Exhibit 4(b)
THIS NOTE AND THE SHARES INTO WHICH THIS NOTE IS CONVERTIBLE (THE "SHARES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE
NOTE NOR THE SHARES MAY BE SOLD OR OTHERWISE TRANSFERRED UNDER SAID ACT, WITHOUT
REGISTRATION OR UPON RECEIPT BY PAYOR OF AN OPINION OF LEGAL COUNSEL OR A COPY
OF A LETTER FROM THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION, IN EITHER
CASE SATISFACTORY TO PAYOR THAT SUCH NOTE OR THE SHARES MAY LEGALLY BE SOLD OR
TRANSFERRED WITHOUT SUCH REGISTRATION.
PROMISSORY NOTE
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$___________________ ____________________, 1995
FOR VALUE RECEIVED, the undersigned, Choices Entertainment Corporation
("Payor"), hereby promises to pay to the order of the undersigned ("Holder") the
principal sum of $_________, with interest from the date hereof on unpaid
principal at the rate of Five Percent (5%) per year, principal due and payable
Twenty-Five (25) Months from the date hereof and interest payable annually. At
the option of the Payor, any or all accrued interest may be paid, when due, in
shares of Payor's $.01 par value Series C Preferred Stock (the "Preferred
Stock"), valued at Twenty-Five Cents ($0.25) per share of Common Stock. Subject
to the approval of the Payor's stockholders, each share of the Preferred Stock
may become convertible into 40,000 shares of Common Stock. This Note may not be
modified without the written consent of the parties hereto.
(a) DEFAULT. At the option of the Holder hereof, this Note shall be
immediately convertible without notice or demand, upon the occurrence at any
time of any of the following events:
1. Assignment for the Benefit of Creditors. An assignment for the benefit
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of creditors by any party liable hereon, whether as maker, endorser, guarantor,
surety or otherwise;
2. Bankruptcy. The commencement of proceedings in bankruptcy, or for the
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reorganization of any party liable hereon, whether as maker, endorser,
guarantor, surety or otherwise, or for the readjustment of any of the debts of
any of the foregoing parties, under the Federal Bankruptcy Code, as amended, or
any part thereof, or under any other laws, whether state or federal, for the
relief of debtors, now or hereafter existing, by any of the foregoing parties,
or against any of the foregoing parties, which shall not be discharged within
thirty (30) days of their commencement;
3. Appointment of Receiver. The appointment of a receiver, trustee or
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custodian for any party liable hereon, whether as maker, endorser, guarantor,
surety or otherwise, or for any substantial part of the assets of any of the
foregoing parties, or the institution of proceedings for the dissolution or the
full or partial liquidation of any of the foregoing parties, and such receiver
or
trustee shall not be discharged within thirty (30) days of his or its
appointment, or such proceedings shall not be discharged within thirty (30) days
of their commencement, or the discontinuance of the business or the material
change in the nature of the business of any of the foregoing parties; or
4. Dissolution. The dissolution of Payor.
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(b) PREPAYMENTS. Payor may, at any time and from time to time, without
penalty, make prepayments which will be applied to the final payment of
principal under this Note in the order or inverse order of maturity, all as the
Holder may determine.
(c) CONVERSION OF NOTE. If this Note is not paid when due, whether at
maturity or by acceleration, the sole remedy of Holder shall be conversion of
the Note. The principal balance of the Note and any accrued interest shall upon
conversion be paid in shares of Preferred Stock as follows: the conversion
shall be at $.25 per share of Common Stock.
Holder shall have no right to convert unless there is a Default as defined
in paragraph (a) above or if the Note is not paid when due. The right to
convert may be exercised by presentation and surrender of this Note to Payor at
its principal office, with the Election to Convert annexed hereto duly executed.
Upon receipt by Payor at its office of this Note and the annexed Purchase Form
in proper form for conversion as heretofore provided, the Holder shall be deemed
to be the Holder of record of the Shares issuable upon such conversion,
notwithstanding that the stock transfer books of Payor shall then be closed or
that certificates representing such Shares shall not then be actually delivered
to the Holder. If this Note is converted, the certificate or certificates
representing the Shares to be issued upon conversion of the Note shall (except
as provided herein) be imprinted with the following legend:
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNDER SAID
ACT, WITHOUT REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION
OF LEGAL COUNSEL OR A COPY OF A LETTER FROM THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION, IN EITHER CASE SATISFACTORY TO THE CORPORATION THAT
SUCH NOTE OR THE SHARES MAY LEGALLY BE SOLD OR TRANSFERRED WITHOUT SUCH
REGISTRATION.
If Payor fails to fulfill its conversion obligations hereunder, ▇▇▇▇▇
promises to pay ▇▇▇▇▇▇'s costs of enforcement, which costs shall include, but
shall not be limited to, reasonable attorneys' fees and court costs incurred by
the Holder hereof on account of such collection.
(d) RESERVATION OF SHARES. Payor hereby agrees that at all times there
shall be authorized and reserved for issuance and/or delivery upon conversion of
this Note such number of shares of Preferred Stock as shall be required for
issuance and delivery upon conversion of this Note.
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(e) RIGHTS OF THE HOLDER. Until such time, if any, as this Note is
converted into Shares, the Holder shall not, by virtue hereof, be entitled to
any rights of a shareholder in Payor, either at law or equity, and the rights of
the Holder are limited to those expressed in this Note and are not enforceable
against Payor except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. The number of securities to be delivered to
Holder upon the conversion of this Note (the "Conversion Ratio") shall be
subject to adjustment from time to time upon the happening of certain events as
follows. In case Payor shall, without receipt of consideration, (i) pay a
dividend or make a distribution on its shares of Common Stock in shares of its
own Common Stock, (ii) subdivide or reclassify its outstanding Common Stock in
shares of Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
Conversion Ratio in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder of this
Note converted after such date shall be entitled to receive the aggregate number
and kind of shares which, if this Note had been converted immediately prior to
such date, Holder would have owned upon such conversion and been entitled to
receive upon such dividend, subdivision, combination or reclassification.
(g) WAIVER. No single or partial exercise of any power hereunder shall
preclude the other or further exercise thereof or the exercise of any other
power. No delay or omission on the part of the Holder hereof in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note.
(h) CHOICE OF LAW. This Note shall be governed by the law of the State of
Pennsylvania.
CHOICES ENTERTAINMENT CORPORATION
By:__________________________________
DO NOT DESTROY THIS ORIGINAL NOTE: When paid, said original Note must be
surrendered to Payor for cancellation and retention.
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ELECTION TO CONVERT
Dated: ___________, 19__
To Choices Entertainment Corporation, Inc. ("CEC")
The undersigned owner of this Note hereby irrevocably elects to
convert the within Note to the extent of purchasing _________________ shares of
Series C Preferred Stock of CEC and hereby acknowledges that, as a result of
such conversion, the entire outstanding principal balance of the Note shall be
deemed paid in full.
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Dated Signature
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
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(Please typewrite or print in block letters)
Address
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Tax Identification Number
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