AMENDED AND RESTATED DEVELOPMENT AGREEMENT

Exhibit 10.7

 

Confidential

AMENDED AND RESTATED DEVELOPMENT AGREEMENT

T HIS A MENDED AND R ESTATED D EVELOPMENT A GREEMENT , originally made and entered into as of February 15, 2002 (the “Effective Date” ), as amended by that certain First Consolidated Amendment dated October 31, 2002 (the “ First Amendment Effective Date ”), that certain Second Amendment dated December 20, 2002 (the “ Second Amendment Effective Date ”), that certain Third Amendment dated January 8, 2003 (the “ Third Amendment Effective Date ”), that certain Fourth Amendment dated April 17, 2003 (the “ Fourth Amendment Effective Date ”), that certain Fifth Amendment dated December 19, 2003 (the “ Fifth Amendment Effective Date ”), that certain Sixth Amendment dated April 30, 2004 (the “ Sixth Amendment Effective Date ”), that certain Seventh Amendment dated April 7, 2006 (the “ Seventh Amendment Effective Date ”) and that certain Eighth Amendment dated July 25, 2007 (the “ Eighth Amendment Effective Date ”), by and between T I V O I NC . , a Delaware corporation (“ TiVo ”), and DIRECTV, I NC . , a California corporation (“ DIRECTV ”) is hereby amended and restated in full (the “ Restatement ”) as of September 2, 2008 (the “ Restatement Effective Date ”). (As so amended and restated herein, the “ Agreement .”). The Restatement shall only be effective as of the Restatement Effective Date and shall have no retroactive effect. Certain provisions regarding the Legacy Combination Receivers are restated herein for reference purposes only and are not intended as an affirmative statement or acknowledgment that any obligations with respect to the Legacy Combination Receivers remain to be performed (except with respect to those obligations which, by their nature, impose obligations that continue past the Restatement Effective Date).

R ECITALS

W HEREAS , TiVo has developed and commercially launched a stand alone set-top receiver (the “Stand Alone Receiver” ) that allows consumers to receive the personalized television services provided by TiVo.

W HEREAS , TiVo and DIRECTV have developed and commercially launched the first generation DIRECTV-TiVo combination receiver known as the Reno Receiver (as defined below), that provides consumers with the DVR/PVR Functionality (as defined in Exhibit A ) and the ability to receive the satellite television, audio, data and other programming services that are part of the DIRECTV Service, pursuant to certain reference design and marketing agreements.

W HEREAS , TiVo and DIRECTV desire to develop, produce (and/or have produced), and market the next generation software, hardware, services and other applications for the DVR/PVR Functionality and for the DIRECTV Service, including a next generation DIRECTV-TiVo combination receiver which will be known as the Provo Receiver (as defined below) and to provide (via download) software upgrades to the existing Reno Receivers and the Provo Receivers, to enable customers to receive the upgraded DVR/PVR Functionality.

W HEREAS , TiVo and DIRECTV anticipate that the Provo Receiver will undergo Manufacturing Release (as defined below) no later than [*] .

W HEREAS , TiVo and DIRECTV have agreed to make certain buy-down arrangements for the Reno Receivers and desire to modify such existing arrangements.

 

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W HEREAS , as of the Restatement Effective Date, DIRECTV desires TiVo to develop the TE Solution (as defined below) components of the DIRECTV TE Receiver, which uses a DIRECTV DVR Platform to enable customers to receive a new version of TiVo’s software, services and other applications for the DVR/PVR Functionality and the DIRECTV Service.

W HEREAS , as of the Restatement Effective Date, TiVo is willing to develop such TE Solution and to permit DIRECTV to produce (and/or have produced) and market the DIRECTV TE Receiver on the terms and conditions set forth in this Agreement.

N OW , T HEREFORE , in consideration of the mutual promises contained herein, the parties hereby agree as follows:

ARTICLE I. DEFINITIONS

The following terms have the following meanings. Other terms may be defined herein without being listed in this ARTICLE I.

1.1 “Change of Control” means any of the following: (a) the sale, conveyance, transfer, or disposition of all or substantially all of TiVo’s assets to a third party, (b) the acquisition of TiVo by a third party (whether through a merger, acquisition, consolidation or other transaction or series of transactions) the consummation of which results in a third party becoming the beneficial owner of 50% or more of the outstanding equity interests or voting power in TiVo, (c) the merger or consolidation of TiVo with or into another corporation, other than, in the case of this clause (c), an acquisition or a merger or consolidation in which holders of shares of voting capital stock of TiVo immediately prior to the acquisition, merger or consolidation will have at least fifty (50) percent of the ownership of voting capital stock of the acquiring third party or the surviving corporation in such merger or consolidation, or transaction effected solely for purpose of changing the corporate domicile of TiVo, as the case may be, immediately after the merger or consolidation; or (d) any third party or group acquires fifty (50) percent or more of the capital stock or voting power or voting stock of TiVo or any rights entitling such third party or group to elect a majority of members of the board of directors of TiVo, either directly or indirectly.

1.2 “Combination Receiver” means the Reno Receiver, the Provo Receiver, the Two-Chip Receiver and any DIRECTV TE Receiver.

1.3 “Commercial TE Launch” means the date of first commercial availability of a DIRECTV TE Receiver.

1.4 “Comparable Solution” means a [*] with [*] software that provides [*] and that carries or employs one or more [*] (either in [*] ).

1.5 “Development Schedule” is defined in Section 2.1(a) (Provo Receiver) and is set forth in Exhibit A (Development Schedule and Specifications).

1.6 “DIRECTV Covered System” means a [*] for providing [*] . Notwithstanding the foregoing, a DIRECTV Covered System does not include any [*] that provides all or part of the [*] distributed directly by [*] and/or indirectly for [*] (i.e. by a retailer, reseller, dealer, distributor or other third party authorized to sell [*] ).

 

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1.7 “ DIRECTV DVR Platform ” means digital video recorder platform(s) designed and developed by DIRECTV (or by a third party) for use with the DIRECTV Service and designated by the parties for use with the TE Solution.

1.8 “DIRECTV Service” shall mean the television, video, audio, data or other programming services or any internet, broadband, digital subscriber line, or other information service, distributed from time to time by DIRECTV via the direct broadcast satellite distribution system, the internet, telecommunication lines, or other communication media, and offered to subscribers by DIRECTV under the DIRECTV brand or other brands owned by DIRECTV or its Subsidiaries.

1.9 “DIRECTV Technology” shall mean (i) the DIRECTV Technical Specifications Versions 3.0 and 3.1.2 provided by or for DIRECTV to TiVo; (ii) the [*] specification provided by or for DIRECTV to TiVo; (iii) the specifications for DIRECTV DVR Platform hardware and proprietary software provided by or for DIRECTV or its vendors to TiVo; and (iv) any specifications provided by or for DIRECTV to TiVo pursuant to any PCR under this Agreement; including any software, components, parts, proprietary information, intellectual property, subassemblies or other technology that is expressly incorporated in, or specifically required for use pursuant to, such specifications under subsections (i), (ii), (iii) or (iv) above, but shall not include any such software, components, parts, proprietary information, intellectual property, subassemblies or other technology that, although providing a possible method of implementing the specifications, is not the required method of implementation and alternate implementations are currently available and may be implemented on reasonable commercial terms and conditions. DIRECTV is not obligated to deliver to TiVo any software, components or parts as part of the DIRECTV Technology unless otherwise mutually agreed in the TE Solution Statement of Work or a PCR. DIRECTV Technology shall include any implementation of the TiVo Technology by DIRECTV or its sublicensees, to the extent such specific implementation is not required in such manner pursuant to (and thus not part of) the TiVo Technology and alternate implementations are currently available and may be implemented on reasonable commercial terms and conditions. DIRECTV Technology also includes (i) DIRECTV trademarks and logos that are incorporated in the customer interface in accordance with Section 2.6; (ii) DIRECTV’s remote scheduling system ( i.e. , DVR Scheduler); and (iii) any other specifications or technology provided by or for DIRECTV to TiVo under this Agreement.

1.10 “DIRECTV TE Acceptance” has the meaning set forth in Section 2.4.

1.11 “DIRECTV TE Receiver” means any DIRECTV-TiVo combination receiver, co-branded with DIRECTV and TiVo brands as permitted hereunder, that (i) is based on a DIRECTV DVR Platform, (ii) incorporates the TE Solution developed by TiVo hereunder, and (iii) requires a subscription to the DIRECTV Service for any substantial use.

1.12 “DVR/PVR Free Functionality” is defined in Exhibit A (Development Schedule and Specifications).

1.13 “DVR/PVR Service Functionality” is defined in Exhibit A (Development Schedule and Specifications).

1.14 “DVR/PVR Service Subscriber” shall mean an active subscriber to the DIRECTV Service (excluding retailers, VIPs, employees, test accounts and promotions mutually agreed by the parties (such agreement not to be unreasonably withheld or delayed)) who DIRECTV allows or has

 

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granted access to use the DVR/PVR Service Functionality on a Combination Receiver. A household with multiple Combination Receivers that receive the DVR/PVR Service Functionality will count as one subscriber. Households receiving only [*] portion of functionality as set forth in Exhibit A shall [*] the DVR/PVR Service and therefore [*] a DVR/PVR Service Subscriber.

1.15 “Final Acceptance Testing” is defined, with respect to Legacy Combination Receivers, in Exhibit A (Development Schedule and Specifications) and, with respect to the TE Solution implemented in a DIRECTV TE Receiver, in the TE Solution Statement of Work.

1.16 “Interface Specifications” is defined in Section 2.3(a) (Interface Specifications).

1.17 “IPG” means [*] which allows [*] information [*] , combined with the [*] .

1.18 “Key Terms” means any terms and conditions relating to any of the following: (i)  [*] ; (ii)  [*] ; (iii)  [*] provisions; (iv)  [*] ; and (v)  [*] .

1.19 “Legacy Combination Receiver” means Combination Receivers other than any DIRECTV TE Receiver.

1.20 “Manufacturing Release” shall mean the date on which the applicable hardware and/or software has successfully completed Final Acceptance Testing, upon which date DIRECTV shall notify TiVo of such in writing.

1.21 “Platform Documentation” means DIRECTV requirements documents, specifications, [*] (in each case, [*] and [*] ).

1.22 “Provo Receiver” shall mean: (a) the second generation DIRECTV-TiVo combination receiver described in Exhibit A (Development Schedule and Specifications) ; (b) the Trinity Hardware (as defined in Section 1 of the Second Amendment to this Agreement) incorporated into a DIRECTV-TiVo combination receiver (the “Trinity Receiver”); and (c) the Phoenix Hardware (as defined in Section 1 of the Third Amendment to this Agreement) incorporated into a DIRECTV-TiVo combination receiver (the “Phoenix Receiver”). For the sake of clarity, when assessing the Parties’ respective obligations prior to (i) the Second Amendment Effective Date, “Provo Receiver” excludes clauses (b) and (c); and (ii) the Third Amendment Effective Date, “Provo Receiver” excludes clause (c).

1.23 “PVR” means [*] that [*] .

1.24 “Reno Receiver” shall mean the first generation DIRECTV-TiVo combination receiver developed and commercially launched by DIRECTV and TiVo pursuant to the Marketing Agreement by and between the parties dated April 13, 1999 (as amended, the “Original Marketing Agreement” ) and the Reference Design Agreement by and between the parties dated September 1, 1999 (as amended, the “Reference Design Agreement” ).

1.25 “Satellite Receiver” means a device that receives all or part of the DIRECTV Service via a satellite distribution system.

1.26 “SILO” shall mean the slicer independent licensed object software tool used for processing certain DIRECTV Service data types for delivery using the DIRECTV Data File Broadcast.

 

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1.27 “Subsidiary” of an entity (the “ Parent Entity ”) means any entity, the majority voting power of which is controlled, directly or indirectly, by the Parent Entity; provided, however , that [*] and [*] and any of [*] respective successors and assigns (collectively, the “ [*] ”) are deemed not to be Subsidiaries under this Agreement regardless of any such control.

1.28 “T & M Rate” means [*] until the first anniversary of the Seventh Amendment Effective Date and, in each subsequent year [*] rate determined by multiplying the [*] rate from the preceding year times [*] .

1.29 “TE Software ” means the initial release of the software developed by TiVo under the TE Solution Statement of Work for execution on a DIRECTV DVR Platform and any updates or upgrades to such software provided to DIRECTV by TiVo pursuant to this Agreement.

1.30 “TE Solution ” means the TE Software, remote control design (if applicable), product labeling/documentation and any other hardware designs (e.g., bezel design), software (e.g., tools), or documentation provided to DIRECTV by TiVo under the TE Solution Statement of Work along with any updates or upgrades to the foregoing provided to DIRECTV by TiVo pursuant to this Agreement.

1.31 “TE Solution Statement of Work ” has the meaning set forth in Section 2.10.

1.32 “ Territory ” shall mean North America, Central America and South America.

1.33 “Third Party Technology” shall mean any software, components, parts, proprietary information, intellectual property, subassemblies or other technology owned or controlled by a party other than TiVo (or its affiliates) which are specified on Exhibit C (Third Party Technology), as may be amended in accordance with the terms of Section 4.8(d), that is incorporated or referenced in, or required for use of, any Combination Receiver or the TiVo Software.

1.34 “TiVo Covered System” means [*] systems related to [*] . For clarification, [*] offered by [*] under [*] that [*] provided or developed by (or for) TiVo [*] a TiVo Covered System.

1.35 “TiVo Licensed Technology” means any technology or intellectual property rights therein licensed by TiVo or a TiVo Subsidiary to a TiVo distributor or TiVo licensee for use in a TiVo Covered System pursuant to a bona fide commercial transaction, which technology or intellectual property is actually implemented or used in a specific TiVo Covered System utilized, deployed or otherwise exploited by such TiVo distributor or TiVo licensee. For clarity, TiVo Licensed Technology does not include any technology provided or supplied by a TiVo distributor or TiVo licensee for implementation or use in a TiVo Covered System.

1.36 “TiVo Service” shall mean the personal video recording services offered by TiVo, carrying the TiVo brand, that involve the delivery of TiVo content and data by TiVo and may involve the delivery of program guide data by TiVo, to video recording devices or similar devices installed in subscribers’ homes.

1.37 “TiVo Software” shall mean the version of TiVo provided software most recently deployed by DIRECTV for each of the Combination Receivers.

1.38 “TiVo Technology” shall mean any software, components, parts, proprietary information, intellectual property, subassemblies or other technology, specifically excluding any

 

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DIRECTV Technology and Third Party Technology, that is expressly incorporated in, or specifically required for use of, any Combination Receiver, including the TiVo Software in Combination Receivers, the Provo Receiver design, and the Two-Chip Receiver design. TiVo Technology shall include any implementation of the DIRECTV Technology by TiVo, to the extent such specific implementation is not required in such manner pursuant to (and thus part of) the DIRECTV Technology and alternate implementations are currently available and may be implemented on reasonable commercial terms and conditions. The TiVo Technology also includes (i) the customer interface which is manifested by the TiVo Software, excluding the DIRECTV trademarks and logos used in accordance with Section 2.6; (ii) TiVo’s remote scheduling system (i.e., TiVo Online Scheduling); (iii) TiVo server-based software and (iv) any TiVo promotional or advertising functionality or tools, excluding any third party hardware and software, provided for under the Services Agreement entered into by the parties as of the Effective Date (as restated and amended from time to time) (the “Services Agreement”) including, but not limited to, TiVoVision and i-Preview Tags (as defined in the Services Agreement).

1.39 “Two-Chip Platform” shall mean the lower cost platform for TiVo’s Stand Alone Receivers that TiVo intends to develop.

1.40 “Two-Chip Receiver” shall mean a lower cost version of the Provo Receiver which, if so requested by DIRECTV pursuant to Section 2.4 (Two-Chip Option), shall be developed by TiVo including porting of Version [*] Software to the Two-Chip Platform.

ARTICLE II.

TECHNOLOGY DEVELOPMENT

2.1 Provo Receiver and Version [*] Software Development, Production and Deployment. TiVo (with collaboration from DIRECTV) will develop the Provo Receivers and the next generation software for the DIRECTV-TiVo combination receivers (as accepted by DIRECTV upon successful completion of Final Acceptance Testing, the “Version [*] Software”) to be available for Manufacturing Release no later than [*] . In addition, TiVo will develop Version [*] Software for download to the Reno Receiver pursuant to the development schedule set forth in Exhibit A (Development Schedule and Specifications) .

(a) Provo Receiver . DIRECTV hereby grants to TiVo under all rights held or sublicensable by DIRECTV the right to use, reproduce, perform, display, and create derivative works of the DIRECTV Technology as required in the performance of TiVo’s obligations under this Agreement, provided that, the DIRECTV Technology shall be deemed Confidential Information of DIRECTV and other than the foregoing license, no other license, right, or interest is granted to TiVo under this Section 2.1(a) by implication, estoppel, or otherwise, for any other purpose and DIRECTV retains all worldwide intellectual property rights in and to the DIRECTV Technology. Notwithstanding the date of Manufacturing Release specified above in Section 2.1, if Manufacturing Release for the Provo Receiver (with Version [*] Software) [*] therein and [*] is directly [*] to any [*] by [*] such Manufacturing Release shall [*] for [*] that there will be [*] to the [*] is directly [*] to any [*] by [*] in [*] . TiVo and DIRECTV have established a mutually agreed development schedule (the “Development Schedule”) that sets forth the various milestone deliverables, dates and payment obligations associated with the Provo Receiver and Version [*] Software, which is attached hereto as Exhibit A (Development Schedule and Specifications). The Provo Receiver and Version [*] Software shall be accepted at the successful completion of the Final Acceptance Testing and after TiVo has been notified of such by DIRECTV.

 

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(b) Version [*] Software Upgrade for the Reno Receiver. Concurrent with the development and production of the Provo Receiver, TiVo shall develop the Version [*] Software for the existing Reno Receivers that will enable the Reno Receivers to have the features, functionality, performance and user interface defined in the DIRECTV Technology and Exhibit A (Development Schedule and Specifications) , in accordance with the Schedule set forth in Exhibit A . The Version [*] Software upgrade will be deployed via telco download to the Reno Receivers and will occur simultaneous with or shortly following the Manufacturing Release of the Provo Receivers, all in accordance with the Development Schedule attached as Exhibit A .

(c) Provo Finished Goods Pricing. Notwithstanding DIRECTV’s rights as set forth in Section 4.7 (Provo Receiver Manufacturing), TiVo shall provide to DIRECTV a Provo Receiver Finished Goods Price [*] . As used herein, the “Finished Goods Price” shall include the price for the completed receiver (built by a contract manufacturer), any packaging, remote control, cables, connectors, manuals, diagrams, and user instructions, as specified in Exhibit E (Hardware Description) , when the components reflected in the Finished Goods Price are purchased on competitive terms, conditions, and pricing. In the event the Finished Goods Price [*] , TiVo shall [*] and [*] of the [*] of the Provo Receiver during the first [*] from the date of Manufacturing Release of the Provo Receiver (with Version [*] Software); provided that [*] , the DVR/PVR Service Subscriber fees to be paid by DIRECTV to TiVo pursuant to the Provo Receiver fees provision in Section 3.4 (DVR/PVR Service Fees) [*] . Notwithstanding DIRECTV’s rights [*] , TiVo shall not be responsible for any increase in the Finished Goods Price [*] in this Section 2.1(c) and Exhibit E . [*] pursuant to this Section 2.1(c) shall be [*] at the same time and under the same conditions as the corresponding [*] DIRECTV to the respective [*] , provided that DIRECTV will give TiVo prompt notice [*] determining them. The Parties agree that this Section 2.1(c) applies only to the Provo Receiver as defined in clauses (a) and (b) of Section 1.22 of this Agreement.

(d) Parts List. No later than [*] , TiVo shall provide a preliminary parts list to DIRECTV for the Provo Receiver. TiVo will provide any changes to the preliminary by [*] . In the event that TiVo [*] the parts list and changes [*] and [*] results in a [*] (assuming commercially reasonable efforts by DIRECTV and/or authorized manufacturers [*] any [*] ), TiVo will [*] of [*] , for actual [*] not to [*] .

2.2 DIRECTV Subscriber Commitment . By a date no later than [*] , DIRECTV commits to having [*] DVR/PVR Service Subscribers for the Provo Receivers, Two-Chip Receivers, and Reno Receivers activated after the Manufacturing Release of the Provo Receiver (with Version [*] Software). For avoidance of doubt, such minimum specifically excludes DVR/PVR Service Subscribers using solely Reno Receivers activated prior to the Manufacturing Release of the Provo Receiver, or DIRECTV Service Subscribers using solely a Stand Alone Receiver.

(a) If DIRECTV does not have a minimum of [*] such DVR/PVR Service Subscribers as of [*] , and DIRECTV has not exercised its option to the Technology License Agreement pursuant to Section 4.6 (Technology License), then, commencing on [*] , DIRECTV shall pay to TiVo the DVR/PVR Service Fee set forth in Exhibit B – Schedule 3 on any shortfall in the number of DVR/PVR Service Subscribers until such time as DIRECTV has paid a total of [*] in shortfall payments or there exists a total of [*] DVR/PVR Service Subscribers. The parties acknowledge and agree that the “shortfall” in subscribers shall decrease as DIRECTV adds additional DVR/PVR Service Subscribers.

 

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(b) If DIRECTV has exercised its option to the Technology License Agreement and the number of receivers licensed thereunder is less than [*] as of [*] , DIRECTV shall pay to TiVo a one-time fee of [*] per receiver for any shortfall in the number of licensed receivers and such payment shall be made [*] . If DIRECTV has exercised its Technology License option and paid the [*] per receiver shortfall in number of licensed receivers, TiVo shall credit DIRECTV’s account for such payment and DIRECTV may use such credit to offset per-receiver royalties due and payable to TiVo under the Technology License Agreement.

2.3 Version [*] Software Development and Deployment. TiVo and DIRECTV shall collaborate on the modification and enhancement of the Version [*] Software and the definition of the interface between the DIRECTV broadcast and back-haul infrastructure and the Provo and Reno Receivers as set forth below.

(a) Interface Specifications. Promptly after the Effective Date, TiVo and DIRECTV shall collaborate jointly to develop the data broadcast interface specifications, including the network and client interfaces (as finalized by DIRECTV in its sole discretion, the “ Interface Specifications ”), for the data broadcast systems, satellite up-link, and back-haul server infrastructure to be used in conjunction with and in support of the Provo Receiver, the Reno Receiver, Two-Chip Receiver, and the DVR/PVR Functionality. TiVo shall identify all network operations required to maintain service for the Reno Receivers, Provo Receivers and Two-Chip Receivers. The Interface Specifications will provide that the push data functionality associated with the Provo Receivers, Reno Receivers, and Two-Chip Receivers shall have a satellite broadcast architecture while the back-haul data functionality shall have a telco-based server and network architecture.

(b) Version [*] Software. TiVo shall develop the version [*] software (as accepted by DIRECTV upon successful completion of Final Acceptance Testing, the “Version [*] Software” ) for deployment to the Reno Receivers, Provo Receivers, and Two-Chip Receivers. The Version [*] Software shall enable the features and functionality in the Provo Receiver, Reno Receivers, and Two-Chip Receiver in accordance with the DIRECTV Technology, the Interface Specifications, and Exhibit A .

(c) Deliverables and Download of Version [*] Software. TiVo shall deliver to DIRECTV the Version [*] Software that is compliant with the Interface Specifications, DIRECTV Technology (except as agreed to in writing by the parties) and Exhibit A, for Manufacturing Release on the date set forth in the development schedule in Exhibit A , as such date may be modified pursuant to Section 2.3(f) (Project Change Requests) of this Agreement. Notwithstanding the foregoing, if the [*] Manufacturing Release [*] and [*] is directly [*] to any [*] by [*] , the date for Manufacturing Release of the Version [*] Software [*] , except that there will be [*] is directly [*] to any [*] . TiVo and DIRECTV shall download the Version [*] Software to the Provo Receivers and Reno Receivers using satellite bandwidth, provided that such method can be jointly validated by the parties. If the parties cannot so validate such method of download, the Version [*] Software will be downloaded to the Provo Receivers and Reno Receivers via the currently utilized telco network and system [*] .

(d) Transition to DIRECTV Infrastructure. DIRECTV shall convert the Provo, Reno and (if applicable) Two-Chip Receivers to utilize the DIRECTV satellite-based push network for all DIRECTV push content and data within [*] after the start of downloads of the initial Version [*] Software download to the Provo Receivers, Reno Receivers, and (if applicable) Two-Chip Receivers. At any time until [*] after the Manufacturing Release of the Version [*] Software, DIRECTV shall

 

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notify TiVo in writing if DIRECTV, at its discretion, will use the DIRECTV satellite-based push network for all TiVo push content and data (the “TiVo Data Conversion Notice”). Upon receipt of the TiVo Data Conversion Notice, the Parties will work together to enable the use of the DIRECTV satellite-based push network for all TiVo push content and data. For a period starting on the Second Amendment Effective Date and ending [*] following DIRECTV’s initial use of DIRECTV’s satellite-based push network for all TiVo push and content data, TiVo shall be allowed to continue to use the method employed by TiVo as of the Second Amendment Effective Date (such method referred to as “Plan Y”) to distribute TiVo push content and data. If DIRECTV does not provide TiVo with the TiVo Data Conversion Notice, then TiVo shall be allowed to continue to use Plan Y to distribute TiVo push content and data to Legacy Combination Receivers during the term of the Services Agreement (defined in Section 4.5 of this Agreement). TiVo shall be allowed to use Plan Y to distribute TiVo push content and data to DIRECTV TE Receivers, except to the extent a different method of distribution is provided in the TE Solution Statement of Work or any DIRECTV-initiated PCR (it being understood, however, that any such DIRECTV-initiated PCR for a different method of distribution shall not decrease the amount of content that TiVo would otherwise be permitted to distribute if the Plan Y method was utilized). At DIRECTV’s discretion, DIRECTV may also convert the Provo, Reno and Two-Chip Receivers to utilize the DIRECTV telco-based back-haul network for the back-haul of all or selected data. DIRECTV and TiVo shall collaborate to ensure such a transition to the DIRECTV infrastructure is orderly. Following the Version [*] Software download, DIRECTV shall have sole discretion and authority to provision and operate the DVR/PVR Functionality (including the ability to contract out such provisioning and operation to TiVo and/or any other party) on all Combination Receivers. TiVo will continue to have sole responsibility and authority for any Stand Alone Receivers.

(e) Server Services. For [*] after the start of downloads of the initial Version [*] Software download to the Provo Receivers, Reno Receivers, and (if applicable) Two-Chip Receivers, TiVo shall continue to provide the server support to enable the applicable DVR/PVR Functionality in substantially the same manner as provided as of the Effective Date or as otherwise mutually agreed to by the parties ( “Server Services” ). Thereafter, TiVo shall have no obligations to provide any such Server Services with the sole exception of downloading the Version [*] Software to those Provo Receivers, Reno Receivers, and (if applicable) Two-Chip Receivers that were not manufactured with the Version [*] Software. Notwithstanding the foregoing, in the event of a breach of the covenant in Section 3.1 of the Third Amendment to this Agreement, TiVo shall be obligated to provide such Server Services as required to support the TiVo Service Data Type(s) giving rise to the breach until [*] after the modified Version [*] Software is accepted by DIRECTV.

(f) Project Change Requests. Each party may initiate a project change request ( “PCR” ) regarding the features of TiVo Software for Legacy Combination Receivers by submitting to the other party a detailed description of the PCR in the form attached as Exhibit I (Project Change Request Form) . The parties will work together in good faith to estimate the feasibility, schedule and cost of each PCR, with such estimate to be completed within 30 days of a party’s initiation of the PCR. With respect to PCRs initiated by DIRECTV, each such PCR shall be priced by TiVo at the T & M Rate. The party initiating the PCR will accept or reject the PCR within 30 days of completion of the estimate. Once provided with schedule and cost, neither party is under an obligation to accept the PCR, provided that TiVo may not reject a PCR initiated by DIRECTV if DIRECTV agrees to pay for the changes described in the PCR at the T & M Rate and provides TiVo a commercially reasonable amount of time to perform the changes described in the PCR, including, without limitation, all development and testing necessary to implement such changes. Upon mutual acceptance of the PCR,

 

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the Parties will work together to prepare a finalized development schedule, product requirement document and associated fee schedule in order to implement the accepted PCR. In the event that TiVo [*] provided for in an approved PCR initiated by DIRECTV for a Legacy Combination Receiver [*] DIRECTV shall [*] , provided that DIRECTV shall [*] with respect to the duration of any Non-TiVo Delay occurring subsequent to [*] (a “Subsequent Non-TiVo Delay”) that exceeds [*] . For the sake of clarity, (i) DIRECTV [*] pursuant to this Section 2.3(f) [*] prior to such [*] regardless of the date [*] , and (ii) DIRECTV shall [*] as set forth above even if [*] provided for herein. Notwithstanding anything to the contrary in this Section 2.3(f), in no event will [*] pursuant to this Section 2.3(f) at any given time (regardless of the number of outstanding PCRs under this Section 2.3(f)). The “ [*] ” shall mean the longer of (a)  [*] , (b) the [*] specified in the PCR, plus [*] (i.e., [*] specified in the PCR), or (c) if applicable, such time [*] ; provided, however, the [*] shall be [*] in each case to reflect [*] , plus [*] , as applicable (i.e., [*] ). Upon TiVo’s [*] , DIRECTV shall [*] pursuant to this Section 2.3(f) within [*] . DIRECTV shall [*] to the duration of any Subsequent Non-TiVo Delay that exceeds [*] ys within the period provided for in Section 3.4.

(g) Optional Features in Version [*] Software. The Parties agree that [*] will be features of the Version [*] Software. TiVo agrees that such features shall not be activated for customer use or otherwise be visible to customers without written agreement between the Parties regarding the terms and conditions (including economic terms) under which such features would become available to customers. TiVo agrees that TiVo’s activation of those features shall occur via DIRECTV’s satellite network.

2.4 Corrections. If at any time during the Term of this Agreement, DIRECTV or TiVo determines (i) that there is a defect in the design for any of the Legacy Combination Receivers as provided by TiVo under this Agreement; (ii) that a Legacy Combination Receiver design as provided by TiVo or the TiVo Software as provided by TiVo does not comply with the DIRECTV Technology, Exhibit A (Development Schedule and Specifications), the Interface Specifications (if applicable), the ATSC specifications (if applicable), or any applicable product requirement document or specifications attached to any amendment to this Agreement, each of the foregoing as amended by any mutually agreed PCR; (iii) that there is a defect in the design of the TE Solution as provided by TiVo under this Agreement; or (iv) that the TE Solution as provided by TiVo does not comply with the DIRECTV Technology or the TE Solution Statement of Work, each of the foregoing as they existed on the date of successful completion of Final Acceptance Testing of the first DIRECTV TE Receiver (“ DIRECTV TE Acceptance ”) under this Agreement, and each of the foregoing as amended by any mutually agreed PCR or amendment to this Agreement, TiVo has an obligation to promptly correct such defect or non-compliance at TiVo’s sole cost and expense in accordance with the provisions set forth in this Section 2.4.

(a) DIRECTV shall promptly notify TiVo of any such defect or non-compliance and shall provide TiVo with sufficient supporting information and materials reasonably requested by TiVo to verify, diagnose and correct the reported defect or non-compliance. In the event of a dispute regarding whether there is a defect or non-compliance, or failure by TiVo to promptly perform such correction, DIRECTV and TiVo shall immediately communicate such dispute to the appropriate business/project manager when such party becomes aware of the dispute. If such dispute cannot be mutually resolved by such business/project managers within five (5) business days, then such dispute shall be immediately referred to the senior management of each party for discussion and attempted resolution. Further, the parties agree to collaborate on a remedy of such defect as promptly as commercially reasonable, but not more than ten (10) business days from the time senior management begin discussions. The foregoing represents DIRECTV’s sole and exclusive remedy for any defect or non-compliance in the designs or

 

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TiVo Software provided hereunder; provided, that in the event TiVo materially breaches its obligations to correct such defect or non-compliance, DIRECTV shall be entitled to exercise any and all legal and equitable remedies available in accordance with the terms of this Agreement, including, but not limited to, release of the deliverables from the Software Escrow Account, as provided pursuant to Article XI (Network Operation Continuity). For five (5) years following the end of the Term of this Agreement, upon DIRECTV’s request, TiVo agrees to provide the services set forth in this Section 2.4 at commercially reasonable rates and subject to reasonable terms and conditions consistent with those set forth herein.

(b) TiVo shall maintain sufficient staff and resource availability to fulfill its correction obligations under this Section 2.4. In the event of any defect or non-compliance that prevents operation of the material functions of any Combination Receiver, TiVo shall promptly allocate no less than 2 dedicated personnel with appropriate experience and expertise to diagnose and correct such defect or non-compliance, until such time as the correction is completed. In each instance, TiVo shall cooperate with DIRECTV and provide sufficient resources to permit the completion of any necessary TiVo Software download to all affected Combination Receivers within a timeframe of no less than nine (9) weeks from the start of such download, provided that such timeframe will be increased for any delays not attributable to TiVo. In the event that the parties determine that an issue reported by DIRECTV as a defect or non-compliance is the result of a deficiency in any software, hardware, or any other element of a Combination Receiver not provided by TiVo (e.g., the DIRECTV DVR Platform), DIRECTV will, subject to the terms of this Agreement, use commercially reasonable efforts to resolve the issue, and TiVo will support resolution of the issue by testing the TiVo Software in conjunction with updates or other means of resolving the issue that are provided by DIRECTV or a vendor of DIRECTV.

2.5 [Intentionally left blank.]

2.6 Branding. At the time of delivery by TiVo for Manufacturing Release, the Version [*] Software, Version [*] Software, Provo Receiver, Two-Chip Receiver and the DIRECTV TE Receiver shall comply with the TiVo OEM Branding Guidelines set forth in Exhibit H and the DIRECTV Trademark and Style Guide set forth in Exhibit M . In the event Exhibit H and the Exhibit M conflict, Exhibit M shall supersede. No later than the date of execution of the TE Solution Statement of Work, the Parties will negotiate in good faith any changes to Exhibit H necessary or appropriate for the DIRECTV TE Receiver as contemplated in the TE Solution Statement of Work.

2.7 Wink Option. Within [*] of the Effective Date, TiVo shall provide to DIRECTV a good faith estimate of the additional costs and schedule impact to include the Wink functionality in the Version [*] Software.

2.8 Hard Drive Qualification. Through [*] , TiVo shall [*] qualify in accordance with TiVo’s qualification requirements, except as specifically identified below or in Attachment 3, any hard drive for the Provo Receiver design and (if applicable) the Two-Chip Receiver design if such hard drive is qualified for the TiVo-branded Stand Alone Receivers after the Third Amendment Effective Date. In addition, TiVo agrees that it will qualify [*] hard drives as necessary to maintain at least one qualified [*] hard drive through [*] for the Provo Receiver design and (if applicable) the Two-Chip Receiver design. TiVo shall verify that any hard drive qualified by TiVo pursuant to this Section 2.8, when tested in the Trinity Hardware Reference Design (as defined in Section 2.1 of Attachment 2 to the Second Amendment to this Agreement) chassis, [*] . TiVo shall, upon obtaining information that a qualified [*] hard drive will be “end-of-lifed” by the manufacturer, promptly notify DIRECTV of the expected end date of production or availability of any previously qualified hard drive.

 

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2.9 Notice and Effect of Delay.

(a) Notice. In any case where TiVo believes there is a potential for a delay to a date set forth under this Agreement including, but not limited to, the TE Solution Statement of Work and/or any PCR hereunder, due to any material action, inaction, or omission by DIRECTV, NDS, any DIRECTV-designated manufacturer, Broadcom solely with respect to the Trinity Hardware, the Phoenix Hardware and the DIRECTV DVR Platform, or any other DIRECTV-specified vendor (each such case, a “ Non-TiVo Delay ”), TiVo shall use commercially reasonable efforts to mitigate or avoid any such delay and shall make good faith efforts to notify DIRECV of TiVo’s efforts to mitigate or avoid such delay, provided that TiVo’s failure to provide such notice shall not constitute a breach of the Agreement. If, notwithstanding such efforts to mitigate or avoid any such delay, TiVo believes that any such date must be extended or delayed as a direct result of such a Non-TiVo Delay, TiVo shall provide prompt written notice to DIRECTV (but in any event, no later than [*] after TiVo reasonably becomes aware that such Non-TiVo Delay will cause a delay to a date set forth under this Agreement including, but not limited to, the TE Solution Statement of Work and/or any PCR hereunder) setting forth TiVo’s understanding regarding such delay, the anticipated consequences of such delay and the steps taken by TiVo to mitigate or avoid such delay. TiVo’s request for such an extension or delay based on a Non-TiVo Delay is subject to approval by DIRECTV, such approval not to be unreasonably withheld, conditioned or delayed. In the event of any dispute regarding an extension or delay hereunder, the Parties shall attempt to resolve such dispute pursuant to the dispute resolution provisions of Section 3.11 of this Agreement.

(b) Effect. In the event that the Parties agree that any Non-TiVo Delay has occurred and that such Non-TiVo Delay has the effect of a milestone date in this Agreement (including but not limited to the TE Solution Statement of Work and/or any PCR hereunder) being extended or delayed, DIRECTV shall pay to TiVo [*] any associated milestone fee on the date such milestone was originally planned for all milestones that are extended or delayed. With respect to all milestones other than final milestones, DIRECTV shall pay the remaining [*] of any relevant milestone fee upon the earlier of: (i) completion of the relevant milestone; or (ii)  [*] in which the relevant milestone was originally planned. With respect to final milestones, DIRECTV shall pay [*] the final milestone fee [*] . Notwithstanding the foregoing, DIRECTV shall not be required to pay TiVo [*] of any associated milestone as set forth in this Section 2.9(b) if (i) the Non-TiVo Delay is [*] to provide [*] with respect to the [*] and (ii) the parties are unable to agree upon [*] .

2.10 TE Solution Development. Subject to the terms and conditions of this Section 2.10, TiVo shall develop the TE Solution as set forth in the TE Solution Statement of Work (as amended by any mutually agreed PCR related thereto) for use with the designated DIRECTV DVR Platform as set forth below. Notwithstanding anything herein, any issue or dispute concerning or relating to the development of the TE Solution Statement of Work as provided for herein shall not be subject to arbitration pursuant to Section 3.11 below.

(a) TE Solution Statement of Work Contents. Unless otherwise mutually agreed by the Parties, the TE Solution Statement of Work will include, at a minimum, the following elements: (i) a designation of the first DIRECTV DVR Platform for the TE Solution using the DVR platform used by a DIRECTV manufacturer for one of the following DIRECTV DVR models: [*] ; (ii) features

 

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and functionality to be enabled by the TE Software; (iii) features and functionality of remote control for use with TE Software; (iv) any additional hardware or software to be developed by TiVo (e.g., bezel design; tools to minimize operational dependencies); (v) development and integration plan; (vi) acceptance testing criteria; (vii) estimated man-hours required to complete development, which [*] , and reimbursement procedures for required travel and equipment provided by TiVo to DIRECTV that is to be owned by DIRECTV; (viii)  [*] all development fees payable by DIRECTV for the TE Solution Statement of Work which [*] ; (ix) payment schedules and associated milestones; (x) respective obligations of TiVo and DIRECTV; and (xi) any dependencies on third parties and any additions or modifications to Exhibit C (Third Party Technology). For clarity, no features or functionality that have not been documented for DIRECTV (e.g. undocumented secret codes, short cuts and backdoors) shall be included or enabled by the TE Software without DIRECTV’s written consent.

(b) TE Solution Statement of Work Development. The Parties will develop the TE Solution Statement of Work in accordance with this Section 2.10(b). Promptly after the Restatement Effective Date (and in any event no later than [*] following the Restatement Effective Date) and thereafter until execution of the TE Solution Statement of Work, DIRECTV shall provide TiVo access to a project manager and such technical and other information as is reasonably necessary to complete a preliminary version of the TE Solution Statement of Work. DIRECTV shall use commercially reasonably efforts to provide such information to TiVo on a timely basis. In the case that the [*] or [*] is designated as the first DIRECTV DVR Platform for the TE Solution, such access shall include [*] of the applicable DIRECTV DVR model suitable for development, along with access to relevant Platform Documentation for the [*] or [*] , as applicable. If the [*] is designated as the first DIRECTV DVR Platform for the TE Solution, promptly after the Restatement Effective Date, and in any event no later than the timeframe set forth in Section 2.11(b)(ii), DIRECTV shall provide TiVo with relevant Platform Documentation for the [*] and [*] for such model suitable for development. Promptly after the Restatement Effective Date, DIRECTV shall authorize all relevant DIRECTV vendor(s) (but not more than one manufacturer selected by TiVo at any time) to provide TiVo with such Platform Documentation in such vendor’s possession. To the extent DIRECTV owns the Platform Documentation or otherwise has the right to provide independent contractors with such Platform Documentation without the further consent of a third party, DIRECTV shall provide such Platform Documentation to TiVo promptly after the Restatement Effective Date (but DIRECTV will have no obligation to support TiVo with third party information contained within the Platform Documentation), and will otherwise use commercially reasonable efforts to obtain any required third party consents promptly after the Restatement Effective Date, provided that [*] (i)  [*] , (ii)  [*] (provided that once such delay would not be caused, DIRECTV shall continue to undertake reasonable efforts to obtain consents and [*] as provided for above), or (iii) otherwise [*] with [*] . Failure of DIRECTV to provide information reasonably requested by TiVo in a timely manner will be considered a Non-TiVo Delay. Subject to the foregoing, within [*] after the Restatement Effective Date (as extended for any Non-TiVo Delay), TiVo shall use commercially reasonable efforts to prepare the preliminary version of the TE Solution Statement of Work and deliver the same to DIRECTV. The Parties will negotiate in good faith which capabilities/features to include in the TE Software when TiVo and DIRECTV capabilities/features are duplicative, provided that in the event that the parties cannot agree because each party prefers its own capabilities and features for the DIRECTV TE Receiver, the [*] capabilities and features shall be included (including the implementation of such capabilities/features in such a way that [*] ). Notwithstanding anything to the contrary in this Section 2.10, unless otherwise mutually agreed, all capabilities/features must be Acceptable Features (as defined in Section 2.12 below). The Parties shall use reasonable commercial efforts to finalize the TE Solution Statement of Work within [*] after the Restatement Effective Date (as extended for any Non-TiVo Delays) or by

 

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such later date as is mutually agreed in writing by the Parties’ respective project managers. For clarification, TiVo shall be primarily responsible for the work required in preparing and developing the Statement of Work and DIRECTV shall provide information and efforts as provided for herein. If the parties are unable to agree on the terms of the TE Solution Statement of Work, TiVo may terminate this Agreement for Non-TiVo Delay as provided for in Section 9.4.

(c) Performance of Obligations. The parties shall perform their respective obligations related to design, development, testing and deployment of the TE Solution in a diligent, timely and workmanlike manner.

(d) Vendor Cooperation. DIRECTV will use commercially reasonable efforts to ensure that DIRECTV vendors with technology or intellectual property that is required for TiVo to develop the TE Solution enter into commercially reasonable agreements with TiVo (or DIRECTV) to provide TiVo (or DIRECTV and its contractors) with reasonable cooperation and support along with any technology or licenses required for the TE Solution. If any such DIRECTV vendor fails to enter into such an agreement on such terms, or breaches its obligations thereunder, or [*] , or will otherwise [*] , then the parties will discuss a proposed resolution, which may (but is not required to) include further discussions with such DIRECTV vendor, subject to the terms provided for herein. If the issue is not resolved within [*] from TiVo’s notice to DIRECTV, TiVo and DIRECTV will discuss and negotiate in good faith a workaround that enables TiVo to complete the TE Solution without such vendor’s cooperation, support, technology or licenses. If the Parties fail to mutually agree to a workaround within [*] , either party may pursue dispute resolution with respect to an appropriate workaround under Section 3.11, provided that, in no event shall any arbitration decision resulting from such process [*] . Notwithstanding the foregoing, in no event shall DIRECTV be required to incur costs of more than [*] (including, but not limited to, any increase in the cost of any other DIRECTV DVR or product) in the aggregate during any [*] during the Term as a direct consequence of obtaining vendor cooperation as provided for in this Section 2.10(d).

(e) Notification of DIRECTV TE Acceptance. DIRECTV shall notify TiVo upon DIRECTV TE Acceptance.

2.11 New DIRECTV DVR Platforms and TiVo Features.

(a) DIRECTV DVR Platform and TiVo Feature Planning. Beginning [*] after delivery of a Functional Prototype (as defined below) and continuing through the remainder of the Term, the parties shall make available executives with responsibility for the features being discussed for any existing or future DIRECTV TE Receiver to meet in person or via conference call every [*] . At such meetings or conference calls, such executives may, subject to the terms of this Agreement, discuss current and future DIRECTV DVR platforms and current or future TiVo features, functions and capabilities, provided, however , that nothing in this Section 2.11(a) requires either party to disclose any Confidential Information to the other party.

(b) New DIRECTV DVR Platforms. Upon receipt of a Functional Prototype (as defined below) for the first TE Solution, DIRECTV shall provide TiVo with access to [*] information regarding any New Platforms (as defined below) as set forth below in this Section 2.11(b). DIRECTV is under no obligation to provide additional information or assistance regarding New Platforms (unless otherwise set forth in this Agreement or as mutually agreed in a PCR), and TiVo will treat all information provided under this Section 2.11(b) as Confidential Information under this Agreement.

 

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“ New Platforms ” shall be defined as any new, revised or updated DVR hardware platform of DIRECTV, excluding DVR hardware platforms developed pursuant to a contractual agreement with a third party [*] .

(i) “ Functional Prototype ” shall be defined as a prototype of the TE Software for the first TE Solution that [*] after testing (in a similar manner as [*] ) is likely (after further development by TiVo) to result in a TE Solution that will pass DIRECTV TE Acceptance. Once a Functional Prototype has been delivered and thereafter during the Term, DIRECTV shall provide TiVo with access to any Preliminary Hardware Documentation (as defined below) for New Platforms then available to DIRECTV. “ Preliminary Hardware Documentation ” shall be defined as DIRECTV requirements documents, hardware design specification sheets, architectural block diagrams, identification of core chip set design, and other similar information regarding the basic hardware design elements as to which DIRECTV has executed third party vendor contracts or otherwise placed an order with a third party vendor using a purchase order or other mechanism. Thereafter during the Term, DIRECTV shall provide TiVo with the Preliminary Hardware Documentation for each New Platform when it becomes available. Notwithstanding the foregoing, DIRECTV shall provide TiVo with Preliminary Hardware Documentation for the DIRECTV DVR Model [*] (or, if there is no DIRECTV Model [*] , the successor to DIRECTV DVR Model [*] ) no later than [*] . It is expressly understood that the Preliminary Hardware Documentation is subject to change from time to time, and DIRECTV makes no representation or warranty that it shall remain accurate, although DIRECTV will use commercially reasonably efforts to notify TiVo as promptly as practicable after it confirms that a material change to the information delivered to TiVo in the Preliminary Hardware Documentation has occurred. TiVo further understands and acknowledges that DIRECTV shall have no obligation to provide TiVo with information or explanations regarding the Preliminary Hardware Documentation, or to authorize DIRECTV’s vendors to do so, and TiVo acknowledges that DIRECTV does not intend to devote resources to discussion of the Preliminary Hardware Documentation. TiVo agrees that it shall not request support or assistance from DIRECTV’s vendors to discuss or review the information contained in the Preliminary Hardware Documentation.

(ii) Once DIRECTV authorizes one or more manufacturers to produce a run of at least [*] units in the aggregate of a New Platform, DIRECTV, at no cost to TiVo, shall provide TiVo with [*] such units when available. On and after delivery of such DVRs to TiVo as set forth above, DIRECTV also shall provide TiVo with access to a product manager to answer questions with respect to such development units.

(iii) Once DIRECTV authorizes one or more manufacturers to produce a run of at least [*] units in the aggregate of a New Platform, DIRECTV will provide TiVo with Platform Documentation for the applicable New Platform and provide such other technical information as is reasonably necessary for TiVo to develop and initiate a PCR (or respond to a PCR initiated by DIRECTV) to port the TE Software to such New Platform. Subject to the terms of this Agreement, including the procedures set forth in Section 2.3(f), the parties shall negotiate any such PCR in good faith, including scope, schedule, cost and responsibilities, and (i) TiVo may not withhold or delay approval of such a PCR initiated by DIRECTV if DIRECTV agrees to pay to port the TE Solution to such New Platform at the T & M Rate and provides TiVo a commercially reasonable amount of time to perform the changes described in the PCR, including, without limitation, all development and testing necessary to implement such changes, and (ii) DIRECTV may not withhold or delay approval of such a PCR initiated by TiVo if TiVo agrees to pay all costs to port the TE Software to a new DIRECTV TE Receiver based on such New Platform, provided that any new or modified feature, function or capability in such new

 

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DIRECTV TE Receiver is an Acceptable Feature (as defined in Section 2.12 below). Unless otherwise authorized by DIRECTV in writing (or otherwise set forth in this Agreement or set forth in a mutually agreed PCR), TiVo shall not contact, exchange information, or discuss any such New Platform with any of DIRECTV’s vendors until such New Platform has been approved by DIRECTV for consumer launch.

(iv) Subject to TiVo’s compliance with Article X (Confidentiality) and the last sentence of Section 2.11(b)(iii) above, nothing in this Agreement will prevent TiVo from discussing, reviewing or otherwise obtaining support from any vendor in connection with TiVo’s other (non-DIRECTV related) business activities.

(c) New or Modified TiVo Features, Functions or Capabilities. Subject to the terms and conditions of this Agreement, including the procedures set forth in Section 2.3(f), at any time after Commercial TE Launch, either party may initiate a PCR to update the TE Solution to add or modify features, functions or capabilities of DIRECTV TE Receivers.

(i) TiVo may not withhold or delay approval of such a PCR initiated by DIRECTV if DIRECTV agrees to pay for the changes described in the PCR at the T & M Rate and provides TiVo a commercially reasonable amount of time to perform the changes described in the PCR, including, without limitation, all development and testing necessary to implement such changes. In the event that TiVo [*] provided for in an approved PCR initiated by DIRECTV under this Section 2.11(c)(i) [*] DIRECTV shall [*] (except in the case of [*] under this Section 2.11(c)(i), DIRECTV shall [*] , provided that DIRECTV shall [*] with respect to the duration of any Subsequent Non-TiVo Delay that exceeds [*] . For the sake of clarity, (a) DIRECTV [*] pursuant to this Section 2.11(c)(i) [*] prior to such [*] regardless of the date [*] , and (b) DIRECTV shall [*] (or [*] if applicable) of the [*] as set forth above [*] provided for herein. Notwithstanding anything to the contrary in Section 2.3(f) or this Section 2.11(c)(i), in no event will more than [*] pursuant to Section 2.3(f) or this Section 2.11(c)(i) at any given time (regardless of the number of outstanding PCRs). Upon TiVo’s [*] , DIRECTV shall [*] pursuant to this Section 2.11(c)(i) within [*] . DIRECTV shall [*] to the duration of any Subsequent Non-TiVo Delay that exceeds [*] within the period provided for in Section 3.4. In the event DIRECTV initiates a PCR to implement changes necessary to reflect a change in a third party provider of features or services to the DIRECTV TE Receiver, the parties will work together to develop an appropriate transition from the original third party provider, including termination of applicable contractual obligations to such third party with respect to such features or services of the DIRECTV TE Receiver.

(ii) DIRECTV may not withhold or delay approval of a PCR initiated by TiVo pursuant to this Section 2.11(c), provided that TiVo agrees to pay for the changes described in the PCR, and provided further that the proposed feature, function or capability is an Acceptable Feature (as defined in Section 2.12 below). Upon the conclusion of Final Acceptance Testing for a new release of TE Software (or any other change to the TE Solution, if applicable), DIRECTV shall (1)  [*] , begin to download such software update to DIRECTV TE Receivers in the field, and (2) update the master disk for DIRECTV TE Receiver units in production (and update the TE Solution for new production, if applicable), [*] , in each case subject to compatibility of such new release with particular DIRECTV TE Receiver models.

(d) Removal of Features, Functions Capabilities. DIRECTV reserves the right to require the disablement or removal of any feature, function or capability in a DIRECTV TE Receiver that DIRECTV reasonably determines is (i)  [*] , or (ii)  [*] with respect thereto. Any such disablement or removal will follow the procedures for DIRECTV initiated PCRs set forth in Section 2.11(c)(i) above to the extent changes to the TiVo Software are necessary to disable or remove such features, functions or capabilities.

 

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2.12 Acceptable Features. Any feature, function or capability proposed for inclusion in any DIRECTV TE Receiver pursuant to Sections 2.10 or 2.11 above must, unless otherwise agreed by DIRECTV [*] , (i) comply with DIRECTV’s written requirements for content security ( e.g. , encryption, etc.); (ii) utilize solely DIRECTV’s head end support, and provide all data and contact for services directly to DIRECTV (and not through TiVo); (iii) not be likely to [*] , as reasonably determined by DIRECTV (except that this subsection (iii) will not apply in the case of any feature, function or capability that exists and is then currently enabled and documented for DIRECTV (e.g. features other than undocumented shortcuts, secret codes and backdoors) in another non-TiVo DIRECTV DVR or any Legacy Combination Receiver, subject to changes in implementation from the Legacy Combination Receiver as required by DIRECTV in its reasonable discretion); (iv) in the case of any feature, function or capability that exists and is then currently enabled and documented in a Legacy Combination Receiver, the method of implementation of such feature, function or capability shall be determined by [*] , and in the case of a feature, function or capability that exists in any other DIRECTV DVR, unless otherwise agreed, the [*] features, functions or capabilities shall be selected (including the implementation of such capabilities and features) in such a way that the [*] ), (v) in the case of features, functions or capabilities that require ongoing third party commercial relationships (e.g., content or service providers), such third parties shall [*] , and shall enter into such relationships [*] , and (vi) not, in DIRECTV’s reasonable judgment, [*] or be [*] . Any feature, function or capability proposed by TiVo for inclusion in any DIRECTV TE Receiver pursuant to Sections 2.10 or 2.11 will only be deemed to be an “ Acceptable Feature ” if, in addition to the requirements set forth above in this Section 2.12, (x) the proposed feature, function or capability is [*] , and such [*] ; (y) another DIRECTV DVR has the proposed feature, function or capability (or a substantially similar or analogous feature, function or capability) or DIRECTV has a documented plan to implement such feature, function or capability (or a substantially similar or analogous feature, function or capability) within [*] of such TiVo request; or (z) the proposed feature, function or capability (or a substantially similar or analogous feature, function or capability) appears on Exhibit R (Features List).

ARTICLE III.

BUY DOWN AND PAYMENT OBLIGATIONS

3.1 Reno Receiver Buy-Down during First Period. To encourage the continued retail sales of the Reno Receivers from the date of this Agreement through [*] (the “First Period” ), TiVo and DIRECTV shall continue to make buy-down payments (the “Reno Buy-Down Amount” ) as set forth in the Letter Agreement dated September 28, 2001, as amended on January 7, 2002 (as amended, the “Buy Down Letter Agreement” ).

3.2 Reno Receiver Buy-Down during Second Period. For the period beginning on [*] (the “Second Period” ), TiVo shall no longer be obligated to pay any portion of the Reno Buy-Down Amount and the DIRECTV portion of the “Revenue Share” (defined as the percentage of the fee charged by DIRECTV to subscribers for access to the DVR/PVR Service) from the Reno Receiver sold during the Second Period shall be [*] (and TiVo portion shall be [*] ) as set forth in Exhibit B – Schedule 3 attached hereto; provided, that DIRECTV continues to make Reno Buy-Down Amount payments of a minimum of [*] per Reno Receiver sold to end users, consistent with DIRECTV’s current practices regarding retailer chargebacks. DIRECTV shall continue to account for and remit TiVo’s [*] portion of the Revenue Share in accordance with the administrative procedures set forth in the (i) Original Marketing Agreement, and

 

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(ii) the Buy Down Letter Agreement; provided , however , that in the event TiVo fails the “Liquidity Test” (as defined in Exhibit F ), then beginning on the date of such failur