Document:

<PAGE>

                                                                    EXHIBIT 10.3

                                                                  Execution Copy

                               SECOND AMENDMENT TO
                      NOTE PURCHASE AND SECURITY AGREEMENT

         THIS SECOND AMENDMENT TO NOTE PURCHASE AND SECURITY AGREEMENT (this
"Second Amendment") is dated as of April 4, 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.

                                    RECITALS:

         WHEREAS, Seller, Presencia and PVI Holding are parties to that certain
Note Purchase and Security Agreement, dated as of February 18, 2003, as amended
by the Amendment to Note Purchase and Security Agreement among the parties
thereto dated March 20, 2003 (as so amended, the "Agreement"); and

         WHEREAS, Presencia delivered an Election Notice on March 31, 2003 (the
"March Election Notice") indicating that Joseph F. Decosimo and Benjamin Sitt
(together the "Designees") and Presencia would purchase an aggregate of
$1,000,000 of Convertible Notes at the Third Closing; and

         WHEREAS, the Agreement provided that the Third Closing was to occur
within five (5) days after Presencia gave the March Election Notice; and

         WHEREAS, notwithstanding delivery of the March Election Notice,
Presencia has requested that the parties to the Agreement agree that: (i)
Presencia shall purchase $650,000 of Convertible Notes at the Third Closing,
(ii) the Designees shall not be required to purchase any Convertible Notes at
the Third Closing, (iii) the Third Closing be held not later than ten (10) days
following its delivery of the March Election Notice, and (iv) Presencia shall
have the option to purchase an additional $350,000 of Convertible Notes at a
Fourth Closing (as hereinafter defined) to be held five (5) days after it
delivers a second notice of election; and

         WHEREAS, the parties to the Agreement wish to amend the Agreement to
reduce the amount of the Third Closing Purchase Price to $650,000, to extend the
time in which the Third Closing may occur, and to provide Presencia with an
option to purchase $350,000 of Convertible Notes at a Fourth Closing pursuant to
a notice of election to be delivered within thirty (30) days after the Third
Closing Date;

         NOW, THEREFORE, for good and adequate consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

    1.     All defined terms used herein and not otherwise defined shall have
the meaning ascribed thereto in the Agreement.

<PAGE>

                                                                  Execution Copy

    2.     The following definitions set forth in Section 1 of the Agreement are
hereby amended by deleting such definitions in their entirety and substituting
in lieu thereof the following:

                  "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), (ii) the promissory note in the
amount of $500,000 executed and delivered by the Seller to the Purchaser at the
Second Closing (as hereinafter defined), (iii) the promissory note(s), if any,
in the aggregate amount of $650,000 executed and delivered by the Seller to the
Purchasers at the Third Closing (as hereinafter defined), and (iv) the
promissory note(s), if any, in the aggregate amount of $350,000 executed and
delivered by the Seller to the Purchasers at the Fourth Closing all in
substantially the form attached hereto as Annex A.

                  "Election Notice" shall mean (i) for purposes of the Third
Closing, a notice by Presencia to the Seller in which Presencia agrees that it
or its designees will purchase $650,000 of Convertible Notes at the Third
Closing, and (ii) for purposes of the Fourth Closing, a notice by Presencia to
the Seller in which Presencia agrees that it or its designees will purchase
$350,000 of Convertible Notes at the Fourth Closing.

                  "Purchaser" shall mean, (i) for purposes of the First Closing
and the Second Closing, Presencia, and (ii) for purposes of the Third Closing
and Fourth Closing, Presencia and/or its designee(s) as specified in the
applicable Election Notice and approved by PVI Holding, such approval not to be
unreasonably withheld or delayed.

         3.  Section 2 of the Agreement is hereby amended and restated in its
entirety as follows:

         "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, 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 Third
Closing (as hereinafter defined) unless Presencia gives an Election Notice to
the Seller on or before March 31, 2003 or at the Fourth Closing, unless
Presencia gives an Election Notice to the Seller within thirty (30) days of the
Third Closing Date.

                  2.2      Purchase Price. The aggregate purchase price to be
delivered at the First Closing is $1,500,000 (the "First Closing Purchase
Price"), the aggregate purchase price to be delivered at the Second Closing is
$500,000 (the "Second Closing Purchase Price"), the aggregate purchase price to
be delivered at the Third Closing is $650,000 (the "Third Closing Purchase
Price") and the aggregate purchase price to be delivered at the Fourth Closing
(as such terms are defined below) is $350,000 (the "Fourth Closing Purchase
Price").

                  2.3      Closings. The closing of the purchase and sale of a
Convertible Note in

<PAGE>

                                                                  Execution Copy

the principal amount equal to the First Closing Purchase Price is occurring
simultaneously with the execution of this Agreement (the "First Closing") at the
offices of Smith, Stratton, Wise, Heher & Brennan, LLP, 600 College Road East,
Princeton, New Jersey on the date hereof. The closing of the purchase and sale
of a Convertible Note in the principal amount equal to the Second Closing
Purchase Price (the "Second Closing") will occur at the offices of Smith,
Stratton, Wise, Heher & Brennan, LLP, 600 College Road East, Princeton, New
Jersey on March 20, 2003 (the "Second Closing Date"). The closing of the
purchase and sale of one or more additional Convertible Notes in the aggregate
principal amount equal to the Third Closing Purchase Price (the "Third Closing")
shall occur within ten (10) days after Presencia gives an Election Notice (the
"Third Closing Date") to the Seller and shall be held at the offices of Smith,
Stratton, Wise, Heher & Brennan, LLP, 600 College Road East, Princeton, New
Jersey. The closing (the "Fourth Closing") of the purchase and sale of one or
more additional Convertible Notes in the aggregate principal amount equal to the
Fourth Closing Purchase Price shall occur within five (5) days after Presencia
gives an Election Notice (the "Fourth Closing Date") to the Seller and shall be
held at the offices of Smith, Stratton, Wise, Heher & Brennan, LLP, 600 College
Road East, Princeton, New Jersey.

                  2.4      Closing Actions. Subject to the terms of this
Agreement,

                           (a)      at the First Closing,

                                    (i)      the Purchaser is delivering the
First Closing 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 First Closing Purchase Price to the
Purchaser;

                                    (iii)    the Seller is delivering to each of
Presencia and PVI Holding a check in the amount of $25,000 payable to it in
immediately available funds for the reimbursement of fees and expenses described
in Section 19 hereof.

                                    (iv)     the Purchaser and PVI Holding are
delivering to each other an intercreditor agreement (the "Intercreditor
Agreement");

                                    (v)      the Seller and Cablevision are
delivering to each other an amendment to the Option Agreement by and between the
Seller and Cablevision dated as of June 25, 2002 (the "Option Agreement");

                                    (vi)     the Seller and Cablevision are
delivering to each other an amendment to the Proprietary Information Escrow
Agreement by and among the Seller, Cablevision and Kramer Levin Naftalis &
Frankel LLP, dated as of June 25, 2002 (the "Escrow Agreement");

                                    (vii)    the Seller and each of David Sitt
and Roberto Sonabend are

<PAGE>

                                                                  Execution Copy

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(d)(vi) that may be delivered in connection with the
Fourth 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 First
Closing 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:

                                    (i)      Purchaser will deliver an amount
equal to the Second Closing Purchase Price by wire transfer to such account
previously specified by the Seller:

                                    (ii)     the Seller will deliver a
Convertible Note in the aggregate principal amount of the Second Closing
Purchase Price to the Purchaser;

                                    (iii)    the Seller will deliver to the
Purchaser a certificate, executed on behalf of the Seller by its Secretary,
dated as of the Second Closing Date, certifying the resolutions of the Seller's
Board and any duly authorized committee thereof, approving the

<PAGE>

                                                                  Execution Copy

transactions contemplated by this Agreement and the other Transaction Documents;
and

                                    (iv)     the Seller will deliver to the
Purchaser an opinion of the Seller's counsel in substantially the form delivered
at the First Closing.

                           (c)      at the Third Closing, subject to Presencia's
delivery of an Election Notice, which shall be in Presencia's sole discretion,
and PVI Holding's approval of Presencia's designee(s) (if any) designated
therein, which approval will not be unreasonably withheld or delayed:

                                    (i)      to the extent it is not already a
party to this Agreement and the Intercreditor Agreement, each Purchaser will
deliver a joinder agreement in the form attached hereto as Annex B;

                                    (ii)     each Purchaser will deliver an
amount equal to the face amount of the Convertible Note to be issued to it to
the Seller by wire transfer to such account previously specified by the Seller,
it being agreed that the Purchasers will deliver an aggregate amount equal to
the Third Closing Purchase Price at the Third Closing;

                                    (iii)    the Seller will deliver Convertible
Notes in the aggregate principal amount of the Third Closing 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 Third
Closing 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 David Sitt nor Roberto
Sonabend 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

<PAGE>

                                                                  Execution Copy

officers stating that the representations and warranties made by the Seller in
Section 4 hereof are true and correct as of the Third Closing Date with the same
force and effect as if they had been made on and as of said date; and

                                    (x)      the Seller will deliver to the
Purchaser a certificate, executed on behalf of the Seller by its Secretary,
dated as of the Third Closing Date, certifying the resolutions of the Seller's
Board approving the transactions contemplated by this Agreement and the other
Transaction Documents.

                           (d)      at the Fourth Closing, subject to
Presencia's delivery of an Election Notice, which shall be in Presencia's sole
discretion, and PVI Holding's approval of Presencia's designee(s) (if any)
designated therein, which approval will not be unreasonably withheld or delayed:

                                    (i)      to the extent it is not already a
party to this Agreement and the Intercreditor Agreement, each Purchaser will
deliver a joinder agreement in the form attached hereto as Annex B;

                                    (ii)     each Purchaser will deliver an
amount equal to the face amount of the Convertible Note to be issued to it to
the Seller by wire transfer to such account previously specified by the Seller,
it being agreed that the Purchasers will deliver an aggregate amount equal to
the Fourth Closing Purchase Price at the Fourth Closing;

                                    (iii)    the Seller will deliver Convertible
Notes in the aggregate principal amount of the Fourth Closing Purchase Price to
the Purchasers;

                                    (iv)     the Seller will deliver to the
Purchaser a certificate, executed on behalf of the Seller by its Secretary,
dated as of the Fourth Closing Date, certifying the resolutions of the Seller's
Board and any duly authorized committee thereof, approving the transactions
contemplated by this Agreement and the other Transaction Documents;

                                    (v)      the Seller will deliver to the
Purchasers an opinion of the Seller's counsel in substantially the form
delivered at the First Closing;

                                    (vi)     if neither David Sitt nor Roberto
Sonabend 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 Fourth Closing Date with the same force and effect as if
they had been made on and as of said date; and

                                    (vii)    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 Eduardo Sitt, David Sitt or Roberto
Sonabend) warrants to purchase up to an aggregate of 100,000 shares of the
Seller's common

<PAGE>

                                                                  Execution Copy

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."

         3.       All references to the "First Closing" and the "Second Closing"
in the waiver and consents delivered by each of PVI Holding, LLC and Presencia
en Medios, S.A. de C.V. at the First Closing shall be deemed to mean the "First
and Second Closings" and the "Third and Fourth Closings", respectively.

         4.       By signing this Second Amendment, the parties to the Agreement
acknowledge and agree that: (i) the March Election Notice shall be deemed to be
an Election Notice by Presencia for the purchase by Presencia of $650,000 of
Convertible Notes, (ii) Presencia has no obligation to purchase Convertible
Notes in excess of $650,000 at the Third Closing, and (iii) the designees
designated in the March Election Notice have no obligation to purchase
Convertible Notes at the Third Closing nor any liability to the Seller as a
result of Presencia's delivery of the March Election Notice.

         5.       Except as amended hereby, the Agreement shall remain in full
force and effect.

         6.       This Second Amendment 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.

                                       ***

<PAGE>

                                                                  Execution Copy

         IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Note Purchase and Security Agreement to be duly executed on their
behalf.

                                   PRINCETON VIDEO IMAGE, INC.

                                   By: /s/ James Green
                                       -----------------------------------------
                                   Name: J Green
                                   Title: COO

                                   PRESENCIA EN MEDIOS, S.A. DE C.V.

                                   By: /s/ David Sitt
                                       -----------------------------------------
                                   Name: David Sitt
                                   Title:_______________________________________

                                   PVI HOLDING, LLC

                                   By: /s/ Wilt Hildenbrand
                                       -----------------------------------------
                                   Name: Wilt Hildenbrand
                                   Title: EVP Technology

<PAGE>

                                                                  Execution Copy

         Cablevision Systems Corporation hereby consents to the execution and
delivery of this Second Amendment and to the transactions contemplated hereby
and waives any breach or violation of the Option Agreement that may result from
such actions. This waiver is limited to the actions contemplated by this Second
Amendment and shall not be deemed to be a waiver of any rights not specifically
set forth herein.

                                    CABLEVISION SYSTEMS CORPORATION

                                    By: /s/ Wilt Hildenbrand
                                        ----------------------------------------
                                    Name: Wilt Hildenbrand
                                    Title: EVP Technology<PAGE>

                                                                    EXHIBIT 10.5

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.

                           PRINCETON VIDEO IMAGE, INC.
                           CONVERTIBLE PROMISSORY NOTE

$500,000                                               Lawrenceville, New Jersey
                                                                  March 20, 2003

         1.       Obligation. Princeton Video Image, Inc., a Delaware
corporation ("Maker"), promises to pay to the order of Presencia en Medios, S.A.
de C.V., a Mexican corporation ("Payee"), the principal sum of Five Hundred
Thousand Dollars ($500,000), plus interest at the rate specified herein. The
unpaid principal from time to time outstanding shall bear interest prior to
maturity at an annual rate of interest equal to 10% per annum. Interest hereon
shall be compounded semi-annually based on the actual number of days elapsed
from March 20, 2003.

         2.       Maturity Date. The unpaid principal balance of this
Convertible Note and all accrued interest thereon (together, the "Convertible
Debt") shall be due and payable in arrears in full on July 31, 2003 or, at the
option of Payee, such later date on or before July 31, 2005 as Payee shall
specify in writing to Maker on or before June 30, 2003 (either date, the
"Maturity Date").

         3.       Conversion.

                  (a)      By Payee. Upon the terms set forth in this Section
3(a), Payee shall have the right, at its option, at any time prior to Maker's
repayment of this Convertible Note, to convert the Convertible Debt, in whole or
in part, into the number of fully paid and nonassessable shares of Maker's
common stock equal to the quotient obtained by dividing the Convertible Debt by
the Conversion Price (as defined below). Payee may exercise the conversion right
pursuant to Section 3(a) by delivering to Maker, at the address set forth below,
written notice stating that Payee elects to convert the Convertible Debt and
stating the name or names (with address) in which the certificate or
certificates for the shares of common stock are to be issued. Conversion shall
be deemed to have been effected on the date when such delivery is made (the
"Effective Date"). As promptly as practicable thereafter, Maker shall issue and
deliver to Payee, to the place designated by Payee, a certificate or
certificates for the number of full shares of common stock to which Payee is
entitled and cash in payment of the portion of the Convertible Debt represented
by any fractional interest in a share of common stock and a new convertible
promissory note representing any portion of this Convertible Note not so
converted. The person in whose name the certificate or certificates for common
stock are to be issued shall

                                       1

<PAGE>

be deemed to have become a holder of record of such common stock on the
Effective Date unless the transfer books of Maker are closed on that date, in
which event such person shall be deemed to have become a stockholder of record
on the next succeeding date on which the transfer books are open, but the
Conversion Price shall be that in effect on the Effective Date. As promptly as
practicable following the Effective Date, and upon receipt of a new convertible
note, if applicable, Payee shall deliver to Maker this Convertible Note marked
"Cancelled", provided, however, that this Convertible Note shall be deemed
cancelled and the Convertible Debt shall cease to be outstanding as of the
Effective Date, whether or not this Convertible Note has been actually delivered
to Maker.

                  (b)      Conversion Price; Adjustment.

                           (i)      As used herein, prior to the consummation of
the first New Financing (as hereinafter defined) following the issuance hereof,
"Conversion Price" shall mean $.75 and following the consummation of such New
Financing, "Conversion Price" shall mean $2.50, in each case as adjusted from
time to time pursuant to the provisions hereof.

                           (ii)     Upon the happening of an Extraordinary
Common Stock Event (as hereinafter defined), the Conversion Price then in effect
shall, simultaneously with the happening of such Extraordinary Common Stock
Event, be adjusted by multiplying the then effective Conversion Price by a
fraction, the numerator of which shall be the number of shares of common stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of common stock outstanding
immediately after such Extraordinary Common Stock Event, and the product so
obtained shall thereafter be the Conversion Price. The Conversion Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
subsequent Extraordinary Common Stock Event or Events. As used herein, the term
"Extraordinary Common Stock Event" shall mean (A) a subdivision of outstanding
shares of common stock into a greater number of shares of common stock (i.e., a
stock split), (B) a combination of outstanding shares of common stock into a
smaller number of shares of common stock (i.e., a reverse stock split) or (C)
the payment of a dividend in shares of common stock.

                  (c)      Capital Reorganization or Merger. In the event of any
capital reorganization of Maker, any reclassification of the stock of Maker
(other than a change in par value or from no par value to par value or from par
value to no par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or any consolidation or merger of Maker, the
Convertible Debt shall, after such reorganization, reclassification,
consolidation, or merger, be convertible into the kind and number of shares of
stock or other securities or property of Maker or of the entity resulting from
such consolidation or surviving such merger to which Payee would have been
entitled had the Convertible Debt been converted (immediately prior to the time
of such reorganization, reclassification, consolidation or merger). The
provisions of this Section 3(c) shall similarly apply to successive,
reorganizations, reclassifications, consolidations or mergers. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 3(c) with respect to the rights of Payee after the capital
reorganization to the end that the provisions of this Section 3(c) (including
adjustment of the Conversion Price

                                       2

<PAGE>

then in effect and the number of shares issuable upon conversion of the
Convertible Debt) shall be applicable after that event and be as nearly
equivalent as practicable.

                  (d)      New Financing. Notwithstanding anything to the
contrary contained herein, in the event that Maker sells (a "New Financing") any
security (equity, debt or otherwise) of Maker (a "New Security") at any time
while this Convertible Note is outstanding, the Convertible Debt shall, after
such New Financing, be convertible, at the option of Payee, into the kind and
number of shares of the New Security, on such terms and conditions (including
any warrants or other consideration received by the purchasers in the New
Financing) as the New Security is sold in the New Financing, subject to all of
the terms of the New Financing; provided, however, that if the New Security is
common stock of Maker or a security convertible into such common stock, the
price per share of common stock (within the meaning of the rules of the Nasdaq
Stock Market or such other market, exchange or automated quotation system on
which Maker's common stock is then listed or trading as the case may be) at
which the Convertible Debt may be converted into the New Security shall not be
less than $0.38 (the "Minimum Conversion Price"). The price of a New Security
shall be determined on the basis of an appropriate allocation of consideration
paid by the purchasers of such New Security between the New Security and other
benefits, if any (as such allocation is determined and reported in Maker's
financial statements in consultation with Maker's outside auditors). Without the
consent of Payee, Maker shall not consummate any New Financing regarding a New
Security that is common stock of Maker or a security convertible into common
stock of Maker for less than the Minimum Conversion Price. If Maker consummates
more than one New Financing during the period that this Convertible Note is
outstanding, Payee shall have the right to convert the Convertible Debt under
the terms of any such New Financings at any time (even if later New Financings
were done on different terms or prices). Notwithstanding anything to the
contrary contained herein, as used herein, the term "New Financing" shall not
include the sale or transfer of securities (i) designated by vote of Maker's
board of directors to Maker's employees, consultants, vendors or others in
exchange for services rendered in the ordinary course of business, (ii) as a
result of any stock split, stock dividend, or reclassification of Maker's common
stock, distributed on a pro rata basis to all holders of Maker's common stock,
(iii) as a result of a merger, consolidation or reorganization approved by
Maker's board of directors, or (iv) in an amount not to exceed, with respect to
all issuances in connection with Strategic Transactions (as hereinafter
defined), an aggregate of 500,000 shares of common stock, including shares of
common stock issuable upon the conversion of other securities, issued as a
commercially reasonable inducement to enter into a Strategic Transaction. The
conversion rights set forth in this Section 3(d) are in addition to, and not in
substitution for, the rights set forth in Section 3(a). As used herein,
"Strategic Transaction" shall mean a transaction the main purpose of which, as
determined by Maker's Board of Directors, is to generate material sales revenue
for Maker (and not for the purpose of raising equity or other financing).

                  (e)      Notice.

                           (i)      If Maker shall propose to take any action of
the types described in Sections 3(b) or 3(c) above, Maker shall give notice to
Payee which shall specify the record date, if any, with respect to any such
action and the date on which such action is to take place. Such notice shall
also set forth such facts with respect thereto as shall be reasonably necessary
to

                                       3

<PAGE>

indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Price and the number, kind or class
of shares or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon conversion of
the Convertible Debt. In the case of any action which would require the fixing
of a record date, such notice shall be given at least ten (10) days prior to the
date so fixed, and in case of all other action, such notice shall be given at
least ten (10) days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
any such action.

                           (ii)     If Maker shall propose to enter into a New
Financing as described in Section 3(d) above, Maker shall give notice to Payee
which shall specify the terms and conditions of such New Financing including,
without limitation, the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable in the New Financing, the
nature of the transfer, the sale price and the type of consideration to be paid.
Such notice shall be given at least ten (10) days prior to the closing of the
New Financing; provided, however, that the failure to give such notice, or any
defect therein, shall not delay such closing or affect the legality or validity
of the actions taken at such closing.

                  (f)      Reservation of Common Stock and New Securities. Maker
shall reserve, and at all times from and after the date hereof keep reserved,
free from preemptive rights, out of its authorized but unissued shares of common
stock, solely for the purpose of effecting the conversion of the Convertible
Debt, sufficient number of shares of common stock to provide for the conversion
of the Convertible Debt pursuant to Section 3(a) hereof. Following the
consummation of any New Financing, Maker shall reserve, and at all times from
and after the date thereof keep reserved, free from preemptive rights, out of
its authorized but unissued shares of the applicable New Security, solely for
the purpose of effecting the conversion of the Convertible Debt, sufficient
number of shares of such New Security to provide for the conversion of the
Convertible Debt pursuant to Section 3(d) hereof.

         4.       Prepayment. Maker may prepay the Convertible Debt, in whole or
in part, without premium or penalty of any kind, at any time; provided, however,
that Maker gives Payee thirty (30) days prior notice of its intent to prepay and
Payee shall retain the option to convert the Convertible Debt in accordance with
Section 3 during such thirty (30) day period. Such prepayments shall be applied
to principal or interest at the election of Maker.

         5.       Event of Default.

                  (a)      The occurrence of any of the following (whatever the
reason for such occurrence and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any government body) shall
constitute an "Event of Default" under this Convertible Note:

                           (i)      Maker fails to pay any or all of the
Convertible Debt on the Maturity Date;

                                       4

<PAGE>

                           (ii)     Maker fails to comply with any provision of
this Convertible Note, the Note Purchase and Security Agreement, dated February
18, 2003, by and among Payee, PVI Holding, LLC ("Holding"), as creditor and
collateral agent, and Maker, as amended by the Amendment to Note Purchase and
Security Agreement among the parties thereto dated the date hereof (as so
amended, the "Note Purchase Agreement"), or the Note Purchase and Security
Agreement, dated June 25, 2002, between Maker and Holding (the "June Note
Purchase Agreement") and such failure is not cured within thirty (30) days of
notice of such breach, provided that if such failure cannot reasonably be cured
within such thirty (30) days period, such period shall be extended for thirty
(30) days so long as Maker is diligently pursuing a cure;

                           (iii)    Maker commences any voluntary proceeding
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, receivership, dissolution or liquidation law or statute, of any
jurisdiction, whether now or subsequently in effect; or Maker is adjudicated
insolvent or bankrupt by a court of competent jurisdiction; or Maker petitions
or applies for, acquiesces in, or consent to, the appointment of any receiver or
trustee of Maker or for all or substantially all of its property or assets; or
Maker makes an assignment for the benefit of its creditors; or Maker admits in
writing its inability to pay its debts as they mature;

                           (iv)     There is commenced against Maker any
proceeding relating to Maker under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, receivership, dissolution or liquidation law
or statute, of any jurisdiction, whether now or subsequently in effect, and the
proceeding remains undismissed for a period of sixty (60) days or Maker by any
act indicates its consent to, approval of, or acquiescence in, the proceeding;
or a receiver or trustee is appointed for Maker or for all or substantially all
of its property or assets, and the receivership or trusteeship remains
undischarged for sixty (60) days; or

                           (v)      An Event of Default (as defined therein)
occurs under either the amended and restated convertible promissory note issued
by Maker on February 18, 2003 to PVI Holding, LLC ("Holding") or any other
convertible promissory note issued by Maker pursuant to the June Note Purchase
Agreement.

                  (b)      Except as provided for in the intercreditor
agreement, dated as of February 18, 2003, between Payee and Holding (the
"Intercreditor Agreement"), upon an Event of Default (other than an Event of
Default specified in clause (iii) or (iv) above) Payee may, at Payee's option
and without notice, declare all of the Convertible Debt to be due and payable
immediately. Upon an Event of Default specified in clause (iii) or (iv) above,
the Convertible Debt shall become automatically due and payable immediately
without notice or other action on the part of Payee. Except as provided for in
the Intercreditor Agreement, Payee may waive any default before or after it
occurs and may restore this Convertible Note in full effect without impairing
the right to declare it due for a subsequent default.

         6.       Waiver of Presentment and Notice of Dishonor. Maker and all
others who may at any time be liable hereon in any capacity, jointly and
severally, waive presentment for payment, demand, notice of nonpayment, notice
of protest, protest of this Convertible Note and other notices of any kind.

                                       5

<PAGE>

         7.       Taxes and Expenses. Maker shall pay any and all taxes, duties,
fees and other costs arising out of enforcing or converting this Convertible
Note or that may be payable in respect of any issuance or delivery of shares of
common stock or other securities issued or delivered upon conversion of this
Convertible Note.

         8.       Transfer. Subject to its compliance with applicable laws,
Payee shall be able to offer, sell, contract to sell or otherwise dispose of
this Convertible Note in full but not in part, provided, that the transferee
agrees to be bound by the terms contained herein and in the Intercreditor
Agreement and provided further, that Payee simultaneously transfers to the
transferee any other convertible promissory note of Maker issued to Payee by
Maker pursuant to the Note Purchase Agreement. In the event of the transfer of
this Convertible Note, the term "Payee" as used herein shall refer to the
transferee or the original Payee as the context requires.

         9.       Amendment. Subject to the terms of the Intercreditor
Agreement, this Convertible Note may not be changed orally, but only by an
agreement in writing signed by the parties against whom enforcement of any
waiver, change, modification, or discharge is sought.

         10.      Related Agreements. This Convertible Note is subject and
entitled to all of the terms and conditions set forth in the Note Purchase
Agreement and in the Intercreditor Agreement.

         11.      Governing Law. The validity, interpretation and enforcement of
this Convertible Note, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York (without giving effect to
principles of conflicts of law).

         12.      Notices. All notices or other communications in connection
with this Convertible Note shall be in writing and shall be considered given
when personally delivered or when mailed by registered or certified mail,
postage prepaid, return receipt requested, or when sent via commercial courier
or telecopier, directed, as follows or to such other address as a party may
designate by notice:

                  (a)      If to Payee:

                           Presencia en Medios, S.A. de C.V.
                           Palmas # 735-206
                           Mexico DF 11000
                           Attn: Eduardo Sitt

                           With a copy (which shall not constitute notice) to:

                           Fried, Frank, Harris, Shriver & Jacobson
                           One New York Plaza
                           New York, NY 10004
                           Facsimile: 212-859-4000
                           Attn: Joseph A. Stern, Esq.

                                       6

<PAGE>

                  (b)      If to Maker:

                           Princeton Video Image, Inc.
                           15 Princess Road
                           Lawrenceville, N.J. 08648
                           Attn: President
                           Facsimile: (609) 912-0044

                           With a copy (which shall not constitute notice) to:

                           Smith, Stratton, Wise, Heher & Brennan, LLP
                           600 College Road East
                           Princeton, New Jersey 08540
                           Attn: Richard J. Pinto, Esq.
                           Facsimile: (609) 987-6651

         Each party may, by notice to the other, change the address at which
notices or other communications are to be given to it.

                                    * * * * *

<PAGE>

         IN WITNESS WHEREOF, Maker has caused this Convertible Note to be
executed in its corporate name by the signature of its duly authorized officer.

                                      PRINCETON VIDEO IMAGE, INC.

                                      By: /s/ James Green
                                          --------------------------------------

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]