TiVo 2005 Annual Report Download - page 92

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Table of Contents
The Company also signed an Amendment to Marketing Agreement and Tax Agreement with DIRECTV on February 15, 2002. The Amendment to
Marketing Agreement and Tax Agreement amends the Marketing Agreement dated April 13, 1999 and the Tax Agreement dated July 24, 2001. The
amendment provides that several terms of the Marketing Agreement, including those relating to, among other things, the billing system, customer service and
customer data, be replaced by the terms set forth in the Development Agreement. In conjunction with the execution of the Development Agreement, the
amendment also revises provisions relating to, among other things bandwidth allocation, promotional activities, the subscriber billing system and certain
indemnification obligations set forth in the Marketing Agreement. Additionally, this amendment affirms that revenue share arrangements with DIRECTV for
TiVo stand-alone receivers are permanent and does not change from revenue share arrangements previously in effect for which DIRECTV receives a
percentage of TiVo's subscription revenues attributable to DIRECTV/TiVo subscribers. These amounts are included in sales and marketing expense. For
product lifetime subscription revenue share, the Company capitalized upfront revenue share payments and expenses the revenue share payments ratably over a
four-year period, in the same manner that it recognizes product lifetime subscription revenues. Monthly subscription revenue share is expensed on a monthly
basis as they are earned by DIRECTV. The Amendment also modifies the Company's indemnity obligations under the Tax Agreement, such that, following a
specific milestone date set forth in the Development Agreement, DIRECTV will have responsibility for taxability determinations.
On October 31, 2002, the Company entered into the First Consolidated Amendment to the Development Agreement. The amendment revised provisions
related to, among other things, the manufacturing release date of the Two-Chip option.
On December 20, 2002, the Company entered into the Second Amendment to the Development Agreement dated February 15, 2002 with DIRECTV.
The amendment revises provisions relating to, among other things, the specifications, development schedules, milestone payment schedule and transition
services for the development and manufacture of Series2 DIRECTV receivers and new versions of the associated client software.
On January 8, 2003, the Company entered into the Third Amendment to the Development Agreement dated February 15, 2002 with DIRECTV. The
amendment adds provisions relating to, among other things, the product requirements, the development schedule and the milestone payment schedule for the
development of a TiVo-DIRECTV combination device capable of receiving and recording high-definition television signals and new versions of the
associated client software. The amendment also revises provisions relating to, among other things, various obligations of the parties under the Development
Agreement.
During the year ended January 31, 2004, the Company entered into the following agreements with DIRECTV: The Second Consolidated Amendment to
Marketing Agreement, dated as of June 30, 2003 and Amendment No. 1 to the Services Agreement, dated as of October 3, 2003. These amendments revise
provisions relating to, among other things, the amount, timing and duration of revenue share payments made by the Company to DIRECTV for each
subscription from integrated DIRECTV satellite receivers with TiVo service. The Company also entered into the Fourth and Fifth Amendment to
Development Agreement dated as of April 17, 2003 and December 19, 2003, respectively, with DIRECTV. These amendments revise provisions relating to,
among other things, hardware and software requirements and development schedules under the Development Agreement.
On April 7, 2006, the Company entered into the Seventh Amendment of our Development Agreement, dated as of February 15, 2002, with DIRECTV,
Inc. Under this amendment, which amends the expiration date of the Development Agreement from February 15, 2007, to February 15, 2010, TiVo will
continue to provide maintenance and support for DIRECTV receivers with TiVo service through the expiration date of the Development Agreement. In
addition, DIRECTV will continue to have the right to distribute DIRECTV receivers with TiVo service through February 15, 2007, and a related grace period
as set forth in the Development Agreement. Further, TiVo and DIRECTV agreed that neither party would assert its patents against the other party with respect
to each company's products and services deployed prior to the expiration of the agreement, subject to limited exceptions. DIRECTV will continue to pay a
monthly fee for all households using DIRECTV receivers with TiVo service similar to the amount paid by DIRECTV for households with DIRECTV
receivers with TiVo service currently being deployed, subject to a monthly minimum payment by DIRECTV. On an annual basis, TiVo will reserve a portion
of these fees as a non-refundable credit to fund mutually agreed development, maintenance, and support services.
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