Attachment to Investment Agreement of 7-19, 1998
EXHIBIT A
UNSECURED NON-NEGOTIABLE PROMISSORY NOTE
Xxxxxxx Xxxxx
Principal Amount of this Note: $28,400 La Jolla, California
--------- Date of Note: 7-19, 1998
Page 1 of 3
FOR VALUE RECEIVED and subject to the terms and conditions of the
Investment Agreement attached hereto, the undersigned, Alternative
Entertainment, Inc. (hereinafter called "Maker"), promises to pay to the
order of the Investor whose name and address is shown on page 12 of the
attached Investment Agreement (together with all subsequent holders of this
Note, hereinafter called the "Payees"), or at such other place as Payee may
from time to time designate in writing, the principal sum of Twenty Eight
Thousand Dollars ($28,400), together with interest thereon calculated on a
daily basis (based at Payees' option, on 360-day or 365/366-day years) from
the date hereof on the principal balance from time to time outstanding as
hereinafter provided, principal, interest and all other sums payable
hereunder to be paid in lawful money of the United States of America as
follows:
A. Interest shall accrue at all times hereunder at the rate of
twelve percent (12%) per annum commencing upon the execution of this Note,
and shall be payable six (6) months from the date first stated above until
this Note is paid in full.
B. If not earlier due and payable, the unpaid principal balance,
all accrued and unpaid interest and all other amounts payable hereunder
shall be due and payable in full at the earlier of: (i.) six months from
the date first stated above; or (ii.) from the proceeds of the Additional
Capital (as defined in Recital "I" on page 2 of the Agreement) sought by
Maker (the "Maturity Date").
Maker agrees to an effective rate of interest that is the rate stated above
in connection with this Note. All payments on this Note shall be applied in such
manner as the Payee elects, and may be applied first to the payment of any
costs, penalties, late charges, fees or other charges incurred in connection
with the indebtedness evidenced hereby, next to the payment of accrued interest
and then to the reduction of the principal balance.
Time is of the essence of this Note. At the option of the Payee, the entire
unpaid principal balance, all accrued and unpaid interest and all other amounts
payable hereunder shall be paid in the form of shares of the Maker's Common
Stock (par value $0.01) (the "Shares") upon the failure to pay any sum due and
owing hereunder as provided herein or upon the occurrence of any Event of
Default. The Shares shall be valued at One Dollar ($1.00) per Share.
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The occurrence of any of the following events or conditions shall
constitute and is hereby defined to be an "Event of Default":
(a) Any failure to pay any principal or interest or any other amount
due in connection with this Note when the same shall become due and
payable.
(b) Any failure or neglect to perform or observe any of the terms,
provisions, or covenants of this Note, and such failure or neglect either
cannot be remedied or, if it can be remedied, it continues unremedied for
a period of fifteen (15) days after notice thereof to Maker.
(c) Any warranty, representation or statement contained in the or
delivered in connection with this Note, or made or furnished by or on
behalf of Maker, that shall be or shall prove to have been false when made
or furnished.
(d) The filing by Maker, any endorser of the Note or any guarantor
of this Note (or against Maker or such endorser or guarantor in which Maker
or such endorser or guarantor acquiesces or which is not dismissed within
forty-five (45) days after the filing thereof) of any proceeding under the
federal bankruptcy laws now or hereafter existing or any other similar
stature now or hereafter in effect; the entry of an order for relief under
such laws with respect to Maker or such endorser or guarantor; or the
appointment of a receiver, trustee, custodian or conservator of all or any
part of the assets of Maker or such endorser or guarantor.
(e) The insolvency of Maker, any endorser of the Note or any
guarantor of this Note; or the execution by Maker or such endorser or
guarantor of an assignment for the benefit of creditors; or the convening
by Maker or such endorser or guarantor of a meeting of its creditors, or
any class thereof, for purposes of effecting a moratorium upon or extension
or composition of its debts; or the failure of Maker or such endorser or
guarantor to pay its debts as they mature; or if Maker or such endorser or
guarantor is generally not paying its debts as they mature.
(f) The admission in writing by Maker, any endorser of the Note or
any guarantor of this Note that it is unable to pay its debts as they
mature or that it is generally not paying its debts as they mature.
(g) The death or incapacity of Maker, any endorser of the Note or
any guarantor of this Note, if an individual, or the liquidation,
termination or dissolution of Maker or any such endorser or guarantor, if a
corporation, partnership or joint venture.
(h) The occurrence of any Event of Default in connection with this
Note; and not otherwise specifically described in other provisions of this
Note.
(i) The occurrence of any adverse change in the financial condition
of Maker that the Payees (or either of them), in its reasonable discretion,
deems material, or if the Payees (or either of them) in good faith shall
believe that the prospect of payment or performance of the Note is
impaired.
After maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable hereunder
shall bear interest at twelve percent 12%) from the date of maturity until the
Shares due the Payee by this Note are paid in full.
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All said interest shall be paid in the form of additional Shares valued at
One Dollar ($1.00) per Share. Maker shall pay no other costs incurred in the
collection or enforcement of all or any part of this Note.
Upon the occurrence of an Event of Default under this Note, the Payee may
proceed against the Company and the Payee's sole and exclusive remedy is to
require the Company to promptly issue the Shares due Payee hereunder.
Failure of the Payee to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of the continuance of any existing default after demand
for strict performance hereof.
Maker, sureties, guarantors and endorsers hereof: (a) agree to be jointly
and severally bound, (b) severally waive demand, diligence, presentment for
payment, protest and demand, and notice of extension, dishonor, protest, demand
and nonpayment of this Note, (c) consent that Payee may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person primarily liable
hereon, and such consent shall not alter nor diminish the liability of any
person, and (d) agree that the Payee may set off at any time any sums or
property owed to any of them by the Payee.
No provision of this Note is intended to or shall require or permit the
Payee, directly or indirectly, to take, collect or receive in money, goods or in
any other form, any interest (including amount deemed by law to be interest) in
excess of the maximum rate of interest permitted by applicable law. If any
amount due from or paid by Maker shall be determined by a court of competent
jurisdiction to be interest in excess of such maximum rate, Maker shall not be
obligated to pay such excess and, if paid, such excess shall be applied against
the unpaid principal balance of this Note, or if and to the extent that this
Note has been paid in full, such excess shall be remitted to Maker.
This Note shall not be negotiable or assignable except upon the express
written consent of the Payee. Notwithstanding this provision, this Note shall be
binding upon Maker and his successors and assigns and shall inure to the benefit
of the Payee and its successors and assigns. This Note may be prepaid at any
time prior to the Maturity Date without penalty.
All notices required or given in connection with this Note shall be given
at the place and in the manner reasonably calculated to give notice by the party
giving such notice.
This Note shall be governed by and construed according to the laws of the
State of California.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
PRINCIPAL SUM OF THIS NOTE: TWENTY EIGHT THOUSAND DOLLARS (28,400).
MAKER:
/s/ [ILLEGIBLE]
---------------------------
ALTERNATIVE ENTERTAINMENT, INC.
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Attachment to Investment Agreement of ___________, 1998
EXHIBIT B
PLANNED USE OF PROCEEDS
The Company currently estimates that the proceeds received from the sale of
the Note and Stock to Investors in this Note Offering will be used in accordance
with the following planned allocations. To the extent that the Company can avoid
or reduce certain payments, any funds saved will be allocated to increase the
Company's working capital.
Description or Category Dollar Amount
----------------------- -------------
Gross Offering Amount...................... $500,000
Less:
Finder's Fees.............................. 50,000
--------
Net Offering Amount(1)..................... $450,000
Addition to Working Capital................ $450,000
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Footnote:
1. The Company may pay a finder's fee of up to 10% of any funds received in
connection with the Offering and sale of the Notes offered hereby.
The payment of any finder's fee to any finder will require that the Company
receive sufficient assurances that the payment of the finder's fee will not
violate the requirements of the SECURITIES EXCHANGE ACT OF 1934 and applicable
state securities laws. The amounts shown do not include legal fees, fees
incurred for compliance with state securities laws, printing costs, postage, and
other costs incurred in connection with this Note Offering. There can be no
assurance that the Company will receive any funds from the sale of the Notes
offered hereby.
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