TiVo 2003 Annual Report Download - page 77

Table of Contents
Stockholder and Registration Rights Agreement
In conjunction with the Investment Agreement, TiVo also entered into a Stockholders and Registration Rights Agreement with AOL, dated as of June 9,
2000. Under the Stockholders and Registration Rights Agreement, as amended by the Funds Release Agreement, TiVo was obligated, upon the request of
AOL, to register for resale under the Securities Act of 1933, as amended, the shares of common stock and Series A convertible preferred stock sold to AOL
pursuant to the Investment Agreement, including the shares of common stock issuable upon exercise of the warrants, under the circumstances described
below. AOL's registration rights expired on September 9, 2002.
Pursuant to the Stockholders and Registration Rights Agreement, AOL also agreed to certain limitations on its rights as a TiVo stockholder until the
earlier of eight years from the date of the agreement or until AOL no longer holds 10.0% of the outstanding shares of TiVo common stock. As of January 31,
2004, AOL held less than 10% of the outstanding shares of TiVo common stock. The limitations include:
• AOL will be entitled to vote at its discretion the stock it owns representing up to 19.9% of the Company's outstanding voting securities, but,
subject certain limitations, will be required to vote all of the stock that it owns representing in excess of 19.9% of TiVo's outstanding voting
securities in accordance with the recommendation of the Company's Board of Directors;
• Without TiVo's prior written consent, AOL is not permitted to sell the Company's securities to a transferee that, to AOL's knowledge, would
thereafter own or have the right to acquire in excess of 5.0% of the Company's outstanding capital stock, except in the event of a third party
acquisition proposal, following a change of control or in other limited circumstances. In addition, TiVo has a right of first offer with respect to any
sales of its securities by AOL other than sales pursuant to a third party acquisition proposal, following a change of control or pursuant to a bona
fide underwritten public offering or Rule 144 under the Securities Act. AOL also has the right to transfer the Company's securities to its affiliates,
provided that any such affiliate agrees to be bound by the terms of the Stockholders and Registration Rights Agreement, and that it agrees to
transfer such securities back to AOL if it ceases to be an affiliate of AOL;
• AOL will not, subject to certain exceptions, acquire additional equity securities of TiVo without the Company's prior written consent;
• AOL will not make any solicitation of proxies or seek to influence any person with respect to TiVo voting securities without the Company's prior
written consent; and
• AOL will not submit any offer or purchase proposal that is required to be made public by TiVo for any merger, consolidation, purchase of
substantial assets or tender offer for the Company's securities without the Company's prior written consent.
In addition, the Stockholders and Registration Rights Agreement granted AOL the right to designate one person for election to the Company's Board of
Directors. In lieu of a Board member, AOL had the right to appoint an observer to attend all regular and special meetings of the Board of Directors. AOL was
also entitled under the Stockholders and Registration Rights Agreement to receive financial and other information from TiVo, and have access to TiVo
management. AOL waived these rights pursuant to the Funds Release Agreement.
Funds Release Agreement
In addition to providing for the release of the restricted funds and the amendments to the Company's other agreements with AOL described above, TiVo
and AOL also agreed to the following pursuant to the Funds Release Agreement that, at any time when AOL is no longer an affiliate of the Company, and
subject to owning a minimum number of shares, AOL will be required to notify TiVo before making a block sale of greater than 500,000 shares at a discount
of greater than a specified percentage and TiVo will have the option, in lieu of such block sale, to facilitate an underwritten secondary offering of such shares.
Initial Common Stock Warrants A and B
Under the terms of the Investment Agreement, the Company issued two initial warrants that vested immediately:
• one warrant to purchase up to 2,308,475 shares of common stock at an initial exercise price of $23.11 per share,
• one warrant to purchase up to 295,428 shares of common stock at an initial exercise price of $30.00.
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