Escrow Agreement

Exhibit 10.28


ESCROW AGREEMENT


among


AMERICA ONLINE, INC.,


TIVO INC.,


and


U.S. TRUST COMPANY, NATIONAL ASSOCIATION


Dated as of September 11, 2000


This ESCROW AGREEMENT is entered into as of September 11, 2000 (this "Agreement") by and among U.S. TRUST COMPANY, NATIONAL ASSOCIATION (the "Escrow Agent"), AMERICA ONLINE, INC., a Delaware corporation (the "Purchaser"), and TIVO INC., a Delaware corporation (the "Company" and, together with the Purchaser, referred to herein collectively as the "Depositors" and each individually, a "Depositor").


WHEREAS, the Purchaser and the Company are parties to an Investment Agreement, dated as of June 9, 2000 (the "Investment Agreement"); and


WHEREAS, pursuant to the Investment Agreement, the Purchaser and the Company have agreed to cause the deposit of certain funds with the Escrow Agent, and the parties to this Agreement desire to define the terms and conditions pursuant to which the Escrow Agent shall hold and release such funds or portions thereof;


NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Escrow Agent shall hold in escrow and shall distribute the Escrowed Funds (as defined herein) in accordance with and subject to the following Instructions and Terms and Conditions:


I. INSTRUCTIONS:


1. Escrowed Funds. As provided in Section 1.4(a) of the Investment Agreement,
-------------- the Company shall deposit with the Escrow Agent in accordance with the terms of the Investment Agreement (a) at the closing of the Share Purchase (as defined in the Investment Agreement), an amount as specified in the Investment Agreement, and (b) from time to time, upon the exercise of any of the Warrants (as defined in the Investment Agreement), amounts as specified in the Investment Agreement, in the aggregate totaling up to ninety-one million, five hundred thousand dollars ($91,500,000), to be held subject to the terms and provisions herein. The foregoing funds, plus all interest, dividends and other distributions and payments thereon (collectively the "Distributions") received by the Escrow Agent, less any funds distributed or paid in accordance with this Agreement, are collectively referred to herein as the "Escrowed Funds." The Escrow Agent shall hold the Escrowed Funds in escrow and shall not withdraw, and none of the Depositors shall be entitled to any disbursement of, the Escrowed Funds for any purpose other than as set forth herein.


2. Investment of Escrowed Funds. The Escrowed Funds shall be invested and
---------------------------- reinvested in such of the following investments (the "Permitted Investments") as specified in a joint written notice signed by an officer of each of the Depositors and delivered from time to time by the Depositors to the Escrow Agent:


(a) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof;


(b) commercial paper that rates at least A-1 by Standard & Poor's
Corporation or P-1 Moody's Investors Services, Inc. that is scheduled to
mature not more than ninety (90) days after the date of issue and is issued
by a corporation organized under the laws of the United States or any state
thereof;


(c) time deposits with, including certificates of deposit (which are
scheduled to mature not more than ninety (90) days after the date of issue)
issued by, a bank or trust company organized under the laws of the United
States or any state thereof (a "Qualified Financial Institution");


(d) repurchase agreements entered into with a Qualified Financial
Institution that are secured by any obligations of the type described in
paragraphs (a) through (c) above and have a market value at the time such
repurchase agreement is entered into of not less than 100% of the
repurchase obligation thereunder; and


(e) money market funds with a rating of AAAm or AAAm-G by Standard &
Poor's Corporation or similar rating entity that invest only in securities
described above in clauses (a) through (d).


Absent a joint notice of investment or reinvestment in accordance with this Section 2, the Escrow Agent shall invest any uninvested portion of the Escrowed Funds in a money market of the type specified in paragraph (e) above as shall be selected by the Company pursuant to a written notice to the Escrow Agent and the Purchaser. Absent both a joint notice of investment or reinvestment in accordance with this Section 2 and a notice from the Company in accordance with the previous sentence, the Escrow Agent shall invest any uninvested portion of the Escrowed Funds in such Permitted Investments of the type specified in paragraph (e) above as shall be selected from time to time by the Escrow Agent.


The Escrow Agent shall have no obligation to invest or reinvest the Escrowed Funds if deposited with the Escrow Agent after 12:00 p.m. (E.S.T.) on such day of deposit. Instructions received after 12:00 p.m. (E.S.T.) will be treated as if received on the following business day.


The Escrow Agent shall have the power to sell or liquidate the foregoing investments whenever the Escrow Agent shall be required to release the Escrowed Funds pursuant to the terms hereof. Requests (or instructions) received after 12:00 p.m. (E.S.T.) by the Escrow Agent to liquidate the Escrowed Funds will be treated as if received on the following business day. The Escrow Agent shall have no responsibility for any investment losses resulting from the investment, reinvestment or liquidation of the Escrowed Funds. Any interest or other income received on such investment and reinvestment of the Escrowed Funds shall become part of the Escrowed Funds. It is agreed and understood that the Escrow Agent may earn fees associated with the investments outlined above.


The Escrow Agent shall have no liability for any loss arising from or related to any such investment other than in accordance with paragraph 1 of the Terms and Conditions.


2


3. Distribution of Escrowed Funds. The Escrow Agent is directed to hold and
------------------------------ distribute the Escrowed Funds in the following manner:


(a) Release of the Escrowed Funds to the Company. All of the Escrowed
Funds shall be released by the Escrow Agent to the Company, by wire
transfer of immediately available funds to such account as the Company
shall designate in writing, upon receipt by the Escrow Agent of written
instructions of the Company countersigned by the Purchaser certifying (i)
that the Set Top Box Launch (as defined in the Investment Agreement) has
occurred prior to the Planned Launch Date (as defined in the Investment
Agreement), (ii) that the Put Option has expired without being exercised,
or (iii) the Commercial Agreement has been terminated in accordance with
Section 11.6 thereof; or


(b) Release of the Escrowed Funds to the Purchaser. All of the
Escrowed Funds (less the amount of cash dividends received by the Purchaser
on the Preferred Shares, if any, up to a maximum equal to the total amount
of Distributions, as set forth in the Release Instructions (as defined
below) (the "Preferred Dividend Amount")) shall be released to the
Purchaser, by wire transfer of immediately available funds to such account
as the Purchaser shall designate in writing, at the time and place
specified in written instructions (the "Release In ...