LOAN AND SECURITY AGREEMENT
BETWEEN
DMX INC.,
a Delaware corporation,
as Borrower
AND
TELE-COMMUNICATIONS, INC.,
a Delaware corporation,
as Lender
DATED AS OF FEBRUARY 6, 1997
$3,500,000
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
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Page
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ARTICLE 1 Definitions1
ARTICLE 2 Loan and Note3
2.1 Loan3
2.2 Interest4
(a) Interest4
(b) Computation of Interest4
2.3 Payments4
(a) Payment of Loan4
(b) Optional Prepayment4
(c) Payments5
ARTICLE 3 Conditions Precedent5
3.1 Note5
3.2 Reports, Certificates and Other Information5
3.3 No Existing Default5
3.4 Representations and Warranties Correct; Compliance
with Covenants5
3.5 No Material Adverse Effect5
3.6 Affiliation Agreement5
3.7 Verification of Use of Proceeds6
ARTICLE 4 Representations and Warranties of Borrower6
4.1 Due Organization6
4.2 Chief Executive Office6
4.3 Corporate Power6
4.4 Authorization6
4.5 Representative Authorization6
4.6 Binding Nature6
4.7 Litigation and Contingent Liabilities6
4.8 No Event of Default7
4.9 Compliance With Laws7
4.10 Absence of Conflicts7
4.11 Accurate and Complete Disclosure7
4.12 Title and Authority7
4.13 Filings7
4.14 No Other Names7
4.15 Priority of Security Interest7
ARTICLE 5 Affirmative Covenants8
5.1 Accounting Records8
5.2 Corporate Existence8
5.3 Qualifications To Do Business8
5.4 Compliance With Laws8
5.5 Taxes and Other Liabilities8
5.6 Conduct of Business8
5.7 Use of Proceeds8
5.8 Records of Accounts Receivable9
5.9 Protection of Security9
5.10 Continuing Obligations of Borrower9
5.11 Indemnification9
ARTICLE 6 Negative Covenants9
6.1 No Merger, etc9
6.2 Type of Business9
6.3 Indebtedness9
6.4 Dividends10
6.5 Loans and Investments10
6.6 Sale of Assets10
6.7 No Other Lien10
ARTICLE 7 Events of Default10
7.1 Events of Default10
(a) Payments11
(b) Other Covenants11
(c) Warranties11
(d) Bankruptcy11
(e) Cross-Default11
7.2 Acceleration11
7.3 Other Remedies11
ARTICLE 8 Security Interest12
8.1 Grant of Security Interest12
8.2 Collections12
8.3 Remedies upon Default13
8.4 Application of Proceeds14
8.5 Locations of Collateral; Place of Business15
ARTICLE 9 Miscellaneous15
9.1 Successors and Assigns15
9.2 No Implied Waiver15
9.3 Amendments; Waivers16
9.4 Severability16
9.5 Notices16
9.6 Interpretation17
9.7 Governing Law17
9.8 Counterparts17
9.9 Headings17
9.10 Terms17
9.11 Additional Waivers18
(a) Bankruptcy18
(b) Statutes of Limitation.18
(c) Demands for Performance.18
(d) No Set-off.18
9.12 Further Assurances18
9.13 Expenses19
9.14 Jurisdiction and Venue19
9.15 Waiver of Jury Trial19
LIST OF EXHIBITS
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Exhibit Description
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A Form of Promissory Note
LIST OF SCHEDULES
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Schedule Description
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8.5 Location of Collateral
LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT is entered into
as of February 6, 1997, between DMX Inc., a Delaware
corporation ("Borrower"), and TELE-COMMUNICATIONS, INC., a
Delaware corporation ("Lender").
RECITAL
Lender desires to lend to Borrower, and Borrower
desires to borrow from Lender, up to $3,500,000 on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
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Definitions
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In addition to any terms defined elsewhere in this
Agreement, the following terms have the meanings indicated
for purposes of this Agreement:
1.1 "Acceleration" means that the Loan (i) shall
not have been paid at the Maturity Date or (ii) shall have
become due and payable prior to the Maturity Date pursuant
to Section 7.2.
1.2 "Advance Date" has the meaning set forth in
Section 2.1.
1.3 "Affiliate" means, with respect to any
Person, any other Person Controlling, Controlled by or under
common Control with such Person; Control for this purpose
means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and
policies of a Person, whether through the ownership of
voting securities or voting interests, by contract or
otherwise.
1.4 "Agreement" means this Loan and Security
Agreement, as amended from time to time.
1.5 "Business Day" means a day when banks in Los
Angeles, California, New York, New York and Denver, Colorado
are open for business.
1.6 "Closing Date" means the date first above
written.
1.7 "Collateral" has the meaning set forth in
Section 8.1.
1.8 "Commitment Period" has the meaning set forth
in Section 2.1(a).
1.9 "Commitment Termination Date" means May 31,
1997.
1.10 "Event of Default" has the meaning set forth
in Article 7.
1.11 "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
1.12 "GAAP" means generally accepted accounting
principles as in effect in the United States, as set forth
in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession, which
principles are applicable to the circumstances as of the
date of determination.
1.13 "Indebtedness" means, with respect to any
Person, without duplication, (a) all obligations of such
Person for borrowed money, or with respect to advances of
any kind (including repurchase obligations), (b) all
obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention
agreements relating to property purchased by such Person,
(d) all obligations of such Person incurred or assumed as the
deferred purchase price of property or services (other
than accounts payable to suppliers incurred in the ordinary
course of business and paid in the ordinary course of
business of such Person), (e) all indebtedness of others
secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person,
whether or not the obligations secured thereby have been
assumed, (f) all capitalized lease obligations of such
Person, (g) all guaranties of such Person and (h) all
obligations of such Person as an account party in respect of
letters of credit and bankers acceptances.
1.14 "Legal Requirements" means all legal
requirements in effect from time to time including all laws,
statutes, codes, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determina
tions, approvals, notices, demand letters, directions and
requirements of all governments, departments, commissions,
boards, courts, authorities and agencies, foreseen or unfore
seen, ordinary or extraordinary, including any change in any
law, regulation or the interpretation thereof by any
governmental authority (whether or not having the force of
law).
1.15 "Lien" means any lien, security
interest, pledge, mortgage, deed of trust, encumbrance,
right of first refusal or other right to purchase or any
right or claim in the nature of any of the foregoing.
1.16 "Loan" means the loan by Lender to Borrower
of the principal sum of up to $3,500,000 as described in
Section 2.1.
1.17 "Material Adverse Effect" means a material
adverse effect on (i) the business, assets, operations,
prospects or financial condition of Borrower, (ii) the
ability of Borrower to pay the Obligations in accordance
with their terms or (iii) the enforceability of Borrower's
obligations under this Agreement.
1.18 "Maturity" means any date on which the Loan
or any portion thereof, or any interest, fee, expense or
other payment becomes due and payable, whether as stated or
by virtue of mandatory prepayment, by Acceleration or
otherwise.
1.19 "Maturity Date" means June 1, 2000, or such
earlier date as all Outstanding Principal and accrued but
unpaid interest on the Note becomes due.
1.20 "Note" has the meaning set forth in Section
2.1.
1.21 "Obligations" means the Loan and any other
loans, advances, debts, interest, liabilities, obligations,
fees, expenses, covenants and duties owing to Lender by
Borrower, of any kind or nature, present or future, whether
or not evidenced by any note, guaranty or other instrument,
arising under this Agreement.
1.22 "Outstanding Principal" means, as determined
from time to time, the unpaid principal amount of the Loan
made by Lender to Borrower pursuant to this Agreement.
1.23 "Person" means any human being or any
corporation, partnership, trust, association or other entity
or organization, including any governmental authority.
1.24 "Potential Default" means any event or
condition which with notice, passage of time or a
determination by Lender, or any combination of the
foregoing, would constitute an Event of Default.
ARTICLE 2
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Loan and Note
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2.1 Loan.
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(a) Subject to the terms and conditions of
this Agreement, at any time and from time to time during the
period (the "Commitment Period") beginning on the Closing
Date and ending on the Commitment Termination Date, Lender
shall make the Loan to Borrower in the principal amount of
up to $3,500,000. Borrower shall use the proceeds of the
Loan solely for the purposes described in Section 5.7.
(b) Subject to satisfaction of the
conditions set forth in Article 3, during the Commitment
Period Lender shall disburse proceeds of the Loan to
Borrower on each date (an "Advance Date") that is designated
by Borrower by a notice requesting such disbursement given
to Lender at least three Business Days before such Advance
Date. Such notice shall state the principal amount
requested to be disbursed and must be accompanied by (i) a
certificate of Borrower signed on its behalf by its Chief
Executive Officer or Chief Financial Officer certifying that
the conditions to the obligation of Lender to make such
advance, as set forth in Article 3, will be satisfied as of
the Advance Date and (ii) the items prescribed by Section
3.7 to the extent applicable to such advance.
(c) Borrower's obligation to repay the Loan
shall be evidenced by a promissory note of Borrower (the
"Note") in the form attached as Exhibit A. On the Closing
Date, Borrower shall deliver to Lender the Note, executed by
Borrower.
2.2 Interest.
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(a) Interest. The Loan shall bear interest
from the Closing Date on the Outstanding Principal until
such amount is repaid at the rate of 12 1/2% per annum.
Borrower shall, on the Commitment Termination Date, pay
Lender all accrued interest on Outstanding Principal
accrued through such date. Any payment of principal,
interest or any fee, expense or other payment payable
by Borrower hereunder that is not paid
when due shall bear interest from the due date thereof until
the date such payment is made in full at the rate of 15% per
annum.
(b) Computation of Interest. Interest shall
be computed for the actual number of days elapsed on the
basis of a 360-day year. If the amount of interest payable
on any interest payment date in respect of the immediately
preceding interest computation period would exceed the
maximum amount permitted by applicable Legal Requirements to
be charged by Lender, the amount of interest payable on such
interest payment date shall automatically be reduced to such
maximum permissible amount. If the amount of interest
payable in respect of any interest computation period is
reduced pursuant to the foregoing sentence and the amount of
interest payable for Lender's account in respect of any
subsequent interest computation period would be less than
the maximum amount permitted by applicable Legal
Requirements to be charged by Lender, then the amount of
interest payable in respect of such subsequent interest
computation period shall be automatically increased to such
maximum permissible amount; provided that at no time shall
the aggregate amount by which interest paid has been
increased exceed the aggregate amount by which interest paid
has theretofore been reduced.
2.3 Payments.
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(a) Payment of Loan. Borrower (i) shall pay
---------------
interest accrued on the Loan as provided in Section 2.2(a)
and (ii) shall pay the Outstanding Principal as of the
Commitment Termination Date and all interest thereon in 36
equal monthly installments, commencing on July 1, 1997 and
thereafter on the first day of each month until the Maturity
Date. All payments on the Loan shall be applied first to
the payment of unpaid interest and the balance, if any, to
Outstanding Principal. Amounts repaid by Borrower may not
be reborrowed.
(b) Optional Prepayment. Borrower may, at
-------------------
any time, prepay the Loan in whole or in part, without
penalty or premium.
(c) Payments. All payments made to Lender
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under this Agreement, whether for interest, principal, fees,
expenses or late charges shall be made in immediately
available funds by wire transfer to the account designated
by Lender or, if no such account is designated, by delivery
to Lender at Lender's address for notices as set forth in
this Agreement and shall be made prior to noon Colorado time
on the date of the scheduled payment. All payments received
after noon Colorado time shall be considered to have been
received on the next Business Day. If the due date of any
payment falls on a day that is not a Business Day, such
payment shall instead be due the next succeeding Business
Day.
ARTICLE 3
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Conditions Precedent
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The obligation of Lender to make the Loan (or any
advance thereof) shall be subject to the satisfaction, on
the Closing Date and on each Advance Date, as applicable, of
each of the following conditions:
3.1 Note. Lender shall have received the Note
----
duly executed and delivered by Borrower.
3.2 Reports, Certificates and Other Information.
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Lender shall have received such instruments or documents as
Lender may reasonably request relating to the existence and
good standing of Borrower, the authority for execution,
delivery and performance of this Agreement or the creation
and perfection of the security interest set forth in Article
8 hereof.
3.3 No Existing Default. No Event of Default or
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Potential Default shall exist.
3.4 Representations and Warranties Correct;
------------------------------------------
Compliance with Covenants. The representations and
-----------------------------
warranties set forth in Article 4 shall be true and correct
in all material respects and Borrower shall have complied in
all material respects with its covenants and agreements in
this Agreement.
3.5 No Material Adverse Effect. Since December
--------------------------
31, 1996, no event shall have occurred that has had, or
reasonably could be expected to have, a Material Adverse
Effect, other than with respect to, or as a result of, the
disposition of Borrower's European operations.
3.6 Affiliation Agreement. Borrower and
----------------------
Satellite Services, Inc. shall have entered into an
affiliation agreement (or an amendment to the affiliation
agreement currently in effect) providing, among other
things, for the inclusion of Borrower's music services in
the digital cable television services offered by Lender's
Affiliates.
3.7 Verification of Use of Proceeds. Borrower
-------------------------------
shall have provided to Lender invoices, purchase orders or
other evidence reasonably satisfactory to Lender as to
compliance by Borrower with its covenant in Section 5.7 as
to each advance of the Loan.
ARTICLE 4
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Representations and Warranties of Borrower
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To induce Lender to enter into this Agreement and
to make the Loan, Borrower makes the following
representations and warranties to Lender:
4.1 Due Organization. Borrower is a corporation
----------------
duly organized, validly existing and in good standing under
the laws of Delaware.
4.2 Chief Executive Office. The chief executive
----------------------
office of Borrower is at 11400 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000.
4.3 Corporate Power. Borrower has all corporate
---------------
power necessary to own and operate its properties and to
carry on its business as now conducted and to execute and
deliver, and to perform its obligations under, this
Agreement, the Note and the other instruments and agreements
to be executed and delivered by Borrower pursuant to this
Agreement.
4.4 Authorization. All corporate action on the
-------------
part of Borrower necessary for the execution, delivery and
performance of this Agreement has been duly taken and is in
full force and effect.
4.5 Representative Authorization. The officer
----------------------------
executing this Agreement on behalf of Borrower is fully
authorized to execute and deliver the same.
4.6 Binding Nature. This Agreement is a legal,
--------------
valid and binding obligation of Borrower, enforceable in
accordance with its terms, except as affected by bankruptcy,
insolvency or similar laws and by general equitable
principles.
4.7 Litigation and Contingent Liabilities. There
--------------------------------------
is no action, suit, investigation or proceeding pending or,
to the knowledge of Borrower, threatened in writing against
or affecting Borrower, or any of its property by or before
any court, arbitrator or administrative or governmental
authority, the adverse determination of which reasonably
could be expected to have a Material Adverse Effect, except
for the purported class action lawsuit entitled Brickell
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Partners v. Xxxxxx X. Xxxxxxxxxx, Xxxxx X. Xxxxxx, Xxx X.
------------------------------------------------------------
Hindery, Jr., Xxxxx X. Xxxx, Xx., Xxxx Xxxxxxxx, X.X.
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Xxxxxxxx, Menon Bhaskar, DMX Inc., and Tele-Communications,
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Inc. (Civil Action No. 15206) filed in the Delaware Chancery
----
Court.
4.8 No Event of Default. No Event of Default has
-------------------
occurred and is continuing or would result from the execu
tion, delivery and performance by Borrower of this
Agreement.
4.9 Compliance With Laws. Borrower is in
----------------------
compliance with all Legal Requirements applicable to its
assets and business with only such exceptions as in the
aggregate would not be reasonably likely to have a Material
Adverse Effect. No approvals by, or filings with, any
governmental authority are required to be obtained or made
in connection with the execution and delivery of this
Agreement or the Note, the consummation of the transactions
herein or therein contemplated or the performance of or
compliance with the terms and conditions hereof or thereof.
4.10 Absence of Conflicts. The execution,
----------------------
delivery or performance of this Agreement or the Note
will not (a) violate any Legal Requirement, (b) conflict
with or result in a breach of or a default under any
agreement or instrument to which Borrower
is a party or by which any of
its properties is bound or (c) result in the creation or
imposition of a Lien upon any property (now owned or
hereafter acquired) of Borrower (except for the security
interest granted pursuant to Article 8).
4.11 Accurate and Complete Disclosure. No repre
--------------------------------
sentation or warranty made by Borrower in this Agreement is
false or misleading in any material respect (including by
omission of material information necessary to make such
representation, warranty or statement not misleading).
4.12 Title and Authority. Borrower has
---------------------
rights in and good title to the Collateral and has full
power and authority to grant to Lender a security interest
in the Collateral pursuant to this Agreement and to execute,
deliver and perform its obligations in accordance with this
Agreement, without the consent or approval of any other
Person other than any consent or approval which has been
obtained.
4.13 Filings. Fully executed Uniform
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Commercial Code financing statements containing a
description of the Collateral have been filed of record in
every governmental office in which such filing is necessary
to establish a legal, valid and perfected security interest
in favor of Lender in respect of any Collateral (other than
Collateral that is equipment located at premises occupied by
subscribers to Borrower's music services) in which a
security interest may be perfected by filing in the United
States and its territories and possessions, and no further
or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with
respect to the filing of Uniform Commercial Code
continuation statements.
4.14 No Other Names. Borrower uses no name
--------------
other than "DMX Inc."
4.15 Priority of Security Interest. The
---------------------------------
Collateral is and will be owned by Borrower free and clear
of any Lien other than the security interest granted hereby.
The security interest granted to Lender in Article 8 is a
legal, valid and perfected first priority security interest
subject to no prior Lien of any nature.
ARTICLE 5
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Affirmative Covenants
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Unless Lender shall otherwise agree, Borrower
shall comply with the following provisions so long as any
Obligation is outstanding:
5.1 Accounting Records. Borrower shall maintain
------------------
adequate books and accounts in accordance with GAAP.
Within 45 days after the end of each of the first
three quarters of each fiscal year, Borrower shall deliver
to Lender a copy of consolidated financial statements
for such quarter (consisting of at least a balance
sheet and related statements of operations, cash flows
and stockholders equity), and within 90 days after
the end of each fiscal year Borrower shall deliver a copy of
audited consolidated financial statements for such fiscal
year (consisting of at least a balance sheet and related
statements of operations, cash flows and stockholders
equity). All such financial statements shall be prepared in
accordance with GAAP applied on a basis consistent with
prior periods (except as otherwise noted therein) and,
to the extent applicable, Regulation S-X under the Exchange
Act.
5.2 Corporate Existence. Borrower shall preserve
-------------------
and maintain its corporate existence and all its licenses,
privileges and franchises and other rights necessary or
desirable in the normal course of its businesses, except to
the extent that the failure to preserve and maintain its
corporate existence and such rights would not be reasonably
likely to have a Material Adverse Effect.
5.3 Qualifications To Do Business. Borrower
-------------------------------
shall qualify to do business and shall be and remain in good
standing in each jurisdiction in which the nature of its
business requires it to be so qualified, or in which failure
to be so qualified and in good standing would be reasonably
likely to have a Material Adverse Effect.
5.4 Compliance With Laws. Borrower shall comply
--------------------
with all applicable Legal Requirements, except where the
failure to do so would not have a Material Adverse Effect.
5.5 Taxes and Other Liabilities. Borrower shall
---------------------------
pay and discharge when due (including any grace period) any
and all Indebtedness and all taxes and assessments except as
may be subject to good faith contest or as to which a bona
fide dispute may arise.
5.6 Conduct of Business. Borrower shall conduct
-------------------
its business only in the ordinary course.
5.7 Use of Proceeds. Borrower shall use the
----------------
proceeds of the Loan only (i) to purchase (or to reimburse
the Company for its purchase, after September 30, 1996, of)
tuners, including remote controls and related equipment, for
use by its commercial and residential customers in receiving
Borrower's music services and (ii) to pay commissions owed
in connection with the obtaining of commercial customers for
Borrower's music services.
5.8 Records of Accounts Receivable. Borrower
-------------------------------
shall keep or cause to be kept records of all accounts
receivable included in the Collateral which are accurate in
all material respects. Borrower shall at all times keep all
records of such accounts receivable and the other Collateral
at its chief executive office located at 11400 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000.
5.9 Protection of Security. Borrower shall, at
----------------------
its own cost and expense, take any and all actions necessary
to defend title to the Collateral against all
Persons and to defend the security interest of Lender in the
Collateral and the priority thereof, against any adverse
Lien of any nature whatsoever.
5.10 Continuing Obligations of Borrower.
-------------------------------------
Borrower shall observe and perform all the material
conditions and obligations to be observed and performed by
it under each material contract, agreement, interest or
obligation relating to the Collateral, all in accordance
with the terms and conditions thereof.
5.11 Indemnification. Borrower shall indemnify
---------------
and hold Lender and Lender's directors, officers, employees,
affiliates, attorneys and agents (collectively, the "Indem
nitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel) which may be
imposed on, incurred by or asserted against such Indemnitees
in any manner relating to or arising out of this Agreement
or the making of the Loan (collectively, the "Indemnified
Matters"); provided, however, that Borrower shall have no
obligation to an Indemnitee under this Section 5.11 with
respect to Indemnified Matters to the extent such Indemni
fied Matters were caused by or resulted from the gross
negligence or willful misconduct of an Indemnitee.
ARTICLE 6
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Negative Covenants
------------------
Unless Lender shall otherwise agree, Borrower
shall comply with the following provisions so long as any
Obligation is outstanding:
6.1 No Merger, etc. Borrower shall not effect or
--------------
enter into any agreement to effect, any merger,
consolidation, reorganization, recapitalization or similar
transaction other than as contemplated by the proposal made
by Lender to the Company on August 30, 1996.
6.2 Type of Business. Borrower shall not engage
----------------
in any material respect in any business other than the
businesses in which it currently is engaged.
6.3 Indebtedness. Borrower shall not incur,
------------
assume or suffer to exist any Indebtedness, except (a) the
Loan, (b) Indebtedness for borrowed money and capital lease
obligations outstanding as of the Closing Date and reflected
in the most recent balance sheet of Borrower delivered to
Lender and (c) Indebtedness for goods or services incurred
in the ordinary course of business.
6.4 Dividends. Without the prior written consent
---------
of Lender, Borrower shall not make or pay, or become or
remain liable to make or pay, any distribution of any nature
(whether in cash, property, securities or otherwise) on
account of or in respect of any equity interest in Borrower
or on account of the purchase, redemption, retirement or
acquisition of any such equity interest.
6.5 Loans and Investments. Borrower shall not at
---------------------
any time make or have outstanding any loan or advance to, or
purchase, acquire or own any stock, bonds, notes or
securities of, or any partnership or other ownership
interest in, or make any capital contribution to, any other
Person, or purchase or acquire any assets (whether with cash
or in exchange for other assets) or make any other
investment in any Person or agree, become or remain liable
to do any of the foregoing, except:
(a) investments and loans described in any
of its periodic reports filed pursuant to the Exchange Act
prior to the date of this Agreement;
(b) trade credit extended to subcontractors
or suppliers, under usual and customary terms in the
ordinary course of business; and
(c) loans and advances on a short-term basis
to employees and officers of Borrower in the ordinary course
of Borrower's business for expenses of such businesses.
6.6 Sale of Assets. Borrower shall not at any
--------------
time sell, lease, assign or otherwise dispose of any of its
assets to any Person, whether pursuant to a sale, lease,
assignment, transfer or other disposition of capital stock,
assets or other property, in one transaction or in any
series of related transactions, except for sales of
inventory and equipment in the ordinary course of business
of Borrower or the leasing of equipment and other property
in the ordinary course of business of Borrower.
6.7 No Other Lien. Except for the security
---------------
interest herein granted to Lender, Borrower shall not
create, incur, assume or suffer to exist any Lien of any
kind on the Collateral.
ARTICLE 7
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Events of Default
-----------------
7.1 Events of Default. Each of the following
------------------
shall constitute an Event of Default under this Agreement:
(a) Payments. Borrower shall fail to pay
--------
when due, whether at Maturity or otherwise, any principal,
interest, fees, expenses or other payment due under this
Agreement or the Note, and such failure shall continue
uncured for two Business Days after the due date.
(b) Other Covenants. Borrower shall fail in
---------------
any material respect to perform any of its obligations under
this Agreement other than any obligation to pay money, and
such failure shall continue uncured for a period of 30 days.
(c) Warranties. Any warranty or
----------
representation made by Borrower shall be untrue in any
material respect.
(d) Bankruptcy. Borrower shall institute a
----------
voluntary case seeking liquidation or reorganization under
Chapter 7 or Chapter 11 of the United States Bankruptcy
Code, or shall consent to the institution of an involuntary
case thereunder against it; Borrower shall file a petition
initiating or shall otherwise institute any similar proceed
ing under any other applicable federal or state law, or
shall consent thereto; or Borrower shall apply for, or by
consent or acquiescence there shall be an appointment with
respect to Borrower of, a receiver, liquidator,
sequestrator, trustee or other officer with similar powers,
or Borrower shall make an assignment for the benefit of
creditors; or Borrower shall admit in writing its inability
to pay its debts generally as they become due; or, if an
involuntary case shall be commenced seeking the liquidation
or reorganization of Borrower under Chapter 7 or Chapter 11
of the United States Bankruptcy Code, or any similar
proceeding shall be commenced against Borrower under any
other applicable law, and (i) the petition commencing the
involuntary case is not timely controverted, (ii) the
petition commencing the involuntary case is not dismissed
within 45 days after its filing, (iii) an interim trustee is
appointed to take possession of all or a portion of the
property, to operate all or any part of the business of
Borrower or (iv) an order for relief or a decree or order of
a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee
or other officer shall have been issued or entered therein.
(e) Cross-Default. Borrower shall be in
-------------
default of any obligation (other than the Obligations) under
any agreement or instrument for the payment of Indebtedness
in excess of $100,000 and such Indebtedness shall continue
uncured for more than 10 days.
7.2 Acceleration. If any Event of Default
------------
described in Section 7.1(d) shall occur, all Obligations
shall become immediately due and payable, all without notice
of any kind. If any other Event of Default shall occur,
Lender may declare all Obligations to be due and payable,
whereupon all Obligations shall immediately become due and
payable, all as so declared by Lender and without
presentment, demand, protest or other notice of any kind.
Any such declaration made pursuant to this Section 7.2 may
be rescinded by Lender.
7.3 Other Remedies. If any Event of Default
---------------
shall occur and be continuing, Lender shall have, in addi
tion to the remedies set forth in this Agreement, all other
remedies available at law or in equity.
ARTICLE 8
---------
Security Interest
-----------------
8.1 Grant of Security Interest. To secure the
--------------------------
prompt payment and performance of the Obligations, Borrower
hereby grants to Lender a security interest in all of
Borrower's right, title and interest in the following
(collectively, the "Collateral"):
(a) all tuners, remote control devices and
other equipment designed for use by Borrower's customers in
receiving Borrower's music services;
(b) all agreements with commercial
subscribers to Borrower's music services, including accounts
receivable or other rights to payment arising from goods
sold or leased or services rendered under such agreements;
and
(c) all proceeds from the sale, exchange,
lease or other disposition of any asset that constitutes
Collateral.
8.2 Collections.
-----------
(a) So long as no Event of Default
shall have occurred and be continuing, Borrower shall have
the right to collect all accounts receivable included in the
Collateral in the ordinary course of its business; provided
that Borrower shall, if Lender shall so request, (i) arrange
for remittances on any such accounts receivable to be made
directly to lock boxes or blocked accounts designated by
Lender or in such other manner as Lender may direct, and
(ii) promptly deposit all payments received by Borrower on
account of such accounts receivable, whether in the form of
cash, checks, notes, drafts, bills of exchange, money orders
or otherwise, in one or more accounts designated by Lender
in precisely the form received (but with any endorsements of
Borrower necessary for deposit or collection), subject to
withdrawal by Lender only, as hereinafter provided, and
until they are deposited, such payments shall be deemed to
be held in trust by Borrower for and as Lender's property
and shall not be commingled with Borrower's other funds.
(b) Upon the occurrence and during the
continuance of an Event of Default, Lender shall have the
right, as the agent of Borrower, with power of substitution
for Borrower and in Borrower's name, Lender's name or
otherwise, for the use and benefit of Lender (i) to receive,
endorse, assign or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (ii) to
demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the
Collateral; (iii) to sign the name of Borrower on any
invoice or xxxx of lading relating to any of the Collateral;
(iv) to send verifications of accounts receivable to any
customer; (v) to commence and prosecute any and all suits,
actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in
respect of any Collateral; (vi) to settle, compromise,
adjust or defend any actions, suits or proceedings relating
to or pertaining to all or any of the Collateral; (vii) to
notify, or to require Borrower to notify, the account
debtors obligated on any accounts receivable to make payment
thereof directly to Lender; and (viii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do
all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as
though Lender were the absolute owner of the Collateral for
all purposes; provided that nothing herein contained shall
be construed as requiring or obligating Lender to make any
commitment or to make any inquiry as to the nature or
sufficiency of any payment received by Lender, or to present
or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys
due or to become due in respect thereof or any property
covered thereby, and no action taken by Lender or omitted to
be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in
favor of Borrower or to any claim or action against Lender
in the absence of the gross negligence or wilful misconduct
of Lender. The appointment of Lender as the agent of
Borrower for the purposes set forth in this Section 8.2 is
coupled with an interest and is irrevocable. The provisions
of this Section 8.2 shall in no event relieve Borrower of
any of its obligations under this Agreement with respect to
the Collateral or any part thereof or impose any obligation
on Lender to proceed in any particular manner with respect
to the Collateral or any part thereof, or in any way limit
the exercise by Lender of any other or further right which
it may have on the date of this Agreement or hereafter,
whether hereunder or by law or otherwise.
8.3 Remedies upon Default.
---------------------
(a) Upon the occurrence and during the
continuance of an Event of Default, Borrower shall deliver
each item of Collateral to Lender on demand, and it is
agreed that Lender shall have the right to take any or all
of the following actions at the same or different times:
(i) with or without legal process and with or without
previous notice or demand for performance, to take
possession of the Collateral and without liability for
trespass (as to the property of Borrower) to enter any
premises where the Collateral may be located for the purpose
of taking possession of or removing the Collateral; and (ii)
generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other
applicable Legal Requirements. Without limiting the
generality of the foregoing, Lender shall have the right,
subject to the applicable Legal Requirements, to sell or
otherwise dispose of all or any part of the Collateral, at
public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future
delivery as Lender shall deem appropriate. As to any
Collateral constituting a security, Lender shall be
authorized at any such sale (if it reasonably deems it
advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they
are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale
thereof. Upon consummation of any sale Lender shall have
the right to assign, transfer and deliver to the purchaser
or purchasers thereof the Collateral so sold. Each
purchaser at any sale of Collateral shall hold the property
sold absolutely, free from any claim or right on the part of
Borrower, and Borrower hereby waives (to the extent
permitted by applicable Legal Requirements) all rights of
redemption, stay and appraisal which Borrower now has or
may at any time in the future have under any Legal
Requirement now existing or hereafter enacted.
(b) Lender shall give Borrower at least
10 days' written notice (which Borrower agrees is reasonable
notice within the meaning of Section 9-504(3) of the Uniform
Commercial Code) of Borrower's intention to make any sale of
Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such
board or exchange. Any such public sale shall be held at
such time or times within ordinary business hours and at
such place or places as Lender may fix and state in the
notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as Lender may
determine. Lender shall not be obligated to make any sale
of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such
Collateral shall have been given. Lender may, without
notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and
place to which the same was so adjourned. In case any sale
of all or any part of the Collateral is made on credit or
for future delivery, the Collateral so sold may be retained
by Lender until the sale price is paid by the purchaser or
purchasers thereof, but Lender shall not incur any liability
in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like
notice. At any public sale, Lender may bid for or purchase,
free (to the extent permitted by applicable Legal
Requirements) from any right of redemption, stay or
appraisal on the part of Borrower (all such rights being
also hereby waived and released to the extent permitted by
applicable Legal Requirements), the Collateral or any part
thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to Lender
from Borrower as a credit against the purchase price, and
Lender may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further
accountability to Borrower therefor. As an alternative to
exercising the power of sale herein conferred upon it,
Lender may proceed by a suit or suits at law or in equity to
foreclose on and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver. In any event,
Lender shall have the right to claim and collect from
Borrower any deficiency remaining after sale of any
Collateral.
8.4 Application of Proceeds. Lender shall apply
-----------------------
the proceeds of any collection or sale of the Collateral as
follows:
FIRST, to the payment of all reasonable costs and
expenses incurred by Lender in connection with such
collection or sale or otherwise in connection with this
Agreement or any of the Obligations, including all
court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all
advances made by Lender hereunder on behalf of Borrower
and any other reasonable costs or expenses incurred by
Lender in connection with the exercise of any right
or remedy hereunder;
SECOND, to the payment in full of the Obligations,
in accordance with this Agreement; and
THIRD, to Borrower, its successors or assigns, or
as a court of competent jurisdiction may otherwise
direct.
Lender shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the
Collateral by Lender (including, pursuant to a power of sale
granted by statute or under a judicial proceeding), the
receipt of Lender or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of
the purchase money paid over to Lender or such officer or be
answerable in any way for the misapplication thereof.
8.5 Locations of Collateral; Place of Business.
------------------------------------------
(a) Borrower hereby represents and warrants that
all the tangible Collateral (other than Collateral that is
equipment located at premises occupied by subscribers to
Borrower's music services) is located at the locations
listed on Schedule 8.5. Borrower shall not establish, or
permit to be established, any other location for Collateral
unless all filings under the Uniform Commercial Code or
otherwise which are required by this Agreement to be made
with respect to the Collateral have been made and Lender has
a valid, legal and perfected first priority security
interest in the Collateral.
(b) At such time or times as Lender may request,
Borrower shall promptly prepare and deliver to Lender a
schedule or schedules in form satisfactory to Lender,
certified on behalf of Borrower by the president or a vice
president of Borrower, showing the identity, amount and
location of any and all Collateral.
(c) Borrower shall not change, or permit to be
changed, the location of its chief executive office unless
all filings under the Uniform Commercial Code or otherwise
which are required by this Credit Agreement to be made have
been made and Lender has a valid, legal and perfected first
priority security interest.
ARTICLE 9
---------
Miscellaneous
-------------
9.1 Successors and Assigns. The terms and provisions
----------------------
of this Agreement shall be binding upon, and the benefits
thereof shall inure to, the parties hereto and their
respective successors and assigns, except that Borrower may
not assign or transfer any of its rights or obligations
hereunder without the prior written consent of Lender.
9.2 No Implied Waiver. No delay or omission to
-------------------
exercise any right, power or remedy accruing to Lender upon
any breach or default of Borrower under this Agreement shall
impair any such right, power or remedy of Lender, nor shall
it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar
breach or default occurring thereafter, nor shall any waiver
of any single breach or default be deemed a waiver of any
other breach or default occurring theretofore or thereafter.
9.3 Amendments; Waivers. No amendment, modification
-------------------
or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed and
delivered by each party to be bound thereby. Any amendment,
modification or waiver hereunder shall be effective only in
the specific instance and for the specific purpose for which
given.
9.4 Severability. If any provision of this Agreement,
------------
or the application of such provision to any Person or
circumstance, is found by a court of competent jurisdiction
to be unenforceable for any reason, such provision may be
modified or severed from this Agreement to the extent
necessary to make such provision enforceable against such
Person or in such circumstance. Neither the
unenforceability of such provision nor the modification or
severance of such provision will affect (i) the
enforceability of any other provision of this Agreement or
(ii) the enforceability of such provision against any Person
or in any circumstance other than those against or in which
such provision is found to be unenforceable.
9.5 Notices. Any notice which Borrower or Lender may
-------
be required or may desire to give to the other under any
provision of this Agreement shall be in writing, and shall
be deemed to have been duly given if (a) personally
delivered (including delivery by Federal Express or other
nationally recognized overnight courier) or (b) sent by
telecopy as follows:
To Borrower:
DMX Inc.
11400 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
Telecopy No.: (000) 000-0000
With a copy to:
Irell & Xxxxxxx LLP
1800 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
To Lender:
Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Any party may change the address to which all notices,
requests and other communications are to be sent to it by
giving written notice of such address change to the other
parties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been
received by the other parties.
9.6 Interpretation. This Agreement, together with the
--------------
exhibits and schedules to this Agreement, is the final
expression of their agreement with respect to the subject
matter hereof and is intended as a complete statement of the
terms and conditions of such agreement.
9.7 Governing Law. The validity, construction and
--------------
effect of this Agreement shall be governed by the laws of
the State of Colorado, without regard to its laws regarding
choice of applicable law.
9.8 Counterparts. This Agreement may be executed in
------------
any number of counterparts each of which shall be an
original with the same effect as if the signatures thereto
and hereto were upon the same instrument.
9.9 Headings. Captions, headings and the table of
--------
contents in this Agreement are for convenience only, and are
not to be deemed part of this Agreement.
9.10 Terms. Terms used with initial capital letters
-----
will have the meanings specified, applicable to both singular
and plural forms, for all purposes of this Agreement.
All pronouns (and any variation) will be deemed
to refer to the masculine, feminine or neuter, as the
identity of the Person may require. The singular or plural
includes the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative
sense rather than a limiting sense. The word day means a
calendar day. The word year means a calendar year.
9.11 Additional Waivers.
------------------
(a) Bankruptcy. In the event that Borrower
----------
becomes insolvent or files a petition for reorganization,
arrangement, composition, discharge or similar relief under
any present or future provision of the Bankruptcy Code, or
if such a petition be filed against Borrower, and in any
such proceedings some or all of the Obligations shall be
terminated or rejected or any of the Obligations of Borrower
modified or abrogated, Borrower agrees that its liability
hereunder shall not thereby be affected or modified, and
such liability shall continue in full force and effect as if
no such action or proceeding had occurred and shall continue
to be effective or reinstated, as the case may be, if any
payment of any of the Obligations must be returned by Lender
upon such insolvency, bankruptcy or reorganization, or
otherwise, as though such payment had not been made.
(b) Statutes of Limitation. Borrower waives the
----------------------
benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof, to the
extent permitted by law. Borrower understands that Lender
would not make the Loan in the absence of the foregoing
covenant by Borrower and the other covenants of Borrower in
this Agreement.
(c) Demands for Performance. Borrower
---------------------------
acknowledges that repeated and successive demands may be
made and payments or performance made hereunder in response
to such demands as and when, from time to time, Borrower may
default in its performance of the Obligations.
Notwithstanding any such performance hereunder, this
Agreement shall remain in full force and effect and shall
apply to any and all subsequent defaults by Borrower in
payment or performance of the Obligations.
(d) No Set-off. Borrower waives any defense
-----------
arising by reason of any disability of Borrower. Borrower
waives any setoff, defense or counterclaim which Borrower
may have or claim to have against Lender. Borrower shall
not have any right of subrogation, and hereby waives any
right to enforce any remedy which Lender now has or may
hereafter have against Borrower, and waives any and all
statutory or other rights to participate in any security now
or hereafter held by Lender.
9.12 Further Assurances. Borrower, at its
-------------------
expense, shall execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take
all such actions as Lender may from time to time reasonably
request for the better assuring and preserving of the security
interests and the rights and remedies created hereby,
including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement,
the granting of the security interests created hereby and
the filing of any financing statements or other documents
in connection herewith. If any amount payable under or
in connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument,
such note or instrument shall be immediately pledged and
delivered to Lender, duly endorsed in a manner satisfactory
to Lender. Borrower shall notify Lender of any change in its
corporate name or in the location of its chief executive
office, its chief place of business or the office where it
keeps its records relating to the accounts receivable
owned by it. Borrower shall promptly notify Lender if any
material portion of the Collateral is damaged or destroyed.
9.13 Expenses. Borrower shall pay all reasonable and
--------
documented out-of-pocket costs and expenses, including
reasonable fees and documented disbursements of Lender's
counsel, in connection with an Event of Default or Potential
Default, the enforcement of this Agreement or the Note and
collection and other proceedings resulting therefrom.
Borrower shall indemnify Lender against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and
delivery of this Agreement or the Note.
9.14 Jurisdiction and Venue. The parties hereby
----------------------
irrevocably agree that any legal action or proceeding with
respect to this Agreement may be brought in (i) the Superior
Court of Los Angeles County, California, (ii) the United
States District Court, Central District of California, (iii)
any court of the State of Colorado having jurisdiction over
the subject matter of such action or proceeding or (iv) the
United States District Court, District of Colorado, and by
execution and delivery of this Agreement, each party hereby
irrevocably consents and submits to each such jurisdiction
and hereby irrevocably waives any and all objections which
it may have as to venue in any of the above courts.
Borrower and Lender hereby waive personal service or any and
all process, and consent that all such services of process
be made by registered or certified mail directed to the
addresses provided for in this Agreement and service so made
shall be deemed to be completed five Business Days after the
same shall have been deposited in the United States mail,
postage prepaid.
9.15 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES
--------------------
ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR ANY DEALINGS
BETWEEN BORROWER AND LENDER RELATING TO THE SUBJECT MATTER
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. The scope
of this waiver is intended to be all encompassing of any and
all disputes that may be filed in any court and that relate
to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Each party acknowledges
that this waiver is a material inducement to enter into a
business relationship, that Lender has already relied on
this waiver in entering into this Agreement, and that each
party will continue to rely on this waiver in any future
dealings with the other. Each party further warrants and
represents that he or it has reviewed this waiver with his
or its legal counsel, and that he and or it knowingly and
voluntarily waives his or its jury trial rights following
consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE AND MAY BE MODIFIED ONLY IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT,
RENEWAL, SUPPLEMENT OR MODIFICATION OF OR TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
DMX INC., a Delaware corporation
By:
Title:
TELE-COMMUNICATIONS, INC., a
Delaware corporation
By:
Title:
Schedule 8.5
------------
Location of Collateral
----------------------
Location Type of Collateral
------------- ------------------
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000 tuners, remote control
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000 devices and other
equipment designed for
use by Borrower's
customers in receiving
Borrower's music services
00000 Xxxxx Xxxxxxx, Xxxxx 000, same
Building 18
Xxxxxx, Xxxxxxxxxx 00000
Exhibit A
---------
NOTE
----
$3,500,000____________, 0000
Xxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, DMX Inc., a Delaware corporation
("Borrower"), promises to pay to the order of
Tele-Communications, Inc., a Delaware corporation
("Lender"), at 0000 XXX Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
in lawful money of the United States of America and in
immediately available funds, the principal sum of up to
Three Million Five Hundred Thousand Dollars ($3,500,000).
This Note is made pursuant to the Loan and Security
Agreement (the "Loan Agreement") dated as of ____________,
1997, between Lender and Borrower, and all terms defined in
the Loan Agreement shall have the same meanings when used
herein. Interest shall accrue on the Outstanding Principal
at the rate prescribed by the Loan Agreement.
All interest on Outstanding Principal accrued from the
date hereof through and including May 31, 1997 shall be due
and payable on May 31, 1997. Thereafter, Outstanding
Principal as of May 31, 1997 and accrued and unpaid interest
thereon shall be due and payable in 36 equal monthly
installments on the first day of each calendar month,
beginning July 1, 1997. In any event, all Outstanding
Principal and all accrued and unpaid interest shall be due
and payable on the Maturity Date. All payments made on this
Note shall be credited first to accrued interest and second
to the reduction of principal.
This Note is subject to the terms and conditions of the
Loan Agreement, to which reference is hereby made for a
statement of such terms and conditions, including the
security provisions thereof, and those under which this Note
shall be paid prior to its due date or its due date
accelerated.
This Note shall be deemed to be made under and shall be
construed in accordance with and governed by the laws of the
State of Colorado.
DMX INC., a Delaware corporation
By:
Title:
