Development Agreement - TiVo Inc. and DIRECTV Inc.
DEVELOPMENT AGREEMENT
This Development Agreement (the "Agreement") is made and entered into as of
February 15, 2002 (the "Effective Date"), by and between TiVo Inc., a Delaware
corporation ("TiVo"), and DIRECTV, Inc., a California corporation ("DIRECTV").
Recitals
Whereas, TiVo has developed and commercially launched a stand alone set-top
receiver (the "Stand Alone Receiver") that allows consumers to receive the
personalized television services provided by TiVo.
Whereas, TiVo and DIRECTV have developed and commercially launched the first
generation DIRECTV-TiVo combination receiver known as the Reno Receiver (as
defined below), that provides consumers with the DVR/PVR Functionality (as
defined in Exhibit A) and the ability to receive the satellite television,
audio, data and other programming services that are part of the DIRECTV Service,
pursuant to certain reference design and marketing agreements.
Whereas, TiVo and DIRECTV desire to develop, produce (and/or have produced), and
market the next generation software, hardware, services and other applications
for the DVR/PVR Functionality and for the DIRECTV Service, including a next
generation DIRECTV-TiVo combination receiver which will be known as the Provo
Receiver (as defined below) and to provide (via download) software upgrades to
the existing Reno Receivers and the Provo Receivers, to enable customers to
receive the upgraded DVR/PVR Functionality.
Whereas, TiVo and DIRECTV anticipate that the Provo Receiver will undergo
Manufacturing Release (as defined below) no later than[*].
Whereas, TiVo and DIRECTV have agreed to make certain buy-down arrangements for
the Reno Receivers and desire to modify such existing arrangements.
Now, Therefore, in consideration of the mutual promises contained herein, the
parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "Development Schedule" is defined in Section 2.1(a) (Provo Receiver)
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and is set forth in Exhibit A (Development Schedule and Specifications).
1.2 "DIRECTV Service" shall mean the television, video, audio, data or
other programming services or any internet, broadband, digital subscriber line,
or other information service, distributed from time to time by DIRECTV via the
direct broadcast satellite distribution system, the internet, telecommunication
lines, or other communication media, and offered to
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subscribers by DIRECTV under the DIRECTV brand or other brands owned by DIRECTV
or its subsidiaries.
1.3 "DIRECTV Technology" shall mean the DIRECTV Technical Specifications
Version 3.0 provided by DIRECTV to TiVo, including any software, components,
parts, proprietary information, intellectual property, subassemblies or other
technology that is expressly incorporated in, or specifically required for use
pursuant to, such specifications, but shall not include any such software,
components, parts, proprietary information, intellectual property, subassemblies
or other technology that, although providing a possible method of implementing
the specifications, is not the required method of implementation and alternate
implementations are currently available and may be implemented on reasonable
commercial terms and conditions. DIRECTV is not obligated to deliver to TiVo any
software, components or parts as part of the DIRECTV Technology. DIRECTV
Technology shall include any implementation of the TiVo Technology by DIRECTV or
its sublicensees, to the extent such specific implementation is not required in
such manner pursuant to (and thus not part of) the TiVo Technology and alternate
implementations are currently available and may be implemented on reasonable
commercial terms and conditions. DIRECTV Technology includes DIRECTV trademarks
and logos that are incorporated in the customer interface in accordance with
Section 2.6.
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1.4 "DVR/PVR Free Functionality" is defined in Exhibit A (Development
Schedule and Specifications).
1.5 "DVR/PVR Functionality" is defined in Exhibit A (Development Schedule
and Specifications).
1.6 "DVR/PVR Service Subscriber" shall mean an active subscriber to the
DIRECTV Service (excluding retailers, VIPs, employees, test accounts and
promotions mutually agreed by the parties (such agreement not to be unreasonably
withheld or delayed))who DIRECTV allows or has granted access to use the DVR/PVR
Service. A household with multiple receivers that receive the DVR/PVR
Functionality will count as one subscriber. Households receiving [*] portion of
functionality as set forth in Exhibit A shall [*]the DVR/PVR Service and
therefore [*]a DVR/PVR Service Subscriber.
1.7 "Final Acceptance Testing" is defined in Exhibit A (Development
Schedule and Specifications).
1.8 "Interface Specifications" is defined in Section 2.2(a) (Interface
Specifications).
1.9 "Manufacturing Release" shall mean the date on which the applicable
hardware and/or software has successfully completed Final Acceptance Testing,
upon which date DIRECTV shall notify TiVo of such in writing.
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1.10 "Provo Receiver" shall mean the second generation DIRECTV-TiVo
combination receiver described in Exhibit A (Development Schedule and
Specifications).
1.11 "Reno Receiver" shall mean the first generation DIRECTV-TiVo
combination receiver developed and commercially launched by DIRECTV and TiVo
pursuant to the Marketing Agreement by and between the parties dated April 13,
1999 (as amended, the "Original Marketing Agreement") and the Reference Design
Agreement by and between the parties dated September 1, 1999 (as amended, the
"Reference Design Agreement").
1.12 "Territory" shall mean North America, Central America and South
America.
1.13 "Third Party Technology" shall mean any software, components, parts,
proprietary information, intellectual property, subassemblies or other
technology owned or controlled by a party other than TiVo (or its affiliates)
which are specified on Exhibit C (Third Party Technology), as may be amended in
accordance with the terms of Section 4.8(c) (Third Party Technology), that is
incorporated or referenced in, or required for use of, the Provo Receiver or the
TiVo Software.
1.14 "TiVo Service" shall mean the personal video recording services
offered by TiVo, carrying the TiVo brand, that involve the delivery of TiVo
content and data by TiVo and may involve the delivery of program guide data by
TiVo, to video recording devices or similar devices installed in subscribers'
homes.
1.15 "TiVo Software" shall mean the Version [*]Software and Version
[*]Software, collectively, along with any updates thereto that may be provided
by TiVo.
1.16 "TiVo Technology" shall mean any software, components, parts,
proprietary information, intellectual property, subassemblies or other
technology, specifically excluding any DIRECTV Technology and Third Party
Technology, that is expressly incorporated in, or specifically required for use
of, the Reno Receiver, Provo Receiver and/or Two-Chip Receiver, including the
TiVo Software and the Provo Receiver and Two-Chip Receiver manufacturing
designs. TiVo Technology shall include any implementation of the DIRECTV
Technology by TiVo, to the extent such specific implementation is not required
in such manner pursuant to (and thus part of) the DIRECTV Technology and
alternate implementations are currently available and may be implemented on
reasonable commercial terms and conditions. The TiVo Technology also includes
the customer interface which is manifested by the TiVo Software, excluding the
DIRECTV trademarks and logos used in accordance with Section 2.6.
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1.17 "Two-Chip Platform" shall mean the lower cost platform for TiVo's
Stand Alone Receivers that TiVo intends to develop.
1.18 "Two-Chip Receiver" shall mean a lower cost version of the Provo
Receiver which, if so requested by DIRECTV pursuant to Section 2.4 (Two-Chip
Option), shall be developed by TiVo including porting of Version[*] Software to
the Two-Chip Platform.
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ARTICLE II.
TECHNOLOGY DEVELOPMENT
2.1 Provo Receiver and Version [*]Software Development, Production and
Deployment. TiVo (with collaboration from DIRECTV) will develop the Provo
Receivers and the next generation software for the DIRECTV-TiVo combination
receivers (as accepted by DIRECTV upon successful completion of Final
Acceptance Testing, the "Version [*]Software") to be available for
Manufacturing Release no later than[*]. In addition, TiVo will develop
Version [*]Software for download to the Reno Receiver pursuant to the
development schedule set forth in Exhibit A (Development Schedule and
Specifications).
(a) Provo Receiver. DIRECTV hereby grants to TiVo under all rights
held or sublicensable by DIRECTV the right to use, reproduce, perform, display,
and create derivative works of the DIRECTV Technology as required in the
performance of TiVo's obligations under this Agreement, provided that, the
DIRECTV Technology shall be deemed Confidential Information of DIRECTV and other
than the foregoing license, no other license, right, or interest is granted to
TiVo under this Section 2.1(a) by implication, estoppel, or otherwise, for any
other purpose and DIRECTV retains all worldwide intellectual property rights in
and to the DIRECTV Technology. Notwithstanding the date of Manufacturing Release
specified above in Section 2.1, if Manufacturing Release for the Provo Receiver
(with Version[*] Software) [*]therein and [*]is directly [*]to any [*]by [*]such
Manufacturing Release shall [*]on a [*]for[*], [*]that there will be [*]to the
[*]is directly [*]to any [*]by [*]in[*]. TiVo and DIRECTV have established a
mutually agreed development schedule (the "Development Schedule") that sets
forth the various milestone deliverables, dates and payment obligations
associated with the Provo Receiver and Version [*]Software, which is attached
hereto as Exhibit A (Development Schedule and Specifications). The Provo
Receiver and Version [*] Software shall be accepted at the successful completion
of the Final Acceptance Testing and after TiVo has been notified of such by
DIRECTV.
(b) Version [*]Software Upgrade for the Reno Receiver. Concurrent with
the development and production of the Provo Receiver, TiVo shall develop the
Version [*]Software for the existing Reno Receivers that will enable the Reno
Receivers to have the features, functionality, performance and user interface
defined in the DIRECTV Technology and Exhibit A (Development Schedule and
Specifications), in accordance with the Schedule set forth in Exhibit A. The
Version [*]Software upgrade will be deployed via telco download to the Reno
Receivers and will occur simultaneous with or shortly following the
Manufacturing Release of the Provo Receivers, all in accordance with the
Development Schedule attached as Exhibit A.
(c) Provo Finished Goods Pricing. Notwithstanding DIRECTV's rights as
set forth in Section 4.7 (Provo Receiver Manufacturing), TiVo shall provide to
DIRECTV a Provo Receiver Finished Goods Price [*]As used herein, the "Finished
Goods Price" shall include the price for the completed receiver (built by a
contract manufacturer), any packaging, remote control, cables, connectors,
manuals, diagrams, and user instructions, as specified in Exhibit E (Hardware
Description), when the components reflected in the Finished Goods Price
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are purchased on competitive terms, conditions, and pricing. In the event the
Finished Goods Price [*]TiVo shall [*]and [*]and [*]of the [*]of the Provo
Receiver during the first [*]from the date of Manufacturing Release of the Provo
Receiver (with Version [*]Software); provided that [*], the DVR/PVR Service
Subscriber fees to be paid by DIRECTV to TiVo pursuant to the Provo Receiver
fees provision in Section 3.4 (Reno Receiver and Provo Receiver Fees)[*].
Notwithstanding DIRECTV's rights[*], TiVo shall not be responsible for any
increase in the Finished Goods Price [*]in this Section 2.1(c) and Exhibit E.
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[*]pursuant to this Section 2.1(c) shall be [*]at the same time and under the
same conditions as the corresponding [*]DIRECTV to the respective [*], provided
that DIRECTV will give TiVo prompt notice [*]determining them.
(d) Parts List. No later than[*], TiVo shall provide a preliminary
parts list to DIRECTV for the Provo Receiver. TiVo will provide any changes to
the preliminary by[*]. In the event that TiVo [*]the parts list and changes,
[*]and [*]results in a [*](assuming commercially reasonable efforts by DIRECTV
and/or authorized manufacturers to [*]any [*]), TiVo will [*]of[*], for actual
[*]not to [*].
2.2 DIRECTV Subscriber Commitment. [*]from the date of Manufacturing
Release of the Provo Receiver (with Version [*]Software), DIRECTV commits to
having [*]DVR/PVR Service Subscribers for the Provo Receivers, Two-Chip
Receivers, and Reno Receivers sold after the Manufacturing Release of the Provo
Receiver (with Version [*]Software). For avoidance of doubt, such minimum
specifically excludes DVR/PVR Service Subscribers solely for the Reno Receiver
activated prior to the Manufacturing Release of the Provo Receiver, or DIRECTV
Service subscribers using solely a Stand Alone Receiver.
(a) If DIRECTV does not have a minimum of [*]such DVR/PVR Service
Subscribers at the end of such [*]period, and DIRECTV has not exercised its
option to the Technology License Agreement pursuant to Section 4.6 (Technology
License), then, commencing on the first month after such [*]year period, DIRECTV
shall pay to TiVo the DVR/PVR Service Fee set forth in Exhibit B - Schedule 3 on
any shortfall in the number of DVR/PVR Service Subscribers until such time as
DIRECTV has paid a total of [*]in shortfall payments or there exists a total of
[*]DVR/PVR Service Subscribers. The parties acknowledge and agree that the
"shortfall" in subscribers shall decrease as DIRECTV adds additional DVR/PVR
Service Subscribers.
(b) If DIRECTV has exercised its option to the Technology License
Agreement and the number of receivers licensed thereunder is less than [*]at the
end of such [*]period, DIRECTV shall pay to TiVo a one-time fee of [*]per
receiver for any shortfall in the number of licensed receivers and such payment
shall be made within [*]days of the [*]of the Manufacturing Release date for the
Provo Receiver (with Version [*]Software). If DIRECTV has exercised its
Technology License option and paid the [*]per receiver shortfall in number of
licensed receivers, TiVo shall credit DIRECTV's account for such payment and
DIRECTV may use such credit to offset per-receiver royalties due and payable to
TiVo under the Technology License Agreement.
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2.3 Version [*]Software Development and Deployment. TiVo and DIRECTV shall
collaborate on the modification and enhancement of the Version [*]Software and
the definition of the interface between the DIRECTV broadcast and back-haul
infrastructure and the Provo and Reno Receivers as set forth below.
(a) Interface Specifications. Upon execution of this Agreement, TiVo
and DIRECTV shall collaborate jointly to develop the data broadcast interface
specifications, including the network and client interfaces (as finalized by
DIRECTV in its sole discretion, the "Interface Specifications"), for the data
broadcast systems, satellite up-link, and back-haul server infrastructure to be
used in conjunction with and in support of the Provo Receiver, the Reno
Receiver, Two-Chip Receiver, and the DVR/PVR Functionality. TiVo shall identify
all network operations required to maintain service for the Reno Receivers,
Provo Receivers and Two-Chip Receivers. The Interface Specifications will
provide that the push data functionality associated with the Provo Receivers,
Reno Receivers, and Two-Chip Receivers shall have a satellite broadcast
architecture while the back-haul data functionality shall have a telco-based
server and network architecture.
(b) Version [*]Software. TiVo shall develop the version [*]software
(as accepted by DIRECTV upon successful completion of Final Acceptance Testing,
the "Version [*]Software") for deployment to the Reno Receivers, Provo
Receivers, and Two-Chip Receivers. The Version [*]Software shall enable the
features and functionality in the Provo Receiver, Reno Receivers, and Two-Chip
Receiver in accordance with the DIRECTV Technology, the Interface
Specifications, and Exhibit A.
(c) Deliverables and Download of Version [*]Software. TiVo shall
deliver to DIRECTV the Version [*]Software that is compliant with the Interface
Specifications, DIRECTV Technology and Exhibit A, for Manufacturing Release no
later than [*](as such date may be adjusted based on adjustments to the
Manufacturing Release for the Provo Receiver pursuant to Section 2.1(a)).
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Notwithstanding the foregoing, if the [*]Manufacturing Release [*]and [*]is
directly [*]to any [*]by [*]for Manufacturing Release of the Version [*]Software
shall [*]on a [*]for [*]there will be [*]to the [*]is directly [*]to any [*]by
[*]in[*]. The Version [*]Software shall be accepted at the successful completion
of the Final Acceptance Testing and after TiVo has been notified of such by
DIRECTV. TiVo and DIRECTV shall download the Version [*] Software to the Provo
and Reno Receivers via the currently utilized telco network and system.
(d) Transition to DIRECTV Infrastructure. Following the Version
[*]Software download to the Provo, Reno, and (if applicable) Two-Chip Receivers,
DIRECTV may, at its discretion, convert the Provo, Reno and (if applicable)
Two-Chip Receivers to utilize the DIRECTV satellite-based push network for all
push content and data. At DIRECTV's discretion, DIRECTV may also convert the
Provo, Reno and Two-Chip Receivers to utilize the DIRECTV telco-based back-haul
network for the back-haul of all or selected data. DIRECTV and TiVo shall
collaborate to ensure such a transition to the DIRECTV infrastructure is
orderly. Following the Version [*]Software download, DIRECTV shall have sole
discretion and authority
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to provision and operate the DVR/PVR Functionality (including the ability to
contract out such provisioning and operation to TiVo and/or any other party) on
all DIRECTV-TiVo combination receivers, including the Reno, Provo and Two-Chip
Receivers. TiVo will continue to have sole responsibility and authority for any
Stand Alone Receivers.
(e) Server Services. Until DIRECTV elects to make the conversion set
forth in subsection (d) above, TiVo shall continue to provide the server support
to enable the DVR/PVR Functionality in substantially the same manner as they are
provided as of the Effective Date or as otherwise mutually agreed to by the
parties ("Server Services"). In the event TiVo wishes to discontinue providing
the Server Services or is otherwise unable to provide such services, TiVo shall
so notify DIRECTV and shall work with DIRECTV to develop and execute an orderly
transition of the Server Services to DIRECTV, and shall provide DIRECTV with
such materials and rights that are necessary to enable DIRECTV to provide the
Server Services (the "Server Services Materials").
2.4 Corrections. Notwithstanding the foregoing, if at any time during the
term of this Agreement DIRECTV or TiVo determines (i) that there is a defect in
the Provo Receiver design as provided by TiVo or the Two Chip Receiver design as
provided by TiVo; or (ii) that the Provo Receiver design as provided by TiVo,
the Two Chip Receiver design as provided by TiVo, or the TiVo Software as
provided by TiVo does not comply with the DIRECTV Technology, Exhibit A, or the
Interface Specifications (as applicable), TiVo has an obligation to promptly
correct such defect or non-compliance. DIRECTV shall promptly notify TiVo of any
such defect or non-compliance and shall provide TiVo with sufficient supporting
information and materials reasonably requested by TiVo to verify, diagnose and
correct the reported defect or non-compliance. In the event of a dispute
regarding whether there is a defect or non-compliance, or the failure by TiVo to
promptly perform such correction, DIRECTV and TiVo shall immediately communicate
such dispute to the appropriate business/project manager when such party becomes
aware of the dispute. If such dispute cannot be mutually resolved by such
business/project managers within five (5) business days, then such dispute shall
be immediately referred to the senior management of each party for discussion
and attempted resolution. Further, the parties agree to collaborate on a remedy
of such defect as promptly as commercially reasonable, but not more than ten
(10) business days from the time senior management begin discussions. The
foregoing represents DIRECTV's sole and exclusive remedy for any defect or
non-compliance in the designs or TiVo Software provided hereunder; provided,
that in the event TiVo materially breaches its obligations to correct such
defect or non-compliance, DIRECTV shall be entitled to exercise any and all
legal and equitable remedies available in accordance with the terms of this
Agreement, including, but not limited to, release of the deliverables from the
Software Escrow Account, as provided pursuant to Article XI (Network Operation
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Continuity). For five (5) years following the end of the term of this Agreement,
upon DIRECTV's request, TiVo agrees to provide the services set forth in this
Section 2.4 at commercially reasonable rates and subject to reasonable terms and
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conditions consistent with those set forth herein.
2.5 Two-Chip Option. At DIRECTV's request, TiVo shall develop the Two-Chip
Receiver, for Manufacturing Release no later than[*]. Any such DIRECTV request
shall be
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made in writing and provided to TiVo on or before[*]. Upon receipt of
such notice, DIRECTV and TiVo shall mutually agree on the development schedule
for porting of the Version [*]Software with respect to such Two-Chip Receiver
(including, without limitation, adjustments to the [*]Manufacturing Release
date) and setting forth the various milestone deliverables, dates, and payment
obligations associated with such porting and consistent with the fees and
payments set forth in Section 3.6 (Technology Development Payments).
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2.6 Branding. At the time of delivery by TiVo for Manufacturing Release and
until such time as DIRECTV exercises the option contained in the Technology
License Agreement, the Version [*]Software, Version [*]Software, Provo Receiver
and Two-Chip Receiver shall comply with the TiVo OEM Branding Guidelines set
forth in Exhibit H and the DIRECTV Trademark and Style Guide set forth in
Exhibit M. In the event Exhibit H and the Exhibit M conflict, Exhibit M shall
supersede.
2.7 Wink Option. Within [*]days of the Effective Date, TiVo shall provide
to DIRECTV a good faith estimate of the additional costs and schedule impact to
include the Wink functionality in the Version [*]Software.
ARTICLE III.
BUY DOWN AND PAYMENT OBLIGATIONS
3.1 Reno Receiver Buy-Down during First Period. To encourage the continued
retail sales of the Reno Receivers from the date of this Agreement through
[*](the "First Period"), TiVo and DIRECTV shall continue to make buy-down
payments (the "Reno Buy-Down Amount") as set forth in the Letter Agreement dated
September 28, 2001, as amended on January 7, 2002 (as amended, the "Buy Down
Letter Agreement").
3.2 Reno Receiver Buy-Down during Second Period. For the period beginning
on [*]through [*](the "Second Period"), TiVo shall no longer be obligated to pay
any portion of the Reno Buy-Down Amount and the DIRECTV portion of the "Revenue
Share" (defined as the percentage of the fee charged by DIRECTV to subscribers
for access to the DVR/PVR Service) from the Reno Receiver sold during the Second
Period shall be [*](and TiVo portion shall be[*]) as set forth in Exhibit B -
Schedule 3 attached hereto; provided, that DIRECTV continues to make Reno
Buy-Down Amount payments of a minimum of [*]per Reno Receiver sold to end users,
consistent with DIRECTV's current practices regarding retailer chargebacks.
DIRECTV shall continue to account for and remit TiVo's [*]portion of the Revenue
Share in accordance with the administrative procedures set forth in the (i)
Original Marketing Agreement, and (ii) the Buy Down Letter Agreement; provided,
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however, that in the event TiVo fails the "Liquidity Test" (as defined in
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Exhibit F), then beginning on the date of such failure and continuing
thereafter, TiVo's [*] portion of the Revenue Share from all Reno Receivers sold
during the Second Period that activate the "TiVo Lifetime Service Subscription"
shall [*]to a [*](the [*]to [*]any TiVo Subsidy Payments (defined in Section 3.3
(Reno Receiver Subsidy to DIRECTV subsequent to Second Period)) that are
incurred subsequent to[*]. In the event the Manufacturing Release for the Provo
Receiver (with Version [*]Software) does not occur on or
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prior to [*] (as [*] date may be adjusted pursuant to Section 2.1(a) (Provo
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Receiver)), the foregoing arrangements shall remain in effect until [*]
Manufacturing Release. If such Manufacturing Release occurs on or prior to
[*](as such date may be adjusted pursuant to Section 2.1(a)), then commensurate
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with such Manufacturing Release, DIRECTV shall [*]to [*]any [*](including[*]).
If such Manufacturing Release occurs after [*](as such date may be adjusted
pursuant to Section 2.1(a)), DIRECTV shall [*]any [*](including[*]) remaining
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[*]to TiVo (following payment of all TiVo Subsidy Payments due or payable by
TiVo pursuant to Section 3.3) at the conclusion of any necessary accounting,
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invoice and reconciliation period which the Parties anticipate may take up to
(but shall not exceed) six (6) months following[*].
3.3 Reno Receiver Subsidy to DIRECTV subsequent to Second Period. In the
event that the Manufacturing Release of the Provo Receiver (with Version
[*]Software) has not occurred on or prior to [*] (as such date may be adjusted
pursuant to Section 2.1(a) (Provo Receiver)), TiVo shall be obligated to pay a
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subsidy payment to DIRECTV (the "TiVo Subsidy Payment") as set forth in Exhibit
B -- Schedule 1 attached hereto and fees payable to TiVo shall increase as set
forth in Exhibit B - Schedule 3. The parties acknowledge and agree that the sole
purpose of [*]described in Section 3.2 (Reno Receiver Buy-Down during Second
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Period) is to [*](a) such TiVo Subsidy Payments that may be incurred after[*],
and (b) [*]of any [*]in the[*], as provided in Section 2.1(c), and any such
required payments shall first be paid [*]([*]) prior to TiVo making such
payments.
3.4 Reno, Provo and Two-Chip Receiver Fees. For all Reno Receivers, Provo
Receivers and Two-Chip Receivers, DIRECTV shall pay to TiVo the DVR/PVR Service
Fee in accordance with the fee payment arrangements set forth in Exhibit B --
Schedule 3 attached hereto for a DVR/PVR Service Subscriber. Except as otherwise
provided for herein, DIRECTV's obligation to pay the DVR/PVR Service Fee
payments shall terminate upon the expiration or termination of this Agreement
(except with respect to amounts earned and accrued, but not yet paid, as of such
date for receivers then activated).
(a) Beginning on the Effective Date and then within thirty (30) days
following the end of each calendar month, and within thirty (30) days after
termination of this Agreement for any reason, DIRECTV shall submit to TiVo a
reconciliation report detailing, for the report period: (i) the number of Reno
Receivers and Provo Receivers activated by DIRECTV, as applicable; (ii) the
number of DVR/PVR Service Subscribers using Reno Receivers; (iii) the number of
DVR/PVR Service Subscribers using Provo Receiver or Two-Chip Receiver; (iv) the
total amount to be remitted to TiVo; (v) any TiVo Subsidy Payments currently due
and payable by TiVo to DIRECTV; and (vi) such other information as may be
reasonably requested by TiVo to verify the amount remitted by DIRECTV or owed by
TiVo. With such report, DIRECTV shall remit to TiVo all amounts due to TiVo with
deduction or set off for amounts (if any) that are currently due and payable to
DIRECTV from TiVo pursuant to this Agreement.
(b) The DVR/PVR Subscriber Fee set forth in Schedule 3 of Exhibit B
shall be payable by DIRECTV per DVR/PVR Service Subscriber account, regardless
of the total number of receivers associated with such subscriber account or the
mix of Reno Receiver(s)
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and/or Provo Receiver(s) used by such subscriber account. In the event the
DVR/PVR Service Subscriber has a Reno Receiver(s) that TiVo contributed to the
Buy Down Amount or paid a Subsidy to DIRECTV as set forth in Schedule 3 of
Exhibit B (regardless of whether the subscriber account has any additional Provo
Receiver(s) or Reno Receiver(s)), DIRECTV shall pay the higher applicable
DVR/PVR Subscriber Fee set forth in Schedule 3 of Exhibit B to TiVo; provided,
however, if the last Reno Receiver in which TiVo contributed to the Buy Down
Amount or paid a Subsidy to DIRECTV as set forth in Schedule 3 of Exhibit B,
ceases to be an active and operational receiver attributable to the subscriber
account for any reason whatsoever (including without limitation destruction,
malfunction or expiration of the receiver, or subscriber termination), DIRECTV
shall be entitled to pay the lower applicable DVR/PVR Subscriber Fee set forth
Schedule 3 of Exhibit B.
(c) For subscriber accounts with a Reno Receiver who paid a Lifetime
TiVo Service Subscription prior to the Manufacturing Release of the Provo
Receiver (with Version [*]Software) (regardless of whether TiVo contributed to
the Buy Down Amount), no additional payments of DVR/PVR Subscriber Fees shall be
required from DIRECTV to TiVo.
3.5 Provo Receiver Buy Down. TiVo shall have no "buy-down" or subsidy
payment obligations for the Provo Receivers, Two-Chip Receivers or any
subsequent receivers.
3.6 Technology Development Payments. In consideration of TiVo's development
of the Provo Receivers, the Version [*]Software, and the Version [*]Software,
DIRECTV shall pay to TiVo a technology development fee in the aggregate amount
of [*](the "Technology Development Fee"), of which [*]shall be payable within
[*]days of the date of this Agreement and the remainder shall be payable in
accordance with the Development Schedule attached hereto as Exhibit A, which
shall include the remaining milestone payment amounts, the milestone payment
dates and the milestone deliverables. If DIRECTV elects to exercise its option
for a Two-Chip Receiver set forth in Section 2.5 (Two-Chip Option), DIRECTV
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shall pay to TiVo an additional technology development fee in the amount of
[*](the "Additional Development Fee"), of which [*] shall be payable within
[*]days of the date of DIRECTV's written two-chip option exercise notice and the
remainder shall be payable in accordance with the milestone payments specified
in a Two-Chip Receiver development schedule to be mutually agreed to by the
parties. DIRECTV agrees that the Technology Development Fee and the Additional
Development Fee (if applicable) shall be paid without offset or deduction
against any amounts owing by TiVo pursuant to this Agreement.
3.7 Incremental Interface Costs. TiVo will assess the Interface
Specifications and, within [*]days of DIRECTV finalizing the Interface
Specifications pursuant to Section 2.3(a), will provide to DIRECTV a reasonable
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and good faith estimate of any Development Schedule modifications or any costs
incremental to the Technology Development Fee (collectively, the "Incremental
Interface Costs") related to compliance with such Interface Specifications. The
Incremental Interface Costs will provide a cost quote which includes a detailed
estimate of the incremental "man-hours" associated with each component of
Interface Specifications, with such man-hours to be calculated at a labor rate
of [*]per hour. The Incremental Interface Costs will be
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paid in accordance with milestones to be agreed upon by the parties. If no such
agreement on the Incremental Interface Costs is reached by the Manufacturing
Release of the Provo Receiver, DIRECTV shall have the right, immediately upon
written notice to TiVo, to terminate any remaining development obligations of
TiVo regarding the Version [*] Software pursuant to this Agreement (including,
if exercised, porting to the Two-Chip Receiver pursuant to Section 2.5);
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provided that DIRECTV shall pay to TiVo all milestone payments for milestone
deliverables provided by TiVo prior to the date of such written notice.
3.8 Technology Development[*]. Beginning from the time the Provo Receiver
(with Version [*]Software) enters alpha testing (as described in the Development
Schedule) and continuing until the earlier of (i) [*]after Manufacturing Release
of the Provo Receiver (with Version [*] Software), or (ii) the [*]of any [*]with
[*]resulting in the sale, merger, or acquisition of all or substantially all of
DIRECTV's assets[*], if [*]enters into an agreement with [*]in the [*]to provide
such entity with [*]related to a [*]which [*]of the [*]with[*], [*]shall [*]to
[*]a [*]equal to [*]of any [*]and [*]paid by [*]to[*]. Such [*]shall be [*]to
[*]in equal [*]over a [*]on the [*]such other [*]makes the [*]commercially
available to consumers. Notwithstanding any of the foregoing, [*]shall have no
obligation to [*]any [*]if [*]are restricted to [*]the "TiVo Application" (as
defined in Exhibit G)[*].
3.9 Accounting and Reconciliation. For at least eighteen (18) months from
the date of their creation, DIRECTV shall maintain complete, current, and
accurate records of activation, billing, Subscriber payments, and other
accounting records arising from the Reno Receivers, Provo Receivers and Two-Chip
Receivers and all amounts to be paid to TiVo hereunder. DIRECTV shall remit the
corresponding amounts to TiVo in accordance with Section 3.4 (Reno Receiver and
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Provo Receiver Fees). In conjunction with such accounting, DIRECTV shall provide
TiVo with the necessary reconciliation or back office support regarding the
number of Reno Receivers, Provo Receivers and Two-Chip Receivers subject to
payment to TiVo.
3.10 TiVo Audit Rights. No more than once every year during the Term and
for one year thereafter, TiVo or its designee (which designee shall be subject
to approval by DIRECTV and appropriate confidentiality requirements) shall have
the right upon twenty (20) days' notice and during regular business hours at
DIRECTV's regular locations for maintenance of such records, to conduct an audit
of such records maintained pursuant to Section 3.9 (Accounting and
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Reconciliation), to verify compliance with the Agreement. If any such audit
should disclose any underpayments of royalties or other fees, DIRECTV shall
promptly pay to TiVo such underpaid amount, together with interest as provided
for in Section 3.12. If any such audit should disclose any overpayments of
royalties or other fees, DIRECTV shall have the right to offset any such amounts
against future amounts payable by DIRECTV hereunder; provided that if the
overpayment exceeds five percent (5%) in any calendar quarter, such offset shall
be reduced by one-half of the reasonable costs and expenses incurred by TiVo in
connection with such audit. The audit will be conducted at TiVo's expense,
except as otherwise provided above and unless the audit reveals that DIRECTV has
underpaid TiVo by five percent (5%) or more in any calendar quarter, in which
case DIRECTV will reimburse TiVo for all reasonable costs and expenses incurred
by TiVo in connection with such audit.
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3.11 Dispute Resolution. In the event of an accounting dispute arising from
this Agreement, including the Buy-Down Amount and the accounting records,
including but not limited to (i) the amount of the Buy-Down Amount, (ii) the
dollar amounts due to DIRECTV from TiVo, (iii) the number of applicable
Subscribers, and (iv) the fees payable in accordance with this Agreement,
DIRECTV and TiVo agree to communicate such dispute to the appropriate
business/project manager within ten (10) business days of the date such party
becomes aware of the discrepancy. If any such dispute cannot be mutually
resolved by such business/project managers within ten (10) business days, then
such dispute shall be immediately referred to the senior management of each
party for discussion and attempted resolution. Further, the parties agree to
collaborate on a remedy of such a dispute as promptly as commercially reasonable
or not more than ten (10) business days from the time senior management begin
discussions. In the event the dispute is not resolved within such time period,
the parties shall be entitled to exercise any and all legal and equitable
remedies available in accordance with the terms of this Agreement, including but
not limited to, binding arbitration in accordance with the terms set forth in
the Original Marketing Agreement.
3.12 Interest on Late Payments. Interest on late payments shall accrue at a
rate of 18% per annum or the highest rate allowed by law, during such period
which such amount became due until finally paid.
3.13 Commercial Accounts. The parties acknowledge that the fees and
royalties under this Article III do not cover use of the Reno Receivers, Provo
Receivers, and Two-Chip Receivers in commercial establishments. In the event
that DIRECTV desires to use such receivers in such establishments, TiVo and
DIRECTV shall negotiate in good faith on the appropriate terms, fees and/or
royalties.
ARTICLE IV.
OTHER RELATIONSHIPS
4.1 DVR/PVR Service Pricing and Customer Relationship. Following the
Effective Date, TiVo shall [*]the price of the TiVo Services to any current or
future DIRECTV-TiVo combination receiver end users, from [*] prices in
effect[*]. Following the Manufacturing Release of the Provo Receiver (with
Version [*]Software), DIRECTV in its sole discretion shall determine the pricing
and packaging of all services available (including any component of DVR/PVR
Functionality) on all Provo Receivers. Then, following the download of Version
[*]Software to the existing Reno Receivers, the parties shall transition current
TiVo Service subscribers to DIRECTV in accordance with the terms and conditions
of the TiVo Service Agreement and Privacy Policy attached hereto as Exhibit O
(the "TiVo Service Agreement" and the "Privacy Policy" respectively) effective
as of a mutually agreed upon date (the "Transition Date"). Until the Transition
Date, TiVo will not change the Service Agreement or the Privacy Policy without
DIRECTV's approval which will not be unreasonably withheld. After the Transition
Date, DIRECTV in its sole discretion shall determine the pricing and packaging
of all services available (including any component of DVR/PVR Functionality) on,
and the right to control and operate, all DIRECTV-TiVo combination receivers
(including the Reno Receivers,
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Provo Receivers and Two-Chip Receivers). In addition, after the Transition Date,
all customers of the DIRECTV Service with access to DVR/PVR Functionality
delivered by a Reno Receiver and/or Provo Receiver and/or Two-Chip Receiver will
be accounted for and billed by DIRECTV, and subject to Section 4.2 below,
DIRECTV shall provide customer service to such customers, including service
activation (excluding for those Reno Receivers that have not received the
software upgrade(s)), customer account inquiries, and basic
technical/troubleshooting support. Notwithstanding any of the foregoing, current
subscribers accessing the TiVo Service on a Reno Receiver shall be provided a
minimum of [*]days' advance notice of the end of the TiVo Service subscriber
agreement and beginning of the applicable DIRECTV agreement, in accordance with
the terms and conditions of the TiVo Service Agreement and Privacy Policy.
DIRECTV and TiVo shall cooperate to transition subscribers accessing the TiVo
Service on a Reno Receiver to DIRECTV including, without limitation, in
subscriber communications regarding the transition of all such subscriber
agreements to DIRECTV. Following the Transition Date, DIRECTV shall assume sole
responsibility for administering the applicable subscriber agreements. For all
such subscribers who have "TiVo Lifetime Service Subscriptions", DIRECTV shall
continue to honor such agreements. Further, following the Manufacturing Release
of Version [*]Software, to the extent that any claim arises from such agreements
for liabilities incurred after the assignment thereof, DIRECTV shall indemnify
and hold TiVo harmless from such claim in accordance with the terms and
conditions in Article VII.
4.2 TiVo Customer Support.
(a) Until the Manufacturing Release of the Version [*]Software, TiVo
shall continue to provide reasonable customer support solely of customer calls
regarding technical problems that could not be addressed by DIRECTV and are,
therefore, escalated to TiVo by DIRECTV. Such support shall be in the form of
technical/troubleshooting support and technical questions related to the DVR/PVR
Functionality. The parties will agree as to the process by which TiVo will have
access to customer information necessary for TiVo to perform its obligations
under this Section 4.2(a). DIRECTV shall provide training for its customer
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service representatives in an amount to be proposed by DIRECTV and approved by
TiVo (which approval shall not be unreasonably withheld), and TiVo shall provide
reasonable assistance for such training. The parties shall meet on a monthly
basis to review i) the number of service calls escalated from DIRECTV to TiVo
during the given 1-month review period, and ii) the percentage of such escalated
calls answered by TiVo within [*]minutes. If (a) the total call volume escalated
from DIRECTV to TiVo exceeds (1) [*]calls per the total number of DVR/PVR
Service Subscribers per month during the period from [*]to [*]following download
of Version [*]Software to Reno Receivers ("Reno [*] Upgrade Date") or (2) [*]
calls per the total number of DVR/PVR Service Subscribers per month during the
period from the Reno [*] Upgrade Date to the date of the Manufacturing Release
of the Version [*] Software, and/or (b) the percentage of such escalated calls
answered by TiVo within [*]minutes drops below [*] then either party shall be
entitled to provide notice to the other for the parties to undertake the
"Support Resolution Process". The Support Resolution Process shall entail a
meeting or conference call, within 10 business days of notice, by
representatives of each party, for the purpose of reviewing the reasons for such
call volume or response times and possible solutions.
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After such initial meeting, the parties shall continue to work together in good
faith with the goal of devising and implementing such commercially reasonable
steps as are necessary to return to an acceptable call volume for service calls
escalated to TiVo.
(b) After Manufacturing Release of the Version [*] Software, TiVo
shall have no obligation to provide any customer support whether to customers or
to DIRECTV.
4.3 Intentionally Omitted.
4.4 Customer Data Usage. In connection with the transition of TiVo Service
subscribers to DIRECTV pursuant to Section 4.1, TiVo shall provide to DIRECTV
such customer data related to such TiVo Service subscribers as is needed by
DIRECTV to support and answer customer questions and otherwise provide service
regarding such subscriber accounts. Following the Transition Date, DIRECTV shall
have sole ownership and control of all future customer data received, derived or
otherwise collected from the Reno Receiver, Provo Receiver or Two-Chip Receiver.
Except as set forth in the Services Agreement, DIRECTV shall have the sole
discretion and control over which type of customer data (if any) is collected by
DIRECTV or by TiVo from the Reno, Provo or Two-Chip Receiver. Except as
otherwise permitted in the Services Agreement defined in Section 4.5, TiVo shall
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not be entitled to extract, receive, derive or otherwise collect any data from
the Reno, Provo or Two-Chip Receiver without the express written consent of
DIRECTV and any customer data shall be deemed the confidential information of
DIRECTV and subject to DIRECTV's privacy policies.
4.5 TiVo Value-Added Services Agreement. Except as provided for herein or
otherwise allowed by the Services Agreement entered into between the parties
dated as of the same date as this Agreement (the "Services Agreement"), TiVo
shall require the written consent of DIRECTV to distribute any content or other
data to the Reno, Provo or Two-Chip Receiver, or any other DIRECTV-TiVo
combination receiver.
4.6 Technology License. DIRECTV may, at its option, elect to enter into a
technology license agreement with TiVo in the form attached hereto as Exhibit J
(the "Technology License Agreement"). DIRECTV shall exercise its option by
providing TiVo with written notice of DIRECTV's election to exercise such
option. Upon such notice, the parties shall execute the Technology License
Agreement and DIRECTV shall pay to TiVo the applicable license fee set forth in
Section 6.1 of the Technology License Agreement. In connection therewith, TiVo
shall [*]of any [*]by [*]following the Effective Date with other [*]receiving a
[*]to the [*]on [*]and [*]set forth herein, which [*]contains [*]and [*]which,
[*]in the[*], are [*]the [*](as defined in the Technology License Agreement) and
[*](as defined in the Technology License Agreement), other than [*]in connection
with [*]or any [*]or any [*]to the Effective Date (the "[*]"), and shall
[*](subject to [*]) the [*]of such [*]and shall [*]with such [*]any [*]which
[*]to be made to [*]in order to [*]to or [*]the[*].
4.7 Provo Receiver Manufacturing. DIRECTV shall have the sole discretion to
select the authorized manufacturer(s) of the Provo Receiver and Two-Chip
Receiver and shall
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determine the terms and conditions for such manufacture of the Provo Receiver
and Two-Chip Receiver. TiVo shall provide reasonable assistance to DIRECTV's
manufacturers of the Provo Receivers as further described in, and in accordance
with the fee schedule set forth in, Exhibit D (TiVo Manufacturing Assistance).
4.8 Manufacturing and Distribution License.
(a) Subject to the terms and conditions of this Agreement, TiVo grants
to DIRECTV, under all of TiVo's present and future rights in the TiVo
Technology, a non-transferable (except as set forth in Section 12.4),
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non-exclusive license to: (i) make and have made the Provo Receiver and Two-Chip
Receiver (with TiVo Software solely in object code form); (ii) make and have
made improvements to the Provo Receivers and Two-Chip Receivers (herein, a
"Receiver Improvement"), but not the TiVo Software; (iii) use, maintain,
display, and perform, Reno Receivers, Provo Receivers and Two-Chip Receivers in
the Territory; (iv) distribute (e.g., offer to sell, sell, offer to lease, lease
or otherwise transfer) and import Provo Receivers and Two-Chip Receivers in the
Territory; (v) distribute the TiVo Software (solely in object code form) with,
or download to, Provo Receivers, Reno Receivers, and Two-Chip Receivers; (vi)
sublicense to DIRECTV Service subscribers who have access to the DVR/PVR
Functionality the right to use, display and perform the TiVo Technology as
incorporated in (or downloaded to) Provo Receivers, Reno Receivers and/or the
Two-Chip Receivers pursuant to a license agreement containing terms no less
restrictive than set forth in Exhibit K (it being understood that in no event
shall DIRECTV be deemed to be in violation of the grant contained in this
Section 4.8 if despite its providing the end user license agreement to end users
-----------
and using commercially reasonable efforts to enforce the terms thereof, users
are found to be in violation of such end user license agreement); and (vii)
distribute the Provo Receiver and Two Chip Receiver manufacturing packages
including any Receiver Improvements and TiVo Software (solely in object code
form) to manufacturers of the Provo Receiver or the Two-Chip Receiver and
sublicense to such manufacturers the rights set forth in (i), (ii), (iii), (iv),
(v) or (vi) above, pursuant to a manufacturing sublicense agreement containing
the minimum terms and conditions set forth in Exhibit L.
(b) DIRECTV acknowledges and agrees that the TiVo Technology, Provo
Receiver, Two-Chip Receiver, and the TiVo Software contain valuable trade
secrets of TiVo, and DIRECTV shall not, and shall not provide permission to any
third party, to: (a) translate, reverse engineer, decompile, disassemble, or
attempt to derive the source code of any TiVo Software; (b) except as otherwise
expressly provided for herein and subject to Section 2.6, modify or create any
-----------
improvements to the TiVo Software, provided that DIRECTV may modify the look and
feel generated by the TiVo Software to the extent such look and feel is
modifiable without modification of the source code; (c) sublicense, rent, lease,
loan, timeshare, sell, distribute, assign or transfer any rights in, grant a
security interest in, or transfer possession of any TiVo Technology or TiVo
Software, except as otherwise expressly provided for herein; or (d) obfuscate,
alter or remove any of TiVo's copyright or other proprietary rights notices or
legends appearing on or in the Provo or Two-Chip Receiver documentation or TiVo
Software, and all such markings shall be included on or in all copies of any
portion of the documentation and TiVo Software made by DIRECTV.
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(c) DIRECTV acknowledges that the Reno Receivers, Provo Receivers, and
Two-Chip Receivers, TiVo Technology, and the TiVo Software may incorporate,
reference or require the use of certain Third Party Technology and that licenses
granted pursuant to this Section 4.8 specifically exclude any license rights in
-----------
or to such Third Party Technology. DIRECTV acknowledges that TiVo shall not be
responsible for obtaining any license rights in the Third Party Technology. TiVo
will notify DIRECTV of any proposed revisions to Exhibit C (Third Party
Technology), which revisions shall require DIRECTV's consent (which consent
shall not be unreasonably withheld or delayed, it being understood that
withholding by DIRECTV of consent to a revision that [*]of more than a [*]shall
not be[*]).
(d) Other than the license rights granted in Section 4.8(a), no other
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license, right, or interest is granted to DIRECTV by implication, estoppel, or
otherwise, for any other purpose and TiVo retains all worldwide intellectual
property rights in and to the TiVo Technology, Provo Receiver (excluding the
DIRECTV Technology), the Two Chip Receiver (excluding the DIRECTV Technology),
the TiVo Software (excluding the DIRECTV Technology), and any other deliverable
provided by TiVo hereunder.
4.9 Infomercial. If the Provo Receiver is commercially available (i.e.,
generally available for purchase by end users via retail stores) by[*], DIRECTV
will, at its own cost, produce an infomercial regarding the Provo Receiver and
associated services which will air on the DIRECTV satellite television service,
on a continuous 24x7 basis for a period of [*]days between [*]and[*]. DIRECTV
will own and retain all right, title and interest in such infomercial (with the
exception of such TiVo trademark rights as granted by TiVo in connection
therewith).
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF TIVO
TiVo represents and warrants to DIRECTV and agrees that:
5.1 Organization, Good Standing and Qualification. TiVo is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted. TiVo is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business or properties.
5.2 Authorization; Binding Obligation. All corporate action on the part of
TiVo, its officers, directors and stockholders necessary for the authorization,
execution, and delivery of this Agreement has been taken. The performance of all
obligations of TiVo hereunder constitute valid and legally binding obligations
of TiVo, enforceable against TiVo in accordance with its respective terms.
5.3 No Consents. The execution and delivery of this Agreement in accordance
with the terms thereof and the compliance by TiVo with the provisions hereof or
thereof (i) are not and will not be inconsistent with TiVo's Charter or Bylaws,
(ii) do not and will not contravene
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any Laws (as defined below) applicable to TiVo, and (iii) do not and will not
contravene any material provision of, or constitute a default under, any
indenture, mortgage, contract, license, agreement or other instrument of which
TiVo is a party or by which it is bound or requires the consent or approval of,
the giving of notice to, the registration with or the taking of any action in
respect of or by, any federal, state or local government authority or agency or
other person.
5.4 Laws. TiVo has complied and shall comply with any and all Laws
regarding TiVo's development of the TiVo Software, the Provo Receiver and
Two-Chip Receiver and TiVo's deployment, if applicable, of the TiVo Software and
TiVo's other obligations hereunder. As used herein, "Laws" shall mean FCC and
all other governmental (whether international, federal, state, municipal, or
otherwise) statutes, laws, rules, regulations, ordinances, codes, directives,
and orders.
5.5 Ability to Perform. TiVo possesses the technical and other knowledge
and other abilities required to timely and fully meet its obligations under this
Agreement.
5.6 Warranty Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE V, TIVO MAKES
NO WARRANTIES AS TO THE PERFORMANCE OF THIS AGREEMENT OR THE DELIVERABLES OR
SERVICES TO BE PROVIDED HEREUNDER AND TIVO EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES IMPLIED AND STATUTORY, WHETHER ARISING FROM COURSE OF DEALING OR
USAGE OF TRADE INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THIRD
PARTY RIGHTS.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF DIRECTV
DIRECTV represents and warrants to TiVo and agrees that:
6.1 Organization, Good Standing and Qualification. DIRECTV is a corporation
duly organized, validly existing and in good standing under the laws of the
state of California and has all requisite corporate power and authority to carry
on its business as now conducted. DIRECTV is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business or properties.
6.2 Authorization; Binding Obligation. All corporate action on the part of
DIRECTV, its officers, directors and stockholders necessary for the
authorization, execution, and delivery of this Agreement has been taken. The
performance of all obligations of DIRECTV hereunder constitute valid and legally
binding obligations of DIRECTV, enforceable against DIRECTV in accordance with
its respective terms.
6.3 No Consents. The execution and delivery of this Agreement in accordance
with the terms thereof and the compliance by DIRECTV with the provisions hereof
or thereof (i) are not and will not be inconsistent with DIRECTV's Charter or
Bylaws, (ii) do not and will not contravene any Laws applicable to DIRECTV, and
(iii) do not and will not contravene any material provision of, or constitute a
default under, any indenture, mortgage, contract, license, agreement or other
instrument of which DIRECTV is a party or by which it is bound or requires
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the consent or approval of, the giving of notice to, the registration with or
the taking of any action in respect of or by, any federal, state or local
government authority or agency or other person.
6.4 Laws. DIRECTV has complied and shall comply with any and all Laws
regarding DIRECTV's obligations hereunder.
6.5 Ability to Perform. DIRECTV possesses the technical and other knowledge
and other abilities required to timely and fully meet its obligations under this
Agreement.
6.6 Warranty Disclaimer. Except AS SET FORTH IN THIS ARTICLE VI, DIRECTV
MAKES NO WARRANTIES AS TO THE PERFORMANCE OF THIS AGREEMENT OR THE DELIVERABLES
OR SERVICES TO BE PROVIDED HEREUNDER AND DIRECTV EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES IMPLIED AND STATUTORY, WHETHER ARISING FROM COURSE OF DEALING OR
USAGE OF TRADE INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THIRD
PARTY RIGHTS.
ARTICLE VII.
INDEMNIFICATION
7.1 Indemnification. Each Party (the "Indemnifying Party"), at its own
expense, shall (a) defend, or at its option, settle, any claims, suits, and
actions brought by a third party (collectively "Claims") against the other Party
and its affiliated companies and their respective employees, officers, agents,
attorneys, stockholders and directors, and their respective successors and
assigns (the "Indemnified Party(ies)") (i) based on allegations that such
Indemnifying Party's Technology [*] in the United States and which allegations
relate to [*] the Provo Receiver, Reno Receiver (post Version [*]Software), and
Two-Chip Receiver, or (ii) based on allegations that such Indemnifying Party's
Product Liability caused [*]; and (b) pay any award, damages, or costs
(including, without limitation, reasonable attorneys' fees) finally awarded by a
court of competent jurisdiction or agreed on in a settlement of any such Claim;
provided that the Indemnified Party: (A) promptly notifies the Indemnifying
Party in writing of all such Claims; (B) cooperates reasonably with the
Indemnifying Party (at the Indemnifying Party's expense) in defending such
Claims; and (C) allows the Indemnifying Party the primary right to control the
defense (including the selection of counsel), at the Indemnifying Party's sole
option, to settle, all such Claims. For purposes of this Section 7.1, (x) the
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Indemnifying Party's Technology shall be the DIRECTV Technology if DIRECTV is
the Indemnifying Party, and the TiVo Technology if TiVo is the Indemnifying
Party; and (y) the Indemnifying Party's [*] shall be the [*] Provo Receiver and
Two-Chip Receiver [*] is the Indemnifying Party.
7.2 Mitigation and Exceptions. If the Indemnifying Party receives written
notice of an alleged infringement or believes that a Claim of infringement is
likely, the Indemnifying Party may, at is sole option and expense: (i) procure
for the Indemnified Party the right to continue to use such Indemnifying Party's
Technology at the Indemnifying Party's sole expense; (ii) modify
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the Indemnifying Party's Technology so that it no longer infringes; or (iii)
replace the infringing portion of the Indemnifying Party's Technology with
technology that does not infringe, provided, that, in the case of subsections
(ii) and (iii), if TiVo is the Indemnifying Party, the modified and/or replaced
technology contains substantially similar functionality and otherwise complies
with the requirements of this Agreement, including the DIRECTV Technology,
Interface Specifications, and Exhibit A, as applicable (such technology,
"Replacement Technology"). The Indemnifying Party shall have no liability to or
for any such Claims based on (i) any improvement to the Indemnifying Party's
Technology that was not made by the Indemnifying Party; (ii) any use of the
Indemnifying Party's Technology in combination with products, services, or
technology not required by the Indemnifying Party or not otherwise required to
use the Indemnifying Party's Technology in a standalone form (i.e., not in a
DIRECTV-TiVo combination receiver), if such infringement would not occur except
for such combination; or (iii) any use of the infringing version of the
Indemnifying Party's Technology once a non-infringing version of Replacement
Technology has been made available to the Indemnified Party.
7.3 Entire Obligation. The foregoing states the Indemnifying Party's entire
liability and the Indemnified Party's sole and exclusive remedy with respect to
any infringement of any patents, copyrights or trademarks, or the
misappropriation of any trade secrets or other proprietary rights of any third
party, whether direct or contributory, and any third party product liability
claims, as related to the receivers specified in this Article 7.
7.4 [*]To[*]. [*]that neither [*] nor [*]shall [*]or the [*]of
[*](including[*], the[*]) any [*]of [*]of any [*]owned or controlled by [*]or
[*]by any [*]or [*]in the[*], [*], or [*]or [*]utilized by or on behalf of
[*]that are in use or deployed as of the Effective Date (including any [*]of
those products deployed or in use, and any [*]of all such products), provided
[*]is not [*]of any [*]of [*](and [*]and the other [*]have not taken any action
that, if taken by[*], would be[*]) which [*]after the proper notice of [*]and
within the [*]specified in[*]. It is expressly understood and agreed that [*]the
expiration of this Agreement and the termination of this Agreement, except in
the case of termination as a result of [*]of[*].
7.5 [*] To[*]. [*] that neither[*], [*]nor any of the other [*]shall [*]or
[*]any [*]of [*]of any [*]or a[*], by any [*]or [*]products, services or [*]or
[*]by or on behalf of [*]or [*]that are in use or deployed as of [*](including
any [*]of those products deployed or in use, and any [*]of all such products),
provided [*]is not [*]of any [*]of [*](and [*]have not taken any action that,
[*], would be[*]) which remains [*]after the proper notice of [*]and within the
[*]specified in[*]. It is expressly understood and agreed that [*]the expiration
of this Agreement and the termination of this Agreement, except in the case of
termination as a result of [*]of [*]by[*].
ARTICLE VIII.
LIMITATION OF LIABILITY
EXCEPT FOR ANY CLAIMS OR DAMAGES RESULTING FROM A BREACH OF ARTICLE X OR SECTION
--------- -------
4.8 OR THE LICENSE GRANTED IN SECTION 2.1(A) OR AN
--- --------------
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
19
<PAGE>
INDEMNIFICATION CLAIM AS SET FORTH IN ARTICLE VII ABOVE, (A) IN NO EVENT SHALL
-----------
EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
THE OTHER PARTY OR ANY THIRD PARTY (INCLUDING WITHOUT LIMITATION, LOSS OF
PROFITS, OTHER COMMERCIAL LOSS, OR COST OF PROCUREMENT OF SUBSTITUTE TECHNOLOGY
OR SERVICES), WHETHER FORESEEABLE OR NOT AND REGARDLESS OF THE FORM, LEGAL
THEORY OR BASIS OF RECOVERY OF ANY SUCH CLAIM AND (B) IN NO EVENT SHALL EITHER
PARTY'S CUMULATIVE LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT EXCEED
AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT OF ALL FEES PAID TO TIVO HEREUNDER.
ARTICLE IX.
TERMINATION
9.1 Initial Term. The term of this Agreement (the "Term") shall be 5 years
from the Effective Date.
9.2 Termination for Material Default. Either party may terminate this
Agreement if the other party materially breaches this Agreement and fails to
cure such breach within sixty (60) days after receipt of written notice thereof
from the non-breaching party.
9.3 Termination for Insolvency. Either Party may terminate this Agreement
effective immediately upon giving notice to the other Party, (i) upon the
institution by or against the other Party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of its debts
and such proceeding is not dismissed within sixty (60) days of its being filed;
(ii) upon the other Party making an assignment for the benefit of creditors; or
(iii) upon the other Party's dissolution or liquidation.
9.4 Termination for Manufacturing Release Delay. DIRECTV shall have the
right to terminate this Agreement if the Manufacturing Release of the Provo
Receiver (with Version [*]Software) does not occur on or before [*] (as such
date may be adjusted on a day-by-day basis for adjustments in the Manufacturing
Release date pursuant to Section 2.1(a)). DIRECTV's right to terminate this
--------------
Agreement pursuant to this Section 9.4 shall be exercisable by delivery of
-----------
written notice to TiVo. In such event, no further payments of Technical
Development Fees, Additional Development Fees or Incremental Interface Costs
will be due from DIRECTV to TiVo; provided that DIRECTV shall pay to TiVo all
milestone payments for milestone deliverables provided by TiVo prior to the date
of such written notice; provided that in the event TiVo is in material breach,
the foregoing provision and the payment by DIRECTV of amounts pursuant to
Sections 3.6 and 3.7 shall not create a presumption one way or the other as to
whether such charges are or are not direct damages.
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
20
<PAGE>
9.5 Other.
(a) Termination or Expiration. In the event this Agreement is
terminated for any reason or in the case of expiration of this Agreement, unless
otherwise provided for herein, all licenses and payment obligations shall
terminate. Notwithstanding the foregoing, subject to DIRECTV's compliance with
the terms and conditions of Section 4.8 (including, without limitation, the
license restrictions set forth in Section 4.8(b)), for 180 days (the "Grace
---------------
Period") following the effective date of termination (the "Termination Date"),
DIRECTV shall be entitled to: (a) exercise its rights under Section 4.8 to
complete, manufacture, distribute, sell, and otherwise clear any Provo
Receivers, Reno Receivers and/or Two Chip Receivers that are in existence in the
manufacture, production, distribution, retail or sales chain on the Termination
Date ("Grace Period Devices", and together with any other activated Provo
Receivers, Reno Receivers and/or Two Chip Receivers, the "Outstanding
Receivers"); and (b) a perpetual license to support, maintain and otherwise
service such Outstanding Receivers (including the rights set forth in Sections
4.8(a)(iii) and (vi)). Any end user licenses previously granted or granted
during the Grace Period shall remain in full force and effect, provided that the
end user continues to comply with the terms and conditions of such end user
license agreement.
(b) Termination by DIRECTV. In addition to the rights in subsection
(a) above, in the event of termination of this Agreement by DIRECTV in
accordance with the terms of Section 9.2 (Termination for Material Default), all
licenses granted to DIRECTV in Section 4.8 (Manufacturing and Distribution
License) shall continue in full force and effect, to the extent applicable, for
the initial five (5) year Term, subject to DIRECTV's compliance with the terms
and conditions of Section 4.8 (including without limitation, the license
restrictions set forth in Section 4.8(b)) and the payment obligations set forth
in Section 3.4, and TiVo shall continue to provide support services (including
providing the services set forth in Sections 2.3(e), 2.4, 4.2, the "TiVo Ongoing
Support Services") for the Outstanding Receivers. In addition, to the extent
applicable, the following terms shall survive: 2.1(c), 2.1(d), 2.4 (with respect
to DIRECTV's option to continue receiving such services for an additional 5 year
period), 3.3, 3.8, 4.1, 4.6 (solely for the initial five (5) year term) and 11
(solely for the initial five (5) year term).
(c) Termination by TiVo. In addition to the rights in subsection (a)
above, in the event of termination of this Agreement by TiVo in accordance with
the terms of Section 9.2 (Termination for Material Default), TiVo shall have the
option of whether or not to continue to provide the TiVo Ongoing Support
Services for the remainder of the initial five (5) year Term, and so long as
TiVo provides such services, DIRECTV shall continue to pay the fees set forth in
Section 3.3. In addition, DIRECTV shall pay TiVo the charges set forth in
Sections 3.6 and 3.7 for any milestones which have been achieved, and a pro rata
portion for any milestone which has been partially achieved.
(d) Survival of Provisions of this Agreement. The following Articles
and Sections shall survive any expiration or termination of this Agreement:
Article I, Section 2.1(c), Sections 3.6 and 3.7 (solely for any milestones that
have been achieved), Sections 3.9 and 3.10 (for the time periods specified
therein), Section 3.11, Sections 4.1, 4.4, 4.5, 4.7, Articles V and VI, Section
7.1, Section 7.2, Section 7.3, Section 7.4 (except as otherwise provided for
therein) 7.5 (except as otherwise provided for therein), Article VIII, Sections
9.5, 9.6, and 9.7, Article X, and Article XII.
21
<PAGE>
(e) Exercise of Option (from Section 4.6). Notwithstanding subsection
(d) above, (Survival of Provisions of this Agreement), upon the effective date
of the Technology License Agreement, the following terms and conditions of this
Agreement shall be terminated and superseded in their entirety by the terms and
conditions set forth in the Technology License Agreement: (i) Sections 3.2 (Reno
------------
Receiver Buy-Down during Second Period) and 3.4 (Reno, Provo, and Two-Chip
---
Receiver Fees) (all of the foregoing, excluding any payments due and payable as
of the effective date of the Technology License Agreement); (ii) Section 4.8
-----------
(Manufacturing License); (iii) Sections 7.1 (Indemnification), 7.2 (Mitigation
------------ ---
and Exceptions); and (iv) Section 11.2 (Network Operation Continuity).
------------
ARTICLE X.
CONFIDENTIALITY
10.1 Confidential Information. Each party (the "Disclosing Party") may,
from time to time during the term of this Agreement, disclose or make available
to the other party (the "Receiving Party") certain proprietary or non-public
information including, without limitation, trade secrets, know-how, formulas,
flow charts, diagnostic routines, business information, forecasts, financial
plans and data, customer information, marketing plans, and unannounced product
information (collectively, "Confidential Information"). If provided in tangible
form, such information shall be marked as "confidential" or "proprietary" or
with a similar legend and, if disclosed orally or visually, shall be identified
as confidential at the time of disclosure. Confidential Information shall
exclude information the Receiving Party can demonstrate by reasonably detailed
written documentation: (a) was independently developed by the Receiving Party's
employees, consultants or contractors without access to or use of the Disclosing
Party's Confidential Information; (b) became known to the Receiving Party,
without restriction, from a source (having a right to disclose such information)
other than the Disclosing Party without breach of this Agreement; (c) was in the
public domain at the time it was disclosed or enters the public domain through
no act or omission of the Receiving Party; or (d) was rightfully known by the
Receiving Party, without restriction, at the time of disclosure.
10.2 Protection of Confidential Information. The Receiving Party shall not
use the Confidential Information of the Disclosing Party except for the purpose
of carrying out its rights or obligations under this Agreement and shall not
disclose the Confidential Information of the Disclosing Party, except as
expressly authorized in this Agreement or in writing by the Disclosing Party.
Notwithstanding the foregoing, the Receiving Party may disclose any Confidential
Information that must be disclosed pursuant to applicable federal, state, or
local law, regulation, court order, or other legal process or pursuant to the
rules and regulations of any stock exchange or stock association in which
securities of the Receiving Party may be traded from time to time; provided,
that the Receiving Party gives the Disclosing Party prompt written notice
thereof and the Receiving Party obtains prior to any such disclosure a
protective order or other appropriate remedy. The Receiving Party will use the
same degree of care to prevent such misuse or disclosure that the Receiving
Party uses with respect to its own proprietary information, but in no event with
less than with reasonable care. Disclosure of Confidential Information does not
constitute a license with respect to such Confidential Information.
10.3 Disclosure Restrictions. The Receiving Party may disclose Confidential
Information only to its employees, consultants and contractors when such
disclosure is necessary
22
<PAGE>
for the Receiving Party to exercise its rights in compliance with, and only for
purposes contemplated by, this Agreement, provided such employees, consultants
and contractors are advised of the confidential nature thereof and bound by
nondisclosure obligations and restrictions no less restrictive than those set
forth in this Section 10 (Confidentiality).
----------
ARTICLE XI.
NETWORK OPERATION CONTINUITY
11.1 Client Preferred Escrow Agreement. The parties will enter into the
Client Preferred Escrow Agreement attached hereto as Exhibit N.
11.2 Server Preferred Escrow Agreement. In addition, the parties will enter
into a Preferred Escrow Agreement substantially similar to Exhibit N, except
that the following alternate terms shall apply:
(a) The term "Deposit Materials" shall mean the Server Services
Materials, which shall be deposited within 30 days of the Manufacturing Release
of the Version [*]Software, and updated quarterly.
(b) The term "Release Conditions" shall mean: (a) A bankruptcy,
liquidation, dissolution, assignment for the benefit of creditors or other such
event of Depositor that is not rescinded or withdrawn within sixty (60) days of
filing; or (b) A material breach by Depositor of its obligations set forth in
Section 2.3(e) of the Development Agreement, if such material breach is not
cured within sixty (60) days of Depositor's receipt of written notice thereof
from Preferred Beneficiary.
(c) The rights following release identified in Section 4.5 shall be
replaced with the following: "The rights set forth in Section 2.1(c) of the
Technology License Agreement solely to perform the Server Support Services,
subject to Section 2.3 of the Technology License Agreement."
ARTICLE XII.
MISCELLANEOUS
12.1 No Agency. Each party will in all matters relating to this Agreement
act as an independent contractor. Nothing contained in this Agreement, nor the
execution or performance thereof, shall be construed as creating any agency,
partnership, or other form of joint enterprise between the parties. Neither
party will have authority nor represent that it has any authority to assume or
create any obligation, express or implied, on behalf of the other party, or to
represent the other party as agent, employee or in any other capacity.
12.2 Taxes. All payments made by DIRECTV hereunder shall be paid without
deduction for and net of any sales, use, excise, import or export, value-added
or similar tax or duty, government permit or license fees, customs and similar
fees, penalties and interest and any costs associated with the collection or
withholding of any of the foregoing (except for taxes
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
23
<PAGE>
based on TiVo's net income) (collectively, "Taxes"). If any deduction is legally
required on any fees payable by DIRECTV to TiVo hereunder, DIRECTV shall pay in
the manner and at the same time such additional amounts as will result in TiVo
receiving the amounts TiVo would have received absent such required deduction.
DIRECTV shall promptly pay or reimburse all federal, state, and local Taxes, if
any, due, arising from, or measured by amounts payable to TiVo under this
Agreement.
12.3 Amendment, Modification or Waiver. This Agreement shall not be altered
or otherwise amended except pursuant to an instrument in writing signed by each
of the parties hereto.
12.4 Successors; Assigns. All the terms of this Agreement shall be binding
upon and shall inure to the benefit of the permitted successors and assigns of
the respective parties hereto. Anything contained herein to the contrary
notwithstanding, neither party may assign this Agreement without the written
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, following written notice to the other party,
either party may transfer and assign this Agreement, by operation of law or
otherwise, to the surviving entity in the event of a sale to, merger with, or
acquisition of all or substantially all of such party's assets by such entity,
and the other party hereby consents to such assignment in advance.
12.5 Governing Law. This Agreement and all matters or issues related hereto
or arising hereunder shall be governed by the laws of the State of California,
without regard to principles of conflicts of law, as such laws would apply to
contracts entered into by California residents and performed entirely in
California. The parties agree that all disputes and litigation regarding this
Agreement and matters connected with its performance shall be brought in a
federal court in the Northern District or Central District of California or in
state court in Los Angeles County or Santa Clara County, California, and each
party irrevocably submits to the jurisdiction and venue of any such court in any
such action or proceeding.
12.6 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
12.7 Notices. All notices permitted or required under this Agreement shall
be in writing and shall be delivered to the address(es) for notice set forth
below or such other address as either party may specify in writing. Notices
shall be effective (i) on the date received, if delivered by hand; (ii) on the
date sent if sent by facsimile with confirmation, (ii) on the next business day
following delivery thereof to an air courier for overnight delivery, and (iii)
on the fifth business day after deposit into either the United States mail
service (as applicable), postage prepaid, return receipt requested.
<TABLE>
<CAPTION>
<S> <C>
To: TiVo Inc. To: DIRECTV, Inc.
Chief Executive Officer Larry Chapman, Executive Vice President
2160 Gold Street 2230 East Imperial Highway
Alviso, CA 95002 El Segundo, California 90245
Fax: (408) 519-5330 Fax: (310) 535-5422
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
With a copy to: With a copy to:
TiVo Inc. DIRECTV, Inc.
General Counsel: Matthew Zinn General Counsel
2160 Gold Street 2230 East Imperial Highway
Alviso, CA 95002 El Segundo, California 90245
Fax: (408) 519-5330 Fax: (310) 964-4991
</TABLE>
12.8 Force Majeure. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder (except for
payments of money) on account of strikes (other than strikes of a party's own
employees), shortages, riots, insurrection, fires, flood, storm, explosions,
acts of God, war, governmental action, labor conditions (other than with respect
to a party's own employees), earthquakes, material shortages or any other causes
that are beyond the reasonable control of such party; provided, however, that
the parties will use commercially reasonable efforts, including the
implementation of business continuity measures, to mitigate the effects of such
force majeure.
12.9 Section 365(n) of the Bankruptcy Code. All rights and licenses granted
under or pursuant to this Agreement by TiVo to DIRECTV are, and shall otherwise
be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section
101(56) of the United States Bankruptcy Code. The Parties agree that DIRECTV, as
licensee of such rights and licenses, shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code, provided that DIRECTV abides
by the terms of this Agreement.
12.10 Injunctive Relief. It is understood and agreed that, notwithstanding
any other provision of this Agreement, any breach of Section 4.8 (Manufacturing
-----------
and Distribution License) or Article X (Confidentiality) or the license granted
---------
by DIRECTV in Section 2.1(a) and any restrictions related thereto will cause
irreparable damage for which recovery of money damages would be inadequate, and
that both parties shall therefore be entitled to obtain timely injunctive relief
to protect their respective rights under this Agreement, in addition to any and
all remedies available at law.
12.11 Export Controls. Each Party agrees that it will comply with all U.S.
export control laws and the applicable regulations thereunder, as well as any
other applicable laws of the U.S. affecting the export of technology.
12.12 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
12.13 Counterparts. The Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
agreement.
25
<PAGE>
12.14 Confidentiality. The parties shall treat this Agreement, its
existence, attachments, and terms as confidential and proprietary information
subject to nondisclosure agreements between the parties.
12.15 Entire Agreement. This Agreement, including any exhibits and
schedules attached hereto or thereto, in conjunction with the Services
Agreement, constitutes the entire agreement between DIRECTV and TiVo with
respect to the subject matter specifically set forth herein.
12.16 Precedence. Except as specifically provided herein, all other
agreements between the parties effective as of the date hereof, including but
not limited to the Reference Design Agreement, the Original Marketing Agreement,
and the Buy-Down Letter Agreement, shall remain in full force and effect in
accordance with the terms therein. In the event of any conflict between the
terms and conditions of this Agreement and any of the terms and conditions of
the agreements in this Section 12.16, the terms and conditions of this Agreement
shall govern and control.
Remainder of page intentionally left blank.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by
their respective duly authorized officers.
TiVo Inc. DIRECTV, Inc.
By: /s/ Morgan Guenther By: /s/ Lawrence N. Chapman
-------------------------------- ----------------------------------
Name: Morgan Guenther Name: Lawrence N. Chapman
Title: President Title: Executive Vice President
27
<PAGE>
Exhibit B - Subsidies and Revenue
Schedule 1 - Subsidies
TiVo Subsidy Payment to DIRECTV if Manufacturing Release of the Provo Receiver
(with Version [*] Software) does not occur on or before [*]
---------------------------------------------------------------------------
Date Reno Receiver Sold TiVo Subsidy Payment to DIRECTV
---------------------------------------------------------------------------
[*] [*]
---------------------------------------------------------------------------
[*] [*]
---------------------------------------------------------------------------
[*] [*]
---------------------------------------------------------------------------
[*] [*]
---------------------------------------------------------------------------
[*] [*]
---------------------------------------------------------------------------
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-1
<PAGE>
Exhibit B - Subsidies and Revenue
Schedule 2 -Subscriber Fees
[*] to TiVo's [*]Based on [*] in [ *]
--------------------------------------------------------------------
[*] Monthly TiVo DVR/PVR Service
Subscriber Fee Increase
--------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-2
<PAGE>
Exhibit B - Subsidies and Revenue
Schedule 3 - DVR/PVR Service Fee
All fees in this Exhibit B, Schedule 3 are monthly fees.
<TABLE>
<CAPTION>
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Time Period Effective During the Period From During the Period After During the Period
Date to [*] until [*] [*] Manufacturing Release From [*](as
[*] Manufacturing Release and Before [*](as adjusted under
adjusted under Sections Sections 2.3(c) and
2.3(c) and 3.7) 3.7) until [*]
Manufacturing
Release
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reno with Reno TiVo Revenue TiVo Revenue Share [*] Lesser of [*]or [*]of the Lesser of [*]or
Buy-Down by TiVo Share [*] Average Monthly TiVo [*]of the Average
(sold prior to [*]) Service Charges Monthly TiVo
Service Charges
-----------------------------------------------------------------------------------------------------------------------
Reno with no TiVo Revenue TiVo Revenue Share [*] Lesser of [*]or [*]of the [*]
Reno Buy-Down by Share [*] Average Monthly TiVo
TiVo Service Charges
or TiVo
Subsidy Payment
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Reno with N/A TiVo [*] [*] Lesser of [*] or
TiVo Subsidy Revenue [*] of the Average
Payment (if [*] Share Monthly TiVo
Manufacturing [*] Service Charges
Release, as
adjusted, occurs
after [*])
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Provo and Two-Chip N/A N/A Lesser of [*] or [*] of [*]
the Average Monthly TiVo
Service Charges
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</TABLE>
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-3
<PAGE>
<TABLE>
<CAPTION>
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After Manufacturing Release of Version [*]Software
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<S> <C> <C>
Receiver If Receivers Use TiVo's Telco Network for Push If Receivers Do Not Use TiVo's Telco Network or Uses
Content and Data Back-Haul TiVo's Telco Network only for Back-Haul of Box
Diagnostics Data
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Reno with Reno Buy-Down Lesser of [*] or [*] of the Average Monthly TiVo Lesser of [*] or [*] of the Average Monthly
Service Charges
----------------------------------------------------------------------------------------------------------------------------------
Reno with no Lesser of [*] or [*]of the Average Monthly TiVo [*]
Reno Buy-Down Service Charges
or TiVo
Subsidy Payment
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Reno with Lesser of [*] or [*] of the Average Monthly TiVo [*]
TiVo Subsidy Payment Service Charges
----------------------------------------------------------------------------------------------------------------------------------
Provo and Two-Chip Lesser of [*] or [*] of the Average Monthly TiVo [*]
Service Charges
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</TABLE>
The Average Monthly TiVo Service Charge shall be equal to: (i) the monthly price
charged by TiVo for TiVo Service on a TiVo Stand Alone Receiver; or (ii) the
weighted-average of the monthly prices charged by TiVo for TiVo Service on a
TiVo Stand Alone Receiver, if there is more than one monthly price charged.
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-4
<PAGE>
Exhibit F - Liquidity Test
In the event that, at the end of any month, the balance in TiVo's unrestricted
cash accounts drops below $12 million (such requirement defined as the
"Liquidity Test"), TiVo will notify DIRECTV within 20 days of the end of such
month. In such event, TiVo will notify DIRECTV within 20 days of the time it
subsequently meets the Liquidity Test, but such notice shall not affect
DIRECTV's rights to place funds in and maintain the Escrow Account in accordance
with Section 3.2 of the Agreement.
In addition, as an informational convenience, and separate from the Liquidity
Test, TiVo will also notify DIRECTV within 20 days if the balance in TiVo's
unrestricted cash accounts drops below $15 million at the end of any month.
F-1
<PAGE>
Exhibit J - Intellectual Property and
Technology Licence Agreement
This Intellectual Property and Technology License Agreement (the "Agreement") is
entered into as of February 15, 2002 (the "Effective Date") by and between
DIRECTV, INC., a California corporation having its principal place of business
at 2230 East Imperial Highway, El Segundo, California 90245 ("DIRECTV"), and
TIVO INC., a Delaware corporation having its principal place of business at 2160
Gold Street, Alviso, California 95002 ("TiVo").
Recitals
Whereas, TiVo has developed certain technology that enables, among other
functionality, one touch recording, pausing, rewinding and slow-motion viewing
of television programming;
Whereas, DIRECTV is a leading digital satellite television service provider;
Whereas, TiVo and DIRECTV are parties to a development agreement dated on
February 15, 2002 (the "Development Agreement") relating to the development,
production and marketing of a DIRECTV-TiVo combination receiver referred to as
the "Provo Receiver";
Whereas, pursuant to the Development Agreement, TiVo granted DIRECTV an option
to license the TiVo Client Technology either alone or together with the TiVo
Server Technology, for use with DIRECTV Devices and the DIRECTV Services (the
"Option");
Whereas, the Development Agreement provides that the Option is exercisable by
DIRECTV upon payment of the applicable License Fee provided for herein to TiVo;
and
Whereas, DIRECTV presently wishes to exercise the Option to license the TiVo
Licensed Technology, and TiVo is willing to license such technology to DIRECTV
on the terms and conditions set forth in this Agreement.
Now, Therefore, in consideration of the foregoing and the mutual covenants,
promises and undertakings set forth in this Agreement, DIRECTV and TiVo agree as
follows:
Agreement
1. Definitions.
The capitalized terms in this Agreement shall have following meaning:
1.1 "DIRECTV Device" shall mean a consumer electronics product developed
by, for or on behalf of DIRECTV (including under certain manufacturing
arrangements) that is specifically designed to enable a Subscriber to receive
and access the DIRECTV Service.
J-1
<PAGE>
1.2 "DIRECTV Device With TiVo" shall mean a DIRECTV Device that: (a) uses
or contains all or any part of the TiVo Licensed Software; (b) incorporates a
material portion of the hardware reference design of the Provo or Two-Chip
Receiver; or (c) incorporates the Mediaswitch ASIC.
1.3 "DIRECTV Improvements" shall mean Improvements made by or on behalf of
DIRECTV . The definition of DIRECTV Improvements shall specifically exclude: (i)
the TiVo Licensed Technology and (ii) any and all works made by or on behalf of
DIRECTV resulting from independent work based on technology and/or information
(such as patents, copyrights and common knowledge) that is available in the
public domain.
1.4 "DIRECTV Source Code Improvement"
shall mean any derivative work of the TiVo Source Code made by DIRECTV or any
Authorized Personnel (as defined in Section 2.3(a) (Handling of TiVo Source
Code)) which is in Source Code form.
1.5 "DIRECTV Service" shall mean the television, video, audio, data or
other programming services or any internet, broadband, digital subscriber line,
or other information service, distributed from time to time by DIRECTV via the
direct broadcast satellite distribution system, the internet, telecommunication
lines, or other communication media, and offered and marketed under the DIRECTV
brand or other brands owned by DIRECTV or its subsidiaries and provided to
Subscribers by DIRECTV via a DIRECTV Device.
1.6 "End User" shall mean a consumer who purchases a DIRECTV Device and/or
a DIRECTV Device With TiVo for such consumer's own personal use and not for
resale or further distribution.
1.7 "Improvements" shall mean any and all adaptations, customizations,
modifications, revisions, upgrades, improvements, enhancements, and any other
developments derived or originated from the TiVo Licensed Technology, including,
without limitation, any derivative works of any copyrightable material therein,
as defined by the Copyright Law of the United States of America, Title 17 U.S.C.
Section 101 et seq., but specifically excluding the TiVo Licensed Technology.
1.8 "License Fee" shall mean the one-time license fee that DIRECTV shall
pay to TiVo pursuant to Section 5.2(a) (License Fee).
1.9 "Object Code" shall mean computer programming code substantially in
binary form that is directly executable by a computer after processing, but
without compilation or assembly.
1.10 "Prior Software Version" shall mean [*] of TiVo's personal digital
video recorder client device software developed by TiVo and implemented on the
Reno Receivers.
----------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
J-2
<PAGE>
1.11 "Provo Receiver" shall have the meaning assigned to it in the
Development Agreement.
1.12 "Reno Receiver" shall have the meaning assigned to it in the
Development Agreement.
1.13 "Source Code" shall mean computer programming code and all associated
header files that may be displayed in a form readable and understandable by a
programmer of ordinary skill including any related source code level system
documentation, development tools, comments and procedural code, such as job
control language, and which requires further compilation or other processing to
be executed by a computer.
1.14 "Subscriber" means (i) an End User who is an active paying customer of
the DIRECTV Service or (ii) an End User that DIRECTV enables to receive the
DIRECTV Service.
1.15 "Territory" shall mean North America, Central America and South
America.
1.16 "Third Party Technology" shall mean any software, components, parts,
proprietary information, intellectual property, subassemblies or other
technology owned or controlled by a party other than TiVo (or its affiliates)
and specified on Exhibit B (Third Party Technology), as may be amended in
accordance with the terms of Section 2.2 (Third Party Technology), that is
incorporated or referenced in, or required for use of, the TiVo Licensed
Technology.
1.17 "TiVo Client Technology" shall mean the TiVo Client Technology
Deliverables and Hardware Reference Design Deliverables as defined in Exhibit A.
1.18 "TiVo Improvements" shall mean any and all Improvements made by or on
behalf of TiVo.
1.19 "TiVo Licensed Software" shall mean (i) the Prior Software Versions
and the TiVo Software as defined in the Development Agreement, collectively,
along with any updates thereto that may be provided by TiVo, and, (ii) if
DIRECTV exercises the Option to license the TiVo Server Technology, the TiVo
Server Technology.
1.20 "TiVo Server Technology" shall mean the Server Deliverables as defined
in Exhibit A
1.21 "TiVo Service" shall mean the personal video recording services
offered by TiVo, carrying the TiVo brand, that involve the delivery of program
guide data and other TiVo content and data by TiVo to video recording devices or
similar devices installed in End Users' homes, for which TiVo receives
subscription fees.
1.22 "TiVo Source Code" shall mean the TiVo Licensed Software in Source
Code form.
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1.23 "TiVo Licensed Technology" shall mean: (i) the TiVo Client Technology,
and (ii) if DIRECTV exercises the Option to license the TiVo Server Technology,
the TiVo Server Technology.
1.24 "Two-Chip Receiver" shall have the meaning assigned to it in the
Development Agreement.
2. LICENSE GRANTS.
If DIRECTV elects to receive only the TiVo Client Technology as of the Effective
Date of this Agreement, DIRECTV may subsequently elect to license the TiVo
Server Technology following the delivery to TiVo of a subsequent written Option
exercise notice.
2.1 TiVo Technology License.
(a) Manufacturing and Distribution License.
If DIRECTV exercises the Option to license the TiVo Client Technology and pays
the applicable License Fee, then subject to the terms and conditions of this
Agreement, TiVo grants to DIRECTV a perpetual, irrevocable (except as set forth
in Section 11.3 (Termination)), non-transferable (except as set forth in Section
13.11 (Assignment), non-exclusive, royalty-bearing, non-sublicenseable (except
as expressly set forth herein) license, under all of TiVo's present and future
rights in the TiVo Client Technology, to: (i) make and have made the DIRECTV
Devices with TiVo, including the Provo Receiver and Two-Chip Receiver (with TiVo
Licensed Software solely in object code form); (ii) make and have made
improvements to the Provo Receivers and Two-Chip Receivers; (iii) use, maintain,
display and perform DIRECTV Devices with TiVo, including Reno Receivers, Provo
Receivers and Two-Chip Receivers in the Territory; (iv) distribute (e.g., offer
to sell, sell, offer to lease, lease or otherwise transfer) and import Provo
Receivers and Two-Chip Receivers in the Territory; (v) distribute the TiVo
Licensed Software (solely in object code form) with, or download to, DIRECTV
Devices with TiVo, including Provo Receivers, Reno Receivers, and Two-Chip
Receivers; (vi) sublicense to DIRECTV Service subscribers who have access to the
DVR/PVR Functionality (as defined in the Development Agreement) the right to
use, display and perform the TiVo Licensed Technology as incorporated in (or
downloaded to) DIRECTV Devices with TiVo, including Provo Receivers, Reno
Receivers and/or the Two-Chip Receivers pursuant to an end user agreement
subject to Section 2.3(c) (it being understood that in no event shall DIRECTV be
deemed to be in violation of the grant contained in this Section 2.1(a) if
despite its providing the end user license agreement to end users and using
commercially reasonable efforts to enforce the terms thereof, users are found to
be in violation of such end user license agreement); and (vii) distribute the
Provo Receiver and Two Chip Receiver manufacturing packages and TiVo Licensed
Software (solely in object code form) to manufacturers of DIRECTV Devices with
TiVo, including the Provo Receiver or the Two-Chip Receiver, and sublicense to
such manufacturers the rights set forth in (i), (ii), (iii), (iv), (v) or (vi)
above, pursuant to a manufacturing sublicense agreement containing the minimum
terms and conditions set forth in Exhibit L. Notwithstanding the foregoing,
following Manufacturing Release of the Version 3.1 Software (as defined in the
Development Agreement), DIRECTV shall not have the right to (iv) for Prior
Software Versions.
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(b) Client Source Code License. If DIRECTV exercises the Option to
license the TiVo Client Technology and pays the applicable License Fee, then
subject to the terms and conditions of this Agreement, TiVo grants to DIRECTV a
perpetual, irrevocable (except as set forth in Section 11.3 (Termination)),
non-transferable (except as set forth in Section 13.11 (Assignment),
non-exclusive, royalty-bearing, non-sublicenseable (except as expressly set
forth herein) license, under all of TiVo's present and future rights in the
Source Code of the TiVo Client Technology to create and have created DIRECTV
Improvements of the Source Code of the TiVo Client Technology and exercise all
rights set forth in Section 2.1(a) with respect to such DIRECTV Improvements
and, subject to Section 2.3(a), to translate, reverse engineer, decompile,
disassemble, or attempt to derive Source Code solely for the purposes of testing
and security validation.
(c) TiVo Server Technology. If DIRECTV exercises the Option to license
the TiVo Server Technology and pays the applicable License Fee, then subject to
the terms and conditions of this Agreement (including without limitation, with
respect to TiVo Server Technology in Source Code form and DIRECTV Source Code
Improvements, the limitations of Section 2.3(a)), TiVo grants to DIRECTV a
perpetual, irrevocable (except as set forth in Section 11.3 (Termination)),
non-transferable, non-sublicenseable (except as expressly set forth herein)
license, under all of TiVo's present and future rights in the TiVo Server
Technology, to:
(i) internally use, perform, display, reproduce, modify,
decompile, disassemble, reverse engineer, combine and maintain the TiVo Server
Technology for use in providing DIRECTV Services solely to End Users of DIRECTV
Devices With TiVo;
(ii) internally use, perform, display, reproduce, modify,
decompile, disassemble, reverse engineer, combine, maintain and create DIRECTV
Improvements for use in providing DIRECTV Services solely to End Users of
DIRECTV Devices With TiVo; and
(iii) use, display, distribute, perform, offer to sell, sell,
lease, and offer to lease the DIRECTV Services, using the TiVo Server Technology
or DIRECTV Improvements, solely to End Users of DIRECTV Devices With TiVo
located in the Territory; and
(iv) have done for or on behalf of DIRECTV the rights granted to
DIRECTV herein, solely in support of DIRECTV's business operations for the
DIRECTV Device With TiVo and the DIRECTV Service, provided that DIRECTV will not
solicit third parties for such services prior to soliciting TiVo for such
services.
2.2 Third Party Technology. DIRECTV acknowledges that the TiVo Licensed
Technology may incorporate, reference or require the use of certain Third Party
Technology and that licenses granted pursuant to Section (TiVo Technology
License) specifically exclude any license rights in or to such Third Party
Technology. DIRECTV acknowledges that TiVo shall not be responsible for
obtaining any license rights in the Third Party Technology. TiVo will notify
DIRECTV of any proposed revisions to Exhibit B (Third Party Technology), which
revisions shall require DIRECTV's consent (which shall not be unreasonably
withheld or delayed, it being understood that withholding by DIRECTV of consent
to a revision that would
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impose additional economic cost of more than a nominal amount on DIRECTV shall
not be deemed unreasonable).
2.3 License Restrictions.
(a) Handling of TiVo Source Code. The TiVo Source Code and the DIRECTV
Source Code Improvements shall: (i) only be provided to DIRECTV employees on a
need-to-know basis, solely for the purposes authorized under this Agreement, and
provided such employees are expressly bound in writing by the nondisclosure
obligations and restrictions on use contained in this Agreement (such employees
are hereinafter referred to as, "DIRECTV Authorized Personnel"); and (ii) be
subject to the terms and conditions set forth in Exhibit D (Secure Procedures
for Handling TiVo Source Code). Following a request by DIRECTV and subject to
the consent of TiVo (that shall not be unreasonably withheld or delayed),
DIRECTV may provide applicable sections or application program interfaces (APIs)
of the TiVo Source Code and/or DIRECTV Source Code Improvements to certain
third-party software development firms, manufacturers, agents, consultants, and
other business partners of DIRECTV, provided, that such parties: (x) have a
demonstrable need to access the Source Code in conjunction with such parties'
written agreements with DIRECTV; (y) are expressly bound in writing by the
nondisclosure obligations and restrictions on use contained in this Agreement
(such parties are hereinafter also referred to as, "Third Party Authorized
Personnel", and with the DIRECTV Authorized Personnel, the "Authorized
Personnel"); and (z) shall be subject to the terms and conditions set forth in
Exhibit D (Secure Procedures for Handling TiVo Source). Notwithstanding the
foregoing, TiVo's consent [*] for DIRECTV to provide: (1) the [*] of the TiVo
Licensed Technology to [*]; or (2) applicable sections or APIs of the TiVo
Source Code and/or DIRECTV Source Code Improvements to [*], provided that such
party enters into a license agreement with TiVo in the form attached hereto as
Exhibit K (Manufacturer Source Code License) and such parties will be deemed
Authorized Personnel and must comply with all other requirements for Authorized
Personnel.
(b) TiVo User Interface. Notwithstanding DIRECTV's rights pursuant to
Section 2.1, DIRECTV will not modify the TiVo Source Code to: (a) use the term
TiVo Central; (b) use TiVo as the primary brand of the DIRECTV Services; (c) use
loop sets confusingly similar to those used by TiVo in TiVo products other than
DIRECTV Devices With TiVo as of the Effective Date. In addition, DIRECTV's right
to continue to use "Wishlist", "Season Pass", "Showcases", "TiVolution", "TiVo
Suggestions" or "To Do List" TiVo Marks, is conditioned on DIRECTV using such
terms with functionality substantially the same as the functionality and form
associated with such terms in Version 3.1 Software and/or Version 4.1 Software
(i.e., achieving the substantially same result in substantially the same way
resulting in a substantially similar user experience).
(c) End User Agreements. In the event of any sublicenses granted to
End Users of the DIRECTV Devices With TiVo pursuant to Section 2.1 (TiVo
Technology License), DIRECTV shall grant such sublicense pursuant to the End
User license agreement (the "End User License Agreement") governing such End
User's use of the TiVo Licensed Technology as
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incorporated in a DIRECTV Device With TiVo. The minimum terms and conditions of
such End User License Agreement are set forth in Exhibit E (End User Terms).
DIRECTV shall provide a copy of the End User License Agreement in the packaging
for the DIRECTV Device With TiVo or shall otherwise distribute a copy to the End
User in a manner approved (such approval not to be unreasonably withheld) by
TiVo.
(d) General Restrictions. Except as expressly provided in this
Agreement, DIRECTV shall not, and shall not authorize any third party to: (i)
sublicense, rent, lease, loan, timeshare, sell, distribute, assign or transfer
any rights in, grant a security interest in, or transfer possession of any TiVo
Licensed Technology; or (ii) obfuscate, alter or remove any of TiVo's copyright
or other proprietary rights notices or legends appearing on or in the TiVo
Licensed Technology as delivered to DIRECTV, and all such markings shall be
included on or in all copies of any portion of the TiVo Licensed Technology made
by DIRECTV (all marking required for copies distributed to third parties is set
forth in Section (Branding and Use of TiVo Marks)).
2.4 DIRECTV[*].
(a) DIRECTV [*] DIRECTV Enterprises, Inc. ("Enterprises"), the
Subsidiaries of Enterprises (including DIRECTV, the "DIRECTV Subsidiaries"), [*]
or the [*] that [*] (or in the case of [*}, was [*]) [*] of any [*], any of the
[*], or [*], which [*] to a [*] following delivery of the [*], provided, that,
in the case of [*], solely such [*] which are [*]. For the avoidance of doubt,
applications which are authored to standard interfaces available to third party
developers (e.g., TVBus, Device Mosaic, and "Plug-in interface") [*]. The
foregoing will not apply to [*] (except any such [*] or other [*] as is
initiated by [*] or any [*]) regarding [*].
(b) In the event of a [*] as to whether [*], [*] shall have the [*]
that it has [*] without [*]. It is expressly understood and agreed that [*] in
this Section 2.4 shall bind and inure to all successors of interest in TiVo and
DIRECTV and survive the expiration or termination of this Agreement.
2.5 TiVo[*]. TiVo [*] that [*] shall [*] any [*], by [*] that are [*] as of
the Effective Date; provided [*] are not [*] related to [*] which are [*]
(except where [*] to have [*]). The foregoing will not apply to [*] which [*]
(except any [*]), ([*] as set forth in Section 2.4; [*]which [*] and within [*]
specified in [*]. It is expressly understood and agreed that [*] in this Section
2.5(a) shall bind and inure to all successors of interest in TiVo and DIRECTV
and survive the expiration or termination of this Agreement, except for a
termination by [*] due to a [*].
2.6 [*] Option.
(a) Upon [*], TiVo, on behalf of itself and the TiVo Subsidiaries,
shall [*] pursuant to which TiVo [*] grant Enterprises, the DIRECTV
Subsidiaries, and the DIRECTV Supporting Parties [*], solely with respect to
DIRECTV Products specified by DIRECTV and
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which are manufactured after the delivery of the TiVo Technology [*]; provided
DIRECTV is not in material breach of any term of this Agreement (and Enterprises
and the other DIRECTV Subsidiaries have not taken any action that, if taken by
DIRECTV, would be a breach hereof) which remains uncorrected after the proper
notice of such material breach and within the cure period specified in this
Agreement. [*] shall be [*]: (a) a [*], which [*] with respect to DIRECTV
Devices [*], and which [*] shall be [*] (e.g., if DIRECTV [*], there shall be
[*]; (b) the [*] shall, [*], be [*] (if required and requested by [*]) to a [*],
subject to [*] for any [*] through such [*]; and (c) such other [*] as may be
[*].
(b) The License options set forth in this Section 2.6 shall bind and
inure to all successors of interest to DIRECTV (and shall expressly apply to any
successor to the direct-to-home satellite network distribution business of
DIRECTV) and shall survive the expiration or termination of this Agreement,
except for a termination by TiVo due to a material breach by DIRECTV.
(c) Each License provided for herein shall be independently
selectable, and the exercise of any License hereunder shall in no way effect any
of the parties rights or obligations under Sections 2.4, 2.5 and 2.7 or any
rights under Section 7.4 and 7.5 of the Development Agreement.
2.7 Successors.
(a) For the avoidance of doubt, if DIRECTV's direct-to-home satellite
network distribution business has been directly or indirectly acquired by an
entity or was merged with or into an entity (such entity the "Other Party")
prior to the delivery of the TiVo Source Code, then: (1) the [*] set forth in
[*] shall apply to such Other Party (or successor), the Other Party Products
that are in use or deployed before the delivery of the TiVo Licensed Technology,
and Other Party's (or successor's) [*], if and only if the Other Party (or
successor) [*] (and the failure of Other Party (or successor) to so elect will
not be deemed a breach of this Agreement); (2) the Other Party (or successor)
shall be included in the [*] set forth in Section 2.6(a); and (3) any of the [*]
specified by DIRECTV (or successor) not in use or deployed as of the delivery of
the TiVo Technology shall [*].
(b) For the avoidance of doubt, if DIRECTV's direct-to-home satellite
network distribution business is directly or indirectly acquired or merged with
or into an Other Party after delivery of the TiVo Source Code, then, (1) the
Other Party (or successor) shall be included in the [*]); and (2) any of the [*]
specified by DIRECTV (or successor) shall be [*] (3) the Other Party's (or
successor's) [*] and (4) the [*] set forth in [*] shall not apply to such [*].
2.8 Additional Defined Terms.The following terms shall apply to Sections
2.4, 2.5, 2.6 and 2.7.
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(a) "TiVo Parties" means TiVo's and TiVo's Subsidiaries' suppliers
(including technology providers), distributors, dealers, manufacturers,
consultants, customers or licensees and other business partners.
(b) "DIRECTV Supporting Parties" means DIRECTV's, Enterprise's (as
defined below) and DIRECTV's Subsidiaries' (as defined below) suppliers
(including technology providers), distributors, dealers, customers,
manufacturers, consultants and other business partners who support the DIRECTV
Device or the DIRECTV Service.
(c) "Products" shall mean any products, services, or distribution
system or systems utilized by or on behalf of an entity.
(d) "Subsidiaries" shall mean an entity that at any time during the
term of this Agreement is a wholly-owned subsidiary of a party and such entity
shall be a "Subsidiary" only so long as it is wholly-owned.
3. Delivery and Acceptance.
3.1 Delivery. Upon payment by DIRECTV of the applicable License Fee, TiVo
shall deliver to DIRECTV the applicable TiVo Client Technology or TiVo Server
Technology as identified in Exhibit A, with any TiVo Licensed Software in Source
Code form.
3.2 Acceptance. DIRECTV shall have sixty (60) days (the "Acceptance
Period") from receipt of the TiVo Licensed Technology to verify that the
delivery is complete. If during the Acceptance Period, DIRECTV or TiVo
determines that any component of the TiVo Licensed Technology is missing or
incomplete, DIRECTV shall promptly notify TiVo in writing of such omission and
TiVo shall deliver the missing or complete components as soon as commercially
practicable. The TiVo Licensed Technology shall be deemed unconditionally and
irrevocably accepted upon the conclusion of the Acceptance Period or at any time
DIRECTV modifies or uses the TiVo Licensed Technology for any purpose other than
testing and verification, whichever occurs first. Without limiting the
foregoing, if at any time following the Acceptance Period, DIRECTV or TiVo
discovers that, any component was not delivered to DIRECTV as of the delivery
date, TiVo agrees to provide such component to DIRECTV.
4. Branding and Use of Tivo Marks.
4.1 Branding Requirements. DIRECTV shall provide appropriate credits to
TiVo, as mutually agreed to by TiVo and DIRECTV, in the marketing and
distribution of any DIRECTV Device With TiVo. Branding of DIRECTV Devices With
TiVo shall be in conformance with the branding requirements set forth in Exhibit
F (Branding Requirements), which shall be subject to and not in conflict with
Exhibit H - Schedule 1 (DIRECTV Trademark & Style Guide).
4.2 License to TiVo Marks. Subject to the terms and conditions of this
Agreement, TiVo hereby grants to DIRECTV a royalty-free, worldwide, nonexclusive
license to use TiVo's trademarks, service marks, trade names and logos
specifically set forth in Exhibit G (TiVo Marks) (collectively, the "TiVo
Marks") solely for the purposes set forth in Section 4.1 (Branding Requirements)
as related to the DIRECTV Device With TiVo. Before making use of
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any TiVo Mark, DIRECTV shall provide TiVo with a sample of the proposed use of
the TiVo Marks for approval by TiVo, which shall comply with Exhibit H -
Schedule 2 (TiVo Trademark Usage Guidelines). If TiVo rejects the proposed use
of the TiVo Marks as not being consistent with the requirements of Section 4.1,
TiVo shall notify DIRECTV of the reason for the rejection and DIRECTV will
modify or cancel the proposed use consistent with Section 4.1. All use of the
TiVo Marks hereunder shall inure to the benefit of TiVo. TiVo has and shall
retain exclusive ownership of the TiVo Marks, and DIRECTV will not contest or
challenge, or do anything inconsistent with, TiVo's exclusive ownership of the
TiVo Marks. Without limiting the generality of the foregoing, DIRECTV may not
affix, append, or place any of its trademarks, trade names, or logos to, or in
close proximity to, the TiVo Marks in a manner that results or could result in
the creation of a unitary composite mark. TiVo reserves the right to terminate
DIRECTV's right to use the TiVo Marks, at any time and at TiVo's sole
discretion, subject to a commercially reasonable transition period, provided
further that DIRECTV's obligations under Sections 2.3(d)(ii) shall be terminated
as they apply to the TiVo Marks and DIRECTV's obligations under Section 4.1
shall be terminated as they apply to such TiVo Marks. Any termination of rights
pursuant to the preceding sentence shall not affect any other rights of DIRECTV
hereunder, including the license rights granted to DIRECTV pursuant to Section
2.
5. TiVo Maintenance Services and Training.
5.1 Maintenance Services. DIRECTV may, at its discretion, elect to receive
annual maintenance services for the TiVo Licensed Technology (the "Maintenance
Services") by payment to TiVo of an annual fee in the amount and according to
the terms set forth in Exhibit I (TiVo Maintenance). DIRECTV may make such
election at any time during the Term; provided (i) that DIRECTV pays to TiVo the
annual fee for the year of election and any prior years (i.e., from the
Effective Date to the year of election); and (ii) that at the time of such
election, TiVo is currently maintaining the version of the TiVo Licensed
Software for which DIRECTV requests maintenance. Maintenance Services may be
renewed annually during the Term following the request by DIRECTV and the
payment of the applicable maintenance fee.
(a) Training. At any time during the first sixty (60) days following
delivery of the TiVo Licensed Technology, DIRECTV may request that TiVo provide
up to [*]. Such training shall be provided [*] according to a schedule to be
mutually agreed upon by the parties. DIRECTV shall have the right to purchase at
least [*] additional hours of training from TiVo at a rate of [*].
6. License Fees and Royalties.
6.1 License Fee. In consideration of the license(s) granted in Section 2.1
(TiVo Technology License), DIRECTV shall pay to TiVo the applicable License Fee.
Such License Fee is payable upon DIRECTV's election to exercise the Option for
the TiVo Client Technology License either alone or together with TiVo Server
Technology License, as follows:
(a) TiVo Client Technology License Fee: [*]; and
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(b) TiVo Server Technology License Fee: at DIRECTV's option, either
(i) [*] or (ii) [*] plus [*].
6.2 Royalties. DIRECTV shall pay TiVo the royalties set forth in this
Section 6.2 (the "Royalties").
(a) Royalties on Receivers Activated Prior to Effective Date.
(i) For all DIRECTV Devices With TiVo which are activated as of
the Effective Date and which are either a Provo Receiver (as defined in the
Development Agreement), Two-Chip Receiver (as defined in the Development
Agreement) or Reno Receiver (as defined in the Development Agreement) for which
TiVo has not paid a Buy Down pursuant to Section 3.1 of the Development
Agreement (any such receiver, a "Qualified Receiver"), DIRECTV will pay to TiVo
a one time payment of [*] multiplied by the total number of such Qualified
Receivers, [*], for each household, [*] (as defined in the Development
Agreement) [*], up to a [*] at each such household (e.g., a [*] may result in a
[*] of [*] the Royalties payment). The foregoing shall be in lieu of DIRECTV's
payment obligation under Section 3.4 of the Development Agreement, which
obligations shall terminate as of the Effective Date.
(ii) For all DIRECTV Devices with TiVo which are activated as of
the Effective Date other than those addressed pursuant to Section 6.2(a)(i)
above, DIRECTV will have the option of either: (A) continuing to pay TiVo the
monthly amounts set forth in Section 3.4 (and Exhibit B, Schedule 3) of the
Development Agreement for all such receivers; or (B) paying TiVo a one time fee
equal to: [*].
(b) Royalties on Receivers Activated After Effective Date. For all
other DIRECTV Devices with TiVo other than those set forth in Section 6(a)
above, DIRECTV will pay to TiVo [*] for each activation of a DIRECTV Device With
TiVo. Such Royalties shall accrue at the time a DIRECTV Device With TiVo [*].
Such royalties are payable [*], with payment due simultaneous with submission of
the royalty report required under Section 6.5 (Royalty Reports). The amounts
payable by DIRECTV pursuant to this paragraph shall be reduced by any shortfall
payments made by DIRECTV pursuant to Section 2.2(b) of the Development
Agreement.
(c) Services Agreement [*]. In [*] pursuant to the Services Agreement,
TiVo shall [*] Shared Revenue (as defined in the Services Agreement) less [*],
until [*] for which DIRECTV [*].
6.3 [*].
(a) Scope. The License Fee and Royalties to be paid by DIRECTV to TiVo
under this Section 6 (License Fees and Royalties), when taken in the aggregate,
shall be less than or equal to the aggregated license fees and per unit
royalties to be paid by any other unaffiliated TiVo licensee receiving a license
to the TiVo Licensed Technology after the effective date of the
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Development Agreement on terms and conditions substantially similar to those
set forth herein; provided, that the foregoing shall not apply to any licenses
to the TiVo Licensed Technology granted in connection with any claim, action,
dispute or litigation or any settlement thereof or any licenses granted prior to
the Effective Date.
(b) Adjustment. In the event TiVo provides a licensee with a license
fee and per unit royalties which, when taken in the aggregate, are less than
those set forth in this Section 6 (License Fees and Royalties), TiVo shall
disclose to DIRECTV (subject to confidentiality restrictions) the relevant terms
and conditions of such other license agreement and, at DIRECTV's election, and
solely for the period that such lesser aggregated fees and royalties are
provided to such licensee, adjust DIRECTV's per unit royalties such that the
aggregate of DIRECTV's License Fee and Royalties are no greater than the
aggregate of such licensee's license fees and royalties and provide such
adjusted royalties to DIRECTV on the same terms and conditions as provided to
the licensee. Any overpayments made by DIRECTV as a result of such adjustments
will be credited against future Royalties payable by DIRECTV. The foregoing
represents DIRECTV's sole remedy in the event the most favored nation provision
in this Section 6.4 (Most Favored Nation) is triggered.
6.4 Manufacturer License Payment. In the event that TiVo licenses or
otherwise provides use rights for the TiVo Client Technology (including
functionally or substantively similar technology of TiVo) to certain third
parties (such as manufacturers and other consumer electronics component makers)
that are manufacturing or otherwise performing services on behalf of DIRECTV for
the DIRECTV Devices With TiVo, upon DIRECTV's request, the manufacturing of such
DIRECTV Devices with TiVo will be subject to the licenses granted herein and the
terms of this Agreement, and as such, any fees or other restrictions imposed on
such manufacturer by TiVo shall be waived. In effect, TiVo shall be permitted to
collect only one (1) such fee for each DIRECTV Device With TiVo, which will be
from DIRECTV.
6.5 Royalty Reports. Within thirty (30) days following the end of each
calendar [*] ending on [*], and within thirty (30) days after any termination of
this Agreement for any reason, DIRECTV shall submit to TiVo a royalty report
detailing, for the reporting period: (i) the number of all DIRECTV Devices With
TiVo activated by DIRECTV and DIRECTV's product identifier (such as model
number); and, if DIRECTV exercises the Option to license the TiVo Server
Technology and elects to pay the per subscriber fee identified in Section
6.2(b), (ii) the number of subscribers to any DVR/PVR Service that contains or
uses the TiVo Server Technology.
6.6 Payments. All payments made by DIRECTV hereunder must be made in United
States Dollars and shall be paid without deduction, set-off, or counterclaim,
free and clear of any restrictions or conditions.
6.7 Taxes. All payments made by DIRECTV hereunder shall be paid without
deduction for and net of any sales, use, excise, import or export, value-added
or similar tax or duty, government permit or license fees, customs and similar
fees, penalties and interest and any
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costs associated with the collection or withholding of any of the foregoing
(except for taxes based on TiVo's net income) (collectively, "Taxes"). If any
deduction is legally required on any fees payable by DIRECTV to TiVo hereunder,
DIRECTV shall pay in the manner and at the same time such additional amounts as
will result in TiVo receiving the amounts TiVo would have received absent such
required deduction. DIRECTV shall promptly pay or reimburse all federal, state,
and local Taxes, if any, due, arising from or measured by amounts payable to
TiVo under this Agreement.
6.8 Records and Audits. For at least eighteen (18) months after any royalty
payment, DIRECTV shall maintain complete, current and accurate records
documenting all amounts to be paid to TiVo hereunder. No more than once every
year and for one year after the last Royalty is due, TiVo or its designee (which
designee shall be subject to approval by DIRECTV (not unreasonably withheld or
delayed) and appropriate confidentiality requirements) shall have the right,
upon twenty (20) business days' notice and during regular business hours at
DIRECTV's regular locations for maintenance of such records, to conduct an audit
of the records maintained pursuant to this Section 6.8, to verify compliance
with this Agreement. If any such audit should disclose any underpayment of
royalties or other fees, DIRECTV shall promptly pay TiVo such underpaid amount,
together with interest at the lesser of: (i) 18% per annum or (ii) the highest
rate allowed by law, during such period in which such amount became due until
paid. If any such audit should disclose any overpayments of royalties or other
fees, DIRECTV shall have the right to offset any such amounts against future
amounts payable by DIRECTV hereunder; provided that if the overpayment exceeds
five percent (5%) in any calendar quarter, such offset shall be reduced by
one-half of the reasonable costs and expenses incurred by TiVo in connection
with such audit. The audit will be conducted at TiVo's expense except as
otherwise provided for above, unless the audit reveals that DIRECTV has
underpaid TiVo by five percent (5%) or more in any calendar quarter, in which
case DIRECTV will reimburse TiVo for all reasonable costs and expenses incurred
by TiVo in connection with such audit.
7. Ownership.
7.1 TiVo. Excluding any Third Party Technology therein, TiVo has and shall
retain exclusive ownership of all of its right, title, and interest in and to
the TiVo Client Technology, TiVo Server Technology, TiVo Marks, and any TiVo
Improvements. Other than the rights granted in Section 2.1 (TiVo Technology
License), no other license, right, or interest is granted to DIRECTV by
implication, estoppel, or otherwise, for any purpose.
7.2 DIRECTV. Subject to TiVo's ownership of the TiVo Licensed Technology
and TiVo Improvements as set forth in Section 7.1 (TiVo) above, DIRECTV shall
have sole and exclusive right, title and interest in and to any DIRECTV
Improvements. Notwithstanding anything in this Agreement to the contrary,
including DIRECTV's indemnification obligations herein, DIRECTV shall have no
obligation to provide any DIRECTV Improvement to TiVo hereunder and, subject to
Section 2.4 hereof, TiVo shall have no right in or to any DIRECTV Improvements.
8. Confidentiality.
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8.1 Confidential Information. Each party (the "Disclosing Party") may, from
time to time during the term of this Agreement, disclose or make available to
the other party (the "Receiving Party") certain proprietary or non-public
information including, without limitation, trade secrets, know-how, formulas,
flow charts, diagnostic routines, business information, forecasts, financial
plans and data, customer information, marketing plans, and unannounced product
information (collectively, "Confidential Information"). If provided in tangible
form, such information shall be marked as "confidential" or "proprietary" or
with a similar legend and, if disclosed orally or visually, shall be identified
as confidential at the time of disclosure. Notwithstanding the foregoing, the
TiVo Licensed Technology shall be deemed the Confidential Information of TiVo,
whether or not so marked or identified. Confidential Information shall exclude
information the Receiving Party can demonstrate by reasonably detailed written
documentation: (a) was independently developed by the Receiving Party's
employees, consultants or contractors without access to or use of the Disclosing
Party's Confidential Information; (b) became known to the Receiving Party,
without restriction, from a source (having a right to disclose such information)
other than the Disclosing Party without breach of this Agreement; (c) was in the
public domain at the time it was disclosed or enters the public domain through
no act or omission of the Receiving Party; or (d) was rightfully known by the
Receiving Party, without restriction, at the time of disclosure.
8.2 Protection of Confidential Information. The Receiving Party shall not
use the Confidential Information of the Disclosing Party except for the purpose
of carrying out its rights or obligations under this Agreement and shall not
disclose the Confidential Information of the Disclosing Party, except as
expressly authorized in this Agreement or in writing by the Disclosing Party.
Notwithstanding the foregoing, the Receiving Party may disclose any Confidential
Information that must be disclosed pursuant to applicable federal, state, or
local law, regulation, court order, or other legal process or pursuant to the
rules and regulations of any stock exchange or stock association in which
securities of the Receiving Party may be traded from time to time; provided,
that the Receiving Party gives the Disclosing Party prompt written notice
thereof and the Receiving Party obtains prior to any such disclosure a
protective order or other appropriate remedy. The Receiving Party will use the
same degree of care to prevent such misuse or disclosure that the Receiving
Party uses with respect to its own proprietary information, but in no event with
less than with reasonable care. Disclosure of Confidential Information does not
constitute a license with respect to such Confidential Information.
8.3 Disclosure Restrictions. The Receiving Party may disclose Confidential
Information only to its employees, consultants and contractors when such
disclosure is necessary for DIRECTV to exercise its rights in compliance with,
and only for purposes contemplated by, this Agreement, provided such employees,
consultants and contractors are advised of the confidential nature thereof and
bound by nondisclosure obligations and restrictions no less restrictive than
those set forth in this Section 8 (Confidentiality). Notwithstanding the
foregoing, Source Code of the TiVo Licensed Technology, TiVo Improvements and
DIRECTV Source Code Improvements may only be disclosed to Authorized Personnel
in accordance with the terms of Section 2.3(a) (Handling of TiVo Source Code).
9. Representations and Warranties.
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9.1 TiVo Representations and Warranties. TiVo hereby represents and
warrants to DIRECTV that:
(a) TiVo is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has all requisite corporate
power and authority to carry on its business as now conducted. TiVo is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a material adverse effect on its
business or properties.
(b) All corporate action on the part of TiVo, its officers, directors
and stockholders necessary for the authorization, execution, delivery and
performance of this Agreement has been taken. This Agreement constitutes a valid
and legally binding obligation of TiVo, enforceable against TiVo in accordance
with its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which may affect creditors' rights and
remedies generally and by principles of equity.
(c) The execution and delivery of this Agreement in accordance with
the terms thereof and the compliance by TiVo with the provisions hereof (i) are
not and will not be inconsistent with TiVo's Charter or Bylaws, (ii) do not and
will not contravene any law, governmental rule or regulation, judgment or order
applicable to TiVo, and (iii) do not and will not contravene any material
provision of, or constitute a default under, any indenture, mortgage, contract,
license, agreement or other instrument of which TiVo is a party or by which it
is bound or requires the consent or approval of, the giving of notice to, the
registration with or the taking of any action in respect of or by, any federal,
state or local government authority or agency or other person.
(d) TiVo has complied and shall comply with any and all Laws regarding
the licensing of the TiVo Licensed Technology. As used herein, "Laws" shall mean
FCC and all other governmental (whether international, federal, state,
municipal, or otherwise) statutes, laws, rules, regulations, ordinances, codes,
directives, and orders.
(e) TiVo possesses the technical and other knowledge and other
abilities required to timely and fully meet its obligations under this
Agreement.
(f) DIRECTV ACKNOWLEDGES AND AGREES THAT THE TIVO Licensed Technology
PROVIDED BY TIVO HEREUNDER IS PROVIDED "As Is," WITHOUT ANY WARRANTY OF ANY
KIND. Except AS OTHERWISE EXPRESSLY SET FORTH IN THIS Section 9.1 (TIVO
REPRESENTATIONS AND WARRANTIES), TIVO MAKES NO WARRANTIES AS TO THE PERFORMANCE
OF THIS Agreement OR THE TECHNOLOGY, SERVICES OR SUPPORT PROVIDED HEREUNDER AND
TIVO EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, IMPLIED AND STATUTORY, WHETHER
ARISING FROM COURSE OF DEALING OR USAGE OF TRADE INCLUDING, WITHOUT LIMITATION,
THE IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NONINFRINGEMENT OF THIRD PARTY RIGHTS.
9.2 DIRECTV Representations and Warranties. DIRECTV hereby represents and
warrants to TiVo that.
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(a) DIRECTV is a corporation duly organized, validly existing and in
good standing under the laws of the state of California and has all requisite
corporate power and authority to carry on its business as now conducted. DIRECTV
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties;
(b) All corporate action on the part of DIRECTV, its officers,
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement has been taken. This Agreement constitutes a
valid and legally binding obligation of DIRECTV, enforceable against DIRECTV in
accordance with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity.
(c) The execution and delivery of this Agreement in accordance with
the terms thereof and the compliance by DIRECTV with the provisions hereof (i)
are not and will not be inconsistent with DIRECTV's Charter or Bylaws, (ii) do
not and will not contravene any law, governmental rule or regulation, judgment
or order applicable to DIRECTV, and (iii) do not and will not contravene any
material provision of, or constitute a default under, any indenture, mortgage,
contract, license, agreement or other instrument of which DIRECTV is a party or
by which it is bound or requires the consent or approval of, the giving of
notice to, the registration with or the taking of any action in respect of or
by, any federal, state or local government authority or agency or other person.
(d) DIRECTV has complied and shall comply with any and all Laws
regarding DIRECTV's obligations hereunder and the exercise of any rights granted
in this Agreement.
(e) DIRECTV possesses the technical and other knowledge and other
abilities required to timely and fully meet its obligations under this
Agreement.
(f) Except AS OTHERWISE EXPRESSLY SET FORTH IN THIS Section 9.2
(DIRECTV Representations AND Warranties), DIRECTV MAKES NO WARRANTIES AS TO THE
PERFORMANCE OF THIS Agreement AND DIRECTV EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES, IMPLIED AND STATUTORY, WHETHER ARISING FROM COURSE OF DEALING OR
USAGE OF TRADE INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THIRD
PARTY RIGHTS.
10. Indemnification.
10.1 TiVo Indemnification Obligation.
(a) Indemnity. TiVo, at its own expense, shall (i) defend, or at its
option, settle, any claims, suits, and actions brought by a third party
(collectively "Claims") against the DIRECTV and its affiliated companies and
their respective employees, officers, agents, attorneys, stockholders and
directors, and their respective successors and assigns (the "DIRECTV Indemnified
Party(ies)") based on (1) allegations that the TiVo Licensed Technology (in the
form initially provided to DIRECTV), TiVo Improvements, or the TiVo
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Marks infringe any patent, copyright, or trademark, or misappropriates any trade
secret, issued or in effect in the United States, which allegations relate to
incorporation of the TiVo Licensed Technology (in the form initially provided to
DIRECTV), TiVo Improvements, or the TiVo Marks in, or the use of such technology
in, DIRECTV Devices with TiVo or in connection with the DIRECTV Service, (2)
allegations that the TiVo Improvements infringe directly any patent, copyright,
or trademark, or misappropriate any trade secret, issued or in effect in the
United States, or (3) allegations that TiVo's design (as provided by TiVo) for
the Provo Receiver and Two-Chip Receiver caused personal injury or damage to
persons or tangible property; and (ii) pay any award, damages, or costs
(including, without limitation, reasonable attorneys' fees) as incurred or
finally awarded by a court of competent jurisdiction or agreed on in a
settlement of any such Claim; provided that DIRECTV: (A) promptly notifies TiVo,
in writing, of all such Claims; (B) cooperates reasonably with TiVo (at TiVo's
expense) in defending such Claims; and (C) allows TiVo the primary right to
control the defense (including the selection of counsel), or at TiVo's sole
option, to settle, all such Claims; provided such settlement provides a full
unconditional release of DIRECTV and does not impose any liability on DIRECTV.
At its discretion, DIRECTV shall be entitled to jointly participate in the
defense of such Claim with counsel of its own selection and DIRECTV shall be
obligated to pay the fees and expenses of such counsel of its own selection.
(b) Mitigation. If TiVo receives written notice of an alleged
infringement or believes that a Claim of infringement is likely, or if DIRECTV's
use of the TiVo Licensed Technology, the TiVo Improvements and/or the TiVo Marks
is prevented by a permanent injunction, TiVo may, at its sole option and
expense, (i) procure for DIRECTV the right to continue use of the TiVo Licensed
Technology, the TiVo Improvements and/or the TiVo Marks at TiVo's sole expense;
(ii) modify the TiVo Licensed Technology, the TiVo Improvements and/or the TiVo
Marks; or (iii) replace the infringing portion of the TiVo Licensed Technology,
the TiVo Improvements and/or the TiVo Marks with technology that does not
infringe, provided that, in the case of subsections (ii) and (iii), the modified
and/or replaced technology contains substantially similar functionality and
otherwise complies with the requirements of this Agreement and the DIRECTV
Technology (as defined in the Development Agreement), Interface Specifications
(as defined in the Development Agreement) and Exhibit A of the Development
Agreement (the "Replacement Technology").
(c) Exceptions. TiVo shall have no liability to or for any such Claims
based on (i) any Third Party Technology; or (ii) any DIRECTV Improvement of the
TiVo Licensed Technology made by DIRECTV or any Authorized Personnel; (iii) any
use of the TiVo Licensed Technology in combination with products, services or
technology not required by TiVo or not otherwise required to use the TiVo
Licensed Technology in a standalone form (i.e., not in a DIRECTV-TiVo
combination receiver), if such infringement would not occur except for such
combination; or (iv) any use of an infringing version of the TiVo Licensed
Technology, TiVo Improvements or TiVo Marks once a non-infringing version of
Replacement Technology has been made available to DIRECTV.
(d) Entire Obligation. The foregoing states TiVo's entire liability
and DIRECTV's sole and exclusive remedy with respect to any infringement of any
patents, copyrights, trademarks, trade secrets or other proprietary rights of
any third party whether direct or contributory. This Section 10.1 supersedes in
its entirety TiVo indemnification obligation
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pursuant to Article VII (Indemnification) of the Development Agreement and any
third party product liability claims, as related to the receivers specified in
this Section 10.1, other than Reno Receivers.
10.2 DIRECTV Indemnity.
(a) Indemnity. DIRECTV, at its own expense, shall (i) defend, or at
its option, settle, any claims, suits, and actions brought by a third party
(collectively "Claims") against TiVo and its affiliated companies and their
respective employees, officers, agents, attorneys, stockholders and directors,
and their respective successors and assigns (the "TiVo Indemnified Party(ies)")
based on (1) allegations that the DIRECTV Technology (as defined in the
Development Agreement) [*] in the United States, and which allegations relate to
the [*] DIRECTV Devices with TiVo or in connection with the DIRECTV Service, (2)
allegations that the DIRECTV [*] in the United States, (3) allegations that the
[*] (by or on behalf of DIRECTV) of DIRECTV Devices with TiVo (explicitly
excluding Reno Receivers) or DIRECTV Improvements in DIRECTV Devices with TiVo
[*] or (4) any allegations that the use by DIRECTV or use expressly authorized
by DIRECTV of the TiVo Licensed Technology violates any Law, other than Claims
for which TiVo is obligated to defend DIRECTV pursuant to Section 10.1; and (ii)
pay any award, damages, or costs (including, without limitation, reasonable
attorneys' fees) as incurred or finally awarded in a court of competent
jurisdiction or agreed on in a settlement of any such Claim; provided that TiVo
(A) promptly notifies DIRECTV, in writing, of all such Claims; (B) cooperates
reasonably with DIRECTV (at DIRECTV's expense) in defending such Claims; and (C)
allows DIRECTV the primary right to control the defense (including the selection
of counsel), or at DIRECTV's sole option, to settle, all such Claims; provided
such settlement provides a full unconditional release of TiVo and does not
impose any liability on TiVo. At its discretion, TiVo shall be entitled to
jointly participate in the defense of such Claim with counsel of its own
selection and TiVo shall be obligated to pay the fees and expenses of such
counsel of its own selection.
(b) Mitigation. If DIRECTV receives written notice of an alleged
infringement or believes that a Claim of infringement is likely, DIRECTV may, at
its sole option and expense, (i) modify the DIRECTV Technology or DIRECTV
Improvements; or (ii) replace the infringing portion of the DIRECTV Technology
or DIRECTV Improvements with technology that does not infringe.
(c) Exceptions. DIRECTV shall have no liability to or for any such
Claims based on (i) TiVo's use the DIRECTV Technology or DIRECTV Improvements
other than in connection with DIRECTV Products, (ii) a combination of the TiVo
Licensed Technology with the DIRECTV Improvement, if the Claims arise from the
underlying TiVo Licensed Technology; or (iii) the TiVo Licensed Technology, any
TiVo Improvement by or on behalf of TiVo and/or the TiVo Marks.
(d) Entire Obligation. The foregoing states DIRECTV's entire liability
and TiVo's sole and exclusive remedy with respect to any infringement of any
patents, copyrights,
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trademarks, trade secrets or other proprietary rights of any third party whether
direct or contributory. This Section 10.2 supersedes in its entirety DIRECTV's
indemnification obligation pursuant to Article VII (Indemnification) of the
Development Agreement and any third party product liability claims, as related
to the receivers specified in this Section 10.2, other than Reno Receivers.
11. Term and Termination.
11.1 Term. The term of this Agreement shall begin on the Effective Date and
continue for a period of five (5) years, unless sooner terminated pursuant to
this Section 11 (Term and Termination).
11.2 Termination. Either party may terminate this Agreement if the other
party materially breaches this Agreement and fails to cure such breach within
sixty (60) days after receipt of written notice thereof from the non-breaching
party.
11.3 Other.
(a) Termination. In the event this Agreement is terminated for any
reason, unless otherwise provided for herein, all licenses and payment
obligations shall terminate. Notwithstanding the foregoing, subject to DIRECTV's
compliance with the terms and conditions of Sections 2 and 4 (including, without
limitation, the license restrictions set forth in Section 2.3), for 180 days
(the "Grace Period") following the effective date of termination (the
"Termination Date"), DIRECTV shall be entitled to: (a) exercise its rights under
Section 2.1 to complete, manufacture, distribute, sell, and otherwise clear any
DIRECTV Devices with TiVo, including Provo Receivers, Reno Receivers and/or Two
Chip Receivers, that are in existence in the manufacture, production,
distribution, retail or sales chain on the Termination Date ("Grace Period
Devices", and together with any other activated DIRECTV Devices with TiVo, the
"Outstanding Receivers"), subject to Section 6.2(b); and (b) a perpetual license
to support, maintain and otherwise service such Outstanding Receivers (including
the rights set forth in Sections 2.1(a)(iii) and (vi)), and provide support and
maintenance with respect to such Outstanding Receivers. Any end user licenses
previously granted or granted during the Grace Period shall remain in full force
and effect, provided that the end user continues to comply with the terms and
conditions of such end user license agreement.
(b) Termination by TiVo. In addition to the rights in subsection (a),
in the event of termination of this Agreement by TiVo in accordance with the
terms of Section 11.2 (Termination for Material Default), if DIRECTV has
exercised its Option to the TiVo Server Technology, the license rights set forth
in Section 2.1(c) shall survive except that DIRECTV shall no longer have rights
to further develop or enhance the Source Code of the TiVo Server Technology.
(c) Termination by DIRECTV. In the event of termination of this
Agreement by DIRECTV in accordance with the terms of Section 11.2 (Termination),
all licenses granted to DIRECTV in Section 2 (License Grants) and Section 4
(License to TiVo Marks) shall continue in full force and effect, subject to
DIRECTV's compliance with the terms and conditions of this Agreement (including,
without limitation, the license restrictions set forth
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in Section 2.3 (License Restrictions) and the payment and related obligations
set forth in Section 6.2(b) (License Fees and Royalties)). In addition, TiVo
shall continue to provide subject to DIRECTV's payment obligations under Section
6.2(b), the services set forth in Section 5.
(d) End User Agreements. Any End User licenses granted pursuant to
Section 3.3(c) (End User Agreements) shall not be affected by expiration or
termination of this Agreement and shall continue in full force and effect;
provided, such End User continues to comply with the terms and conditions of the
applicable End User agreement.
(e) [*] Termination. In the event of an assignment of this Agreement
in accordance with Section 13.11 by DIRECTV to any entity [*], and in the event
TiVo has not approved such assignment, DIRECTV (including the surviving entity)
shall no longer be entitled to exercise any rights herein with respect to TiVo
Source Code [*].
(f) Survival of Provisions of this Agreement. The following Sections
shall survive any expiration or termination of this Agreement: 1, 2.3, 2.4-2.7
(except as otherwise provided for therein), 6.8 (solely for the period set forth
therein), 7, 8, 9, 10, 11.3, 11.4, 12, and 13. In addition, the following
Sections shall survive expiration of this Agreement: 2 and 4 (but not 6).
11.4 No Liability for Termination. Each party understands that the rights
of termination hereunder are absolute. The terminating party shall not incur any
liability whatsoever for any damage, loss or expenses of any kind suffered or
incurred by the other arising from or incident to the terminating party's
exercise of its termination rights under this Agreement. In particular, without
limiting the foregoing, the terminated party shall not be entitled to any
damages on account of prospective profits or anticipated sales related to such
exercise of termination rights.
12. Limitation of Liability.
EXCEPT IN THE EVENT OF A BREACH OF SECTION 2 (LICENSE GRANTS) OR SECTION 8
(CONFIDENTIAL INFORMATION), AND EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS SET
FORTH IN SECTION 10 (INDEMNIFICATION), IN NO EVENT WILL EITHER PARTY BE LIABLE
UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES OF ANY NATURE WHATSOEVER (INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS,
OTHER COMMERCIAL LOSS, OR COST OF PROCUREMENT OF SUBSTITUTE TECHNOLOGY OR
SERVICES), ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF THE
OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF ANY
EXCLUSIVE REMEDY STATED IN THIS AGREEMENT IS DEEMED TO FAIL OF ITS ESSENTIAL
PURPOSE. EXCEPT IN THE EVENT OF A BREACH OF SECTION 2 (LICENSE GRANTS) OR
SECTION 8 (CONFIDENTIAL INFORMATION), AND EXCEPT FOR THE INDEMNIFICATION
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the Securities and Exchange Commission. Confidential treatment has been
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OBLIGATIONS SET FORTH IN SECTION 10 (INDEMNIFICATION), IN NO EVENT WILL EITHER
PARTY'S CUMULATIVE LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT EXCEED
AN AMOUNT EQUAL TO THE AGGREGATE AMOUNT OF ALL FEES AND ROYALTIES PAID BY, OR
DUE FROM, DIRECTV TO TIVO HEREUNDER. THIS LIMITATION OF LIABILITY IS CUMULATIVE,
WITH ALL PAYMENTS FOR CLAIMS IN CONNECTION WITH THIS AGREEMENT BEING AGGREGATED
TO DETERMINE SATISFACTION OF THE LIMIT. THE EXISTENCE OF ONE OR MORE CLAIMS
UNDER THIS AGREEMENT WILL NOT ENLARGE THE LIMIT.
13. General Provisions.
13.1 No Agency. Each party will in all matters relating to this Agreement
act as an independent contractor. Nothing contained in this Agreement, nor the
execution or performance thereof, shall be construed as creating any agency,
partnership, or other form of joint enterprise between the parties. Neither
party will have authority nor represent that it has any authority to assume or
create any obligation, express or implied, on behalf of the other party, or to
represent the other party as agent, employee or in any other capacity.
13.2 Governing Law and Jurisdiction. This Agreement and all matters or
issues related hereto or arising hereunder shall be governed by the laws of the
State of California, without regard to principles of conflicts of law, as such
laws would apply to contracts entered into by California residents and performed
entirely in California. The parties agree that all disputes and litigation
regarding this Agreement and matters connected with its performance shall be
brought in a federal court in the Northern District of California or in state
court in Santa Clara County, California, and each party irrevocably submits to
the jurisdiction and venue of any such court in any such action or proceeding.
13.3 Notices. All notices permitted or required under this Agreement shall
be in writing and shall be delivered to the address(es) for notice set forth
below or such other address as either party may specify in writing. Notices
shall be effective (i) on the date received, if delivered by hand; (ii) on the
date sent if sent by facsimile with confirmation, (ii) on the next business day
following delivery thereof to an air courier for overnight delivery, and (iii)
on the fifth business day after deposit into either the United States mail
service (as applicable), postage prepaid, return receipt requested.
To: Tivo, Inc. To: Directv, Inc.
Chief Executive Officer Larry Chapman, Executive Vice President
2160 Gold Street 2230 East Imperal Highway
Alviso, CA 95502 El Segundo, California 90245
Fax: (408) 519-5330 Fax: (310) 535-5422
With a copy to: With a copy to:
TiVo, Inc. Directv, Inc.
General Counsel: Matthew Zinn General Counsel
2160 Gold Street 2230 East Imperial Highway
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Alviso, CA 95502 El Segundo, California 90245
Fax: (408) 519-5330 Fax: (310) 964-4991
13.4 Injunctive Relief. It is understood and agreed that, notwithstanding
any other provision of this Agreement, any breach of Section 2.4 (Covenant Not
to Assert), Sections 3 (License Grants), (Ownership), or (Confidentiality) will
cause irreparable damage for which recovery of money damages would be
inadequate, and that both parties shall therefore be entitled to obtain timely
injunctive relief to protect their respective rights under this Agreement, in
addition to any and all remedies available at law.
13.5 Waiver. The failure of either party to require performance by the
other party of any provision hereof shall not affect the full right to require
such performance at any time thereafter; nor shall the waiver by either party of
a breach of any provision hereof be taken or held to be a waiver of the
provision itself.
13.6 Severability.In the event that any provision of this Agreement shall
be unenforceable or invalid under any applicable law or be so held by applicable
court decisions, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.
13.7 Headings. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe
or describe the scope or extent of such section, or in any way affect this
Agreement.
13.8 Confidentiality of Agreement. Neither Party will disclose any terms of
this Agreement except as required by law. Notwithstanding the foregoing, either
party may disclose the terms of this Agreement with (i) its advisors and
counselors so long as such advisors and counselors are bound by obligations of
confidentiality and (ii) any third parties bound by written obligations of
confidentiality in order to facilitate the exploration of a business combination
with such third parties.
13.9 Press Release. Subject to the mutual agreement of TiVo and DIRECTV
(including DIRECTV's communications policies), DIRECTV and TiVo shall cooperate
with each other as to the timing and content of press releases to be issued by
the parties concerning this Agreement and any subsequent press releases on the
initial shipment of any DIRECTV Device With TiVo and the initial launch of any
DIRECTV Service containing or using the TiVo Licensed Technology.
13.10 Export Controls. Each Party agrees that it will comply with all U.S.
export control laws and the applicable regulations thereunder, as well as any
other applicable laws of the U.S. affecting the export of technology.
13.11 Assignment. All the terms of this Agreement shall be binding upon and
shall inure to the benefit of the permitted successors and assigns of the
respective parties hereto.
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Anything contained herein to the contrary notwithstanding, neither party may
assign this Agreement without the written consent of the other party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
following written notice to the other party, either party may transfer and
assign this Agreement, by operation of law or otherwise, to the surviving entity
in the event of a sale to, merger with, or acquisition of all or substantially
all of such party's assets by such entity, and the other party hereby consents
to such assignment in advance.
13.12 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same original.
13.13 Force Majeure. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder (except for
payments of money) on account of strikes (other than strikes of a party's own
employees), shortages, riots, insurrection, fires, flood, storm, explosions,
acts of God, war, governmental action, labor conditions (other than with respect
to a party's own employees), earthquakes, material shortages or any other causes
that are beyond the reasonable control of such party; provided, however, that
the parties will use commercially reasonable efforts, including the
implementation of business continuity measures, to mitigate the effects of such
force majeure.
13.14 Section 365(n) of the Bankruptcy Code. All rights and licenses
granted under or pursuant to this Agreement by TiVo to DIRECTV are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the United States
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101(56) of the United States Bankruptcy Code. The Parties agree that
DIRECTV, as licensee of such rights and licenses, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code, provided
that DIRECTV abides by the terms of this Agreement.
13.15 Entire Agreement. This Agreement and Exhibits hereto, in conjunction
with the Services Agreement and the Development Agreement, constitute the entire
agreement between the parties with respect to TiVo's licensing of the TiVo
Licensed Technology (as defined herein) to DIRECTV. This Agreement supersedes
any prior or collateral agreements with respect to the subject matter hereof.
This Agreement may only be changed by written mutual agreement of authorized
representatives of the parties.
13.16 Precedence. In the event of any conflict between the terms and
conditions of this Agreement and any of the terms and conditions of the
Development Agreement, the terms and conditions of this Agreement shall govern
and control.
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<PAGE>
In Witness Whereof, the parties hereto have duly executed this Agreement by
their respective duly authorized officers.
Tivo, Inc. DIRECTV, Inc.
By: By:
----------------------- --------------------------------
Name: Morgan Guenther Name: Lawrence N. Chapman
Title: President Title: Executive Vice President
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