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INSTRUMENT OF EVIDENCE OF INDEBTEDNESS
THIS INSTRUMENT OF EVIDENCE OF INDEBTEDNESS dated as of the 15th day of
November, 1996, is by and between West Coast Entertainment Corporation, a
Delaware corporation (the "Buyer"), and Xxxxxx Turn Entertainment, Inc. and
Xxxxxx Turn Entertainment II, Inc. (the "Sellers"), in connection with the
transactions contemplated by that certain Asset Purchase Agreement dated as of
November 15, 1996, by and among the Buyer, the Sellers and Xxxxxxxx Xxxxx,
Xxxxxx Xxxxxx and Xxxxxx Xxxxx (the "Purchase Agreement"). Capitalized terms
used herein, and not otherwise defined herein, shall have the respective
meanings ascribed to them in the Purchase Agreement.
WHEREAS, the Buyer has acquired substantially all of the assets and
business of the Sellers pursuant to the Purchase Agreement; and
WHEREAS, in partial consideration for such assets and business, the Buyer
has agreed to issue this Instrument, pursuant to which it will deliver to the
Sellers shares of its Common Stock, at the times and on the terms described
herein.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Buyer and the Sellers hereby agree as follows:
1. Payment of Indebtedness.
(a) The Buyer shall deliver to the Seller, on January 5, 1998, that number
of shares of Common Stock, $.01 par value per share, of the Buyer ("Common
Stock") as is determined by dividing (x) $600,000 by (y) the Market Value. The
"Market Value" shall equal the average of the closing prices of a share of
Common Stock on the Nasdaq National Market for each of the 15 trading days
ending on the third business day prior to the date on which the Closing of the
transaction contemplated by the Purchase Agreement occurred.
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(b) Shares of Buyer Common Stock issuable pursuant to Section 1(a) above
shall be registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement (the "Registration
Statement") filed with the Securities and Exchange Commission (the "SEC").
(c) If prior to the issuance of shares of Buyer Common Stock pursuant to
Section 1(a) above, the Buyer shall:
(x) declare a dividend of Common Stock on its Common Stock,
(y) subdivide outstanding Common Stock into a larger number of
shares of Common Stock by reclassification, stock split or
otherwise, or
(z) combine outstanding Common Stock into a smaller number of
shares of Common Stock by reclassification or otherwise,
then the number of shares of Buyer Common Stock issuable pursuant to Section
1(a) shall be adjusted proportionately so that thereafter the Sellers shall be
entitled to receive the number of shares of Common Stock which the Sellers
would have been entitled to receive after the happening of any of the events
described above had the shares to be issued been issued immediately prior to
the happening of such events. An adjustment made pursuant to this Section 1(c)
shall become effective immediately after the record date in the case of a
dividend and shall become effective immediately after the effective date in the
case of a subdivision or combination.
2. Right of Set-Off. The Buyer shall be permitted to set off, against the
number of shares deliverable to the Sellers hereunder, amounts or obligations
owed by the Principals or the Sellers to the Buyer pursuant to the Purchase
Agreement. In order to calculate the reduction in the number of shares which
may be issuable by the Buyer hereunder for this purpose, each share shall be
deemed to have a value equal to the Market Value.
3. Allocation of Shares Deliverable to the Assets. The Buyer and the
Sellers hereby agree and acknowledge that the value of the consideration
issuable pursuant to this Instrument shall be allocated for tax purposes solely
to goodwill of the Sellers being acquired by the Buyer pursuant to the Purchase
Agreement, and not to any of the Sellers' other Assets.
4. General.
(a) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Buyer and the Sellers may not assign their respective
rights and obligations hereunder without the prior written consent of the other
party. Any assignment in contravention of this provision shall be void. The
Sellers may not
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transfer to any other person the right to receive shares of Buyer Common Stock
hereunder without the prior consent of the Buyer.
(b) Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by
federal express or other reputable nationwide overnight courier service,
registered or certified mail, postage prepaid, addressed to the address set
forth in Section 14 of the Purchase Agreement or such other address of which
the parties may have given notice. Unless otherwise specified herein, such
notices or other communications shall be deemed received (1) on the date
delivered, if delivered personally; (2) on the business day following delivery
to an overnight courier; (3) three business days after being sent, if sent by
registered or certified mail; or (4) on the date of actual delivery, if sent by
any other method.
(c) Arbitration.
(i) Any dispute, controversy or claim between the parties arising out of
or relating to this Agreement, a breach hereof or the transactions contemplated
hereby, shall be settled by arbitration in accordance with the provisions of
this Section 4(c). Any arbitration pursuant to this Section 4(c) shall be
conducted by a single arbitrator appointed by the Philadelphia, Pennsylvania
office of the American Arbitration Association upon the request of any party.
The arbitrator shall have a minimum of five years of experience in the area of
business relevant to the particular dispute. Each of the two parties to the
dispute shall be permitted to submit only one proposal to the arbitrator, and
the arbitrator shall be required to choose one of such two proposals as the
resolution of the dispute. The arbitrator may proceed to a resolution
notwithstanding the failure of a party to participate in the proceedings. Each
of the parties shall pay its own costs and expenses in connection with any such
arbitration, and the parties shall share equally in the fees and expenses of
the arbitrator.
(ii) The parties agree that any such arbitration will occur in
Philadelphia, Pennsylvania, any such arbitration award shall be final and
binding upon the parties, may be entered in any court having jurisdiction and
shall not be appealable by either party in any court.
(d) Entire Agreement; Amendments; Attachments. The Buyer and the Sellers
may amend or modify this Agreement, in such manner as may be agreed upon, only
by a written instrument executed by the Buyer and the Sellers.
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(e) Section Headings. The section headings contained in this Instrument
are for the convenience of the parties and in no way alter, modify, amend,
limit, or restrict the contractual obligations of the parties.
(f) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(g) Counterparts. This Instrument and any amendment hereto may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall be one and the same document.
(h) Governing Law. This Instrument shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of Delaware.
IN WITNESS WHEREOF, this Instrument has been executed and delivered as a
sealed instrument on the date first above written by the duly authorized
representative of the Buyer.
WEST COAST ENTERTAINMENT CORPORATION
By /s/ Xxxxxxx Xxxxx
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Vice President
AGREED TO AND ACCEPTED AS OF
THE DATE FIRST SET FORTH ABOVE:
XXXXXX TURN ENTERTAINMENT, INC.
By: /s/ Xxxxxxxx Xxxxx
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Title: President
XXXXXX TURN ENTERTAINMENT II, INC.
By: /s/ Xxxxxxxx Xxxxx
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Title: President
