TiVo Corporation
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SEC Document
SEC Filing

Section 382 Rights Plan

On December 18, 2019 (the “Rights Dividend Declaration Date”), the Board of Directors (the “TiVo Board”) of TiVo adopted a Section 382 rights plan (the “Section 382 Rights Plan”), which is attached hereto as Exhibit 4.1, and declared a dividend distribution of one right for each outstanding share of TiVo Common Stock to stockholders of record at the close of business on January 6, 2020. The TiVo Board adopted the Section 382 Rights Plan in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its net operating loss carryforwards (“NOLs”). If TiVo experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), TiVo’s ability to fully utilize the NOLs on an annual basis will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of those benefits. The Section 382 Rights Plan is intended to act as a deterrent to any person (an “Acquiring Person”) acquiring (together with all affiliates and associates of such person) beneficial ownership of 4.95% or more of TiVo’s outstanding common stock within the meaning of Section 382 of the Code, without the approval of the TiVo Board. Stockholders who beneficially own 4.95% or more of TiVo’s outstanding common stock as of the Rights Dividend Declaration Date will not be deemed to be an Acquiring Person, but such person will be deemed an Acquiring Person if such person (together with all affiliates and associates of such person) becomes the beneficial owner of securities representing a percentage of TiVo’s common stock that exceeds by 0.5% or more than the lowest percentage of beneficial ownership of TiVo’s common stock that such person had at any time since the Rights Dividend Declaration Date. The description and terms of the rights are set forth in a Section 382 Rights Agreement, dated as of December 18, 2019 (the “Section 382 Rights Agreement”), by and between TiVo and American Stock Transfer & Trust Company, LLC, as Rights Agent.

The Rights

On the Rights Dividend Declaration Date, the TiVo Board authorized the issuance of one right (a “Right”) for each outstanding share of TiVo’s common stock to TiVo’s stockholders of record as of December 18, 2019. Subject to the terms, provisions and conditions of the Section 382 Rights Agreement, if the Rights become exercisable, each Right would initially represent the right to purchase from TiVo one one-thousandth of a share of TiVo’s Series A Junior Participating Preferred Stock, par value $0.001 per share, for a purchase price of $35 per Right (the “Purchase Price”). If issued, each fractional share of Series A Junior Participating Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of TiVo’s common stock. However, prior to exercise, a Right does not give its holder any rights as a stockholder of TiVo, including any dividend, voting or liquidation rights.


Initial Exercisability

The Rights are not exercisable until the earlier of (i) ten days after a public announcement that a person has become an Acquiring Person and (ii) ten business days (or such later date as may be determined by the TiVo Board) after the commencement of a tender or exchange offer by or on behalf of a person that, if completed, would result in such person becoming an Acquiring Person. The date that the Rights become exercisable under the Section 382 Rights Agreement is referred to as the “Distribution Date.” Until the Distribution Date, TiVo’s common stock certificates will evidence the Rights. Any transfer of TiVo’s common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, separate Rights certificates will be issued, and the Rights may be transferred apart from the transfer of the underlying shares of TiVo’s common stock, unless and until the Board of Directors has determined to effect an exchange pursuant to the Section 382 Rights Agreement (as described below).

“Flip-In” Event

In the event that a person becomes an Acquiring Person, each holder of a Right, other than Rights that are or, under certain circumstances, were beneficially owned by the Acquiring Person (which will thereupon become void), will from and after the Distribution Date, have the right to receive, upon exercise of a Right and payment of the Purchase Price, a number of shares of TiVo’s common stock having a market value of two times the Purchase Price. However, Rights are not exercisable following the occurrence of a person becoming an Acquiring Person until such time as the Rights are no longer redeemable by TiVo (as described below).

Exempted Persons and Exempted Transactions

The TiVo Board recognizes that there may be instances when an acquisition of shares of TiVo’s common stock that would cause a stockholder to become an Acquiring Person may not jeopardize or endanger in any material respect the availability of the NOLs to TiVo. Accordingly, the Section 382 Rights Agreement grants discretion to the TiVo Board to designate a person as an “Exempted Person” or to designate a transaction involving shares of TiVo’s common stock as an “Exempted Transaction.” An “Exempted Person” cannot become an Acquiring Person and an “Exempted Transaction” cannot result in a person becoming an Acquiring Person. The TiVo Board can revoke an “Exempted Person” designation if it subsequently makes a contrary determination regarding whether a person jeopardizes or endangers in any material respect the availability of the NOLs to the Company.

Redemption

At any time until ten calendar days following the first date of public announcement that a person has become an Acquiring Person, TiVo may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the TiVo Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the Right to exercise the Rights will terminate, and the only right of the holders of Rights will be to receive the Redemption Price.

Exchange

At any time after a person becomes an Acquiring Person and prior to the acquisition by the Acquiring Person of 50% or more of TiVo’s outstanding common stock, the TiVo Board may exchange the Rights (other than Rights that have become void), in whole or in part, at an exchange ratio of one share of common stock, or a fractional share of Series A Junior Participating Preferred Stock (or of a share of a similar class or series of TiVo’s preferred stock having similar rights, preferences and privileges) of equivalent value, per Right (subject to adjustment). Immediately upon an exchange of any Rights, the right to exercise such Rights will terminate and the only right of the holders of Rights will be to receive the number of shares of common stock (or a fractional share of Series A Junior Participating Preferred Stock or of a share of a similar class or series of TiVo’s preferred stock having similar rights, preferences and privileges) equal to the number of such Rights held by such holder multiplied by the exchange ratio.

Expiration

The Section 382 Rights Agreement will expire on the earliest of the following:

  the close of business on December 18, 2022;

  the redemption of the Rights;

  the exchange of the Rights;

  the termination of the Merger Agreement prior to the consummation of the Mergers;


  the consummation of the Mergers in accordance with the terms of the Merger Agreement;

  the close of business on the effective date of the repeal of Section 382 or any successor statute if the TiVo Board determines that the Section 382 Rights Agreement is no longer necessary or desirable for the preservation of certain tax benefits; and

  the close of business on the first day of a taxable year to which the TiVo Board determines that no tax benefits may be carried forward.

Anti-Dilution Provisions

The TiVo Board may adjust the Purchase Price of the Series A Junior Participating Preferred Stock, the number of shares of Series A Junior Participating Preferred Stock issuable and the number of outstanding Rights to prevent dilution that may occur as a result of certain events, including among others, a share dividend, a share split or a reclassification of the Series A Junior Participating Preferred Stock or of TiVo’s common stock. With certain exceptions, no adjustments to the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price.

Amendments

Prior to the Distribution Date, the TiVo Board may supplement or amend any provision of the Section 382 Rights Agreement in any respect without the approval of the holders of the Rights. From and after the Distribution Date, no amendment can adversely affect the interests of the holders of the Rights.