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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------
FORM 8-K
-----------------------------------------------------
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 29, 1998 0-23396
- ------------------------------- -----------------------------------
Date of Report (Date of Commission File Number
earliest event reported)
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
New York 11-3182335
- --------------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
350 Fifth Avenue
New York, New York 10118
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 564-2224
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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Item 5. Other Events.
As previously reported, On May 20, 1998, Skyline Multimedia
Entertainment, Inc., (the "Company") and its subsidiaries entered into a
Senior Secured Credit Agreement (the "Credit Agreement") with the Bank of New
York, as Trustee for the Employees Retirement Plan of Keyspan Energy Corp.
("Keyspan") and Prospect Street NYC Discovery Fund, L.P. ("Prospect Street",
and together with Keyspan, the "Institutional Investors") relating to the
financing during April 1998 of an aggregate of $935,000 (the "Financing"), in
exchange for receipt by the Institutional Investors of senior secured
promissory notes (the "Notes") and warrants to purchase shares of Common Stock
of the Company (the "Warrants"). The Notes mature on July 15, 1998 (the
"Maturity Date"), accrue interest at a per annum rate equal to 14% and are
secured (with certain exceptions) by all the assets of the Company and its
subsidiaries. The Notes and the obligations under the Credit Agreement and
Warrants are also collateralized by a pledge of the stock of the subsidiaries.
On May 29, 1998, the Credit Agreement was amended to increase the loan amount
funded by Keyspan from an aggregate of $500,000 to $1,850,000, which increased
the total Financing amount from $935,000 to $2,285,000. There were no other
modifications to the terms and conditions of the Credit Agreement.
The Company is required to obtain an equity financing of at
least $3 million prior to the Maturity Date and is currently in the process of
reviewing its alternatives. However, it is unlikely that the Company will
obtain such financing by the Maturity Date, in which event the Company will
not have sufficient cash to repay the Notes. The Company's failure to repay
the Notes when they come due will result in a default under the Credit
Agreement and other debt instruments executed with the Institutional Investors
with respect to prior financings. The Company is currently in discussions with
the Institutional Investors.
The Company recently hired Jay Berkman as Executive Director
of Marketing and Business Development. Prior to joining the Company, Mr. Berkman
held the position of Senior Marketing Executive with the Bank of New York
electronic commerce division. Prior thereto, Mr. Berkman held various positions
in the Investment Banking and Securities Industries during which period he was a
consultant to a number of entertainment and theme related enterprises. Mr.
Berkman will share the responsibilities of the office of Chief Executive with
Steven Schwartz, Executive Director of Operations and Finance. Mr. Schwartz has
been with the Company for approximately four years as Chief Financial Officer
and has been integrally involved in raising the capital needed to fund the
Company's growth during such period. Prior to joining the Company, Mr. Schwartz
was employed as an Audit Supervisor by Richard A. Eisner and Co., LLP, a
large regional accounting firm located in New York City.
Mr. Berkman entered into a two year employment agreement with
the Company and will receive an annual salary of $140,000. Mr. Berkman will also
receive a signing bonus of $25,000 and an option, exercisable prior to September
15, 1998, to receive either $30,000 in cash or 100,000 shares of restricted
stock. Mr. Berkman has been granted options to purchase 200,000 shares of common
stock at an exercise price equal to $.3125 per share (the fair market value on
the date of grant) vesting over the term of his employment. Mr. Berkman has also
been granted options to purchase 300,000 shares of Common Stock at an exercise
price equal to $.3125 per share (the fair market value on the date of grant)
subject to the Company achieving certain performance targets for the six months
ending December 31, 1998 and for the fiscal year ending June 30, 1999.
Mr. Schwartz has entered into a one year employment contract
with the Company and will receive a salary of $140,000. Mr. Schwartz has been
granted options to purchase 100,000 shares of Common Stock at an exercise
price equal to $.4375 per share (the fair market value on the date of grant)
which vest immediately. Mr. Schwartz has also been granted options to purchase
200,000
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shares of Common Stock at an exercise price equal to $.3125 per share (the
fair market value on the date of grant) subject to the Company achieving
certain performance targets for the six months ending December 31, 1998 and
for the fiscal year ending June 30, 1999.
The Company's Board of Directors has appointed Mr. Steven Vocino as
Chairman of the Board to fill the vacancy created by the resignation of Jay
Coleman on May 13, 1998. Mr. Vocino is the Founder and President of WTLN-TV, the
Teaching Learning Network, and international television program supplier. Mr.
Vocino's background includes a variety of fully sponsored internationally
televised sporting events (i.e., 1984 Summer Olympic Games, the Traveling
Sportsman, Tour of America and the Pan Am Games). Apart from sports programming,
Mr. Vocino has established an excellent sponsor and advertising following within
the children's market. Productions include Classroom of the Future, College
Bound, Pets and Vets and Kids Cafe. Mr. Vocino has established an excellent
reputation within the broadcast, cable and public television industry and has
won numerous awards for programming, including Telly, Emmy, Golden Globe, Golden
Apple, Peabody, International Peace Through Sports Awards and Children's
Television Workshop awards. In 1995 Mr. Vocino assumed the responsibilities of
President of New Media Inc., a television production company focusing on the
travel industry, and was instrumental in its turnaround.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) not applicable
(b) not applicable
(c) Exhibits
10.53 First Amendment to Senior Secured Credit
Agreement among the Company and its
subsidiaries and the Institutional
Investors.
10.54 Employment Agreement dated May 12, 1998 between the
Company and Steven Schwartz.
10.55 Employment Agreement dated June 15, 1998 between the
Company and Jay Berkman.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 10, 1998 SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By: /s/Steven Schwartz
---------------------------
Name: Steven Schwartz
Title: Executive Director of Operations and Finance
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FIRST
AMENDMENT
TO
SENIOR SECURED CREDIT AGREEMENT
FIRST AMENDMENT, dated as of May 29, 1998 (this "Amendment") to the
Senior Secured Credit Agreement dated as of May 20, 1998 (the "Credit
Agreement"), by and among Skyline Multimedia Entertainment, Inc., a New York
corporation (the "Company"), New York Skyline, Inc., a New York corporation
("NYSI"), Skyline Virtual Reality, Inc., a Delaware corporation ("SVRI"),
Skyline Chicago, Inc., a Delaware corporation ("SCI"), Skyline Magic, Inc., a
Delaware corporation ("SMI"), Skyline Las Vegas, Inc., a Delaware corporation
("SLVI") (the Company, NYSI, SVRI, SCI, SMI and SLVI, together the
"Borrowers"), Prospect Street NYC Discovery Fund, L.P., a Delaware limited
partnership ("Prospect"), and Bank of New York, as Trustee for the Employees
Retirement Plan of Keyspan Energy Corp. ("KEP").
WHEREAS, capitalized terms not otherwise defined herein have the
respective meanings set forth in the Credit Agreement;
WHEREAS, each of the Borrowers, Prospect and KEP desire to amend
Schedule 2.1 of the Credit Agreement in order to increase the Loan Amount of
KEP from $500,000 to $1,850,000.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Schedule 2.1 of the Credit Agreement. Schedule 2.1 of
the Credit Agreement is hereby amended by deleting "$500,000" in the column
entitled "Loan Amount" and inserting in lieu thereof "$1,850,000".
2. Effectiveness of Amendment. Pursuant to Section 8.7 of the Credit
Agreement, this Amendment shall become effective upon the execution and
delivery of this Agreement by the Lenders and each Borrower.
3. Effect on Credit Agreement. The Credit agreement shall continue in
full force and effect as amended by this Amendment. From and after the date
hereof, all references to the Credit Agreement shall be deemed to mean the
Credit Agreement as amended by this Amendment.
4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
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NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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In WITNESS WHEREOF, this Amendment has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Executive Director of Operations
and Finance
NEW YORK SKYLINE, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Secretary
SKYLINE VIRTUAL REALITY, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Secretary
SKYLINE CHICAGO, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Secretary
SKYLINE MAGIC, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Secretary
SKYLINE LAS VEGAS, INC.
By:
-----------------------------------
Name: Steven Schwartz
Title: Secretary
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PROSPECT STREET NYC DISCOVERY FUND, L.P.
By: Prospect Street Discovery Fund, Inc.,
its general partner
By:
-------------------------------
Name: John F. Barry, III
Title:
BANK OF NEW YORK, as Trustee for the
Employees Retirement Plan of Keyspan
Energy Corp.
By:
-----------------------------------
Name:
Title:
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Skyline Multimedia Entertainment, Inc.
350 Fifth Avenue
New York, New York 10118
May 12, 1998
Mr. Steven Schwartz
1030 East 22nd Street
Brooklyn, New York 11210
Dear Steven:
This letter will confirm our understanding and your agreement with
Skyline Multimedia Entertainment, Inc. and its subsidiaries (collectively, the
"Company") as follows:
1. Employment. You will be employed as Executive Director of
Operations and Finance of the Company on an interim basis until further
notification by the Board of Directors. In the event the Board of Directors
determines that you shall no longer be employed as Executive Director of
Operations and Finance (except pursuant to Paragraph 10A herein), you shall
continue to be employed for the remainder of the Term (as defined below) as
Chief Financial Officer of the Company with no diminution in the Base Salary
(as set forth herein). You agree to devote substantially all of your time and
attention to the affairs of the Company to fulfill your responsibilities
hereunder during the Term of this Agreement. You shall report directly to the
Board of Directors of the Company or to such person as directed by the Board
of Directors.
2. Term. Your employment with the Company will continue as
of the date hereof for a period ending on June 30, 1999 (the "Term") unless
terminated sooner in accordance with the provisions of Paragraphs 10A or 10B.
This Agreement may be renewed from year to year upon written notice by the
Company of same, including in such notice any modifications of the terms
hereof, delivered to you not less than three months prior to the end of the
then current Term and accepted by you within 30 days of such notice.
3. (a) Annual Salary. During the Term, the Company will pay
you an annual salary of $140,000 (the "Base Salary") payable in equal
installments every two weeks.
(b) Bonus. In addition to the compensation set forth
herein, you will be entitled to receive bonuses as the Board of Directors shall
determine.
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4. Stock Options. You will be eligible to receive grants of
stock options under the Company's Stock Incentive Plan as the Board of
Directors shall determine. Upon execution of this Agreement, you shall be
entitled to receive stock options under the Company's Stock Incentive Plan
exercisable for 100,000 shares of Common Stock of the Company at an exercise
price per share equal to the fair market value on the date hereof, which
options shall vest at the rate of 50% on the date which is 90 days from the
date hereof and the remaining 50% on June 30, 1999; provided, however, in each
instance, that you have not been terminated as an employee of the Company on
such vesting dates. Additionally, you shall receive that number of stock
options under the Company's Stock Incentive Plan, subject to satisfaction of
the performance criteria, as set forth on Schedule A hereto; provided,
however, that the vesting of such options shall accelerate and such
performance criteria shall be deemed satisfied in the event of the sale of the
Company or the disposition of substantially all of the assets of the Company
or a similar event during the Term.
5. Benefits. You will be entitled to participate in and be
covered by all health, insurance, bonus, pension and other employee plans and
benefits established by the Company for its employees generally, subject to
meeting applicable eligibility requirements.
6. Vacations and Holidays. During the Term, you will be
entitled to an annual vacation leave of three weeks at full pay. You will be
entitled to such holidays as are established by the Company for all employees.
In addition, you will be entitled to four personal days at your choosing at
full pay.
7. Confidential Information. During the Term as same may be
renewed and thereafter, you agree that you will not make use of any
information you become aware of in connection with your duties hereunder
unless such information is in the public domain, for your own purposes or for
the benefit of anyone other than the Company, whether or not such information
is specifically treated or marked as "Confidential". In the event of the
termination of your employment with the Company (irrespective of the cause of
termination), you will promptly deliver to the Company all materials,
property, documents, data and other information belonging to the Company or
pertaining to Confidential Information. You shall not take any materials,
property, documents or other information, or any reproduction or excerpt
thereof, belonging to the Company or pertaining to any Confidential
Information.
"Confidential Information" shall mean any information
regarding the business methods, business policies, procedures, techniques,
research or processes of or developed by the Company, or any names and
addresses of customers, vendors, strategic partners or joint venturers or
clients or any data on or relating to past, present or prospective customers,
clients, vendors, strategic partners or joint venturers or any other
confidential information relating to or dealing with the business operations
or activities of the Company, made known to you or learned or acquired by you
while in the employ of the Company.
8. Injunctive Relief. You agree that the Company cannot be
adequately compensated in damages in an action at law in the event that you
have breached your obligations
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under Paragraph 8 of this Agreement. Therefore, you expressly agree that the
Company shall be entitled to injunctive and other relief without the posting
of a bond or other security in addition to any other rights or remedies which
the Company may possess. In the event that any of the prohibitions of this
Agreement relating to the scope or period of restriction shall be deemed to
exceed the maximum scope or period of time which a Court deems valid and
enforceable, such scope or period shall be reduced to the maximum deemed
allowable by such court.
9. A. Termination. The Board of Directions may
terminate your employment hereunder as follows:
(a) upon your death, whereupon this Agreement shall
immediately terminate;
(b) upon a determination of Permanent Disability;
"Permanent Disability" shall mean a physical or mental
incapacity as a result of which you become totally unable to
continue the performance of your duties hereunder for a
period of 90 consecutive days. A determination of Permanent
Disability shall be subject to the certification of a
qualified medical doctor agreed to by the Company and you or
your legal representative. In the absence of agreement
between the Company and you, each party shall nominate a
qualified medical doctor and the two doctors so nominated
shall select a third doctor, who shall make the
determination as to the occurrence and continuance of a
Permanent Disability; or
(c) for Cause, whereupon this Agreement shall
immediately terminate. "Cause" shall mean only the
following:
(i) the willful and, after notice and a
reasonable opportunity to cure, continued failure
by you to substantially perform your duties
hereunder (other than such failure resulting from
your incapacity due to physical or mental illness);
(ii) personal dishonesty in the
performance of your duties to the Company;
(iii) willful misconduct by you in
performance of your duties to the Company (which
includes a willful, material breach of this
Agreement by you);
(iv) conviction of a felony;
(v) willful theft from the Company or
misuse of Company funds or assets; or
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(vi) a willful violation of any law, rule
or regulation, or the imposition of a final order
issued by any regulatory authority against the
Company, which, in any event, prohibits you from
holding a position with the Company.
For purposes of this Agreement, no act, or failure to act,
on your part shall be considered "willful" unless done, or omitted to
be done, by you in bad faith and without a reasonable belief that
such action or omission by you was in the best interests of the
Company.
Any termination pursuant to this provision shall be
accompanied by a written explanation of the event or events
constituting "cause", which writing shall be executed by the
Company's President and/or Chief Executive Officer and/or Board of
Directors.
If you are terminated without "cause" (as determined by a
judicial non-appealable decision or a decision the Company chooses
not to appeal), or any other basis for termination not permitted
hereunder, or you terminate this Agreement for "Good Reason" (as
defined below), you shall be entitled to a severance payment equal to
no more than the remainder of your salary for the unexpired portion
of the Term of this Agreement. In the event of your termination of
employment, you shall be under an obligation to use reasonable
efforts to seek other employment and there shall be an offset against
any amounts due you hereunder on account of any remuneration you may
obtain from any subsequent employment.
10. B. You will be entitled to terminate this Agreement
for Good Reason if:
(a) You are asked by the Company to take actions
inconsistent with your obligations to the public or regulatory
agencies; or
(b) The Company breaches any term or covenant
contained herein.
11. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt required, postage prepaid, as follows:
If to the Company:
Skyline Multimedia Entertainment, Inc.
350 Fifth Avenue, Suite 612
New York, New York 10118
Attn: Chairman, Compensation Committee of the Board
of Directors
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If to Executive:
Steven Schwartz
1030 East 22nd Street
Brooklyn, N.Y. 11210
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
without regard to its conflicts of laws provisions.
13. Arbitration. Any and all disputes or controversies
arising out of or relating to this Agreement, other than injunctive relief
pursuant to Paragraph 9, shall be resolved by arbitration at the American
Arbitration Association at its New York City offices before a panel of one
arbitrator under the then existing rules and regulations of the American
Arbitration Association. The parties agree that in any such arbitration, the
arbitrator shall not have the power to reform or modify this Agreement in any
way and to that extent his powers are so limited. The determination of the
arbitrator shall be final and binding on the parties hereto and judgment on it
may be entered in any court of competent jurisdiction. Except as required by
law, neither the Company nor Executive shall issue any press release or make
any statement which is reasonably foreseeable to become public with respect to
any arbitration or dispute between the parties without receiving the prior
written consent of the other party to the content of such press release or
statement. In the event Executive prevails in such proceedings, as determined
by the arbitrator, the Company shall reimburse Executive for all expenses
(including, without limitation, reasonable legal fees and expenses) incurred
by Executive in connection with such proceeding or any other proceeding in
which Executive prevails in contesting or defending any claim or controversy
arising out of or relating to this Agreement. All such amounts shall be paid
promptly, but in any event within ten (10) days after Executive provides the
Company with a statement of such amounts to be recovered. In the event
Executive does not prevail in such proceedings, as determined by the
arbitrator, each party hereto shall be responsible for their own expenses
(including, without limitation, legal fees and expenses) incurred in
connection with such proceedings.
14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
Very truly yours,
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:
-----------------------------------
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ACCEPTED AND AGREED TO:
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Steven Schwartz
6
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Schedule A
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Performance-Based Stock Options
-------------------------------
<TABLE>
<CAPTION>
- ------------------------ ------------------------------- ----------------------------------------------
Exercise Price Per
Number of Shares Share (FMV on Vesting Criteria Skyride and
Subject to Option grant date) XS New York EBITDA Targets
- ----------------- ----------- --------------------------
- ------------------------ ------------------------------- -----------------------------------------------
<S> <C> <C>
1. 100,000 $.3125 [6/15] for the six month period ending 12/31/98 =
$1,021,000 or for the twelve month period
ending June 30, 1999 = $1,577,000
- ------------------------ ------------------------------- -----------------------------------------------
2. 100,000 $.3125 [6/15] for the twelve month period ending June 30,
1999 = $1,577,000
- ------------------------ ------------------------------- -----------------------------------------------
- ------------------------ ------------------------------- -----------------------------------------------
</TABLE>
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Skyline Multimedia Entertainment, Inc.
350 Fifth Avenue
New York, New York 10118
June 15, 1998
Mr. Jay Berkman
4 Hyde Ridge Road
Weston, CT 06882
Dear Jay:
This letter will confirm our understanding and your agreement with
Skyline Multimedia Entertainment, Inc. and its subsidiaries (collectively, the
"Company"), as follows:
1. Employment. You will be employed as Executive Director of
Marketing and Business Development and Co-Chief Executive Officer (or such
other similar title as designated by the Board) of the Company subject to the
direction of the Board of Directors. You agree to devote substantially all of
your time and attention to the affairs of the Company to fulfill your
responsibilities hereunder during the Term of this Agreement. You shall report
directly to the Board of Directors of the Company or to such person as
directed by the Board of Directors.
2. Term. Your employment with the Company will commence as
of June 15, 1998 for a period ending on the second anniversary hereof (the
"Term") unless terminated sooner in accordance with the provisions of
Paragraphs 10A or 10B. This Agreement may be renewed from year to year upon
written notice by the Company of same, including in such notice any
modifications of the terms hereof, delivered to you not less than three months
prior to the end of the then current Term and accepted by you within 30 days
of such notice. Prior to the commencement date of your employment, the Company
may utilize your services as a consultant to the Company.
3. (a) Annual Salary. During the Term, the Company will pay
you an annual salary of $140,000 (the "Base Salary") payable in equal
installments every two weeks. Increases in Base Salary will be subject to the
discretion of the Board of Directors.
(b) Special Bonus. At your election, upon notice to the
Company within 90 days of the date hereof, the Company will pay you a special
bonus of either (i) an aggregate of $30,000 payable during the period from the
date of election hereunder through December 31, 1998 in equal payments every
two weeks in accordance with the Company's regular payroll policies; provided,
however, that such payments will cease in the event of termination of your
employment for any reason prior to December 31, 1998, or (ii) an aggregate
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of 100,000 shares of restricted common stock of the Company, which shares
shall vest on December 31, 1998; provided, however that your employment with
the Company has not been terminated prior to such date.
(c) Signing Bonus. Upon commencement of employment
hereunder, you will be entitled to receive a signing bonus equal to $25,000
payable in two equal installments on the 15th and 30th day subsequent to your
commencement of employment; provided, however that such payments shall cease
in the event of the termination of your employment for any reason on or prior
to such payment dates.
(d) Board Membership. Upon the execution of this Agreement,
the Company and its current directors will use their best efforts to elect you
to the Board of Directors of the Company.
4. Stock Options. You will be eligible to receive grants of
stock options under the Company's Stock Incentive Plan as the Board of
Directors shall determine. In addition to the grant of options or shares of
common stock pursuant to Paragraph 3 herein, upon execution of this Agreement,
you shall be entitled to receive stock options under the Company's Stock
Incentive Plan exercisable for 200,000 shares of common stock of the Company
at an exercise price per share equal to the fair market value on the date
hereof, which options shall vest 50% on June 30, 1999 and 50% on June 30, 2000
in the event your employment with the Company has not been terminated prior to
each such vesting date, as the case may be. Additionally, you shall receive
stock options under the Company's Stock Incentive Plan exercisable for 300,000
shares of common stock of the Company, subject to satisfaction of the
performance criteria as set forth on Schedule A hereto.
5. Sale Event/Put Option. In the event of a sale of the
Company, disposition of substantially all of the assets of the Company, a
merger in which the Company is not the survivor or other business combination
(each a "Sale Event") during the Term, all the restricted shares and the stock
options identified in this Agreement that have not vested as of the date of
such Sale Event, shall accelerate and automatically vest. Therefore and
consequent to such Sale Event, you shall be entitled to receive the greater of
(i) $200,000 (Two Hundred Thousand Dollars) or (ii) the restricted shares
pursuant to Paragraph 3 and the stock options pursuant to Paragraph 4 (an
aggregate of 600,000 shares (or 500,000 shares in the event you elect not to
take the shares pursuant to Paragraph 3(b)(ii) hereof)). Should you elect to
receive the cash payment set forth in subclause (i), it is understood and
agreed that the shares and option identified in this Agreement shall
automatically be cancelled and revert back to the Company.
6. Benefits. You will be entitled to participate in and be
covered by all health, insurance, bonus, pension and other employee plans and
benefits established by the Company for its employees generally, subject to
meeting applicable eligibility requirements.
7. Vacations and Holidays. During the Term, you will be
entitled to an annual vacation leave of three weeks at full pay. You will be
entitled to such holidays as are
2
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established by the Company for all employees. In addition, you will be
entitled to four personal days at your choosing at full pay.
8. Confidential Information. During the Term as same may be
renewed and thereafter, you agree that you will not make use of any
information you become aware of in connection with your duties hereunder
unless such information is in the public domain, for your own purposes or for
the benefit of anyone other than the Company, whether or not such information
is specifically treated or marked as "Confidential". In the event of the
termination of your employment with the Company (irrespective of the cause of
termination) you will promptly deliver to the Company all materials,
property, documents, data and other information belonging to the Company or
pertaining to Confidential Information. You shall not take any materials,
property, documents or other information, or any reproduction or excerpt
thereof, belonging to the Company or pertaining to any Confidential
Information.
"Confidential Information" shall mean any information
regarding the business methods, business policies, procedures, techniques,
research or processes of or developed by the Company, or any names and
addresses of customers, vendors, strategic partners or joint venturers or
clients or any data on or relating to past, present or prospective customers,
clients, vendors, strategic partners or joint venturers or any other
confidential information relating to or dealing with the business operations
or activities of the Company, made known to you or learned or acquired by you
while in the employ of the Company.
9. Injunctive Relief. You agree that the Company cannot be
adequately compensated in damages in an action at law in the event that you
have breached your obligations under Paragraph 8 of this Agreement. Therefore,
you expressly agree that the Company shall be entitled to injunctive and other
relief without the posting of a bond or other security in addition to any
other rights or remedies which the Company may possess. In the event that any
of the prohibitions of this Agreement relating to the scope or period of
restriction shall be deemed to exceed the maximum scope or period of time
which a Court deems valid and enforceable, such scope or period shall be
reduced to the maximum deemed allowable by such court.
10. A. Termination. The Board of Directors may terminate
your employment hereunder as follows:
(a) upon your death, whereupon this Agreement shall
immediately terminate;
(b) upon a determination of Permanent Disability;
"Permanent Disability" shall mean a physical or mental
incapacity as a result of which you become totally unable to
continue the performance of your duties hereunder for a
period of 90 consecutive days. A determination of Permanent
Disability shall be subject to the certification of a
qualified medical doctor agreed to by the Company and you or
your legal representative. In the absence of agreement
between the Company and you, each party shall nominate a
qualified medical doctor and the
3
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two doctors so nominated shall select a third doctor, who
shall make the determination as to the occurrence and
continuance of a Permanent Disability; or
(c) for Cause, whereupon this Agreement shall
immediately terminate. "Cause" shall mean only the
following:
(i) the willful and, after notice and a
reasonable opportunity to cure, continued failure
by you to substantially perform your duties
hereunder (other than such failure resulting from
your incapacity due to physical or mental illness);
(ii) personal dishonesty in the
performance of your duties to the Company;
(iii) willful misconduct by you in
performance of your duties to the Company (which
includes a willful, material breach of this
Agreement by you);
(iv) conviction of a felony;
(v) willful theft from the Company or
misuse of Company funds or assets; or
(vi) a willful violation of any law, rule
or regulation, or the imposition of a final order
issued by any regulatory authority against the
Company, which, in any event, prohibits you from
holding a position with the Company.
For purposes of this Agreement, no act, or failure to act,
on your part shall be considered "willful" unless done, or omitted to
be done, by you in bad faith and without a reasonable belief that
such action or omission by you was in the best interests of the
Company.
Any termination pursuant to this provision shall be
accompanied by a written explanation of the event or events
constituting "cause", which writing shall be executed by the
Company's Chairman and/or Board of Directors.
If you are terminated without "cause" (as determined by a
judicial non-appealable decision or a decision the Company chooses
not to appeal), or any other basis for termination not permitted
hereunder, or you terminate this Agreement for "Good Reason" (as
defined below), you shall be entitled to a severance payment equal to
no more than the remainder of your salary for the unexpired portion
of the Term of this Agreement.
10. B. You will be entitled to terminate this Agreement
for Good Reason if:
4
<PAGE>
(a) You are asked by the Company to take actions
inconsistent with your obligations to the public or
regulatory agencies; or
(b) The Company breaches any term or covenant
contained herein.
11. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt required, postage prepaid, as follows:
If to the Company:
Skyline Multimedia Entertainment, Inc.
350 Fifth Avenue, Suite 612
New York, New York 10118
Attn: Chairman, Compensation Committee of the Board of
Directors
If to Executive:
Mr. Jay Berkman
4 Hyde Ridge Road
Weston, CT 06882
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
without regard to its conflicts of laws provisions.
13. Arbitration. Any and all disputes or controversies
arising out of or relating to this Agreement, other than injunctive relief
pursuant to Paragraph 9, shall be resolved by arbitration at the American
Arbitration Association at its New York City offices before a panel of one
arbitrator under the then existing rules and regulations of the American
Arbitration Association. The parties agree that in any such arbitration, the
arbitrator shall not have the power to reform or modify this Agreement in any
way and to that extent his powers are so limited. The determination of the
arbitrator shall be final and binding on the parties hereto and judgment on it
may be entered in any court of competent jurisdiction. Except as required by
law, neither the Company nor you shall issue any press release or make any
statement which is reasonably foreseeable to become public with respect to any
arbitration or dispute between the parties without receiving the prior written
consent of the other party to the content of such press release or statement.
In the event you prevail in such proceedings, as determined by the arbitrator,
the Company shall reimburse you for all expenses (including, without
limitation, reasonable legal fees and expenses) incurred by you in connection
with such proceeding or any other proceeding in which you prevail in
contesting or defending any claim or controversy arising out of or
5
<PAGE>
relating to this Agreement. All such amounts shall be paid promptly, but in
any event within ten (10) days after you provide the Company with a statement
of such amounts to be recovered. In the event you do not prevail in such
proceedings, as determined by the arbitrator, each party hereto shall be
responsible for their own expenses (including, without limitation, legal fees
and expenses) incurred in connection with such proceedings.
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<PAGE>
14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
Very truly yours,
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:
--------------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
- ----------------------------------
Jay Berkman
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<PAGE>
Schedule A
----------
Performance-Based Stock Options
-------------------------------
<TABLE>
<CAPTION>
- --------------------------- ----------------------------- ---------------------------------------------
Exercise Price Per
Number of Shares Share (FMV on Vesting Criteria Skyride and
Subject to Option grant date) XS New York EBITDA Targets
- ----------------- ------------------ --------------------------
- --------------------------- ----------------------------- ---------------------------------------------
<S> <C> <C>
1. 150,000 $.3125 [6/15] for the six month period ending 12/31/98 =
$1,021,000 or for the twelve month period
ending June 30, 1999 = $1,577,000
- --------------------------- ----------------------------- ---------------------------------------------
2. 150,000 $.3125 [6/15] for the twelve month period ending June 30,
1999 = $1,577,000
- --------------------------- ----------------------------- ---------------------------------------------
- --------------------------- ----------------------------- ---------------------------------------------
</TABLE>
8
