Accrued interest on senior secured convertible notes 3,046 —Other 6,915 4,783Total accrued expenses $58,140 $86,031Expected retention awards liability was settled through cash or the issuance of shares in 2018.10.Commitments and ContingenciesOperating LeasesThe Company is obligated under various non-cancelable operating leases for office facilities and equipment. The leases require us to pay taxes, insurance andordinary repairs and maintenance. These leases generally provide for renewal options and escalation increases. On May 30, 2018, the Company entered intoan amendment with the landlord of its corporate headquarters in Reston, Virginia to reduce the space occupied to approximately 84,000 square feet effectiveMay 2019 and extended the lease term through July 31, 2027.Future minimum lease commitments and sublease receipts under non-cancelable lease agreements with initial terms of one year or more in effect as ofDecember 31, 2018 are as follows: (In thousands)Operating LeaseCommitment SubleaseReceipts2019$14,780 $1,385202013,027 1,693202112,259 1,59720229,322 1,55120239,722 1,145Thereafter31,475 2,905Total minimum lease payments$90,585 $10,276Rent expense under non-cancelable operating leases was $15.0 million, $16.6 million, and $14.4 million for the years ended December 31, 2018, 2017, and2016, respectively. Rent expense was net of sublease income of $0.3 million, $0.1 million, and $0.3 million for the years ended December 31, 2018, 2017,and 2016, respectively.Unconditional Purchase ObligationsThe Company is obligated under certain unconditional agreements with MVPDs. The future fixed and determinable payments under these agreements withinitial terms of one year or more as of December 31, 2018 were as follows: (In thousands) 2019$39,422202040,959202123,870202219,182202318,522Total$141,95588Table of ContentsContingenciesThe Company is involved in various legal proceedings from time to time. The Company establishes reserves for specific legal proceedings when managementdetermines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. The Company has also identifiedcertain other legal matters where an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. In these cases,the Company does not establish a reserve until it can reasonably estimate the loss. Legal fees are expensed as incurred. The outcomes of legal proceedings areinherently unpredictable, subject to significant uncertainties, and could be material to the Company's operating results and cash flows for a particular period. Derivative LitigationThe Consolidated Virginia Derivative Action. In May 2016 and July 2016, two purported shareholder derivative actions, Terry Murphy v. Serge Matta et al.and Ron Levy v. Serge Matta et al., were filed in the Circuit Court of Fairfax County, Virginia against the Company as a nominal defendant and againstcertain of its current and former directors and officers. The complaints alleged that the defendants intentionally or recklessly made materially false ormisleading statements regarding the Company and asserted claims of breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement andwaste of corporate assets against the defendants. The complaints sought declarations that the plaintiffs could maintain the action on behalf of the Company,declarations that the individual defendants breached fiduciary duties or aided and abetted such breaches, awards to the Company for damages sustained,purported corporate governance reforms, awards to the Company of restitution from the individual defendants and reasonable attorneys’ and experts’ fees. OnApril 13, 2017, the Court entered a consent order consolidating the Murphy and Levy actions.The Assad Action. On April 14, 2017, another purported shareholder derivative action, George Assad v. Gian Fulgoni et al., was filed in the Circuit Court ofFairfax County, Virginia against the Company as a nominal defendant and against the same current and former directors and officers of the Company as theMurphy and Levy actions, as well as certain additional individuals. The Assad complaint alleged claims for breach of fiduciary duty, waste of corporate assets,and unjust enrichment, as well as a claim seeking to compel the Company's Board of Directors to hold an annual stockholders’ meeting. In addition to anorder compelling the Board of Directors to hold an annual stockholders’ meeting, the Assad complaint sought judgment against the defendants in the amountby which the Company was allegedly damaged, an order directing defendants to provide operations reports and financial statements for all previous quartersallegedly identified by the Audit Committee as inaccurate, purported corporate governance reforms, the restriction of proceeds of defendants’ tradingactivities pending judgment, an award of restitution from the defendants, and an award of attorneys’ fees and costs. On August 4, 2017, the Company movedfor an order of consolidation of the Assad action into the consolidated Virginia derivative action noted above. The motion was not brought for a hearing dueto the pendency of the derivative litigation settlement noted below.The Consolidated Federal Derivative Action. In December 2016 and February 2017, two purported shareholder derivative actions, Wayne CountyEmployees’ Retirement System v. Fulgoni et al. and Michael C. Donatello v. Gian Fulgoni et al., were filed in the District Court for the Southern District ofNew York against the Company and certain of the Company's current and former directors and officers. The complaints alleged, among other things, that thedefendants provided materially false and misleading information regarding the Company, its business and financial performance. The Donatello complaintalso alleged that the defendants breached their fiduciary duties, failed to maintain internal controls and were unjustly enriched to the detriment of theCompany. The complaints sought awards of monetary damages, purported corporate governance reforms, punitive damages, and attorneys’, accountants’ andexperts’ fees and other relief. On April 25, 2017, the Court signed and entered the parties’ stipulation to consolidate the Wayne County and Donatelloactions. Following proposed settlement discussions, the Court stayed the case on September 21, 2017 pending application for preliminary approval ofsettlement.Derivative Litigation Settlement. On September 10, 2017 the Company, along with all derivative plaintiffs and named individual defendants, reached aproposed settlement, subject to court approval, to resolve all of the above shareholder derivative actions on behalf of the Company. Under the terms of theproposed settlement, the Company would receive a $10.0 million cash payment, funded by the Company’s insurer. Pursuant to this proposed settlement, theCompany agreed, subject to court approval, to contribute $8.0 million in Common Stock toward the payment of attorneys’ fees. The Company also agreed aspart of the proposed settlement to adopt certain corporate governance and compliance terms that were negotiated by derivative plaintiffs’ counsel and theCompany. As of December 31, 2017, the Company reserved $8.0 million in accrued litigation settlements, and recorded $10.0 million in insurancerecoverable on litigation settlements for the insurance proceeds expected from its insurers. On June 7, 2018, the Court granted final approval of the settlementand dismissed the consolidated federal derivative action. On June 21, 2018, the Company issued to the plaintiffs’ lead counsel 354,671 shares of CommonStock, valued at $8.0 million, as payment of attorneys’ fees. On July 9, 2018, the consolidated Virginia derivative action and the Assad action were dismissedin Virginia state court and the $10.1 million in insurance proceeds held in escrow were released to the Company.89Table of ContentsOregon Section 11 LitigationIn October 2016, a class action complaint, Ira S. Nathan v. Serge Matta et al., was filed in the Multnomah County Circuit Court in Oregon against certain ofthe Company's current and former directors and officers and Ernst & Young LLP ("EY"). The complaint alleged that the defendants provided untruestatements of material fact in the Company's registration statement on Form S-4 filed with the SEC and declared effective on December 23, 2015. Thecomplaint sought a determination of the propriety of the class, a finding that the defendants were liable and an award of attorneys’ and experts’ fees. OnMarch 17, 2017, a separate action, John Hulme v. Serge Matta et al., was filed in the Multnomah County Circuit Court in Oregon alleging materially similarclaims as the Nathan complaint against the same defendants. On April 18, 2017, the Nathan and Hulme cases were consolidated by order of the court. OnFebruary 14, 2018, following a hearing, the Court granted class certification only as to EY. On April 23, 2018, the Court issued an order staying the casepending the final approval hearing in the Fresno County Employees' Retirement Association case noted below, and, following the final approval hearing onJune 7, 2018, the parties filed a joint stipulation of dismissal. The claims against the Company’s current and former directors and officers were dismissed withprejudice on July 17, 2018.Federal Securities Class Action LitigationIn October 2016, a consolidated class action complaint, Fresno County Employees’ Retirement Association et al. v. comScore, Inc. et al., was filed in theDistrict Court for the Southern District of New York against the Company, certain of the Company's current and former directors and officers, Rentrak andcertain former directors and officers of Rentrak. On January 13, 2017, the lead plaintiffs filed an amended complaint alleging that the defendants providedmaterially false and misleading information regarding the Company and its financial performance, including in the Company and Rentrak’s joint proxystatement/prospectus, and failed to disclose material facts necessary in order to make the statements made not misleading. The complaint sought adetermination of the propriety of the class, compensatory damages and the award of reasonable costs and expenses incurred in the action, includingattorneys’ and experts’ fees. On September 10, 2017, the parties reached a proposed settlement, subject to court approval, pursuant to the terms of which thesettlement class would receive a total of $27.2 million in cash and $82.8 million in Common Stock to be issued and contributed by the Company to asettlement fund to resolve all claims asserted against the Company. All of the $27.2 million in cash would be funded by the Company's insurers. Theproposed settlement further provided that the Company denied all claims of wrongdoing or liability. On January 29, 2018, the Court granted preliminaryapproval of the settlement. On June 7, 2018, the Court granted final approval of the settlement and entered judgment dismissing the case with prejudice. Noappeals of the judgment were filed. As of December 31, 2017, the Company reserved $110.0 million in accrued litigation settlements for the gross settlementamount and recorded $27.2 million in insurance recoverable on litigation settlements for the insurance proceeds expected from the Company's insurers. OnJune 21, 2018, the Company issued to a settlement fund for the benefit of authorized claimants 3,669,444 shares of Common Stock, valued at $82.8 million.The insurance proceeds of $27.2 million were contributed to the settlement fund concurrently.Privacy Class Action LitigationOn September 11, 2017, the Company and a wholly-owned subsidiary, Full Circle Studies, Inc., (“Full Circle”), received demand letters on behalf of namedplaintiffs and all others similarly situated alleging that the Company and Full Circle collected personal information from users under the age of 13 withoutverifiable parental consent in violation of Massachusetts law and the federal Children’s Online Privacy Protection Act. The letters alleged that the Companyand Full Circle collected such personal information by embedding advertising software development kits ("SDKs") in applications created or developed byDisney. The letters sought monetary damages, attorneys’ fees and damages under Massachusetts law. On June 4, 2018, the plaintiffs filed amendedcomplaints adding the Company and Full Circle as defendants in a purported class action against Disney, Twitter and other defendants, alleging violations ofCalifornia’s constitutional right to privacy and intrusion upon seclusion law, New York’s deceptive trade practices statute, and Massachusetts’ deceptivetrade practices and right to privacy statutes. The complaints allege damages in excess of $5 million, with any award to be apportioned among the defendants.The Company and Full Circle deny any wrongdoing or liability and intend to vigorously defend against these claims. Although the ultimate outcome of thismatter is unknown, the Company believes that a material loss was not probable or estimable as of December 31, 2018.Nielsen Arbitration/LitigationOn September 22, 2017, Nielsen Holdings plc ("Nielsen") filed for arbitration against the Company, alleging that the Company breached the parties'agreement regarding an alleged unauthorized use of Nielsen's data to compete directly against Nielsen's linear television services. On September 22 and 25,2017, Nielsen also filed a civil complaint against the Company in the United States District Court for the Southern District of New York seeking preliminaryinjunctive relief against any unauthorized use of Nielsen's data. On March 6, 2018, Nielsen's motion for preliminary injunction was denied, and the case wasstayed pending completion of arbitration. The arbitration was completed and resolved in April 2018, and the U.S. District Court dismissed the case on May10, 2018.90Table of ContentsSEC InvestigationThe SEC is investigating allegations with respect to the Company regarding revenue recognition, internal controls, non-GAAP disclosures, tone at the topand whistleblower retaliation. The SEC has made no decisions regarding this matter including whether any securities laws have been violated. The Companyis cooperating fully with the SEC and is seeking to resolve this matter as soon as possible.Export Controls ReviewIn March 2018, the Company became aware of possible violations of U.S. export controls and economic sanctions laws and regulations involving theCompany. The circumstances giving rise to these possible violations pertained to the Company’s collection of survey data from panelists within U.S.embargoed countries, as a part of the Company’s larger global survey efforts not intentionally targeted at such countries. The Company filed a joint initialnotice of voluntary disclosure with the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’sBureau of Industry and Security (“BIS”) and commenced an internal review to identify the causes and scope of transactions that could constitute violations ofthe OFAC and BIS regulations. On May 31, 2018, the Company filed a final voluntary disclosure with OFAC and BIS. On September 10, 2018, the Companywas notified that BIS did not find a violation of export regulations and closed the matter. If OFAC moves forward with this matter, the Company could besubject to fines or penalties. Although the ultimate outcome of this matter is unknown, the Company believes that a material loss was not probable orestimable as of December 31, 2018.Other MattersIn addition to the matters described above, the Company is, and may become, a party to a variety of legal proceedings from time to time that arise in thenormal course of the Company's business. While the results of such legal proceedings cannot be predicted with certainty, management believes that, based oncurrent knowledge, the final outcome of any such current pending matters will not have a material adverse effect on the Company's financial position, resultsof operations or cash flows. Regardless of the outcome, legal proceedings can have an adverse effect on the Company because of defense costs, diversion ofmanagement resources and other factors.IndemnificationThe Company has entered into indemnification agreements with each of the Company's directors and certain officers, and the Company's amended andrestated certificate of incorporation requires it to indemnify each of its officers and directors, to the fullest extent permitted by Delaware law, who was or is aparty or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was adirector or officer of the Company. The Company has paid and continues to pay legal counsel fees incurred by the present and former directors and officerswho are involved in legal proceedings that require indemnification.Similarly, certain of the Company's commercial contracts require it to indemnify contract counterparties under specified circumstances, and the Companymay incur legal counsel fees and other costs in connection with these obligations.91Table of Contents11.Income TaxesThe components of loss before income tax (benefit) provision are as follows: Years Ended December 31,(In thousands) 2018 2017 2016Domestic $(140,298) $(258,735) $(139,005)Foreign (15,264) (25,375) 17,825Total $(155,562) $(284,110) $(121,180)Income tax provision (benefit) is as follows: Years Ended December 31,(In thousands) 2018 2017 2016Current: Federal $— $(850) $(780)State (119) (155) (28)Foreign 1,806 1,491 798Total $1,687 $486 $(10)Deferred: Federal $898 $(5,216) $313State 1,060 1,120 (3,443)Foreign 61 893 (867)Total $2,019 $(3,203) $(3,997)Income tax provision (benefit) $3,706 $(2,717) $(4,007)A reconciliation of the statutory U.S. income tax rate to the effective income tax rate is as follows: Years Ended December 31, 2018 2017 2016Statutory federal tax rate 21.0 % 35.0 % 35.0 %State taxes (2.8)% (0.3)% 1.9 %Nondeductible items (0.5)% 0.7 % — %Nondeductible interest and derivatives (4.0)% — % — %Foreign rate differences (2.2)% (3.7)% 5.6 %Change in statutory tax rates — % 1.4 % — %Change in valuation allowance (5.4)% (30.8)% (32.1)%Transaction costs — % — % (1.8)%Stock compensation (5.6)% (0.1)% (0.6)%Executive compensation (0.3)% — % (2.1)%Asset disposition — % — % (2.2)%Subscription Receivable (1.2)% (1.3)% (1.5)%Other adjustments (1.0)% (0.1)% 0.3 %Uncertain tax positions (0.4)% 0.2 % 0.8 %Effective tax rate (2.4)% 1.0 % 3.3 %The 2016 and 2017 reconciliation presentation above has changed to break out Subscription Receivable, Stock compensation, and Nondeductible items forcomparability purposes across all years.Income Tax (Benefit) ProvisionThe Company recognized an income tax expense of $3.7 million during the year ended December 31, 2018, which is comprised of current tax expense of$1.7 million primarily related to foreign taxes and a deferred tax expense of $2.0 million related to temporary differences between the tax treatment andGAAP accounting treatment for certain items. Included within the total tax expense is an income tax expense of $19.0 million related to the increase invaluation allowance recorded against the Company’s92Table of Contentsdeferred tax assets to offset the tax benefit of the Company’s operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $19.7million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibilityof certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Thesetax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S. federalstatutory rate, are the primary drivers of the annual effective income tax rate.The Company recognized an income tax benefit of $2.7 million during the year ended December 31, 2017, which is comprised of current tax expense of $0.5million primarily related to foreign taxes and a deferred tax benefit of $3.2 million related to temporary differences between the tax treatment and GAAPaccounting treatment for certain items. Included within the total tax benefit is an income tax benefit of $8.3 million related to the impact of the TCJAprovisions on the Company's U.S. deferred taxes, including the reduction in the corporate tax rate from 35% to 21% and a change in the Company's valuationallowance assessment. Also included is income tax expense of $126.1 million related to the increase in valuation allowance recorded against the Company’sdeferred tax assets to offset the tax benefit of the Company’s operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $2.5 millionhas also been included for permanent differences in the book and tax treatment of certain stock-based compensation, meals and entertainment and othernondeductible expenses. These tax adjustments, along with having book losses in foreign jurisdictions where the income tax rate is substantially lower thanthe U.S. federal statutory rate, are the primary drivers of the annual effective income tax rate.The Company recognized an income tax benefit of $4.0 million during the year ended December 31, 2016 which is comprised of a current tax benefit of $0.8million related to federal and state taxes, current tax expense of $0.8 million related to foreign taxes, and a deferred tax benefit of $4.0 million related totemporary differences between the tax treatment and GAAP accounting treatment for certain items. Included within the total tax benefit is income tax expenseof $54.9 million related to the increase in valuation allowance recorded against the Company’s deferred tax assets, to offset the tax benefit of the Company’soperating losses in the U.S. and certain foreign jurisdictions. Also included is an income tax benefit of $6.9 million related to the release of the portion of theCompany's valuation allowance as a result of the Merger with Rentrak and income tax expense of $12.7 million for permanent differences in the book and taxtreatment of the DAx disposition, certain transaction costs, excess officers' compensation, and other nondeductible expenses. These tax adjustments, alongwith having book income in foreign jurisdictions where the income tax rate is substantially lower than the U.S. federal statutory rate, are the primary driversof the annual effective income tax rate.93Table of ContentsDeferred Income TaxesDeferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposesand the amounts used for income tax reporting purposes. The components of net deferred income taxes are as follows: As of December 31, (In thousands) 2018 2017Deferred tax assets: Net operating loss carryforwards $199,959 $141,607Deferred compensation 13,684 27,175Tax credits 6,171 6,204Deferred rent 3,976 3,722Deferred revenues 2,764 2,908Property and equipment 1,788 —Tax contingencies 1,422 1,439Accrued salaries and benefits 2,200 8,138Capital leases 444 2,343Allowance for doubtful accounts 334 391Capital loss carryforwards 266 269Litigation settlement 1,197 26,557Other 1,105 1,551Gross deferred tax assets 235,310 222,304Valuation allowance (200,366) (181,334)Net deferred tax assets $34,944 $40,970Deferred tax liabilities: Intangible assets $(23,886) $(30,645)Goodwill (9,987) (6,850)Property and equipment — (409)Subpart F income recapture (1,404) (1,397)Outside basis difference (152) (290)Other (1,051) (488)Total deferred tax liabilities (36,480) (40,079)Net deferred tax asset (liability) $(1,536) $891Tax Cuts and Jobs ActThe Company’s deferred tax assets and liabilities have been revalued as of December 31, 2017 to reflect the TCJA reduction in the U.S. corporate income taxrate from 35% to 21%. The impact of the rate change on the Company’s net U.S. deferred tax assets (before valuation allowance) was a decrease of $66.7million. However, due to the Company’s valuation allowance position in the U.S., the income statement impact of the rate change was an income tax benefitof $3.6 million.In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications for TCJA ("SAB 118"), which allowed theCompany to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, the Companypreviously provided a provisional estimate of the effect of the Tax Act in its financial statements. In fourth quarter of 2018, the Company completed itsanalysis to determine the effects of the Tax Act and recorded immaterial adjustments as of December 31, 2018.Tax Valuation AllowanceAs of December 31, 2018 and 2017, the Company had a valuation allowance of $200.4 million and $181.3 million, respectively, against certain deferred taxassets. The valuation allowance relates to the deferred tax assets of the Company’s U.S. entities, including federal and state tax attributes and timingdifferences, as well as the deferred tax assets of certain foreign subsidiaries. The increase in the valuation allowance during 2018 is primarily related tooperating losses incurred during the year. To the extent the Company determines that, based on the weight of available evidence, all or a portion of itsvaluation allowance is no longer necessary, the Company will recognize an income tax benefit in the period such determination is made for the reversal ofthe94Table of Contentsvaluation allowance. If management determines that, based on the weight of available evidence, it is more-likely-than-not that all or a portion of the netdeferred tax assets will not be realized, the Company may recognize income tax expense in the period such determination is made to increase the valuationallowance. It is possible that such reduction of or addition to the Company's valuation allowance may have a material impact on the Company's results fromoperations.A summary of the deferred tax asset valuation allowance is as follows: As of December 31,(In thousands) 2018 2017Beginning Balance $181,334 $119,904Additions 19,356 137,495Reductions (324) (76,065)Ending Balance $200,366 $181,334Net Operating Loss and Credit CarryforwardsAs of December 31, 2018, the Company had federal and state net operating loss carryforwards for tax purposes of $563.6 million and $1,318.5 million,respectively. These net operating loss carryforwards begin to expire in 2022 for federal income tax purposes and 2018 for state income tax purposes. Thefederal and certain state net operating losses generated during the year ended December 31, 2018, will have an indefinite carryforward period as a result ofTCJA. As of December 31, 2018, the Company had an aggregate net operating loss carryforward for tax purposes related to its foreign subsidiaries of $12.1million which begins to expire in 2019.As of December 31, 2018, the Company had research and development credit carryforwards of $3.2 million which begin to expire in 2025.Under the provisions of Internal Revenue Code Section 382, certain substantial changes in the Company’s ownership may result in a limitation on theamount of U.S. net operating loss carryforwards that can be utilized annually to offset future taxable income and taxes payable. A significant portion of theCompany’s net operating loss carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code. Additionally, despite the netoperating loss carryforwards, the Company may have a future tax liability due to foreign tax or state tax requirements.Foreign Undistributed EarningsThe Company has not provided for U.S. income and foreign withholding taxes on approximately $2.6 million of certain foreign subsidiaries' undistributedearnings as of December 31, 2018, because such earnings have been retained and are intended to be indefinitely reinvested outside of the U.S. It is notpracticable to estimate the amount of taxes that would be payable upon remittance of these earnings because such tax, if any, is dependent on circumstancesexisting if and when remittance occurs.Uncertain Tax PositionsFor uncertain tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Taxpositions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefits determined on a cumulative probabilitybasis, which are more-likely-than-not to be realized upon ultimate settlement in the financial statements. The Company has unrecognized tax benefits, whichare tax benefits related to uncertain tax positions which have been or will be reflected in income tax filings that have not been recognized in the financialstatements due to potential adjustments by taxing authorities in the applicable jurisdictions. The Company's liabilities for unrecognized tax benefits, whichinclude interest and penalties, were $1.6 million and $1.3 million as of December 31, 2018 and 2017, respectively. The remaining unrecognized tax benefitshave reduced deferred tax balances. The amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate are $2.5million, $2.4 million and $3.3 million as of December 31, 2018, 2017 and 2016, respectively and include the federal tax benefit of state deductions. TheCompany anticipates that $0.1 million of unrecognized tax benefits will reverse during the next year due to the expiration of statutes of limitation.95Table of ContentsChanges in the Company's unrecognized income tax benefits are as follows: December 31, (In thousands) 2018 2017 2016Beginning balance $2,508 $3,608 $3,418Increase related to tax positions of prior years 167 81 68Increase related to tax positions of the current year 90 88 449Increase related to acquired tax positions — — 974Decrease related to tax positions of prior years (106) (1,064) (1,084)Decrease due to settlements — — (117)Decrease due to lapse in statutes of limitations (99) (205) (100)Ending balance $2,560 $2,508 $3,608The Company recognizes interest and penalties related to income tax matters in income tax expense. As of December 31, 2018 and 2017, accrued interest andpenalties on unrecognized tax benefits were $0.7 million and $0.3 million, respectively. The Company or one of its subsidiaries files income tax returns inthe U.S. federal jurisdiction, and various state and foreign jurisdictions. For income tax returns filed by the Company, the Company is no longer subject toU.S. federal examinations by tax authorities for years prior to 2015 or state and local tax examinations by tax authorities for years prior to 2014. Tax attributecarryforwards may still be adjusted upon examination by tax authorities.12.Stockholders' Equity2007 Equity Incentive PlanPursuant to the merger agreement with Rentrak, upon the closing of the transaction, the Company assumed outstanding stock options under the RentrakCorporation Amended and Restated 2005 Stock Incentive Plan and assumed outstanding stock options, RSUs and a stock appreciation right ("SAR") underthe Rentrak Corporation 2011 Incentive Plan, and such stock options, RSUs and SAR were automatically converted into stock options, RSUs and SAR,respectively, with respect to shares of Common Stock, subject to appropriate adjustments to the number of shares and the exercise price (if applicable) of eachsuch award.In March 2017, the Company's 2007 Equity Incentive Plan reached the end of its ten-year term and expired.2018 Equity and Incentive Compensation PlanThe Company's stockholders approved the 2018 Plan at the Company's 2018 Annual Meeting. Under the 2018 Plan, the Company may grant option rights,appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units up to 10,650,000 shares of Common Stock. Theaggregate number of shares of Common Stock available will be reduced by: (i) one share of Common Stock for every one share of Common Stock subject toan award of option rights or appreciation rights granted under the 2018 Plan and (ii) two shares of Common Stock for every one share of Common Stocksubject to an award other than option rights or appreciation rights granted under the 2018 Plan. If any award granted under the 2018 Plan (in whole or in part)is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation,forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share of Common Stock for every one share of Common Stocksubject to awards of option rights or appreciation rights and two shares of Common Stock for every one share of Common Stock subject to awards other thanof option rights or appreciation rights. Additionally, if, after December 31, 2017, any shares of Common Stock subject to an award granted under the 2007Equity Incentive Plan (the "2007 Plan") are forfeited, or an award granted under the 2007 Plan (in whole or in part) is canceled or forfeited, expires, is settledin cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, orunearned amount, be available for awards under the 2018 Plan at a rate of one share for every one share subject to such award. The Company registered thesecurities under the 2018 Plan with the SEC effective June 1, 2018.96Table of ContentsStock OptionsA summary of the options assumed, exercised and expired during the years ended December 31, 2016, 2017 and 2018 is presented below: Number ofshares Weighted-AverageExercise PriceOptions outstanding as of December 31, 2015 1,701,944 $42.87Options assumed 1,973,801 18.68Options exercised (225,088) 18.39Options forfeited (2,760) 16.85Options expired (2,385) 12.05Options outstanding as of December 31, 2016 3,445,512 30.65Options expired (1,260) 20.24Options outstanding as of December 31, 2017 3,444,252 $30.65Options exercised (1) (347,752) 15.45Options expired (2,050,587) 39.74Options outstanding as of December 31, 2018 1,045,913 $17.89Options exercisable as of December 31, 2018 1,045,913 $17.89(1) Includes 125,523 options withheld to pay the exercise price for certain exercises during the year ended December 31, 2018.No stock options were granted during the years ended December 31, 2018, 2017 and 2016. On April 26, 2016, the Board approved an extension of the periodof time over which terminated employees could exercise their vested options from 90 days after termination of employment to the earlier of the original 10-year option expiration date or 180 days following the date the Company's registration statements on Form S-8 were again available for use. The Companytreated this extension as a modification of the award upon the employees’ termination and recognized incremental compensation cost. The Companymeasured the incremental compensation cost as the excess of the fair value of the modified award over the fair value of the original award immediately beforeits terms were modified. As a result of these modifications, the Company recognized compensation cost of $6.3 million and $3.0 million in stock-basedcompensation expense during 2017 and 2016, respectively.The following are the assumptions used in valuing the options that were assumed in the Rentrak Merger during the year ended 2016:Dividend yield0.00%Expected volatility41.18%-44.51%Risk-free interest rate0.54%-0.63%Expected life of options (in years)1.37-1.87Dividend yield — The Company has never declared or paid a cash dividend on its Common Stock and has no plans to pay cash dividends in the foreseeablefuture.Expected volatility — Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or isexpected to fluctuate (expected volatility) during a period. The Company considered the historical volatility of its stock price over a term similar to theexpected life of the options in determining expected volatility.Risk-free interest rate — The Company used rates on the grant date of zero-coupon government bonds with maturities over periods covering the term of theawards, converted to continuously compounded forward rates.Expected life of the options — This is the period of time that the options granted are expected to remain outstanding.97Table of ContentsThe weighted-average fair value of the options assumed during year ended December 31, 2016 was $21.09.The following table summarizes information about options outstanding as of December 31, 2018: Options Outstanding Options ExercisableRange of Exercise Prices OptionsOutstanding WeightedAverageExercisePrice WeightedAverageRemainingContractualLife (Years) OptionsExercisable WeightedAverageExercisePrice WeightedAverageRemainingContractualLife (Years)$11.56 - $19.31 755,031 $15.01 2.25 755,031 $15.01 2.25$20.11 - $25.86 284,825 25.05 2.16 284,825 25.05 2.16$40.80 - $42.92 6,057 40.80 5.62 6,057 40.80 5.62 1,045,913 $17.89 2.25 1,045,913 $17.89 2.25The intrinsic value of exercised stock options is calculated based on the difference between the exercise price and the quoted market price of the Company'sCommon Stock as of the close of the exercise date. There were 347,752 options exercised during the year ended December 31, 2018. The aggregate intrinsicvalue for all options exercisable was $1.5 million under the Company’s stock plans as of December 31, 2018. No options were exercised in 2017. Theaggregate intrinsic value for all options outstanding and exercisable was $0.7 million under the Company's stock plans as of December 31, 2018. As ofDecember 31, 2018, there was no unrecognized compensation expense related to outstanding options.Stock Appreciation Rights ("SAR")The Company assumed an, as-converted, SAR with respect to 86,250 shares of Common Stock originally granted pursuant to the terms of RentrakCorporation 2005 Stock Incentive Plan at an, as-converted, base price of $12.61 per share. The SAR was fully vested prior to the consummation of the Mergerand remains outstanding as of December 31, 2018. Upon exercise of all or a portion of the SAR, the Company will calculate the SAR spread, tax offsetamount and the net SAR value into a whole number of SAR settlement shares based on the fair market value of the Company's Common Stock on the exercisedate. The SAR is exercisable through June 15, 2019.Stock AwardsThe Company's stock awards are comprised of restricted stock awards ("RSAs") and restricted stock units ("RSUs"). The RSAs only represent participatingsecurities. The Company has a right of repurchase on such shares that lapses at a rate of twenty-five percent (25%) of the total shares awarded at eachsuccessive anniversary of the initial award date, provided that the employee continues to provide services to the Company through such date.A summary of the status of unvested stock awards as of December 31, 2018 is presented as follows:Unvested Stock Awards RestrictedStock Awards RestrictedStock Units Number ofSharesUnderlyingAwards WeightedAverageGrant-Date FairValueUnvested as of December 31, 2015 112,395 861,201 973,596 $33.34Assumed — 367,263 367,263 39.65Granted 214,010 459,166 673,176 35.49Vested (320,907) (405,031) (725,938) 31.74Forfeited (1,750) (240,214) (241,964) 37.19Unvested as of December 31, 2016 3,748 1,042,385 1,046,133 $37.16Vested (1,623) (185,754) (187,377) 36.45Forfeited — (76,719) (76,719) 38.48Unvested as of December 31, 2017 2,125 779,912 782,037 $37.22Granted — 2,872,408 2,872,408 22.53Vested (2,125) (2,077,253) (2,079,378) 27.55Forfeited — (108,932) (108,932) 29.50Unvested as of December 31, 2018 — 1,466,135 1,466,135 $22.62The aggregate intrinsic value for all unvested RSUs outstanding as of December 31, 2018 was $21.3 million. The aggregate intrinsic value of RSAs vestedduring the year ended December 31, 2018 was approximately $0.1 million.98Table of ContentsDuring 2018, the Company's Compensation Committee approved and awarded 2,612,457 time-based RSUs, 191,800 performance-based RSUs, and 68,151market-based RSUs under the 2018 Plan to employees, directors and consultants of the Company. Of the time-based RSUs, 1,493,288 vested immediatelyupon grant, including 165,086 shares related to the compensation of the Company's former Chief Executive Officer as part of his retirement and transitionservices agreement. The remaining time-based RSUs generally vest after three to four years contingent on continued service, and performance-based RSUsgenerally vest after three years based on achievement of pre-established revenue and adjusted earnings before interest income, interest expense, income taxes,depreciation and amortization (Adjusted EBITDA) goals. Market-based awards generally vest after three years based on the attainment of certain stock pricehurdles.Undelivered shares are classified as unvested until the date of delivery of the shares of the underlying awards. During the twelve months ended December 31,2018, all vested shares were delivered to participants in the 2018 Plan. The maximum number of shares available for issuance under the 2018 Plan as ofDecember 31, 2018 is 6,585,928.As of December 31, 2018, total unrecognized compensation expense related to unvested RSUs was $20.5 million, which the Company expects to recognizeover a weighted-average vesting period of approximately 1.91 years. The estimated forfeiture rate as of December 31, 2016, 2017, and 2018 was 10%.Changes in the estimates and assumptions relating to forfeitures and subsequent grants may result in material changes in stock-based compensation expensein the future.Preferred StockThe Company has 5,000,000 shares of $0.001 par value preferred stock authorized; no shares have been issued or outstanding as of December 31, 2018 and2017.Rights PlanOn February 7, 2017, the Company's Board adopted a rights plan (the "Rights Plan") and declared a dividend to the Company’s stockholders of rights("Rights") to purchase newly designated Series A Junior Participating Preferred Stock (the "Series A Preferred Stock"). The terms of the Rights Plan and theRights were set forth in a Tax Asset Protection Rights Agreement, dated as of February 8, 2017 (the "Rights Agreement"), by and between the Company andAmerican Stock Transfer & Trust Company, LLC.The purpose of the Rights Plan was to preserve the Company's ability to utilize its net operating loss carryforwards and other significant tax attributes tooffset future taxable income in the United States. The Company had designated 1,000,000 shares of its Series A Preferred Stock in connection with theadoption of the Rights Plan.On September 28, 2017, the Company entered into an amendment to the Rights Agreement to accelerate the expiration date of the Rights to September 28,2017, effectively terminating the Rights Agreement on that date. At the time of such termination, all of the Rights expired, after which the Company filed aCertificate of Elimination eliminating the 1,000,000 shares of Series A Preferred Stock and returning them to authorized but undesignated shares of theCompany’s preferred stock. No shares of Series A Preferred Stock were issued.13.Share RepurchasesOn February 17, 2016, the Company announced that the Board had approved the adoption of a new share repurchase program, superseding prior programs,for $125.0 million of Common Stock. As part of the Company's repurchase program, shares were purchased in open market transactions or pursuant to tradingplans that were adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of anyrepurchases could be determined at the Company's discretion, and the share repurchase program could be suspended, terminated or modified at any time forany reason. Shares repurchased were classified as treasury stock. On March 5, 2016, the Board suspended the share repurchase program indefinitely. Sharesrepurchased for the year ended December 31, 2016 were as follows: (Dollars in millions, except share and per share data)Year Ended December 31, 2016Total number of shares repurchased675,672Average price paid per share$40.39Total value of shares repurchased (as measured at time of repurchase)$27.314.Employee Benefit Plans99Table of ContentsThe Company has a 401(k) plan for the benefit of all U.S. employees who meet certain eligibility requirements. This plan covers substantially all of theCompany’s full-time U.S. employees. The Company contributed $1.2 million, $1.3 million and $1.2 million to the 401(k) plan for the years ended December31, 2018, 2017 and 2016, respectively.15.Geographic InformationThe Company attributes revenues to customers based on the location of the customer. The composition of the Company’s sales to customers between those inthe United States and those in other locations is as follows: Years Ended December 31, (In thousands) 2018(1) 2017 2016United States $359,379 $332,344 $316,755Europe 34,623 43,218 54,289Latin America 13,179 13,460 12,470Canada 7,882 9,273 10,206Other 4,419 5,254 5,740Total revenues $419,482 $403,549 $399,460(1) As discussed in Footnote 2, Summary of Significant Accounting Policies, revenue for 2017 and 2016 is not comparable to 2018 due to the adoption of ASC 606 on January 1, 2018.Refer to the reconciliation of as reported revenue to compare the periods presented.The composition of the Company’s property and equipment, net between those in the United States and those in other locations as of the end of each year areas follows: December 31, (In thousands) 2018 2017United States $25,456 $25,777Europe 1,415 2,252Latin America 365 625Other 103 239Total $27,339 $28,893Of the Company's long-lived intangible assets, net, $107.9 million and $137.6 million were generated by or located in the United States for the years endedDecember 31, 2018 and 2017, respectively. The Company also had $19.0 million and $22.2 million of long-lived intangible assets, net generated by orlocated in Europe for the years ended December 31, 2018 and 2017, respectively.16.Related Party TransactionsTransactions with WPPAs of December 31, 2018, WPP owned 11,319,363 shares of the Company's outstanding Common Stock, representing 19.1% ownership in the Company. OnJuly 19, 2018, the Company filed a registration statement on Form S-1 with the SEC for the purpose of registering the shares of Common Stock owned byWPP in order to fulfill the Company's contractual obligations under a stockholders' rights agreement entered into by the Company and WPP in 2015. Refer toFootnote 5, Long-term Debt for more information. The Company provides WPP, in the normal course of business, services amongst its different product linesand receives various services from WPP supporting the Company's data collection efforts. In early 2015, there were a series of business and asset acquisitionsand sales and issuances of Common Stock between the Company and WPP (giving rise to the stockholders' rights agreement described above) as well as aSubscription Receivable agreement that the Company entered into with GroupM, a WPP subsidiary.In 2015, the Company and GroupM entered into an agreement in which GroupM agreed to a minimum commitment to purchase $20.9 million of theCompany's products over five years, which was recorded as Subscription Receivable as contra equity within additional paid-in capital on the ConsolidatedStatements of Stockholders' Equity. In December 2017, the Company signed an amendment with GroupM in which GroupM agreed to purchase additionalsubscription services for $17.8 million over three years, which was offset by the $3.7 million Subscription Receivable that remained as of December 31, 2017.Upon fully utilizing the Subscription Receivable in September 2018, the Company began recognizing revenue under the amendment as the Companydelivered products and services under the agreement. Total revenue recognized in 2018 was $2.0 million.100Table of ContentsIn January 2016, as part of the Company's merger with Rentrak Corporation ("Rentrak"), the Company acquired two contracts with net present value of $14.5million with WPP wholly-owned subsidiaries which were reflected as Subscription Receivable. The Company recorded the Subscription Receivable as contraequity within additional paid-in capital on the Consolidated Statements of Stockholders' Equity. As cash was received on the Subscription Receivable,additional paid-in capital was increased by the amount of cash received and the Company recognizes imputed interest income. Effective August 31, 2018,the Company terminated one legacy Rentrak agreement which was originally reflected in Subscription Receivable and concurrently signed a newarrangement for $7.4 million for various subscription services over a three-year period. As of December 31, 2018, the balance of the Subscription Receivableis zero and the Company recorded $0.8 million in revenues in the Consolidated Statement of Operations.The Company has a cancelable five-year agreement with Lightspeed, a WPP subsidiary, to conduct a proof of concept and follow-on program (the "Program")to demonstrate the capability of designing and deploying a program to collect browsing and demographic data for individual participating households. Theagreement provides that the Company makes payments to Lightspeed of approximately $5 million per year. The Program is designed to be a comprehensivedata collection effort across multiple in-home devices (e.g., television, streaming devices, computers, mobile phones, tablets, gaming devices and wearables)monitored via the installation of household internet routers (“Meters”) in panelist households. The Meters will collect and send the data back to theCompany for use in its Total Home Panel product. Under the terms of the Program, Lightspeed is paid to manage the operational aspects of panel recruitment,compliance, inventory management, support and collection of panel demographic data.Transactions with StarboardOn January 16, 2018, the Company entered into certain agreements with Starboard, then a beneficial owner of more than five percent of the Company’soutstanding Common Stock. Refer to Footnote 5, Long-term Debt, for further information regarding these agreements and the Company's issuance of seniorsecured convertible notes to Starboard in 2018. As a result of these agreements and the transactions contemplated thereby, Starboard ceased to be a beneficialowner of more than five percent of the Company's outstanding Common Stock on January 16, 2018.On April 18, 2018, the Company amended a prior agreement with Starboard, dated as of September 28, 2017 (the "September Agreement"), pertaining to themembership and composition of the Company's Board of Directors (the "Board"). Pursuant to the amendment, the Company and Starboard agreed that,effective as of the Company's annual meeting of stockholders on May 30, 2018, the size of the Board would be fixed at eight members. The amendmentfurther designated Starboard's "appointees" under the September Agreement. As of December 31, 2018, Starboard had no remaining right to designate anydirectors to the Board.The Company's results from transactions with WPP, Starboard and other related parties, as reflected in the Consolidated Statements of Operations andComprehensive Loss, are detailed below: Years Ended December 31,(In thousands) 2018 2017 2016Revenues (1) $12,662 $13,181 $9,688 Cost of revenues 11,239 12,956 15,695Selling and marketing 158 157 1,743Research and development 186 119 3,662General and administrative 650 777 633Investigation and audit related (2) — 16,844 2,563 Interest (expense) income, net (16,023) 672 1,106(1) The Company entered into certain agreements with WPP and its affiliates that were not characterized as revenue arrangements under GAAP. Accordingly, despite cash being receivedunder these agreements, no revenue was recognized through August 31, 2018 other than imputed interest income on the net present value of anticipated future cash payments. (2) The investigation and audit related expenses relate to accounting advisory services, audit preparation support, and process improvement services provided by CrossCountryConsulting, LLC, whose managing partner served as the Company’s interim Chief Financial Officer and Treasurer for a portion of 2017 pursuant to an interim services agreement.101Table of ContentsThe Company has the following balances related to transactions with WPP, Starboard and other related parties, as reflected in the Consolidated BalanceSheets: December 31,(In thousands) 2018 2017Assets Accounts receivable, net $4,024 $2,899Prepaid expenses and other current assets 484 —Other non-current assets 65 —Liabilities Accounts payable $1,878 $2,715Accrued expenses 4,478 5,857Contract liability 2,521 2,755Financing derivatives 26,100 —Senior secured convertible notes 177,342 —Other non-current liabilities 251 —Stockholders' Equity Subscription Receivable (Additional paid-in capital) $— $10,25417.Organizational RestructuringIn December 2017, the Company implemented a reduction in force plan ("2017 Restructuring Plan") that resulted in the termination of approximately 10% ofits workforce. The reduction in force was implemented following management’s determination to reduce its staffing levels and exit certain geographicregions, in order to enable the Company to decrease its global costs and more effectively align resources to business priorities. The majority of the employeesimpacted by the reduction in force exited the Company in the fourth quarter of 2017, while the remainder exited in 2018. Total restructuring expenserecognized for the 2017 Restructuring Plan was $11.8 million. The 2017 Restructuring Plan is complete as of December 31, 2018.In June and December 2018, the Company's Board of Directors authorized management to implement additional reductions in its workforce (less than 10%)and rationalize its portfolio of leased properties due to the reductions in headcount ("2018 Restructuring Plans"). This additional restructuring effort resultedin the termination of one operating lease, the extension of the lease related to the Company's headquarters, and the sublease of three offices. Employeesseparated or to be separated from the Company as a result of these restructuring initiatives were offered severance. In connection with the 2018 RestructuringPlans, the Company expects to incur total exit-related costs of up to $13.0 million, including $10.3 million recorded in 2018. The remaining expense isexpected to be recognized through the second quarter of 2019 primarily as stock-based compensation.During the year ended December 31, 2018, the Company recognized $11.8 million in restructuring expense.The total amount accrued for restructuring is $7.3 million, of which $1.8 million is long-term and included in other non-current liabilities in theConsolidated Balance Sheets. The table below summarizes the balance of accrued restructuring expenses and the changes in the accrued amounts as of andfor the year ended December 31, 2018 by restructuring plan:2017 Restructuring Plan(In thousands)Severance pay andbenefitsOther direct costsLong-term lease exit andother direct costsTotalRestructuring expense$10,298$212$—$10,510Payments(1,340)——(1,340)Foreign exchange14——14Accrued Balance as of December 31, 2017$8,972$212$—$9,184Restructuring expense 1,275 — — 1,275Payments(10,180) — —(10,180)Foreign exchange(1) — —(1)Accrued Balance as of December 31, 2018$66$212$—$278102Table of Contents2018 Restructuring Plans(In thousands) Severance pay andbenefits Short-term lease exitand other direct costs Long-term lease exitand other direct costs TotalRestructuring expense(1) $7,145 $1,271 $1,847 $10,263Payments (2,652) (561) (37) (3,250)Foreign exchange — (2) — (2)Accrued Balance as of December 31, 2018 $4,493 $708 $1,810 $7,011(1) During the year ended December 31, 2018, the Company recognized a reduction of $0.7 million of liability related to the write-off of certain lease-related liabilities, offset by $0.5million in stock-based compensation related to the termination of certain employees, $0.5 million in accelerated depreciation on assets located within subleased properties, and $0.1million in other expenses.103Table of Contents18.Quarterly Financial Information (Unaudited)The following tables summarize quarterly financial data for 2018 and 2017. The Company’s results of operations vary and may continue to fluctuatesignificantly from quarter to quarter. The results of operations in any period should not necessarily be considered indicative of the results to be expected fromany future period.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except share and per share data) 2018 First Second Third FourthRevenues $105,919 $101,389 $102,864 $109,310Cost of revenues (1) 47,254 51,526 49,446 51,994Gross profit 58,665 49,863 53,418 57,316Selling and marketing (1) 25,905 29,647 24,866 27,977Research and development (1) 18,716 20,889 18,742 18,632General and administrative (1) 18,661 28,699 18,707 18,468Investigation and audit related 31,867 4,883 696 892Amortization of intangible assets 8,544 8,266 7,896 8,158Settlement of litigation, net — 5,250 — —Restructuring 1,257 3,833 51 6,696Total operating expenses 104,950 101,467 70,958 80,823Loss from operations (46,285) (51,604) (17,540) (23,507)Interest expense, net (2,905) (4,124) (4,682) (4,754)Other income (expense), net 77 807 (1,711) (637)(Loss) gain from foreign currency transactions (922) 1,045 (304) 1,484Loss before income taxes (50,035) (53,876) (24,237) (27,414)Income tax (provision) benefit (1,415) (2,101) (400) 210Net loss $(51,450) $(55,977) $(24,637) $(27,204)Net loss per common share: Basic and diluted $(0.93) $(1.02) $(0.42) $(0.46)Weighted-average number of shares used in per sharecalculation - Common Stock: Basic and diluted 55,227,046 55,192,741 58,212,306 59,116,831 (1) Stock-based compensation expense is included in the line items above as follows: First Second Third FourthCost of revenues $213 $3,774 $1,248 $1,114Selling and marketing 575 5,792 1,860 1,225Research and development 344 3,972 1,137 1,127General and administrative 749 9,461 2,066 2,494Restructuring — — — 468Total stock-based compensation expense $1,881 $22,999 $6,311 $6,428104Table of Contents CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except share and per share data) 2017 First Second Third FourthRevenues $100,861 $99,439 $100,323 $102,926Cost of revenues (1) 47,313 47,301 48,803 50,188Gross profit 53,548 52,138 51,520 52,738Selling and marketing (1) 29,733 31,190 29,873 39,713Research and development (1) 21,020 21,502 21,580 24,921General and administrative (1) 17,785 13,310 22,331 21,225Investigation and audit related 17,678 17,399 21,392 26,929Amortization of intangible assets 8,735 8,443 8,491 9,154Settlement of litigation, net 1,533 (915) 81,799 116Restructuring — — — 10,510Total operating expenses 96,484 90,929 185,466 132,568Loss from operations (42,936) (38,791) (133,946) (79,830)Interest expense, net (154) (252) (148) (107)Other income, net 3,184 2,683 6,619 2,719Loss from foreign currency transactions (20) (1,205) (298) (1,628)Loss before income taxes (39,926) (37,565) (127,773) (78,846)Income tax (provision) benefit (866) (1,061) (2,296) 6,940Net loss $(40,792) $(38,626) $(130,069) $(71,906)Net loss per common share: Basic and diluted $(0.71) $(0.67) $(2.26) $(1.25)Weighted-average number of shares used in per sharecalculation - Common Stock: Basic and diluted 57,274,851 57,498,228 57,547,863 57,616,774 (1) Amortization of stock-based compensation expense is included in the line items above as follows: First Second Third FourthCost of revenues $629 $433 $384 $320Selling and marketing 1,446 1,532 1,461 808Research and development 821 450 537 462General and administrative 924 409 6,340 358Total stock-based compensation expense $3,820 $2,824 $8,722 $1,948105Table of ContentsITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A.CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresWe carried out an evaluation required by the Securities Exchange Act of 1934 (the "Exchange Act"), under the supervision and with the participation of ourprincipal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, asdefined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2018. Based on this evaluation, our principal executive officer andprincipal financial officer concluded that as of December 31, 2018, these disclosure controls and procedures were not effective to provide reasonableassurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, andreported within the time periods specified in the SEC's rules and forms and to provide reasonable assurance that such information is accumulated andcommunicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisionsregarding required disclosure, due to the existence of an unremediated material weakness in our internal control over financial reporting (described below).Notwithstanding the identified material weakness, management believes that the Consolidated Financial Statements and related financial informationincluded in this 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented.Management's belief is based on a number of factors, including the remediation actions described below.Management's Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) ofthe Exchange Act. Management, under the supervision and with the participation of our principal executive officer and principal financial officer, assessedthe effectiveness of our internal control over financial reporting as of December 31, 2018 based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, managementconcluded that, as of December 31, 2018, our internal control over financial reporting was not effective in providing reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples, due to the existence of an unremediated material weakness in internal control over financial reporting. A material weakness is a deficiency, or acombination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annualor interim financial statements will not be prevented or detected on a timely basis.In our evaluation, we identified the following, which in the aggregate comprise a material weakness in our revenue accounting:•Our accounting for revenue contracts is complex and highly dependent on manual processes, and certain controls related to reviewing certainrevenue-related journal entries, evaluating evidence of product or service delivery, and account reconciliations related to unbilled revenue anddeferred revenue were not designed or operating in a consistent manner as of December 31, 2018.Deloitte has independently assessed the effectiveness of our internal control over financial reporting, and its report is included below. Deloitte has audited,and issued an unqualified opinion with respect to, our Consolidated Financial Statements for 2018, which opinion is included in Item 8, "FinancialStatements and Supplementary Data," of this 10-K.Changes in Internal Control over Financial ReportingUnder Exchange Act Rules 13a-15(d) and 15d-15(d), management is required to evaluate, with the participation of our principal executive officer andprincipal financial officer, any changes in internal control over financial reporting that occurred during each fiscal quarter that materially affected, or arereasonably likely to materially affect, our internal control over financial reporting. Other than as disclosed under "Remediation Efforts to Address MaterialWeaknesses in Internal Control over Financial Reporting" below, there were no changes in our internal control over financial reporting during our mostrecent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Remediation Efforts to Address Material Weaknesses in Internal Control Over Financial Reporting106Table of ContentsAs discussed in Item 9A, Controls and Procedures, of the 2017 10-K, we identified in our internal control assessment as of December 31, 2017 materialweaknesses relating to certain internal controls in the areas of revenue accounting, business combinations and significant asset acquisitions, financial closeand reporting processes, and tax accounting.Revenue AccountingDuring 2017 and 2018, in order to strengthen the internal controls with respect to our revenue accounting, we:•Designed and implemented compensating controls to mitigate the risk of material misstatement that existed due to our dependency on multipleaccounting systems and technologies that require modernization;•Designed and implemented controls to facilitate timely and accurate accounting for contracts in our international operations;•Improved accounting processes in-country, including consolidation of third-party accounting services, clarification of in-country roles andresponsibilities, and headquarters-level oversight and review of financial information and reconciliations;•Increased the number of staff and level of expertise in the revenue and technical accounting groups;•Implemented enhanced training on policies, procedures, controls, and products for revenue accounting and technical staff; and•Transitioned revenue accounting functions that were previously performed by consultants to our internal accounting teams.As of December 31, 2018, management determined that the material weaknesses related to accounting for contracts in our international operations andadequacy of our revenue accounting staffing resources, which were identified in the 2017 10-K, have been remediated.With respect to the remaining material weakness as of December 31, 2018, relating to the complexity of our accounting for revenue contracts and ourdependence on manual processes, management designed and implemented new controls over revenue accounting to compensate for the complex contractsand manual processes. Due to the timing of the design and implementation of these controls during the fourth quarter of 2018, however, there was insufficienttime to consistently execute against their design as of December 31, 2018. As such, management concluded that our controls over revenue accounting werenot designed or operating effectively at the reasonable assurance level as of December 31, 2018. We expect to continue to strengthen these controls until thematerial weakness is fully remediated.Business Combinations and Significant Asset AcquisitionsDuring 2018, in order to strengthen our internal controls with respect to a potential business combination or significant asset acquisition, we:•Developed a new and enhanced policy for accounting for business combinations;•Adopted a reservation of authority policy requiring Board of Directors approval for any business combinations or significant asset acquisitions; and•Performed an assessment of the finance department's technical accounting competencies and capabilities to evaluate and properly account for aproposed business combination or asset acquisition, including evaluation of key assumptions in forecasts to support the value for any businesscombinations and asset acquisitions.As of December 31, 2018, management determined that the material weakness related to business combinations and significant asset acquisitions, which wasidentified in the 2017 10-K, has been remediated.Financial Close and ReportingDuring 2017 and 2018, in order to strengthen our internal controls with respect to our financial close and reporting processes, we:•Designed and implemented controls to mitigate risks associated with manual processes and complex accounting transactions;•Increased the number, experience level and skills of the personnel involved in our general ledger and financial reporting functions through hiringand improved training programs;•Aligned our team and closing processes to reduce the amount of time it takes to complete the close cycle;•Added additional corporate level reviews of our financial results within both domestic and international subsidiaries, including more robust analysisof fluctuations, to improve our ability to review, understand and analyze our financial results, trends and key performance metrics;•Enhanced and strengthened our documentation and review procedures relating to our key account reconciliations, including additional supervisorycontrols;•Developed a responsibility matrix to facilitate oversight and responsibility over the financial close, and increased communication of accountability;and•Transitioned close processes and procedures that were previously performed by outside parties to our internal accounting teams.107Table of ContentsAs of December 31, 2018, management determined that the material weakness related to our financial close and reporting processes, which was identified inthe 2017 10-K, has been remediated.Tax AccountingDuring 2017 and 2018, in order to strengthen our internal controls with respect to our tax accounting, we:•Designed and implemented new quarterly and annual control processes over our tax positions and processes;•Hired additional tax personnel to facilitate timely execution of controls; and•Engaged an external accounting firm to provide an additional layer of review over our tax reporting process, including the review of our quarterlyand annual income tax provision calculations as well as our annual U.S. federal and material state income tax returns.As of December 31, 2018, management determined that the material weakness related to tax accounting, which was identified in the 2017 10-K, has beenremediated.Compliance ProgramAs discussed in Item 9A, Controls and Procedures, of the 2017 10-K, we have taken a number of actions to reinforce a culture of integrity, accountability,and adherence to established internal controls, policies and procedures, including through formal communications, town hall meetings, and mandatoryemployee training, which continued through 2018. We have a Compliance Coordinating Committee at the executive level that oversees our complianceprogram, which includes a policies and procedures library, education and mandatory training, and monitoring for compliance and corrective action whereappropriate. The program also includes policies for receiving, evaluating and reporting on allegations of misconduct or noncompliance with our Code ofBusiness Conduct and Ethics and our Reporting and Non-Retaliation Policy (our corporate whistleblower program). We intend to continue our focus onmaintaining a strong "tone at the top" and culture of compliance and control consciousness in 2019.Inherent Limitation on the Effectiveness of Internal ControlsThe effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing,implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system ofinternal control over financial reporting can only provide reasonable, not absolute, assurance that its objectives will be met. In addition, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary orappropriate for our business, but we cannot assure that such improvements will be sufficient to provide us with effective internal control over financialreporting in 2019 and future periods.108Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors of comScore, Inc.Opinion on Internal Control over Financial ReportingWe have audited the internal control over financial reporting of comScore, Inc. and its subsidiaries (the “Company”) as of December 31, 2018, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, theCompany has not maintained effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control -Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedfinancial statements as of and for the year ended December 31, 2018, of the Company and our report dated February 28, 2019 expressed an unqualifiedopinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.Material WeaknessesA material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesseshave been identified and included in management's assessment as set forth below:•The Company enters into complex multiple-performance obligation revenue arrangements and the controls over the accounting for revenue ishighly dependent on manual processes. Controls related to reviewing revenue related journal entries, evaluating evidence of product or servicedelivery, and account reconciliations related to unbilled revenue and deferred revenue were not designed or operating in a consistent manner.109Table of ContentsThese material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financialstatements as of and for the year ended December 31, 2018, of the Company, and this report does not affect our report on such financial statements./s/ Deloitte & Touche LLPMcLean, VirginiaFebruary 28, 2019110Table of ContentsITEM 9B.OTHER INFORMATIONNot Applicable.111Table of ContentsPART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCECertain information regarding our directors and executive officers required by Item 10 of Part III is set forth in Item 1 of Part I "Business - Executive Officersand Directors." Other information required by Item 10 of Part III, including information regarding any material changes to the process by which securityholders may recommend nominees to the Board of Directors, is included in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders, and isincorporated herein by reference. Information required by Item 10 of Part III regarding our Audit Committee is set forth in our Proxy Statement relating to our2019 Annual Meeting of Stockholders and is incorporated herein by reference. Information relating to our compliance with Section 16(a) of the ExchangeAct is set forth in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders and is incorporated herein by reference.We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accountingofficer or controller, and persons performing similar functions. We have posted the Code of Business Conduct and Ethics on our investor relations websiteunder the heading "Corporate Governance" at www.comscore.com. To the extent permissible under Nasdaq rules, we intend to disclose any amendments toour Code of Business Conduct and Ethics, as well as waivers of the provisions thereof, on our investor relations website under the heading "CorporateGovernance" at www.comscore.com.ITEM 11.EXECUTIVE COMPENSATIONInformation required by Item 11 of Part III is included in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders and is incorporatedherein by reference.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSInformation required by Item 12 of Part III is included in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders and is incorporatedherein by reference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation required by Item 13 of Part III is included in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders and is incorporatedherein by reference.ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICESInformation required by Item 14 of Part III is included in our Proxy Statement relating to our 2019 Annual Meeting of Stockholders and is incorporatedherein by reference.112Table of ContentsPART IV ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) The following documents are filed as part of this Annual Report on Form 10-K:(1) Financial statements and reports of our independent registered public accounting firms. See (i) Index to Consolidated Financial Statements at Item 8 and (ii) Item 9A of this Annual Report on Form 10-K.(2) All other schedules, for which provision is made in the applicable accounting regulations of the SEC, are omitted, as the required informationis inapplicable or the information is presented in the Consolidated Financial Statements and Notes to Consolidated Financial Statements in Item 8 of thisAnnual Report on Form 10-K.(3) Exhibits. The exhibits filed as part of this report are listed under “Exhibits” at subsection (b) of this Item 15.(b) Exhibits113Table of ContentsEXHIBITS ExhibitNo. ExhibitDocument 3.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant'sRegistration Statement on Form S-1, as amended, filed June 12, 2007) (File No. 333-141740) 3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of comScore, Inc. (incorporated by reference to Exhibit 4.2to the Registrant’s Registration Statement on Form S-8, filed June 4, 2018) (File No. 333-225400) 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of comScore, Inc., as filed with the Secretary of State of the State ofDelaware on February 9, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed February 9,2017) (File No. 001-33520) 3.4 Certificate of Elimination of Series A Junior Participating Preferred Stock of comScore, Inc., as filed with the Secretary of State of the State ofDelaware on September 29, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed October 4,2017) (File No. 001-33520) 3.5 Amended and Restated Bylaws of comScore, Inc (incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Qfor the period ended June 30, 2018, filed August 10, 2018) (File No. 001-33520). 4.1+ Form of Senior Secured Convertible Note (Initial Notes), as amended 4.2+ Form of Senior Secured Convertible Note (Option Notes), as amended 4.3 Form of Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed January 16, 2018) (File No.001-33520) 4.4 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1, asamended, filed June 12, 2007) (File No. 333-141740) 10.1 Patent Purchase, License and Settlement Agreement, dated as of December 20, 2011, by and among comScore, Inc., The Nielsen Company(US) LLC and NetRatings LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed December21, 2011) (File No. 001-33520) 10.2 Purchase Agreement, dated as of December 20, 2011, by and among comScore, Inc. and The Nielsen Company (US) LLC (incorporated byreference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed December 21, 2011) (File No. 001-33520) 10.3 Voting Agreement, dated as of December 20, 2011, by and among comScore, Inc. and The Nielsen Company (US) LLC (incorporated byreference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed December 12, 2011) (File No. 001-33520) 10.4 Stock Purchase Agreement, dated as of February 11, 2015, by and among Cavendish Square Holding B.V., WPP Group USA, Inc., CSWorldnet Holding B.V. and comScore, Inc. (incorporated by reference to Exhibit (d)(1) to Cavendish Square Holding B.V.’s and WPP plc’sTender Offer Statement on Schedule TO, filed February 20, 2015) (File No. 005-83687) 10.5 Stockholders Rights Agreement, dated as of February 11, 2015, by and among comScore, Inc., WPP Group USA, Inc. and Cavendish SquareHolding B.V. (incorporated by reference to Exhibit (d)(3) to Cavendish Square Holding B.V.’s and WPP plc’s Tender Offer Statement onSchedule TO, filed February 20, 2015) (File No. 005-83687) 10.6 Voting Agreement, dated as of February 11, 2015, by and among comScore, Inc., WPP Group USA, Inc. and Cavendish Square Holding B.V.(incorporated by reference to Exhibit (d)(4) to Cavendish Square Holding B.V.’s and WPP plc’s Tender Offer Statement on Schedule TO,filed February 20, 2015) (File No. 005-83687) 10.7 Strategic Alliance Agreement, dated February 11, 2015, by and between comScore, Inc. and WPP Group USA, Inc. (incorporated by referenceto Exhibit (d)(5) to Cavendish Square Holding B.V.’s and WPP plc’s Tender Offer Statement on Schedule TO, filed February 20, 2015) (FileNo. 005-83687) 10.8 Purchase Agreement, dated as of April 1, 2015, by and between comScore, Inc. and Cavendish Square Holding B.V. (incorporated byreference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, filed April 3, 2015) (File No. 001-33520) 114Table of Contents10.9 Notice of Termination, dated as of January 3, 2018, to the Credit Agreement dated as of September 26, 2013, by and among comScore, Inc.,the subsidiaries of comScore, Inc. identified therein, Bank of America, N.A., SunTrust Bank, and the other lenders party thereto (incorporatedby reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed March 23, 2018)(File No. 001-33520) 10.10 Amended and Restated Security Agreement (Deposit Accounts - Specific), dated as of January 11, 2018, by and among comScore, Inc., thesubsidiaries of comScore, Inc. identified therein, Bank of America, N.A., and the other lenders party thereto (incorporated by reference toExhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed March 23, 2018) (File No. 001-33520) 10.11 Securities Purchase Agreement, dated as of January 16, 2018, by and among comScore, Inc. and the investors listed on the Schedule ofBuyers attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed January 16, 2018)(File No. 001-33520) 10.12 Guaranty Agreement, dated as of January 16, 2018, made by the subsidiary guarantors signatory thereto (incorporated by reference to Exhibit10.2 to the Registrant’s Current Report on Form 8-K, filed January 16, 2018) (File No. 001-33520) 10.13 Pledge and Security Agreement, dated as of January 16, 2018, made by comScore, Inc., the subsidiaries signatory thereto and StarboardValue and Opportunity Master Fund Ltd., as Collateral Agent (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Reporton Form 8-K, filed January 16, 2018) (File No. 001-33520) 10.14 Registration Rights Agreement, dated as of January 16, 2018, by and among comScore, Inc. and the investors listed on the Schedule ofBuyers attached thereto (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed January 16, 2018)(File No. 001-33520) 10.15 Agreement between comScore, Inc. and Starboard Value LP, dated as of September 28, 2017 (incorporated by reference to Exhibit 10.1 to theRegistrant’s Current Report on Form 8-K, filed October 4, 2017) (File No. 001-33520) 10.16 Amendment Agreement, dated as of April 18, 2018, by and among comScore, Inc., Starboard Value LP and certain affiliates of StarboardValue LP (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed April 20, 2018) (File No. 001-33520) 10.17 First Amendment to Senior Secured Convertible Notes, dated as of May 17, 2018, by and between comScore, Inc., Starboard Value andOpportunity Master Fund Ltd. and each of the other investors listed on the signature pages attached thereto (incorporated by reference toExhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed May 17, 2018) (File No. 001-33520) 10.18 Second Amendment to Senior Secured Convertible Notes, dated as of August 8, 2018, by and between comScore, Inc., Starboard Value andOpportunity Master Fund Ltd. and each of the other investors listed on the signature pages attached thereto (incorporated by reference toExhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed August 9, 2018) (File No. 001-33520) 10.19 Agreement, dated as of November 13, 2018, by and between comScore, Inc., Starboard Value and Opportunity Master Fund Ltd. and each ofthe other investors listed on the signature pages attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Reporton Form 8-K, filed on November 13, 2018) (File No. 001-33520) 10.20 Deed of Lease between South of Market LLC (as Landlord) and comScore, Inc. (as Tenant), dated December 21, 2007 (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed February 5, 2008) (File No. 001-33520) 10.21 Amendment No. 6 to Deed of Lease, dated as of May 30, 2018, by and between South of Market LLC and comScore, Inc. (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520) 10.22* Consulting Agreement, dated as of March 25, 2018, by and between comScore, Inc. and Susan Riley (incorporated by reference to Exhibit10.1 to the Registrant’s Current Report on Form 8-K, filed March 26, 2018) (File No. 001-33520) 10.23* Executive Employment Agreement, dated as of April 20, 2018, by and between comScore, Inc. and Bryan Wiener (incorporated by referenceto Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed April 26, 2018) (File No. 001-33520) 10.24* Performance Restricted Stock Units Award Notice, dated as of June 5, 2018, by and between comScore, Inc. and Bryan Wiener (incorporatedby reference to Exhibit 10.46 to the Registrant’s Registration Statement on Form S-1, filed July 19, 2018) (File No. 333-226246) 10.25* Restricted Stock Units and Common Stock Award Notice, dated as of June 5, 2018, by and between comScore, Inc. and Bryan Wiener(incorporated by reference to Exhibit 10.47 to the Registrant’s Registration Statement on Form S-1, filed July 19, 2018) (File No. 333-226246)115Table of Contents 10.26* 2007 Equity Incentive Plan, as amended and restated September 8, 2014 (incorporated by reference to Exhibit 10.2 to the Registrant'sQuarterly Report on Form 10-Q, filed October 29, 2014) (File No. 001-33520) 10.27* Form of Notice of Grant of Stock Option under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to the Registrant’sRegistration Statement on Form S-1, filed April 2, 2007) (File No. 333-141740) 10.28* Form of Notice of Grant of Restricted Stock under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to the Registrant’sRegistration Statement on Form S-1, filed April 2, 2007) (File No. 333-141740) 10.29* Form of Notice of Grant of Restricted Stock Units under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to theRegistrant’s Registration Statement on Form S-1, filed April 2, 2007) (File No. 333-141740) 10.30* 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on FormS-8, filed June 4, 2018) (File No. 333-225400) 10.31* Form of Restricted Stock Units Award Notice for Employees (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report onForm 8-K, filed June 5, 2018) (File No. 001-33520) 10.32* Form of Restricted Stock Units and Common Stock Award Notice for Employees (incorporated by reference to Exhibit 10.4 to theRegistrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520) 10.33* Form of Restricted Stock Units Award Notice for Directors (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report onForm 8-K, filed June 5, 2018) (File No. 001-33520) 10.34* Form of Common Stock Award Notice for Employees (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form8-K, filed June 5, 2018) (File No. 001-33520) 10.35* Form of Common Stock Award Notice for Directors (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520) 10.36* Form of Common Stock Award Notice for Consultants (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form8-K, filed June 5, 2018) (File No. 001-33520) 10.37* Form of Performance Restricted Stock Units Award Agreement for CEO/President (incorporated by reference to Exhibit 10.2 to theRegistrant's Quarterly Report on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No. 001-33520) 10.38* Form of Restricted Stock Units Award Agreement for CEO/President (incorporated by reference to Exhibit 10.3 to the Registrant's QuarterlyReport on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No. 001-33520) 10.39* Form of Performance Restricted Stock Units Award Agreement for Employees (incorporated by reference to Exhibit 10.4 to the Registrant'sQuarterly Report on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No. 001-33520) 10.40* Form of Restricted Stock Units Award Agreement for Employees (incorporated by reference to Exhibit 10.5 to the Registrant's QuarterlyReport on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No. 001-33520) 10.41* Form of Restricted Stock Units Award Agreement for President (Sign-On Award) (incorporated by reference to Exhibit 10.6 to the Registrant'sQuarterly Report on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No. 001-33520) 10.42* Employment Agreement, dated September 4, 2018, by and between comScore, Inc. and Sarah Hofstetter (incorporated by reference to Exhibit10.1 to the Registrant’s Current Report on Form 8-K, filed September 10, 2018) (File No. 001-33520) 10.43* Form of Change of Control and Severance Agreement (CFO and General Counsel) (incorporated by reference to Exhibit 10.2 to theRegistrant's Current Report on Form 8-K, filed on September 10, 2018) (File No. 001-33520) 10.44* Form of Change of Control and Severance Agreement (Other Executive Officers) (incorporated by reference to Exhibit 10.3 to theRegistrant's Current Report on Form 8-K, filed on September 10, 2018) (File No. 001-33520) 10.45 Form of Indemnification Agreement for directors and executive officers (incorporated by reference to Exhibit 10.3 to the Registrant’s CurrentReport on Form 8-K, filed October 4, 2017) (File No. 001-33520) 10.46* Separation and General Release Agreement, dated as of January 12, 2017, by and between comScore, Inc. and Christiana Lin (incorporatedby reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed January 12, 2017) (File No. 001-33520) 116Table of Contents10.47* Consulting Agreement, dated as of January 12, 2017, by and between comScore, Inc. and Christiana Lin (incorporated by reference toExhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed January 12, 2017) (File No. 001-33520)10.48* Separation and General Release Agreement, dated as of June 15, 2017, between comScore, Inc. and Michael Brown (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 16, 2017) (File No. 001-33520) 10.49* Consulting Agreement, dated as of June 15, 2017, between comScore, Inc. and Michael Brown (incorporated by reference to Exhibit 10.2 tothe Registrant’s Current Report on Form 8-K, filed June 16, 2017) (File No. 001-33520) 10.50* Separation and General Release Agreement, dated as of September 8, 2017, between comScore, Inc. and David Chemerow (incorporated byreference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K, filed March 23, 2018) (File No. 001-33520) 10.51* Retirement and Transition Services Agreement, dated as of October 24, 2017, between comScore, Inc. and Gian M. Fulgoni (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed October 25, 2017) (File No. 001-33520) 10.52* Amendment No. 1, dated as of November 13, 2017, to the Retirement and Transition Services Agreement dated as of October 24, 2017,between comScore, Inc. and Gian M. Fulgoni (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filedNovember 15, 2017) (File No. 001-33520) 10.53* Separation and General Release Agreement, dated as of December 5, 2017, between comScore, Inc. and Cameron Meierhoefer (incorporatedby reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed December 6, 2017) (File No. 001-33520) 21.1+ List of Subsidiaries 23.1+ Consent of Deloitte & Touche LLP 23.2+ Consent of Ernst & Young LLP 31.1+ Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2+ Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1+ Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 32.2+ Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002 101.1 XBRL Instance Document 101.2 XBRL Taxonomy Extension Schema Document 101.3 XBRL Taxonomy Extension Calculation Linkbase Document 101.4 XBRL Taxonomy Extension Definition Linkbase Document 101.5 XBRL Taxonomy Extension Label Linkbase Document 101.6 XBRL Taxonomy Extension Presentation Linkbase Document *Management contract or compensatory plan or arrangement. +Filed or furnished herewith117Table of ContentsITEM 16.FORM 10-K SUMMARYNone.118Table of ContentsSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized. COMSCORE, INC. By:/s/ Bryan J. Wiener Bryan J. Wiener Chief Executive Officer (Principal Executive Officer) By:/s/ Gregory A. Fink Gregory A. Fink Chief Financial Officer and Treasurer (Principal Financial Officer andPrincipal Accounting Officer)February 28, 2019119Table of ContentsPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. Signature TitleDate /s/ Bryan J. Wiener Chief Executive OfficerFebruary 28, 2019Bryan J. Wiener (Principal Executive Officer) /s/ Gregory A. Fink Chief Financial Officer and TreasurerFebruary 28, 2019Gregory A. Fink (Principal Financial Officer andPrincipal Accounting Officer) /s/ Brent D. Rosenthal Non-Executive ChairmanFebruary 28, 2019Brent D. Rosenthal /s/ William P. Livek Vice ChairmanFebruary 28, 2019William P. Livek /s/ Dale Fuller DirectorFebruary 28, 2019Dale Fuller /s/ Jacques Kerrest DirectorFebruary 28, 2019Jacques Kerrest /s/ Michelle McKenna DirectorFebruary 28, 2019Michelle McKenna /s/ Paul Reilly DirectorFebruary 28, 2019Paul Reilly /s/ Robert Norman DirectorFebruary 28, 2019Robert Norman 120Table of ContentsExhibit 4.1[FORM OF SENIOR SECURED CONVERTIBLE NOTE]NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THESECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THESECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCEOF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACTOF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A FORMREASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAIDACT, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDINGTHE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGINACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANYTRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDINGSECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THEAMOUNT SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.COMSCORE, INC.SENIOR SECURED CONVERTIBLE NOTEIssuance Date: January 16, 2018Original Principal Amount: U.S. $[●](Reflects the amendments dated May 17, 2018, August 8, 2018 and November 13, 2018)FOR VALUE RECEIVED, comScore, Inc., a Delaware corporation (the "Company"), hereby promises to pay to[BUYER] or registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined below) the amount set out aboveas the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the"Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case inaccordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate from thedate set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, whether upon an Interest Date(as defined below), the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the termshereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or Exhibit 4.1replacement hereof, this "Note") is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities PurchaseAgreement on the Initial Closing Date (collectively, the "Notes" and such other Senior Secured Convertible Notes, the "OtherNotes"). Certain capitalized terms used herein are defined in Section 31.(1)PAYMENTS OF PRINCIPAL; PREPAYMENT. On the Maturity Date, the Company shall pay to theHolder an amount in cash representing all outstanding Principal, any accrued and unpaid Interest and any accrued and unpaid LateCharges (as defined in Section 24(b)) on such Principal and Interest. The "Maturity Date" shall be January 16, 2022, as may beextended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall haveoccurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred andbe continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to curewould result in an Event of Default and (ii) through the date that is ten (10) Business Days after the consummation of a Change ofControl in the event that a Change of Control is publicly announced or a Change of Control Notice (as defined in Section 5(b)) isdelivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may not prepay any portion of theoutstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.(2)INTEREST.(a) Interest on this Note shall commence accruing on the Issuance Date at the Interest Rate and shall becomputed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears for each Calendar Quarter on thefirst (1st) Business Day of each Calendar Quarter after the Issuance Date (each, an "Interest Date").(b) Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable InterestDate, in whole or in part, in shares of Common Stock ("Interest Shares") so long as there is no Equity Conditions Failure (other thanas a result of the delivery of an Interest Blocker Notice (as defined below)) occurring on the applicable Interest Date; provided,however, that the Company may, at its option following written notice to each holder of the Notes and any Additional Notes on orprior to the applicable Interest Notice Due Date (the date such notice is delivered to the Holder and holders of Other Notes andAdditional Notes, the "Interest Notice Date"), elect to pay Interest on any Interest Date in cash ("Cash Interest") or in a combinationof Cash Interest and Interest Shares. Each Interest Election Notice shall specify the amount or percentage of Interest that the Companywill pay in respect of the Interest Date as Cash Interest and Interest Shares which amounts or percentages, as applicable, when addedtogether, must equal the applicable Interest (or 100% thereof, as applicable) due on such Interest Date. If the Company elects (or isdeemed to have elected by operation of this Section 2) the payment of applicable Interest in Interest Shares, in whole or in part, and anEquity Conditions Failure (other than the delivery to the Company of an Interest Blocker Notice) occurs at any time prior to theapplicable Interest Date that is expected to last through the applicable Interest Date (which is not waived in writing by the Holder), theCompany shall provide the Holder a written notice to that effect by no later than the Trading Day immediately following the Companyhaving knowledge of such Equity Conditions 2 Exhibit 4.1Failure, indicating that unless the Holder waives the Equity Conditions Failure in writing, the applicable portion of Interest as to whichthe Holder did not waive the Equity Conditions shall be paid as Cash Interest. If any portion of Interest for a particular Interest Dateshall be paid in Interest Shares, then on the applicable Interest Date, the Company shall issue to the Holder, such number of shares ofCommon Stock equal to (a) the amount of Interest payable on the applicable Interest Date in Interest Shares divided by (b) the InterestConversion Price as in effect on the applicable Interest Date. All Interest Shares shall be fully paid and nonassessable shares ofCommon Stock (rounded to the nearest whole share in accordance with Section 3(a)). Except as expressly provided in this Section 2,the Company shall pay the applicable Interest in the same ratio of Interest Shares and Cash Interest on the Notes, the Other Notes andany Additional Notes. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery to theHolder of shares of Common Stock as Interest pursuant to this Section 2; provided, however, that the Holder shall be solelyresponsible for any transfer taxes if the Interest Shares are to be registered, issued or delivered in the name of a Person other than theHolder.(c) Notwithstanding the foregoing, if (i) the Company elects (or is deemed to have elected by operation of thisSection 2) to pay all or any portion of Interest due on any Interest Date in Interest Shares, (ii) the Company is permitted pursuant to thisSection 2 to pay all or any portion of Interest due on such Interest Date in Interest Shares if not for the delivery to the Company of anInterest Blocker Notice and (iii) within two (2) Business Days following the applicable Interest Notice Date the Holder has delivered tothe Company a written notice (an "Interest Blocker Notice") (A) stating that such payment of Interest in Interest Shares would resultin a violation of Section 3(d), (B) specifying the portion of the applicable Interest with respect to which the payment in Interest Shareswould result in a violation of Section 3(d) if such payment of Interest in Interest Shares were effected (such amount so specified isreferred to herein as the "Designated Interest Amount") and (C) requesting the Company hold the Designated Interest Amountissuable to the Holder in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and its otherAttribution Parties exceeding the Maximum Percentage, at which time or times the Company shall promptly upon written notice fromthe Holder deliver such Interest Shares to the extent as if there had been no such limitation. Any Interest Shares held in abeyancepursuant to the provisions of this Section 2(c) shall satisfy the Company's requirement to pay the applicable Interest corresponding tothe number of Interest Shares so held in abeyance until the Company receives a notice from the Holder instructing the Company thatthe Maximum Percentage no longer prevents the Holder from receiving such Interest Shares.(d) Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rateand be payable by way of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each Conversion Date(as defined in Section 3(c)(i)) in accordance with Section 3(b)(i) and/or on each Redemption Date.(3) CONVERSION OF NOTES. At any time or times after the first (1st) Trading Day following the Pricing Date (asdefined in Section 3(b)(ii)) (the "Initial Convertibility Date"), this Note shall be convertible into shares of Common Stock, on theterms and conditions set forth in this Section 3. 3 Exhibit 4.1(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the InitialConvertibility Date, the Holder shall be entitled to convert all or any portion of the outstanding and unpaid Conversion Amount intofully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below).The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in theissuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock to the nearestwhole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance anddelivery of Common Stock upon conversion of any Conversion Amount; provided, however, that the Holder shall be solelyresponsible for any transfer taxes if the shares of Common Stock registrable, issuable or deliverable pursuant to a Conversion Noticeare to be registered, issued or delivered in the name of a Person other than the Holder.(b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any ConversionAmount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the"Conversion Rate").(i) "Conversion Amount" means the sum of (A) the portion of the Principal to be converted,redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with respect tosuch Principal and (C) accrued and unpaid Late Charges, if any, with respect to such Principal and Interest.(ii) "Conversion Price" means, as of any Conversion Date or other date of determination, a price pershare equal to the greater of: (A) 130% of the arithmetic average of the Weighted Average Price of the Common Stock on eachTrading Day during the ten (10) consecutive Trading Days commencing on the later of (x) the Initial Closing Date and (y) thePublic Announcement Date (the last date in such period, the "Pricing Date") (all such determinations to be appropriatelyadjusted for any stock split, stock dividend, stock combination, reclassification or other similar transaction occurring duringsuch period) and (B) $28.00, subject to adjustment as provided herein and pursuant to Section 4(q) of the Securities PurchaseAgreement.(c) Mechanics of Conversion.(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on anydate on or after the Initial Convertibility Date (a "Conversion Date"), the Holder shall (A) deliver to the Company on suchdate, a copy of an executed notice of conversion substantially in the form attached hereto as Exhibit I (the "ConversionNotice") and (B) if required by Section 3(c)(iii), but without delaying the Company's requirement to deliver shares of CommonStock on the applicable Share Delivery Date (as defined below), surrender this Note to a common carrier for delivery to theCompany as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in thecase of its loss, theft or destruction). No ink-original Conversion Notice shall be required, nor shall any medallion guarantee (orother type of guarantee or notarization) of any Conversion Notice be required. On or before the first (1st) Business Dayfollowing the date of receipt of a Conversion Notice, the Company shall transmit a 4 Exhibit 4.1confirmation of receipt of such Conversion Notice to the Holder and the Company's transfer agent (the "Transfer Agent"). Onor before the second (2nd) Trading Day following the date of receipt of a Conversion Notice (a "Share Delivery Date"), theCompany shall, (x) if the Transfer Agent is participating in the Depository Trust Company ("DTC") Fast Automated SecuritiesTransfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to theHolder's or its designee's balance account with DTC through its Deposit Withdrawal At Custodian system or (y) if the TransferAgent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specifiedin the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares ofCommon Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required bySection 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount beingconverted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of thisNote and at its own expense, issue and deliver to the Holder a new Note (in accordance with Section 18(d)) representing theoutstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon aconversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on theConversion Date, irrespective of the date such shares of Common Stock are credited to the Holder's account with DTC or thedate of delivery of the certificates evidencing such shares of Common Stock, as the case may be.(ii) Company's Failure to Timely Convert. If the Company shall fail on or prior to the applicable ShareDelivery Date to issue and deliver a certificate to the Holder (if the Transfer Agent is not participating in the DTC FastAutomated Securities Transfer Program), or credit the Holder's balance account with DTC (if the Transfer Agent isparticipating in the DTC Fast Automated Securities Transfer Program), for the number of shares of Common Stock to whichthe Holder is entitled upon the Holder's conversion of any Conversion Amount (a "Conversion Failure"), then the Holder,upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the casemay be, any portion of this Note that has not been converted pursuant to such Conversion Notice; provided that the voiding ofa Conversion Notice shall not affect the Company's obligations to make any payments which may have accrued prior to thedate of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail on orprior to the applicable Share Delivery Date to issue and deliver a certificate to the Holder, if the Transfer Agent is notparticipating in the DTC Fast Automated Securities Transfer Program, or credit the Holder's balance account with DTC, if theTransfer Agent is participating in the DTC Fast Automated Securities Transfer Program, for the number of shares of CommonStock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount or on any date of theCompany's obligation to deliver shares of Common Stock as contemplated pursuant to clause (y) below, and if after suchTrading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of asale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a"Buy-In"), then the Company shall, within three (3) Trading Days after the Holder's request and in the Holder's 5 Exhibit 4.1discretion, either (x) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokeragecommissions) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation toissue and deliver such certificate or certificates or credit the Holder's balance account with DTC for the shares of CommonStock to which the Holder is otherwise entitled upon the Holder's conversion of the applicable Conversion Amount shallterminate, or (y) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares ofCommon Stock or credit the Holder's balance account with DTC for such shares of Common Stock and pay cash to the Holderin an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock,times (B) the Closing Sale Price of the Common Stock on the applicable Conversion Date. Nothing herein shall limit theHolder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decreeof specific performance and/or injunctive relief with respect to the Company's failure to timely deliver shares of Common Stockupon conversion of this Note as required pursuant to the terms hereof.(iii) Registration; Book-Entry. The Company shall maintain a register (the "Register") for therecordation of the names and addresses of the holders of each Note and the Principal amount of the Notes (and stated interestthereon) held by such holders (the "Registered Notes"). The entries in the Register shall be conclusive and binding for allpurposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded inthe Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of Principal andInterest, if any, hereunder, notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or inpart only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign or sell all or part ofany Registered Note by the Holder, in form and substance reasonably satisfactory to the Company, the Company shall recordthe information contained therein in the Register and issue one or more new Registered Notes in the same aggregate Principalamount as the Principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section17. The Company shall be entitled to act and rely upon any such request without inquiry as to the genuineness thereof, andwithout liability of any type or nature arising therefrom. Notwithstanding anything to the contrary in this Section 3(c)(iii), theHolder may assign the Note or any portion thereof to an Affiliate of such Holder or a Related Fund of such Holder withoutdelivering a request to assign or sell such Note to the Company and the recordation of such assignment or sale in the Register (a"Related Party Assignment"); provided, that (x) the Company may continue to deal solely with such assigning or sellingHolder unless and until such Holder has delivered a request, in form and substance reasonably satisfactory to the Company, toassign or sell such Note or portion thereof to the Company for recordation in the Register; and (y) such assigning or sellingHolder shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register (the "Related PartyRegister") comparable to the Register on behalf of the Company, and any such assignment or sale shall be effective uponrecordation of such assignment or sale in the Related Party Register. Notwithstanding anything to the contrary set forth herein,upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically 6 Exhibit 4.1surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B)the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice)requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain recordsshowing the Principal, Interest and Late Charges, if any, converted and the dates of such conversions or shall use such othermethods, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note uponconversion except as provided above.(iv) Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Noticerelating to this Note and one or more holders of Other Notes or Additional Notes for the same Conversion Date and theCompany can convert some, but not all, of such portions of this Note, the Other Notes and the Additional Notes submitted forconversion, the Company, subject to Section 3(d), shall convert from the Holder and each holder of Other Notes andAdditional Notes electing to have this Note, the Other Notes or Additional Notes converted on such date a pro rata amount ofsuch holder's portion of the Note, its Other Notes and/or Additional Notes submitted for conversion based on the Principalamount of this Note, the Other Notes and/or Additional Notes submitted for conversion on such date by such holder relative tothe aggregate Principal amount of this Note and all Other Notes and Additional Notes submitted for conversion on such date.In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion ofthis Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and such dispute shallbe resolved in accordance with Section 23.(d) Beneficial Ownership Limitation. The Company shall not deliver any shares of Common Stockpursuant to the terms and conditions of this Note, and the Holder shall not have the right to any shares otherwise issuable orotherwise deliverable pursuant to the terms and conditions of this Note and any such delivery shall be null and void and treatedas if never made, to the extent that, immediately after giving effect to such issuance, the Holder together with its otherAttribution Parties collectively would beneficially own in excess of the Maximum Percentage of the number of shares ofCommon Stock outstanding. For purposes of the foregoing sentence, the aggregate number of shares of Common Stockbeneficially owned by the Holder and its other Attribution Parties shall include the number of shares of Common Stockbeneficially owned by the Holder and all of its other Attribution Parties plus the number of shares of Common Stock issuablepursuant to the terms of this Note with respect to which the determination of such sentence is being made, but shall exclude thenumber of shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion ofthis Note beneficially owned by the Holder or any of its other Attribution Parties and (ii) exercise or conversion of theunexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertiblenotes or convertible preferred stock or warrants, including any Additional Notes and Warrants) beneficially owned by theHolder or any of its other Attribution Parties subject to a limitation on conversion or exercise analogous to the limitationcontained in this Section 3(d). For purposes of this Section 3(d), beneficial 7 Exhibit 4.1ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of determining the numberof outstanding shares of Common Stock the Holder may acquire pursuant to the terms of this Note without exceeding theMaximum Percentage, the Holder, absent other knowledge, may rely on the number of outstanding shares of Common Stockas reflected in (i) the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Reporton Form 8-K or other public filing with the SEC, as the case may be, (ii) a more recent public announcement by the Companyor (iii) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stockoutstanding (the "Reported Outstanding Share Number"). If the Company receives a Conversion Notice from the Holder ata time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number,the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extentthat such Conversion Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section3(d), to exceed the Maximum Percentage, the Holder shall, within one (1) Business Day thereafter, notify the Company of areduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. The number of outstandingshares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company,including this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding ShareNumber was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Notewould result in the Holder and its other Attribution Parties being deemed to beneficially own, in the aggregate, more than theMaximum Percentage of the number of outstanding shares of Common Stock, the number of shares by which the Holder's andits other Attribution Parties' aggregate beneficial ownership would exceed the Maximum Percentage (the "Excess Shares")shall be deemed null and void and any portion of the Conversion Amount so converted shall be reinstated, and the Holder shallnot have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder mayfrom time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified insuch notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) dayafter such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and its otherAttribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. The provisions of thisparagraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section3(d) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistentwith the intended beneficial ownership limitation contained in this Section 3(d) or to make changes or supplements necessary ordesirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shallapply to a successor holder of this Note.(4) RIGHTS UPON EVENT OF DEFAULT.(a) Event of Default. Each of the following events shall constitute an "Event of Default": 8 Exhibit 4.1(i) the failure of the applicable Registration Statement required to be filed pursuant to the RegistrationRights Agreement to be filed or declared effective within the applicable time periods specified in the Registration RightsAgreement, or, at any time while the applicable Registration Statement is required to be maintained effective pursuant to theterms of the Registration Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason(including, without limitation, the issuance of a stop order) and such lapse continues for a period of greater than ten (10)consecutive Trading Days or for more than an aggregate of twenty (20) Trading Days in any 365-day period or suchRegistration Statement is unavailable to any holder of the Notes for sale of all of such holder's Registrable Securities inaccordance with the terms of the Registration Rights Agreement (unless such unavailability is during an Allowable GracePeriod (as defined in the Registration Rights Agreement));(ii) (A) the suspension of the Common Stock from trading on an Eligible Market, or, on or after April30, 2019, on a Qualified Market, for a period of more than five (5) consecutive Trading Days or for more than an aggregate often (10) Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed or quoted for trading on anEligible Market;(iii) the failure of the Common Stock to be listed or quoted for trading on or after April 30, 2019, on aQualified Market;(iv) the Company's delivery of written notice to the Holder or any holder of the Other Notes or anyAdditional Notes, including by way of public announcement or through any of its agents, at any time, of its intention not tocomply with a valid request for conversion of this Note, any Other Notes or any Additional Notes into shares of CommonStock that is validly tendered in accordance with the provisions of this Note, the Other Notes or any Additional Notes, asapplicable, other than pursuant to Section 3(d) (and analogous provisions under the Other Notes and any Additional Notes);(v) the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges or otheramounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption amountshereunder) or any other Transaction Document or any other agreement, document, certificate or other instrument delivered inconnection with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failureto pay any amounts other than Principal when and as due, in which case only if such failure continues for a period of at least anaggregate of two (2) Business Days;(vi) any default under any Indebtedness in an aggregate principal amount of more than $10,000,000 ofthe Company and/or any of its Subsidiaries other than with respect to this Note, any Other Notes or any Additional Notes, theeffect of which default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf ofsuch holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due orto be repurchased, prepaid, defeased 9 Exhibit 4.1or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made,prior to its stated maturity;(vii) the Company or any of its domestic Subsidiaries, pursuant to or within the meaning of Title 11,U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, "Bankruptcy Law"), (A)commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to theappointment of a receiver, trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes a general assignment forthe benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) isfor relief against the Company or any of its domestic Subsidiaries in an involuntary case, (B) appoints a Custodian of theCompany or any of its domestic Subsidiaries or (C) orders the liquidation of the Company or any of its domestic Subsidiaries,and, in each case, continues undismissed or unstayed for sixty (60) days;(ix) one or more judgments, orders or awards for the payment of money aggregating (above anyinsurance coverage or indemnity from a credit worthy party so long as such insurance provider has been notified of the claimand does not dispute coverage) in excess of $10,000,000 are rendered against the Company or any of its Subsidiaries andwhich judgments, orders or awards are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pendingappeal, or are not discharged within sixty (60) days after the expiration of such stay;(x) other than as specifically set forth in another clause of this Section 4(a), the Company or any of itsSubsidiaries breaches any covenant in any Transaction Document, and such breach, if curable, continues for a period of at leastan aggregate of thirty (30) calendar days after the earlier of (A) an authorized officer of the Company or such Subsidiarybecoming aware of such failure and (B) receipt by an authorized officer of the Company or such Subsidiary of a notice fromthe Holder of such breach;(xi) any representation, warranty, certification or statement of fact made or deemed made by theCompany or any Subsidiary herein, or in any other Transaction Document, shall be incorrect or misleading in any materialrespect when made or deemed made;(xii) any breach or failure in any respect to comply with Sections 14 or 15 of this Note;(xiii) any material provision of any Security Document (as defined in the Securities PurchaseAgreement) shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding onor enforceable against the Company or any Subsidiary party thereto, or ceases to give the Collateral Agent the Liens purportedto be created thereby or the validity or enforceability thereof shall be contested by the Company or any Subsidiary, or aproceeding shall be commenced by the Company 10 Exhibit 4.1or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity orunenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purportedto be created under any Security Document;(xiv) any material damage to, or loss, theft or destruction of, any Collateral or a material amount ofproperty of the Company, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God orpublic enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantialcurtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstancecould reasonably be expected to have a Material Adverse Effect (as defined in the Securities Purchase Agreement);(xv) a false or inaccurate certification (including a false or inaccurate deemed certification) by theCompany that the Equity Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether anyEvent of Default has occurred (in each case other than any Equity Conditions Failure arising solely as a result of the delivery tothe Company of an Interest Blocker Notice);(xvi) the Company's failure to file with the SEC any periodic or current reports due after the filing withthe SEC of the Form 10-K (as defined in Section 15(b)) in accordance with the Company's requirements under the ExchangeAct but only if such failure continues for a period of at least one (1) year;(xvii) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes; or(xviii) any Event of Default (as defined in the Additional Notes) occurs with respect to any AdditionalNotes.(b) Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any OtherNote, the Company shall promptly deliver written notice thereof (an "Event of Default Notice") to the Holder. At any time after theearlier of the Holder's receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder mayrequire the Company to redeem (an "Event of Default Redemption") all, but not less than all, of this Note by delivering writtennotice thereof (the "Event of Default Redemption Notice" and the date the Holder delivers an Event of Default Redemption Noticeto the Company, an "Event of Default Redemption Notice Date") to the Company, which Event of Default Redemption Notice shallindicate that the Holder is electing to require the Company to redeem this Note. To the extent this Note is subject to redemption by theCompany pursuant to this Section 4(b), this Note shall be redeemed by the Company in cash at a price equal to the greater of (i) theproduct of (x) the Redemption Premium and (y) the Conversion Amount being redeemed and (ii) solely if there is an EquityConditions Failure (that is not waived in writing by the Holder) during the period from the applicable Event of Default RedemptionNotice Date through and including the applicable Event of Default Redemption Date (as defined in Section 10(a)), the product of (x)the Conversion Rate with respect to the Conversion Amount being redeemed and (y) the quotient determined by dividing 11 Exhibit 4.1(I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding suchEvent of Default and ending on the date the Holder delivers the Event of Default Redemption Notice, by (II) the lowest ConversionPrice in effect during such period(the "Event of Default Redemption Price"). Redemptions required by this Section 4(b) shall bemade in accordance with the provisions of Section 10. To the extent redemptions required by this Section 4(b) are deemed ordetermined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed tobe voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event ofDefault Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption underthis Section 4(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stockpursuant to Section 3. Any such converted Conversion Amount shall reduce the Event of Default Redemption payment by anequivalent amount. The parties hereto agree that in the event of the Company's redemption of this Note under this Section 4(b), theHolder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and theuncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Event of Defaultredemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of theHolder's actual loss of its investment opportunity and not as a penalty.(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.(a) Assumption and Corporate Events. Upon the consummation of any Fundamental Transaction, theCompany shall cause any Successor Entity or Successor Entities to jointly and severally succeed to, and be added to the term"Company" under this Note (so that from and after the consummation of such Fundamental Transaction, each and every provision ofthis Note referring to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointlyand severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right andpower of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Companyprior thereto under this Note with the same effect as if the Company and such Successor Entity or Successor Entities, jointly andseverally, had been named as the Company in this Note. In addition to and not in substitution for any other rights hereunder, prior tothe occurrence or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock becomeentitled to receive securities, cash, assets or other property with respect to or in exchange for shares of Common Stock (a "CorporateEvent"), the Company shall provide that it shall be a required condition to the occurrence or consummation of such Corporate Eventthat the Holder will have the right to receive upon conversion of this Note at any time after the occurrence or consummation of theCorporate Event, shares of Common Stock or capital stock of a Successor Entity or, if so elected by the Holder, in lieu of the shares ofCommon Stock (or other securities, cash, assets or other property) purchasable upon the conversion of this Note prior to suchCorporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchaseor subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence orconsummation of such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate 12 Exhibit 4.1Event, had this Note been converted immediately prior to such Corporate Event or the record, eligibility or other determination date forthe event resulting in such Corporate Event (without regard to any limitations on conversion of this Note). The provisions of thisSection 5(a) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events.(b) Redemption Right. As soon as practicable following the public announcement of the consummation of aChange of Control, the Company shall deliver written notice thereof to the Holder (a "Change of Control Notice"). At any timeduring the period beginning on the earlier to occur of (x) the Holder becoming aware of the consummation of a Change of Control and(y) the Holder's receipt of a Change of Control Notice and ending thirty five (35) Trading Days after the date of the consummation ofsuch Change of Control, the Holder may require the Company to redeem (a "Change of Control Redemption") all or any portion ofthis Note by delivering written notice thereof ("Change of Control Redemption Notice" and the date the Holder delivers a Changeof Control Redemption Notice to the Company, a "Change of Control Redemption Notice Date") to the Company, which Changeof Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to require the Company to redeem. Theportion of this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the Company in cash at a price equal tothe sum of (i) the greater of (x) 110% of the Conversion Amount being redeemed and (y) solely if (a) the applicable Change of Controlis a Make-Whole Change of Control or (b) there is an Equity Conditions Failure (that is not waived in writing by the Holder) duringthe period from the applicable Change of Control Redemption Notice Date through and including the applicable Change of ControlRedemption Date (as defined in Section 10(a)), the product of (I) the Conversion Amount being redeemed and (II) the quotientdetermined by dividing (A) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the dateimmediately preceding the earlier to occur of (1) the consummation of the Change of Control and (2) the public announcement of suchChange of Control and ending on the date the Holder delivers the Change of Control Redemption Notice, by (B) the lowestConversion Price in effect during such period, and (ii) if the applicable Change of Control is a Make-Whole Change of Control, theMake-Whole Change of Control Premium (the "Change of Control Redemption Price"). Redemptions required by this Section 5shall be made in accordance with the provisions of Section 10 and shall have priority to payments to stockholders in connection with aChange of Control. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competentjurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price(together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (togetherwith any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. Any suchconverted Conversion Amount shall reduce the Conversion Amount submitted for redemption under this Section 5(b) by an equivalentamount. The parties hereto agree that in the event of the Company's redemption of any portion of the Note under this Section 5(b), theHolder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and theuncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Change of Controlredemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of theHolder's actual loss of its investment opportunity and not as a penalty. 13 Exhibit 4.1(6) ADJUSTMENTS TO THE CONVERSION PRICE.(a) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock or Stock Dividend.If the Company issues solely shares of Common Stock as a dividend or distribution on all or substantially all shares of the CommonStock, or if the Company effects a stock split or a stock combination of the Common Stock (in each case excluding an issuance solelypursuant to a Fundamental Transaction or other Corporate Event, as to which the provisions set forth in Section 5 will apply), then theConversion Price will be adjusted based on the following formula:CP1 = CP0 * OS0___ OS1 where:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such dividend or distribution, or immediately before the open of business on the effective date ofsuch stock split or stock combination, as applicable;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Dateor the open of business on such effective date, as applicable;OS0 = the number of shares of Common Stock outstanding immediately before the open of business onsuch Ex-Dividend Date or effective date, as applicable; andOS1 = the number of shares of Common Stock outstanding immediately after giving effect to suchdividend, distribution, stock split or stock combination.For the avoidance of doubt, pursuant to the definition of CP1 above, any adjustment to the Conversion Price madepursuant to this Section 6(a) will become effective immediately after the open of business on such Ex-Dividend Date or the open ofbusiness on such effective date, as applicable. If any dividend, distribution, stock split or stock combination of the type described in thisSection 6(a) is declared or announced, but not so paid or made, then the Conversion Price, if previously adjusted, will be readjusted,effective as of the date the Board of Directors of the Company determines not to pay such dividend or distribution or to effect suchstock split or stock combination, to the Conversion Price that would then be in effect had such dividend, distribution, stock split orstock combination not been declared or announced.(b) Rights, Options and Warrants. If the Company distributes, to all or substantially all holders of CommonStock, rights, options or warrants entitling such holders, for a period of not more than sixty (60) calendar days after the record date ofsuch distribution, to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the 14 Exhibit 4.1Closing Sale Prices per share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Dayimmediately before the date such distribution is publicly announced, then the Conversion Price will be decreased based on thefollowing formula:CP1 = CP0 * OS + Y___ OS + Xwhere:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such distribution;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Date;OS = the number of shares of Common Stock outstanding immediately before the open of business onsuch Ex-Dividend Date;X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants;andY = a number of shares of Common Stock obtained by dividing (x) the aggregate price payable toexercise such rights, options or warrants by (y) the average of the Closing Sale Prices per share ofCommon Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Dayimmediately before the date such distribution is announced.For the avoidance of doubt, any adjustment to the Conversion Price made pursuant to this Section 6(b) will be madesuccessively whenever any such rights, options or warrants are issued and, pursuant to the definition of CP1 above, will becomeeffective immediately after the open of business on the Ex-Dividend Date for the applicable distribution. To the extent that shares ofCommon Stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options orwarrants not being exercised), the Conversion Price, if previously adjusted, will be readjusted effective as of such expiration date to theConversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on the basis ofdelivery of only the number of shares of Common Stock actually delivered upon exercise of such rights, option or warrants. To theextent such rights, options or warrants are not so distributed, the Conversion Price will be readjusted effective as of the date the Boardof Directors of the Company determines not to distribute such rights, options or warrants, to the Conversion Price that would then be ineffect had the Ex-Dividend Date for the distribution of such rights, options or warrants not occurred.For purposes of this Section 6(b), in determining whether any rights, options or warrants entitle holders of CommonStock to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Closing Sale Pricesper share of Common 15 Exhibit 4.1Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date of thedistribution 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 the Company receives for such rights, options or warrants andany amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Board of Directorsof the Company.(c) Spin-Offs and Other Distributed Property.(i) Distributions Other than Spin-Offs. If the Company distributes shares of its Capital Stock, evidencesof its indebtedness or other assets or property of the Company, or rights, options or warrants to acquire CapitalStock of the Company or other securities, to all or substantially all holders of the Common Stock, excluding:(u) rights issued in the Rights Offering (as defined in the Securities Purchase Agreement);(v) dividends, distributions, rights, options or warrants for which an adjustment to the Conversion Priceis required pursuant to Section 6(a) or 6(b);(w) dividends or distributions paid exclusively in cash for which an adjustment to the Conversion Priceis required pursuant to Section 6(d);(x) rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extentprovided in Section 6(g);(y) Spin-Offs for which an adjustment to the Conversion Price is required pursuant to Section 6(c)(ii);and(z) a distribution solely pursuant to a Corporate Event, as to which the provisions set forth in Section 5will apply,then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * SP - FMV___ SP 16 Exhibit 4.1where:CR0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such distribution;CR1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Date;SP = the average of the Closing Sale Prices per share of Common Stock for the ten (10) consecutiveTrading Days ending on, and including, the Trading Day immediately before such Ex-Dividend Date;andFMV = the fair market value (determined in the good faith judgment of the Board of Directors of theCompany), 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 Common Stock pursuant to suchdistribution;provided, however, that if FMV is equal to or greater than SP, or if the difference between FMV and SPis less than one dollar ($1.00), then, in lieu of the foregoing adjustment to the Conversion Price, eachHolder will receive, at the same time and on the same terms as holders of Common Stock, the amountand kind of shares of Capital Stock, evidences of indebtedness, assets, property, rights, options orwarrants that such Holder would have received if such Holder had owned, on such record date, anumber of shares of Common Stock equal to the principal amount of Notes held by such Holder on therecord date for such distribution divided by the Conversion Price in effect on such record date.For the avoidance of doubt, pursuant to the definition of CP1 above, any adjustment to the Conversion Pricemade pursuant to this Section 6(c)(i) will become effective immediately after the open of business on the Ex-Dividend Date for theapplicable distribution. To the extent such distribution is not so paid or made, or such rights, options or warrants are not exercisedbefore their expiration (including as a result of being redeemed or terminated), the Conversion Price, if previously adjusted, will bereadjusted effective as of the date the Board of Directors of the Company determines not to make or pay such distribution, to theConversion Price that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actually madeor paid or on the basis of the distribution of only such rights, options or warrants, if any, that were actually exercised, if at all. Subjectto Section 6(g), if any such rights, options or warrants are exercisable only upon the occurrence of certain triggering events, then theConversion Price will not be adjusted pursuant to this Section 6(c)(i) until the earliest of these triggering events occurs. 17 Exhibit 4.1(ii) Spin-Offs. If the Company distributes or dividends shares of stock of any class or series, or similarequity interest, of or relating to an Affiliate, a Subsidiary or other business unit of the Company to all orsubstantially all holders of the Common Stock, and such stock or equity interest is listed or quoted (or will belisted or quoted upon the consummation of the transaction) on a U.S. national securities exchange (a "Spin-Off"), then the Conversion Price will be increased based on the following formula:CP1 = CP0 * MP ___ MP + FMVwhere:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such Spin-Off;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Date;FMV = the average of the Closing Sale Prices of the stock or equity interests distributed per share ofCommon Stock in such Spin-Off over the ten (10) consecutive Trading Day period (the "Spin-OffValuation Period") beginning on, and including, such Ex-Dividend Date (such average to bedetermined as if references to Common Stock in the definitions of Closing Sale Price and Trading Daywere instead references to the number or units of such stock or equity interests distributed per share ofCommon Stock in such Spin-Off); andMP = the average of the Closing Sale Prices per share of Common Stock over the Spin-Off ValuationPeriod.The adjustment to the Conversion Price pursuant to this Section 6(c)(ii) will be calculated as of the close of business onthe last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the open of business on the Ex-Dividend Date for the Spin-Off, with retroactive effect. If this Note is converted and the Conversion Date occurs during the Spin-OffValuation Period, then, in lieu of the foregoing adjustment to the Conversion Price, the Holder will receive, at the same time and on thesame terms as holders of Common Stock, the number of shares of stock or other equity interests that such Holder would have receivedif such Holder had owned, on such record date, a number of shares of Common Stock equal to the principal amount of Notes held bysuch Holder on the record date for Spin-Off divided by the Conversion Price in effect on such record date.To the extent any dividend or distribution of the type set forth in this Section 6(c)(ii) is declared but not made or paid,the Conversion Price, if previously adjusted, will be readjusted effective as of the date the Board of Directors of the Companydetermines not to make or pay such 18 Exhibit 4.1dividend or distribution, to the Conversion Price that would then be in effect had the adjustment been made on the basis of only thedividend or distribution, if any, actually made or paid.(d) Cash Dividends or Distributions. If any cash dividend or distribution is made to all or substantially allholders of Common Stock, then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * SP ___ SP - D 19 Exhibit 4.1where:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such dividend or distribution;CR1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Date;SP = the Closing Sale Price per share of Common Stock on the Trading Day immediately before suchEx-Dividend Date; andD = the cash amount distributed per share of Common Stock in such dividend or distribution;provided, however, that if D is equal to or greater than SP, or if the difference between D and SP is lessthan one dollar ($1.00), then, in lieu of the foregoing adjustment to the Conversion Price, the Holder willreceive, at the same time and on the same terms as holders of Common Stock, the amount of cash thatsuch Holder would have received if such Holder had owned, on such record date, a number of shares ofCommon Stock equal to the principal amount of Notes held by such Holder on the record date for suchdividend or distribution divided by the Conversion Price in effect on such record date. For the avoidanceof doubt, pursuant to the definition of CP1 above, any adjustment to the Conversion Price made pursuantto this Section 6(d) will become effective immediately after the open of business on the Ex-DividendDate for the applicable dividend or distribution.To the extent any such dividend or distribution is declared but not made or paid, the Conversion Price, if previouslyadjusted, will be readjusted effective as of the date the Board of Directors of the Company determines not to make or pay suchdividend or distribution, to the Conversion Price that would then be in effect had the adjustment been made on the basis of only thedividend or distribution, if any, actually made or paid.(e) Tender Offers or Exchange Offers. If the Company or any of its Subsidiaries makes a payment in respect ofa tender offer or exchange offer for shares of Common Stock, and the value (as determined as of the Expiration Time (as definedbelow) in the judgment of the Board of Directors of the Company) of the cash and other consideration paid per share of CommonStock in such tender or exchange offer exceeds the Closing Sale Price per share of Common Stock on the Trading Day immediatelyafter the last date (the "Expiration Date") on which tenders or exchanges may be made pursuant to such tender or exchange offer (asit may be amended), then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * OS0 x SP ___ AC + (SP x OS1) 20 Exhibit 4.1where:CP0 = the Conversion Price in effect immediately before the time (the "Expiration Time") such tenderor exchange offer expires;CP1 = the Conversion Price in effect immediately after the Expiration Time;AC = the aggregate value (as determined as of the Expiration Time in the judgment of the Board ofDirectors of the Company) of all cash and other consideration paid for shares of Common Stockpurchased in such tender or exchange offer;OS0 = the number of shares of Common Stock outstanding immediately before the Expiration Time(before giving effect to the purchase of all shares of Common Stock accepted for purchase or exchangein such tender or exchange offer);OS1 = the number of shares of Common Stock outstanding immediately after the Expiration Time(excluding all shares of Common Stock accepted for purchase or exchange in such tender or exchangeoffer); andSP = the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive TradingDay period (the "Tender/Exchange Offer Valuation Period") beginning on, and including, theTrading Day immediately after the Expiration Date.The adjustment to the Conversion Price pursuant to this Section 6(e) will be calculated as of the close of business on thelast Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after the Expiration Time, withretroactive effect. If this Note is converted and the Conversion Date occurs during the Tender/Exchange Offer Valuation Period, then,notwithstanding anything to the contrary in the Notes, the Company will, if necessary, delay the settlement of such conversion until thesecond (2nd) Business Day after the last day of the Tender/Exchange Offer Valuation Period. To the extent such tender or exchangeoffer is announced but not consummated (including as a result of the Company being precluded from consummating such tender orexchange offer under applicable law), or any purchases or exchanges of shares of Common Stock in such tender or exchange offer arerescinded, the Conversion Price, if previously adjusted, will be readjusted effective as of the date the Board of Directors of theCompany determines not to consummate such offer, to the Conversion Price that would then be in effect had the adjustment been madeon the basis of only the purchases or exchanges of shares of Common Stock, if any, actually made, and not rescinded, in such tender orexchange offer.(f) No Adjustments in Certain Cases. Notwithstanding anything to the contrary in this Section 6, the Companywill not be obligated to adjust the Conversion Price on account of a transaction or other event otherwise requiring an adjustmentpursuant to this Section 21 Exhibit 4.16 (other than a stock dividend, distribution, split or combination of the type set forth in Section 6(a) or a tender or exchange offer of thetype set forth in Section 6(e)) if each Holder participates, at the same time and on the same terms as holders of Common Stock, andsolely by virtue of being a Holder of Notes, in such transaction or event without having to convert such Holder's Notes and as if suchHolder held a number of shares of Common Stock equal to the quotient of (i) the aggregate principal amount (expressed in thousands)of Notes held by the Holder on such date; divided by (ii) the Conversion Price in effect on the related record date, effective date orExpiration Date, as applicable.(g) Stockholder Rights Plans. If any shares of Common Stock are to be issued upon conversion of this Noteand, at the time of such conversion, the Company has in effect any stockholder rights plan, then the Holder will be entitled to receive,in addition to, and concurrently with the delivery of, the consideration otherwise payable under this Note upon such conversion, therights set forth in such stockholder rights plan, unless such rights have separated from the Common Stock at or prior to such time, inwhich case, and only in such case, the Conversion Price will be adjusted pursuant to Section 6(c)(1) on account of such separation asif, at the time of such separation, the Company had made a distribution of the type referred to in such Section to all holders of theCommon Stock, subject to readjustment in accordance with such Section if such rights expire, terminate or are redeemed.(h) Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with theprior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of timedeemed appropriate by the Board of Directors of the Company.(7) OPTIONAL REDEMPTION AT THE COMPANY'S ELECTION.(a) General. At any time after January 16, 2021 (the "Company Optional Trigger Date"), so long as (i) thearithmetic average of the Weighted Average Prices of the Common Stock for any thirty (30) consecutive Trading Days occurring afterthe Company Optional Trigger Date (all such determinations to be appropriately adjusted for any stock split, stock dividend, stockcombination, reclassification or other similar transaction during such period) (a "Company Optional Measuring Period") equaled orexceeded one hundred forty percent (140%) of the Conversion Price on the Issuance Date (as adjusted for any stock dividend, stocksplit, stock combination, reclassification or similar transaction after the Subscription Date) and (ii) there has been no Equity ConditionsFailure during the period beginning on the applicable Company Optional Redemption Notice Date (as defined below) through theapplicable Company Optional Redemption Date (as defined below), the Company shall have the right to redeem all or any portion ofthe Conversion Amount then remaining outstanding under this Note, the Other Notes and the Additional Notes (a "CompanyOptional Redemption Amount") as designated in the applicable Company Optional Redemption Notice on the applicable CompanyOptional Redemption Date (each as defined below) (a "Company Optional Redemption"). The portion of this Note, the Other Notesand any Additional Notes subject to redemption pursuant to this Section 7(a) shall be redeemed by the Company on the applicableCompany Optional Redemption Date in cash at a price equal to the 100% of the Conversion Amount to be redeemed (a "CompanyOptional Redemption Price"). 22 Exhibit 4.1The Company may exercise its right to require redemption under this Section 7 by delivering within not more than ten (10) TradingDays following the end of such Company Optional Measuring Period a written notice thereof to the Holder and all, but not less thanall, of the holders of the Other Notes and any Additional Notes (a "Company Optional Redemption Notice" and the date all of theholders of the Notes received such notice is referred to as a "Company Optional Redemption Notice Date"). Each CompanyOptional Redemption Notice shall be irrevocable. Each Company Optional Redemption Notice shall (i) state the date on which theapplicable Company Optional Redemption shall occur (a "Company Optional Redemption Date"), which date shall not be less thanten (10) Trading Days nor more than thirty (30) Trading Days following the applicable Company Optional Redemption Notice Dateand (ii) state the aggregate Conversion Amount of the Notes which the Company has elected to redeem from the Holder and all of theholders of the Other Notes and any Additional Notes pursuant to this Section 7(a) (and analogous provisions under the Other Notesand any applicable Additional Notes) on the applicable Company Optional Redemption Date an Equity Conditions Failure (other thanas a result of the receipt by the Company of an Interest Blocker Notice) occurs between the applicable Company Optional RedemptionNotice Date and the applicable Company Optional Redemption Date and (iii) confirm that there has been no Equity Conditions Failureduring the period beginning on the applicable Company Optional Redemption Date through the applicable Company OptionalRedemption Notice Date. If the Company confirmed that there was no such Equity Conditions Failure as of the applicable CompanyOptional Redemption Notice Date but an Equity Conditions Failure occurs between the applicable Company Optional RedemptionNotice Date and the applicable Company Optional Redemption Date (a "Company Optional Redemption Interim Period"), theCompany shall provide the Holder a subsequent notice to that effect. If there is an Equity Conditions Failure (which is not waived inwriting by the Holder) during such Company Optional Redemption Interim Period, then the applicable Company OptionalRedemption shall be null and void with respect to all or any part designated by the Holder of the unconverted Company OptionalRedemption Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of theapplicable Company Optional Redemption Amount. Notwithstanding anything to the contrary in this Section 7, until the applicableCompany Optional Redemption Price is paid, in full, the applicable Company Optional Redemption Amount may be converted, inwhole or in part, by the Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holderafter the applicable Company Optional Redemption Notice Date shall reduce the applicable Company Optional Redemption Amountof this Note required to be redeemed on the applicable Company Optional Redemption Date, unless the Holder otherwise indicates inthe applicable Conversion Notice. Company Optional Redemptions made pursuant to this Section 7 shall be made in accordance withSection 10. To the extent redemptions required by this Section 7 are deemed or determined by a court of competent jurisdiction to beprepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments. The parties hereto agreethat in the event of the Company's redemption of any portion of the Note under this Section 7, the Holder's damages would beuncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability ofa suitable substitute investment opportunity for the Holder. For the avoidance of doubt, any Conversion Amount that is subject to aConversion Notice delivered to the Company may no longer be subject to a Company Optional Redemption even if the shares issuableupon such conversion have not been delivered on or prior to the applicable Company Optional Redemption Date. 23 Exhibit 4.1(b) Pro Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemptionpursuant to Section 7(a), then it must simultaneously take the same action in the same proportion with respect to the Other Notes andany Additional Notes. If the Company elects to cause a Company Optional Redemption pursuant to Section 7(a) (or similar provisionsunder the Other Notes and the Additional Notes) with respect to less than all of the Conversion Amounts of the Notes and anyAdditional Notes then outstanding, then the Company shall require redemption of a Conversion Amount from each of the holders ofthe Notes and any Additional Notes equal to the product of (i) the aggregate Company Optional Redemption Amount of Notes and theAdditional Notes which the Company has elected to cause to be redeemed pursuant to Section 7(a), multiplied by (ii) the fraction, thenumerator of which is the sum of the aggregate Principal Amount of the Notes and any Additional Notes held by such holder and thedenominator of which is the sum of the aggregate Principal Amount of the Notes and any Additional Notes held by all holders holdingoutstanding Notes and any Additional Notes (such fraction with respect to each holder is referred to as its "Company OptionalRedemption Allocation Percentage", and such amount with respect to each holder is referred to as its "Pro Rata CompanyOptional Redemption Amount"). In the event that the initial holder of any Notes or Additional Notes shall sell or otherwise transferany of such holder's Notes or any Additional Notes, the transferee shall be allocated a pro rata portion of such holder's CompanyOptional Redemption Allocation Percentage and Pro Rata Company Optional Redemption Amount.(8) NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, byamendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, schemeof arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance orperformance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take allaction as may be required to protect the rights of the Holder of this Note.(9) RESERVATION OF AUTHORIZED SHARES.(a) Reservation. The Company shall initially reserve out of its authorized and unissued shares of CommonStock a number of shares of Common Stock for each of this Note, the Other Notes and any Additional Notes equal to the sum of (i)130% of the Conversion Rate with respect to the Conversion Amount of each such Note as of the Issuance Date and (ii) 130% of themaximum number of shares issuable as Interest Shares assuming all Interest through the Maturity Date is paid in Interest Shares at themaximum possible Interest Rate. So long as any of this Note, the Other Notes and the Additional Notes are outstanding, the Companyshall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose ofeffecting the conversion of this Note, the Other Notes and any Additional Notes, the number of shares of Common Stock specifiedabove in this Section 9(a) as shall from time to time be necessary to effect the conversion of all of the Notes and any Additional Notesthen outstanding; provided, that at no time shall the number of shares of Common Stock so reserved be less than the number of sharesrequired to be reserved pursuant hereto (in each case, without regard to any limitations on conversions) (the "Required ReserveAmount"). The initial number of shares of Common Stock reserved for conversions of this Note, the Other Notes and the AdditionalNotes 24 Exhibit 4.1and each increase in the number of shares so reserved shall be allocated pro rata among the Holder, the holders of the Other Notes andthe holders of any Additional Notes based on the Principal amount of this Note and the Other Notes held by each holder at the InitialClosing (as defined in the Securities Purchase Agreement) or increase in the number of reserved shares, as the case may be (the"Authorized Share Allocation"). In the event that a holder shall sell or otherwise transfer this Note, or a portion thereof, or any ofsuch holder's Other Notes or Additional Notes, each transferee shall be allocated a pro rata portion of such holder's Authorized ShareAllocation. Any shares of Common Stock reserved and allocated to the portion of the Note held by any Person who ceases to hold anyNotes shall be allocated to the portion of the Note held by the Holder and the remaining holders of Other Notes and the AdditionalNotes, pro rata based on the then-outstanding Principal amount of this Note, the Other Notes and any Additional Notes then held bysuch holders.(b) Insufficient Authorized Shares. If at any time while any of the Notes remain outstanding the Company doesnot have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to have reserved forissuance upon conversion of the outstanding Notes at least a number of shares of Common Stock equal to the Required ReserveAmount (an "Authorized Share Failure"), then the Company shall promptly take all action necessary to increase the Company'sauthorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for theNotes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrenceof an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, theCompany shall either (x) obtain the written consent of its stockholders for the approval of an increase in the number of authorizedshares of Common Stock and provide each stockholder with an information statement with respect thereto or (y) file with the SEC aproxy statement for a meeting of its stockholders at which meeting the Company will seek the approval of its stockholders for anincrease in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide eachstockholder with a proxy statement and shall use commercially reasonable efforts to solicit its stockholders' approval of such increase inauthorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve suchproposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain thewritten consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number ofauthorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing withthe SEC an Information Statement on Schedule 14C. If, upon any conversion of this Note, the Company does not have sufficientauthorized shares to deliver in satisfaction of such conversion, then unless the Holder elects to rescind such attempted conversion, theHolder may require the Company to pay to the Holder within three (3) Trading Days of the applicable attempted conversion, cash inan amount equal to the product of (i) the number of shares of Common Stock that the Company is unable to deliver pursuant to thisSection 9, and (ii) the highest Closing Sale Price of the Common Stock during the period beginning on the applicable Conversion Dateand ending on the date the Company makes the applicable cash payment.(10) REDEMPTIONS. 25 Exhibit 4.1(a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holderwithin three (3) Business Days after the Company's receipt of the Holder's Event of Default Redemption Notice (the "Event ofDefault Redemption Date"). If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b),the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently with the consummationof such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii) within three (3)Business Days after the Company's receipt of such notice otherwise (such date, the "Change of Control Redemption Date"). TheCompany shall deliver the applicable Company Optional Redemption Price to the Holder on the applicable Company OptionalRedemption Date. The Company shall pay the applicable Redemption Price to the Holder on the applicable due date. In the event of aredemption of less than all of the Conversion Amount of this Note and a surrender of this Note by the Holder, the Company shallpromptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 18(d)) representing the outstandingPrincipal which has not been redeemed and any accrued Interest on such Principal which shall be calculated as if no RedemptionNotice has been delivered. In the event that the Company does not pay the applicable Redemption Price to the Holder within the timeperiod required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have theoption, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing theConversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any LateCharges thereon) has not been paid. Upon the Company's receipt of such notice, (x) the applicable Redemption Notice shall be nulland void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (inaccordance with Section 18(d)) to the Holder representing such Conversion Amount not redeemed and (z) the Conversion Price of thisNote or such new Note shall be adjusted to the Conversion Price as in effect on the date on which the applicable Redemption Notice isvoided. The Holder's delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affectthe Company's obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect tothe Conversion Amount subject to such notice.(b) Redemption by Other Holders. Upon the Company's receipt of notice from any of the holders of the OtherNotes or any Additional Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events oroccurrences described in Section 4(b) or Section 5(b) or pursuant to equivalent provisions set forth in the Other Notes or anyAdditional Notes (each, an "Other Redemption Notice"), the Company shall promptly provide notice of such request. If theCompany receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day periodbeginning on and including the date which is three (3) Business Days prior to the Company's receipt of the Holder's RedemptionNotice and ending on and including the date which is three (3) Business Days after the Company's receipt of the Holder's RedemptionNotice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and suchOther Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amountfrom the Holder and each holder of the Other Notes and the Additional Notes (including the Holder) based on the outstandingPrincipal amount of this Note, the Other Notes and any Additional Notes 26 Exhibit 4.1submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company duringsuch seven (7) Business Day period.(11) VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by lawand as expressly provided in this Note.(12) SECURITY. This Note, the Other Notes and any Additional Notes are secured to the extent and in the mannerset forth in the Security Documents.(13) RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes, Additional Notes,Rights Offering Notes, if any, Backstop Commitment Notes, if any, and Indebtedness described in clause (iii) of the definition ofPermitted Indebtedness, if any, and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries.(14) NEGATIVE COVENANTS.(a) Until all of the Notes and the Additional Notes have been converted, redeemed or otherwise satisfied inaccordance with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior writtenconsent of the Required Holders to, directly or indirectly:(i) incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness; or(ii) allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbranceupon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries(collectively, "Liens") other than Permitted Liens.(b) Solely in the event that the Company does not at the applicable time of determination satisfy the QualifyingConditions, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior written consent of theRequired Holders to, directly or indirectly:(i) Redeem or repurchase any Equity Interests or other Junior Claims, or declare or pay any dividend orother distributions of assets (or rights to acquire assets) to any or all holders of Equity Interests or other Junior Claims, by way of returnof capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property, Options, evidence ofIndebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement orother similar transaction) of the Company or any of its Subsidiaries (any of the foregoing, a "Restricted Payment"), in each case otherthan:(1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Indebtednessmade by exchange for, or out of the proceeds of the substantially concurrent sale of, Refinancing Indebtedness; 27 Exhibit 4.1(2) each Subsidiary may declare and make Restricted Payments to Persons that own Equity Interests insuch Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such RestrictedPayment is being made;(3) the Company and each Subsidiary may declare and make dividend payments or other distributionspayable solely in Equity Interests of such Person;(4) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of EquityInterest of the Company or a Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of EquityInterests of the Company;(5) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement forvalue of Equity Interests of the Company held by or on behalf of any future, present or former employee, director, manager orconsultant of the Company or any of its Subsidiaries (or permitted transferees, assigns, estates, trusts or heirs of such employee,director, manager or consultant) either pursuant to any management equity plan or stock option plan or any other management oremployee benefit plan or agreement or upon the termination of such employee, director, manager or consultant's employment,directorship or manager position; provided that the aggregate amount of Restricted Payments made under this clause (5) do not exceedin any calendar year an amount equal to $1,000,000;(6) purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of EquityInterests deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such Equity Interestsrepresents a portion of the exercise price thereof; and(7) additional Restricted Payments in an amount not to exceed $5,000,000 during any fiscal year or$10,000,000 in the aggregate prior to the Maturity Date.(15) AFFIRMATIVE COVENANTS.(a) By no later than April 30, 2019, the Company shall have filed with the SEC one or more Annual Reportson Form 10-K containing its audited financial statements for the fiscal years ended December 31, 2015, 2016 and 2017 in accordancewith the applicable requirements of the Exchange Act, the rules and regulations thereunder and the SEC's instructions to AnnualReports on Form 10-K (the "Form 10-K").(b) From and after the date the Company files the Form 10-K, on or before the date that the Company isrequired to file any Quarterly Report on Form 10-Q or Annual Report on Form 10-K, the Company shall publicly discloseConsolidated EBITDA with respect to the most recent completed financial period as to which such report relates.(c) The Company shall maintain on deposit cash and/or cash equivalents (as defined in GAAP) in an aggregateamount equal to: 28 Exhibit 4.1(i) not less than $40,000,000 from and after the Initial Closing Date to and excluding the earlier tooccur of (x) the consummation of the Rights Offering (as defined in the Securities Purchase Agreement) and (y) the Maturity Date(such earlier date, the "Cash Measuring Date"); provided, however, that the minimum amount shall be reduced to $20,000,000 fromAugust 8, 2018 to and including the date immediately prior to the earliest to occur of (x) the date the Company files with the SEC itsQuarterly Report on Form 10-Q for the quarter ended June 30, 2019 ("2019 Q2 10-Q"), (y) August 9, 2019, and (z) the CashMeasuring Date;(ii) solely if the Cash Measuring Date is determined by clause (x) of such definition:(1) not less than $75,000,000 from and after the Cash Measuring Date through and excluding January1, 2020; provided, however, that such amount shall be not less than $55,000,000 for the period, if any, from and after the CashMeasuring Date to and excluding the earlier to occur of (a) the date the Company files the 2019 Q2 10-Q and (b) August 9, 2019; and(2) not less than $50,000,000 from and after January 1, 2020 through and including the Maturity Date.(d) The Company shall deliver a Final Make-Whole Table (as defined in Section 31(oo)) to the Holder on orprior to the date that is five (5) Business Days following the Pricing Date.(16) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote of the Required Holders ata meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for anychange or amendment or waiver of any provision to this Note, any of the Other Notes or any Additional Notes. Any change,amendment or waiver by the Company and the Required Holders shall be binding on the Holder of this Note and all holders of theOther Notes and the Additional Notes.(17) TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered,sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(g) of theSecurities Purchase Agreement.(18) REISSUANCE OF THIS NOTE.(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereuponthe Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d) and subjectto Section 3(c)(iii)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, ifless than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representingthe outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that,by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion 29 Exhibit 4.1of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to theCompany of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnificationundertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of thisNote, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstandingPrincipal.(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof bythe Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in theaggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal asis designated by the Holder at the time of such surrender.(d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms ofthis Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, thePrincipal remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principaldesignated by the Holder which, when added to the principal represented by the other new Notes issued in connection with suchissuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii)shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shallhave the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges, if any, on thePrincipal and Interest of this Note, from the Issuance Date.(19) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVERELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note andany of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief),and nothing herein shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to complywith the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion, redemption and the like(and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, besubject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of itsobligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. TheCompany therefore agrees that, in the event of any such breach, the Holder shall be entitled, in addition to all other available remedies,to an injunction restraining such breach, without the necessity of showing economic loss and without any bond or other security beingrequired, to the fullest extent enforceable under applicable law.(20) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in thehands of an attorney for collection or enforcement or is collected or 30 Exhibit 4.1enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce theprovisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affectingCompany creditors' rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for suchcollection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including,but not limited to, actual and reasonable attorneys' fees and disbursements.(21) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all theBuyers and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of referenceand shall not form part of, or affect the interpretation of, this Note.(22) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise ofany power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power,right or privilege preclude other or further exercise thereof or of any other right, power or privilege.(23) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price, the ClosingSale Price or the Weighted Average Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or anyRedemption Price, the Company shall submit the disputed determinations or arithmetic calculations within two (2) Business Days ofreceipt, or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case maybe, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within three (3) BusinessDays of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2)Business Days submit (a) the disputed determination of the Closing Bid Price, the Closing Sale Price or the Weighted Average Price toan independent, reputable investment bank selected by the Holder and approved by the Company, such approval not to beunreasonably withheld, conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price orany Redemption Price to an independent, outside accountant, selected by the Holder and approved by the Company, such approval notto be unreasonably withheld, conditioned or delayed. The Company, at the Company's expense, shall cause the investment bank or theaccountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results nolater than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank's oraccountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.(24) NOTICES; PAYMENTS.(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, suchnotice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holderwith prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and thereason therefore. Without limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediatelyupon any adjustment of the Conversion Price, setting 31 Exhibit 4.1forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least ten (10) days prior to the date on which theCompany closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respectto any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any FundamentalTransaction, dissolution or liquidation, provided in each case that such information shall have been made known to the public prior toor in conjunction with such notice being provided to the Holder.(b) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to thisNote, such payment shall be made in lawful money of the United States of America via wire transfer of immediately available funds toan account so designated by the Holder; provided, that the Holder, upon timely written notice to the Company, may elect to receive apayment of cash by a check drawn on the account of the Company and sent via overnight courier service to such Person at suchaddress as previously provided to the Company in writing (which address, in the case of each of the Buyers, shall initially be as setforth on the Schedule of Buyers attached to the Securities Purchase Agreement. Whenever any amount expressed to be due by theterms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is aBusiness Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shallresult in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteenpercent (18.0%) per annum from the date such amount was due until the same is paid in full ("Late Charge").(25) CANCELLATION. After all Principal, any accrued Interest and any other amounts at any time owed on thisNote have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellationand shall not be reissued.(26) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protestand all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.(27) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction, validity,enforcement and interpretation of this Note shall be governed by the internal laws of the State of New York, without giving effect toany choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would causethe application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication ofany dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and herebyirrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to thejurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,action or proceeding is improper. The Company hereby irrevocably waives personal service of process and consents to process beingserved in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f) of theSecurities Purchase Agreement and agrees that such service 32 Exhibit 4.1shall constitute good and sufficient service of process and notice thereof to the fullest extent enforceable under applicable law. Nothingcontained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing containedherein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in anyother jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for suchobligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLYWAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THEADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTEOR ANY TRANSACTION CONTEMPLATED HEREBY.(28) SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid orunenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall bedeemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of suchprovision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express,without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity orunenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of theCompany or the Holder hereof or the practical realization of the benefits that would otherwise be conferred upon the Company or theHolder hereof. The Company and the Holders will endeavor in good faith negotiations to replace the prohibited, invalid orunenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid orunenforceable provision(s).(29) DISCLOSURE. From and after the filing of the Form 10-K and provided that, at the applicable time ofdetermination, no individual affiliated with the Holder serving on the Board of Directors of the Company was appointed thereto,including pursuant to Section 1(a) of the September Agreement, the Company will not provide to the Holder any information thatconstitutes material non-public information of or relating to the Company or its Subsidiaries without the prior written consent of theHolder. If and to the extent the Company does provide any such information, or the Holder otherwise comes into possession ofmaterial non-public information relating to the Company or its Subsidiaries as a result of the receipt or delivery of any notice inaccordance with the terms hereof, the Company will comply with its obligations under Regulation FD under the Exchange Act. In theabsence of any disclosure by the Company pursuant thereto, the Holder shall be allowed to presume that all matters relating thereto donot constitute material non-public information relating to the Company or its Subsidiaries.(30) USURY. This Note is subject to the express condition that at no time shall the Company be obligated or requiredto pay interest hereunder at a rate or in an amount which could subject the Holder to either civil or criminal liability as a result of beingin excess of the maximum interest rate or amount which the Company is permitted by applicable law to contract or agree to pay. If bythe terms of this Note, the Company is at any time required or obligated to pay interest hereunder at a rate or in an amount in excess ofsuch maximum rate or amount, the rate or amount of interest under this Note shall be deemed to be immediately reduced to suchmaximum 33 Exhibit 4.1rate or amount and the interest payable shall be computed at such maximum rate or be in such maximum amount and all prior interestpayments in excess of such maximum rate or amount shall be applied and shall be deemed to have been payments in reduction of theprincipal balance of this Note.(31) CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:(a) "Acquired EBITDA" means with respect to any Acquired Entity or Business (any of the foregoing, a"Pro Forma Entity") for any period, the amount for such period of Consolidated EBITDA of such Pro Forma Entity (determined as ifreferences to the Company and its Subsidiaries in the definition of the term "Consolidated EBITDA" were references to such ProForma Entity and its Subsidiaries which will become Subsidiaries), all as determined on a consolidated basis for such Pro FormaEntity.(b) "Additional Closing Date" shall have the meaning set forth in the Securities Purchase Agreement.(c) "Additional Notes" means all Additional Notes (as defined in the Securities Purchase Agreement), if any,issued by the Company pursuant to the Securities Purchase Agreement on an Additional Closing Date.(d) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, iscontrolled by, or is under common control with, such Person, it being understood for purposes of this definition that "control" of aPerson means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election ofdirectors of such Person or direct or cause the direction of the management and policies of such Person whether by contract orotherwise.(e) "Attribution Parties" means, collectively, the following Persons: (i) any investment vehicle, including,any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed oradvised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder orany of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of theforegoing and (iv) any other Person whose beneficial ownership of the Company's Common Stock would or could be aggregated withthe Holder's and its Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing isto subject collectively the Holder and its Attribution Parties to the Maximum Percentage.(f) "Backstop Commitment Notes" any Notes issued in connection with the Buyer's backstop commitment ofthe Rights Offering (as defined in the Securities Purchase Agreement) as contemplated in Section 1(e) of the Securities PurchaseAgreement.(g) "Bloomberg" means Bloomberg Financial Markets. 34 Exhibit 4.1(h) "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks inThe City of New York are authorized or required by law to remain closed.(i) "Buyer" shall have the meaning ascribed to such term in the Securities Purchase Agreement.(j) "Calendar Quarter" means each of: the period beginning on and including January 1 and ending on andincluding the next occurring March 31; the period beginning on and including April 1 and ending on and including the next occurringJune 30; the period beginning on and including July 1 and ending on and including the next occurring September 30; and the periodbeginning on and including October 1 and ending on and including the next occurring December 31.(k) "Capital Stock" means, for any entity, any and all shares, interests, rights to purchase, warrants, options,participations or other equivalents of or interests in (however designated) stock issued by that entity.(l) "Change of Control" means any Fundamental Transaction other than (i) any reorganization,recapitalization or reclassification of the Common Stock in which holders of the Company's voting power immediately prior to suchreorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publiclytraded securities and, directly or indirectly, are, in all material respects, the holders of a majority of the voting power of the survivingentity (or entities with the authority or voting power to elect the members of the Board of Directors (or their equivalent if other than acorporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii) pursuant to a migratory mergereffected solely for the purpose of changing the jurisdiction of incorporation of the Company.(m) "Closing Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bidprice and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the PrincipalMarket begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the casemay be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported byBloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bidprice or last trade price, respectively, of such security on the principal securities exchange or trading market where such security islisted or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, ofsuch security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if noclosing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the askprices, respectively, of any market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.(formerly Pink OTC Markets Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particulardate on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such dateshall be the fair market value as mutually determined by the 35 Exhibit 4.1Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then suchdispute shall be resolved pursuant to Section 23. All such determinations to be appropriately adjusted for any stock dividend, stocksplit, stock combination, reclassification or similar transaction occurring during the applicable calculation period.(n) "Common Stock" means (i) shares of Common Stock, par value $0.001 per share of the Company, and(ii) any share capital into which such Common Stock shall be changed or any share capital resulting from a reclassification of suchCommon Stock.(o) "Consolidated EBITDA" means, for any period, the Consolidated Net Income for such period plus:(i) without duplication and to the extent already deducted (and not added back) in arriving at suchConsolidated Net Income (or, as applicable, to the extent not already included in Consolidated Net Income), the sum of the followingamounts for such period:(1) total interest expense and, to the extent not reflected in such total interest expense, any losses onswap obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income andgains on such swap obligations or such derivative instruments, and bank and letter of credit fees and costs of surety bonds inconnection with financing activities,(2) provision for taxes based on income, profits or capital gains, including federal, foreign, state,franchise, excise and similar taxes paid or accrued during such period (including in respect of repatriated funds),(3) depreciation and amortization (including amortization of intangible assets established throughpurchase accounting and amortization of deferred financing fees or costs),(4) non-cash charges (excluding any non-cash charges which consists of or requires an accrual of, orreserve for, potential cash charges in any future period),(5) extraordinary losses in accordance with GAAP,(6) unusual or non-recurring charges (including litigation and investigation-related costs and expenses,costs associated with tax projects/audits and professional, consulting or other fees) incurred in connection with the Company's pendingaudit or any of the legal proceedings listed on Schedule 3(r) of the Securities Purchase Agreement,(7) restructuring charges, accruals or reserves (including restructuring costs related to acquisitions afterthe Initial Closing),(8) losses on asset sales, disposals or abandonments (other than asset sales, disposals or abandonmentsin the ordinary course of business), 36 Exhibit 4.1(9) the amount of any net losses from discontinued operations in accordance with GAAP,(10) any expenses, charges or losses that are covered by indemnification or other reimbursementprovisions in connection with any Investment, acquisition or any sale, conveyance, transfer or other disposition of assets, to the extentactually reimbursed, or, so long as the Company has received notification from the applicable carrier that it intends to indemnify orreimburse such expenses, charges or losses and that there exists reasonable evidence that such amount will in fact be reimbursed by theinsurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in factreimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not soreimbursed within such 365 days), such expenses, charges or losses,(11) to the extent covered by insurance and actually reimbursed, or, so long as the Company has madea determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extentthat such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days ofthe date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days),expenses, charges or losses with respect to liability or casualty event or business interruption,(12) fees, costs and expenses incurred in connection with the transactions contemplated by theTransaction Documents (including, without limitation, the Rights Offering);(13) any fees and expenses incurred during such period, or any amortization thereof for such period, inconnection with any acquisition, investment, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancingtransaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummatedprior to the Initial Closing and any such transaction undertaken but not completed) and any charges or non-recurring merger costsincurred during such period as a result of any such transaction,less(ii) without duplication and to the extent included in arriving at such Consolidated Net Income (or, asapplicable, to the extent not already included in Consolidated Net Income), the sum of the following amounts for such period:(1) extraordinary gains in accordance with GAAP and unusual or non-recurring gains,(2) non-cash gains,(3) gains on asset sales, disposals or abandonments (other than asset sales, disposals or abandonmentsin the ordinary course of business), and 37 Exhibit 4.1(4) the amount of any net income from discontinued operations in accordance with GAAP,in each case, as determined on a consolidated basis for the Company and its Subsidiaries in accordancewith GAAP, provided that, to the extent included in Consolidated Net Income,(1) there shall be excluded in determining Consolidated EBITDA, without duplication, any netunrealized gains and losses relating to mark-to-market of amounts denominated in foreign currencies resulting from the application ofFASB ASC 830;(2) there shall be included in determining Consolidated EBITDA for any period, without duplication,the Acquired EBITDA of any Person, property, business or asset acquired by the Company or any Subsidiary of the Company duringsuch period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of anyrelated Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired,including pursuant to a transaction consummated prior to the Initial Closing, and not subsequently so disposed of, an "AcquiredEntity or Business"), in each case based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portionthereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis;(3) there shall be excluded in determining Consolidated EBITDA for any period the DisposedEBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinuedoperations by the Company or any Subsidiary of the Company during such period (each such Person, property, business or asset sosold, transferred or otherwise disposed of, closed or classified, a "Sold Entity or Business"), in each case based on the DisposedEBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer,disposition, closure, classification or conversion) determined on a historical Pro Forma Basis; and(4) there shall be excluded in determining Consolidated EBITDA for any period the cumulative effectof a change in accounting principles during such period to the extent included in Consolidated Net Income.(p) "Consolidated Net Income" means, for any period, the net income (loss) of the Company and itsSubsidiaries for such period determined on a consolidated basis in accordance with GAAP.(q) "Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise,of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent ofthe Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liabilitywill be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will beprotected (in whole or in part) against loss with respect thereto. 38 Exhibit 4.1(r) "Conversion Premium" means the quotient obtained by dividing (x) the Conversion Price in effect as ofthe applicable date of determination, by (y) the arithmetic average of the ten (10) Weighted Average Prices of the Common Stock oneach Trading Day during the ten (10) consecutive Trading Days immediately preceding the applicable date of determination. All suchdeterminations to be appropriately adjusted for any stock split, stock dividend, stock combination, reclassification or other similartransaction during such period.(s) "Convertible Securities" means any stock or securities (other than Options) directly or indirectlyconvertible into or exercisable or exchangeable for shares of Common Stock.(t) "Disposed EBITDA" means with respect to any Sold Entity or Business for any period, the amount forsuch period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Company and its Subsidiariesin the definition of the term "Consolidated EBITDA" (and in the component financial definitions used therein) were references to suchSold Entity or Business and its Subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.(u) "Eligible Market" means the Principal Market, The New York Stock Exchange, the Nasdaq CapitalMarket, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE American, the OTC QX, the OTC QB or the OTCPink.(v) "Equity Conditions" means each of the following conditions: (i) either (x) one or more RegistrationStatements covering all of the Interest Shares to be issued on the applicable Interest Date or the shares of Common Stock issuable uponconversion of the Conversion Amount that is subject to the applicable Company Optional Redemption, as applicable, shall be effectiveand available for the resale of such shares, in accordance with the terms of the Registration Rights Agreement or (y) all Interest Sharesissuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amount that issubject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions, shall beeligible for sale without restriction or limitation pursuant to Rule 144 and without the need for registration under any applicable federalor state securities laws; (ii) the Company shall have no knowledge of any fact that would cause (x) the applicable RegistrationStatements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of the Interest Sharesissuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amount that issubject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions, inaccordance with the terms of the Registration Rights Agreement or (y) the Interest Shares issuable on the applicable Interest Date or theshares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Company OptionalRedemption, as applicable, requiring the satisfaction of the Equity Conditions, not being eligible for sale without restriction orlimitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto)promulgated under the Securities Act and any applicable state securities laws; (iii) the Interest Shares issuable on the applicable InterestDate requiring the satisfaction of the Equity Conditions may be issued in full without violating Section 3(d) hereof; (iv) the Interest 39 Exhibit 4.1Shares issuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amountthat is subject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions maybe issued in full without violating the rules or regulations of the Principal Market; (v) the Common Stock is designated for quotation onthe Principal Market and shall not have been suspended from trading on such exchange or market; and (vi) if the event requiringsatisfaction of the Equity Conditions is a Company Optional Redemption, an Event of Default Redemption or a Change of ControlRedemption, from and after the applicable Company Optional Redemption Notice, Event of Default Notice or Change of ControlNotice, as applicable, the Company shall have delivered shares of Common Stock pursuant to the terms of this Note to the Holder on atimely basis as set forth in Section 3(c) hereof.(w) "Equity Conditions Failure" means that on the applicable date of determination through the applicabledate of determination, the Equity Conditions have not each been satisfied (or waived in writing by the Holder).(x) "Equity Interests" means (a) all shares of capital stock (whether denominated as common capital stock orpreferred capital stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or otherownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whethervoting or non-voting and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, Options or otherrights to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable orexercisable.(y) "Exchange Act" means the Securities Exchange Act of 1934, as amended.(z) "Ex-Dividend Date" means the first date on which shares of the Common Stock trade on the applicableEligible Market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, ifapplicable, from the seller of Common Stock on such Eligible Market (in the form of due bills or otherwise) as determined by suchEligible Market.(aa) "Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including throughSubsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not theCompany is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all orsubstantially all of the properties or assets of the Company and its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X), taken as a whole, to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow theCompany to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tenderor exchange offer that is accepted by the holders of greater than either (x) 50% of the outstanding shares of Common Stock, (y) 50% ofthe outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to,or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; 40 Exhibit 4.1or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entitymaking or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 underthe Exchange Act) of greater than 50% of the outstanding shares of Common Stock, or (iv) consummate a share purchase agreement orother business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) withone or more Subject Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) greater than 50% of theoutstanding shares of Common Stock, (y) greater than 50% of the outstanding shares of Common Stock calculated as if any shares ofCommon Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stockpurchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that theSubject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of greater than 50% ofthe outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall,directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions allow any SubjectEntity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x)greater than 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) greater than 50%of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities asof the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) apercentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equitysecurities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiringother stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Companyor (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance ofor the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of thisdefinition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with theterms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective orinconsistent with the intended treatment of such instrument or transaction.(bb) "GAAP" means United States generally accepted accounting principles, consistently applied, as in effecton the Subscription Date.(cc) "Grace Period" shall have the meaning ascribed to such term in the Registration Rights Agreement.(dd) "Group" means a "group" as that term is used in Section 13(d) of the Exchange Act and as defined inRule 13d-5 thereunder. 41 Exhibit 4.1(ee) "Indebtedness" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) allobligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capitalleases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement orpayment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes,bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property,assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred asfinancing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rightsand remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property),(vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for theperiods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (orfor which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust,lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any property or assets (includingaccounts and contract rights) with respect to any asset or property owned by any Person, even though the Person which owns suchassets or property has not assumed or become liable for the payment of such indebtedness, (with the amount of such indebtedness, inthe case where the Person has not assumed or become liable for the payment of such indebtedness) equal to the lesser of (x) theoutstanding principal amount of such indebtedness and (y) the fair market value of the assets securing such indebtedness) and (viii) allContingent Obligations in respect of indebtedness of others of the kinds referred to in clauses (i) through (vii) above.(ff) "Initial Closing Date" shall have the meaning set forth in the Securities Purchase Agreement.(gg) "Interest Conversion Price" means as of any Interest Date, that price which shall be the arithmeticaverage of the Weighted Average Prices of the Common Stock on each Trading Day during the ten (10) consecutive Trading Daysimmediately preceding the applicable Interest Date. All such determinations to be appropriately adjusted for any stock split, stockdividend, stock combination, reclassification or other similar transaction occurring during such period.(hh) "Interest Notice Due Date" means the fifteenth (15th) Trading Day prior to the applicable Interest Date.(ii) "Interest Reset Date" means each of (i) January 30, 2019, (ii) January 30, 2020, (iii) February 1, 2021(each of the foregoing (i) through (iii), an "Anniversary Interest Reset Date") and (iv) any applicable Event of Default RedemptionNotice Date.(jj) "Interest Rate" means: 42 Exhibit 4.1If the Conversion Premium (as of January30, 2018 for the second column and as ofthe applicable Interest Reset Date for thethird column) is:Then the Interest Rate (which shall bedetermined on January 30, 2018) fromthe Initial Issuance Date through thefirst Interest Reset Date shall be:And the Interest Rate from theapplicable Interest Reset Date until thenext subsequent Interest Reset Dateshall be:1.0 or less6.0%4.0%1.056.0%4.3%1.106.0%4.7%1.156.0%5.0%1.206.0%5.3%1.256.0%5.7%1.306.0%6.0%1.358.0%8.0%1.4010.0%10.0%1.45 or higher12.0%12.0%If the Conversion Premium is between two Conversion Premium amounts in the table above, the Interest Rate will be determined bystraight-line interpolation between the Interest Rates set forth for the higher and lower Conversion Premium amounts.Upon a 10-K Filing Failure (as defined below), any applicable Interest Rate then in effect shall automatically be increased by anadditional 200 bps (e.g. from 4.7% to 6.7%). Such increased Interest Rate shall continue in effect until the next Anniversary InterestReset Date. Upon the next Anniversary Interest Reset Date, the Interest Rate will adjust according to table above; provided that if theCompany has not effected the 10-K Filing Remedy (as defined below) by such date, then the reset Interest Rate will be furtherincreased by 200 bps and will continue in effect until the next Anniversary Interest Reset Date, at which time this mechanism will berepeated. For the avoidance of doubt, on any Anniversary Interest Reset Date where there is no 10-K Filing Failure and where anyapplicable 10-K Filing Remedy has been effected, the reset Interest Rate will be determined according to the table above withoutadding 200 bps. For purposes hereof, (i) the "10-K Filing Failure" means that the Company fails on or prior to each April 30 whilethis Note is outstanding to have filed the Form 10-K and any subsequent required periodic or current reports required to be filed by theCompany prior to each such date under the Exchange Act (including audited financial statements for the fiscal years ended prior toeach such date) and (ii) a "10-K Filing Remedy" means the Company shall have filed with the SEC the Form 10-K and all subsequentrequired periodic and current reports required to be filed under the Exchange Act be filed by the Company prior to such date and thereshall not exist any Event of Default.In the event the Interest Rate shall be increased pursuant to Section 4(q) of the Securities Purchase Agreement, each applicable InterestRate amount set forth in the table above shall be adjusted by the same amount as the Interest Rate is adjusted as mutually agreed uponby the Company and the Holder. Such further Interest Rate adjustments will then be according to the table as increased. 43 Exhibit 4.1(kk) "Junior Claims" means any Indebtedness or securities of the Company or any of its Subsidiaries of anyclass junior in rank to the Notes and the Additional Notes in respect of the preferences as to distributions and payments upon aLiquidation Event, including, without limitation, any Equity Securities of the Company or any of its Subsidiaries.(ll) "Lead Investor" means Starboard Value and Opportunity Master Fund Ltd.(mm) "Liquidation Event" means the voluntary or involuntary liquidation, dissolution or winding up of theCompany or such Subsidiaries the assets of which constitute all or substantially all of the assets of the business of the Company and itsSubsidiaries taken as a whole, in a single transaction or series of transactions, or adoption of any plan for the same.(nn) "Make-Whole Change of Control" means any Change of Control in which more than ten percent (10%)of the consideration received or to be received by the holders of Common Stock (excluding cash payments for fractional shares orpursuant to dissenters rights), in connection with such transaction or event, consists of cash.(oo) "Make-Whole Change of Control Premium" means a cash amount per $1,000 principal amount ofNotes being redeemed in a Make-Whole Change of Control determined by multiplying the applicable Make-Whole Stock Price (asadjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the SubscriptionDate) by the amount set forth in a table to be mutually agreed upon by the Company and the Holder which table shall be determinedbased on the assumptions and methodology set forth on Schedule 31(oo) attached hereto and shall be in the format set forth below andshall be deemed an integral part of this Note for all purposes hereof (the "Final Make-Whole Table"), with such amountcorresponding to the date of the Make-Whole Change of Control occurring after the date in the first column but prior to the date, if any,on the immediately following row of the first column of the tables set forth in Schedule 31(oo) attached hereto or in the Final Make-Whole Table: 44 Exhibit 4.1Change ofControlRedemptionDateMake-Whole Stock Price$20.00$25.00$28.50$30.00$35.00$37.05$40.00$45.00$50.00$55.00January 5,2018 January 7,2019 January 7,2020 January 7,2021 January 5,2022 The exact Make-Whole Stock Price and Change of Control Redemption Date may not be set forth in Schedule 31(oo) attached heretoor in the Final Make-Whole Table, in which case, if the Make-Whole Stock Price is between two such amounts in the Final Make-Whole Table or the Change of Control Redemption Date is between two Change of Control Redemption Dates in the Final Make-Whole Table, the applicable value will be determined by straight-line interpolation between the applicable value set forth for the higherand lower Make-Whole Stock Prices and the earlier and later Change of Control Redemption Dates, as applicable, based on a 365-dayyear.In the event the Interest Rate and/or Conversion Price shall be adjusted pursuant to Section 4(q) of the Securities Purchase Agreement,each Make-Whole Stock Price set forth in the Final Make-Whole Table shall be adjusted to reflect such adjustment(s) as mutuallyagreed upon by the Company and the Holder based on the same assumptions and methodology used to determine the Final Make-Whole Table, after which such adjusted Final Make-Whole Table shall be deemed an integral part of this Note for all purposes hereof.(pp) "Make-Whole Stock Price" means, for any Make-Whole Change of Control: (A) if the holders ofCommon Stock receive only cash in consideration for their shares of Common Stock in such Make-Whole Change of Control, theamount of cash paid per share of Common Stock in such Make-Whole Change of Control; and (B) in all other cases, the arithmeticaverage of the Closing Sale Prices for the five (5) consecutive Trading Days ending on, and including, the Trading Day immediatelybefore the effective date of such Make-Whole Change of Control (all such determinations to be appropriately adjusted for any stocksplit, stock dividend, stock combination, reclassification or other similar transaction during such period).(qq) "Maximum Percentage" means, initially, 4.99%, which may be increased or decreased in accordancewith the provisions of Section 3(d); provided, however, that upon receipt by the Holder of a Company Optional Redemption Notice,then unless the Holder 45 Exhibit 4.1elects a lower Maximum Percentage in accordance with the provisions of Section 3(d), the Maximum Percentage shall immediatelyand automatically, without any further action by the Holder, be set at 9.99%.(rr) "Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock orConvertible Securities.(ss) "Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person,including such entity whose common capital stock or equivalent equity security is quoted or listed on an Eligible Market (or, if soelected by the Required Holders, any other market, exchange or quotation system), or, if there is more than one such Person or suchentity, the Person or entity designated by the Required Holders or in the absence of such designation, such Person or entity with thelargest public market capitalization as of the date of consummation of the Fundamental Transaction.(tt) "Permitted Indebtedness" means (i) Indebtedness evidenced by this Note, the Other Notes, theAdditional Notes, the Rights Offering Notes, if any, and Backstop Commitment Notes, if any, (ii) unsecured Indebtedness incurred bythe Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in awritten agreement acceptable to the Required Holders and approved by the Required Holders in writing, and which Indebtedness doesnot provide at any time for (a) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal orpremium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (b) total interest and fees at a rate in excess of12.00% per annum, (iii) Indebtedness in an aggregate outstanding principal amount not to exceed $50,000,000 incurred under arevolving credit facility; (iv) Indebtedness with respect to capital leases in an aggregate principal amount not to exceed $40,000,000,(v) Indebtedness secured by Permitted Liens described in clauses (iv) of the definition of Permitted Liens, (vi) existing Indebtednessdescribed on Schedule 31(tt) attached hereto as in effect on the Subscription Date, and any refinancings and extensions thereof,provided that (A) the principal amount plus unpaid accrued interest and premium thereon and applicable discounts, fees, commissionsand expenses thereunder shall not be increased, (B) the maturity thereof is not earlier than ninety (90) days after the Maturity Date, (C)if the Indebtedness being refinanced or extended is subordinated in right of payment to this Note, the Other Notes and the AdditionalNotes or any guarantees thereof, such refinanced or extended Indebtedness shall be subordinated in right of payment to this Note, theOther Notes, any Additional Notes and any guarantees thereof on terms at least as favorable to the Holder as those contained in thedocumentation governing the Indebtedness being refinanced or extended, (D) no refinanced or extended Indebtedness shall havedifferent obligors, or greater guarantees or security than, the Indebtedness being refinanced or extended and (E) if the Indebtednessbeing refinanced or extended is secured by any Collateral, such refinanced or extended Indebtedness may be secured by suchCollateral on terms relating to such Collateral not materially less favorable to this Note, the Other Notes and any Additional Notes thanthose contained in the documentation (including any intercreditor agreement) governing the Indebtedness being refinanced orextended, (any such Indebtedness, "Refinancing Indebtedness"), (vii) intercompany Indebtedness among the Company and anySubsidiaries, (viii) Indebtedness arising under swap or interest rate contracts entered into in the ordinary course of business, (ix) 46 Exhibit 4.1Contingent Obligations in respect of Indebtedness otherwise permitted hereunder, (x) direct or Contingent Obligations arising undersurety bonds, letters of credit and similar instruments (including any related indemnity agreement) entered into in the ordinary course ofbusiness and consistent with past practice, (xi) Indebtedness in respect of cash management agreements entered into in the ordinarycourse of business, (xii) Indebtedness of foreign Subsidiaries not exceeding $10,000,000 in the aggregate at any time outstanding, (xiii)Indebtedness under corporate credit cards in an aggregate outstanding principal amount not to exceed $3,000,000, (xiv) Indebtednessof Persons acquired in an acquisition, provided that (x) such Indebtedness existed prior to such acquisition and was not incurred inanticipation of such acquisition and (b) after giving effect to such acquisition, the Total Net Leverage Ratio is equal to or less thanimmediately prior to such acquisition and (xv) additional Indebtedness in an aggregate principal amount not to exceed $5,000,000.(uu) "Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faithby appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lienarising in the ordinary course of business by operation of law with respect to a liability that is not yet more than sixty (60) days overdueor delinquent, (iii) any Lien created by operation of law, such as materialmen's liens, mechanics' liens and other similar liens, arising inthe ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith byappropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to securethe purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of suchequipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property soacquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewalor refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal orreplacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness beingextended, renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in theordinary course of the Company's business, not interfering in any material respect with the business of the Company and itsSubsidiaries taken as a whole, (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments ofcustom duties in connection with the importation of goods, (viii) Liens arising from judgments, decrees or attachments in circumstancesnot constituting an Event of Default under Section 4(a)(ix); (ix) Liens securing Permitted Indebtedness described in clause (iv) of thedefinition of Permitted Indebtedness, (x) Liens securing existing Indebtedness described on Schedule 31(tt) attached hereto as in effecton the Subscription Date, and Liens securing any refinancings and extensions thereof provided that any collateral securing suchrefinancings or extensions is not broader than the collateral that is subject to the Liens being refinanced or extended, (xi) pledges ordeposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other socialsecurity legislation, (xii) deposits to secure performance of bids, trade contracts and leases, statutory obligations, surety and appealbonds, performance bonds and other obligations of a like nature in the ordinary course of business, (xiii) normal and customary rightsof setoff upon deposits of cash in favor of banks or other depository institutions, (xiv) Liens deemed to exist in connection withinvestments in repurchase agreements in the ordinary course of business, (xv) Liens arising 47 Exhibit 4.1on any real property as a result of eminent domain, condemnation or similar proceeding with respect to such real property, (xvi) Lienson any cash deposits in connection with any letter of intent or purchase agreement relating to an acquisition, (xvii) customary rights offirst refusal, "tag-along" and "drag-along" rights with respect to any equity interests in any joint venture, (xviii) Liens on assets offoreign Subsidiaries securing obligations of foreign Subsidiaries not exceeding $10,000,000 in the aggregate at any time outstanding,(xix) Liens arising under the Transaction Documents, (xx) additional Liens securing obligations not exceeding $5,000,000 in theaggregate at any time outstanding, and (xxi) Liens securing Permitted Indebtedness described in clause (iii) of the definition ofPermitted Indebtedness, provided that such Liens are subject to an intercreditor agreement in form and substance reasonablysatisfactory to the Required Holders.(vv) "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, atrust, an unincorporated organization, any other entity and a government or any department or agency thereof.(ww) "Post-Acquisition Period" shall mean, with respect to any Specified Transaction, the period beginningon the date such Specified Transaction is consummated and ending on the last day of the 18th month immediately following the dateon which such Specified Transaction is consummated.(xx) "Principal Market" means the OTC Markets, or, if the OTC Markets is not the principal trading marketfor the Common Stock, then the principal Eligible Market on which the Common Stock is then traded.(yy) "Pro Forma Basis," "Pro Forma Compliance" and "Pro Forma Effect" means, with respect tocompliance with any test or covenant hereunder, that all Specified Transactions and the following transactions in connection therewithshall be deemed to have occurred as of the first day of the applicable period of measurement in such test or covenant: (a) incomestatement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (i) in thecase of a sale, transfer or other disposition of all or substantially all equity interests in any Subsidiary of the Company or any division,product line, or facility used for operations of the Company or any of its Subsidiaries, shall be excluded, and (ii) in the case of apermitted acquisition or investment described in the definition of the term "Specified Transaction," shall be included, (b) any retirementor repayment of Indebtedness and (c) any Indebtedness incurred or assumed by the Company or any of its Subsidiaries in connectiontherewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period forpurposes of this definition determined by utilizing the rate that is or would be in effect with respect to such Indebtedness as at therelevant date of determination.(zz) "Public Announcement Date" means (i) the Trading Day on which the Company first publiclyannounces on or prior to 9:30 a.m. New York time certain historical metrics agreed to in writing by the Company and the LeadInvestor, including, among other metrics, the number of shares of Common Stock outstanding as of December 31, 2017, in connectionwith the Initial Closing Date (the "Public Announcement") or (ii) in case the Company makes the Public Announcement after 9:30a.m. New York time, the first (1st) Trading Day immediately following the Public Announcement. 48 Exhibit 4.1([[) "Qualified Market" means the Principal Market, The New York Stock Exchange, the Nasdaq CapitalMarket, the Nasdaq Global Market, the Nasdaq Global Select Market or the NYSE American.(aaa) "Qualifying Conditions" means that both at the time of and immediately after the applicable proposedaction or omission to take any action, by the Company or any of its Subsidiary, each of the following conditions are satisfied (orwaived in writing by the Holder): (x) no Equity Conditions Failure has occurred, (ii) the Total Net Leverage Ratio is less than or equalto 3:1 and (iii) the Form 10-K has been filed with the SEC.(bbb) "Redemption Dates" means, collectively, the Event of Default Redemption Dates, the Change ofControl Redemption Dates and the Company Optional Redemption Dates, each of the foregoing, individually, a Redemption Date.(ccc) "Redemption Notices" means, collectively, the Event of Default Redemption Notices, the Change ofControl Redemption Notices and the Company Optional Redemption Notices, each of the foregoing, individually, a RedemptionNotice.(ddd) "Redemption Premium" means (i) in the event of an Event of Default set forth in Section 4(a)(iii) andany Event of Default occurring at a time the Common Stock is not listed on a Qualified Market, 110% and (ii) in all other events,100%.(eee) "Redemption Prices" means, collectively, the Event of Default Redemption Prices, the Change ofControl Redemption Prices and the Company Optional Redemption Prices, each of the foregoing, individually, a Redemption Price.(fff) "Registrable Securities" shall have the meaning ascribed to such term in the Registration RightsAgreement.(ggg) "Registration Rights Agreement" means that certain registration rights agreement dated as of theSubscription Date by and among the Company and the Buyers relating to, among other things, the registration for resale of the sharesof Common Stock issuable upon conversion of this Note, the Other Notes and any Additional Notes and upon any exercise of theWarrants.(hhh) "Registration Statement" shall have the meaning ascribed to such term in the Registration RightsAgreement.(iii) "Related Fund" means, with respect to any Person, a fund or account managed by such Person or anAffiliate of such Person.(jjj) "Required Holders" means the holders of Notes of Additional Notes representing at least a majority ofthe aggregate principal amount of the Notes and Additional Notes then outstanding.(kkk) "Rights Offering Notes" shall have the meaning ascribed to such term in the Securities PurchaseAgreement. 49 Exhibit 4.1(lll) "SEC" means the United States Securities and Exchange Commission.(mmm) "Securities Act" means the Securities Act of 1933, as amended.(nnn) "Securities Purchase Agreement" means that certain securities purchase agreement dated as of theSubscription Date by and among the Company and the Buyers of the Notes pursuant to which the Company issued the Notes, theAdditional Notes and Warrants.(ooo) "September Agreement" means that certain Agreement, dated as of September 28, 2017 by and amongthe Company, Starboard Value LP and the other parties signatory thereto.(ppp) "Specified Transaction" means, with respect to any period, any investment, sale, transfer or otherdisposition of assets or property, incurrence or repayment of indebtedness, restricted payment, or other event that by the terms hereofrequires such test or covenant to be calculated on a "Pro Forma Basis" or to be given "Pro Forma Effect."(qqq) "Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person,Persons or Group.(rrr) "Subscription Date" means January 16, 2018.(sss) "Subsidiary" shall have the meaning set forth in the Securities Purchase Agreement.(ttt) "Successor Entity" means one or more Person or Persons (or, if so elected by the Required Holders, theCompany or Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or,if so elected by the Required Holders, the Company or the Parent Entity) with which such Fundamental Transaction shall have beenentered into.(uuu) "Total Debt" shall mean, on any date of determination, the total Indebtedness of the Company and itsSubsidiaries at such time (excluding Indebtedness of the type described in clause (iii) of the definition of such term, except to the extentof any unreimbursed drawings thereunder).(vvv) "Total Net Debt" shall mean, on any date of determination, (a) Total Debt minus (b) unrestricted cashand cash equivalents (as defined in GAAP).(www) "Total Net Leverage Ratio" shall mean on any date of determination, the ratio of Total Net Debt onsuch date to Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date.Each calculation of the Total Net Leverage Ratio hereunder shall be made on a Pro Forma Basis.(xxx) "Trading Day" means any day on which the Common Stock is traded on the Principal Market, or, if thePrincipal Market is not the principal trading market for the Common 50 Exhibit 4.1Stock on such day, then on the principal securities exchange or securities market on which the Common Stock is then traded; providedthat "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for lessthan 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange ormarket (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, thenduring the hour ending at 4:00:00 p.m., New York Time).(yyy) "Transaction Documents" shall have the meaning set forth in the Securities Purchase Agreement.(zzz) "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreement, and shallinclude all warrants issued in exchange therefor or replacement thereof.([[[) "Weighted Average Price" means, for any security as of any date, the dollar volume-weighted averageprice for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as thePrincipal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time asthe Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its "Volume at Price"functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter marketon the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time assuch market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time assuch market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted averageprice is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest closingask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.(formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular date on any of theforegoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by theCompany and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then suchdispute shall be resolved pursuant to Section 23. All such determinations to be appropriately adjusted for any stock dividend, stocksplit, stock combination, reclassification or similar transaction occurring during the applicable calculation period.[Signature Page Follows] 51 Exhibit 4.1IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set outabove.comScore, Inc.By:Name:Title: Exhibit 4.1Schedule 31(tt)Permitted IndebtednesscomScore Inc:Banc of America Leasing and CapitalMaster Lease Agreement dated December 12, 2006Lease Schedule #24 (3/31/15) - #27 (12/31/15)$2,720,000Dell Financial ServicesMaster Lease Agreement dated August 3, 2012Lease Schedule #9 (2/1/15) – Lease Schedule #19 (1/1/17)$5,320,000Bank of America, N.ALetters of Credit (Office Lease Security Deposit)$3,475,000comScore BV:Dell Financial ServicesEuropean Master Lease Agreement dated July 23, 2012Lease Schedule #3 (8/1/15)$155,000 Exhibit 4.1Schedule 31(oo)Make-Whole Change of Control PremiumExample 1:Example 2: Exhibit 4.1EXHIBIT I COMSCORE, INC.CONVERSION NOTICEReference is made to the Senior Secured Convertible Note (the "Note") issued to the undersigned by comScore, Inc., a Delawarecorporation (the "Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the ConversionAmount (as defined in the Note) below into shares of Common Stock, par value $0.001 per share (the "Common Stock"), of theCompany, as of the date specified below.Date of Conversion: Aggregate Conversion Amount to be converted: Please confirm the following information:Conversion Price: Number of shares of Common Stock to be issued: Please issue the Common Stock into which the Note is being converted in the following name and to the following address:Issue to: Facsimile Number and Electronic Mail: Authorization: By: Title: Dated: Account Number: (if electronic book entry transfer) Transaction Code Number: (if electronic book entry transfer) Exhibit 4.1ACKNOWLEDGMENTThe Company hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer & TrustCompany to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions datedJanuary __, 2018 from the Company and acknowledged and agreed to by American Stock Transfer & Trust Company.comScore, Inc.By:Name:Title: Exhibit 4.2[FORM OF SENIOR SECURED CONVERTIBLE NOTE]NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THESECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THESECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCEOF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACTOF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A FORMREASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAIDACT, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDINGTHE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGINACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANYTRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDINGSECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THEAMOUNT SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.COMSCORE, INC.SENIOR SECURED CONVERTIBLE NOTEIssuance Date: May 17, 2018 Original Principal Amount: U.S. $[●](Reflects the amendments dated May 17, 2018, August 8, 2018 and November 13, 2018)FOR VALUE RECEIVED, comScore, Inc., a Delaware corporation (the "Company"), hereby promises to pay to[BUYER] or registered assigns (the "Holder") in cash and/or in shares of Common Stock (as defined below) the amount set out aboveas the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the"Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case inaccordance with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest Rate from thedate set out above as the Issuance Date (the "Issuance Date") until the same becomes due and payable, whether upon an Interest Date(as defined below), the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the termshereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer orreplacement hereof, this "Note") is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities PurchaseAgreement on the Additional Closing Date (collectively, the "Notes" and such other Senior Secured Convertible Notes, the "OtherNotes"). Certain capitalized terms used herein are defined in Section 31. Exhibit 4.2(1)PAYMENTS OF PRINCIPAL; PREPAYMENT. On the Maturity Date, the Company shall pay to theHolder an amount in cash representing all outstanding Principal, any accrued and unpaid Interest and any accrued and unpaid LateCharges (as defined in Section 24(b)) on such Principal and Interest. The "Maturity Date" shall be January 16, 2022, as may beextended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall haveoccurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred andbe continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to curewould result in an Event of Default and (ii) through the date that is ten (10) Business Days after the consummation of a Change ofControl in the event that a Change of Control is publicly announced or a Change of Control Notice (as defined in Section 5(b)) isdelivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may not prepay any portion of theoutstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.(2) INTEREST.(a) Interest on this Note shall commence accruing on the Issuance Date at the Interest Rate and shall becomputed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears for each Calendar Quarter on thefirst (1st) Business Day of each Calendar Quarter after the Issuance Date (each, an "Interest Date").(b) Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable InterestDate, in whole or in part, in shares of Common Stock ("Interest Shares") so long as there is no Equity Conditions Failure (other thanas a result of the delivery of an Interest Blocker Notice (as defined below)) occurring on the applicable Interest Date; provided,however, that the Company may, at its option following written notice to each holder of the Notes and any Additional Notes on orprior to the applicable Interest Notice Due Date (the date such notice is delivered to the Holder and holders of Other Notes andAdditional Notes, the "Interest Notice Date"), elect to pay Interest on any Interest Date in cash ("Cash Interest") or in a combinationof Cash Interest and Interest Shares. Each Interest Election Notice shall specify the amount or percentage of Interest that the Companywill pay in respect of the Interest Date as Cash Interest and Interest Shares which amounts or percentages, as applicable, when addedtogether, must equal the applicable Interest (or 100% thereof, as applicable) due on such Interest Date. If the Company elects (or isdeemed to have elected by operation of this Section 2) the payment of applicable Interest in Interest Shares, in whole or in part, and anEquity Conditions Failure (other than the delivery to the Company of an Interest Blocker Notice) occurs at any time prior to theapplicable Interest Date that is expected to last through the applicable Interest Date (which is not waived in writing by the Holder), theCompany shall provide the Holder a written notice to that effect by no later than the Trading Day immediately following the Companyhaving knowledge of such Equity Conditions Failure, indicating that unless the Holder waives the Equity Conditions Failure inwriting, the applicable portion of Interest as to which the Holder did not waive the Equity Conditions shall be paid as Cash Interest. Ifany portion of Interest for a particular Interest Date shall be paid in Interest Shares, then on the applicable Interest Date, the Companyshall issue to the Holder, such number of shares of Common Stock equal to (a) the amount of Interest payable on the applicable InterestDate in Interest 2 Exhibit 4.2Shares divided by (b) the Interest Conversion Price as in effect on the applicable Interest Date. All Interest Shares shall be fully paidand nonassessable shares of Common Stock (rounded to the nearest whole share in accordance with Section 3(a)). Except as expresslyprovided in this Section 2, the Company shall pay the applicable Interest in the same ratio of Interest Shares and Cash Interest on theNotes, the Other Notes and any Additional Notes. The Company shall pay any and all taxes that may be payable with respect to theissuance and delivery to the Holder of shares of Common Stock as Interest pursuant to this Section 2; provided, however, that theHolder shall be solely responsible for any transfer taxes if the Interest Shares are to be registered, issued or delivered in the name of aPerson other than the Holder.(c) Notwithstanding the foregoing, if (i) the Company elects (or is deemed to have elected by operation of thisSection 2) to pay all or any portion of Interest due on any Interest Date in Interest Shares, (ii) the Company is permitted pursuant to thisSection 2 to pay all or any portion of Interest due on such Interest Date in Interest Shares if not for the delivery to the Company of anInterest Blocker Notice and (iii) within two (2) Business Days following the applicable Interest Notice Date the Holder has delivered tothe Company a written notice (an "Interest Blocker Notice") (A) stating that such payment of Interest in Interest Shares would resultin a violation of Section 3(d), (B) specifying the portion of the applicable Interest with respect to which the payment in Interest Shareswould result in a violation of Section 3(d) if such payment of Interest in Interest Shares were effected (such amount so specified isreferred to herein as the "Designated Interest Amount") and (C) requesting the Company hold the Designated Interest Amountissuable to the Holder in abeyance for the Holder until such time or times as its right thereto would not result in the Holder and its otherAttribution Parties exceeding the Maximum Percentage, at which time or times the Company shall promptly upon written notice fromthe Holder deliver such Interest Shares to the extent as if there had been no such limitation. Any Interest Shares held in abeyancepursuant to the provisions of this Section 2(c) shall satisfy the Company's requirement to pay the applicable Interest corresponding tothe number of Interest Shares so held in abeyance until the Company receives a notice from the Holder instructing the Company thatthe Maximum Percentage no longer prevents the Holder from receiving such Interest Shares.(d) Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rateand be payable by way of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each Conversion Date(as defined in Section 3(c)(i)) in accordance with Section 3(b)(i) and/or on each Redemption Date.(3) CONVERSION OF NOTES. At any time or times after the first (1st) Trading Day following the Pricing Date (asdefined in Section 3(b)(ii)) (the "Initial Convertibility Date"), this Note shall be convertible into shares of Common Stock, on theterms and conditions set forth in this Section 3.(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the InitialConvertibility Date, the Holder shall be entitled to convert all or any portion of the outstanding and unpaid Conversion Amount intofully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below).The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the 3 Exhibit 4.2issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share ofCommon Stock to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payablewith respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount; provided, however, that theHolder shall be solely responsible for any transfer taxes if the shares of Common Stock registrable, issuable or deliverable pursuant to aConversion Notice are to be registered, issued or delivered in the name of a Person other than the Holder.(b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any ConversionAmount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the"Conversion Rate").(i) "Conversion Amount" means the sum of (A) the portion of the Principal to be converted,redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with respect to suchPrincipal and (C) accrued and unpaid Late Charges, if any, with respect to such Principal and Interest.(ii) "Conversion Price" means, as of any Conversion Date or other date of determination, a price pershare equal to the greater of: (A) 130% of the arithmetic average of the Weighted Average Price of the Common Stock on eachTrading Day during the ten (10) consecutive Trading Days commencing on the later of (x) the Initial Closing Date and (y) the PublicAnnouncement Date (the last date in such period, the "Pricing Date") (all such determinations to be appropriately adjusted for anystock split, stock dividend, stock combination, reclassification or other similar transaction occurring during such period) and (B)$28.00, subject to adjustment as provided herein.(c) Mechanics of Conversion.(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on anydate on or after the Initial Convertibility Date (a "Conversion Date"), the Holder shall (A) deliver to the Company on such date, acopy of an executed notice of conversion substantially in the form attached hereto as Exhibit I (the "Conversion Notice") and (B) ifrequired by Section 3(c)(iii), but without delaying the Company's requirement to deliver shares of Common Stock on the applicableShare Delivery Date (as defined below), surrender this Note to a common carrier for delivery to the Company as soon as practicable onor following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). No ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of anyConversion Notice be required. On or before the first (1st) Business Day following the date of receipt of a Conversion Notice, theCompany shall transmit a confirmation of receipt of such Conversion Notice to the Holder and the Company's transfer agent (the"Transfer Agent"). On or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice (a "ShareDelivery Date"), the Company shall, (x) if the Transfer Agent is participating in the Depository Trust Company ("DTC") FastAutomated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall beentitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal At Custodian system or (y) if theTransfer Agent is not participating in the DTC 4 Exhibit 4.2Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate,registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled.If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greaterthan the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no eventlater than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note (inaccordance with Section 18(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive theshares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders ofsuch shares of Common Stock on the Conversion Date, irrespective of the date such shares of Common Stock are credited to theHolder's account with DTC or the date of delivery of the certificates evidencing such shares of Common Stock, as the case may be.(ii) Company's Failure to Timely Convert. If the Company shall fail on or prior to the applicable ShareDelivery Date to issue and deliver a certificate to the Holder (if the Transfer Agent is not participating in the DTC Fast AutomatedSecurities Transfer Program), or credit the Holder's balance account with DTC (if the Transfer Agent is participating in the DTC FastAutomated Securities Transfer Program), for the number of shares of Common Stock to which the Holder is entitled upon the Holder'sconversion of any Conversion Amount (a "Conversion Failure"), then the Holder, upon written notice to the Company, may void itsConversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not beenconverted pursuant to such Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company'sobligations to make any payments which may have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) orotherwise. In addition to the foregoing, if the Company shall fail on or prior to the applicable Share Delivery Date to issue and delivera certificate to the Holder, if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, or creditthe Holder's balance account with DTC, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program,for the number of shares of Common Stock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount oron any date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (y) below, and if aftersuch Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a saleby the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"),then the Company shall, within three (3) Trading Days after the Holder's request and in the Holder's discretion, either (x) pay cash tothe Holder in an amount equal to the Holder's total purchase price (including brokerage commissions) for the shares of Common Stockso purchased (the "Buy-In Price"), at which point the Company's obligation to issue and deliver such certificate or certificates or creditthe Holder's balance account with DTC for the shares of Common Stock to which the Holder is otherwise entitled upon the Holder'sconversion of the applicable Conversion Amount shall terminate, or (y) promptly honor its obligation to deliver to the Holder acertificate or certificates representing such shares of Common Stock or credit the Holder's balance account with DTC for such sharesof Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)such number of shares of Common Stock, times (B) the Closing Sale Price of the Common Stock 5 Exhibit 4.2on the applicable Conversion Date. Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder,at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company'sfailure to timely deliver shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.(iii) Registration; Book-Entry. The Company shall maintain a register (the "Register") for therecordation of the names and addresses of the holders of each Note and the Principal amount of the Notes (and stated interest thereon)held by such holders (the "Registered Notes"). The entries in the Register shall be conclusive and binding for all purposes absentmanifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the ownerof a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest, if any, hereunder,notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of suchassignment or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by the Holder, inform and substance reasonably satisfactory to the Company, the Company shall record the information contained therein in theRegister and issue one or more new Registered Notes in the same aggregate Principal amount as the Principal amount of thesurrendered Registered Note to the designated assignee or transferee pursuant to Section 17. The Company shall be entitled to act andrely upon any such request without inquiry as to the genuineness thereof, and without liability of any type or nature arising therefrom.Notwithstanding anything to the contrary in this Section 3(c)(iii), the Holder may assign the Note or any portion thereof to an Affiliateof such Holder or a Related Fund of such Holder without delivering a request to assign or sell such Note to the Company and therecordation of such assignment or sale in the Register (a "Related Party Assignment"); provided, that (x) the Company may continueto deal solely with such assigning or selling Holder unless and until such Holder has delivered a request, in form and substancereasonably satisfactory to the Company, to assign or sell such Note or portion thereof to the Company for recordation in the Register;and (y) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain aregister (the "Related Party Register") comparable to the Register on behalf of the Company, and any such assignment or sale shallbe effective upon recordation of such assignment or sale in the Related Party Register. Notwithstanding anything to the contrary setforth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required tophysically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or(B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requestingreissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing thePrincipal, Interest and Late Charges, if any, converted and the dates of such conversions or shall use such other methods, reasonablysatisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion except as providedabove.(iv) Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Noticerelating to this Note and one or more holders of Other Notes or Additional Notes for the same Conversion Date and the Company canconvert some, but not all, of such portions of this Note, the Other Notes and the Additional Notes submitted for conversion, theCompany, subject to Section 3(d), shall convert from the Holder and each holder of Other Notes 6 Exhibit 4.2and Additional Notes electing to have this Note, the Other Notes or Additional Notes converted on such date a pro rata amount of suchholder's portion of the Note, its Other Notes and/or Additional Notes submitted for conversion based on the Principal amount of thisNote, the Other Notes and/or Additional Notes submitted for conversion on such date by such holder relative to the aggregate Principalamount of this Note and all Other Notes and Additional Notes submitted for conversion on such date. In the event of a dispute as to thenumber of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue tothe Holder the number of shares of Common Stock not in dispute and such dispute shall be resolved in accordance with Section 23.(d) Beneficial Ownership Limitation. The Company shall not deliver any shares of Common Stock pursuant tothe terms and conditions of this Note, and the Holder shall not have the right to any shares otherwise issuable or otherwise deliverablepursuant to the terms and conditions of this Note and any such delivery shall be null and void and treated as if never made, to theextent that, immediately after giving effect to such issuance, the Holder together with its other Attribution Parties collectively wouldbeneficially own in excess of the Maximum Percentage of the number of shares of Common Stock outstanding. For purposes of theforegoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and its other AttributionParties shall include the number of shares of Common Stock beneficially owned by the Holder and all of its other Attribution Partiesplus the number of shares of Common Stock issuable pursuant to the terms of this Note with respect to which the determination of suchsentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of theremaining, nonconverted portion of this Note beneficially owned by the Holder or any of its other Attribution Parties and (ii) exerciseor conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, anyconvertible notes or convertible preferred stock or warrants, including any Additional Notes and Warrants) beneficially owned by theHolder or any of its other Attribution Parties subject to a limitation on conversion or exercise analogous to the limitation contained inthis Section 3(d). For purposes of this Section 3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of theExchange Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire pursuant tothe terms of this Note without exceeding the Maximum Percentage, the Holder, absent other knowledge, may rely on the number ofoutstanding shares of Common Stock as reflected in (i) the Company's most recent Annual Report on Form 10- K, Quarterly Reporton Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (ii) a more recent publicannouncement by the Company or (iii) any other written notice by the Company or the Transfer Agent setting forth the number ofshares of Common Stock outstanding (the "Reported Outstanding Share Number"). If the Company receives a Conversion Noticefrom the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding ShareNumber, the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extentthat such Conversion Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 3(d), toexceed the Maximum Percentage, the Holder shall, within one (1) Business Day thereafter, notify the Company of a reduced numberof shares of Common Stock to be purchased pursuant to such Conversion Notice. The number of outstanding shares of CommonStock shall be determined after giving effect to the conversion or exercise of securities of the 7 Exhibit 4.2Company, including this Note, by the Holder and any other Attribution Party since the date as of which the Reported OutstandingShare Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Notewould result in the Holder and its other Attribution Parties being deemed to beneficially own, in the aggregate, more than theMaximum Percentage of the number of outstanding shares of Common Stock, the number of shares by which the Holder's and its otherAttribution Parties' aggregate beneficial ownership would exceed the Maximum Percentage (the "Excess Shares") shall be deemednull and void and any portion of the Conversion Amount so converted shall be reinstated, and the Holder shall not have the power tovote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase ordecrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) anysuch increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to theCompany and (ii) any such increase or decrease will apply only to the Holder and its other Attribution Parties and not to any otherholder of Notes that is not an Attribution Party of the Holder. The provisions of this paragraph shall be construed and implemented in amanner otherwise than in strict conformity with the terms of this Section 3(d) to the extent necessary to correct this paragraph (or anyportion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in thisSection 3(d) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitationcontained in this paragraph may not be waived and shall apply to a successor holder of this Note.(4) RIGHTS UPON EVENT OF DEFAULT.(a) Event of Default. Each of the following events shall constitute an "Event of Default":(i) the failure of the applicable Registration Statement required to be filed pursuant to the RegistrationRights Agreement to be filed or declared effective within the applicable time periods specified in the Registration Rights Agreement,or, at any time while the applicable Registration Statement is required to be maintained effective pursuant to the terms of theRegistration Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, withoutlimitation, the issuance of a stop order) and such lapse continues for a period of greater than ten (10) consecutive Trading Days or formore than an aggregate of twenty (20) Trading Days in any 365-day period or such Registration Statement is unavailable to any holderof the Notes for sale of all of such holder's Registrable Securities in accordance with the terms of the Registration Rights Agreement(unless such unavailability is during an Allowable Grace Period (as defined in the Registration Rights Agreement));(ii) (A) the suspension of the Common Stock from trading on an Eligible Market, or, on or after April30, 2019, on a Qualified Market, for a period of more than five (5) consecutive Trading Days or for more than an aggregate of ten (10)Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed or quoted for trading on an Eligible Market;(iii) the failure of the Common Stock to be listed or quoted for trading on or after April 30, 2019, on aQualified Market; 8 Exhibit 4.2(iv) the Company's delivery of written notice to the Holder or any holder of the Other Notes or anyAdditional Notes, including by way of public announcement or through any of its agents, at any time, of its intention not to complywith a valid request for conversion of this Note, any Other Notes or any Additional Notes into shares of Common Stock that is validlytendered in accordance with the provisions of this Note, the Other Notes or any Additional Notes, as applicable, other than pursuant toSection 3(d) (and analogous provisions under the Other Notes and any Additional Notes);(v) the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges or otheramounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption amountshereunder) or any other Transaction Document or any other agreement, document, certificate or other instrument delivered inconnection with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to payany amounts other than Principal when and as due, in which case only if such failure continues for a period of at least an aggregate oftwo (2) Business Days;(vi) any default under any Indebtedness in an aggregate principal amount of more than $10,000,000 ofthe Company and/or any of its Subsidiaries other than with respect to this Note, any Other Notes or any Additional Notes, the effect ofwhich default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder orholders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased,prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness tobe made, prior to its stated maturity;(vii) the Company or any of its domestic Subsidiaries, pursuant to or within the meaning of Title 11,U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, "Bankruptcy Law"), (A) commences avoluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of areceiver, trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes a general assignment for the benefit of its creditorsor (E) admits in writing that it is generally unable to pay its debts as they become due;(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) isfor relief against the Company or any of its domestic Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company orany of its domestic Subsidiaries or (C) orders the liquidation of the Company or any of its domestic Subsidiaries, and, in each case,continues undismissed or unstayed for sixty (60) days;(ix) one or more judgments, orders or awards for the payment of money aggregating (above anyinsurance coverage or indemnity from a credit worthy party so long as such insurance provider has been notified of the claim and doesnot dispute coverage) in excess of $10,000,000 are rendered against the Company or any of its Subsidiaries and which judgments,orders or awards are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are notdischarged within sixty (60) days after the expiration of such stay; 9 Exhibit 4.2(x) other than as specifically set forth in another clause of this Section 4(a), the Company or any of itsSubsidiaries breaches any covenant in any Transaction Document, and such breach, if curable, continues for a period of at least anaggregate of thirty (30) calendar days after the earlier of (A) an authorized officer of the Company or such Subsidiary becoming awareof such failure and (B) receipt by an authorized officer of the Company or such Subsidiary of a notice from the Holder of such breach;(xi) any representation, warranty, certification or statement of fact made or deemed made by theCompany or any Subsidiary herein, or in any other Transaction Document, shall be incorrect or misleading in any material respectwhen made or deemed made;(xii) any breach or failure in any respect to comply with Sections 14 or 15 of this Note;(xiii) any material provision of any Security Document (as defined in the Securities PurchaseAgreement) shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on orenforceable against the Company or any Subsidiary party thereto, or ceases to give the Collateral Agent the Liens purported to becreated thereby or the validity or enforceability thereof shall be contested by the Company or any Subsidiary, or a proceeding shall becommenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking toestablish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability orobligation purported to be created under any Security Document;(xiv) any material damage to, or loss, theft or destruction of, any Collateral or a material amount ofproperty of the Company, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or publicenemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenueproducing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could reasonably be expectedto have a Material Adverse Effect (as defined in the Securities Purchase Agreement);(xv) a false or inaccurate certification (including a false or inaccurate deemed certification) by theCompany that the Equity Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether any Event ofDefault has occurred (in each case other than any Equity Conditions Failure arising solely as a result of the delivery to the Company ofan Interest Blocker Notice);(xvi) the Company's failure to file with the SEC any periodic or current reports due after the filing withthe SEC of the Form 10-K (as defined in Section 15(b)) in accordance with the Company's requirements under the Exchange Act butonly if such failure continues for a period of at least one (1) year;(xvii) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes; or 10 Exhibit 4.2(xviii) any Event of Default (as defined in the Additional Notes) occurs with respect to any AdditionalNotes.(b) Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any OtherNote, the Company shall promptly deliver written notice thereof (an "Event of Default Notice") to the Holder. At any time after theearlier of the Holder's receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder mayrequire the Company to redeem (an "Event of Default Redemption") all, but not less than all, of this Note by delivering writtennotice thereof (the "Event of Default Redemption Notice" and the date the Holder delivers an Event of Default Redemption Noticeto the Company, an "Event of Default Redemption Notice Date") to the Company, which Event of Default Redemption Notice shallindicate that the Holder is electing to require the Company to redeem this Note. To the extent this Note is subject to redemption by theCompany pursuant to this Section 4(b), this Note shall be redeemed by the Company in cash at a price equal to the greater of (i) theproduct of (x) the Redemption Premium and (y) the Conversion Amount being redeemed and (ii) solely if there is an EquityConditions Failure (that is not waived in writing by the Holder) during the period from the applicable Event of Default RedemptionNotice Date through and including the applicable Event of Default Redemption Date (as defined in Section 10(a)), the product of (x)the Conversion Rate with respect to the Conversion Amount being redeemed and (y) the quotient determined by dividing (I) thegreatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding such Eventof Default and ending on the date the Holder delivers the Event of Default Redemption Notice, by (II) the lowest Conversion Price ineffect during such period(the "Event of Default Redemption Price"). Redemptions required by this Section 4(b) shall be made inaccordance with the provisions of Section 10. To the extent redemptions required by this Section 4(b) are deemed or determined by acourt of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntaryprepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the Event of DefaultRedemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under thisSection 4(b) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant toSection 3. Any such converted Conversion Amount shall reduce the Event of Default Redemption payment by an equivalent amount.The parties hereto agree that in the event of the Company's redemption of this Note under this Section 4(b), the Holder's damageswould be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of theavailability of a suitable substitute investment opportunity for the Holder. Accordingly, any Event of Default redemption premium dueunder this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of itsinvestment opportunity and not as a penalty.(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.(a) Assumption and Corporate Events. Upon the consummation of any Fundamental Transaction, theCompany shall cause any Successor Entity or Successor Entities to jointly and severally succeed to, and be added to the term"Company" under this Note (so that from and after the consummation of such Fundamental Transaction, each and every provision ofthis 11 Exhibit 4.2Note referring to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly andseverally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and powerof the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company priorthereto under this Note with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally,had been named as the Company in this Note. In addition to and not in substitution for any other rights hereunder, prior to theoccurrence or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock become entitledto receive securities, cash, assets or other property with respect to or in exchange for shares of Common Stock (a "Corporate Event"),the Company shall provide that it shall be a required condition to the occurrence or consummation of such Corporate Event that theHolder will have the right to receive upon conversion of this Note at any time after the occurrence or consummation of the CorporateEvent, shares of Common Stock or capital stock of a Successor Entity or, if so elected by the Holder, in lieu of the shares of CommonStock (or other securities, cash, assets or other property) purchasable upon the conversion of this Note prior to such Corporate Event,such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscriptionrights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence or consummationof such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event, had thisNote been converted immediately prior to such Corporate Event or the record, eligibility or other determination date for the eventresulting in such Corporate Event (without regard to any limitations on conversion of this Note). The provisions of this Section 5(a)shall apply similarly and equally to successive Fundamental Transactions and Corporate Events.(b) Redemption Right. As soon as practicable following the public announcement of the consummation of aChange of Control, the Company shall deliver written notice thereof to the Holder (a "Change of Control Notice"). At any timeduring the period beginning on the earlier to occur of (x) the Holder becoming aware of the consummation of a Change of Control and(y) the Holder's receipt of a Change of Control Notice and ending thirty five (35) Trading Days after the date of the consummation ofsuch Change of Control, the Holder may require the Company to redeem (a "Change of Control Redemption") all or any portion ofthis Note by delivering written notice thereof ("Change of Control Redemption Notice" and the date the Holder delivers a Changeof Control Redemption Notice to the Company, a "Change of Control Redemption Notice Date") to the Company, which Changeof Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to require the Company to redeem. Theportion of this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the Company in cash at a price equal tothe sum of (i) the greater of (x) 110% of the Conversion Amount being redeemed and (y) solely if (a) the applicable Change of Controlis a Make-Whole Change of Control or (b) there is an Equity Conditions Failure (that is not waived in writing by the Holder) duringthe period from the applicable Change of Control Redemption Notice Date through and including the applicable Change of ControlRedemption Date (as defined in Section 10(a)), the product of (I) the Conversion Amount being redeemed and (II) the quotientdetermined by dividing (A) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the dateimmediately preceding the earlier to occur of (1) the consummation of the Change of Control and (2) the public announcement of suchChange of Control and ending on the date the 12 Exhibit 4.2Holder delivers the Change of Control Redemption Notice, by (B) the lowest Conversion Price in effect during such period, and (ii) ifthe applicable Change of Control is a Make-Whole Change of Control, the Make-Whole Change of Control Premium (the "Change ofControl Redemption Price"). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 10and shall have priority to payments to stockholders in connection with a Change of Control. To the extent redemptions required by thisSection 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, suchredemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject toSection 3(d), until the Change of Control Redemption Price (together with any interest thereon) is paid in full, the Conversion Amountsubmitted for redemption under this Section 5(b) (together with any interest thereon) may be converted, in whole or in part, by theHolder into Common Stock pursuant to Section 3. Any such converted Conversion Amount shall reduce the Conversion Amountsubmitted for redemption under this Section 5(b) by an equivalent amount. The parties hereto agree that in the event of the Company'sredemption of any portion of the Note under this Section 5(b), the Holder's damages would be uncertain and difficult to estimatebecause of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investmentopportunity for the Holder. Accordingly, any Change of Control redemption premium due under this Section 5(b) is intended by theparties to be, and shall be deemed, a reasonable estimate of the Holder's actual loss of its investment opportunity and not as a penalty.(6) ADJUSTMENTS TO THE CONVERSION PRICE.(a) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock or Stock Dividend.If the Company issues solely shares of Common Stock as a dividend or distribution on all or substantially all shares of the CommonStock, or if the Company effects a stock split or a stock combination of the Common Stock (in each case excluding an issuance solelypursuant to a Fundamental Transaction or other Corporate Event, as to which the provisions set forth in Section 5 will apply), then theConversion Price will be adjusted based on the following formula:CP1 = CP0 * OS0 OS1where:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-DividendDate for such dividend or distribution, or immediately before the open of business on the effective dateof such stock split or stock combination, as applicable;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-Dividend Dateor the open of business on such effective date, as applicable; 13 Exhibit 4.2OS0 = the number of shares of Common Stock outstanding immediately before the open of businesson such Ex-Dividend Date or effective date, as applicable; andOS1 = the number of shares of Common Stock outstanding immediately after giving effect to suchdividend, distribution, stock split or stock combination.For the avoidance of doubt, pursuant to the definition of CP1 above, any adjustment to the Conversion Price madepursuant to this Section 6(a) will become effective immediately after the open of business on such Ex-Dividend Date or the open ofbusiness on such effective date, as applicable. If any dividend, distribution, stock split or stock combination of the type described inthis Section 6(a) is declared or announced, but not so paid or made, then the Conversion Price, if previously adjusted, will bereadjusted, effective as of the date the Board of Directors of the Company determines not to pay such dividend or distribution or toeffect such stock split or stock combination, to the Conversion Price that would then be in effect had such dividend, distribution, stocksplit or stock combination not been declared or announced.(b) Rights, Options and Warrants. If the Company distributes, to all or substantially all holders of CommonStock, rights, options or warrants entitling such holders, for a period of not more than sixty (60) calendar days after the record date ofsuch distribution, to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the ClosingSale Prices per share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Dayimmediately before the date such distribution is publicly announced, then the Conversion Price will be decreased based on thefollowing formula:CP1 = CP0 * OS + Y OS + Xwhere:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-DividendDate for such distribution;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-DividendDate;OS = the number of shares of Common Stock outstanding immediately before the open of business onsuch Ex-Dividend Date;X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants;andY = a number of shares of Common Stock obtained by dividing (x) the aggregate price payable toexercise such rights, options or 14 Exhibit 4.2warrants by (y) the average of the Closing Sale Prices per share of Common Stock for the ten (10)consecutive Trading Days ending on, and including, the Trading Day immediately before the date suchdistribution is announced.For the avoidance of doubt, any adjustment to the Conversion Price made pursuant to this Section 6(b) will be madesuccessively whenever any such rights, options or warrants are issued and, pursuant to the definition of CP1 above, will becomeeffective immediately after the open of business on the Ex-Dividend Date for the applicable distribution. To the extent that shares ofCommon Stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options orwarrants not being exercised), the Conversion Price, if previously adjusted, will be readjusted effective as of such expiration date tothe Conversion Price that would then be in effect had the decrease to the Conversion Price for such distribution been made on thebasis of delivery of only the number of shares of Common Stock actually delivered upon exercise of such rights, option or warrants.To the extent such rights, options or warrants are not so distributed, the Conversion Price will be readjusted effective as of the date theBoard of Directors of the Company determines not to distribute such rights, options or warrants, to the Conversion Price that wouldthen be in effect had the Ex- Dividend Date for the distribution of such rights, options or warrants not occurred.For purposes of this Section 6(b), in determining whether any rights, options or warrants entitle holders of CommonStock to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Closing Sale Pricesper share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately beforethe date of the distribution of such rights, options or warrants is announced, and in determining the aggregate price payable to exercisesuch rights, options or warrants, there will be taken into account any consideration the Company receives for such rights, options orwarrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Boardof Directors of the Company.(c) Spin-Offs and Other Distributed Property.(i) Distributions Other than Spin-Offs. If the Company distributes shares of its Capital Stock, evidencesof its indebtedness or other assets or property of the Company, or rights, options or warrants to acquire Capital Stock of the Companyor other securities, to all or substantially all holders of the Common Stock, excluding:(u)rights issued in the Rights Offering (as defined in the Securities Purchase Agreement);(v)dividends, distributions, rights, options or warrants for which an adjustment to the ConversionPrice is required pursuant to Section 6(a) or 6(b); 15 Exhibit 4.2(w)dividends or distributions paid exclusively in cash for which an adjustment to the ConversionPrice is required pursuant to Section 6(d);(x)rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extentprovided in Section 6(g);(y)Spin-Offs for which an adjustment to the Conversion Price is required pursuant to Section 6(c)(ii); and(z)a distribution solely pursuant to a Corporate Event, as to which the provisions set forth in Section5 will apply,then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * SP - FMV SPwhere:CR0 = the Conversion Price in effect immediately before the open of business on the Ex-DividendDate for such distribution;CR1 = the Conversion Price in effect immediately after the open of business on such Ex-DividendDate;SP = the average of the Closing Sale Prices per share of Common Stock for the ten (10) consecutiveTrading Days ending on, and including, the Trading Day immediately before such Ex- Dividend Date;andFMV = the fair market value (determined in the good faith judgment of the Board of Directors of theCompany), 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 Common Stock pursuant to suchdistribution;provided, however, that if FMV is equal to or greater than SP, or if the difference between FMV andSP is less than one dollar ($1.00), then, in lieu of the foregoing adjustment to the Conversion Price,each Holder will receive, at the same time and on the same terms as holders of Common Stock, theamount and kind of shares 16 Exhibit 4.2of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants that suchHolder would have received if such Holder had owned, on such record date, a number of shares ofCommon Stock equal to the principal amount of Notes held by such Holder on the record date for suchdistribution divided by the Conversion Price in effect on such record date.For the avoidance of doubt, pursuant to the definition of CP1 above, any adjustment to the Conversion Pricemade pursuant to this Section 6(c)(i) will become effective immediately after the open of business on the Ex-Dividend Date for theapplicable distribution. To the extent such distribution is not so paid or made, or such rights, options or warrants are not exercisedbefore their expiration (including as a result of being redeemed or terminated), the Conversion Price, if previously adjusted, will bereadjusted effective as of the date the Board of Directors of the Company determines not to make or pay such distribution, to theConversion Price that would then be in effect had the adjustment been made on the basis of only the distribution, if any, actuallymade or paid or on the basis of the distribution of only such rights, options or warrants, if any, that were actually exercised, if at all.Subject to Section 6(g), if any such rights, options or warrants are exercisable only upon the occurrence of certain triggering events,then the Conversion Price will not be adjusted pursuant to this Section 6(c)(i) until the earliest of these triggering events occurs.(ii) Spin-Offs. If the Company distributes or dividends shares of stock of any class or series, or similarequity interest, of or relating to an Affiliate, a Subsidiary or other business unit of the Company to all or substantially all holders of theCommon Stock, and such stock or equity interest is listed or quoted (or will be listed or quoted upon the consummation of thetransaction) on a U.S. national securities exchange (a "Spin-Off"), then the Conversion Price will be increased based on the followingformula:CP1 = CP0 * MP MP + FMVwhere:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-DividendDate for such Spin-Off;CP1 = the Conversion Price in effect immediately after the open of business on such Ex-DividendDate;FMV = the average of the Closing Sale Prices of the stock or equity interests distributed per share ofCommon Stock in such Spin-Off over the ten (10) consecutive Trading Day period (the "Spin-OffValuation Period") beginning on, and including, such Ex-Dividend Date (such average to bedetermined as if references to Common Stock in the definitions of Closing Sale Price and Trading 17 Exhibit 4.2Day were instead references to the number or units of such stock or equity interests distributed pershare of Common Stock in such Spin-Off); andMP = the average of the Closing Sale Prices per share of Common Stock over the Spin-Off ValuationPeriod.The adjustment to the Conversion Price pursuant to this Section 6(c)(ii) will be calculated as of the close of businesson the last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the open of business on the Ex-Dividend Date for the Spin-Off, with retroactive effect. If this Note is converted and the Conversion Date occurs during the Spin-OffValuation Period, then, in lieu of the foregoing adjustment to the Conversion Price, the Holder will receive, at the same time and onthe same terms as holders of Common Stock, the number of shares of stock or other equity interests that such Holder would havereceived if such Holder had owned, on such record date, a number of shares of Common Stock equal to the principal amount ofNotes held by such Holder on the record date for Spin-Off divided by the Conversion Price in effect on such record date.To the extent any dividend or distribution of the type set forth in this Section 6(c)(ii) is declared but not made or paid,the Conversion Price, if previously adjusted, will be readjusted effective as of the date the Board of Directors of the Companydetermines not to make or pay such dividend or distribution, to the Conversion Price that would then be in effect had the adjustmentbeen made on the basis of only the dividend or distribution, if any, actually made or paid.(d) Cash Dividends or Distributions. If any cash dividend or distribution is made to all or substantially allholders of Common Stock, then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * SP SP - Dwhere:CP0 = the Conversion Price in effect immediately before the open of business on the Ex-Dividend Datefor such dividend or distribution;CR1 = the Conversion Price in effect immediately after the open of business on such Ex-DividendDate;SP = the Closing Sale Price per share of Common Stock on the Trading Day immediately before suchEx-Dividend Date; andD = the cash amount distributed per share of Common Stock in such dividend or distribution; 18 Exhibit 4.2provided, however, that if D is equal to or greater than SP, or if the difference between D and SP is lessthan one dollar ($1.00), then, in lieu of the foregoing adjustment to the Conversion Price, the Holderwill receive, at the same time and on the same terms as holders of Common Stock, the amount of cashthat such Holder would have received if such Holder had owned, on such record date, a number ofshares of Common Stock equal to the principal amount of Notes held by such Holder on the recorddate for such dividend or distribution divided by the Conversion Price in effect on such record date. Forthe avoidance of doubt, pursuant to the definition of CP1 above, any adjustment to the ConversionPrice made pursuant to this Section 6(d) will become effective immediately after the open of businesson the Ex-Dividend Date for the applicable dividend or distribution.To the extent any such dividend or distribution is declared but not made or paid, the Conversion Price, if previouslyadjusted, will be readjusted effective as of the date the Board of Directors of the Company determines not to make or pay suchdividend or distribution, to the Conversion Price that would then be in effect had the adjustment been made on the basis of only thedividend or distribution, if any, actually made or paid.(e) Tender Offers or Exchange Offers. If the Company or any of its Subsidiaries makes a payment in respect ofa tender offer or exchange offer for shares of Common Stock, and the value (as determined as of the Expiration Time (as definedbelow) in the judgment of the Board of Directors of the Company) of the cash and other consideration paid per share of CommonStock in such tender or exchange offer exceeds the Closing Sale Price per share of Common Stock on the Trading Day immediatelyafter the last date (the "Expiration Date") on which tenders or exchanges may be made pursuant to such tender or exchange offer (asit may be amended), then the Conversion Price will be decreased based on the following formula:CP1 = CP0 * OS0 x SP AC + (SP x OS1)where:CP0 = the Conversion Price in effect immediately before the time (the "Expiration Time") such tenderor exchange offer expires;CP1 = the Conversion Price in effect immediately after the Expiration Time;AC = the aggregate value (as determined as of the Expiration Time in the judgment of the Board ofDirectors of the Company) of all cash and other consideration paid for shares of Common Stockpurchased in such tender or exchange offer; 19 Exhibit 4.2OS0 = the number of shares of Common Stock outstanding immediately before the Expiration Time(before giving effect to the purchase of all shares of Common Stock accepted for purchase or exchangein such tender or exchange offer);OS1 = the number of shares of Common Stock outstanding immediately after the Expiration Time(excluding all shares of Common Stock accepted for purchase or exchange in such tender or exchangeoffer); andSP = the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive TradingDay period (the "Tender/Exchange Offer Valuation Period") beginning on, and including, theTrading Day immediately after the Expiration Date.The adjustment to the Conversion Price pursuant to this Section 6(e) will be calculated as of the close of business onthe last Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after the Expiration Time,with retroactive effect. If this Note is converted and the Conversion Date occurs during the Tender/Exchange Offer Valuation Period,then, notwithstanding anything to the contrary in the Notes, the Company will, if necessary, delay the settlement of such conversionuntil the second (2nd) Business Day after the last day of the Tender/Exchange Offer Valuation Period. To the extent such tender orexchange offer is announced but not consummated (including as a result of the Company being precluded from consummating suchtender or exchange offer under applicable law), or any purchases or exchanges of shares of Common Stock in such tender orexchange offer are rescinded, the Conversion Price, if previously adjusted, will be readjusted effective as of the date the Board ofDirectors of the Company determines not to consummate such offer, to the Conversion Price that would then be in effect had theadjustment been made on the basis of only the purchases or exchanges of shares of Common Stock, if any, actually made, and notrescinded, in such tender or exchange offer.(f) No Adjustments in Certain Cases. Notwithstanding anything to the contrary in this Section 6, the Companywill not be obligated to adjust the Conversion Price on account of a transaction or other event otherwise requiring an adjustmentpursuant to this Section 6 (other than a stock dividend, distribution, split or combination of the type set forth in Section 6(a) or a tenderor exchange offer of the type set forth in Section 6(e)) if each Holder participates, at the same time and on the same terms as holders ofCommon Stock, and solely by virtue of being a Holder of Notes, in such transaction or event without having to convert such Holder'sNotes and as if such Holder held a number of shares of Common Stock equal to the quotient of (i) the aggregate principal amount(expressed in thousands) of Notes held by the Holder on such date; divided by (ii) the Conversion Price in effect on the related recorddate, effective date or Expiration Date, as applicable.(g) Stockholder Rights Plans. If any shares of Common Stock are to be issued upon conversion of this Noteand, at the time of such conversion, the Company has in effect any stockholder rights plan, then the Holder will be entitled to receive,in addition to, and 20 Exhibit 4.2concurrently with the delivery of, the consideration otherwise payable under this Note upon such conversion, the rights set forth insuch stockholder rights plan, unless such rights have separated from the Common Stock at or prior to such time, in which case, andonly in such case, the Conversion Price will be adjusted pursuant to Section 6(c)(1) on account of such separation as if, at the time ofsuch separation, the Company had made a distribution of the type referred to in such Section to all holders of the Common Stock,subject to readjustment in accordance with such Section if such rights expire, terminate or are redeemed.(h) Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with theprior written consent of the Required Holders, reduce the then current Conversion Price to any amount and for any period of timedeemed appropriate by the Board of Directors of the Company.(7) OPTIONAL REDEMPTION AT THE COMPANY'S ELECTION.(a) General. At any time after January 16, 2021 (the "Company Optional Trigger Date"), so long as (i) thearithmetic average of the Weighted Average Prices of the Common Stock for any thirty (30) consecutive Trading Days occurring afterthe Company Optional Trigger Date (all such determinations to be appropriately adjusted for any stock split, stock dividend, stockcombination, reclassification or other similar transaction during such period) (a "Company Optional Measuring Period") equaled orexceeded one hundred forty percent (140%) of the Conversion Price on the Issuance Date (as adjusted for any stock dividend, stocksplit, stock combination, reclassification or similar transaction after the Subscription Date) and (ii) there has been no Equity ConditionsFailure during the period beginning on the applicable Company Optional Redemption Notice Date (as defined below) through theapplicable Company Optional Redemption Date (as defined below), the Company shall have the right to redeem all or any portion ofthe Conversion Amount then remaining outstanding under this Note, the Other Notes and the Additional Notes (a "CompanyOptional Redemption Amount") as designated in the applicable Company Optional Redemption Notice on the applicable CompanyOptional Redemption Date (each as defined below) (a "Company Optional Redemption"). The portion of this Note, the Other Notesand any Additional Notes subject to redemption pursuant to this Section 7(a) shall be redeemed by the Company on the applicableCompany Optional Redemption Date in cash at a price equal to the 100% of the Conversion Amount to be redeemed (a "CompanyOptional Redemption Price"). The Company may exercise its right to require redemption under this Section 7 by delivering withinnot more than ten (10) Trading Days following the end of such Company Optional Measuring Period a written notice thereof to theHolder and all, but not less than all, of the holders of the Other Notes and any Additional Notes (a "Company Optional RedemptionNotice" and the date all of the holders of the Notes received such notice is referred to as a "Company Optional Redemption NoticeDate"). Each Company Optional Redemption Notice shall be irrevocable. Each Company Optional Redemption Notice shall (i) statethe date on which the applicable Company Optional Redemption shall occur (a "Company Optional Redemption Date"), which dateshall not be less than ten (10) Trading Days nor more than thirty (30) Trading Days following the applicable Company OptionalRedemption Notice Date and (ii) state the aggregate Conversion Amount of the Notes which the Company has elected to redeem fromthe Holder and all of the holders of the Other Notes and any Additional Notes pursuant to this Section 7(a) (and analogous provisionsunder the Other 21 Exhibit 4.2Notes and any applicable Additional Notes) on the applicable Company Optional Redemption Date an Equity Conditions Failure(other than as a result of the receipt by the Company of an Interest Blocker Notice) occurs between the applicable Company OptionalRedemption Notice Date and the applicable Company Optional Redemption Date and (iii) confirm that there has been no EquityConditions Failure during the period beginning on the applicable Company Optional Redemption Date through the applicableCompany Optional Redemption Notice Date. If the Company confirmed that there was no such Equity Conditions Failure as of theapplicable Company Optional Redemption Notice Date but an Equity Conditions Failure occurs between the applicable CompanyOptional Redemption Notice Date and the applicable Company Optional Redemption Date (a "Company Optional RedemptionInterim Period"), the Company shall provide the Holder a subsequent notice to that effect. If there is an Equity Conditions Failure(which is not waived in writing by the Holder) during such Company Optional Redemption Interim Period, then the applicableCompany Optional Redemption shall be null and void with respect to all or any part designated by the Holder of the unconvertedCompany Optional Redemption Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to suchamount of the applicable Company Optional Redemption Amount. Notwithstanding anything to the contrary in this Section 7, until theapplicable Company Optional Redemption Price is paid, in full, the applicable Company Optional Redemption Amount may beconverted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts convertedby the Holder after the applicable Company Optional Redemption Notice Date shall reduce the applicable Company OptionalRedemption Amount of this Note required to be redeemed on the applicable Company Optional Redemption Date, unless the Holderotherwise indicates in the applicable Conversion Notice. Company Optional Redemptions made pursuant to this Section 7 shall bemade in accordance with Section 10. To the extent redemptions required by this Section 7 are deemed or determined by a court ofcompetent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntaryprepayments. The parties hereto agree that in the event of the Company's redemption of any portion of the Note under this Section 7,the Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future interest rates and theuncertainty of the availability of a suitable substitute investment opportunity for the Holder. For the avoidance of doubt, anyConversion Amount that is subject to a Conversion Notice delivered to the Company may no longer be subject to a Company OptionalRedemption even if the shares issuable upon such conversion have not been delivered on or prior to the applicable Company OptionalRedemption Date.(b) Pro Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemptionpursuant to Section 7(a), then it must simultaneously take the same action in the same proportion with respect to the Other Notes andany Additional Notes. If the Company elects to cause a Company Optional Redemption pursuant to Section 7(a) (or similar provisionsunder the Other Notes and the Additional Notes) with respect to less than all of the Conversion Amounts of the Notes and anyAdditional Notes then outstanding, then the Company shall require redemption of a Conversion Amount from each of the holders ofthe Notes and any Additional Notes equal to the product of (i) the aggregate Company Optional Redemption Amount of Notes and theAdditional Notes which the Company has elected to cause to be redeemed pursuant to Section 7(a), multiplied by (ii) the fraction, thenumerator of which is the sum of the aggregate Principal Amount of the Notes and any Additional Notes held by such holder and thedenominator 22 Exhibit 4.2of which is the sum of the aggregate Principal Amount of the Notes and any Additional Notes held by all holders holding outstandingNotes and any Additional Notes (such fraction with respect to each holder is referred to as its "Company Optional RedemptionAllocation Percentage", and such amount with respect to each holder is referred to as its "Pro Rata Company OptionalRedemption Amount"). In the event that the initial holder of any Notes or Additional Notes shall sell or otherwise transfer any ofsuch holder's Notes or any Additional Notes, the transferee shall be allocated a pro rata portion of such holder's Company OptionalRedemption Allocation Percentage and Pro Rata Company Optional Redemption Amount.(8) NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, byamendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, schemeof arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance orperformance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take allaction as may be required to protect the rights of the Holder of this Note.(9) RESERVATION OF AUTHORIZED SHARES.(a) Reservation. The Company shall initially reserve out of its authorized and unissued shares of CommonStock a number of shares of Common Stock for each of this Note, the Other Notes and any Additional Notes equal to the sum of (i)130% of the Conversion Rate with respect to the Conversion Amount of each such Note as of the Issuance Date and (ii) 130% of themaximum number of shares issuable as Interest Shares assuming all Interest through the Maturity Date is paid in Interest Shares at themaximum possible Interest Rate. So long as any of this Note, the Other Notes and the Additional Notes are outstanding, the Companyshall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose ofeffecting the conversion of this Note, the Other Notes and any Additional Notes, the number of shares of Common Stock specifiedabove in this Section 9(a) as shall from time to time be necessary to effect the conversion of all of the Notes and any Additional Notesthen outstanding; provided, that at no time shall the number of shares of Common Stock so reserved be less than the number of sharesrequired to be reserved pursuant hereto (in each case, without regard to any limitations on conversions) (the "Required ReserveAmount"). The initial number of shares of Common Stock reserved for conversions of this Note, the Other Notes and the AdditionalNotes and each increase in the number of shares so reserved shall be allocated pro rata among the Holder, the holders of the OtherNotes and the holders of any Additional Notes based on the Principal amount of this Note and the Other Notes held by each holder atthe Initial Closing (as defined in the Securities Purchase Agreement) or increase in the number of reserved shares, as the case may be(the "Authorized Share Allocation"). In the event that a holder shall sell or otherwise transfer this Note, or a portion thereof, or anyof such holder's Other Notes or Additional Notes, each transferee shall be allocated a pro rata portion of such holder's AuthorizedShare Allocation. Any shares of Common Stock reserved and allocated to the portion of the Note held by any Person who ceases tohold any Notes shall be allocated to the portion of the Note held by the Holder and the remaining holders of Other Notes and theAdditional Notes, pro rata based on the then- outstanding Principal amount of this Note, the Other Notes and any Additional Notesthen held by such holders. 23 Exhibit 4.2(b) Insufficient Authorized Shares. If at any time while any of the Notes remain outstanding the Company doesnot have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to have reserved forissuance upon conversion of the outstanding Notes at least a number of shares of Common Stock equal to the Required ReserveAmount (an "Authorized Share Failure"), then the Company shall promptly take all action necessary to increase the Company'sauthorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for theNotes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrenceof an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, theCompany shall either (x) obtain the written consent of its stockholders for the approval of an increase in the number of authorizedshares of Common Stock and provide each stockholder with an information statement with respect thereto or (y) file with the SEC aproxy statement for a meeting of its stockholders at which meeting the Company will seek the approval of its stockholders for anincrease in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide eachstockholder with a proxy statement and shall use commercially reasonable efforts to solicit its stockholders' approval of such increase inauthorized shares of Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve suchproposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain thewritten consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number ofauthorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing withthe SEC an Information Statement on Schedule 14C. If, upon any conversion of this Note, the Company does not have sufficientauthorized shares to deliver in satisfaction of such conversion, then unless the Holder elects to rescind such attempted conversion, theHolder may require the Company to pay to the Holder within three (3) Trading Days of the applicable attempted conversion, cash inan amount equal to the product of (i) the number of shares of Common Stock that the Company is unable to deliver pursuant to thisSection 9, and (ii) the highest Closing Sale Price of the Common Stock during the period beginning on the applicable Conversion Dateand ending on the date the Company makes the applicable cash payment.(10) REDEMPTIONS.(a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holderwithin three (3) Business Days after the Company's receipt of the Holder's Event of Default Redemption Notice (the "Event ofDefault Redemption Date"). If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b),the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently with the consummationof such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii) within three (3)Business Days after the Company's receipt of such notice otherwise (such date, the "Change of Control Redemption Date"). TheCompany shall deliver the applicable Company Optional Redemption Price to the Holder on the applicable Company OptionalRedemption Date. The Company shall pay the applicable Redemption Price to the Holder on the applicable due date. In the event of aredemption of less than all of the Conversion Amount of this Note and a surrender of this Note by the Holder, 24 Exhibit 4.2the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 18(d))representing the outstanding Principal which has not been redeemed and any accrued Interest on such Principal which shall becalculated as if no Redemption Notice has been delivered. In the event that the Company does not pay the applicable RedemptionPrice to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Pricein full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or anyportion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable RedemptionPrice (together with any Late Charges thereon) has not been paid. Upon the Company's receipt of such notice, (x) the applicableRedemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return thisNote, or issue a new Note (in accordance with Section 18(d)) to the Holder representing such Conversion Amount not redeemed and(z) the Conversion Price of this Note or such new Note shall be adjusted to the Conversion Price as in effect on the date on which theapplicable Redemption Notice is voided. The Holder's delivery of a notice voiding a Redemption Notice and exercise of its rightsfollowing such notice shall not affect the Company's obligations to make any payments of Late Charges which have accrued prior tothe date of such notice with respect to the Conversion Amount subject to such notice.(b) Redemption by Other Holders. Upon the Company's receipt of notice from any of the holders of the OtherNotes or any Additional Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events oroccurrences described in Section 4(b) or Section 5(b) or pursuant to equivalent provisions set forth in the Other Notes or anyAdditional Notes (each, an "Other Redemption Notice"), the Company shall promptly provide notice of such request. If theCompany receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day periodbeginning on and including the date which is three (3) Business Days prior to the Company's receipt of the Holder's RedemptionNotice and ending on and including the date which is three (3) Business Days after the Company's receipt of the Holder's RedemptionNotice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and suchOther Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amountfrom the Holder and each holder of the Other Notes and the Additional Notes (including the Holder) based on the outstandingPrincipal amount of this Note, the Other Notes and any Additional Notes submitted for redemption pursuant to such RedemptionNotice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.(11) VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by lawand as expressly provided in this Note.(12) SECURITY. This Note, the Other Notes and any Additional Notes are secured to the extent and in the mannerset forth in the Security Documents.(13) RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes, Additional Notes,Rights Offering Notes, if any, Backstop Commitment Notes, if any, and Indebtedness described in clause (iii) of the definition ofPermitted Indebtedness, if any, and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries. 25 Exhibit 4.2(14) NEGATIVE COVENANTS.(a) Until all of the Notes and the Additional Notes have been converted, redeemed or otherwise satisfied inaccordance with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior writtenconsent of the Required Holders to, directly or indirectly:(i) incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness; or(ii) allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbranceupon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries(collectively, "Liens") other than Permitted Liens.(b) Solely in the event that the Company does not at the applicable time of determination satisfy the QualifyingConditions, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior written consent of theRequired Holders to, directly or indirectly:(i) Redeem or repurchase any Equity Interests or other Junior Claims, or declare or pay any dividend orother distributions of assets (or rights to acquire assets) to any or all holders of Equity Interests or other Junior Claims, by way of returnof capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property, Options, evidence ofIndebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement orother similar transaction) of the Company or any of its Subsidiaries (any of the foregoing, a "Restricted Payment"), in each case otherthan:(1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Indebtednessmade by exchange for, or out of the proceeds of the substantially concurrent sale of, Refinancing Indebtedness;(2) each Subsidiary may declare and make Restricted Payments to Persons that own Equity Interests insuch Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such RestrictedPayment is being made;(3) the Company and each Subsidiary may declare and make dividend payments or other distributionspayable solely in Equity Interests of such Person;(4) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of EquityInterest of the Company or a Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of EquityInterests of the Company;(5) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement forvalue of Equity Interests of the Company held by or on behalf of any future, present or former employee, director, manager orconsultant of the Company or any 26 Exhibit 4.2of its Subsidiaries (or permitted transferees, assigns, estates, trusts or heirs of such employee, director, manager or consultant) eitherpursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or uponthe termination of such employee, director, manager or consultant's employment, directorship or manager position; provided that theaggregate amount of Restricted Payments made under this clause (5) do not exceed in any calendar year an amount equal to$1,000,000;(6) purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of EquityInterests deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such Equity Interestsrepresents a portion of the exercise price thereof; and(7) additional Restricted Payments in an amount not to exceed $5,000,000 during any fiscal year or$10,000,000 in the aggregate prior to the Maturity Date.(15) AFFIRMATIVE COVENANTS.(a) By no later than April 30, 2019, the Company shall have filed with the SEC one or more Annual Reportson Form 10-K containing its audited financial statements for the fiscal years ended December 31, 2015, 2016 and 2017 in accordancewith the applicable requirements of the Exchange Act, the rules and regulations thereunder and the SEC's instructions to AnnualReports on Form 10-K (the "Form 10-K").(b) From and after the date the Company files the Form 10-K, on or before the date that the Company isrequired to file any Quarterly Report on Form 10-Q or Annual Report on Form 10-K, the Company shall publicly discloseConsolidated EBITDA with respect to the most recent completed financial period as to which such report relates.(c) The Company shall maintain on deposit cash and/or cash equivalents (as defined in GAAP) in an aggregateamount equal to:(i) not less than $40,000,000 from and after the Initial Closing Date to and excluding the earlier tooccur of (x) the consummation of the Rights Offering (as defined in the Securities Purchase Agreement) and (y) the Maturity Date(such earlier date, the "Cash Measuring Date"); provided, however, that the minimum amount shall be reduced to $20,000,000 fromAugust 8, 2018 to and including the date immediately prior to the earliest to occur of (x) the date the Company files with the SEC itsQuarterly Report on Form 10-Q for the quarter ended June 30, 2019 ("2019 Q2 10-Q"), (y) August 9, 2019, and (z) the CashMeasuring Date;(ii) solely if the Cash Measuring Date is determined by clause (x) of such definition:(1) not less than $75,000,000 from and after the Cash Measuring Date through and excluding January1, 2020; provided, however, that such amount shall be not less than $55,000,000 for the period, if any, from and after the CashMeasuring Date to and excluding the earlier to occur of (a) the date the Company files the 2019 Q2 10-Q and (b) August 9, 2019; and 27 Exhibit 4.2(2) not less than $50,000,000 from and after January 1, 2020 through and including the Maturity Date.(16) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote of the Required Holders ata meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for anychange or amendment or waiver of any provision to this Note, any of the Other Notes or any Additional Notes. Any change,amendment or waiver by the Company and the Required Holders shall be binding on the Holder of this Note and all holders of theOther Notes and the Additional Notes.(17) TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered,sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(g) of theSecurities Purchase Agreement.(18) REISSUANCE OF THIS NOTE.(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereuponthe Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d) and subjectto Section 3(c)(iii)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, ifless than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representingthe outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that,by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstandingPrincipal represented by this Note may be less than the Principal stated on the face of this Note.(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to theCompany of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnificationundertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of thisNote, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstandingPrincipal.(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof bythe Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in theaggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal asis designated by the Holder at the time of such surrender.(d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms ofthis Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, thePrincipal remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principaldesignated by the Holder which, when added to the principal represented by the other 28 Exhibit 4.2new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediatelyprior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same asthe Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaidInterest and Late Charges, if any, on the Principal and Interest of this Note, from the Issuance Date.(19) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVERELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note andany of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief),and nothing herein shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to complywith the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion, redemption and the like(and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, besubject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of itsobligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. TheCompany therefore agrees that, in the event of any such breach, the Holder shall be entitled, in addition to all other available remedies,to an injunction restraining such breach, without the necessity of showing economic loss and without any bond or other security beingrequired, to the fullest extent enforceable under applicable law.(20) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in thehands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwisetakes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy,reorganization, receivership of the Company or other proceedings affecting Company creditors' rights and involving a claim under thisNote, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection withsuch bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, actual and reasonable attorneys' feesand disbursements.(21) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all theBuyers and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of referenceand shall not form part of, or affect the interpretation of, this Note.(22) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise ofany power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power,right or privilege preclude other or further exercise thereof or of any other right, power or privilege.(23) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price, the ClosingSale Price or the Weighted Average Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or anyRedemption Price, the Company 29 Exhibit 4.2shall submit the disputed determinations or arithmetic calculations within two (2) Business Days of receipt, or deemed receipt, of theConversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holderand the Company are unable to agree upon such determination or calculation within three (3) Business Days of such disputeddetermination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit(a) the disputed determination of the Closing Bid Price, the Closing Sale Price or the Weighted Average Price to an independent,reputable investment bank selected by the Holder and approved by the Company, such approval not to be unreasonably withheld,conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price or any Redemption Price toan independent, outside accountant, selected by the Holder and approved by the Company, such approval not to be unreasonablywithheld, conditioned or delayed. The Company, at the Company's expense, shall cause the investment bank or the accountant, as thecase may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10)Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant'sdetermination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.(24) NOTICES; PAYMENTS.(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, suchnotice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holderwith prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and thereason therefore. Without limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediatelyupon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and(ii) at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend ordistribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) fordetermining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that suchinformation shall have been made known to the public prior to or in conjunction with such notice being provided to the Holder.(b) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to thisNote, such payment shall be made in lawful money of the United States of America via wire transfer of immediately available funds toan account so designated by the Holder; provided, that the Holder, upon timely written notice to the Company, may elect to receive apayment of cash by a check drawn on the account of the Company and sent via overnight courier service to such Person at suchaddress as previously provided to the Company in writing (which address, in the case of each of the Buyers, shall initially be as setforth on the Schedule of Buyers attached to the Securities Purchase Agreement. Whenever any amount expressed to be due by theterms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is aBusiness Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shallresult in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of 30 Exhibit 4.2eighteen percent (18.0%) per annum from the date such amount was due until the same is paid in full ("Late Charge").(25) CANCELLATION. After all Principal, any accrued Interest and any other amounts at any time owed on thisNote have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellationand shall not be reissued.(26) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protestand all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.(27) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning the construction, validity,enforcement and interpretation of this Note shall be governed by the internal laws of the State of New York, without giving effect toany choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would causethe application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication ofany dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and herebyirrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to thejurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,action or proceeding is improper. The Company hereby irrevocably waives personal service of process and consents to process beingserved in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f) of theSecurities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof tothe fullest extent enforceable under applicable law. Nothing contained herein shall be deemed to limit in any way any right to serveprocess in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringingsuit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, torealize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TOREQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTIONWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.(28) SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid orunenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall bedeemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of suchprovision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express,without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity orunenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of theCompany or the Holder hereof or the practical 31 Exhibit 4.2realization of the benefits that would otherwise be conferred upon the Company or the Holder hereof. The Company and the Holderswill endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), theeffect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).(29) DISCLOSURE. From and after the filing of the Form 10-K and provided that, at the applicable time ofdetermination, no individual affiliated with the Holder serving on the Board of Directors of the Company was appointed thereto,including pursuant to Section 1(a) of the September Agreement, the Company will not provide to the Holder any information thatconstitutes material non-public information of or relating to the Company or its Subsidiaries without the prior written consent of theHolder. If and to the extent the Company does provide any such information, or the Holder otherwise comes into possession ofmaterial non-public information relating to the Company or its Subsidiaries as a result of the receipt or delivery of any notice inaccordance with the terms hereof, the Company will comply with its obligations under Regulation FD under the Exchange Act. In theabsence of any disclosure by the Company pursuant thereto, the Holder shall be allowed to presume that all matters relating thereto donot constitute material non-public information relating to the Company or its Subsidiaries.(30) USURY. This Note is subject to the express condition that at no time shall the Company be obligated or requiredto pay interest hereunder at a rate or in an amount which could subject the Holder to either civil or criminal liability as a result of beingin excess of the maximum interest rate or amount which the Company is permitted by applicable law to contract or agree to pay. If bythe terms of this Note, the Company is at any time required or obligated to pay interest hereunder at a rate or in an amount in excess ofsuch maximum rate or amount, the rate or amount of interest under this Note shall be deemed to be immediately reduced to suchmaximum rate or amount and the interest payable shall be computed at such maximum rate or be in such maximum amount and allprior interest payments in excess of such maximum rate or amount shall be applied and shall be deemed to have been payments inreduction of the principal balance of this Note.(31) CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:(a) "Acquired EBITDA" means with respect to any Acquired Entity or Business (any of the foregoing, a"Pro Forma Entity") for any period, the amount for such period of Consolidated EBITDA of such Pro Forma Entity (determined as ifreferences to the Company and its Subsidiaries in the definition of the term "Consolidated EBITDA" were references to such ProForma Entity and its Subsidiaries which will become Subsidiaries), all as determined on a consolidated basis for such Pro FormaEntity.(b) "Additional Closing Date" shall have the meaning set forth in the Securities Purchase Agreement.(c) "Additional Notes" means all Initial Notes issued by the Company pursuant to the Securities PurchaseAgreement on the Initial Closing Date. 32 Exhibit 4.2(d) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, iscontrolled by, or is under common control with, such Person, it being understood for purposes of this definition that "control" of aPerson means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election ofdirectors of such Person or direct or cause the direction of the management and policies of such Person whether by contract orotherwise.(e) "Attribution Parties" means, collectively, the following Persons: (i) any investment vehicle, including,any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed oradvised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder orany of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of theforegoing and (iv) any other Person whose beneficial ownership of the Company's Common Stock would or could be aggregated withthe Holder's and its Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing isto subject collectively the Holder and its Attribution Parties to the Maximum Percentage.(f) "Backstop Commitment Notes" any Notes issued in connection with the Buyer's backstop commitment ofthe Rights Offering (as defined in the Securities Purchase Agreement) as contemplated in Section 1(e) of the Securities PurchaseAgreement.(g) "Bloomberg" means Bloomberg Financial Markets.(h) "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks inThe City of New York are authorized or required by law to remain closed.(i) "Buyer" shall have the meaning ascribed to such term in the Securities Purchase Agreement.(j) "Calendar Quarter" means each of: the period beginning on and including January 1 and ending on andincluding the next occurring March 31; the period beginning on and including April 1 and ending on and including the next occurringJune 30; the period beginning on and including July 1 and ending on and including the next occurring September 30; and the periodbeginning on and including October 1 and ending on and including the next occurring December 31.(k) "Capital Stock" means, for any entity, any and all shares, interests, rights to purchase, warrants, options,participations or other equivalents of or interests in (however designated) stock issued by that entity.(l) "Change of Control" means any Fundamental Transaction other than (i) any reorganization,recapitalization or reclassification of the Common Stock in which holders of the Company's voting power immediately prior to suchreorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold 33 Exhibit 4.2publicly traded securities and, directly or indirectly, are, in all material respects, the holders of a majority of the voting power of thesurviving entity (or entities with the authority or voting power to elect the members of the Board of Directors (or their equivalent ifother than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification or (ii) pursuant to amigratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.(m) "Closing Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bidprice and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the PrincipalMarket begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the casemay be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported byBloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bidprice or last trade price, respectively, of such security on the principal securities exchange or trading market where such security islisted or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, ofsuch security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if noclosing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the askprices, respectively, of any market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.(formerly Pink OTC Markets Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particulardate on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such dateshall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable toagree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 23. All such determinations tobe appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring duringthe applicable calculation period.(n) "Common Stock" means (i) shares of Common Stock, par value $0.001 per share of the Company, and(ii) any share capital into which such Common Stock shall be changed or any share capital resulting from a reclassification of suchCommon Stock.(o) "Consolidated EBITDA" means, for any period, the Consolidated Net Income for such period plus:(i) without duplication and to the extent already deducted (and not added back) in arriving at suchConsolidated Net Income (or, as applicable, to the extent not already included in Consolidated Net Income), the sum of the followingamounts for such period:(1) total interest expense and, to the extent not reflected in such total interest expense, any losses onswap obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income andgains on such swap obligations or such derivative instruments, and bank and letter of credit fees and costs of surety bonds inconnection with financing activities, 34 Exhibit 4.2(2) provision for taxes based on income, profits or capital gains, including federal, foreign, state,franchise, excise and similar taxes paid or accrued during such period (including in respect of repatriated funds),(3) depreciation and amortization (including amortization of intangible assets established throughpurchase accounting and amortization of deferred financing fees or costs),(4) non-cash charges (excluding any non-cash charges which consists of or requires an accrual of, orreserve for, potential cash charges in any future period),(5) extraordinary losses in accordance with GAAP,(6) unusual or non-recurring charges (including litigation and investigation-related costs and expenses,costs associated with tax projects/audits and professional, consulting or other fees) incurred in connection with the Company's pendingaudit or any of the legal proceedings listed on Schedule 3(r) of the Securities Purchase Agreement,(7) restructuring charges, accruals or reserves (including restructuring costs related to acquisitions afterthe Initial Closing),(8) losses on asset sales, disposals or abandonments (other than asset sales, disposals or abandonmentsin the ordinary course of business),(9) the amount of any net losses from discontinued operations in accordance with GAAP,(10) any expenses, charges or losses that are covered by indemnification or other reimbursementprovisions in connection with any Investment, acquisition or any sale, conveyance, transfer or other disposition of assets, to the extentactually reimbursed, or, so long as the Company has received notification from the applicable carrier that it intends to indemnify orreimburse such expenses, charges or losses and that there exists reasonable evidence that such amount will in fact be reimbursed by theinsurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in factreimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not soreimbursed within such 365 days), such expenses, charges or losses,(11) to the extent covered by insurance and actually reimbursed, or, so long as the Company has madea determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extentthat such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days ofthe date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days),expenses, charges or losses with respect to liability or casualty event or business interruption, 35 Exhibit 4.2(12) fees, costs and expenses incurred in connection with the transactions contemplated by theTransaction Documents (including, without limitation, the Rights Offering);(13) any fees and expenses incurred during such period, or any amortization thereof for such period, inconnection with any acquisition, investment, asset disposition, issuance or repayment of debt, issuance of equity securities, refinancingtransaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummatedprior to the Initial Closing and any such transaction undertaken but not completed) and any charges or non-recurring merger costsincurred during such period as a result of any such transaction,less(ii) without duplication and to the extent included in arriving at such Consolidated Net Income (or, asapplicable, to the extent not already included in Consolidated Net Income), the sum of the following amounts for such period:(1) extraordinary gains in accordance with GAAP and unusual or non-recurring gains,(2) non-cash gains,(3) gains on asset sales, disposals or abandonments (other than asset sales, disposals or abandonmentsin the ordinary course of business), and(4) the amount of any net income from discontinued operations in accordance with GAAP,in each case, as determined on a consolidated basis for the Company and its Subsidiaries in accordancewith GAAP, provided that, to the extent included in Consolidated Net Income,(1) there shall be excluded in determining Consolidated EBITDA, without duplication, any netunrealized gains and losses relating to mark-to-market of amounts denominated in foreign currencies resulting from the application ofFASB ASC 830;(2) there shall be included in determining Consolidated EBITDA for any period, without duplication,the Acquired EBITDA of any Person, property, business or asset acquired by the Company or any Subsidiary of the Company duringsuch period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of anyrelated Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired,including pursuant to a transaction consummated prior to the Initial Closing, and not subsequently so disposed of, an "AcquiredEntity or Business"), in each case based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion 36 Exhibit 4.2thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis;(3) there shall be excluded in determining Consolidated EBITDA for any period the DisposedEBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinuedoperations by the Company or any Subsidiary of the Company during such period (each such Person, property, business or asset sosold, transferred or otherwise disposed of, closed or classified, a "Sold Entity or Business"), in each case based on the DisposedEBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer,disposition, closure, classification or conversion) determined on a historical Pro Forma Basis; and(4) there shall be excluded in determining Consolidated EBITDA for any period the cumulative effectof a change in accounting principles during such period to the extent included in Consolidated Net Income.(p) "Consolidated Net Income" means, for any period, the net income (loss) of the Company and itsSubsidiaries for such period determined on a consolidated basis in accordance with GAAP.(q) "Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise,of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent ofthe Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liabilitywill be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will beprotected (in whole or in part) against loss with respect thereto.(r) "Conversion Premium" means the quotient obtained by dividing (x) the Conversion Price in effect as ofthe applicable date of determination, by (y) the arithmetic average of the ten (10) Weighted Average Prices of the Common Stock oneach Trading Day during the ten (10) consecutive Trading Days immediately preceding the applicable date of determination. All suchdeterminations to be appropriately adjusted for any stock split, stock dividend, stock combination, reclassification or other similartransaction during such period.(s) "Convertible Securities" means any stock or securities (other than Options) directly or indirectlyconvertible into or exercisable or exchangeable for shares of Common Stock.(t) "Disposed EBITDA" means with respect to any Sold Entity or Business for any period, the amount forsuch period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Company and its Subsidiariesin the definition of the term "Consolidated EBITDA" (and in the component financial definitions used therein) were references to suchSold Entity or Business and its Subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business. 37 Exhibit 4.2(u) "Eligible Market" means the Principal Market, The New York Stock Exchange, the Nasdaq CapitalMarket, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE American, the OTC QX, the OTC QB or the OTCPink.(v) "Equity Conditions" means each of the following conditions: (i) either (x) one or more RegistrationStatements covering all of the Interest Shares to be issued on the applicable Interest Date or the shares of Common Stock issuable uponconversion of the Conversion Amount that is subject to the applicable Company Optional Redemption, as applicable, shall be effectiveand available for the resale of such shares, in accordance with the terms of the Registration Rights Agreement or (y) all Interest Sharesissuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amount that issubject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions, shall beeligible for sale without restriction or limitation pursuant to Rule 144 and without the need for registration under any applicable federalor state securities laws; (ii) the Company shall have no knowledge of any fact that would cause (x) the applicable RegistrationStatements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of the Interest Sharesissuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amount that issubject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions, inaccordance with the terms of the Registration Rights Agreement or (y) the Interest Shares issuable on the applicable Interest Date or theshares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Company OptionalRedemption, as applicable, requiring the satisfaction of the Equity Conditions, not being eligible for sale without restriction orlimitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto)promulgated under the Securities Act and any applicable state securities laws; (iii) the Interest Shares issuable on the applicable InterestDate requiring the satisfaction of the Equity Conditions may be issued in full without violating Section 3(d) hereof; (iv) the InterestShares issuable on the applicable Interest Date or the shares of Common Stock issuable upon conversion of the Conversion Amountthat is subject to the applicable Company Optional Redemption, as applicable, requiring the satisfaction of the Equity Conditions maybe issued in full without violating the rules or regulations of the Principal Market; (v) the Common Stock is designated for quotation onthe Principal Market and shall not have been suspended from trading on such exchange or market; and (vi) if the event requiringsatisfaction of the Equity Conditions is a Company Optional Redemption, an Event of Default Redemption or a Change of ControlRedemption, from and after the applicable Company Optional Redemption Notice, Event of Default Notice or Change of ControlNotice, as applicable, the Company shall have delivered shares of Common Stock pursuant to the terms of this Note to the Holder on atimely basis as set forth in Section 3(c) hereof.(w) "Equity Conditions Failure" means that on the applicable date of determination through the applicabledate of determination, the Equity Conditions have not each been satisfied (or waived in writing by the Holder).(x) "Equity Interests" means (a) all shares of capital stock (whether denominated as common capital stock orpreferred capital stock), equity interests, beneficial, 38 Exhibit 4.2partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents(regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting and (b) all securitiesconvertible into or exchangeable for any of the foregoing and all warrants, Options or other rights to purchase, subscribe for orotherwise acquire any of the foregoing, whether or not presently convertible, exchangeable or exercisable.(y) "Exchange Act" means the Securities Exchange Act of 1934, as amended.(z) "Ex-Dividend Date" means the first date on which shares of the Common Stock trade on the applicableEligible Market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, ifapplicable, from the seller of Common Stock on such Eligible Market (in the form of due bills or otherwise) as determined by suchEligible Market.(aa) "Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including throughSubsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not theCompany is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all orsubstantially all of the properties or assets of the Company and its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X), taken as a whole, to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow theCompany to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tenderor exchange offer that is accepted by the holders of greater than either (x) 50% of the outstanding shares of Common Stock, (y) 50% ofthe outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to,or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) suchnumber of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making orparty to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under theExchange Act) of greater than 50% of the outstanding shares of Common Stock, or (iv) consummate a share purchase agreement orother business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) withone or more Subject Entities whereby such Subject Entities, individually or in the aggregate, acquire, either (x) greater than 50% of theoutstanding shares of Common Stock, (y) greater than 50% of the outstanding shares of Common Stock calculated as if any shares ofCommon Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stockpurchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that theSubject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of greater than 50% ofthe outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall,directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions allow any SubjectEntity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, whether through 39 Exhibit 4.2acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock,merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization,recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) greater than 50% of the aggregate ordinaryvoting power represented by issued and outstanding Common Stock, (y) greater than 50% of the aggregate ordinary voting powerrepresented by issued and outstanding Common Stock not held by all such Subject Entities as of the Subscription Date calculated as ifany shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinaryvoting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient toallow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company tosurrender their shares of Common Stock without approval of the stockholders of the Company or (C) directly or indirectly, includingthrough Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any otherinstrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case thisdefinition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to theextent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intendedtreatment of such instrument or transaction.(bb) "GAAP" means United States generally accepted accounting principles, consistently applied, as in effecton the Subscription Date.(cc) "Grace Period" shall have the meaning ascribed to such term in the Registration Rights Agreement.(dd) "Group" means a "group" as that term is used in Section 13(d) of the Exchange Act and as defined inRule 13d-5 thereunder.(ee) "Indebtedness" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) allobligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capitalleases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement orpayment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes,bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property,assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred asfinancing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rightsand remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property),(vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for theperiods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (orfor which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust,lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any property or assets (includingaccounts and contract rights) with respect to any asset 40 Exhibit 4.2or property owned by any Person, even though the Person which owns such assets or property has not assumed or become liable forthe payment of such indebtedness, (with the amount of such indebtedness, in the case where the Person has not assumed or becomeliable for the payment of such indebtedness) equal to the lesser of (x) the outstanding principal amount of such indebtedness and (y) thefair market value of the assets securing such indebtedness) and (viii) all Contingent Obligations in respect of indebtedness of others ofthe kinds referred to in clauses (i) through (vii) above.(ff) "Initial Closing Date" shall have the meaning set forth in the Securities Purchase Agreement.(gg) "Interest Conversion Price" means as of any Interest Date, that price which shall be the arithmeticaverage of the Weighted Average Prices of the Common Stock on each Trading Day during the ten (10) consecutive Trading Daysimmediately preceding the applicable Interest Date. All such determinations to be appropriately adjusted for any stock split, stockdividend, stock combination, reclassification or other similar transaction occurring during such period.(hh) "Interest Notice Due Date" means the fifteenth (15th) Trading Day prior to the applicable Interest Date.(ii) "Interest Reset Date" means each of (i) January 30, 2019, (ii) January 30, 2020, (iii) February 1, 2021(each of the foregoing (i) through (iii), an "Anniversary Interest Reset Date") and (iv) any applicable Event of Default RedemptionNotice Date.(jj) "Interest Rate" means:If the Conversion PremiumThen the Interest RateAnd the Interest Rate from(as of January 30, 2018 for(which shall be determinedthe applicable Interest Resetthe second column and as ofon January 30, 2018) fromDate until the nextthe applicable Interest Resetthe Issuance Datesubsequent Interest ResetDate for the third column)through the first InterestDate shall be:is:Reset Date shall be: 1.0 or less6.0%4.0%1.056.0%4.3%1.106.0%4.7%1.156.0%5.0%1.206.0%5.3%1.256.0%5.7%1.306.0%6.0%1.358.0%8.0%1.4010.0%10.0%1.45 or higher12.0%12.0% 41 Exhibit 4.2If the Conversion Premium is between two Conversion Premium amounts in the table above, the Interest Rate will be determined bystraight-line interpolation between the Interest Rates set forth for the higher and lower Conversion Premium amounts.Upon a 10-K Filing Failure (as defined below), any applicable Interest Rate then in effect shall automatically be increased by anadditional 200 bps (e.g. from 4.7% to 6.7%). Such increased Interest Rate shall continue in effect until the next Anniversary InterestReset Date. Upon the next Anniversary Interest Reset Date, the Interest Rate will adjust according to table above; provided that if theCompany has not effected the 10-K Filing Remedy (as defined below) by such date, then the reset Interest Rate will be furtherincreased by 200 bps and will continue in effect until the next Anniversary Interest Reset Date, at which time this mechanism will berepeated. For the avoidance of doubt, on any Anniversary Interest Reset Date where there is no 10-K Filing Failure and where anyapplicable 10-K Filing Remedy has been effected, the reset Interest Rate will be determined according to the table above withoutadding 200 bps. For purposes hereof, (i) the "10-K Filing Failure" means that the Company fails on or prior to each April 30 whilethis Note is outstanding to have filed the Form 10-K and any subsequent required periodic or current reports required to be filed by theCompany prior to each such date under the Exchange Act (including audited financial statements for the fiscal years ended prior toeach such date) and (ii) a "10-K Filing Remedy" means the Company shall have filed with the SEC the Form 10-K and all subsequentrequired periodic and current reports required to be filed under the Exchange Act be filed by the Company prior to such date and thereshall not exist any Event of Default.(kk) "Junior Claims" means any Indebtedness or securities of the Company or any of its Subsidiaries of anyclass junior in rank to the Notes and the Additional Notes in respect of the preferences as to distributions and payments upon aLiquidation Event, including, without limitation, any Equity Securities of the Company or any of its Subsidiaries.(ll) "Lead Investor" means Starboard Value and Opportunity Master Fund Ltd.(mm) "Liquidation Event" means the voluntary or involuntary liquidation, dissolution or winding up ofthe Company or such Subsidiaries the assets of which constitute all or substantially all of the assets of the business of the Company andits Subsidiaries taken as a whole, in a single transaction or series of transactions, or adoption of any plan for the same.(nn) "Make-Whole Change of Control" means any Change of Control in which more than ten percent (10%)of the consideration received or to be received by the holders of Common Stock (excluding cash payments for fractional shares orpursuant to dissenters rights), in connection with such transaction or event, consists of cash.(oo) "Make-Whole Change of Control Premium" means a cash amount per $1,000 principal amount ofNotes being redeemed in a Make-Whole Change of Control determined by multiplying the applicable Make-Whole Stock Price (asadjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the SubscriptionDate) by the amount set forth in the table below (the "Final Make-Whole Table"), 42 Exhibit 4.2with such amount corresponding to the date of the Make-Whole Change of Control occurring after the date in the first column but priorto the date, if any, on the immediately following row of the first column of the Final Make-Whole Table:DateMake-Whole Stock Price$20.00 $23.62 $25.00 $28.50 $30.00$31.29 $35.00 $37.05 $40.00 $45.00 $50.00 $55.00January5, 20185.32 6.19 6.20 7.44 7.67 8.656.79 6.00 5.08 3.95 2.89 2.10January7, 20194.21 5.10 5.21 6.49 7.15 7.715.87 5.10 4.23 3.17 2.26 1.62January7, 20203.21 3.96 4.13 5.34 5.96 6.504.64 3.89 3.06 2.11 1.40 0.94January7, 20212.37 2.82 3.01 4.06 4.60 5.073.09 2.28 1.36 0.00 0.00 0.00January5, 20220.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00The exact Make-Whole Stock Price and Change of Control Redemption Date may not be set forth in the Final Make-Whole Table, inwhich case, if the Make-Whole Stock Price is between two such amounts in the Final Make-Whole Table or the Change of ControlRedemption Date is between two Change of Control Redemption Dates in the Final Make-Whole Table, the applicable value will bedetermined by straight-line interpolation between the applicable value set forth for the higher and lower Make-Whole Stock Prices andthe earlier and later Change of Control Redemption Dates, as applicable, based on a 365-day year.(pp) "Make-Whole Stock Price" means, for any Make-Whole Change of Control: (A) if the holders ofCommon Stock receive only cash in consideration for their shares of Common Stock in such Make-Whole Change of Control, theamount of cash paid per share of Common Stock in such Make-Whole Change of Control; and (B) in all other cases, the arithmeticaverage of the Closing Sale Prices for the five (5) consecutive Trading Days ending on, and including, the Trading Day immediatelybefore the effective date of such Make-Whole Change of Control (all such determinations to be appropriately adjusted for any stocksplit, stock dividend, stock combination, reclassification or other similar transaction during such period).(qq) "Maximum Percentage" means, initially, 4.99%, which may be increased or decreased in accordancewith the provisions of Section 3(d); provided, however, that upon receipt by the Holder of a Company Optional Redemption Notice,then unless the Holder elects a lower Maximum Percentage in accordance with the provisions of Section 3(d), the MaximumPercentage shall immediately and automatically, without any further action by the Holder, be set at 9.99%.(rr) "Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock orConvertible Securities.(ss) "Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person,including such entity whose common capital stock or equivalent equity security is quoted or listed on an Eligible Market (or, if soelected by the Required Holders, any other market, exchange or quotation system), or, if there is more than one such Person 43 Exhibit 4.2or such entity, the Person or entity designated by the Required Holders or in the absence of such designation, such Person or entitywith the largest public market capitalization as of the date of consummation of the Fundamental Transaction.(tt) "Permitted Indebtedness" means (i) Indebtedness evidenced by this Note, the Other Notes, theAdditional Notes, the Rights Offering Notes, if any, and Backstop Commitment Notes, if any, (ii) unsecured Indebtedness incurred bythe Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in awritten agreement acceptable to the Required Holders and approved by the Required Holders in writing, and which Indebtedness doesnot provide at any time for (a) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal orpremium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (b) total interest and fees at a rate in excess of12.00% per annum, (iii) Indebtedness in an aggregate outstanding principal amount not to exceed $50,000,000 incurred under arevolving credit facility; (iv) Indebtedness with respect to capital leases in an aggregate principal amount not to exceed $40,000,000,(v) Indebtedness secured by Permitted Liens described in clauses (iv) of the definition of Permitted Liens, (vi) existing Indebtednessdescribed on Schedule 31(tt) attached hereto as in effect on the Subscription Date, and any refinancings and extensions thereof,provided that (A) the principal amount plus unpaid accrued interest and premium thereon and applicable discounts, fees, commissionsand expenses thereunder shall not be increased, (B) the maturity thereof is not earlier than ninety (90) days after the Maturity Date, (C)if the Indebtedness being refinanced or extended is subordinated in right of payment to this Note, the Other Notes and the AdditionalNotes or any guarantees thereof, such refinanced or extended Indebtedness shall be subordinated in right of payment to this Note, theOther Notes, any Additional Notes and any guarantees thereof on terms at least as favorable to the Holder as those contained in thedocumentation governing the Indebtedness being refinanced or extended, (D) no refinanced or extended Indebtedness shall havedifferent obligors, or greater guarantees or security than, the Indebtedness being refinanced or extended and (E) if the Indebtednessbeing refinanced or extended is secured by any Collateral, such refinanced or extended Indebtedness may be secured by suchCollateral on terms relating to such Collateral not materially less favorable to this Note, the Other Notes and any Additional Notes thanthose contained in the documentation (including any intercreditor agreement) governing the Indebtedness being refinanced orextended, (any such Indebtedness, "Refinancing Indebtedness"), (vii) intercompany Indebtedness among the Company and anySubsidiaries, (viii) Indebtedness arising under swap or interest rate contracts entered into in the ordinary course of business, (ix)Contingent Obligations in respect of Indebtedness otherwise permitted hereunder, (x) direct or Contingent Obligations arising undersurety bonds, letters of credit and similar instruments (including any related indemnity agreement) entered into in the ordinary course ofbusiness and consistent with past practice, (xi) Indebtedness in respect of cash management agreements entered into in the ordinarycourse of business, (xii) Indebtedness of foreign Subsidiaries not exceeding $10,000,000 in the aggregate at any time outstanding, (xiii)Indebtedness under corporate credit cards in an aggregate outstanding principal amount not to exceed $3,000,000, (xiv) Indebtednessof Persons acquired in an acquisition, provided that (x) such Indebtedness existed prior to such acquisition and was not incurred inanticipation of such acquisition and (b) after giving effect to such acquisition, the Total Net Leverage Ratio is equal to or less thanimmediately prior to such 44 Exhibit 4.2acquisition and (xv) additional Indebtedness in an aggregate principal amount not to exceed $5,000,000.(uu) "Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faithby appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lienarising in the ordinary course of business by operation of law with respect to a liability that is not yet more than sixty (60) days overdueor delinquent, (iii) any Lien created by operation of law, such as materialmen's liens, mechanics' liens and other similar liens, arising inthe ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith byappropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to securethe purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of suchequipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property soacquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewalor refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal orreplacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness beingextended, renewed or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in theordinary course of the Company's business, not interfering in any material respect with the business of the Company and itsSubsidiaries taken as a whole, (vii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments ofcustom duties in connection with the importation of goods, (viii) Liens arising from judgments, decrees or attachments in circumstancesnot constituting an Event of Default under Section 4(a)(ix); (ix) Liens securing Permitted Indebtedness described in clause (iv) of thedefinition of Permitted Indebtedness, (x) Liens securing existing Indebtedness described on Schedule 31(tt) attached hereto as in effecton the Subscription Date, and Liens securing any refinancings and extensions thereof provided that any collateral securing suchrefinancings or extensions is not broader than the collateral that is subject to the Liens being refinanced or extended, (xi) pledges ordeposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other socialsecurity legislation, (xii) deposits to secure performance of bids, trade contracts and leases, statutory obligations, surety and appealbonds, performance bonds and other obligations of a like nature in the ordinary course of business, (xiii) normal and customary rightsof setoff upon deposits of cash in favor of banks or other depository institutions, (xiv) Liens deemed to exist in connection withinvestments in repurchase agreements in the ordinary course of business, (xv) Liens arising on any real property as a result of eminentdomain, condemnation or similar proceeding with respect to such real property, (xvi) Liens on any cash deposits in connection withany letter of intent or purchase agreement relating to an acquisition, (xvii) customary rights of first refusal, "tag-along" and "drag-along" rights with respect to any equity interests in any joint venture, (xviii) Liens on assets of foreign Subsidiaries securing obligationsof foreign Subsidiaries not exceeding $10,000,000 in the aggregate at any time outstanding, (xix) Liens arising under the TransactionDocuments, (xx) additional Liens securing obligations not exceeding $5,000,000 in the aggregate at any time outstanding, and (xxi)Liens securing Permitted Indebtedness described in clause (iii) of the definition of Permitted Indebtedness, provided that such Liens aresubject to an intercreditor agreement in form and substance reasonably satisfactory to the Required Holders. 45 Exhibit 4.2(vv) "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, atrust, an unincorporated organization, any other entity and a government or any department or agency thereof.(ww) Intentionally omitted.(xx) "Principal Market" means the OTC Markets, or, if the OTC Markets is not the principal trading marketfor the Common Stock, then the principal Eligible Market on which the Common Stock is then traded.(yy) "Pro Forma Basis," "Pro Forma Compliance" and "Pro Forma Effect" means, with respect tocompliance with any test or covenant hereunder, that all Specified Transactions and the following transactions in connection therewithshall be deemed to have occurred as of the first day of the applicable period of measurement in such test or covenant: (a) incomestatement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (i) in thecase of a sale, transfer or other disposition of all or substantially all equity interests in any Subsidiary of the Company or any division,product line, or facility used for operations of the Company or any of its Subsidiaries, shall be excluded, and (ii) in the case of apermitted acquisition or investment described in the definition of the term "Specified Transaction," shall be included, (b) any retirementor repayment of Indebtedness and (c) any Indebtedness incurred or assumed by the Company or any of its Subsidiaries in connectiontherewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period forpurposes of this definition determined by utilizing the rate that is or would be in effect with respect to such Indebtedness as at therelevant date of determination.(zz) "Public Announcement Date" means (i) the Trading Day on which the Company first publiclyannounces on or prior to 9:30 a.m. New York time certain historical metrics agreed to in writing by the Company and the LeadInvestor, including, among other metrics, the number of shares of Common Stock outstanding as of December 31, 2017, in connectionwith the Initial Closing Date (the "Public Announcement") or (ii) in case the Company makes the Public Announcement after 9:30a.m. New York time, the first (1st) Trading Day immediately following the Public Announcement.([[) "Qualified Market" means the Principal Market, The New York Stock Exchange, the Nasdaq CapitalMarket, the Nasdaq Global Market, the Nasdaq Global Select Market or the NYSE American.(aaa) "Qualifying Conditions" means that both at the time of and immediately after the applicable proposedaction or omission to take any action, by the Company or any of its Subsidiary, each of the following conditions are satisfied (orwaived in writing by the Holder): (x) no Equity Conditions Failure has occurred, (ii) the Total Net Leverage Ratio is less than or equalto 3:1 and (iii) the Form 10-K has been filed with the SEC.(bbb) "Redemption Dates" means, collectively, the Event of Default Redemption Dates, the Change ofControl Redemption Dates and the Company Optional Redemption Dates, each of the foregoing, individually, a Redemption Date. 46 Exhibit 4.2(ccc) "Redemption Notices" means, collectively, the Event of Default Redemption Notices, the Change ofControl Redemption Notices and the Company Optional Redemption Notices, each of the foregoing, individually, a RedemptionNotice.(ddd) "Redemption Premium" means (i) in the event of an Event of Default set forth in Section 4(a)(iii) andany Event of Default occurring at a time the Common Stock is not listed on a Qualified Market, 110% and (ii) in all other events,100%.(eee) "Redemption Prices" means, collectively, the Event of Default Redemption Prices, the Change ofControl Redemption Prices and the Company Optional Redemption Prices, each of the foregoing, individually, a Redemption Price.(fff) "Registrable Securities" shall have the meaning ascribed to such term in the Registration RightsAgreement.(ggg) "Registration Rights Agreement" means that certain registration rights agreement dated as of theSubscription Date by and among the Company and the Buyers relating to, among other things, the registration for resale of the sharesof Common Stock issuable upon conversion of this Note, the Other Notes and any Additional Notes and upon any exercise of theWarrants.(hhh) "Registration Statement" shall have the meaning ascribed to such term in the Registration RightsAgreement.(iii) "Related Fund" means, with respect to any Person, a fund or account managed by such Person or anAffiliate of such Person.(jjj) "Required Holders" means the holders of Notes of Additional Notes representing at least a majority ofthe aggregate principal amount of the Notes and Additional Notes then outstanding.(kkk) "Rights Offering Notes" shall have the meaning ascribed to such term in the Securities PurchaseAgreement.(lll) "SEC" means the United States Securities and Exchange Commission.(mmm) "Securities Act" means the Securities Act of 1933, as amended.(nnn) "Securities Purchase Agreement" means that certain securities purchase agreement dated as of theSubscription Date by and among the Company and the Buyers of the Notes pursuant to which the Company issued the Notes, theAdditional Notes and Warrants.(ooo) "September Agreement" means that certain Agreement, dated as of September 28, 2017 by and amongthe Company, Starboard Value LP and the other parties signatory thereto. 47 Exhibit 4.2(ppp) "Specified Transaction" means, with respect to any period, any investment, sale, transfer or otherdisposition of assets or property, incurrence or repayment of indebtedness, restricted payment, or other event that by the terms hereofrequires such test or covenant to be calculated on a "Pro Forma Basis" or to be given "Pro Forma Effect."(qqq) "Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person,Persons or Group.(rrr) "Subscription Date" means January 16, 2018.(sss) "Subsidiary" shall have the meaning set forth in the Securities Purchase Agreement.(ttt) "Successor Entity" means one or more Person or Persons (or, if so elected by the Required Holders, theCompany or Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or,if so elected by the Required Holders, the Company or the Parent Entity) with which such Fundamental Transaction shall have beenentered into.(uuu) "Total Debt" shall mean, on any date of determination, the total Indebtedness of the Company and itsSubsidiaries at such time (excluding Indebtedness of the type described in clause (iii) of the definition of such term, except to the extentof any unreimbursed drawings thereunder).(vvv) "Total Net Debt" shall mean, on any date of determination, (a) Total Debt minus (b) unrestricted cashand cash equivalents (as defined in GAAP).(www) "Total Net Leverage Ratio" shall mean on any date of determination, the ratio of Total Net Debt onsuch date to Consolidated EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such date.Each calculation of the Total Net Leverage Ratio hereunder shall be made on a Pro Forma Basis.(xxx) "Trading Day" means any day on which the Common Stock is traded on the Principal Market, or, if thePrincipal Market is not the principal trading market for the Common Stock on such day, then on the principal securities exchange orsecurities market on which the Common Stock is then traded; provided that "Trading Day" shall not include any day on which theCommon Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock issuspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designatein advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).(yyy) "Transaction Documents" shall have the meaning set forth in the Securities Purchase Agreement. 48 Exhibit 4.2(zzz) "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreement, and shallinclude all warrants issued in exchange therefor or replacement thereof.([[[) "Weighted Average Price" means, for any security as of any date, the dollar volume-weighted averageprice for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as thePrincipal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time asthe Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its "Volume at Price"functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter marketon the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time assuch market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time assuch market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume- weighted averageprice is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest closingask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc.(formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular date on any of theforegoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by theCompany and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then suchdispute shall be resolved pursuant to Section 23. All such determinations to be appropriately adjusted for any stock dividend, stocksplit, stock combination, reclassification or similar transaction occurring during the applicable calculation period.[Signature Page Follows] 49 Exhibit 4.2IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set outabove. COMSCORE, INC. By: Name: Title: [Signature Page to Note]Exhibit 4.2Schedule 31(tt)Permitted IndebtednesscomScore Inc: Banc of America Leasing and Capital Master Lease Agreement dated December 12, 2006 Lease Schedule #24 (3/31/15) - #27 (12/31/15) $2,720,000Dell Financial Services Master Lease Agreement dated August 3, 2012 Lease Schedule #9 (2/1/15) – Lease Schedule #19 (1/1/17) $5,320,000Bank of America, N.A Letters of Credit (Office Lease Security Deposit) $3,475,000comScore BV: Dell Financial Services European Master Lease Agreement dated July 23, 2012 Lease Schedule #3 (8/1/15) $155,000 Exhibit 4.2EXHIBIT ICOMSCORE, INC.CONVERSION NOTICEReference is made to the Senior Secured Convertible Note (the "Note") issued to the undersigned by comScore, Inc., a Delawarecorporation (the "Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the ConversionAmount (as defined in the Note) below into shares of Common Stock, par value $0.001 per share (the "Common Stock"), of theCompany, as of the date specified below.Date of Conversion: Aggregate Conversion Amount to be converted: Please confirm the following information:Conversion Price: Number of shares of Common Stock to be issued:Please issue the Common Stock into which the Note is being converted in the following name and to the following address:Issue to: Facsimile Number and Electronic Mail: Authorization: By: Title: Dated: Account Number: (if electronic book entry transfer)Transaction Code Number: (if electronic book entry transfer) Exhibit 4.2ACKNOWLEDGMENTThe Company hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer & TrustCompany to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions datedJanuary __, 2018 from the Company and acknowledged and agreed to by American Stock Transfer & Trust Company. COMSCORE, INC. By: Name: Title: Exhibit 21.1 Name of Subsidiary Jurisdiction of Incorporation .Rentrak Corporation Oregon, U.S.A.comScore International Inc. Delaware, U.S.A.CS Worldnet International C.V. NetherlandsExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-144281, 333-155355, 333-159126, 333-166349, 333-172838, 333-179625, 333-186764, 333-194010, 333-202221, 333-209310, and 333-225400 on Form S-8 and Registration StatementNo. 333-226246 on Form S-1 of our report dated February 28, 2019 relating to the financial statements of comScore, Inc. andsubsidiaries (the “Company”) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to theadoption of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers), and of our report dated February28, 2019 relating to internal control over financial reporting (which report expresses an adverse opinion on the effectiveness of theCompany’s internal control over financial reporting because of material weaknesses) appearing in this Annual Report on Form 10-K ofthe Company for the year ended December 31, 2018./s/ Deloitte & Touche LLPMcLean, VirginiaFebruary 28, 2019Exhibit 23.2Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8, No. 333-144281) pertaining to the 1999 Stock Plan and the 2007 Equity Incentive Plan ofcomScore, Inc.,(2)Registration Statement (Form S-8, No. 333-155355) pertaining to the 2007 Equity Incentive Plan of comScore, Inc.,(3)Registration Statement (Form S-8, No. 333-159126) pertaining to the 2007 Equity Incentive Plan of comScore, Inc.,(4)Registration Statement (Form S-8, No. 333-166349) pertaining to the 2007 Equity Incentive Plan of comScore, Inc.,(5)Registration Statement (Form S-8, No. 333-172838) pertaining to the 2007 Equity Incentive Plan, as amended and restated, ofcomScore, Inc.,(6)Registration Statement (Form S-8, No. 333-179625) pertaining to the 2007 Equity Incentive Plan, as amended and restated, ofcomScore, Inc.,(7)Registration Statement (Form S-8, No. 333-186764) pertaining to the 2007 Equity Incentive Plan, as amended and restated, ofcomScore, Inc.,(8)Registration Statement (Form S-8, No. 333-194010) pertaining to the 2007 Equity Incentive Plan, as amended and restated, ofcomScore, Inc.,(9)Registration Statement (Form S-8, No. 333-202221) pertaining to the 2007 Equity Incentive Plan, as amended and restated, ofcomScore, Inc.,(10)Registration Statement (Form S-8, No. 333-209310) pertaining to the Rentrak Corporation Amended and Restated 2005 StockIncentive Plan and the Rentrak Corporation 2011 Incentive Plan,(11)Registration Statement (Form S-8, No. 333-225400) pertaining to the 2018 Equity and Incentive Compensation Plan ofcomScore, Inc., and(12)Registration Statement (Form S-1, No. 333-226246) pertaining to the offer and sale of shares of comScore, Inc. common stockby the selling stockholders named therein;of our report dated March 23, 2018, with respect to the consolidated financial statements of comScore, Inc. included in this AnnualReport (Form 10-K) of comScore, Inc. for the year ended December 31, 2018./s/ Ernst & Young LLPTysons, VirginiaFebruary 28, 2019Exhibit 31.1CERTIFICATIONSI, Bryan J. Wiener, certify that:1. I have reviewed this Annual Report on Form 10-K of comScore, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting./s/ Bryan J. WienerBryan J. WienerChief Executive Officer(Principal Executive Officer)Date: February 28, 2019Exhibit 31.2CERTIFICATIONSI, Gregory A. Fink, certify that:1. I have reviewed this Annual Report on Form 10-K of comScore, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting/s/ Gregory A. FinkGregory A. FinkChief Financial Officer and Treasurer(Principal Financial Officer)Date: February 28, 2019Exhibit 32.1Certification Pursuant to 18 U.S.C. Section 1350In connection with the Annual Report of comScore, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with the Securitiesand Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Bryan J. Wiener, Chief Executive Officer of the Company, certify, pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff uponrequest./s/ Bryan J. WienerBryan J. WienerChief Executive Officer(Principal Executive Officer)Date: February 28, 2019Exhibit 32.2Certification Pursuant to 18 U.S.C. Section 1350In connection with the Annual Report of comScore, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with the Securitiesand Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Gregory A. Fink, Chief Financial Officer and Treasurer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff uponrequest./s/ Gregory A. FinkGregory A. FinkChief Financial Officer and Treasurer(Principal Financial Officer)Date: February 28, 2019

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