<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 16, 1996
----------------------------
Choices Entertainment Corporation
- - - ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-17001 52-1529536
- - - ------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
Of Incorporation) File Number) Identification No.)
836 West Trenton Avenue, Morrisville, Pennsylvania 19067
- - - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 428-1000
--------------------------
220 Continental Drive, Suite 102, Newark, Delaware 19713
- - - -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
As previously reported, on July 29, 1996, a group of shareholders (the
"Shareholder Group") delivered written shareholder consents to the Company,
which the Shareholder Group asserted were sufficient to remove and replace the
Company's present Board of Directors with the nominees of the Shareholder Group
without the holding of a meeting. The Company did not recognize the action
purported to have been taken by the Shareholder Group, having concluded that the
Shareholder Group had not delivered sufficient consents to remove and replace
the Company's present Board and, in any event, that such consents were otherwise
invalid as having been obtained in violation of the federal securities laws. As
previously reported, the Company had determined to hold an annual meeting of
shareholders on December 20, 1996, for the election of directors and for action
upon such other matters as shall be determined.
On August 16, 1996, the Shareholder Group nominees, Carl Shaifer,
Joseph De Saye and Max Scheuerer, filed a lawsuit in the Delaware Court of
Chancery for New Castle County, C.A. No. 15170, entitled Carl Shaifer, et al v.
----------------------
Ronald W. Martignoni, et al., against the Company and the existing Board of
- - - ----------------------------
Directors, seeking: (i) a declaration that the present Board had been duly and
validly removed and that plaintiffs were validly elected as the Company's Board,
(ii) an order directing the holding of an annual meeting of shareholders on a
date, to be fixed by the Court, not more than 30 days from August 16, 1996 (the
date of the filing of the complaint), (iii) costs and expenses, including
attorneys fees, and (iv) such other relief as the Court deems just and proper.
On September 4, 1996, after two summary hearings, and prior to the
filing of an answer by defendants, the Court, without ruling on the merits,
ordered, inter alia: (i) that the annual meeting of shareholders be held on
----------
December 20, 1996, as previously announced by the Company, (ii) that the present
Board, consisting of Ronald W. Martignoni, John A. Boylan and Fred E. Portner,
shall constitute the Company's board of directors, until the earlier of the
election of directors at the meeting or the resolution of plaintiffs claims in
the lawsuit, and that Joseph De Saye, except with respect to certain matters, be
permitted to attend Board meetings, and (iii) that, until the earlier of the
election of directors at the meeting or the resolution of plaintiffs claims in
the lawsuit, the Company will not issue any voting securities in certain
specified transactions except upon Court order and that the Company will not,
except upon five business days notice, take any "action out of the ordinary
course", as defined in the order. The order also provides that the restrictions
contained therein may be waived by written agreement of the parties and that the
order may be modified by the Court.
On September 6, 1996, defendants filed an answer to the complaint,
denying plaintiffs' allegations with regard to all claims.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
Exhibit No. Description
----------- -----------
99 Order of Delaware Chancery Court, dated
September 4, 1996
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CHOICES ENTERTAINMENT CORPORATION
(Registrant)
Date: September 13, 1996 By:/s/ Ronald W. Martignoni
------------------------------------
Ronald W. Martignoni
President
4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- - - ----------- ----------------------
99 Order of Delaware Chancery Court, Dated September 4, 1996 (1)
- - - ------------------------
(1) Filed herewith.
5
<PAGE>
Exhibit 99
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CARL SHAIFER, JOSEPH DE SAYE and )
MAX SCHEUERER, )
)
Plaintiffs, )
)
v. ) C.A. No. 15170
)
RONALD W. MARTIGNONI, JOHN A. )
BOYLAN, FRED E. PORTNER and )
CHOICES ENTERTAINMENT )
CORPORATION, a Delaware corporation, )
)
Defendants. )
ORDER
-----
Without ruling on the merits of any of the positions advanced by the parties,
IT IS HEREBY ORDERED this 4th day of September, 1996, as follows:
1. An annual meeting (the "Meeting") of shareholders of Choices
Entertainment Corporation (the "Company") for the election of directors shall be
held on December 20, 1996. At the meeting, a quorum shall be determined in
accordance with 8 Del. C. (S) 211.
-------
2. Pending the earlier of the election of directors at the Meeting or
the resolution of plaintiffs' claims in this Court pursuant to 8 Del. C. (S) 225
-------
(the "Section 225 claims"), Ronald Martignoni, John Boylan and Fred Portner
shall constitute the board of directors of the Company and shall conduct its
day-to-day operations. If at any time prior to the earlier of the election of
directors at the Meeting or the resolution of plaintiffs Section 225 claims, one
of the directors should resign, his replacement shall be determined by the
Court. Joseph DeSaye shall be given notice of and shall be entitled to attend
meetings of the board of directors of the Company, and shall be bound to the
same fiduciary duties of loyalty and confidentiality, as if he were a member of
the board of directors of the Company, provided, however, that he may be
excluded from any board discussions regarding litigation strategy or proxy
solicitation strategy of the Company prior to the Annual Meeting.
3. Pending the earlier of the election of directors at the Meeting or
the resolution of plaintiffs' Section 225 claims, (i) defendants shall not issue
or cause the Company to issue voting
6
<PAGE>
instruments or voting securities or instruments or securities convertible into
voting instruments or voting securities of the Company, in satisfaction of debt
to vendors or trade payables except upon further order of the Court, and (ii)
except upon five business days notice by telecopy to Robert B. Macauley,
Esquire, (305) 358-9617, neither the Company nor any director or officer shall
on behalf of the Company take or agree to take any action out of the ordinary
course of business. For purposes of this Order, "action out of the ordinary
course of business" shall mean:
a. issuing, selling or purchasing, or committing to issue, sell or
purchase any voting instruments or voting securities or
instruments or securities convertible into voting instruments or
voting securities of the Company, except pursuant to and in
accordance with the terms of (i) options, warrants, convertible
securities or other rights to acquire securities entered into
prior to July 29, 1996, or (ii) promissory notes to members of the
Committee to Maximize Choices Shareholder Value.
b. transferring, encumbering, pledging, loaning or otherwise
disposing of directly or indirectly, assets of Choices or any
interest therein with a value in excess of $250,000, in any single
transaction, except with respect to financing and leasing
arrangements with vendors and landlords;
c. undertaking, authorizing or directing any actions which would
affect the ability of a duly-elected board of directors to
exercise control of the Company or control of any substantial
portion of its assets;
d. entering into or agreeing to any merger, tender offer,
restructuring or recapitalization involving the Company;
e. declaring any dividend or distribution with respect to the
Company;
f. amending, modifying or repealing the Company's by-laws;
g. entering into or amending any existing employment agreement,
management retention agreement, "golden parachute" or other
similar agreement providing for the payment of extraordinary
compensation or accelerated vesting of stock options or other
employment benefits to any member of the Company's management.
4. The restrictions imposed by this Order may be waived on a case-by-case
basis by written agreement of the parties. After a hearing, upon notice of the
parties, this Order may be modified by the Court in whole or in part.
/s/ Myron T. Steele
-----------------------------
Vice Chancellor
7
