Product Integration And Marketing Agreement

EXHIBIT 10.26
=============


PRODUCT INTEGRATION AND MARKETING AGREEMENT
-------------------------------------------


This Product Integration and Marketing Agreement (the "Agreement") is made and entered into as of this 9 day of June, 2000 (the "Effective Date") by and
--- between America Online, Inc., a Delaware corporation ("AOL"), and TiVo, Inc., a Delaware corporation ("TiVo") (each a "Party" and, collectively, the "Parties").


R E C I T A L S


WHEREAS, TiVo has developed and continues to develop hardware, software and data systems that provide feature-rich personal digital video recorder functionality for television programming;


WHEREAS, AOL and TiVo desire to cooperate to develop a version of AOL's "AOL TV" service that is bundled with and installed on a TiVo personal digital video recorder, that includes a "TiVo Channel" to permit access to enhanced TiVo functionality and certain other features and functions described in the Specifications (as defined below);


WHEREAS, AOL and TiVo desire to cooperate to develop equipment and software required for the provision of such integrated AOL TV/TiVo device;


WHEREAS, AOL and TiVo will work together to design, develop, test, launch, market, sell and support the Integrated Product, in accordance with the terms of this Agreement;


WHEREAS, AOL and TiVo, have entered a short-form Product Integration and Marketing Relationship Agreement, dated August 6, 1999 (the "Preliminary Agreement"), under which the Development Activities have begun; and


WHEREAS, AOL and TiVo intend that this Agreement replace and supersede the Preliminary Agreement.


A G R E E M E N T


NOW, THEREFORE, in consideration of the foregoing and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, AOL and TiVo, intending to be legally bound, agree as follows:


1. Certain Definitions.


Capitalized terms used but not defined in the Agreement will be as defined in Schedule 1 attached hereto.


2. Definitive Agreement.


This Agreement replaces and supersedes the Preliminary Agreement in its entirety. The Preliminary Agreement is hereby terminated and has no further force or effect.


3. Obligations related to the Development and Delivery of the Integrated
Product.


3.1 Joint Responsibilities. Joint responsibilities of the Parties
----------------------
hereunder shall include, without limitation, the following:


(a) AOL and TiVo will jointly coordinate the development of the
Specifications to ensure compatibility and integration between the
AOL TV Service, the TiVo Channel, the Liberate Browser and the
Developed Hardware, and to allow each Party to implement its
respective services


------------------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


1


on the Developed Hardware. TiVo will be responsible for the design
of the TiVo Channel and the DVR Functionality, and AOL will be
responsible for the design of the AOL TV Service.


(b) AOL and TiVo will meet on a weekly basis during the term of this
Agreement in order to refine the Specifications to reflect the
optimal level of integration between the AOL TV Service, the TiVo
Channel and the Integrated Service.


(c) Each Party shall use good faith efforts to finalize and mutually
agree upon the Specifications (Schedule 12), the Milestone
Schedule (Schedule 2), the Acceptance Criteria (Schedule 4) and
the Description of Provisioning Support (Schedule 7) within thirty
(30) days of the Effective Date.


(d) * * * will provide to * * * that (1) will allow * * * to with * *
* reasonable assistance, enable the operation of the * * * through
the * * * (2) will allow * * * to * * * (including all * * * and *
* * related thereto); (3) are made * * * to * * * by * * * and (4)
the Parties agree shall be provided to * * *. For the avoidance of
doubt, unless mutually agreed to by the Parties, * * * will not *
* * and/or * * * that utilize the * * * of the * * * that are not
part of the * * * will have the right to use the * * * described
above solely to enable the * * * and that do not * * * as it
exists at the time * * * proposes such new * * * unless otherwise
agreed to by the Parties.


(e) TiVo and AOL jointly will be responsible for the integration of
the AOL TV Software on to the combination of the Liberate Browser,
the TiVo Software and the Developed Hardware. Notwithstanding the
foregoing, AOL will be responsible for the operation of the AOL TV
Software in accordance with Section 3.3, provided that TiVo will
remain responsible for integration of the Integrated Product in
accordance with Section 3.2(a).


(f) AOL and TiVo jointly will select third party relationships for the
manufacture of all Developed Hardware. TiVo will provide to any
such Manufacturer, under commercially reasonable terms and
conditions, a royalty-free license to use the TiVo Software and a
reference design for development and manufacture of the Integrated
Product. AOL will contract with such Manufacturer for the
manufacture of the Integrated Product and shall be responsible for
the day-to-day management of all such third party Manufacturing
relationships. TiVo agrees to provide reasonable assistance to
such Manufacturer as may be necessary or appropriate to further
the intent of the Parties hereunder, in a manner consistent with
TiVo's favorable relationships with its own Manufacturers.


(g) AOL and TiVo jointly and in good faith will explore the
possibility of collaborating on future versions of the Integrated
Product and the Integrated Service * * *.


(h) Following the closing of the merger between AOL and Time Warner,
Inc., AOL and TiVo jointly will explore possible relationships to
provide TiVo * * * for use in conjunction with the DVR
Functionality, TiVo Channel and other TiVo services on terms to be
mutually agreed upon.


(i) AOL and TiVo will jointly explore the possibility of providing
TiVo with assistance in the development and deployment of TiVo's
e-commerce capabilities through access to AOL's transaction
processing architecture and interfaces (e.g., QuickCheckout
integration, APIs and other software). Such assistance will be
provided to TiVo, if agreed to by the Parties, on terms to be
mutually agreed upon, taking into consideration AOL's costs to
provide such assistance.


------------------------- * * * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as * * *. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


2


3.2 Obligations of TiVo.
-------------------
(a) Development. In order to create the Integrated Product and to achieve
-----------
the integration of the TiVo Software, the Robust DVR Functionality and
the Basic DVR Functionality with the AOL TV Service in accordance with
this Agreement, TiVo will undertake the Development Activities set
forth in this Section 3.2. The Development Activities will be
performed in conjunction with the development of the Developed
Hardware (as described in the Minimum Specifications set forth in
Schedule 3). The Parties will use all commercially reasonable efforts
to release the commercial version of the Integrated Product as soon as
practicable * * *. TiVo and AOL will work together to ensure that the
design and implementation of the Developed Hardware is capable of
supporting the AOL TV Service and the TiVo Channel in accordance with
the Specifications. * * * (subject to the terms and conditions of this
Agreement) TiVo agrees to perform the following development services
in accordance with applicable milestones set forth in the Milestone
Schedule and in any case by * * *:


(i) TiVo will deliver to AOL the Integrated Product (including,
without limitation, Provisioning Support as described herein).


(ii) TiVo will implement suitable graphics APIs to support the
Liberate Browser to enable on-screen Web-based graphics for
the AOL TV Service, as set forth in the Specifications.


(iii) TiVo has contracted with Liberate to provide for porting of
the Liberate Browser to the Integrated Product, preserving all
Liberate Browser functionality set forth in the
Specifications. TiVo shall ensure that the port of the
Liberate Browser is executed in such a way that the AOL TV
Software and the Integrated Service will function as specified
in the Specifications without degradation and without
requiring modifications (except as otherwise mutually agreed
to by the TiVo, AOL and Liberate). TiVo shall actively and
diligently enforce Liberate's obligations under the TiVo-
Liberate contract * * * TiVo will provide to AOL status
reports on the Liberate development effort, including reports
of errors and limitations in the Liberate Browser.


(iv) TiVo will work with Liberate to test and verify the port of
the Liberate Browser, to package the ported Liberate Browser
into TiVo distribution formats, as set forth in the
Specifications, and to run alpha and beta programs with the
ported Liberate Browser leveraging TiVo's then-existing beta
community as necessary.


(v) TiVo will integrate the TiVo Software and the Liberate Browser
with the Developed Hardware in accordance with the
Specifications.


(vi) TiVo shall permit AOL to review and consult with TiVo as to
the design specifications, engineering schematics and other
technical aspects of the Developed Hardware, and shall in good
faith consider any changes to same proposed by AOL.


(vii) AOL acknowledges and agrees that TiVo is not required to make
any changes or modifications to the style, look and feel of
the TiVo Channel existing as of the Effective Date.
Notwithstanding the foregoing, the Parties agree that the
screens displayed on the * * * shall carry * * * that shall
include, among other things, * * * from * * * and * * * in a
manner consistent with other versions of * * * and other * * *
as mutually agreed to by the Parties, provided as part of the
* * *. The * * * will be similar to * * * which comprises
approximately * * * In addition, TiVo and AOL will collaborate
to ------------------------- * * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


3


establish consistency between the style, look and feel of the
TiVo Channel, the AOL TV Service and the AOL Style Guidelines.


(viii) TiVo will implement changes to the TiVo Platform required to
permit access to the AOL TV Service in accordance with the
Specifications.


(ix) To the extent that AOL recommends changes to the TiVo
Software or the TiVo Channel (other than any changes required
hereunder), * * *.


(x) TiVo will develop documentation necessary for testing,
operation, and use of the Integrated Product which
documentation shall be sufficient to enable AOL's software
engineers to apply * * * with * * * to enable * * * and * * *
through * * * (hereinafter "TiVo Documentation"), and will
deliver such TiVo Documentation, in both print and machine
readable format, to AOL. TiVo Documentation shall include
release dates and version numbers to facilitate its use with
the Integrated Products. Such TiVo Documentation shall be
deemed TiVo Confidential Information.


(xi) TiVo will provide AOL with periodic oral and written reports
of its progress in the development of the Integrated Product.


(xii) TiVo will provide the TiVo System Software and the Liberate
Ported TiVo Software to AOL, * * * (with the exception of * *
* that is provided * * * and * * * for * * * to which AOL * *
* in performance of its obligations under this Agreement), and
all documentation related thereto produced by or available to
TiVo, so that AOL can integrate such software with the AOL TV
Software.


(xiii) TiVo will use best efforts to provide a fully functional (in
accordance with the Specifications) working hardware and
software prototype of the Integrated Product for * * *
provided that TiVo shall not be responsible for the
functionality of the AOL TV Software or the AOL TV Service
(excluding the EPG Data and the Basic DVR Functionality) used
in such prototype.


(b) Change Requests. The Parties may, from time to time, agree to changes
---------------
(consisting of additions, modifications, deletions or other revisions)
to the Minimum Specifications, to the Specifications or to the
Development Activities. Each change request must be reflected in a
written document signed by both Parties that includes a detailed
description of the specific change, along with any modified
specifications and desired completion date(s) ("Change Request"). Each
Change Request duly authorized in writing by the Parties shall
constitute a formal amendment to this Agreement, and shall be deemed
incorporated into and shall become part of this Agreement. A Change
Request shall have no effect on the rights and obligations of TiVo or
AOL with respect to products delivered or Services provided before the
effective date of the Change Request. In addition, in connection with
any duly authorized Change Request, TiVo shall provide * * * to * * *
to AOL as reasonably requested by AOL or as needed to * * * TiVo shall
clearly identify * * * from * * * of * * * supplied to AOL hereunder.
TiVo will place a priority on Change Requests in terms of resource
allocation. Unless otherwise agreed in a Change Request, TiVo will pay
all costs of a Change Request.


(c) Approval.
--------


------------------------- * * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


4


(i) Acceptance Testing. AOL will test the Integrated Product, in
------------------
accordance with standard diagnostic practices, to determine
whether or not it meets the Acceptance Criteria that will be
mutually agreed to within * * * days of the Effective Date.
TiVo will provide * * * as AOL conducts acceptance tests
(including alpha and beta level testing) of the Integrated
Product, in accordance with the Acceptance Criteria.


(ii) Test Units. TiVo shall provide (directly or indirectly
----------
through a Manufacturer) and AOL shall purchase up to * * *
total (such total to include the number of development units
purchased pursuant to Section 3.2(c)(iii) below) units of the
various test versions of the Integrated Product and shall
participate in the alpha, beta and other testing of the
Integrated Product conducted by AOL. Such participation shall
be pursuant to the various test plans and procedures
established by AOL.


(iii) Development Units. The pre-release version of the Integrated
-----------------
Product shall be subject to Acceptance by AOL based on
satisfaction of such tests as the Parties will mutually and
reasonably construct in order to determine whether the
Integrated Product operates in substantial compliance with the
Acceptance Criteria set forth in Schedule 4. TiVo shall
provide (directly or indirectly through a Manufacturer) and
AOL shall purchase up to * * * total (such total to include
the number of test units purchased pursuant to Section
3.2(c)(ii) above) units of the Integrated Product solely for
AOL's own internal use in performing such tests. For each
production run of development units delivered to AOL, TiVo
shall provide documentation containing lists and descriptions
of known errors and limitations for such production run. AOL
shall test the Integrated Product within * * * days of
receipt, in order to determine whether it is in substantial
compliance with the Acceptance Criteria. Within such period,
AOL shall provide TiVo with written Acceptance of the
Integrated Product or a statement identifying any failure of
the Integrated Product to substantially comply with the
Acceptance Criteria in sufficient detail for TiVo to recreate
such non-compliance. In the event AOL identifies such a
failure and rejects the Integrated Product, TiVo shall have *
* * days from TiVo's receipt of notice of such rejection to
repair the failure and resubmit the units of the repaired
Integrated Product to AOL for testing. AOL shall then have * *
* days after receipt of the resubmitted product to determine
whether such version passes Acceptance testing. The process
shall be repeated until the Integrated Product passes
Acceptance testing or, if it fails to pass after * * * rounds
of Acceptance testing and such failure is not due solely to
the AOL TV Software or the AOL TV Service (excluding the EPG
Data and the Basic DVR Functionality), TiVo shall have * * *
as set forth in Section * * *.


(iv) Cooperation by TiVo. TiVo shall cooperate in all testing
-------------------
undertaken pursuant to this Section 3.2(c) to the extent
reasonably requested by AOL. TiVo shall use its commercially
reasonable efforts to diagnose any failure of Integrated
Product to comply with the Specifications and the Acceptance
Criteria set forth in Schedule 4 prior to and during any
testing. TiVo also shall use its commercially reasonable
efforts to promptly correct any such failure diagnosed by TiVo
or reported to TiVo in writing. TiVo's use of commercially
reasonable efforts to diagnose and correct such failures shall
not supersede the rights and remedies of the Parties set forth
in Subsection 3.2(c)(iii) above.


(v) Review of Documentation. AOL shall also be entitled to
-----------------------
evaluate whether the TiVo Documentation is consistent with
Section 3.2(a)(x). All required documentation shall be
provided to AOL, in the form mutually agreed to by the
Parties, prior to and as a condition of AOL's Acceptance of
Integrated Product.


------------------------- * * * Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


5


(vi) No Effect on TiVo's Other Obligations. AOL's inspection or
-------------------------------------
fail ...