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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...........to...............
Commission File Number 0-22042
MILLENNIUM SPORTS MANAGEMENT, INC.
(Name of small business issuer in its charter)
NEW JERSEY 22-3127024
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ROSS' CORNER
U.S. HIGHWAY 206 AND COUNTY ROUTE 565
AUGUSTA, NEW JERSEY 07822
(Address of principal executive offices)
Issuer's telephone number: (973) 383-7644
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, no par value
Warrants to Purchase Common Stock
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was
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required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes..X.. No.....
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to the Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $656,554.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of March 20, 1998, was $28,964,552.
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes.....No......
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of the issuer's common stock, no par value, as
of March 20, 1998 was 6,658,563.
Documents Incorporated by Reference: None
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PART I
Unless otherwise indicated, all descriptions of and references to the
Company's common stock, and all share and per share information, contained in
this report have been adjusted to give effect to a 1-for-10 reverse stock split
effected by the Company on and as of November 7, 1996.
From June 1, 1994 to April 13, 1995, the Company operated as a debtor-in-
possession under Chapter 11 of the United States Bankruptcy Code, as more fully
described in this report.
ITEM 1. DESCRIPTION OF BUSINESS
THE COMPANY
Millennium Sports Management, Inc., formerly known as Skylands Park
Management, Inc. (the "Company"), was incorporated in the State of New Jersey in
August 1991. The Company has developed a regional sports entertainment and
recreation center in Sussex County, New Jersey, known as the Skylands Park
Sports and Recreation Center (the "Complex"). Sussex County is located in the
heart of New Jersey's "Skylands" region (comprised of the counties of Sussex,
Warren, Passaic, Morris and Hunterdon), approximately 50 miles northwest of New
York City. The Complex has been designed with a view to addressing both the
entertainment interests and the sports and other recreational needs of the
region's diverse population (including interest in spectator sports, and the
need for equipment and practice facilities for participatory sports and
activities), including tourists who visit the region regularly. The Company
also seeks to take advantage of the related market for sporting goods, sports
apparel and sports collectibles.
The centerpiece of the Complex is Skylands Park, which is a 4,300 seat
professional baseball stadium ("Skylands Park"), and is, among other things, the
home of the New Jersey Cardinals (the "Team"), a Class "A" Minor League
affiliate of the St. Louis Cardinals Major League baseball franchise of the
National League. The Company has a minority ownership interest in Minor League
Heroes, L.P., the limited partnership that owns the Team. The Team is a member
of the New York-Penn League. Skylands Park was placed in operation in April
1994, and the Team has played all of its home games at Skylands Park during the
1994 through 1997 Minor League baseball seasons.
During the 1997 calendar year, in addition to the Team's 38 regular season
home games, Skylands Park hosted a total of 91 college, high school and other
amateur games, including 18 home games of the Sussex County Colonels (the
"Colonels"), a member of the summer Atlantic Collegiate Baseball League (the
"ACBL"), and the ACBL All-Star Game.
The remainder of the Complex follows a courtyard village design theme, and
includes a recreation facility containing batting cages, a soft-play area,
sports video parlor, mini-gym, children's party room and sports collectibles
store; a wholesale and retail sporting goods outlet;
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and an exhibit hall. The Company is currently exploring potential alternate uses
of the exhibit hall.
In 1994 through 1996, the Company published six issues of BarnStorming: New
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Jersey's Baseball Magazine, a quarterly baseball magazine edited by Phil Pepe, a
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nationally syndicated sports columnist and author. The Company did not realize
a profit from the magazine, and the Company has discontinued publication of
BarnStorming.
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The Company currently operates, in the Complex, a Skylands Sporting Goods
store, which sells, both at retail and at wholesale, a broad range of sporting
goods relating to baseball and other sports, and Team paraphernalia and apparel.
In 1998, the Company has entered into agreements with affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen, in implementation
of such parties' October 1997 letter of intent, with respect to the development,
through a joint venture corporation known as Stadium Capital, Inc. ("Stadium
Capital"), of a "Stadium Golf" resort destination (including two 18-hole golf
courses) in Naples, Florida. The Company currently holds 50% of the outstanding
capital stock of Stadium Capital, for which the Company has contributed to
Stadium Capital an aggregate of $150,000 in cash, and up to 3,000,000 Class D
Warrants of the Company (to the extent required to support a pending private
placement of convertible notes and warrants of Stadium Capital) exercisable
through June 30, 2001. In addition, the Company has paid the sum of $25,000 to
Golf Stadiums, Inc. in reimbursement of certain pre-organization expenses
relating to Stadium Capital, and has agreed to issue to two affiliates of the
Rasmussens an aggregate of 1,000,000 Class D Warrants of the Company exercisable
from time to time through March 31, 2003 (subject to a restriction prohibiting
any shares issuable thereunder from being sold or transferred at any time prior
to March 31, 2000 without the Company's written consent).
The Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized professional
franchise owners and sports facility operators. However, the Company has not
yet entered into any definitive consulting arrangements.
The Company filed a voluntary petition for reorganization with the United
States Bankruptcy Court for the District of New Jersey (the "Court") on June 1,
1994. The Company made such filing with a view to fostering a more orderly
payment and resolution of the Company's obligations. On April 13, 1995, with
the requisite approval of the Company's creditors, the Court approved and
confirmed the Company's proposed plan of reorganization (the "Plan"). See "Item
6 - Management's Discussion and Analysis or Plan of Operations - Plan of
Reorganization" below.
SKYLANDS PARK
The first and most significant of the businesses of the Company is the
operation of Skylands Park, which includes clubhouses, concession stations and
press accommodations as well as 10 private "skybox" suites. Each suite contains
indoor and outdoor seats overlooking the
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field and offers other amenities, including private food and beverage service.
These suites are available for leasing primarily on an annual basis.
It is anticipated that the Team will play all of its home games during each
Minor League baseball season at Skylands Park. The Company rents Skylands Park
to the Team for a base rent of $1,100 per game plus utilities (prorated based on
usage) and a 20% share of signage revenues, and the Company is entitled to
retain all parking fees generated at Team games.
MINOR LEAGUE BASEBALL AT SKYLANDS PARK
The Company has executed a long-term lease (running through September 2008,
subject to prior termination) with Minor League Heroes, L.P. ("Heroes"), the
owner of the Team. The Team is a Class "A" Minor League affiliate of the St.
Louis Cardinals Major League franchise.
The Minor Leagues are organized as the National Association of Professional
Baseball Leagues and currently consist of four levels of playing ability. These
levels, in descending order, are Class AAA, Class AA, Class A and Rookie. Each
level has various organized leagues based upon geographic area. The New York-
Penn League concluded its 57th year of operation in 1997, and is the longest
continuously operating Class "A" professional baseball league in North America.
Currently, the League has 14 franchises, all of which are affiliated with a
Major League baseball franchise. One franchise is located in Ontario, Canada,
two franchises are located in Pennsylvania, two franchises are located in
Massachusetts, one franchise is located in Vermont, seven franchises are located
in New York State, and one franchise (the Team) is located in New Jersey.
The Team has been affiliated with the St. Louis Cardinals Major League
franchise since 1982, and currently operates under a player development contract
which expires after the 2002 Minor League season.
During the 1994 Minor League season, the Team held 38 regular-season and four
playoff home games at Skylands Park. During each of the 1995, 1996 and 1997
Minor League seasons, the Team held 38 regular season home games at Skylands
Park. Average attendance for each of these games exceeded 4,000 paid
admissions. All ticket receipts from Team home games played at Skylands Park
are revenues belonging to the Team.
In the first quarter of 1994, the Company purchased limited partnership
interests in Heroes, and the Company now owns a 16.82% interest in Heroes.
OTHER EVENTS AT SKYLANDS PARK
Based on its experience in the 1994 through 1997 seasons, the Company believes
that baseball at Skylands Park will not be limited to the professional ranks.
College games, both regular and post-season tournament play, as well as high
school and other amateur leagues, have used and continue to seek to use the
Skylands Park facilities. In the 1994 calendar year, a total of 53 college,
high school and other amateur baseball games were held at Skylands Park, and for
the 1995, 1996 and 1997 calendar years, a total of 98, 61 and 91, respectively,
amateur baseball
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games were played at Skylands Park, which included home games of the Colonels, a
team which the Company operated in 1995 and 1996, and which leased Skylands Park
in 1997. The Company and the owner of the Colonels have since terminated the
Colonels' lease at Skylands Park, and the Company has entered into a lease with
Ladies Professional Baseball ("LPB") pursuant to which LPB has committed to have
its New Jersey franchise play all of its home games at Skylands Park in each of
the 1998, 1999 and 2000 baseball seasons.
In the 1994 calendar year, the Company also held seven concerts at Skylands
Park, and leased a portion of the Complex for two professional wrestling events.
In 1995, such additional events, including concerts, antique and craft fairs,
sports card shows, and art and travelling exhibits, utilized the Company's
facilities for a total of 24 calendar dates. Although the Company did not host
any such additional events in 1996, and only one concert in 1997, management of
the Company is pursuing alternative arrangements for hosting such types of
events on a basis which will minimize the Company's risk of incurring losses
from such events. All of these events have produced revenue for the Company in
the form of concession sales, facility rental fees or ticket sales, parking
fees, corporate sponsorship of events, and value enhancement of fence signs and
corporate skyboxes; however, in many instances, cash revenues from these events
were not sufficient to cover the Company's cash expenses. The profitability of
Skylands Park will be largely dependent upon receiving adequate revenues from
these ancillary events.
The Complex also includes a 6,300 square foot exhibit hall, which houses
baseball and other sports exhibits of local, regional, and national interest.
The Company held a dedication ceremony for the exhibit hall in December 1995, at
which time the initial exhibits included a 38-piece collection of limited
edition lithographs portraying great moments in Major League baseball parks;
photographs, newspapers and paraphernalia chronicling the history of the New
Jersey Cardinals franchise and the Sussex County Colonels; commemorative plaques
and photographs from the Sussex County Sports Hall of Fame; and autographs and
memorabilia of past and present Major League baseball players. Management of
the Company is currently considering other potential uses for the exhibit hall
space, with a view to generating increased revenues from that space.
LAND ACQUISITION
The Complex is located on a tract of land owned by the Company, consisting of
approximately 28.5 acres located in Frankford Township, New Jersey at the
intersection of U.S. Highway 206 and Sussex County Route 565. The land was
acquired by the Company at a cost of approximately $1,202,000, and as part of
the purchase agreement, the seller of the land agreed to pay up to 50% of the
costs for installing certain roads and other sitework improvements. The Company
does not expect to receive any such payments in respect of sitework improvements
until the seller begins to develop its adjoining properties at some
indeterminate time in the future.
CONSTRUCTION OF THE COMPLEX AND GOVERNMENT REGULATIONS
Baseball facilities to be used by Minor League teams must meet certain
standards established by Major League Baseball and the National Association of
Professional Baseball
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Leagues. Skylands Park has been designed to meet or exceed all such required
standards for Class "A" teams. Gould Evans Associates, the architectural
consultant for Major League Baseball, has issued its approval of the stadium
design on behalf of Major League Baseball.
The Company has been issued a permanent certificate of occupancy for all of
the existing facilities in the Complex, and has received final site plan
approval from Frankford Township. The Company has also received and has in
effect all other required licenses and permits (including food, beverage and
liquor licenses) for the operation of Skylands Park and the Complex. Sales of
alcoholic beverages at Skylands Park entails the risk of liability under so-
called "dram shop" laws.
THE BARN
The Company has built a 16,500 square foot indoor recreational facility on the
grounds of the Complex, known as "The Barn." The Barn is intended to provide
sports and entertainment activities for fans on game days, including facilities
for the casual visitor to Skylands Park, for the serious athlete looking to
improve his or her skill level in baseball, and for those seeking a specially
planned program such as a birthday party or a group sports activity. The Barn
is open twelve months a year, and contains five baseball and softball batting
cages, a soft-play area, a sports video parlor, a children's party room, a mini-
gym for half-court basketball, and an aerobics court. A professional
batting/pitching tunnel, which is used by the Team during the Minor League
baseball season, is also available for private instruction. The Barn also
houses Bob's Hot Corner, which is space subleased by an unaffiliated third
party, in which such third party sells sports collectibles for his own account.
SKYLANDS SPORTING GOODS
Since May 1993, the Company has operated Skylands Sporting Goods as both a
retail seller and wholesale distributor of a broad range of sporting goods,
including baseballs, bats and gloves, Team paraphernalia and apparel, and
equipment related to other sports such as basketball, football and hockey. The
store encompasses approximately 3,000 square feet, of which approximately one-
half is dedicated to the retail business. It is expected that volume purchasing
derived from outfitting school teams, recreation leagues, and local amateur
teams will enable the Company to provide discounted prices to retail customers.
STADIUM GOLF
In the first quarter of 1998, the Company began to implement the transactions
contemplated by its October 1997 letter of intent with certain affiliates of
Golf Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen. Pursuant to
such transactions, the Company and the Rasmussens' affiliates have formed
Stadium Capital, which has as its purpose the planning, construction,
development and operation of a "Stadium Golf" resort destination (including two
18-hole golf courses and a related "Stadium" facility containing luxury boxes
and/or condominium units, grandstand seating, telecast facilities, professional
golf facilities and dining and locker room amenities) in Naples, Florida. The
Company currently owns 50% of the outstanding stock of Stadium Capital, in
consideration of which the Company has contributed to
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Stadium Capital an aggregate of $150,000 in cash, and up to 3,000,000 Class D
Warrants of the Company (to the extent required to support Stadium Capital's
pending private placement of convertible notes and warrants) exercisable through
June 30, 2001. In addition, the Company has paid the sum of $25,000 to Golf
Stadiums, Inc. in reimbursement of certain pre-organization expenses relating to
Stadium Capital, and has agreed to issue to two affiliates of the Rasmussens an
aggregate of 1,000,000 Class D Warrants of the Company exercisable from time to
time through March 31, 2003 (subject to a restriction prohibiting any shares
issuable thereunder from being sold or transferred at any time prior to March
31, 2000 without the Company's written consent).
Stadium Capital has entered into binding commitments for the purchase of the
land in Naples, Florida on which it proposes to develop this golf facility.
Stadium Capital's current budget calls for a total of $66,250,000 to be spent
for the acquisition, development and initial promotion of this facility, and
Stadium Capital proposes to raise the first $10,000,000 of this budget through
its pending private placement, which includes as a feature thereof the right of
investors, under certain circumstances, to exchange their convertible notes in
Stadium Capital for shares of common stock of the Company (which Stadium Capital
would obtain through the exercise of some or all of the Class D Warrants
contributed by the Company to Stadium Capital, as described above). There can
be no assurance as to whether or when Stadium Capital will be able to obtain any
or all of the required financing for its business plan, although the Company is
hopeful that its investment in Stadium Capital may eventually enable the Company
to avoid the problems of seasonality inherent in the Company's current business.
BARNSTORMING MAGAZINE
In 1994 through 1996, the Company published six issues of BarnStorming: New
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Jersey's Baseball Magazine, featuring nationally syndicated baseball journalist
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Phil Pepe as its Senior Editor. The Company did not realize a profit from the
magazine, and the Company has discontinued publication of BarnStorming.
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INSURANCE
The Company maintains all-risk and general liability insurance covering
personal injury which may be suffered by patrons of Skylands Park and the other
facilities in the Complex, with limits of coverage of $1,000,000 per occurrence
and $2,000,000 in the aggregate. The Company also maintains approximately
$9,000,000 of property damage insurance coverage. The Company is also named as
an additional insured on its concessionaire's liability insurance coverage,
which includes coverage relating to "dram shop" liability. Although the Company
believes that such insurance coverage will be adequate to insure against the
risks relating to the ownership and operation of the Complex, there is no
assurance that such insurance coverage will continue to be available at
commercially reasonable rates, or at all, or that if available, such coverage
will be sufficient to insure against potential liability which the Company may
incur in the future.
The Company also maintains casualty and liability coverage in respect of the
Skylands Sporting Goods store, in amounts which the Company believes to be
normal and customary for such types of operations.
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COMPETITION
Located in northwest New Jersey, Sussex County is part of the State's Skylands
region, comprising the counties of Sussex, Warren, Passaic, Morris and
Hunterdon. According to a 1993 report of the Sussex County Office of Economic
Development and the Sussex County Chamber of Commerce (which report relied in
substantial part on information contained in a 1992 survey by the New Jersey
Department of Travel & Tourism), the Skylands Region generated $1.6 billion in
tourism expenditures in 1991, with Sussex County accounting for more than $125
million. Approximately 4,200 people in Sussex County are employed in tourism-
related jobs. Among Sussex County's major tourist attractions are Action Park,
Wild West City, Waterloo Village, and Space Farms. Other recreation facilities,
including the Meadowlands sports facility located in East Rutherford, New
Jersey, are also within driving distance from Sussex County. However, the
closest Minor League baseball franchises are a Class "A" New York-Penn League
team located in Hudson Valley, New York, which is approximately a 55-mile drive
from Skylands Park, a Class "AAA" team located in Scranton, Pennsylvania, which
is approximately a 70-mile drive from Skylands Park, and a Class "AA" team
located in Trenton, New Jersey, which is approximately a 110-mile drive from
Skylands Park; and, in addition, developers in the new independent Atlantic
League have announced that they are building and/or have proposed the
construction of minor league-sized baseball stadiums in Newark, Camden, Somerset
and Atlantic City, New Jersey. The closest Major League baseball franchises are
the New York Yankees and the New York Mets, respectively located in Bronx County
and Queens County, New York. The Company's revenues have been generated
primarily from ticket and concession sales generated from events scheduled at
Skylands Park (other than Team events), parking fees from events at Skylands
Park (including Team games), a percentage of advertising charges for the rental
of signs and other advertising at Skylands Park, and the Company's recreational
facilities, sporting goods store and other businesses. Although the Company
believes that Sussex County is a growing market for sports-oriented
entertainment, especially as a result of its growing tourism attractions, there
can be no assurance that the Company will be successful in marketing its
businesses. In this connection, the Company is competing with established
companies having substantially greater financial resources than those of the
Company, and there can be no assurance that the Company will be able to
successfully compete against such companies for the public's entertainment
expenditures. The Company's sporting goods business also competes with sporting
goods stores operating in the locality of the Complex, and national mail order
and catalogue businesses.
EMPLOYEES
As of March 20, 1998, the Company had a total of nine employees, consisting of
four full-time employees and five part-time employees. The Company also hires
additional part-time employees in the spring through the fall season, as
required for the operation of Skylands Park in connection with games and other
events.
None of the Company's employees is represented by any labor union or other
collective bargaining unit. The Company has not experienced any significant
degree of employee turnover, and the Company believes that its relations with
its employees are satisfactory.
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ITEM 2. DESCRIPTION OF PROPERTY
THE COMPLEX
The Company's primary property consists of the 28.5 acres (approximate) on
which Skylands Park and the Complex are located. Such land is located in
Frankford Township, New Jersey at the intersection of U.S. Highway 206 and
Sussex County Route 565. In addition to the Company's lease with the Team
(described below), the Company has also entered into rental agreements for the
use of Skylands Park and/or other portions of the Complex with the NCAA,
colleges, high schools, LPB, the Colonels, concert promoters, and a professional
wrestling promoter.
LEASE WITH THE TEAM
The Company has entered into a long-term lease (the "Stadium Lease") for
Skylands Park with Heroes, the owner of the Team. Under the terms of the
Stadium Lease, the Company was required to construct and make available to
Heroes a new Minor League baseball stadium for the Team to play its home games
by the spring of 1994. The Stadium Lease commenced June 1, 1994 and expires
September 30, 2008. Under the Stadium Lease, Heroes is currently obligated to
pay rent of $1,100 per game scheduled to be played at Skylands Park subject to
adjustment in certain instances. Such rent is subject to a 10% increase
effective at the beginning of each of the 2001 and 2005 Minor League baseball
seasons. The rent is payable in installments (each approximately 50%) on August
1 and October 1 of each year. Heroes may cancel the Stadium Lease if: (a)
Skylands Park is not constructed as required by the terms of the Stadium Lease,
(b) Skylands Park does not meet all minimum requirements under the Professional
Baseball Agreement ("PBA") among the Minor Leagues' governing organizations, or
(c) at any time during any Minor League baseball season, Skylands Park does not
meet the requirements as set forth in the PBA. In addition, Heroes may
terminate the Stadium Lease after the Minor League baseball seasons of 2003,
2004, 2005, 2006 and 2007 during the period from October 1 through November 30
if: (i) the average paid attendance for the immediately preceding baseball
season was less than 900 people per game, and (ii) the Team did not realize an
operating profit in its previous fiscal year. The Stadium Lease will
automatically terminate if the New York-Penn League is disbanded, or if the Team
is required to relocate from Skylands Park or is disbanded by the New York-Penn
League or Major League Baseball (other than for reasons of Heroes' or the Team's
bankruptcy, financial mismanagement or non-compliance with rules and
regulations). In the event of such termination, a penalty of $70,000 will be
payable by Heroes to the Company. Heroes may voluntarily cancel the Stadium
Lease by payment of a lump sum equal to 75% of the remaining outstanding rent
(based upon an assumed $35,000 rent per year). In addition, if the New York-
Penn League is disbanded, the Stadium Lease will be terminated without any
further obligation of the parties.
The Team is entitled to play its regular season and post-season home games and
hold pre-season training and practice sessions open to the public at Skylands
Park. The Team is entitled to exclusive use of the home clubhouse and
batting/pitching tunnel on days that Team home
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games are to be played ("Game Days"). The Company has the right to schedule
other activities at Skylands Park for such times as will not materially
interfere with the Team's scheduled games.
All parking facilities are operated by the Company and the Company is entitled
to retain all revenues derived therefrom. Heroes is required to provide and pay
for the following with respect to Game Days: (i) game staff personnel, such as
ushers, ticket takers and P.A. announcers, (ii) security personnel during the
Team games and open practices, (iii) medical personnel, and (iv) skybox
attendants. The Company is required to provide all utilities but Heroes pays
the cost of such utilities pro-rated according to their use.
Heroes sets admission prices for Game Days and retains all Game Day admission
revenues, except that the Company is entitled to establish the price for, and
retain all revenues from, admissions to skyboxes at Skylands Park for all
events; provided that (a) the price of game tickets for Team games (valued at
box seat prices) is payable to Heroes out of the Company's skybox revenues, and
(b) Heroes is provided with one skybox during the Minor League baseball season.
On Game Days, Heroes has the exclusive right to sell, and retain revenues from
the sale of, food, beverages and souvenirs of the Team. During the off-season,
Heroes has the right to use the Skylands Park souvenir shop to sell Team
souvenirs subject to paying a 20% commission to the Company on all such sales,
or, at Heroes' option, a fixed fee of $825 per month (subject to 10% escalations
commencing with each of the 2000 and 2004 Minor League baseball seasons).
The Company is required, at its sole expense, to (i) perform all maintenance
work necessary both before and during the Minor League baseball season to
maintain Skylands Park in conformity with standards maintained generally by
Minor League baseball facilities, (ii) provide the Team with an administrative
office at Skylands Park, and (iii) provide and maintain radio and television
broadcast facilities at Skylands Park. Heroes is entitled to all revenues
derived from broadcasts of the Team's activities, as well as revenues from the
sale of, and advertising in, scorebooks, yearbooks, media guides and other
sponsorships associated with the Team. The Company, on the other hand, retains
the exclusive right to sell, and retain revenues from the sale of, sponsorships
attributable to the name of Skylands Park and the exhibition space within
Skylands Park. However, if the Company sells a sponsorship package which
includes the name of Skylands Park for in excess of $250,000, Heroes will
receive 10% of the price of such sponsorship. Revenues received from sign
rentals and certain advertising in Skylands Park are divided 80% to Heroes and
20% to the Company.
In the event of casualties such as fire, earthquake, rain, flood or any other
acts of God, the Company is not required to restore or rebuild Skylands Park,
and Heroes may terminate the Stadium Lease. In the event any portion of the
property is taken by eminent domain which results in loss of use of Skylands
Park by the Team, Heroes may terminate the Stadium Lease. The Company and
Heroes have agreed to indemnify each other from all damages, losses and
liabilities caused by or arising from any breach of the Stadium Lease.
AGREEMENT WITH LADIES PROFESSIONAL BASEBALL
In February 1998, the Company entered into a lease agreement with Ladies
Professional Baseball ("LPB"), which owns and operates a professional women's
baseball league which is to include,
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commencing in the 1998 baseball season, a franchise to be owned and operated by
the league and to be known as the New Jersey Diamonds (the "Diamonds"). Pursuant
to the lease agreement, the Diamonds are expected to play all of their home
games at Skylands Park in each of the 1998, 1999 and 2000 baseball seasons. Base
rent under the lease is at the rate of $1,300 per game. In 1998, the Diamonds
are scheduled to play 28 home games at Skylands Park, resulting in a base rent
of $36,400 for the year, which will be payable (as in each year of the lease)
one-half on or before April 1, and one-half on or before August 1. LPB is
further responsible for providing game day personnel and security, and the
Company is responsible for stadium maintenance, traffic control and parking. LPB
is entitled to retain all revenues from admissions to Diamonds games and all
revenues from the sale of LPB's souvenirs, and to receive 30% of all receipts
from sales of food and non-alcoholic beverage concessions during Diamonds games.
The Company will retain 70% of all food and non-alcoholic beverage concession
receipts, 100% of alcoholic beverage concession receipts, and 100% of parking
fees.
OTHER LEASES
The Company is party to a lease with Robert Adams d/b/a Bob's Hot Corner
("Adams") which expires on December 31, 1998, pursuant to which the Company is
leasing to Adams a 400 square foot area in the Barn, within which Adams operates
his own store. The lease provides for average rent of $500 per month plus
various escalations calculated as a percentage of annual sales, if any, in
excess of $75,000. Adams' store uses the leased space to display and sell
trading cards and sports memorabilia except cards depicting or relating to the
New Jersey or St. Louis Cardinals or the New York-Penn League. The Company is
required to supply heating, cooling and electricity and the use of a cash
register, display cases and storage space. Adams is obligated to organize and
conduct, for the Company, sports card shows in Skylands Park or any other
location reasonably selected by the Company, in consideration of which he will
receive 10% of the total fees received by the Company from exhibitors at the
shows.
INVESTMENT POLICIES
The Company generally acquires its assets for the purpose of producing
revenues from the use of such assets in the Company's operations. The Company
invests any excess cash on hand primarily in interest-bearing demand deposit
accounts, short-term certificates of deposit and United States Treasury
instruments.
The Company's primary assets are the land, buildings and improvements
constituting the Complex, which is located in Frankford Township, New Jersey, at
the intersection of U.S. Highway 206 and Sussex County Route 565. The Company
operates such property so as to derive revenues therefrom as described above.
The Company owns fee simple title to such property. Such property, and the
improvements thereon, are presently subject to a mortgage which secures the
current $63,542 unpaid balance of accrued interest of the Creditors' Note issued
pursuant to the Company's plan of reorganization (the "Plan"); and as of the
date of this report, the Company has set aside funds sufficient to pay such
unpaid balance in full. Through December 31, 1997, the Company had expended
approximately $14,000,000 (before
10
<PAGE>
depreciation) for land acquisition and the planning, development and
construction of the Complex.
ITEM 3. LEGAL PROCEEDINGS
On June 1, 1994, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. The petition was filed
in the United States Bankruptcy Court for the District of New Jersey, and the
case was assigned Case No. 94-23761. On April 13, 1995, with the requisite
approval of the Company's creditors, the Plan was approved and confirmed by the
Court. The Company has implemented the Plan, and is no longer a debtor-in-
possession. However, until the Creditors' Note issued under the Plan is paid in
full (for which adequate funds are currently set aside), the Company will
continue to report to and operate under the review of the independent
accountants retained by the official committee of unsecured creditors of the
Company. See "Plan of Operations and Management's Discussion and Analysis of
Financial Condition and Results of Operations - Plan of Reorganization."
The Company is not party to any other material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year ended December 31, 1997.
11
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The following represents the range of reported high ask and low bid quotations
for the Company's common stock on a quarterly basis since January 1, 1996, as
reported on the SmallCap Market of the National Association of Securities
Dealers Automated Quotation System (NASDAQ). None of such quotations have been
adjusted to reflect the 1-for-10 reverse stock split in respect of the Common
Stock, which became effective on November 7, 1996.
Period High Low
- ------ ---- ---
1st Quarter 1996 $1.125 $0.40
2nd Quarter 1996 $0.53 $0.21
3rd Quarter 1996 $0.437 $0.125
4th Quarter 1996 $0.75 $0.25
1st Quarter 1997 $1.72 $0.25
2nd Quarter 1997 $2.125 $0.75
3rd Quarter 1997 $2.44 $1.50
4th Quarter 1997 $5.125 $2.03
1st Quarter 1998
(through March 20, 1998) $5.56 $2.69
In November 1996, in order to create additional available authorized but
unissued shares of common stock, and in an effort to increase the market price
of the common stock (in anticipation of stricter NASDAQ listing requirements),
the Company effected a 1-for-10 reverse stock split in respect of the then-
outstanding common stock.
On March 20, 1998, the closing bid price for the Company's common stock was
$4.44, and the Company had 290 stockholders of record as of that date. The
Company believes that there are in excess of 2,000 beneficial owners of common
stock of the Company.
RECENT SALES OF UNREGISTERED SECURITIES
In the past three years, in addition to options granted under the Company's
1993 Stock Option Plan (see Item 10 below), the Company consummated a private
placement in August 1995 of 69,789 shares of common stock of the Company at a
price of $23.275 per share. After deducting finder's fees and sales
commissions, the Company received net proceeds of $1,500,000 from this private
placement. The issuance of such shares in such private placement was exempt
from registration under Regulation S promulgated under the Securities Act of
1933,
12
<PAGE>
as amended, based upon representations and warranties made by the three
purchasers thereof as to their status as offshore buyers and their covenants and
agreements not to offer or sell the subject shares within the United States at
any time such as would disqualify the private placement from the exemption under
Regulation S.
DIVIDEND POLICY
The Company has not previously paid any dividends on its common stock and for
the foreseeable future intends to continue its policy of retaining any earnings
to finance the operation and development of its business. In addition, pursuant
to the Plan, the Company is not permitted to pay any dividends on its common
stock until all required payments under the Plan have been made.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
information set forth in the financial statements and notes thereto included in
this report.
PLAN OF OPERATIONS
Prior to Skylands Park beginning to host events and generate revenues in the
second quarter of 1994, the Company was a development stage entity that did not
generate any significant operating revenues. During this period, the Company's
primary activities were limited to planning the construction and development of
Skylands Park and the Complex; obtaining financing for Skylands Park and the
Complex, primarily through the private placement of common stock and warrants in
March 1993, the sale of common stock and Class A Warrants as part of an initial
public offering consummated on October 1, 1993, and short-term borrowings in
March and April 1994; and completing a substantial portion of Skylands Park and
the Complex. Skylands Park is a 4,300 seat professional baseball stadium which,
among other things, has been and will be leased for sports and other
entertainment events.
In the second quarter of 1994, the Company received a temporary certificate of
occupancy for Skylands Park (as well as the sporting goods store/ticket office,
the Team clubhouse/administrative offices, and the maintenance building).
Beginning with the 1994 Minor League baseball season, the Team, which is a
member of the New York-Penn League, has played all of its home games at Skylands
Park. The Company has a minority ownership interest in Minor League Heroes,
L.P. ("Heroes"), which is the limited partnership that owns the Team. During
the 1994 calendar year, in addition to the Team's 38 regular season home games
and 4 playoff games, Skylands Park also hosted 53 college and other amateur
baseball games, seven concerts and two professional wrestling events; however,
such events only generated limited amounts of revenues for the Company, due in
part to the fact that certain portions of the Complex were either incomplete or
otherwise non-operational as further described below.
13
<PAGE>
The remaining portions of the Complex follow a courtyard village design theme,
and include a recreation facility containing batting cages, a sports video
parlor, mini-gym, children's party room and sports collectibles store; a
wholesale and retail sporting goods outlet; and an exhibit hall.
From June 1, 1994 to April 13, 1995, the Company operated as a debtor-in-
possession under Chapter 11 of the United States Bankruptcy Code. On April 13,
1995, the Court approved the Company's plan of reorganization (the "Plan"), and
the Company has implemented the Plan. Under the Plan, the Company expects to
pay all of its pre-petition liabilities at their original principal amounts.
See "-Plan of Reorganization" below.
The construction of Skylands Park and the Complex was suspended from June 1,
1994 through December 31, 1994. The Company obtained the Court's permission and
sufficient financing (primarily through the issuance and exercise of Class B
Warrants) to enable the Company to resume construction and development work on
Skylands Park and the Complex during the first quarter of 1995. Substantially
all of such facilities are completed and in operation, and the Company has
obtained a certificate of occupancy for such facilities.
For the 1995 calendar year, in addition to the Team's 38 regular season home
games, Skylands Park hosted a total of 98 amateur baseball games (including 21
Colonels home games and the ACBL All-Star Game). Other events (including
concerts, antique and craft fairs, sports card shows, and art and traveling
exhibits) were held at the Company's facilities for a total of 24 calendar dates
in 1995. For the 1996 season, the Company held a total of 61 college and high
school baseball games, including 17 Colonels games, at Skylands Park; and in the
1997 season, the Company held a total of 91 college and high school baseball
games, including 18 Colonels games and the ACBL All-Star Game, at Skylands Park.
The Company has terminated its lease with the Colonels and has entered into a
new lease with Ladies Professional Baseball for the 1998, 1999 and 2000 baseball
seasons.
In 1994 through 1996, the Company published six issues of BarnStorming: New
-----------------
Jersey's Baseball Magazine, a baseball magazine edited by Phil Pepe, a
- --------------------------
nationally syndicated sports columnist and author. The Company did not realize
a profit from the magazine, and the Company has discontinued publication of
BarnStorming.
- ------------
The Company currently operates, in the Complex, a Skylands Sporting Goods
store, which sells, year-round both at retail and at wholesale, a broad range of
sporting goods relating to baseball and other sports, and Team paraphernalia and
apparel. The Company also operates the Barn, a year-round recreational facility
in the Complex, which contains batting cages, a sports video parlor, mini-gym
and children's party room, and a subleased space in which an unaffiliated third
party sells sports collectibles.
The Company has acquired a 50% stock interest in Stadium Capital, which is a
start-up joint venture between the Company and certain affiliates of Golf
Stadiums, Inc., William F. Rasmussen and Glenn J. Rasmussen. Stadium Capital
has been formed for the purpose of designing, developing and operating a
"Stadium Golf" resort destination in Naples, Florida. The
14
<PAGE>
prospects for this joint venture are substantially dependent upon Stadium
Capital raising substantial debt and/or equity financing, of which there is no
assurance.
The Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized professional
franchise owners and sports facility operators. However, the Company has not
yet entered into any definitive consulting arrangements.
The Company anticipates receiving approximately $40,000 per year in rent from
the Team, which management does not believe will constitute a significant
portion of the Company's revenues. The Company expects to generate additional
revenues from, among other things, the rentals of skyboxes and advertising
signs in Skylands Park, the rental of Skylands Park for other sports and
entertainment events, the operation of the retail, recreation and other related
facilities in the Complex, and its ownership interest in the limited partnership
that owns the Team. As of March 20, 1998, the Company had received 1998 season
commitments for six skyboxes for an aggregate annual rental of $55,000 (of which
the Team is entitled to retain $19,152), which the Company expects to receive
prior to the commencement of the Cardinals' season in June 1998. In addition,
the Company is entitled to 20% of all revenues from advertising sign rental
commitments at Skylands Park, and the Company's 20% share of such revenues in
1997 was approximately $76,000.
Although the Company does not expect to receive significant rental income from
the Team, the Company does expect that it will continue to derive income and
cash distributions through its minority ownership interests in Heroes (see "-
Purchase of Interest in Heroes" below). Accordingly, the revenues generated by
the Team through paid admissions and its ancillary operations will indirectly
benefit the Company. A portion of the Company's cash flow in each year of
operations has been received in the form of a distribution from Heroes in
respect of the Company's share of the net income of Heroes.
SOURCES AND USES OF RESOURCES AND COMPARATIVE ANNUAL RESULTS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996
During the year ended December 31, 1997, the Company's revenues were
approximately $657,000, consisting of approximately $301,000 of stadium rentals,
admissions and parking fees, approximately $97,000 of retail sales,
approximately $149,000 of concession sales, and approximately $110,000 of
advertising and subscription revenues. Revenues in 1996 were approximately
$771,000, with the reduction in revenues from 1996 to 1997 being primarily
attributable to a reduction in retail sales due to reduced institutional sales
resulting from limited cash flows.
From 1996 to 1997, total operating expenses were reduced from approximately
$1,637,000 in 1996 to approximately $1,518,000 in 1997; this change is
attributable to a substantial reduction in the cost of retail sales
(corresponding to the reduction in revenues from retail sales). All other
categories of operating expenses remained substantially constant from 1996 to
1997.
15
<PAGE>
The Company incurred a loss of approximately $825,000 in 1997, as compared to
a loss of approximately $867,000 in 1996. The decreased loss is attributable
primarily to a $53,000 reduction in interest expense, as the Company paid down
its interest-bearing pre-petition liabilities during 1997. Due primarily to an
82% increase in the number of weighted average common shares outstanding, loss
per share went from $.72 per share in 1996 to $.37 per share in 1997.
The Company will need to obtain substantial additional financing in 1998. The
Company currently has outstanding an aggregate of 927,715 Class A Warrants (each
such Class A Warrant entitling the holder to purchase 2.8 shares of common stock
at a total price of $2.80), and has authorized for issuance and/or has
outstanding an aggregate of 9,500,000 Class D Warrants (each of which is
purchasable at $.10 per Class D Warrant and exercisable at $.50 per share of
common stock), all of which warrants are currently due to expire on June 30,
1998. Except for the Class D Warrants to be issued to Stadium Capital and to
the affiliates of the Rasmussens, the Company has not determined whether or for
how long to extend the exercise period of such Class A Warrants or the offering
of such Class D Warrants, and regardless of whether or not any of such warrants
are extended, there can be no assurance as to whether or when any of such
warrants may be exercised. See "--Liquidity and Capital Resources" below.
Due to the Company's consistent history of operating losses, the likelihood of
continuing losses in the future, and the Company's need for additional financing
to cover such potential losses and pay its liabilities when due, the opinion of
the Company's independent auditors, included in the audited financial statements
at Item 7 below, includes a "going concern" qualification, indicating that the
foregoing factors raise substantial doubt about the Company's ability to
continue as a going concern.
PLAN OF REORGANIZATION
Pursuant to the Plan, the Company's various pre-petition liabilities, and the
administrative expenses relating to the reorganization, are divided into several
classifications, which are treated in substantially the following manner.
First, all previously unpaid administrative claims relating to the
reorganization proceedings, and all priority claims (other than tax claims,
which are payable over six years or as may otherwise be agreed by the Company
and the subject tax authorities), were paid at the time of or shortly after the
confirmation of the Plan. The total of such claims was approximately $400,000.
In April 1995, the Company repaid in full a $200,000 loan which was secured by
substantially all of the Company's assets (other than its equity interest in the
Team). Total payments in respect of this loan, including all unpaid accrued
interest, were approximately $233,000.
Also in April 1995, the Company paid to Strescon, a mechanic's lienholder in
respect of pre-petition liabilities, the sum of approximately $115,000. (The
balance of Strescon's claim has
16
<PAGE>
been categorized as a general unsecured claim, and is to be paid on a ratable
basis with the other unsecured pre-petition liabilities.)
Also in April 1995, the Company paid $1,600,000 in respect of its pre-petition
unsecured liabilities (including payment in full of de minimis claims, and
subject to the Company's reservation of rights to contest a limited number of
unsecured claims), leaving a balance due in respect of such claims of
$2,608,153, which has been and will be payable pursuant to the Creditors' Note.
Following the issuance of the Creditors' Note, the Company has made payments on
the Creditors' Note primarily out of net equity proceeds received by the
Company, leaving a balance of accrued interest of $205,897 under the Creditors'
Note as of December 31, 1997 and $63,542 as of March 20, 1998 (for which the
Company has paid or set aside funds sufficient to pay such amount in full). The
Creditors' Note is secured by substantially all of the assets of the Company, as
same are constituted from time to time. Until the Creditors' Note has been paid
in full, the Company continues to report to and operate under the review of the
independent accountants retained by the official committee of the unsecured
creditors of the Company.
Claims held by insiders (consisting primarily of past directors and executive
officers of the Company and certain of their affiliates) in respect of pre-
petition obligations (including but not limited to pre-petition loans made to
the Company), in the aggregate amount of approximately $339,609, may be paid
from time to time after payment in full of the Creditors' Note, as the cash flow
of the Company may permit; or, at the option of each insider, may be paid at any
time or from time to time in shares of common stock of the Company valued at the
then-current market price of such common stock as reported on NASDAQ.
Equity interests, including interests of shareholders and warrantholders, were
not altered or impaired under the terms of the Plan. However, pursuant to the
Plan, the Company is not permitted to pay any dividends on its common stock
until all required payments under the Plan have been made.
THE FOREGOING DESCRIPTION OF THE PLAN IS MERELY A SUMMARY OF CERTAIN MATERIAL
PROVISIONS THEREOF, AND IS QUALIFIED IN ITS ENTIRETY BY THE SPECIFIC PROVISIONS
OF THE PLAN. A COPY OF THE PLAN HAS BEEN FILED BY THE COMPANY AS AN EXHIBIT TO
ITS REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity since its inception have been the
sale of shares of common stock to and short-term borrowings from certain
shareholders, which were used during the period from inception through March
1993; the net proceeds of approximately $739,000 from a private placement of
common stock and warrants, which were used during the period from March 1993
through September 1993; the net proceeds of approximately $5,815,000 from an
initial public offering of common stock and Class A Warrants, which were used
during the last quarter of 1993 and the first quarter of 1994; short-term
borrowings from certain officers, former shareholders and other related and
unrelated parties during March, April and May 1994,
17
<PAGE>
which were used during the first and the beginning of the second quarter of
1994; net proceeds of approximately $6,830,000 from the exercise of Class A
Warrants and Class B Warrants, which were received and used during the fourth
quarter of 1994 and in 1995; net proceeds of $1,500,000 from a private placement
of common stock in August 1995 (all of which net proceeds were utilized to make
a partial prepayment of the Creditors' Note); and net proceeds of $2,475,949
from the issuance and exercise of Class A Warrants, Class D Warrants and
underwriter's warrants in 1997 and the first quarter of 1998.
Substantially all of such capital resources have been utilized for the
planning, construction and development of the Complex, for working capital for
the Company's operations (including funding shortfalls in the Company's cash
flow from operations), for the payment of administrative expenses relating to
the Company's reorganization proceedings, and for a $150,000 capital
contribution to Stadium Capital. As of December 31, 1997, the Company had
capitalized costs of approximately $14,000,000 (before depreciation) for the
purchase of land and the development and construction of Skylands Park and the
Complex.
Although the Company derived significant revenues from operations in 1994
through 1997, those revenues were not sufficient to cover operating expenses or
produce a positive cash flow. If the Company is unable to generate additional
revenues from its existing facilities or develop or acquire additional
businesses for operations in the winter months, additional losses may also be
expected in 1998 and thereafter.
As of December 31, 1997, the Company had cash totaling approximately $115,000,
substantially all of which has been used or set aside to make the final
remaining payment under the Creditors' Note. From January 1 through March 20,
1998, the Company has received cash proceeds of $614,221 from the exercise of
Class A Warrants, Class D Warrants and underwriter's warrants, the substantial
majority of which proceeds have been applied or set aside in respect of the
Creditors' Note and/or utilized for the Company's capital contribution to
Stadium Capital. Management believes that the Company is in need of additional
liquid resources to enable the Company to sustain operations in 1998, whether
through the exercise of its remaining outstanding warrants, through the issuance
of other equity securities (including the registered Class D Warrants and shares
of common stock underlying the Class D Warrants), and/or from other sources.
The Company has outstanding 927,715 Class A Warrants, each entitling the
holder thereof to purchase, at any time through June 30, 1998, 2.8 shares of
common stock of the Company for a total price of $2.80. In addition, the
Company has outstanding or reserved for issuance 9,500,000 Class D Warrants,
purchasable at $.10 per Class D Warrant and exercisable for one share of Common
Stock at a price of $.50 through June 30, 1998. Except for the Class D Warrants
to be issued to Stadium Capital and to the affiliates of the Rasmussens, the
Company has not determined whether or for how long to extend the exercise period
of such Class A Warrants or the offering of such Class D Warrants, and
regardless of whether or not any of such warrants are extended, there can be no
assurance as to whether or to what extent any of such warrants may be exercised.
In addition to such potential equity financing, management of the
18
<PAGE>
Company is exploring possibilities for bank financing or other debt financing,
although the Company has no commitments for any such financing.
The Company's history of operating losses, the likelihood of ongoing operating
losses, and the need to raise additional financing to sustain ongoing operations
and pay the Company's liabilities as they mature, has caused the Company's
independent auditors to include a "going concern" qualification in their opinion
on the Company's financial statements as of December 31, 1997 and for the year
then ended, as included in Item 7 below. If the Company is unable to raise
additional financing, the Company may be required to sell certain assets (such
as its interest in the Team) to raise required cash, or may be required to again
seek the protection of the Bankruptcy Court. Although management continues to
explore various financing alternatives, the Company does not have any
commitments with respect to any additional financing.
PURCHASE OF INTEREST IN HEROES
In 1994, the Company purchased limited partnership interests in Heroes, the
limited partnership that owns the Team.
As of December 31, 1997, the Company owned a 16.82% limited partnership
interest in Heroes. The cost of the Company's limited partnership interests was
$284,375 paid in cash, including $14,875 paid to persons who were then directors
and executive officers of the Company.
The Company is using the equity method to account for its investment in
Heroes. The operations of Heroes are highly seasonal because the Team does not
play any games during the first and last quarters of the year.
Historically, the Company's share of the net income of Heroes has been $90,000
or more in each year, and the Company has received cash distributions from
Heroes in amounts ranging from $35,000 to $100,000 in each year. On February
10, 1998, the Company received from Heroes the sum of $98,994, representing the
Company's full distributions from Heroes with respect to the 1997 year.
SEASONALITY
The Company's cash flow from operations is significantly greater in each
spring, summer and fall than in the winter months when Skylands Park is not
rented for outdoor events, and the Company relies upon income generated by its
other businesses. In the event that the Company is unable to generate
sufficient cash flow from operations during the seasons of full operations, the
Company may be required to utilize other cash reserves (if any) or seek
additional financing to meet operating expenses, and there can be no assurance
that there will be any other cash reserves or that additional financing will be
available or, if available, on reasonable terms.
19
<PAGE>
YEAR 2000 COMPLIANCE
The Company is not dependent to any significant extent on computer systems,
and will not be affected to any material extent by Year 2000 issues. Based on
its preliminary investigation, the Company believes that it will not be required
to incur any material costs or expenses in order to adapt or upgrade its systems
to be Year 2000 compliant.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
requires that certain long-lived assets be reviewed for possible impairment and
written down to fair value, if appropriate. The Company adopted this new
pronouncement in 1996, and the impact of adoption has not had a material effect
on the Company's financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," requires companies to measure employee stock compensation
plans based on the fair value method of accounting. However, the statement
allows the alternative of continued use of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," with pro forma disclosure of
net income and earnings per share determined as if the fair value based method
had been applied in measuring compensation cost. The Company provides pro forma
disclosure.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 128, "Earnings Per Share" ("SFAS 128"), which is
effective for financial statements for both interim and annual periods ending
after December 31, 1997. The Company adopted SFAS 128 in the fourth quarter of
1997. SFAS 128 replaces the presentation of primary and fully diluted earnings
per share with basic and diluted earnings per share. Basic earnings per share
is calculated based on the weighted average number of common shares outstanding
during the period and excludes all dilution. Diluted earnings per share is
calculated by using the weighted average number of common shares outstanding,
while also giving effect to all dilutive potential common shares that were
outstanding during the period. SFAS 128 had no impact on the loss per share for
the year ended December 31, 1996.
20
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Page Number
-----------
INDEX TO FINANCIAL STATEMENTS 22
INDEPENDENT AUDITORS' REPORT 23
BALANCE SHEET AS OF DECEMBER 31, 1997 24
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996 25
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 26
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996 27
NOTES TO FINANCIAL STATEMENTS 28
21
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITORS' REPORT 23
FINANCIAL STATEMENTS:
BALANCE SHEETS AT DECEMBER 31, 1997 24
STATEMENT OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 1997 AND 1996 25
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 26
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996 27
NOTES TO FINANCIAL STATEMENTS 28 to 39
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Millennium Sports Management, Inc.
(formerly Skylands Park Management, Inc.)
We have audited the balance sheet of Millennium Sports Management, Inc.
(formerly Skylands Park Management, Inc.) as of December 31, 1997 and the
related statements of operations, changes in stockholders' equity and cash flows
for each of the two years in the period then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Millennium Sports Management,
Inc. (formerly Skylands Park Management, Inc.) at December 31, 1997, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
WISS & COMPANY, LLP
Woodbridge, New Jersey
February 25, 1998, except as to Note 12 for
which the date is March 11, 1998
23
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
PROPERTY AND EQUIPMENT, AT COST,
LESS ACCUMULATED DEPRECIATION $ 12,799,986
CASH 115,295
INVENTORIES 85,170
INVESTMENT IN LIMITED PARTNERSHIP, AT EQUITY 485,555
OTHER ASSETS 108,680
------------
$ 13,594,686
============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
LIABILITIES:
Amounts due insiders, pursuant to Chapter 11 proceedings $ 339,609
Accounts payable 250,110
Accrued interest 209,297
Accrued compensation - officers and directors 170,775
------------
Total Liabilities $ 969,791
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 500,000 shares
authorized, none issued -
Common stock, no par value, stated value $.10
per share; 20,000,000 shares authorized and
4,353,607 shares issued 435,361
Additional paid-in capital 17,182,135
Accumulated deficit (4,992,601)
------------
Total Stockholders' Equity 12,624,895
------------
$ 13,594,686
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
REVENUES:
Stadium rentals and admissions $ 301,293 $ 304,865
Retail sales 96,514 222,499
Concession sales 149,130 147,396
Advertising and subscription revenues 109,617 95,973
--------------- ---------------
Totals 656,554 770,733
--------------- ---------------
COSTS OF SALES AND SERVICES:
Costs of stadium operations 285,287 272,141
Costs of retail sales 79,580 206,506
Selling, general and administrative expenses 783,923 780,936
Depreciation 368,829 377,745
--------------- ---------------
1,517,619 1,637,328
--------------- ---------------
LOSS FROM OPERATIONS (861,065) (866,595)
--------------- ---------------
OTHER INCOME ( EXPENSE ):
Equity in income of limited partnership 93,985 111,009
Interest (net) (58,140) (111,794)
--------------- ---------------
35,845 (785)
--------------- ---------------
NET LOSS $ (825,220) $ (867,380)
=============== ===============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,203,043 1,212,202
=============== ===============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.37) $ (0.72)
=============== ===============
</TABLE>
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
----------------------- Additional
Number Paid-in Accumulated
of Shares Amount Capital Deficit Total
----------- ---------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1996 1,207,727 $ 120,773 $ 15,544,911 $ (3,300,001) $ 12,365,683
YEAR ENDED DECEMBER 31, 1996:
Issuance of common stock:
For services rendered by an
officer and an employee 3,920 392 11,858 - 12,250
Upon conversion of debt 3,230 323 9,771 - 10,094
Upon exercise of warrants 10 1 95 - 96
Net loss - - - (867,380) (867,380)
----------- ---------- ------------- ------------- --------------
BALANCES, DECEMBER 31, 1996 1,214,887 121,489 15,566,635 (4,167,381) 11,520,743
YEAR ENDED DECEMBER 31, 1997:
Issuance of common stock upon
exercise of warrrants:
Class A warrants, net of costs 279,720 27,972 210,413 238,385
Class D warrants, net of costs 2,725,000 272,500 1,058,921 1,331,421
Issuance of common stock for
services rendered by an officer 1,500 150 225 375
Issuance of common stock upon
conversion of debt 90,000 9,000 36,000 45,000
Issuance of Class D Warrants, net of costs 300,922 300,922
Exercise of options under Stock Option Plan 42,500 4,250 9,019 13,269
Net Loss - - - (825,220) (825,220)
----------- ---------- ------------- ------------- --------------
BALANCE, DECEMBER 31, 1997 4,353,607 $ 435,361 $ 17,182,135 $ (4,992,601) $ 12,624,895
=========== ========== ============= ============= ==============
</TABLE>
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(Formerly Skylands Park Management, Inc.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1997 1996
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (825,220) $ (867,380)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 368,829 377,745
Equity in income of limited partnership (93,985) (104,109)
Common stock issued for services rendered 375 12,250
Changes in operating assets and liabilities:
Inventory 39,007 1,688
Other assets (40,945) (10,766)
Accounts payable and accrued expenses (299,089) 365,864
------------- --------------
Net cash flows from operating activities (851,028) (224,708)
------------- --------------
INVESTING ACTIVITIES:
Net disbursements of restricted cash - 24,125
Purchases of property and improvements (41,616) (45,306)
Distribution from limited partnership 30,469 156,406
------------- --------------
Net cash flows from investing activities (11,147) 135,225
------------- --------------
FINANCING ACTIVITIES:
Repayments of creditors' notes payable (940,627) (45,029)
Deferred offering costs - (25,500)
Proceeds from issuance of common stock
and warrants, net of costs 1,909,497 96
------------- --------------
Net cash flows from financing activities 968,870 (70,433)
------------- --------------
NET CHANGE IN CASH 106,695 (159,916)
CASH, BEGINNING OF YEAR 8,600 168,516
------------- --------------
CASH, END OF YEAR $ 115,295 $ 8,600
============= ==============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 151,002 $ 17,741
============= ==============
Income taxes paid $ - $ -
============= ==============
NON-CASH FINANCING ACTIVITIES:
Issuance of common stock and warrants upon
conversion of outstanding debt $ 45,000 $ 10,094
============= ==============
</TABLE>
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The accompanying financial statements of Millennium Sports Management,
Inc. (formerly Skylands Park Management, Inc.) (the "Company") have
been presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company reported net
losses of approximately $825,000 and $867,000 for the years ended
December 31, 1997 and 1996, respectively. In addition, the Company had
an accumulated deficit of approximately $4,992,000 at December 31,
1997. Revenues from operations in 1997 and 1996 were not sufficient to
cover operating expenses or produce a positive cash flow from
operations. Additional losses are expected in 1998. The Company will
require additional working capital to cover anticipated losses and
sustain operations in 1998, and will also be required to pay the
remaining accrued interest balance of the pre-petition liabilities in
1998 (See Note 2). Accordingly, the Company will need to obtain
additional financing through the exercise of outstanding warrants,
through the issuance of other equity securities, by bank financing
and/or through other sources. Although management continues to explore
various financing alternatives, the Company does not have any
commitments with respect to any additional financing. In February
1997, the Company's registration statement on Form SB-2 was declared
effective. The maximum proceeds sought from this secondary offering
approximated $10,000,000. Through December 31, 1997, the net proceeds
from the offering amounted to approximately $1,689,000.
Management is also developing plans to further curtail its general and
administrative expenses and is reviewing other revenue generating
alternatives, including a variety of entertainment functions. The
Company also intends to utilize the professional skills and collective
sports-related backgrounds of its management team to provide strategic,
financial and operational consulting services to small to mid-sized
professional franchise owners and sports facility operators. However,
the Company has not yet entered into any definitive consulting
arrangements.
Reference should be made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere
herein for additional information.
NOTE 2 - ORGANIZATION, PROCEEDINGS UNDER CHAPTER 11 AND SUBSEQUENT OPERATIONS:
ORGANIZATION AND DEVELOPMENT The Company operates a regional sports
entertainment and recreation center in Sussex County, New Jersey, known
as the Skylands Park Sports and Recreation Center (the "Complex"). The
Complex includes a professional baseball stadium ("Skylands Park") used
for sports and other entertainment events, and other adjacent
recreational and commercial facilities (the "Related Facilities") that
include, among other things, a sports apparel and collectibles store, a
wholesale and retail sporting goods outlet, batting cages and a video
parlor.
28
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
The Company did not have sufficient financing to pay its contractors
and other vendors and, as a result, filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court (the "Court") for the District of
New Jersey on June 1, 1994 (the "Petition Date"). The Company operated
as a debtorinpossession subject to the jurisdiction of the Court from
the Petition Date through April 13, 1995, the date its plan of
reorganization (the "Plan") was confirmed.
During the years ended December 31, 1997 and 1996, the Company
generated only limited amounts of revenues from the events held at
Skylands Park and the operation of the Related Facilities and, as a
result, the Company incurred significant net losses during such years.
Revenues from the rental of Skylands Park to its primary tenant have
not and will not be significant. Instead, management expects that the
Company will generate revenues primarily from the rental of skyboxes
and advertising signs in Skylands Park, the rental of Skylands Park for
certain other sports and entertainment events, concession sales, and
the operation of the Related Facilities in the Complex. Accordingly,
the Company's ability to generate significant additional revenues will
be dependent upon, among other things, its ability to generate future
attendance at events and the success of its other commercial
operations.
CONFIRMATION OF PLAN OF REORGANIZATION -The Company's Plan was
confirmed by its creditors and the Court on April 13, 1995 (the
"Confirmation Date"). Since the Confirmation Date, the Company has paid
the unsecured prepetition liabilities that were pursuant to the terms
of a secured promissory note (the "Creditors' Note"). The Creditors'
Note bore interest on the unpaid principal balance at the prime rate
plus 3%. The unpaid accrued interest is due and payable on or before
April 26, 1998. The Creditors' Note was secured by substantially all
of the assets of the Company.
Claims of "insiders" (generally, the directors and executive officers
of the Company and certain of their affiliates) of approximately
$339,000 as of the Confirmation Date (including accrued salaries and
loans and advances made to the Company) may be paid from time to time
after payment in full of the Creditors' Note, as the cash flow of the
Company may permit; however, each insider has the option to elect to be
paid in shares of common stock of the Company valued at the then
current market price of such common stock as reported on "NASDAQ."
Equity interests, including interests of stockholders and warrant
holders, were not altered or impaired under the terms of the Plan.
However, the terms of the Plan prohibit the Company from paying
dividends until all payments required under the Plan have been made.
Pursuant to Statement of Position 90-7, the Company did not adopt
"freshstart" reporting (and, as a result, revalue all of its assets and
liabilities) since the holders of the Company's existing voting stock
immediately prior to confirmation held the same relative voting
interests after confirmation. In addition, since the Company will be
29
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
paying all of its prepetition liabilities at their original principal
amounts, the Company did not recognize any material gain or loss as a
result of the confirmation of the Plan.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ESTIMATES AND UNCERTAINTIES - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
REVENUE RECOGNITION - The Company recognizes revenues from facility
rentals and stadium admissions upon official completion of such events,
advertising on a pro-rata basis over the minor league baseball season,
and retail sales at the time the customer takes possession of the
merchandise.
FINANCIAL INSTRUMENTS - Financial instruments include cash, other
assets, accounts payable, accrued interest and amounts due to insiders.
The following methods were used in determining the fair value of the
financial instruments:
Cash, other assets, accounts payable and accrued interest - Due to
the short-term maturity of these instruments, carrying value
approximates fair value.
Due to insiders - Although it is impractical to determine the current
fair value of this liability or its current interest rate because of
the lack of an identifiable market for financial instruments with
similar characteristics, management considers this liability to
approximate its fair value due to the short-term nature of the
obligation.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost
and are depreciated using straight line and accelerated methods over
the estimated useful lives of the assets. The estimated useful lives
used in computing depreciation are: buildings and improvements - 40
years, and equipment - 5 to 10 years.
INVENTORIES - Inventories principally consist of merchandise for resale
which is stated at the lower of cost (first-in, first-out method) or
market.
INVESTMENT IN LIMITED PARTNERSHIP - The Company accounts for its direct
16.82% interest in Minor League Heroes, L.P. ("Heroes"), the limited
partnership that leases Skyland Park, pursuant to the equity method.
Under this method, the proportionate interest in the net income or loss
of the limited partnership is reflected in the Company's results of
operations. The Company's investment is reduced by any distributions
from the limited partnership.
30
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
INCOME TAXES - Deferred tax assets and liabilities are computed
annually for temporary differences between the financial statement and
tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the temporary differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
CONCENTRATION OF CREDIT RISK - The Company maintains cash in bank
accounts. Such bank accounts are insured by the Federal Deposit
Insurance Corporation up to $100,000 per institution. Uninsured
balances, including outstanding checks, totaled approximately $73,000
at December 31, 1997.
NET INCOME (LOSS) PER COMMON SHARE - In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards 128, Earnings Per Share ("SFAS 128") which is effective for
financial statements for both interim and annual periods ending after
December 31, 1997. The Company adopted SFAS 128 in the fourth quarter
of 1997. SFAS 128 replaces the presentation of primary and fully
diluted earnings per share with basic and diluted earnings per share.
Basic earnings per share is calculated based on the weighted average
number of common shares outstanding during the period and excludes all
dilution. Diluted earnings per share is calculated by using the
weighted average number of common shares outstanding, while also giving
effect to all dilutive potential common shares that were outstanding
during the period. Such dilutive potential common shares have been
excluded since the effect would be anti-dilutive, due to net losses for
all periods presented. SFAS 128 had no impact on the loss per share for
the year ended December 31, 1996.
31
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
STOCK-BASED COMPENSATION - The Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and related interpretations in accounting for its
employee stock options. Under APB 25, because the exercise price of
employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recorded. The Company
has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation ("SFAS 123).
RECLASSIFICATION - Certain amounts previously reported have been
reclassified to conform to current year presentation.
NOTE 4 - PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1997 consists of the following:
Land $ 1,202,342
Buildings and improvements 12,377,983
Equipment 493,496
-----------
14,073,821
Less: Accumulated depreciation 1,273,835
-----------
$12,799,986
===========
NOTE 5 - INVESTMENT IN LIMITED PARTNERSHIP:
The Company's statement of operations includes income of $93,985 (1997)
and $111,009 (1996) attributable to the Company's equity in Heroes' net
income. The carrying value of the investment was reduced by
distributions received by the Company of $30,469 in 1997 and $156,406
in 1996.
Summary balance sheet and operating data for Heroes as of December 31,
1997 and 1996 and for the years then ended follows:
1997 1996
---------- ----------
Balance sheet data:
Current assets $1,450,000 $1,402,000
Noncurrent assets 805,000 927,000
---------- ----------
$2,255,000 $2,329,000
========== ==========
Current liabilities $ 474,000 $ 495,000
Partners' capital 1,781,000 1,834,000
---------- ----------
$2,255,000 $2,329,000
========== ==========
Operating data:
Gross receipts $1,844,000 $1,864,000
========== ==========
Net income $ 558,767 $ 642,000
========== ==========
32
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
Note 6 - Commitments:
COMMITMENTS - The Company has employment agreements with certain
officers and employees. Amounts due are as follows:
Year Ending December 31,
------------------------
1998 $234,000
1999 125,000
--------
$359,000
========
NOTE 7 - STOCKHOLDERS' EQUITY:
WARRANTS - In December 1997 , the Company again extended the expiration
date of the outstanding Class A common stock warrants to June 30, 1998
from the original expiration date of September 23, 1995. The exercise
price was reduced from $4.00 to $2.80 per warrant in December 1996,
with each warrant continuing to entitle the exercising holder to
receive the increased amount of 2.8 shares of the Company's common
stock. A total of 894,928 Class A Warrants remain unexercised at
December 31, 1997. The Class A Warrants are subject to redemption at
$.10 per Class A Warrant on 30 days' prior written notice if the
closing bid price of the Company's common stock equals or exceeds
$32.70 per share for any 20 trading days within a period of 30
consecutive trading days ending on the fifth day prior to the date of
the notice of redemption.
The Underwriter's Warrants (pursuant to an IPO) were amended, in 1996,
to provide for the right to purchase up to an aggregate of 1,500,000
shares of common stock at a price of $.10 per share if exercised prior
to November 6, 1997 (or $1.00 per share if exercised thereafter through
September 23, 1998) and up to an aggregate of 70,000 Class A Warrants
at $.165 each. The Class A Warrants issuable upon exercise of the
Underwriter's Warrants cannot be redeemed by the Company. The
Underwriter's Warrants grant to the holders thereof certain rights of
registration for the securities issuable upon exercise of the
Underwriter's Warrants. The Underwriter's Warrants were exercised in
full in October 1997, although the Company did not deposit the payment
therefor or issue the shares and Class A Warrants thereunder until
March 1998.
In February 1997, the Company authorized the issuance and sale of up to
13,000,000 Class D Warrants. Each Class D Warrant entitles the
exercising holder to receive one share of the Company's common stock
upon payment of a $.10 per Class D Warrant purchase price and a $.50
per share exercise price. After giving effect to Class D Warrants
issued and exercised through December 31, 1997, a total of 10,185,000
Class D warrants remained reserved at December 31, 1997.
STOCK OPTION PLAN - The Board of Directors of the Company adopted the
1993 Stock Option Plan (the "Stock Option Plan") in April 1993, which
became effective in
33
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
August 1993. The Stock Option Plan provides for grants of options to
key employees (including officers), non-employee directors and
consultants to purchase up to 53,571 shares of common stock which are
intended to qualify either as incentive stock options ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code, as amended, or
as options which are not intended to meet the requirements of such
section.
The exercise price of all options granted under the Stock Option Plan
must be at least equal to the fair market value of the Company's common
stock on the date of grant (at least 110% of the fair market value in
the case of an ISO granted to a holder of 10% or more of the Company's
outstanding common shares). The maximum exercise period for which
options may be granted is ten years from the date of grant (five years
in the case of an ISO granted to a holder of 10% or more of the
Company's outstanding common shares).
Through December 31, 1997, 49,500 options had been granted under the
Stock Option Plan, of which 42,500 options were exercised and 5,000
lapsed in 1997. The remaining 2,000 outstanding options provide for an
exercise price of $14.375 per share, are currently exercisable and
expire on November 1, 2005. No options were granted in 1997 under the
Stock Option Plan.
SHARES RESERVED FOR ISSUANCE OF COMMON STOCK - Shares of common stock
reserved for issuance by the Company as of December 31, 1997 upon
exercise of options and warrants were as follows:
Class A Warrants 2,505,798
Underwriter's Warrants for:
Common stock 1,500,000
Class A Warrants 196,000
Class D Warrants 10,185,000
Stock option plan 9,071
Stock award plan 1,000,000
----------
Total 15,395,869
==========
The number of shares issuable have been adjusted pursuant to anti-
dilution provisions of the respective warrant agreements for the
effects of the Company's 3-for-1 stock split in 1993, the 1994 issuance
of the Class B Warrants and Class C Warrants, to reflect voluntary
amendments of the terms of the Underwriter's Warrants, to reflect the
Company's 1-for-10 reverse stock split in 1996, and to reflect anti-
dilution adjustments relating to the authorization of the issuance of
13,000,000 Class D Warrants.
34
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
REVERSE STOCK SPLIT - Effective November 7, 1996, following approval
by the Company's shareholders, the Company effectuated a one-for-ten
reverse stock split, which has been retroactively reflected in the
accompanying financial statements.
STOCK AWARD PLAN - In December 1996, and subsequently amended in
December 1997, the Board of Directors adopted a stock award plan (the
"Stock Award Plan") pursuant to which, subject to the achievement of
certain targets, the Board of Directors is given the authority to
grant, to such members of the Board, executive officers, key employees
and consultants to the Company as may be determined by the Board, the
right to purchase up to an aggregate of 1,000,000 shares of common
stock of the Company at a nominal price for a limited period of time.
Up to 250,000 shares of common stock may be awarded from time to time
if and after the Company receives gross proceeds of $2,000,000 on or
before December 31, 1997 from issuances of equity securities of the
Company, and up to an additional 250,000 shares of common stock may be
awarded from time to time if and after the Company receives additional
gross proceeds (over and above the first $2,000,000) of $2,200,000 or
more, on or before December 31, 1998, from issuances of equity
securities of the Company. Up to an additional 250,000 shares of
common stock may be awarded from time to time if and after the Company
achieves a positive cash flows from operations for any two consecutive
fiscal quarters, and up to an additional 250,000 shares of common stock
may be awarded time to time if and after the Company achieves an
operating profit for any two consecutive fiscal quarters. In the event
and to the extent that any person to whom any such award may be granted
shall fail to timely purchase the subject shares of common stock, then
such shares will again become available for award under this plan.
The Company received gross proceeds in excess of $2,000,000 from
issuances of equity securities between the date of the adoption of the
Stock Award Plan and December 31, 1997, thereby permitting the award of
up to 250,000 shares of common stock of the Company under the first
threshold stated above. As of this date, no awards from such 250,000
shares have been made.
35
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - RELATED PARTY TRANSACTIONS:
LEASE OF SKYLANDS PARK TO THE TEAM - The Company entered into a long-
term lease (the "Stadium Lease") for the use of Skylands Park with
Heroes, the owner of the Team, which is a Class "A" minor league
affiliate of the St. Louis Cardinals and a member of the New York-Penn
League (the "League"). Under the terms of the Stadium Lease, the
Company is required to make available to Heroes a minor league baseball
stadium for the Team's home games. The Stadium Lease commenced June 1,
1994 and expires September 30, 2008. Under the Stadium Lease, Heroes
is obligated to pay rent of $1,100 per game scheduled to be played at
Skylands Park subject to adjustment under certain circumstances.
Pursuant to this lease, the Company derived rental income of
approximately $42,000 in 1997 and $37,000 in 1996. Such rent is
subject to a 10% increase effective at the beginning of each of the
2001 and 2005 minor league baseball seasons. Heroes will retain all
admission revenues from Team games (except certain revenues from
skyboxes that will be retained by the Company) and the net concession
revenues generated on the dates of Team games. The Company will
operate and retain all revenues derived from parking facilities.
Revenues received from sign rentals and advertising in Skylands Park
are divided 80% to Heroes and 20% to the Company. Heroes will be
required to pay for, among other things, game staff personnel (such as
ushers), security and medical personnel, and the cost of utilities pro-
rated according to use.
Heroes may terminate the Stadium Lease after the minor league baseball
seasons of 2003, 2004, 2005, 2006 and 2007 during the period from
October 1 through November 30 if the average paid attendance for the
immediately preceding baseball season was less than 900 people per game
and the Team did not realize an operating profit in its previous fiscal
year. The Stadium Lease will automatically terminate, and Heroes will
be required to pay specified damages to the Company, if the League is
disbanded and under certain other circumstances. Heroes may
voluntarily cancel the Stadium Lease by paying a lump sum equal to 75%
of the remaining outstanding rent (based upon an assumed $35,000, rent
per year).
The amount due from Heroes for the Team's share of utilities, and
signage, netted with Team merchandise sold in the Company's sporting
goods store and certan loans from Heroes of $30,000, approximated
$7,000 at December 31, 1997, and is included in other assets.
36
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES:
Deferred income taxes reflect the net effects of temporary differences
between the amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The temporary
differences arise principally from net operating loss carryforwards and
certain accruals and result in a deferred tax asset of approximately
$1,484,000 at December 31, 1997 and $1,192,000 at December 31, 1996.
A valuation allowance is provided when it is more likely than not that
some portion of the deferred tax asset will not be realized. The
Company has determined, based on the Company's recurring net losses
from operations and lack of a continuing substantial revenue stream,
that a full valuation allowance is appropriate at December 31, 1997 and
1996.
A reconciliation of the provision (benefit) for income taxes computed
at the federal statutory rate of 34% and the effective tax rate of
income (loss) before income taxes is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
------------------------------------------
1997 1996
-------------------- --------------------
<S> <C> <C>
Computed tax benefit on net loss
at federal statutory rate $ (281,000) $ (295,000)
State income tax, net of federal income
tax effect (49,000) (52,000)
Tax effect of net operating losses not
currently usable 330,000 347,000
------------------- -------------------
Provision (benefit) for income taxes $ - $ -
=================== ===================
</TABLE>
The significant components of the Company's deferred tax assets
as of December 31, 1997 are summarized below:
<TABLE>
<S> <C>
Net operating loss tax carryforwards $ 1,332,000
Accrued interest 84,000
Accrued compensation officers and directors 68,000
-----------------
1,484,000
Valuation allowance (1,484,000)
-----------------
$ -
=================
</TABLE>
37
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
The Company has available at December 31, 1997 net operating loss
carryforwards totaling approximately $3,356,000 that may be applied
against future federal taxable income. The loss carryforwards will
expire through 2012. Certain losses are subject to limitation by the
provisions of Section 382 of the Internal Revenue Code due to a more
than 50% change in ownership which occurred through the sale of common
stock.
NOTE 10 - STOCK BASED COMPENSATION:
The Stock Option Plan (see Note 7) provides for the granting of either
incentive stock options or non-qualified stock options to purchase
shares of the Company's common stock to officers, directors and key
employees responsible for the direction and management of the Company
and to non-employee consultants and independent contractors.
As required by SFAS 123, the Company has determined the pro forma
information as if the Company had accounted for stock options granted
under the fair value method of SFAS 123. The Black Scholes option
pricing model was used with the following weighted-average
assumptions; risk-free rate of 6.0%; expected common stock market
price volatility factor of 2.81; and an expected life of the options
of eight years. The fair value of options granted was $.3125. No
options were granted in 1997. The pro forma effect on net loss and
net loss per share would have been as follows as of December 31:
1997 1996
---------- ---------
Net loss:
As reported $825,220 $867,380
Pro forma $825,220 $889,000
Basic and diluted loss
per share:
As reported $ 0.37 $ 0.72
Pro forma $ 0.37 $ 0.73
NOTE 11 - SUBSEQUENT EVENT:
Ladies Professional Baseball - In February 1998, the Company entered
into a three year lease agreement, commencing in 1998, with Ladies
Professional Baseball. Pursuant to the agreement, the New Jersey
Diamonds (the "Diamonds"), a league-owned team, will play its regular
season home games, approximately 28, at the Stadium during the months
of July through September. The Diamonds will pay rent of approximately
$37,000. The Company will retain the proceeds for parking and alcohol
revenue, and a portion of the food revenue.
NOTE 12 - EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT:
38
<PAGE>
MILLENNIUM SPORTS MANAGEMENT, INC.
(FORMERLY SKYLANDS PARK MANAGEMENT, INC.)
NOTES TO FINANCIAL STATEMENTS
INVESTMENT IN JOINT VENTURE CORPORATION - In March 1998, the Company
purchased a 50% interest in a corporate joint venture to develop a
resort golf facility. The Company has committed to fund a total of
$175,000 to this venture, of which $41,000 was advanced through
December 31, 1997 for feasibly studies.
39
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In August 1995, the Company replaced its former auditors, J.H. Cohn LLP, as
the Company's independent public accountants. Such change in accountants did
not relate to or arise out of any disagreements between the Company and J.H.
Cohn LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, and there were no such
disagreements at any time.
40
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
NAME AGE POSITION
Barry M. Levine 54 President, Chief Executive Officer, and Director
Robert H. Stoffel, Jr. 58 Vice President, Chief Financial Officer, Chief
Accounting Officer, and Director
Barry J. Gordon 52 Director
Marc H. Klee 43 Director
All directors are elected at the annual meeting of shareholders and hold
office until the next annual meeting and until their successors have been
elected and qualified. By agreement with the Company, A.S. Goldmen & Co., Inc.
("Goldmen") has the right, through September 24, 1998, to designate one
director, although Goldmen has not yet exercised such right. Officers are
elected by and hold office at the discretion of the Board of Directors.
The following sets forth summary biographical information as to the business
experience of each executive officer and director of the Company.
BARRY M. LEVINE was elected a Director and the President and Chief Executive
Officer of the Company in October 1996. From March to October 1996, Mr. Levine
was unemployed. From December 1991 through March 1996, Mr. Levine held various
offices (including, at varying times, President, Chief Executive Officer,
Executive Vice President, Chief Financial and Administrative Officer, Vice
President-Finance and Administration, and Treasurer) in, and from April 1994
through March 1996 was a Director of, Sports Heroes, Inc. ("SHI"), a publicly
traded company which was engaged primarily in the business of acquiring and
marketing sports memorabilia and related collectible items. Mr. Levine resigned
from SHI in March 1996, and subsequently, in May 1996, SHI filed a voluntary
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code; and in October 1996, such case was converted to a proceeding under Chapter
7 of the United States Bankruptcy Code. Prior to his employment with SHI, Mr.
Levine was Chief Financial Officer of Pharmos Corporation (a New York-based
pharmaceutical company), and from 1984 to 1991 he was Chief Financial Officer of
Cardio Fitness Corporation. Mr. Levine is also a certified public accountant,
and spent sixteen years with a certified public accounting firm, where he was a
partner.
41
<PAGE>
ROBERT H. STOFFEL, JR. has been Vice President, Chief Financial Officer and
Chief Accounting Officer of the Company since January 1993, and a Director of
the Company from May 1995 to June 1995 and from February 1996 to the date of
this report. Mr. Stoffel has been an independent financial consultant from 1990
to the present, serving several contract research organizations in the
pharmaceutical field. Specifically, Mr. Stoffel has been working in the areas
of acquisitions and accounting systems. From 1987 to 1990, he was Vice
President and Chief Controller for the New York Yankees, reporting directly to
its Managing General Partner and Principal Owner George Steinbrenner. Mr.
Stoffel has over 30 years of professional experience in the area of finance.
BARRY J. GORDON has been a Director of the Company since October 1996. Since
1980, Mr. Gordon has been President and a Director of American Fund Advisors,
Inc., a money management firm, and has served as Chairman of the Board of that
company since 1987. In addition, Mr. Gordon is a Director of Winfield Capital
Corp., a publicly traded small business investment company, a Director of Hain
Food Corp., a publicly traded specialty foods product company, and President of
the John Hancock Global Technology Fund, a mutual fund specializing in
telecommunications and technology securities. From April 1989 to March 1996,
Mr. Gordon was also a Director of SHI. Mr. Gordon is also the Chairman and
Chief Executive Officer of the general partner of Heroes, which is the limited
partnership that owns the Team. Mr. Gordon is also Chairman and Chief Executive
Officer of the general partner of the limited partnership that owns the Norwich
Navigators, a Class "AA" Minor League affiliate of the New York Yankees.
MARC H. KLEE has been a Director of the Company since October 1996. Since May
1984, Mr. Klee has been Senior Vice President and a Director of American Fund
Advisors, Inc., and since May 1987, Mr. Klee has also been Senior Vice President
of John Hancock Technology Series, Inc., a mutual fund specializing in
technology securities. Mr. Klee is also the Treasurer and Secretary of the
general partner of Heroes, and the Vice President, Treasurer and Secretary of
the general partner of the limited partnership that owns the Norwich Navigators.
ITEM 10. EXECUTIVE COMPENSATION
The Company did not pay any cash compensation to its executive officers in
1991 or 1992. Although compensation for services was paid to certain executive
officers in 1992 through the issuance of certain shares of common stock (see
"Item 12-Certain Relationships and Related Transactions"), and cash compensation
was paid in 1993 and thereafter, no executive officer or other employee received
total compensation in excess of $100,000 in any of 1991, 1992, 1993, 1994, 1995
or 1996.
42
<PAGE>
The following table shows all compensation of any and all types paid or
accrued in the Company's three most recent full fiscal years for services
rendered in all capacities by the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
Total
Name and Principal Compensation
Position Year Salary Options/SAR's (#) Paid or Accrued
- -------------------------- ---------- ------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Robert A. Hilliard 1995 $77,175(2) 0 $77,175(1)(2)
Chairman and
Chief Executive Officer 1996 $81,000(3) 5,000 (4) $81,000(1)(3)
Barry M. Levine 1996 $31,250(5) 15,000 $31,250(1)(5)
President and
Chief Executive Officer 1997 $125,000 0 $125,000(1)
</TABLE>
(1) Does not include benefits or perquisites in an aggregate amount which is
less than 10% of the total compensation for the subject year.
(2) Consists of $30,000 paid in cash, and an additional $47,175 accrued.
(3) Consists of $7,500 paid in cash, and an additional $73,500 accrued.
(4) Consists of 5,000 stock options which were repriced in 1996, and have since
lapsed without exercise.
(5) Consists of $31,250 accrued following the commencement of Mr. Levine's
employment on October 1, 1996.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Levine in October
1996, pursuant to which Mr. Levine is to serve as President and Chief Executive
Officer of the Company through December 31, 1999 at an annual salary of
$125,000. Mr. Levine agreed to accrue and defer receipt of his salary and other
cash compensation through June 30, 1997, to the extent required by the Company's
lack of cash resources.
The Company has also entered into an amended employment agreement with Mr.
Stoffel effective through October 31, 1998, providing for compensation at the
rate of $72,000 per annum through October 31, 1997 and $78,000 per annum
thereafter, and further providing for the periodic issuance to Mr. Stoffel of an
aggregate of 5,000 shares of common stock of the Company (all of which shares
have been issued) and the issuance of options to purchase an additional 5,000
shares of common stock pursuant to the Company's 1993 Stock Option Plan (all of
which options have been issued).
Under their respective agreements, each of Messrs. Levine and Stoffel is
required to devote the majority of his business time to the affairs of the
Company, and each of them has agreed that, for the duration of his employment
agreement, he will not engage in any activities which are competitive with the
businesses of the Company.
43
<PAGE>
In light of the Company's financial condition, a substantial portion of the
salaries payable under the foregoing employment agreements has to date been
accrued but not paid, and continues to be deferred, until such time as the
Company has the financial means to make payment.
DIRECTOR COMPENSATION
The Company has adopted a policy whereby the Company will pay each non-
employee director $500 per year for serving in such capacity, in addition to
reimbursement of out-of-pocket expenses in connection with attending directors'
meetings. To the date of this report, although there have been numerous
directors' meetings, no such directors' fees or expenses have been paid or
accrued, and all of such fees in respect of prior meetings have been waived.
Although the Plan permits the payment of such fees and expenses on a current
basis, all current non-employee directors have agreed to waive such fees for
their current term of office.
STOCK OPTION PLAN
The Company's 1993 Stock Option Plan (the "Stock Option Plan") was adopted by
the Company's Board of Directors on April 14, 1993, was approved by a majority
of the Company's shareholders on July 23, 1993, and became effective on August
9, 1993. The Stock Option Plan provides for the granting of options to key
employees (including officers), non-employee directors and consultants to
purchase up to 53,571 shares of common stock of the Company which are intended
to qualify either as incentive stock options ("Incentive Stock Options") within
the meaning of Section 422 of the Internal Revenue Code, as amended, or as
options which are not intended to meet the requirements of such section.
The Stock Option Plan provides for its administration by an administrative
committee of two directors (the "Committee") which has discretionary authority,
subject to certain restrictions, to determine the number and type of options to
be granted and the individuals to whom, the times at which and the exercise
price for which options will be granted.
The exercise price of all options granted under the Stock Option Plan must be
at least equal to the fair market value of the underlying shares of common stock
on the date of the grant, or, in the case of Incentive Stock Options granted to
an individual owning more than ten percent of the Company's outstanding voting
shares, at least 110% of the fair market value of such shares on the date of the
grant. The maximum exercise period for which options may be granted is ten
years from the date of grant (five years in the case of an Incentive Stock
Option granted to an individual owning more than 10% of the Company's
outstanding voting shares). The aggregate fair market value (determined at the
date of the option grant) of shares of common stock with respect to which
Incentive Stock Options are exercisable for the first time by the holder of the
option during any calendar year may not exceed $100,000.
No options were awarded under the Stock Option Plan in 1997.
Through March 20, 1998, an aggregate of 42,500 options granted under the Stock
Option Plan had been exercised (40,000 by executive officers and directors, all
in 1997), and 5,000 options had lapsed without exercise. As of March 20, 1998,
2,000 options remained outstanding
44
<PAGE>
under the Stock Option Plan, and 9,071 options remained available for future
issuance under the Stock Option Plan.
The following table sets forth all stock option exercises by executive
officers and directors of the Company during the fiscal year ended December 31,
1997, the "value" (i.e., the amount by which the fair market value of the
underlying common stock exceeded the option exercise price on the date of
exercise) realized upon such exercises, and the number of remaining options held
by executive officers and directors of the Company as of December 31, 1997.
<TABLE>
<CAPTION>
Number of Value of
Shares Acquired Value Unexercised Unexercised
Name on Exercise Realized Options at Year End Options
----------- -------- ------------------- -------
<S> <C> <C> <C> <C>
Barry M. Levine 15,000 $22,500 0 --
Robert H. Stoffel, Jr. 5,000 $18,100 0 --
Barry J. Gordon 10,000 $14,688 0 --
Marc H. Klee 10,000 $14,688 0 --
</TABLE>
STOCK AWARD PLAN
In December 1996, the Board of Directors adopted a Stock Award Plan pursuant
to which, subject to the achievement of certain targets, the Board of Directors
is given the authority to grant, to such members of the Board, executive
officers, key employees and consultants to the Company as may be determined by
the Board, the right to purchase up to an aggregate of 1,000,000 shares of
common stock of the Company at a nominal price for a limited period of time. Up
to 250,000 shares of common stock may be awarded from time to time if and after
the Company receives gross proceeds of $2,000,000 between the date of adoption
of the Stock Award Plan and December 31, 1997 from issuances of equity
securities of the Company, and up to an additional 250,000 shares of common
stock may be awarded from time to time if and after the Company receives
additional gross proceeds (over and above the first $2,000,000) of $2,200,000 or
more, on or before December 31, 1998, from issuances of equity securities of the
Company. Up to an additional 250,000 shares of common stock may be awarded from
time to time if and after the Company achieves a positive cash flow from
operations for any two consecutive fiscal quarters, and up to an additional
250,000 shares of common stock may be awarded time to time if and after the
Company achieves an operating profit for any two consecutive fiscal quarters.
In the event and to the extent that any person to whom any such award may be
granted shall fail to timely purchase the subject shares of common stock, then
such shares will again become available for award under this plan.
Management has determined that the first threshold for awards under the Stock
Award Plan (i.e., the Company's receipt of gross proceeds of $2,000,000 on or
before December 31,
45
<PAGE>
1997 from issuances of equity securities of the Company) has been satisfied.
However, no awards have yet been made out of the 250,000 shares of common stock
available by reason of the satisfaction of such condition.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 20, 1998, the number of shares of
the Company's common stock owned by each person (including any "group" as used
in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company
to be the beneficial owner of more than five percent of the Company's common
stock, each director of the Company, and all directors and officers of the
Company as a group.
<TABLE>
<CAPTION>
Percentage of
Outstanding
Name and Address of Owner(1) Number of Shares(2) Common Stock
- ---------------------------- ------------------- ------------
<S> <C> <C>
Barry M. Levine 15,200 0.2%
Robert H. Stoffel, Jr. 6,500 0.1%
Barry J. Gordon 42,970 0.7%
Marc H. Klee 66,670 1.1%
All directors and executive 131,340 2.1%
officers as a group (four persons)
</TABLE>
____________________
(1) The address for all persons is c/o Millennium Sports Management, Inc.,
Ross' Corner, U.S. Highway 206 and County Route 565, P.O. Box 117, Augusta,
New Jersey 07822-0117.
(2) All shares are directly held unless otherwise stated.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1993, the Company and Robert H. Stoffel, Jr. entered into an
agreement whereby, in lieu of Mr. Stoffel's receiving certain shares of common
stock of the Company (which were originally to be transferred to Mr. Stoffel as
an inducement for entering into employment with the Company), the Company agreed
to pay to Mr. Stoffel a total of $35,000. Of such $35,000, a total of $25,000
has been paid in cash, and the remaining $10,000 was paid by the issuance to Mr.
Stoffel of an aggregate of 3,230 shares of common stock.
In March 1994, the Company borrowed $100,000 and $6,000, respectively, from
Robert A. Hilliard and John C. Ertmann (each of whom was then a director and
executive officer of the Company), which loans bear simple interest at 15% per
annum and matured in November 1994.
46
<PAGE>
Such loans remain outstanding as of the date of this report, and may be repaid
out of available funds after all other unsecured pre-petition liabilities have
been paid pursuant to the Plan (or, at the option of the subject creditor, may
sooner be paid in shares of common stock of the Company valued at their then-
current market price).
Also in April 1994, Barry J. Gordon and Marc H. Klee each loaned the Company
the principal amount of $125,000. Such loans were included in the Company's
pre-petition obligations to unsecured creditors, and the remaining unpaid
balance of such loans constitutes an undivided portion of the Creditors' Note.
Also in April 1994, the Company received an advance from Heroes, the limited
partnership that owns the Team, in the aggregate amount of $180,000. This
advance consists of unsecured loans in the aggregate amount of $125,000 (which
were non-interest-bearing until their due date on October 31, 1994, and
thereafter have accrued interest at the rate of 2% per month on the first
$60,000 of principal and 1.25% per month on the remaining $65,000 of principal,
until fully paid), and the sum of $55,000 which was designated as a prepayment
of rentals and advertising fees. Pursuant to the agreements under which the
advance was made, Heroes agreed to reimburse the Company for certain additional
construction costs to be undertaken by the Company, and reserved the right to
satisfy such reimbursement obligations by offset against up to $65,000 of loan
principal and reduction of the $55,000 of rent and advertising prepayments.
However, as a result of the Company's reorganization proceedings, there are
substantial uncertainties relating to Heroes' right to offset its obligations
for current rents, fees and reimbursement obligations against its pre-petition
advances, and thus, in the Company's financial statements, the Company has
continued to reflect the entire $180,000 advance as a loan payable, and includes
rents and advertising fees payable by Heroes (totaling $49,000 for the period
from June 16, 1994, when the Team played its first game at Skylands Park,
through December 31, 1994) in income as and when earned, without regard to
either the pre-petition designation of the $55,000 as being "prepayments," or
any rights of offset described above.
Also in April 1994, the Company also borrowed $20,000 from Richard A.
Hunsicker (who was then a director of the Company), and in May 1994, the Company
borrowed an additional $15,000 from Mr. Hilliard. These loans bear simple
interest at 15% per annum and matured in November 1994. Such loans remain
outstanding as of the date of this report, and may be repaid out of available
funds after all other unsecured pre-petition liabilities have been paid pursuant
to the Plan (or, at the option of the subject creditor, may sooner be paid in
shares of common stock of the Company valued at their then-current market
price).
The proceeds of the foregoing 1994 loans were used for the construction of the
Complex and for working capital. Other than the advance from Heroes (which has
been classified with the Company's other pre-petition liabilities), all of the
foregoing loans have been classified separately from the Company's other
unsecured pre-petition liabilities within the framework of the Plan, and may be
repaid out of available funds after all other unsecured pre-petition liabilities
have been paid pursuant to the Plan (or, at the option of the subject creditor,
may sooner be paid in shares of common stock of the Company valued at their
then-current market price).
47
<PAGE>
As of December 31, 1997, in addition to the aforedescribed $180,000 loan, the
Company was indebted to Heroes in respect of other pre-petition liabilities
subject to compromise (consisting primarily of the unremitted portion of
proceeds from season ticket subscriptions collected by the Company on behalf of
Heroes) of $81,606. The remaining balance of this amount is to be repaid ratably
with the Company's other pre-petition liabilities.
In April 1997, the Company received a $40,000 loan from Heroes. In December
1997, Heroes applied $10,000 of the principal of this loan to exercise 20,000
Class D Warrants of the Company, and in March 1998, Heroes applied the remaining
$30,000 principal balance of this loan to exercise 60,000 Class D Warrants of
the Company.
CONFLICTS OF INTEREST
Two directors of the Company, Barry J. Gordon and Marc H. Klee, are also
executive officers and equity owners in the limited partnership that owns the
Team. In light of the potential conflicts of interest, the Company has adopted
policies whereby all matters relating to the relationship between the Company
and the Team will be determined by directors other than Messrs. Gordon and Klee.
ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K
Number Description of Exhibit
- ------ ----------------------
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 Certificate of Amendment of Certificate of Incorporation of the Company,
regarding a 1-for-1.4 reverse stock split effected in August 1993.
3.3 Certificate of Amendment of Certificate of Incorporation of the Company,
regarding an increase in the Company's authorized capital in January 1994.
3.4 Certificate of Amendment of Certificate of Incorporation of the Company,
regarding a 1-for-10 reverse stock split effected in November 1996.
3.5 Certificate of Amendment of Certificate of Incorporation of the Company,
regarding the name change to "Millennium Sports Management, Inc."
3.6 Second Amended By-Laws of the Company.
4.1 Specimen Common Stock Certificate. (4)
4.2 Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company ("Continental"), including form of Class A Warrant
therein. (1)
48
<PAGE>
4.3 Notification letter to Class A Warrantholders regarding the extension of
the expiration date of the Class A Warrants, the adjustments arising by
reason of the issuance of Class D Warrants, and a further voluntary
reduction of the exercise price under the Class A Warrants. (4)
4.4 Notification letter to Class A Warrant holders regarding the further
extension of the expiration date of the Class A Warrants.
4.5 Form of Warrant Agreement between the Company and Continental, including
form of Class D Warrant therein.
10.1 Stock Option Plan.
10.2 $125,000 Loan Agreement between the Company and Barry Gordon.
10.3 $125,000 Loan Agreement between the Company and Marc Klee.
10.4 $100,000 Promissory Note from the Company to Robert A. Hilliard.
10.5 $140,000 Promissory Note from the Company to Bruce Starr.
10.6 $6,000 Promissory Note from the Company to John C. Ertmann.
10.7 Amended Employment Agreement between the Company and Robert H. Stoffel,
Jr.
10.8 First Amended Plan of Reorganization of the Company. (2)
10.9 Creditors' Note, issued pursuant to the First Amended Plan of
Reorganization. (3)
10.10 Employment Agreement dated October 28, 1996 between the Company and Barry
M. Levine.
10.11 Amendment to Employment Agreement between the Company and Robert A.
Hilliard.
10.12 1996 Stock Award Plan.
16.1 Letter on change in certifying accountant.
(1) Incorporated by reference, filed as an exhibit to Amendment No. 2 to the
Company's Registration Statement on Form SB-2 filed on August 12, 1993.
(2) Incorporated by reference, filed as an exhibit to the Company's report on
Form 10-KSB filed on April 28, 1995.
49
<PAGE>
(3) Incorporated by reference, filed as an exhibit to Post-Effective Amendment
No. 1 to the Company's Registration Statement (SEC File No. 33-79930) filed
on July 14, 1995.
(4) Incorporated by reference, filed as an exhibit to Amendment No. 1 to the
Company's Registration Statement on Form SB-2, filed on December 16, 1996,
SEC File No. 333-90.
REPORTS ON FORM 8-K
On December 23, 1997, the Company filed a current report on Form 8-K relating
to the extension of the exercise period for the Company's outstanding Class A
Warrants and authorized Class D Warrants through and including 5:00 p.m. (New
York time) on June 30, 1998.
50
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MILLENNIUM SPORTS MANAGEMENT, INC.
By: /s/ Barry M. Levine
------------------------------------------
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Barry M. Levine President, Chief Executive Officer March 30, 1997
- ------------------- and Director
Barry M. Levine
/s/ Robert H. Stoffel, Jr. Vice President, Principal Financial March 30, 1997
- -------------------------- Officer, Principal Accounting
Robert H. Stoffel, Jr. Officer and Director
/s/ Marc H. Klee Director March 30, 1997
- ----------------
Marc H. Klee
</TABLE>
51
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SKYLANDS PARK MANAGEMENT, INC.
-----------------------------
THE UNDERSIGNED OFFICER OF SKYLANDS PARK MANAGEMENT, INC., executes the
following Amended and Restated Certificate of Incorporation pursuant to the
provisions of Section 14A:9-5, Corporations, General of the New Jersey Statutes,
as follows:
ARTICLE I
NAME
----
The name of the Corporation, hereinafter referred to as the "Corporation",
is Skylands Park Management, Inc.
ARTICLE II
ADDRESS
-------
The address of the Corporation's current registered office in the state of
New Jersey is Ribis, Graham & Curtin, 4 Headquarters Plaza, CN-1991, Morristown,
New Jersey 07962-1991, and the name of the Corporation's current registered
agent at such address is David Pepe, Esq.
ARTICLE III
PURPOSE
-------
The purposes for which the corporation is organized are:
To engage in any activity within the purposes for which corporations
may be organized under the New Jersey Business Corporation Act.
<PAGE>
ARTICLE IV
STOCK
The total authorized capital stock of the Corporation is Ten Million Five
Hundred Thousand (10,500,000) shares, consisting of Ten Million (10,000,000)
shares of common stock, no par value (the "Common Stock") and Five Hundred
Thousand (500,000) shares of preferred stock, no par value (the "Preferred
Stock"). The designations, powers, preferences and rights of the Preferred Stock
and the qualifications, limitations and restrictions thereof, are as follows:
1. General. The Board of Directors of the Corporation is authorized to
-------
adopt from time to time and to cause to be executed and filed without
further approval of the shareholders amendments to this Amended and
Restated Certificate of Incorporation that divide the Preferred Stock into
classes and series, specify the designation and number of shares of any
class or series and determine the relative rights, preferences and
limitations of the share of any class or series, whether prior or
subordinate to, or equal with, the shares of any other class or series,
including the Common Stock. The preferred shares of any class or series
established by an amendment by the Board shall be issued for the
consideration that the Board may fix. The Board of Directors is authorized
to set forth in the amendment, without limitation upon its general power,
any of the provisions set forth in this Article IV.
2. Designation and Number. The Board may provide a distinctive designation
----------------------
for each class or series and the number of shares that shall constitute
each class or series. By resolution, the Board may from time to time
increase the number of shares that the Board has previously determined for
any class or series, unless the Board otherwise provided in its resolution
creating the class or series. From time to time, the Board may also pass a
resolution to decrease the number of shares that the Board has previously
determined for any class or series, but not below the number of shares of
the class or series then outstanding.
3. Dividend Rates. The Board may determine the dividend rate payable on the
--------------
shares of the class or series and whether dividends are to be cumulative,
partially cumulative, or noncumulative. If any cumulative rights are
provided, the Board may establish the date or dates from which dividends
may cumulate.
4. Redemption Price. The Board may establish the price or prices and the
----------------
terms and conditions for redemption of the shares of the class or series at
the option of the corporation.
5. Sinking Fund. The Board may determine whether or not the shares of the
------------
class or series are entitled to a retirement or sinking fund to be applied
to the purchase or
2
<PAGE>
redemption of the shares, and if a fund is to be established, the Board may
specify the amount of the fund and its terms and provisions.
6. Liquidation Preferences. The Board may determine the rights of the
-----------------------
shares of the class or series in the event of voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation.
7. Conversion Rights. The Board may determine whether or not the shares of
-----------------
the class or series are to be convertible into, or exchangeable for, any
other shares of the Corporation or other securities. If the shares are
convertible or exchangeable, the Board may establish the conversion price
or prices or the rates of exchange, any adjustments to those prices or
rates, and any other terms and conditions of the conversion or exchange.
8. Priorities. The Board may determine whether or not the shares of the
----------
class or series established are to be prior, equal or junior to the shares
of any other class or series in any respect, including the Common Stock.
The Board may determine whether or not the shares of the class or series
established are to be entitled to restrictions on the issuance of shares of
any other class or series that are prior or equal to the shares of the
class or series established. The Board may determine whether or not the
shares of the class or series established are to be entitled to
restrictions on payments of dividends, distributions of assets, and
purchases or redemptions of shares of any other class or series of shares
of the Corporation ranking junior to the shares of the class or series
established.
9. Voting Rights. The Board may determine whether any class or series of
-------------
the Preferred Stock shall have voting rights and whether such voting rights
may be greater or lesser then the voting rights of the Common Stock.
10. Additional Rights. The Board may establish any other preferences,
-----------------
qualifications, privileges, options and other relative or special rights
and limitations of the class or series.
ARTICLE V
CURRENT BOARD OF DIRECTORS
--------------------------
The number of directors constituting the Board of Directors at the time of
the adoption of this Amended and Restated Certificate of Incorporation is five
(5). The name and
3
<PAGE>
address of each director constituting the current Board of Directors is as
follows:
Name Address
---- -------
Robert A. Hilliard Skylands Park Management, Inc.
26 Eric Trail
Sussex, New Jersey 07461
Frederick A. Voight Mohawk Lumber
Route 639
P.O. Box 727
Sussex, New Jersey 07461
Richard Hunsicker Dejajar Drive
Augusta, New Jersey 07822
Louis Hawkins 3 Valley View Terrace
Sussex, New Jersey 07461
John C. Ertmann 2608 Hemingway Lane
Mahwah, New Jersey 07430
ARTICLE VI
INDEMNIFICATION
---------------
The Corporation shall indemnify and reimburse any present or former
"corporate agent", as defined in N.J.S.A.14A:3-5, who serves the Corporation,
--------
against any reasonable and necessary expenses, counsel fees and liabilities
actually incurred by them in any civil or criminal proceeding brought or
threatened for acts or omissions arising out of their status as corporate agents
including the right to be indemnified against liabilities and expenses incurred
in proceedings by or in the right of the Corporation, to the maximum extent
permitted or authorized by N.J.S.A.14A:3-5(8) (or, to the extent indemnification
--------
is thereafter broadened, as it may be amended). Termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
---- ----------
equivalent shall not of itself create a presumption that such corporate agent
did not meet the applicable standard of conduct for indemnification. Indemnity
4
<PAGE>
shall be paid in advance of the final disposition of the proceeding, provided
the corporate agent undertakes to repay the Corporation if it shall be
ultimately determined that he is not entitled to indemnification as provided by
this Article VI.
The Corporation shall have the power to purchase and maintain insurance,
and to furnish similar protection (including but not limited to providing a
trust fund, letter of credit, self-insurance or indemnification contract) on
behalf of any individual to whom indemnification or advances may be paid
hereunder.
A director shall not be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to the Corporation or its
shareholders; provided, however, that this provision shall not relieve a
-------- -------
director from liability for any breach of duty based upon an act or omission (a)
in breach of such director's duty of loyalty to the Corporation or its
shareholders, (b) not in good faith or involving a knowing violation of law, or
(c) resulting in receipt by such director of an improper benefit.
IN WITNESS WHEREOF, the undersigned, as President of the Corporation,
hereby declares and certifies that this is his act and deed and the facts herein
stated are true and, accordingly, has hereunto set his hand this 13 day of
January, 1993.
/s/ Robert A. Hilliard, President
---------------------------------
5
<PAGE>
CERTIFICATE OF ROBERT A. HILLIARD
---------------------------------
The undersigned, being over the age of eighteen (18) years and authorized
to execute the within Certificate as required by the provisions of Section
14A:9-5(5), Corporations, General, of the New Jersey Business Corporation Act,
hereby certifies as follows:
(a) The name of the Corporation is Skylands Park Management, Inc.
(b) The Amended and Restated Certificate of Incorporation was adopted by
the shareholders of the Corporation on January 13, 1993
(c) The number of shares entitled to vote on the proposed Amended and
Restated Certificate of Incorporation was 430,000 shares of Common Stock, no par
value.
(d) The number of shares voting on the Amended and Restated Certificate of
Incorporation was 430,000 shares of Common Stock, no par value.
/s/ Robert A. Hilliard, President
---------------------------------
DATED: January 13, 1993
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
------------------------
TO THE CERTIFICATE OF INCORPORATION
-----------------------------------
OF SKYLANDS PARK MANAGEMENT, INC.
---------------------------------
TO: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4), Corporations, General of
the New Jersey Statutes, the undersigned corporation executes the following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is Skylands Park Management, Inc.
2. The following amendments to the Certificate of Incorporation were
approved by the directors of the corporation on August 6, 1993 and thereafter
duly adopted by the shareholders of the corporation on August 9, 1993:
RESOLVED: That, subject to obtaining requisite approval of shareholders of
the Corporation as and to the extent required by New Jersey law, there is
hereby declared a 1-for-1.4 reverse stock split in respect of the
Corporation's common stock, to become effective upon the filing of the
certificate of amendment in respect thereof, pursuant to which, on such
effective date, (a) each outstanding share of the Corporation's common
stock, and each share reserved for issuance pursuant to outstanding option
plans, options, warrants and other rights to subscribe for, purchase and/or
receive shares of the Corporation's common stock, shall automatically be
converted into 1/1.4 of a share of common stock, with any fractional shares
held by any shareholder or issuable under any instrument as a result
thereof to be rounded up to the nearest whole share in the case of
fractional shares of .50 or greater, and to be eliminated and converted
into the right to receive $2.50 times the fractional share interest in the
case of fractional shares of less than .50 (without requirement of any
payment by the subject shareholder or instrument holder), and (b) after
giving effect to such reverse stock split, the authorized common stock of
the Corporation shall remain 10,000,000 shares without par value (thereby
causing the reverse stock split to have the effect of causing the
percentage of authorized shares that remains unissued after the reverse
stock split to
<PAGE>
exceed the percentage of authorized shares that was unissued prior to the
reverse stock split).
3. The number of shares outstanding at the time of adoption of the
amendments was 1,370,000 shares of common stock without par value. The total
number of shares entitled to vote thereon was 1,370,000.
4. The amendments were adopted by the written consent of the holders of
733,500 shares (constituting a majority of the issued and outstanding shares of
the common stock of the corporation) on August 9, 1993 (with no shares
dissenting therefrom) ; and, in accordance with Section 14A:5-6(2),
Corporations, General of the New Jersey Statutes, written notice of the adoption
of such amendments was given to all non-consenting shareholders on August 9,
1993, wherein there was specified a proposed effective date for these amendments
of August 20, 1993 (or as soon thereafter as this Certificate of Amendment was
filed). No shareholder consents have been revoked.
Dated: This 26 day of August, 1993
SKYLANDS PARK MANAGEMENT, INC.
By: /s/ Frederick A. Voight
---------------------------
Frederick A. Voight, Chairman
2
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
------------------------
TO THE CERTIFICATE OF INCORPORATION
-----------------------------------
OF SKYLANDS PARK MANAGEMENT, INC.
---------------------------------
TO: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4), Corporations, General of
the New Jersey Statutes, the undersigned corporation executes the following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is Skylands Park Management, Inc.
2. The following amendment to the Certificate of Incorporation was approved
by the directors of the corporation on November 18, 1993 and thereafter duly
adopted by the shareholders of the corporation on January 14, 1994:
RESOLVED: That the number of authorized shares of common stock of the
corporation be increased to 20,000,000 shares without par value; and that,
in furtherance thereof, the proper officers of the corporation are hereby
authorized, empowered and directed to file a Certificate of Amendment to
the corporation's Certificate of Incorporation whereby the first sentence
of ARTICLE IV shall be amended so as to read in full as follows: "The total
authorized capital stock of the Corporation is Twenty Million Five Hundred
Thousand (20,500,000) shares, consisting of Twenty Million (20,000,000)
shares of common stock, no par value (the "Common Stock") and Five Hundred
Thousand (500,000) shares of preferred stock, no par value (the "Preferred
Stock")."
3. The number of shares outstanding at the time of adoption of the
amendment was 1,978,571 shares of common stock without par value. The total
number of shares entitled to vote thereon was 1,978,571.
4. The amendment was adopted by the shareholders of the corporation at a
meeting of such shareholders held on January 14, 1994 pursuant to due notice
thereof, at which a total of 1,214,448 shares (constituting a majority of the
issued and outstanding shares of the common stock of the Corporation) were
present in person or by proxy. A total of 1,167,948 shares voted for the
amendment, a total of 39,545 shares voted against the amendment, and a total of
6,955 shares abstained with respect to the amendment.
<PAGE>
Dated: This 14th day of January, 1994
SKYLANDS PARK MANAGEMENT, INC.
By:
-------------------------------
Frederick A. Voight, Chairman
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
------------------------
TO THE CERTIFICATE OF INCORPORATION
-----------------------------------
OF SKYLANDS PARK MANAGEMENT, INC.
---------------------------------
TO: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4), Corporations, General of
the New Jersey Statutes, the undersigned corporation executes the following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is Skylands Park Management, Inc.
2. The following amendments to the Certificate of Incorporation were
approved by the directors of the corporation on August 15, 1996 and thereafter
duly adopted by the shareholders of the corporation on October 28, 1996:
RESOLVED: That subject to obtaining requisite approval of shareholders of
the Corporation as and to the extent required by New Jersey law, there is
hereby declared a 1-for-10 reverse stock split in respect of the
Corporation's common stock, to become effective within ten days after the
filing of the certificate of amendment in respect thereof, pursuant to
which, on such effective date, (a) each outstanding share of the
corporation's common stock, and each share reserved for issuance pursuant
to outstanding option plans, options, warrants and other rights to
subscribe for, purchase and/or receive shares of the Corporation's common
stock, shall automatically be converted into one-tenth of a share of common
stock, with any fractional shares held by any shareholder or issuable under
any instrument as a result thereof to be rounded (up or down) to the
nearest whole share, and (b) after giving effect to such reverse stock
split, the authorized common stock of the Corporation shall remain
20,000,000 shares without par value (thereby causing the reverse stock
split to have the effect of causing the percentage of authorized shares
that remains unissued
<PAGE>
after the reverse stock split to exceed the percentage of authorized shares
that was unissued prior to the reverse stock split).
3. The number of shares outstanding at the time of adoption of the
amendments was 12,148,869 shares of common stock without par value. The total
number of shares entitled to vote thereon was 12,148,869.
4. The amendments were adopted by the affirmative vote of the holders of
10,456,981 shares (constituting a majority of the issued and outstanding shares
of the common stock of the corporation) on October 28, 1996. A total of
1,008,185 shares were voted against the amendments, and a total of 182,360
shares abstained with respect to the amendments.
5. The amendments shall become effective at the close of business on
November 7, 1996.
Dated: This 29th day of October, 1996
SKYLANDS PARK MANAGEMENT, INC.
By:
-------------------------------
Barry M. Levine, President
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT
-------------------------
TO THE CERTIFICATE OF INCORPORATION
-----------------------------------
OF SKYLANDS PARK MANAGEMENT, INC.
--------------------------------
TO: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4), Corporations, General of
the New Jersey Statutes, the undersigned Corporation executes the following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the Corporation is Skylands Park Management, Inc.
2. The following amendment to the Certificate of Incorporation was approved
by the directors of the Corporation on July 1, 1997 and thereafter adopted by
the shareholders of the Corporation on September 12, 1997:
RESOLVED: That the name of the Corporation is changed to "Millennium Sports
Management, Inc."; and that in furtherance thereof, the proper officers of
the Corporation are hereby authorized, empowered and directed to file a
Certificate of Amendment to the Corporation's Certificate of Incorporation
whereby ARTICLE I- NAME thereof shall be amended so as to read in full as
follows: "The name of the Corporation, hereinafter referred to as the
"Corporation", is Millennium Sports Management, Inc."
3. The number of shares outstanding at the time of the adoption of the
amendment was shares of common stock without par value. The total number of
shares entitled to vote thereon was 1,973,975.
4. The amendment was adopted by the shareholders of the corporation at a
meeting of such shareholders held on September 12, 1997 pursuant to due notice
thereof, at which a total of 1,865,771 shares (constituting a majority of the
issued and outstanding shares of the common stock of the corporation) were
present in person or by proxy. A total of 1,791,355 shares voted for the
amendment, a total of 42,222 shares voted against the amendment, a total of
29,549 shares abstained with respect to the amendment, and a total of 2,645
shares were present but not voted with respect to the amendment.
Dated: This 17th day of September, 1997
SKYLANDS PARK MANAGEMENT, INC.
By:
--------------------------------
Barry M. Levine, President
<PAGE>
EXHIBIT 3.6
SECOND AMENDED
BY-LAWS
ARTICLE I - OFFICES
Section 1. The registered office of the corporation shall be at 61 Spring
Street, P.O. Box 248, Newton, N.J. 07860.
Section 2. The corporation may have such other offices either within or
without the state as the board of directors may designate or as the business of
the corporation may require from time to time.
ARTICLE II - SEAL
Section 1. The corporation seal shall have inscribed thereon the name of
the corporation, the year of its creation and the words "Corporate Seal, New
Jersey".
ARTICLE III - SHAREHOLDERS' MEETINGS
Section 1. All meetings of the shareholders shall be held at 26 Eric Trail,
Sussex, New Jersey or at such other place or places, either within or without
the State of New Jersey, as may from time to time be selected by the board of
directors.
Section 2. Annual Meetings: The annual meeting of shareholders, after the
year 1991 shall be held on the 28th day of August in each year if not a legal
holiday, and if a legal holiday, then on the next full business day following at
10 o'clock a.m. or on such other day as may be fixed by the Board, when the
shareholders shall elect, by a plurality vote, a Board of Directors, and
transact such other business as may properly be brought before the meeting.
If the annual meeting for election of directors is not held on the day
designated therefor, the directors shall cause the meeting to be held as soon
thereafter as convenient.
Section 3. Special Meetings: Special meetings of the shareholders may be
called by the President or the Board of Directors, and shall be called at the
request in writing to the President by the holder or holders of not less than
ten percent of all the shares entitled to vote at a meeting.
<PAGE>
Section 4. Notice of Shareholders' Meetings: Written notice of the time,
place and purpose or purposes of every meeting of shareholders shall be given
not less than ten or more than sixty days before the date of the meeting, either
personally or by mail, to each shareholder of record entitled to vote at the
meeting, unless a greater period of notice is required by statute in a
particular case.
When a meeting is adjourned to another time or place, it shall not be
necessary to give notice of the adjourned meeting if the time and place to which
the meeting is adjourned are announced at the meeting at which the adjournment
is taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting. However, if after the adjournment
the Board fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record on the new record
date entitled to notice.
Section 5. Waiver of Notice: Notice of a meeting need not be given to any
shareholder who signs a waiver of such notice, in person or by proxy, whether
before or after the meeting. The attendance of any shareholder at a meeting, in
person or by proxy, without protesting prior to the conclusion of the meeting
the lack of notice of such meeting, shall constitute a waiver of notice by him.
Whenever shareholders are authorized to take any action after the lapse of
a prescribed period of time, the action may be taken without such lapse if such
requirement is waived in writing, in person or by proxy, before or after the
taking of such action, by every shareholder entitled to vote thereon as of the
date of the taking of such action.
Section 6. Action by shareholders Without Meeting:
(1) Any action required or permitted to be taken at a meeting of
shareholders by statute or the Certificate of Incorporation or By-Laws of the
corporation, may be taken without a meeting if all the shareholders entitled to
vote thereon consent thereto in writing, except that in the case of any action
to be taken pursuant to Chapter 10 of the Business Corporation Act (concerning
mergers, etc.) , such action may be taken without a meeting only if all
shareholders entitled to vote consent thereto in writing and the
-2-
<PAGE>
corporation provides to all other shareholders the advance notification required
by paragraph (2)(b) of this section.
(2) Except as otherwise provided in the Certificate of Incorporation and
subject to the provisions of this subsection, any action required or permitted
to be taken at a meeting of shareholders by this Act, the Certificate of
Incorporation, or By-Laws, other than the annual election of directors, may be
taken without a meeting upon written consent of shareholders who would have been
entitled to cast the minimum number of votes which would be necessary to
authorize such action at a meeting at which all shareholders entitled to vote
thereon were present and voting.
(a) If any shareholder shall have the right to dissent from a proposed
action, pursuant to Chapter 11 of the Act, the Board shall fix a date on which
written consents are to be tabulated; in any other case, it may fix a date for
tabulation. If no date is fixed, consents may be tabulated as they are received.
No consent shall be counted which is received more than sixty days after the
date of the Board action authorizing the solicitation of consents or, in a case
in which consents, or proxies for consents, are solicited from all shareholders
who would have been entitled to vote at a meeting called to take such action,
more than sixty days after the date of mailing of solicitation of consents, or
proxies for consents.
(b) Except as provided in paragraph (2)(c) , the corporation, upon receipt
and tabulation of the requisite number of written consents, shall promptly
notify all non-consenting shareholders, who would have been entitled to notice
of a meeting to vote upon such action, of the action consented to, the proposed
effective date of such action, and any condition precedent to such action. Such
notification shall be given at least twenty days in advance of the proposed
effective date of such action in the case of any action taken pursuant to
Chapter 10 of the Act, and at least ten days in advance in the case of any other
action.
(c) The corporation need not provide the notification required to be given
by paragraph (2)(b) if it
-3-
<PAGE>
(i) solicits written consents or proxies for consents from all shareholders
who would have been entitled to vote at a meeting called to take action, and at
the same time gives notice of the proposed action to all other shareholders who
would have been entitled to notice of a meeting called to vote upon such action;
(ii) advises all shareholders, if any, who are entitled to dissent from the
proposed action, as provided in Chapter 11 of the Act, of their right to do so
and to be paid the fair value of their shares; and
(iii) fixes a date for tabulation of consents not less than twenty days, in
the case of any proposed action to be taken pursuant to Chapter 10 of the Act,
or not less than ten days in the case of any other proposed action, and not more
than sixty days after the date of mailing of solicitation of consents or proxies
for consents.
(d) Any consent obtained pursuant to paragraph (2)(c) may be revoked at any
time prior to the day fixed for tabulation of consents. Any other consent may be
revoked at any time prior to the day on which the proposed action could be taken
upon compliance with paragraph (2)(b). The revocation must be in writing and be
received by the corporation.
(3) Whenever action is taken pursuant to subsection (1) or (2) , the
written consents of the shareholders consenting thereto or the written report of
inspectors appointed to tabulate such consents shall be filed with the minutes
or proceedings of shareholders.
In case the corporation is involved in a merger, consolidation or other
type of acquisition or disposition regulated by Chapters 10 and 11 of the Act,
the pertinent provisions of the statute should be referred to and strictly
complied with.
Section 7. Fixing Record Date:
(1) The Board may fix, in advance, a date as the record date for
determining the corporation's shareholders with regard to any corporate action
or event and, in particular, for determining the shareholders who are entitled
to
-4-
<PAGE>
(a) notice of or to vote at any meeting of shareholders of any adjourned
thereof;
(b) give a written consent to any action without a meeting; or
(c) receive payment of any dividend or allotment of any right.
The record date may in no case be more than sixty days prior to the
shareholders' meeting or other corporate action or event to which it relates.
The record date for a shareholders' meeting may not be less than ten days before
the date of the meeting. The record date to determine shareholders to give a
written consent may not be more than sixty days before the date fixed for
tabulation of the consents or, if no date has been fixed for tabulation, more
than sixty days before the last day on which consents received may be counted.
(2) If no record date is fixed,
(a) the record date for a shareholders' meeting shall be the close of
business on the day next proceeding the day on which notice is given, or, if no
notice is given, the day next preceding the day on which the meeting is held;
and
(b) the record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the resolution of the
Board relating thereto is adopted.
(c) When a determination of shareholders of record for a shareholders'
meeting has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board fixes a new record date under
this section for the adjourned meeting.
Section 8. Voting Lists: The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at a shareholders' meeting or any adjournment
thereof. A list required by this section may consist of cards arranged
alphabetically or any equipment which permits the visual display of such
information. Such list shall be arranged (a) alphabetically within each class,
series or group of shareholders maintained by the corporation for convenience of
the reference, with the address of and the
-5-
<PAGE>
number of shares held by, each shareholder; (b) be produced at the time and
place of the meeting; (c) be subject to the inspection of any shareholder for
reasonable periods during the meeting; (d) and be prima facie evidence as to who
are the shareholders entitled to examine such list or to vote at any meeting.
If the requirements of this section have not been complied with, the
meeting shall, on demand of any shareholder in person or by proxy, be adjourned
until the requirements are complied with. Failure to comply with the
requirements of this section shall not affect the validity of any action taken
at such meeting prior to the making of any such demand.
Section 9. Quorum: Unless otherwise provided in the Certificate of
Incorporation or by statute, the holders of shares entitled to cast a majority
of the votes at a meeting shall constitute a quorum at such meeting. The
shareholders present in person or by proxy at a duly organized meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
Whenever the holders of any class or series of shares are entitled to vote
separately on a specified item of business, the provisions of this section shall
apply in determining the presence of a quorum of such class or series for the
transaction of such specified item of business.
Section 10. Voting: Each holder of shares with voting rights shall be
entitled to one vote for each such share registered in his name, except as
otherwise provided in the Certificate of Incorporation. Whenever any action,
other than the election of directors, is to be taken by vote of the
shareholders, it shall be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon,
unless a greater plurality is required by the Certificate of Incorporation.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent without a meeting may authorize another person or persons to act
for him by proxy. Every proxy shall be executed in writing by the shareholder or
his agent, except that a proxy may be given by a
-6-
<PAGE>
shareholder or his agent by telegram or cable or by any means of electronic
communication which results in a writing. No proxy shall be valid for more than
eleven months unless a longer period is expressly provided therein. A proxy
shall be revocable at will unless the proxy states that it is irrevocable and is
coupled with an interest either in the stock itself or in the corporation and in
particular and without limitation, if it is held by a pledgee, a person who has
purchased or agreed to purchase the shares, a creditor who is given the proxy in
consideration of the extension of credit to the corporation, a person who has
agreed to perform services as an employee, or a person designated pursuant to
the terms of an agreement as to voting between two or more shareholders. An
irrevocable proxy becomes revocable when the interest which supports the proxy
has terminated. The grant of a later proxy revokes any earlier proxy unless the
earlier proxy is irrevocable. A proxy shall not be revoked by the death or
incapacity of the shareholder, but the proxy shall continue to be in force until
revoked by the personal representative or guardian of the shareholders. The
presence at any meeting of any shareholder who has given a proxy does not revoke
the proxy unless the shareholder files written notice of the revocation with the
secretary of the meeting prior to the voting of the proxy or votes the shares
subject to the proxy by written ballot.
Section 11. Elections of Directors: At each election of directors every
shareholder entitled to vote at such election shall have the right to vote the
number of shares owned by him for as many persons as there are directors to be
elected and for whose election he has a right to vote. Directors shall be
elected by a plurality of the votes cast at the election, except as otherwise
provided by the Certificate of Incorporation.
Elections of directors need not be by written ballot unless a shareholder
demands election by ballot at the election and before voting begins.
-7-
<PAGE>
Section 12. Inspections of Election: The Board may, in advance of any
shareholders' meeting, or the tabulation of written consents of the shareholders
without a meeting, appoint one or more inspectors to act at the meeting or any
adjournment thereof or to tabulate such consents and make a writing thereof. If
inspections to act at any meeting of shareholders are not so appointed or shall
fail to qualify, the person presiding at a shareholders' meeting may, and on the
request of any shareholder entitled to vote thereat, shall, make such
appointment.
Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his ability. No person shall be
elected a director in an election for which he has served as an inspector.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall be managed by
or under the direction of its Board of Directors, not less than ONE (1) or more
than SIX (6) in number. A director shall be at least eighteen years of age and
need not be a United States citizen or a resident of this state or a shareholder
in this corporation. The Directors named in the Certificate of Incorporation
shall hold office until the first annual meeting of shareholders, and until
their successors shall have been elected and qualified. At the first annual
meeting of shareholders and at each annual meeting thereafter the shareholders
shall elect directors to hold office until the next succeeding annual meeting.
Each director shall hold office for the term of one year and until his successor
shall have been elected and qualified.
Section 2. First Meeting After Election: After the election of the
directors, the newly elected Board may meet at such place and time as shall be
fixed by the vote of the shareholders at the annual meeting, for the purpose of
organization and otherwise, and no notice of such meeting shall be necessary to
the newly elected directors in order to legally constitute the meeting; provided
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<PAGE>
a majority of the whole Board shall be present; or such place and time may be
fixed by the consent in writing of the directors.
Section 3. Regular Meetings: Regular meetings of the Board shall be held
without notice at such times and dates mutually agreed upon, at the registered
office of the corporation, or at such other time and place as shall be
determined by the Board.
Section 4. Quorum: Each director shall have one vote at a meeting of the
board or at meetings of board committees unless the Certificate of Incorporation
provides the director is entitled to more than one vote pursuant to a provision
in the Certificate of Incorporation.
The participation of directors with a majority of the votes of the entire
board, or of any committee thereof, shall constitute a quorum for the
transaction of business, unless the Certificate of Incorporation provides that a
greater or lesser proportion shall constitute a quorum, which in no case shall
be less than one-third of the entire board or committee.
Any action approved by a majority of the votes of directors present at a
meeting at which a quorum is present shall be the act of the board or of a
committee of the board, unless the act, or the Certificate of Incorporation,
requires a greater proportion, including a unanimous vote.
Any action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board or any committee thereof, may be taken without a
meeting if, prior or subsequent to such action, all members of the Board or of
such committee, as the case may be, consent thereto in writing and such written
consents are filed with the minutes of the proceedings of the Board or
committee.
Where appropriate communication facilities are reasonably available, any or
all directors shall have the right to participate in all or any part of a
meeting of the board or committee of the
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board by means of conference telephone or any means of communication by which
all persons participating in the meeting are able to hear each other.
Section 5. Special Meetings: Special meetings of the board may be called by
the President on 10 days notice to each director, either personally or by mail;
special meetings may be called in like manner and on like notice, on the written
request of any director.
Section 6. Waiver of Notice: Notice of any meeting need not be given to any
director who signs a waiver of notice, whether before or after the meeting. The
attendance of any director at a meeting without protesting prior to the
conclusion of the meeting the lack of notice of such meeting shall constitute a
waiver of notice by him. Neither the business to be transacted at, nor the
purposes of, any meeting of the board need be specified in the notice or waiver
of notice of such meeting. Notice of an adjourned meeting need not be given if
the time and place are fixed at the meeting adjourning and if the period of
adjournment does not exceed ten days in any one adjournment.
Section 7. Powers of Directors: The board of directors shall have the full
power of management of the business of the corporation. In addition to the
powers and authorities by these By-Laws expressly conferred upon them, the board
may exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by these by-laws directed or required to be
exercised or done by the shareholders.
Section 8. Compensation of Directors: The board, by the affirmative vote of
a majority of directors in office and irrespective of any personal interest of
any of them, shall have authority to establish reasonable compensation of
directors for services to the corporation as directors, officers or otherwise.
Section 9. Executive Committee: If deemed advisable, the board of
directors, by resolution adopted by a majority of the entire board, may appoint
from among its members an
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executive committee and one or more other committees, each of which shall have
one or more members. Each committee shall have and exercise all the authority of
the board, except that no such committee shall make, alter or repeal any by-law
of the corporation; elect or appoint any director, or remove any officer or
director; submit to shareholders any action that requires shareholder approval;
or amend or repeal any resolution theretofore adopted or repealable only by the
board.
Actions taken at a meeting of any such committee shall be reported to the
board at its next meeting following such committee meeting; except that, when
the meeting of the board is held within two days after the committee meeting,
such report shall, if not made at the first meeting, be made to the board at its
second meeting following such committee meeting.
One or more or all directors of the corporation may be removed for cause or
unless otherwise provided in the Certificate of Incorporation, without cause by
the shareholders by the affirmative vote of the majority of the votes cast by
the holders of shares entitled to vote for the election of directors, except in
any case where cumulative voting is authorized, if less than the total number of
director then serving on the board is to be removed by the shareholders, no one
of the directors may be so removed if the votes cast against his removal would
be sufficient to elect him if then voted cumulatively at an election of the
entire board; or a director elected by a class vote may be removed only by a
class vote of the holders of shares entitled to vote for his election; or if the
Certificate of Incorporation requires a greater vote than a plurality of the
votes cast for the election of directors, no director may be removed except by
the greater vote required to elect him and shareholders of a corporation whose
board of directors is classified as provided in 14A:6-4(l) shall not be entitled
to remove directors without cause.
ARTICLE V - OFFICERS
Section 1. The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if desired, a Chairman of the Board, one or more
Vice Presidents, and such other officers as may be required. They shall be
annually elected by the board of directors and shall hold office for one
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year and until successors are elected and have qualified, subject to earlier
termination by removal or resignation. The board may also choose such employees
and agents as it shall deem necessary, who shall hold their offices for such
terms and shall have such authority and shall perform such duties as from time
to time shall be prescribed by the board.
Any two or more offices may be held by the same person but no officer shall
execute, acknowledge, or verify any instrument in more than one capacity if such
instrument is required by law or by these by-laws to be executed, acknowledged,
or verified by two or more officers.
Section 2. Salaries: The salaries of all officers, employees and agents of
the corporation shall be fixed by the board of directors.
Section 3. Removal: Any officer elected by the board of directors may be
removed by the board with or without cause. An officer elected by the
shareholders may be removed, with or without cause, only by vote of the
shareholders but his authority to act as an officer may be suspended by the
board for cause.
Section 4. President: The President shall be the chief executive officer of
the corporation; he shall preside at all meetings of shareholders and directors;
he shall have general and active management of the business of the corporation,
shall see that all orders and resolutions of the board are carried into effect,
subject, however, to the right of the directors to delegate any specific powers,
except such as may be by statute exclusively conferred on the President, to any
other officer or officers of the corporation. He shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation. He
shall be EX-OFFICIO a member of all committees, and shall have general powers
and duties of supervision and management usually vested in the office of
President of a corporation.
Section 5. Vice President: The Vice President, if one has been appointed,
shall be vested with all the powers and be required to perform all duties of the
President in his absence.
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Section 6. Chairman of the Board: The Chairman of the Board, if one has
been appointed, shall exercise such powers and perform such duties as shall be
provided in the resolution proposing that a Chairman of the Board be elected.
Section 7. Secretary: The Secretary shall keep full minutes of all meetings
of the shareholders and directors; he shall be EX-OFFICIO Secretary of the board
of directors; he shall attend all sessions of the board, shall act as clerk
thereof, and record all votes and minutes of all proceedings in a book to be
kept for that purpose; and shall perform like duties for the standing committees
when required. He shall give or cause to be given, notice of all meetings of the
shareholders of the corporation and the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or the
President, under whose supervision he shall be.
Section 8. Treasurer: The Treasurer shall keep full and accurate accounts
of the receipts and disbursements in books belonging to the corporation, and
shall deposit all moneys and other valuable effects in the name and to the
credit of the corporation, in such depositories as may be designated by the
board of directors.
He shall disburse the funds of the corporation as may be ordered by the
board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at regular meetings of the board, or whenever they may
require it, an account of all transactions as Treasurer and of the financial
condition of the corporation, and shall submit a full financial report at the
annual meeting of the shareholders.
ARTICLE VI - VACANCIES
Section 1. Directors: Any directorship not filled at the annual meeting,
any vacancy, however caused, occurring in the Board and newly created
directorships resulting from an increase in the authorized number of directors
may be filled by the affirmative vote of a majority of the. remaining directors
even though less than a quorum of the Board, or by a sole remaining director. A
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director so elected by the Board shall hold office until his successor shall
have been elected and qualified.
If by reason of death, resignation or other cause the corporation has no
directors in office, any shareholder or the executor or administrator of a
deceased shareholder may call a special meeting of the shareholders for the
election of directors and over his own signature, shall give notice of said
meeting, except to the extent that such notice is waived.
Section 2. Officers: Any vacancy occurring among the officers, however
caused, shall be filled by the Board of Directors.
Section 3. Resignations: Any director or other officer may resign by
written notice to the corporation. The resignation shall be effective upon
receipt thereof by the corporation or at such subsequent time as shall be
specified in the notice of resignation.
ARTICLE VII - SHARE CERTIFICATES
Section 1. The share certificates of the corporation shall be numbered and
registered in the transfer records of the corporation as they are issued. They
shall bear the corporate seal, or a facsimile thereof, and be signed by the
president and Secretary of the corporation.
Section 2. Transfers: All transfers of the shares of the corporation shall
be made upon the books of the corporation by the holders of the shares in
person, or by his legal representatives. Share certificates shall be surrendered
and cancelled at the time of transfer.
Section 3. Loss of Certificates: In the event that a share certificate
shall be lost, destroyed or mutilated, a new certificate may be issued therefor
upon such terms and indemnity to the corporation as the board of directors may
prescribe.
ARTICLE VIII - BOOKS AND ACCOUNTS
Section 1. The corporation shall keep books and records of account and
minutes of the proceedings of the shareholders, board of directors and executive
committee, if any. Such books, records
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and minutes may be kept outside of this state. The corporation shall keep at its
principal office, its registered office, or at the office of a transfer agent, a
record or records containing the names and addresses of all shareholders, the
number, class, and series of shares held by each and the dates when they
respectively became owners of record thereof. Any of the foregoing books,
minutes or records may be in written form or in any other form capable of being
converted into readable form within a reasonable time. The corporation shall
convert into readable form without charge any such records not in such form,
upon the written request of any person entitled to inspect them.
Section 2. Upon the written request of any shareholder, the corporation
shall mail to such shareholder its balance sheet as at the end of the preceding
fiscal year, and its profit and loss and surplus statement for such fiscal year.
Section 3. Inspection: Any person who shall have been a shareholder of
record of the corporation for at least six months immediately preceding his
demand, or any person holding, or so authorized in writing by the holders of, at
least five percent of the outstanding shares of any class or series, upon at
least five days' written demand shall have the right for any proper purpose to
examine in person or by agent or attorney, during usual business hours, the
minutes of the proceedings of the shareholders and record of shareholders and to
make extracts therefrom at the places where the same are kept.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Monetary Disbursements: All checks or demands for money and
notes of the corporation shall be signed by such officer or officers as the
Board of Directors may from time to time designate.
Section 2. Fiscal Year: The fiscal year of the corporation shall begin on
the first day of January.
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Section 3. Dividends: The Board of Directors may declare and pay dividends
upon the outstanding shares of the corporation from time to time and to such
extent as they deem advisable, in the manner and upon the terms and conditions
provided by statute and the Certificate of Incorporation.
Section 4. Reserve: Before payment of any dividend there may be set aside
such sum or sums as the directors, from time to time, in their absolute
discretion think proper as a reserve fund to meet contingencies, or for the
equalizing of dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interests of the corporation, and the directors may abolish any such reserve
in the manner in which it was created.
Section 5. Giving Notice: Whenever written notice is required to be given
to any person, it may be given by personal delivery to the person to whom it is
directed or by sending a copy thereof by mail or certified mail. If notice is
given my mail, the notice shall be deemed to be given when deposited in the mail
addressed to the person to whom it is directed at his last address as it appears
on the records of the corporation, with postage prepaid thereon. Such notice
shall specify the place, day and hour of the meeting and, in the case of a
shareholders' meeting, the general nature of the business to be transacted. In
computing the period of time for the giving of any notice required or permitted
by statute, or by the Certificate of Incorporation or by these by-laws or any
resolution of the board of directors or shareholders, the day on which the
notice is given shall be excluded, and the day on which the matter noticed is to
occur shall be included.
Section 6. Loans to Officers or Employees: The corporation may lend money
to, or guarantee any obligation of, or otherwise assist, any officer or other
employee of the corporation or of any subsidiary, wherever it may reasonably be
expected to benefit the corporation. If the officer or employee is also a
director of the corporation, such loan, guarantee or assistance, unless pursuant
to a plan adopted by the shareholders in accordance with the provisions of
Chapter 8 of the act (Employee Benefit Plans), shall be authorized by a majority
of the entire board of directors. The
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loan, guarantee or other assistance may be made with or without interest, and
may be unsecured, or secured in such manner as the board shall approve,
including, without limitation, a pledge of shares of the corporation, and may be
made upon such other terms and conditions as the board may determine.
Section 7. Disallowed Compensation: Any payments made to an officer or
employee of the corporation such as a salary, commission, bonus, interest, rent,
travel or entertainment expense incurred by him, which is disallowed by the
Internal Revenue Service, shall be reimbursed by such officer or employee to the
corporation to the full extent of such disallowance. It shall be the duty of the
directors, as a board, to enforce payment of each such amount disallowed. In
lieu of payment by the officer or employee, subject to the determination of the
directors, proportionate amounts may be withheld from his future compensation
payments until the amount owed to the corporation has been recovered.
ARTICLE X - INDEMNIFICATION
Section 1. Indemnification of Directors and Officers: To the full extent
permitted by the laws of the state of New Jersey, as they exist on the date
hereof or as they may hereafter be amended, the corporation shall indemnify any
person who is or was a director, officer, employee or other agent of the
corporation or of any constituent corporation absorbed by this corporation in a
consolidation or merger and any person who is or was a director, officer,
trustee, employee or agent of any other enterprise serving as such at the
request of the corporation, or of any such constituent corporation, or the legal
representative of any such director, officer, trustee, employee or agent, (an
"indemnitee") who was or is involved in any manner (including without
limitation, as a party or witness) in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, legislative or investigative (including, without
limitation, any action, suit or proceeding by or in the right of the Corporation
to procure a judgment in its favor) (a "Proceeding") or who is threatened with
being so involved, by reason of the fact that he or she was a director or
officer of the Corporation or, while serving as a director or officer of the
Corporation, is or was at the request of the Corporation also
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serving as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including, without
limitation, any employee benefit plan), against all expenses (including
attorneys' fees), judgments, fines, penalties, excise taxes and amounts paid in
settlement and reasonably incurred by the Indemnitee in connection with such
Proceeding, provided that, there shall be no indemnification hereunder with
respect to any settlement or other non-adjudicated disposition of any threatened
or pending Proceeding unless the Corporation has given its prior consent to such
settlement or disposition. The right of indemnification created by this Article
shall be a contract right enforceable by an Indemnitee against the Corporation,
and it shall be exclusive of any other rights to which an Indemnitee may
otherwise be entitled. The provisions of this Article shall inure to the benefit
of the heirs and legal representatives of an Indemnitee and shall be applicable
to proceedings commenced or continuing after the adoption of this Article,
whether arising from acts or omissions occurring before or after such adoption.
No amendment, alteration, change or repeal of or to these By-Laws shall deprive
any Indemnitee of any rights under this Article with respect to any act or
omission of such Indemnitee occurring prior to such amendment, alteration,
change, addition or repeal.
ARTICLE XI - RELIANCE ON CORPORATE RECORDS BY DIRECTORS
Section 1. Liability of Directors; Reliance on Corporate Records: Directors
and members of any committee designated by the Board shall discharge their
duties in good faith and with that degree of diligence, care and skill which
ordinarily prudent people would exercise under similar circumstances in like
positions. In discharging their duties, directors and members of any committee
designated by the Board shall not be liable if, acting in good faith, they rely
upon the opinion of counsel for the corporation or upon written reports setting
forth financial data concerning the corporation and prepared by an independent
public accountant or certified public accountant or firm of such accountants or
upon financial statements, books of accounts or reports of the corporation
represented to them to be correct by
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the President, the officer of the corporation having charge of its books of
account, or the person presiding at a meeting of the board, or upon written
reports of committees of the board.
ARTICLE XII - EMPLOYEE BENEFIT PLANS
Section 1. Employee benefit plans may be adopted, amended or terminated by
the board, a committee of the board, or officers to whom the responsibility has
been designated. Notwithstanding the foregoing any plan for the issuance of
shares shall be initially adopted by the board or any committee thereof.
ARTICLE XIII - AMENDMENTS
Section 1. The board of directors shall have the power to make, alter and
repeal these By-Laws, but By-Laws made by the board may be altered or repealed,
and new By-Laws may be made, by the shareholders.
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EXHIBIT 4.4
MILLENNIUM SPORTS MANAGEMENT, INC.
(f/k/a Skylands Park Management, Inc.)
Ross' Corner
U.S. Highway 206 & Country Route 565
P.O. Box 117
Augusta, New Jersey 07822-0117
December 19, 1997
VIA FACSIMILE AND FIRST CLASS MAIL
- ----------------------------------
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Dear Sirs:
Reference is made to the Warrant Agreement between us dated as of September
24, 1993 (the "Warrant Agreement"). All capitalized terms used herein without
definition have the respective meanings ascribed to them in the Warrant
Agreement.
Pursuant to the Warrant Agreement, the Company hereby certifies that,
pursuant to due authorization of the Board of Directors of the Company, the
Company has elected to extend the Warrant Expiration Date through and including
5:00 p.m. (New York time) on June 30, 1998, subject to the Company's right,
prior to such Warrant Expiration Date, in its sole discretion, to extend such
Warrant Expiration Date on five business days' prior written notice to the
Registered Holders; and Section 1(m) of the Warrant Agreement is hereby
correspondingly amended. No other term of the Warrants has been amended.
In accordance with Section 8(d) of the Warrant Agreement, the existing
Warrant Certificates will continue to represent the Warrants, notwithstanding
the extension described herein.
In accordance with Section 8(e) of the Warrant Agreement, the Company
hereby directs you, as Warrant Agent, to send a copy of this letter by ordinary
first class mail to each Registered Holder of Warrants at his, her or its last
address as it appears on your registry books as Warrant Agent.
Very truly yours,
MILLENNIUM SPORTS MANAGEMENT, INC.
By:
--------------------------------
Barry M. Levine, President
cc: A. S. Goldmen & Co., Inc.
<PAGE>
EXHIBIT 4.5
- --------------------------------------------------------------------------------
SKYLANDS PARK MANAGEMENT, INC.
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
WARRANT AGREEMENT
Dated as of February 6, 1997
- --------------------------------------------------------------------------------
<PAGE>
AGREEMENT, dated as of this 6th day of February, 1997, between SKYLANDS
PARK MANAGEMENT, INC., a New Jersey corporation (the "Company"), and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Warrant Agent (the
"Warrant Agent").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Securities and Exchange Commission has
declared effective the Company's registration statement in respect of, among
other securities, (a) 13,000,000 non-redeemable Class D Common Stock Purchase
Warrants of the Company (the "Warrants"), each to purchase one share of common
stock, no par value, of the Company (the "Common Stock"), and (b) 13,000,000
shares of Common Stock issuable upon exercise of the Warrants; and
WHEREAS, the Company desires to provide for the issuance from time to time
of certificates representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants, and the Warrant Agent, the parties
hereto agree as follows:
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1. Definitions. As used herein, the following terms shall have the
-----------
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
voting and in the distribution of earnings and assets of the Company without
limit as to amount or percentage.
(b) "Corporate Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its principal business in New
York, New York, shall be administered, which office is located on the date
hereof at 2 Broadway, New York, New York 10004.
(c) "Exercise Date" shall mean, subject to the provisions of
Section 5(b) hereof, as to any Warrant, the date on which the Warrant Agent
shall have received both (i) the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder thereof or
his attorney duly authorized in writing, and (ii) payment in cash or by check
made payable to the Warrant Agent for the account of the Company, of the amount
in lawful money of the United States of America equal to the applicable Purchase
Price.
(d) "Initial Warrant Exercise Date" shall mean February 6, 1997.
(e) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, fifty cents ($.50), and further subject to
Company's right, in its sole discretion, to decrease the Purchase Price for a
period of not less than 30 days on not less than 30 days' prior written notice
to the Registered Holders.
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(f) "Registered Holder" shall mean the person in whose name any certificate
representing the Warrants shall be registered on the books maintained by the
Warrant Agent pursuant to Section 6.
(g) "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation (regardless of whether
or not at the time stock of any other class or classes of such corporation shall
have or may have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
(h) "Transfer Agent" shall mean Continental Stock Transfer & Trust Company,
New York, New York, or its authorized successor.
(i) "Warrant Certificate" shall mean a certificate representing each of the
Warrants substantially in the form annexed hereto as Exhibit A.
---------
(j) "Warrant Expiration Date" shall mean 5:00 p.m. (New York time) on
December 31, 1997 or, if such date shall in the State of New York be a holiday
or a day on which banks are authorized to close, then 5:00 p.m. (New York time)
on the next following day which in the State of New York is not a holiday or a
day on which banks are authorized to close, subject to the Company's right,
prior to the Warrant Expiration Date, in its sole discretion, to extend such
Warrant Expiration Date on five business days' prior written notice to the
Registered Holders.
(k) "Warrant Agent" shall mean Continental Stock Transfer & Trust Company,
New York, New York or its authorized successor.
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<PAGE>
SECTION 2. Warrants and Issuance of Warrant Certificates.
---------------------------------------------
(a) One Warrant shall initially entitle the Registered Holder
of the Warrant Certificate representing such Warrant to purchase at the Purchase
Price therefor from the Initial Warrant Exercise Date until the Warrant
Expiration Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
(b) From time to time up to the Warrant Expiration Date, the
Warrant Agent shall effect the original issuance of Warrants by countersigning
and delivering Warrant Certificates to such persons and in such amounts as the
Company shall direct in writing.
(c) From time to time up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. Except as provided in Section 7 hereof, no Warrant Certificates shall
be issued except (i) Warrant Certificates initially issued hereunder, (ii)
Warrant Certificates issued upon any transfer or exchange of Warrants
(including, without limitation, Warrant Certificates representing the
unexercised portion of any Warrant Certificates exercised only in part), (iii)
Warrant Certificates issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 7, and (iv) at the option of
the Company, Warrant Certificates in such form as may be approved by its Board
of Directors, to reflect any adjustment or change in the Purchase Price, the
number of shares of Common Stock purchasable upon exercise of the Warrants or
the Redemption Price therefor made pursuant to Section 8 hereof.
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<PAGE>
SECTION 3. Form and Execution of Warrant Certificates.
------------------------------------------
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates).
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<PAGE>
(b) Warrant Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President or any Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Warrant Certificates shall be
manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
SECTION 4. Exercise.
--------
(a) Warrants in denominations of one or whole number multiples thereof
may be exercised commencing at any time on or after the Initial Warrant Exercise
Date, but not after the Warrant Expiration Date, upon the terms and subject to
the conditions set forth herein (including the provisions set forth in Section 5
hereof) and in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date, provided that the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder thereof or his
attorney duly authorized in writing, together with payment in cash or by check
made payable to the Warrant Agent for the account of the Company, of an amount
in lawful money of the United
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<PAGE>
States of America equal to the applicable Purchase Price has been received in
good funds by the Warrant Agent. The person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as the holder
of such securities as of the close of business on the Exercise Date. As soon as
practicable on or after the Exercise Date, if any Warrants have been exercised,
the Warrant Agent on behalf of the Company shall cause to be issued to the
person or persons entitled to receive the same a Common Stock certificate or
certificates for the shares of Common Stock deliverable upon such exercise, and
the Warrant Agent shall deliver the same to the person or persons entitled
thereto. Upon the exercise of any Warrants, the Warrant Agent shall promptly
notify the Company in writing of such fact and of the number of securities
delivered upon such exercise and shall cause all payments of an amount in cash
or by check made payable to the order of the Company, equal to the Purchase
Price, to be deposited promptly in the Company's bank account.
(b) The Company shall not be obligated to issue any fractional share
interests or fractional warrant interests upon the exercise of any Warrant or
Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall be
rounded up to the next full share or Warrant, as the case may be, and any
fraction less than one-half shall be eliminated.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
-----------------------------------------------------
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall
-8-
<PAGE>
be issuable upon exercise of the Warrants shall, at the time of delivery thereof
following payment therefor in accordance herewith and therewith, be duly and
validly issued and fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each securities exchange, if
any, on which the other shares of outstanding Common Stock of the Company are
then listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with, or approval
of, any governmental authority under any federal securities law before such
securities may be validly issued or delivered upon such exercise, then the
Company will file a registration statement under the federal securities laws or
a post-effective amendment, use its best efforts to cause the same to become
effective, keep such registration statement current while any of the Warrants
are outstanding and deliver a prospectus which complies with Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Act"), to the Registered Holder
exercising the Warrant (except, if in the opinion of counsel to the Company,
such registration is not required under the federal securities law or if the
Company receives a letter from the staff of the Securities and Exchange
Commission (the "Commission") stating that it would not take any enforcement
action if such registration is not effected). The Company will use best efforts
to obtain appropriate approvals or registrations under applicable state "blue
sky" securities laws, provided that, the Company shall not be required in
connection therewith to qualify as a foreign corporation, subject itself to
taxation or consent to service of process generally in those jurisdictions. With
respect to any
-9-
<PAGE>
such securities, however, Warrants may not be exercised by, or shares of Common
Stock issued to, any Registered Holder in any state in which such exercise would
be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants or the issuance or delivery of any shares of Common Stock upon exercise
of the Warrants; provided, however, that if shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer
Agent to requisition from time to time certificates representing shares of
Common Stock or other securities required upon exercise of the Warrants, and the
Company will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
-------------------------------------
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at such office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates
-10-
<PAGE>
and the transfer thereof. Upon due presentment for registration of transfer of
any Warrant Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or transferees a new
Warrant Certificate or Certificates representing an equal aggregate number of
Warrants.
(c) With respect to any Warrant Certificates presented for registration of
transfer, or for exchange or exercise, the subscription or exercise form, as the
case may be, on the reverse thereof shall be duly endorsed or be accompanied by
a written instrument or instruments of transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by the
Registered Holder thereof or his attorney duly authorized in writing with such
signature appropriately executed thereon as required by the Warrant Agent.
(d) No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates. However, the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange shall
be promptly cancelled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof of each Warrant represented
thereby (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes and shall
not be affected by any notice to the contrary.
-11-
<PAGE>
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the Warrant
------------------
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Common
-----------------------------------------------------------
Stock Deliverable.
- -----------------
(a) In the event that, at any time or from time to time after the date
hereof, there shall occur any change in the outstanding Common Stock of the
Company by reason of the declaration of stock dividends, through
recapitalization, or from stock splits or combinations of shares, without the
payment of any compensation therefor in money, services or property, then the
number of shares of Common Stock issuable upon exercise of the Warrants and the
Purchase Price, as in effect immediately prior thereto, shall be appropriately
adjusted (but without regard to fractions) to reflect such changes.
(b) In the event that, at any time or from time to time after the date
hereof, there shall occur any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), then the Registered Holder of each
Warrant Certificate at the time of such event shall have the right
12
<PAGE>
thereafter to receive, upon exercise of the subject Warrants, the kind and
amount of shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock for
which such Warrant might have been exercised immediately prior to such
consolidation or merger.
(c) The foregoing Sections 8(a) and 8(b) shall similarly apply to
successive changes in the outstanding Common Stock and to successive
consolidations or mergers.
(d) Irrespective of any adjustments or changes in the Purchase Price or the
number of shares of Common Stock purchasable upon exercise of the Warrants, the
Warrant Certificates theretofore and thereafter issued shall, unless the Company
shall exercise its option to issue new Warrant Certificates pursuant to Section
2(c) hereof, continue to express the Purchase Price per share and the number of
shares purchasable thereunder as the Purchase Price per share and the number of
shares purchasable thereunder were expressed in the Warrant Certificates when
the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this Section 8,
the Company will promptly prepare a certificate signed by the Chairman or
President or a Vice President, and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file such certificate with the Warrant Agent and cause a brief summary
thereof to be sent by ordinary first class mail to each Registered Holder at his
last address as it shall appear
-13-
<PAGE>
on the registry books of the Warrant Agent. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail such notice, or
except as to the holder whose notice was defective. The affidavit of an officer
of the Warrant Agent or the Secretary or an Assistant Secretary of the Company
that such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
SECTION 9. Concerning the Warrant Agent.
----------------------------
(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity
for the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
-14-
<PAGE>
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of fact contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board of Directors, President or any Vice President (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand.
-15-
<PAGE>
(e) The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; the Company further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own gross negligence or willful misconduct), after giving
30 days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation the Company shall
appoint in writing a new warrant agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation by the resigning Warrant Agent, then the Registered Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its stockholders,
of not less than $10,000,000, or a stock transfer company doing business in New
York, New York. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be vested
with the same powers, rights, duties and
-16-
<PAGE>
responsibilities as if it had been originally named herein as the warrant agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment, the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent or
any new warrant agent shall be a successor warrant agent under this Agreement
without any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
-17-
<PAGE>
(i) The Warrant Agent shall retain for a period of two years from the
date of exercise any Warrant Certificate received by it upon such exercise.
SECTION 10. Modification of Agreement.
-------------------------
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (a) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (b) that they may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than 66-2/3%
of the Warrants then outstanding; provided, further, that no change in the
number or nature of the securities purchasable upon the exercise of any Warrant,
or to increase the Purchase Price therefor, shall be made without the consent in
writing of the Registered Holders representing not less than 66-2/3% of the
Warrants then outstanding other than such changes as are specifically prescribed
by this Agreement as originally executed or as hereafter amended in accordance
herewith.
SECTION 11. Notices.
-------
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid, or delivered to a telegraph office for transmission
if to the Registered Holder of a Warrant Certificate, at the address of such
holder as shown on the registry books maintained by the Warrant Agent; if to the
Company at P.O. Box 117, Augusta, New Jersey 07822-0117,
-18-
<PAGE>
Attention: Barry M. Levine, or at such other address as may have been furnished
to the Warrant Agent in writing by the Company; and if to the Warrant Agent, at
its Corporate Office.
SECTION 12. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to conflicts of laws.
SECTION 13. Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation.
SECTION 14. Counterparts.
------------
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
[SEAL]
SKYLANDS PARK MANAGEMENT, CONTINENTAL STOCK TRANSFER
INC. & TRUST COMPANY
As Warrant Agent
By: By:
---------------------- -----------------------
Barry M. Levine Name:
President Title:
By:
----------------------------
Robert H. Stoffel, Jr.
Secretary
-20-
<PAGE>
Exhibit A
---------
No. WD-__ _____Class D Warrants
CUSIP___________
Warrant Certificate for Class D
Common Stock Purchase Warrants
SKYLANDS PARK MANAGEMENT, INC.
THIS CERTIFIES THAT, FOR VALUE RECEIVED, ______, or registered assigns (the
"Holder") is the owner of the number of Class D Warrants (the "Class D
Warrants") specified above. Each Class D Warrant initially entitles the Holder
to purchase, subject to the terms and conditions set forth in this Certificate,
one fully paid and nonassessable share (a "Share") of Common Stock, no par
value, of Skylands Park Management, Inc., a New Jersey corporation (the
"Company"), at any time prior to 5:00 p.m. (New York time) on December 31, 1997
upon the presentation and surrender of this Certificate with the subscription
form on the reverse hereof duly executed, at the corporate office of Continental
Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004, as Warrant
Agent, or its successors (the "Warrant Agent"), accompanied by payment of $.50
per share, subject to adjustment (the "Purchase Price"), in lawful money of the
United States of America in cash or by check made payable to the Warrant Agent
for the account of the Company.
<PAGE>
1. Exercise of Class D Warrants. The purchase rights represented by the
----------------------------
Class D Warrants are exercisable at the option of the Holder hereof, in whole or
in part (but not as to fractional Shares underlying the Class D Warrants),
during any period in which the Class D Warrants may be exercised as set forth
above. In the case of the purchase of less than all the Shares purchasable under
this Certificate, the Company shall cancel this Certificate upon the surrender
hereof and shall execute and deliver a new Certificate of like tenor, which the
Warrant Agent shall countersign, for the balance of the Shares purchasable
hereunder.
2. Issuance of Certificates. Upon the exercise of the Class D Warrants, the
------------------------
issuance of certificates for Shares underlying such Class D Warrants shall be
made forthwith (and in any event as soon as practicable thereafter) without
charge to the Holder hereof, including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificates shall be
issued in the name of, or in such names as may be directed by, the Holder
hereof; provided, however, that the Company shall not be required to pay any tax
-------- -------
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
3. Exercise Price. The initial exercise price under each Class D Warrant
--------------
shall be $.50 per Share. The adjusted exercise price shall be the price which
shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions
<PAGE>
of Section 4 hereof and subject to Section 4 hereof. The term "Exercise Price"
shall mean the initial exercise price or the adjusted exercise price, depending
upon the context.
4. Adjustments of Exercise Price and Number of Shares. In the event that,
--------------------------------------------------
prior to the issuance by the Company of all the Shares issuable upon exercise of
the Class D Warrants represented by this Certificate, there shall be any change
in the outstanding Common Stock of the Company by reason of the declaration of
stock dividends, through recapitalization, or from stock splits or combinations
of shares, without the payment of any compensation therefor in money, services
or property, the remaining Shares still subject to the Class D Warrants and the
exercise price therefor shall be appropriately adjusted (but without regard to
fractions) by the Board of Directors of the Company to reflect such change.
Notwithstanding any such adjustments from time to time, the Class D Warrants may
continue to be represented by this Certificate, provided that the Company has
caused to be given to the Holder, at the time of the event giving rise to such
adjustment(s), a written notice setting forth the nature and extent of the
adjustment(s) required hereunder.
5. Merger or Consolidation. In case of any consolidation of the Company
-----------------------
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each Class D Warrant
then outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Class D Warrant) to receive, upon exercise of such warrant,
the kind and
<PAGE>
amount of shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such warrant might have been exercised immediately prior
to such consolidation or merger. Such supplemental warrant agreement shall
provide for adjustments which shall be identical to the adjustments provided in
Section 4 hereof. This Section 5 shall similarly apply to successive
consolidations or mergers.
6. Exchange and Replacement of Certificate.
---------------------------------------
(a) This Certificate is exchangeable without expense, upon the surrender
hereof by the registered Holder at the office of the Warrant Agent, for a new
Certificate of like tenor representing in the aggregate the right to purchase
the same number of Shares as are purchasable hereunder in such denominations as
shall be designated by the Holder hereof at the time of such surrender.
<PAGE>
(b) Upon receipt by the Warrant Agent of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Certificate, if
mutilated, the Company will make and deliver a new Certificate of like tenor, in
lieu of this Certificate.
7. Elimination of Fractional Interests. The Company shall not be required
-----------------------------------
to issue certificates representing fractions of Shares on the exercise of Class
D Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent that all fractional interests shall be
eliminated.
8. Reservation of Securities. The Company shall at all times reserve and
-------------------------
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the exercise of the Class B Warrants, such number of Shares as
shall be issuable upon the exercise thereof. Upon exercise of the Class D
Warrants represented by this Certificate, and payment of the Exercise Price
therefor, all Shares issuable upon such exercise shall be duly and validly
issued, fully paid and nonassessable.
9. Rights of Class D Warrant Holders. The Class D Warrants do not confer
---------------------------------
upon the Holder hereof the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company, prior to exercise of the Class D Warrants.
<PAGE>
10. Headings. The headings in this Certificate are inserted for purposes of
--------
convenience only and shall have no substantive effect.
11. Law Governing. This Class D Warrant shall be construed and enforced in
-------------
accordance with, and governed by, the laws of the State of New Jersey, without
giving effect to conflicts of law principles.
12. Countersignature. This Certificate is not valid unless countersigned by
----------------
the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:_____________
SKYLANDS PARK MANAGEMENT, INC.
By:_______________________
<PAGE>
EXHIBIT 10.1
SKYLANDS PARK MANAGEMENT, INC.
STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to provide a means whereby Skylands
-------
Park Management, Inc. (the "Company") may, through the grant of options to
purchase Common Stock of the Company, attract and retain persons of ability as
key employees, members of the Board of Directors, and consultants and motivate
such individuals to exert their best efforts on behalf of the Company.
2. Shares Subject to the Plan. Options may be granted by the Company from
--------------------------
time to time to eligible individuals to purchase an aggregate of 250,000 shares
of Common Stock (no par value) of the Company and 250,000 of such shares shall
be reserved for options granted under the Plan (subject to adjustment as
provided in Section 5(h)). The shares issued upon exercise of options granted
under the Plan may be authorized and unissued shares or shares held by the
Company in its treasury. If any option granted under the Plan shall terminate or
expire new options covering such shares may thereafter be granted to other
eligible individuals.
3. Eligibility. Options may be granted under this Plan to employees of the
-----------
Company, including officers, who are designated as Key Employees by the Stock
Option Committee (described in Section 4). Members of the Board of Directors and
consultants selected by the Stock Option Committee shall also be eligible to
receive options under this Plan.
4. Administration of the Plan. The Plan shall be administered by the Stock
--------------------------
Option Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall consist of two members of the Board of Directors chosen by the
Board.
Subject to the provisions of the Plan, the Committee shall have the
authority to:
<PAGE>
(a) determine and designate from time to time those eligible
individuals to whom options are to be granted and the number of shares to
be optioned to each such individual; provided, however, that no option
shall be granted after the expiration of the period of ten years from the
effective date of the Plan specified in Section 8;
(b) determine the time or times and the manner in which each option
shall be exercisable and the duration of the exercise period;
(c) extent the term of any option (including extension by reason of
any optionee's death, permanent disability or retirement; and
(d) issue options under this Plan either as incentive stock options in
accordance with the requirements of Section 422 of the Internal Revenue
Code (the "Code") or as nonstatutory options.
The Committee may interpret the Plan, prescribe, amend and rescind any
rules and regulations necessary or appropriate for the administration of the
Plan, and make such other determinations and take such other action as it deems
necessary or advisable. Any interpretation, determination or other action made
or taken by the Committees shall be final, binding and conclusive.
5. Terms and Conditions of Options. Each option granted under the Plan
-------------------------------
shall be evidenced by an agreement, in form approved by the Committee, which
shall be subject to the following express terms and conditions and to such other
terms and conditions as the Committee may deem appropriate:
(a) Option Period. Each option agreement shall specify the period for
-------------
which the option thereunder is granted and shall provide that the option
shall expire at the end of such period. No option granted under this Plan
may be exercisable after the expiration of
2
<PAGE>
ten years from the date the option is granted; provided, however, that any
incentive option granted to any person owning more than 10 percent of the
voting power of all classes of the Company's Stock shall not be exercisable
after the expiration of five years from the date such option is granted.
(b) Option Price. The option price per share shall be determined by
-------------
the Committee at the time any option is granted, and shall be not less than
the fair market value of the Common Stock of the Company on the date the
option is granted, as determined by the Committee.
(c) Exercise of Option.
------------------
(1) In the case of an optionee who is an employee, no part of any
option may be exercised until the optionee shall have remained in
the employ of the Company for such period after the date on which
the option is granted as the Committee may specify in the option
agreement, and until such other conditions as specified in the
option agreement shall have been satisfied. Subject in each case
to the provisions of paragraphs (a) through (c) and (e) of this
Section 5, any option may be exercised, to the extent exercisable
by its terms, at such time or times as may be determined by the
Committee at the time of grant.
(2) In the case of an optionee who is a member of the Board of
Directors or a consultant, the Committee may specify in the
option agreement any requirement as to the period of time after
the grant of the option that the optionee is required to be a
member of the Board of Directors or a consultant to the Company
or other conditions which shall
3
<PAGE>
be satisfied before the option is exercisable, in whole or in
part. Any option may be exercised, to the extent exercisable by
its terms, at such time or times as may be determined by the
Committee at the time of grant. The option agreement may also
specify the extent to which the options is exercisable in the
event of the death or disability of the optionee, by whom the
option is exercisable, and the requirements for exercise of the
option in either of such events.
(d) Payment of Purchase Price upon Exercise. The purchase price
---------------------------------------
of the shares as to which an option shall be exercised shall be paid
to the Company in full at the time of exercise.
(e) Termination of Employment. Any option agreement with an
-------------------------
employee under this Plan shall provide that:
(1) If prior to the expiration date of the option (the
"expiration date") the employee shall for any reason whatever, other
than (i) his authorized retirement as defined in (2) below, or (ii)
his death, cease to be employed by the Company, any unexercised
portion of the option granted shall automatically terminate;
(2) If prior to the expiration date, the employee shall (i)
retire upon or after reaching the age which at the time of retirement
is established as the normal retirement age for employees of the
Company (such normal retirement age not being 65 years) or (ii) with
the written consent of the Company retire prior to such age on account
of physical or mental disability (such
4
<PAGE>
to any shares subject to his option prior to the date on which he
is recorded as the holder of such shares on the records of the
Corporation.
(f) Plan and Option Not to Confer Rights with Respect to
----------------------------------------------------
Continuance of Employment. The Plan and any option granted under the
-------------------------
Plan shall not confer upon any optionee any right with respect to
continuance of employment by the Company, nor shall they interfere in
any way with the right of the Company to terminate his employment at
any time.
6. Limitation. Incentive stock options shall not be granted under this
----------
Plan, which first become exercisable in any calendar year and which permit the
optionee to purchase shares of the Company having an aggregate value in excess
of $100,000, determined at the time of the grant of the options. No optionee may
exercise incentive stock options during a calendar year for the purchase of
shares having an aggregate fair market value (determined at the time of the
grant of the options) exceeding $100,000, except and to the extent that such
options were first exercisable in preceding calendar years.
7. Purchase price. The purchase price for a shares of the stock subject to
--------------
any option granted hereunder shall be not less than the fair market value of the
stock on the date of grant of the option, said fair market value to be
determined in good faith at the time of grant of such option by decision of the
Committee; provided, however, that in the case of an incentive option granted to
any person then owning more than 10 percent of the voting power of all classes
of the Company's stock, the purchase price per share of the stock subject to
option shall be not less than 110 percent of the fair market value of the stock
on the date of grant of the option, determined in good faith as aforesaid.
5
<PAGE>
8. Compliance with Laws and Regulations. The Plan, the grant and exercise
------------------------------------
of options thereunder, and the obligation of the Company to sell and deliver
shares under such options, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any government or
regulatory agency as may be required. The Company shall not be required to issue
or deliver any certificates for shares of Common Stock prior to (i) the listing
of such shares on any stock exchange on which the Common Stock may then be
listed and (ii) the completion of any registration or qualification of such
share under any federal or state law, or any ruling or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable.
9. Amendment or Discontinuance of the Plan. The Board or Directors of the
---------------------------------------
Company may at any time amend, suspend or terminate the Plan; provided, however,
that, subject to provisions of Section 5(h), no action of the Board may (i)
increase the number of shares reserved for options pursuant to Section 2, and
(ii) permit the granting of any option at an option price less than that
determined in accordance with Section 5(b). Without the written consent of any
optionee, no amendment, discontinuance or termination of the Plan shall alter or
impair any option previously granted to him under the Plan.
10. Effective Date of the Plan and Jurisdiction. The effective date of the
-------------------------------------------
Plan shall be the date of its adoption by the Board of Directors, subject to its
approval by the shareholders within twelve months of the date of its adoption.
Notwithstanding the foregoing, if the Plan shall have been approved by the Board
prior to such stockholder approval, options may be granted by the Committee as
provided herein subject to such subsequent stockholder approval. This Plan shall
be governed by the laws of the State of Delaware.
6
<PAGE>
11. Name. The Plan shall be known as the "Skylands Park Management, Inc.
----
Stock Option Plan."
7
<PAGE>
EXHIBIT 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 3rd day of March, 1994, by and between
SKYLANDS PARK MANAGEMENT, INC., having an address at 26 Eric Trail, Sussex, New
Jersey 07461 ("Borrower") and BARRY GORDON, having an address at c/o American
Fund Advisors, Inc., 1415 Kellum Place, Suite 205, Garden City, New York 11530
("Lender").
WHEREAS, Borrower is the owner of certain real property located in Sussex,
New Jersey, on which it is constructing a baseball stadium (the "Stadium"); and
WHEREAS, Borrower is the owner of certain limited partnership units (the
"Units") of that entity known as Minor League Heroes (the "Partnership"); and
WHEREAS, Borrower wishes to borrow certain monies from Lender, and Lender
wishes to lend certain monies to Borrower, in order for Borrower to meet certain
financial obligations with respect to Borrower's construction of the Stadium.
NOW, THEREFORE, in consideration of the mutual convenants and promises
herein, all of which are deemed sufficient, it is hereby agreed to as follows:
1. Immediately upon the full execution hereof, Lender shall lend to
Borrower the amount of One Hundred Twenty Five Thousand Dollars ($125,000.00)
(the "Loan"). The Loan shall be funded immediately upon the full execution
hereof, by wire transfer, certified check, or cash, as determined in the sole
discretion of the Borrower.
2. The interest rate on the outstanding and unpaid principal amount of the
Loan shall be twelve percent (12%) simple interest, as calculated on an annual
basis assuming a 365-day year.
3. The term of the Loan shall be six (6) months in length, beginning on
March 3, 1994 and concluding on September 3, 1994 (the "Term").
4. The Borrower shall make payments of principal and interest to the
address of the Lender set forth hereinabove. The entire outstanding and unpaid
principal amount of the Loan, together with any interest and penalties thereon,
shall be due and payable at the end of the Term.
5. Borrower may prepay the Loan without premium or penalty at any time
during the Term upon no less than five (5) days prior notice by Borrower to
Lender.
<PAGE>
If this is your understanding of the agreement between us, please so
indicate your acceptance of the terms and conditions hereof by signing in the
place indicated below and returning all copies of this agreement for
countersignature. One fully executed copy of the agreement will be sent to you
for your files.
Very truly yours,
SKYLANDS PARK MANAGEMENT, INC.
By: /s/ Frederick A. Voight
-----------------------
Title: Chairman
ACCEPTED AND AGREED:
By: /s/ Barry Gordon
----------------
<PAGE>
EXHIBIT 10.3
LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 3rd day of March, 1994, by and between
SKYLANDS PARK MANAGEMENT, INC., having an address at 26 Eric Trail, Sussex, New
Jersey 07461 ("Borrower") and MARC KLEE, having an address at c/o American Fund
Advisors, Inc., 1415 Kellum Place, Suite 205, Garden City, New York 11530
("Lender").
WHEREAS, Borrower is the owner of certain real property located in Sussex,
New Jersey, on which it is constructing a baseball stadium (the "Stadium"); and
WHEREAS, Borrower is the owner of certain limited partnership units (the
"Units") of that entity known as Minor League Heroes (the "Partnership"); and
WHEREAS, Borrower wishes to borrow certain monies from Lender, and Lender
wishes to lend certain monies to Borrower, in order for Borrower to meet certain
financial obligations with respect to Borrower's construction of the Stadium.
NOW, THEREFORE, in consideration of the mutual convenants and promises
herein, all of which are deemed sufficient, it is hereby agreed to as follows:
1. Immediately upon the full execution hereof, Lender shall lend to
Borrower the amount of One Hundred Twenty Five Thousand Dollars ($125,000.00)
(the "Loan"). The Loan shall be funded immediately upon the full execution
hereof, by wire transfer, certified check, or cash, as determined in the sole
discretion of the Borrower.
2. The interest rate on the outstanding and unpaid principal amount of the
Loan shall be twelve percent (12%) simple interest, as calculated on an annual
basis assuming a 365-day year.
3. The term of the Loan shall be six (6) months in length, beginning on
March 3, 1994 and concluding on September 3, 1994 (the "Term").
4. The Borrower shall make payments of principal and interest to the
address of the Lender set forth hereinabove. The entire outstanding and unpaid
principal amount of the Loan, together with any interest and penalties thereon,
shall be due and payable at the end of the Term.
5. Borrower may prepay the Loan without premium or penalty at any time
during the Term upon no less than five (5) days prior notice by Borrower to
Lender.
<PAGE>
If this is your understanding of the agreement between us, please so
indicate your acceptance of the terms and conditions hereof by signing in the
place indicated below and returning all copies of this agreement for
countersignature. One fully executed copy of the agreement will be sent to you
for your files.
Very truly yours,
SKYLANDS PARK MANAGEMENT, INC.
By:/s/ Frederick A. Voight
-----------------------
Title: Chairman
ACCEPTED AND AGREED:
By: /s/ Marc H. Klee
----------------
<PAGE>
EXHIBIT 10.4
PROMISSORY NOTE
---------------
$100,000 March 31, 1994
FOR VALUE RECEIVED, the undersigned, SKYLANDS PARK MANAGEMENT, INC., a New
Jersey corporation (the "Maker"), hereby promises to pay to Robert A. Hilliard
(the "Payee"), on November 30, 1994, or sooner as and to the extent hereinafter
provided, at 26 Eric Trial, Sussex, NJ 07461, the sum of One hundred thousand
($100,000) Dollars, together with accrued interest from the date hereof until
the date of payment at the rate of fifteen (15%) percent per annum. Such
interest shall accrue, but shall not be due and payable until the maturity of
this Note or in connection with any prepayment hereunder as hereinafter
provided.
1. Optional Prepayment. The Maker shall have the right to prepay, without
-------------------
premium or penalty, at any time or times after the date hereof, all or any
portion of the outstanding principal balance of this Note. Each optional
prepayment of principal pursuant to this paragraph 1 shall be accompanied by
payment of all unpaid accrued interest on the principal amount being prepaid.
2. Mandatory Prepayment. In the event and to the extent that the Maker
--------------------
shall make prepayment of all or any portion of any other promissory note issued
by the Maker pursuant to the offering described in that certain offering and
disclosure letter of the Maker dated March 1, 1994 (this Note being one of the
promissory notes issued pursuant to such offering (collectively, the "Offering
Notes")), then the Maker shall be required to prepay an equal proportionate
amount of this Note, such that all of the Offering Notes shall be prepaid in th
same proportion. Each prepayment under this paragraph 2 shall be deemed to
consist of principal and accrued interest on the principal amount prepaid, and
the total amount of the prepayment shall be allocated accordingly.
3. Events of Default. The following are Events of Default hereunder:
----------------
(a) Any failure by the Maker to pay all or any portion of this Note when
due hereunder (including, without limitation, upon maturity or if, when and to
the extent required to be prepaid in accordance with paragraph 2 above); or
(b) If the Maker (i) admits in writing its inability to pay generally its
debts as they mature, or (ii) makes a general assignment for the benefit of
creditors, or (iii) is adjudicated a bankrupt or insolvent, or (iv) files a
voluntary petition in bankruptcy, or (v) takes advantage, as against its
creditors, of any bankruptcy law or statute of the United States of America or
any state or subdivision thereof now or hereafter in effect, or (vi) has a
petition or proceeding filed against it under any provisions of any bankruptcy
or insolvency law or statute of the United States of America or any state or
subdivision thereof, which petition or proceeding is not dismissed within sixty
(60) days after the date of the commencement thereof, (vii) has a receiver,
liquidator, trustee, custodian, conservator, sequestrator or other such person
appointed by any court to take charge of its affairs or assets or business and
such appointment is not vacated or discharged within sixty (60) days thereafter,
or (viii) takes any action in furtherance of any of the foregoing; or
<PAGE>
(c) If any portion of the loan represented by this Note is utilized other
than for purposes of making payments to persons providing labor and/or materials
in the construction of Skylands Park and Recreation Center (a project in
development by the Maker); or
(d) The liquidation, dissolution or permanent cessation of all business
operations of the Maker.
4. Remedies on Default. If any Event of Default shall occur and be
-------------------
continuing, the Payee shall have the right, in addition to any and all other
rights and remedies, to declare the entire unpaid balance of this Note and all
unpaid accrued interest hereunder to be immediately due and payable. Following
any such acceleration, interest hereunder shall continue to accrue at the rate
provided herein, until this Note has been paid or discharged in full.
5. Certain Waiver. The Maker hereby waives diligence, demand, presentment
--------------
for payment, protest, dishonor, nonpayment, default, and notice of any and all
of the foregoing.
6. Amendments. This note may not be charged orally, but only by an
----------
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
7. Governing Law; Consent to Jurisdiction. This Note shall be deemed to be
--------------------------------------
a contract made under the laws of the State of New Jersey and shall be governed
by, and construed in accordance with, the laws of the State of New Jersey. The
Maker hereby consents to the jurisdiction of all courts (state and federal)
sitting in the State of New Jersey in connection with any claim, action or
proceeding relating to or for the collection or enforcement of this Note.
8. Collection Costs. In the event that this Note shall not be paid when due
----------------
and payable (whether upon maturity, by acceleration or otherwise), the Maker
shall further be liable for and shall pay to the Payee all reasonable collection
costs and expenses incurred by the Payee, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on and
as of the date first set forth above.
SKYLANDS PARK MANAGEMENT, INC.
By:
----------------------------
<PAGE>
EXHIBIT 10.5
PROMISSORY NOTE
---------------
$140,000 March 3, 1994
FOR VALUE RECEIVED, the undersigned, SKYLANDS PARK MANAGEMENT, INC., a New
Jersey corporation (the "Maker"), hereby promises to pay to BRUCE STARR (the
"Payee"), on September 3, 1994, at 136 Woodbine Avenue, Merrick, New York
11566-3245, the principal sum of One Hundred Forty Thousand Dollars ($140,000)
Dollars, together with simple interest thereon from the date hereof at the rate
of one (1%) percent per month. Such interest shall accrue, but shall not be due
and payable until the maturity of this Note.
1. Prepayment. The Maker shall have the right to prepay, without premium or
----------
penalty, at any time or times after the date hereof, all or any portion of the
outstanding principal balance of this Note. Each prepayment of principal shall
be accompanied by payment of all unpaid accrued interest on the principal amount
being prepaid.
2. Events of Default. The following are Events of Default hereunder:
-----------------
(a) Any failure by the Maker to pay all or any portion of this Note
(principal or accrued interest) when due hereunder; or
(b) If the Maker (i) admits in writing its inability to pay generally its
debts as they mature, or (ii) makes a general assignment for the benefit of
creditors, or (iii) is adjudicated a bankrupt or insolvent, or (iv) files a
voluntary petition in bankruptcy, or (v) takes advantage, as against its
creditors, of any bankruptcy law or statute of the United States of America or
any state or subdivision thereof now or hereafter in effect, or (vi) has a
petition or proceeding filed against it under any provision of any bankruptcy or
insolvency law or statute of the United States of America or any state or
subdivision thereof, which petition or proceeding is not dismissed within sixty
(60) days after the date of the commencement thereof, (vii) has a receiver,
liquidator, trustee, custodian, conservator, sequestrator or other such person
appointed by any court to take charge of its affairs or assets or business and
such appointment is not vacated or discharged within sixty (60) days thereafter,
or (viii) takes any action in furtherance of any of the foregoing; or
(c) If any portion of the loan represented by this Note is utilized other
than for purposes of making payments to persons providing labor and/or materials
in the construction of Skylands Park and Recreation Center (a project in
development by the Maker); or
(d) The liquidation, dissolution or permanent cessation of all business
operations of the Maker.
-1-
<PAGE>
3. Remedies on Default. If any Event of Default shall occur and be
-------------------
continuing, the Payee shall have the right, in addition to any and all other
rights and remedies, to declare the entire unpaid balance of this Note and all
unpaid accrued interest hereunder to be immediately due and payable. Following
any such acceleration, interest hereunder shall continue to accrue at the rate
provided herein, until this Note has been paid or discharged in full.
4. Certain Waivers. The Maker hereby waives diligence, demand, presentment
----------------
for payment, protest, dishonor, nonpayment, default, and notice of any and all
of the foregoing.
5. Amendments. This Note may not be changed orally, but only by an
-----------
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
6. Governing Law; Consent to Jurisdiction. This Note shall be deemed to be
---------------------------------------
a contract made under the laws of the State of New Jersey and shall be governed
by, and construed in accordance with, the laws of the State of New Jersey. The
Maker hereby consents to the jurisdiction of all courts (state and federal)
sitting in the State of New Jersey in connection with any claim, action or
proceeding relating to or for the collection or enforcement of this Note.
7. Collection Costs. In the event that this Note shall not be paid when due
-----------------
and payable (whether upon maturity, by acceleration or otherwise), the Maker
shall further be liable for and shall pay to the Payee all reasonable collection
costs and expenses incurred by the Payee, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on and
as of the date first set forth above.
SKYLANDS PARK MANAGEMENT, INC.
By:_______________________________
(Title)
-2-
<PAGE>
EXHIBIT 10.6
PROMISSORY NOTE
$6,000.00 March __, 1994
FOR VALUE RECEIVED, the undersigned, SKYLANDS PARK MANAGEMENT, INC., a New
Jersey corporation (the "Maker"), hereby promises to pay to JOHN C. ERTMANN (the
"Payee"), on November 30, 1994, or sooner as and to the extent hereinafter
provided, at 2608 Hemingway Lane, Mahwah, New Jersey 07430, the sum of Six
Thousand ($6,000.00) Dollars, together with accrued interest from the date
hereof until the date of payment at the rate of fifteen (15%) percent per annum.
Such interest shall accrue, but shall not be due and payable until the maturity
of this Note or in connection with any prepayment hereunder as hereinafter
provided.
1. Optional Prepayment. The Maker shall have the right to prepay, without
-------------------
premium or penalty, at any time or times after the date hereof, all or any
portion of the outstanding principal balance of this Note. Each optional
prepayment of principal pursuant to this paragraph 1 shall be accompanied by
payment of all unpaid accrued interest on the principal amount being prepaid.
2. Mandatory Prepayment. In the event and to the extent that the Maker
--------------------
shall make prepayment of all or any portion of any other promissory note issued
by the Maker pursuant to the offering described in that certain offering and
disclosure letter of the Maker dated March 1, 1994 (this Note being one of the
promissory notes issued pursuant to such offering (collectively, the "Offering
Notes")), then the Maker shall be required to prepay an equal proportionate
amount of this Note, such that all of the Offering Notes shall be prepaid in the
same proportion. Each prepayment under this paragraph 2 shall be deemed to
consist of principal and accrued interest on the principal amount prepaid, and
the total amount of the prepayment shall be allocated accordingly.
3. Events of Default. The following are Events of Default hereunder:
-----------------
(a) Any failure by the Maker to pay all or any portion of this Note when
due hereunder (including, without limitation, upon maturity or if, when and to
the extent required to be prepaid in accordance with paragraph 2 above); or
(b) If the Maker (i) admits in writing its inability to pay generally
its debts as they mature, or (ii) makes a general assignment for the benefit of
creditors, or (iii) is adjudicated a bankrupt or insolvent, or (iv) files a
voluntary petition in bankruptcy, or (v) takes advantage, as against its
creditors, of any bankruptcy law or statute of the United States of America or
any state or subdivision thereof now or hereafter in effect, or (vi) has a
petition or proceeding filed against it under any provision of any bankruptcy or
insolvency law or statute of the United States of America or any state or
subdivision thereof, which petition or proceeding is not dismissed within sixty
(60) days after the date of the commencement thereof, (vii) has a receiver,
liquidator,
<PAGE>
trustee, custodian, conservator, sequestrator or other such person appointed by
any court to take charge of its affairs or assets or business and such
appointment is not vacated or discharged within sixty (60) days thereafter, or
(viii) takes any action in furtherance of any of the foregoing; or
(c) If any portion of the loan represented by this Note is utilized other
than for purposes of making payments to persons providing labor and/or materials
in the construction of Skylands Park and Recreation Center (a project in
development by the Maker); or
(d) The liquidation, dissolution or permanent cessation of all business
operations of the Maker.
4. Remedies on Default. If any Event of Default shall occur and be
--------------------
continuing, the Payee shall have the right, in addition to any and all other
rights and remedies, to declare the entire unpaid balance of this Note and all
unpaid accrued interest hereunder to be immediately due and payable. Following
any such acceleration, interest hereunder shall continue to accrue at the rate
provided herein, until this Note has been paid or discharged in full.
5. Certain Waivers. The Maker hereby waives diligence, demand, presentment
----------------
for payment, protest, dishonor, nonpayment, default, and notice of any and all
of the foregoing.
6. Amendments. This Note may not be changed orally, but only by an
-----------
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
7. Governing Law; Consent to Jurisdiction. This Note shall be deemed to be
---------------------------------------
a contract made under the laws of the State of New Jersey and shall be governed
by, and construed in accordance with, the laws of the State of New Jersey. The
Maker hereby consents to the jurisdiction of all courts (state and federal)
sitting in the State of New Jersey in connection with any claim, action or
proceeding relating to or for the collection or enforcement of this Note.
8. Collection Costs. In the event that this Note shall not be paid when due
-----------------
and payable (whether upon maturity, by acceleration or otherwise), the Maker
shall further be liable for and shall pay to the Payee all reasonable collection
costs and expenses incurred by the Payee, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on and
as of the date first set forth above.
SKYLANDS PARK MANAGEMENT, INC.
By:_______________________________
(Title)
<PAGE>
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, made this ___ day of ________, 1994, as of the 1st day of
November, 1994 by and between SKYLANDS PARK MANAGEMENT, INC. (hereinafter,
the "Company" or the "Employer") a New Jersey corporation having its
principal offices at 26 Eric Trail, Sussex, New Jersey 07461, and ROBERT H.
STOFFEL, JR. (hereinafter, the "Employee"), an individual residing at 18
Valley Way, Mendham, New Jersey 07945.
WITNESSETH
WHEREAS, Company is engaged in the business of constructing and operating a
regional sports entertainment and recreation center in Sussex County, New
Jersey, which center is expected to include Skylands Park, a professional
baseball stadium, and certain related businesses; and
WHEREAS, Employee has certain experience and skills that will be useful to
Company in the conduct of its intended businesses; and
WHEREAS, Employee is willing to be employed by Employer, and Employer is
willing to employ Employee, on the terms, covenants and conditions set forth in
this Agreement.
NOW THEREFORE, for the reasons set forth above, and in consideration of the
mutual promises, covenants and agreements of Company and Employee set forth
herein, all of which is agreed and deemed to be good and valuable consideration,
Company and Employee hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs, engages, and hires Employee as
----------
Executive Vice President, Administration and Finance/Chief Financial Officer to
exercise executive duties and policy-making authority commensurate therewith,
and Employee hereby accepts and agrees to such hiring, engagement, and
employment, subject to the general supervision and pursuant to the orders,
advice, and direction of Employer. Employee shall perform such other duties as
are customarily performed by one holding such position in other, same, or
similar businesses or enterprises as that engaged in by Employer, and shall also
additionally render such other and unrelated services as may be assigned to him
from time to time by Employer.
2. BEST EFFORTS OF EMPLOYEE. Employee agrees that, when his services are
------------------------
required by Employer, he will faithfully, industriously, competently and to the
best of his ability, experience, and talents, perform all of the duties that may
be required of and from him pursuant to the express and implicit terms of the
Agreement, to the reasonable satisfaction of Employer. Such duties shall be
rendered at such place or places as the good faith interest, needs, business, or
opportunity of Employer shall require. Employee agrees that no statement by him,
whether spoken or in writing, shall be disparaging to or derogatory of,
Employer. Furthermore, Employee agrees that during the Term he shall not act in
a manner inimical to the interests of Employer or in any manner that shall
reflect negatively on Employer.
1
<PAGE>
3. TERM OF EMPLOYMENT. The term of this Agreement shall commence as of
------------------
November 1, 1994 and continue through and including October 31, 1998, subject,
however, to prior termination as provided in this Agreement (hereinafter, the
"Term"). Upon the mutual consent of Employer and Employee, the Term shall be
extended for such additional period from the date following the expiration of
the original Term as is mutually agreeable.
4. COMPENSATION. (A) Employer shall pay Employee and Employee agrees to
------------
accept from Employer, in full payment for Employee's services under this
Agreement, compensation in the amounts and at the times as set forth in Exhibits
A and B hereto, during such time as this Agreement is in full force and effect.
Exhibits A and B are hereby incorporated by reference and made a part of this
Agreement. Employer shall pay Employee's salary by check or in cash, in either
case forwarded to Employee at the address provided herein above. The failure of
Employer to pay Employee his salary as provided may, in Employee's sole
discretion, be deemed a breach of the Agreement; provided, however, that
--------
Employer shall have twenty (20) days to cure such non- or under-payment.
Additionally, during each year of this Agreement, Employer shall pay to
Employee, if Employer in its full discretion deems such payment to be warranted,
a bonus in such amount as Employer in its full desecration deems appropriate.
Employer shall have the right to deduct from the compensation payable to
Employee under all of the provisions of the Agreement any and all Social
Security, federal, state, and municipal taxes and charges as may now be in
effect or that may be enacted or required after the effective date of this
Agreement as charges on the compensation of Employee. In addition, Employer
shall withhold any taxes required to be withheld by federal, state, or local law
in respect to any payment to Employee in common stock, if any. If any payment is
so made in common stock Employer may deliver to Employee, or Employee's agent,
only the number of wholes shares remaining after withholding, or it may make
other arrangements consistent with the provisions of the Agreement, with the
person entitled to receive the payments as it may deem appropriate.
(B) The Agreement signed October 1, 1993 (Exhibit B), is modified to
reflect the following:
- Payment due 12/31/94 for $7,000 will be deferred and paid on 4/l/95
- The $500 per month added to salary will be deferred and commence, again,
as of 4/l/95
- The $3,000 deferred above will be added to the $7,000 payment due on
12/31/95, with a total of $10,000 being paid on 12/31/95
5. STOCK OPTIONS. Employer hereby agrees that by December 31, 1994, it will
-------------
grant to Employee 50,000 common stock options consistent with the Employee Stock
Option Plan adopted by the company entitling Employee to purchase from the
Company shares of the Company's common stock.
6. REIMBURSEMENT OF EMPLOYEE'S BUSINESS EXPENSES. Employee is hereby
---------------------------------------------
authorized by Employer to incur reasonable, ordinary, and necessary business
expenses for conducting Employer's business, including expenditures for travel
and entertainment.
2
<PAGE>
Employer shall reimburse diary, or similar record in which Employee has
recorded, at or near the time each expenditure was made, (1) the amount of the
expenditure, (2) the time, place, and nature of the travel or entertainment
expense, (3) the business reason for the expense and the business benefit
derived or expected to be derived therefrom, and (4) the names, occupations, and
other data concerning individuals entertained sufficient to establish the
amount, date, place, and essential character of (I) any expenditure for lodging
while traveling away from home, and (ii) any other expenditure of Twenty-Five
Dollars ($25.00) or more, except for transportation charges not readily
available. Expenses of more than One Hundred Dollars ($100.00) must be approved
by Employer's Chief Executive Officer or Chief Operating Officer prior to
reimbursement.
7. OTHER EMPLOYMENT. Employee shall devote substantially all of his
----------------
professional time, attention, knowledge, and skills to the business and interest
of Employer, and Employer shall be entitled to the benefits, profits, or other
issues arising from or incident to work, services, and advice of Employee
related to Employer's business, and Employee shall not, unless otherwise
permitted by Employer, during the Term, be interested directly or indirectly, in
any manner, as partner, officer, director, shareholder, advisor, employee, or in
any other capacity in any other business similar to Employer's business or any
allied trade, provided, however, that nothing contained in this Section shall be
--------
deemed to prevent or to limit the right of entity (including partnership) whose
stock, securities, or interests are publicly owned or are regularly traded on
any public exchange, nor shall anything contained in this section be deemed to
prevent Employee from investing or limit Employee's right to invest his money in
real estate. Investment in that entity currently known as Minor League Heroes,
L.P., shall be deemed not to be a violation of this Section 7. Employer and
Employee hereby agree that during the Term, Employee may render professional
consulting services to other employers; provided, that such services do not
--------
interfere with the performance of Employee's services thereunder and do not
violate the terms and conditions hereof, as mutually agreed between Employer and
Employee.
8. RECOMMENDATIONS FOR IMPROVING OPERATIONS. Employee shall make available
----------------------------------------
to Employer all information of which Employee shall have any knowledge and shall
make all suggestions and recommendations that will be of mutual benefit to
Employer and Employee.
9. TRADE SECRETS. Employee shall not at any time or in any manner, either
-------------
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Employer including, without
limitation, any of its customers, the prices it obtains or has obtained from the
sale of, or at which it sells or has sold its assets, or nay other information
concerning the business of Employer, its manner of operation, its plans,
processes, or other information without regard to whether all of the above
stated matters will be deemed confidential, material, or important. Employer and
Employee specifically and expressly stipulate that as between them, such matters
are important, material, and confidential and gravely affect the effective and
successful conduct of the business of Employer, and Employer's good will, and
that any breach of the terms of this Section shall be a material breech of this
Agreement.
3
<PAGE>
10. TRADE SECRETS AFTER TERMINATION OF EMPLOYMENT. All of the terms of
---------------------------------------------
Section 9 of this Agreement shall remain in full force and effect for the period
of one (1) year after the termination of Employee's employment for any reason,
except
11. EMPLOYEE'S INABILITY TO CONTRACT FOR EMPLOYER. Notwithstanding anything
---------------------------------------------
contained in this Agreement to the contrary, Employee shall not have the right
to make any contracts or commitments for or on behalf of Employer without first
obtaining the express consent of Employer.
12. AGREEMENTS OUTSIDE OF CONTRACT. This Agreement contains the sole and
------------------------------
complete agreement concerning the employment arrangement between the parties and
shall, as of the effective date hereof, supersede all other agreements between
the parties. The parties stipulate that neither of them has made any
representation with respect to the subject matter of this Agreement or nay
representations including the execution and delivery of the Agreement except
such representations as are specifically set forth in this Agreement and each of
the parties acknowledges that he has relied on his own judgment in entering into
this Agreement. The parties further acknowledge that any payments or
representations that may have been made by either of them to the other prior to
the date of executing this Agreement are of no effect and that neither of them
has relied thereon in connection with his or its dealings with the other.
13. WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING. It is agreed that
----------------------------------------------------
no waiver or modification of this Agreement or of any covenant, condition, or
limitation contained in it shall be valid unless it is in writing and duly
executed by the party to be charged with it, and that no evidence of any waiver
or modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting this
Agreement, or the rights or obligations of any party under it, unless such
waiver or modification is in writing, duly executed as above. The parties agree
that the provisions of this Section may not be waived except by a duly executed
writing.
14. TERMINATION BY EMPLOYER.
-----------------------
(A) This Agreement may be terminated by Employer on thirty (30) days'
written notice to Employee for Employee's continued insubordination, for an
ongoing practice of intentional and material violations of Employer's rules or
regulations, willful neglect of significant duties and responsibilities, or if
Employee fails to perform or comply with any of this Agreement's material terms
(each, a "Termination Event"); provided, that Employee shall have a fair and
reasonable amount of time to cure such Termination Event. Employer's exercise of
its right to terminate this Agreement hereunder shall be without prejudice to
any other remedy to which it is entitled at law, in equity, or otherwise.
(B) If Employee shall fail or be unable to perform the services required by
this Agreement because of any physical or mental infirmity, and such failure or
inability shall continue for six (6) consecutive months, or for seven (7) months
during any twelve consecutive month period, Employer shall have the right to
terminate this Agreement thirty (30) days after delivering written notice of the
termination to Employee; provided, however, that Employee
--------
4
<PAGE>
shall continue to receive his full compensation to the date of termination,
notwithstanding any such infirmity. Employer shall provide at its expense
employee disability insurance in the amount of two-thirds of Employee's salary
for the remainder of the Term. The provisions of Sections 17 and 18 shall
continue in effect notwithstanding the termination of this Agreement pursuant to
the Section 14(b).
(C) This Agreement shall terminate automatically upon the death of
Employee.
(D) Should Employer terminate Employee for any reason or Employee resigns
any Monies deferred and not paid and balance owed as per October 1, 1993
Agreement, that is the balance of $36,000 in deferred payments owed by Employer
to Employee will be paid to Employee within sixty (60) days after the effective
date of termination.
(E) If this agreement is terminated by Employer then Employee shall receive
Severance Pay equivalent to one (1) month pay for each year of service to the
company, which commenced 1/1/93, at the rate of pay at the time of termination.
This amount can be either a lump sum payment or paid over the six (6) month
period immediately following termination.
15. TERMINATION DUE TO UNPROFITABLE BUSINESS. Employer shall have the right
----------------------------------------
to terminate this Agreement at any time that the business conducted by Employer
shall be unprofitable, as determined by Employer in its absolute discretion, on
giving to Employee thirty (30) days' written notice of termination. In such
event, Employee shall continue to receive and be owed the pro rata amount of his
compensation earned through the date of such termination, except that all moneys
deferred shall be paid to Employee within sixty (60) days after the effective
date of termination.
16. TERMINATION DUE TO DISCONTINUANCE OF BUSINESS. Notwithstanding anything
---------------------------------------------
contained in the Agreement to the contrary, in the event that Employer shall
substantially discontinue operating its business at the foregoing location, then
this Agreement shall terminate as of the last day of the month in which Employer
ceases operations at such location with the same force and effect as if such
last day of the month were originally set as the termination date of the
Agreement. In such event, Employee shall be owed the pro rata amount of his
compensation through such date of termination, except that all moneys deferred
shall be paid to Employee within sixty (60) days after the effective date of
termination.
17. NONCOMPETITION AFTER TERMINATION. Employee agrees that in addition to
--------------------------------
any other limitation, for a period of six (6) months after the termination of
his employment under this Agreement, except a termination caused by Employer in
violation of the terms of this Agreement or a termination under Sections 16 and
17 hereof, and unless otherwise permitted, he will not directly or indirectly
engage in any business, or in any manner be connected with or employed by any
person, firm or corporation, in competition with Employer or engaged in
providing services similar to those provided hereunder within a radium of fifty
(50) miles of the principal office of Employer. behalf of any other person firm,
or corporation, call on
5
<PAGE>
any of the customers of Employer of the purpose of soliciting and/or providing
to any of the customers any services similar to those provided hereunder.
18. OWNERSHIP IN EMPLOYER. All ideas and other developments or improvements
---------------------
conceived by Employee, alone or with others, during the term of his employment,
whether or not during working hours, that are within the scope of Employer's
business operations or that relate to any company work or project (other than
general accounting concepts, processes and procedures), are the exclusive
property of Employer. Employee agrees to assist Employer in the ordinary course
of business of Employer in order to establish Employer's ownership of such
ideas.
19. FORCE MAJEURE. In the event that, due to labor disputes, government
-------------
regulations, war, fire, earthquake, rain, flood, or other calamity, or because
of any other acts of God or any cause or conditions beyond Employer's control,
whether of a similar or dissimilar nature (including, but not limited to the
completion of Employer's initial public offering or the fact that Skylands Park
is not constructed on time or completed) (hereinafter, "Force Majeure:),
Employer in good faith believes it is unable fully to utilize Employee's
services, Employer shall have the right upon fine (50 days' notice to Employee
to suspend Employee's services for the duration of such Force Majeure or for any
part thereof, and no compensation will be paid or accrued to Employee during any
such period of suspension; provided, that such period of suspension shall end as
soon as such Force Majeure terminates. Should any such suspension prior exceed
three (3) consecutive weeks, either party hereto may by written notice to the
other terminate this Agreement, effective fine (5) days thereafter. Upon such
termination neither party shall have any further obligation to each other, other
than accrued but unpaid compensation due and owing and any obligations
continuing hereunder, such as those set forth in Section 10, 18, and 19.
20. RETURN OF EMPLOYER'S PROPERTY. On termination of this Agreement,
-----------------------------
regardless of how termination is effected, or whenever requested by Employer,
Employee shall immediately return to Employer all of Employer's property used by
Employee in rendering services under this Agreement or otherwise, that is in
Employee's possession or under his control.
21. ASSIGNABILITY OF AGREEMENT BY EMPLOYEE. This Agreement is a personal
--------------------------------------
services employment contract. As such, Employee agrees that Employee may not in
any way transfer any of his rights or interest arising from this Agreement.
22. ASSIGNABILITY OF AGREEMENT BY EMPLOYER. Employer specifically retains
--------------------------------------
the right to transfer or assign its rights and interests arising from this
Agreement to any entity the ownership of which is substantially the same as the
ownership of Employer. This Agreement shall inure to the benefit of, and be
binding upon, any such successor or assign of Employer.
23. NOTICE TO PARTIES TO AGREEMENT. Any notice, request, or other
------------------------------
communication required to be given pursuant to the provisions of this Agreement
shall be in
6
<PAGE>
writing and shall be deemed to have been given when delivered in person or five
(5) days after being deposited in the United States mail, certified or
registered, postage prepaid, return recent requested, and addressed as follows:
(A) If Employer: at the name and address set forth hereinabove, c/o
Employer's President.
(B) If to Employee: at the name and address set forth hereinabove. The
address of either party to this Agreement may be changed by notice in writing to
the other party served in accordance with this provision.
24. EMPLOYEE'S SERVICE AS DIRECTOR. Employee consents to serve as a
------------------------------
Director of Employer on condition that Employee receive the amount of Five
Hundred Dollars ($500.00) per year for such service.
25. EFFECT OF PARTIAL INVALIDITY. The invalidity of any portion of this
----------------------------
Agreement will not and shall not be deemed to affect the validity of any other
provision. In the event that any provision of this Agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
26. CHOICE OF LAW. It is the intention of the parties to this Agreement
-------------
that this Agreement and the performance under this Agreement, and all suits and
special proceedings under this Agreement, be constructed in accordance with an
dunder and pursuant to the laws of the State of New Jersey and that, in any
action, special proceeding or other proceeding that may be brought arising out
of, in connection with, or by reason of this Agreement, the laws of the State of
New Jersey shall be applicable and shall govern tot he exclusion of the law of
any other forum, without regard to the jurisdiction in which any action or
special proceeding may be instituted.
27. NO WAIVER. The failure of either party to this Agreement to insist upon
---------
the performance of nay of the terms and conditions of this Agreement, or the
waiver of any breach of any of the terms and conditions of the Agreement, shall
not be constructed as thereafter waiving any such terms and conditions, but the
same shall continue and remain in full force and effect as if no such
forebearance or waiver had occurred.
28. ARBITRATION. Any differences, claims, or matters in dispute arising
-----------
between them out of this Agreement or connected with it shall be submitted by
the parties to arbitration by the American Arbitration Association or its
success, and the determination of the American Arbitration Association or its
successor shall be final and absolute. The arbitrator shall be governed by the
duly promulgated rules and regulations of the American Arbitration Association
or its successor, and the pertinent provisions of the laws of the State of New
Jersey relating to arbitration. The decision of the arbitrator may be entered as
a judgment in any court of the State of New Jersey or elsewhere.
7
<PAGE>
29. INDEMNIFICATION. Employer agrees to indemnify and hold harmless
---------------
Employee and Employee agrees to indemnify and hold harmless Employer, its
partners, officers, directors, agents and employees, in both instances against
any and all damages, claims, losses, liabilities and expenses (including, but
not limited to, reasonable legal fees and disbursements) caused by, in
connection with, arising out of, or resulting from any act by the indemnifying
party done in connection with the Agreement, or any failure to act as required
under this Agreement.
30. COVENANTS. Both parties hereby represent, warrant and covenant that
---------
(A) they have all the necessary rights, licenses and authorization to
carry out the terms of this Agreement;
(B) they have full and complete power and authority to enter into this
Agreement and to make the covenants, representations and undertakings
contained herein: and
(C) in the case of Employer, the individual who has signed this
Agreement on behalf of Employer has been authorized to do so.
31. COMPLIANCE WITH LAW. Both parties hereto hereby agree to comply with
-------------------
all laws, ordinances, rules, or regulations of any Federal, state country, city,
or other governmental authority in connection with the exercise of the rights
and performances of the obligations hereunder.
32. SECTION HEADINGS. The titles to the Sections of this Agreement are
----------------
solely for the convenience of the parties and shall not be used to explain,
modify, simplify, or aid in the interpretation of the provisions of the
Agreement.
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by
its duly authorized officer, and Employee has signed this Agreement, all so of
the day and year first above written.
SKYLANDS PARK MANAGEMENT INC.
By: /s/ Robert A. Hilliard
--------------------------
ACCEPTED AND AGREED:
/s/ Robert H. Stoffel, Jr.
- --------------------------
Robert H. Stoffel, Jr.
8
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Annualized Compensation
Compensation Period for Period Time of Payment
- ------------------- ---------- ---------------
<S> <C> <C>
1. 11/1/94-3/31/95 $60,000.00* $4,000.00 on or before the 15th day of
each month
2. 4/1/95-10/31/95 $60,000.00 $5,000.00 on or before the 15th day of
each month
3. 11/1/95-10/31/96 $66,000.00 $5,500.00 on or before the 15th day of
each month
4. 11/1/96-10/31/97 $72,000.00 $6,000.00 on or before the 15th day of
each month
5. 11/l/97-10/31/98 $78,000.00 $6,500.00 on or before the 15th day of
each month
</TABLE>
* 1,000.00 per month is deferred until April 1, 1995, then paid out at $500.00
per month starting April 1, 1995 for ten months.
STOCK
<TABLE>
<CAPTION>
Date Issued Number of Stock Condition
- ----------- --------------- ---------
<S> <C> <C>
l/l/95 10,000 Unregistered shares that shall be locked up for a
7/l/95 10,000 period of 18 months from the time said shares are
l/l/96 15,000 issued. The company shall cause to have said shares
l/l/97 15,000 registered at the conclusion of the lock-up period or
within 60 days thereafter if the company is
anticipating the registration of other securities.
</TABLE>
9
<PAGE>
EXHIBIT B
---------
SKYLANDS PARK MANAGEMENT INC.
Ross' Corner, P. O. Box 117, Augusta, NJ 07822-0117
This Agreement, made this 1st day of October, 1993 by and between SKYLANDS
PARK MANAGEMENT, INC. (hereinafter, the "Company" or the "Employer") a New
Jersey corporation having its principal offices at 26 Eric Trail, Sussex,
New Jersey 07461, and ROBERT H. STOFFEL, JR. (hereinafter, the "Employee"),
an individual residing at 18 Valley Way, Mendham, New Jersey 07945.
Employee has the right of beneficial ownership of 6,000 shares of common
stock of SKYLANDS PARK MANAGEMENT, INC. and employee has the right to
require these shares be transferred to him by Messrs. Robert A. Hilliard,
Frederick C. Voight and John C. Ertmann, at such time as he may elect.
As an inducement for the employee to give up this right the company and
employee agree as follows:
1). For the period beginning July, 1993 and ending December 1995
$500.00 per month will be added to the employee's salary. These
payments will total $15,000,00.
2). In addition to the above, three lump sum payments will be made as
follows, $6,000.00 on December 1, 1993, $7,000.00 on December 1,
1994 and $7,000.00 on December 1, 1995.
3). The total amount to be paid as this inducement is $35,000.00 and
if the services of the employee are terminated either by the
company or the employee the balance owed at that time will be
paid to the employee within 60 days.
4). These above payments have no bearing as to salary, bonus and
stock options as agreed to in the personal services agreement
between SKYLANDS PARK MANAGEMENT, INC. and ROBERT H. STOFFEL, JR.
In witness whereof, Employer has caused this Agreement to be executed by
its duly authorized officer, and Employee has signed this Agreement, all as
of the day and year first above written.
SKYLANDS PARK MANAGEMENT, INC.
By: /s/ Frederick A. Voight, CEO
----------------------------
ACCEPTED AND AGREED
/s/ Robert H. Stoffel, Jr.
--------------------------
Robert H. Stoffel, Jr.
10
<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT (this "Agreement"), entered into as of this ____ day
of October, 1996, by and between SKYLANDS PARK MANAGEMENT, INC., a New Jersey
corporation having offices at U.S. Highway 206 and County Route 565, P.O. Box
117, Augusta, New Jersey 07822-0117 (the "Company"), and BARRY M. LEVINE, an
individual residing at 18 Ramapo Trail, Harrison, New York 10528 (the
"Employee");
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is engaged in the business of operating a regional
sports entertainment and recreation center, including a 4,300 seat baseball
stadium, indoor recreation center, sporting goods store, and related facilities;
and
WHEREAS, the Employee has substantial experience relating to the management
and operation of sports-related businesses; and
WHEREAS, to promote the ongoing business of the Company, the Company
desires to assure itself of the right to the Employee's services on the terms
and conditions of this Agreement; and
WHEREAS, the Employee is willing and able to render his services to the
Company on the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
1. Nature of Employment.
--------------------
(a) Subject to the terms and conditions of this Agreement, the Company
shall, throughout the term of this Agreement, retain the Employee, and the
Employee shall render services to the Company, in the capacity and with the
title of President and Chief Executive Officer of the Company. In such capacity,
the Employee shall have and exercise responsibility for (i) managing and
overseeing all aspects of the day-to-day business operations of the Company,
(ii) participating in corporate planning and development strategy for the
Company, (iii) advising on and participating and assisting in corporate finance
and shareholder relations matters relating to the Company, and (iv) such other
similar or related duties as may be assigned to the Employee from time to time
by the Board of Directors of the Company (the "Board").
<PAGE>
(b) Throughout the period of his employment hereunder, the Employee shall:
(i) devote his full business time, attention, knowledge and skills, faithfully,
diligently and to the best of his ability, to the active performance of his
duties and responsibilities hereunder on behalf of the Company; (ii) observe and
carry out such reasonable rules, regulations, policies, directions and
restrictions as may be established from time to time by the Board, including but
not limited to the standard policies and procedures of the Company as in effect
from time to time; and (iii) do such traveling as may reasonably be required in
connection with the performance of such duties and responsibilities; provided,
--------
however, that the Employee shall not be assigned to regular duties that would
- -------
reasonably require him to relocate his permanent residence from that first set
forth above.
(c) Anything contained in paragraph 2(b) above to the contrary
notwithstanding, the Employee may make passive investments of his personal funds
(including, without limitation, in securities of publicly traded entities), so
long as such investments do not otherwise constitute or entail a violation of
paragraph 6 below.
2. Term of Employment.
------------------
(a) Subject to prior termination in accordance with paragraph 2(b)
below, the term of this Agreement and the Employee's employment hereunder shall
commence on the date hereof and shall continue through and including December
31, 1999, and shall thereafter automatically renew for additional terms of one
(1) year each unless either party gives written notice of termination to the
other party not less than ninety (90) days prior to the end of any term (in
which event this Agreement shall terminate effective as of the close of such
term).
(b) This Agreement:
(i) may be terminated upon mutual written agreement of the Company
and the Employee;
(ii) may be terminated at the option of the Employee, upon
fourteen (14) days' prior written notice to the Company, in the event that
the Company shall (A) fail (subject to the last sentence of paragraphs 3(a)
and 3(b) below) to make any payment to the Employee required to be made
under the terms of this Agreement within thirty (30) days after payment is
due, (B) fail to perform any other material covenant or agreement to be
performed by it hereunder or take any action prohibited by this Agreement,
and fail to cure or remedy same within thirty (30) days after written
notice thereof to the Company, or (C) for any reason discontinue
substantially all of its business operations for any period in excess of
six (6) consecutive months;
(iii) may be terminated at the option of the Company, upon written
notice to the Employee, "for cause" (as hereinafter defined);
<PAGE>
(iv) may be terminated at the option of the Company in the event of
the "permanent disability" (as hereinafter defined) of the Employee; or
(v) shall automatically terminate, without requirement of any notice,
upon the death of the Employee.
(c) As used herein, the term "for cause" shall mean and be limited to: (i)
any willful and material breach of this Agreement (including, without
limitation, the covenants contained in paragraph 6 below) by the Employee which
in any case is not fully corrected within thirty (30) days after written notice
of same from the Company to the Employee; (ii) gross neglect by the Employee of
his duties and responsibilities hereunder; (iii) any fraud, criminal misconduct,
breach of fiduciary duty, dishonesty, or gross and willful misconduct by the
Employee in connection with the performance of his duties and responsibilities
hereunder; (iv) the Employee being legally intoxicated during business hours or
while on call, or being habitually drunk or addicted to drugs (provided that
this shall not restrict the Employee from taking physician-prescribed medication
in accordance with the applicable prescription); (v) the commission by the
Employee of any felony or crime of moral turpitude, the making by the Employee
of any material written or verbal statements which are intentionally disparaging
to or derogatory of the Company, or any other action by the Employee which may
materially impair or damage the reputation of the Company; or (vi) habitual
breach by the Employee of any of the material provisions of this Agreement
(regardless of any prior cure thereof).
(d) As used herein, the term "permanent disability" shall mean, and be
limited to, any physical or mental illness, disability or impairment that
prevents the Employee from continuing the performance of his normal duties and
responsibilities hereunder for a period in excess of six (6) consecutive months.
For purposes of determining whether a "permanent disability" has occurred under
this Agreement, the written determination thereof by two (2) qualified
practicing physicians selected and paid for by the Company (and reasonably
acceptable to the Employee) shall be conclusive.
(e) Upon any termination of this Agreement as hereinabove provided, the
Employee (or his estate or legal representatives, as the case may be) shall be
entitled to receive any and all unpaid Base Salary appropriately prorated to and
as of the effective date of termination (based on the number of days elapsed
prior to the date of termination), and any other amounts then due and payable to
the Employee hereunder. All such payments shall be made on the next applicable
payment date therefor (as provided in paragraph 3 below) following the effective
date of termination. Such payments shall constitute all amounts to which the
Employee shall be entitled hereunder upon termination of this Agreement.
<PAGE>
3. Compensation and Benefits.
-------------------------
(a) Base Salary. As compensation for his services to be rendered
-----------
hereunder, the Company shall pay to the Employee a base salary at the rate of
One Hundred Twenty-Five Thousand ($125,000) Dollars per annum (the "Base
Salary"), which shall be payable in periodic installments in accordance with the
standard payroll practices of the Company in effect from time to time, and shall
be subject to withholding and deduction for federal, state and local taxes,
unemployment insurance, social security and other legally required withholdings.
At the sole and absolute discretion of the Board, such Base Salary may be
reviewed and upwardly adjusted at any time and from time to time. Anything
elsewhere contained in this Agreement to the contrary notwithstanding, the
Employee hereby acknowledges and confirms that he is aware of the Company's
historic and ongoing cash flow problems, and the Employee hereby agrees that,
during the period from the date hereof through and including June 30, 1997, the
Company may accrue and defer payment of all or any portion of the Base Salary as
and to the extent that the cash flow of the Company may, in the Company's good
faith judgment, be insufficient to permit payment of such Base Salary and the
Company's other pressing obligations; and any Base Salary so accrued and
deferred shall be paid as soon as the Company's cash flow shall reasonably
permit the payment thereof.
(b) Bonus. The Board may authorize and pay bonuses to the Employee at
-----
any time and from time to time. Any such bonus shall be in the sole and absolute
discretion of the Board.
(c) Automobile. In addition to the Base Salary, the Company shall
----------
reimburse the Employee, throughout the period of his employment hereunder, for
all reasonable expenses incurred by the Employee in the use of an automobile
(such reimbursement not to exceed the sum of $1,000 per month). To the extent
that any such payment is made as a lump sum without requiring the Employee to
account for the actual expenditure thereof, and/or to the extent that any such
payment is in respect of any items that would be deemed to constitute personal
expenses of the Employee under applicable federal or state tax law, the Employee
will be solely responsible for any and all taxes which may be payable in respect
of the receipt of such automobile allowance. Payments under this paragraph 3(b)
for periods through June 30, 1997 may also be deferred in a manner consistent
with paragraph 3(a) above.
(d) Fringe Benefits. The Company shall also make available to the
---------------
Employee, throughout the period of his employment hereunder, such benefits and
perquisites as are generally provided by the Company to its executive employees,
including but not limited to eligibility for participation in any group
insurance plan, pension plan, profit-sharing plan, retirement savings plan,
401(k) plan, or other such benefit plan or policy which may presently be in
effect or which may hereafter be adopted by the Company for the benefit of its
executive employees; provided, however, that nothing herein contained shall be
-------- -------
deemed to require the Company to adopt or maintain any particular plan or
policy. Participation in such benefit plans
<PAGE>
may be subject to standard waiting periods following the commencement of
full-time employment.
(e) Expenses. Throughout the period of the Employee's employment
--------
hereunder, the Company shall also reimburse the Employee, upon presentment by
the Employee to the Company of appropriate records, receipts and vouchers
therefor, for any reasonable out-of-pocket business expenses incurred by the
Employee in connection with the performance of his duties and responsibilities
hereunder; provided, however, that no reimbursement shall be required to be made
-------- -------
for any expense which is not properly deductible (in whole or in part) by the
Company for income tax purposes, or for any expense item which has not
previously been approved if and to the extent required in accordance with the
Company's standard policies and procedures in effect from time to time.
4. Vacation, etc.
-------------
(a) The Employee shall be entitled to take, from time to time, up to
four (4) weeks of paid vacation per year, to be taken at such times as shall be
mutually convenient to the Employee and the Company, and so as not to interfere
unduly with the conduct of the business of the Company.
(b) The Employee shall further be entitled to paid holidays, personal
days and sick days in accordance with the Company's standard policies and
procedures in effect from time to time.
5. Company Property.
----------------
(a) The Employee hereby acknowledges and confirms that all ideas and
other developments or improvements conceived by the Employee, whether alone or
with others, during the period of his employment hereunder (whether or not
during working hours), that are within the scope of the Company's business
operations or that relate to any business of any type conducted or proposed to
be conducted by the Company, constitute the exclusive property of the Company.
The Employee shall assist the Company as required in order to establish, confirm
and evidence the Company's ownership of such ideas, developments and
improvements, and shall execute and deliver any and all such agreements,
instruments and other documents as may be necessary or appropriate in connection
therewith.
(b) Upon termination of this Agreement under any circumstances, and
otherwise upon request of the Company, the Employee shall immediately return all
property of the Company utilized by the Employee in rendering services
hereunder, to the extent in the Employee's possession or under his control.
<PAGE>
6. Restrictive Covenants.
---------------------
(a) The Employee hereby acknowledges and agrees that (i) the business
contacts, customers, suppliers, know-how, trade secrets, marketing techniques,
promotional methods and other aspects of the business of the Company have been
and are of value to the Company, and have provided and will hereafter provide
the Company with substantial competitive advantage in the operation of its
business, and (ii) by reason of his employment with the Company, he will have
detailed knowledge and will possess confidential information concerning the
business and operations of the Company. The Employee hereby further acknowledges
that his business skills are not uniquely suited to businesses of the type
conducted by the Company, and that, if required, he could readily adapt and
utilize such skills in one or more other types of businesses.
(b) The Employee shall not, directly or indirectly, for himself or
through or on behalf of any other person or entity:
(i) at any time, divulge, transmit or otherwise disclose or cause
to be divulged, transmitted or otherwise disclosed, any business contacts,
customer or supplier lists, know-how, trade secrets, marketing techniques,
promotional methods, contracts or other confidential or proprietary information
of the Company of whatever nature, whether now existing or hereafter created or
developed (provided, however, that for purposes hereof, information shall not be
considered to be confidential or proprietary if (A) it is a matter of common
knowledge or public record, (B) it is generally known in the industry, or (C)
the Employee can demonstrate that such information was already known to the
recipient thereof other than by reason of any breach of any obligation under
this Agreement or any other confidentiality or non-disclosure agreement); and/or
(ii) at any time during the period from the date hereof through
and including the date of the termination of the Employee's employment with the
Company, and for an additional period of one (1) year thereafter, (A) invest,
carry on, engage or become involved, either as an employee, agent, advisor,
officer, director, stockholder (excluding passive ownership of not more than 5%
of the outstanding shares of a publicly held corporation if such ownership does
not involve managerial or operational responsibility), manager, partner, joint
venturer, participant or consultant, in any business enterprise (other than the
Company and/or its affiliates, successors or assigns) which is located or
operating in Sussex County, New Jersey and/or any county contiguous thereto, and
derives any material revenues from any type of sports-related business engaged
in by the Company or any of its affiliates at the time that the Employee
proposes to become involved in such other business enterprise, and/or (B) induce
or attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the Company's relationship with any of its
employees; provided, however, that the restrictions pursuant to clause (A) of
-------- -------
this paragraph 6(b)(ii) shall not thereafter be applicable in the event that,
and from and after such time as, (x) the Company terminates the Employee's
<PAGE>
employment other than "for cause," or (y) this Agreement is terminated by reason
of any election by the Company not to renew this Agreement in accordance with
paragraph 2(a) above.
(c) The Employee and the Company hereby acknowledge and agree that any
breach by the Employee, directly or indirectly, of the foregoing restrictive
covenants will cause the Company irreparable injury for which there is no
adequate remedy at law. Accordingly, the Employee expressly agrees that, in the
event of any such breach or any threatened breach hereunder by the Employee,
directly or indirectly, the Company shall be entitled, in addition to any and
all other remedies available, to seek and obtain injunctive and/or other
equitable relief to require specific performance of or prevent, restrain and/or
enjoin a breach under the provisions of this paragraph 6.
(d) In the event of any dispute under or arising out of this paragraph 6,
the prevailing party in such dispute shall be entitled to recover from the
non-prevailing party or parties, in addition to any damages and/or other relief
that may be awarded, its reasonable costs and expenses (including reasonable
attorneys' fees) incurred in connection with prosecuting or defending the
subject dispute.
7. Non-Assignability.
-----------------
In light of the unique personal services to be performed by the Employee
hereunder, it is acknowledged and agreed that any purported or attempted
assignment or transfer by the Employee of this Agreement or any of his duties,
responsibilities or obligations hereunder shall be void.
8. Notices.
-------
Any notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been given (a) when delivered personally, (b) one (1) day after being deposited
for overnight delivery with a recognized overnight delivery service, with all
charges prepaid or billed to the account of the sender and properly addressed as
hereinafter provided, or (c) three (3) days after being mailed by postpaid
certified mail, return receipt requested, addressed to the party being notified
at the address of such party first set forth above, or at such other address as
such party may hereafter have designated by notice; provided, however, that any
-------- -------
notice of change of address shall not be effective until its receipt by the
party to be charged therewith. Copies of any notices or other communications to
the Company shall simultaneously be sent by first class mail to Mr. Barry J.
Gordon, American Fund Advisors, Inc., 1415 Kellum Place, Suite 205, Garden City,
New York 11530-1665.
<PAGE>
9. General.
-------
(a) Neither this Agreement nor any of the terms or conditions hereof
may be waived, amended or modified except by means of a written instrument duly
executed by the party to be charged therewith. Any waiver or amendment shall
only be applicable in the specific instance, and shall not constitute or be
construed as a waiver or amendment in any other or subsequent instance. No
failure or delay on the part of either party in respect of any enforcement of
obligations hereunder shall in any manner affect such party's right to seek or
effect enforcement at any other time or in respect of any other required
performance.
(b) Neither this Agreement nor any rights or obligations hereunder
may be assigned (other than by the Company by operation of law) by either party
without the express prior written consent of the other party.
(c) The captions and paragraph headings used in this Agreement are
for convenience of reference only, and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.
(d) This Agreement, and all matters or disputes relating to the
validity, construction, performance or enforcement hereof, shall be governed,
construed and controlled by and under the laws of the State of New Jersey.
(e) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns.
(f) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original hereof, but all of which together shall
constitute one and the same instrument.
(g) Except for any legal or judicial proceeding which may be brought
for injunctive and/or any other equitable relief as contemplated by paragraph
6(c) above, any dispute involving the interpretation or application of this
Agreement shall be resolved by final and binding arbitration before one or more
arbitrators designated by the American Arbitration Association in New Jersey.
The award of such arbitrator(s) may be enforced in any court of competent
jurisdiction. The prevailing party in any action or proceeding hereunder shall
be entitled to an award for its costs and reasonable attorneys' fees in
connection with such action or proceeding, and the arbitrator(s) in any
arbitration hereunder shall be empowered and directed to make such an award in
his, her or their discretion.
(h) This Agreement constitutes the sole and entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior
<PAGE>
discussions, agreements and understandings of every kind and nature between them
as to such subject matter.
(i) This Agreement is intended for the sole and exclusive benefit of the
parties hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns, and no other person or entity
shall have any right to rely on this Agreement or to claim or derive any benefit
herefrom absent the express written consent of the party to be charged with such
reliance or benefit.
(j) If any provision of this Agreement is held invalid or unenforceable,
either in its entirety or by virtue of its scope or application to given
circumstances, such provision shall thereupon be deemed modified only to the
extent necessary to render same valid, or not applicable to given circumstances,
or excised from this Agreement, as the situation may require; and this Agreement
shall be construed and enforced as if such provision had been included herein as
so modified in scope or application, or had not been included herein, as the
case may be.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the date first set forth above.
SKYLANDS PARK MANAGEMENT, INC.
By:_____________________________
(Title)
___________________________________
Barry M. Levine
<PAGE>
EXHIBIT 10.11
SKYLANDS PARK MANAGEMENT, INC.
P.O. Box 117
Augusta, New Jersey 07822-0117
December __, 1996
Mr. Robert A. Hilliard
26 Eric Trail
Sussex, New Jersey 07461
Re: Amendment of Employment Agreement
---------------------------------
Dear Rob:
This will confirm our agreement with respect to the amendment and phase-out
of your existing employment agreement with Skylands Park Management, Inc. (the
"Company").
Specifically, we have agreed that the term of your employment agreement
will end on and as of December 31, 1996, after which date you will no longer be
expected to render services to the Company, and all compensation will cease to
accrue. The termination of your employment will not affect or impair your status
as a Director of the Company, and it is expected that you will continue to serve
as a member of the Board and be available for and participate in Board meetings
(either in person or by telephonic conference call).
The Company hereby recognizes your rights and standing as a creditor of the
Company, and this agreement in no way alters your rights and standing as a
creditor of the Company, including but not limited to your right to receive
unpaid salary, loan amounts due, and agreed-upon interest on such loans, as
defined by the Company's Plan of Reorganization which was approved by the
Creditors' Committee and confirmed by the United States Bankruptcy Court for the
District of New Jersey.
The Company also recognizes its obligation to pay your accrued
post-petition salary, up to the agreed-upon amount permitted under the Company's
Plan of Reorganization, within the context of existing state and federal labor
law.
With respect to such compensation and other obligations owed and to be owed
to you by the Company, the Company will pay its accrued obligations to you on a
ratable basis along with the Company's other outstanding insider pre-petition
and post-petition liabilities, as and to the extent that funds are available for
such payments within the Company's budget. The foregoing is without prejudice to
your rights to receive payment of any pre-petition obligations
<PAGE>
through the issuance to you of shares of common stock of the Company valued at
the fair market value of such shares at the time of their issuance.
The Company would like to take this opportunity to thank you for the many
years of conscientious effect that you have put into the planning and
development of the Company, and the Company wishes you the utmost success in all
of your future endeavors. We will continue to value your input as a member of
the Board, and look forward to seeing you at future games and events at Skylands
Park.
Kindly confirm your agreement to the foregoing by countersigning a
counterpart copy of this letter, whereupon this letter will become an agreement
which will be binding upon and inure to the benefit of each of us and our
respective heirs, executors, administrators, personal representatives,
successors and assigns.
Very truly yours,
SKYLANDS PARK MANAGEMENT, INC.
By:
-----------------------------
Barry M. Levine, President
Acknowledged, Confirmed and
Agreed To:
- ---------------------------------
Robert A. Hilliard
<PAGE>
EXHIBIT 10.12
SKYLANDS PARK MANAGEMENT, INC.
-----------------------------
1996 STOCK AWARD PLAN
---------------------
In order to provide its directors, executive and management employees, and
key consultants with additional incentives for enhanced performance, Skylands
Park Management, Inc. hereby adopts the following 1996 Stock Award Plan for the
benefit of the Company's directors, selected executive and management employees,
and key consultants from time to time.
1. Definitions. Wherever used in this Plan, the following terms shall have
-----------
the following meanings:
(a) "Board" shall mean the Board of Directors of the Company, as such
Board of Directors is constituted from time to time.
(b) "Committee" shall mean the Compensation Committee of the Board, as
such Compensation Committee is constituted from time to time; provided, that if,
at any time, there has not been appointed a "Compensation Committee" of the
Board, then the Board shall constitute the Committee for purposes of this Plan,
until such time as a Compensation Committee of the Board is appointed.
(c) "Common Stock" shall mean the authorized common stock, no par value,
of the Company.
(d) "Company" shall mean Skylands Park Management, Inc., a New Jersey
corporation, and its successors and assigns.
(e) "Operating Cash Flow" shall mean, for any fiscal quarter(s) in
question, the net cash flow from operations of the Company for such fiscal
quarter(s) calculated in accordance with generally accepted accounting
principles consistently applied.
(f) "Operating Income" shall mean, for any fiscal quarter(s) in
question, the sum of (i) the net operating income of the Company (exclusive of
extraordinary gains or extraordinary losses) for such fiscal quarter(s) as
determined in accordance with generally accepted accounting principles
consistently applied, plus (ii) an allocable portion (based on time elapsed) of
the Company's equity in the income of Minor League Heroes, L.P. for the four (4)
consecutive fiscal quarters of the Company ended on the last day of the period
for which Operating Income is being calculated.
(g) "Plan" shall mean this 1996 Stock Award Plan as same may be amended,
modified and/or restated from time to time in accordance herewith.
<PAGE>
(h) "Proceeds" shall mean any and all cash amounts received by the
Company from issuances or sales of equity securities of the Company (including
the issuance price of any options or warrants), without deduction for any
offering expenses or reasonable selling commissions.
(i) "Stock Award" shall mean any and all awards made under this Plan
from time to time for the purchase of Common Stock.
(j) "Threshold Level" shall mean each of those threshold events
permitting the grant of Stock Awards, as set forth in paragraph 4(b) below.
2. Administration. This Plan shall be administered by the Committee. The
--------------
Committee shall have full and final authority to make all determinations as to
whether Threshold Levels have been achieved hereunder, to determine which
directors, executive and management employees, and/or key consultants of the
Company shall receive Stock Awards hereunder, to determine the terms and
conditions of each Stock Award (subject to the express limitations provided in
this Plan), and to determine all other matters relating to the administration of
this Plan.
3. Eligible Participants. All directors, executive and management
---------------------
employees, and key consultants of the Company at the time of granting Stock
Awards hereunder shall be eligible to receive Stock Awards under this Plan. In
determining which eligible persons will receive Stock Awards hereunder, the
Committee shall take into account its evaluation of the duties and
responsibilities of each eligible person, the tenure and performance of each
eligible person, the eligible person's actual contributions to the achievement
of any Threshold Level, and such other matters as the Committee may deem
relevant under the circumstances.
4. Calculations and Awards.
-----------------------
(a) No Stock Awards may be granted under this Plan unless and until the
Company achieves one or more of the four Threshold Levels set forth in paragraph
4(b) below. For each Threshold Level that is achieved, there may be awarded,
under this Plan, Stock Awards for up to an aggregate of 250,000 shares, which
awards may be made at any time and from time to time after the achievement of
the subject Threshold Level. In no event and under no circumstances will Stock
Awards be granted hereunder for more than 1,000,000 shares of Common Stock;
provided, that in the event that there shall occur at any time and from time to
- --------
time after December 5, 1996 any stock dividend, stock split, combination of
shares, recapitalization or other such event relating to the outstanding Common
Stock, or any merger or consolidation pursuant to which the outstanding Common
Stock is converted into a different number or type of securities, then the
number of shares for which Stock Awards may be granted hereunder shall be
proportionately and correspondingly adjusted (and any outstanding Stock Awards
shall be similarly adjusted).
<PAGE>
(b) The four Threshold Levels under this Plan are as follows:
(i) The Company's receipt of Proceeds of $2,000,000 during the period
from December 5, 1996 through December 31, 1997.
(ii) The Company's receipt of an additional $2,000,000 of Proceeds
(over and above the first $2,000,000 under clause (i) above) during the
period from December 5, 1996 through December 31, 1997.
(iii) The Company's achievement of positive Operating Cash Flow for
any two (2) consecutive fiscal quarters.
(iv) The Company's achievement of positive Operating Income for any
two (2) consecutive fiscal quarters.
(c) In the event that either or both of the Threshold Levels under
clauses (i) and (ii) of paragraph 4(b) above are not timely achieved, there
shall be no extension of time within which to achieve such Threshold Level(s),
the 250,000 shares of Common Stock allocated for such Threshold Level(s) shall
lapse, and no Stock Awards may be granted in respect of such share increment(s).
(d) Subject to the achievement of the requisite Threshold Levels, Stock
Awards may be granted hereunder to such eligible persons and in such amounts as
shall be determined by the Committee, provided that no Stock Award shall entitle
the recipient to purchase the subject Common Stock (i) at a price less than the
stated value per share at which Common Stock is carried on the Company's
financial statements, or (b) for a period in excess of six (6) months after the
date of such Stock Award. Any Stock Award which is not timely exercised within
the terms of such Stock Award shall lapse and be of no further force or effect,
and the Committee shall thereafter be entitled to make other Stock Awards
hereunder in respect of the subject shares of Common Stock.
5. Amendment of Plan. In addition to its rights of interpretation and
-----------------
administration with respect to this Plan, the Committee, subject to approval by
the full Board, shall have the right to make such amendments to this Plan as it
may deem necessary, appropriate, advisable and/or in the best interests of the
Company, provided that no such amendment shall have the effect of (a)
terminating this Plan prior to December 31, 2001, (b) altering any of the
Threshold Levels, (c) altering any of the requirements for Stock Awards set
forth in paragraph 4(d), or (d) adversely affecting the rights of any recipient
with respect to any Stock Award previously granted.
<PAGE>
6. Governing Law. This Plan shall be governed by and construed in
-------------
accordance with the laws of the State of New Jersey, without giving effect to
principles of conflicts of laws.
<PAGE>
EXHIBIT 16.1
J.H Cohn & Company
75 EISENHOWER PARKWAY LAWRENCEVILLE, NJ
ROSELAND, NJ 07068-1697 NEW YORK, NY
(201) 228-3500 ROSELAND, NJ
SAN DIEGO, CA
August 7, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Skylands Park Management, Inc. (File No. 0-22042)
Gentlemen:
We were previously the principal accountants for Skylands Park Management, Inc.
(the "Company") and on March 17, 1995 we reported on the financial statements of
the Company as of December 31, 1994 and 1993 and for the years ended December
31, 1994, 1993 and 1992. On August 2, 1995 we were informed that we were
dismissed as the principal accountants for the Company. We have read the
Company's statements included pursuant to Item 4 in its Form 8-K Current Report
dated August 7, 1995. At the request of the Company, we hereby state that we
agree with the statements included in the second and third paragraphs thereof
that relate to our firm.
Very truly yours,
/s/ J.H. Cohn & Company
-----------------------
J.H. COHN & COMPANY
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JAN-01-1997
<CASH> 115,295
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 85,170
<CURRENT-ASSETS> 200,465
<PP&E> 14,073,821
<DEPRECIATION> 1,273,835
<TOTAL-ASSETS> 13,594,686
<CURRENT-LIABILITIES> 969,791
<BONDS> 205,897
0
0
<COMMON> 435,361
<OTHER-SE> 12,189,534
<TOTAL-LIABILITY-AND-EQUITY> 13,594,686
<SALES> 355,261
<TOTAL-REVENUES> 656,554
<CGS> 79,850
<TOTAL-COSTS> 733,696
<OTHER-EXPENSES> 783,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,140
<INCOME-PRETAX> (825,220)
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