Product Integration and Marketing Agreement - America Online Inc. and TiVo Inc.
PRODUCT INTEGRATION AND MARKETING AGREEMENT
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This Product Integration and Marketing Agreement (the "Agreement") is made and
entered into as of this 9 day of June, 2000 (the "Effective Date") by and
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between America Online, Inc., a Delaware corporation ("AOL"), and TiVo, Inc., a
Delaware corporation ("TiVo") (each a "Party" and, collectively, the "Parties").
R E C I T A L S
WHEREAS, TiVo has developed and continues to develop hardware, software and data
systems that provide feature-rich personal digital video recorder functionality
for television programming;
WHEREAS, AOL and TiVo desire to cooperate to develop a version of AOL's "AOL TV"
service that is bundled with and installed on a TiVo personal digital video
recorder, that includes a "TiVo Channel" to permit access to enhanced TiVo
functionality and certain other features and functions described in the
Specifications (as defined below);
WHEREAS, AOL and TiVo desire to cooperate to develop equipment and software
required for the provision of such integrated AOL TV/TiVo device;
WHEREAS, AOL and TiVo will work together to design, develop, test, launch,
market, sell and support the Integrated Product, in accordance with the terms of
this Agreement;
WHEREAS, AOL and TiVo, have entered a short-form Product Integration and
Marketing Relationship Agreement, dated August 6, 1999 (the "Preliminary
Agreement"), under which the Development Activities have begun; and
WHEREAS, AOL and TiVo intend that this Agreement replace and supersede the
Preliminary Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, AOL and TiVo, intending to be
legally bound, agree as follows:
1. Certain Definitions.
Capitalized terms used but not defined in the Agreement will be as defined
in Schedule 1 attached hereto.
2. Definitive Agreement.
This Agreement replaces and supersedes the Preliminary Agreement in its
entirety. The Preliminary Agreement is hereby terminated and has no further
force or effect.
3. Obligations related to the Development and Delivery of the Integrated
Product.
3.1 Joint Responsibilities. Joint responsibilities of the Parties
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hereunder shall include, without limitation, the following:
(a) AOL and TiVo will jointly coordinate the development of the
Specifications to ensure compatibility and integration between the
AOL TV Service, the TiVo Channel, the Liberate Browser and the
Developed Hardware, and to allow each Party to implement its
respective services
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
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on the Developed Hardware. TiVo will be responsible for the design
of the TiVo Channel and the DVR Functionality, and AOL will be
responsible for the design of the AOL TV Service.
(b) AOL and TiVo will meet on a weekly basis during the term of this
Agreement in order to refine the Specifications to reflect the
optimal level of integration between the AOL TV Service, the TiVo
Channel and the Integrated Service.
(c) Each Party shall use good faith efforts to finalize and mutually
agree upon the Specifications (Schedule 12), the Milestone
Schedule (Schedule 2), the Acceptance Criteria (Schedule 4) and
the Description of Provisioning Support (Schedule 7) within thirty
(30) days of the Effective Date.
(d) * * * will provide to * * * that (1) will allow * * * to with * *
* reasonable assistance, enable the operation of the * * * through
the * * * (2) will allow * * * to * * * (including all * * * and *
* * related thereto); (3) are made * * * to * * * by * * * and (4)
the Parties agree shall be provided to * * *. For the avoidance of
doubt, unless mutually agreed to by the Parties, * * * will not *
* * and/or * * * that utilize the * * * of the * * * that are not
part of the * * * will have the right to use the * * * described
above solely to enable the * * * and that do not * * * as it
exists at the time * * * proposes such new * * * unless otherwise
agreed to by the Parties.
(e) TiVo and AOL jointly will be responsible for the integration of
the AOL TV Software on to the combination of the Liberate Browser,
the TiVo Software and the Developed Hardware. Notwithstanding the
foregoing, AOL will be responsible for the operation of the AOL TV
Software in accordance with Section 3.3, provided that TiVo will
remain responsible for integration of the Integrated Product in
accordance with Section 3.2(a).
(f) AOL and TiVo jointly will select third party relationships for the
manufacture of all Developed Hardware. TiVo will provide to any
such Manufacturer, under commercially reasonable terms and
conditions, a royalty-free license to use the TiVo Software and a
reference design for development and manufacture of the Integrated
Product. AOL will contract with such Manufacturer for the
manufacture of the Integrated Product and shall be responsible for
the day-to-day management of all such third party Manufacturing
relationships. TiVo agrees to provide reasonable assistance to
such Manufacturer as may be necessary or appropriate to further
the intent of the Parties hereunder, in a manner consistent with
TiVo's favorable relationships with its own Manufacturers.
(g) AOL and TiVo jointly and in good faith will explore the
possibility of collaborating on future versions of the Integrated
Product and the Integrated Service * * *.
(h) Following the closing of the merger between AOL and Time Warner,
Inc., AOL and TiVo jointly will explore possible relationships to
provide TiVo * * * for use in conjunction with the DVR
Functionality, TiVo Channel and other TiVo services on terms to be
mutually agreed upon.
(i) AOL and TiVo will jointly explore the possibility of providing
TiVo with assistance in the development and deployment of TiVo's
e-commerce capabilities through access to AOL's transaction
processing architecture and interfaces (e.g., QuickCheckout
integration, APIs and other software). Such assistance will be
provided to TiVo, if agreed to by the Parties, on terms to be
mutually agreed upon, taking into consideration AOL's costs to
provide such assistance.
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
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3.2 Obligations of TiVo.
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(a) Development. In order to create the Integrated Product and to achieve
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the integration of the TiVo Software, the Robust DVR Functionality and
the Basic DVR Functionality with the AOL TV Service in accordance with
this Agreement, TiVo will undertake the Development Activities set
forth in this Section 3.2. The Development Activities will be
performed in conjunction with the development of the Developed
Hardware (as described in the Minimum Specifications set forth in
Schedule 3). The Parties will use all commercially reasonable efforts
to release the commercial version of the Integrated Product as soon as
practicable * * *. TiVo and AOL will work together to ensure that the
design and implementation of the Developed Hardware is capable of
supporting the AOL TV Service and the TiVo Channel in accordance with
the Specifications. * * * (subject to the terms and conditions of this
Agreement) TiVo agrees to perform the following development services
in accordance with applicable milestones set forth in the Milestone
Schedule and in any case by * * *:
(i) TiVo will deliver to AOL the Integrated Product (including,
without limitation, Provisioning Support as described herein).
(ii) TiVo will implement suitable graphics APIs to support the
Liberate Browser to enable on-screen Web-based graphics for
the AOL TV Service, as set forth in the Specifications.
(iii) TiVo has contracted with Liberate to provide for porting of
the Liberate Browser to the Integrated Product, preserving all
Liberate Browser functionality set forth in the
Specifications. TiVo shall ensure that the port of the
Liberate Browser is executed in such a way that the AOL TV
Software and the Integrated Service will function as specified
in the Specifications without degradation and without
requiring modifications (except as otherwise mutually agreed
to by the TiVo, AOL and Liberate). TiVo shall actively and
diligently enforce Liberate's obligations under the TiVo-
Liberate contract * * * TiVo will provide to AOL status
reports on the Liberate development effort, including reports
of errors and limitations in the Liberate Browser.
(iv) TiVo will work with Liberate to test and verify the port of
the Liberate Browser, to package the ported Liberate Browser
into TiVo distribution formats, as set forth in the
Specifications, and to run alpha and beta programs with the
ported Liberate Browser leveraging TiVo's then-existing beta
community as necessary.
(v) TiVo will integrate the TiVo Software and the Liberate Browser
with the Developed Hardware in accordance with the
Specifications.
(vi) TiVo shall permit AOL to review and consult with TiVo as to
the design specifications, engineering schematics and other
technical aspects of the Developed Hardware, and shall in good
faith consider any changes to same proposed by AOL.
(vii) AOL acknowledges and agrees that TiVo is not required to make
any changes or modifications to the style, look and feel of
the TiVo Channel existing as of the Effective Date.
Notwithstanding the foregoing, the Parties agree that the
screens displayed on the * * * shall carry * * * that shall
include, among other things, * * * from * * * and * * * in a
manner consistent with other versions of * * * and other * * *
as mutually agreed to by the Parties, provided as part of the
* * *. The * * * will be similar to * * * which comprises
approximately * * * In addition, TiVo and AOL will collaborate
to
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* * * 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.
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establish consistency between the style, look and feel of the
TiVo Channel, the AOL TV Service and the AOL Style Guidelines.
(viii) TiVo will implement changes to the TiVo Platform required to
permit access to the AOL TV Service in accordance with the
Specifications.
(ix) To the extent that AOL recommends changes to the TiVo
Software or the TiVo Channel (other than any changes required
hereunder), * * *.
(x) TiVo will develop documentation necessary for testing,
operation, and use of the Integrated Product which
documentation shall be sufficient to enable AOL's software
engineers to apply * * * with * * * to enable * * * and * * *
through * * * (hereinafter "TiVo Documentation"), and will
deliver such TiVo Documentation, in both print and machine
readable format, to AOL. TiVo Documentation shall include
release dates and version numbers to facilitate its use with
the Integrated Products. Such TiVo Documentation shall be
deemed TiVo Confidential Information.
(xi) TiVo will provide AOL with periodic oral and written reports
of its progress in the development of the Integrated Product.
(xii) TiVo will provide the TiVo System Software and the Liberate
Ported TiVo Software to AOL, * * * (with the exception of * *
* that is provided * * * and * * * for * * * to which AOL * *
* in performance of its obligations under this Agreement), and
all documentation related thereto produced by or available to
TiVo, so that AOL can integrate such software with the AOL TV
Software.
(xiii) TiVo will use best efforts to provide a fully functional (in
accordance with the Specifications) working hardware and
software prototype of the Integrated Product for * * *
provided that TiVo shall not be responsible for the
functionality of the AOL TV Software or the AOL TV Service
(excluding the EPG Data and the Basic DVR Functionality) used
in such prototype.
(b) Change Requests. The Parties may, from time to time, agree to changes
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(consisting of additions, modifications, deletions or other revisions)
to the Minimum Specifications, to the Specifications or to the
Development Activities. Each change request must be reflected in a
written document signed by both Parties that includes a detailed
description of the specific change, along with any modified
specifications and desired completion date(s) ("Change Request"). Each
Change Request duly authorized in writing by the Parties shall
constitute a formal amendment to this Agreement, and shall be deemed
incorporated into and shall become part of this Agreement. A Change
Request shall have no effect on the rights and obligations of TiVo or
AOL with respect to products delivered or Services provided before the
effective date of the Change Request. In addition, in connection with
any duly authorized Change Request, TiVo shall provide * * * to * * *
to AOL as reasonably requested by AOL or as needed to * * * TiVo shall
clearly identify * * * from * * * of * * * supplied to AOL hereunder.
TiVo will place a priority on Change Requests in terms of resource
allocation. Unless otherwise agreed in a Change Request, TiVo will pay
all costs of a Change Request.
(c) Approval.
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* * * 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.
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(i) Acceptance Testing. AOL will test the Integrated Product, in
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accordance with standard diagnostic practices, to determine
whether or not it meets the Acceptance Criteria that will be
mutually agreed to within * * * days of the Effective Date.
TiVo will provide * * * as AOL conducts acceptance tests
(including alpha and beta level testing) of the Integrated
Product, in accordance with the Acceptance Criteria.
(ii) Test Units. TiVo shall provide (directly or indirectly
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through a Manufacturer) and AOL shall purchase up to * * *
total (such total to include the number of development units
purchased pursuant to Section 3.2(c)(iii) below) units of the
various test versions of the Integrated Product and shall
participate in the alpha, beta and other testing of the
Integrated Product conducted by AOL. Such participation shall
be pursuant to the various test plans and procedures
established by AOL.
(iii) Development Units. The pre-release version of the Integrated
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Product shall be subject to Acceptance by AOL based on
satisfaction of such tests as the Parties will mutually and
reasonably construct in order to determine whether the
Integrated Product operates in substantial compliance with the
Acceptance Criteria set forth in Schedule 4. TiVo shall
provide (directly or indirectly through a Manufacturer) and
AOL shall purchase up to * * * total (such total to include
the number of test units purchased pursuant to Section
3.2(c)(ii) above) units of the Integrated Product solely for
AOL's own internal use in performing such tests. For each
production run of development units delivered to AOL, TiVo
shall provide documentation containing lists and descriptions
of known errors and limitations for such production run. AOL
shall test the Integrated Product within * * * days of
receipt, in order to determine whether it is in substantial
compliance with the Acceptance Criteria. Within such period,
AOL shall provide TiVo with written Acceptance of the
Integrated Product or a statement identifying any failure of
the Integrated Product to substantially comply with the
Acceptance Criteria in sufficient detail for TiVo to recreate
such non-compliance. In the event AOL identifies such a
failure and rejects the Integrated Product, TiVo shall have *
* * days from TiVo's receipt of notice of such rejection to
repair the failure and resubmit the units of the repaired
Integrated Product to AOL for testing. AOL shall then have * *
* days after receipt of the resubmitted product to determine
whether such version passes Acceptance testing. The process
shall be repeated until the Integrated Product passes
Acceptance testing or, if it fails to pass after * * * rounds
of Acceptance testing and such failure is not due solely to
the AOL TV Software or the AOL TV Service (excluding the EPG
Data and the Basic DVR Functionality), TiVo shall have * * *
as set forth in Section * * *.
(iv) Cooperation by TiVo. TiVo shall cooperate in all testing
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undertaken pursuant to this Section 3.2(c) to the extent
reasonably requested by AOL. TiVo shall use its commercially
reasonable efforts to diagnose any failure of Integrated
Product to comply with the Specifications and the Acceptance
Criteria set forth in Schedule 4 prior to and during any
testing. TiVo also shall use its commercially reasonable
efforts to promptly correct any such failure diagnosed by TiVo
or reported to TiVo in writing. TiVo's use of commercially
reasonable efforts to diagnose and correct such failures shall
not supersede the rights and remedies of the Parties set forth
in Subsection 3.2(c)(iii) above.
(v) Review of Documentation. AOL shall also be entitled to
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evaluate whether the TiVo Documentation is consistent with
Section 3.2(a)(x). All required documentation shall be
provided to AOL, in the form mutually agreed to by the
Parties, prior to and as a condition of AOL's Acceptance of
Integrated Product.
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* * * 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.
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(vi) No Effect on TiVo's Other Obligations. AOL's inspection or
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failure to inspect, and AOL's Acceptance of the Integrated
Product shall in no way relieve TiVo of its obligations under
this Section 3.2 and Section 5.2 of Schedule 5 of this
Agreement. Notwithstanding the foregoing, if AOL does not test
the Integrated Product in accordance with Section 3.2(c)(ii)
within the time frames set forth therein, the Integrated
Product shall be deemed "accepted" by AOL.
(d) Support of AOL. TiVo will provide for the sole and exclusive benefit
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of AOL support of the Integrated Product in accordance with the
support level provisions of Schedule 6, at no cost to AOL or any End
User. Subject to the provisions of Section 10.1, such support does not
extend to any third parties, including without limitation any End-
Users, and specifically excludes any obligation to provide corrections
for errors in the operation of the AOL TV Software and/or AOL TV
Service, if such errors are attributable to the AOL TV Software or AOL
TV Service in the form provided by AOL.
(e) Provisioning Support. The TiVo Platform shall include service
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provisioning support required to remotely update, manage and maintain
the Integrated Product, including the software thereof, in a multiple
service, closed loop bit and information management system, as set
forth in Schedule 7 attached hereto (the "Provisioning Support"). Such
Provisioning Support also shall include without limitation, service
testing and certification, reliable distribution of service software
to receiver populations, operational reporting and data acquisition,
measurement and backhaul, as set forth in Schedule 7. The Integrated
Product shall operate substantially in accordance with the
specifications for maximum downtime, service interruption and
degradation as set forth in the Specifications; provided that in no
event shall TiVo be responsible for any downtime, service interruption
or degradation attributable to the AOL communications network, AOL TV
Service, AOL TV Software or any manufacturing defect in the Integrated
Product.
(f) TiVo Channel. Except as otherwise provided herein, TiVo shall, at its
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expense, be responsible for programming, operation and management of
the TiVo Channel. Notwithstanding the foregoing, TiVo may, * * *,
discontinue the TiVo Channel (or any portion(s) thereof) * * *,
provided that in the event of a discontinuance of the TiVo Channel,
AOL's obligations to TiVo hereunder shall terminate except AOL's
obligations to TiVo set forth in Sections * * *, and * * *. In
addition, AOL may continue to offer * * * to all current and future
End Users of the AOL TV Service using the Integrated Product and may
develop, implement and/or offer * * *; provided that AOL shall not use
or incorporate any technology owned or provided by TiVo, except to the
extent necessary to implement * * * and to provide required
Provisioning Support, and provided that any such use remains subject
to the restrictions in Section 4 of Schedule 5.
(g) Marketing Assistance. TiVo will assist AOL to market and distribute
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the Integrated Product and promote the Integrated Service in
accordance with the AOL marketing and distribution plan set forth in
Schedule 8 attached hereto (the "Marketing Plan"). TiVo's assistance
shall be in the form of provision of all necessary TiVo logos and
trademarks for inclusion in the AOL marketing and promotional
materials.
(h) * * *
(i) * * *
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* * * 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.
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3.3 Obligations of AOL.
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(a) AOL's Assistance. AOL shall, at its expense and upon request by TiVo,
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furnish TiVo with materials in AOL's possession and control, except
source code, that are reasonably related to TiVo's development and
testing of the Integrated Product (collectively, "AOL Materials"). AOL
shall provide the relevant AOL Materials to TiVo as soon as practical
after the Effective Date and promptly upon the release of any new
versions of such AOL Materials. AOL shall provide TiVo reasonable
technical assistance to enable TiVo to port the Liberate Browser
functionality to the Integrated Product as set forth in Section 3.2(a)
including, without limitation, providing TiVo with access to current
and future software releases, in object code form, of the AOL TV
Software and AOL Deliverables.
(b) Network Access. AOL will utilize its communications network to
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deliver the necessary data required to enable the functionality of the
Integrated Service and the Robust DVR Functionality to all Integrated
Products. * * * for the delivery of this data.
(c) Availability of Integrated Product. AOL's decision to not
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commercially release and deploy the Integrated Product by * * *
(provided that TiVo has not committed a Material Breach that has not
been cured or waived at such time and the that Integrated Product has
been Accepted by AOL as provided herein) * * * subject, however, to
AOL's decision to deploy or continue to provide the AOL Interactive TV
Service as set forth in Section 3.3(d).
(d) AOL TV Service. Except as otherwise provided herein, AOL shall, at
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its expense, be responsible for programming, operation and management
of the AOL TV Service. Subject to the provisions of this Agreement,
AOL shall determine, in its sole and absolute discretion, the nature
and type of content and services that will be made available on the
AOL TV Service. AOL shall have no obligation to consult with or
otherwise notify TiVo regarding any decisions relating to the nature
and type of content and services that will be available on the AOL TV
Service. Notwithstanding the foregoing, AOL may, at any time and in
its sole and absolute discretion, discontinue the AOL Interactive TV
Service without any liability whatsoever to TiVo. AOL shall use
reasonable commercial efforts to provide TiVo with a minimum of * * *
written notice prior to discontinuing the AOL Interactive TV Service.
If AOL publicly announces that it will discontinue its efforts in
providing interactive television (including the AOL TV service, any
successor service thereto, and any other interactive television
service) (herein, the "AOL Interactive TV Service") then TiVo may
request from AOL confirmation of such announcement and, upon receipt
of such confirmation in writing from AOL by TiVo, * * * to TiVo for
use * * *, however, * * * will not affect any "Escrowed Funds" as
defined in the Investment Agreement.
(e) End User Interface. AOL will consult with TiVo in developing design
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guidelines of the End User interface of the Integrated Product (the
"User Interface") that will be compatible with the Specifications,
including the placement of TiVo buttons on the AOL TV Main Menu and
AOL TV EPG layout and button placement, subject to AOL's final
approval of same, as set forth in Section 5.1.
(f) AOL Deliverables. AOL shall, at its expense, provide to TiVo the AOL
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TV Software, in object code form only, which conforms in all material
respects to the applicable Specifications and AOL
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* * * 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.
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TV documentation (collectively, the "AOL Deliverables"). Such AOL
Deliverables shall be delivered to TiVo no later than the dates
specified in the Milestone Schedule in order for TiVo to meet its
obligations set forth in this Agreement.
(g) Documentation. AOL will develop documentation for the Integrated
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Product instructing End-Users how to subscribe to and use the AOL TV
Service ("Subscriber Documentation"). TiVo will assist AOL in
developing Subscriber Documentation related to the DVR Functionality.
AOL shall * * *, design and reproduction of all such Subscriber
Documentation, unless otherwise provided in the Marketing Plan.
(h) Marketing and Distribution. AOL, with TiVo's reasonable assistance,
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shall market and distribute the Integrated Product in accordance with
the Marketing Plan.
3.4 Liberate License. TiVo has secured a license from Liberate to use the
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Liberate Browser in the manner required to integrate the Liberate Browser,
the TiVo TV Software and the AOL TV Software into the Integrated Product,
manufacture, market and distribute the Integrated Product and offer the
Integrated Service as contemplated in this Agreement. TiVo has delivered to
AOL a copy of the TiVo-Liberate agreement and all schedules, exhibits,
attachments and amendments thereto. AOL shall provide commercially
reasonable assistance to TiVo to cause Liberate to perform its obligations
required to implement the Integrated Product and offer the Integrated
Service within the timeframes set forth in the Milestone Schedule. TiVo
shall use reasonable commercial efforts (i) to keep AOL appraised of
Liberate's performance or any non-performance; (ii) to provide AOL with
notice of status and issues meetings relating to the same; and (iii) to
provide AOL the opportunity to participate in any such meetings.
3.5 Program Managers; Dedication of Resources. AOL and TiVo each shall
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designate a program manager ("Program Manager") who shall be the principal
point of contact between them for all matters relating to this Agreement.
The initial Program Manager for AOL shall be Lin Jenner and the initial
Program Manager for TiVo shall be Allen Bourgoyne. AOL and TiVo may
designate new Program Managers and other personnel responsible for
particular tasks related to this Agreement by written notice to the other
Party.
3.6 TiVo Responsibility for Performance. TiVo acknowledges and agrees that it
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is solely responsible for performance of its obligations to develop the
Integrated Product so that it conforms in all material respects to the
applicable Specifications, as warranted by TiVo in Section 5 of Schedule 5,
on schedule in accordance with the Milestone Schedule. Notwithstanding the
foregoing, TiVo shall not be in breach of the foregoing obligation to the
extent TiVo fails to perform such obligation because (i) TiVo received the
AOL TV Software, which conforms in all material respects to the applicable
Specifications, later than the date specified in the Milestone Schedule;
(ii) the Specifications are finalized in a form mutually agreed to by the
Parties later than the date specified in the Milestone Schedule; (iii) the
Liberate Browser, in the form eventually accepted by TiVo and used in the
Integrated Product is made available to TiVo later than the date specified
in the Milestone Schedule; and (iv) of other failures or delays resulting
from the acts or omissions of AOL or Liberate. If a milestone date
specified in the Milestone Schedule is missed due to the fault of AOL or
Liberate, the Milestone Schedule will be adjusted equitably to account for
the delay, to the extent such fault caused the delay.
3.7 Milestone Schedule. The Parties will meet at least monthly to review each
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Party's respective performance and the overall status of the project in
accordance with the Milestone Schedule. If either Party, or the project as
a whole, is not on schedule, the Parties agree to work together to resolve
the delay. Notwithstanding the foregoing, nothing in this Section 3.7 shall
be construed to alter the rights and obligations on either Party with
respect to any delay of either Party under this Agreement.
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* * * 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.
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4. The Integrated Product.
4.1 Hard Drive Allocation. AOL will allocate to TiVo * * * on the Hard
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Drive of each Developed Hardware containing the Integrated Service for
the purpose of providing the TiVo Channel (the "TiVo Hard Drive
Allocation"). * * * The Hard Drive storage area required to enable the
Basic DVR Functionality is estimated to be approximately * * * TiVo's
space requirement for the software needed to enable the Basic DVR
Functionality of the Integrated Service shall not be considered to be
part of the TiVo Hard Drive Allocation, unless the storage requirement
for such software exceeds * * *, in which case the storage area
required in excess of * * * shall be at the expense of TiVo's * * *
allocation. * * * allocated to the TiVo Channel and services may be
increased to accommodate additional TiVo Channel offerings in the
future as mutually agreed by the Parties. * * *
4.2 Integrated Service EPG. The Integrated Service will utilize the AOL TV
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EPG, * * *. During the term of this Agreement and subject to the terms
and conditions set forth herein, TiVo and AOL will cooperate in good
faith to establish processes and procedures required or appropriate to
incorporate TiVo and AOL fields and data into the AOL TV EPG and to
efficiently deliver such AOL TV EPG to the Integrated Product for use
by the AOL TV Service and the TiVo Channel in accordance with the
Specifications. Notwithstanding the foregoing and for the avoidance of
doubt, AOL shall not have access to * * * for use with * * * in support
of * * *
4.3 Hardware Costs. AOL will have the right, at its option, to use the
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TiVo remote control hardware to be provided with the Integrated Product
to run the Integrated Service and TiVo will provide assistance to allow
AOL to map the buttons and features of such remote to the Integrated
Service. AOL will pay the actual reasonable cost of (a) all alpha and
beta versions of the TiVo Platform in excess of the number of units
described in Section 3.2(c)(ii) and (iii) * * * necessary for the
testing of such hardware as provided for in Section 3.2(c) above, (b)
reasonable engineering and tooling costs of changes to the TiVo remote
control requested by AOL, and (c) reasonable engineering costs of
causing AOL's own remote control and/or keyboard to function with the
Integrated Product.
5. The Integrated Service.
5.1 AOL Linking to the TiVo Channel. As part of the Integrated Service,
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TiVo shall provide the Initial Robust DVR Functionality, as described
in Schedule 10 attached hereto for use solely with the TiVo Channel.
AOL will provide TiVo with a menu box or button linked to the TiVo
Channel that is * * *. AOL shall determine the look,
feel and user interface of the AOL TV Main Menu. Such linkable button
shall be viewable by End Users when initiating any session or
interaction with the Integrated Service. In addition, AOL will provide
TiVo with a similar linkable button on the AOL TV EPG and other areas
of the Integrated Service where appropriate as agreed to by the
Parties. The buttons will link to the TiVo Channel, which will contain
TiVo-branded DVR content and services. The TiVo Channel will also be
accessible through a TiVo-branded, multi-color button contained at the
top center of each remote control for the Integrated Service and
through a similar key * * *. TiVo shall make provision for automatic
updates of, and shall regularly update, subject to telephone access via
the AOL communications network to the Integrated Product as controlled
by the End User, the program, schedule and related data used by the
Robust DVR Functionality to ensure that the program and schedule
information contained in the TiVo Channel is reasonably current. AOL
will host provisioning for updates to the EPG Data to facilitate the
receipt and integration of such updates.
-------------------------
* * * 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.
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5.2 Extended or Additional Services. Although the initial Robust DVR
-------------------------------
Functionality will be based on the features and functionality described in
Schedule 10 as of the Effective Date (the "Initial Robust DVR
Functionality"), the Parties acknowledge that enhanced or additional
features may be offered in subsequent versions of the TiVo Software. TiVo
may desire from time to time to offer enhanced or additional services as
part of the Robust DVR Functionality including, without limitation,
enhanced services for which TiVo may require End Users to pay a fee, which
enhanced or additional services shall not include the updates and upgrades
discussed in Section 5.3 below or the services provided by the Basic DVR
Functionality (the "New Services"). Such New Services may be developed by
TiVo internally (such as * * *) or developed in conjunction with third
parties and offered as part of the TiVo Channel (such as * * *). Nothing
herein shall restrict TiVo's right to develop and offer enhanced or
additional DVR Functionality on TiVo platforms other than the Developed
Hardware. Any current, enhanced or new services offered by TiVo through the
Integrated Product for which it charges an End User an additional fee shall
be deemed a New Service. * * *
5.3 TiVo Software Updates and Upgrades. AOL will have editorial approval
----------------------------------
rights with respect to changes in content, advertising and minor upgrades
and updates to the Initial Robust DVR Functionality, such approval not to
be unreasonably withheld or delayed. To the extent that TiVo makes
generally available to its subscribers updates and upgrades to the TiVo
Software, TiVo shall offer such updates and upgrades to AOL solely for use
in the Integrated Product. AOL, in its discretion, may elect to test such
updates and upgrades, with reasonable assistance provided by TiVo, and, if
AOL so desires, AOL, with reasonable assistance from TiVo, may integrate
such updates and upgrades into the Integrated Product and distribute such
AOL-approved updates or upgrades to End Users. If AOL elects not to
incorporate a particular upgrade, TiVo shall continue to support the
version of the TiVo Software used in the Integrated Product in accordance
with Section 3.2 and Schedules 6 and 7 hereof. Notwithstanding the
foregoing, AOL shall promptly incorporate any upgrade or update provided by
TiVo to remedy any infringement or potential infringement of the TiVo
Software (in the form then-currently used by AOL) as further described in
Subsection 8.3 of Schedule 5.
5.4 * * *
6. Exclusivity
6.1 Subject only to the exceptions set forth in this Section 6.1 and as
provided in Section 6.2 with regard to platforms not in AOL's control
and MSOs, * * *. With respect to Sections 6.1(a) and 6.1(c) below, the
Exclusivity shall terminate, at
-------------------------
* * * 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.
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AOL's option, following thirty (30) days' written notice to TiVo of the
occurrence of the respective condition(s) specified in Section 6.1(a) or
6.1(c), as the case may be, and the failure of TiVo to correct such
condition(s) during such thirty (30) day period. With respect to Section
6.1(b), AOL, at its option, may terminate the Exclusivity immediately upon
written notice to TiVo. The Exclusivity shall terminate in the following
cases:
(a) If because of TiVo's or TiVo contracted third parties' failure to
perform or Material Breach (with the exception of Liberate and as
opposed to delays caused by AOL or AOL contracted third parties), the
Shipment Release of the Developed Hardware supporting the Integrated
Service does not occur by * * * the Exclusivity shall terminate.
(b) * * *
(c) If the AOL TV Service is offered on a hardware/software platform as to
which TiVo is unable to port its service in a "Reasonable" time frame,
the Exclusivity shall terminate as to that platform. Until * * *
"Reasonable" time frame shall mean the last to occur of * * * from
authorization to begin work and the receipt by TiVo of all necessary
hardware and software specifications and/or source code, or * * * prior
to the projected date upon which the platform will first be available
for public distribution with AOL TV Service enabled. After * * *
"Reasonable" time frame shall mean the last to occur of * * * from
authorization to begin work and the receipt by TiVo of all necessary
hardware and software specifications and/or source code, or * * * to
the projected date upon which the platform will first be available for
public distribution with AOL TV Service enabled. In all cases, TiVo's
porting schedule will reflect commensurate penalties for failure to
deliver as promised.
6.2 If AOL desires to distribute AOL TV on a platform not in AOL's control or
in conjunction with an MSO (e.g., Cox, Comcast, Time-Warner Cable and
MediaOne), then * * *. The Parties mutually agree that following the
closing of the merger between AOL and Time Warner, Inc. (the "Closing"), *
* *.
7. Development Costs; Royalties
7.1 Development Costs. * * * will be responsible for * * * in
-----------------
relation to the development of the Specifications, the Integrated
Product and the Integrated Service in order to enable delivery of the
Integrated Service by the milestone date specified in the Milestone
Schedule; particularly, * * * will remain responsible for the costs
related to its obligations under * * * above.
7.2 Integrated Service Revenues. AOL will collect and, subject to the
---------------------------
limitations set forth below, retain revenues generated from sales of
the Developed Hardware and from subscription to and use of the
Integrated Service. AOL shall pay to TiVo all revenues collected by AOL
that are generated from any
-------------------------
* * * 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.
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New Services for which TiVo charges an additional fee. TiVo will retain
all advertising, promotion, audience measurement (subject to the
provisions of Subsection 5.4) and other revenues generated by the TiVo
Channel that are collected by TiVo.
7.3 Taxes. Neither Party shall be required to reimburse the other Party
for any taxes, including, without limitation, ad valorem personal
property taxes, state and local privilege, franchise and excise taxes
based on gross revenue, and taxes based on or measured by such Party's
net income.
8. Distribution, Marketing and Promotion.
8.1 Distribution. During the term of this Agreement (following completion
------------
of the Development Activities and Acceptance), AOL will distribute the
Integrated Products in accordance with the Marketing Plan. The schedule
for such distribution set forth in the Marketing Plan will be
reasonable taking into account the schedule for the Development
Activities and manufacturing and distribution lead times, but in no
event later than * * *. Following completion of the Development
Activities and Acceptance of the Developed Hardware and subject to an
applicable commercially reasonable and royalty-free license agreement,
TiVo will deliver all the software required to operate the Integrated
Product and enable the Integrated Service to AOL's Manufacturers for
distribution by inclusion in the Integrated Product. AOL and TiVo agree
that it is the intent of both Parties to * * * of the
Integrated Service and will cooperate to explore additional
distribution relationships with third party hardware manufacturers,
service providers, retailers, etc.
8.2 Subsidy Payments. Pursuant to the Investment Agreement, dated as of
----------------
the date hereof, between TiVo and AOL (the "Investment Agreement"), AOL
and TiVo have agreed that TiVo will deposit certain funds totaling up
to * * * (the "Earmarked Funds") into an escrow account pursuant to a
form of escrow agreement attached as an exhibit to the Investment
Agreement (the "Investment Escrow Agreement"). TiVo agrees that, upon
and after the release of the Earmarked Funds from escrow in accordance
with the terms of the Investment Escrow Agreement, the Earmarked Funds
will be segregated from TiVo's other cash balances and used by TiVo (a)
* * * (as defined below) or (b) if agreed in writing by AOL and TiVo, *
* * of the Integrated Product in amounts and on terms set forth in such
written agreement, and (c) for no other purpose. In order to * * * the
production and * * * TiVo shall make a payment of * * * for each unit
of Developed Hardware produced and shipped, such payment to be made to
(x) the Manufacturer or Manufacturers; or (y) to such other party as
determined by AOL (each such payment, a "* * *"). * * * TiVo promptly
shall provide to AOL all such information as AOL shall reasonably
requests concerning TiVo's use of the Earmarked Funds and * * *
relating to TiVo's compliance with this Section 8.2.
8.3 Hardware Branding and Packaging. The Integrated Service as enabled in
-------------------------------
the Developed Hardware will be branded * * * in a manner as is mutually
agreed by the Parties * * *. All of the Robust DVR Functionality and
TiVo Channels, except for the Live TV Guide accessible from the TiVo
Channel, which will be an AOL TV EPG as noted above, will be * * *, as
mutually agreed by the Parties.
8.4 Ad Sales Representation. Subject to mutually agreed upon terms and
-----------------------
performance requirements and milestones, AOL will serve as TiVo's
representative for sales of advertising inventory (e.g., ads,
promotions, links) to be offered within the TiVo Channel and upon
TiVo's reasonable approval of such advertisements, TiVo agrees to run
such advertisements on the TiVo Channel as arranged by AOL. TiVo will
retain all advertising and commerce revenues from the TiVo Channel, net
of AOL's selling expenses (as to which the Parties mutually will agree)
and * * * commission. All advertising will be subject to AOL's standard
advertising policies and, with respect to advertising placed by AOL on
the Integrated
-------------------------
* * * 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.
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Service, such advertising will not include the promotion of personal
television services that are competitive to TiVo in any material
respect.
8.5 Marketing Materials and On Screen Promotion.
-------------------------------------------
AOL will include materials promoting the TiVo Channel in the packaging
of the Integrated Product, including without limitation promotional
inserts and TiVo Channel user manuals inside such packaging and a
promotional presence on the outside of such box and on any appropriate
retail signage. AOL will provide all such promotional materials in
accordance with Section 3.3(f), which materials will be subject to the
reasonable approval of TiVo.
9. Payment and Related Terms.
9.1 Books and Records.
-----------------
(a) Maintenance of Records. Each Party shall maintain complete,
----------------------
clear and accurate records of all expenses, revenues, fees,
transactions and related documentation (including agreements) in
connection with the performance of this Agreement ("Records").
(b) Records on Disputed Amounts. Each Party shall provide the other
---------------------------
Party with supporting documentation concerning any disputed
invoice within thirty (30) days of receipt of written notice of a
dispute. Each Party shall also be entitled to audit the other
Party's books and records in accordance with Section 9.1(c) below
in order to verify any amounts in dispute.
(c) Audit Rights. For the sole purpose of ensuring compliance with
------------
this Agreement, each Party shall have the right to direct an
independent certified public accounting firm subject to strict
confidentiality restrictions to conduct a reasonable and
necessary copying and inspection of portions of the Records of
the other Party which are directly related to the amounts payable
to TiVo hereunder. Any such audit may be conducted after five (5)
business day's prior written notice, subject to the following.
Such audits shall not be made more frequently than once every
twelve months. Any such audit shall be at the auditing Party's
expense, unless an audit discloses that the other Party
overcharged or underpaid, as applicable, the auditing Party by at
least * * * for the period of the audit, in which case the
audited Party shall reimburse the auditing Party for the
reasonable costs of the audit. In the event of any dispute or
disagreement regarding such payments, either Party may refer the
matter to the Management Committee as set forth in Section 16 of
Schedule 5 (Management Committee/Arbitration). Notwithstanding
the foregoing, neither Party may audit the other Party for the
period from sixty (60) days prior to the end of its fiscal year
to thirty (30) days following the end of such fiscal year.
9.2 Disputed Amounts. AOL shall not be obligated to make payments
----------------
required hereunder to the extent and for the duration that such
payments are in dispute in good faith; provided, however, that in the
event of such dispute, AOL shall be required to make payments required
hereunder on any undisputed portion of any properly rendered invoice
for which payment is due. Each Party shall be deemed to have
acknowledged and accepted the validity of any claim if it does not
notify the other Party that it disputes such claim and specifies with
particularity its reasons therefor within thirty (30) days from the
date it receives notice thereof.
10. Customer Support.
10.1 Support Responsibilities. AOL will be responsible for providing
------------------------
* * * customer support to End Users of the Integrated
Service. Tier one support includes (i) initial contact with the user
to define
----------------------
* * * 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.
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<PAGE>
the problem, if any, and (ii) the provision of answers to any
questions about product functionality, to the extent reasonable
possible. Tier two support is a higher level of support that
reflects a knowledge base of principally all known issues that may
arise related to the TiVo Channel and DVR Functionality. AOL will
provide a toll-free telephone number to TiVo for referral of End
Users having support issues. In addition, TiVo shall provide such
training and materials to AOL's customer service and telemarketing
representatives as is reasonably required to enable AOL to provide
tier one and tier two support of the TiVo Channel, the Robust DVR
Functionality and the Basic DVR Functionality, and the Integrated
Product. To this end, TiVo agrees to provide AOL sufficient product
and service information to reasonably support such training efforts.
TiVo shall also provide AOL with * * * at which TiVo's designated
technical support personnel responsible for the Integrated Product
can be reached by AOL's designated support personnel, * * * to
answer AOL's questions with respect to the Integrated Product that
could not be handled by AOL's tier one and tier two support
contacts. AOL agrees that AOL will only contact TiVo's designated
support personnel outside of TiVo's standard customer service hours
in the event of a major service interruption or other problem that
results in a significant increase in immediate call volume to AOL's
call centers. AOL shall provide TiVo with * * * at which technical
support personnel responsible for the AOL TV Software and the AOL TV
Service can be reached by TiVo * * * for referral of customers with
questions with respect to the AOL TV Software and the AOL TV
Service. TiVo will provide service engineering support to AOL as it
relates to the TiVo Channel, the Robust DVR Functionality and the
Basic DVR Functionality, in accordance with Schedule 11. TiVo's
obligations to support the Basic DVR Functionality contained in the
Integrated Product shall survive the expiration or termination of
this Agreement.
10.2 Support Materials. Prior to the first commercial release of the
-----------------
Integrated Product, the Parties will mutually agree on customer
support information materials so as to clearly indicate the
appropriate customer service contact for particular problems and
questions related to the integration and user interface of the
Integrated Product.
10.3 Liberate Browser Support. As part of * * * * * * will provide for
------------------------
maintaining the port of the Liberate Browser, including upgrades, on
the Developed Hardware during the term. During the Term, as between
* * * * * * will bear the cost of such maintenance.
11. Term and Termination.
11.1 Term. Subject to the right of extension, as provided below, the
----
term of this Agreement shall commence on the Effective Date and
shall terminate on the * * * anniversary of the Effective Date (the
"Initial Term"). The Agreement may be extended by mutual agreement
of the Parties, except that, if the Subsidy Payments have not
exhausted the Earmarked Funds by the end of the Initial Term, AOL
may extend the term of the Agreement for successive * * * renewal
periods until such time as the Earmarked Funds shall be exhausted.
The Initial Term, together with any extensions thereto, shall be
referred to herein as the "Term."
11.2 Termination for Material Breach. Either Party may terminate this
-------------------------------
Agreement immediately by giving written notice to the other Party
for the occurrence of any Material Breach by such other Party. For
the purposes of this Agreement, "Material Breach" shall mean a
Party's material default in the performance or observance of any
material covenant, agreement or condition set forth herein, which
default remains uncured for a period of thirty (30) days (or other
applicable cure period as may be specified herein) from the date
that the other Party provides notice to the defaulting Party of such
default, including, without limitation, any of the following:
(a) a Party's uncured material breach of any of Sections * * * of
the Agreement; or
----------------------------
* * * 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.
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<PAGE>
(b) a Party's uncured material breach of any provision of * * * or
(c) * * *
11.3 * * *
11.4 Termination by * * *. * * * may terminate this Agreement immediately upon
--------------------
notice to * * * if the Parties fail to mutually agree upon * * * of the
Effective Date.
11.5 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 such 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 such other Party making an assignment for the
benefit of creditors; or (iii) upon such other Party's dissolution or
liquidation.
11.6 Cancellation of * * *. If at any time during the term hereof * * *
---------------------
announces the discontinuation of its efforts in providing * * * (including
* * * any successor service thereto, and any other * * *, and does
discontinue such efforts, * * * may terminate this Agreement * * * upon
thirty (30) days' prior written notice. Notwithstanding the foregoing, in
the event of such discontinuance, all Earmarked Funds shall be immediately
* * *.
11.7 * * *
11.8 Effect of Termination or Expiration.
-----------------------------------
(a) If this Agreement is terminated pursuant to Section * * * or Section *
* * each Party, at the option of such Party, shall return to the other
Party all of such other Party's Confidential Information or destroy
all of such other Party's Confidential Information, including all
copies of, and notes and compilations related thereto, and shall
certify in writing to the other Party that such obligations have been
completed.
(b) If this Agreement expires or is terminated (i) by * * * pursuant to
Section * * * or Section * * *, or (ii) by * * * pursuant to Section *
* *, the Parties agree that within thirty (30) days of the date of
such termination or expiration of this Agreement, * * * shall
discontinue * * * provided that * * * shall retain * * * necessary to
* * *
(c) If this Agreement is terminated by * * * pursuant to Section * * *
Section * * * or Section * * *, the Parties agree that * * * may * * *
the * * * in accordance with the terms hereof.
(d) Unless this Agreement is terminated pursuant to Section * * * Section
* * * or Section * * * (i) the termination of this Agreement shall not
affect the right of * * * including without limitation * * * and (ii)
accordingly, * * *
(e) * * *
11.9 Survival. Notwithstanding the termination, cancellation or expiration of
--------
this Agreement for any reason, the provisions of Sections * * * of this
Agreement and Sections * * * through * * * and * * * of Schedule * * *
shall survive such termination, cancellation or expiration indefinitely
and the provisions of Section * * * of this Agreement and Section * * * of
Schedule * * * shall survive such termination, cancellation or expiration
solely to the extent necessary * * * set forth in Section * * * of this
Agreement.
--------------------------
* * * 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.
15
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12. Standard Terms.
The Standard Terms & Conditions set forth on Schedule 5 attached hereto are
hereby made a part of this Agreement.
[Signatures contained on following page]
16
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers and representatives as of the day and year
first written above.
AMERICA ONLINE, INC. TIVO, INC.
By: /s/ David M. Colburn By: /s/ Michael Ramsay
------------------------------- ------------------------------
Name: David M. Colburn Name: Michael Ramsay
----------------------------- ----------------------------
Title: President, Business Affairs Title: Chief Executive Officer and
---------------------------- ---------------------------
Chairman of the Board of
Directors
(Principal Executive Officer)
17