Secured Convertible Debenture Purchase Agreement - TiVo Inc., Strategic Value LP, GC&H Investments LLC, Institutional Venture Partners and New Enterprise Associates
SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
This Secured Convertible Debenture Purchase Agreement (this "Agreement") is
entered into as of this 8th day of April, 1999, among TiVo Inc., a Delaware
corporation (the "Company"), and the creditors listed on Exhibit A (each a
"Creditor" and collectively, the "Creditors").
1. Purchase and Sale of Debentures.
1.1 Authorization. Pursuant to this Agreement, the Company has
authorized the issuance of (i) four Secured Convertible Debentures (one for each
Creditor) in the form attached hereto as Exhibit B (each individually, a
"Debenture" and collectively, the "Debentures"), and (ii) the warrants more
specifically described in Sections 6.3 and 8 hereof (collectively, the
"Warrants").
1.2 Issuance and Sale of Securities. Subject to the terms and
conditions hereof, the Company hereby agrees to issue and sell to each Creditor,
and each Creditor hereby agrees to accept delivery from the Company, of a
Debenture and the Warrants to be issued to such Creditor pursuant to Section 6.3
and 8 hereof.
1.3 Advance of Funds. The delivery of the Debentures and the Initial
Warrants (as defined in Section 6.3 hereof) shall take place at the offices of
Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto,
California 94306, on April 8, 1999 (the "Closing"). At the Closing, the Company
shall deliver to each Creditor the Initial Warrant and a Debenture against
delivery to the Company by the Creditors, severally but not jointly, from time
to time on a pro rata basis (except for GC&H Investments who shall be limited to
an amount not to exceed $100,000.00 borrowed and outstanding at any one time) by
wire transfer of immediately available funds, or by check, in the aggregate
amount outstanding at any one time under all of the Debentures not to exceed
Three Million Dollars ($3,000,000), subject to the conditions set forth herein
and in the Debentures; provided, however, that in no event shall any Creditor be
required to advance more than its commitment as set forth in Exhibit A.
1.4 Repayment Terms/Conversion. Outstanding principal and accrued
interest on the Debentures shall be fully due and payable in compliance with the
terms set forth in the Debentures. At each Creditor's option, if the Company
fails to pay it any principal and/or accrued interest on the Maturity Date (as
defined in the Debentures), upon an Equity Event (as defined in the Debentures)
or after acceleration, that Creditor may choose to have all or any part of the
outstanding principal and accrued interest owing to that Creditor repaid in
shares of Common Stock of the Company at a conversion rate equal to the
following (the "Conversion Price"): (1) in the case of interest, the fair market
value of the Common Stock at the time of conversion, as determined by the
Company in good faith, as adjusted pursuant to Section 2, or (2) in the case of
principal, $3.68 per share, as adjusted pursuant to Section 2. In addition, at
each Creditor's option, that Creditor may choose to have all or any part of any
accrued interest owing to that Creditor prior to the Maturity Date repaid in
shares of Common Stock of the Company at the Conversion Price. In the event a
Creditor chooses to convert any outstanding principal and/or accrued interest
into Common Stock of the Company, that Creditor shall give
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written notice to the Company of such conversion no less than fifteen (15)
business days prior to such conversion.
2. Adjustment of Exercise Price and Number of Shares. The Conversion
Price and the number of shares of Common Stock subject to the Debentures (the
"Debenture Stock") shall be subject to adjustment from time to time as follows:
2.1 Subdivision or Combination of Stock. If at any time or from time
to time after the date of the Debentures (the "Issue Date") the Company shall
subdivide its outstanding shares of Debenture Stock, the Conversion Price in
effect immediately prior to such issuance or subdivision shall be
proportionately reduced. If the outstanding shares of Debenture Stock of the
Company shall be combined into a smaller number of shares, the Conversion Price
in effect immediately prior to such combination shall be proportionately
increased.
2.2 Adjustment for Stock Dividends. If and whenever at any time the
Company shall declare a dividend or make any other distribution upon any class
or series of stock of the Company payable in shares of Debenture Stock or
securities convertible into shares of Debenture Stock, the Conversion Price and
the number of shares to be obtained upon exercise of the Debentures shall be
proportionately adjusted to reflect the issuance of any shares of Debenture
Stock or convertible securities, as the case may be, issuable in payment of such
dividend or distribution.
2.3 Adjustment for Reclassifications. In case, at any time prior to
the Debentures being paid in full, the Company undertakes any capital
reorganization, reclassification of the Debenture Stock, the consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving corporation), or
of the sale or other disposition of all or substantially all the properties and
assets of the Company in its entirety to any other person, the Debentures shall,
after such reorganization, reclassification, consolidation, merger, sale or
other disposition (a "Reclassification"), be exercisable so that upon conversion
each Creditor shall procure, in lieu of each share of Debenture Stock, the kind
and amount of shares of stock, other securities, money or property receivable
upon such Reclassification by the holder of one share issuable upon exercise of
the Debentures had the Debentures been exercised immediately prior to such
Reclassification at the price that would have been effective prior to such
Reclassification. The provisions of this Section 2.3 shall similarly apply to
successive Reclassifications.
2.4 Minimal Adjustments. No adjustment in the Conversion Price and/or
the number of shares of Debenture Stock subject to the Debentures need be made
if such adjustment would result in a change in the Conversion Price of less than
one cent ($0.01) or a change in the number of subject shares of less than one-
hundredth (1/100th) of a share. Any adjustment less than these amounts which is
not made shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of at least these amounts.
2.5 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 2,
the Company at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and
2.
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prepare and furnish to each Creditor a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request at any time of a
Creditor, furnish or cause to be furnished to that Creditor a like certificate
setting forth (i) such adjustments and readjustments, (ii) the then effective
Conversion Price and number of shares of Debenture Stock subject to the
Debenture issued to that Creditor, and (iii) the then effective amount of
securities (other than Debenture Stock) and other property, if any, which would
be received upon exercise of the Debenture issued to that Creditor.
3. Security. The Debentures shall be secured by a security interest in
certain assets of the Company in accordance with the terms of the Security
Agreement in the form attached hereto as Exhibit C (the "Security Agreement").
4. Representations and Warranties of the Company. The Company hereby
represents and warrants the following as of the date hereof, as of the date of
Closing, and as of the date of each subsequent borrowing:
4.1 Organization and Standing. The Company 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 and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify is reasonably likely to have a material adverse
effect on its business or its properties.
4.2 Authorization. All corporate action on the part of the Company,
its officers and directors necessary for the authorization, execution and
delivery of this Agreement, the Debentures, the Warrants, the Security Agreement
and performance of all obligations of the Company hereunder and thereunder, has
been or shall be taken prior to the Closing, and this Agreement, the Debentures,
the Warrants, and the Security Agreement, when executed and delivered, shall
constitute the valid and legally binding obligations of the Company, enforceable
in accordance with their terms.
4.3 Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with any third
party or any federal, state or provincial governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated herein, other than consents related to interest rates which may be
deemed to exceed the maximum interest rates established by the law.
4.4 No Conflicts. Neither the execution and delivery of this
Agreement, the Debentures, the Warrants, or the Security Agreement by the
Company nor the consummation by the Company of the transactions contemplated
herein will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of the Company, (ii) violate in any
material respect any statute, rule, regulation, order, writ, injunction, decree
or arbitration award applicable to the Company or its assets, or (iii) breach in
any material respect any other material agreement, undertaking, contract, or
security agreement to which the Company is subject.
3.
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4.5 No Defaults. No Event of Default, as defined in Section 9.1 of
this Agreement, shall have occurred and be continuing prior to the Closing or
any subsequent advance.
4.6 Voting. Other than the Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred
Stock, there are no shares of stock in the Company possessing voting rights.
4.7 Authorized Shares. Until the later of the date on which (a) all
the Warrants have been exercised or have expired, or (b) the Maturity Date (as
defined in the Debentures), the Company shall maintain sufficient numbers of
shares of authorized Common Stock to permit the full exercise of the Warrants
and conversion of the Debentures.
5. Representations and Warranties of the Creditor. Each Creditor
represents and warrants to the Company as follows:
5.1 Authorization. This Agreement, when executed and delivered by
it, will constitute a valid and legally binding obligation of it, enforceable in
accordance with its terms.
5.2 Investment. It is acquiring the Debenture to be sold by the
Company to it, the Warrants to be issued by the Company to it, and any equity in
the Company which it may receive therefrom for investment for its own account,
not as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act of 1933, as
amended (the "Securities Act"). It understands that the Debenture to be sold by
the Company to it, the Warrants to be issued by the Company to it, and equity of
the Company to be purchased or received have not been, and will not be,
registered under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act, which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Creditor's representations as expressed herein. It has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. It must bear the economic risk of this investment indefinitely
unless the shares to be issued to it pursuant to the Warrants to be issued by
the Company to it and its conversion rights under the Debenture to be sold by
the Company to it are registered pursuant to the Securities Act of 1933, as
amended, or an exemption from registration is available.
6. Conditions of Creditor's Obligations at Closing. The obligations of
the Creditors under Sections 1.2 and 1.3 of this Agreement are subject to the
fulfillment on or before the Closing, and on or before of each borrowing, of
each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 4 hereof shall be true on and as
of the Closing and each borrowing.
6.2 Performance/No Event of Default. The Company shall have performed
and complied with all agreements and conditions contained herein to be performed
or complied with by it on or before the Closing and there shall exist no Event
of Default.
4.
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6.3 Execution and Delivery of Debenture and Warrant. The Company
shall have authorized, executed and delivered (a) one Debenture to each
Creditor, and (b) one warrant to each Creditor to purchase, on a pro rata basis,
a total of 81,522 shares of the Company's Common Stock at an exercise price of
$2.50 per share (the "Initial Warrants") in a form substantially similar to that
set forth at Exhibit D.
6.4 Security Agreement. The Company shall have duly authorized,
executed and delivered to the Creditor the Security Agreement. Within five (5)
business days of Closing, the Company shall file a UCC-1 financing statement
with the California Secretary of State.
6.5 Good Standing. The Company shall have delivered a Certificate of
Good Standing from the State of Delaware, dated no more than thirty (30) days
prior to the Closing.
7. Conditions of the Company's Obligations at Closing. The obligations
of the Company under Sections 1.2 and 1.3 of this Agreement are subject to the
fulfillment on or before the Closing of the following condition:
7.1 Representations and Warranties. The representations and
warranties of the Creditors contained in Section 5 hereof shall be true on and
as of the Closing.
8. Affirmative Covenants of the Company.
8.1 At the end of each month, the Company shall execute and deliver
to each Creditor, on a pro rata basis, in a form substantially similar to that
set forth in Exhibit D, a warrant to purchase a total number of shares of the
Company's Common Stock equal to the New Borrowing Shares (as defined below) at
an exercise price equal to $2.50 per share. The New Borrowing Shares shall be
that number of shares equal to: (a) 10% of the amount of any new borrowing(s) by
the Company during such month, divided by (b) $3.68.
8.2 At the end of each month, the Company shall execute and deliver
to each Creditor, on a pro rata basis, in a form substantially similar to that
set forth in Exhibit D, a warrant to purchase a total number of shares of the
Company's Common Stock equal to the Unpaid Principal Shares (as defined below)
at an exercise price equal to $2.50 per share. The Unpaid Principal Shares
shall be that number of shares equal to: (a) 5% of the difference between (i)
the outstanding unpaid principal amount of all borrowings as of the last day of
such month and (ii) the amount of any new borrowing(s) during such month,
divided by (b) $3.68.
9. Default.
9.1 Events of Default. With respect to the Debentures, the Warrants,
the Security Agreement, and this Agreement, the following events are "Events of
Default" thereunder and hereunder:
(a) Default shall be made by the Company in the payment of
principal of or any interest on any Debenture after five (5) days' written
notice from the applicable Creditor following the date when the same is due and
payable; or
5.
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(b) Default shall be made in the due performance or observance
of any other material covenant, agreement or provision herein, or in any
Debenture, any Warrant, or the Security Agreement, to be performed or observed
by the Company, or a material breach shall exist in any representation or
warranty herein contained, or in any Debenture, any Warrant, or the Security
Agreement, as of the date when made, and such default or breach shall have
continued for a period of thirty (30) days after written notice thereof to the
Company from the applicable Creditor; or
(c) The Company shall be involved in financial difficulties as
evidenced:
(i) by the Company filing a petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the United States
Bankruptcy Code (as now or in the future amended, the "Bankruptcy Code") or an
admission seeking the relief therein provided;
(ii) by the Company making a general assignment for the
benefit of its creditors;
(iii) by the Company consenting to the appointment of a
receiver or trustee for all or a substantial part of the property of the Company
or approving as filed in good faith a petition filed against the Company under
said Bankruptcy Code (in both cases without the consent of the Company);
(iv) by the commencement of a proceeding or case, without
the application or consent of the Company, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Company or of all or any substantial part of its assets, or (iii) similar relief
in respect of the Company under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and such
proceeding or case set forth in (i), (ii), or (iii) above continues undismissed
or uncontroverted, or an order, judgement or decree approving or ordering any of
the foregoing being entered and continuing unstayed and in effect, for a period
of sixty (60) days; or
(v) by the Company admitting in writing its inability to
pay its debts as such debts become due; or
(d) Company shall be terminated, dissolved or liquidated (as a
matter of law or otherwise) or proceedings shall be commenced by the Company or
by any person seeking the termination, dissolution or liquidation of the
Company.
9.2 Acceleration. If any one or more Events of Default described in
Section 9.1 shall occur and be continuing, then the applicable Creditor may, at
such Creditor's option and by written notice to the Company and the other
Creditors, declare the unpaid balance of the Debenture owing to said Creditor to
be forthwith due and payable and thereupon such balance shall become so due and
payable without presentation, protest or further demand or notice of
6.
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intent to accelerate or other notice of any kind, all of which are hereby
expressly waived by the Company.
10. Intercreditor Provisions
10.1 Collateral. Prior to any Creditor taking any action to enforce
any right or remedy with respect to the Collateral (as defined in the Security
Agreement), that Creditor must first obtain the consent of all of the other
Creditors.
10.2 Waivers. Waivers granted pursuant to this Agreement, any
Debenture or the Security Agreement, shall be effective as against all Creditors
if in writing executed by a Majority (as defined below) of the Creditors.
"Majority" shall mean the holders of at least 51% of the principal amount due as
of that date under all of the Debentures.
10.3 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Creditor shall obtain on account of any advance made by it
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of its Pro Rata Share (as defined below),
such Creditor shall forthwith (a) notify the other Creditors of such fact, and
(b) purchase from the other Creditors such participations in the advances made
by them as shall be necessary to cause such purchasing Creditor to share the
excess payment ratably with each of them. "Pro Rata Share" shall mean an amount
equal to the amount which results when the total amount of principal that is
owing to that Creditor is divided by the aggregate principal owing to all
Creditors (expressed as a percentage).
10.4 Amendment. No amendment of any provision of this Agreement, any
Debenture, any Warrant, or the Security Agreement shall in any event be
effective unless the same shall be in writing and signed by all of the
Creditors.
11. Miscellaneous.
11.1 Notices. All notices, requests, demands and other communications
under this Agreement, the Debentures, the Warrants and the Security Agreement
shall be in writing and shall be deemed to have been duly "given" on the date of
delivery, if delivery is made personally or by telegram or telecopy to the party
to whom notice is to be given, or upon receipt if mailed by first class mail,
either registered or certified, postage prepaid and properly addressed as
follows:
If to the Company: 894 Ross Drive
Sunnyvale, CA 94089
Attn: President
If to the Creditors: At the addresses set forth on Exhibit A
Each party may change its address for purposes of this Section by giving the
other parties written notice of the new address in the manner set forth above.
7.
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11.2 Remedies. No failure on the part of any Creditor to exercise,
and no delay on the part of any Creditor in exercising, any right hereunder or
under the Debentures, the Warrants or the Security Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any right owned by
it preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
11.3 Costs and Expenses. The Company shall pay all of the reasonable
costs and expenses, including without limitation all reasonable attorneys' fees
and legal expenses, incurred by it in connection with the documentation of this
Agreement, the Debentures, the Warrants, the Security Agreement and other
documents to be delivered hereunder.
11.4 Binding Effect; Governing Law. This Agreement, the Debentures,
the Warrants, and the Security Agreement shall be binding upon and inure to the
benefit of the Company and the Creditors and their respective successors, except
that no party shall have the right to assign its rights or obligations
hereunder, in the Debentures, the Warrants, or the Security Agreement, or any
interest herein or therein. This Agreement, the Debentures, the Warrants, and
the Security Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of California (without reference to any
principles of conflicts of laws).
11.5 Jurisdiction. The Company and Creditors each hereby irrevocably
submit to the non-exclusive jurisdiction of any court sitting in the County of
Santa Clara over any action, suit or proceeding arising out of or relating to
this Agreement, the Debentures, the Warrants, or the Security Agreement. The
Company and the Creditors agree that final judgment in any such action, suit or
proceeding brought in such a court shall be conclusive and binding upon the
Company and the Creditors and may be enforced in any court of the jurisdiction
to which the Company or the Creditors are subject by a suit upon such judgment;
provided, however, that service of process is affected upon the Company or the
Creditors in the manner permitted by law.
11.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
11.7 Term. This Agreement shall terminate upon repayment or
conversion of all of the Debentures.
8.
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In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Company TiVo Inc.
By: /s/ Michael Ramsay
---------------------
Michael Ramsay,
President
and Chief Executive Officer
Creditors Strategic Value I, L.P.
By Its General Partner
SV Partners, LLC
By: /s/ Robert P. Parker
----------------------
Name: Robert P. Parker
--------------------
Title: Managing Member
-------------------
GC&H Investments
By: /s/ John L. Cardoza
-----------------------
John L. Cardoza
Executive Partner
Institutional Venture Partners VII,
L.P.
By Its General Partner
Institutional Venture Management VII, L.P.
By: /s/ Geoffrey Y. Yang
------------------------
Geoffrey Y. Yang
General Partner
9.
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New Enterprise Associates VII, L.P.
By NEA Partners VII, L.P., Its General
Partner
By: /s/ Mark W. Perry
---------------------
Mark W. Perry
General Partner
NEA Presidents Fund, L.P.
By: NEA General Partners, L.P.
By: General Partner
By: /s/ Mark W. Perry
---------------------
Mark W. Perry
General Partner
10.
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EXHIBIT A
CREDITORS
Commitment
----------
(1) Strategic Value I, L.P. $ 301,500.00
Address: 2 Embarcadero Center
Suite 200
San Francisco, CA 94111
Attn: Bob Parker
(2) GC&H Investments (only up to $100,000) $ 99,900.00
Address: 5 Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: Alan Mendelson
(3) Institutional Venture Partners VII, L.P. $1,299,300.00
Address: 3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Attn: Geoffrey Y. Yang
(4) New Enterprise Associates VII, L.P. $1,299,300.00
Address: 2490 Sand Hill Road
Menlo Park, CA 94025
Attn: Mark Perry
Total: $3,000,000.00
11.
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EXHIBIT B
THIS DEBENTURE IS SUBJECT TO A SECURED CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT DATED MARCH____, 1999.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS ("BLUE
SKY LAWS"). ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED BY BLUE SKY LAWS IS IN
EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL SATISFACTORY TO THE
BORROWER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY
WITH THE ACT AND BLUE SKY LAWS.
SECURED CONVERTIBLE DEBENTURE
$[ ]
March____, 1999
For Value Received, the undersigned, TiVo Inc., a Delaware corporation
("Borrower"), under the terms of this Secured Convertible Debenture
("Debenture") hereby unconditionally promises to pay to the order of ___________
("Creditor"), by wire transfer to such account as Creditor shall provide notice
of to Borrower or by check, in lawful money of the United States of America and
in immediately available funds, the principal amount borrowed and outstanding
hereunder at any time not to exceed $_______ (the "Commitment") and such
interest as will have accrued and been outstanding, both payable in the manner
set forth below, such funds to be advanced by the Creditor to Borrower from time
to time upon the request of Borrower. Borrower may repay any amounts borrowed
hereunder and reborrow any amounts repaid, up to the Commitment, without penalty
or premium from the date hereof through December 31, 1999 (the "Drawdown
Period").
Capitalized terms used herein but not otherwise defined herein shall
have the meanings given to them in that certain Secured Convertible Debenture
Purchase Agreement ("Purchase Agreement") dated of even date herewith among the
Borrower, Creditor, and other creditors named therein.
This Debenture is the Debenture referred to in the Purchase Agreement,
the Warrants, and the Security Agreement.
1. Repayment. Interest on each advance shall be due and payable monthly
in arrears on the last day of each month and shall be payable, at the Creditor's
option, in Common Stock of the Borrower at a conversion rate equal to the fair
market value per share, at the time of conversion, as determined by the Borrower
in good faith. For each advance, all outstanding principal and accrued interest
shall be fully due and payable on the earlier of (the "Maturity Date"): (a) the
date which is six months from the date the advance was initially borrowed, or
(b) June 30, 2000, subject to the right of the Creditor to accelerate after the
occurrence and continuance of an Event of Default as defined in Section 9.1 of
the Purchase Agreement. In addition, Borrower shall repay in full any principal
and accrued interest outstanding hereunder on the date Borrower closes its next
bona fide equity financing (the "Equity Event"). Principal
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and accrued interest shall be paid by wire transfer or by check. At Creditor's
option, if Borrower fails to pay all outstanding principal and interest on the
Maturity Date, upon the Equity Event, or upon acceleration, Creditor may choose
to have all or any part of the outstanding principal and accrued interest repaid
in shares of Common Stock of the Borrower at a conversion rate equal to, in the
case of interest, the fair market value of the Common Stock at the time of
conversion, as determined by the Borrower in good faith (subject to adjustment
as set forth in Section 2 of the Purchase Agreement) or, in the case of
principal, at $3.68 per share (subject to adjustment as set forth in Section 2
of the Purchase Agreement). Such repayment shall not affect Creditor's rights
under any Warrant issued to the Creditor by the Borrower. In the event that
Creditor chooses to convert outstanding principal and accrued interest into
Common Stock of the Borrower, Creditor shall give written notice to the Borrower
of such anticipated conversion no less than fifteen (15) business days prior to
the date of conversion.
2. Interest. Simple interest shall accrue on the outstanding principal
amount hereof from the date funds are advanced until payment in full is received
by Creditor, which interest shall be equal to 4.67% per annum.
3. Secured Debenture. The full amount of this Debenture is secured by the
collateral identified and described as security therefor in the Security
Agreement.
4. Default. Borrower's failure to pay timely any of the principal amount
due under this Debenture or any accrued interest or other amounts due under this
Debenture pursuant to the terms hereof shall constitute an Event of Default as
defined in Section 9.1 of the Purchase Agreement.
5. Waiver. Except as provided for herein, Borrower waives presentment,
notice of dishonor, protest or notice of protest and nonpayment, notice of
costs, expenses or losses and interest thereon and diligence in taking any
action to collect any sums owing under this Debenture or in any proceeding
against any of the rights or interests in or to the properties or assets
securing payment of this Debenture.
6. Governing Law. This Debenture shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
7. Successors. The provisions of this Debenture shall inure to the
benefit of and be binding on any successor or Creditor. This Debenture cannot be
assigned by any party hereto.
2.
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8. Legal Interest Rate. Notwithstanding anything herein to the contrary,
in no event shall Borrower be obligated to pay interest in excess of the legal
limit of the State of California. In the event such interest is determined to
have been paid, such excess shall be deemed to have been paid on the principal
balance outstanding on this Debenture.
TiVo Inc.
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
3.
<PAGE>
THIS SECURITY AGREEMENT IS SUBJECT TO A SECURED
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
DATED APRIL 8, 1999.
SECURITY AGREEMENT
This Security Agreement (this "Security Agreement") dated as of April
8, 1999, is made by TiVo Inc., a Delaware corporation ("Grantor"), in favor of
the creditors listed on the signature page hereof (collectively, the
"Creditors"). Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement (as defined
below).
Recitals
A. Pursuant to that certain Secured Convertible Debenture Purchase
Agreement dated as of April 8, 1999 (the "Purchase Agreement"), by and among
Grantor and Creditors and the related Debentures, Creditors have agreed,
severally but not jointly, to make certain advances of money and to extend
certain financial accommodations to Grantor in the amounts and in the manner set
forth in the Purchase Agreement and the Debentures (collectively, the "Loan").
B. Creditors are willing to make the Loan to Grantor only upon the
condition, among others, that Grantor shall have executed and delivered to the
Creditors this Security Agreement.
Agreement
Now, Therefore, in order to induce the Creditors to make the Loan and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Grantor hereby
represents, warrants, covenants and agrees as follows:
1. Defined Terms. The following terms shall have the following meanings
(such meanings being equally applicable to both the singular and plural forms of
the terms defined):
"Collateral" shall have the meaning assigned to such term in Section 3
of this Security Agreement.
"Contracts" means all contracts, undertakings, franchise agreements or
other agreements in or under which Grantor may now hold or hereafter acquires
any right, title or interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the terms of
performance thereof.
"Event of Default" shall have the meaning set forth in the Purchase
Agreement.
"Permitted Dispositions" means transfers in the ordinary course of
business, including, without limitation, (a) sales of inventory in the ordinary
course of business, and (b) transfers of worn out or obsolete equipment.
<PAGE>
"Permitted Lien" means:
(a) Liens in favor of Creditors;
(b) Liens existing on the date hereof and disclosed in Exhibit A
hereto;
(c) Liens consisting of leases or subleases and licenses and
sublicenses in the ordinary course of Grantor's business and any interest or
title of a lessor or licensor under any lease or license, as applicable;
(d) Liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities;
(e) Liens incurred or deposits made in the ordinary course of
Grantor's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(f) Liens arising from judgments, decrees or attachments;
(g) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property;
(h) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;
(i) Any interest or title of a lessor in equipment subject to
any capitalized lease;
(j) Any liens arising from the filing of any financing statement
relating to true leases;
(k) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution;
(l) Liens, not otherwise permitted, which liens do not in the
aggregate exceed $50,000 at any time; and
(m) Liens incurred in the refinancing of any of the obligations
giving rise to any of the liens in (a)-(l) above.
"Secured Obligations" means all indebtedness, liabilities and
obligations of Grantor to Creditors, whether now existing or hereafter incurred,
pursuant to the Debentures and the Purchase Agreement.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the event
that, by reason of
2.
<PAGE>
mandatory provisions of law, any or all of the attachment, perfection or
priority of Secured Party's security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of California, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection of priority and for purposes of definitions
related to such provisions.
In addition, the following terms shall be defined terms having the meaning
set forth for such terms in the UCC (definition sections of the UCC are noted
parenthetically): "Accounts" (9106); "Chattel Paper" (9105(1)(b)); "Deposit
Accounts" (9105(e)); "Documents" (9105(1)(f)); "Equipment" (9109(2)); "Financial
Assets" (8102(a)(9)); "Fixtures" (9313(1)(a)); "General Intangibles" (9106);
"Goods" (9105(1)(h)); "Instruments" (9105(1)(i); "Inventory" (9109(4));
"Investment Property" (9115(1)(f)); "Proceeds" (9306(1)). Each of the foregoing
defined terms shall include all of such items now owned, or hereafter acquired,
by Grantor.
2. Secured Obligations. Grantor agrees to pay to the Creditors all of
the unpaid principal amount of, and accrued interest on, the Debentures, in
accordance with the terms thereof, and all other indebtedness, liabilities and
obligations of Grantor to Creditors, whether now existing or hereafter incurred,
arising out of or in connection with the Purchase Agreement, the Debentures or
this Security Agreement.
3. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations and in order to induce
the Creditors to cause the Loan to be made, Grantor hereby, assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Creditors, for the benefit
the Creditors, and hereby grants to Creditors, a security interest in all of
Grantor's right, title and interest in, to and under the following (including
any and all after-acquired property, all of which being herein collectively
called the "Collateral"):
(a) All Accounts of Grantor;
(b) All Chattel Paper of Grantor;
(c) All Contracts of Grantor;
(d) All Deposit Accounts of Grantor;
(e) All Documents of Grantor;
(f) All Equipment of Grantor;
(g) All Financial Assets of Grantor;
(h) All Fixtures of Grantor;
(i) All Goods of Grantor;
(j) All Instruments of Grantor;
3.
<PAGE>
(k) All Inventory of Grantor;
(l) All Investment Property of Grantor; and
(m) To the extent not otherwise included, all Proceeds of each
of the foregoing and all accessions to, substitutions and replacements for, and
rents, profits and products of each of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include any Contract which
prohibits the granting of a security interest in such Contract or any asset
leased by Grantor.
CREDITORS (1) HEREBY ACKNOWLEDGE THAT QUANTUM CORPORATION HAS A SECURITY
INTEREST IN PART OF THE COLLATERAL (THE "QUANTUM COLLATERAL") AS DESCRIBED IN
FINANCING STATEMENT NUMBER 9831660560 FILED WITH THE CALIFORNIA SECRETARY OF
STATE, AND (2) AGREE THAT THEIR INTEREST IN THE QUANTUM COLLATERAL IS JUNIOR IN
PRIORITY TO THE SECURITY INTEREST OF QUANTUM CORPORATION REGARDLESS OF THE TIME
OF FILING OF ANY UNIFORM COMMERCIAL CODE FINANCING STATEMENTS OR THE TAKING OF
OTHER ACTIONS TO PERFECT EITHER SUCH SECURITY INTEREST.
4. Representations and Warranties. Grantor hereby represents and
warrants to the Creditors that except for the security interest granted under
this Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner of each item of Collateral in which it purports to grant a
security interest hereunder, having good, marketable title thereto and that the
Creditors shall have a valid, binding and enforceable lien and/or security
interest in and to the Collateral.
5. Covenants. Grantor covenants and agrees with the Creditors that from
and after the date of this Security Agreement and until the Secured Obligations
have been performed and paid in full:
5.1 Further Assurances. At any time and from time to time, upon the
written request of the Creditors, and at the sole expense of Grantor, Grantor
shall promptly and duly execute and deliver any and all such further instruments
and documents and take such further actions as the Creditors may reasonably deem
desirable to obtain the full benefit of this Security Agreement.
5.2 Maintenance of Records. Grantor shall keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral.
Grantor shall allow reasonable access to such records upon reasonable notice
from Creditors.
5.3 Collateral. The Grantor agrees that it will not, without the
prior written consent of a Majority of the Creditors, consent to, permit or
suffer to occur any sale, transfer, hypothecation, lien, or use of any of the
Collateral adversely affecting the interest of the Creditors therein, other than
Permitted Liens and Permitted Dispositions.
4.
<PAGE>
6. Rights and Remedies Upon Default.
(a) If any Event of Default shall occur and be continuing, the
Creditors shall have the right to take title to, seize, assign, sell, and
otherwise dispose of the Collateral, or any part thereof, either at public or
private sale, in lots or in bulk, for cash, credit or otherwise, with or without
representations or warranties, and upon such terms as shall be reasonable, and
any Creditor may bid or become the purchaser at any such sale, and such Creditor
shall have the right at its option to apply or credit the amount of all or any
part of the Secured Obligations owing to it against the purchase price bid by it
at any such sale. If notification to Grantor of any intended disposition by the
Creditors of any of the Collateral is required by applicable law, such
notification will be deemed to have been reasonable and proper if given at least
20 days prior to such disposition.
(b) If any Event of Default shall occur and be continuing, the
Creditors may exercise in addition to all other rights and remedies granted to
it under this Security Agreement, all rights and remedies of a secured party
under the UCC.
(c) Except as specifically provided for herein, Grantor hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed to Creditors in the
following order of priorities:
First, to the Creditors in an amount sufficient to pay
in full the reasonable costs of the Creditors in connection with
such sale, disposition or other realization, including all fees,
costs, expenses, liabilities and advances incurred or made by the
Creditors in connection therewith, including, without limitation,
reasonable attorneys' fees;
Second, to the Creditors pro rata in accordance with
the amount of the Secured Obligations owing to each Creditor; and
Finally, upon payment in full of the Secured
Obligations, to Grantor or its representatives or as a court of
competent jurisdiction may direct.
7. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's property and assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In
5.
<PAGE>
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.
8. Miscellaneous.
8.1 No Waiver; Cumulative Remedies.
(a) Creditors shall not by any act, delay, omission or otherwise
be deemed to have waived any of their respective rights or remedies hereunder,
nor shall any single or partial exercise of any right or remedy hereunder on any
one occasion preclude the further exercise thereof or the exercise of any other
right or remedy.
(b) The rights and remedies hereunder provided are cumulative and
may be exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
(c) None of the terms or provisions of this Security Agreement
may be waived, altered, modified or amended except by an instrument in writing,
duly executed by Grantor and Creditors; provided, however, that a Majority of
Creditors may grant consents and waivers pursuant to Section 5.3.
8.2 Termination of this Security Agreement. This Security Agreement
shall terminate upon the payment and performance in full of the Secured
Obligations.
8.3 Successor and Assigns. This Security Agreement shall be binding
upon the successors of Grantor and Creditors and may not be assigned by any
party.
8.4 Governing Law. In all respects, including all matters of
construction, validity and performance, this Security Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws.
8.5 Counterparts. This Security Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 Titles and Subtitles. The titles of the sections and subsections
of this Security Agreement are not to be considered in construing this Security
Agreement.
8.7 Separability. In case any provision of this Security Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8.8 Agreement is Entire Contract. This Security Agreement, together
with the Debentures, the Warrants, and the Purchase Agreement, constitutes the
final, complete and exclusive contract between the parties hereto with respect
to the subject matter hereof and no party shall be liable or bound to the other
in any manner by any warranties, representations,
6.
<PAGE>
guarantees or covenants except as specifically set forth herein and in such
other documents referred to above. Nothing in this Security Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any right, remedies, obligations or
liabilities under or by reason of this Security Agreement, except as expressly
provided herein.
8.9 Relationship of Certain Rights and Obligations. The repayment of
the Loan does not diminish, curtail, amend, alter, or otherwise change the
rights of the Creditors to exercise the Warrants, nor does the exercise of the
Warrants by Creditors alleviate, amend, alter, or otherwise change Grantor's
obligation to repay the Loan.
7.
<PAGE>
In Witness Whereof, the undersigned has caused this Security Agreement to
be executed and delivered by its duly authorized officer on the date first set
forth above.
Grantor TiVo Inc.
By: /s/ Michael Ramsay
--------------------------------
Michael Ramsay, President
and Chief Executive Officer
Creditors Strategic Value I, L.P.
By Its General Partner
SV Partners, LLC
By: /s/ Robert P. Parker
-----------------------------------
Name: Robert P. Parker
---------------------------------
Title: Managing Member
--------------------------------
GC&H Investments
By: /s/ John L. Cardoza
-----------------------------------
John L. Cardoza
Executive Partner
Institutional Venture Partners VII,
L.P.
By Its General Partner
Institutional Venture Management VII, L.P.
By: /s/ Geoffrey Y. Yang
-----------------------------------
Geoffrey Y. Yang
General Partner
8.
<PAGE>
New Enterprise Associates VII, L.P.
By NEA Partners VII, L.P., Its General
Partner
By: /s/ Mark W. Perry
----------------------------------
Mark W. Perry
General Partner
NEA Presidents Fund, L.P.
By: NEA General Partners, L.P.
By: General Partner
By: /s/ Mark W. Perry
----------------------------------
Mark W. Perry
General Partner
9.
<PAGE>
Exhibit A
LISTING OF PERMITTED LIENS
1) Liens in favor of Quantum Corporation pursuant to Financing Statement
#9831660560 as filed with the California Secretary of State.
2) Liens in favor of Silicon Valley Bank pursuant to Financing Statement
#9803460373 as filed with the California Secretary of State.
10.
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN
ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
TIVO INC.
Warrant No. CW-- _______ Shares of Common Stock
TIVO INC.
1. Issuance. This Warrant is issued to ____________, by TiVo Inc., a
Delaware corporation (hereinafter with its successors called the "Company").
2. Purchase Price; Number of Shares. The registered holder of this
Warrant (the "Holder"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto as Exhibit A
duly executed, at the principal office of the Company, to purchase from the
Company _______ fully paid and nonassessable shares (the "Shares") of Common
Stock, $0.001 par value, of the Company (the "Common Stock") at a price per
share (the "Purchase Price") of two dollars and fifty cents ($2.50). The person
or persons in whose name or names any certificate representing shares of Common
Stock is issued hereunder shall be deemed to have become the holder of record of
the shares represented thereby as at the close of business on the date this
Warrant is exercised, whether or not the transfer books of the Company shall be
closed.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
or by certified check or wire transfer, (ii) by the surrender or forgiveness by
the Holder to the Company of any promissory notes or other obligations issued by
the Company, with all such notes and obligations so surrendered being credited
against the Purchase Price in an amount equal to the principal amount thereof
plus accrued interest to the date of surrender, or (iii) by any combination of
the foregoing.
4. Net Issue Election. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock
equal to the value of this Warrant by the surrender of this Warrant to the
Company, with the net issue election notice set forth in Exhibit A annexed
hereto duly executed, at the principal office of the Company. Thereupon, the
Company shall issue to the Holder such number of fully paid and nonassessable
shares of Common Stock as is computed using the following formula:
<PAGE>
Y(A - B)
X = --------
A
where: X = the number of shares of Common Stock to be issued to the
Holder pursuant to this Section 4.
Y = the number of shares of Common Stock covered by this Warrant
at the time the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Common Stock,
determined as follows: (i) if the Warrant is being exercised in
connection with an initial public offering of the Company's Common
Stock pursuant to a registration statement filed under the Securities
Act of 1933, as amended (an "Initial Public Offering"), then the per
share offering price to the public in such Initial Public Offering,
(ii) if at such time the Common Stock is listed on a national
securities exchange or on the over-the-counter market and is not being
exercised in connection with an Initial Public Offering, then the
closing price of the Common Stock on the business day immediately
prior to the date of exercise or, if no sale of the Common Stock was
made on such day, the first business day immediately preceding such
day upon which a sale was made, or (iii) if at such time the Common
Stock is not listed on a national securities exchange or on the over-
the-counter market, then as determined in good faith by the Board at
the time the net issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time
the net issue election is made pursuant to this Section 4.
5. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Purchase Price.
6. Exercise; Expiration Date; Automatic Exercise. This Warrant may be
exercised in whole or in part at any time commencing on the date hereof and
ending at the earlier to occur of (i) the closing of an Initial Public Offering
at a per share public offering price of not less than $5.00 (equitably adjusted
for any stock split, combination or similar event) and an aggregate public
offering price of at least $10,000,000, and (ii) 5:00 p.m. Pacific Time on the
fifth anniversary of the date of this warrant (the "Expiration Date") and shall
be void thereafter. Notwithstanding the foregoing, this Warrant shall
automatically be deemed to be exercised in full pursuant to the provisions of
Section 4 hereof, without any further action on behalf of the Holder,
immediately prior to the Expiration Date.
7. Reserved Shares; Valid Issuance. The Company covenants that it will
at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock of the Company, free from all
preemptive or similar rights therein, as will be sufficient to permit the
exercise of this Warrant in full. The Company further covenants that such shares
as may be issued pursuant to such exercise will, upon issuance, be duly and
2.
<PAGE>
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
8. Stock Splits and Dividends. If after the date hereof the Company
shall subdivide the Common Stock, by stock split or otherwise, or combine the
Common Stock, or issue additional shares of Common Stock in payment of a stock
dividend on the Common Stock, the number of shares of Common Stock issuable on
the exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately
increased in the case of a combination.
9. Mergers and Reclassifications. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Holder, so that the Holder shall thereafter have the right
to purchase, at a total price not to exceed that payable upon the exercise of
this Warrant in full, the kind and amount of shares of stock and other
securities and property receivable upon such Reorganization by a holder of the
number of shares of Common Stock which might have been purchased by the Holder
immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
to the end that the provisions hereof (including without limitation, provisions
for the adjustment of the Purchase Price and the number of shares issuable
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof. For
the purposes of this Section 9, the term "Reorganization" shall include without
limitation any reclassification, capital reorganization or change of the Common
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 8 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a merger in which the Company is the surviving corporation and which
does not result in any reclassification or change of the outstanding Common
Stock), or any sale or conveyance to another corporation or other business
organization of all or substantially all of the assets of the Company.
10. Certain Events. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the provisions of Section 8 or
Section 9 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number and class of shares available under the Warrant, the Purchase
Price or the application of such provisions, so as to protect such purchase
rights as aforesaid. The adjustment shall be such as will give the Holder of the
Warrant upon exercise for the same aggregate Purchase Price the total number,
class and kind of shares as he would have owned had the Warrant been exercised
prior to the event and had he continued to hold such shares until after the
event requiring adjustment.
11. Certificate of Adjustment. Whenever the Purchase Price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's chief
3.
<PAGE>
financial officer setting forth the Purchase Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
12. Issue Tax. The issuance of certificates for the Shares upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
13. Notices of Record Date, Etc. In the event of:
(1) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares
of stock of any class or any other securities or property, or to receive
any other right;
(2) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets;
(3) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company; or
(4) the filing of a registration statement under the Securities Act of
1933, as amended, in connection with an Initial Public Offering;
then and in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least
fifteen (15) business days prior to the date specified in such notice on which
any such action is to be taken.
14. Representations, Warranties and Covenants. This Warrant is issued and
delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
(a) The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant has
been duly authorized, issued, executed and delivered by the Company and is the
valid and binding obligation of the Company, enforceable in accordance with its
terms.
(b) The shares of Common Stock issuable upon the exercise of this
Warrant have been duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable.
(c) The issuance, execution and delivery of this Warrant do not, and
the issuance of the shares of Common Stock upon the exercise of this Warrant in
accordance with the terms hereof will not, (i) violate or contravene the
Company's certificate of incorporation or
4.
<PAGE>
by-laws, or any law, statute, regulation, rule, judgment or order applicable to
the Company, (ii) violate, contravene or result in a breach or default under any
contract, agreement or instrument to which the Company is a party or by which
the Company or any of its assets are bound or (iii) require the consent or
approval of or the filing of any notice (other than, if any, post-issuance state
securities laws filings) or registration with any person or entity.
15. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase Shares, and no mere enumeration herein of the rights or
privileges of the Holder hereof, shall give rise to any liability of such Holder
for the Purchase Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by its creditors.
16. Amendment. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
17. Notices, Etc.
(a) Any notice or written communication required or permitted to be
given to the Holder may be given by United States mail, by overnight courier or
by facsimile transmission at the address most recently provided by the Holder to
the Company or by hand, and shall be deemed received upon the earlier to occur
of (i) receipt, (ii) if sent by overnight courier, then on the day after which
the same has been delivered to such courier for overnight delivery, or (iii) if
sent by United States mail, seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail.
(b) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant.
18. No Impairment. The Company will not, by amendment of its certificate
of incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance of performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
19. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not
5.
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constitute a part of this Warrant. The provisions and terms of this Warrant
shall be governed by and construed in accordance with the internal laws of the
State of California.
20. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors and legal representatives.
Dated____________, 1999 TiVo Inc.
________________________________
Name:___________________________
Title:__________________________
6.
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Exhibit A
SUBSCRIPTION FORM
Date: ____________, ____
TiVo Inc.
894 Ross Drive, Suite 100
Sunnyvale, CA 94089
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects:
to exercise the warrant issued to it by TiVo Inc. (the "Company") and dated
____________, 1999 (the "Warrant") in full and to purchase all of the
_______________________ shares of the Common Stock of the Company (the
"Shares") purchasable thereunder at a purchase price of ___________________
($______) per Share or an aggregate purchase price of ________________
Dollars ($__________) (the "Purchase Price"). Pursuant to the terms of the
Warrant the undersigned has delivered the Purchase Price herewith in full
in cash or by certified check or wire transfer or as otherwise permitted
pursuant to Section 3 of the Warrant; or
to surrender the right to purchase Shares pursuant to this Warrant and to
receive in lieu thereof Shares pursuant to the provisions of Section 4 of
the Warrant.
The undersigned also makes the representations set forth on Exhibit B
attached to the Warrant.
The certificate(s) for such shares shall be issued in the name of the
undersigned or as otherwise indicated below:
Very truly yours,
1.
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Exhibit B
TO WARRANT CERTIFICATE
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO TIVO INC. ALONG WITH
THE SUBSCRIPTION FORM BEFORE THE SHARES ISSUABLE UPON EXERCISE OF THE WARRANT
CERTIFICATE DATED ______________, 1999 WILL BE ISSUED.
_____________________, ____
TiVo Inc.
894 Ross Drive, Suite 100
Sunnyvale, CA 94089
Attention: President
The undersigned, ___________________ ("Purchaser"), intends to acquire up
to ______________ shares of the Common Stock (the "Shares") of TiVo Inc. (the
"Company") from the Company pursuant to the exercise of a certain Warrant to
purchase Shares held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws. In connection with such purchase and in order
to comply with the exemptions from registration relied upon by the Company,
Purchaser represents, warrants and agrees as follows:
1. Purchaser is acquiring the Shares for its own account, to hold for
investment, and Purchaser shall not make any sale, transfer or other disposition
of the Shares in violation of the 1933 Act or the General Rules and Regulations
promulgated thereunder by the Securities and Exchange Commission (the "SEC") or
in violation of any applicable state securities law;
2. Purchaser has been advised that the Shares have not been registered
under the 1933 Act or state securities laws on the ground that this transaction
is exempt from registration, and that reliance by the Company on such exemptions
is predicated in part on Purchaser's representations set forth in this letter;
3. Purchaser has been informed that under the 1933 Act, the Shares must
be held indefinitely unless it is subsequently registered under the 1933 Act or
unless an exemption from such registration (such as Rule 144) is available with
respect to any proposed transfer or disposition by Purchaser of the Shares;
4. The Company may refuse to permit Purchaser to sell, transfer or
dispose of the Shares (except as permitted under Rule 144) unless there is in
effect a registration statement under the 1933 Act and any applicable state
securities laws covering such transfer, or unless
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Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel for
the Company, to the effect that such registration is not required;
5. Purchaser has invested in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Shares. Purchaser represents and warrants that it is an
"accredited investor" within the meaning of Rule 501 of Regulation D of the 1933
Act.
Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Shares, or any substitutions therefor, legends stating in
substance:
"These securities have not been registered under the Securities
Act of 1933, as amended (the "Act"), or any applicable state
securities laws, and may not be sold, offered for sale or
transferred unless such sale or transfer is in accordance with
the registration requirements of such Act and applicable laws or
an exemption from the registration requirements of such Act and
applicable laws is available with respect thereto."
Any legend required pursuant to applicable state securities laws.
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Shares with
Purchaser's counsel.
Very truly yours,
2.