EXHIBIT 10.29
EXECUTION COPY
NOTE PURCHASE AND SECURITY AGREEMENT
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.
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"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.
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,
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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,
(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,
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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
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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
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resolutions of the Seller's Board approving the transactions contemplated by
this Agreement and the other Transaction Documents.
3. Security Interest.
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.
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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.
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4.4 Capitalization.
(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
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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.
(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.
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(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
11
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
12
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
13
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:
(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;
14
(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
15
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
(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
16
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.
17
(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
18
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.
(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
19
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
20
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
21
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.
22
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.
23
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:
24
(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
25
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.
***
26
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/ XXXXX XXXX (Power of Attorney)
------------------------------------
Name: Xxxxxxx Xxxx
----------------------------------
Title: President
----------------------------------
PVI HOLDING, LLC
By: /s/ XXXXXXX X. XXXX
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
27
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
----------------------------------
28
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:
-----------------------------
