DEBT TO EQUITY CONVERSION AGREEMENT
This Agreement ("Agreement") is made as of this 2nd day of
September, 1998 by and among Skyline Multimedia Entertainment, Inc., a New
York corporation (the "Company"), New York Skyline, Inc., a New York
corporation ("NYSI"), Skyline Virtual Reality, Inc., a Delaware corporation
("SVRI"), Skyline Chicago, Inc., a Delaware corporation ("SCI"), Skyline
Magic, Inc., a Delaware corporation ("SMI"), Skyline Las Vegas, Inc., a
Delaware corporation ("SLVI") (NYSI, SVRI, SCI, SMI and SLVI, each a "Skyline
Subsidiary" and, collectively, the "Skyline Subsidiaries"), Prospect Street
NYC Discovery Fund, L.P. ("Prospect"), The Bank of New York as Trustee for the
Employees Retirement Plan of The Brooklyn Union Gas Company ("BUG"), The Bank
of New York as Trustee for the Employees Retirement Plan of The Brooklyn Union
Gas Company Health VEBA ("VEBA"), The Bank of New York as Trustee for the
Employees Retirement Plan of KeySpan Energy Corporation ("KeySpan"). Prospect,
BUG, VEBA and KeySpan are also hereinafter referred to collectively as the
"Investors" or separately as an "Investor".
Recitals
A. The Investors presently hold $7.235 million principal amount of
debt (the "Debt") of the Company evidenced by certain promissory notes in the
amounts listed in Schedule A attached hereto, plus accrued and unpaid interest
through the date hereof as set forth in Schedule A.
B. The Company's Common Stock, $.001 par value per share ("Common
Stock") is traded publicly on the Nasdaq SmallCap Market ("Nasdaq"). The
Company's net capital is currently below the level required by Nasdaq for
continued listing thereon.
C. The Company desires to convert the Debt into equity of the Company
in order to (i) restore and maintain its net capital in excess of that
required to maintain the Company's listing of its Common Stock on Nasdaq, and
(ii) reduce its debt to equity ratio and make the Company more attractive to
potential investors and strategic partners.
D. Pursuant to a Letter of Intent dated August 18, 1998, the
Investors have agreed to convert the Debt into shares of Series B Redeemable
Convertible Preferred Stock of the Company, $.01 par value per share (the
"Series B Preferred Stock") at a conversion rate and on such terms and
conditions as set forth herein.
Agreements
THEREFORE, the Company and the Investors hereby agree as
follows:
1. Certain Definitions. (a) As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under common
control with, that Person, (b) any other Person that owns or controls 10% or
more of any class of equity securities (including any equity securities
issuable upon the exercise of any option or convertible security) of that
Person or any of its Affiliates, or (c) any director, partner, officer, agent,
employee or relative of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"Agreement" means this Debt to Equity Conversion Agreement,
the Exhibits, Annexes and the certificates or other documents or instruments
delivered in accordance herewith, as the same may be amended from time to time
in accordance with the terms hereof.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person, including, without limitation, cash, cash equivalents, Investment
Assets, accounts and notes receivable, chattel paper, documents, instruments,
general intangibles, real estate, equipment, inventory, goods and Intellectual
Property.
"Capital Lease Obligation(s)" means, as to any Person, any
obligation of such Person which is or should be classified and accounted for
as a capital lease for financial reporting purposes in accordance with GAAP,
and the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP on a consolidated basis.
"Contract" means any agreement, lease, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
"GAAP" means generally accepted accounting principles,
consistently applied.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision, and shall include,
without limitation, any stock exchange, quotation service and the National
Association of Securities Dealers.
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"Indebtedness" of any Person means, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments,
(iii) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (iv) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding accounts payable incurred in the ordinary
course of business), (v) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (vi)
all guarantees by such Person of Indebtedness of others, (vii) all Capital
Lease Obligations of such Person, (viii) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (ix) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership
in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Intellectual Property" shall mean all (a) copyrights,
copyright registrations and applications for copyright registrations, (b)
patents and patent applications, (c) trade names, trademarks and service
marks, logos, trademark and service ▇▇▇▇ registrations, and applications for
trademark and service ▇▇▇▇ registrations, (d) inventions, processes,
production methods, proprietary information, know-how and trade secrets, and
(e) licenses or user or other agreements granted to the Company with respect
to any of the foregoing, in each case whether now or hereafter owned or used.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase
and securities convertible into or exchangeable for other securities),
interests in joint ventures, and general and limited partnerships, mortgage
loans and other investment or portfolio assets owned of record or beneficially
by the Company or any Skyline Subsidiary (other than securities issued by any
Subsidiary of the Company or of any Skyline Subsidiary).
"Law(s)" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"License(s)" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Lien(s)" means any mortgage, pledge, assessment, security
interest, lien, adverse claim, levy, charge or other encumbrance of any kind,
or other Contract granting any of the foregoing.
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"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, limited liability
partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests or the voting power of such
Person.
(b) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the
singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement; (iv) the terms "Article" or
"Section" refer to the specified Article or Section of this Agreement; and (v)
the phrases "ordinary course of business" and "ordinary course of business
consistent with past practice" refer to the business and practice of the
Co-Borrowers or a Subsidiary. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under GAAP.
2. Conversion of Debt. (a) Upon the Effective Date (as defined in subsection
2(b) below), the Debt, plus accrued and unpaid interest thereon through the
date hereof, shall be deemed to automatically convert (the "Series B
Conversion") into such number of shares of Series B Preferred Stock of the
Company equal to one share of Series B Preferred Stock for each One Thousand
($1,000) dollars of principal Debt, plus accrued and unpaid interest thereon.
No fractional shares of Series B Preferred Stock shall be issued and any such
fractional interests shall be paid in cash.
(b) The "Effective Date" shall mean the date upon which the
first of the following events occurs:
(i) At an annual meeting of the shareholders of the
Corporation, the holders of a majority of the
shares of its Common Stock approve of the issuance
of the Series B Preferred Stock; or
(ii) The Nasdaq SmallCap Market, Inc. ("Nasdaq")
grants a waiver to the Corporation (a "Nasdaq
Waiver") which exempts the Corporation from any
Nasdaq requirement that the Corporation obtain
approval of the Series B Conversion from the
holders of a majority of the shares of its Common
Stock, and ten days have passed since notice of
such Nasdaq Waiver was mailed to all the
shareholders of the Corporation.
3. Series B Preferred Stock Received Upon Conversion.
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(a) Upon the Effective Date, the Company shall, or shall cause its
registrar and transfer agent to, issue and deliver to the Investors, in
accordance with Section 2 above, the number of shares of Series B Preferred
Stock set forth opposite each Investor's name on Schedule B hereto.
(b) All shares of Series B Preferred Stock received by the Investors
upon the Series B Conversion shall be "restricted securities" under the
federal securities laws, which may not be resold without registration under
the Securities Act of 1933, as amended (the "Securities Act"), or pursuant to
an exemption from the registration requirements of the Securities Act.
Accordingly, each stock certificate evidencing the shares of Series B
Preferred Stock received by the Investors hereunder will bear the following
legend:
"These securities have not been registered under
the Securities Act of 1933, as amended (the "Act"). These
securities may not be sold or offered for sale unless a
registration statement under the Act is in effect with
respect to such sale or in the opinion of counsel reasonably
satisfactory to the Company, such sale may be made pursuant
to Rule 144, or such sale otherwise is exempt from
registration or such registration otherwise is not
required."
Notwithstanding the foregoing, no such registration statement or opinion of
counsel shall be necessary for transfer by the Investors to an affiliated
company if the transferee agrees in writing to be subject to the terms hereof
to the same extent as if it were the original Investor hereunder.
(c) The terms and conditions of the Series B Preferred Stock shall be
as set forth on the form of Certificate of Designation attached hereto as
Exhibit C (the "Certificate of Designation"). The Certificate of Designation
shall be filed by the Company with the Secretary of State of the State of New
York as soon as practicable following the execution of this Agreement.
(d) Upon conversion of the Series B Preferred Stock to Common Stock
as set forth in the Certificate of Designation, such shares of Common Stock
shall be accompanied by such Registration Rights as are set forth in the
Registration Rights Agreement attached hereto as Exhibit D.
4. Representations and Warranties of the Company and the Skyline Subsidiaries.
As an inducement to the Investors to enter into this Agreement, the Company
and the Skyline Subsidiaries represent and warrant to each of the Investors as
follows:
(a) Subject to the filing and acceptance of the Certificate of
Designation with the Secretary of State, any shares of Series B Preferred
Stock of the Company issued pursuant to this Agreement will be (i) duly and
validly issued, fully paid and non-assessable, (ii) free of any pledges,
liens, security interests, claims or other encumbrances of any kind, and (iii)
issued in compliance with all applicable federal and state securities laws. In
addition, the Company represents that, at the next annual meeting of
shareholders, it will use its best efforts to seek
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shareholder approval of an amendment to its certificate of incorporation to
increase the number of authorized shares of capital stock of the Company to
ensure that a sufficient number of shares of Common Stock into which the
Series B Preferred Stock is convertible is reserved for issuance.
(b) Each of the Company and the Skyline Subsidiaries has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby, including without limitation, to issuance by the Company
of the Series B Preferred Stock required to be issued hereunder. The execution
and delivery by each of the Company and the Skyline Subsidiaries of this
Agreement, and the performance by each of the Company and the Skyline
Subsidiaries of their respective obligations hereunder, including without
limitation the issuance by the Company of the Series B Preferred Stock
required to be issued hereunder, have been duly and validly authorized by all
necessary action of the board of directors. This Agreement has been duly and
validly executed and delivered by each of the Company and the Skyline
Subsidiaries and constitutes legal, valid and binding obligations of each of
the Company and the Skyline Subsidiaries enforceable against each of the
Company and the Skyline Subsidiaries in accordance with its terms (except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and as the
same may be limited by general principles of equity).
(c) The execution and delivery by each of the Company and the Skyline
Subsidiaries of this Agreement, the performance by the Company of their
respective obligations under this Agreement and the consummation of the
transactions contemplated hereby do not, and could not reasonably be expected
to:
(i) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate of
incorporation or by-laws of the Company or the Skyline
Subsidiaries, or any amendments thereto;
(ii) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to the Company
or the Skyline Subsidiaries or any of their respective
Assets and Properties;
(iii) conflict with or result in a violation or breach of any
material Contract or material License to which the Company
or the Skyline Subsidiaries are a party or by which any of
their respective Assets and Properties are bound;
(iv) constitute (with or without notice or lapse of time or both)
a default under any material Contract or material License to
which the Company or the Skyline Subsidiaries are a party or
by which any of their respective Assets and Properties are
bound;
(v) require the Company or the Skyline Subsidiaries to obtain,
from any Person other than the Investors, the parties to
this Agreement or any of their respective affiliates, any
consent, approval or action of, make any filing with or give
any
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notice to any Person as a result or under the terms of any
material Contract or material License to which the Company
or the Skyline Subsidiaries are parties or by which any of
their respective Assets and Properties are bound;
(vi) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with
respect to any material Contract or material License to
which the Company or the Skyline Subsidiaries are a party or
by which any of their respective Assets and Properties are
bound;
(vii) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or
guaranteed payments under, any material Contract or material
License to which the Company or the Skyline Subsidiaries are
parties or by which any of their respective Assets and
Properties are bound; or
(viii) result in the creation or imposition of any Lien upon the
Company or the Skyline Subsidiaries or any of their
respective Assets and Properties (other than in favor of the
Investors).
5. Restrictive Covenants. As a further inducement to the Investors to enter
into this Agreement, each of the Company and the Skyline Subsidiaries
covenants with each of the Investors that, without the prior written consent
of the holders of a majority in interest of the Series B Preferred Stock, the
Company and the Skyline Subsidiaries shall not, directly or indirectly:
(a) create, incur, assume, extend the maturity of, or otherwise
become directly or indirectly liable with respect to, any Indebtedness other
than, without duplication: (i) Indebtedness which is or should be classified
and accounted for as a capital lease for financial reporting purposes in
accordance with GAAP; and (ii) as an endorser of negotiable instruments for
the payment of money deposited to the Company's or its Subsidiaries' bank
account for collection in the ordinary course of business;
(b) create, incur, assume, or permit to exist any Lien upon or with
respect to any of its Assets and Properties, whether now owned hereafter
acquired or any income or profits therefrom, or assign or otherwise convey any
right to receive income to secure any Indebtedness, except for Liens securing
Indebtedness of up to an aggregate amount of $250,000 at any time outstanding
for the Company and the Skyline Subsidiaries taken together;
(c) voluntarily liquidate or dissolve, or consolidate or merge with
or into any other Person, or permit any other Person to consolidate with or
merge into it or participate in a share exchange with or sell, lease,
transfer, contribute or otherwise dispose of any of its Assets and Properties
to any other Person (other than sales of inventory and worn out and obsolete
assets in the ordinary course of business);
(d) create or suffer to exist, or permit any Subsidiary to create or
suffer to exist, any obligations for the payments of rental for any property
under leases or agreements to lease having
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a term of one year or more, except for real property leases requiring annual
lease payments not exceeding $250,000 in the aggregate;
(e) hold any Investment Assets, or make or keep outstanding any
advance or loans, except that the Company may invest in (i) direct obligations
of, obligations fully guaranteed by, and repurchase agreements fully secured
by, the United States of America or any agency thereof, (ii) certificates of
deposit of any commercial bank which is a member of the Federal Reserve
System, and (iii) money market accounts or other similar low-risk, liquid
investments approved by the board of directors of the Company;
(f) declare or pay any cash or asset dividend on any of its shares or
make any other distribution or disposition of any Assets and Properties to
shareholders in respect of its shares (or otherwise), or make, or commit to
make, any payment on account of the purchase, redemption or other retirement
of any of its shares or warrants or options therefor;
(g) organize or cause to exist any Subsidiary;
(h) enter into any arrangement with any Person providing for the
leasing by the Company or any of its Subsidiaries of real or personal property
which has been or is to be sold by the Company to such Person;
(i) amend the certificate of incorporation or by-laws of the Company
or such Subsidiary as in effect on the date hereof (or, in the case of any
future Subsidiary, the date of incorporation of such Subsidiary) or change the
size or composition of the Company's or such Subsidiary's board of directors,
except as permitted pursuant to the certificate of incorporation of the
Company;
(j) create or otherwise cause or allow to exist or become effective
any consensual encumbrance or restriction on the ability of any Subsidiary to
(i) pay dividends or make any other distributions on its capital stock or any
other interest participation in, or measured by, its profits owned by, or pay
any Indebtedness owed to, the Company or such Subsidiary, (ii) make loans or
advances to the Company or such Subsidiary or (iii) transfer any of its Assets
and Properties to the Company or such Subsidiary;
(k) enter into any agreement with any Person other than the holders
Series B Preferred Stock, other than agreements made in the ordinary course of
business;
(l) enter into any agreements or arrangements which, by their terms
or reasonably foreseeable effect, restricts or adversely affects the Company's
or such Subsidiary's right and ability to meet its obligations to the holders
of Series B Preferred Stock;
(m) enter into any transaction (including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service)
with any Affiliate, unless such transaction is (i) otherwise permitted under
this Agreement, (ii) in the ordinary course of the Company's or such
Subsidiary's business and (iii) upon fair and reasonable terms no less
8
favorable to the Company or such Subsidiary than it would obtain in a
comparable arm's length transaction with a Person that is not an Affiliate;
and
(n) engage in any business other than the business currently
conducted by the Company or such Subsidiary and activities reasonably related
thereto;
provided, however, that no such consent shall be required at such time as the
outstanding shares of Series B Preferred Stock represent less than 25% of the
shares of Series B Preferred Stock initially issued hereunder.
6. Affirmative Covenants. Each of the Company and the Skyline Subsidiaries
covenants with each of the Investors that:
(a) This Agreement and all obligations of each of the Company and the
Skyline Subsidiaries hereunder shall be binding on and enforceable against any
and all Subsidiaries of each of the Company and the Skyline Subsidiaries which
are formed subsequent to the date hereof;
(b) KeySpan, acting as a separate class, shall be entitled to elect
or designate two (2) directors of the Company; provided, however, that such
right to elect or designate such directors shall terminate in the event that
at any time KeySpan shall hold less than 10% of the outstanding Series B
Preferred Stock of the Company.
7. Effect of this Agreement. As of the date hereof, each of the following
shall be deemed canceled, and of no further force and effect:
(a) the Senior Credit Agreement dated as of December 20, 1996, as
amended, by and among the Company, the Skyline Subsidiaries and the Investors,
along with all schedules, exhibits and ancillary documents related thereto,
except any warrants of the Company delivered in connection therewith; and
(b) the Senior Secured Credit Agreement dated as of May 20, 1998, as
amended, by and among the Company, the Skyline Subsidiaries and the Investors,
along with all schedules, exhibits and ancillary documents related thereto,
except any warrants of the Company delivered in connection therewith.
8. Delivery of Notes. Immediately following the execution and delivery of this
Agreement, each Investor shall deliver to the Company for cancellation all
promissory notes (the "Notes") evidencing the Debt being converted hereunder;
provided, however, that (i) the failure to deliver any such Note to the
Company for cancellation shall not be deemed a condition to conversion of the
Debt hereunder and (ii) each such Note shall be deemed canceled as of the date
hereof, whether or not such Note is delivered.
9. Termination of Financing Statements. (a) Immediately following the
execution and delivery of this Agreement, each Investor shall deliver to the
Company executed copies of such
9
Uniform Commercial Code termination statements on form UCC-3 as required for
cancellation of all Uniform Commercial Code financing statements on form
UCC-1, and any amendments thereto or continuations thereof, filed in
connection with the agreements set forth in Sections 7(a) and (b) above and
naming the Company and/or the Skyline Subsidiaries as debtor and such Investor
as the secured party (the "UCC Termination Statements").
(b) Investors hereby authorize the Company, without notice or the
signature of any Investor, to file any UCC Termination Statements. At the
Company's request, each Investor will join with the Company in executing any
such UCC Termination Statements. In order to terminate such security interests
of the Investors, the Company may deliver a copy of this Agreement to any
Person.
10. Other Documents, Etc. The parties shall execute and deliver all documents
contemplated by this Agreement and shall cooperate with each other in carrying
out its terms and conditions in accordance with the intentions of the parties
expressed herein.
11. Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered, mailed first-class postage prepaid or delivered by facsimile
transmission,
(a) if to Investors, at:
Prospect Street NYC Discovery Fund, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, III
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇, Esq.
with a copy to:
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The Bank of New York, as Trustee for the Employees Retirement Plans of
Brooklyn Union Gas Company and KeySpan Energy Corporation
c/o The Brooklyn Union Gas Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Cullen and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or at such other address or fax number as may have been furnished to the
Company in writing by the Investors.
(b) if to the Company, at:
Skyline Multimedia Entertainment, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or at such other address or fax number as may have been furnished to Investors
in writing by the Company.
12. Entire Agreement. This Agreement embodies the entire agreement and
understanding between Investors and the Company relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.
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13. Successors and Assigns. All covenants and agreements in this Agreement
contained by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto.
14. Headings. The headings of the articles and sections of this Agreement have
been inserted for convenience of reference only and shall in no way restrict
or otherwise modify any of the terms or provisions hereof.
15. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the law of the State of New York without giving
effect to the conflict of laws.
16. Facsimile Documents. Facsimile documents that are transmitted by
telecommunications and reproduced by electronic means, with electronically
reproduced signatures, shall be legally effective and binding until such time
as replaced by documents containing the original signatures, which shall be
provided within a reasonable time.
17. Counterparts. This Agreement may be signed in any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the
same instrument.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Director of Operations and
Finance and Co-Chief Executive Officer
NEW YORK SKYLINE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
SKYLINE VIRTUAL REALITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
SKYLINE CHICAGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
SKYLINE MAGIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
SKYLINE LAS VEGAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Secretary
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THE BANK OF NEW YORK, AS
TRUSTEE FOR THE EMPLOYEES
RETIREMENT PLAN OF KEYSPAN
ENERGY CORPORATION
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK, AS
TRUSTEE FOR THE EMPLOYEES
RETIREMENT PLAN OF THE
BROOKLYN UNION GAS COMPANY
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK, AS
TRUSTEE FOR THE EMPLOYEES
RETIREMENT PLAN OF THE
BROOKLYN UNION GAS COMPANY
NON-BARGAINING HEALTH VEBA
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
PROSPECT STREET NYC DISCOVERY
FUND, L.P.
By: Prospect Street Discovery Fund, Inc.,
its General Partner
By: /s/▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Partner
14
SCHEDULE A
Debt of Skyline Multimedia Entertainment, Inc.
Accrued
Date Principal Interest Interest as of
Payee Incurred Debt Type Amount Rate Sept. 30, 1998
------ --------- ----------- --------- -------- --------------
BUG 12/20/96 Subordinated Debt $1,000,000 14% $238,959
BUG 12/31/96 Subordinated Debt 500,000 14% 117,370
BUG 2/18/97 Subordinated Debt 500,000 14% 107,973
VEBA 3/21/97 Subordinated Debt 500,000 14% 102,027
KeySpan 4/15/98 Subordinated Debt 500,000 14% 27,233
KeySpan 5/29/98 Subordinated Debt 1,350,000 14% 50,745
Prospect 11/6/96 Subordinated Debt 1,500,000 14% 383,753
Prospect 3/14/97 Subordinated Debt 450,000 14% 93,033
Prospect 6/30/97 Note Payable 500,000 14% 82,658
Prospect 4/4/15/98 Subordinated Debt $435,000 14% $23,693
---------- ----------
$7,235,000 $1,227,444
========== ==========
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SCHEDULE B
Shares of Series B Preferred Stock
To be Issued Upon Conversion
Total Total Accrued Total Amount of No. of
Principal Interest as of Principal plus Preferred Cash Payment for
Investor Amount Sept. 4, 1998 Accrued Interest Shares* Fractional Amount
-------- ----------- ------------- ---------------- ----------- -----------------
BUG $2,000,000 $464,302 $2,464,302 2,464 302
VEBA 500,000 102,027 602,027 602 27
KeySpan 1,850,000 77,978 1,927,978 1,927 978
Prospect 2,885,000 583,137 3,468,137 3,468 137
*Calculated at a conversion rate of one (1) share of Series B Preferred Stock
per $1,000 of "Total Amount of Principal plus Accrued Interest."
16