Escrow Agreement - America Online Inc., TiVo Inc. and U.S. Trust Co. NA
ESCROW AGREEMENT
among
AMERICA ONLINE, INC.,
TIVO INC.,
and
U.S. TRUST COMPANY, NATIONAL ASSOCIATION
Dated as of September 11, 2000
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This ESCROW AGREEMENT is entered into as of September 11, 2000 (this
"Agreement") by and among U.S. TRUST COMPANY, NATIONAL ASSOCIATION (the "Escrow
Agent"), AMERICA ONLINE, INC., a Delaware corporation (the "Purchaser"), and
TIVO INC., a Delaware corporation (the "Company" and, together with the
Purchaser, referred to herein collectively as the "Depositors" and each
individually, a "Depositor").
WHEREAS, the Purchaser and the Company are parties to an Investment
Agreement, dated as of June 9, 2000 (the "Investment Agreement"); and
WHEREAS, pursuant to the Investment Agreement, the Purchaser and the
Company have agreed to cause the deposit of certain funds with the Escrow Agent,
and the parties to this Agreement desire to define the terms and conditions
pursuant to which the Escrow Agent shall hold and release such funds or portions
thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Escrow Agent shall hold in escrow and shall distribute the
Escrowed Funds (as defined herein) in accordance with and subject to the
following Instructions and Terms and Conditions:
I. INSTRUCTIONS:
1. Escrowed Funds. As provided in Section 1.4(a) of the Investment Agreement,
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the Company shall deposit with the Escrow Agent in accordance with the terms of
the Investment Agreement (a) at the closing of the Share Purchase (as defined in
the Investment Agreement), an amount as specified in the Investment Agreement,
and (b) from time to time, upon the exercise of any of the Warrants (as defined
in the Investment Agreement), amounts as specified in the Investment Agreement,
in the aggregate totaling up to ninety-one million, five hundred thousand
dollars ($91,500,000), to be held subject to the terms and provisions herein.
The foregoing funds, plus all interest, dividends and other distributions and
payments thereon (collectively the "Distributions") received by the Escrow
Agent, less any funds distributed or paid in accordance with this Agreement, are
collectively referred to herein as the "Escrowed Funds." The Escrow Agent shall
hold the Escrowed Funds in escrow and shall not withdraw, and none of the
Depositors shall be entitled to any disbursement of, the Escrowed Funds for any
purpose other than as set forth herein.
2. Investment of Escrowed Funds. The Escrowed Funds shall be invested and
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reinvested in such of the following investments (the "Permitted Investments") as
specified in a joint written notice signed by an officer of each of the
Depositors and delivered from time to time by the Depositors to the Escrow
Agent:
(a) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof;
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(b) commercial paper that rates at least A-1 by Standard & Poor's
Corporation or P-1 Moody's Investors Services, Inc. that is scheduled to
mature not more than ninety (90) days after the date of issue and is issued
by a corporation organized under the laws of the United States or any state
thereof;
(c) time deposits with, including certificates of deposit (which are
scheduled to mature not more than ninety (90) days after the date of issue)
issued by, a bank or trust company organized under the laws of the United
States or any state thereof (a "Qualified Financial Institution");
(d) repurchase agreements entered into with a Qualified Financial
Institution that are secured by any obligations of the type described in
paragraphs (a) through (c) above and have a market value at the time such
repurchase agreement is entered into of not less than 100% of the
repurchase obligation thereunder; and
(e) money market funds with a rating of AAAm or AAAm-G by Standard &
Poor's Corporation or similar rating entity that invest only in securities
described above in clauses (a) through (d).
Absent a joint notice of investment or reinvestment in accordance with this
Section 2, the Escrow Agent shall invest any uninvested portion of the Escrowed
Funds in a money market of the type specified in paragraph (e) above as shall be
selected by the Company pursuant to a written notice to the Escrow Agent and the
Purchaser. Absent both a joint notice of investment or reinvestment in
accordance with this Section 2 and a notice from the Company in accordance with
the previous sentence, the Escrow Agent shall invest any uninvested portion of
the Escrowed Funds in such Permitted Investments of the type specified in
paragraph (e) above as shall be selected from time to time by the Escrow Agent.
The Escrow Agent shall have no obligation to invest or reinvest the
Escrowed Funds if deposited with the Escrow Agent after 12:00 p.m. (E.S.T.) on
such day of deposit. Instructions received after 12:00 p.m. (E.S.T.) will be
treated as if received on the following business day.
The Escrow Agent shall have the power to sell or liquidate the foregoing
investments whenever the Escrow Agent shall be required to release the Escrowed
Funds pursuant to the terms hereof. Requests (or instructions) received after
12:00 p.m. (E.S.T.) by the Escrow Agent to liquidate the Escrowed Funds will be
treated as if received on the following business day. The Escrow Agent shall
have no responsibility for any investment losses resulting from the investment,
reinvestment or liquidation of the Escrowed Funds. Any interest or other income
received on such investment and reinvestment of the Escrowed Funds shall become
part of the Escrowed Funds. It is agreed and understood that the Escrow Agent
may earn fees associated with the investments outlined above.
The Escrow Agent shall have no liability for any loss arising from or
related to any such investment other than in accordance with paragraph 1 of the
Terms and Conditions.
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3. Distribution of Escrowed Funds. The Escrow Agent is directed to hold and
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distribute the Escrowed Funds in the following manner:
(a) Release of the Escrowed Funds to the Company. All of the Escrowed
Funds shall be released by the Escrow Agent to the Company, by wire
transfer of immediately available funds to such account as the Company
shall designate in writing, upon receipt by the Escrow Agent of written
instructions of the Company countersigned by the Purchaser certifying (i)
that the Set Top Box Launch (as defined in the Investment Agreement) has
occurred prior to the Planned Launch Date (as defined in the Investment
Agreement), (ii) that the Put Option has expired without being exercised,
or (iii) the Commercial Agreement has been terminated in accordance with
Section 11.6 thereof; or
(b) Release of the Escrowed Funds to the Purchaser. All of the
Escrowed Funds (less the amount of cash dividends received by the Purchaser
on the Preferred Shares, if any, up to a maximum equal to the total amount
of Distributions, as set forth in the Release Instructions (as defined
below) (the "Preferred Dividend Amount")) shall be released to the
Purchaser, by wire transfer of immediately available funds to such account
as the Purchaser shall designate in writing, at the time and place
specified in written instructions (the "Release Instructions") of the
Purchaser and countersigned by the Company delivered to the Escrow Agent
stating that the Put Option has been exercised by the Purchaser. The
Release Instructions shall specify the Preferred Dividend Amount and the
proposed time, date and place of the closing of the transactions
contemplated by Section 1.4(b) of the Investment Agreement. Upon the
release of Escrowed Funds to the Purchaser pursuant to this Section 3(b),
an amount of Escrowed Funds equal to the Preferred Dividend Amount shall be
released to the Company, by wire transfer of immediately available funds to
such account as the Company shall designate in writing.
4. Addresses and Account Information. Notices, instructions and other
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communications hereunder shall be sent:
If to the Escrow Agent to:
U.S. Trust Company, National Association
One Embarcadero, Suite 2050
San Francisco, CA 94111
Attn: Corporate Trust Department
Facsimile: 415-392-0876
If to the Purchaser to:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166- 9323
Attn: General Counsel
Facsimile: 703-265-1600
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With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017- 3954
Attn: David J. Sorkin, Esq.
Facsimile: 212-455-2502
If to the Company, to:
TiVo Inc.
2160 Gold Street
Alviso, CA 95002
Attn: Chief Financial Officer
Facsimile: 408-519-5333
With a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, CA 94025
Attn: Alan C. Mendelson, Esq.
Facsimile: 650-463-2600
All notices or communications required or permitted to be given hereunder shall
be in writing and shall be delivered by hand or sent by facsimile or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or
facsimile, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service).
5. Termination of Escrow Agreement. This Agreement shall terminate upon the
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distribution of all of the Escrowed Funds by the Escrow Agent pursuant to this
Agreement.
6. Compensation. The Escrow Agent's fees and expenses shall be in the amounts
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set forth on Exhibit A attached hereto.
II. TERMS AND CONDITIONS
1. Limitation of Escrow Agent's Duties and Liabilities.
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(a) The duties and responsibilities of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Agreement, and
no other or further duties or responsibilities shall be implied.
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(b) The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request
provided for and furnished to it pursuant to the terms of this Agreement
and believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Escrow Agent shall be under no duty to
inquire into or investigate the validity, accuracy or content of any
document or agreement. The Escrow Agent shall have no duty to solicit any
item which may be due it hereunder.
(c) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith unless a court of competent jurisdiction
determines that the Escrow Agent's willful misconduct or negligence was the
primary cause of any loss to either of the Depositors. The Escrow Agent may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or omitted by it
hereunder in good faith and in accordance with the opinion of such counsel.
(d) The Depositors hereby jointly and severally agree to indemnify
the Escrow Agent for and to hold it harmless against any loss, liability or
expense arising out of or in connection with this Agreement and carrying
out its duties hereunder, including the costs and expenses of defending
itself against any claim of liability, except in those cases where the
Escrow Agent has acted with negligence or willful misconduct. Anything in
this Agreement to the contrary notwithstanding, in no event shall the
Escrow Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action.
2. No Third Party Beneficiaries. This Agreement is for the exclusive benefit
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of the parties hereto and their respective permitted successors hereunder, and
shall not be deemed to give, either express or implied, any legal or equitable
right, remedy, or claim to any other entity or person whatsoever except as
provided herein.
3. Information Regarding the Escrowed Funds. The Escrow Agent shall provide
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to Depositors monthly statements identifying transactions, transfers or holdings
of the Escrowed Funds and each such statement shall be deemed to be correct and
final upon receipt thereof by the Depositors unless the Escrow Agent is notified
in writing, by the Depositors to the contrary within thirty (30) business days
of the date of such statement.
4. Interest of the Escrow Agent. The Escrow Agent does not have any interest
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in the Escrowed Funds deposited hereunder (except for fees and expenses due to
the Escrow Agent hereunder, to the extent such fees and expenses are unpaid),
but is serving as escrow holder only and having only possession thereof.
5. Governing Law; Submission to Jurisdiction. This Agreement shall be
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governed by and construed in accordance with the laws of the State of New York
applicable to agreements
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made and to be performed entirely within such state. Each party hereby
irrevocably and unconditionally consents to submit to the exclusive juris
diction of the courts of the State of New York or the courts of the United
States of America located in the Southern District of New York for any actions,
suits or proceedings arising out of or relating to this agreement (and the
parties agree not to commence any action, suit or proceeding relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to the respective addresses set forth
above shall be effective service of process for any action, suit or proceeding
brought against the parties in any such court. Each party hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this agreement, in the courts of the State of New
York or the United States of America located in the Southern District of New
York, and hereby further irrevocably and unconditionally waives its right and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
6. Assignment. No party may assign any of its rights or obligations under this
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Agreement without the written consent of the other parties hereto. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
7. Waivers. No waiver by any party hereto of any condition or of any breach of
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any provision of this Agreement shall be effective unless in writing and signed
by a duly authorized representative of the party granting such waiver. No
waiver by any party of any such condition or breach in any one instance shall be
deemed to be a further or continuing waiver of such condition or breach or a
waiver of any other condition or breach of any other provision contained herein.
8. Amendment. This Agreement may only be amended by the written agreement of
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the Purchaser, the Company and the Escrow Agent.
9. Merger of the Escrow Agent. Any corporation into which the Escrow Agent in
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its individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Agreement without further act.
10. Successor Agent. In the event the Escrow Agent becomes unavailable or
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unwilling to continue in its appointed capacity hereunder, the Escrow Agent may
resign and be discharged from its duties or obligations hereunder by giving
notice of resignation to each of the Depositors, specifying a date not less than
sixty (60) days following such notice date when such resignation will take
effect; provided, however, that such resignation shall in no event take effect
before the successor to the Escrow Agent shall have been appointed pursuant to
this Section 10. The
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Purchaser and the Company shall designate a successor to the Escrow Agent prior
to the expiration of such sixty- day period by giving written notice to the
Escrow Agent. The Escrow Agent shall promptly transfer all assets in the Escrow
Account to such designated successor. In the event that the Depositors fail to
designate a successor within such sixty- day period, then the Escrow Agent shall
be entitled to petition a court of competent jurisdiction for the appointment of
a substitute for it hereunder or, in the alternative, it may transfer and
deliver the Escrowed Funds to or upon the order of such court.
11. Use of Subcustodians/Agents/Affiliates. The Escrow Agent is authorized to
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engage the services of any affiliate of the Escrow Agent, to hold the escrow
funds, as invested, through such agents or sub-custodians or their custodians or
registered depositories. For purposes of this Agreement, all references to
services to be performed by the Escrow Agent shall be construed as if they
referred to any agent or sub-custodian of the Escrow Agent. Notwithstanding
any of the foregoing, the Escrow Agent shall remain liable for any actions taken
by any such subcustodians, agents or affiliates.
12. Severability. The invalidity, illegality or unenforceability of any
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provision of this Agreement shall in no way effect the validity, legality or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
13. Headings. The headings contained in this Agreement are for convenience of
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reference only and shall have no effect on the interpretation or operation
hereof.
14. Entire Agreement. This Agreement with respect to the Escrow Agent, the
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Purchaser and the Company, and this Agreement, the Investment Agreements and the
other Related Agreements (as defined in the Investment Agreement) with respect
to the Purchaser and the Company constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, written or oral, between the
parties hereto with respect to the subject matter hereof.
15. Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed by a duly authorized officer as of the day and year first written
above.
AMERICA ONLINE, INC.
By: /s/ David M.Colburn
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Name: David M. Colburn
Title: President, Business Affairs
TIVO INC.
By: /s/ David H. Courtney
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Name: David H. Courtney
Title: Senior Vice President, Finance &
Administration
U.S. TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ Sandra H. Leess
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Name: Sandra H. Leess
Title: Senior Vice President
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EXHIBIT A
SCHEDULE OF FEES FOR SERVICES AS
ESCROW AGENT
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TiVo
Escrow Agreement
Proposal for Escrow Agent Services
from
U.S. TRUST COMPANY, N.A.
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ACCEPTANCE FEE $500
For review and complete analysis of the escrow agreement, meetings and
conferences with all parties, execution of documents and opening of required
accounts.
ANNUAL ADMINISTRATION FEE $2,500
For normal administrative functions as specified in the escrow agreement
including maintenance of administrative records and custody of funds. Any
extraordinary services will be charged based on our appraisal of the services
rendered.
OTHER CHARGES
1099 Reporting $2.50 each
Wire transfers $25 per wire transfer
Purchase, sale, receipt, delivery, maturity, $35 per transaction
or redemption of securities
Out-of-pocket expenses and disbursements AT COST
Includes expenses incurred on the client's behalf such as postage, telephone,
insurance, express mail and messenger charges, etc.
Charges for any services not specifically covered in this schedule
will be billed commensurate with the services rendered. This schedule reflects
charges which are now in effect for our normal and regular services and are
minimal only, subject to modification where unusual conditions or requirements
prevail.
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