-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BLXRRcF3/7W1pmF6YUjPb7zYKG8lU+RzZtDR4ffr+Vivpz4odewokX9zK8idkW9z 6dxvcgvZQkI+/5fdqxTdCQ== 0000950130-98-001657.txt : 19980401 0000950130-98-001657.hdr.sgml : 19980401 ACCESSION NUMBER: 0000950130-98-001657 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILLENNIUM SPORTS MANAGEMENT INC CENTRAL INDEX KEY: 0000904075 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 223127024 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-22042 FILM NUMBER: 98583183 BUSINESS ADDRESS: STREET 1: PO BOX 117 CITY: AUGUSTA STATE: NJ ZIP: 07822-0117 BUSINESS PHONE: 9733837644 MAIL ADDRESS: STREET 1: PO BOX 117 CITY: AUGUSTA STATE: NJ ZIP: 07822-0117 FORMER COMPANY: FORMER CONFORMED NAME: SKYLANDS PARK MANAGEMENT INC DATE OF NAME CHANGE: 19930510 10KSB 1 FORM 10-K 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 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 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; 1 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 ----------------- Jersey's Baseball Magazine, a quarterly 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, 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 2 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 3 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 4 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 5 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 ------------------ Jersey's Baseball Magazine, featuring nationally syndicated baseball journalist - -------------------------- Phil Pepe as its Senior Editor. The Company did not realize a profit from the magazine, and the Company has discontinued publication of BarnStorming. ------------ 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. 6 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. 7 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 8 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, 9 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 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 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 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 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 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 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 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 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 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 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 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 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 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 MILLENNIUM SPORTS MANAGEMENT, INC. (Formerly Skylands Park Management, Inc.) BALANCE SHEET DECEMBER 31, 1997
ASSETS 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 ============ LIABILITIES AND STOCKHOLDERS' EQUITY 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 ============
See accompanying notes to financial statements. MILLENNIUM SPORTS MANAGEMENT, INC. (Formerly Skylands Park Management, Inc.) STATEMENTS OF OPERATIONS
Year Ended December 31, -------------------------------- 1997 1996 --------------- --------------- 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) =============== ===============
MILLENNIUM SPORTS MANAGEMENT, INC. (Formerly Skylands Park Management, Inc.) STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock ----------------------- Additional Number Paid-in Accumulated of Shares Amount Capital Deficit Total ----------- ---------- ------------- ------------- -------------- 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 =========== ========== ============= ============= ==============
MILLENNIUM SPORTS MANAGEMENT, INC. (Formerly Skylands Park Management, Inc.) STATEMENTS OF CASH FLOWS
Year Ended December 31, ------------------------------ 1997 1996 ------------- -------------- 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 ============= ==============
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 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 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 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 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 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 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 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 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 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:
Year Ended December 31, ------------------------------------------ 1997 1996 -------------------- -------------------- 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 $ - $ - =================== ===================
The significant components of the Company's deferred tax assets as of December 31, 1997 are summarized below: 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) ----------------- $ - =================
37 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 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 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 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 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 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.
Total Name and Principal Compensation Position Year Salary Options/SAR's (#) Paid or Accrued - -------------------------- ---------- ------------- ---------------------- ------------------ 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)
(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 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 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.
Number of Value of Shares Acquired Value Unexercised Unexercised Name on Exercise Realized Options at Year End Options ----------- -------- ------------------- ------- 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 --
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 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.
Percentage of Outstanding Name and Address of Owner(1) Number of Shares(2) Common Stock - ---------------------------- ------------------- ------------ 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)
____________________ (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 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 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 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 (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 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.
SIGNATURE TITLE DATE /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
51 EX-3.1 2 AMENDED AND RESTATED CERTIFICATE 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. 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 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 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 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 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 EX-3.2 3 CERTIFICATE OF AMENDMENT AUGUST 1993 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 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 EX-3.3 4 CERTIFICATER OF AMENDMENT JANUARY 1994 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. Dated: This 14th day of January, 1994 SKYLANDS PARK MANAGEMENT, INC. By: ------------------------------- Frederick A. Voight, Chairman EX-3.4 5 CERTIFICATE OF AMENDMENT NOVEMBER 1996 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 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 EX-3.5 6 CERTIFICATE OF AMENDMENT (MILLENIUM) 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 EX-3.6 7 SECOND AMENDED AND RESTATED 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. 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- 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- (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- (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- 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- 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- 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 -8- 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 -9- 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 -10- 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 -11- 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. -12- 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 -13- 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 -14- 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. -15- 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 -16- 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 -17- 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 -18- 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. -19- EX-4.4 8 NOTIFICATION LETTER TO CLASS A WARRANT 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. EX-4.5 9 FORM OF WARRANT AGREEMENT EXHIBIT 4.5 - -------------------------------------------------------------------------------- SKYLANDS PARK MANAGEMENT, INC. AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY WARRANT AGREEMENT Dated as of February 6, 1997 - -------------------------------------------------------------------------------- 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: -2- 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. -3- (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. -4- 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. -5- 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). -6- (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 -7- 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- 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- 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- 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- 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 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- 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- (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- (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- 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- (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- 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- 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- 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. 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 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 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. (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. 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:_______________________ EX-10.1 10 STOCK OPTION PLAN 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: (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 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 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 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 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 11. Name. The Plan shall be known as the "Skylands Park Management, Inc. ---- Stock Option Plan." 7 EX-10.2 11 $125,000 LOAN AGREEMENT/BARRY GORDON 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. 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 ---------------- EX-10.3 12 $125,000 LOAN AGREEMENT / MARC KLEE 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. 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 ---------------- EX-10.4 13 $100,000 PROMISSARY NOTE 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 (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: ---------------------------- EX-10.5 14 $140,000 PROMISSARY NOTE 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- 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- EX-10.6 15 $6,000 PROMISSARY NOTE 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, 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) EX-10.7 16 AMENDED EMPLOYEE AGREEMENT 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 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 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 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 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 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 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 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 EXHIBIT A
Annualized Compensation Compensation Period for Period Time of Payment - ------------------- ---------- --------------- 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
* 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
Date Issued Number of Stock Condition - ----------- --------------- --------- 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.
9 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 EX-10.10 17 EMPLOYEE AGREEMENT DATED OCTOBER 28, 1996 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"). (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); (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. 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 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. 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 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. 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 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 EX-10.11 18 AMENDMENT TO EMPLOYEE AGREEMENT 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 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 EX-10.12 19 1996 STOCK AWARD PLAN 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. (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). (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. 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. EX-16.1 20 LETTER ON CHANGE IN CERTIFYING ACCOUNTANT 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 EX-27 21 FINANCIAL DATA SCHEDULES
5 12-MOS DEC-31-1998 JAN-01-1997 115,295 0 0 0 85,170 200,465 14,073,821 1,273,835 13,594,686 969,791 205,897 0 0 435,361 12,189,534 13,594,686 355,261 656,554 79,850 733,696 783,923 0 58,140 (825,220) 0 (825,220) 0 0 0 (825,220) (0.37) (0.37)
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