Sample Business Contracts


Investment Agreement [Amendment No. 1] - TiVo Inc. and America Online Inc.

Stock Purchase Forms


                               FIRST AMENDMENT TO

                              INVESTMENT AGREEMENT
                              --------------------


          This First Amendment, dated as of September 11, 2000 (this "First
Amendment"), to the Investment Agreement, dated as of June 9, 2000 (the
"Investment Agreement"), is made by and between TiVo Inc., a Delaware
corporation (the "Company"), and America Online, Inc., a Delaware corporation
(the "Purchaser").  Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Investment Agreement.


                             W I T N E S S E T H :
                             - - - - - - - - - -


          WHEREAS, Section 7.8 of the Investment Agreement provides for the
amendment of the Investment Agreement upon the written consent of the Company
and the Purchaser;

          WHEREAS, Section 1.4 of the Investment Agreement provides for a
certain portion of the Escrowed Funds to be designated as Earmarked Funds to be
used exclusively in accordance with Section 8.2 of the Product Integration and
Marketing Agreement (the "Commercial Agreement");

          WHEREAS, Purchaser and the Company are entering into an AOL
Advertising Insertion Order, dated as of the date hereof (the "Carriage Order"),
pursuant to which the Company has agreed to certain advertising commitments;

          WHEREAS, in connection with the Carriage Order, the Company and the
Purchaser desire to amend certain provisions of the Investment Agreement;


          NOW THEREFORE, the parties hereto agree as follows:

          1.  Amendment to Section 1.4(a).  Section 1.4(a) of the Investment
              ---------------------------
Agreement is hereby amended by deleting such section in its entirety and
substituting therefor the following:

          "(a)  The Company and the Purchaser agree that (i) sixty percent (60%)
     of the proceeds received by the Company in the Share Purchase and forty
     percent (40%) of the proceeds received by the Company upon the exercise of
     any of the Warrants  (the "Discretionary Funds") shall be retained by the
     Company without any restriction on the use thereof, except that the first
     three million, five hundred thousand dollars ($3,500,000) of the
     Discretionary Funds shall be used in accordance with the Carriage Order,
     and (ii) an amount in cash equal to forty percent (40%) of any proceeds
     received by the Company
<PAGE>

     in the Share Purchase and sixty percent (60%) of the proceeds received by
     the Company upon the exercise of any of the Warrants shall be deposited
     into an interest-bearing escrow account (the "Escrow Account") with an
     escrow agent to be selected by mutual agreement of the Company and the
     Purchaser pursuant to an escrow agreement in the form of Exhibit F hereto,
     with such changes and additions as shall be requested by the escrow agent
     and are reasonably acceptable to the Company and the Purchaser (the "Escrow
     Agreement"), except that the first eight million, five hundred thousand
     dollars ($8,500,000) of the proceeds received by the Company that are not
     Discretionary Funds shall not be deposited into the Escrow Account and
     shall be used in accordance with the Carriage Order (together with the
     three million, five hundred thousand dollars ($3,500,000) of Discretionary
     Funds also to be so used, the "Carriage Funds"). Such proceeds shall be
     allocated in such manner until such time as the aggregate amount of
     Discretionary Funds equals one hundred million dollars ($100,000,000),
     after which time an amount in cash equal to all such proceeds shall be
     deposited into the Escrow Account (except for Carriage Funds as set forth
     in clause (ii) of the immediately preceding sentence) until such time as
     all such deposited funds (but excluding any interest earned on such funds)
     equal ninety-one million, five hundred thousand dollars ($91,500,000),
     after which time all further proceeds shall be retained by the Company. All
     amounts deposited into the Escrow Account, together with all interest
     earned on amounts in the Escrow Account (all such funds and interest, the
     "Escrowed Funds"), shall be held as a trust fund and shall not be subject
     to any lien, attachment, trustee process or any other judicial process of
     any creditor of any party hereto, and shall be held and distributed in
     accordance with the terms, at the times and to the parties in accordance
     with the terms hereof and the Escrow Agreement.

          Upon release to the Company in accordance with this Section 1.4 and
     the terms of the Escrow Agreement, ninety-one million, five hundred
     thousand dollars ($91,500,000) of the Escrowed Funds (or such lesser amount
     as shall have been deposited in the Escrow Account pursuant to this Section
     1.4(a)) shall be designated as "Earmarked Funds" and used exclusively in
     accordance with Section 8.2 of the Commercial Agreement and any additional
     Escrowed Funds shall be released to the Company and may be used by the
     Company for any purpose whatsoever.  At any time that this Agreement
     provides for the Escrowed Funds to be released from the Escrow Account,
     both parties agree to take any action required under the Escrow Agreement
     to cause the release of the Escrowed Funds.  If, upon the release of the
     Escrowed Funds to the Company in accordance with the terms of the Escrow
     Agreement, the amount of Escrowed Funds (excluding any interest earned
     while in the Escrow Account) is less than ninety-one million, five hundred
     thousand dollars ($91,500,000) at such time, then 60% of the proceeds from
     the exercise of any of the Warrants (up to the difference between ninety-
     one million, five hundred thousand dollars ($91,500,000)) and such amount
     of Escrowed Funds) shall also be designated as "Earmarked Funds" and used
     exclusively in accordance with Section 8.2 of the Commercial Agreement."

          2.  Amendment to Section 1.4(b).  Section 1.4(b) of the Investment
              ---------------------------
Agreement is hereby amended by deleting such section in its entirety and
substituting therefore the following:

                                       2
<PAGE>

          "(b)  If (i) (x) the bona fide commercial release and deployment ("Set
     Top Box Launch") of the Integrated Product (as defined in the Commercial
     Agreement) has not occurred by December 31, 2001, or such later date as may
     be mutually agreed by the Company and the Purchaser pursuant to Section 3.6
     of the Commercial Agreement or otherwise (the "Planned Launch Date"), and
     (y) the Purchaser has not committed a Material Breach (as defined in the
     Commercial Agreement) of the Commercial Agreement that has not been cured
     or waived at such time, or (ii) the Company breaches its obligations
     pursuant to Section 6.9, Section 6.10 or Section 6.13 of this Agreement
     (collectively, the "Financial Covenants"), then the Purchaser shall have
     the option (the "Put Option"), exercisable for a period of ninety (90)
     days, subject to the further provisions set forth herein, to require the
     Company, exercisable by written notice to such effect to the Company, to
     repurchase that number of Preferred Shares having an initial liquidation
     value equal to the amount of proceeds deposited by the Company into the
     Escrow Account (the "Put Amount") and, if all the Preferred Shares have an
     aggregate initial liquidation value of less than the Put Amount (or if no
     shares of Preferred Stock are issued pursuant to the terms of this
     Agreement), then the Purchaser may also require the Company to repurchase a
     number of shares of Common Stock having a value (calculated as the product
     of the number of shares of Common Stock and the Common Stock Price) equal
     to the difference between the aggregate initial liquidation value of the
     Preferred Shares, if any, and the Put Amount.  The aggregate purchase price
     for the repurchase of Shares pursuant to this Section 1.4(b) shall be
     deemed paid by the release to the Purchaser of all the Escrowed Funds
     (including all interest included therein); provided that amount of the
                                                --------
     interest earned on funds deposited into the Escrow Account to be released
     to the Purchaser shall be reduced by the amount of dividends actually paid
     in cash or Common Stock to the Purchaser on the Preferred Shares, subject
     to a maximum equal to the amount of all such interest.  Notwithstanding the
     foregoing, in the event that the Set Top Box Launch occurs after the
     Planned Launch Date, but prior to the exercise of the Put Option, the Put
     Option shall immediately expire and be of no further force or effect.

          In the event that the Put Option is exercised in accordance with the
     terms of this Section 1.4(b), the closing of such repurchase shall occur as
     soon as practicable following delivery of the Purchaser's notice of
     exercise, subject to the receipt of necessary governmental approvals.  The
     Company agrees to use its best efforts to obtain all such governmental
     approvals and take all such other actions as shall be required to
     consummate such repurchase.  At such closing, the Purchaser shall deliver
     to the Company certificates representing the Shares to be repurchased and
     the Company shall deliver to the Purchaser and the escrow agent under the
     Escrow Agreement any notice of release or other instrument reasonably
     requested by either of them to effectuate the release of the Escrowed Funds
     (including all interest earned thereon, subject to the proviso in the
     second sentence of this section) in accordance with the terms of the Escrow
     Agreement and this Section 1.4(b).  It is agreed that, in the event the
     Purchaser is entitled to exercise the Put Option pursuant to clause (ii) of
     the first sentence of this Section 1.4(b), such exercise shall be in
     addition to and without limiting any other remedy or right, whether at law
     or equity, that the Purchaser may have as a result of the breach of a
     Financial Covenant.

                                       3
<PAGE>

          3.  Amendment to Sections 1.4(c) and 1.4(d).  Sections 1.4(c) and
              ---------------------------------------
1.4(d) of the Investment Agreement are hereby amended by deleting Section 1.4(c)
in its entirety, renumbering Section 1.4(d) as Section 1.4(c) and amending the
new Section 1.4(c) to replace all references to "one hundred million dollars
($100,000,000)" to "ninety-one million, five hundred thousand dollars
($91,500,000)."

          4.  Amendment to Section 5.1(k).  Section 5.1(k) of the Investment
              ---------------------------
Agreement is hereby amended by replacing the clause in the first sentence
thereof which reads "Cooley Godward LLP," with "Latham & Watkins,".

          5.  Amendments to Section 6.  Section 6 of the Investment Agreement is
              -----------------------
hereby amended by adding the following new sections immediately after Section
6.8:

          "6.9  Limitations on Indebtedness.

                (a)  Subject to Section 6.11, the Company will not, and will not
          permit any of its subsidiaries to, without the prior written consent
          of the Purchaser, Incur any Indebtedness (each as defined below) that
          shall mature or for which payments of principal shall otherwise become
          due, including, without limitation, upon the acceleration of any
          Indebtedness, on or prior to January 1, 2003, except for (x)
          Indebtedness up to an aggregate maximum amount of twenty-five million
          dollars ($25,000,000) to be used to fund the ongoing operations of the
          Company, and (y) Leasing Obligations (as defined below) up to an
          aggregate maximum amount of one hundred fifty million dollars
          ($150,000,000), each as calculated in accordance with generally
          accepted accounting principles in the United States of America
          ("GAAP").

                (b)  For the purposes hereof:

                     (i)  "Incur" means to issue, create, assume, guarantee,
          incur or otherwise become liable for;

                     (ii) "Indebtedness", means any indebtedness of a person,
          whether or not contingent, including, without duplication, (1) all
          obligations in respect of borrowed money, (2) all obligations
          evidenced by bonds, notes, debentures or similar instruments, (3)
          letters of credit, bankers' acceptances or other similar instruments
          (or reimbursement agreements in respect thereof), (4) all obligations
          representing the balance of deferred and unpaid purchase price of
          property (including pursuant to capital leases) or services that in
          accordance with GAAP would be shown on the liability side of the
          balance sheet of such person, (5) all indebtedness of others secured
          by any mortgage, pledge, security interest, encumbrance, lien or
          charge of any kind on any asset of such person (whether or not such
          indebtedness is assumed by such person), (6) all obligations of such
          person with respect to the redemption, repayment or other repurchase
          of any capital stock of such person or any warrants, rights or options
          to acquire such

                                       4
<PAGE>

          capital stock, (7) the indebtedness of any other person to the extent
          Guaranteed by such person, (8) to the extent not otherwise included in
          this definition, net obligations of such person under any swap
          agreement (as such term is defined in the Section 101 of the United
          States Bankruptcy Code, as amended) and any other agreements or
          arrangements designed to provide protection against fluctuations in
          interest or currency exchange rates or commodity prices, and (9) any
          principal, interest, premiums, penalties, overadvances, breakage
          costs, fees, expenses and indemnities due thereunder, to the extent
          paid in respect of those items listed in clauses (1) through (8) of
          this Section 6.9(b)(ii); provided, however,  that "Indebtedness" shall
                                   --------  -------
          not include trade payables and accrued expenses, in each case arising
          in the ordinary course of business;

                    (iii)  "Guarantee" means any obligation, contingent or
          otherwise, of any person directly or indirectly guaranteeing any
          Indebtedness of any other person and any obligation, direct or
          indirect, contingent or otherwise, of such person; and

                    (iv)   "Leasing Obligations" means all obligations
          representing the balance of deferred and unpaid purchase price of set
          top boxes (including pursuant to capital leases and other financing
          devices) that in accordance with GAAP would be shown on the liability
          side of the balance sheet of the Company or the balance of rent due
          under operating leases of set top boxes, assumed in order to support
          the Company's relationships or agreements with cable companies for
          distribution by cable companies of the Company's interactive
          television service in exchange for a portion of the cable company's
          subscription revenues and/or other consideration.

          6.10  Minimum Capital Requirements.   Subject to Section 6.11, the
     Company will, at the end of each fiscal quarter commencing after August 31,
     2000, maintain a positive Net Cash position in excess of twenty-five
     million dollars ($25,000,000).  "Net Cash" means (x) consolidated current
     assets (excluding deferred tax assets and the Escrowed Funds), minus (y)
     consolidated current  liabilities (however arising), but excluding any (i)
     deferred revenue, (ii) other non-cash liabilities, as set forth on Schedule
     6.10 attached hereto, which Schedule 6.10 may be amended from time to time
     by the Company with Purchaser's consent (such consent not to be
     unreasonably withheld), which the Company reasonably believes are not
     likely to become cash liabilities on or before the termination of the
     Financial Covenants as set forth in Section 6.11 of this Agreement, and
     (iii) Leasing Obligations, each as determined in accordance with GAAP.  In
     addition, the Company agrees to advise the Purchaser of the Company's Net
     Cash position, calculated as set forth above, on an informational basis at
     the end of each calendar month, beginning August 31, 2000.  On or before
     the twentieth (20/th/) day following each calendar month, the Company shall
     deliver to Purchaser a certificate, duly signed by the Chief Financial
     Officer of the Company, providing the Purchaser with the following
     information for the preceding calendar month:  (i) its Net Cash position
     and (ii) the Company's consolidated current assets and consolidated current
     liabilities (and

                                       5
<PAGE>

     any exclusions therefrom) in a format consistent with the Company's public
     filings, in each case as of the end of such preceding calendar month.

          6.11  Termination of Financial Covenants.  The Financial Covenants
     shall terminate and be of no further force or effect on and from the
     earlier of (i) the date of the Set Top Box Launch, so long as such Set Top
     Box Launch occurs before the Planned Launch Date, (ii) the expiration of
     the Put Option in accordance with the provisions of Section 1.4(b), or
     (iii) the day following the first anniversary of the Planned Launch Date.

          6.12  Reporting and Audit Rights.  From and after the Closing until
     the termination of the Financial Covenants, (i) the Purchaser shall have
     the right, upon reasonable notice and during regular business hours, to
     audit the books and records of the Company as may be necessary in order to
     determine if the Company is in compliance with the Financial Covenants, and
     (ii) the Company shall promptly notify the Purchaser of any breach of a
     Financial Covenant.

          6.13  Contractual Restrictions.  Subject to Section 6.11, the Company
     hereby agrees that it will not enter into any contract with any Person that
     prohibits, restricts, delays in any manner or otherwise adversely affects
     the release of the Escrowed Funds to the Purchaser in accordance with the
     terms of the Escrow Agreement and of this Agreement."

          4.  Counterparts.  This First Amendment may be executed simultaneously
              ------------
or in any number of counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same instrument.

          5.  Effective Date.  This First Amendment shall become effective as of
              --------------
the day and year first above written.

          6.  Construction and Governing Law. This First Amendment shall be
              ------------------------------
construed together with, and as a part of, the Investment Agreement and shall be
governed in all respects by the laws of the State of New York as such laws are
applied to agreements to be performed entirely in such state.


                                      ***

                                       6
<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed this First Amendment
dated as of the date first written above.



                         TIVO INC.


                         By:    /s/ David H. Courtney
                             ---------------------------------
                         Name:  David H. Courtney
                         Title: Senior Vice President,
                                Finance & Administration


                         AMERICA ONLINE, INC.


                         By:    /s/ David M. Colburn
                             ---------------------------------
                         Name:  David M. Colburn
                         Title: President, Business Affairs


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