Document:

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                                                                   EXHIBIT 10.34

                                [PVI LETTERHEAD]

February 18, 2003

Mr. Roberto Sonabend
Cofre de Perote 274
Col. Lomas de Chapultepec CP
Mexico, D.F. 11010
Mexico

Dear Mr. Sonabend:

On behalf of Princeton Video Image, Inc. (PVI), and its wholly owned subsidiary,
Publicidad Virtual, S.A. de C.V. (PV), we are pleased to offer you the positions
of co-Chief Executive Officer of PVI and Corporate Vice President of PV. For so
long as PVI and/or PV continue to employ you, you will be employed either
directly or indirectly through Consultores Asociados Dasi, S.C. ("Dasi"), or
another Sociedad Civil in Mexico (an "SC"). Your duties and responsibilities
shall be those customarily performed, respectively, by a CEO of a company such
as PVI and by a Corporate Vice President of a company such as PV. You will also
hold, in addition to the offices described above, such other senior executive
offices in PVI or PV to which you may be appointed or assigned from time to time
by the Board of Directors of PVI or PV, as the case may be; and you will
professionally discharge such duties in connection therewith.

As consideration for your service as Corporate Vice President of PV, your rate
of pay will be US$8,333.33 payable on a semi-monthly basis, which when
annualized is US$200,000 (such amount, as adjusted upward from time to time,
being your "Salary"). As additional consideration for such service, subject to
the approval of the Board of Directors of PVI, you will receive options to
purchase 275,000 shares of PVI common stock, as further described below. Such
options shall be in lieu of the options contemplated under the Reorganization
Agreement dated as of December 28, 2000, as amended, by and among Presencia en
Medios, S.A. de C.V., Eduardo Sitt, David Sitt, Roberto Sonabend, Presence in
Media LLC, Virtual Advertisement LLC, PVI LA, LLC, Princeton Video Image, Inc.
and Princeton Video Image Latin America, LLC, and the exhibits attached thereto
(the "Reorganization Agreement").

As consideration for your service as co-Chief Executive Officer of PVI, PVI
hereby confirms that you have been granted options to purchase 180,000 shares of
PVI common stock. Of these options, 151,778 are vested as of the date hereof,
and the remainder of such options shall vest at the rate of 14,111 per month
beginning on March 10, 2003, until all of such options are vested. You will be
provided a stock option agreement for

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Roberto Sonabend
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February 18, 2003

signature evidencing such options. Schedule 1 attached hereto sets forth the
number of option shares allocable to specific exercise prices and indicates
whether such options are currently vested or unvested.

As consideration for your agreement in August, September and October, 2002 to
accept a salary reduction in connection with your service as co-Chief Executive
Officer of PVI, PVI hereby confirms that, subject to the approval of the Board
of Directors of PVI, you will be granted options to purchase 55,000 shares of
PVI common stock at an exercise price of $1.00 per share and that all of these
options will be vested immediately on the date of grant.

With respect to the options to purchase 275,000 shares of PVI common stock, as
described above, the exercise price for such options will be the closing price
for PVI common stock on the date the Board of Directors approves the option
grant in accordance with the provisions of the Amended 1993 Stock Option Plan
(the "Plan"); provided, however, that the exercise price shall not be less than
$0.50 per share. Of these options, 75,000 will be vested immediately on the date
of grant, as defined in the stock option agreement required under the Plan. The
remaining 200,000 options will vest at the rate of 8,333.33 per month for the
twenty-four months following the date of grant (1/24 of the total number vest
per month) for so long as you remain an employee of PVI or PV. The intent of PVI
is that these options shall be incentive stock options to the fullest extent
allowed by applicable law and the Plan; in the event that any of the these
options do not qualify as incentive stock options for any reason, such options
shall be non-qualified stock options.

As of January 21, 2003, there were 18,487,802 shares of PVI common stock
outstanding. Of course, the Company plans to issue additional shares to
investors and others from time to time.

The stock option agreements to be executed in connection with (a) the options to
purchase 180,000 shares of PVI common stock granted in connection with your
service as co-CEO of PVI, which are not yet vested as of the date hereof, and
(b) the options to purchase 275,000 shares of PVI common stock granted in
connection with your service as Corporate Vice President of PV will provide that
the applicable number of all unvested options will vest immediately and become
exercisable immediately if following the occurrence of a Change in Control of
PVI, as defined below, you cease to serve in a senior executive position with or
as a director of PVI, or your duties are inconsistent with those customarily
performed by a company's senior executive officer or director, other than as a
result of your voluntary action. A Change in Control of PVI shall be deemed to
occur if (i) PVI is merged with or into or consolidated with another corporation
or other entity under circumstances where the shareholders of PVI immediately
prior to such merger or consolidation do not own after such merger or
consolidation shares representing at least fifty percent (50%) of the voting
power of PVI or the surviving or resulting corporation or other entity, as the
case may be, or (ii) if PVI is liquidated or

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Roberto Sonabend
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February 18, 2003

sells or otherwise disposes of substantially all of its assets to another
corporation or entity, or (iii) if any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934) shall become the
beneficial owner (within the meaning of Rule 13d-3 under such Act) of forty
(40%) percent or more of the Common Stock of PVI other than pursuant to a plan
or arrangement entered into by such person and PVI or otherwise approved by the
Board of Directors of PVI; provided however, that a Change of Control of PVI
shall not include any acquisition of PVI's securities by, or a transaction with,
(A) Cablevision Systems Corporation or (B) any member of the Seller Group, as
defined in the Reorganization Agreement, or (C) any of their respective
affiliates.

In the event that the acceleration, as set forth in the paragraph immediately
above, of any option to be granted to you pursuant to the Plan which causes the
option to be exercisable immediately (the "Accelerated Options"), (i)
constitutes a "parachute payment" within the meaning of section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
provision, would be subject to the excise tax imposed by section 4999 of the
Code (the "Excise Tax"), then the amount of the Accelerated Options may be
reduced to the largest amount which you, in your sole discretion, determine
would result in no portion of the Accelerated Options (or only such portion
thereof as is acceptable to you) being subject to the Excise Tax. The
determination by you of any reduction shall be conclusive and binding upon PVI.
PVI shall reduce such Accelerated Options only upon written notice by you
indicating the amount of such reduction.

In the event that your employment as Corporate Vice President or a senior
executive of PV is terminated other than for Cause (as defined below) or in the
event you voluntarily terminate your employment with PV for Good Reason (as
defined below), PV will pay to you as severance six months of your then current
Salary.

"Cause" as used herein shall mean (i) conviction from which no further appeal
may be taken for, or plea of nolo contendere to, a felony or a crime involving
moral turpitude, (ii) commission of a breach of fiduciary duty involving
personal profit in connection with your employment by PVI or PV, (iii)
commission of an act which the Board of Directors of PVI or PV shall reasonably
have found to have involved willful misconduct or gross negligence on your part,
in the conduct of your duties, (iv) habitual absenteeism with respect to your
position at PV, (v) your material breach of any material provision of the terms
of your employment, as set forth herein, which breach remains uncured for a
period of thirty (30) days following notice to you by PVI, or (vi) your willful
and continued failure to perform substantially your duties (other than any such
failure resulting from your incapacity due to physical or mental illness). With
respect to the matters set forth in (iii), (iv), (v), and (vi) of the
immediately preceding sentence, neither PVI nor PV may terminate your employment
unless you have first been given notice of the conduct forming the cause for
such termination and an opportunity to explain such conduct to either PVI or PV,
as the case may be.

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Roberto Sonabend
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February 18, 2003

"Good Reason" shall mean (i) a detrimental change in the nature or scope of your
employment or duties as the Corporate Vice President or a senior executive of PV
or which is otherwise inconsistent with those duties customarily performed by a
company's corporate vice president or similar senior executive position; (ii) a
reduction in Salary or those employee benefits consisting of an
employer-provided automobile, major medical insurance, major life insurance, and
a bonus of thirty (30) days extra salary per year, that are required to be
provided to you under the terms of this offer letter; or (iii) the failure of PV
to pay the Commission Override Fee, as defined in the Consultant Services
Agreement, dated September 20, 2001, between PV and Presencia en Medios, S.A. de
C.V. (the "Consultant Services Agreement"), subject (A) to any cure periods or
dispute resolution procedures provided for in the Consultant Services Agreement
and (B) any amendment, waiver, modification, or deferral of the obligation to
pay the Commission Override Fee agreed to by Presencia en Medios, S.A. de C.V.

You agree that the services rendered by you as co-CEO of PVI and Corporate Vice
President of PV are unique and irreplaceable. You further agree that during the
Non-competition Term (as defined below) you shall not, directly or indirectly,
through any other person, firm, corporation or other entity (whether as an
officer, director, employee, partner, consultant, holder of equity or debt
investment, lender or in any other manner or capacity): (a) compete with PVI or
any subsidiary of PVI in any geographical area in the United States or in those
foreign countries where PVI or any subsidiary of PVI, during the period of your
employment with PVI and/or PV, conducts or proposes to conduct business or
initiate activities, design, manufacture, sell, market, offer to sell or supply
video or television technology similar to that being developed or sold by PVI or
any subsidiary of PVI on the date of the termination of your employment, for any
reason, with PVI or PV, as the case may be; (b) solicit, induce, encourage or
attempt to induce or encourage any employee of PVI or any subsidiary of PVI to
terminate his or her employment with PVI or any subsidiary of PVI or to breach
any other obligation to PVI or any subsidiary of PVI; (c) solicit, interfere
with, disrupt, alter or attempt to disrupt or alter the relationship,
contractual or otherwise, between PVI or any subsidiary of PVI and any customer,
potential customer, or supplier of PVI or any subsidiary of PVI; or (d) engage
in or participate in any business conducted under any name that shall be the
same as or similar to the name of PVI or any subsidiary of PVI, or any trade
name used by PVI or any subsidiary of PVI. You acknowledge that the foregoing
geographic, activity and time limitations contained in this non-competition
provision are reasonable and properly required for the adequate protection of
PVI's business. In the event that any such geographic, activity or time
limitation is deemed to be unreasonable by a court, you shall submit to the
reduction of either said activity or time limitation to such activity or period
as the court shall deem reasonable. In the event that you are in violation of
the aforementioned restrictive covenants, then the time limitation thereof shall
be extended for a period of time equal to the pendency of such proceedings,
including appeals. As used herein, "Noncompetition Term" shall mean the period
beginning on the date hereof and ending on the later of (i) September 20, 2005
or (ii) one year after the termination of your employment with PVI or PV,
provided that if your employment terminates after

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Roberto Sonabend
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February 18, 2003

September 20, 2005, then the one year period described in the foregoing clause
(ii) shall not apply if following the termination of your employment you waive
in writing any right or claim to receive any severance benefits.

You acknowledge that, during the period of your employment with PVI and PV, you
have had or will have access to Confidential Information, as defined below, of
PVI and PV. Therefore, you agree that both during and after the period of your
employment with PVI or PV, as the case may be, you shall not, without the prior
written approval of PVI or PV, directly or indirectly (a) reveal, report,
publish, disclose or transfer any Confidential Information of PVI or PV to any
person or entity, or (b) use any Confidential Information of PVI or PV for any
purpose or for the benefit of any person or entity, except as may be necessary
in the performance of your work for PVI or PV. You further acknowledge that,
during the period of your employment with PVI and PV, you may have access to
Confidential Information of third parties who have given PVI or PV the right to
use such Confidential Information, subject to a non-disclosure agreement between
PVI of PV and such third party. Therefore, you agree that both during and after
the period of your employment with PVI or PV, you shall not, without the prior
written approval of PVI or PV, as the case may be, directly or indirectly (i)
reveal, report, publish, disclose or transfer any Confidential Information of
such third parties to any person or entity, or (ii) use any Confidential
Information of such third parties for any purpose or for the benefit of any
person or entity, except as may be necessary in the performance of your work for
PVI or PV. You acknowledge and agree that all Confidential Information of PVI
and PV, and all reports, drawings, blueprints, data, notes, and other documents
and records, whether printed, typed, handwritten, videotaped, transmitted or
transcribed on data files or on any other type of media, made or compiled by
you, or made available to you during the period of your employment with PVI and
PV (including the period prior to the date of this letter), concerning PVI's or
PV's Confidential Information are and shall remain PVI's or PV's property and
shall be delivered to PVI or PV, as the case may be, on the termination of your
employment or at any earlier time on request of PVI or PV. You shall not retain
copies of such Confidential Information, documents and records. As used herein,
"Confidential Information" means trade secrets, proprietary information, and
confidential knowledge and information which includes, but is not limited to,
matters of a technical nature (such as discoveries, ideas, concepts, designs,
drawings, specifications, techniques, models, diagrams, test data and know-how),
and matters of a business nature (such as the identity of customers and
prospective customers, suppliers, marketing techniques and materials, marketing
and development plans, pricing or pricing policies, financial information, plans
for further development, and any other information of a similar nature not
available to the public).

You agree that you shall promptly, from time to time, fully inform and disclose
to PVI or PV, as the case may be, in writing all inventions, copyrightable
material, designs, improvements and discoveries of any kind which you have made,
conceived or developed, or which you may later make, conceive or develop, during
the period of your employment with PVI or PV, which pertain to, or relate to
PVI's or PV's business or any

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Roberto Sonabend
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February 18, 2003

of the work or businesses carried on by PVI or PV and result from any work you
performs for PVI or PV("Inventions"). This covenant applies to all such
Inventions, whether or not they are eligible for patent, copyright, trademark,
trade secret or other legal protection; and whether or not they are conceived by
Employee alone or with others; and whether or not they are conceived and/or
developed during regular working hours. All Inventions shall be the sole and
exclusive property of PVI or PV, as the case may be, and shall be deemed part of
the Confidential Information of PVI for purposes of this Agreement, whether or
not fixed in a tangible medium of expression. You hereby assign all of your
rights in all Inventions and in all related patents, copyrights and trademarks,
trade secrets and other proprietary rights therein to PVI or PV, as the case may
be. Without limiting the foregoing, you agree that any copyrightable material
shall be deemed to be "works made for hire" and that PVI or PV, as the case may
be, shall be deemed the author of such works under the United States Copyright
Act, or any foreign counterpart, provided that in the event and to the extent
such works are determined not to constitute "works made for hire", you hereby
irrevocably assign and transfer to PVI or PV all your right, title and interest
in such works. You agree to assist and cooperate with PVI or PV, both during and
after the period of your employment, at PVI's or PV's sole expense, to obtain,
maintain and enforce patent, copyright, trademark, trade secret and other legal
protection for the Inventions. You agree to sign all documents, and do all
things necessary, to obtain such protection and to vest PVI or PV, as the case
may be, with full and exclusive title in all Inventions against infringement by
others. You hereby appoint the Secretary of PVI as your attorney-in-fact to
execute documents on your behalf for this purpose. You agree that you shall not
be entitled to any additional compensation for any and all Inventions made
during the period of Employee's employment with PVI.

For the purposes of this Agreement and solely as pertains to your eligibility
and qualification to participate in benefit plans and the level of that
participation, except for vesting provisions relating to stock options, you
shall be given constructive credit for service to PVI and PV for such time as
you previously provided management services to PV (directly or through Dasi), on
a continuing basis without a break in service.

While employed by PVI or PV, you shall be entitled to vacation benefits
consistent with the past practices of Dasi or PV. Such vacation may be taken by
you at such times as do not unreasonably interfere with the business of PVI or
PV. The accumulation of annual vacation time earned but not taken will be in
accordance with the policy guidelines of PVI. Additional vacation will be earned
in accordance with the policy of PVI.

You will be entitled to payment or reimbursement for all travel and other
reasonable business expenses incident to the performance of your
responsibilities and obligations for PV and PVI, as the case may be; any claim
for reimbursement is subject to the submission of appropriate vouchers and
receipts in accordance with the policies of either PVI or PV, as in effect from
time to time.

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Roberto Sonabend
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February 18, 2003

If you die during your employment with PVI or PV, as the case may be, your
employment will be automatically terminated. However, PVI or PV, as the case may
be, will pay three (3) months Salary at your then current rate to your estate or
personal representative. This benefit will be in addition to and not in
substitution for any other benefits which may be payable by either PVI or PV in
respect of your death.

If you are rendered incapable by illness or any other disability from complying
with the terms, conditions and provisions on your part to be kept, observed and
performed for a period in excess of 180 days (whether or not consecutive) or 90
days consecutively, as the case may be, during any 12-month period during your
employment ("Disability"), the Board of Directors of PVI or PV, as the case may
be, may terminate your employment. If your employment is terminated by reason of
Disability, you will receive notice to that effect. In addition to and not in
substitution for any other benefits which may be payable to you in respect of
your Disability, in the event of the termination of the your employment due to
such Disability pursuant, you will be entitled to receive in twelve (12) equal
semi-monthly installments, an aggregate amount equal to six (6) months' Salary
at the rate in effect on the effective date of such termination; provided,
however, that PVI or PV, as the case may be, shall deduct from such payments the
amount of any and all disability insurance benefits paid to you during such
six-month period if either PVI or PV paid for such insurance benefits.

This letter will further confirm that during your employment by PVI and PV, you
shall be entitled to participate in employee benefit plans and programs of PVI,
PV, Dasi or an SC that are available to other senior management personnel of
such entities, subject only to the extent that your position, tenure, salary,
age, health and other qualifications make you eligible to participate. In
addition, you shall be entitled to receive benefits no less favorable than those
you currently receive and those received by senior management personnel of such
entities who perform services for PV, which benefits include, without
limitation, (i) an employer-provided automobile, (ii) major medical insurance,
(iii) major life insurance, and (iv) a bonus of thirty (30) days extra salary
per year, consistent with the past practices of PV or Dasi, as the case may be.

Nothing in this letter creates any obligation on the part of PVI or PV to
continue to employ you in any capacity; rather you are an employee at will and
your employment by PVI or PV may be terminated at any time for any reason with
or without notice.

By acknowledging below, you accept and agree to the terms and conditions of
employment set forth in this offer letter. You further acknowledge and agree (i)
that the terms and conditions of employment set forth herein are in satisfaction
and fulfillment of the terms and conditions of the Reorganization Agreement
relating to your employment and (ii) that you waive any requirement thereunder
to execute a specific form of employment agreement. This letter sets forth the
entire agreement between the parties with respect

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Roberto Sonabend
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February 18, 2003

to your employment arrangements, salary, options, and benefits and supersedes
all prior and contemporaneous arrangements or understandings with respect
thereto, including, without limitation, those contained in or contemplated by
the Reorganization Agreement or any prior resolutions of the Board of Directors.
The acknowledgement, agreement and waiver set forth in this paragraph shall not
be construed in any manner to be an amendment, alteration or modification of the
rights of Presencia en Medios, S.A. de C.V. under the Consultant Services
Agreement.

Sincerely,

/s/ JAMES GREEN

James Green
President and Chief Operating Officer

Acknowledged and Agreed to on this 18 day of February 2003.

/s/ ROBERTO SONABEND
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Roberto Sonabend<PAGE>
                                                                   EXHIBIT 10.35

THIS AMENDED AND RESTATED 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.
                AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE

$5,000,000                                             Lawrenceville, New Jersey
                                                               February 18, 2003

      This Amended and Restated Convertible Promissory Note (the "Convertible
Note") amends and restates in full the Convertible Promissory Note dated June
25, 2002 issued by Princeton Video Image, Inc., a Delaware corporation
("Maker"), to PVI Holding, LLC, a Delaware limited liability company ("Payee"),
and shall be deemed to be a renewal and extension of such Convertible Promissory
Note within the meaning of the definition of "Convertible Debt" as defined in
Section 1 of the Note Purchase and Security Agreement dated as of June 25, 2002
between Maker and Payee (the "June Note Purchase Agreement").

      1. Obligation. Maker promises to pay to the order of Payee the principal
sum of Five Million Dollars ($5,000,000), 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 June 25, 2002.

      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

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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 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

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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 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).

                                       3
<PAGE>

            (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 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

                                       4
<PAGE>

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;

                  (ii) Maker fails to comply with any provision of this
Convertible Note, the June Note Purchase and Security Agreement, or the Note
Purchase and Security Agreement, dated February 18, 2003, among Maker, Presencia
en Medios, S.A. de C.V. ("Presencia") and Payee, as creditor and collateral
agent (the "February 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 any
convertible promissory note issued by Maker pursuant to the February Note
Purchase Agreement.

            (b) Except as provided for in the intercreditor agreement, dated as
of the date hereof, between Payee and Presencia (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.

                                       5
<PAGE>

      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.

      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. 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 June 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:

                  PVI Holding, LLC
                  c/o Cablevision Systems Corporation
                  1111 Stewart Avenue
                  Bethpage, New York 11714
                  Attn: General Counsel
                  Facsimile:  (516) 803-2577

                  With copies (which shall not constitute notice) to:

                  Sullivan & Cromwell LLP

                                       6
<PAGE>

                  125 Broad Street
                  New York, New York 10004
                  Attn: Robert W. Downes
                  Facsimile:  (212) 558-3588

                  and

                  Kramer, Levin, Naftalis & Frankel, LLP
                  919 Third Avenue
                  New York, NY 10022-3852
                  Attn: Peter A. Abruzzese
                  Facsimile:  (212) 715-8000

            (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.

                                    * * * * *

                                       7
<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
                                            -------------------------------
                                            James Green
                                            C.O.O.

                                       8

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