2nd Amendment To Investment Agreement Jan 30, 2001

EXHIBIT 10.1


SECOND AMENDMENT TO


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


This Second Amendment, dated as of January 30, 2001 (this "Second Amendment"), to the Investment Agreement, dated as of June 9, 2000, as amended by the First Amendment, dated as of September 11, 2000 (together, 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:
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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, the Purchaser has agreed to release a certain portion of the Escrowed Funds to the Company upon terms and conditions agreed to by the Purchaser and the Company;


WHEREAS, the Company has issued Warrants pursuant to Section 1.3 of the Investment Agreement and, in connection with the release of Escrowed Funds, the Company and the Purchaser have agreed to amend certain provisions of certain of the outstanding Warrants;


WHEREAS, 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. Section 1.4 of the Investment Agreement is
------------------------ hereby amended by deleting such section in its entirety and substituting therefor the following:


"(a) The Company has deposited ninety-one million, five hundred
thousand dollars ($91,500,000) of the proceeds received by the Company in
the Share Purchase into an interest-bearing escrow account (the "Escrow
Account") pursuant to the Escrow Agreement, dated as of September 11, 2000
(the "Escrow Agreement"), by and among U.S. Trust Company, National
Association (the "Escrow Agent"), the Purchaser and the Company. The
Purchaser and the Company shall direct the Escrow Agent to release to the
Company from the Escrow Account funds in an aggregate amount of forty-three
million, five hundred thousand dollars ($43,500,000). All amounts
remaining in the Escrow Account after such release, together with all
interest earned on any amounts held in the Escrow Account (all such funds
and interest, the "Escrowed Funds"), shall be held


as a trust fund and not subject to any lien, attachment, trustee process or
any other judicial process of any creditor of any party, and shall be held
and distributed in accordance with the terms hereof and the Escrow
Agreement.


Upon release to the Company in accordance with Section 1.4(b) and the
terms of the Escrow Agreement, forty-eight million dollars ($48,000,000) of
the Escrowed Funds 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.


(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
following the Planned Launch Date or each such breach, as the case may be,
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 the Escrowed Funds at such time (excluding any interest
included therein) (the "Put Amount") and, if all the Preferred Shares then
outstanding have an aggregate initial liquidation value of less than the
Put Amount, then the Purchaser may also require the Company to repurchase a
number of shares of Common Stock held by the Purchaser having a value
(calculated as the product of the number of shares of Common Stock and the
Common Stock Price paid by the Purchaser) 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 the 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 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 under clause (i) above shall
immediately expire and be of no further force of 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 1.4(b)) 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.


(c) If the Set Top Box Launch occurs prior to December 31, 2001, the
Company shall be entitled to receive from the escrow under the Escrow
Agreement all Escrowed Funds. Forty-eight million dollars ($48,000,000) of
the Escrowed Funds released to the Company 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.


2. Agreement to Amend the Escrow Agreement. In order to effectuate the
--------------------------------------- foregoing, the Company and the Purchaser hereby agree to execute and deliver an amendment to the Escrow Agreement in the form of Exhibit A hereto (the "Escrow
--------- Agreement Amendment"), with such changes and additions as shall be requested by the Escrow Agent and reasonably acceptable to the Company and the Purchaser.


3. Amendment to the Warrants. In consideration for the release of the
------------------------- Escrowed Funds in accordance herewith and the other amendments effectuated hereby, the Company hereby agrees that it shall amend (i) the TiVo Inc. Stock Subscription Warrant No. VW-A-1, dated September 13, 2000, issued to the Purchaser (the "VW-A-1 Warrant") and (ii) the TiVo Inc. Stock Subscription Warrant No. VW-B-1, dated September 13, 2000, issued to the Purchaser (the "VW-B-1 Warrant" and, together with the VW-A-1 Warrant, the "VW Warrants"), to reflect certain changes in the exercise price of each VW Warrant as set forth below. The Company shall deliver to the Purchaser an amended and restated form of each warrant against delivery for cancellation of each warrant amended hereby (the "Amended Warrants"). The Amended Warrants shall be in the forms of Exhibits
-------- B and C hereto. The Purchaser shall not be obligated to pay any additional - - consideration for the delivery of the Amended Warrants.


(a) The TiVo Inc. Stock Subscription Warrant No. VW-A-1, dated September 13, 2000, issued to the Purchaser is hereby amended by (i) deleting from the first paragraph thereof the words "at a price per share (the "Warrant Price") of $23.10625" and (ii) substituting in lieu thereof "at a price per share (the "Warrant Price") of $7.29."


(b) The TiVo Inc. Stock Subscription Warrant No. VW-B-1, dated September 13, 2000, issued to the Purchaser is hereby amended by (i) deleting from the first paragraph thereof the words "at a price per share (t ...