TiVo 2013 Annual Report Download - page 89

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Table of Contents
 

2015 $3,189
2016 $2,935
2017 $2,716
Total $8,840

On March 10, 2011, the Company issued $150.0 million aggregate principal amount of 4.00% convertible senior subordinated notes due
March 15, 2016 for which it received approximately $144.5 million in net proceeds. On March 30, 2011, the Company issued an additional
$22.5 million aggregate principal amount of the convertible senior subordinated notes and received approximately $21.8 million in net
proceeds pursuant to the exercise of the initial purchaser's overallotment option. The effective interest rate of these notes is not materially
different than the stated interest rate of 4.00%. These notes have an initial conversion price of $11.16 per share of TiVo's common stock. The
conversion option has no cash settlement provisions. Total issuance costs for the convertible notes and the overallotment was $6.4 million.
The Company uses the straight-line method to amortize its debt issuance costs which yields a similar result as the effective interest rate
method. The Company believes that the conversion option does not meet the criterion for separate accounting as a derivative because it is
indexed to the Company's own stock and is classified in stockholders' equity.
The Company will pay 4.00% interest per annum on the outstanding principal amount of the notes semi-annually on March 15 and
September 15 of each year beginning in September 2011. Interest began to accrue on March 10, 2011. The notes are unsecured senior
obligations of the Company. These notes were offered and sold only to qualified institutional investors, as defined in Rule 144 under the
Securities Act of 1933 (“Securities Act”), and the notes and the shares of the Company's common stock issuable upon conversion of the
notes have not been registered under the Securities Act.
The Company may not redeem the notes prior to their maturity date although investors may convert the notes into TiVo common stock
at any time until March 14, 2016 at their option. The notes will be convertible at an initial conversion rate of 89.6359 shares of the
Company's common stock per $1,000 principal amount of notes, subject to adjustment upon certain events, which is equivalent to a
conversion price of approximately $11.16 per share of the Company's common stock. The conversion rate will be adjusted for certain dilutive
events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture
governing the notes). The holders of the notes will have the ability to require the Company to repurchase the notes in whole or in part upon
the occurrence of an event that constitutes a “Fundamental Change” (as defined in the indenture governing the notes including such events
as a "change in control" or "termination of trading"). In such case, the repurchase price would be 100% of the principal amount of the notes
plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase price.
Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the notes, as described in
the indenture governing the notes, including, among other events, the Company's failure to file with the SEC the reports required pursuant
to Section 13 or 15(d) of the Securities Exchange of 1934, as amended, within 180 days after the time such report was required to be filed.
There are no financial covenants to these convertible notes.

1999 Equity Incentive Plan
In April 1999, the Company’s stockholders approved the 1999 Equity Incentive Plan (the 1999 Plan). Amendments to the 1999 Plan
were adopted in July 1999. The 1999 Plan permits the granting of incentive stock options, non-statutory stock options, non-vested stock
awards (also known as restricted stock), stock appreciation rights, performance-based awards, and stock purchase rights. The 1999 Plan
allows the grant of options to purchase shares of the Company’s common stock to employees and other individuals at a price equal to the fair
market value of the common stock at the date of grant. The options granted to new employees typically vest 25% after the first year of service,
and the remaining 75% vest monthly over the next 36 months. The vesting period for
86