<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant Under Rule 14a-12
[_] Confidential, For Use Of The Commission Only (As Permitted By Rule 14a-6
(e)(2))
TIVO INC.
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
--------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
5. Total fee paid:
--------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[TIVO LOGO APPEARS HERE]
TiVo Inc.
2160 Gold Street
P.O. Box 649101
San Jose, CA 95164-9101
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JULY 26, 2000
----------------
To The Stockholders of TiVo Inc.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of TiVo Inc.,
a Delaware corporation (the "Company"), will be held on Wednesday, July 26,
2000, at 10:00 a.m. local time at the Company's offices at 2160 Gold Street,
San Jose, California for the following purposes:
1. To elect three directors to hold office until the 2003 Annual Meeting
of Stockholders;
2. To ratify the selection of Arthur Andersen LLP as independent
auditors of the Company for its fiscal year ending December 31, 2000;
3. To approve the issuance of securities exceeding 20% of the Company's
Common Stock to America Online, Inc.;
4. To approve an amendment and restatement of the Company's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 75 million shares to 150 million shares and the
number of authorized shares of Preferred Stock from 2 million shares to 10
million shares and make certain other changes; and
5. To transact such other business as may properly come before the
Annual Meeting.
The foregoing items of business, including the nominees for directors, are
more fully described in the proxy statement that is attached and made a part of
this Notice.
The Board of Directors has fixed the close of business on Monday, June 26,
2000 as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting or at any adjournment thereof.
By Order of the Board of Directors,
/s/ Michael Ramsay
Michael Ramsay
Chairman of the Board, Chief
Executive Officer and President
San Jose, California
July 3, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER
TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON
IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE
HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT
THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR
NAME.
<PAGE>
TiVo Inc.
2160 Gold Street
P.O. Box 649101
San Jose, CA 95164-9101
----------------
PROXY STATEMENT
----------------
General
The enclosed proxy is solicited on behalf of the Board of Directors of TiVo
Inc., a Delaware corporation ("TiVo" or the "Company"), for use at the Annual
Meeting of Stockholders to be held on July 26, 2000, at 10:00 a.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the Company's offices at 2160 Gold Street, San
Jose, California. The Company intends to mail this proxy statement and
accompanying proxy card on or about July 3, 2000 to all stockholders entitled
to vote at the Annual Meeting.
Shares Entitled to Vote
Only holders of record of Common Stock at the close of business on June 26,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on June 26, 2000, the Company had outstanding and entitled to
vote 37,945,151 shares of its $.001 par value Common Stock (the "Common
Stock").
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
Voting and Solicitation
All votes will be tabulated by the Inspector of Elections ("Inspector")
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether a
matter has been approved. The nominees for election as directors at the Annual
Meeting will be elected by a plurality of the votes of the shares of Common
Stock PRESENT IN PERSON OR REPRESENTED BY PROXY at the meeting. All other
matters submitted to the stockholders will require the affirmative vote of a
majority of shares present in person or represented by proxy at a duly held
meeting at which a quorum is present as is required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of the shares ENTITLED TO VOTE
and present in person or represented by proxy. Any proxy which is returned
using the form of proxy enclosed and which is not marked as to a particular
item will be voted FOR the election of directors and FOR ratification of the
selection of the designated independent auditors and FOR the approval of
issuance of securities exceeding 20% of the Company's Common Stock and FOR the
approval of an amendment and restatement of the Company's Amended and Restated
Certificate of Incorporation and as the proxy holders deem advisable on other
matters that may come before the meeting, as the case may be with respect to
the item not marked. The Company believes that the tabulation procedures to be
followed by the Inspector are consistent with the general statutory
requirements in Delaware concerning voting of shares and determination of a
quorum.
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders.
1
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Copies of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 2160 Gold
Street, P.O. Box 649101, San Jose, CA 95164-9101, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
Voting Confidentiality
Proxies, ballots and voting tabulations are handled on a confidential basis
to protect your voting privacy. Information will not be disclosed except as
required by law.
Voting Results
Final voting results will be announced at the meeting and will be published
in TiVo's Form 10-Q for the third quarter of fiscal 2000. We file this
quarterly report with the Securities and Exchange Commission ("SEC"). After the
report is filed, you may obtain a copy by:
. Visiting our web site at www.tivo.com
. Contacting our Investor Relations department at (408) 519-9101
. Visiting the SEC's web site at www.sec.gov
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the number of directors) shall serve for the remainder of the
full term of the class of directors in which the vacancy occurred and until
such director's successor is elected and qualified.
The Board of Directors is presently composed of ten members. There are three
directors in the class whose term of office expires in 2000. Each of the
nominees for election to this class is currently a director of the Company who
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2003 Annual Meeting and until his or
her successor is elected and has qualified, or until such director's earlier
death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the three nominees named below. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence,
such shares will be voted for the election of such substitute nominee as
management may propose. Each person nominated for election has agreed to serve
if elected, and management has no reason to believe that any nominee will be
unable to serve.
The names of the nominees and directors, their ages as of May 31, 2000 and
certain other information about them are set forth below:
<TABLE>
<CAPTION>
Director
Name of Nominee or Director Age Principal Occupation Since
--------------------------- --- -------------------- --------
<C> <C> <S> <C>
Michael Ramsay(1)........... 50 Chairman, Chief Executive Officer 1997
and President of the Company
Geoffrey Y. Yang(1)(2)(3)... 40 General Partner, Redpoint Venture 1997
Partners
Randy Komisar(1)(3)......... 45 Strategic advisor to various 1998
privately held companies
James Barton(1)............. 42 Senior Vice President, Research 1997
and Development, and Chief
Technical Officer of the Company
Michael J. Homer(2)......... 41 Senior Vice President, America 1999
Online, Inc.
Stewart Alsop(1)(3)......... 47 General Partner, New Enterprise 1997
Associates
Larry N. Chapman(2)......... 45 President, DIRECTV Global Digital 1999
Media, Inc.
Jan P. Oosterveld........... 55 Senior Director of Corporate 1999
Strategy, Royal Philips
Electronics Group of Companies
John S. Hendricks........... 47 Chairman and Chief Executive 1999
Officer, Discovery
Communications, Inc.
Howard Stringer............. 57 Chairman and Chief Executive 1999
Officer, Sony Corporation of
America, Inc.
</TABLE>
--------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
There are no family relationships among any of the directors or executive
officers of the Company.
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Nominees for Election for a Three-Year Term Expiring at the 2003 Annual Meeting
of Stockholders
Michael Ramsay
Michael Ramsay is a co-founder of TiVo and has served as TiVo's Chairman of
the Board of Directors, Chief Executive Officer and President since its
inception in August 1997. From April 1996 to July 1997, Mr. Ramsay was the
Senior Vice President of the Silicon Desktop Group for SGI, a manufacturer of
advanced graphics computers. From August 1994 to April 1996, Mr. Ramsay was
President of Silicon Studio, Inc., a wholly owned subsidiary of SGI focused on
enabling applications development for emerging interactive media markets. From
July 1991 to August 1994, Mr. Ramsay served as the Senior Vice President and
General Manager of SGI's Visual Systems Group. Mr. Ramsay also held the
positions of vice president and general manager for the Entry Systems Division
of SGI. Prior to 1986, Mr. Ramsay held research & development and engineering
management positions at Hewlett-Packard and Convergent Technologies. Mr. Ramsay
holds a B.S. degree in Electrical Engineering from the University of Edinburgh,
Scotland.
Geoffrey Y. Yang
Geoffrey Y. Yang has served as a director of TiVo since October 1997. Since
August, 1999, Mr. Yang has been a general partner of Redpoint Venture Partners,
a venture capital firm. Prior to joining Redpoint, Mr. Yang was a general
partner of Institutional Venture Partners, a venture capital firm, from 1989 to
1999. Mr. Yang is a director of MMC Networks, Inc., a developer of network
processors, Ask Jeeves, Inc., a provider of natural-language question answering
services on the Internet, and Turnstone Systems, Inc., a provider of products
that enable DSL services. Mr. Yang holds a B.A. degree in Economics from
Princeton University, a B.S.E. degree in Engineering and Management Systems
from Princeton University and an M.B.A. degree from Stanford University.
Randy Komisar
Randy Komisar has served as a director of TiVo since March 1998. Since 1996,
Mr. Komisar has been a strategic business advisor to various start-up
companies. Since November 1997, Mr. Komisar has served as a director of
IQ.commerce Corp., an online promotions and merchandising services company. Mr.
Komisar was President and Chief Executive Officer of Crystal Dynamics Inc., a
video game development and publishing company, between May 1995 and June 1996.
He served as President and Chief Executive Officer of LucasArts Entertainment
Company, a digital entertainment company, between January 1994 and May 1995.
Mr. Komisar holds a B.A. degree in Economics from Brown University and a J.D.
degree from Harvard Law School.
America Online, Inc. Representative
Pursuant to TiVo's agreements with America Online, Inc. ("AOL") set forth in
PROPOSAL 3 hereof, AOL will have the right to nominate one director to TiVo's
Board of Directors upon the approval of PROPOSAL 3 and PROPOSAL 4 and the
completion of the transaction described in PROPOSAL 3. It is anticipated that
such representative of AOL will be elected to the Board of Directors by action
of the Board of Directors immediately after this Annual Meeting of
Stockholders. Upon election to the Board, the AOL representative would serve
until the 2003 Annual Meeting and until his or her successor is elected and is
qualified, or until such representative's earlier death, resignation or
removal.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE IN PROPOSAL 1
4
<PAGE>
Directors Continuing in Office Until the 2001 Annual Meeting of Stockholders
James Barton
James Barton is a co-founder of TiVo and has served as TiVo's Senior Vice
President of Research and Development, Chief Technical Officer and director
since its inception. From June 1996 to August 1997, Mr. Barton was President
and Chief Executive Officer of Network Age Software, Inc., a company that he
founded to develop software products targeted at managed electronic
distribution. From November 1994 to May 1996, Mr. Barton served as Chief
Technical Officer of Interactive Digital Solutions Company, a joint venture of
SGI and AT&T Network Systems created to develop interactive television systems.
From June 1993 to November 1994, Mr. Barton served as Vice President and
General Manager of the Media Systems Division of SGI. From January 1990 to May
1991, Mr. Barton served as Vice President and General Manager of the Systems
Software Division of SGI. Prior to joining SGI, Mr. Barton held technical and
management positions with Hewlett-Packard and Bell Laboratories. Mr. Barton
holds a B.S. degree in Electrical Engineering and an M.S. degree in Computer
Science from the University of Colorado at Boulder.
Michael J. Homer
Michael J. Homer has served as a director of TiVo since July 1999. Mr. Homer
has been employed with Netscape Communications Corporation, an Internet
software company, since October 1994 and has served as a Senior Vice President
of America Online, Inc. since March 1998. From July 1997 to March 1998, he was
Executive Vice President of Sales and Marketing for Netscape, and from October
1994 to July 1997, he served as Netscape's Vice President of Marketing. Prior
to joining Netscape, Mr. Homer served as Vice President of Engineering for GO
Corporation. Mr. Homer holds a B.S. degree in Finance from the University of
California at Berkeley.
Stewart Alsop
Stewart Alsop has served as a director of TiVo since October 1997. Since
1998, Mr. Alsop has served as a general partner at New Enterprise Associates, a
venture capital investment firm. Mr. Alsop was a venture partner at New
Enterprise Associates from 1996 to 1998. Mr. Alsop is also a columnist for
Fortune magazine. From June 1991 to 1996, Mr. Alsop served as Senior Vice
President and Editor-in-Chief of InfoWorld Media Group, Inc., which publishes
InfoWorld, a weekly newspaper for information-technology professionals.
Mr. Alsop also serves on the board of directors of Be Inc., a manufacturer of
computer operating systems, Egreetings Network, a provider of internet
services, and Netcentives, a provider of online direct marketing products and
services. He holds a B.A. degree in English from Occidental College.
Directors Continuing in Office Until the 2002 Annual Meeting of Stockholders
Larry N. Chapman
Larry N. Chapman has served as a director of TiVo since April 1999. Mr.
Chapman was elected to serve on the Board as the nominee of DIRECTV, Inc.
("DIRECTV") pursuant to an agreement between the Company and certain
stockholders. Since April 2000, Mr. Chapman has been the President of DIRECTV
Global Digital Media, Inc., a leading digital television service provider and a
unit of Hughes Electronics Corporation. Prior to his present position, Mr.
Chapman served in a number of capacities for DIRECTV since its inception in
1990, including Executive Vice President of New Ventures, Advanced Products and
Programming, Senior Vice President of Special Markets and Distribution, Senior
Vice President of Programming, and Vice President of Business Affairs and
Development. Mr. Chapman holds a B.S. degree and M.S. degree in Electrical
Engineering from the University of Florida.
Jan P. Oosterveld
Jan P. Oosterveld has served as a director of TiVo since September 1999. Mr.
Oosterveld was elected to serve on the Board as the nominee of Royal Philips
Electronics B.V. ("Philips") pursuant to an agreement
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<PAGE>
between the Company and certain stockholders. Since 1972, Mr. Oosterveld has
been employed with Philips, an electronics company. Since May 1997, he has
served as Senior Director of Corporate Strategy of Philips and a member of the
Philips Group Management Committee. Since April 1999, he also has served as a
director of Philips Venture Capital Fund B.V. Prior to 1997, Mr. Oosterveld was
involved in the management of Philips' Key Modules division. Mr. Oosterveld
holds an M.B.A. degree from the Instituto de Estudios Superiors de la Empresa
in Barcelona, Spain.
John S. Hendricks
John S. Hendricks has served as a director of TiVo since September 1999. Mr.
Hendricks was elected to serve on the Board as the nominee of Discovery
Communications, Inc. ("Discovery") pursuant to an agreement between the Company
and certain stockholders. Mr. Hendricks is the Chairman and Chief Executive
Officer of Discovery, a privately held, diversified media company, which he
founded in 1982. He is also a member of the boards of directors of Excalibur
Technologies Corporation, a software solutions company; Interactive Pictures
Corporation, an interactive photography and imaging company; the National
Museum of Natural History, Smithsonian Institution; the James Madison Council,
the Library of Congress; and the National Cable Television Association. Mr.
Hendricks is a member of the advisory board of the Lowell Observatory, Chairman
of the board of trustees of the Walter Kaltz Foundation and Co-chair of the CEO
Forum on Education and Technology. Mr. Hendricks holds a B.A. degree and an
honorary doctorate from the University of Alabama.
Howard Stringer
Howard Stringer has served as a director of TiVo since September 1999. Mr.
Stringer was elected to serve on the Board as the nominee of Sony Corporation
of America ("Sony Corp."), pursuant to an agreement between the Company and
certain stockholders. Mr. Stringer has been Chairman and Chief Executive
Officer of Sony Corp. an entertainment, media and consumer goods company, since
December 1998, with Sony Music Entertainment Inc., Sony Pictures Entertainment,
Sony Online Entertainment, and Sony Development reporting to him. He joined
Sony Corp. in May 1997, and was named to the board of directors of Sony Corp.
in June 1999. From March 1995 to April 1997, Mr. Stringer was Chairman and CEO
of TELE-TV, a company formed by Bell Atlantic, Nynex and Pacific Telesis. Prior
to that, Mr. Stringer had been President of the CBS Broadcast Group from 1988
to 1995. Mr. Stringer also serves on the board of directors of Applied Graphics
Technologies, Inc., a provider of digital prepress services to publishers, and
Loews Cineplex Entertainment Corp., a theatre exhibition company. Mr. Stringer
holds a B.A. and an M.A. degree in Modern History from Oxford University.
Board Committees, Members and Meetings
During the period from January 1, 1999 through December 31, 1999 (the "last
fiscal year") the Board of Directors held eight meetings and acted by unanimous
written consent four times. The Board has an Executive Committee, an Audit
Committee and a Compensation Committee.
Executive Committee. The Executive Committee has broad discretionary
authority to take most actions that may be taken by the Board of Directors,
including acting upon recommendations of other committees of the Board of
Directors, declaring a dividend, authorizing the issuance of stock and
administering our stock plans. Actions the Executive Committee is not
authorized to take include amending our Certificate of Incorporation or Bylaws,
adopting an agreement of merger or consolidation or appointing members to
Committees of our Board of Directors. The Executive Committee met four times
the last fiscal year. The Executive Committee consists of Messrs. Ramsay,
Barton, Yang, Alsop and Komisar.
Audit Committee. The Audit Committee is responsible for, among other things,
making recommendations to the Board of Directors regarding the engagement of
our independent public accountants,
6
<PAGE>
reviewing with the independent public accountants the plans and results of the
audit engagement, approving professional services provided by the independent
public accountants, and reviewing the adequacy of our internal accounting
controls. The Audit Committee is composed of outside directors who are not
officers or employees of the Company. The Audit Committee met once during the
last fiscal year and consists of Messrs. Yang, Chapman and Homer. The Board and
the Audit Committee have adopted an Audit Committee Charter, which is attached
hereto as Exhibit A.
Compensation Committee. The Compensation Committee is responsible for
determining salaries and incentives compensation for our directors, officers,
employees and consultants, and administering our stock option incentive plans.
The Compensation Committee consists of Messrs. Alsop, Komisar and Yang and met
three times during the last fiscal year.
During the fiscal year ended December 31, 1999, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the Committees
on which he served, held during the period for which he was a director or
committee member, respectively.
Compensation of Directors
Each non-employee director of the Company is eligible for reimbursement for
their expenses incurred in connection with attendance at Board meetings in
accordance with Company policy. Directors who are also executive officers do
not receive any additional compensation for serving as members of the Board or
any Committee of the Board.
Each non-employee director of the Company also receives stock option grants
under the 1999 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Only non-employee directors of the Company or an affiliate of such
directors (as defined in the Code) are eligible to receive options under the
Directors' Plan. Options granted under the Directors' Plan are intended by the
Company not to qualify as incentive stock options under the Code.
Option grants under the Directors' Plan are non-discretionary. Under the
Director's Plan, non-employee directors are granted a nonstatutory option to
purchase 20,000 shares of Common Stock on the date on which such person is
first elected or appointed a director. Options initially granted under the
Directors' Plan vest over a two-year period at a rate of 1/24th per month. In
addition, on the day after each of our Annual Meetings of stockholders,
starting with the Annual Meeting in 2001, each non-employee director will
automatically receive an option for 10,000 shares if the director has been a
non-employee director for at least the prior eighteen months. This option will
be fully vested upon its grant. The exercise price of options under the
Directors' Plan will be equal to the fair market value of the Common Stock on
the date of grant.
Options generally have an exercise price equal to 100% of the fair market
value of the Common Stock on the grant date. The option term is 10 years but it
terminates three months after the optionholder's service as a director, an
employee or a consultant to the Company or its affiliates terminates. If such
termination is due to the optionholder's disability, the exercise period is
extended to 12 months. If such termination is due to the optionholder's death
or if the optionholder dies within three months after his or her service
terminates, the exercise period is extended to 18 months following death. The
optionholder may transfer the option by gift to immediate family or for estate-
planning purposes. The optionholder also may designate a beneficiary to
exercise the option following the optionholder's death. Otherwise, the option
exercise rights will pass by the optionholder's will or by the laws of descent
and distribution. Transactions not involving receipt of consideration by the
Company, such as a merger, consolidation, reorganization, stock dividend or
stock split, may change the class and number of shares subject to the
Directors' Plan and to outstanding options. In that event, the Board will
appropriately adjust the Directors' Plan as to the class and the maximum number
of shares subject to the Directors' Plan and subject to future option grants.
It also will adjust outstanding options as to the class, number of shares and
price per share subject to such options. Upon a change in control of the
7
<PAGE>
Company, the vesting and exercisability of outstanding options will accelerate,
and the options will terminate unless an acquiring corporation assumes or
replaces outstanding options.
During the last fiscal year, the Company granted options covering 20,000
shares to each non-employee director of the Company (in one case to an
affiliate of a non-employee director), at exercise prices per share ranging
from $8.50 to $11.00. As of March 31, 2000, options to purchase 21,667 options
had been exercised under the Directors' Plan.
8
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Arthur Andersen LLP
has audited the Company's financial statements since its inception in 1997.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
Stockholder ratification of the selection of Arthur Andersen LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Arthur Andersen
LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit Committee
and the Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board in their discretion
may direct the appointment of different independent auditors at any time during
the year if they determine that such a change would be in the best interests of
the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote on proposal 2 at the Annual
Meeting will be required to ratify the selection of Arthur Anderson LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2
9
<PAGE>
PROPOSAL 3
APPROVAL OF THE ISSUANCE OF SECURITIES EXCEEDING 20% OF THE COMPANY'S COMMON
STOCK TO AMERICA ONLINE, INC.
General
The Bylaws of the National Association of Securities Dealers, Inc. (the
"NASD") require the Company to obtain stockholder approval (i) in connection
with a transaction other than a public offering involving the sale or issuance
by the Company of Common Stock (or securities convertible into or exercisable
for Common Stock) equal to twenty percent (20%) or more of the outstanding
Common Stock (or securities convertible into or exercisable for Common Stock)
or twenty percent (20%) or more of the voting power outstanding before the
issuance for less than the greater of book value or market value of the Common
Stock and (ii) in connection with a transaction involving the issuance of
securities of the Company when such issuance will result in a change of control
of the Company.
In June 2000, the Company entered into an Investment Agreement (the
"Agreement") and a Stockholders and Registration Rights Agreement (the
"Stockholders Agreement") with America Online, Inc., a Delaware corporation
(herein referred to as "AOL"). Upon satisfaction of the conditions set forth in
the Agreement (including shareholder approval of this proposal 3 and proposal
4), AOL will purchase shares of Common Stock, and possibly shares of the
Company's $.001 par value Series A Convertible preferred stock (the "Series A
Preferred Stock"), for an aggregate purchase price of $200 million. TiVo will
also issue warrants to AOL, which will give AOL the right to acquire additional
shares of Common Stock. In connection with the execution of the Agreement, the
Company and AOL also entered into a Product Integration and Marketing Agreement
(the "Commercial Agreement"), pursuant to which the Company and AOL agreed to
cooperate to develop a version of AOL's "AOL TV" service that is bundled with
and installed on a TiVo personal digital video recorder (together, "the
Integrated Product"), that includes a "TiVo Channel" to permit access to
enhanced TiVo functionality and certain other features and functions. The
Agreement, the Stockholders Agreement and the Commercial Agreement have been
approved by the Board of Directors of the Company.
Upon the sale and issuance of the Common Stock, the Series A Preferred
Stock, if any is issued, and the full exercise of all of the warrants, AOL will
own approximately 30% of the issued and outstanding shares of Common Stock of
the Company (assuming conversion of the Series A Preferred Stock into Common
Stock).
Issuance of Common Stock
Under the terms of the Agreement, AOL will acquire up to a maximum of
6,666,667 shares of Common Stock subject to the adjustments described below.
The price per share paid by AOL for the Common Stock shall be the higher of (i)
$23 or (ii) the average closing price of the Company's Common Stock on the
Nasdaq National Market System ("NASDAQ NMS") for the ten consecutive trading
day period ending on the day before the closing date of the Agreement (the
"Closing Date"), subject to maximum price of $35. The average closing price for
the ten consecutive day period shall be referred to herein as the "Closing
Average." The actual price per share to be paid by AOL for the shares of Common
Stock pursuant to the terms set forth in this paragraph shall be referred to
herein as the "Common Stock Price."
If the Common Stock Price is $30 or higher, TiVo will issue only Common
Stock to AOL. The specific number of shares of Common Stock issued to AOL will
be determined by dividing the Common Stock Price into $200 million. For
example, if the Common Stock Price is equal to $30, the Company will issue to
AOL 6,666,667 shares of Common Stock. If the Common Stock Price is equal to or
greater than $35, the Company will issue to AOL 5,714,286 shares of Common
Stock.
Issuance of Series A Convertible Preferred Stock
If the Common Stock Price is less than $30, the number of shares of Common
Stock issued to AOL will be reduced, and TiVo shall also issue to AOL shares of
Series A Preferred Stock. The number of shares of
10
<PAGE>
Common Stock that will be issued shall be reduced to a number equal to
6,666,667 multiplied by a fraction, the numerator of which is the Common Stock
Price, unless the Closing Average is less than $10, in which case the numerator
will be the Closing Average, and the denominator of which is $30. Thus, if the
Common Stock Price is $20, the number of shares of Common Stock to be issued to
AOL will be 6,666,667 multiplied by 20/30, which equals 4,444,444 shares. The
number of shares of Series A Preferred Stock to be issued shall be equal to
that number of shares having an initial liquidation value equal to $200 million
less the number of shares of Common Stock issued multiplied by either the
Common Stock Price or, if the Closing Average is less than $10, the Closing
Average. The initial liquidation price of each share of the Series A Preferred
Stock shall be $30 per share. Thus, if the Common Stock Price equals $20, then
the Company will issue 4,444,444 shares of Common Stock having, solely for the
purposes of this calculation, an aggregate liquidation value of $88,888,880,
and a number of shares of Series A Preferred Stock having an initial
liquidation value equal to $200,000,000 less $88,888,880, which equals
$111,111,120. Accordingly, in this example the specific number of shares of
Series A Preferred Stock issued to AOL will be the initial liquidation value,
$111,111,120, divided by the per share liquidation price of $30, or 3,703,703
shares. Therefore, if the Common Stock Price is $20, the Company will issue to
AOL 4,444,444 shares of Common Stock and 3,703,703 shares of Series A Preferred
Stock.
In the event shares of Series A Preferred Stock are issued to AOL, the
Company will also need to reserve shares of its Common Stock for the conversion
of the shares of Series A Preferred Stock to Common Stock upon the occurrence
of certain events.
Notwithstanding the foregoing, if, as of the Closing Date, the aggregate
liquidation value of the Series A Preferred Stock to be purchased by AOL, plus
the value of the Common Stock to be purchased by AOL, plus the value of the
Common Stock already owned by AOL, exceeds twenty-five percent (25%) of the
value of the Company's then currently outstanding stock, including for purposes
of this calculation the value of the Common Stock and initial liquidation value
of the Series A Preferred Stock to be issued to AOL under the Agreement, then
the number of shares of Series A Preferred Stock to be issued to AOL shall be
reduced by such number of shares as would have an initial liquidation value
equal to the amount of the excess value above twenty-five percent (25%) (the
"Excess Equity Value"). For example, if the value of securities to be purchased
by AOL under the Agreement plus the value of stock already owned by AOL exceeds
twenty-five percent (25%) of the value of TiVo's currently outstanding stock by
$10,000,000, then the number of shares of Series A Preferred Stock to be issued
shall be reduced by an amount equal to $10,000,000 divided by $30, or 333,333
shares. In addition, there will be a corresponding increase to the number of
shares that AOL may purchase pursuant to the warrants issued to AOL in
connection with the Agreement.
If the Closing Average is less than $10, AOL will have the right to
terminate the Agreement. If AOL notifies the Company of its intention to
exercise its right to terminate the Agreement, TiVo shall have the right to
adjust the Common Stock Price to $10 and prevent AOL from terminating the
Agreement. In such an event, the price paid by AOL for the Series A Preferred
Stock will be reduced from $30 per share to a price equal to three (3) times
the Closing Average.
Issuance of Warrants
On the Closing Date, TiVo will issue to AOL warrants to purchase an
aggregate number of shares of Common Stock that will bring AOL's total
ownership of the Company's equity securities to an amount equal to thirty
percent (30%) of the issued and outstanding shares of capital stock of the
Company (including shares of Series A Preferred Stock on an as converted basis)
(the "Warrant Shares"). The Warrant Shares will be divided among two
performance-based warrants (the "Performance Warrants") and one or two non-
performance-based warrants (the "Initial Warrant" or "Initial Warrants"). If
the Closing Average is greater than $30, only one Initial Warrant will be
issued. If, however, the Closing Average is less than $30, two Initial Warrants
will be issued. One-third (1/3) of the Warrant Shares will be allocated to each
of the two Performance Warrants. The remaining one-third (1/3) of the Warrant
Shares will be allocated to the Initial Warrant or Initial Warrants. If two
Initial Warrants are issued, the shares will be divided among the two warrants
in the same ratio as the Common Stock and Series A Preferred Stock is issued to
AOL where the Closing Average is less than $30, as described above.
11
<PAGE>
The Initial Warrants will be immediately exercisable at a price per share
equal to $30. The Performance Warrants will not be immediately exercisable and
will become exercisable only upon the occurrence of certain events, as
described below. Upon the occurrence of the described events, the Performance
Warrants will be exercisable at a price per share equal to ninety percent (90%)
of the average of the last reported trading prices of the Common Stock on the
NASDAQ NMS for the ten (10) consecutive trading days immediately preceeding the
date of the holder's Notice of Exercise exercising all or a portion of the
warrant.
One Performance Warrant will become exercisable following the execution of
the Launch Commitment, as defined below; provided that (i) the Launch
Commitment is entered into prior to the expiration of a twelve (12) month
period following the date on which AOL's merger with Time Warner Inc. ("Time
Warner") is consummated and (ii) AOL stipulates that the commercial deployment
of the Integrated Product shall commence during the term of the Commercial
Agreement. For purposes of this Performance Warrant only the term "Launch
Commitment" means a binding contractual commitment providing for the launch of
the Integrated Product to occur on cable television systems owned or controlled
by Time Warner or its affiliates in markets where the Company has the potential
to acquire at least 1,500,000 subscribers in the aggregate on such cable
systems. Upon becoming exercisable, this Performance Warrant must be exercised
within six months, or it will terminate.
The second Performance Warrant will become exercisable on the date that AOL
notifies the Company that there were at one time 1,500,000 activated users of
the Integrated Product. Upon becoming exercisable, this Performance Warrant
must be exercised within six months. Any portion of this Performance Warrant
that has not become exercisable shall expire in the event that AOL commits an
uncured material breach of the Commercial Agreement. Upon becoming exercisable,
this Performance Warrant must be exercised within six months, or it will
terminate.
Escrow of Funds
Up to $100 million of the proceeds from the sale of the Common Stock, Series
A Preferred Stock, if any is issued, and Warrant Shares shall be placed into an
interest bearing escrow account (the "Escrowed Funds"). The Escrowed Funds
shall be released from escrow to the Company upon the commercial launch of the
Integrated Product, provided such launch occurs before December 31, 2001. Upon
release from escrow to the Company, the Escrowed Funds shall be earmarked
solely (i) to make certain subsidy payments as set forth in the Commercial
Agreement, or (ii) to subsidize the production and reduce the retail price of
the Integrated Product. If the commercial launch has not occurred by December
31, 2001, and AOL has not materially breached the Commercial Agreement, then
AOL shall have the option to require the Company to repurchase that number of
shares of Series A Preferred Stock having an aggregate liquidation value equal
to the amount of proceeds placed in escrow. If all of the shares of the Series
A Preferred Stock issued to AOL have an aggregate liquidation value of less
than the total amount of proceeds placed in escrow, then AOL shall also have
the right to require the Company to repurchase, in addition to all of the
shares of Series A Preferred Stock, that number of shares of Common Stock
having an aggregate initial liquidation value equal to the amount of proceeds
placed in escrow less the aggregate liquidation value of the Series A Preferred
Stock issued to AOL. If AOL exercises its option to require the Company to
repurchase shares, the price for such repurchased shares shall be paid by the
release of the Escrowed Funds to AOL, including interest earned on the Escrowed
Funds.
Stockholders Agreement
The Company has granted AOL registration rights and has agreed to register
for resale under the Securities Act of 1933, as amended, the shares of Common
Stock and Series A Preferred Stock, if any is issued, that will be sold to AOL
pursuant to the Agreement, including the shares of Common Stock issuable upon
exercise of the warrants. The Company has also granted AOL certain rights to
information.
12
<PAGE>
Pursuant to the Stockholders Agreement, AOL agreed to certain limitations on
its rights as a stockholder of the Company for a period of eight (8) years or
until AOL no longer holds 10% of the outstanding shares of Common Stock of the
Company. Limitations in the Stockholders Agreement include:
. AOL will be entitled to vote at its discretion the stock it owns
representing up to 19.9% of the outstanding voting securities of the
Company, but, subject to certain limitations, will be required to vote
all of stock that it owns representing in excess of 19.9% of the
outstanding voting securities of the Company in accordance with the
recommendation of the Board of Directors of the Company.
. AOL will not, subject to certain exceptions, transfer any of its
securities of the Company without TiVo's prior written consent.
. AOL will not, subject to certain exceptions, acquire additional equity
securities of the Company without TiVo's prior written consent.
. AOL will not make any solicitation of proxies or seek to influence any
person with respect to the voting of securities of the Company without
TiVo's prior written consent.
. AOL will not submit any offer or purchase proposal that is required to be
made public by TiVo for any merger, consolidation, purchase of
substantial assets or tender offer for securities of the Company without
TiVo's prior written consent.
Use of Proceeds
Under the terms of the Agreement, up to $100 million of the proceeds of the
sale of the Common Stock, Series A Preferred Stock, if any is issued, and
Warrant Shares will be earmarked solely (i) to make certain subsidy payments as
set forth in the Commercial Agreement, or (ii) to subsidize the production and
reduce the retail price of the Integrated Product. The Company currently
intends to use the remainder of the proceeds for general corporate purposes,
including advertising and promotion of the TiVo service and the TiVo brand,
product development, and expansion of its sales, marketing and service
capabilities.
The Company has agreed to pay Credit Suisse First Boston, for its services
as a financial advisor to TiVo in connection with the structuring and
negotiation of the Agreement, up to $4.5 million.
As noted above, the NASD requires stockholder approval in a transaction
where the issuance of securities will result in a change of control of the
company. The NASD deems the issuance of securities equal to or exceeding 30% of
the issued and outstanding Common Stock (including securities convertible or
exercisable for Common Stock) to be a change of control of the Company. Upon
the purchase of the shares of Common Stock, the Series A Preferred Stock, if
any is issued, and the full exercise of all warrants issued pursuant to the
Agreement, AOL will own and be entitled to vote 30% of the issued and
outstanding securities of the Company. Pursuant to the Agreement, AOL will also
be entitled to elect one (1) member to the Board of Directors of the Company.
Stockholder Approval
Approval of proposal 3 by the requisite stockholder vote is a condition to
the parties' respective obligations under the Investment Agreement. The
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock will be required to approve the issuance of securities exceeding
twenty percent (20%) of the Company's Common Stock. As a result, abstentions
and broker non-votes will have the same effect as negative votes. If proposal 3
is not approved, the Company will not be able to complete the transaction under
the Investment Agreement as planned. As a condition to the execution and
delivery of the Agreement, AOL required that TiVo obtain the execution and
delivery of certain voting agreements from holders of a majority of the
outstanding shares of Common Stock, whereby such holders have granted their
proxies to David H. Courtney, Vice President of Finance and Administration and
Chief Financial Officer of the Company, to vote all of their shares of Common
Stock in favor of proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3
13
<PAGE>
PROPOSAL 4
APPROVAL OF RESTATED CERTIFICATE OF INCORPORATION
General
The Board of Directors has approved and adopted, subject to stockholders'
approval, the amendment and restatement of the Company's Amended and Restated
Certificate of Incorporation ("Restated Certificate"). Pursuant to the terms of
the Investment Agreement described in proposal 3, the Company is seeking
stockholder approval of a proposed Restated Certificate in substantially the
form attached to this proxy statement as Exhibit B. The proposed Restated
Certificate provides for an increase in the Company's authorized capital stock
from 77 million shares to 160 million shares, increasing the authorized Common
Stock from 75 million shares to 150 million shares and the authorized Preferred
Stock from 2 million shares to 10 million shares. If the Restated Certificate
is adopted, it will become effective upon filing with the Secretary of State of
the State of Delaware.
At June 26, 2000, there were 37,945,151 shares of Common Stock outstanding
and no shares of Preferred Stock outstanding. At the same date, an aggregate of
6,682,442 shares of Common Stock were reserved for issuance upon (a) exercise
of outstanding options granted under the Company's stock option plans, (b)
exercise of outstanding warrants, and (c) exercise of rights under the
Company's employee stock purchase plan. Under the Investment Agreement,
assuming all conditions to closing are satisfied, the Company will issue AOL up
to 6,666,667 shares of Common Stock and up to 3,240,000 shares of Series A
Preferred Stock. In addition, TiVo will also issue AOL warrants to purchase up
to an additional 10,030,000 shares of Common Stock. In addition, 3,240,000
shares of Common Stock will be reserved for issuance upon conversion of the
preferred shares. Currently, the Company's Restated Certificate does not
authorize sufficient shares of Preferred Stock or Common Stock to permit the
Company to issue the shares of Series A Preferred Stock and Common Stock under
the Investment Agreement or sufficient shares of Common Stock to allow
conversion of the Series A Preferred Stock into Common Stock in the event that
Series A Preferred Stock is issued under the Agreement. TiVo is proposing to
increase the authorized capital stock, in part, to ensure that sufficient
shares are available to consummate the Investment Agreement.
The additional Common Stock to be authorized by adoption of the Restated
Certificate would have identical rights to the currently outstanding Common
Stock of the Company. Increasing the Common Stock and issuance of the Common
Stock would not affect the rights of the holders of currently outstanding
Common Stock of the Company, except for effects that are incidental to the
increase, such as dilution of the earning per share and voting rights of
current holders of Common Stock.
Of the 10 million shares of preferred stock authorized under the Restated
Certificate, 5 million shares will be designated Series A Preferred Stock. The
Series A Preferred Stock will have the rights, powers, preferences and
limitations set forth in the Restated Certificate, as summarized below. The
remaining 5 million shares of preferred stock are not currently designated,
subject to the power of the Board of Directors to designate additional series
at its discretion from time to time.
Rights and Preferences of and Limitations on the Series A Preferred Stock
The principal rights, preferences and privileges of and limitations on the
Series A Preferred Stock are described below:
Dividends. The holders of the Series A Preferred Stock are to receive
cumulative dividends payable quarterly at the annual rate equal to the average
of the Non-Government Institutional Funds, 7-day Yields Current Rates simple
average. Unless any and all accrued dividends on the Series A Preferred Stock
are fully paid, then: (A) no dividend shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Common Stock or
any other series of preferred stock; (B) no other distribution shall be
declared or made upon, or any sum set apart for the payment of any distribution
upon, any shares of Common
14
<PAGE>
Stock or any other series of preferred stock; (C) no shares of Common Stock or
any other series of preferred stock shall be purchased, redeemed or otherwise
acquired or retired for value (except by (i) conversion into or an exchange for
shares of Common Stock or (ii) acquisition of Common Stock by the Company
pursuant to employee agreements which permit the Company to repurchase such
shares upon termination of services to the Company) by the Company or any
entity as to which the Company owns, directly or indirectly, more than fifty
percent (50%) of such entity's stock (or similar voting interests) entitled to
vote generally in the election of directors (or other governing body) (a
"Subsidiary"); and (D) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption or
other acquisition or retirement for value of any shares of Common Stock or any
other series of preferred stock by the Company.
Voting Rights. The Series A Preferred Stock shall vote together with the
shares of the Common Stock of the Company and not as a separate class, at any
annual or special meeting of stockholders of the Company. The holders of the
Series A Preferred Stock also shall have the right to vote as a separate class
with respect to the following matters:
. Any amendment, alteration, or repeal of any provision of the Restated
Certificate or the Bylaws of the Company, whether by merger,
consolidation or otherwise that adversely affects the Series A Preferred
Stock in a discriminatory manner;
. Any alteration or change in the voting powers, preferences, dividend
rights, or other special rights or privileges, qualifications,
limitations, or restrictions of the Series A Preferred Stock that
adversely affects the Series A Preferred Stock;
. Any increase or decrease (other than by redemption as specified in the
Restated Certificate or conversion in accordance with the terms of the
Restated Certificate) in the number of authorized or issued shares of
Series A Preferred Stock;
. Any authorization, creation or issuance, whether by reclassification or
otherwise, of any new class or series of stock or any other securities
convertible into equity securities of the Company ranking on a parity
with or senior to the Series A Preferred Stock in right of redemption,
liquidation preference, voting or dividends;
. Any redemption, repurchase, payment of dividends or other distributions
with respect to Common Stock or other series of preferred stock (except
for acquisitions of Common Stock by the Company pursuant to employee
agreements which permit the Company to repurchase such shares upon
termination of services to the Company or in exercise of the Company's
right of first refusal upon a proposed transfer by an employee) unless
the Company permits the Series A Preferred Stock to participate in such
redemption, repurchase, payment of dividends or other distributions on a
pro-rata, as-converted basis;
. Any sale or transfer of all or substantially all of the assets of the
Company or a consolidation, merger or other reorganization in which the
stockholders of the Company prior to the transaction own less than fifty
percent (50%) of the Company's voting power after such transaction or
series of transactions to which the Company is a party in which over
fifty percent (50%) of the Company's voting power is transferred. No such
separate vote of the holders of Series A Preferred Stock shall be
necessary for such a transaction where: (1) in the case of a transaction
in which holders of Common Stock receive cash, adequate provision is made
in the agreement for such transaction for the holders of Series A
Preferred Stock to receive cash in an amount equal to the aggregate
liquidation preference of the Series A Preferred Stock, or (2) in the
case of a transaction in which holders of Common Stock receive securities
listed on a national securities exchange, adequate provision is made in
the agreement for such transaction for the holders of Series A Preferred
Stock to receive shares of preferred stock of the issuer of such
securities with substantially identical rights, powers, preferences or
privileges as enjoyed by the Series A Preferred Stock, which shall be
initially convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of
Common Stock deliverable upon conversion of such Series A Preferred Stock
would have been entitled to receive in such transaction.
15
<PAGE>
Liquidation Rights. Upon any liquidation of the Company prior to any payment
or distribution being made to the holders of Common Stock, the holders of
Series A Preferred Stock are entitled to receive an amount per share equal to
the greater of (a) the original price paid for the Series A Preferred Stock
plus all accrued dividends or (b) the amount such holder would have received if
the shares of Series A Preferred Stock had been converted to Common Stock
immediately prior to the liquidation.
For this purpose, "liquidation" includes (a) a consolidation, merger or
other reorganization in which the stockholders of the Company prior to the
transaction own less than fifty percent (50%) of the Company's voting power
after such transaction or series of transactions to which the Company is a
party in which over fifty percent (50%) of the Company's voting power is
transferred; or a sale, lease, exchange, mortgage, pledge transfer or other
disposition in one transaction or a series of transactions of all or
substantially all of the assets of the Company.
Conversion; Adjustments. The Series A Preferred Stock may, at the option of
the holder of such stock, be converted at any time into shares of Common Stock.
The conversion rate in effect at any time for conversion of the Series A
Preferred Stock shall be the quotient obtained by dividing (x) the original
price of the Series A Preferred Stock, plus dividends accrued and not paid
(whether or not compounded), by (y) the Series A Conversion Price, calculated
as set forth below. The Series A Conversion Price for the Series A Preferred
Stock shall initially be the lesser of (i) $30 or (ii) three (3) times the
Closing Average (as such term is defined in the Investment Agreement between
the Company and AOL).
In addition, outstanding shares Series A Preferred Stock shall automatically
be converted into shares of Common Stock if the closing price of the Common
Stock, as reported on the NASDAQ NMS, exceeds $30 for eighteen (18) trading
days in any twenty (20) consecutive trading-day period.
The rate at which the Series A Preferred Stock is convertible into shares of
Common Stock is subject to adjustment for stock splits, stock dividends,
reclassifications, certain reorganizations, mergers, sales of assets and the
like.
Redemption. The Series A Preferred Stock may be redeemed by the Company, in
whole but not in part, at any time after the third anniversary of the date of
original issuance at a redemption price per share equal to the $30 plus all
compounded or accrued and unpaid dividends as of the Redemption Date.
Stockholder Approval
Approval of proposal 4 by the requisite stockholder vote is a condition to
the parties' respective obligations under the Investment Agreement. The
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock will be required to approve the amendment and restatement of the
Company's Restated Certificate. As a result, abstentions and broker non-votes
will have the same effect as negative votes. If proposal 4 is not approved, the
Company will not be able to complete the transaction under the Investment
Agreement as planned. As a condition to the execution and delivery of the
Agreement, AOL required that TiVo obtain the execution and delivery of certain
voting agreements from holders of a majority of the outstanding shares of
Common Stock, whereby such holders have granted their proxies to David H.
Courtney, Vice President of Finance and Administration and Chief Financial
Officer, to vote all of their shares of Common Stock in favor of proposal 4.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4
16
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of May 31, 2000 by: (i) each director; (ii)
each of the executive officers named in the Summary of Executive Compensation
table; (iii) all executive officers and directors of the Company as a group;
and (iv) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.
<TABLE>
<CAPTION>
Beneficial Owner Beneficial Ownership(1)
---------------- ---------------------------------
Executive Officers and Directors Number of Shares Percent of Total
-------------------------------- ---------------- ----------------
<S> <C> <C>
Michael Ramsay(2)........................... 2,764,999 7.2%
James Barton(3)............................. 1,724,999 4.5%
David Courtney(4)........................... 305,782 *
Geoffrey Y. Yang(5)......................... 4,237,204 11.2%
Stewart Alsop(6)............................ 4,187,204 11.0%
Larry N. Chapman(8)......................... 3,406,601 9.0%
Howard Stringer(12)......................... 2,663,482 7.0%
Jan P. Oosterveld(10)....................... 1,371,351 3.6%
John S. Hendricks(11)....................... 740,461 2.0%
Randy Komisar(7)............................ 253,133 *
Michael J. Homer(9)......................... 20,000 *
5% Stockholders
---------------
Entities Affiliated with Institutional 4,217,204 11.1%
Venture Partners(5)........................
3000 Sand Hill Road
Building 2,
Suite 290
Menlo Park, CA 94025
Entities Affiliated with New Enterprise 4,167,204 11.0%
Associates(6)..............................
2490 Sand Hill Road
Menlo Park, CA 94025
DIRECTV, Inc.(8)............................ 3,386,601 8.9%
2230 East Imperial Highway
El Segundo, CA 90245
Sony Corporation of America, Inc.(12)....... 2,643,482 7.0%
550 Madison Avenue
New York, NY 10022
All executive officers and directors as a 21,675,216 57.1%
group (11 persons)(13).....................
</TABLE>
--------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
37,977,220 shares outstanding on May 31, 2000 adjusted as required by
rules promulgated by the SEC.
(2) Includes 319,020 shares subject to repurchase by the Company within 60
days of May 31, 2000 and also includes 650,000 shares Mr. Ramsay has the
right to acquire pursuant to outstanding options exercisable within 60
days, 473,959 of which will not have vested.
(3) Includes 319,020 shares subject to repurchase by the Company within 60
days of May 31, 2000 and also includes 100,000 shares Mr. Barton has the
right to acquire pursuant to outstanding options exercisable within 60
days, 27,082 of which will not have vested.
17
<PAGE>
(4) Includes 230,782 shares Mr. Courtney has the right to acquire pursuant to
outstanding options exercisable within 60 days, 220,165 shares of which
will not have vested.
(5) Includes 4,041,747 shares of stock owned by Institutional Venture Partners
VII, L.P. ("IVP"), 83,638 shares of stock owned by Institutional Venture
Management VII, L.P. ("IVM VII") and 91,819 shares of stock owned by IVP
Founders Fund I, L.P. ("FFI"). Mr. Yang, one of our directors, was a
general partner of IVM VII, the general partner of IVP, and a general
partner of Institutional Venture Management VI, L.P., the general partner
of FFI. Mr. Yang disclaims beneficial ownership of these shares except to
the extent of his individual partnership interests, but exercises sole
voting and investment power with respect to 13,700 shares and shared
voting and investment power with respect to the remainder of these shares.
Also includes 20,000 shares subject to stock options exercisable within 60
days of May 31, 2000, 10,003 shares of which will not have vested.
(6) Represents 4,167,204 shares held by New Enterprise Associates VII, L.P.
Mr. Alsop, one of our directors, is a limited partner of NEA Partners VII,
which is the general partner of New Enterprise Associates VII, L.P. Mr.
Alsop disclaims beneficial ownership of such shares except to the extent
of his pecuniary interests therein. Mr. Alsop is not a partner of NEA
Presidents Fund L.P. or NEA Ventures 1997, L.P. Also includes 20,000
shares subject to stock options exercisable within 60 days of May 31,
2000, 10,003 shares of which will not have vested.
(7) Includes 156,250 shares Mr. Komisar acquired pursuant to the exercise of
stock options, 91,145 shares of which will be vested within 60 days. Also
includes 20,000 shares subject to stock options exercisable within 60 days
of May 31, 2000, 10,003 shares of which will not have vested.
(8) Includes 3,386,601 shares held by DIRECTV, Inc. Mr. Chapman is an officer
of DIRECTV and is a member of our Board of Directors. Mr. Chapman
disclaims beneficial ownership of such shares. Also includes 20,000 shares
subject to stock options exercisable within 60 days of May 31, 2000,
10,003 shares of which will not have vested.
(9) Includes 10,003 shares subject to repurchase by the Company within 60 days
of May 31, 2000.
(10) Includes 1,351,351 shares held by Philips Venture Capital Fund B.V. Mr.
Oosterveld is an officer of Royal Philips Electronics B.V., an affiliate
of Philips Venture Capital Fund B.V., and is a member of our Board of
Directors. Mr. Oosterveld disclaims beneficial ownership of such shares.
Also includes 20,000 shares subject to stock options exercisable within 60
days of May 31, 2000, 10,003 shares of which will not have vested.
(11) Includes 720,461 shares held by Discovery Communications, Inc. Mr.
Hendricks is an officer of Discovery Communications and is a member of our
Board of Directors. Mr. Hendricks disclaims beneficial ownership of such
shares. Also includes 20,000 shares subject to stock options exercisable
within 60 days of May 31, 2000, 11,667 shares of which will not have
vested.
(12) Includes 2,643,482 shares held by Sony Corporation of America, Inc. ("Sony
Corp."). Mr. Stringer is an officer of Sony Corp. and a member of our
Board of Directors. Mr. Stringer disclaims beneficial ownership of such
shares. Also includes 20,000 shares subject to stock options exercisable
within 60 days of May 31, 2000, all of which have been assigned by Mr.
Stringer to Sony Corp. and 11,667 shares of which will not have vested.
(13) Includes 1,120,782 shares subject to options exercisable within 60 days of
May 31, 2000, 336,224 of which will have vested. Also includes 251,250
shares acquired pursuant to the exercise of stock options, 176,142 shares
of which will be vested within 60 days.
18
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Compensation
The following table shows for the fiscal years ended December 31, 1999 and
1998 compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its two executive officers.
Summary of Executive Compensation
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------ ------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options/SARs Compensation
------------------ ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael Ramsay.......... 1999 $218,750 $ -- $ -- 650,000 $ --
Chairman of the Board, 1998 150,000 -- -- -- --
President and Chief
Executive Officer
James Barton............ 1999 195,833 -- -- 100,000 --
Vice President of 1998 148,000 -- -- -- --
Research and
Development, Chief
Technical Officer and
Director
David H. Courtney....... 1999 187,500* 69,000 -- 305,782 --
Vice President of 1998 $ -- $ -- $ -- -- $ --
Finance and
Administration and
Chief Financial Officer
</TABLE>
--------
* Mr. Courtney joined TiVo in 1999. His annualized 1999 salary was $225,000.
Stock Option Grants and Exercises
The Company grants options to its executive officers under its 1997 Equity
Incentive Plan and 1999 Equity Incentive Plan. As of May 31, 2000, options to
purchase a total of 5,981,409 shares were outstanding under the 1997 and 1999
Equity Incentive Plans and options to purchase 3,259,433 shares remained
available for grant thereunder.
The following tables show, for the fiscal year ended December 31, 1999,
certain information regarding options granted to, exercised by, and held at
year-end by, the executive officers listed on the "Summary of Executive
Compensation" table above. The exercise price of each option was equal to the
fair value of our Common Stock as valued by the Board of Directors on the date
of grant. The exercise price may be paid in cash, in shares of our Common Stock
valued at fair value on the exercise date or through a cashless exercise
procedure involving same-day sale of the purchased shares.
The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the SEC and does not represent our
prediction of our stock price performance. The potential realizable values at
5% or 10% appreciation are calculated by:
. multiplying the number of shares of Common Stock subject to a given
option by the exercise price per share;
19
<PAGE>
. assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table until the
expiration of the options; and
. subtracting from that result the aggregate option exercise price.
The shares listed in the following table under "Number of Securities
Underlying Options/SARs Granted" are subject to vesting. The stock options
listed in the table vest ratably over forty-eight months. Each of the options
has a ten-year term, subject to earlier termination if the optionee's service
with us ceases. Under certain circumstances following a change of control, the
vesting of such option grants may accelerate and become immediately
exercisable. See the section below entitled "Certain Relationships and Related
Transactions" for a description of the stock options that have been granted to
Messrs. Ramsay, Barton and Courtney.
Percentages shown under "Percent of Total Options/SARs Granted to Employees
in 1999" are based on 4,307,487 options granted to our employees during the
year ended December 31, 1999.
Option/SAR Grants During the Year ended December 31, 1999
<TABLE>
<CAPTION>
Individual Grants
-------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options/SARs Exercise Price Appreciation
Underlying Granted to or Base for Option Term
Options/SARs Employees in Price Expiration ---------------------
Name Granted(#) 1999 ($/Share) Date 5%($) 10%($)
---- ------------ ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Ramsay.......... 650,000 15.09% $6.50 6/15/09 $2,657,080 $6,733,562
James Barton............ 100,000 2.32% $6.50 6/15/09 $ 408,782 $1,035,933
David H. Courtney....... 305,782 7.10% $1.00 3/11/09 $ 192,305 $ 487,338
</TABLE>
The following table sets forth the number and value of securities underlying
unexercised options that are held by the executive officers listed on the
"Summary of Executive Compensation" table above. Amounts shown under the column
"Value Realized" include the proceeds received from the options exercised,
which is calculated by multiplying the deemed fair value per share on the date
of exercise less the option exercise price per share times the number of shares
exercised. Amounts shown under the column "Value of Unexercised In-the-Money
Options/SARs at December 31, 1999" are based on the closing price of our Common
Stock ($33.75) on December 31, 1999, as reported on the NASDAQ NMS, without
taking into account any taxes that may be payable in connection with the
transaction, multiplied by the number of shares underlying the option, less the
exercise price payable for these shares. The Company's stock option plans allow
for the early exercise of options granted to employees. All options exercised
early are subject to repurchase by the Company at the original exercise price,
upon the optionholder's cessation of service prior to the vesting of the
shares.
Aggregated Option/SAR Exercises during the Year ended December 31, 1999,
and Option/SAR Values as of December 31, 1999
<TABLE>
<CAPTION>
Number of Securities
UnderlyingUnexercised Value of Unexercised, In-the-
Options/SARs at Money Options/SARs at
Shares Acquired Value December 31, 1999 December 31, 1999
Name On Exercise(#) Realized($) (#) Exercisable/Unexercisable ($) Exercisable/Unexercisable
---- --------------- ----------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Michael Ramsay.......... -- $ -- 650,000 / -- $17,712,500 / $--
James Barton............ -- $ -- 100,000 / -- $2,725,000 / $ --
David H. Courtney....... 75,000 $262,500 230,782 / -- $7,558,110 / $ --
</TABLE>
Employment Contracts, Employment Severance and Change of Control Agreements
The Company does not have employment agreements with any of its executive
directors.
20
<PAGE>
The Board of Directors has approved change of control provisions for stock
options granted to all employees, including our executive officers. Pursuant to
the change of control provisions, employees are entitled to acceleration of
vesting on a portion of stock options held by them in the event the employee is
terminated or his or her job is materially changed following a change of
control of the company. If change of control provisions are triggered, non-
executive officer employees are entitled to acceleration of twenty-five percent
(25%) of their unvested options and executive officer employees are entitled to
acceleration of fifty percent (50%) of their unvested options. Under stock
options granted to them, Mr. Ramsay and Mr. Barton are entitled to accelerated
vesting on all of their outstanding options if the change of control provisions
of their option grants are triggered.
21
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Messrs. Alsop, Komisar and Yang, none of whom are currently
officers or employees of the Company. The Committee is responsible for
establishing the Company's compensation programs for all employees, including
executives. For executive officers, the Committee evaluates performance and
determines compensation policies and levels.
Compensation Philosophy
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract,
retain and reward executive officers and other key employees who contribute to
the long-term success of the Company and to motivate them to enhance long-term
stockholder value. Key elements of this philosophy are:
. The Company pays competitively with leading technology companies with
which the Company competes for talent. To ensure that pay is competitive,
the Company regularly compares its pay practices with these companies and
sets it pay parameters based on this review.
. The Company maintains annual incentive opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
. The Company provides significant equity-based incentives for executives
and other key employees to ensure that they are motivated over the long-
term to respond to the Company's business challenges and opportunities as
owners and not just as employees.
Base Salary. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices.
Annual Incentives. The annual Executive Bonus Plan is based on strategic,
operational and functional performance. The actual incentive award earned
depends on the extent to which Company and individual performance objectives
are achieved. At the start of each year, the Committee and the full Board of
Directors review and approve the annual performance objectives for the Company
and individual officers. The Company objectives consist of operating, strategic
and financial goals that are considered to be critical to the Company's
fundamental long-term goal of building stockholder value. For fiscal 1999,
these goals included execution of the Company's retail launch, signed
agreements with specific consumer electronic partners, content providers and
network partners and achievement of financial and subscriber targets.
After the end of the year, the Committee evaluates the degree to which the
Company has met its goals and evaluates each participant's performance against
the objectives. Bonuses are awarded based on the participant's contributions
during the year. Awards are paid in cash and distributions are made in January
following the performance year.
Long-Term Incentives. The Company's long-term incentive program consists of
the Equity Incentive Plan. The incentive stock option program utilizes vesting
periods (generally four years) to encourage key employees to continue in the
employ of the Company. Through option grants, executives receive significant
equity incentives to build long-term stockholder value. Grants are made at 100%
of fair market value on the date of grant. Employees receive value from these
grants only if the Company's Common Stock appreciates over the long-term. The
size of option grants is determined based on competitive practices at leading
companies in the technology industry and the Company's philosophy of
significantly linking executive compensation with stockholder interests. The
Committee believes this approach creates an appropriate focus on longer term
objectives and promotes executive retention.
Other Compensation. The Company's executive officers are also eligible to
participate in compensation and benefit programs generally available to other
employees, including the Company's Employee Stock Purchase Plan. In addition,
from time to time, executive officers have received sign-on bonuses or other
bonuses based on extraordinary effort.
22
<PAGE>
Corporate Performance and Chief Executive Officer Compensation
Mr. Ramsay's base salary at the beginning of 1999 as President and Chief
Executive Officer was $225,000. The Committee set Mr. Ramsay's base annual
salary through 2000 at $300,000. This amount, in addition to annual incentives
was estimated to provide an annual cash compensation level at the average as
compared to a selected group of leading technology companies. In setting this
amount, the Committee took into account (i) its belief that Mr. Ramsay is a CEO
of a leading technology company who has significant and broad-based experience
in the personal television industry, (ii) the scope of Mr. Ramsay's
responsibility, and (iii) the Board's confidence in Mr. Ramsay to lead the
Company's continued development. Considering these factors, Mr. Ramsay was
granted an option in June 1999 to purchase 650,000 shares of Common Stock as an
incentive for future performance, an amount the Committee determined was
consistent with competitive practices.
During 1999, the Company achieved most, but not all of its corporate
objectives. The Committee rated Mr. Ramsay's individual performance as above
average primarily reflecting his success in the Company's achievement of most
of the goals determined at the beginning of 1999. This performance level
resulted in a bonus to him of $22,500 for fiscal 1999.
Policy on Deductibility of Compensation
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, limits
the tax deductibility by a corporation of compensation in excess of $1 million
paid to its Chief Executive Officer and any other of its four most highly
compensated executive officers. However, compensation which qualifies as
"performance-based" is excluded from the $1 million limit if, among other
requirements, the compensation is payable only upon attainment of pre-
established, objective performance goals under a plan approved by the
corporation's stockholders.
The Compensation Committee does not presently expect total cash compensation
payable for salaries to exceed the $1 million limit for any individual
executive officer of the Company. After consideration of the requirements of
Section 162(m), the Compensation Committee believes that stock option grants to
date meet the requirement that such grants be "performance-based" and are,
therefore, exempt from the limitations on deductibility. The Compensation
Committee will continue to monitor the compensation levels potentially payable
under the Company's cash compensation programs, but intends to retain the
flexibility necessary to provide total cash compensation in line with
competitive practice, the Company's compensation philosophy and the Company's
best interests.
Conclusion
Through the plans described above, a significant portion of the Company's
compensation program and Mr. Ramsay's compensation are contingent on Company
performance, and realization of benefits is closely linked to increases in
long-term stockholder value. The Company remains committed to this philosophy
of pay for performance, recognizing that the competitive market for talented
executives and the volatility of the Company's business may result in highly
variable compensation for a particular time period.
Compensation Committee
Geoffrey Y. Yang
Stewart Alsop
Randy Komisar
23
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of our Compensation Committee are Messrs. Alsop, Komisar and
Yang. None of the members of our Compensation Committee is currently or has
been, at any time since our formation, an officer or employee. Prior to the
formation of the Compensation Committee, all decisions regarding compensation
for directors, officers, employees and consultants and administration of stock
and incentive plans were made solely by the Board of Directors.
Stock Performance Measurement Comparison
The following graph shows a comparison of cumulative total stockholder
returns for the Company's Common Stock, the Nasdaq Stock Market Index for U.S.
Companies and the Standards & Poor's 500 Index (the "S&P 500"). The graph
assumes the investment of $100 on September 29, 1999, the date of the Company's
initial public offering. The data regarding the Company assumes an investment
at the initial public offering price of $16.00 per share of the Company's
Common Stock. All values assume reinvestment of the full amount of all
dividends and are calculated as of December 31, 1999. The performance shown is
not necessarily indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
TIVO, INC., NASDAQ STOCK MARKET AND S&P 500
[Stock Performance Graph]
<TABLE>
<CAPTION>
9/99 12/99
------- -------
<S> <C> <C>
TiVo Inc....................................................... $100.00 $210.94
Nasdaq Stock Market (U.S.)..................................... $100.00 $147.33
S&P 500 Index.................................................. $100.00 $114.88
</TABLE>
24
<PAGE>
OTHER INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers and persons who own
more than ten percent of a registered class of the Company's equity securities
(collectively, "Reporting Persons"), to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Reporting Persons are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations from certain
Reporting Persons that no other reports were required, the Company believes
that during its fiscal year ended December 31, 1999 all Reporting Persons
complied with all applicable filing requirements.
Relationship with Independent Public Accountants
The firm of independent accountants recommended by the Audit Committee and
selected by the Board of Directors for fiscal year 2000 is Arthur Anderson LLP.
The Board of Directors expects that the representatives of Arthur Anderson LLP
will be present at the meeting, will be given an opportunity to make a
statement at such meeting if they desire to do so and will be available to
respond to appropriate questions.
Incorporation by Reference
In TiVo's filings with the SEC, information is sometimes "incorporated by
reference". This means that we are referring you to information that has
previously been filed with the SEC, so that information should be considered as
part of the filing that your are reading. TiVo's 1999 Annual Report is
incorporated by reference. Based on SEC regulations, the performance graph on
page 24 of this proxy statement and the "Compensation Committee Report" on page
22 specifically are not incorporated by reference into any other filings with
the SEC.
This proxy statement is sent to you as part of the proxy materials for the
2000 Annual Meeting of Stockholders. You may not consider this proxy statement
as material for soliciting the purchase or sale of TiVo stock.
Availability of Additional Information
Copies of the 1999 Annual Report of the Company have been distributed to
stockholders. Additional copies and additional information, including the
annual report (Form 10-K/A) filed with the SEC are available without charge
from Investor Relations, 2160 Gold Street, P.O. Box 649101, San Jose, CA 95164-
9101. The annual report, proxy statement and Form 10-K/A are also available on
the Company's web site at www.tivo.com/about/invest.asp.
Stockholder Proposals for 2001 Annual Stockholders' Meeting
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 Annual
Meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is March 2, 2001. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must give timely notice thereof in writing to the Secretary of the
corporation. To be timely, a stockholder's proposal or nomination must be
delivered to or mailed and received at the principal executive offices of the
Company no later than the close of business on April 27, 2001 nor earlier than
the close of business on March 28, 2001, and must otherwise satisfy the
requirements of the Company's Bylaws. If the date of the 2001 Annual Meeting
changes by more than thirty (30) days from the date of the 2000 Annual Meeting,
such stockholder's proposal or nomination must be
25
<PAGE>
delivered to or mailed and received at the principal executive offices of the
Company no later than ten (10) calendar days following the first public
announcement of the revised date of the 2001 Annual Meeting. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the Annual Meeting: (i) a brief description of the
business desired to be brought before the Annual Meeting and the reasons for
conducting such business at the Annual Meeting, (ii) the name and address, as
they appear on the corporation's books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in such business and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholders' meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in the Company's Bylaws to the contrary, no business
shall be conducted at any Annual Meeting except in accordance with the
procedures set forth in the Company's Bylaws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment. It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ Michael Ramsay
Michael Ramsay
Chairman of the Board, Chief
Executive Officer and President
San Jose, California
July 3, 2000
26
<PAGE>
EXHIBIT A
TiVo Inc.
CHARTER OF THE AUDIT COMMITTEE
The Charter of the Company's Audit Committee is as follows:
Purpose
The purpose of the Audit Committee (the "Committee") of the Board of
Directors (the "Board") of TiVo Inc., a Delaware corporation (the "Company"),
will be to make such examinations as are necessary to monitor the corporate
financial reporting and the internal and external audits of the Company, to
provide the Board the results of its examinations and recommendations derived
therefrom, to outline to the Board improvements made, or to be made, in
internal accounting controls, to nominate independent auditors, and to provide
such additional information and materials as it may deem necessary to make the
Board aware of significant financial matters that require the Board's
attention.
Composition
The Committee will be comprised of two or more independent members of the
Board. The members of the Committee will be appointed by and serve at the
discretion of the Board.
Functions and Authority
The operation of the Committee will be subject to the provisions of the
Bylaws of the Company, the Delaware Corporations Code and the corporate laws of
any other state that may apply to the Company in the future, each as in effect
from time to time. The Committee will have the full power and authority to
carry out the following responsibilities:
1. To recommend annually to the full Board, the firm of certified public
accountants to be employed by the Company as its independent auditors
for the ensuing year.
2. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be
paid therefor, and all other matters the Committee deems appropriate.
3. To have familiarity, through the individual efforts of its members,
with the accounting and reporting principles and practices applied by
the Company in preparing its financial statements, including, without
limitation, the policies for recognition of revenue in financial
statements.
4. To review with management and the independent auditors, upon completion
of their audit, financial results for the year, as reported in the
Company's financial statements, supplemental disclosures to the
Securities and Exchange Commission or other disclosures.
5. To assist and interact with the independent auditors in order that they
may carry out their duties in the most efficient and cost-effective
manner.
6. To evaluate the cooperation received by the independent auditors during
their audit examination, including their access to all requested
records, data and information, and elicit the comments of management
regarding the responsiveness of the independent auditors to the
Company's needs.
7. To review and approve all professional services provided to the Company
by its independent auditors and consider the possible effect of such
services on the independence of such auditors.
27
<PAGE>
8. To consult with the independent auditors and discuss with Company
management the scope and quality of internal accounting and financial
controls in effect.
9. To investigate, review and report to the Board the propriety and
ethical implications of any transactions, as reported or disclosed to
the Committee by the independent auditors, employees, officers, members
of the Board or otherwise, between (a) the Company and (b) any
employee, officer or member of the Board of the Company or any of its
affiliates of the foregoing.
10. To perform such other functions and have such power as may be necessary
or convenient in the efficient and lawful discharge of the foregoing.
Meetings
The Committee will hold at least two regular meetings per year and
additional meetings as the Committee deem appropriate. The President, Chief
Executive Officer, Chairman of the Board, Chief Operating Officer and Chief
Financial Officer may attend any meeting of the Committee, except for portions
of the meeting where his, her or their presence would be inappropriate, as
determined by the Committee Chairman.
Minutes and Reports
Minutes of each meeting will be kept and distributed to each member of the
Committee, members of the Board who are not members of the Committee and the
Secretary of the Company. The Chairman of the Committee will report to the
Board from time to time, or whenever so requested by the Board.
28
<PAGE>
EXHIBIT B
PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Michael Ramsay and Alan C. Mendelson hereby certify that:
1. The name of this corporation is TiVo Inc. The name under which this
corporation was originally incorporated is Teleworld Inc. and the date of
filing the original Certificate of Incorporation of this corporation with the
Secretary of State of the State of Delaware is August 4, 1997.
2. They are the duly elected and acting President and Secretary,
respectively, of TiVo Inc., a Delaware corporation.
3. The Certificate of Incorporation of this corporation is hereby amended
and restated to read as follows:
I.
The name of the corporation is TiVo Inc. (the "Corporation" or the
"Company").
II.
The address of the registered office of the Corporation in the State of
Delaware is 15 East North Street, City of Dover, County of Kent. The name of
the Corporation's registered agent at said address is Amerisearch Corporate
Services Inc.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is one
hundred sixty million (160,000,000) shares. One hundred fifty million
(150,000,000) shares shall be Common Stock, each having a par value of one
tenth of one cent ($.001). Ten million (10,000,000) shares shall be
Preferred Stock, each having a par value of one tenth of one cent ($.001).
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a
certificate (a "Preferred Stock Designation") pursuant to the Delaware
General Corporation Law, to fix or alter from time to time the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions of any wholly unissued series
of Preferred Stock, and to establish from time to time the number of shares
constituting any such series or any of them; and to increase or decrease
the number of shares of any series subsequent to the issuance of shares of
that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be decreased
in accordance with the foregoing sentence, the shares constituting such
decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
C. Five million (5,000,000) of the authorized shares of Preferred Stock
are hereby designated "Series A Convertible Preferred Stock."
29
<PAGE>
D. The rights, preferences, privileges, restrictions and other matters
relating to the Series A Convertible Preferred Stock are as follows:
1. Dividend Rights.
(a) The holders of shares of Series A Convertible Preferred Stock
shall be entitled to receive when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
cumulative dividends payable in cash on a quarterly basis in
arrears, in an amount per share (rounded to the nearest cent) equal
to the percentage Dividend Rate (calculated as set forth below)
applied to $30 (the "Original Series A Purchase Price") for each
share of Series A Convertible Preferred Stock, plus all accrued and
unpaid dividends (whether or not compounded) on such share of Series
A Convertible Preferred Stock from the date of original issuance of
the Series A Convertible Preferred Stock (the "Original Issue
Date"). With respect to each share of Series A Convertible Preferred
Stock, such dividends shall accrue daily and be paid and compounded
quarterly on the first day of January, April, July and October (each
such date a "Payment Date" and each period commencing on each
Payment Date and ending on the date immediately prior to the
succeeding Payment Date, or if earlier, the date on which such share
is converted, redeemed, paid out upon liquidation, exchanged for
other property or otherwise retired, a "Dividend Period") in each
year commencing with a payment on the first Payment Date following
the Original Issue Date of dividends accrued from the Original Issue
Date to the Record Date. Each such dividend shall be payable to the
holders of record of shares of Series A Convertible Preferred Stock
as they appear on the share register of the Company on the
corresponding Record Date. As used herein, the term "Record Date"
means, with respect to the dividend payable on January 1, April 1,
July 1 and October 1, respectively of each year, the preceding
December 15, March 15, June 15 and September 15, or such other
record date, not more than 60 days or less than 10 days preceding
the Payment Dates thereof, as shall be fixed by the Board. The
"Dividend Rate" for any Dividend Period shall be:
(i) the average of the Non-Government Institutional Funds, 7-
day Yields Current Rates simple average displayed as the NON-
GOVERNMENT INST. FUNDS, SIMPLE AVERAGE rate by iMoneyNet, Inc.
on the Money Fund Selector page of its website
(http://ibcdata.com/mfs/iotopper.htm#gp) (or any successor non-
government institutional simple average rate similarly reported
or such rate as reported on any successor webpage) on the first
day of each calendar month in such Dividend Period (or on the
Original Issue Date for the initial Dividend Period); or
(ii) if such rate (or such successor rate) is not so
displayed, or ceases to be updated by iMoneyNet, Inc. (or any
successor thereto), a money funds yield index rate providing a
similar rate reported on a monthly basis by any other reputable
source as mutually agreed among the Company (as approved by a
resolution of the Board of Directors of the Company) and the
holders of a majority of the outstanding shares of Series A
Convertible Preferred Stock, or, if not so agreed within 60
days, as specified by a nationally recognized money center bank
located in the State of New York reasonably acceptable to the
Company (as approved by a resolution of the Board of Directors
of the Company) and the holders of a majority of the outstanding
shares of Series A Convertible Preferred Stock; provided that
until such alternative money funds yield index rate is selected,
the Dividend Rate shall be the last Dividend Rate calculated
pursuant to clause (i) above.
Upon the fixing of the Dividend Rate for any Dividend Period, the Company will
cause to be filed with the Secretary of the Company and mailed to each holder
of Series A Convertible Preferred Stock a certificate setting forth such rate
and, if the rate is established pursuant to clause (ii) above, identifying the
source of such rate.
(b) The amount of dividends payable for each full Dividend Period
for the Series A Convertible Preferred Stock shall be computed by
dividing the Dividend Rate in effect for such Dividend Period by
four. The amount of dividends payable for the initial Dividend
Period, or
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any other period shorter or longer than a full Dividend Period,
shall be computed on the basis of twelve 30-day months and a 360-day
year.
(c) Dividends on the Series A Convertible Preferred Stock shall
accumulate and compound quarterly whether or not the Company has
earnings or profits, whether or not there are funds legally
available for payment of such dividends and whether or not dividends
are declared. Dividends will accumulate and compound quarterly to
the extent they are not paid. The Company shall take all actions
required or permitted under the General Corporation Law of Delaware
to permit the payment of dividends on the Series A Convertible
Preferred Stock and shall declare and pay such dividends to the
extent there are funds legally available therefor.
(d) So long as any shares of Series A Convertible Preferred Stock
are outstanding, except as described in the next succeeding
sentence, unless full cumulative dividends on all outstanding shares
of Series A Convertible Preferred Stock for all past dividends have
contemporaneously been declared and paid in full or declared and
consideration sufficient for the payment thereof set apart for such
payment on the Series A Convertible Preferred Stock, then: (A) no
dividend shall be declared or paid upon, or any sum set apart for
the payment of dividends upon, any shares of Common Stock or any
other series of Preferred Stock; (B) no other distribution shall be
declared or made upon, or any sum set apart for the payment of any
distribution upon, any shares of Common Stock or any other series of
Preferred Stock; (C) no shares of Common Stock or any other series
of Preferred Stock shall be purchased, redeemed or otherwise
acquired or retired for value (except by (i) conversion into or an
exchange for shares of Common Stock or (ii) acquisition of Common
Stock by the Company pursuant to employee agreements which permit
the Company to repurchase such shares upon termination of services
to the Company) by the Company or any entity as to which the Company
owns, directly or indirectly, more than 50% of such entity's stock
(or similar voting interests) entitled to vote generally in the
election of directors (or other governing body) (a "Subsidiary");
and (D) no monies shall be paid into or set apart or made available
for a sinking or other like fund for the purchase, redemption or
other acquisition or retirement for value of any shares of Common
Stock or any other series of Preferred Stock by the Company or any
of its Subsidiaries. If at any time the Company pays less than the
total amount of dividends then accrued with respect to the Series A
Convertible Preferred Stock, such payment shall be distributed
ratably among the holders of Series A Convertible Preferred Stock
based upon the aggregate accrued but unpaid dividends on the Series
A Convertible Preferred Stock held by each holder.
(e) Subject to Section 6(e), upon the election of the holders of
a majority of the outstanding shares of Series A Convertible
Preferred Stock, the holders of Series A Convertible Preferred Stock
may irrevocably waive their right to receive dividends pursuant to
paragraph (a) above. Following notice of such waiver to the Company,
the Company shall not be obligated to pay any dividends on the
Series A Convertible Preferred Stock accruing after receipt of such
notice; provided that the Company shall be required to pay any
dividends that have accrued and not been paid for prior Dividend
Periods and for the portion of the Dividend Period elapsed to the
date of such waiver on the next succeeding Payment Date.
(f) In addition and not in lieu of the foregoing, when and if the
Board of Directors shall declare a dividend payable with respect to
the then outstanding shares of Common Stock, the holders of the
Series A Convertible Preferred Stock shall be entitled to the amount
of dividends per share as would be payable on the largest number of
whole shares of Common Stock into which each share of Series A
Convertible Preferred Stock could then be converted pursuant to
Section 4 hereof. Any such declared and unpaid dividends will be
payable first to the holders of Series A Convertible Preferred Stock
and then to the holders of Common Stock.
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2. Voting Rights.
(a) General Rights. Except as otherwise provided herein or as
required by law, the Series A Convertible Preferred Stock shall vote
together with the shares of the Common Stock of the Company and not
as a separate class, at any annual or special meeting of
stockholders of the Company upon the following basis: each holder of
shares of Series A Convertible Preferred Stock shall be entitled to
such number of votes as shall be equal to the whole number of shares
of Common Stock into which such holder's aggregate number of shares
of Series A Convertible Preferred Stock are convertible (pursuant to
Section 4 hereof) immediately after the close of business on the
record date fixed for such meeting.
(b) Separate Vote of Series Preferred. The vote of the holders of
at least a majority of the outstanding shares of Series A
Convertible Preferred Stock, voting separately as a class, shall be
necessary for effecting or validating the following actions:
(i) Any amendment, alteration, or repeal of any provision of
the Certificate of Incorporation or the Bylaws of the Company,
whether by merger, consolidation or otherwise that adversely
affects the Series A Convertible Preferred Stock in a
discriminatory manner;
(ii) Any alteration or change in the voting powers,
preferences, dividend rights, or other special rights or
privileges, qualifications, limitations, or restrictions of the
Series A Convertible Preferred Stock that adversely affects the
Series A Convertible Preferred Stock;
(iii) Any increase or decrease (other than by redemption in
accordance with Section 6 or conversion in accordance with
Section 4) in the number of authorized or issued shares of
Series A Convertible Preferred Stock;
(iv) Any authorization, creation or issuance, whether by
reclassification or otherwise, of any new class or series of
stock or any other securities convertible into equity securities
of the Company ranking on a parity with or senior to the Series
A Convertible Preferred Stock in right of redemption,
liquidation preference, voting or dividends;
(v) Any redemption, repurchase, payment of dividends or other
distributions with respect to Common Stock or other series of
Preferred Stock (except for acquisitions of Common Stock by the
Company pursuant to employee agreements which permit the Company
to repurchase such shares upon termination of services to the
Company or in exercise of the Company's right of first refusal
upon a proposed transfer by an employee) unless the Company
permits the Series A Convertible Preferred Stock to participate
in such redemption, repurchase, payment of dividends or other
distributions on a pro-rata, as-converted basis;
(vi) Any Asset Transfer, Acquisition or any merger,
consolidation or other combination of the Company with or into
any other corporation, entity or person, or any other corporate
reorganization to which the Company is a direct party, provided
that such separate vote of the Series A Convertible Preferred
Stock shall not be necessary for such transaction where: (1) in
the case of a transaction in which holders of Common Stock
receive cash, adequate provision is made in the agreement for
such transaction for the holders of Series A Convertible
Preferred Stock to receive cash in an amount equal to the
aggregate Liquidation Preference of the Series A Convertible
Preferred Stock, or (2) in the case of a transaction in which
holders of Common Stock receive securities listed on a national
securities exchange, adequate provision is made in the agreement
for such transaction for the holders of Series A Convertible
Preferred Stock to receive shares of preferred stock of the
issuer of such securities with substantially identical rights,
powers, preferences or privileges as enjoyed by the Series A
Convertible Preferred Stock, which shall be initially
convertible into the number of shares of stock or other
securities or
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property to which a holder of the number of shares of Common
Stock deliverable upon conversion of such Series A Convertible
Preferred Stock would have been entitled to receive in such
transaction. By way of clarification, a separate vote of the
holders of Series A Convertible Preferred Stock shall not be
required under this clause (vi) for any merger, consolidation or
other combination of a direct or indirect subsidiary of the
Company with or into any other corporation, entity or person
(other than the Company) in which the outstanding shares of
Common Stock are not affected.
3. Liquidation Rights.
(a) Upon any liquidation, dissolution, or winding up of the
Company, whether voluntary or involuntary, before any distribution
or payment shall be made to the holders of Common Stock or any other
series of Preferred Stock, the holders of Series A Convertible
Preferred Stock shall be entitled to be paid out of the assets of
the Company an amount per share in cash equal to the greater of (i)
the Original Series A Purchase Price (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with
respect to such shares) plus the amount of all accrued and unpaid
dividends (whether or not compounded) on the Series A Convertible
Preferred Stock (whether or not declared and whether of not funds
are legally available therefor) for each share of Series A
Convertible Preferred Stock held by them; and (ii) an amount equal
to the amount the holders of the Series A Convertible Preferred
Stock would have received upon liquidation, dissolution or winding
up had such holders converted their shares of Series A Convertible
Preferred Stock in accordance with the terms of Section 4 into
shares of Common Stock (such greater amount being the "Liquidation
Preference"). If, upon any liquidation, distribution, or winding up,
the assets of the Company shall be insufficient to make payment in
full to all holders of Series A Convertible Preferred Stock of the
Liquidation Preference set forth in this Section 3(a), then such
assets shall be distributed among the holders of Series A
Convertible Preferred Stock at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be
respectively entitled.
(b) After the payment of the full Liquidation Preference of the
Series A Convertible Preferred Stock as set forth in Section 3(a)
above, the remaining assets of the Company legally available for
distribution, if any, shall be distributed ratably to the holders of
the Common Stock.
(c) For purposes of this Section 3, provided that the holders of
Series A Convertible Preferred Stock have received notice and a
prior opportunity to convert their shares to Common Stock in
accordance with Section 4 below, the following events shall be
deemed a liquidation:
(i) the completion of any consolidation or merger of the
Company with or into any other corporation or other entity or
person, or any other corporate reorganization to which the
Company is a direct party, in which the stockholders of the
Company immediately prior to such consolidation, merger or
reorganization, own less than 50% of the Company's voting power
immediately after such consolidation, merger or reorganization,
or any transaction or series of related transactions in which in
excess of fifty percent (50%) of the Company's voting power is
transferred (an "Acquisition"); provided, by way of
clarification, any merger, consolidation or other combination of
a direct or indirect subsidiary of the Company with or into any
other corporation, entity or person (other than the Company) in
which the outstanding shares of Common Stock are not affected
shall not constitute an Acquisition; or
(ii) the completion of a sale, lease, transfer or other
disposition of all or substantially all of the assets of the
Company for which approval of the stockholders is required under
Section 271 of the Delaware General Corporation Law (an "Asset
Transfer").
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4. Conversion Rights. The holders of the Series A Convertible
Preferred Stock shall have the following rights with respect to the
conversion of the Series A Convertible Preferred Stock into shares of
Common Stock (the "Conversion Rights"):
(a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A Convertible
Preferred Stock may, at the option of the holder, be converted at
any time into fully-paid and nonassessable shares of Common Stock.
The number of shares of Common Stock to which a holder of Series A
Convertible Preferred Stock shall be entitled upon conversion shall
be the product obtained by multiplying the "Series A Conversion
Rate" then in effect (determined as provided in Section 4(b)) by the
number of shares of Series A Convertible Preferred Stock being
converted.
(b) Conversion Rate. The conversion rate in effect at any time
for conversion of the Series A Convertible Preferred Stock (the
"Series A Conversion Rate") shall be the quotient obtained by
dividing (x) the Original Series A Purchase Price, plus dividends
accrued and not paid (whether or not compounded), by (y) the "Series
A Conversion Price", calculated as provided in Section 4(c).
(c) Conversion Price. The conversion price for the Series A
Convertible Preferred Stock shall initially be the lesser of (i) $30
or (ii) three (3) times the Closing Average (as defined in the
Investment Agreement, dated June 9, 2000 between the Company and
America Online, Inc.) (the "Series A Conversion Price"). The Series
A Conversion Price shall be adjusted from time to time in accordance
with this Section 4. All references to the Series A Conversion Price
herein shall mean the Series A Conversion Price as so adjusted.
(d) Mechanics of Conversion. Each holder of Series A Convertible
Preferred Stock who desires to convert the same into shares of
Common Stock pursuant to this Section 4 shall surrender the
certificate or certificates therefor, duly endorsed, at the office
of the Company or any transfer agent for the Series A Convertible
Preferred Stock, and shall give written notice to the Company at
such office that such holder elects to convert the same. Such notice
shall state the number of shares of Series A Convertible Preferred
Stock being converted. Thereupon, the Company shall promptly issue
and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which such
holder is entitled and shall promptly pay in cash any declared and
unpaid dividends on the shares of Series A Convertible Preferred
Stock being converted. Such conversion shall be deemed to have been
made at the close of business on the date of such surrender of the
certificates representing the shares of Series A Convertible
Preferred Stock to be converted, and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of
Common Stock on such date. If the conversion is in connection with
an underwritten offering of securities registered pursuant to the
Securities Act of 1933, as amended, the conversion may, at the
option of any holder tendering Series A Convertible Preferred Stock
for conversion, be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon
such conversion of the Series A Convertible Preferred Stock shall
not be deemed to have converted such Series A Convertible Preferred
Stock until immediately prior to the closing of the sale of such
securities.
(e) Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the Original Issue Date
effect a subdivision or split-up of the outstanding Common Stock
without a corresponding subdivision or split-up of the Series A
Convertible Preferred Stock, the Series A Conversion Price in effect
immediately before that subdivision shall be proportionately
decreased. Conversely, if the Company shall at any time or from time
to time after the Original Issue Date combine the outstanding shares
of Common Stock into a smaller number of shares without a
corresponding combination of the Series A
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Convertible Preferred Stock, the Series A Convertible Preferred
Stock outstanding before the combination shall be proportionately
increased. Any adjustment under this Section 4(e) shall become
effective at the close of business on the date the subdivision or
combination becomes effective. The provisions of this clause shall
similarly apply to successive subdivisions, split-ups and
combinations.
(f) Adjustment for Common Stock Dividends and Distributions. If
the Company at any time or from time to time after the Original
Issue Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, in each
such event the Series A Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event
such record date is fixed, as of the close of business on such
record date, by multiplying the Series A Conversion Price then in
effect by a fraction (i) the numerator of which is the total number
of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record
date, and (ii) the denominator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date, plus the number of shares of Common Stock issuable in payment
of such dividend or distribution; provided, however, that if such
record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Series A Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Series A
Conversion Price shall be adjusted pursuant to this Section 4(f) to
reflect the actual payment of such dividend or distribution. The
provisions of this clause shall similarly apply to successive
dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. If the
Company at any time or from time to time after the Original Issue
Date makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company other than shares
of Common Stock or evidences of indebtedness or assets or rights or
warrants to subscribe for or purchase any of its securities
(excluding those rights or warrants referred to in paragraph (h)
below) (any of the foregoing being hereinafter in this subparagraph
(g) called the "Securities"), then, in each such case, the Series A
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Series A Conversion Price in
effect immediately prior to the date of such distribution by a
fraction the numerator of which shall be the Fair Market Value of
the Common Stock as of the record or issuance date mentioned above,
less the then fair market value (as determined in good faith by the
Board of Directors) of the portion of the Securities so distributed
allocable to one share of Common Stock, and the denominator of which
shall be the Fair Market Value of the Common Stock. Such adjustment
shall become effective immediately prior to the opening of business
on the day following the record date for the determination of
stockholders entitled to receive such distribution. The provisions
of this clause shall similarly apply to successive distributions. In
the event that such distribution is not so made, the Series A
Conversion Price shall again be adjusted to be the Series A
Conversion Price which would then be in effect if such date fixed
for the determination of stockholders entitled to receive such
distribution had not been fixed. For purposes of the above
calculation, "Fair Market Value" of one share of Common Stock as of
any date means:
(i) (A) the average of the closing prices quoted on Nasdaq
National Market System, if applicable, or the average of the
last bid and asked prices of the Common Stock quoted in the
over-the-counter-market or (B) if the Common Stock is then
traded on a national securities exchange, the average of the
high and low prices of the Common Stock listed on the principal
national securities exchange on which the Common Stock is so
traded, in each
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<PAGE>
case for the ten (10) trading days immediately preceding such
date or, if such date is not a business day on which shares are
traded, the next immediately preceding trading day; and
(ii) in all other circumstances, the fair market value per
share of Common Stock as determined in good faith by the Board
of Directors.
(h) In case the Company shall issue warrants or other rights to
all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
Fair Market Value of the Common Stock (as defined for purposes of
this subparagraph (h) in paragraph (g) above) as of the record date
for the determination of stockholders entitled to receive such
rights or warrants, the Series A Conversion Price in effect after
such record date shall be determined by multiplying the Series A
Conversion Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the record date
for issuance of such rights or warrants plus the number of shares of
Common Stock which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at such Fair
Market Value, and the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on the
record date for issuance of such rights or warrants plus the total
number of shares of Common Stock receivable upon exercise of such
rights or warrants. Such adjustment shall be made successively
whenever any such rights or warrants are issued, and shall become
effective immediately after such record date. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors. Shares of Common Stock owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of
any such computation. The provisions of this clause shall similarly
apply to successive issuances of such warrants or rights. In the
event that such rights or warrants are not so issued, the Series A
Conversion Price shall again be adjusted to be the Series A
Conversion Price which would then be in effect if such record date
had not been fixed.
(i) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Original
Issue Date, the Common Stock issuable upon the conversion of the
Series A Convertible Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an
Acquisition or Asset Transfer as defined in Section 3(c) or a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 4), in any such event each holder of
Series A Convertible Preferred Stock (whether outstanding or
thereafter issued) shall have the right thereafter to convert such
stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or
other change by holders of the maximum number of shares of Common
Stock into which such shares of Series A Convertible Preferred Stock
could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other
securities or property by the terms thereof.
(j) Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time or from time to time after the Original Issue
Date, there is a merger, consolidation, recapitalization, sale of
all or substantially all of the Company's assets or other capital
reorganization of the Common Stock (a "Capital Reorganization")
(other than an Acquisition or Asset Transfer as defined in Section
3(c) or a recapitalization, subdivision, combination,
reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4), as a part of such Capital
Reorganization, provision shall be made so that the holders of the
Series A Convertible Preferred Stock (whether outstanding or
thereafter issued) shall thereafter be entitled to receive upon
conversion of the Series A Convertible Preferred Stock the number of
shares of stock or other
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securities or property of the Company to which a holder of the
number of shares of Common Stock deliverable upon conversion would
have been entitled on such Capital Reorganization, subject to
adjustment in respect of such stock or securities by the terms
thereof. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to
the rights of the holders of Series A Convertible Preferred Stock
after the Capital Reorganization to the end that the provisions of
this Section 4 (including adjustment of each Series A Convertible
Preferred Stock Price then in effect and the number of shares
issuable upon conversion of the Series A Convertible Preferred
Stock) shall be applicable after that event and be as nearly
equivalent as practicable. In the event that the Corporation is not
the surviving entity of any such Capital Reorganization, each share
of Series A Convertible Preferred Stock shall become shares of
preferred stock of such surviving entity, with the same powers,
rights and preferences as provided herein.
(k) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Series A Conversion Price for the number of
shares of Common Stock or other securities issuable upon conversion
of the Series A Convertible Preferred Stock, if the Series A
Convertible Preferred Stock is then convertible pursuant to this
Section 4, the Company, at its expense, shall compute such
adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment,
and shall mail such certificate, by first class mail, postage
prepaid, to each registered holder of Series A Convertible Preferred
Stock at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing
in detail the facts upon which such adjustment or readjustment is
based.
(l) Notices of Record Date. Upon (i) any taking by the Company of
a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any
dividend or other distribution, or otherwise participate in any
event for which the Series A Conversion Price is adjusted pursuant
to Section 4, (ii) any subdivision or combination of the outstanding
Common Stock, (iii) any recapitalization or reclassification of or
other change in the Common Stock or any Capital Reorganization, (iv)
any event for which the Series A Conversion Price is adjusted
pursuant to Section 4, (v) any Acquisition (as defined in Section
3(c)), any merger or consolidation of the Company with or into any
other corporation, or any Asset Transfer (as defined in Section
3(c)), or (vi) any voluntary or involuntary dissolution, liquidation
or winding up of the Company, the Company shall mail to each holder
of Series A Convertible Preferred Stock at least twenty (20) days
prior to the record date specified therein a notice specifying (A)
the date on which any such record is to be taken for the purpose of
such dividend, distribution or other event and a description of such
dividend, distribution or other event, (B) the date on which any
such subdivision, combination, reorganization, reclassification,
recapitalization, Capital Reorganization, transfer, consolidation,
Acquisition, merger, Asset Transfer, dissolution, liquidation or
winding up is expected to become effective, and (C) the date, if
any, that is to be fixed as to when the holders of record of Common
Stock (or other securities) shall be entitled to exchange their
shares of Common Stock (or other securities) for securities or other
property deliverable upon such subdivision, combination,
reorganization, reclassification, recapitalization, Capital
Reorganization, transfer, consolidation, Acquisition, merger, Asset
Transfer, dissolution, liquidation or winding up.
(m) Automatic Conversion.
(i) Each share of Series A Convertible Preferred Stock shall
automatically be converted into fully paid and nonassessable
shares of Common Stock, based on the then-effective Series A
Conversion Price if the closing price of the Common Stock (as
reported on the Nasdaq National Market System) exceeds $30 for
eighteen (18) trading days in any twenty (20) consecutive
trading-day period (an "Automatic Conversion Event").
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(ii) The Corporation will promptly provide to each holder of
Series A Convertible Preferred Stock written notice, delivered
to such holder's address as shown in the Company's books, of the
occurrence of an Automatic Conversion Event, which shall include
a table showing the closing prices of the Common stock as
reported on the Nasdaq National Market System for the twenty
(20) trading day period referred to in paragraph (i) above and
shall specify the Series A Conversion Price and the Series A
Conversion Rate in effect upon the date of the Automatic
Conversion Event.
(iii) Upon the occurrence of the Automatic Conversion Event
specified in paragraph (i) above, the outstanding shares of
Series A Convertible Preferred Stock shall be converted
automatically without any further action by the holders of such
shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to
issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless the certificates evidencing
such shares of Series A Convertible Preferred Stock are either
delivered to the Company or its transfer agent as provided
below, or the holder notifies the Company or its transfer agent
that such certificates have been lost, stolen or destroyed and
executes an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection
with such certificates. Upon the occurrence of such automatic
conversion of the Series A Convertible Preferred Stock, the
holders of Series A Convertible Preferred Stock shall surrender
the certificates representing such shares at the office of the
Company or any transfer agent for the Series A Convertible
Preferred Stock. Thereupon, there shall be issued and delivered
to such holder promptly at such office and in its name as shown
on such surrendered certificate or certificates, a certificate
or certificates for the number of shares of Common Stock into
which the shares of Series A Convertible Preferred Stock
surrendered were convertible on the date on which such automatic
conversion occurred in accordance with the provisions of
Sections 4(a) through 4(d).
(n) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Series A Convertible Preferred Stock.
All shares of Common Stock (including fractions thereof) issuable
upon conversion of more than one share of Series A Convertible
Preferred Stock by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of any fractional share,
the Company shall, in lieu of issuing any fractional share, pay cash
equal to the product of such fraction multiplied by the Common
Stock's closing price on the date of conversion.
(o) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Convertible
Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Convertible Preferred Stock. If
at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Convertible Preferred Stock, the
Company will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(p) Notices. Any notice required by the provisions of this
Section 4 shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when
sent by confirmed telex or facsimile if sent during normal business
hours of the recipient; if not, then on the next business day, (iii)
five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a
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nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All notices shall be
addressed to each holder of record at the address of such holder
appearing on the books of the Company.
(q) Payment of Taxes. The Company will pay all taxes (other than
taxes based upon income) and other governmental charges that may be
imposed with respect to the issue or delivery of shares of Common
Stock upon conversion of shares of Series A Convertible Preferred
Stock, excluding any tax or other charge imposed in connection with
any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of Series A
Convertible Preferred Stock so converted were registered.
(r) No Dilution or Impairment. Without the consent of the holders
of then outstanding Series A Convertible Preferred Stock as required
under Section 2(b), the Company shall not amend its Amended and
Restated Certificate of Incorporation or participate in any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary
action, for the purpose or having the effect of avoiding or seeking
to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but shall at all
times in good faith assist in carrying out all such action as may be
reasonably necessary or appropriate in order to protect the
conversion rights of the holders of the Series A Convertible
Preferred Stock against dilution or other impairment.
5. No Preemptive Rights. Stockholders shall have no preemptive
rights except as granted by the Company pursuant to written agreements.
6. Redemption. The shares of Series A Convertible Preferred Stock
shall be redeemable as follows:
(a) Subject to Section 6(e) below, the Series A Convertible
Preferred Stock may be redeemed by the Company at any time after the
third anniversary of the Original Issue Date, at the Company's sole
discretion, in whole but not in part, at a redemption price per
share equal to the Original Series A Purchase Price plus all
compounded or accrued and unpaid dividends as of the Redemption Date
(including the pro rata portion of the dividend for the quarter in
which the redemption occurs), whether or not declared and whether or
not funds are legally available therefor, in each case as adjusted
for any stock dividends, combinations or splits or similar events
with respect to such shares (the "Redemption Price"). The Redemption
Price shall be payable, at the Company's sole discretion, in either
cash or a number of fully paid and nonassessable shares of Common
Stock having an aggregate value (which for the purposes of
redemption by the Company pursuant to this Section 6(a) shall be
based upon the average closing price of the Common Stock (as
reported on the Nasdaq National Market System) for the ten (10)
trading days preceding the Redemption Date) equal to the Redemption
Price.
(b) Redemption Date. The Corporation shall redeem the shares of
Series A Convertible Preferred Stock to be redeemed hereunder on a
date no earlier than 30 and no later than 60 days after the date
notice of redemption is provided to the holders of Series A
Convertible Preferred Stock; provided that any holder of Series A
Convertible Preferred Stock who elects to convert any shares of
Series A Convertible Preferred Stock into Common Stock in accordance
with Section 4(d) at any time prior to the Redemption Date shall not
have such shares redeemed, but rather such shares shall be converted
into Common Stock (or such other securities or assets receivable
upon adjustment of the Series A Conversion Price) in accordance with
Section 4. Such date shall be a "Redemption Date" for the Preferred
Stock as described herein.
(c) At least thirty (30) days prior to the Redemption Date for
the Series A Convertible Preferred Stock, written notice shall be
mailed, postage prepaid, to each holder of record of Series A
Convertible Preferred Stock, at such holder's post office address
last shown on the records of the Corporation, notifying such holder
of the redemption of such shares to be
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<PAGE>
redeemed at that time, specifying the Redemption Date, the
Redemption Price (including the manner of payment of the Redemption
Price), and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, such
holder's certificate or certificate's representing the shares to be
redeemed (such notice is hereinafter referred to as the "Redemption
Notice"). On or after the Redemption Date, each holder of Series A
Convertible Preferred Stock to be redeemed shall surrender such
holder's certificate or certificates representing shares to the
Corporation, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price for such
shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner of such
shares and each surrendered certificates shall be canceled and the
Company shall deliver notice to the bank or trust company of such
surrender for purposes of paragraph (d) below. From and after the
Redemption Date, unless there shall have been a default in payment
of the Redemption Price, all rights of the holders of Series A
Convertible Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such
shares, and such shares shall not subsequently be transferred on the
books of the Corporation or be deemed to be outstanding for any
purpose whatsoever.
(d) Deposit of Redemption Price. On or prior to the Redemption
Date, the Company shall deposit the Redemption Price of all shares
of Series A Convertible Preferred Stock with a bank or trust company
having aggregate capital and surplus in excess of $10,000,000,000 as
a trust fund for the benefit of the respective holders of the shares
designated for the redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust company to pay the
Redemption Price for such shares to their respective holders on or
after the Redemption Date, upon receipt of notification from the
Company that such holder has surrendered such holder's share
certificate to the Company pursuant to Section 6(c) above. Such
instructions shall also provide that any funds deposited by the
Company pursuant to this Section 6(d) for the redemption of shares
of Series A Convertible Preferred Stock subsequently converted into
shares of Common Stock no later than the Redemption Date shall be
returned to the Company forthwith upon such conversion. The balance
of any funds deposited by the Company pursuant to this Section 6(d)
remaining unclaimed at the expiration of two (2) years following the
Redemption Date shall be returned to the Company upon its request
expressed in a resolution of its Board of Directors.
(e) At any time following the Original Issue Date, upon election
of the holders of a majority of the outstanding shares of Series A
Convertible Preferred Stock to waive the right to receive dividends
on the Series A Convertible Preferred Stock in accordance with
Section 1(c), the Series A Convertible Preferred Stock thereafter
shall not be redeemable by the Company pursuant to this Section 6.
7. Reacquired Shares. Any shares of Series A Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein and, in the Restated
Certificate of Incorporation, as then amended.
E. For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of
the powers of the Corporation, of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided that:
(1) The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number
of directors which shall constitute the whole Board of Directors shall
be fixed exclusively by one or more resolutions adopted by the Board of
Directors.
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<PAGE>
(2) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, and
to any restrictions or limitations of applicable law, following the
closing of the initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock to the public (the "Initial
Public Offering"), the directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors
shall be assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the closing of the Initial Public
Offering, the term of office of the Class I directors shall expire and
Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the closing of the
Initial Public Offering, the term of office of the Class II directors
shall expire and Class II directors shall be elected for a full term of
three years. At the third annual meeting of stockholders following the
closing of the Initial Public Offering, the term of office of the Class
III directors shall expire and Class III directors shall be elected for
a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years
to succeed the directors of the class whose terms expire at such annual
meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(3) Subject to the rights of the holders of any series of Preferred
Stock, the Board of Directors or any individual director may be removed
from office at any time with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding
shares of voting stock of the Corporation, entitled to vote at an
election of directors (the "Voting Stock"). The Board of Directors or
any individual director may not be removed from office without cause.
(4) Subject to the rights of the holders of any series of Preferred
Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of
directors, shall, unless the Board of Directors determines by
resolution that any such vacancies or newly created directorships shall
be filled by the stockholders, except as otherwise provided by law, be
filled only by the affirmative vote of a majority of the directors then
in office, even though less than a quorum of the Board of Directors,
and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full
term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified.
B. (1) Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of
at least sixty-six and two-thirds percent (66 2/3%) of the voting power of
all of the then-outstanding shares of the Voting Stock. he Board of
Directors shall also have the power to adopt, amend, or repeal Bylaws.
(2) The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
(3) There shall be no cumulative voting by the stockholders of this
Corporation.
(4) No action shall be taken by the stockholders of the Corporation
except at an annual or special meeting of stockholders called in
accordance with the Bylaws and following the closing of the Initial
Public Offering no action shall be taken by the stockholders by written
consent.
(5) Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the
manner provided in the Bylaws of the Corporation.
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<PAGE>
V.
A. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is amended
after approval by the stockholders of this Article to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of this Article V shall be prospective and
shall not affect the rights under this Article V in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VI.
A. The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, except as provided in paragraph B. of this
Article VI, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of Incorporation
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the voting stock required by law, or this Certificate of
Incorporation, the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the voting power of all of the then-outstanding
shares of the voting stock, voting together as a single class, shall be
required to alter, amend or repeal Articles IV, V and VI.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TIVO INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of TiVo Inc., a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated July 3, 2000, and hereby appoints
Michael Ramsay and David H. Courtney, or either of them, as proxies and
attorneys-in-fact with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 2000 Annual Meeting
of Stockholders of TiVo Inc., to be held on July 26, 2000, at 10:00 a.m., at the
Company's offices at 2160 Gold Street, San Jose, California, and at any
adjournment(s) or postponement(s) thereof, and to vote all shares of Common
Stock that the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side, and in their
discretion, upon such other matter or matters that may properly come before the
meeting and any adjournment(s) thereof.
This proxy will be voted as directed or, if no contrary direction is
indicated, will be voted as follows: (1) for the election of three directors to
hold office until the 2003 Annual Meeting of Stockholders; (2) for the
ratification of the selection of Arthur Andersen LLP as independent auditors of
the Company for its fiscal year ending December 31, 2000; (iii) for the approval
of the issuance of securities exceeding 20% of the Company's Common Stock to
America Online, Inc.; (iv) for the approval and ratification of an amendment and
restatement of the Company's Amended and Restated Certificate of Incorporation
to increase the number of authorized shares of Common Stock from 75 million
shares to 150 million shares and the number of authorized shares of Preferred
Stock from 2 million shares to 10 million shares and make certain other changes;
and as said proxies deem advisable on such other matters as may come before the
meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
Please mark your votes as in this example. [X]
1 Election of Directors [_] FOR all nominees (except as indicated)
[_] WITHHOLD authority to vote for all nominees
Nominees: 01-Michael Ramsay, 02-Geoffrey Y. Yang and 03-Randy Komisar
If you wish to withhold authority to vote for any individual nominee,
strike a line through that individual's name.
2. To ratify the selection of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000. [_] FOR
[_] AGAINST [_] ABSTAIN
3. To approve the issuance of securities exceeding 20% of the Company's Common
Stock to America Online, Inc. [_] FOR [_] AGAINST [_] ABSTAIN
4. To approve and ratify an amendment and restatement of the Company's
Amended and Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 75 million shares to 150 million
shares and the number of authorized shares of Preferred Stock from 2
million shares to 10 million shares and make certain other changes.
[_] FOR [_] AGAINST [_] ABSTAIN
Note: This Proxy should be marked,
dated, signed by the
stockholder(s) exactly as his or
her name appears hereon and
returned in the enclosed envelope.
SIGNATURE(S)
----------------------
DATE
--------------------------------
Please sign exactly as name(s)
appears hereon. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee,
or guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
