Exhibit 99.1
EXECUTION COPY
NOTE PURCHASE AND SECURITY AGREEMENT
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THIS NOTE PURCHASE AND SECURITY AGREEMENT (this "Agreement") is dated
as of February 18, 2003 and is made by and among Princeton Video Image,
Inc., a Delaware corporation (the "Seller"), Presencia en Medios, S.A. de
C.V., a Mexican corporation ("Presencia"), and PVI Holding, LLC, a Delaware
limited liability company ("PVI Holding"), as a creditor to the Seller and
as collateral agent.
1. Definitions. All capitalized terms used in this Agreement shall
have the meanings assigned to them elsewhere in this Agreement or as
specified below:
"Agreement" shall have the meaning set forth in the opening
paragraph hereof.
"Amended Presencia Warrant Certificates" shall have the meaning
set forth in Section 2.4(b)(iv).
"Cablevision" shall mean Cablevision Systems Corporation, the
parent corporation of PVI Holding (as defined below).
"Closing" shall mean the closing of the sale to, and purchase by,
the Purchasers of the Convertible Notes.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all of the assets, rights and other
property of the Seller, now existing or hereafter acquired, including,
without limitation, the assets, rights and other property described in
Schedule A attached hereto.
"Collateral Agent" shall mean PVI Holding, as collateral agent
for the Purchasers under the Intercreditor Agreement.
"Consultant Services Agreement" shall mean that certain
Consultant Services Agreement by and between the Seller, Presencia and
Publicidad, dated as of September 20, 2001.
"Convertible Debt" shall mean the outstanding principal and
accrued interest due under the Convertible Notes, including any renewals
and extensions thereof.
"Convertible Notes" shall mean (i) the promissory note in the
amount of $1,500,000 executed and delivered by the Seller to the Purchaser
at the First Closing (as hereinafter defined) and (ii) the promissory
note(s), if any, in the aggregate amount of $1,500,000 executed and
delivered by the Seller to the Purchasers at the Second Closing (as
hereinafter defined) in the form attached hereto as Annex A.
"Election Notice" shall mean a notice by Presencia to the Seller
in which Presencia agrees that it or its designees will purchase $1,500,000
of Convertible Notes at the Second Closing.
"Event of Default" shall have the meaning ascribed to it in the
Convertible Notes.
"Intercreditor Agreement" shall have the meaning set forth in
Section 2.4(a)(iv).
"Material Adverse Effect" shall mean, when used in connection
with the Seller and its Subsidiaries (as defined below), any change or
effect that, individually or in the aggregate with all other such changes
or effects, would have a material adverse effect on the financial
condition, properties, business, prospects or results of operations of the
Seller and its Subsidiaries taken as a whole or materially impair the
ability of the Seller to perform its obligations under this Agreement.
"Ordinary Course of Business" shall have the meaning set forth in
Section 5.1.
"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an incorporated organization, a limited liability
company, a joint stock corporation, a joint venture, a government or any
department, agency or political subdivision thereof and any other entity.
"Presence in Media" shall mean Presence in Media, LLC, a Delaware
limited liability company and the wholly owned subsidiary of Presencia.
"Presencia Notes" shall mean the promissory notes executed and
delivered to Presencia by the Seller on January 24, 2003 and January 31,
2003.
"Presencia Warrant Certificates" shall mean the warrant
certificates previously issued by the Seller to Presencia and to Presence
in Media, including the Special Warrants.
"Publicidad" shall mean Publicidad Virtual, S.A. de C.V., the
wholly-owned subsidiary of the Seller.
"Purchase Price" shall have the meaning set forth in Section 2.2.
"Purchaser" shall mean, (i) for purposes of the First Closing,
Presencia, and (ii) for purposes of the Second Closing, Presencia and/or
its designee(s) as specified in the Election Notice and approved by PVI
Holding, such approval not to be unreasonably withheld or delayed.
"Purchasers" shall mean all persons who are now, or become, a
Purchaser hereunder.
"PVI Holding" shall have the meaning set forth in the opening
paragraph hereof
"PVI Holding Note" shall mean the convertible promissory note
executed and delivered to PVI Holding by the Seller on June 25, 2002.
"PVI Holding Note Purchase Agreement" shall mean the Note
Purchase and Security Agreement dated as of June 25, 2002, by and between
the Seller and PVI Holding.
"Reorganization Agreement" shall mean the Reorganization
Agreement dated December 28, 2000, as amended, by and among Presencia,
Xxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxxxxxx, Presence in Media, Virtual
Advertisement, LLC, PVI LA, LLC, the Seller, and Princeton Video Image
Latin America, LLC.
"Revolution Company Operating Agreement" shall mean the
Revolution Company, LLC Operating Agreement dated January 24, 2001, by and
among CBS Technology Corporation, Core Digital Technologies, Inc., and the
Seller.
"Secured Obligations" shall have the meaning set forth in Section
3.1.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, all as the same shall be in effect from
time to time.
"Seller" shall have the meaning set forth in the opening
paragraph hereof.
"Seller's Board" shall mean the Seller's board of directors.
"Special Warrants" shall mean (i) the warrants to purchase 133
and 5,316 shares of the Seller's common stock that were previously issued
to Presencia by the Seller and expired on April 3, 2002 and December 16,
2002, respectively, and (ii) the warrants to purchase 2,525 and 101,013
shares of the Seller's common stock that were previously issued to Presence
in Media by the Seller and expired on April 3, 2002 and December 16, 2002,
respectively.
"Stock Purchase Agreement" shall mean the Stock and Warrant
Purchase Agreement dated February 4, 2001, by and between the Seller and
PVI Holding.
"Subsidiary" and "Subsidiaries" shall mean an entity or entities
in which the Seller owns or controls, directly or indirectly, the majority
of voting power.
"Transaction Documents" shall mean this Agreement, the
Convertible Notes, the Amended Presencia Warrant Certificates, the
Intercreditor Agreement, and any other amendment, agreement or instrument
to be entered into in connection with the transactions contemplated by this
Agreement and said other agreements, including without limitation those
documents to be delivered pursuant to Section 2.4 hereof
"Transfer Restrictions" shall have the meaning set forth on
Schedule A hereto.
"UCC" shall have the meaning set forth in Section 6.1.
2. Sale and Purchase of Convertible Notes.
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2.1 Agreement to Purchase and Sell. Upon the terms and subject to
the conditions set forth in this Agreement and upon the representations and
warranties made herein, the Seller agrees to sell to the Purchasers, and
the Purchasers agree to purchase from the Seller, the Convertible Notes,
provided, however, that the Purchasers shall have no obligation to
purchase, and shall not otherwise be in breach or violation of this
Agreement as a result of their decision not to deliver an Election Notice,
and the Seller shall have no obligation to sell, Convertible Notes at the
Second Closing (as hereinafter defined) unless Presencia gives an Election
Notice to the Seller within thirty (30) days after the date hereof.
2.2 Purchase Price. The aggregate purchase price to be delivered
at each of the First Closing and the Second Closing (as such terms are
defined below) is $1,500,000 (the purchase price to be delivered at each
closing being referred to as the "Purchase Price").
2.3 Closings. The closing of the purchase and sale of a
Convertible Note in the principal amount equal to the Purchase Price is
occurring simultaneously with the execution of this Agreement (the "First
Closing") at the offices of Smith, Stratton, Wise, Xxxxx & Xxxxxxx, LLP,
000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx on the date hereof. The
closing (the "Second Closing") of the purchase and sale of one or more
additional Convertible Notes in the aggregate principal amount equal to the
Purchase Price shall occur within five (5) days after Presencia gives the
Election Notice (the "Second Closing Date") to the Seller and shall be held
at the offices of Smith, Stratton, Wise, Xxxxx & Xxxxxxx, LLP, 000 Xxxxxxx
Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx.
2.4 Closing Actions. Subject to the terms of this Agreement,
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(a) at the First Closing,
(i) the Purchaser is delivering the Purchase Price in the
amount of $1,500,000 to the Seller by wire transfer to such account
previously specified by the Seller;
(ii) the Seller is delivering a Convertible Note in the face
amount of the Purchase Price to the Purchaser;
(iii) the Seller is delivering to each of Presencia and PVI
Holding a check in the amount of $25,000 payable to it in immediately
available funds for the reimbursement of fees and expenses described in
Section 19 hereof.
(iv) the Purchaser and PVI Holding are delivering to each
other an intercreditor agreement (the "Intercreditor Agreement");
(v) the Seller and Cablevision are delivering to each other
an amendment to the Option Agreement by and between the Seller and
Cablevision dated as of June 25, 2002 (the "Option Agreement");
(vi) the Seller and Cablevision are delivering to each other
an amendment to the Proprietary Information Escrow Agreement by and among
the Seller, Cablevision and Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, dated as
of June 25, 2002 (the "Escrow Agreement");
(vii) the Seller and each of Xxxxx Xxxx and Xxxxxxx Xxxxxxxx
are delivering to each other employment and stock option agreements;
(viii) the Seller is delivering to PVI Holding an amended
and restated convertible promissory note against delivery by PVI Holding of
the Convertible Promissory Note dated as of June 25, 2002 previously issued
to PVI Holding by the Seller (the "Amended and Restated PVI Holding Note");
(ix) PVI Holding is delivering to the Seller its waiver and
consent with respect to the transactions contemplated hereunder to the
extent required under the Stock Purchase Agreement or the PVI Holding Note
Purchase Agreement, including without limitation its waiver of its rights
pursuant to Section 6.2 of the Stock Purchase Agreement as such rights
relate to the issuance of shares of common stock upon exercise of the
warrant described in Section 2.4(b)(x) that may be delivered in connection
with the Second Closing;
(x) the Seller is delivering to the Purchaser an opinion of
the Seller's counsel in a form as agreed to by the parties;
(xi) the Seller is delivering to the Purchaser a
certificate, executed on behalf of the Seller by its Secretary, dated as of
the Closing Date, certifying the resolutions of the Seller's Board
approving the transactions contemplated by this Agreement and the other
Transaction Documents;
(xii) the Seller and the parties to the Reorganization
Agreement are delivering to each other an amendment thereto and their
consent to the transactions contemplated hereby;
(xiii) Cablevision is delivering to the Seller its waiver
and consent with respect to the transactions contemplated hereunder to the
extent required under the Option Agreement; and
(xiv) following its receipt of the Purchase Price, the
Seller is delivering to Presencia $150,000 to be applied to the principal
amounts outstanding as of the date of such closing with respect to the
Contingent Service Fee (as such term is defined in the Consultant Services
Agreement) for 2001.
(b) at the Second Closing, subject to Presencia's delivery of the
Election Notice , which shall be in Presencia's sole discretion, and PVI
Holding's approval of Presencia's designee(s) (if any) designated therein,
which approval will not be unreasonably withheld or delayed:
(i) to the extent it is not already a party to this
Agreement and the Intercreditor Agreement, each Purchaser will deliver a
joinder agreement in the form attached hereto as Annex B;
(ii) each Purchaser will deliver an amount equal to the face
amount of the Convertible Note to be issued to it to the Seller by wire
transfer to such account previously specified by the Seller, it being
agreed that the Purchasers will deliver an aggregate amount equal to the
Purchase Price of $1,500,000 at the Second Closing;
(iii) the Seller will deliver Convertible Notes in the
aggregate principal amount of the Purchase Price to the Purchasers;
(iv) the Seller will deliver to Presencia amended Presencia
Warrant Certificates (the "Amended Presencia Warrant Certificates") against
delivery of the Presencia Warrant Certificates;
(v) the Seller will deliver to PVI Holding warrants to
purchase 2,658 and 106,329 shares of the Seller's common stock
substantially in the form of the Special Warrants, as amended;
(vi) following its receipt of the Purchase Price, the Seller
will deliver to Presencia an amount equal to the excess of $300,645 plus
accrued interest, if any, over $150,000, on account of amounts accrued as
of the date of such closing with respect to the Contingent Service Fee (as
such term is defined in the Consultant Services Agreement) for 2001;
(vii) the Seller and PVI Holding will deliver to each other
an amendment to the Stock Purchase Agreement in the form attached hereto as
Exhibit 2.4(b)(vii);
(viii) the Seller will deliver to the Purchasers an opinion
of the Seller's counsel in substantially the form delivered at the First
Closing;
(ix) if neither Xxxxx Xxxx nor Xxxxxxx Xxxxxxxx is then
serving as a co-CEO of the Seller (or as the sole CEO if one of them shall
cease to so serve), the Seller shall have delivered to the Purchasers and
PVI Holding a certificate executed by one of its officers stating that the
representations and warranties made by the Seller in Section 4 hereof are
true and correct as of the Second Closing Date with the same force and
effect as if they had been made on and as of said date;
(x) if Presencia requests, the Seller will deliver to one or
more of the Purchasers who are Presencia's designees (including, without
limitation, directors, officers and direct or indirect shareholders of
Presencia, other than Xxxxxxx Xxxx, Xxxxx Xxxx or Xxxxxxx Xxxxxxxx)
warrants to purchase up to an aggregate of 100,000 shares of the Seller's
common stock at an exercise price of $1.50 per share and with a term of
four (4) years, substantially in the form of the Amended Presencia Warrant
Certificates; and
(xi) the Seller is delivering to the Purchaser a
certificate, executed on behalf of the Seller by its Secretary, dated as of
the Closing Date, certifying the resolutions of the Seller's Board
approving the transactions contemplated by this Agreement and the other
Transaction Documents.
3. Security Interest.
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3.1 Creation of Security Interest. In order to secure: (i)
payment of the Convertible Debt, (ii) all costs and expenses incurred in
collection or conversion of the Convertible Debt, and (iii) payment and
performance of any other amounts or obligations due to the Purchasers
pursuant to the Convertible Notes, including all costs of collection and
enforcement of the foregoing, and all obligations of the Seller now or
hereafter existing under this Agreement (all such obligations under this
Section 3.1, the "Secured Obligations"), the Seller hereby grants to the
Purchasers a security interest in the Collateral, in consideration of the
acceptance by the Purchasers of the Convertible Notes.
3.2 Possession; Use of Collateral. So long as no Event of Default
has occurred and is continuing, the Seller shall be entitled to the
possession of the Collateral and to use and enjoy the same; provided, that
the Purchasers shall be entitled to hold all Collateral to the extent
possession is necessary or advisable to perfect the security interest
granted hereby.
3.3 Filings. At any time and from time to time, on the written
request of the Purchasers, the Seller will execute and deliver such further
documents (including without limitation financing and continuation
statements) and do such further acts and things as the Purchasers may
reasonably request, in each case without cost to the Purchasers, in order
to better assure, convey, assign, transfer, and confirm unto the Purchasers
the property and rights hereby conveyed or assigned or intended, and to
evidence, perfect, maintain, record and enforce the interest of the
Purchasers in assets, now or hereafter so to be. The Seller will pay all
costs of filing any financing, continuation, or termination statements with
respect to the security interest created pursuant to this Agreement.
3.4 Continuing Security Interest; Transfer of Convertible Note.
This Agreement shall create a continuing security interest in the
Collateral, and such security interest shall: (i) remain in full force and
effect until payment in full of the Secured Obligations; (ii) be binding
upon the Seller, and its successors and assigns; and (iii) inure, together
with the rights and remedies of the Purchasers, to the benefit of the
Purchasers and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), if a
Purchaser assigns or otherwise transfers its Convertible Note in accordance
with the terms and conditions thereof to any other Person, such other
Person shall thereupon become vested with all the rights in respect thereof
granted to the Purchasers herein or otherwise.
3.5 Release of Security Interest. Upon the payment and discharge
in full of the Secured Obligations, the security interest created hereby
shall be null and void and of no further force and effect. In such event,
the Purchasers shall, upon request, execute and deliver such proper
instruments of release and satisfaction as may reasonably be requested by
the Seller and shall return to the Seller all Collateral in their
possession.
3.6 Intercreditor Agreement. The security interest granted herein
and the security interested granted to PVI Holding pursuant to the PVI
Holding Note Purchase Agreement, and the exercise of the rights and
remedies set forth in Section 6 hereof and thereof, are and shall be at all
times subject to the terms of the Intercreditor Agreement. To the extent
that the terms of the Intercreditor Agreement conflict with Sections 3 or 6
hereof or thereof, the terms of the Intercreditor Agreement shall govern.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchasers and PVI Holding as follows:
4.1 Organization and Standing. The Seller is (a) a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as presently conducted, (c) is duly qualified and in good
standing to do business in the States of New Jersey and New York, which
constitute all of the jurisdictions in which the conduct of the Seller's
business or its ownership, leasing or operation of property requires such
qualification where the absence of such qualification would have a Material
Adverse Effect on the Seller.
4.2 Authorization of Transaction Documents. The Seller has full
legal power and authority to enter into and perform its obligations under
each of the Transaction Documents. This Agreement, the issuance of the
Convertible Notes, and the other transactions contemplated hereby have been
approved by the Seller's Board, including a majority of the members of the
Seller's Board who are not affiliated with PVI Holding, Cablevision or
Presencia. This Agreement and each of the other Transaction Documents have
been duly and validly executed and delivered by the Seller and constitute
valid and binding obligations of the Seller, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights
generally and to general principles of equity.
4.3 Subsidiaries; Other Entities. Each of the Seller's
Subsidiaries, other than Princeton Video Image Europe, N.V., has all
requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and to carry out the
transactions contemplated hereby. Each Subsidiary is qualified to do
business as a foreign corporation in those jurisdictions in which such
qualification is necessary in order to undertake its respective business
and is not qualified to do business as a foreign corporation only in such
other jurisdictions in which the failure to be so qualified will not have a
Material Adverse Effect. Schedule B attached hereto sets forth the details
of ownership of the securities of each direct and indirect Subsidiary and
other entity in which the Seller holds an equity interest and the details
of the equity interests relating thereto. The Seller owns all such
securities of, or other interest in, each Subsidiary (or, as applicable,
the securities of, or other interest in, any indirect Subsidiary are owned)
free and clear of any lien, encumbrance or similar right, except for the
security interest held by PVI Holding pursuant to the PVI Holding Note
Purchase Agreement. Except for the Subsidiaries, the Seller does not
control, directly or indirectly, any other corporation, partnership, joint
venture, limited liability company, association or business entity or other
similar entity.
4.4 Capitalization.
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(a) The authorized capital stock of the Seller is: (i)
60,000,000 shares of Common Stock, par value $.001; (ii) one class of
975,803 shares of Preferred Stock, par value $.001; (iii) one class of
11,363 shares of Series A Redeemable Preferred Stock, par value $4.50
("Series A Redeemable Preferred Stock"); and (iv) one class of 12,834
shares of Series B Redeemable Preferred Stock, par value $5.00 ("Series B
Redeemable Preferred Stock"). As of January 21, 2003, there were issued and
outstanding 18,487,802 shares of Common Stock (net of 214,040 treasury
shares), 11,363 shares of Series A Redeemable Preferred Stock, 12,834
shares of Series B Redeemable Preferred Stock. No shares of the class of
Preferred Stock are issued and outstanding. All such issued and outstanding
shares have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
(b) The Seller has reserved 7,000,000 shares of Common Stock
for issuance to employees, consultants, officers or directors upon exercise
of options granted or to be granted under stock or other option plans or
arrangements approved by the Seller's Board.
(c) Since September 30, 2002, the Seller has issued no
warrants, options, securities, rights or other interests convertible into
or exchangeable for, or otherwise giving the holder thereof the right to
purchase or acquire, directly or indirectly, from the Seller or, to the
best knowledge of the Seller, from any other person any shares of Common
Stock, or granted any registration rights in connection with its capital
stock, except that the Seller: (i) has issued warrants to purchase 10,000
shares of the Seller's Common Stock pursuant to the Agreement For Use of
The L-VIS(R) System dated July 10, 2002, by and between the Dallas Cowboys
Football Club, Ltd. and the Seller; (ii) has issued warrants to purchase
250,000 shares of the Seller's Common Stock pursuant to the Agreement and
Release dated October 23, 2002 between Xxxxxx X. Xxxxxxxxx and the Seller;
(iii) has granted options in accordance with the Seller's stock option
plan, the shares issuable upon the exercise of such options being included
in the reserved shares described in Section 4.4(b) hereof.
(d) The Seller is not a party or subject to any agreement or
understanding between any persons or entities, which affects or relates to
the voting or giving of written consents with respect to any securities,
except for the following: (i) the Shareholders Agreement dated February 4,
2001, by and among the Seller, PVI Holding, Xxxxx F Xxxxxxxx, and
Presencia; (ii) the Reorganization Agreement; (iii) the Shareholders
Agreement of Princeton Video Image Europe, N.V., dated July 18, 2000, by
and among the Seller, Interactive Media, S.A., and Princeton Video Image
Europe, N.V. (the "PVI Europe Shareholders Agreement"); and (iv) the
Stockholders Agreement by and among the Seller, SciDel Technologies, Ltd.
and the stockholders named therein.
4.5 Valid Issuance. The shares of the Seller's Common Stock (the
"Shares") to be issued upon any conversion of the Convertible Notes will be
duly and validly issued, fully paid and nonassessable and will be free of
any liens or encumbrances. The rights and restrictions of the Shares are as
set forth in the Seller's Certificate of Incorporation. The Shares issuable
upon conversion of the Convertible Notes pursuant to Section 3(a) thereof
have been duly and validly reserved for issuance, and the number reserved
is subject to adjustment in accordance with the terms of the Convertible
Notes. The Shares when issued and delivered in accordance with the terms of
the Convertible Notes will be entitled to full and unencumbered voting
rights consistent with the provisions of the Seller's Certificate of
Incorporation.
4.6 No Preemptive Rights. Except as provided in the
Reorganization Agreement and the Stock Purchase Agreement, no person has
any right of first refusal or any preemptive rights in connection with (i)
the issuance of the Shares or (ii) any future issuances of securities by
the Seller.
4.7 Intellectual Property Rights.
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(a) "Intellectual Property Rights" means all domestic and
foreign patents, trademarks, copyrights, service marks, and applications
and registrations therefore, and all software, technical data and designs,
trade names, customer lists, trade secrets, proprietary processes and
formulae, inventions, know-how, other confidential and proprietary
information, and other industrial and intellectual property rights.
Schedule C hereto sets forth a true and complete list of all domestic and
foreign patents, domestic and foreign trademarks, domestic and foreign
service marks, domestic and foreign copyrights, and applications and
registrations therefore, owned or controlled by the Seller or its
Subsidiaries. The Seller or its Subsidiaries own or are licensed to use all
of the Intellectual Property Rights used by the Seller or its Subsidiaries
to carry on their businesses as presently conducted and as presently
proposed to be conducted. All registered or issued patents, copyrights,
trademarks, and service marks, and applications therefore (unless expired
or abandoned as of the date hereof), owned or controlled by the Seller or
its Subsidiaries, are in full force and effect. All prior art known to the
Seller or its Subsidiaries which may be or may have been pertinent to the
examination of any United States patent or patent application owned or
filed by the Seller and its Subsidiaries has been cited to the United
States Patent and Trademark Office.
(b) Except with respect to the Licensed Rights (as defined
herein), the Seller has good, valid and subsisting title to all of the
Intellectual Property Rights used by the Seller or its Subsidiaries to
carry on its business as presently conducted, free and clear of all liens,
mortgages, security interests, pledges, charges and encumbrances, and, to
the Seller's best knowledge, third party claims of any ownership rights,
title or interest; provided, that the Intellectual Property Rights held by
Princeton Video Image Israel, Ltd., are subject to certain rights and
restrictions held by the government of Israel and its Office of the Chief
Scientist; and provided further, that the Seller's ownership interest in
the Intellectual Property Rights is subject to the security interest held
by PVI Holding pursuant to the PVI Holding Note Purchase Agreement and to
the terms of the Escrow Agreement and the Option Agreement. The Seller or
its Subsidiaries has the right to bring infringement actions with respect
to the Intellectual Property Rights owned or controlled by the Seller or
its Subsidiaries. Intellectual Property Rights conceived by employees or
consultants of the Seller or its Subsidiaries and related to the business
of the Seller or its Subsidiaries were "works for hire", and all right,
title, and interest therein were transferred and assigned to the Seller or
its Subsidiaries.
(c) To the Seller's best knowledge, neither the Seller nor
its Subsidiaries use, market or sell, or propose to use, market or sell,
any product or service that violates or would violate any Intellectual
Property Right of a third party. There is no pending or threatened claim or
litigation against the Seller or its Subsidiaries (i) contesting the
Seller's or its Subsidiaries' right to use Intellectual Property Rights to
carry on its business as presently conducted, (ii) asserting the
invalidity, unenforceability or misuse of any Intellectual Property Rights
owned or controlled by the Seller or its Subsidiaries, or (iii) asserting
the infringement or other violation of, or conflict with, any Intellectual
Property Rights of a third party. The Seller is not aware of any third
party that uses, markets or sells or proposes to use, market or sell, any
product or service that violate, or would violate or is in conflict with
the Intellectual Property Rights owned or controlled by the Seller or its
Subsidiaries, except that Xxxxx Vision, a French company and subsidiary of
Lagardere may currently be in violation of certain patents which Seller has
recently acquired from SciDel Technologies, Ltd..
(d) None of the Intellectual Property Rights owned or
controlled by the Seller or its Subsidiaries are subject to any outstanding
judgment or contract restricting the use thereof by the Seller or its
Subsidiaries, except as set forth in Section 4.7(b) above. Other than in
the ordinary course of business consistent with past practices, neither the
Seller nor its Subsidiaries has entered into any agreement to indemnify any
other Person against any charge of infringement of any Intellectual
Property Rights.
(e) Assuming the consummation of the transactions
contemplated herein and the application of the proceeds thereof, the Seller
and its Subsidiaries are not in default, which default could result in a
Material Adverse Effect, in the payment of any royalties, license fees or
other consideration to any owner or licensor of any agreements, memorandums
or other undertakings that grant licenses, sublicenses or other rights of
use of any Intellectual Property Rights owned by a third party and licensed
to the Seller or its Subsidiaries (the "Licensed Rights") used in or
necessary for the conduct of its business as now conducted and as proposed
to be conducted or to any agent or representative of any such owner or
licensor by reason of the use thereof by the Seller or its Subsidiaries,
nor otherwise is in default, which default could result in a Material
Adverse Effect, in any respect in the performance of any of its obligations
to any such owner or licensor, and no such owner or licensor, nor any such
agent or representative, has notified the Seller or its Subsidiaries of any
claim of any such default, which default could result in a Material Adverse
Effect; except that the Seller's intention to discontinue any further
payment of royalties under the Research Agreement between the Seller and
Xxxxx Xxxxxxx Research Center, Inc. dated November 4, 1990, as amended, may
result in a default with respect to such agreement. Such Licensed Rights
are valid and authorized by the terms under which the Seller or its
Subsidiaries licenses or otherwise uses such Licensed Rights.
4.8 Compliance with Other Instruments. Each of the Seller and its
Subsidiaries is not in violation of any term of its Certificate of
Incorporation or Bylaws, nor is the Seller nor its Subsidiaries, to the
best knowledge of the Seller, in violation of any order, statute, rule or
regulation applicable to the Seller or its Subsidiaries, the violation of
which could result in a Material Adverse Effect, except that Princeton
Video Image Europe, N.V. is in violation of Belgian law with respect to
non-payment of certain social security and withholding taxes. The
execution, delivery and performance of and compliance with this Agreement
or the other Transaction Documents, and the issuance and sale of the Shares
upon conversion of the Convertible Notes, will not (a) result in any such
violation which could have a Material Adverse Effect; (b) be in conflict
with or constitute a default under any term of any mortgage, indenture,
contract, agreement, instrument, judgment or decree which could have a
Material Adverse Effect; or (c) result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
the Seller and its Subsidiaries, individually or in the aggregate, pursuant
to any such term which could have a Material Adverse Effect. To the best
knowledge of the Seller, there is no such term or any such order, statute,
rule or regulation which adversely affects, or in the future could have a
Material Adverse Effect.
4.9 Litigation. There is no action, proceeding or investigation
pending or threatened against the Seller or its Subsidiaries, or their
respective officers, directors or stockholders, or to the best knowledge of
the Seller, against employees of the Seller or its Subsidiaries (or, to the
best knowledge of the Seller, any basis therefor or threat thereof): (a)
which, assuming the consummation of the transactions contemplated herein
and the application of the proceeds thereof, could result, either
individually or in the aggregate, in (i) any Material Adverse Effect, or
(ii) any material impairment of the right or ability of the Seller or its
Subsidiaries to carry on its business as now conducted or as proposed to be
conducted; or (b) which questions the validity of this Agreement or the
other Transaction Documents, or any action taken or to be taken in
connection herewith; provided, the Belgian government may initiate legal
proceedings against Princeton Video Image Europe, N.V. for non-payment of
certain social security and withholding taxes; and provided further,
Intervest Management, N.V., has indicated an intent to initiate legal
proceedings against Princeton Video Image Europe, N.V., as lessee, and the
Seller, as guarantor, for recovery of rent and service fees due pursuant to
the terminated lease agreement, dated July 17, 2000, by and between
Princeton Video Image Europe, N.V. and Intervest Management, N.V. Neither
the Seller nor any of its Subsidiaries is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Seller or its Subsidiaries currently
pending or which the Seller or its Subsidiaries currently intends to
initiate; provided, however, the Seller may initiate legal proceedings
against Virtual Media Lab, Inc. ("VML") for recovery of the L-VIS(R) System
in VML's possession pursuant to the license agreement, dated December 28,
2000, by and between the Seller and VML, which was terminated by the Seller
on or about September 10, 2002.
4.10 No Consents or Approvals Required. No consents, approvals or
authorization of or designation, declaration or filing with any
governmental or regulatory authority agency, commission, body or other
governmental entity, including, without limitation, the Nasdaq Stock
Market, or by any court or other third party which has not been made or
obtained is required for the valid authorization, execution, delivery and
performance by the Seller of this Agreement and each of the other
Transaction Documents or for the valid sale, issuance, delivery and
performance of the Convertible Notes. The approval of the Company's
stockholders is not required in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated
hereby.
4.11 Offering. In reliance on the representations and warranties
of the Purchasers in Section 7 hereof, the offer, sale and issuance of the
Convertible Notes in conformity with the terms of this Agreement, and the
offer, sale and issuance of the Shares upon any conversion of the
Convertible Notes, will not result in a violation of the requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act"),
or the qualification or registration requirements of applicable blue sky
laws.
4.12 Taxes. Each of the Seller and its Subsidiaries has filed all
tax returns that are required to have been filed with appropriate federal,
state, county and local governmental agencies or instrumentalities, except,
assuming the consummation of the transactions contemplated herein and the
application of the proceeds thereof, where the failure to do so could not
have a Material Adverse Effect; provided, Princeton Video Image Europe,
N.V. has not made payment of certain social security and withholding taxes
required by the Belgian government. Neither the Seller nor its Subsidiaries
have elected pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"), to be treated as a Subchapter S corporation or a collapsible
corporation pursuant to Section 341(f) or Section 1362(a) of the Code, nor
has it made any other elections pursuant to the Code (other than elections
which relate solely to methods of accounting, depreciation or amortization)
which could have a Material Adverse Effect, as presently conducted or
proposed to be conducted or any of its properties or material assets.
4.13 Title. Each of the Seller and its Subsidiaries owns or
leases all property and assets used in the conduct of its business free and
clear of all liens, mortgages, loans or encumbrances except liens for
current taxes and such encumbrances and liens which arise in the ordinary
course of business and do not have a Material Adverse Effect on the
Seller's or its Subsidiary's ownership (as applicable) or use of such
property or assets; provided, that all such property and assets are subject
to a security interest held by PVI Holding pursuant to the PVI Holding Note
Purchase Agreement and to the terms of the Escrow Agreement and the Option
Agreement.
4.14 Material Contracts and Commitments. All of the material
contracts and agreements to which the Seller is a party (each a "Contract")
are valid, binding and in full force and effect and enforceable by and
against the Seller in accordance with their respective terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application relating to or affecting
enforcement of creditors' rights, and rules or laws concerning equitable
remedies; provided, the L-VIS(R) System License Agreement, dated July 12,
2002, by and between Princeton Video Image Europe, N.V. and the Seller has
been terminated by the Seller effective December 20, 2002; provided,
further, Princeton Video Image Europe, N.V. is in default of loans with an
outstanding principal and accrued interest balance in the amount of
$3,666,290, as of December 13, 2002, made by the Seller to Princeton Video
Image Europe, N.V.; provided further, the Restated and Amended Employment
Agreement dated as of October 28, 2001, by and between Xxxxxxxx X. Xxxxxxx,
Vice President Finance and Chief Financial Officer, and the Seller was
terminated effective October 31, 2002, by letter dated November 26, 2002.
For purposes of the foregoing provision, "material contracts" shall be
deemed to mean: (i) all of the contracts, mortgages, indentures,
agreements, instruments and transactions to which the Seller is a party or
by which it is bound (including purchase orders to the Seller or placed by
the Seller) which involve obligations of, or payments to, the Seller in
excess of $100,000; (ii) all agreements between the Seller and its
officers, directors, consultants and employees; (iii) all agreements or
understandings between the Seller and current or potential sales
affiliates, agents or distributors; (iv) all agreements of the Seller that
contain restrictions on its ability to compete; (v) all agreements creating
an obligation to participate in a joint venture, limited liability company,
partnership or similar arrangement; (vi) all agreements that contain
provisions that require or gives either party to the agreement the option
that payments by the Seller be made as a percent of its revenue or in
stock; (viii) all agreements with a term exceeding three years; (ix) all
guarantees of the obligations of others; (x) all agreements granting rights
of exclusivity to third parties; (xi) all agreements relating to the
acquisition or disposition of any business or any interest therein; (xii)
all leases of real property or material personal property or any capital
leases.
4.15 Financial Statements. The Seller's financial statements,
consolidated balance sheets, consolidated statements of operations and
consolidated statements of cash flows for the fiscal years ended December
31, 2001 and June 30, 2001 (the "Audited Financial Statements"), reported
on by PricewaterhouseCoopers LLP, have been delivered to the Purchasers.
The Seller's financial statements, consolidated balance sheets,
consolidated statements of operations and consolidated statements of cash
flows for the interim periods subsequent to December 31, 2001 (the "Interim
Financial Statements" and, together with the Audited Financial Statements,
the "Financial Statements") are in accordance with the books and records of
the Seller, are complete and correct, and fairly and accurately present the
financial condition and operating results of the Seller for the periods
indicated therein, all in conformity with generally accepted accounting
principles ("GAAP"), except that the Interim Financial Statements do not
contain footnotes or reflect the inter-period adjustments required by GAAP.
As of the date of the most recent balance sheet included in the Interim
Financial Statements, the Seller did not have any liabilities, absolute,
contingent, or otherwise, which in accordance with GAAP are required to be
disclosed or reserved for other than as set forth in the Financial
Statements. The Seller maintains and will continue to maintain a standard
system of accounting established and administered in accordance with GAAP.
4.16 No Material Adverse Effect. Since December 31, 2001, there
has been no Material Adverse Effect, except that Seller has received a
going concern qualification from its independent auditors; and, unless the
transactions, including the Second Closing, as contemplated herein are
consummated, the Seller will continue to lack sufficient cash assets to pay
its obligations as they become due. Seller has also received notification
from the Nasdaq Stock Market that it is not in compliance with the Nasdaq
Stock Market listing qualification requirements. The Seller's common stock
was conditionally transferred from the Nasdaq National Market to the Nasdaq
SmallCap Market at the recommendation of the Nasdaq Listing Qualifications
Panel.
4.17 Absence of Changes. Since December 31, 2001:
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(a) there has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) resulting in a
Material Adverse Effect;
(b) neither the Seller nor any of its Subsidiaries has
declared or paid any dividend or made any distribution on its stock, or
issued, offered, redeemed, purchased or otherwise acquired any of its
capital stock;
(c) there has been no resignation or termination of
employment of any key officer or employee of the Seller or its Subsidiaries
that has resulted in a Material Adverse Effect (it being noted that
Xxxxxxxx X. Xxxxxxx ceased to be employed by the Seller effective October
31, 2002, which has not resulted in a Material Adverse Effect), and each of
the Seller and its Subsidiaries does not know of any impending resignation
or termination of employment of any such officer or employee that, if
consummated, would have a Material Adverse Effect;
(d) there has been no change, except in the ordinary course
of business, in the material contingent obligations of the Seller or its
Subsidiaries (or in any contingent obligation of the Seller or its
Subsidiaries regarding any director, shareholder or key employee or officer
of the Seller or its Subsidiaries) by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(e) there have been no loans made by the Seller or its
Subsidiaries to any of its employees, officers or directors other than
travel advances and other advances made in the ordinary course of business;
(f) there has been no waiver by the Seller or the
Subsidiaries of a valuable right or of a material debt owing to it; and
(g) there has not been any satisfaction or discharge of any
lien, claims or encumbrance or any payment of any obligation by the Seller
or its Subsidiaries, except in the ordinary course of business and which
has not resulted in a Material Adverse Effect.
4.18 Registration Rights. The Seller has not granted or agreed to
grant any rights to register securities, including piggyback registration
rights, to any person or entity which grants or agreements are effective as
of the date hereof, except for those registration rights granted to: (i)
Presencia, Xxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxxxxxx, Presence in Media,
in accordance with the Reorganization Agreement; (ii) Xxxxx & Company in
accordance with warrant certificates dated October 20, 1999, December 20,
2000 and September 20, 2001; (iii) Warner Brothers in accordance with the
Agreement Re Digital Product Insertion Services dated September 1, 2002, by
and between Warner Brothers and the Seller; and (iv) PVI Holding in
accordance with the Stock Purchase Agreement.
4.19 Certain Transactions. Each of the Seller and its
Subsidiaries is not indebted, directly or indirectly, to any of its
employees, officers, directors or stockholders or to their spouses or
children, in any amount whatsoever, except that the Seller owes expense
reimbursement to employees and the Seller is indebted to (i) PVI Holding
under the PVI Holding Note and (ii) Presencia under the Presencia Notes;
and none of said employees, officers, directors, stockholders, or any
member of their immediate families, are indebted to the Seller or its
Subsidiaries or have any direct or indirect ownership interest in any firm
or corporation with which the Seller or its Subsidiaries is affiliated or
with which the Seller or its Subsidiaries has a business relationship,
except that the certain officers and directors have an interest in,
respectively, Presencia and Consultores Asociados Dasi, S.C., both of which
have business relationships with Publicidad. No such employee, officer,
director, shareholder, or any member of their immediate families, is,
directly or indirectly, interested in any Contract with the Seller or its
Subsidiaries, except: (x) as previously stated in this Section 4.19; (y)
certain directors are affiliated with Presencia, PVI Holding and with
licensees of the Seller; and (z) Presencia is guarantor on a note executed
and delivered to BBVA Bancomer by Publicidad on June 13, 2002. Each of the
Seller and its Subsidiaries is not guarantor or indemnitor of any
indebtedness of any other person, firm or corporation, except for any
guarantees or indemnification by the Seller of any obligations or debts of
its Subsidiaries.
4.20 Proprietary Information of Third Parties. No employee or
consultant of the Seller nor its Subsidiaries is or will be in violation of
any judgment, decree, or order, or any term of any employment contract,
patent disclosure agreement, or other contract or agreement relating to the
relationship of any such employee or consultant with the Seller or its
Subsidiaries or, to the Seller's best knowledge, any other party because of
the nature of the business conducted or proposed to be conducted by the
Seller or its Subsidiaries or the use by the employee or consultant of his
best efforts with respect to such business. To the Seller's best knowledge,
no third party has claimed or has reason to claim that any person employed
or engaged by the Seller or its Subsidiaries has (a) violated or may be
violating any of the terms or conditions of his employment, non-competition
or non-disclosure agreement with such third party, (b) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party, or (c) interfered or may
be interfering in the employment relationship between such third party and
any of its present or former employees. No third party has requested
information from the Seller or its Subsidiaries which suggests that such a
claim might be contemplated. To the Seller's best knowledge, no person
employed by or engaged by the Seller or its Subsidiaries has used or
proposes to use any trade secret or any information or documentation
proprietary to any former employer, and no person employed by or engaged by
the Seller or its Subsidiaries has violated any confidential relationship
which such person may have had with any third party, in connection with the
development, manufacture or sale of any product or proposed product or the
development or sale of any service or proposed service of the Seller or its
Subsidiaries, and the Seller has no reason to believe there will be any
such use or violation.
4.21 Employee Benefit Plans
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(a) All benefit and compensation plans, contracts, policies
or arrangements covering current or former employees of the Seller and its
Subsidiaries (the "Employees") and current or former directors of the
Seller, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans
(the "Benefit Plans"), other than "multiemployer plans" within the meaning
of Section 3(37) of ERISA, covering Employees which are subject to ERISA
(the "ERISA Plans") are in substantial compliance with ERISA, and any
non-compliance would not result in a Material Adverse Effect. Each ERISA
Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code, may properly rely upon a
favorable determination letter issued by the Internal Revenue Service, and
the Seller is not aware of any circumstances likely to result in revocation
of any such favorable determination letter or the loss of the qualification
of such Plan under Section 401(a) of the Code. Each ERISA Plan which is
intended to be part of a voluntary employees' beneficiary association
within the meaning of Section 501(c)(9) of the Code has (i) received an
opinion letter from the Internal Revenue Service recognizing its exempt
status under Section 501(c)(9) of the Code and (ii) filed a timely notice
with the Internal Revenue Service pursuant to Section 505(c) of the Code,
and the Seller is not aware of circumstances likely to result in the loss
of the exempt status of such ERISA Plan under Section 501(c)(9) of the
Code. Neither the Seller nor any of its Subsidiaries has engaged in a
transaction with respect to any ERISA Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the
Seller or any Subsidiary to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA in an amount which would result in a
Material Adverse Effect.
(b) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Seller or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Seller under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate").
The Seller and the Subsidiaries have not incurred and do not expect to
incur any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived or extended, other than pursuant to PBGC
Reg. Section 4043.66, has been required to be filed for any Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date
hereof.
(c) All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the
Audited Financial Statements or the Interim Financial Statements. Neither
any Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither the Seller nor any of its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(d) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
Pension Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Plan, and there has been no material
change in the financial condition of such Plan since the last day of the
most recent plan year. The withdrawal liability of the Seller and its
Subsidiaries under each Benefit Plan which is a multiemployer plan to which
the Seller, any of its Subsidiaries or an ERISA Affiliate has contributed
during the preceding 12 months, determined as if a "complete withdrawal",
within the meaning of Section 4203 of ERISA, had occurred as of the date
hereof, does not exceed $100,000.
(e) There is no pending or, to the best knowledge of the
Seller, threatened, litigation relating to the Benefit Plans which could
result in a Material Adverse Effect. Neither the Seller nor any of its
Subsidiaries has any obligations for retiree health and life benefits under
any ERISA Plan. The Seller or the Subsidiaries may amend or terminate any
such Plan at any time without incurring any liability thereunder.
(f) There has been no amendment to, announcement by the
Seller or any of its Subsidiaries relating to, or change in employee
participation or coverage under, any Benefit Plan which would materially
increase the expense of maintaining such Plan above the level of the
expense incurred therefor for the most recent fiscal year. Neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will (i) entitle any employees of the Seller or any of
the Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment after the date hereof, (ii) accelerate the time
of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Benefit Plans, (iii) cause the Seller or any of its Subsidiaries to record
any material additional compensation expense on its income statement with
respect to any outstanding stock option or other equity-based award or (iv)
result in payments under any of the Benefit Plans which would not be
deductible under Section 162(m) or Section 280G of the Code.
(g) All Benefit Plans maintained outside of the United
States comply in all material respects with applicable local law. The
Seller and its Subsidiaries have no material unfunded liabilities with
respect to any such Benefit Plan.
4.22 Environmental and Safety Laws. Neither the Seller nor its
Subsidiaries is in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety which
violation or violations, in the aggregate, would have a Material Adverse
Effect, and no expenditures that could result in a Material Adverse Effect
are or will be required in order to comply with any such existing statute,
law, or regulation.
4.23 Insurance. Each of the Seller and its Subsidiaries has in
full force and effect fire and casualty insurance policies, and insurance
against other hazards, risks and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses
similarly situated.
4.24 Disclosure. The Seller has delivered or made available via
XXXXX or otherwise to the Purchasers each registration statement, report,
proxy statement or information statement filed by it with the Securities
and Exchange Commission (the "SEC") in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC (collectively, the "
Seller Reports"). As of their respective dates, the Seller Reports complied
in all material respects with the requirements of the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, not misleading. No representation or warranty of
the Seller made in this Agreement, or in any statement, document or
certificate furnished or to be furnished to the Purchasers pursuant hereto
or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements made herein and
therein, not misleading.
4.25 Transfer Restrictions.
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(a) The Seller's direct and indirect equity ownership
interests in other entities are not subject to any Transfer Restrictions
(as defined in Schedule A hereto) that will materially interfere with the
ownership, use or enjoyment of such ownership interests, except for the
following: (i) the Seller's ownership interest in Princeton Video Image
Europe, N.V. is subject to the PVI Europe Shareholders Agreement; (ii) the
Seller's ownership interest in the Revolution Company, LLC, is subject to
the Operating Agreement dated January 24, 2001, by and among CBS Technology
Corporation, Core Digital Technologies, Inc., and the Seller (the
"Revolution Company Operating Agreement"); (iii) any transfer of the
Seller's ownership interest in Princeton Video Image Israel, Ltd. requires
the consent or approval of the government of Israel and its Office of the
Chief Scientist; (iv) the Seller's ownership interest in its Subsidiaries
is subject to the security interest held by PVI Holding pursuant to the PVI
Holding Note Purchase Agreement; and (v) except as required pursuant to the
Revolution Company, LLC Operating Agreement, any sale, transfer,
assignment, pledge or hypothecation of any of the Seller's interests in
Princeton Video Image Europe, N.V., Princeton Video Image Israel, Ltd., or
Revolution Company, LLC shall require the written consent of PVI Holding.
(b) Neither the Seller's nor its Subsidiaries' Intellectual
Property Rights are subject to any Transfer Restrictions that will
materially interfere with the ownership, use or enjoyment of such
Intellectual Property Rights in the manner used by the Seller and its
Subsidiaries to carry on their businesses as presently conducted or
proposed to be conducted, including without limitation the planned
commercial deployment of the Seller's L-VIS and iPOINT products, except for
the following: (i) any transfer of the Intellectual Property Rights of
Princeton Video Image Israel, Ltd. will require the consent or approval of
the government of Israel and its Office of the Chief Scientist; (ii) the
Cross-License Agreement among the Seller, Sportvision, Inc. and the others
named therein dated as of July 29, 2002 contains restrictions on the
assignment of the licenses granted to the Seller thereby to parties other
than Cablevision or Presencia, or their respective affiliates; (iii) the
Seller's software license with Broadcom Corporation prohibits the Seller
from transferring or distributing Broadcom proprietary software used to
create the existing iPoint interface with Broadcom products to third
parties other than in object code form; (iv) the Seller's ownership
interest in the Intellectual Property Rights is subject to the security
interest held by PVI Holding pursuant to the PVI Holding Note Purchase
Agreement; (v) the Seller's ownership interest in the Intellectual Property
Rights is subject to the terms of the Escrow Agreement and the Option
Agreement; (vi) any sale, transfer, assignment, pledge or hypothecation of
any of the Intellectual Property Rights or other assets of Princeton Video
Image Israel, Ltd. shall require the written consent of PVI Holding; and
(vii) any sale, transfer, assignment, pledge or hypothecation of any of the
Intellectual Property Rights or other assets of Publicidad shall require
the written consent of PVI Holding.
(c) To the best knowledge of the Seller, no asset, right or
property of the Seller or its Subsidiaries not described in Sections
4.25(a) or 4.25(b) which is material to the conduct of the Seller's
business as presently conducted or proposed to be conducted, including
without limitation, the planned commercial deployment of the Seller's L-VIS
and iPOINT products, is subject to any Transfer Restrictions, other than
property subject to the security interest held by PVI Holding pursuant to
the PVI Holding Note Purchase Agreement, and property subject to the terms
of the Escrow Agreement and the Option Agreement.
4.26 Security Interest; Collateral. The Seller has made all
filings and recordings necessary or appropriate to create in favor of the
Purchasers a legal, valid and enforceable security interest in the
Collateral to the extent that a security interest can be created therein
under Section 9-109 of the Uniform Commercial Code in effect in the State
of New York. Subject to the Purchasers taking possession or control of the
Collateral, where permitted or required, all actions will have been taken
so that the Purchasers, or one of them, have a fully perfected security
interest in such of the Collateral as may be perfected by such filing or
possession or control.
4.27 Assets of Princeton Video Image Europe, N.V. Princeton Video
Image Europe, N.V., the Seller's Subsidiary, has no material assets.
5. Covenants of the Seller. Unless approved, consented to or excepted
in advance in writing by the Purchasers, until payment and discharge in
full of the Secured Obligations, the Seller covenants and agrees that:
5.1 Transfer; Liens. Except as otherwise permitted hereunder, or
in the ordinary course of business as presently conducted with respect to
normal transfers, sales, leases and licenses of equipment, products and
technology, abandonments of damaged, worn, or dilapidated assets and
property, account receivables, and Collateral of de minimus value and the
application of cash to payments to vendors and other creditors (the
"Ordinary Course of Business"), the Seller shall not sell, loan, exchange,
assign, deliver, or transfer the Collateral or otherwise dispose of the
Collateral or any of the Seller's rights in or to the Collateral. Except as
otherwise permitted hereunder, the Seller shall not: (i) permit any other
security interest to attach to any of the Collateral; (ii) permit the
Collateral to be levied upon under any legal process; or (iii) permit
anything to be done that may impair the value of any of the Collateral or
the security intended to be afforded by this Agreement. Except as otherwise
permitted hereunder, the Seller shall defend the title to the Collateral
against all persons and all claims and demands whatsoever and shall keep
the Collateral free and clear of all liens, charges, encumbrances, taxes
and assessments not in existence of the date hereof.
5.2 Maintenance; Taxes; Inspection. The Seller will maintain all
tangible property included in the Collateral in good condition and repair,
at its own expense, reasonable wear and tear excepted, and will pay and
discharge all taxes levied on the Collateral as well as the cost of repairs
to or maintenance of the same. The Seller will permit the Purchasers to
inspect the Collateral at all reasonable times, following reasonable prior
notice.
5.3 Insurance. The Seller will insure all tangible property
included in the Collateral against such risks and casualties and in such
amounts as are customary in the Seller's business. All insurance policies
shall be written for the benefit of the Seller and the Purchasers, as their
interests may appear, and such policies or certificates evidencing same
shall be furnished to the Purchasers. The Seller shall give the Purchasers
and all relevant insurers written notice, as promptly as practicable, of
loss of or damage to the Collateral and shall promptly file proofs of loss
with relevant insurers.
5.4 Filings. The Seller will pay all costs of filing any
financing, continuation or termination statements with respect to the
security interest created by the Seller pursuant to this Agreement. The
Purchasers are hereby appointed the Seller's attorney-in-fact to do all
acts and things which the Purchasers may deem necessary to perfect and
continue perfected the security interest created by this Agreement and to
protect the Collateral.
5.5 Additional Indebtedness. The Seller will not incur any (i)
severance and other termination obligations, other than in the ordinary
course of business as presently conducted, or (ii) additional indebtedness,
other than indebtedness for trade payables and similar items of
indebtedness incurred in the ordinary course of business as presently
conducted that do not constitute indebtedness for borrowed money.
5.6 Purchasers' Performance of the Seller's Obligations. In case
of the Seller's default in performing any agreement, covenant or obligation
under this Agreement, the Purchasers may (but shall not be obligated to)
procure the performance thereof and add the cost (including reasonable
attorneys' fees) thereof to the Secured Obligations.
5.7 Transfers of Certain Assets.
---------------------------
(a) Except to the extent that it may be required to do so
pursuant to Article 8 of the Revolution Company Operating Agreement, the
Seller will not directly or indirectly sell, transfer, assign, pledge or
hypothecate any of its interests in Princeton Video Image Europe, N.V.,
Princeton Video Image Israel, Ltd., or Revolution Company, LLC without the
written consent of the Purchasers. Nothing contained in this Agreement to
the contrary shall be construed to prohibit the Seller from causing the
dissolution of Princeton Video Image Europe, N.V. or taking any action in
connection with such dissolution.
(b) The Seller agrees that it will not directly or
indirectly, and will cause Princeton Video Image Israel, Ltd. not to, sell,
transfer, assign, pledge or hypothecate any of the assets of Princeton
Video Image Israel, Ltd., except in the Ordinary Course of Business, as
defined in Section 5.1, or pursuant to agreements in effect on the date
hereof, without the written consent of the Purchasers.
(c) The Seller agrees that it will not directly or
indirectly, and will cause Publicidad not to, sell, transfer, assign,
pledge or hypothecate any of the assets of Publicidad except in the
Ordinary Course of Business, as defined in Section 5.1, or pursuant to
agreements in effect on the date hereof, without the written consent of the
Purchasers.
6. Remedies in the Event of Default.
--------------------------------
6.1 General. The Purchasers may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it under applicable law as in effect at that time,
all the rights, remedies and privileges with respect to the collateral of a
secured party in the event of a default under the Uniform Commercial Code
(the "UCC") in effect in the State of New York at that time, or under the
law pertaining to secured creditors of any other jurisdiction as may apply,
and the Purchasers may also, without notice except as specified below, sell
such Collateral or any part thereof in one or more parcels at public or
private sale, for cash, on credit or for future delivery. The Seller agrees
that, to the extent notice of sale shall be required by law, at least 10
days' notice to the Seller of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Purchasers shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Purchasers
may adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
6.2 Application of Cash to Secured Obligations. Any cash held by
the Purchasers as Collateral and all cash proceeds received by the
Purchasers in respect of the sale of, collection from or other realization
upon all or any part of the Collateral, in the discretion of the
Purchasers, may be held by the Purchasers as collateral for, and/or then or
at any time thereafter applied (after payments of any amounts payable
pursuant to Section 6.4) in whole or in part by the Purchasers against, all
or any part of the Secured Obligations in such order as the Purchasers
shall elect. The Seller shall remain liable under the Secured Obligations
for any Secured Obligations remaining unpaid after application of such cash
or cash proceeds against the Secured Obligations. Any surplus of such cash
or cash proceeds held by the Purchasers and remaining after payment in full
of all the Secured Obligations shall be paid over to the Seller or to any
party lawfully entitled to receive such surplus.
6.3 Assembly of Collateral. Upon the demand of the Purchasers
after the occurrence of an Event of Default, the Seller shall assemble the
Collateral and make it available to the Purchasers at a reasonable time and
reasonable place designated in such demand.
6.4 Expenses. The Seller agrees to pay to the Purchasers and PVI
Holding, upon demand, the amount of any and all reasonable expenses,
including the reasonable fees and expenses of counsel and of any experts
and agents, that the Purchasers or PVI Holding may incur in connection
with: (i) the sale of, collection from or other realization upon any of the
Collateral; (ii) the exercise or enforcement of any of the rights of the
Purchasers hereunder or under the Convertible Notes; or (iii) the failure
by the Seller to perform or observe any of the provisions hereof or
thereof.
7. Representations and Warranties of the Purchasers. Each of the
Purchasers represents and warrants to the Seller as follows:
7.1 Authorization of Agreement. The Purchaser has full legal
power and authority to enter into and perform this Agreement. This
Agreement has been duly and validly executed and delivered by the
Purchasers and constitutes the valid and binding obligation of the
Purchasers, enforceable in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting creditors' rights generally and to general principles of equity.
7.2 Accredited Investor. The Purchaser is an accredited investor
within the meaning of Rule 501(a) promulgated under the Securities Act. It
is acquiring its Convertible Note for its own account and not with the view
to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act. It understands that the
Convertible Note has not been registered under the Securities Act or any
applicable state laws by reason of its issuance or contemplated issuance in
a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act and such laws, and that the reliance of
the Seller and others upon this exemption is predicated in part upon this
representation and warranty. It further understands that the Convertible
Note may not be transferred or resold without (a) registration under the
Securities Act and any applicable state securities laws, or (b) an
exemption from the requirements of the Securities Act and applicable state
securities laws.
7.3 Investment Evaluation and Business Affairs. The Purchaser has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment to be made
hereunder. It has and has had access to all of the Seller's books and
records and access to the Seller's executive officers as the Purchaser has
requested. From its access to such information, the Purchaser is aware of
the Seller's limited cash on hand and going-concern risks. The Purchaser
recognizes that investment in the Convertible Note involves a number of
significant risks.
7.4 Legend. The Purchaser understands that its Convertible Note
shall bear a legend in substantially the following form in addition to any
other legends that may be required under any other documents to which the
Purchaser is a party.
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND IS A "RESTRICTED SECURITY" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE NOTE MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
NOTE UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144 OR
ANOTHER EXEMPTION FROM THE ACT.
8. Covenants of the Purchasers. Each Purchaser agrees that it will
consider in good faith any requests of the Seller that it modify or waive
certain of the rights to which it is entitled pursuant to the Transaction
Documents and, in the case of Presencia, the Reorganization Agreement, to
the extent that such requested modification or waiver is necessary to
induce a third party to make a material investment of new capital in the
Seller; provided, that it is understood and acknowledged by the Seller that
a Purchaser will consider such request solely in its own best interests and
without regard for the interests of any other Person.
9. Indemnification; Survival.
-------------------------
9.1 Indemnity. The Seller agrees to indemnify, defend and hold
harmless each of the Purchasers and PVI Holding, and their respective
affiliates, stockholders, directors, officers, partners, employees, agents,
successors and assigns from and against all losses, damages, liabilities,
deficiencies or obligations, including, without limitation, all claims,
actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including settlement costs and
reasonable legal fees) to which any of them may become subject as a result
of any and all misrepresentations or breaches of a representation or
warranty made by the Seller herein.
9.2 Survival. All representations and warranties made herein by
the Seller and the Purchasers shall survive the closing of the transactions
contemplated hereby for a period of three (3) years, except as to title to
the Seller's property (including Section 4.13), which shall survive
forever. Any matter as to which a claim has been asserted by notice to the
other party that is pending or unresolved at the end of such survival
period shall continue to be covered by this Section 9.2 until such matter
is finally terminated or otherwise resolved by the parties under this
Agreement or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.
10. Successors and Assigns; Parties in Interest. This Agreement shall
bind and inure to the benefit of (a) the Purchasers, (b) the Seller and (c)
their respective successors and assigns, including without limitation any
Person who succeeds to the rights and properties of the Seller as a result
of a merger, consolidation, acquisition of substantially all of the
Seller's assets or similar transaction. No party may assign its rights
under this Agreement without the consent of the others, which consent shall
not be unreasonably withheld; provided, however, that PVI Holding and any
Purchaser may assign its rights under Section 9.1 hereof at any time to any
Person which it controls; provided, further, that Presencia or PVI Holding
shall not require the consent of PVI Holding or Presencia, respectively, or
any designee that becomes a party to this Agreement pursuant to an executed
joinder agreement in the form attached hereto as Annex B in order to assign
its rights under this Agreement.
11. Entire Agreement. This Agreement (as amended from time to time)
and the other writings referred to herein or delivered pursuant hereto
which form a part hereof contain the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto. The
transactions contemplated hereby are without prejudice to the Purchasers'
right to exercise its rights under existing agreements in its sole
discretion and absolute best interests and without regard to the interests
of any other Person.
12. Notices. All notices or other communications in connection with
this Agreement shall be in writing and shall be considered given when
personally delivered or when mailed by registered or certified mail,
postage prepaid, return receipt requested, or when sent via commercial
courier or telecopier, directed, as follows or to such other address as a
party may designate by notice:
(a) If to Presencia:
Presencia en Medios, S.A. de X.X.
Xxxxxx # 000-000
Xxxxxx DF 11000
Attn: Xxxxxxx Xxxx
With a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile: 212-859-4000
(b) If to PVI Holding:
PVI Holding, LLC
c/o Cablevision Systems Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
With copies (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(c) If to the Seller
Princeton Video Image, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, X.X. 00000
Attn: President
With a copy (which shall not constitute notice) to:
Smith, Stratton, Wise, Xxxxx & Xxxxxxx, LLP
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Each party may, by notice to the other, change the address at which
notices or other communications are to be given to it.
13. Changes. The terms and provisions of this Agreement may not be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, except pursuant to the consent of the affected party.
14. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflict of laws.
17. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. Further Assurances. The parties hereto shall, subsequent to the
date hereof, execute and deliver such further documentation, and take such
further action, in each case without cost to the other party, as shall be
reasonably requested by such other party hereto to further evidence and
perfect the completion of the transactions contemplated hereby. The Seller
hereby acknowledges that, except as provided in Section 8 hereof, neither
the transactions contemplated hereby or anything contained herein or in the
documents and agreements being delivered at the Closing will affect the
Purchasers' rights under any agreement between it and the Seller in effect
on the date hereof, including, without limitation, its right to withhold in
its sole discretion its approval of the offering, sale and issuance of
equity securities of the Company.
19. Fees and Expenses. Each party shall be responsible for payment of
its own fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby; provided, however, that Seller shall
reimburse each of Presencia and PVI Holding for reasonable fees and
expenses of outside counsel incurred in connection with the negotiation of
the Transaction Documents, and in the case of PVI Holding for certain fees
and expenses incurred in connection with its role as Collateral Agent, up
to a maximum aggregate amount of $25,000 each.
***
IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase
and Security Agreement to be duly executed on their behalf.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
---------------------------
Title: COO
--------------------------
PRESENCIA EN MEDIOS, S.A. DE C.V.
By: /s/ Power of Attorney - Xxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
---------------------------
Title: President
--------------------------
PVI HOLDING, LLC
By: /s/ Xxxxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
---------------------------
Title:
--------------------------
Princeton Video Image Latin America, L.L.C. is executing this Note
Purchase and Security Agreement for the purpose of granting a security
interest to the Purchasers in all of its right, title, and interest in, to,
and under the membership interest it holds in PVI LA, LLC, a Delaware
limited liability company.
PRINCETON VIDEO IMAGE,
LATIN AMERICA, L.L.C.
By: /s/ Xxxxx Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
---------------------------
Title: COO
--------------------------
PVI LA, LLC is executing this Note Purchase and Security Agreement for
the purpose of granting a security interest to the Purchasers in all of its
right, title, and interest in, to, and under the securities it holds in
Publicidad Virtual, S.A. de C.V., a company formed under the laws of
Mexico.
PVI LA, LLC
By: /s/ Xxxxx Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
---------------------------
Title: COO
--------------------------
SCHEDULE A
----------
DESCRIPTION OF COLLATERAL
All of the assets, rights and property of the Seller, whether real or
personal, tangible or intangible, wherever located, now existing or
hereafter acquired, including, without limitation, all of the Seller's
right, title, and interest in, to, and under the following, except to the
extent that the Seller is subject to any restriction on the transfer, sale,
assignment, pledge or hypothecation of such assets, rights and property
(any such restriction being referred to as a "Transfer Restriction"):
(a) all accounts receivable of the Seller, all prepaid expenses (to
the extent transferable to the Purchasers), vendor credits and credit
balances and deposits, price adjustments or rights with respect thereto,
rebates, and deposits with manufacturers and others;
(b) all monies, reserves, deposits, certificates of deposit and
deposit accounts and interest or dividends thereon, securities, investment
accounts, cash, cash equivalents, and equity interests in partnerships,
limited partnerships, limited liability companies or other entities, and
other property now or at any time under the control of the Seller, it being
understood that the Seller's interest in, respectively, Princeton Video
Image Europe, N.V., Revolution Company, LLC, and Princeton Video Image
Israel, Ltd. are subject to Transfer Restrictions;
(c) all real property and leasehold interests in real property,
together with all improvements and fixtures thereon and interests therein,
any prepaid rent, security deposits and options to renew or purchase
thereunder;
(d) all inventory, equipment, machinery, tools, computer systems
(including all hardware and software), furniture, trade fixtures,
personalty, vehicles, and other personal property, whether owned, leased or
otherwise held by the Seller, and all rights of the Seller under or
pursuant to all warranties, representations and guaranties made by
suppliers, manufacturers and contractors in connection with the products
sold to or services provided to the Seller, or affecting the property
heretofore described;
(e) all office and other supplies, tools, spare parts, advertising,
and promotional materials;
(f) all common law and registered trademarks or copyrights and all
license agreements relating thereto and unregistered trademarks or
copyrights, logos, service marks, trade dress, trade names and
copyrightable words, including without limitation, the name "Princeton
Video Image," and all applications, registrations, certificates, Section 8
affidavits (stating that a xxxx has been in continual use), renewals,
investigations, search reports, histories and other documents or files
pertaining thereto;
(g) all patents and patent applications, as well as all reissues,
divisions, continuations and continuation-in-part applications and any
other patents issuing thereon, and all license agreements and other
agreements which relate to inventions and discoveries and any patent
applications and patents thereon, as well as improvements therein which are
owned, licensed, used or held for use by or on behalf of the Seller;
(h) all technical information and know-how, confidential and
non-confidential, which is used or held for use by or on behalf of the
Seller, including, without limitation, all inventions, processes, formulae
and all discoveries, improvements, trade secrets and confidential data,
whether or not patented or patentable and whether or not copyrighted or
copyrightable, computer software (including, without limitation, source
codes and object codes), software licenses, patterns, plans, designs,
research data, trade secrets and other proprietary know-how, formulae and
manufacturing, sales, service or other processes, operating manuals,
drawings, technology, equipment and parts lists (with related descriptions
and instructions), manuals, data, records, procedures, product packaging
instructions, product specifications, analytical methods, sources and
specifications for raw materials, toxicity and general health and safety
information, environmental compliance and regulatory information, research
and development records and reports and other documents relating to the
foregoing and all licenses, approvals, authorizations or other rights to
use intellectual property rights of others;
(i) all of the Seller's rights in and under the agreements to which
the Seller is a party, mortgages, instruments, leases for personal
property, customer contracts, insurance policies, marketing agreements,
joint venture, partnership or similar agreements, and other agreements;
(j) all transferable licenses, permits, filings and other governmental
authorizations;
(k) all manufacturer's, supplier's, contractor's and seller's
warranties made to the Seller, or affecting the property, machinery or
equipment used by the Seller, and all rights of a successor employer for
employment tax and unemployment insurance purposes under applicable law
(should the Purchasers choose to avail themselves thereof);
(l) blueprints, instruction manuals, maintenance manuals, reports and
similar documents;
(m) all right, title and interest of the Seller in and to all Business
Information (as defined below) and related books and records used by the
Seller in the operation of its business, including, but not limited to,
files, computer data, computer discs and tapes, invoices, credit and sales
records, personnel records (subject to applicable law), payroll, current
and former customer lists (including customer contracts and agreements),
current and former supplier lists (including supplier cost information),
manuals, drawings, business plans and other plans and specifications, sales
literature, current price lists and discounts, promotional signs and
literature, marketing and sales programs, manufacturing and quality control
records and procedures and any other files and records relating to the
Seller's business, whether or not held by the Seller or a third party
(collectively, the "Business Information"); provided, however, that the
Seller shall have the right to complete access to, and the right to copy
the Business Information for any reasonable purpose, including, without
limitation, the right to access and copy (i) all business records relating
to tax returns or which are reasonably necessary to substantiate all
entries on such tax returns or otherwise reasonably necessary in connection
with any audit or other examination of such returns; (ii) all business
records which are reasonably required by the Seller to defend against any
liabilities, claims or assessments for which the Seller is or may be
legally responsible, or for which the Seller is required to indemnify the
Purchasers or the Collateral Agent; and (iii) any other records for which
the Seller can demonstrate a legitimate need; and
(n) all goodwill of the Seller arising out of or associated with its
business.
SCHEDULE B
----------
Princeton Video Image Europe, N.V., a corporation formed under the
laws of Belgium. The Seller owns 90% of the outstanding capital stock of
Princeton Video Image Europe, N.V.; Interactive Media, S.A. owns the
remaining 10% of the outstanding capital stock.
Princeton Video Image Israel, Ltd., a corporation formed under the
laws of Israel. The Seller is the owner of 100% of the equity interests in
Princeton Video Image Israel, Ltd.
Princeton Video Image Latin America, L.L.C., a New Jersey limited
liability company. The Seller is the sole member of Princeton Video Image
Latin America, L.L.C.
PVI LA, LLC, a Delaware limited liability company. Princeton Video
Image Latin America, L.L.C. is the sole member of PVI LA, LLC. The Seller
is the indirect owner of all outstanding equity interests in this company.
Publicidad Virtual, S.A. de C.V., a company formed under the laws of
Mexico. The Seller owns 5% of the outstanding capital stock of Publicidad
Virtual, S.A. de C.V.; PVI LA, LLC owns the remaining 95% of the
outstanding capital stock. The Seller is the indirect owner of all
outstanding equity interests in Publicidad Virtual, S.A. de C.V.
Publicidad Virtual, S.A. de C.V. owns all the equity interests in
Publicidade Virtual Latina America L.T.D.A., a company formed under the
laws of Brazil.
Revolution Company, L.L.C., a Delaware limited liability company. The
Seller owns a 25% interest in the Revolution Company, L.L.C., with CBS
Technology Corporation owning 40% and Core Digital Technologies, Inc.
owning 35%.
SCHEDULE C
----------
U.S. Patents.
------------
Patent No. 5,264,933, which relates to basic pattern recognition video
insertion technology, was issued on November 23, 1993, will expire on
January 28, 2012 and was assigned to the Seller on January 22, 1992.
Patent No. 5,543,856, which relates to the use of remote insertion of
images that might be useful in a narrow casting application, was issued on
August 6, 1996, will expire on October 27, 2013 and was assigned to the
Seller on October 22, 1993.
Patent No. 5,627,915, which relates to a pattern recognition system
using templates, was issued on May 6, 1997, will expire on January 31,
2015, and was assigned to the Seller on January 30, 1995.
Patent No. 5,808,695, which relates to a method of tracking scene
motion for live video insertion systems, was issued on September 15, 1998
and will expire on December 29, 2015 and was assigned to the Seller on
December 27, 1995.
Patent No. 5,892,554, which relates to inserting live and moving
objects into scenes, was issued to the Seller on April 6, 1999, will expire
on November 28, 2015, and was assigned to the Seller on March 31, 1998.
Patent No. 5,953,076, which relates to techniques for occlusion
processing, was issued on September 14, 1999 and will expire on June 12,
2016.
Patent No. 6,100,925, which relates to techniques for combining camera
sensors with image processing, was issued on August 8, 2000, and will
expire on November 25, 2017.
Patent No. 6,184,937, which relates to audio enhancement of the
inserts, was issued on February 20, 2001 and will expire on March 14, 2017.
U.S. Trademarks.
---------------
L-VIS(R), C-TRAK(R), i-Point(TM)
Foreign Patents and Trademarks
------------------------------
Australia Patent No. 687,086
Spain Patent Nos. 0746942, 0792068, 000000
Xxxxxx Patent Nos. 0746942, 0796541, 0792068
UK Patent Nos. 0746942, 0792068, 000000
Xxxxx Patent No. 0746942, 0792068, 0796541, 595808, 0000000
Xxxxx Patent Nos. 0000000, 3155173
Luxemburg Patent No. 0000000
Xxxxxx Patent Nos. 188,649, 183,569, 194066, 196502
Netherlands Patent No. 0746942, 0792068, 595808, 0796541
Xxx Xxxxxxx Xxxxxx Xx. 000000
Xxxx Patent No. 858
Russia Patent No. 2144279
Australia Patent No. 698648
Europe Patent Nos. 0792068, 0796541, 000000
Xxxxxx Patent Nos. 3032500, 3031285, 3030996, 0792068
Sweden Patent Nos. 792,063, 596,541, 595,808, 0792068, 000000
Xxxxxxxxx Patent Nos. AR 252895 V1, AR 002497 B1, AR 000000
Xxxxxxxxx Prwnr Nos. 50,533, 40,825
Belgium Patent Nos. 0792068, 000000
Xxxxxxx Patent No. 69421554.6-08, 595808, 69602515.9-08
Licensed Rights to the Seller
-----------------------------
License granted pursuant to the Research Agreement between the Seller
and Xxxxx Xxxxxxx Research Center, Inc. dated November 4, 1990, as amended,
subject to the exception set forth in Section 4.7(e) hereof.
License granted pursuant to the License Agreement between the Seller
and Theseus Research, Inc. dated December 18, 1995.
Licenses granted pursuant to the Cross-License Agreement among the
Seller, Sportvision, Inc. and the others named therein dated as of July 29,
2002.
Applications.
------------
Chile Applications No. 153-96
EU Application No. 96905244.8
Xxxxxxxxx Xxxxxxxxxxx Xx. XX 000-00
Xxxxxx Application No. SN P19405641-2
Canada Application No. 2,175,038
Xxxxx Xxxxxxxxxxx Xx. 0000-00
Xxxxx Application No. 941 93937.5
Germany Application No. 69409407.2-08
EU EPO Application No. 94924588.0, priority date of 10/27/93, grant
issued 2/19/98; validated in 10 European countries.
Korea Application No. SN 96-702,186
Singapore Application No. 9604188-4
Belgium Validation of 3780.107.1, unknown status
Germany Application No. 6942155472
Spain validation application of 3780-107.1, Patent No. 0000000
Xxxxxx validation application of 3780-107.1, Patent No. 0000000
Xxxxx Application No. 00000XX/0000
Xxxxxxxxxxx validation application of 3780-107.1EP, Patent No. 0792068
Xxxxx Xxxxxxxxxxx Xx. 0000-00
Xxxxxxx validation of EP 3780-109, EPO Application No. 9191562.8
Spain validation of EP 3780-109, EPO Application No. 9191562.8
France validation of EP 3780-109, EPO Application No. 9191562.8
UK validation of EP 3780-109, EPO Application No. 9191562.8
Italy validation of EP 3780-109, EPO Application No. 9191562.8
Netherlands Certification of Domicile on EP 3780-109, XXX Xxxxxxxxxxx
Xx. 0000000.0
Xxxxxxxxx Application "Television Displays Having Selected Inserted
Displays", coincides with EP 3780-109, EPO Application No. 9191562.8
Argentina Application based on U.S. Patent 5,892,554
Xxxxxx Xxxxxxxxxxx Xx. 0000000
Xxxxx SN 1067-96, 1068-96
EU EPO Application No. 00000000.9
Japan Application based on U.S. Patent 5,892,554
Xxxx XX 00000.00
Xxxxxx Application No. 9608944.
Germany validation of EPO Application No. 96921560.7 (Patent No.
0796541)
Spain validation of EPO Application No. 96921560.7 (Patent No.
0796541)
France validation of EPO Application No. 96921560.7 (Patent No.
0796541)
UK validation of EPO Application No. 96921560.7 (Patent No. 0796541)
Italy validation of EPO Application No. 00000XX/00
Xxxxx Application No. 9-503299
Netherlands validation of EPO Application No. 96921560.7 (Patent No.
0796541)
Brazil application based on U.S. Application No. PCT/US97/04083
EU EPO Application No. 00000000.3
Japan Application No. 09-538866, laid open as No. 2000-509236
Mexico Application No. 988,955
Brazil Application No. 9714971-3
EU EPO Application No. 00000000.0
Japan Application No. 10-524822
Mexico Application No. 99-4772
U.S. Application No. 09/308,949, Motion Tracking Using Image-Texture
Templates
EU Application No. PCT/US97/21608, Motion Tracking Using Image-Texture
Templates
U.S. Application No. 09/331,332, Set Top Device Enhanced for Targeted
Electronic Insertion Into Video
Brazil Application No. 9714970-5
China Application No. 97180124.X
EU EPO Application No. 00000000.4
Japan Application No. 10-524821
Mexico Application No. 00-0000
Xxxxxx Application No. SN 9714949-7
EU EPO Application No. 00000000.3
Japan Application No. 10-528931
Mexico Application No. 99-5800.
EU Application No. PCT/US99/01399, Event Linked Insertion of Indicia
Into Video
Xxxxxxxxx Xxxxxxxxxxx Xx. X00 00 00000
Xxxxxx Application No. P19907194-0
Chile Application No.1999-1844
EU filed
Xxxxxx XX 0000
Xxxxx filed by Xxxxx Xxxxx
U.S. Patent Application No. 09/600,768
U.S. Provisional Application No. 60/115,666
U.S. Provisional Application No. 60/129,812, Method and Apparatus to
Overlay Comparative Time Determined Positional Data in a Video Display
(inactive provisional)
U.S. Application No. 09/551,824, Method and Apparatus to Overlay
Comparative Time Determined Positional Data in a Video Display
EU PCT/US00/10012, Method and Apparatus to Overlay Comparative Time
Determined Positional Data in a Video Display (European counterpart)
U.S. Application No. 09/734,710 (from Provisional 60/170,394) 2-D/3-D
Recognition/Tracking Algorithm for Soccer Application
EU PCT/US00/33672, 2-D/3-D Recognition/Tracking Algorithm for Soccer
Application (European counterpart)
U.S. Provisional Application 60/170,398, System and Method of Real
Time Insertion Into Video With Occlusion on Area Containing Multiple Colors
(inactive provisional)
U.S. Application No. 09/734,709, System and Method of Real Time
Insertion Into Video With Occlusion on Area Containing Multiple Colors
(from provisional SN 60/170,398)
U.S. Application No. 09/230,099, Image Insertion In Video Streams
Using a Combination of Physical Sensors and Pattern Recognition
EU Application No. PCT/US97/21607, Image Insertion In Video Streams
Using a Combination of Physical Sensors and Pattern Recognition
EU Application No. PCT/US97/04083, Audio Enhanced Electronic Insertion
of Indicia Into Video
EU Application No. PCT/US96/10166, System and Method of Real Time
Insertions Into Video Using Adaptive Occlusion With a Synthetic Reference
Image
EU Application No. PCT/US96/10163, System and Method for Inserting
Static and Dynamic images Into a Live Video Broadcast
EU Application No. PCT/US96/10164, Method for Tracking Scene Motion
for Live Video Insertion Systems
EU Application No. PCT/US96/01125, Live Video Insertion System
Including Template Matching
EU Application No. PCT/US94/08863, Downstream Control of Electronic
Billboard
EU Application No. PCT/US91/05174, Television Displays Having Selected
Inserted Indicia
EPO Application No. 00922186.2, Method To Overlay Comparative Time
Determined Positional Data in a Video Stream
U.S. Provisional Application No. 10/115,136, A System for Implanting
an Image into a Video Stream
EPO Application No. 00922186.2, A System for Implanting an Image into
a Video Stream
Korea Application No. 95-702186
U.S. Provisional Application No. 60/000279, Inserting Static and
Dynamic Images into Live Video
EPO Application No. 96911559.9, Inserting Static and Dynamic Images
into Live Video
Japan Application No. 9-503297
U.S. Provisional Application No. 60/031883, Camera Tracking
U.S. Provisional Application No. 60/038143, Image Insertion
U.S. Provisional, Application No. 60/034517, Set Top Device
EPO Application No. 99905457.1-2202, Event Linked Insertion
Japan Application No. 2000-529081, Event Linked Insertion
U.S. Provisional Application No. 60/072354, Event Linked Insertion
U.S. Application No. 09/482,440
Brazil Application No. 9610777, Method of Tracking
Japan Application No. 9-50398, Method of Tracking
Mexico Application No. 9710192, Method of Tracking
Brazil Application No. PI9709751-9, Enhanced Audio
Subsidiaries' Intellectual Property
-----------------------------------
Princeton Video Image Israel, Ltd., acquired the following patents from
SciDel Technologies, Ltd. ("SciDel"), in February 2002.
U.S Patents
-----------
Patent No. 5,491,517, which relates to recognizing a known pattern on
the field, was issued on February 13, 1996 and the rights to which were
Patent No. 5,731,846 is a continuation of 5,491,517 above which
relates to recognizing a known pattern on the field, was issued on March
24,1998 and the rights to which were acquired by Princeton Video Image
Israel, Ltd. from SciDel in February 2002.
Foreign Patents
---------------
Australia Patent No. 692,529
Bulgaria Patent No. 61,114
Czech Republic No. 286,248
Israel Patent Nos. 108,957, 103,002, 115,288
India Patent No. 1,834,210
Korea Patent No. 260,786
Latvia Patent No. 11,716
New Zealand Patent No. 282,275
Poland Patent No. 176,135
Taiwan Patent No. NI 105,845
Vietnam Patent Xx. 000
Xxxxx Xxxxxx Patent No. 95/1403
Mexico Patent No. 000000
Xxxxxxxxx Patent No. 34,536
Hungary Patent No. 22049
EPO Patent No. 0750819
Applications
------------
Japan Application No. 7-524038
Philippines Application No. 00000
Xxxxxxxxx Application Nos. 10511/99
XXX Xxxxxxxxxxx Xx. 00000000.0
Xxxx Xxxx Application No. 00102275.2
Israel Application No. 122194
U.S. Application No. 09/351,329
Canada Application No. 2,179,031
Norway Application No. P963811
ANNEX A
FORM OF CONVERTIBLE PROMISSORY NOTE
ANNEX B
FORM OF JOINDER AGREEMENT
By its execution of this Joinder Agreement, the undersigned:
(1) will be bound by, and have the benefit of, the terms of that
certain:
(a) Note Purchase and Security Agreement, dated February 18,
2003 (the "Purchase Agreement"), by and among Princeton Video Image, Inc.
("PVI"), Presencia en Medios, S.A. de C.V. ("Presencia") and PVI Holding,
LLC ("PVI Holding"), as a Purchaser (as such term as defined in the
Purchase Agreement) and a party thereto and
(b) Intercreditor Agreement, dated February 18, 2003, by and
between PVI Holding and Presencia, as a Creditor (as such term is defined
in such Intercreditor Agreement) and a party thereto.
(2) makes to PVI, those representations and warranties set forth
in Section 7 of the Purchase Agreement.
(3) agrees that, notwithstanding anything to the contrary
contained in the Purchase Agreement or the Convertible Notes (as defined in
the Purchase Agreement), it:
(a) will not exercise any of its rights under the Purchase
Agreement, including without limitation those rights set forth in Section 6
thereof, or take any action thereunder unless such rights or actions are
also taken by Presencia under the Purchase Agreement, provided, however,
that the foregoing restriction shall not apply to conversion of the
Convertible Note issued to it pursuant to Section 3 of such Convertible
Note; and
(b) will be deemed to have: (i) consented to the taking of
any action for which its prior consent is required under the Purchase
Agreement or the Convertible Notes, (ii) waived any rights under the
Purchase Agreement or the Convertible Notes, and (iii) agreed to any
modification or amendment of the Purchase Agreement or the Convertible
Notes, to the extent that Presencia has consented to such action, waived
such rights or agreed to such modification or amendment; and
(c) will, if Presencia converts the Presencia Convertible
Note (as defined below) convert the Convertible Debt in the same proportion
on the same terms and conditions and for the same consideration as the
conversion is effected under the Presencia Convertible Note; and
(d) will, if Presencia extends the Maturity Date (as defined
in the Presencia Convertible Note) of the Presencia Convertible Note,
extend the Maturity Date of the Convertible Note issued to it to the same
date.
(4) acknowledges and agrees that, notwithstanding anything to the
contrary contained in the Purchase Agreement, the Convertible Note to be
delivered to the undersigned will include the following language:
"13. Certain Restrictions.
(a) Notwithstanding anything to the contrary contained
herein,
(i) Payee may not exercise any of its rights under this
Convertible Note, including without limitation those rights set forth in
Section 5(b) hereof, or take any other action hereunder, unless such rights
or actions are also exercised or taken by Presencia en Medios, S.A. de C.V.
("Presencia") under any convertible promissory note issued by Maker to
Presencia pursuant to the Note Purchase and Security Agreement, dated
February 18, 2003, by and among Princeton Video Image, Inc., Presencia and
PVI Holding, LLC on February 18, 2003 (any such convertible promissory note
being referred to herein as a "Presencia Convertible Note") provided,
however, that the foregoing restriction shall not apply to conversion of
this Convertible Note by Payee pursuant to Section 3 hereof;
(ii) Payee will be deemed to have: (i) consented to the
taking of any action for which its prior consent is required under this
Convertible Note, (ii) waived any rights under this Convertible Note, and
(iii) agreed to any modification or amendment of this Convertible Note, to
the extent that Presencia has consented to such action, waived such rights
or agreed to such modification or amendment under a Presencia Convertible
Note.
(iii) Payee will, if Presencia converts the Presencia
Convertible Note, convert the Convertible Debt in the same proportion and
on the same terms and conditions and for the same consideration as the
conversion is effected under the Presencia Convertible Note; and
(iv) Payee will, if Presencia extends the Maturity Date
(as defined in the Presencia Convertible Note) of the Presencia Convertible
Note, extend the Maturity Date of the Convertible Note issued to it to the
same date.
(b) If the Presencia Convertible Note ceases to be
outstanding as a result of Maker's payment to Presencia of all amounts due
and owing under the Presencia Convertible Note, then Payee shall thereafter
be entitled to receive, and Maker shall be required to pay, all amounts due
and owing under this Convertible Note in accordance with the terms and
conditions set forth herein.
* * * * *
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement
to be duly executed on its behalf.
PURCHASER.
By:
----------------------
Name:
--------------------
Title:
-------------------
Accepted and Agreed
to this __ day of February, 2003.
PRINCETON VIDEO IMAGE, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
