In the United States Bankruptcy Court for the District of Delaware
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Case 21-10457-LSS Doc 269 Filed 05/19/21 Page 1 of 22 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 In re: Case No. 21-10457 (LSS) MOBITV, INC., et al., Jointly Administered Debtors.1 Related Docket Nos. 73 and 164 DECLARATION OF KEVIN B. LENHART, REPRESENTATIVE OF TIVO CORPORATION, IN SUPPORT OF ENTRY OF AN ORDER (A) APPROVING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS, AND ENCUMBRANCES AND (B) APPROVING THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES I, Kevin B. Lenhart, being duly sworn, do hereby declare and state as follows: 1. I am the General Manager of Xperi Holding Corporation’s Pay TV business unit, which includes oversight of the business operations of the pertinent aspects of TiVo Corporation’s Pay TV business operations. TiVo Corporation, a Delaware corporation, is a direct wholly-owned subsidiary of Xperi Holding Corporation, a Delaware corporation (“Xperi”). The above-captioned Debtors’ (the “Debtors”) designated TiVo (defined below) as the successful bidder on substantially all of the Debtors’ assets with a purchase price of $17.4 million in cash (the “Purchase Price”) and the assumption of certain liabilities of up to $6.5 million as further described below. My business address is Xperi Holding Corporation, 2160 Gold St, San Jose, CA 95002. 2. I submit this declaration in support of the entry of the Debtors’ proposed order approving the sale of substantially all of the assets of the Debtors to TiVo Corporation or its designee, TiVo Platform Technologies, LLC, a Delaware limited liability company (collectively, 1 The Debtors in these chapter 11 cases and the last four digits of each Debtor’s U.S. tax identification number are as follows: MobiTV, Inc. (2422) and MobiTV Service Corporation (8357). The Debtors’ mailing address is 1900 Powell Street, 9th Floor, Emeryville, CA 94608. DB1/ 121522732 Case 21-10457-LSS Doc 269 Filed 05/19/21 Page 2 of 22 “TiVo”) pursuant to the proposed Order (A) Approving the Sale of Substantially All of the Debtors’ Assets Free and Clear of All Liens, Claims, Interests, and Encumbrances and (B) Approving the Assumption and Assignment of Executory Contracts and Unexpired Leases (the “TiVo Sale Order”). A draft of the proposed TiVo Sale Order was filed at DE #253. Facts Pertaining to Declarant’s Knowledge of Transaction 3. In my role as General Manager of Xperi’s Pay TV business unit and oversight of the Pay TV business operations of TiVo, I have been involved in TiVo’s due diligence process and potential acquisition of the Debtors’ business assets (the “Transaction”) since prior to the commencement of these chapter 11 cases. I therefore have direct knowledge of the relevant aspects of the Transaction and Xperi’s and TiVo’s business operations. All facts set forth in this declaration (this “Declaration”) are based on my personal knowledge, my communications with Xperi’s and TiVo’s advisors and internal personnel at TiVo and Xperi who are also working on this matter, discussions with the Debtors’ advisors and personnel, my review of relevant documents, my opinion based on my overall professional experience, or in light of my personal knowledge of the Transaction and the businesses of Xperi and its subsidiaries, including TiVo. If called as a witness, I could and would competently testify to the matters set forth herein based on the foregoing. I am duly authorized to submit this Declaration on behalf of Xperi and TiVo. Fact Pertaining to Witness Qualifications 4. Given my testimony herein covers TiVo’s ability to both technically and financially perform its obligations in connection with certain assumed contract counterparties, I describe below both my technical and business qualifications. I hold a (a) Bachelor of Science degree in Electrical Engineering from Drexel University in Philadelphia, PA, (b) Master of Science in Engineering in Telecommunications and Network Engineering from the University of DB1/ 121522732 2 Case 21-10457-LSS Doc 269 Filed 05/19/21 Page 3 of 22 Pennsylvania, and (c) Master of Business Administration from the University of Pennsylvania’s Wharton School of Business. 5. My association with TiVo began in 2015 when I joined Rovi Corporation, which acquired TiVo Corporation in 2016 and then merged with Xperi Corporation in June 2020 and formed Xperi as the new parent company of TiVo and Xperi Corporation. I played an instrumental role in Rovi Corporation’s 2016 $1.1 billion acquisition of TiVo Corporation, which was a transformative combination of two large companies in similar business segments that required complex business integration and that led to significant cost synergies. Following the acquisition, I was responsible for TiVo’s Corporate and Strategic Development team, and eventually led the strategic alternatives process resulting in TiVo’s 2016 merger with Xperi Corporation to create a leader in consumer & entertainment technology. Prior to 2015, I developed extensive industry experience, serving in leadership roles across business development, product and engineering at ARRIS Group, Motorola Mobility, Inc., Motorola, Inc. and General Instrument Corporation. My current responsibilities in the Xperi/TiVo organization include (a) overseeing a large portfolio of user experience and discovery solutions for Pay TV operator and media partners, and (b) leading the global Pay TV product, engineering and metadata operations teams. Facts Pertaining to TiVo’s Successful Bid 6. On May 7, 2021, TiVo submitted to the Debtors a bid package for purchasing the Debtors’ assets for $13 million in cash and assuming certain liabilities, including up to $4 million in cure amounts for all agreements that are assumed and assigned to TiVo (the “Transferred Contracts”), which represents a capped cure amount in excess of all cure amounts owing to the contract counterparties according to the Debtors’ books and records provided to TiVo. TiVo also agreed to pay up to $2.5 million for amounts the Debtors owed to certain of its employees that DB1/ 121522732 3 Case 21-10457-LSS Doc 269 Filed 05/19/21 Page 4 of 22 TiVo anticipates hiring in connection with the Transaction. TiVo later modified its bid structure so that is was abundantly clear that the up to $2.5 million in employee-related payments would be in satisfaction of the Debtors’ obligations to pay accrued paid time off (“PTO”) and 2019 bonuses for those employees that TiVo hires. The clarification was to ensure that the potential claims of the hired employees against the Debtors would be satisfied and there would thus be a measurable and tangible benefit to the Debtors’ estates for which TiVo’s bid should be recognized. 7. The Debtors ultimately designated TiVo’s bid as the highest and best, and thus the baseline bid against which other bidders were to top at the auction that was set to commence on the morning of May 11, 2021. The auction commenced on schedule and ran for two days with multiple rounds of bidding. TiVo ultimately emerged as the successful bidder after increasing the cash component of its bid in several increments to $17.4 million. Accordingly, TiVo’s successful bid is comprised of (a) $17.4 million in cash, (b) up to $4 million in cure amounts for Transferred Contracts, and (b) up to $2.5 million for accrued PTO for the more than 50 employees that TiVo has agreed to hire (the “TiVo Sale Consideration”). Facts Pertaining to Xperi and TiVo Corporate Structure and Relationship 8. On December 18, 2019, Xperi Corporation, a Delaware corporation, entered into a definitive agreement with TiVo to combine in an all-stock merger of equals transaction (the “Mergers”). Following consummation of the Mergers on June 1, 2020, Xperi became the parent company of both Xperi Corporation and TiVo Corporation. The common stock of both Xperi Corporation and TiVo Corporation were de-registered after completion of the Mergers. On June 2, 2020, Xperi’s common stock, par value $0.001 per share, commenced trading on the Nasdaq Global Select Market under the ticker symbol “XPER.” DB1/ 121522732 4 Case 21-10457-LSS Doc 269 Filed 05/19/21 Page 5 of 22 Facts Pertaining to Business Operations 9. The Mergers made the combined company a formidable consumer and entertainment product/solutions licensing company and one of the industry’s largest intellectual property licensing platforms, with a diverse portfolio of media and semiconductor intellectual property and more than 11,000 patents and patent applications worldwide. Xperi invents, develops, and delivers technologies that enable extraordinary experiences. These technologies, delivered via Xperi’s brands (DTS, HD Radio, IMAX Enhanced, Invensas, TiVo) make entertainment more entertaining, and smart devices smarter. Xperi’s technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for partners, customers and consumers. Xperi shapes how millions of consumers access and experience entertainment content, and its innovations are found in billions of devices and hundreds of millions of interfaces around the globe. Headquartered in Silicon Valley with operations around the world, Xperi and its subsidiaries, including TiVo, have approximately 1,800 employees and over 30 years of operating experience. Facts Pertaining to Financial Assurance of Future Performance 10. In the Mergers, Xperi Corporation was determined to be the accounting acquiring entity. Accordingly, the historical financial statements of Xperi Corporation for periods prior to the Mergers are considered to be the historical financial statements of Xperi and its financial results of operations include the operations of TiVo after June 1, 2020. TiVo’s results of operations for periods prior to that are separate and are included in TiVo’s historic Annual Reports on Form 10- K. As a publicly traded company, Xperi files Annual Reports on Form 10-Ks and Quarterly Reports on Form 10-Qs showing its financial performance and its subsidiaries on a consolidated basis.