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Exhibit
10.2
Amended and
Restated
Change of Control
Terms and
Conditions
TiVo Inc. (the
“Corporation”) considers it essential to the best
interests of its shareholders to foster the continuous employment
of the Corporation’s key management personnel. In this
regard, the Corporation’s Board of Directors (the
“Board”) recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control
of the Corporation may exist and the uncertainty and questions that
it may raise among management could result in the departure or
distraction of management personnel to the detriment of the
Corporation and its shareholders.
The Board has decided to
reinforce and encourage the continued attention and dedication of
members of the Corporation’s management, including yourself,
to their assigned duties without the distraction arising from the
possibility of a change in control of the Corporation.
In order to induce you to
remain in its employ, the Corporation hereby agrees that after this
letter agreement (this “Agreement”) has been fully
executed, you shall receive the severance benefits set forth in
this Agreement in the event that your employment with the
Corporation is terminated under the circumstances described below
in anticipation of or subsequent to a Change in Control (as defined
below).
Upon the Effective Date (as
defined below), this Agreement shall supersede in its entirety that
certain Change of Control Terms and Conditions agreement entered
into between you and the Corporation effective July 1, 2005
(the “Prior Agreement”) which shall terminate and be of
no further effect as of the Effective Date. You understand and
agree that upon the Effective Date, the Corporation shall have no
liability, and you shall have no rights to any payments whatsoever,
under the Prior Agreement.
1. Term of Agreement. This
Agreement shall commence on March 21, 2007 (the
“Effective Date”) and shall continue in effect until
the earlier of its termination by mutual written consent of you and
Corporation or the date all payments or benefits required to be
made or provided hereunder have been made or provided in their
entirety.
2. Change in Control. No
benefits shall be payable hereunder unless there has been a Change
in Control. For purposes of this Agreement, a “Change in
Control” shall mean:
(i) a dissolution or
liquidation of the Corporation;
(ii) a sale of all or
substantially all of the assets of the Corporation;
(iii) a sale by the
stockholders of the Corporation of the voting stock of the
Corporation to another corporation or its subsidiaries that results
in the ownership by such corporation and/or its subsidiaries of
eighty percent (80%) or more of the combined voting power of
all classes of the voting stock of the Corporation entitled to
vote;
(iv) a merger or
consolidation involving the Corporation in which the Corporation is
not the surviving corporation or a merger or consolidation of a
subsidiary of the Corporation and in which, in either case,
beneficial ownership of securities of the Corporation representing
at least fifty percent (50%) of the combined voting power
entitled to vote in the election of members of the Board of
Directors (“Directors”) has changed;
(v) a reverse merger in which
the Corporation is the surviving corporation but the shares of the
Corporation’s Common Stock outstanding immediately preceding
the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise, and
in which beneficial ownership of securities of the Corporation
representing at least fifty percent (50%) of the combined
voting power entitled to vote in the election of Directors has
changed;
(vi) an acquisition by any
person, entity or group within the meaning of Section 13(d) or
14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored
or maintained by the Corporation or subsidiary of the Corporation
or other entity controlled by the Corporation) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the
Corporation representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of
Directors; or
(vii) for any reason during
any period of two (2) consecutive years (not including any
period prior to the Effective Date) a majority of the Board is
constituted by individuals other than (1) individuals who were
directors immediately prior to the beginning of such period, and
(2) new directors whose election or appointment by the Board
or nomination for election by the Corporation’s stockholders
was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors
immediately prior to the beginning of the period or whose election
or nomination for election was previously so approved.
3. Termination in
Anticipation of or Following Change in Control.
(i) General. If a Change in
Control shall have occurred during the term of this Agreement, you
shall be entitled to the benefits provided in Section 4(ii) if
your employment is terminated within the thirteen (13) month
period immediately following the date of such Change in Control
(a) by the Corporation other than for Cause or Disability
(each as defined below), or (b) by you for Good Reason (as
defined below) (a termination of your employment under the
circumstances described in this sentence is sometimes hereinafter
referred to as a “Payment Termination”).
Notwithstanding anything contained herein, if your employment is
terminated during the period commencing on the public announcement
of a transaction which if consummated will constitute a Change in
Control and ending on the date of consummation of such Change in
Control either by the Corporation other than for Cause or
Disability or by you for Good Reason, and if such termination
(1) was at the request of a third party effecting the Change
in Control or (2) otherwise arose in connection with or in
anticipation of the Change in Control, then for all purposes of
this Agreement your employment shall be deemed to have been
terminated immediately after the actual occurrence of the Change in
Control; provided, however that nothing herein shall extend the
period within which any option to purchase the Corporation’s
capital stock that you hold may be exercised following your
termination of employment in such a
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manner as to result in
adverse tax consequences to you under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
Except as described in the preceding sentence, in the event that
your employment with the Corporation is terminated for any reason
and subsequently a Change in Control occurs, you shall not be
entitled to any benefits hereunder. In the event that you are
entitled to the benefits provided in Section 4(ii), such
benefits shall be paid notwithstanding the subsequent expiration of
the term of this Agreement. Notwithstanding the foregoing, if your
employment is terminated in a Payment Termination, if any benefit
or payment that would otherwise be provided to you pursuant to
Section 5 of the Employment Agreement but for your termination
being a Payment Termination is more favorable to you than that to
which you would be entitled under this Agreement, you shall be
entitled to receive the more favorable benefit or
payment.
(ii) Death or Disability.
Your employment with the Corporation shall terminate automatically
upon your death. The Corporation may terminate your employment for
Disability, but only if that Disability continues through the Date
of Termination (as hereinafter defined). For purposes of this
Agreement, “Disability” shall mean your absence from
the full-time performance of your duties with the Corporation for
one hundred eighty (180) consecutive days by reason of your
physical or mental illness.
(iii) Cause. The Corporation
may terminate your employment for Cause. For purposes of this
Agreement, “Cause” shall mean (a) your willful and
continued failure to substantially perform your duties with the
Corporation (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual or
anticipated failure after your issuance of a Notice of Termination
(as defined below) for Good Reason), after a written demand for
substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties,
(b) your willful and continued failure to substantially follow
and comply with such specific and lawful directives of the Board
that are not inconsistent with your position as President and Chief
Executive Officer of the Corporation (other than any such failure
resulting from your incapacity due to physical or mental illness or
any such actual or anticipated failure after your issuance of a
Notice of Termination for Good Reason), after a written demand for
substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties,
(c) your willful commission of an act of fraud or dishonesty
resulting in material economic or financial injury to the
Corporation, or (d) your conviction of, or entry by you of a
guilty or no contest plea to, the commission of a felony involving
moral turpitude. For purposes of this Section 3(iii), no act,
or failure to act, on your part shall be deemed
“willful” unless done, or omitted to be done, by you
not in good faith.
(iv) Good Reason. You may
terminate your employment with the Corporation for Good Reason. For
purposes of this Agreement, “Good Reason” shall mean
the occurrence, after a Change in Control, of any one or more of
the following events without your prior written consent, unless the
Corporation fully corrects the circumstances constituting Good
Reason (provided such circumstances are capable of correction)
prior to the Date of Termination:
(a) Your removal from your
position as Chief Executive Officer or President of the Corporation
for any reason other than for Cause or your Disability;
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(b) (i) any change in
reporting relationship such that you no longer report to the Board
of Directors of the Corporation (or, if the Corporation has a
parent company, to the Board of Directors of the ultimate parent of
the Corporation) or (ii) any reduction in the nature and scope
of your authorities, duties, and responsibilities from their level
in effect immediately prior to such Change in Control (for this
purpose, if the Corporation ceases to be a publicly-traded
corporation, you will be deemed to have suffered such a reduction
in the nature and scope of your authorities, duties, and
responsibilities unless you are offered a position as Chief
Executive Officer of a publicly-traded parent of the
Corporation).
(c) the Corporation’s
reduction of your annual base salary or bonus opportunity, each as
in effect on the date hereof or as the same may be increased from
time to time;
(d) the Corporation’s
failure to maintain a suitable and appropriate office in New York,
New York or the Corporation’s discontinuance of its agreement
to reimburse you for first class air travel for travel between New
York, New York and the Corporation’s offices in Alviso,
California;
(e) the Corporation’s
failure to pay to you any portion of your then current compensation
or any portion of an installment of deferred compensation under any
deferred compensation program of the Corporation, in each case
within seven (7) days of the date such compensation is
due;
(f) the Corporation’s
failure to continue in effect compensation and benefit plans which
provide you with benefits which are no less favorable on an
aggregate basis, both in terms of the amount of benefits provided
and the level of your participation relative to other participants,
to the benefits provided to you under the Corporation’s
compensation and benefit plans and practices immediately prior to
the Change in Control;
(g) the Corporation’s
failure to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in
Section 5 hereof;
(h) the Corporation requiring
you to relocate your primary residence from New York;
(i) any purported
modification of this Agreement by the Corporation or any
termination of your employment by the Corporation for any reason
other than for Cause or your Disability;
(j) the Corporation’s
providing notice to you pursuant to Section 1 above that it
does not wish to extend the term of this Agreement; or
(k) the Corporation’s
material breach of any provision of your employment agreement with
the Corporation.
Your right to terminate your
employment pursuant to this Section 3(iv) shall not be
affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good
Reason hereunder.
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(v) Notice of Termination.
Any purported termination of your employment by the Corporation or
by you (other than termination due to your death, which shall
terminate your employment automatically) shall be communicated by a
written Notice of Termination to the other party hereto in
accordance with Section 6. For purposes of this Agreement,
“Notice of Termination” shall mean a notice that shall
indicate the specific termination provision in this Agreement (if
any) relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
your employment under the provision so indicated.
(vi) Date of Termination. For
purposes of this Agreement, “Date of Termination” shall
mean (a) if your employment is terminated due to your death,
the date of your death; (b) if your employment is terminated
for Disability, thirty (30) days after Notice of Termination
is given (provided that you shall not have returned to the full
time performance of your duties during such thirty (30) day
period), and (c) if your employment is terminated for any
reason other than death or Disability, the date specified in the
Notice of Termination (which, in the case of a termination by the
Corporation without Cause shall not be less than thirty
(30) days from the date such Notice of Termination is given,
and in the case of a termination by you for Good Reason shall not
be less than fifteen (15) nor more than thirty (30) days
from the date such Notice of Termination is given).
4. Compensation Upon
Termination.
(i) If your employment with
the Corporation is terminated by reason of your death, by the
Corporation for Cause or Disability, or by you other than for Good
Reason, the Corporation shall pay you your full base salary, when
due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or practice of
the Corporation at the time such payments are due (including,
without limitation, all accrued and unused vacation), and the
Corporation shall have no further obligations to you under this
Agreement.
(ii) If you incur a Payment
Termination, then, subject to Section 4(v), in lieu of any
severance benefits to which you may otherwise be entitled under any
severance plan or program of the Corporation or by law, you shall
be entitled to the benefits provided below:
(a) the Corporation shall, at
the time specified in Section 4(iii), pay to you your full
base salary, when due, through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation plan
or practice of the Corporation at the time such payments are due
(including, without limitation, all accrued and unused
vacation);
(b) the Corporation shall, at
the time specified in Section 4(iii), pay as severance pay to
you a lump-sum severance payment equal to the sum of the
following:
(A) one hundred percent
(100%) of the greater of (x) your monthly base salary as
in effect immediately prior to delivery of the Notice of
Termination multiplied by eighteen (18) or (y) your
monthly base salary as in effect immediately prior to the Change in
Control multiplied by eighteen (18); and
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(B) one hundred percent
(100%) of the greater of (x) your targeted annual bonus
for the year in which the Date of Termination occurs or
(y) your targeted annual bonus for the year in which the
Change in Control occurs, as if the bonus goals are
satisfied;
(c) you shall immediately
become vested with respect to one hundred percent (100%) of
the unvested portion of any stock options, stock appreciation
rights, restricted stock and such other awards granted pursuant to
the Corporation’s stock option and equity incentive award
plans or agreements and any shares of stock issued upon exercise
thereof that you then hold; provided, however that with regard to
stock options or restricted shares of the Corporation’s
capital stock held by you that contain provisions making the
vesting of, or lapse of restrictions with respect to, such awards
contingent upon the attainment of one or more performance goals
(“Performance Awards”), such Performance Awards shall
become vested and/or restrictions shall lapse with respect to one
hundred percent (100%) of the shares of the
Corporation’s capital stock that otherwise would have become
vested during the year of your termination of employment as if the
performance goals with respect to such year (or prior periods) had
been attained;
(d) for the period beginning
on the Date of Termination and ending on the earlier of
(i) the date which is eighteen (18) full months following
the Date of Termination or (ii) the first day of your
eligibility to participate in a comparable group health plan
maintained by a subsequent employer, the Corporation shall pay for
and provide you and your dependents with the same medical benefits
coverage to which you would have been entitled had you remained
continuously employed by the Corporation during such period. In the
event that you are ineligible under the terms of the
Corporation’s benefit plans to continue to be so covered, the
Corporation shall provide you with substantially equivalent
coverage through other sources or will provide you with a lump sum
payment (determined on a present value basis using the interest
rate provided in Section 1274(b)(2)(B) of the Code, on the
Date of Termination) in such amount that, after all income and
employment taxes on that amount, shall be equal to the cost to you
of providing yourself such benefit coverage. At the termination of
the benefits coverage under the first sentence of this
Section 4(ii)(e), you and your dependents shall be entitled to
continuation coverage pursuant to Section 4980B of the Code,
Sections 601-608 of the Employee Retirement Income Security Act of
1974, as amended, and under any other applicable law, to the extent
required by such laws, as if you had terminated employment with the
Corporation on the date such benefits coverage terminates;
and
(e) the Corporation shall
furnish you for six (6) years following the Date of
Termination (without reference to whether the term of this
Agreement continues in effect) with directors’ and
officers’ liability insurance insuring you against insurable
events which occur or have occurred while you were a director or
officer of the Corporation, such insurance to have policy limits
aggregating not less than the amount in effect immediately prior to
the Change in Control, and otherwise to be in substantially the
same form and to contain substantially the same terms, conditions
and exceptions as the liability issuance policies provided for
officers and directors of the Corporation in force from time to
time, provided, however , that
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such terms, conditions and
exceptions shall not be, in the aggregate, materially less
favorable to you than those in effect on the date hereof;
provided, further , that if the aggregate annual premiums
for such insurance at any time during such period exceed one
hundred and fifty percent (150%) of the per annum rate of
premium currently paid by the Corporation for such insurance, then
the Corporation shall provide the maximum coverage that will then
be available at an annual premium equal to one hundred and fifty
percent (150%) of such rate.
(iii) The payments provided
for in Sections 4(ii)(a) and (b) as applicable, shall be made
not later than the fifth business day following the Date of
Termination; provided, however , that if the amounts of such
payments cannot be finally determined on or before such day, the
Corporation shall pay to you on such day an estimate, as determined
in good faith by the Corporation, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall
constitute a loan by the Corporation to you, payable on the fifth
day after demand by the Corporation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the
Code).
(iv) You shall not be
required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the
result of employment by another employer or self-employment, by
retirement benefits, by offset against any amounts (other than
loans or advances to you by the Corporation) claimed to be owed by
you to the Corporation, or otherwise.
(v) As a condition to your
receipt of any benefits described in Section 4(ii) hereof, you
shall be required to execute a Release in the form attached hereto
as Exhibit A (the “Release”).
5. Successors; Binding
Agreement.
(i) The Corporation shall
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Corporation to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Corporation would be required to perform it if
no such succession had taken place. Unless expressly provided
otherwise, “Corporation” as used herein shall mean the
Corporation as defined in this Agreement and any successor to its
business and/or assets as aforesaid.
(ii) This Agreement shall
inure to the benefit of and be enforceable by you and your personal
or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
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6. Notice. For purposes of
this Agreement, notices and all other communications provided for
in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified
or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page
of this Agreement, provided that all notices to the Corporation
shall be directed to the attention of its Secretary, or to such
other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
7. Parachute
Payments.
(a) If it is determined that
you would be subject to the excise tax imposed by Section 4999
of the Code (a “Parachute Tax”), as a result of the
receipt of any payment or other event (collectively, a
“Payment”), then the Corporation will pay to you an
additional payment or payments (a “Gross-Up Payment”)
in an amount such that after payment of all federal, state and
local income, employment, excise and penalty taxes, you are left
with an amount equal to all taxes payable by you under
Section 4999 of the Code applicable to the Payment and the
Gross-Up Payment and all penalties and interest imposed with
respect to such taxes.
(b) All determinations
required to be made under this Section 7, including whether a
Parachute Tax is payable by you and the amount of such Parachute
Tax and whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by the nationally recognized
firm of certified public accountants (the “Accounting
Firm”) used by the Corporation as its auditors prior to the
Change in Control (or, if such Accounting Firm declines to serve,
the Accounting Firm shall be a nationally recognized firm of
certified public accountants selected by the Corporation that is
independent of the other person or entity involved in the Change in
Control). For purposes of making the calculations required by this
Section, the Accounting Firm may make reasonable assumptions and
approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application
of Sections 280G and 4999 of the Code, provided that the Accounting
Firm’s determinations must be
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