EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
OF
PVI VIRTUAL MEDIA SERVICES, LLC
This Limited Liability Company Agreement (this "Agreement") of PVI
Virtual Media Services, LLC , dated May 22, 2003, is entered into by PVI
Holding, LLC, a Delaware limited liability company ("Holding"), Presencia en
Medios, S.A. de C.V., a Mexican corporation ("Presencia"), and Presence in
Media, LLC, a Delaware limited liability company and wholly-owned subsidiary of
Presencia ("PiM"), for the purpose of forming a limited liability company (the
"Company") pursuant to and in accordance with the Delaware Limited Company Act
(6 Del.C. ss. 18-101, et seq.), as amended from time to time (the "Act"), upon
the following terms and conditions:
1. Name. The name of the Company is PVI Virtual Media Services, LLC.
2. Purpose. The Company is formed for the object and purpose of, and
the nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability companies may
be formed under the Act and engaging in any and all activities necessary or
incidental to the foregoing.
3. Registered Office. The address of the registered office of the
Company in the State of Delaware is Corporation Service Company, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
4. Registered Agent. The name and address of the registered agent of
the Company for service of process on the Company in the State of Delaware is
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
5. Members. The names and business addresses of the Members of the
Company, the amount credited to each Member's capital account (each, a "Capital
Account") and each Member's limited liability company interest (each, a
"Percentage Interest") are set forth on Schedule A attached hereto. To the
extent that any additional or substitute members (together with the Initial
Members, "Members") are hereafter admitted to the Company, the Company shall
revise Schedule A of this Agreement accordingly.
6. Term. The term of the Company commenced on the date of filing of the
Certificate of Formation of the Company in accordance with the Act and shall
continue until dissolution of the Company in accordance with the Act or Section
27 of this Agreement.
7. Management of the Company.
(a) Board of Managers. The Members hereby vest the management and
operation of the business and affairs of the Company in a management board (the
"Board of Managers"). The Board of Managers shall consist of two (2) managers
(each, a "Manager"), who initially shall be ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇.
(b) Powers. Except as otherwise provided by law or this Agreement,
the Board of Managers shall have the right, power, and authority to oversee the
business and affairs of the Company and its subsidiaries and to perform all acts
and other undertakings that it may in its discretion deem necessary or advisable
in furtherance thereof, in each case in accordance with the provisions of this
Agreement. Any action taken by the Board of Managers or bona fide agent thereof,
to the extent authorized by the Board of Managers, that is not otherwise in
violation of applicable law shall constitute the act of, and shall serve to
bind, the Company. Any action by a Member taken without the approval of the
Board of Managers shall not bind the Company. Each Member, Manager and any
officer of the Company is hereby designated as an "authorized person", within
the meaning of the Act, to execute and file all certificates (and any amendments
and/or restatements thereof) required or permitted by the Act to be filed with
the Secretary of State of the State of Delaware and any applicable filings as a
foreign limited liability company in any State where such filings may be
necessary or desirable. The Board of Managers may delegate to any officer of the
Company elected in accordance with Section 8 below, any of the powers of the
Board of Managers set forth in this Agreement. In the event of a vacancy in the
Board of Managers, the remaining Managers, except as otherwise provided by law,
may exercise the powers of the full Board of Managers until the vacancy is
filled.
(c) Right to Appoint Managers.
(i) Holding shall have the right to appoint to the Board of
Managers and maintain in office one (1) Manager (the "Holding Manager") and
the first Holding Manager shall be ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
(ii) PiM shall have the right to appoint to the Board of Managers
and maintain in office one (1) Manager (the "PiM Manager") and the first
PiM Manager shall be ▇▇▇▇▇▇▇ ▇▇▇▇.
(d) Removal of Appointed Managers. Each Member shall have the
right to remove any Manager nominated by it and appoint another Manager, in each
case by giving notice in writing to the Company or orally at a meeting of the
Board of Manager.
(e) Indemnity upon Removal of Manager. If any Member removes a
Manager nominated by it from his office, that Member shall be responsible for
and shall indemnify the other Members and the Company against any loss,
liability or cost that any of them may suffer or incur as a result of any claim
by such Manager arising out of such removal.
(f) Vacancies. Any vacancy on the Board of Managers created by the
resignation, incapacity, retirement or death of any Manager that is nominated by
a
Member shall be filled by appointment by the Member who had the right to
nominate such Manager. Any vacancy on the Board of Managers created by the
resignation, incapacity, retirement or death of any Manager that is not
nominated by a Member shall be filled as determined by the Board of Managers. If
a Manager is nominated by a Member, and such Member ceases for any reason to be
a Member, such Manager shall be deemed to have resigned from the Board of
Managers upon such event, and the Board of Directors shall have the right to
determine which Member can designate a successor Manager to fill such vacancy.
(g) Meetings of the Board. The Board of Managers may hold
meetings, both regular and special, within or without the State of Delaware.
Regularly scheduled meetings of the Board of Managers may be held upon not less
than fourteen (14) days' prior notice, at such time, date and place as the Board
may from time to time determine. Special meetings of the Board of Managers may
be called at any time by any Manager upon at least forty-eight (48) hours prior
notice to the other Managers. Any such meeting of the Board shall be held at
such date, time and place as may be stated in the notice of the meeting.
(h) Quorum; Vote Required for Action. The presence of two (2)
Managers shall constitute a quorum for the transaction of business. All actions
taken by the Board of Managers shall require the affirmative vote of two (2)
Managers.
(i) Adjournment of Meetings. If within a half an hour of the time
appointed for a meeting of the Board of Managers a quorum is not present, the
meeting shall be adjourned to the date, time and place as determined by the
Managers present. Each Manager not present at the meeting shall be notified by
writing by the Company of the date, time and place of the adjourned meeting.
(j) Participation in Meetings by Conference Telephone Permitted.
Managers may participate in a meeting of the Board of Managers by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting. All
resolutions adopted at any such meeting shall be reduced to writing and included
in the minutes of such meeting.
(k) Consent of the Board of Managers in Lieu of Meeting. Any
action that may be taken at any meeting of the Board of Managers may be taken
without a meeting by unanimous written consent of the Board of Managers.
(l) Waiver of Notice of Meetings of the Board of Managers. Notice
of a meeting need not be given to any Manager if: (i) action is taken under
paragraph (k) above; (ii) a written waiver of notice is executed before or after
the meeting by such Manager; (iii) communication with such Manager is unlawful;
or (iv) such Manager attends the meeting in question, unless such attendance was
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the
meeting was not lawfully called or convened. A notice or waiver of notice of a
meeting of the Board of Managers need not specify the purpose of the meeting
(l) Member's Consent Rights. The Company may take the following
actions only with the written consent of each of the Initial Members holding a
Percentage Interest of at least 20% at the time of the determination, and all
parties hereto agree to use their respective rights and powers to procure so far
as they are able that no such act is carried out unless such consent has been
given:
(i) any voluntary liquidation, dissolution, bankruptcy or winding
up of the Company or any of its subsidiaries;
(ii) any merger, consolidation or combination of the Company or
any of its subsidiaries with any other entity in which the Company or
subsidiary is not the surviving entity, or the sale or restructuring of the
Company or any of its subsidiaries;
(iii) the issuance of any capital stock in any of the Company's
subsidiaries (other than to the Company);
(iv) any amendment or modification of the limited liability
company agreement, certificate of incorporation or bylaws of the Company or
any of its subsidiaries;
(v) the acquisition by the Company or any of its subsidiaries of
any material business enterprise;
(vi) the sale or transfer of assets of the Company or any of its
subsidiaries in one or a series of related transactions that has an
aggregate fair market value of more than 20% of the Company's consolidated
assets or that is otherwise not in the ordinary course of business;
(vii) any capital expenditure (or commitment to such expenditure)
by the Company or any of its subsidiaries that exceeds by more than 20% the
allocation set forth in the Annual Budget;
(viii) the incurrence by the Company or any of its subsidiaries of
any borrowing or any other indebtedness or liability in the nature of
borrowing that exceeds by more than 20% the allocation set forth in the
Annual Budget;
(ix) any material transaction between the Company or any of its
subsidiaries with any Affiliate of a Member (excluding the transactions
contemplated in the Company's licensing agreements with Cablevision Systems
Corporation or its Affiliates) or otherwise inconsistent with the ordinary
course of business;
(x) the hiring, removal, replacement or increase in the
compensation of any executive officer, including the Chief Executive
Officer, President, Chief Operating Officer, Chief Financial Officer, and
Chief Technology Officer, of the Company; or
(xi) the appointment or removal of the auditors of the Company.
8. Officers. The Board of Managers shall have the power to elect such
officers of the Company as it may deem proper. All officers of the Company
elected by the Board of Managers shall hold office for such term as may be
determined by the Board of Managers or until their respective successors are
appointed. Any officer may be removed from office at any time either with or
without cause by the Board of Managers. Each officer of the Company shall have
such powers and duties as shall be granted by the Board of Managers and are not
inconsistent with this Agreement.
9. Capital Contribution. The Members have contributed cash and other
property to the Company as set forth on Schedule B hereof.
10. Initial Contributions. As of the date of this Agreement, the
Initial Members have made the contributions specified on Schedule B of this
Agreement. In addition, at the time of the closing (as defined in the asset
purchase agreement to be entered into by the Company with Princeton Video Image,
Inc. ("PVI")) or, if the Company and PVI do not enter into an asset purchase
agreement, at such other time as the Initial Members shall mutually agree (in
either event, the "Closing"), Holding will contribute $1,800,000 and PiM will
contribute $1,650,000 to the Company, and Schedules A and B shall be revised
accordingly.
11. Additional Contributions. The Members are not required to make any
additional capital contributions to the Company. However, the Members may make
additional capital contributions to the Company in such amounts and at such
times as the Board of Managers shall permit. The Board of Managers shall revise
Schedule B of this Agreement to reflect any additional capital contributions.
12. Capital Accounts.
(a) The Company shall maintain a separate Capital Account for each
Member in accordance with U.S. federal income tax accounting principles. The
initial Capital Account balance of each Member shall be as specified in Schedule
A. The Capital Account of each Member shall be (i) increased by (A) the amount
of cash and the fair market value of other property contributed to the Company
by such Member as a capital contribution (net of liabilities of such Member
assumed by the Company and liabilities to which such contributed property is
subject) and (B) profits and any other items of income or gain allocated to such
Member pursuant to Section 13 and (ii) decreased by (A) the amount of cash and
fair market value of any property distributed to such Member (net of liabilities
of the Company assumed by such Member and liabilities
to which such distributed property is subject), and (B) losses and any other
items of deduction or credit allocated to such Member pursuant to Section 13.
(b) No Member shall be entitled to interest on its capital
contributions or on the positive balance in it Capital Account and no such
interest shall accrue.
13. Tax Treatment. The Members hereby agree that the Company shall be
treated as a partnership for U.S. federal, state and local tax purposes.
14. Allocation of Profits and Losses. The Company's profits and losses
(as well as any other items in the nature of income, gain, loss, deduction or
credit) shall be allocated to each Member in accordance with such Member's
Percentage Interest set forth on Schedule A hereof.
15. Distributions. Distributions of cash or other assets of the Company
shall be made to each Member in accordance with such Member's Percentage
Interest set forth on Schedule A hereof.
16. Assignment of Member's Interest.
(a) Transfer Restrictions. Any sale, transfer, assignment, pledge
or other disposition ("Transfer") of any interest in the Company in violation of
the terms of this Agreement shall be null and void and shall not be recognized
by the Company.
(b) Permitted Transfers. The following Transfers of all but not
less than all of a Member's interest in the Company ("Permitted Transfer") may
be made free of the restrictions and requirements of paragraphs (c), (d), (e),
(f) and (g) of this Section 16 to a permitted transferee (a "Permitted
Transferee") as set forth below: (A)(i) a Member who is an individual may
transfer any or all of the interest in the Company owned by him or her to his or
her spouse, parents, siblings or lineal descendants (by blood or adoption), or
to trusts, partnerships, limited liability companies, corporations or similar
entities established solely for the benefit of such Member; (ii) a Member who is
a partnership, corporation or trust may transfer any or all of the interest in
the Company owned by such Member (x) to its Affiliates, (y) to its general or
limited partners, shareholders or beneficiaries, or (z) to an entity owned by or
organized for the benefit of the general or limited partners, shareholders,
officers, directors, employees, Affiliates or beneficiaries of such Member, as
applicable; (iii) a Member may pledge any interest in the Company owned by such
Member to secure the repayment of any bona fide indebtedness owing by such
Member to a financial institution, provided that such Member retains the rights
of a Member until such time as the pledgee shall have realized upon the pledge
and that the provisions of this Agreement, including this Section 16, shall be
applicable to such interest so pledged; and (iv) transfers to the Member's
immediate family or lineal descendants upon such Member's death. The rights
granted to each Member under this Agreement shall inure to the benefit of any of
its respective Permitted Transferees as though such Permitted Transferee were
the same type of
Member as the transferor, and such Permitted Transferee shall be required to
comply with all applicable provisions of this Agreement to the same extent as
the transferor.
(c) Right of First Negotiation. If an Initial Member (the "Selling
Initial Member") desires to Transfer, directly or indirectly, in whole or in
part, its interest in the Company (the "Offered Initial Member Interest") to a
third party other than a Permitted Transferee that would trigger paragraphs
16(d) or (f), the Selling Initial Member shall first give written notice (the
"Negotiation Notice") to the other Initial Member ("RFN Initial Member") of its
desire to so sell the Offered Initial Member Interest. Upon receipt of the
Negotiation Notice, the RFN Initial Member may attempt to negotiate the purchase
of all but not less than all of the Offered Initial Member Interest for a period
of ten (10) Business Days or such shorter or longer period as agreed in writing
by the Initial Members ("Negotiation Period"). The Selling Initial Member shall
have no obligation of any kind to sell or to reach an agreement to sell the
Offered Initial Member Interest to the RFN Initial Member. The consummation of
any sale negotiated within the Negotiation Period pursuant to this paragraph
16(c) shall be made free of the restrictions and requirements of paragraphs
16(d), (e) and (f) and must be consummated within thirty (30) Business Days
following the end of the Negotiation Period (except as such time period must be
extended to comply with ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ or other regulatory filings or by
mutual written agreement of the Initial Members). If (a) the Selling Initial
Member, in its sole discretion, does not agree to sell the Offered Initial
Member Interest to the RFN Initial Member within the Negotiation Period or (b)
any agreed sale is not consummated within the 30 Business Day period (as may be
extended per the above), the Selling Initial Member shall have the right to
Transfer the Offered Initial Member Interest to any other party, subject to
paragraphs 16(b), (d), (e) and (f). The Selling Initial Member will not again be
subject to this paragraph 16(c) with respect to any proposed Transfer of the
Offered Initial Member Interest unless more than one hundred eighty (180) days
has elapsed from the expiration of the Negotiation Period. Nothing contained in
this paragraph 16(c) shall in any way limit an Initial Member's rights regarding
an Offer Transfer Notice or Co-Sale Notice (each as defined below) initiated by
another Member.
(d) Right of First Offer.
(i) If a Member proposes to Transfer, directly or indirectly, in
whole or in part, its interest in the Company (the "Offered Interest") to a
third party other than a Permitted Transferee, such Member (the "Selling
Member") shall first give written notice (the "Offer Transfer Notice") to
the Company of its intention to sell the Offered Interest and of the terms
and conditions ("Offer Terms") on which the offer is proposed to be made,
including the cash value of the consideration and the date upon which the
sale is proposed to be made. The Company shall deliver such Offer Transfer
Notice to each Member other than the Selling Member ("Other Offerees")
within five (5) Business Days of receipt thereof.
(ii) The Company shall have the right (subject to the consent of
the Initial Members), but not the obligation, to purchase all or a portion
of the Offered Interest, subject to the Offer Terms. If the Company elects
to acquire all or any portion of the Offered Interest, the Company shall so
notify the Selling Member within ten (10) Business Days after delivery of
the Offer Transfer Notice to the Company. Any such election shall be made
by written notice (a "Company Offer Election Notice") to the Selling
Member. The Company Offer Election Notice shall specify the portion of the
Offered Interest to which the Company desires to purchase on the Offer
Terms. The Company shall also deliver such Company Offer Election Notice to
the Other Offerees within the same day in which it delivered the Company
Offer Election Notice to the Selling Member.
(iii) In the event that the Company does not elect to purchase all
of the Offered Interest, the Other Offerees shall have the right, but not
the obligation, to purchase its pro rata share ("Pro Rate Offered
Interest") of the Offered Interest that the Company has not elected to
purchase pursuant to subparagraph 16(d)(ii) above in proportion to its
Percentage Interest in the Company, subject to the Offer Terms. If any of
the Other Offerees elects to acquire all or any portion of its Pro Rata
Offered Interest, such Other Offeree shall so notify the Selling Member and
the Company within ten (10) Business Days after delivery of the Offer
Transfer Notice. If and to the extent that any Pro Rata Offered Interest is
not subscribed to by any of the Other Offerees within the 15 Business Day
period, then the Other Offerees who have elected to purchase a Pro Rata
Offered Interest shall be given written notice thereof and shall have the
right (exercisable by written notice to the Selling Member within three (3)
Business Days after receipt of such written notice) to purchase from the
Selling Member the Pro Rata Offered Interest not otherwise subscribed to
(pro rata among those such Other Offerees who exercise such right).
(iv) If the Company and the Other Offerees make any such election
described above in this paragraph 16(d), the closing of the sale of the
Offered Interest shall be on the tenth Business Day (except as such time
period must be extended to comply with ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ or other
regulatory filings) after the expiration of the notice periods set forth
above. At such closing, the Selling Member shall sell and transfer the
Offered Interest against receipt of consideration from the Company and/or
the purchasing Other Offerees on the Offer Terms.
(v) Notwithstanding the foregoing, in the event that (i) the
Company and the Other Offerees do not elect to purchase all of the Offered
Interest or (ii) the closing of the sale of all of the Offered Interest to
the Company and/or the Other Offerees has not been completed by the
scheduled closing date (other than to the extent such delay is caused by
the Selling Member), the Selling Member shall have no obligation to sell to
the Company and the Other Offerees and shall have the right to sell or
transfer any or all of the Offered Interest to any
third party, subject to the provisions of paragraph 16(e), at any time
within ninety (90) days following the later of (i) expiration of the period
in which an Offeree may elect to purchase the Offered Interest ("Offer
Period Expiration") or (ii) the last date for closing of such sale ("Last
Closing Date"), provided, however, that the consideration offered equals or
exceeds and the other terms and conditions of such offer are at least as
favorable in the aggregate to the Selling Member as those first offered to
the Offerees. The consummation of the sale or transfer to any third party
shall occur within six (6) months after the Offer Period Expiration or Last
Closing Date, as applicable, and if not so consummated, the Selling Member
shall be prohibited from selling or transferring its interest unless it
again complies with the terms of this paragraph 16(d) in respect of the
Offered Interest. If the Selling Member elects to sell the Offered Interest
to the third party pursuant to this paragraph, then it shall provide a
written notice of its intention to make such sale ("Co-Sale Notice")
together with a copy of any definitive documentation of such sale to the
Company and Initial Members at least thirty (30) days prior to the proposed
sale. In the Co-Sale Notice, the Selling Member will state (a) the portion
of the Offered Interest to be Transferred ("Co-Sale Interest"), (b) the
name and address of the prospective transferee, (c) the expected closing
date of the transaction, and (d) confirmation that the prospective
transferee has been informed of the provisions of paragraph 16(e).
(e) Co-Sale Right.
(i) Co-Sale Rights. If any Member proposes to Transfer, directly
or indirectly, in whole or in part, its Co-Sale Interest to a third party
other than a Permitted Transferee, the Initial Member that did not exercise
its rights and did not purchase any Offered Interest under paragraph 16(d)
(the "Co-Sale Offerees") shall have the right ("Co-Sale Right") to
participate in such Transfer to the prospective purchaser pursuant to this
paragraph 16(e) and the terms and conditions of such Transfer. The Co-Sale
Offerees shall have ten (10) Business Days following receipt of the Co-Sale
Notice to deliver a written notice to the Selling Member electing to
exercise its Co-Sale Right ("Co-Sale Election Notice"). The consummation of
such Transfer shall occur within ninety (90) days of the Co-Sale Transfer
Notice (except as such time period must be extended to comply with
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ or other regulatory filings), and if not so consummated,
the Selling Member shall be prohibited from selling or transferring its
interest unless it again complies with the terms of this paragraph 16(e) in
respect of the Co-Sale Interest.
(ii) Interest to be Sold. The Selling Member shall use its best
efforts to arrange for the sale to the prospective purchaser of a portion
of the interest in the Company held by each Co-Sale Offeree who elects to
exercise its Co-Sale Right ("Electing Co-Sale Offerees") that bears the
same proportion to such Electing Co-Sale Offeree's total interest in the
Company as the Co-Sale Interest bears to the Selling Member's total
interest in the Company, at the
purchase price and on the other terms and conditions specified in the
Co-Sale Notice. If the prospective purchaser will not purchase all of the
interest in the Company that the Selling Member and the Electing Co-Sale
Offerees wish to sell pursuant to this paragraph 16(d), then each of the
Selling Member and the Electing Co-Sale Offerees shall be entitled to sell
to such prospective purchaser its pro rata portion of the total interest in
the Company that the prospective purchaser desires to purchase in
proportion to its Percentage Interest in the Company.
(iii) Updates to Co-Sale Notice. The Selling Member shall update
the Co-Sale Notice by promptly providing to each Co-Sale Offeree with
notice of any material changes to the information contained therein,
including changes to the amount of interest in the Company the prospective
purchaser is willing to purchase and any of the definitive documentation
originally provided along with the Co-Sale Notice. Upon receipt of each
such updated notice, (i) each Electing Co-Sale Offeree shall have the right
to withdraw such Electing Co-Sale Offeree's election to participate and
(ii) each Co-Sale Offeree that did not elect to exercise its Co-Sale Right
shall have the right to elect to participate, in each case by delivery of
written notice to that effect to the Selling Member within five (5)
Business Days after the date such updated notice is received.
(iv) Sale to Prospective Purchaser. Upon compliance with the
provisions of this paragraph 16(e), the Selling Member and each Electing
Co-Sale Offeree shall sell to the prospective purchaser all of the interest
in the Company proposed to be sold by them at a price equal or greater and
upon terms and conditions not more favorable in the aggregate to the
prospective purchaser than those contained in the Co-Sale Notice (or the
final update thereof pursuant to subparagraph 16(e)(iii)).
(f) Drag-Along Right.
(i) Notwithstanding anything to the contrary contained in this
Agreement but subject to paragraph 16(c) and (d), if, at any time and from time
to time after the fifteenth month anniversary of the date of this Agreement, an
Initial Member holding at least a 51% interest in the Company, individually or
in a group with other Members, wishes to sell in a bona fide arms' length sale
(the "Proposed Sale") an aggregate of at least a 51% interest in the Company to
a third party other than a Permitted Transferee (the "Proposed Purchasers"),
such Initial Member (the "DAR Selling Member") shall have the right (the
"Drag-Along Right") to require each other Member to sell to the Proposed
Purchasers the same proportion of its interest in the Company as is being sold
by the DAR Selling Member at the same price and on the same terms. Each Member
agrees to take all steps necessary to enable him or it to comply with the
provisions of this paragraph 16(f).
(ii) To exercise a Drag-Along Right, the DAR Selling Member shall
give written notice to each other Member of its intention to sell its interest,
to exercise its Drag-Along Right and of the terms and conditions of the proposed
sale, including the consideration offered and the date upon which the sale is
proposed to be made (the "Drag-Along Notice"). Thereafter, each other Member
shall be obligated to sell its interest subject to such Drag-Along Notice,
provided, that the sale to the Proposed Purchasers is consummated at a price
equal or greater and on terms and conditions no more favorable in the aggregate
to the Proposed Purchaser than those set forth in the Drag-Along Notice and
within ninety (90) days of delivery of the Drag-Along Notice. If the sale is not
consummated within such 90-day period, then each Member shall no longer be
obligated to sell such Member's interests pursuant to that specific Drag-Along
Right but shall remain subject to the provisions of this paragraph 16(f).
(g) Preemptive Right. If the Company proposes to issue any equity
interest in the Company or any securities convertible into such interest
("Preempted Interest"), the Company shall first give to the Initial Members
written notice setting forth in reasonable detail the consideration and other
terms on which such Preempted Interest is proposed to be sold and the amount
thereof proposed to be issued or sold. Each Initial Member shall thereafter have
the preemptive right, exercisable by written notice to the Company no later than
fifteen (15) Business Days after the Company's notice is given, to subscribe to
such issuance in proportion to its relative Percentage Interest in the Company
prior to such issuance, at the price and on the other terms set forth in the
Company's notice. During the one hundred twenty (120) days following the
expiration of the 15 Business Day period, the Company shall be entitled to sell
any portion of the Preempted Interest which the Initial Members have not elected
to purchase at a price equal to or greater than and on terms and conditions no
more favorable in the aggregate to the purchasers thereof than those offered to
the Members.
(h) No Waiver. The exercise or non-exercise by any Member of its
rights pursuant to this Section 16 with respect to any particular proposed
Transfer or issuance of equity interest shall be without prejudice to its rights
under this Section 16 with respect to any future proposed Transfer or issuance
of equity interest.
17. Additional Members. All transferees of interest in the Company in
accordance with the terms of this Agreement shall be admitted as Members. Any
such admitted Member shall be bound by the provisions of this Agreement. In
connection with any such admission, the Board of Managers shall amend Schedule A
hereof to reflect the name, business address, and Percentage Interest of the
admitted Member.
18. Annual Budget. Not later than thirty (30) days prior to the
commencement of each fiscal year of the Company (other than the initial fiscal
year of the Company), the Company shall prepare and provide an annual budget and
operating plan (an "Annual Budget") of the Company and its Subsidiaries for the
next succeeding fiscal year to the Board of Managers for its consideration and
approval. The Board of Managers shall not approve any Annual Budget that does
not include a reasonable and
appropriate allocation, to the extent that the Company has sufficient cash
resources to do so, for the continued development of the iPoint technology.
Following the initial fiscal year of the Company, if the Board does not approve
the proposed Annual Budget, then (i) with respect to any disputed line items,
the amount set forth in the Annual Budget for the previous year shall be
controlling until the Board approves a revised amount, and (ii) with respect to
any line items which are not in dispute, the undisputed amounts shall be
controlling.
19. Financial Information.
(a) Within seventy-five (75) days after the end of each fiscal
year, the Company shall deliver to each Member an audited consolidated balance
sheet as of the end of such fiscal year and the related consolidated income
statement and statement of cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year (if
applicable), certified by a firm of independent public accounts of national
recognized standing.
(b) Within thirty (30) days after end of each fiscal quarter, the
Company shall deliver to each Member an unaudited consolidated balance sheet of
the Company and its subsidiaries as of the end of such fiscal quarter and the
related consolidated income statement and statement of cash flows for such
fiscal quarter, setting forth in each case in comparative form the figures for
the previous fiscal quarter (if applicable), reviewed in accordance with the
Statement of Auditing Standards No. 100.
(c) Within ten (10) days after the end of each calendar month, the
Company shall deliver to each Member a report summarizing the operations and
cash positions of the Company and its subisidiaries during such month, all
material events with respect to the Company or its subsidiaries and the outlook
for the Company and its subsidiaries, including variations from the Annual
Budget.
20. Initial Public Offering of the Company. Prior to any Initial Public
Offering by the Company, the Board of Managers shall approve a plan to effect
such Initial Public Offering (a "IPO Plan") that requires (i) the conversion of
the Company from a limited liability company to a corporation ("Corporate
Conversion"), whether by means of conversion, merger, formation or acquisition
by the Company of a corporation created to facilitate the IPO Plan or
acquisition of the Company by a corporation created to facilitate the IPO Plan
and (ii) the successor company to grant the registration rights set forth in
Section 21 hereof. Each party agrees to execute, acknowledge, deliver, file and
record such further certificates, amendments, instruments and documents, and to
do all such other acts and things, as may be required by law or as, in the
reasonable opinion of the Board of Managers, may be necessary or advisable to
carry out the intent and purpose of the IPO Plan.
21. Registration Rights.
(a) Piggyback Registrations. In the event of a registered offering
following the Initial Public Offering, the Company shall notify the Members at
least ten (10) Business Days prior to the filing of the registration statement
with the Commission of its intention to do so. Upon the written direction of any
Member, the Company shall include in such registration statement any or all of
the Registrable Securities then held by such Member requesting such registration
as such Member has directed to be registered.
(b) Demand Registrations. (i) At any time after six months after
the closing of the Company's Initial Public Offering, if and whenever the
Company shall receive a written request therefor from an Initial Member (a
"Demand Registration"), the Company agrees to prepare and file promptly, but not
more than thirty (30) days after such request, a registration statement under
the Securities Act covering all, but not less than all, shares of Registrable
Securities which are the subject of such request and agrees to use its best
efforts to cause such registration statement to become effective as
expeditiously as possible and no later than one hundred twenty (120) days after
the filing thereof.
(ii) A request and/or registration shall not constitute a Demand
Registration until the registration statement has become effective and remains
continuously effective for the lesser of (i) the period during which all
Registrable Securities registered in the Demand Registration are sold and (ii)
one hundred eighty (180) days; provided, however, that a request and/or
registration shall not constitute a Demand Registration if (x) after such
registration statement has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to the Company or other holders of the securities and such interference is not
thereafter eliminated or (y) the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such Demand
Registration are not satisfied or waived. In addition, the applicable Initial
Member shall have the right to withdraw any request for a Demand Registration at
any time prior to the time that the registration statement in respect of such
Demand Registration has become effective (provided that such Demand Registration
shall nonetheless be deemed a request for purposes of this paragraph 21(b)
unless such withdrawal is based on material adverse information relating to the
Company or its condition, business or prospects that is different from that
generally known to the applicable Initial Member at the time of the request).
(iii) The Company shall be obligated to prepare, file and cause to
become effective only two registration statements per Initial Member pursuant to
this paragraph 21(b), excluding registration statements on Form S-3 which shall
not count for purposes of this limitation. The Company shall not be obligated to
effect more than one registration on Form S-3 under this paragraph 21(b) during
any twelve-month period.
(iv) If the Initial Member making a Demand Registration intends to
distribute the Registrable Securities covered by their request by means of an
underwriting, such Initial Member agrees to provide the Company with the name of
the managing underwriter or underwriters (the "managing underwriter") that it
proposes to employ. In such event, the right of any Initial Member to
registration pursuant to this paragraph 21(b), shall be conditioned upon such
Initial Member's participation in such underwriting and the inclusion of such
Initial Member's Registrable Securities in the underwriting to the extent
requested and to the extent provided herein. All Initial Members proposing to
distribute their Registrable Securities through such underwriting agree to enter
into (together with the Company) an underwriting agreement with the underwriter
or underwriters selected for such underwriting, in the manner set forth above,
provided that such underwriting agreement is in customary form and is reasonably
acceptable to the Company and the applicable Initial Member.
(c) Priority in Registration. Notwithstanding any other provision
of this Section 21, if the managing underwriter of an underwritten distribution
advises the Company and the Initial Member requesting participation in the
distribution ("Requesting Member") and the other holders of Registrable
Securities participating in a Demand Registration in writing that in its good
faith judgment the number of shares of Registrable Securities requested to be
included in such registration exceeds the number of shares of Registrable
Securities which can be sold in such offering without adversely affecting the
marketability of the offering, then the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities of each Requesting Member, pro rata, in
proportion to its Percentage Interest in the Company, (iii) third, the
Registrable Securities of any other Members, pro rata, in proportion to their
Percentage Interest in the Company, and (iv) fourth, the other securities
requested to be included in such registration. Those Registrable Securities and
other securities which are excluded from the underwriting by reason of the
managing underwriter's marketing limitation and all other Registrable Securities
not originally requested to be so included shall not be included in such
registration and shall be withheld from the market by the holders thereof for a
period, not to exceed one hundred eighty (180) days, which the managing
underwriter reasonably determines is necessary to effect the underwritten public
offering.
(d) Registrable Securities. For purposes of this Section 21,
"Registrable Securities" shall mean the securities representing the equity
interests in the successor corporate entity into which membership interests in
the Company shall be convertible following the Corporate Conversion and Initial
Public Offering, and any securities issued successively in exchange for or in
respect of the foregoing equity interest, whether pursuant to a merger or
consolidation, as a result of any successive share split or reclassification of,
or share dividend on, any of the foregoing or otherwise, provided, however, that
such securities shall cease to be Registrable Securities when (i) a registration
statement registering such securities under the Securities Act has been declared
effective and such securities have been sold or otherwise transferred by the
Member pursuant to such effective registration statement or (ii) such securities
are eligible for resale and freely tradeable without any volume limitation or
restriction pursuant to Rule 144 (or any successor provision) promulgated under
the Securities Act.
22. Limited Liability. Except as otherwise provided by the Act, the
expenses, debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the expenses, debts, obligations
and liabilities of the Company, and no Member, Manager or officer of the Company
(including a person having more than one such capacity) shall be personally
liable for any such expense, debt, obligation or liability of the Company solely
by reason of acting in such capacity, except as otherwise provided by the Act.
23. Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless any person who is or was a Member,
Manager or officer of the Company (collectively, the "Indemnified Parties") from
and against any and all losses, claims, damages, liabilities, penalties,
judgments, suits, costs or expenses of whatever nature (each a "Claim"), as
incurred, arising out of or relating to the performance, or failure to perform,
any act by such person, on behalf of the Company, in the capacity of a Member,
Manager or officer of the Company; provided that such indemnification shall not
apply to any such person if such Claim resulted directly from the gross
negligence, bad faith or willful misconduct of such person.
24. Insurance. The Company shall purchase and maintain insurance, in
such reasonable amount as determined by the Board of Managers from time to time,
on behalf of the Indemnified Parties, whether or not the Company would have the
power to indemnify any such party against such liability under the provisions of
the Act or this Agreement.
25. Dissolution. The Company shall dissolve, and its affairs shall be
wound up upon the first to occur of the following: (i) the unanimous written
consent of the Members, (ii) at any time there are no Members unless the
business of the Company is continued in a manner permitted by the Act, or (iii)
the entry of a decree of judicial dissolution under ss. 18-802 of the Act.
26. Representation and Warranties.
(a) Each Initial Member represents and warrants to the other
Initial Member that such Member and each of its Affiliates (other PVI and its
subsidiaries (the "PVI Subsidiaries")) does not have any contractual rights
against any of the PVI Subsidiaries ("PVI Rights"), except, (i) with respect to
Holding, its existing intellectual property rights, and (ii) with respect to
Presencia en Medios, S.A. de C.V. ("Presencia"), PiM's parent, (x) its unsecured
rights against Publicidad Virtual, S.A. de C.V. ("Publicidad") pursuant to a
certain guaranty made by Presencia of a $200,000 bank loan to Publicidad by BBV
Bancomer, and (y) its rights against Publicidad with respect to certain loans to
Publicidad by Presencia in the aggregate principal amount of $200,000 (the
"Publicidad Loans") that are secured only by Publicidad's receivables, and
Presencia and PiM further represents and warrants to Holding that each loan
referenced in (x) and (y) is fully repayable by Publicidad at any time without
penalty. Each Initial Member
hereby waives any PVI Rights that it may have upon the Company's acquisition of
the PVI Subsidiaries at the time of the Closing.
(b) Presencia represents and warrants to Holding that Presencia
has duly and properly transferred or assigned to PiM all of Presencia's and its
Affiliates' rights, titles and interests in the debt and equity of PVI or any of
the PVI Subsidiaries (together, the "Assigned Presencia Property"), including
the following: (i) certain secured convertible notes dated February 18, 2003,
March 20, 2003 and April 4, 2003, issued by PVI to Presencia in the aggregate
principal amount of $2,650,000 (collectively, the "Presencia Notes") plus
accrued interest thereon from the respective dates of issuance; (ii) 1,336,711
shares of PVI's common stock, including 26,784 shares held in escrow pursuant to
the Reorganization Agreement, dated December 28, 2000, among Presencia, PiM,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PVI and others; (iii) certain
warrants to purchase 586,773 shares of PVI's common stock, issued to Presencia;
(iv) the guaranteed loan agreement, dated May 23, 2003, between Presencia and
Publicidad with respect to the Publicidad Loans (the "Publicidad Loan
Agreement") and (v) the note purchase and security agreement, dated as of
February 18, 2003, among PVI, Presencia and PVI Holding, as amended (the
"Presencia Security Agreement"), and that, other than such Assigned Presencia
Property, neither Presencia nor any of its Affiliates directly or indirectly
owns or holds any equity or debt interest in PVI or any of the PVI Subsidiaries.
27. Corporate Opportunity. The Members shall not be obligated to offer
to the Company or its subsidiaries any business opportunities of any kind by
reason of such Member's ownership of an interest in the Company or otherwise.
28. Amendment. This Agreement may be amended, supplemented, repealed or
waived only upon the prior written consent of the Company and the Initial
Members.
29. Consent to Jurisdiction. The parties hereby irrevocably submit to
the exclusive jurisdiction of the courts of the State of New York and the
Federal courts of the United States of America located in the State of New York
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or thereof or of any
such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement may not be enforced
in or by such courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
a New York State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
34 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
30. Definitions
"Affiliate" shall mean, as to any person, any other person
Controlling, Controlled by, or under common Control with, such person.
"Business Day" shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in New York City are required or authorized to
be closed.
"Commission" shall mean the U.S. Securities and Exchange
Commission.
"Control" shall mean, as to any person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through ownership of voting securities or
Company interests, by contract or otherwise.
"Initial Members" shall mean Holding and PiM and their Permitted
Transferees pursuant to a Permitted Transfer.
"Initial Public Offering" shall mean the Company's first offering
of newly-issued or outstanding equity securities that are registered with the
Commission under the Securities Act.
"Securities Act" shall mean the Securities and Exchange Act of
1933, as amended.
"Voting Members" shall be Holding and PiM to the extent each has a
Percentage Interest greater than 20% at the time of such determination.
31. Governing Law. This Agreement shall be governed by, and construed
under, the laws of the State of Delaware without regard to principles of
conflict of law.
32. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or
legality of the remainder of this Agreement.
33. Counterparts. This Agreement may be executed in multiple
counterparts. Each counterpart shall be an original, but altogether shall
constitute one and the same instrument.
34. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by telecopier or reputable overnight courier
service (charges prepaid) or mailed to the recipient by certified or registered
mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to each
party hereto at the addresses below:
(a) If to Holding:
PVI Holding, LLC
c/o Cablevision Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to PiM:
Presence in Media, LLC
c/o Presencia en Medios, S.A. de ▇.▇.
▇▇▇▇▇▇ # ▇▇▇-▇▇▇
▇▇▇▇▇▇ DF 11000
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
With a copy (which shall not constitute notice) to:
Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party given
in accordance with the forgoing.
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as
of the date first above written.
PVI Holding, LLC
By:
----------------------------------
Name:
Title:
Presence in Media, LLC
By:
----------------------------------
Name:
Title:
Presencia en Medios, S.A. de C.V.
By:
----------------------------------
Name:
Title:
MEMBERS
NAME AND BUSINESS ADDRESS PERCENTAGE INTEREST
------------------------- -------------------
PVI Holding, LLC 63%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Presence in Media, LLC 37%
c/o Presencia en Medios, S.A. de ▇.▇.
▇▇▇▇▇▇ #▇▇▇-▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
SCHEDULE B
SCHEDULE OF CAPITAL CONTRIBUTIONS
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DATE PVI HOLDING PRESENCE IN MEDIA
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May , 2003 All rights, title and interest in the All rights, title and interest in the
equity or debt of PVI or any of its equity or debt of PVI or any of its
subsidiaries held, directly or subsidiaries held, directly or
indirectly, by PVI Holding, including indirectly, by Presence in Media or
the following: $5,000,000 secured any of its Affiliates, including the
convertible note issued by PVI plus following: Presencia Notes plus
accrued interest thereon from the date accrued interest thereon from the
of issuance; the note purchase and respective dates of issuance;
security agreement, dated as of June Presencia Security Agreement;
25, 2002, between PVI and PVI Holding; 3,881,146 shares of common stock of
4,000,000 shares of common stock of PVI, including 535,671 shares held in
PVI; warrants to purchase 12,903,193 escrow; warrants to purchase 1,572,027
shares of PVI's common stock; and shares of PVI's common stock; the
$700,000 in cash Publicidad Loan Agreement and $500,000
in cash
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