TiVo 2011 Annual Report Download - page 87

Table of Contents
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.
11. EQUITY INCENTIVE PLANS
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 options granted to continuing employees may vary, but typically vest monthly over a 48 months period. Options expire 10 years after the grant date, based
on continued service. If the optionee’s service terminates, options expire 90 days from the date of termination except under certain circumstances such as
death or disability. For options granted subsequent to August 8, 2001, options are exercisable only as the options vest. In the event that the individual
terminates his or her service to the Company before becoming fully vested, the Company has the right to repurchase any exercised, unvested shares at the
original option price. As of January 31, 2008, the number of shares authorized for option grants under the 1999 Plan was 52,384,204. As of January 31, 2012,
all unissued shares under the 1999 Equity Incentive Plan have expired and no stock-based awards will be granted from the 1999 Plan in the future. Any
awards granted under the 1999 plan that are canceled after August 6, 2008 become available for grant under the 2008 Plan.
1999 Non-Employee Directors’ Stock Option Plan
In July 1999, the Company adopted the 1999 Non-Employee Directors’ Stock Option Plan “the Directors’ Plan”). The Directors’ Plan provides for the
automatic grant of options to purchase shares of the Company’s common stock to non-employee directors at a price equal to the fair market value of the stock
at the date of the grant. Initial options granted to new directors vest monthly over two years from the date of grant. Annual options granted to existing
directors vest upon grant. The option term is ten years after the grant date, based on continued director service. If the director’s service terminates, options
expire 90 days from the date the director’s service terminated. The number of shares authorized for option grants under the Directors’ Plan is 1,400,000,
subject to an annual increase of 100,000 shares. As of January 31, 2012, all unissued shares under 1999 Non-Employee Directors’
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