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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended March 31, 1996
OR
[ ] 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 0-23782
RENAISSANCE ENTERTAINMENT CORPORATION
(Name of Small Business Issuer as Specified in its Charter)
Colorado 84-1094630
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
4440 Arapahoe Road, Suite 200, Boulder, Colorado 80303
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (303) 444-8273
Securities registered under Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.03 par value
(Title of Class)
Common Stock, $.03 par value
Class A Common Stock Purchase Warrants
Class B Common Stock Purchase Warrants
Units, each Unit consisting of one (1) Share of Common Stock,
one (1) Class A Common Stock Purchase Warrant and one (1)
Class B Common Stock Purchase Warrant
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 for 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 in response to
Item 405 of Regulation S-B 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 this Form 10-KSB. [ ]
The Issuer's revenues for the year ended March 31, 1996 were $12,810,617.
As of May 31, 1996, the aggregate market value of the Common Stock of the
Registrant based upon the average of the closing bid and asked prices of the
Common Stock as quoted on the NASDAQ National Market held by non-affiliates
of the Registrant was approximately $51,362,000. As of May 31, 1996,
4,371,306 shares of the Common Stock of the Registrant were outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
The Registrant hereby incorporates herein by reference the
following:
Part III
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Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange
Act.
Item 10. Executive Compensation.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
Item 12. Certain Relationships and Related Transactions.
The foregoing are incorporated by reference from the Registrant's
definitive Proxy Statement relating to its annual meeting of stockholders,
which will be filed in an amendment within 120 days of March 31, 1995.
Transitional small business disclosure format (check one): Yes No X
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PART I
ITEM 1: BUSINESS
OVERVIEW
Renaissance Entertainment Corporation ("the Company") operates five
Renaissance Faires in the United States, and is engaged in a strategy to
develop and acquire additional Renaissance Faires nationwide. The newest
Faire opened on May 4, 1996 in Fredericksburg, Virginia, a project which was
designed and constructed by the Company. On February 5, 1996, the Company
acquired Creative Faires, Ltd., the owner and operator of the New York
Renaissance Faire. With its five Faires currently drawing close to 750,000
visitors annually, the Company believes that it is the largest operator of
Renaissance Faires and Renaissance entertainment events in the United States.
The Renaissance entertainment industry consists of over 100 separate events
of varying size with a Renaissance theme and has an estimated attendance in
excess of 4,000,000 visitors annually.
The Renaissance Faire is a recreation of a Renaissance village, a fantasy
experience transporting the visitor back into sixteenth century England.
This fantasy experience is created through authentic craft shops, food
vendors and continuous live entertainment throughout the day, both on the
street and the stage including actors, jugglers, jousters, magicians, dancers
and musicians.
The Company owns and operates the Bristol Renaissance Faire in Kenosha,
Wisconsin serving the Chicago/Milwaukee metropolitan region; the Northern
California Renaissance Pleasure Faire in Novato, California serving the San
Francisco Bay area; the Southern California Renaissance Pleasure Faire in
Devore, California serving the greater Los Angeles metropolitan area; the New
York Renaissance Faire serving the New York City metropolitan area; and the
Virginia Renaissance Faire in Fredericksburg, Virginia serving the
Washington, D.C. and Richmond metropolitan areas. The Company has a
long-term strategy of expansion through internal growth and acquisitions
which, the Company believes, will strengthen its market position.
HISTORY
The Company was incorporated under the laws of the State of Colorado on June
24, 1988 as Highpoint Technology, Inc. On April 6, 1993, the Company
acquired Ellora Corporation ("Ellora"), a Wisconsin corporation, which owned
and operated the Bristol Renaissance Faire located in Kenosha County,
Wisconsin, in exchange for 1,000,000 shares of Common Stock. Following the
acquisition, the Company changed its name to Renaissance Entertainment
Corporation.
In 1993, the Company organized Heroes and Villains, Ltd. ("H&V") for the
purpose of presenting live combat jousting both at Renaissance Faires owned
by the Company and to a limited extent under contract with third parties.
H&V was merged into the Company effective March 31, 1996.
In April 1994, the Company acquired from the Living History Centre ("LHC"), a
California non-profit public benefit corporation, substantially all of the
assets used in connection with the Northern California Renaissance Faire in
the San Francisco Bay area and the Southern California Renaissance Pleasure
Faire, serving the Los Angeles area. The Company issued 875,000 shares of
Series A Convertible Preferred Stock and 568,333 shares of Common Stock to
acquire the Faires and related assets. The Convertible Preferred Stock was
converted into 291,667 shares of Common Stock during January 1995, in
connection with an offering of the Company's securities.
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In February of 1996, the Company acquired all of the issued and outstanding
stock of Creative Faires, Ltd., which owns and operates the New York
Renaissance Faire. In connection with this acquisition, the Company issued
270,000 shares of Common Stock to the former shareholders of Creative Faires,
Ltd.
STRATEGIC PLAN
The Company's strategic plan is to grow internally as well as through
the acquisition of additional Renaissance Faires located throughout the
United States. The Company believes that with a long-term strategy of
internal growth and acquisitions, the Company will strengthen its market
position.
The Company estimates that there are currently 20 major Renaissance
Faires produced in various locations throughout the country each year which
are owned by approximately 13 different owner/entities. These Faires are
predominantly in major metropolitan areas and in many cases have a history of
decades of profitable operation. Because of the fragmented nature of the
industry, the Company believes that it has an opportunity to acquire existing
major Faire productions as well as develop productions in areas which are not
currently serviced. The Company believes that there are numerous locations
where new Faires can be developed and operated profitably. The Company has
an extensive program to identify areas with suitable demographics for
additional Renaissance Faires.
EXISTING RENAISSANCE FAIRES AND SITES
The Company presently owns and produces five Renaissance Faires: the
Bristol Renaissance Faire in Kenosha, Wisconsin serving the Chicago/Milwaukee
metropolitan region; the Northern California Renaissance Pleasure Faire in
Novato, California serving the San Francisco Bay area; the Southern
California Renaissance Pleasure Faire in Devore, California serving the
greater Los Angeles metropolitan area; the New York Renaissance Faire serving
the New York City metropolitan area; and the Virginia Renaissance Faire in
Fredericksburg, Virginia serving the Washington, D.C. and Richmond
metropolitan areas.
BRISTOL RENAISSANCE FAIRE. The Bristol Renaissance Faire is conducted
at the Kenosha, Wisconsin site owned by the Company. It has been in existence
for approximately 15 years. The Bristol Renaissance Faire is presented
annually for nine weekends beginning the last weekend in June and ending the
third weekend in August. The Bristol Renaissance Faire attracts
approximately 170,000 patrons each year.
The Bristol Renaissance Faire was originally located on 80 acres. In
May 1995, the Company purchased an adjacent 80 acres of real estate which in
the past it had used under lease, for a purchase price of $850,000. During
the first quarter of fiscal 1996, the Company refinanced both 80 acre parcels
with one loan. The new loan, in the original principal amount of $l million,
bears interest at the rate of 9 1/2% per annum, and calls for annual
principal reduction payments of $100,000 until the entire principal balance,
together with interest, has been paid in full. The loan balance at March 31,
1996 was $900,000.
As the site of the Bristol Renaissance Faire is owned, the structures
and improvements which have been constructed on the site, including the
vendor booths, are permanent in nature and do not have to be removed from
year to year. Craft shops and vendor booths are built by the individual
craft vendors at their cost. In many cases, vendors invest substantial sums
of money in the construction of these shops, which represent permanent
improvements and value added to the Company's real estate.
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While the Company believes that the property is amenable to some
income-producing off-season activity, historically, the Company has only
utilized the site for the Renaissance Faire, and the property has been vacant
during the off-season. The Company is considering year-round uses which
could include campgrounds, a micro-brewery, an Octoberfest and music
festivals. To date, however, there exist no agreements, arrangements or
other understandings with respect to alternate year-round uses, and there can
he no assurance that the Company will be successful in developing any
income-producing, off-season activities.
NORTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE. The Northern
Renaissance Pleasure Faire has been held in the San Francisco Bay area for
the past 30 years. This Faire is conducted annually for six to seven
weekends, typically beginning Labor Day weekend and running through the first
or second weekend of October. The Faire typically attracts 200,000 patrons.
The Northern California Faire is located on leased property in Novato,
California. The lease is currently on a year-by-year basis, and the Company
has a lease to cover the 1996 Faire. The rent was $200,000 in 1995 and will
be $300,000 for the 1996 Faire. The Company is actively seeking a new
permanent site for the Northern Renaissance Pleasure Faire. While a new site
has been identified, there can be no assurance that the Company will be
successful in acquiring a new Faire site for the Northern California
Renaissance Pleasure Faire.
In contrast to the permanent structures constructed at the Bristol
Renaissance Faire, all structures, including the gates, stages, booths, shops
and arenas utilized in the California Renaissance Pleasure Faires are mobile.
These props are loaded into the Company's semi-tractor/trailers and
transported between the Northern and Southern California Renaissance Faires
and, during the off-season, are stored at the Northern Renaissance Faire
site. The booths and craft shops utilized by vendors are owned by the
individual vendors and moved onto the site for the Faire and then removed by
them. The Faire is constructed and removed much in the same way as a circus
or traveling carnival.
SOUTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE. The Southern California
Renaissance Pleasure Faire has been conducted for the past 33 years in the
Los Angeles metropolitan area. This Faire typically attracts 200,000 patrons
and is held annually for nine weekends beginning mid-April and ending
Mid-June.
The Southern Renaissance Pleasure Faire is held in Glenn Helen Regional
Park located near Devore, California. The site is leased from the San
Bernardino County Parks and Recreation Department, under a seven-year lease
which will expire following the 1996 Faire. Rental under the lease is equal
to 3.5% of gross revenues. The Company is currently investigating new sites
for the Southern Renaissance Pleasure Faire.
The Southern Renaissance Pleasure Faire site is only occupied during the
Faire season and must be vacated following completion of the Faire.
Accordingly, all structures are mobile and transported to the Northern
Renaissance Faire site for storage during the off-season.
NEW YORK RENAISSANCE FAIRE. The Company acquired Creative Faires, Ltd.,
the owner and operator of the New York Renaissance Faire in February of 1996.
The New York Renaissance Faire opened in July 1978 and recreates a 16th
century English country Faire on 65 leased acres in Sterling Forest, Tuxedo,
New York. Creative Faires, Ltd. also produces Sterling Forest's Forest of
Fear as well as other arts and crafts shows in the New York tri-state area.
The Company issued 270,000 shares of the Company's Common Stock in
consideration for all of the outstanding shares of Creative Faires, Ltd.
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VIRGINIA RENAISSANCE FAIRE. The Company's newest Faire is located in
Fredericksburg, Virginia on 250 acres of land purchased by the Company in
July of 1995 for $925,000. Like the Bristol Faire, this is a permanent
facility, which opened for business on May 4, 1996 and operated for seven
weekends. All buildings on the property, including performance stages,
restaurants, ale stands and craft shops, were designed in a unified style
appropriate to the Renaissance period and were constructed by the Company
during the year prior to opening. This is the first time the Company has
developed a Faire on its own, since all other Faires owned by the Company
represented acquisitions of existing businesses. Management believes the
Virginia Faire to be the most distinctive and dramatic of all Renaissance
Faires in the country, including those owned by competitors in the industry,
and expects that it will serve as the Company's flagship Faire for many years
to come.
The construction of the Faire was financed with a $1.5 million mortgage,
repayable over 15 years at an initial interest rate of 8.65% annually, plus
the use of corporate funds. The Company also borrowed $250,000 to finance
the construction of buildings for crafts vendors, with repayment over five
years at an interest rate of 9.5% annually. Some vendors have paid for their
buildings outright, others have utilized the financing provided by the
Company, while others rent space with an option to purchase. The Company
arranged for vendor financing in order to attract desirable vendors to the
new Faire, and to develop a permanent contingent of Faire participants.
Management of the Virginia Faire is largely handled by employees of the
Bristol Faire, including such areas as entertainment, facilities maintenance,
vendor relations and event finance. The Bristol Faire opens the last week in
June, two weeks after the seven-week run of the Virginia Faire. Although
there are currently no other activities scheduled on the property for 1996
other than the Virginia Renaissance Faire, the Company expects to develop
other income-producing activities, which may include a Halloween forest of
fright, music festivals, Christmas activities and other special events. To
date, however, there exist no agreements, arrangements or other
understandings with respect to alternate year-round uses.
PRODUCTION OF RENAISSANCE FAIRES
The production of a Renaissance Faire consists of (i) site
identification and acquisition, (ii) applying for and obtaining governmental
approvals, (iii) construction of necessary infrastructure, (iv) construction
of the site, (v) marketing, and (vi) Faire operation.
Site identification and acquisition is the responsibility of the
Company's Vice President of Development and is a full-time activity. Once a
site acquisition is completed, the Company begins the process of applying for
all necessary governmental approvals, including licenses for food and
beverage sales, liquor licenses, building permits and waste disposal permits.
In the Company's experience, the licensing and permit process can take as
little as 30 days and as long as six months.
Subject to obtaining the necessary permits and licenses, the Company
typically contracts with third parties for the construction of the necessary
Faire infrastructure. This consists of facilities for water, electricity,
service roads and sewage holding tanks. Typically, construction of the
necessary infrastructure and facilities takes approximately three months.
Construction of an actual Renaissance Faire site involves building front
gates, theatrical stages, craft and food booths, jousting arenas and other
related facilities. The Company has its own construction manager responsible
for completing these improvements who will typically hire a local crew and
oversee and supervise completion of the project. Construction of these
facilities typically takes six to nine months and runs concurrently with the
development of the infrastructure.
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On sites leased by the Company, expenses incurred in the construction of
permanent infrastructure must be amortized over the term of the lease, which
theoretically could be a period as short as one Faire season.
The Company owns all the theatrical props and costumes necessary to
mount a full Renaissance Faire production. When ready to present the Faire,
the Company will move onto the site with its costumes and props, its
entertainers who are under contract and an entire middle management staff to
supervise and administer the operation of the Faire. The professional
entertainers operate under contracts with the Company, which are typically
renewed from year to year. The Company has never experienced any difficulty
in obtaining qualified professional entertainers for any of its productions.
The Company provides instruction in diction, costuming and performance to
apprentice actors, who, in return, perform at the Faire without pay. There
are over 100 street actors interacting with Faire patrons at any given time,
with over 1,000 seasonal employees and volunteers.
VENDORS
Approximately 13% of the revenues realized from presenting the Company's
Renaissance Faires are generated from the Company's relationships with
vendors and craftsmen who sell food and crafts, and offer games and rides.
At the Bristol Renaissance Faire site, the vendors and craftsmen are
required to construct their shops and booths at their own cost and then
occupy the structures on a year-to-year basis for an annual fee of $850.
Since the structures are permanent in nature, once built they become the
property of the Company and substantially increase the value of the Company's
asset at that location.
At the Virginia Renaissance Faire site, shops and booths are constructed
either by the Company or the vendor, and are paid for by the vendor, unless
financing or rental arrangements are in place (as discussed previously). All
buildings so constructed become a permanent part of the Faire and are the
property of the Company. Vendor fees have been largely waived in Virginia
during 1996, its first year of operation, in order to encourage vendors to
participate in this new venture.
At the Northern and Southern California Renaissance Pleasure Faires,
craft shops and booths are owned by the vendors and transported onto the site
for the duration of the Faire and then removed. In lieu of a flat fee to
participate, vendors at the California Faires pay the Company a fee equal to
15% of their gross revenues.
Vendors occupy their booths and shops pursuant to written lease
agreements with the Company which have a term of one year, and require
renewal by both the vendor and the Company each year. Under these agreements,
each vendor agrees to indemnify and hold harmless the Company from any
liability which may arise by virtue of the vendors' activities at the Faire.
Nevertheless, the Company maintains general public liability insurance which
also provides coverage for such risks.
REVENUE SOURCES
A Renaissance Faire generates revenues from numerous sources, including
gate admissions, beverage sales, parking fees, food sales, craft fees, game
fees, camping fees, souvenir sales and sponsorship fees.
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GATE ADMISSIONS. Gate admissions are set between $14.00 and $17.50 for
an adult. Discount coupons are available at retail outlets operated by the
Company's sponsors, including Safeway, Amoco Stations and Sentry Foods. The
Company has a large group sale and advance sale program that provides
discounted tickets. Admission provides the guest with all-day continuous
entertainment on multiple stages. Major entertainment acts include live
combat jousting, a falconer, sword duels, Shakespearean vignettes and
authentic belly-dancing. Gate admissions represent approximately 44% of the
Faire's total revenues.
BEVERAGE INCOME. The Company sells beer, wine and soft drinks at each
Faire. Beverage sales represent approximately 23% of Faire revenues.
PARKING INCOME. The California Faires charge $6.00 per car for regular
parking and $10 for preferred close-in parking. The Bristol and New York
Faires do not charge for regular parking, but in 1996 will initiate $5
preferred parking. The Virginia Faire charges $2 for regular parking.
Parking revenue represents approximately 8% of Faire revenues.
FOOD REVENUE. At the California and New York Faires, all food
concessions are run by independent vendors. These vendors pay the Company a
commission equal to approximately 15% of their gross revenues. At the
Bristol Faire, the Company owns certain food items such as turkey legs,
pizza, roast beef and brats (sausages); additional food items are sold by
independent food vendors who pay the Company approximately 15% of their gross
revenues. At the Virginia Faire, the Company currently owns all of the food
concessions. In the aggregate, food revenues represent approximately 8% of
total Faire income.
CRAFT FEES. Each Faire has over 150 independent craft vendors who sell
their goods to Faire patrons. Most of the craft items are handmade by the
artists who often demonstrate the making of their wares at the Faire. The
glassblowers and lace-makers are generally very popular. The craft vendors
in California pay the Company a fee of approximately 15% of their gross
revenue. At the Bristol, New York and Virginia Faires, craft vendors are
required to build their own booth or shop, and either pay a flat annual fee
or a percentage of their gross income. Craft fees also represent
approximately 7% of total Faire revenues.
GAME FEES. Many games and rides are operated by independent
contractors. The Company receives 15% of the gross revenues from these games
and rides, which represents, in the aggregate, approximately 1% of total
Faire revenues.
CAMPING FEES. The Company allows employees and independent vendors to
camp at the Faire sites during the Faire season. The Company provides
portable rest room facilities, showers and security for campers. The campers
are charged and pay a fee for these services.
SOUVENIR REVENUE. The sale of souvenir tee-shirts, sweatshirts, beer
mugs, books and other high quality merchandise appropriate to the Renaissance
era is believed by the Company to represent an area of excellent future
opportunity. During 1995 the Company hired a Director of Marketing to
oversee the design, manufacture, acquisition and sale of merchandise products
at all of its Faires. It is intended that the Company's products will also
be sold through other outlets, such as catalogues, department stores, and
on-line via the Company's Internet Web site. There can, however, be no
assurance that the Company will be successful in marketing its products and
memorabilia through alternative means in the future. Souvenir sales to date
represent approximately 5% of Faire income.
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SPONSORSHIP FEES. The Company solicits sponsorship arrangements with
major sponsors including Coca-Cola Company, Anheuser-Busch, Inc., Miller
Brewing Company, Amoco Production Company and Eastman Kodak Company. The
sponsors also participate in joint advertising campaigns. In the past,
sponsorship fees have represented approximately 2% of Faire revenues.
MARKETING
The Company markets its Faires as entertainment events for the whole
family, which also include shopping and food. Marketing is accomplished
through local television and radio stations which, from time-to-time, and,
often in conjunction with other advertisers, conduct live broadcasts from the
Faires. Supplementing this television and radio advertising, newspapers and
billboards provide essential information to the general public regarding the
cost of admission, location and times of operation. Artistic brochures and
fliers are directed toward groups for advanced sales campaigns.
In conjunction with the advanced sales campaigns, the Company has also
undertaken a "Sponsorship" campaign. Major sponsors have included American
Airlines, Inc., Eastman Kodak Company, Hyatt Hotels & Resorts, Inc., Heilman
Breweries, Inc., Coca-Cola Company, Miller Brewing Company, Amoco Production
Company and Sentry Foods, Inc. Agreements with such sponsors have included
joint advertising, sponsorship fees, and product giveaways.
SEASONALITY AND WEATHER
The Company generates its revenue primarily from the production of
Renaissance Faires. Since, at this point, they are exclusively outdoor
events, each Faire is scheduled for the time of year most likely to minimize
the risks and hazards of inclement weather. With a total of five Faires in
various U.S. locations, the Company has been able to extend the period of
revenue generation from April (the Southern California Faire) through October
(the Northern California Faire), with the Virginia Renaissance Faire being
held during May and June, the Bristol Renaissance Faire during July and
August, and the New York Faire during August and September. The spread of
Faires over a seven-month period, and the geographic spread across the West
coast, the East coast and the mid-West, helps to assure that inclement
weather in one particular geographic area at any particular time does not
adversely threaten the Company's entire source of revenue. It is normal,
however, for adverse weather to harm the financial results during certain
weekends of any particular Faire.
During the months from October through April, the Company currently has
no material income-generating activity and must meet its working capital
requirements from cash flow earned during the Faire season. Creative Faires,
Ltd. had operated craft shows and the Forest of Fear on the New York site
during the fall and spring. The Company plans to continue those events and
also to develop fall events at certain of the Company's other Faire sites.
It is anticipated that this, along with merchandising income, will result in
income during the non-Faire season.
Each Faire is scheduled for a finite period which is determined
substantially in advance in order to facilitate advertising and other
promotional efforts. Since attendance at each Faire is dependent upon the
weather, poor weather conditions can result in substantial declines in
attendance and loss of revenues. The Company is also vulnerable to severe
climatic events which are similarly beyond its control but nevertheless could
have a direct and material impact upon the Company's relative success or
failure.
COMPETITION
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As a promoter and operator of family entertainment events, the Company
faces competition both from other producers of Renaissance Faires as well as
from other more traditional entertainment alternatives, including amusement
parks, theme parks, local and county fairs, and specialty festivals.
While there are more than 100 annual entertainment events produced in
the country with a Renaissance theme, there are only 20 major Renaissance
Faire productions operated in major metropolitan areas throughout the
country. As families typically do not travel to distant metropolitan areas
in order to attend a Renaissance Faire, the Company does not experience
direct competition with those other major productions. More significant
competition comes from other entertainment alternatives and smaller fair
events.
Further, by the very nature of Renaissance Faires and the lack of
protection afforded by trademark, service mark and unfair competition laws,
there exist few barriers to entry into the industry, and there can be no
assurance that other companies with substantially greater resources will not
develop competing Faires in the metropolitan areas where the Company has
established productions.
INTELLECTUAL PROPERTY
Because of the number of existing Faire productions with Renaissance
themes, it is unlikely that the Company will be able to rely upon trademark
or service mark protection for the name "Renaissance Faire" in connection
with its business. However, the Company did obtain in connection with its
acquisition of Living History Center assets an assignment of a California
registration of the mark "Renaissance Pleasure Faire" which applies only to
the state of California. The Company also has a Virginia service mark for
the "Virginia Renaissance Faire." Further, it is possible that the Company
could apply for and obtain trademark or service mark registrations on a state
level for its other individual Faires, such as "Bristol Renaissance Faire"
and other name-specific marks associated with the "Renaissance Faire"
description as those names are acquired or developed.
While the Company may be able to protect a site-specific name for its
productions, the Company does not consider this protection a significant
deterrent to the entry of competitors into existing markets, given the
limited barriers to such entry.
PUBLIC LIABILITY AND INSURANCE
As a producer of public entertainment events, the Company naturally has
exposure for claims of personal injury and property damages suffered by
visitors to the Company's Renaissance Faires. To date, however, the Company
has only experienced minimum claims which have been resolved quickly without
litigation. The Company maintains comprehensive public liability insurance
which it considers to be adequate against this exposure.
Independent vendors operating food concessions, games and rides are
required to obtain liability insurance protection, and to provide the Company
with proof of such coverage. Alternatively, an independent vendor can be
added as an additional insured under the Company's liability insurance policy
for an additional fee.
GOVERNMENT REGULATION
Since food and alcoholic beverages are served and sold at the various
Faire sites, the Company, its vendors and/or subsidiaries must comply with
all applicable rules, regulations and/or ordinances
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pertaining to the handling and sale of such items. Any material violation of
these regulations would subject the Company, its vendors and/or its
subsidiaries to the possibility of having necessary food service permits and
liquor licenses revoked. Material violations may also result in penalties
and fines being assessed against the Company. The Company must also comply
with all state and federal labor laws and regulations, including all minimum
wage and overtime provisions.
The Company believes that it is in compliance with all such laws, and
does not anticipate that any existing law will have a material adverse impact
upon the proposed business and operations of the Company. Although future
compliance cannot be assured in the event of future changes in such laws or
the addition of regulations governing the proposed business and operations of
the Company, the Company will, at all times, endeavor to take all feasible
and required actions necessary to maintain compliance with such laws.
EMPLOYEES
The Company presently has 9 full-time employees working for its Colorado
headquarters. Each Faire has its own full-time staff as well as seasonal and
part-time employees who are engaged during the Faire presentation. The
Bristol Faire has 7 full-time employees, the California Faires have 30
full-time employees, the New York Faire has 7 full-time employees and the
Virginia Faire has 5 full-time employees.
During Faire presentations, there are over 100 street actors interacting
with Faire patrons at any given time, with over 1,000 seasonal employees and
volunteers. The Company trains its professional street actors, who perform
under contract with the Company for a fixed fee. In addition, the Company
invites numerous apprentice actors and actresses to its training programs to
perform during the Faire on a volunteer basis. Only after an actor or
actress has gained a particular proficiency are they invited to become a
fully-paid contract actor for the Company.
The Company has plans for aggressive acquisition and growth using the
current staff and management systems of the Faire as a management
infrastructure. This initial creation of a year-round staff has increased
expenses, but will, in management's opinion, achieve significant economies of
scale as the Company acquires and produces additional Faire operations. The
Company believes that it currently has full-time management sufficient to
operate nine annual Faires; however, there can be no assurance that rapid
expansion will not necessitate further demand for mid-level management.
ITEM 2: PROPERTY
The Company's corporate headquarters are located at 4440 Arapahoe Road,
Suite 200, in Boulder, Colorado. This property measures 2,000 square feet
and is currently leased at $3,065 per month, with increases of 5% per annum,
expiring March 31, 2000. The Company considers these offices to be suitable
for its needs for the duration of the lease term.
The Company owns approximately 160 acres in Kenosha County, Wisconsin,
which is home to the Bristol Renaissance Faire. The land is subject to a
mortgage dated April 7, 1995, in the original principal amount of $1 million,
which bears interest at the rate of 9 1/2 % per annum and requires annual
principal reduction payments of $100,000 each September 1 until the entire
principal balance, together with all accrued interest, has been paid in full.
The principal balance at March 31, 1996 was $900,000.
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The Company leases the property where the Northern California
Renaissance Pleasure Faire is held, located at 1410 Highway 37, Novato,
California 94945. Office quarters for all California personnel is included
in the overall lease covering the Faire site, which expires February 29, 1997.
The New York Faire is operated on 65 acres of leased land in Tuxedo, New
York. It also has leased offices in New York City and Westhampton Beach, New
York.
On July 27, 1995, the Company acquired approximately 250 acres of land
in Stafford County, Virginia, for a purchase price of $925,000. This
property houses the Virginia Renaissance Faire. The construction of the
Faire was financed with a $1.5 million mortgage, repayable over 15 years at
an initial interest rate of 8.65% annually, plus the use of corporate funds.
The Company also borrowed $250,000 to finance the construction of buildings
for crafts vendors, with repayment over five years at an interest rate of
9.5% annually.
ITEM 3: LEGAL PROCEEDINGS
From time to time, the Company is a party to legal proceedings arising
in the ordinary course of business. The Company is not currently a party to
any material litigation and is not aware of any litigation threatened against
it that could have a material adverse effect on its business.
ITEM 4: MATTERS SUBMITTED TO VOTE OF SECURITYHOLDERS
The Company did not submit any matters to a vote of its securityholders
during the fourth quarter of its fiscal year ended March 31, 1996.
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PART II
ITEM 5: MARKET FOR THE COMMON EQUITY
AND RELATED STOCK HOLDER MATTERS
PRICE RANGE OF COMMON STOCK
On September 1, 1995, the Company's Common Stock began trading on the
NASDAQ National Market. From January 27, 1995 to August 31, 1995, it traded
on the NASDAQ Small-Cap Market and on the Boston Stock Exchange, and prior to
that time, the stock was traded over-the-counter on the OTC Electronic
Bulletin Board. The high and low bid prices for the Common Stock shown below
are quoted by the National Quotation Bureau, Inc. The quotations represent
prices between broker-dealers and do not include retail mark-ups and
mark-downs or any commission to the broker-dealer. The prices may not reflect
prices in actual transactions.
Fiscal Year Ended March 31 High Low
-------------------------- ----- -----
1995
First Quarter $ 2.61 $ 2.46
Second Quarter 3.50 2.79
Third Quarter 4.50 3.50
Fourth Quarter 9.00 6.75
1996
First Quarter 9.75 7.25
Second Quarter 9.38 7.75
Third Quarter 12.25 8.00
Fourth Quarter 14.00 11.25
1997
First Quarter 13.25 11.25
As of June 15, 1996 there were approximately 1,100 shareholders of record.
DIVIDENDS
The Company has never paid cash dividends on its common stock, and does
not anticipate the payment of such dividends in the foreseeable future. In
connection with the Company's acquisition of the Living History Centre's
assets, the Company issued 875,000 shares of Series A Convertible Preferred
Stock. The preferred shares had an annual six percent (6%) dividend payable
monthly in arrears beginning in May, 1994. During January, 1995, all 875,000
shares of Series A Convertible Preferred Stock was converted into 291,667
shares of the Company's $.03 par value Common Stock, and all dividend
obligations with respect to the Preferred Shares were extinguished. Prior to
conversion, the Company paid dividends totalling $43,115 related to the
Preferred Shares.
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ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements, including the footnotes.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 1996 COMPARED TO MARCH 31, 1995
The most significant events of the past year were the purchase of
Creative Faires, Ltd. (owner of the New York Renaissance Faire) and
construction of the Virginia Renaissance Faire. The acquisition of Creative
Faires has been accounted for as a pooling of interests, which means that all
financial results of Creative Faires, Ltd. have been retroactively merged
into those of the Company. Accordingly, all references to the Company's
balance sheets at March 31, 1995 and March 31, 1996 include the financial
position of Creative Faires. Because the Company has a March 31 fiscal year
end and Creative Faires has a December 31 fiscal year end, the balance sheets
of Creative Faires as of December 31, 1994 and December 31, 1995 have been
consolidated into the Company's balance sheets as of March 31, 1995 and March
31, 1996, respectively.
Although inflation can potentially have an effect on financial results,
during the 1996 fiscal year it caused no material effect on the Company's
operations, since the change in prices charged by the Company and by
Company's vendors has not been significant.
Reviewing the change in financial position over one year previous,
current assets, largely comprised of cash and prepaid expenses, decreased
from $4,030,924 at March 31, 1995 to $2,119,867 at March 31, 1996, a decrease
of $1,911,057 or 47%. Of those amounts, cash and cash equivalents decreased
from $3,314,407 at March 31, 1995 to $631,063 at March 31, 1996, due to cash
outflow from operations during the year, plus the use of cash for
construction of the Virginia Faire. Accounts receivable increased from
$50,128 at March 31, 1995 to $392,814 at March 31, 1996, representing amounts
due to the Company from vendors at the 1994 San Francisco Faire, funds due
from exercise of stock warrants, and $323,380 in refunds due from federal and
state tax authorities. Inventory, comprised of merchandise sold at the
Faires and various food and beverage supplies, increased from $82,900 on
March 31, 1995 to $116,221 on March 31, 1996, largely reflecting merchandise
remaining from the previous season and the purchase of new products for
upcoming Faires. Prepaid expenses increased from $582,489 at March 31, 1995
to $979,769 at March 31, 1996. These costs represent expenses incurred on
behalf of the Los Angeles and Virginia Faires, which are expensed once those
Faires are operating.
Current liabilities increased from $1,047,960 at March 31, 1995 to
$2,104,844 at March 31, 1996, an increase of $1,056,884 or 101%. This
increase is largely due to construction spending on the Virginia Faire. In
large part due to that project, accounts payable and accrued expenses
increased from $438,723 on March 31, 1995 to $1,181,090 on March 31, 1996, an
increase of $742,367 or 169%. The current portion of notes payable increased
from $59,430 on March 31, 1995 to $437,956 on March 31, 1996. Of the
increase, $250,000 was due to short-term borrowings on a line of credit in
Wisconsin, plus $100,000 reflects the current portion of a 10-year mortgage
taken against land in Kenosha, Wisconsin. (In April 1995 the Company
acquired 80 acres adjacent to the existing Bristol Renaissance Faire site in
Kenosha, Wisconsin for $800,000. The mortgage on the original property, with
a principal amount of $460,000, was rolled into a new $1,000,000 mortgage,
secured by both parcels of land.) Income taxes payable dropped from $48,175
on March 31, 1995 to nil at March 31, 1996, the result of incurring a net
loss in the 1996 fiscal year. Unearned income, which consists of the sale of
admission tickets to
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upcoming Faires and deposits received from craft vendors for future
Faires, decreased modestly from $501,632 at March 31, 1995 to $485,798 at
March 31, 1996.
The changes in current assets and liabilities resulted in a decrease in
working capital of $2,967,941 or 99%, from $2,982,964 at March 31, 1995 to
$15,023 at March 31, 1996. The decrease in working capital is primarily due
to use of cash to fund the Virginia construction project, which transfers
assets out of working capital and into long-term assets, as well as cash
outflow from operations in the current fiscal year. The Company's future
liquidity is highly dependent on results of the fiscal 1997 Faire season. It
is management's opinion that cash flow from operations will not be adequate
to fund the Company's cash needs through the end of the 1997 fiscal year, and
that it will be necessary to raise additional working capital, either through
debt or equity, for this purpose. Efforts are currently underway to
accomplish that goal.
Total assets for the year ended March 31, 1996 increased from $7,037,596
to $10,433,469, an increase of $3,395,873 or 48%. Of those amounts, property
and equipment (net of depreciation) increased 200% from $1,716,809 on March
31, 1995 to $5,156,217 on March 31, 1996. Most of the increase reflects the
purchase and improvements of land in both Virginia and Wisconsin, with lesser
amounts going toward leasehold improvements and new equipment at all
locations. Construction in progress (the cost of buildings in Virginia)
increased from nil in 1995 to $1,080,895 at March 31, 1996. Upon completion
of the construction project, that amount will be reclassified to property and
equipment. Goodwill, which arose from the purchase of the two California
Faires and is being amortized over 15 years, decreased from $1,126,765 at
March 31, 1995 to $1,046,285 at March 31, 1996. Other miscellaneous assets
(organizational costs and vendor deposits) increased from $83,098 at March
31, 1995 to $121,909 at March 31, 1996.
Total liabilities increased from $1,499,085 at March 31, 1995 to
$4,636,031 at March 31, 1996, an increase of $3,136,946 or 209%. Liabilities
at March 31, 1996 includes $2,104,844 in current liabilities (discussed
above), plus $2,531,187 from the long-term portion of the following bank
loans: a $900,000 mortgage on the Bristol Faire property, a $1,500,000
mortgage on the Virginia Faire property, a $250,000 loan for construction of
vendor booths in Virginia, and approximately $55,000 for auto loans and the
lease of office trailers.
The Company's cash requirements are greatest during the period from
January 1 through April 30 when preparing for the Los Angeles and Virginia
Faires. The Company has historically relied upon various revolving credit
facilities to meet its working capital requirements during this period. At
March 31, 1996, the Company had $1,000,000 in short-term lines of credit
available to it. Of that amount, the full $250,000 line in Wisconsin had
been drawn but none of the $750,000 line in Colorado had been drawn. Both
lines of credit require full repayment by September 1, 1996. As mentioned
above, additional working capital will be required to fund the Company's
operations during fiscal 1997.
Stockholders' Equity increased from $5,538,511 at March 31, 1995 to
$5,797,438 at March 31, 1996, an increase of $258,927 or 5%. This increase
resulted from the exercise of 155,408 Class A Warrants at $4.00 per share;
the exercise of 83,017 Class B Warrants at $5.25 per share; the exercise of
85,530 employee stock options at prices ranging from $2.82 to $7.00 per
share; the repurchase of 10,313 shares by the Company at $8.00 per share; and
the $1,273,671 net loss incurred during fiscal 1996. As of March 31, 1996 the
Company had 4,360,853 shares of common stock outstanding, 969,592 Class A
Warrants convertible to common stock at $4.00 per share, and 1,041,983 Class
B Warrants convertible to common stock at $5.25 per share. The book value of
a share of common stock (stockholders' equity divided by number of shares
outstanding) as of that date was $1.33.
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RESULTS OF OPERATIONS - FISCAL 1996 COMPARED TO FISCAL 1995
Comparisons of the fiscal year ended March 31, 1996 with the fiscal year
ended March 31, 1995 include Creative Faires, Ltd. (owner of the New York
Renaissance Faire). That February 5, 1996 acquisition has been accounted for
as a pooling of interests, which means that the financial results of Creative
Faires, Ltd. have been retroactively merged into those of the Company.
Accordingly, the Company's results of operations for fiscal 1995 and fiscal
1996 include the results of Creative Faires. Because the Company's fiscal
year ends on March 31 and Creative Faires' ends on December 31, the income
statement of Creative Faires for the fiscal years ended December 31, 1994 and
December 31, 1995 have been consolidated into the Company's income statements
for the fiscal years ended March 31, 1995 and March 31, 1996, respectively.
Results of operations for Creative Faires, Ltd. includes three crafts shows
and a Halloween Forest of Fear in addition to the New York Renaissance Faire,
although the Faire represents most of its revenue.
The results of operations of the Company for the fiscal year ended March
31, 1996 reflect the nineteen-day run of the Los Angeles faire, the
nineteen-day run of the Wisconsin faire, the thirteen-day run of the San
Francisco faire, and the seventeen-day run of the New York Faire. The
comparable period of fiscal 1995 included the same number of days for Los
Angeles, Wisconsin and New York, but included an additional four days for the
San Francisco faire. The Virginia Renaissance Faire, under construction as
of March 31, 1996, did not generate any revenues during fiscal 1996. Thus,
these financials include the results of four operating Faires and one Faire
under construction during fiscal 1996, as against four operating Faires
during fiscal 1995. As a further note, as a result of the acquisition of the
Los Angeles faire on April 1, 1994, the comparable figures for the 1995
fiscal year do not reflect advance ticket sales and certain prepaid expenses
of the Los Angeles faire which were recognized by the prior owner.
Revenue increased modestly from $12,539,653 for the fiscal year ended
March 31, 1995 to $12,810,617 for the fiscal year ended March 31, 1996, an
increase of $270,964 or 2%. During fiscal 1995 beverage operations for the
Los Angeles and San Francisco Faires were handled by an outside contractor,
and accordingly only the fee earned from that contractor was reported as
revenue, whereas in fiscal 1996 the Company ran the beverage operation itself
and recorded all revenue. Based on preliminary results for the nineteen-day
run of the Los Angeles Faire during the first quarter of fiscal 1997 and the
thirteen-day run of the Virginia Faire which completed its first run during
this period, the Company estimates that revenues for the first quarter of
fiscal 1997 will be approximately equal to revenue from the first quarter of
fiscal 1996, despite the fact that the Company had two Faires during the 1997
period compared to one Faire in the 1996 period. The Company expects to
report a net loss during the first quarter of fiscal 1997 compared to net
income in the 1996 period, due to losses incurred with the opening of the
Virginia Faire, reflecting the fact that it can take one or more years for a
new Faire to become profitable, and due to a decrease in revenues for the Los
Angeles Faire for the 1997 period compared to the 1996 period.
Faire operating expenses (expenses directly related to faire operations,
such as rent, grounds maintenance, contract services, contract entertainment,
food, beverage and merchandise costs) increased $614,377 or 19%, from
$3,212,491 in fiscal 1995 to $3,826,868 in fiscal 1996. This increase is
partially due to the inclusion of beverage costs for the Los Angeles and San
Francisco faires, which were not reported during the previous period when
handled by an outside contractor, plus higher overall costs related to faire
operations. The gross profit, representing operating income from faire
operations before overhead expenses, decreased 4% from $9,327,162 in fiscal
1995 to $8,983,749 in fiscal 1996. This decrease is attributable to the
shorter run of the San Francisco faire in fiscal 1996 and growing operating
costs which were not offset by increased attendance.
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Operating expenses (year-round operating costs and corporate overhead)
increased $1,888,568 or 22%, from $8,570,320 for fiscal 1995 to $10,458,888
for fiscal 1996. Of these amounts, salaries (wages paid to year-round
employees) increased 17% from $3,474,799 in fiscal 1995 to $4,082,271 in
fiscal 1996, representing a modest expansion of staffing levels company wide.
Depreciation and amortization expense increased 42% from $351,215 in fiscal
1995 to $500,203 in fiscal 1996. This increase is largely the result of the
Company's increased investment in property and equipment for the expanded
Chicago faire, as well as investment in furniture and equipment for the
corporate office, which moved to new quarters in April 1995. Substantial
investment in buildings and improvements to the Virginia property were not
subject to depreciation in fiscal 1996, because at March 31, 1996 the
Virginia Faire had not yet opened. Under accounting rules those assets
(categorized on the balance sheet as construction-in-progress) were not yet
depreciable. Advertising expenditures increased 28% from $1,211,798 in
fiscal 1995 to $1,546,701 in fiscal 1996.
Other operating expenses (all other general and administrative expenses
of the Company) increased $797,205 or 23%, from $3,532,508 for fiscal 1995 to
$4,329,713 for fiscal 1996. This increase is the result of greater overhead
costs at each Faire site plus other corporate activities which support faire
operations and pursue new ventures. For example, a Merchandise Division was
created to centrally design and produce products for sale at both
Company-owned faires and other retail outlets. During the 1996 fiscal year,
approximately $225,000 was spent developing new products and distribution
opportunities. Second, approximately $90,000 in product design costs, which
had been capitalized during the 1995 fiscal year, had to be expensed when
changing circumstances required a different accounting treatment of that
transaction. Third, approximately $160,000 in expenses were incurred
searching for and negotiating for the rights to new sites for the Los Angeles
and San Francisco faires. Management believes that those faires have the
potential to be more profitable once they are located on long-term sites with
permanent structures. Fourth, the Company expensed approximately $300,000 in
overhead costs during construction of the new site in Virginia, including
such costs as salaries, office rent and overhead costs related to overseeing
construction. Although all of these above events unfavorably impacted fiscal
1996 results, management believes that collectively they were necessary to
support the Company's existing business and to position it for better
profitability in future years. As a result of the foregoing, net operating
income (before interest charges and other income) decreased $2,231,981, from
$756,842 for fiscal 1995 to a loss of $1,475,139 for fiscal 1996.
A 128% increase in interest income from $48,132 in fiscal 1995 to
$109,652 in fiscal 1996 resulted from the investment of cash proceeds from
the January 1995 stock offering. Offsetting this was a 159% increase in
interest expense from $53,223 in fiscal 1995 to $138,036 in fiscal 1996. The
increase was due to a new $1,500,000 mortgage and $250,000 note on the
Virginia property, plus a larger mortgage on the Wisconsin property.
Combining interest income with interest expense resulted in an increase in
net interest expense from $5,091 in fiscal 1995 to $28,384 in fiscal 1996.
Miscellaneous expenses (primarily loss on sale of assets) of $28,327 in
fiscal 1995 changed to $36,049 in miscellaneous income (rental income and
vendor refunds) in fiscal 1996. (A $200,000 payment to the Company from the
Commonwealth of Virginia, which was included in other income during the third
quarter of fiscal 1996, was subsequently removed from income in the fourth
quarter. This amount instead has been applied as a reduction of the cost of
property and equipment at the Virginia Renaissance Faire.) Combining net
operating income with other income resulted in a $2,190,898 decrease in net
income before taxes, from income of $723,424 for fiscal 1995 to a loss of
$1,467,474 in fiscal 1996.
Since the Company incurred a net loss for the 1996 fiscal year, it has
applied that loss against taxable income during the previous fiscal year,
resulting in a credit of $193,803 in taxes previously booked. The excess in
operating losses above what has been applied against the previous year
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(approximately $1,400,000) will be carried forward to reduce taxable income
in future periods. During the 1995 fiscal year, a year of net income, income
tax expense of $147,000 was incurred.
Net income to common shareholders decreased $1,806,980, from $533,309 in
fiscal 1995 to a loss of $1,273,671 for fiscal 1996. Net income to common
shareholders for fiscal 1995 is net of $43,115 paid in dividends on preferred
stock. The Company's preferred stock was fully redeemed on January 27, 1995
in conjunction with the public offering, and there has been no preferred
stock outstanding since that date. Finally, net income per share decreased
from $0.21 during fiscal 1995 to a loss of $0.33 during fiscal 1996, based on
2,488,522 average weighted shares outstanding during fiscal 1995 and
3,912,091 shares outstanding during fiscal 1996.
Although net operating income for the fiscal year ended March 31, 1996
decreased considerably from the previous year, that can be partially
attributable to higher profits from the fiscal 1995 San Francisco faire,
which operated for an additional two weekends in fiscal 1995 compared to
fiscal 1996, and also to expenses incurred by the Company in order to
strengthen existing Faires and better position the Company for the future.
The most significant events of fiscal 1996 included construction of the
Virginia faire, development of a centralized merchandising operation, the
search for permanent locations for the Los Angeles and San Francisco faires,
development of a centralized accounting and management information system,
pursuit of acquisitions, and the investigation of new ventures compatible
with the Renaissance Faire business. Management's goals remain consistent
with what it expressed one year ago: (1) to improve the profitability of
existing faires, (2) to acquire or build new faires, and (3) to develop new
ventures compatible with the Company's existing business.
ITEM 7: FINANCIAL STATEMENTS
The following financial statements are filed as part of this
report:
1. Report of Independent Certified Public Accountants;
2. Consolidated Balance Sheet as of March 31, 1996
(audited);
3. Consolidated Statement of Operations for the Fiscal
Years Ended March 31, 1995 and March 31, 1996
(audited);
4. Statements of Changes in Stockholders' Equity for the
Fiscal Years Ended March 31, 1994 through March 31,
1996 (audited);
5. Statements of Cash Flows for the Fiscal Years Ended
March 31, 1995 and March 31, 1996 (audited); and
6. Notes of Consolidated Financial Statements.
ITEM 8: CHANGES IN CERTIFYING PUBLIC ACCOUNTANTS
None.
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PART III
Part III, Items 9, 10, 11 and 12, are incorporated herein by reference
from the Registrant's definitive proxy statement relating to its Annual
Meeting of Shareholders which will be filed in an amendment within 120 days
of March 31, 1996.
ITEM 13: EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
EXHIBITS
EXHIBIT NO TITLE
* 1.0 Underwriting Agreement.
* 1.1 Letter of Intent with Duke & Co., Inc., dated August 3, 1994.
2.0 Agreement and Plan of Merger by and among Western
Renaissance Fair Presentation, Inc. and Renaissance
Entertainment Corporation and Renaissance Pleasure
Faires, Inc., dated March 4, 1994, incorporated by
reference from the Registrant's Current Report on Form 8-K
dated April 1, 1994, filed with the Commission on
April 15, 1994.
2.1 Asset Purchase and Sale Agreement by and among Living
History Centre, Renaissance Entertainment Corporation
and Renaissance Pleasure Faires, Inc., dated as of
March 4, 1994, incorporated by reference from the
Registrant's Current Report on Form 8-K dated April 1,
1994, filed with the Commission on April 15, 1994.
* 2.2 Plan and Agreement of Merger dated February 5, 1996 by
and among Renaissance Entertainment Corporation,
CFaires Acquisition Corp., Creative Faires, Ltd.,
Barbara Hope and Donald C. Gaiti.
3.0(i) Amended and Restated Articles of Incorporation,
incorporated by reference from the Amendment No. 1 to
Registrant's Registration Statement on Form 8-A filed
with the Commission on April 12, 1994.
3.0(ii) By-Laws, incorporated by reference from the Amendment
No. 1 to Registrant's Registration Statement on Form 8-A
filed with the Commission on April 12, 1994.
* 3.1 Articles of Amendment to the Articles of Incorporation.
4.1 Specimen Certificate of Common Stock, incorporated by
reference from the Amendment No. 1 to Registrant's
Registration Statement on Form 8-A filed with the
Commission on April 12, 1994.
* 4.2 Specimen Class A Warrant Certificate.
* 4.3 Specimen Class B Warrant Certificate.
* 4.4 Warrant Agreement.
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* 4.5 Underwriter's Warrant Agreement.
* 4.6 Certificate of Designations, Preferences, and Rights of
Series A Convertible Preferred Voting Stock of
Renaissance Entertainment Corporation.
* 4.7 Renaissance Entertainment Corporation 1993 Stock
Incentive Plan.(1)
* 5.0 Opinion of Neuman & Cobb regarding the legality of the
securities being registered.
10.1 Stock Pooling and Voting Agreement, incorporated by
reference from the Registrant's Current Report on Form
8-K dated April 1, 1994, filed with the Commission on
April 15, 1994.
10.2(i) Consultation Agreement with Charles S. Leavell dated
April 1, 1995.(1)
10.2(ii) Consultation Agreement with Charles S. Leavell
Extention I dated October 1, 1995.(1)
10.2(iii)Consultation Agreement with Charles S. Leavell
Extention II.(1)
10.3(i) Employment Agreement with Miles Silverman, from the
Registrant's Current Report on Form 8-K dated April 1,
1994, filed with the Commission on April 15, 1994.(1)
**10.3(ii)Employment Agreement with Miles Silverman, from the
Registrant's Current Report on Form 8-K dated December
31, 1995.(1)
10.4 Employment Agreement with Phyllis Patterson,
incorporated by reference from the Registrant's Current
Report on Form 8-K dated April 1, 1994, filed with the
Commission on April 15, 1994.(1)
10.5(i) Employment Agreement with Howard Hamburg, incorporated
by reference from the Registrant's Current Report on
Form 8-K dated April 1, 1994, filed with the Commission
on April 15, 1994.(1)
**10.5(ii)Employment Agreement with Howard Hamburg, incorporated
by reference from the Registrant's Current Report on
Form 8-K dated December 31, 1995.(1)
10.6(i) Employment Agreement with Kevin Patterson, incorporated
by reference from the Registrant's Current Report on
Form 8-K dated April 1, 1994, filed with the Commission
on April 15, 1994.(1)
**10.6(ii)Employment Agreement with Kevin Patterson, incorporated
by reference from the Registrant's Current Report on
Form 8-K dated December 31, 1995.(1)
* 10.7 Employment Agreement with J. Stanley Gilbert.(1)
* 10.8 Employment Agreement with Rikki Kipple.(1)
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10.9 Creative Business Strategies, Inc. 1994 Consulting and
Warrant Compensation Agreement, incorporated by
reference from the Registrant's Registration Statement
on Form S-8 which was declared effective on March 18,
1994.(1)
* 10.10 Consultation Agreement with Creative Business
Strategies, Inc.(1)
* 10.11 Letter Agreement with Rob Geller dated July 19, 1994.(1)
* 10.12 Agreement with The Living History Centre dated August
25, 1994.
* 10.13 Specimen Vendor and Exhibitor Agreement for the Bristol
Renaissance Faire.
* 10.14 Specimen Vendor and Exhibitor Agreement for the
Northern and Southern Renaissance Pleasure Faires.
* 10.15 Specimen Bristol Renaissance Faire Concession
Agreement.
* 10.16 Specimen Bristol Renaissance Faire Games Concession
Agreement.
* 10.17 Office Lease.
* 10.18 Services Agreement between The Living History Centre
and Renaissance Pleasure Faires, Inc.
* 10.19 Standard Industrial Lease Agreement between TFC
Development Company and The Living History Centre.
* 10.20 Amendment No. 1 to Standard Industrial Lease Agreement
between TFC Development Company and The Living History
Centre.
* 10.21 Amendment No. 2 to Standard Industrial Lease Agreement
between TFC Development Company and The Living History
Centre.
* 10.22 License Agreement and Lease with San Bernardino County
for the Southern Renaissance Pleasure Faire site.
* 10.23 License Agreement between Theme Events, Ltd. and The
Living History Centre.
* 10.24 Consent to Assignment of License Agreement between
Theme Events, Ltd. and The Living History Centre.
* 10.25 Contract to purchase eighty (80) acres of land adjacent
to the Bristol Renaissance Faire site.
* 10.26 Investment Banking Agreement with Duke & Co., Inc.
* 10.27 Contract to purchase approximately 250 acres of land in
Stafford County, Virginia
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**10.28 Lease Agreement between Creative Faires, Ltd. and
Sterling Forest Corporation dated June 12, 1996.
10.29 Mortgage dated April 7, 1995 with Bank One, Kenosha
N.A. with respect to Bristol Property.
* 10.30 Employment Agreement dated February 5, 1996 with
Barbara Hope.(1)
* 10.31 Employment Agreement dated February 5, 1996 with Donald
C. Gaiti.(1)
10.32 Line of credit with Bank One, Wisconsin in the amount
of $250,000 dated February 6, 1996, incorporated by
reference from the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended December 31, 1995,
filed with the Commission on February 20, 1996.
10.33 Line of credit with Union Bank & Trust in the amount of
$250,000 dated December 29, 1995, incorporated by
reference from the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended December 31, 1995,
filed with the Commission on February 20, 1996.
10.34 Commitment Letter for a line of credit with Bank One
Colorado in the amount of $750,000 dated January 26,
1996, incorporated by reference from the Registrant's
Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1995, filed with the Commission on
February 20, 1996.
**10.35 Mortgage with Union Bank & Trust in the amount of
$1,500,000 with respect to the Virginia property.
* 21.0 Subsidiaries
** 27.0 Financial data schedule.
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* Incorporated by referenced from the Company's Registration
Statement on Form SB-2, as amended, declared effective by
the Commission on January 27, 1995.
** Filed herewith.
(1) Indicates management contracts, compensation plans or
arrangements required to be filed as exhibits.
REPORTS ON FORM 8-K
The Registrant filed no Current Reports on Form 8-K during the fourth
quarter of the fiscal year ended March 31, 1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
RENAISSANCE ENTERTAINMENT CORPORATION
Date: July 1, 1996 /s/ Miles Silverman
--------------------- ----------------------------------------
Miles Silverman, President & Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
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/ Charles S. Leavell Chairman of the Board, July 1, 1996
- ----------------------- Chief Executive Officer
Charles S. Leavell
/s/ Miles Silverman President, Chief Financial Officer July 1, 1996
- -----------------------
Miles Silverman
/s/ Sue Brophy Chief Accounting Officer July 1, 1996
- -----------------------
Sue Brophy
/s/ Howard C. Hamburg Director July 1, 1996
- -----------------------
Howard C. Hamburg
/s/ Phyllis Patterson Director July 1, 1996
- -----------------------
Phyllis Patterson
/s/ Sanford L. Schwartz Director July 1, 1996
- -----------------------
Sanford L. Schwartz
/s/ Robert M. Geller Director July 1, 1996
- -----------------------
Robert M. Geller
/s/ Barbara Hope Director July 1, 1996
- -----------------------
Barbara Hope
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
March 31, 1995 and 1996
F-1
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Page
Report of Independent Certified Public Accountants F-3
Audited Financial Statements:
Combined Balance Sheet F-4
Combined Statements of Operations F-5
Combined Statement of Changes in Stockholders'
Equity F-6
Combined Statements of Cash Flows F-7
Notes to Combined Financial Statements F-8
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Renaissance Entertainment Corporation
and Consolidated Subsidiaries
We have audited the combined balance sheet of Renaissance
Entertainment Corporation and Consolidated Subsidiaries and
Creative Faires, Ltd. as of March 31, 1996 and the related
combined statements of operations and changes in stockholders'
equity, and cash flows for the years ended March 31, 1995 and
1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these combined 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 an 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 combined financial statements referred to
above present fairly, in all material respects, the combined
financial position of Renaissance Entertainment Corporation and
Consolidated Subsidiaries and Creative Faires, Ltd. as of March
31, 1996 and the combined results of operations, changes in
stockholders' equity and cash flows for the years ended March 31,
1995 and 1996 in conformity with generally accepted accounting
principles.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112
June 22, 1996
F-3
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED BALANCE SHEET
March 31, 1996
ASSETS
Current Assets:
Cash and equivalents $ 631,063
Income tax refunds receivable (Note 6) 323,380
Accounts receivable, net of allowance
for doubtful accounts of $8,341 69,434
Inventory, at lower of cost or market 116,221
Prepaid expenses and other current assets 979,769
--------------
Total Current Assets 2,119,867
Property and equipment, net of accumulated
depreciation of $1,372,060 (Note 7) 5,156,217
Construction in progress 1,080,895
Goodwill, net of accumulated amortization
of $160,960 (Note 5) 1,046,285
Covenant not to compete, net of
accumulated amortization of $40,000
(Note 5) 60,000
Restricted cash (Note 11) 848,296
Other assets 121,909
--------------
Total Assets $ 10,433,469
--------------
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,181,090
Notes payable, current portion (Note 3) 437,956
Unearned income 485,798
--------------
Total Current Liabilities 2,104,844
Notes payable, net of current
portion (Note 3) 2,531,187
--------------
Total Liabilities 4,636,031
--------------
Commitments (Notes 3, 4, and 8) -
Stockholders' Equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized, none issued and
outstanding -
Common stock, $.03 par value, 50,000,000
shares authorized, 4,360,853 issued and
outstanding 130,826
Additional paid-in capital 7,108,082
Accumulated (deficit) (1,441,470)
--------------
Total Stockholders' Equity 5,797,438
--------------
Total Liabilities and Stockholders' Equity $ 10,433,469
--------------
--------------
The accompanying notes are an integral part of the financial
statements.
F-4
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED STATEMENTS OF OPERATIONS
Years Ended
March 31
---------------------------
1995 1996
------------ ------------
REVENUE:
Sales $ 12,539,653 $ 12,810,617
Faire operating costs 3,212,491 3,826,868
------------ ------------
Gross Profit 9,327,162 8,983,749
------------ ------------
OPERATING EXPENSES:
Salaries 3,474,799 4,082,271
Depreciation and amortization 351,215 500,203
Advertising 1,211,798 1,546,701
Other operating expenses 3,532,508 4,329,713
------------ ------------
Total Operating Expenses 8,570,320 10,458,888
------------ ------------
Net Operating Income (Loss) 756,842 (1,475,139)
------------ ------------
Other Income (Expenses):
Interest income 48,132 109,652
Interest (expense) (53,223) (138,036)
Other income (expense) (28,327) 36,049
------------ ------------
Total Other Income (Expenses) (33,418) 7,665
------------ ------------
Net Income (Loss) before (Provision)
Credit for Income Taxes 723,424 (1,467,474)
(Provision) Credit for Income Taxes (147,000) 193,803
------------ ------------
Net Income (Loss) $ 576,424 $ (1,273,671)
------------ ------------
------------ ------------
Dividends on preferred stock (43,115) -
------------ ------------
Net Income (Loss) to Common
Stockholders $ 533,309 $ (1,273,671)
------------ ------------
------------ ------------
Net Income (Loss) per Common Share $ .21 $ (.33)
------------ ------------
------------ ------------
Weighted Average Number of
Shares Outstanding 2,488,522 3,912,091
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial
statements.
F-5
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
From March 31, 1994 through March 31, 1996
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional
Paid-in Accumulated
Shares Amount Capital (Deficit) Total
--------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1994 1,332,178 $ 39,965 $ 835,959 $ (631,226) $ 244,698
Common stock issued, private
placements and acquisition
of assets 1,035,025 31,051 866,760 - 897,811
Common stock issued, public
offering, net of offering
costs of $646,056 1,035,000 31,050 2,945,394 - 2,976,444
Common stock issued in
exchange for preferred stock
issued 291,667 8,750 803,445 - 812,195
Preferred dividends - - - (43,115) (43,115)
Net income for the year
ended March 31, 1995,
excluding loss of $48,185 of
CFL included in accumulated
deficit below - - - 624,609 624,609
--------- ---------- ------------ ----------- -----------
Balance March 31, 1995 3,693,870 110,816 5,451,558 (49,732) 5,512,642
Treasury stock acquired and
retired (10,313) (309) (82,195) - (82,504)
Common stock issued for cash 407,296 12,219 1,560,028 - 1,572,247
Common stock issued for CFL 270,000 8,100 178,691 (118,067) 68,724
Net Loss for the year ended
March 31, 1996 - - - (1,273,671) (1,273,671)
--------- ---------- ------------ ----------- -----------
Balance March 31, 1996 4,360,853 $ 130,826 $ 7,108,082 $(1,441,470) $ 5,797,438
--------- ---------- ------------ ----------- -----------
--------- ---------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
COMBINED STATEMENTS OF CASH FLOWS
Years Ended March 31
--------------------------
1995 1996
---------- ------------
Cash Flows from Operating Activities:
Net income (loss) $ 576,424 $(1,273,671)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 351,214 500,200
(Increase) decrease in:
Income tax refund receivable - (323,380)
Accounts receivable (50,124) (19,310)
Prepaid expenses (570,332) (396,276)
Inventory (82,900) (33,321)
Other assets (47,657) (38,811)
Increase (decrease) in:
Income taxes payable 48,175 (48,175)
Accounts payable and accrued
expenses 274,940 742,368
Unearned revenue and other 322,083 42,681
---------- ------------
Net Cash Provided by Operating
Activities 821,823 (847,695)
---------- ------------
Cash Flows from Investing Activities:
Investment in restricted cash - (848,296)
Repayment of advances 351,150 -
Construction in progress costs - (1,046,285)
Acquisition of property and equipment
goodwill and covenant not to compete (896,551) (3,873,738)
---------- ------------
Net Cash (Used in) Investing Activities (545,401) (5,768,319)
---------- ------------
Cash Flows from Financing Activities:
Common stock issued and additional
paid-in capital 3,403,450 1,489,743
Preferred dividends paid (43,115) -
Advances from officers 60,500 -
Proceeds from notes payable - 2,518,018
Principal payments on notes payable (438,793) (59,429)
---------- ------------
Net Cash Provided by (Used in) Financing
Activities 2,982,042 3,948,332
---------- ------------
Net Increase (Decrease) in Cash 3,258,464 (2,667,682)
Cash, beginning of period 40,281 3,298,745
---------- ------------
Cash, end of period $3,298,745 $ 631,063
---------- ------------
---------- ------------
Interest paid $ 54,506 $ 112,248
---------- ------------
---------- ------------
Income tax paid $ 98,825 $ 237,752
---------- ------------
---------- ------------
Note: The Company issued common and preferred stock for assets totalling
$1,408,000 during the year ended March 31, 1995. During the year ended March
31, 1996 the Company issued 270,000 shares of its common stock to consummate
the business combination with CFL.
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) GENERAL
Renaissance Entertainment Corporation (REC) was incorporated
under the laws of the State of Colorado on June 24, 1988.
On April 6, 1993, REC acquired one hundred percent of the
common stock of Ellora Corporation, a Wisconsin corporation
which owns and operates the Bristol Renaissance Faire
located in Kenosha, Wisconsin. In the acquisition, REC
issued a total of 892,400 shares of common stock to the
shareholders of Ellora Corporation, representing ninety-one
percent of the total issued and outstanding shares of REC
following the exchange. The acquisition was accounted for
as a reverse acquisition since the controlling shareholders
of Ellora became the controlling shareholders of REC.
During the year ended March 31, 1994 REC formed a wholly-
owned subsidiary called Heroes and Villains, Ltd. This
entity was formed to provide entertainment services and had
limited activity during the year. During February, 1994 REC
formed Renaissance Pleasure Faires, Inc. (RPFI) for the
purpose of acquiring the assets and the business of two
Renaissance Faires in California. In connection with this
acquisition and the formation of RPFI, the Company issued
568,333 shares of its common stock and 875,000 shares of
Series A Convertible Preferred Voting Stock and assumed
certain liabilities and guaranteed certain lease obligations
of the seller. The preferred shares were later exchanged
for common stock. Of the common shares issued, 262,000
common shares were issued to the seller and 306,333 common
shares were issued to shareholders of Western Renaissance
Fair Presentation, Inc. (Western) a newly formed California
corporation, formed for the purpose of providing management
services to operators of renaissance festivals.
Western was owned by certain employees of the seller.
Subsequent to its acquisition, Western was merged into a
subsidiary of REC. For accounting purposes, the acquisition
of the California Faires' net assets and business and the
acquisition of Western was treated as one combined
acquisition with the excess of cost over fair value of net
assets acquired accounted for as goodwill. The preferred
shares had an annual 6% dividend provision payable monthly
in arrears. The preferred shares had equal voting rights
per share as the common shares outstanding (291,667 votes
after giving effect to the one-for-three reverse common
stock split described in
F-8
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(a) GENERAL, CONTINUED
note 10). The preferred shares had a conversion provision
that they could be converted by the holders at any time
during the first two years into common stock on a one-for-
three basis. REC had the right at any time to redeem these
shares at $1.00 per share. During January, 1995 these
preferred shares were converted to 291,667 shares of common
stock. The Company also forgave loans to the seller
totalling $62,805 which reduced additional paid-in capital
related to this conversion transaction. Prior to
conversion, the Company paid dividends totalling $43,115
related to these preferred shares. All documents related to
this closing and all shares issued were signed and dated in
March, 1994. The bill of sale related to the transfer of
the assets was effective April 1, 1994. In connection with
this transaction, certain controlling shareholders have
entered into a stock pooling and voting agreement requiring
the voting for certain individuals to serve as directors of
the Company. In connection with this acquisition, the
Company incurred approximately $50,000 of legal and
professional fees and issued 116,533 shares of common stock
valued at $72,833 for consulting services related to
assistance with negotiations regarding the acquisition.
The business combination as of April 1, 1994 was accounted
for as a purchase by REC. See Note 10 for additional
information related to this business combination.
Effective December 31, 1995 REC acquired 100% ownership of
Creative Faires, Ltd. (CFL) in exchange for the issuance of
270,000 restricted common shares of REC stock. REC entered
into employment agreements with the two former owners of CFL
and one of the two former owners became a director of REC.
The business combination with CFL was accounted for as a
pooling of interests. CFL has a December 31 year end while
REC uses March 31 as a year end. The combined balance sheet
includes the accounts of CFL as of December 31, 1995 and the
consolidated accounts of REC and subsidiaries as of March
31, 1996. The combined statements of operations include the
accounts of CFL for the two years ended December 31, 1995
and the consolidated accounts of REC and subsidiaries for
the two years ended March 31, 1996. During the three month
period ended March 31, 1996 REC loaned $141,179 to CFL which
was not eliminated in the combined financial statements
because of the
F-9
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(a) GENERAL, CONTINUED
different year ends. The majority of the advances to CFL
were used for start-up costs for the upcoming New York Faire
described in note 9. The $141,179 has been included with
prepaid expenses in the March 31, 1996 combined balance
sheet.
All subsidiaries of the Company were merged into REC as of
March 31, 1996 with the exception of Creative Faires, Ltd.
All references to the "Company" refer to REC and its
subsidiaries. All intercompany transactions and account
balances have been eliminated in the financial statements
other than as noted above.
(b) PER SHARE INFORMATION
Per share information is determined using the weighted
average number of shares outstanding during the periods.
(c) PROPERTY AND EQUIPMENT
Property and equipment is carried at cost, net of
accumulated depreciation. Depreciation is computed using
principally accelerated methods over the useful lives of the
assets ranging from three to thirty years.
(d) REVENUE AND EXPENSE RECOGNITION AND COST OF SALES
The Company recognizes revenues from the renaissance fairs
as earned during the period when the fairs are in operation.
These revenues consist principally of gate entrance fees,
food and beverage concessions sales and fees charged to
craft vendors. At various dates subsequent to the end of
the operation of the prior year's fairs, and prior to the
opening of the next year's fairs, the Company receives
deposits from the craft vendors and others. These deposits
are carried as unearned revenue until applied to fees
charged and then earned on a pro-rata basis during the
operation of the fair.
Cost of sales as shown in the statement of operations
includes all direct costs associated with the production of
the Renaissance Faire, including cost of food, beverage and
merchandise sold, labor costs for seasonal help and other
direct costs of the production. All other expenses related
to operation of the fair are shown as operating expenses in
the statement of operations.
F-10
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(d) REVENUE AND EXPENSE RECOGNITION AND COST OF SALES,
CONTINUED
Advertising costs are expensed as incurred. Direct costs
related to the setting up of the fairs are capitalized as
prepaid expenses and expensed during the period of the
operation of the applicable fairs. Also, included in
prepaid expenses at March 31, 1996 is $141,179 of advances
from REC to CFL. CFL has a December 31 year end and REC has
a March 31 year end. These advances relate principally to
costs related to setting up the New York Faire but also
include operating expenses which apply to the short period
after the CFL year end. See a description above of the
business combination with CFL.
(e) REVERSE STOCK SPLIT
During the fiscal year ended March 31, 1995, the Company
effected a one-for-three reverse stock split and changed the
par value of the common stock from $.01 to $.03 per share.
The financial statements were retroactively adjusted for
this split.
(f) CONCENTRATIONS OF CREDIT RISKS
Financial instruments that potentially subject the Company
to concentrations of credit risk consist principally of
temporary cash investments and cash equivalents and trade
accounts receivables. At March 31, 1996 the Company had
approximately $1,370,000 of its cash and cash equivalents in
financial institutions in excess of amounts insured by
agencies of the U.S. Government. Most of the trade
receivables are from customers in one geographic location,
principally California. The Company does not require
collateral for its trade accounts receivables.
(g) CASH EQUIVALENTS
The Company considers all short term investments in
securities that mature in 90 days or less to be cash
equivalents.
F-11
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(h) INVENTORY
The Company's inventory consists principally of merchandise
held for sale. The Company carries its inventory at the
lower of cost or market. Cost is determined on an average
cost basis.
(i) ALLOWANCE FOR BAD DEBTS
The Company provides an allowance for bad debts based on
prior collection experience.
(j) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL
STATEMENTS
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 revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
(k) GEOGRAPHIC AREA OF OPERATIONS AND INTEREST RATES
The Company owns and operates Renaissance Faires principally
in five major metropolitan areas of the U.S.A. The
potential for severe financial impact can result from
negative effects of economic conditions within the markets
or geographic areas. Since the Company's business is
principally in five areas, this concentration of operations
results in an associated risk and uncertainty.
(l) CONSTRUCTION IN PROGRESS
As of March 31, 1996 the Company had incurred $1,080,895 of
construction costs related to the Company building a fair
site in Virginia. These construction costs incurred
consisted of buildings and land improvements. The
construction was completed subsequent to March 31, 1996.
These costs will be depreciated over estimated useful lives
of the assets beginning with the completion date of the
project.
F-12
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(2) COMMON AND PREFERRED STOCK
The Articles of Incorporation of the Company authorize
issuance of a maximum of 50,000,000 shares of $.03 par value
common stock and 1,000,000 shares of $1.00 par value
preferred stock. See note 1 for a description of the
preferred stock issued and then subsequently converted to
common stock.
During January, 1995 the Company sold in a public offering
1,035,000 units of its securities at $3.50 per unit. Each
unit consisted of one share of common stock and one Class A
warrant and one Class B warrant. Each Class A warrant
entitles the warrant holder thereof to purchase one share of
common stock at a price of $4.00 per share through January
27, 2000. Each Class B warrant entitles the holder thereof
to purchase one share of common stock at a price of $5.25
per share through January 27, 2000. These warrants were
immediately exercisable. The warrants are redeemable by the
Company after 24 months from January 27, 1995, the date of
the prospectus, or sooner with the consent of the
Underwriter, at a price of $.01 per warrant upon 30 days'
notice mailed within ten days after the closing bid price of
the Company's common stock has equaled or exceeded 150% of
the then current respective warrant exercise price for a
period of 20 consecutive trading days. The holders of the
warrants called for redemption are granted exercise rights
until the close of business on the date preceding the date
fixed for redemption.
The Company incurred $646,056 of costs related to this
offering. These offering costs have been offset against the
proceeds of the offering.
F-13
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(3) NOTES PAYABLE
Notes payable at March 31, 1996 are summarized as follows:
Note payable to bank at 8.65%, interest quarterly
until June, 1996 then monthly principal and
interest payments of $5,082 through May, 2011
collateralized by land, improvements and jumbo
CD's. See note 11. $1,500,000
Note payable to bank at 9.5%, 60 equal monthly
payments of $5,251 through March, 2001
collateralized by land, improvements and jumbo
CD's. See note 11. 250,000
Note payable to bank at 9.5%; interest quarterly,
two annual payments of $100,000 each with a
balloon payment of $700,000 due January, 1998;
collateralized by land and improvements. 900,000
Note payable to bank at the bank reference rate
plus 2% with a minimum rate of 10.25%; interest
paid monthly with the balance due September,
1996; collateralized by equipment, fixtures
and inventory. 250,000
Various notes payable to financial institutions
collateralized by certain vehicles. Payable in
monthly installments of principal and interest,
with final payments due in 2000 and interest
ranging from 10% to 12%. 69,144
----------
Total 2,969,144
Less current portion 437,957
----------
Long-term portion $2,531,187
----------
----------
Maturities of notes payable for each of the next five fiscal
years ending March 31 and in the aggregate thereafter, are
as follows:
1997 $ 437,957
1998 916,928
1999 126,307
2000 136,574
2001 138,458
Thereafter 1,212,920
F-14
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(4) LEASES
The Company leases property in San Bernardino County, CA
with minimum rental payments of $130,000 in the year ending
March 31, 1997. The Company is required to pay the greater
of $130,000 per year or 3.25% of the gross revenues
generated at the fair site. The Company also leases a
vehicle under a four year lease which commenced June 8, 1992
with monthly lease payments of $336. Effective April 1,
1995 the Company entered into an operating lease in Boulder
Colorado for office facilities. Initial monthly rental
payments are $3,066 with annual increases of 5% per annum.
In addition the Company will be allocated certain operating
expenses for the building. The Company also leases various
other properties in New York with terms expiring through the
year 2001. Annual lease payments on the New York Faire site
range from approximately $270,000 to $312,000 over the next
five years.
Future minimum rentals under all operating leases with terms
exceeding twelve months are as follows:
Fiscal Year Ending
March 31,
1997 485,227
1998 383,059
1999 374,461
2000 392,615
2001 360,259
----------
Total $1,995,621
----------
----------
Rent expense for the years ended March 31, 1995 and 1996
totalled approximately $404,495 and $788,375, respectively.
(5) GOODWILL AND COVENANT NOT TO COMPETE
The cost of the acquisition of the California Faire assets
and business as described in Notes 1 and 10 in excess of the
fair value of assets acquired has been recorded as goodwill
in the accompanying financial statements. Goodwill is being
amortized on a straight-line basis over fifteen years.
Management reviews the carrying value of goodwill on a
periodic basis, at least annually, to determine if there is
any impairment in value. If management determines that the
carrying value is not recoverable over the remaining
amortization term, the excess balance, if any, will be
expensed. As of March 31, 1996 the Company's net carrying
value for goodwill was $1,046,285 after amortization of
$160,960.
F-15
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(5) GOODWILL AND COVENANT NOT TO COMPETE
In addition, the Company allocated $100,000 for certain
covenants not to compete for certain officers and employees
of The Living History Centre related to the asset and
business acquisition. These covenants not to compete are
being amortized on a straight-line basis over five years.
(6) INCOME TAXES
The Company files income tax returns with its subsidiaries.
During the year ended March 31, 1995 the Company utilized
loss carryovers to offset taxable income totalling
approximately $386,000 resulting in realization of tax
benefits of approximately $154,000. During the year ended
March 31, 1996 the Company incurred an operating loss
resulting in a carryback to prior years. As of March 31,
1996 the Company had income tax refunds receivable resulting
from the carryback and refunds receivable from excess
estimated payments which together totalled $323,380.
As of March 31, 1996, there are no current or deferred
income taxes payable. As of March 31, 1996, the Company has
total deferred tax assets of approximately $300,000 due to
operating loss carryforwards and the depreciation timing
differences described above. However, because of the
uncertainty of potential realization of these tax assets,
the Company has provided a valuation allowance for the
entire $300,000. Thus, no tax assets have been recorded in
the financial statements as of March 31, 1996.
The Company has available at March 31, 1996, unused
operating loss carryforwards of approximately $1,400,000
which may be applied against future taxable income, expiring
in various years through 2011.
(7) PROPERTY AND EQUIPMENT
Land $2,888,350
Buildings and Improvements 1,171,794
Office Furniture and Equipment 366,171
Costumes, Props and Other Assets 2,101,962
-----------
Sub-total 6,528,277
Less Accumulated Depreciation (1,372,060)
-----------
Total $5,156,217
-----------
-----------
F-16
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(8) WARRANTS ISSUED FOR SERVICES AND STOCK OPTIONS
In January, 1994 the Company issued warrants to purchase an
aggregate of 133,333 shares of the Company's common stock at
an exercise price of $1.87 per share. These warrants were
issued pursuant to a Form S-8 registration statement for
various consulting services. These warrants were exercised
during the year ended March 31, 1995. These 133,333
warrants were valued at $.30 per warrant and expensed in the
total amount of $40,000 in the financial statements.
Pursuant to the Company's stock option plans, the Company
has granted options to acquire 540,659 shares of the
Company's common stock. Of this amount 66,862 options have
been exercised and 5,999 have expired. The options are
exercisable at prices ranging from $2.25 per share to $7.00
per share and are exercisable at various dates through 1998.
(9) BUSINESS COMBINATION, NEW YORK FAIRE
Effective December 31, 1995 the Company issued 270,000
shares of its restricted common stock for 100% ownership of
Creative Faires, Ltd. (CFL) The transaction was accounted
for as a pooling of interests as described in note 1. CFL
principally conducted a New York Faire.
REC and consolidated subsidiaries previously reported
revenue of $10,459,476 and net income of $624,609 during the
year ended March 31, 1995. The revenues and net loss of CFL
included in the combined statement of operations for the
year ended March 31, 1995 amounted to $2,081,177 and
$(48,185), respectively. Revenues of $2,308,378 and a net
loss of $(37,756) of CFL, incurred prior to the business
combination have been included in the combined statement of
operations for the year ended March 31, 1996.
(10) BUSINESS COMBINATION, CALIFORNIA FAIRES
Effective April 1, 1994 the Company acquired the assets and
certain liabilities of The Living History Centre, (LHC) a
California, not-for-profit corporation. The Company issued
568,333 shares of its common stock and 875,000 shares of its
preferred stock as consideration for the net assets
acquired. The preferred stock was converted into common
stock during January, 1995. In addition to acquiring
certain assets and liabilities of LHC, the Company has
acquired the rights to operate two California Renaissance
Faires.
F-17
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED
See Note 1 of the financial statements for additional
information related to the business combination. The
transaction was accounted for as a purchase by REC. The
results of operations of the LHC Faire operations are
included in the income statement of REC commencing April 1,
1994. The cost of this acquisition was approximately
$2,534,000, including assumption of liabilities and issuance
of the common and convertible preferred stock.
The following table shows the allocation of the purchase
price assets:
Cash $ 63,000
Prepaid faire costs 318,000
Inventory 56,000
Accounts receivable 87,000
Property and equipment 664,000
Covenant not to compete 100,000
Goodwill 1,207,000
Other assets 39,000
-----------
$ 2,534,000
-----------
-----------
Liabilities assumed 640,000
Preferred stock issued 875,000
Common stock issued 533,000
Cash advanced and acquisition
expenses incurred 486,000
-----------
$ 2,534,000
-----------
-----------
Assets and liabilities acquired or assumed were recorded at
estimated fair value at April 1, 1994 the date of
acquisition.
The amount assigned to the common stock was $532,812 ($.9375
per share) approximately one half of the market trading
price of the Company's common stock as of April 1, 1994.
This value was used due to the large number of shares and
their restrictive nature. LHC, a non-profit corporation,
obtained an appraisal of its business for the purpose of
determining an approximate valuation necessary to obtain
regulatory approval for sale of its assets. Although this
appraisal indicated a valuation in an amount such that the
common stock of REC exchanged for the certain net assets and
the business of LHC would have been recorded at $1.56 per
share, management of REC did not believe that such a
valuation was appropriate under the circumstances. The
appraiser based the valuation on
F-18
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED
projected net income from the California Faires of $500,000
per year. The California Faires have not been historically
profitable and to assume that the Faires will earn $500,000
per year is, as explained in the appraisal, inherently
highly speculative. Therefore, management believes that the
appraisal is unsuitable for determining a value of the
business acquired. Management gave consideration to the
following transactions and events when it determined the
appropriate valuation of the shares issued in the
acquisition:
a. In the fall of 1993, the Company sold 126,667 shares at
a cash price of $1.50 per share. Following this
private offering of a small number of shares, the
Company incurred substantial operating losses and
accumulated deficits.
b. For the two years prior to their acquisition, the two
California Renaissance Faires had generated substantial
net operating loss of $(869,953) and $(928,569) in the
years 1992 and 1993, respectively.
c. In August 1994, the Company sold in a private offering
400,000 shares at a price of $.60 per share,
principally to raise working capital to cover the
anticipated cost of the public offering.
d. The public market of the Company's common stock was and
was highly illiquid, with only 300,000 shares in the
public float eligible for trading. Management believes
that the price of $1.875 per share of the publicly-
traded shares was not indicative of the fair market
value of substantially larger blocks of restricted
shares.
e. The Company issued 38,844 shares and warrants to
purchase an additional 66,667 shares at an exercise
price of $1.875, to an entity affiliated with a
director of the Company. The shares and the exercise
price of the warrants were valued at 100% of the public
trading price due to (i) the transaction having been
between the Company and a related party, and (ii) the
fact that the shares were registered on a Form S-8
which rendered them free-trading.
F-19
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED
f. The Company has granted to executive officers and
key employees incentive stock options at an
exercise price of $1.875 per share. In order to
qualify as incentive stock options under Section
422 of the Internal Revenue Code, the options must
be priced at 100% of the public trading market of
the Company's common stock.
Management believes that recording the shares issued for the
LHC acquisition at 50% of the publicly traded value is
reasonable, appropriate and normal for this large of a block
of restricted securities. Goodwill is being amortized on a
straight-line basis over a fifteen year period and the
covenant not to compete is being amortized on a straight-
line basis over a five year period. The Company believes
that a 15 year estimated life over which goodwill is being
amortized is reasonable due to the fact the California
Faires have been in existence approximately 30 years and the
fact that the average life of other currently successful
Renaissance Faires in the United States is over 15 years and
there is no reason to believe that those Faires will not be
in existence for another 15 years.
It is the Company's policy that management on a periodic
basis, at least quarterly, will evaluate the Carrying value
of goodwill and other intangibles to determine if there is
an impairment of value or the remaining estimated life is
less than the remaining unamortized period. If the
evaluation indicates write-downs or adjustments to the
amortization are necessary, such write-downs or adjustments
will be made immediately.
(11) RESTRICTED CASH
Certificates of Deposit in the amount of $848,296 at March
31, 1996 are collateral to an 8.65% and a 9.5% loan maturing
in 2011 and 2001, respectively, and Certificates of Deposit
totalling $275,000 may be released annually beginning March
1, 1997 and each year thereafter provided that projected net
operating income goals are realized in each of the three
operating seasons commencing in 1996. If the Certificates
of Deposit have not been released for any of the previous
years but the projected income goal for the current year is
reached,
F-20
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION
AND CONSOLIDATED SUBSIDIARIES
AND CREATIVE FAIRES, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
March 31, 1996
(11) RESTRICTED CASH, CONTINUED
the Certificates of Deposit for the previous year and the
current year shall be released. If projected goals are not
reached by year three, then the certificates shall be
released in any subsequent year that the third year goal
amount is reached.
(12) COMMITMENTS AND SUBSEQUENT EVENTS
Effective December 16, 1994 the Company entered into an
agreement with a consulting firm to provide to the Company
certain promotional services for the Company's fairs. The
Company has agreed to pay commissions to the consulting firm
of 17.65% of the actual net billings by advertisers for
media placed pursuant to plans approved by the Company. The
Company has also agreed to pay $7,500 per month for the five
year term of the agreement. The Company has also granted an
option to the consulting firm to allow the firm to acquire a
minimum of 33,000 and a maximum of 66,000 shares of the
Company's common stock at $3.25 per share with the increase
depending on the results of the services performed by the
consulting firm.
Effective October 1, 1994 the Company entered into a
consulting agreement with a company owned by a director of
Renaissance Entertainment Corporation. The Company has
agreed to pay the consulting company $4,500 per month for
twenty hours per month of services. Additional hours will
be compensated at $200 per hour. The term of the agreement
continues until December 31, 1996. Effective April 1, 1995
the Company agreed to pay $4,000 per month for consulting
services to a director of the Company which expired
effective December 31, 1995. The Company also has a
consulting agreement with another company that is owned by a
director of the Company. This agreement is for $75 per hour
plus $300 per Board meeting and can be terminated at any
time.
During the year ended March 31, 1995 the Company adopted a
non-qualified deferred compensation plan for ten employees
of the Company. Monthly contributions to the plan total
approximately $3,500. Beginning April 1, 1996 monthly
contributions are approximately $1,152.
F-21
<PAGE>
INDEX TO EXHIBITS
Exhibit No Title Page
- ---------- ----- ----
* 1.0 Underwriting Agreement.
* 1.1 Letter of Intent with Duke & Co., Inc., dated August 3, 1994.
2.0 Agreement and Plan of Merger by and among Western Renaissance Fair
Presentation, Inc. and Renaissance Entertainment Corporation and
Renaissance Pleasure Faires, Inc., dated March 4, 1994,
incorporated by reference from the Registrant's Current Report on
Form 8-K dated April 1, 1994, filed with the Commission on April
15, 1994.
2.1 Asset Purchase and Sale Agreement by and among Living History
Centre, Renaissance Entertainment Corporation and Renaissance
Pleasure Faires, Inc., dated as of March 4, 1994, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
April 1, 1994, filed with the Commission on April 15, 1994.
* 2.2 Plan and Agreement of Merger dated February 5, 1996 by and among
Renaissance Entertainment Corporation, CFaires Acquisition Corp.,
Creative Faires, Ltd., Barbara Hope and Donald C. Gaiti.
3.0(i) Amended and Restated Articles of Incorporation, incorporated by
reference from the Amendment No. 1 to Registrant's Registration
Statement on Form 8-A filed with the Commission on April 12, 1994.
3.0(ii) By-Laws, incorporated by reference from the Amendment No. 1 to
Registrant's Registration Statement on Form 8-A filed with the
Commission on April 12, 1994.
* 3.1 Articles of Amendment to the Articles of Incorporation.
4.1 Specimen Certificate of Common Stock, incorporated by reference
from the Amendment No. 1 to Registrant's Registration Statement on
Form 8-A filed with the Commission on April 12, 1994.
* 4.2 Specimen Class A Warrant Certificate.
* 4.3 Specimen Class B Warrant Certificate.
* 4.4 Warrant Agreement.
* 4.5 Underwriter's Warrant Agreement.
* 4.6 Certificate of Designations, Preferences, and Rights of Series A
Convertible Preferred Voting Stock of Renaissance Entertainment
Corporation.
* 4.7 Renaissance Entertainment Corporation 1993 Stock Incentive Plan.(1)
* 5.0 Opinion of Neuman & Cobb regarding the legality of the securities
being registered.
10.1 Stock Pooling and Voting Agreement, incorporated by reference from
the Registrant's Current Report on Form 8-K dated April 1, 1994,
filed with the Commission on April 15, 1994.
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<PAGE>
10.2(i) Consultation Agreement with Charles S. Leavell dated April 1,
1995.(1)
10.2(ii) Consultation Agreement with Charles S. Leavell Extention I dated
October 1, 1995.(1)
10.2(iii) Consultation Agreement with Charles S. Leavell Extention II.(1)
10.3(i) Employment Agreement with Miles Silverman, from the Registrant's
Current Report on Form 8-K dated April 1, 1994, filed with the
Commission on April 15, 1994.(1)
**10.3(ii) Employment Agreement with Miles Silverman, from the Registrant's
Current Report on Form 8-K dated December 31, 1995.(1)
10.4 Employment Agreement with Phyllis Patterson, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
April 1, 1994, filed with the Commission on April 15, 1994.(1)
10.5(i) Employment Agreement with Howard Hamburg, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
April 1, 1994, filed with the Commission on April 15, 1994.(1)
**10.5(ii) Employment Agreement with Howard Hamburg, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
December 31, 1995.(1)
10.6(i) Employment Agreement with Kevin Patterson, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
April 1, 1994, filed with the Commission on April 15, 1994.(1)
**10.6(ii) Employment Agreement with Kevin Patterson, incorporated by
reference from the Registrant's Current Report on Form 8-K dated
December 31, 1995.(1)
*10.7 Employment Agreement with J. Stanley Gilbert(1)
*10.8 Employment Agreement with Rikki Kipple(1)
10.9 Creative Business Strategies, Inc. 1994 Consulting and Warrant
Compensation Agreement, incorporated by reference from the
Registrant's Registration Statement on Form S-8 which was declared
effective on March 18, 1994.(1)
*10.10 Consultation Agreement with Creative Business Strategies, Inc.(1)
*10.11 Letter Agreement with Rob Geller dated July 19, 1994.(1)
*10.12 Agreement with The Living History Centre dated August 25, 1994.
*10.13 Specimen Vendor and Exhibitor Agreement for the Bristol
Renaissance Faire.
*10.14 Specimen Vendor and Exhibitor Agreement for the Northern and
Southern Renaissance Pleasure Faires.
*10.15 Specimen Bristol Renaissance Faire Concession Agreement.
*10.16 Specimen Bristol Renaissance Faire Games Concession Agreement.
-25-
<PAGE>
*10.17 Office Lease.
*10.18 Services Agreement between The Living History Centre and
Renaissance Pleasure Faires, Inc.
*10.19 Standard Industrial Lease Agreement between TFC Development
Company and The Living History Centre.
*10.20 Amendment No. 1 to Standard Industrial Lease Agreement between TFC
Development Company and The Living History Centre.
*10.21 Amendment No. 2 to Standard Industrial Lease Agreement between TFC
Development Company and The Living History Centre.
*10.22 License Agreement and Lease with San Bernardino County for the
Southern Renaissance Pleasure Faire site.
*10.23 License Agreement between Theme Events, Ltd. and The Living
History Centre.
*10.24 Consent to Assignment of License Agreement between Theme Events,
Ltd. and The Living History Centre.
*10.25 Contract to purchase eighty (80) acres of land adjacent to the
Bristol Renaissance Faire site.
*10.26 Investment Banking Agreement with Duke & Co., Inc.
*10.27 Contract to purchase approximately 250 acres of land in Stafford
County, Virginia
**10.28 Lease Agreement between Creative Faires, Ltd. and Sterling Forest
Corporation dated June 12, 1996.
10.29 Mortgage dated April 7, 1995 with Bank One, Kenosha N.A. with
respect to Bristol Property.
*10.30 Employment Agreement dated February 5, 1996 with Barbara Hope.(1)
*10.31 Employment Agreement dated February 5, 1996 with Donald C. Gaiti.(1)
10.32 Line of credit with Bank One, Wisconsin in the amount of $250,000
dated February 6, 1996, incorporated by reference from the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1995, filed with the Commission on February 20, 1996.
10.33 Line of credit with Union Bank & Trust in the amount of $250,000
dated December 29, 1995, incorporated by reference from the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1995, filed with the Commission on February 20, 1996.
10.34 Commitment Letter for a line of credit with Bank One Colorado in
the amount of $750,000 dated January 26, 1996, incorporated by
reference from the Registrant's Quarterly Report on Form 10-QSB
for the quarter ended December 31, 1995, filed with the Commission
on February 20, 1996.
**10.35 Mortgage with Union Bank & Trust in the amount of $1,500,000 with
respect to the Virginia property.
*21.0 Subsidiaries
**27.0 Financial data schedule.
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<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("AGREEMENT") is made this 31st day of
December, 1995, by and between RENAISSANCE ENTERTAINMENT CORPORATION, a Colorado
corporation (the "COMPANY"), and Miles I. Silverman ("EMPLOYEE").
RECITALS
A. Employee currently is employed by the Company in accordance with an
Employment Agreement dated April 1, 1994 (the "1994 Employment Agreement").
B. The Company and Employee wish to cancel the 1994 Employment Agreement
effective December 31, 1995.
C. The Company desires to employ Employee effective January 1, 1996 in
accordance with the terms and conditions stated in this Agreement.
D. Employee desires to accept such employment pursuant to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby agrees to employ Employee as President
and Chief Executive Officer of the Company. Employee accepts such employment
pursuant to the terms of this Agreement. Employee shall perform the duties and
responsibilities customarily associated with the position of President and Chief
Executive Officer and such other duties as may be reasonably determined from
time to time by the Board of Directors of the Company, all of which shall be
consistent with Employee's position.
1.2 EXCLUSIVE SERVICES. Employee agrees to devote his or her full
time, attention and energy to performing his or her duties and responsibilities
to the Company under this Agreement during the period this Agreement is in
effect.
1.3 TERM OF EMPLOYMENT. The term of this Agreement shall commence on
January 1, 1996 and shall expire, except as otherwise provided in Article 3
hereof, on the later of December 31, 1997 or one year from the date upon which
the Company shall give Employee written notice of its intention to terminate
this Agreement.
1.4 EMPLOYMENT AGREEMENT. The 1994 Employment Agreement is hereby
canceled by mutual agreement of the Company and Employee.
<PAGE>
2. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the period this Agreement is in effect, the
Company shall pay Employee a base salary at the annual rate of $120,000,
payable twice each month. The Board of Directors of the Company (the
"BOARD") will review the base salary annually, and may in its sole discretion
increase it to reflect performance, appropriate industry guideline data and
other factors. The Board is not, however, obligated to provide for any
increases.
2.2 DISCRETIONARY BONUSES. The Company, in the sole discretion of the
Board, may pay a bonus to Employee in addition to the annual base salary set
forth in Section 2.1.
2.3 VACATIONS. Employee shall be entitled to four weeks of vacation in
accordance with the policies of the Company in effect from time to time.
2.4 EMPLOYEE BENEFITS. Employee shall be entitled to the benefits and
perquisites which the Company generally provides to its other executives under
applicable Company plans and policies, and to future benefits and perquisites
made generally available to executives of the Company. Employee's participation
in such benefit plans shall be on the same basis as applies to other executives
of the Company. Employee shall pay any contributions which are generally
required of employees to receive any such benefits.
2.5 EMPLOYMENT TAXES AND WITHHOLDING. Employee recognizes that the
compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to federal, state or local income taxes. It is
expressly understood and agreed that all such taxes shall be Employee's
responsibility. To the extent that federal, state or local law requires
withholding of taxes on compensation, benefits or other amounts provided under
this Agreement, the Company shall withhold the necessary amounts from the
amounts payable to Employee under this Agreement.
2.6 EXPENSES. During the period this Agreement is in effect, Employee
shall be entitled to receive reimbursement from the Company (in accordance with
the policies and procedures in effect from time to time for the Company's
employees) for all reasonable travel and other expenses incurred by Employee in
connection with his or her services hereunder.
3. TERMINATION OF EMPLOYEE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Employee's employment under this Agreement
may be terminated by the Company at any time for any reason; PROVIDED, HOWEVER,
that, except as expressly provided below in this Section 3.1 and in Section 3.3,
if Employee's employment is terminated by the Company during the term of this
Agreement for a reason other than for "Cause" (as defined in Section 3.2),
Employee shall be entitled to continue to receive his or her base salary under
Section 2.1 for the remaining term of this Agreement. Employee's employment
under this Agreement may be terminated by Employee at any time for any reason.
Any termination shall be effective as of the date specified by the party
initiating the termination in a written notice delivered to the other party,
which date shall not be earlier than the date such
-2-
<PAGE>
notice is delivered to the other party. This Agreement shall terminate in its
entirety immediately upon the death of Employee. Except as expressly provided
to the contrary in this Section or applicable law, Employee's rights to pay and
benefits shall cease on the date his or her employment under this Agreement
terminates.
3.2 CAUSE. For purposes of this Article 3, "Cause" means only the
following: (i) indictment for or conviction of a felony; (ii) theft or
embezzlement of Company property or commission of similar acts involving
moral turpitude; or (iii) the willful failure by Employee to substantially
perform his or her material duties as an executive under this Agreement
(excluding nonperformance resulting from Employee's disability) which willful
failure is not cured within 30 days after written notice from the Company
specifying the act of willful nonperformance or within such longer period
(but no longer than 90 days in any event) as is reasonably required to cure
such willful nonperformance.
3.3 DISABILITY. If Employee has become disabled from performing his or
her duties under this Agreement, and the disability has continued for a
period of more than 60 days, the Board may, in its discretion, determine
that Employee will not return to work and terminate his or her employment
under this Agreement; PROVIDED, HOWEVER, that Employee shall in such case be
entitled to continue to receive his or her base salary under Section 2.1 for
the lesser of (i) the term of this Agreement or (ii) 90 days. During the
period Employee is entitled to continue to receive his or her base salary
under this Section 3.3, the Company shall be entitled to a credit against
Employee's base salary for the amount of any disability insurance or similar
payments made to Employee during such period.
4. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 AGREEMENT NOT TO COMPETE. In consideration of the covenants and
agreements contained in this Agreement, Employee agrees that, on or before the
date which is two years after the date of termination of Employee's employment
with the Company, Employee will not, without the prior written approval of the
Board of Directors of the Company, directly or indirectly engage in any of the
following actions:
(a) Own an interest in (except as provided below), manage, operate,
join, control, lend money or render financial or other assistance to,
or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any entity which owns,
manages or operates fairs, festivals or other similar entertainment
events with a "Renaissance" theme anywhere in North America, except
that nothing in this subsection (a) shall preclude Employee from
holding less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed
on any securities exchange, quoted on the National Association of
Securities Dealers Automated Quotation System or traded in the over-
the-counter market.
-3-
<PAGE>
(b) Intentionally solicit, endeavor to entice away from the Company,
or otherwise interfere with the Company's relationship with, any
person who is employed by or otherwise engaged to perform services for
the Company, or any persons or entity who or which is, or was within
the then most recent 12-month period, a participant in a Company event
or supplier or other provider of goods or services to or for the
Company, whether for Employee's own account or for the account of any
other individual, partnership, firm, corporation or other business
organization.
Employee further agrees that, if at the date of termination of Employee's
employment with the Company, the Company has expanded its business to include
the operation or sponsorship of craft fairs, festivals or other similar events,
Employee will not, without the prior written approval of the Board of Directors
of the Company for a period of one year after the date of termination of
Employee's employment with the Company, directly or indirectly own an interest
in, manage, operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any entity which owns, manages or
operates craft fairs, festivals or other similar events which are competitive
with those conducted by the Company anywhere within a 100 mile radius of any
such event sponsored by the Company.
If the scope of the restrictions in this Section are determined by a
court of competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed
or rewritten (blue-lined) so as to be enforceable to the maximum extent
permitted by law, and Employee hereby consents, to the extent Employee may
lawfully do so, to the judicial modification of the scope of such
restrictions in any proceeding brought to enforce them.
4.2 NON-DISCLOSURE OF INFORMATION. During the period of employment
hereunder, and at all times thereafter, Employee shall not, without the
written consent of the Company, disclose to any person, other than to
employees of the Company or other persons to whom disclosure is reasonably
necessary or appropriate in connection with the performance by Employee of
his or her duties, or except where such disclosure may be required by law,
any material confidential information obtained by Employee while in the
employ of the Company with respect to any products, services, financial
information, customers, methods or future plans of the Company, all of which
Employee acknowledges are valuable, special and unique assets, the disclosure
of which Employee acknowledges may be materially damaging to the Company.
4.3 REMEDIES. Employee acknowledges that the Company's remedy at law
for any breach or threatened breach by Employee of Section 4.1 or Section 4.2
will be inadequate. Therefore, the Company shall be entitled to injunctive
and other equitable relief restraining Employee from violating those
requirements, in addition to any other remedies that may be available to the
Company under this Agreement or applicable law.
-4-
<PAGE>
5. MISCELLANEOUS
5.1 AMENDMENT. This Agreement may be amended only in a writing signed
by both parties.
5.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Employee with respect to the transactions
contemplated herein. Both parties acknowledge that in deciding to enter into
this transaction they have relied on no representations, written or oral,
other than those explicitly set forth in this Agreement.
5.3 ASSIGNMENT. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Employee acknowledges that the
services to be rendered by Employee are unique and personal. Accordingly,
Employee may not assign any of Employee's rights or obligations under this
Agreement.
5.4 SUCCESSORS. Subject to Section 5.3, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto, upon any successor to or assign of the Company, and upon Employee's
heirs and the personal representative of Employee or Employee's estate.
5.5 NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified
or registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to: Renaissance Entertainment Corporation
4440 Arapahoe Avenue
Suite 200
Boulder, CO 80303
If to Employee, to: Miles I. Silverman
4440 Arapahoe Avenue
Suite 200
Boulder, CO 80303
or to such other addresses as either party may designate in writing to the
other party from time to time.
5.6 WAIVER OF BREACH. Any waiver by either party of compliance with
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement. No waiver
by the Company shall be valid unless in writing and signed by a duly
authorized officer of the Company.
-5-
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("AGREEMENT") is made this 31st day of
December, 1995, by and between RENAISSANCE ENTERTAINMENT CORPORATION, a Colorado
corporation (the "COMPANY"), and Howard Hanburg ("EMPLOYEE").
RECITALS
A. Employee currently is employed by the Company in accordance with an
Employment Agreement dated April 1, 1994 (the "1994 Employment Agreement").
B. The Company and Employee wish to cancel the 1994 Employment Agreement
effective Deccember 31, 1995.
C. The Company desires to employ Employee effective January 1, 1996 in
accordance with the terms and conditions stated in this Agreement.
D. Employee desires to accept such employment pursuant to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby agrees to employ Employee as Chief
Operating Officer. Employee accepts such employment pursuant to the terms of
this Agreement. Employee shall perform the duties and responsibilities
customarily associated with the position of Chief Operating Officer and such
other duties as may be reasonably determined from time to time by the President
and Chief Executive Officer of the Company, all of which shall be consistent
with Employee's position.
1.2 EXCLUSIVE SERVICES. Employee agrees to devote his or her full
time, attention-and energy to performing his or her duties and responsibilities
to the Company under this Agreement during the period this Agreement is in
effect.
1.3 TERM OF EMPLOYMENT. The term of this Agreement shall commence on
January 1, 1996 and shall expire, except as otherwise provided in Article 3
hereof, one year from the date upon which the Company shall give Employee
written notice of its intention to terminate this Agreement; provided that such
date shall not be earlier than December 31, 1997.
1.4 EMPLOYMENT AGREEMENT. The 1994 Employment Agreement is hereby
canceled by mutual agreement of the Company and Employee.
<PAGE>
2. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the period this Agreement is in effect,
the Company shall pay Employee a base salary at the annual rate of $105,000,
payable twice each month. The Board of Directors of the Company (the
"BOARD") will review the base salary annually, and may in its sole discretion
increase it to reflect performance, appropriate industry guideline data and
other factors. The Board is not, however, obligated to provide for any
increases.
2.2 DISCRETIONARY BONUSES. The Company, in the sole discretion of
the Board, may pay a bonus to Employee in addition to the annual base salary set
forth in Section 2.1.
2.3 VACATIONS. Employee shall be entitled to four weeks of
vacation in accordance with the policies of the Company in effect from time to
time.
2.4 EMPLOYEE BENEFITS. Employee shall be entitled to the benefits
and perquisites which the Company generally provides to its other executives
under applicable Company plans and policies, and to future benefits and
perquisites made generally available to executives of the Company.
Employee's participation in such benefit plans shall be on the same basis as
applies to other executives of the Company. Employee shall pay any
contributions which are generally required of employees to receive any such
benefits.
2.5 EMPLOYMENT TAXES AND WITHHOLDING. Employee recognizes that
the compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to federal, state or local income taxes. It is
expressly understood and agreed that all such taxes shall be Employee's
responsibility. To the extent that federal, state or local law requires
withholding of taxes on compensation, benefits or other amounts provided under
this Agreement, the Company shall withhold the necessary amounts from the
amounts payable to Employee under this Agreement.
2.6 EXPENSES. During the period this Agreement is in effect,
Employee shall be entitled to receive reimbursement from the Company (in
accordance with the policies and procedures in effect from time to
time for the Company's employees) for all reasonable travel and other
expenses incurred by Employee in connection with his or her services
hereunder.
3. TERMINATION OF EMPLOYEE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Employee's employment under this
Agreement may be terminated by the Company at any time for any reason;
PROVIDED, HOWEVER, that, except as expressly provided below in this Section
3.1 and in Section 3.3, if Employee's employment is terminated by the
Company during the term of this Agreement for a reason other than for "Cause"
(as defined in Section 3.2), Employee shall be entitled to continue to
receive his or her base salary under Section 2.1 for the remaining term of
this Agreement. Employee's employment under this Agreement may be terminated
by Employee at any time for any reason. Any termination shall be effective
as of the date specified by the party initiating the termination in a written
notice delivered to the other party, which date shall not be earlier than the
date such
-2-
<PAGE>
notice is delivered to the other party. This Agreement shall terminate in its
entirety immediately upon the death of Employee. Except as expressly provided
to the contrary in this Section or applicable law, Employee's rights to pay and
benefits shall cease on the date his or her employment under this Agreement
terminates.
3.2 CAUSE. For purposes of this Article 3, "Cause" means only the
following: (i) indictment for or conviction of a felony; (ii) theft or
embezzlement of Company property or commission of similar acts involving
moral turpitude; or (iii) the willful failure by Employee to substantially
perform his or her material duties as an executive under this Agreement
(excluding nonperformance resulting from Employee's disability) which willful
failure is not cured within 30 days after written notice from the Company
specifying the act of willful nonperformance or within such longer period
(but no longer than 90 days in any event) as is reasonably required to cure
such willful nonperformance.
3.3 DISABILITY. If Employee has become disabled from performing his or
her duties under this Agreement, and the disability has continued for a
period of more than 60 days, the Board may, in its discretion, determine that
Employee will not return to work and terminate his or her employment under
this Agreement; PROVIDED, HOWEVER, that Employee shall in such case be
entitled to continue to receive his or her base salary under Section 2.1 for
the lesser of (i) the term of this Agreement or (ii) 90 days. During the
period Employee is entitled to continue to receive his or her base salary
under this Section 3.3, the Company shall be entitled to a credit against
Employee's base salary for the amount of any disability insurance or similar
payments made to Employee during such period.
4. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 AGREEMENT NOT TO COMPETE. In consideration of the covenants and
agreements contained in this Agreement, Employee agrees that, on or before
the date which is two years after the date of termination of Employee's
employment with the Company, Employee will not, without the prior written
approval of the Board of Directors of the Company, directly or indirectly
engage in any of the following actions:
(a) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any entity
which owns, manages or operates fairs, festivals or other similar
entertainment events with a "Renaissance" theme anywhere within a 120
mile radius of such an event sponsored by the Company, except that
nothing in this subsection (a) shall preclude Employee from holding
less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed
on any securities exchange, quoted on the National Association of
Securities Dealers Automated Quotation System or traded in the over-
the-counter market.
-3-
<PAGE>
(b) Intentionally solicit, endeavor to entice away from the Company,
or otherwise interfere with the Company's relationship with, any
person who is employed by or otherwise engaged to perform services for
the Company, or any persons or entity who or which is, or was within
the then most recent 12-month period, a participant in a Company event
or supplier or other provider of goods or services to or for the
Company, whether for Employee's own account or for the account of any
other individual, partnership, firm, corporation or other business
organization.
Employee further agrees that, if at the date of termination of Employee's
employment with the Company, the Company has expanded its business to include
the operation or sponsorship of craft fairs, festivals or other similar events,
Employee will not, without the prior written approval of the Board of Directors
of the Company for a period of one year after the date of termination of
Employee's employment with the Company, directly or indirectly own an interest
in, manage, operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any entity which owns, manages or
operates craft fairs, festivals or other similar events which are competitive
with those conducted by the Company anywhere within a 100 mile radius of any
such event sponsored by the Company.
If the scope of the restrictions in this Section are determined by a
court of competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Employee hereby consents, to the extent Employee may lawfully do so,
to the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
4.2 NON-DISCLOSURE OF INFORMATION. During the period of employment
hereunder, and at all times thereafter, Employee shall not, without the written
consent of the Company, disclose to any person, other than to employees of the
Company or other persons to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Employee of his or her duties,
or except where such disclosure may be required by law, any material
confidential information obtained by Employee while in the employ of the Company
with respect to any products, services, financial information, customers,
methods or future plans of the Company, all of which Employee acknowledges are
valuable, special and unique assets, the disclosure of which Employee
acknowledges may be materially damaging to the Company.
4.3 REMEDIES. Employee acknowledges that the Company's remedy at law for
any breach or threatened breach by Employee of Section 4.1 or Section 4.2 will
be inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Employee from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
-4-
<PAGE>
5. MISCELLANEOUS
5.1 AMENDMENT. This Agreement may be amended only in a writing signed by
both parties.
5.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Employee with respect to the transactions
contemplated herein. Both parties acknowledge that in deciding to enter into
this transaction they have relied on no representations, written or oral,
other than those explicitly set forth in this Agreement.
5.3 ASSIGNMENT. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Employee acknowledges that the
services to be rendered by Employee are unique and personal. Accordingly,
Employee may not assign any of Employee's rights or obligations under this
Agreement.
5.4 SUCCESSORS. Subject to Section 5.3, the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto, upon any
successor to or assign of the Company, and upon Employee's heirs and the
personal representative of Employee or Employee's estate.
5.5 NOTICES. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to: Renaissance Entertainment Corporation
4440 Arapahoe Avenue
Suite 200
Boulder, CO 80303
If to Employee, to: Howard Hanburg
407 Montford Ave.
Mill Valley, CA 94941
or to such other addresses as either party may designate in writing to the
other party from time to time.
5.6 WAIVER OF BREACH. Any waiver by either party of compliance with
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement. No waiver
by the Company shall be valid unless in writing and signed by a duly
authorized officer of the Company.
-5-
<PAGE>
5.7 SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
5.8 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Colorado, without giving effect to
conflict of law principles.
5.9 ARBITRATION. Except as qualified below, any dispute arising under,
out of or in connection with this Agreement shall be submitted to binding
arbitration in Denver, Colorado by and in accordance with the rules and
procedures of the American Arbitration Association. The decision of the
arbitrator(s) shall be final and binding on all parties and judgment may be
entered thereon in any court. Employee acknowledges that the Company's
remedy at law for any breach or threatened breach by Employee of Section 4.1
or Section 4.2 will be inadequate. Therefore, the Company shall be entitled
to injunctive and other equitable relief restraining Employee from violating
those requirements until such time as a final and binding determination is
made by the arbitrator(s).
5.10 HEADINGS. The headings of articles and sections herein are
included solely for convenience and reference and shall not control the
meaning or interpretation of any of the provisions of this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
RENAISSANCE ENTERTAINMENT
CORPORATION
By
------------------------------
Its President
------------------------------
EMPLOYEE:
-----------------------------------
-6-
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("AGREEMENT") is made this 31st day of
December, 1995, by and between RENAISSANCE ENTERTAINMENT CORPORATION, a
Colorado corporation (the "COMPANY"), and Kevin Patterson ("EMPLOYEE").
RECITALS
A. Employee currently is employed by the Company in accordance with an
Employment Agreement dated April 1, 1994 (the "1994 EMPLOYMENT AGREEMENT").
B. The Company and Employee wish to cancel the 1994 Employment
Agreement effective December 31, 1995.
C. The Company desires to employ Employee effective January 1, 1996 in
accordance with the terms and conditions stated in this Agreement.
D. Employee desires to accept such employment pursuant to the terms
and conditions of this Agreement.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT. The Company hereby agrees to employ Employee as Vice
President-West Coast Operations. Employee accepts such employment pursuant
to the terms of this Agreement. Employee shall serve as the General Manager
of the Company's West Coast Operations and shall perform the duties and
responsibilities customarily associated with such position of and such other
duties as may be reasonably determined from time to time by the President or
Chief Operating Officer of the Company, all of which shall be consistent with
Employee's position.
1.2 EXCLUSIVE SERVICES. Employee agrees to devote his or her full
time, attention and energy to performing his or her duties and responsibilities
to the Company under this Agreement during the period this Agreement is in
effect.
1.3 TERM OF EMPLOYMENT. The term of this Agreement shall commence on
January 1, 1996 and shall expire, except as otherwise provided in Article 3
hereof, one year from the date upon which the Company shall give Employee
written notice of its intention to terminate this Agreement; provided that such
date shall not be earlier than December 31, 1997.
1.4 EMPLOYMENT AGREEMENT. The 1994 Employment Agreement is hereby
canceled by mutual agreement of the Company and Employee.
<PAGE>
2. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the period this Agreement is in effect, the
Company shall pay Employee a base salary at the annual rate of $75,000,
payable twice each month. The Board of Directors of the Company (the
"BOARD") will review the base salary annually, and may in its sole discretion
increase it to reflect performance, appropriate industry guideline data and
other factors. The Board is not, however, obligated to provide for any
increases.
2.2 DISCRETION BONUSES. The Company, in the sole discretion of the
Board, may pay a bonus to Employee in addition to the annual base salary set
forth in Section 2.1.
2.3 VACATIONS. Employee shall be entitled to four weeks of vacation in
accordance with the policies of the Company in effect from time to time.
2.4 EMPLOYEE BENEFITS. Employee shall be entitled to the benefits and
perquisites which the Company generally provides to its other executives
under applicable Company plans and policies, and to future benefits and
perquisites made generally available to executives of the Company.
Employee's participation in such benefit plans shall be on the same basis as
applies to other executives of the Company. Employee shall pay any
contributions which are generally required of employees to receive any such
benefits.
2.5 EMPLOYMENT TAXES AND WITHHOLDING. Employee recognizes that the
compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to federal, state or local income taxes. It is
expressly understood and agreed that all such taxes shall be Employee's
responsibility. To the extent that federal, state or local law requires
withholding of taxes on compensation, benefits or other amounts provided
under this Agreement, the Company shall withhold the necessary amounts from
the amounts payable to Employee under this Agreement.
2.6 EXPENSES. During the period this Agreement is in effect, Employee
shall be entitled to receive reimbursement from the Company (in accordance
with the policies and procedures in effect from time to time for the
Company's employees) for all reasonable travel and other expenses incurred by
Employee in connection with his or her services hereunder.
3. TERMINATION OF EMPLOYEE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Employee's employment under this
Agreement may be terminated by the Company at any time for any reason;
PROVIDED, HOWEVER, that, except as expressly provided below in this Section 3.1
and in Section 3.3, if Employee's employment is terminated by the Company
during the term of this Agreement for a reason other than for "Cause" (as
defined in Section 3.2), Employee shall be entitled to continue to receive
his or her base salary under Section 2.1 for the remaining term of this
Agreement. Employee's employment under this Agreement may be terminated by
Employee at any time for any reason. Any termination shall be effective as
of the date specified by the party initiating the termination
-2-
<PAGE>
in a written notice delivered to the other party, which date shall not be
earlier than the date such notice is delivered to the other party. This
Agreement shall terminate in its entirety immediately upon the death of
Employee. Except as expressly provided to the contrary in this Section or
applicable law, Employee's rights to pay and benefits shall cease on the date
his or her employment under this Agreement terminates.
3.2 CAUSE. For purposes of this Article 3, "Cause" means only the
following: (i) indictment for or conviction of a felony; (ii) theft or
embezzlement of Company property or commission of similar acts involving
moral turpitude; or (iii) the willful failure by Employee to substantially
perform his or her material duties as an executive under this Agreement
(excluding nonperformance resulting from Employee's disability) which willful
failure is not cured within 30 days after written notice from the Company
specifying the act of willful nonperformance or within such longer period
(but no longer than 90 days in any event) as is reasonably required to cure
such willful nonperformance.
3.3 DISABILITY. If Employee has become disabled from performing his or
her duties under this Agreement, and the disability has continued for a
period of more than 60 days, the Board may, in its discretion, determine that
Employee will not return to work and terminate his or her employment under
this Agreement; PROVIDED, HOWEVER, that Employee shall in such case be
entitled to continue to receive his or her base salary under Section 2.1 for
the lesser of (i) the term of this Agreement or (ii) 90 days. During the
period Employee is entitled to continue to receive his or her base salary
under this Section 3.3, the Company shall be entitled to a credit against
Employee's base salary for the amount of any disability insurance or similar
payments made to Employee during such period.
4. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 AGREEMENT NOT TO COMPETE. In consideration of the covenants and
agreements contained in this Agreement, Employee agrees that, on or before
the date which is two years after the date of termination of Employee's
employment with the Company, Employee will not, without the prior written
approval of the Board of Directors of the Company, directly or indirectly
engage in any of the following actions:
(a) Own an interest in (except as provided below), manage, operate,
join, control, lend money or render financial or other assistance to,
or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any entity which owns,
manages or operates fairs, festivals or other similar entertainment
events with a "Renaissance" theme anywhere within a 120 mile radius of
such an event sponsored by the Company, except that nothing in this
subsection (a) shall preclude Employee from holding less than one
percent of the outstanding capital stock of any corporation required
to file periodic reports with the Securities and Exchange Commission
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the securities of which are listed on any securities
exchange, quoted on the National Association of Securities Dealers
Automated Quotation System or traded in the over-the-counter market.
-3-
<PAGE>
(b) Intentionally solicit, endeavor to entice away from the Company,
or otherwise interfere with the Company's relationship with, any
person who is employed by or otherwise engaged to perform services for
the Company, or any persons or entity who or which is, or was within
the then most recent 12-month period, a participant in a Company event
or supplier or other provider of goods or services to or for the
Company, whether for Employee's own account or for the account of any
other individual, partnership, firm, corporation or other business
organization.
Employee further agrees that, if at the date of termination of
Employee's employment with the Company, the Company has expanded its business
to include the operation or sponsorship of craft fairs, festivals or other
similar events, Employee will not, without the prior written approval of the
Board of Directors of the Company for a period of one year after the date of
termination of Employee's employment with the Company, directly or indirectly
own an interest in, manage, operate, join, control, lend money or render
financial or other assistance to, or participate in or be connected with, as
an officer, employee, partner, stockholder, consultant or otherwise, any
entity which owns, manages or operates craft fairs, festivals or other
similar events which are competitive with those conducted by the Company
anywhere within a 100 mile radius of any such event sponsored by the Company.
If the scope of the restrictions in this Section are determined by a
court of competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Employee hereby consents, to the extent Employee may lawfully do so,
to the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
4.2 NON-DISCLOSURE OF INFORMATION. During the period of employment
hereunder, and at all times thereafter, Employee shall not, without the written
consent of the Company, disclose to any person, other than to employees of the
Company or other persons to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Employee of his or her duties,
or except where such disclosure may be required by law, any material
confidential information obtained by Employee while in the employ of the Company
with respect to any products, services, financial information, customers,
methods or future plans of the Company, all of which Employee acknowledges are
valuable, special and unique assets, the disclosure of which Employee
acknowledges may be materially damaging to the Company.
4.3 REMEDIES. Employee acknowledges that the Company's remedy at law for
any breach or threatened breach by Employee of Section 4.1 or Section 4.2 will
be inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Employee from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
-4-
<PAGE>
5. MISCELLANEOUS
5.1 AMENDMENT. This Agreement may be amended only in a writing signed by
both parties.
5.2 ENTIRE ASSIGNMENT. This Agreement contains the entire agreement
between the Company and Employee with respect to the transactions
contemplated herein. Both parties acknowledge that in deciding to enter into
this transaction they have relied on no representations, written or oral,
other than those explicitly set forth in this Agreement.
5.3 ASSIGNMENT. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Employee acknowledges that the
services to be rendered by Employee are unique and personal. Accordingly,
Employee may not assign any of Employee's rights or obligations under this
Agreement.
5.4 SUCCESSORS. Subject to Section 5.3, the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto, upon any
successor to or assign of the Company, and upon Employee's heirs and the
personal representative of Employee or Employee's estate.
5.5 NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to: Renaissance Entertainment Corporation
4440 Arapahoe Avenue
Suite 200
Boulder, CO 80303
If to Employee, to: Kevin Patterson
Postal Box B
Novato, CA 94948
or to such other addresses as either party may designate in writing to the other
party from time to time.
5.6 WAIVER OF BREACH. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. No waiver by the Company
shall be valid unless in writing and signed by a duly authorized officer of the
Company.
-5-
<PAGE>
5.7 SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
5.8 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Colorado, without giving effect to
conflict of law principles.
5.9 ARBITRATION. Except as qualified below, any dispute arising under,
out of or in connection with this Agreement shall be submitted to binding
arbitration in Denver, Colorado by and in accordance with the rules and
procedures of the American Arbitration Association. The decision of the
arbitrator(s) shall be final and binding on all parties and judgment may be
entered thereon in any court. Employee acknowledges that the Company's remedy
at law for any breach or threatened breach by Employee of Section 4.1 or Section
4.2 will be inadequate. Therefore, the Company shall be entitled to injunctive
and other equitable relief restraining Employee from violating those
requirements until such time as a final and binding determination is made by the
arbitrator(s).
5.10 HEADINGS. The headings of articles and sections herein are included
solely for convenience and reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed by either of the parties
hereto in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first set forth above.
RENAISSANCE ENTERTAINMENT
CORPORATION
By Miles I. Silverman
---------------------------
Its President
---------------------------
EMPLOYEE:
Kevin Patterson
--------------------------------
<PAGE>
AGREEMENT OF LEASE AND
LICENSE AGREEMENT
STERLING FOREST CORPORATION, LANDLORD/LICENSOR
WITH
CREATIVE FAIRES LTD., TENANT/LICENSEE
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
ARTICLE 2 PREMISES AND TERM
ARTICLE 3 RENT
ARTICLE 4 USE OF INSURANCE PROCEEDS
ARTICLE 5 CONDEMNATION
ARTICLE 6 ASSIGNMENT AND SUBLETTING
ARTICLE 7 MAINTENANCE AND REPAIRS
ARTICLE 8 SFC'S RIGHT OF REVIEW AND APPROVAL OF
IMPROVEMENTS
ARTICLE 9 REQUIREMENTS OF GOVERNMENTAL AUTHORITIES
AND OF INSURANCE UNDERWRITERS AND POLICIES
ARTICLE 10 SECURITY DEPOSIT
ARTICLE 11 DISCHARGE OF LIENS
ARTICLE 12 NO REPRESENTATIONS BY SFC
ARTICLE 13 SFC NOT LIABLE FOR INJURY OR DAMAGE
ARTICLE 14 INDEMNIFICATIONS
ARTICLE 15 RIGHT OF ACCESS AND INSPECTION
ARTICLE 16 PERMITTED USE; NO UNLAWFUL OCCUPANCY
ARTICLE 17 EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS,
REMEDIES, ETC.
ARTICLE 18 NOTICES
<PAGE>
ARTICLE 19 ESTOPPEL CERTIFICATES
ARTICLE 20 SURRENDER AT END OF TERM
ARTICLE 21 ENTIRE AGREEMENT; NO ORAL MODIFICATIONS
ARTICLE 22 QUIET ENJOYMENT
ARTICLE 23 INVALIDITY OF CERTAIN PROVISIONS
ARTICLE 24 NO RECORDING OF MEMORANDUM OF LEASE
ARTICLE 25 LIMITATION OF LIABILITY
ARTICLE 26 MISCELLANEOUS
ARTICLE 27 HAZARDOUS MATERIALS
ARTICLE 28 WAIVER OF TRIAL BY JURY AND COUNTERCLAIMS
IN SUMMARY PROCEEDINGS; JURISDICTION
AND VENUE; SERVICE OF PROCESS
ARTICLE 29 FEES AND EXPENSES
ARTICLE 30 WAIVER OF REDEMPTION
ARTICLE 31 SUBORDINATION
ARTICLE 32 INSURANCE
<PAGE>
AGREEMENT OF LEASE AND LICENSE AGREEMENT made as of the day of
June, 1996 between STERLING FOREST CORPORATION, a corporation established
under the laws of the State of Delaware, as Landlord and Licensor, having an
office at Rural Road 1, Sterling Lake Road, Tuxedo, New York 10987 and
CREATIVE FAIRES LTD., a corporation established under the laws of the State of
New York with an address at P.O. Box 1688, Westhampton Beach, New York 11978,
as Tenant and Licensee.
W I T N E S S E T H
It is hereby mutually covenanted and agreed by and between the
parties hereto that this Lease and License Agreement ("Agreement") is made
upon the terms, covenants and conditions hereinafter set forth.
ARTICLE 1
DEFINITIONS
SECTION 1.01. The terms defined in this Article shall, for all
purposes of this Agreement and all supplemental agreements, have the
following meanings:
(a) "Agreement" or "this Agreement" means this Agreement of Lease and
License Agreement, and all amendments and modifications.
<PAGE>
(b) "CFL" means Creative Faires Ltd., its agents, representatives,
employees, contractors, successors and assigns.
(c) "Commencement Date" means the date of commencement of the Term
(hereinafter defined), as set forth in Article 2.
(d) "Default" means any condition or event which constitutes or would,
after notice or lapse of time, or both, constitute an Event of Default
(hereinafter deemed).
(e) "Event of Default" shall have the meaning provided in Section 17.01.
(f) "Expiration Date" means the date of the expiration of the Term as
set forth in Article 2.
(g) "Faire" means CFL's Renaissance-theme craft production, conducted
over an approximately eight-week period during July, August and September.
(h) "Forest of Fear" means CFL's Halloween-oriented production,
conducted over an approximately six-week period subsequent to the conclusion
of the Faire, during September and October.
"Leased Premises" means the parcel of SFC's real property and the
improvements and fixtures thereon covered by this Agreement, as depicted in
Schedule "A". The Leased Premises constitute a portion of tax lot 1-1-52 on
the tax map of the Town of Tuxedo.
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(j) "Licensed Premises" means SFC's real property, improvements and
fixtures that CFL may use under the terms of this Agreement ancillary to its
use of the Leased Premises, at the times and on the conditions set forth
below in section 2.02, as generally depicted in Schedule "A".
(k) "Operating Days" means the days of actual operation of the Faire and
the Forest of Fear.
(l) "Person" means an individual, corporation, partnership, joint
venture, estate, trust, unincorporated association, any Federal, State,
County or municipal government or any bureau, department or agency thereof,
or any other legally cognizable entity.
(m) "Premises" means the Leased Premises and the Licensed Premises, or
any portion thereof.
(n) "Rent" shall mean all amounts periodically payable by CFL pursuant
to the Terms of this Agreement, together with such other items designated as
Additional Rent in this Agreement.
(o) "SFC" means Sterling Forest Corporation, or its utility
subsidiaries, South County Services Company, Inc., South County Water
Corporation, and South County Sewer Corporation, their agents,
representatives, employees, contractors, successors and assigns.
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(p) "Special Permit" means the resolution of the Zoning Board of Appeals
of the Town of Tuxedo adopted October 27, 1976, granting to SFC a special
permit to use a portion of SFC's lands, including the Premises, as a
social/recreation/visitor center and outdoor recreational facility, a copy of
which is annexed as Schedule "B".
(q) "Term" means the term of this Agreement as set forth in Article 2.
ARTICLE 2
PREMISES AND TERM
SECTION 2.01. (a) SFC hereby leases to CFL, and CFL hereby takes from
SFC, the Leased Premises, for the uses permitted in this Agreement, TO HAVE
AND TO HOLD unto CFL, its successors and assigns, for a term of four (4)
years and seven (7) months (the "Term"); covering five (5) operating seasons
of the Faire and the Forest of Fear. The Term shall commence as of the 1st
day of May, 1996 (the "Commencement Date") and shall expire on the 31st day
of December, 2000 (the "Expiration Date"), or on such earlier date upon
which this Agreement may be terminated.
SECTION 2.02. SFC grants a license to CFL to use the Licensed Premises
ancillary to CFL's permitted use of the Leased Premises, as follows: (i) on
Operating Days, CFL shall have the exclusive use of the parking areas
designated on Schedule "A"; (ii) from May 15 to November 1 of each year
during the Term, CFL shall have the non-exclusive
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use of SFC's Gardens Administration Building, as administrative office space
for the Faire and the Forest of Fear, and for no other purpose; (iii) SFC's
Ski Rental Shop may be used on a non-exclusive basis by CFL during the Faire
only and not during the Forest of Fear, as a dressing area and for no other
purpose. If used by CFL, the Ski Rental Shop will be completely vacated by
CFL within two weeks following the final Operating Day of the Faire, but in no
event later than October 15, in condition for use by SFC. The general
location of the aforementioned areas is indicated on Schedule "A". SFC's Ski
Center Cafeteria, and Pavilion are specifically excluded from this
Agreement and may not be used by CFL.
SECTION 2.03. Provided CFL is not then in default of any of its
obligations under this Agreement, at the end of the third year of the Term
SFC will discuss with CFL the possibility of extending the Term.
SECTION 2.04. The Licenses granted hereunder are in all respects
incidental to and contingent upon CFL's use of the Leased Premises only for
the purposes permitted under this Agreement, and on the continuation in full
force and effect of the leasehold created by this Agreement. In the event the
leasehold expires or is terminated for any reason, the Licenses granted
hereunder shall expire simultaneously.
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SECTION 2.05. The Licenses granted hereunder are revocable in whole or
in part by SFC on reasonable notice to CFL, (a) in the event SFC enters into
an agreement to convey title to the Licensed Premises to a third party who
objects to continuation of the Licenses, or (b) in the event SFC requires
exclusive possession of the Licensed Premises for its own purposes
(including, but not limited to, development thereof), or (c) if for any
reason beyond SFC's reasonable control (including, but not limited to acts of
God or condemnation or destruction of the improvements on the Licensed
Premises) the Licensed Premises or any portion thereof shall become
unavailable or unsuitable for CFL's permitted uses; PROVIDED, however, that
(i) no such revocation by SFC shall materially reduce the area available to
CFL for parking, unless SFC offers CFL commercially reasonable substitute
parking facilities, and (ii) if SFC revokes CFL's License to use the SFC
Gardens Administration Building, the Rent reserved in Section 3.02 for each
remaining year in the Term shall be reduced by ten thousand dollars
($10,000.00) per year, and the remaining Rent payment installments in Section
3.02 shall be adjusted proportionately to reflect the reduction. SFC agrees
that it will not revoke CFL's License to use the SFC Gardens Administration
Building so that the effective date of the revocation would fall during the
actual operation of a Faire or a Forest of Fear.
SECTION 2.06. CFL may request, and SFC may in its discretion grant
permission to CFL, to erect and maintain temporary signs relating to the
Faire or the Forest of Fear on
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SFC's property other than the Premises. SFC may require CFL to erect and
maintain directional signage at designated locations on SFC's property other
than the Premises, to control traffic flow through SFC's property during
operation of the Faire and the Forest of Fear. CFL is solely responsible for
all aspects of advertising, marketing or promoting the Faire and the Forest
of Fear. All permitted or required signage shall be provided, installed,
maintained and removed at CFL's sole cost and expense, and shall in every
respect comply with all applicable laws and regulations.
ARTICLE 3
RENT
SECTION 3.01. CFL shall pay to SFC, without notice or demand, Rent as
set forth herein. Acceptable forms of payment of Rent include cash, money
order, cashier's or certified check payable to the order of SFC, CFL's check
drawn on a New York Clearing House Member bank or bank, savings bank or trust
company that maintains an office in Orange or Rockland County, New York, or
Bergen or Passaic County, New Jersey, payable to the order of SFC, or a wire
transfer of immediately available funds to an account designated by SFC.
Third party checks endorsed to SFC's order are not acceptable.
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SECTION 3.02. CFL shall pay a total of one million four hundred thirty-
three thousand seven hundred fifty-four and 00/100 dollars ($1,433,734.00) to
SFC, in five (5) annual payments, as follows:
Year 1 - $270,000.00
Year 2 - $270,000.00
Year 3 - $283,500.00
Year 4 - $297,675.00
Year 5 - $312,559.00
------- -------------
Total Rent Reserved $1,433,734.00
Each annual payment shall be paid by CFL in four installments, on or before
May 1, July 30, August 30 and September 30 of each year during the Term as
follows:
Year 1 Rent Payment Installment
------ -----------------------
on or before June 15, 1996 $45,000.00
on or before July 30, 1996 $45,000.00
on or before August 30, 1996 $90,000.00
on or before September 30, 1996 $90,000.00
Year 2
------
on or before May 1, 1997 $45,000.00
on or before July 30, 1997 $45,000.00
on or before August 30, 1997 $90,000.00
on or before September 30, 1997 $90,000.00
Year 3
------
on or before May 1, 1998 $47,250.00
on or before July 30. 1998 $47,250.00
on or before August 30, 1998 $94,500.00
on or before September 30, 1998 $94,500.00
Year 4
------
on or before May 1, 1999 $49,612.50
on or before July 30, 1999 $49,612.50
-8-
<PAGE>
on or before August 30, 1999 $99,225.00
on or before September 30, 1999 $99,225.00
Year 5
on or before May 1, 2000 $ 52,093.16
on or before July 30, 2000 $ 52,093.17
on or before August 30, 2000 $104,186.33
on or before September 30, 2000 $104,186.34
Late payment of Rent shall entitle SFC to collect from CFL, as
Additional Rent, a late fee on all overdue Rent for each day the Rent
remains unpaid, equal to eighteen percent (18%) PER ANNUM, prorated for the
number of days the Rent remains unpaid. In no event, however, will the rate
charged exceed the legally permissible interest rate under the usury laws of
the State of New York. In addition to such late charges, SFC will charge a
$50.00 administrative fee for each check not honored by SFC's bank, including
each check returned to SFC as drawn on insufficient funds.
SECTION 3.03. Rent shall be absolutely net to SFC without any abatement,
deduction, counterclaim, set-off or offset whatsoever, so that this Agreement
shall yield, net to SFC, the fUll amounts payable as Rent. The Security
Deposit may not be applied by CFL towards payment of the Rent.
SECTION 3.04. CFL shall pay to SFC, as Additional Rent, all increases in
real property taxes that result from increases in assessed valuation of the
Leased Premises attributable to CFL's improvement thereof, over and above the
assessed valuation and real property taxes paid by SFC in the base year of
1995. SFC will notify CFL of all
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amounts to be paid by CFL pursuant to this paragraph, including the
calculation thereof, on or before October 1, of each year during the Term.
CFL will pay all such Additional Rent to SFC within fourteen (14) days of the
notice.
SECTION 3.05. The Rent and all Additional Rent reserved under this
Agreement are premised upon CFL's operation of the Faire for eight weekends
during July, August and September, and of the Forest of Fear for
approximately six weeks during September and October. Any significant
increase in the number of Operating Days will require an upwards adjustment
of the Rent and Additional Rent to be paid by CFL, in amounts and on terms to
be agreed upon between SFC and CFL prior to the institution of any such
expanded operating schedule. For purposes of this section, CFL's scheduling
of "make up" Operating Days due to adverse weather conditions, or of a
reasonable number of special promotions that may require additional Operating
Days within the period from July through October, shall not constitute a
"significant increase in the number of Operating Days."
ARTICLE 4
USE OF INSURANCE PROCEEDS
SECTION 4.01. If all or any part of SFC's or CFL's improvements
on the Leased Premises shall be substantially destroyed or damaged in whole
or in part by fire or other
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<PAGE>
casualty of any kind or nature, ordinary or extraordinary, foreseen or
unforeseen, CFL shall give to SFC immediate notice thereof. Except as
otherwise provided below in Section 4.02, CFL shall repair, restore, replace
or rebuild the damaged improvements, subject to the provisions hereinafter
set forth, and only with SFC's approval of the plans for the reconstruction,
which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, if within ten (10) days of CFL's notice to SFC set forth above in
this Article, SFC gives notice to CFL that it does not wish CFL to restore
the improvements destroyed, CFL shall not restore the improvements and CFL
shall not be under any obligation to do so. In the event SFC gives notice to
CFL that it does not wish CFL to restore the improvements destroyed, and as a
result CFL is unable to continue operation of the Faire, then this notice
shall be deemed to be an early termination by SFC in accordance with the
provisions of Article 17 of this Agreement.
SECTION 4.02. CFL may elect not to restore, replace or rebuild CFL
improvements that are substantially destroyed or damaged beyond repair;
provided, however, that no such election by CFL shall relieve CFL of its
obligations to pay Rent or from any of its other obligations under this
Agreement.
SECTION 4.03. Except as set forth above, no destruction of or damage to
the Premises, or to any improvements on the Premises or any part thereof
shall relieve CFL of its obligations to pay Rent or from any of its other
obligations under this Agreement.
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<PAGE>
ARTICLE 5
CONDEMNATION
SECTION 5.01. If the whole of the Leased Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use or purpose, or
if less than the whole of the Leased Premises shall be acquired or condemned
by eminent domain for any public or quasi-public use or purpose but the
portion of the Leased Premises remaining is not sufficient in size to permit
CFL to continue to conduct the Faire, then and in that event, the Term of
this Agreement shall expire on the date of the commencement of such
proceeding, the Rent apportioned and paid to the Expiration Date, and CFL
shall have no claim for the value of any unexpired term of said Agreement and
assigns to SFC CFL's entire interest in any such award. Nothing contained
herein shall be deemed a waiver by CFL of its right to present a claim in the
condemnation proceedings for loss of business profits, loss of goodwill or
moving expenses, should these items then be compensable as long as the
ultimate compensability of those items to CFL does not diminish any award to
SFC for the taking of the Leased Premises.
SECTION 5.02. If less than the whole of the Leased Premises shall be
acquired or condemned by eminent domain for any public or quasi public use or
purpose, and if the portion of the Leased Premises remaining is sufficient in
size to permit CFL to continue to conduct the Faire, then and in that event,
this Agreement shall continue on the balance
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of the Leased Premises with no adjustment in Rent, and CFL shall have no
claim for the value of any unexpired term of this Agreement on the portion of
the Premises acquired or condemned, and assigns to SFC CFL's entire interest
in such award.
SECTION 5.03. Notwithstanding the provisions of Section 5.01 above, if
an eminent domain proceeding for the whole of the Leased Premises is
commenced within sixty (60) days prior to the commencement of a Faire, or
while a Faire is in progress, and SFC remains in possession of the Leased
Premises, SFC shall permit CFL to continue in use and occupancy of the Leased
Premises notwithstanding the expiration of the Agreement, for a period not to
exceed six (6) months, for the sole purpose of concluding that one Faire and
Forest of Fear.
ARTICLE 6
ASSIGNMENT AND SUBLETTING
CFL and its successors and assigns shall not assign or sublet (whether
voluntarily or involuntarily) this Agreement, in whole or in part, without
SFC's prior written consent, which SFC may withhold in its sole discretion;
provided, however, that if the proposed assignment is to Renaissance
Entertainment Corporation, the guarantor hereof, SFC's consent may not be
unreasonably withheld. Nothing in this Article 6 shall prevent CFL from
entering into temporary license agreements with vendors or exhibitors to
occupy the
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Leased Premises and participate in the Faire or the Forest of Fear; provided,
however, (i) that no such agreement shall purport to convey any leasehold in
the Premises to any such vendor or exhibitor, (ii) that each such agreement
shall be in all respects consistent with and subject to CFL's obligations in
respect of the Premises as set forth in this Agreement, (iii) that no such
agreement shall relieve CFL of any liability under this Agreement, and (iv)
CFL shall use commercially reasonable efforts to ensure that neither the
Leased Premises, nor the Licensed Premises when CFL is in occupancy thereof,
are used by third parties for the purpose of disseminating information or
materials in opposition to SFC's Comprehensive Plan or other proposed land
uses by SFC. The consent of SFC to any assignment or sublease shall not
relieve CFL from any liability hereunder.
ARTICLE 7
MAINTENANCE AND REPAIRS
SECTION 7.01. CFL shall not commit or suffer, and shall use all
commercially reasonable precaution to prevent, waste, damage, or injury to
the Premises. CFL, at its sole cost and expense throughout the Term, shall
maintain in good order and repair, to SFC's reasonable satisfaction, all
improvements, all fixtures and other structures on the Leased Premises;
provided, however, that all repairs to and maintenance of water and
wastewater utilities infrastructure must be performed by SFC and CFL will pay
to SFC,
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on demand, the cost of such repairs, as Additional Rent. CFL shall have all
duties of complying with all laws, rules and regulations, ordinary and
extraordinary applicable to CFL's activities on the Premises, whether
foreseen or unforeseen. CFL will pay to SFC, as Additional Rent, the cost of
any damage to SFC property or equipment arising out of or in connection with
CFL's operations at or occupancy of the Premises, including but not limited
to damage caused to the Premises or adjacent areas by CFL personnel,
exhibitors, subcontractors or attendees. Damages assessed by SFC during the
Term will be Additional Rent immediately due from and payable by CFL upon
demand by SFC.
SECTION 7.02. CFL, at its sole cost and expense, shall keep the Leased
Premises, and the Licensed Premises when CFL is in occupancy thereof, clean
and free from rubbish and obstructions to access.
SECTION 7.03. For a separate fee, during the Term SFC will prepare and
repair, as requested by CFL, toilet and drinking facilities at the Premises.
In consideration for such services, CFL will pay SFC a fee equal to: SFC's
direct labor costs, payroll taxes and fringe benefits, plus 100%; plus the
invoice cost plus 20% of any materials furnished by SFC. SFC will present
CFL with an itemized statement for services rendered and materials provided
pursuant to this paragraph, and SFC's fee shall constitute Additional Rent
hereunder and shall be due and payable upon presentation of the statement.
Nothing
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in this paragraph shall obligate or require SFC to provide such services to
CFL, or to keep a maintenance crew on call on Operating Days.
SECTION 7.04. The annual installation and removal of the tent cover for
the Peacock Patio on the Leased Premises shall be the sole responsibility of
CFL. This tent cover is the property of SFC and will remain on the Leased
Premises after the end of the Term.
SECTION 7.05. SFC will arrange for Orange and Rockland Utilities to
activate electric meter service and the main electric service panel for each
meter service activated at the Premises for CFL's operations. CFL shall be
responsible for the installation of all electrical connections, outlets and
distribution required by CFL beyond the main service panels. CFL shall pay
all charges for all utilities (including installation charges, if any)
incurred by reason of CFL's operations or occupancy of the Premises during
the Term, including but not limited to electricity, water, sewer and
telephone.
(a) SFC shall render monthly invoices, and CFL shall pay for
electricity on a monthly basis from May through October each
year during the Term. Charges for electricity will be computed
as follows:
(i) CFL will pay to SFC the difference in dollars between
the actual billings to SFC by Orange & Rockland Utilities,
Inc. ("O&R") during the Term, for each of the meters listed on
Schedule "C" to this Agreement; and
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(ii) the "Comparable Billing" for each meter during the "Base Period".
The Base Period is the billing period that ended June 28, 1978;
and the Comparable Billing for each meter is the billing
attributable to that meter reflected in Schedule "C".
(b) All "demand charges" resulting from CFL's operations billed to SFC
by O&R in respect of the meters listed in Schedule "C" will be
reimbursed by CFL. This obligation of CFL will survive beyond the
end of the Term.
(c) SFC will render invoices and CFL will pay for water consumption
and sewer charges on a monthly basis from May through October each
year during the Term, (i) for water, SFC's cost, based upon actual
meter readings of water consumed for July, August and September,
and October, and at one half (1/2) SFC's cost for May and June;
and (ii) for sewer, SFC's cost (as of the date of this Agreement,
$3,900.00 per month), as the same may be adjusted from time to
time, for July, August and September, and October, and at one half (1/2)
SFC's cost for May and June; PROVIDED, however, that for sewer
charges for May, 1996 only, CFL shall pay one-third (1/3) of SFC's
cost.
SECTION 7.06. Except as otherwise expressly provided in this Article 7,
SFC 341 shall not be required to furnish any services, utilities or
facilities whatsoever to the
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Premises. During the Term, SFC shall have no duty or obligation to make any
alteration, change, improvement, replacement, restoration or repair to, or to
demolish, the Premises or the improvements thereon.
ARTICLE 8
SFC'S RIGHT OF REVIEW AND APPROVAL OF IMPROVEMENTS
CFL has previously constructed improvements on the Leased Premises.
During the Term of this Agreement and subject to all laws, regulations and
guidelines applicable to the Leased Premises, and in each case subject to
SFC's prior review and written approval, CFL may construct additional or
replacement improvements on the Leased Premises, consistent with CFL's
permitted uses of the Leased Premises and all other terms of this Agreement.
Prior to the construction of any improvement, CFL shall furnish SFC with plans
and specifications prepared by licensed professionals. All such plans and
specifications must be approved by SFC. CFL may alter, repair or reconstruct
any of the improvements it installs on the Leased Premises, however such
alteration, repair or reconstruction shall also be subject to the provisions
of this Article concerning the submittal of plans and the approval by SFC. It
shall be the obligation of CFL to secure the approval of all governmental
authorities as may be necessary for any construction on
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the Leased Premises, including securing such permits as may be applicable to
the construction.
ARTICLE 9
REQUIREMENTS OF GOVERNMENTAL AUTHORITIES
AND OF INSURANCE UNDERWRITERS AND POLICIES
SECTION 9.01. CFL, at its sole cost and expense, shall promptly comply
with all present and future laws, rules, orders, ordinances, regulations,
statutes, requirements and codes of all governental authorities now
existing or hereafter created, applicable to CFL's activities on the Leased
Premises, without regard to the nature of the work required to be done
whether or not the same involve or require any structural changes or
additions in or to the improvements now or hereinafter on the Leased
Premises, CFL also shall comply at its sole cost with any and all provisions
and requirements of any casualty, liability or other insurance policy
required to be carried by CFL under this Agreement.
SECTION 9.02. Without limiting the generality of the foregoing, CFL will
at all times abide by the terms and conditions of the Special Permit, and
will not, without SFC's prior written consent, take or permit any action or
fail to perform any obligation
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applicable to CFL's activities on the Premises in contravention of the
Special Permit. CFL agrees that it will promptly provide SFC with copies of
all notices of violation of any law, rule, ordinance, regulation, statute,
requirement or code and of all notices of inspection received by CFL or any
of CFL's contractors, vendors or exhibitors. CFL further agrees that it will
not submit or permit submittal of any application for any type of building or
land use determination (including, but not limited to, interpretation or
variance of the Special Permit) to any administrative or legislative body of
the Town of Tuxedo, without SFC's prior knowledge and written consent.
ARTICLE 10
SECURITY DEPOSIT
CFL has previously deposited with SFC the sum of $40,000.00 (together
with the additional sums to be deposited with SFC as provided below, the
"Security Deposit"), which shall be held by SFC as security for CFL's
performance of this Agreement. CFL agrees to deposit with SFC an additional
$35,000.00 to augment the Security Deposit, on or before August 1, 1997,
making the total Security Deposit to be held by SFC $75,000.00, which SFC
agrees to deposit in an interest-bearing account. Except as otherwise
provided below in the case of CFL's default, interest that accrues on the
Security Deposit shall be paid to CFL annually. If CFL defaults in respect of
any of its
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obligations under this Agreement, SFC may use, apply or retain all or any
part of the Security Deposit and interest accrued thereon to any sum as to
which CFL is in default, or to reimburse SFC for any amount which SFC may
expend or may be required to expend by reason of CFL's Default. CFL agrees to
provide SFC with a fully completed and signed form W-9 and any other form(s)
required by the bank holding the Security Deposit.
ARTICLE 11
DISCHARGE OF LIENS
SECTION 11.01 CFL will not, directly or indirectly, create or permit to
be created, or to remain, any lien of any kind, including but not limited to
mechanic's, vendor's, laborer's, materialmen's, or supplier's liens, which
are or may become an encumbrance upon the Premises or any portion thereof.
SECTION 11.02. CFL shall, with reasonable promptness, but in any event
within sixty (60) days after notice of any lien, remove any mechanic's,
laborer's or materialman's lien or any other lien, encumbrance or charge upon
the Premises or any part thereof, which arises out of any action or omission
by or on behalf of CFL, or any subtenant, licensee agent, employee or
representative of CFL.
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SECTION 11.03. Nothing in this Agreement shall be deemed or construed in
any way as constituting the consent or request of SFC, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any
materials for any specific improvement, alteration to or repair of the
Premises or any part thereof, nor as giving CFL or its vendors or exhibitors
any right, power or authority to contract for or permit the rendering of any
services, or the furnishing of materials that would give rise to the filing
of any lien against any assets of SFC. Notice is hereby given, and CFL shall
cause all construction agreements to provide, that SFC shall not be liable
for any work performed or to be performed at the Premises for CFL or of any
materials furnished or to be furnished at the Premises for any of the foregoing.
ARTICLE 12
NO REPRESENTATIONS BY SFC
CFL has previously had possession of and has inspected the Premises and
all improvements thereon and accepts them in "as is" condition. CFL
acknowledges that no representations, statements or warranties, express or
implied, have been made by or on behalf of SFC with respect to the Premises
or this transaction or the laws applicable to this transaction, SFC or the
Premises; that CFL has relied on no such representations,
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statements, or warranties; and that SFC shall not in any event whatsoever be
liable by reason of any such claimed misrepresentation or breach of warranty.
ARTICLE 13
SFC NOT LIABLE FOR INJURY OR DAMAGE
SECTION 13.01. SFC shall not in any event whatsoever be liable for any
injury or damage to CFL (unless caused by a negligent act or omission of SFC,
its agents, servants, or employees) or to any other Person happening on, in
or about the Leased Premises, or the Licensed Premises when CFL is in
occupancy thereof and as a result of an act or omission of CFL, nor for any
injury or damage to the Premises or to any property belonging to CFL or to
any other Person (unless caused by a negligent act or omission of SFC, its
agents, servants or employees).
SECTION 13.02. SFC shall not be liable to CFL (unless caused by a
negligent act or omission of SFC, its agents, servants or employees) or to
any other Person for any failure or interruption of water supply, sewerage,
gas or electric current, nor for any injury or damage to any property of CFL
(unless actually caused by a negligent act or omission of SFC, its agents,
servants or employees) or to any Person or to the Premises caused by or
resulting from gasoline, oil, steam, gas, electricity, fire or hurricane,
tornado, flood, wind or similar storms or disturbances, or water, rain or
snow which may leak or flow from the
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street, sewer, gas mains or subsurface area or from any part of the Premises,
or leakage of gasoline or oil from pipes, appliances, tanks, sewer or
plumbing works therein, or from any other place, nor for interference with
light or other incorporeal hereditaments by anybody, or caused by any public
or quasi-public work.
ARTICLE 14
INDEMNIFICATIONS
SECTION 14.01. CFL agrees to defend and fully indemnify SFC against any
and all liability and costs, including but not limited to reasonable
attorneys' fees (whether incurred in a proceeding between SFC and CFL or
between SFC and a third party), incurred by SFC, resulting directly or
proximately from CFL's activities on the Premises. Without limiting the
generality of the foregoing, CFL shall promptly pay all of SFC's engineers',
architects' and reasonable attorneys' fees and disbursements, which may be
imposed upon or incurred by or asserted against SFC by reason of CFL's
actions or omissions during the Term. SFC agrees to defend and fully
indemnify CFL against any and all liability and costs, including but not
limited to reasonable attorneys' fees, incurred by CFL, resulting from the
negligent acts of SFC's agents or employees on the Premises.
SECTION 14.02. CFL represents and warrants that it has dealt with no
broker in connection with this Agreement. Without limiting the generality of
the foregoing Section
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14.01, CFL shall pay SFC's reasonable attorneys' fees if the foregoing
representation and warranty with respect to brokerage should be breached.
Section 14.03. The provisions of this Article 14 shall survive the
expiration of this Agreement for the applicable Statute of Limitations for
any claim made.
ARTICLE 15
RIGHT OF ACCESS AND INSPECTION
SECTION 15.01. CFL shall permit SFC and its agents or representatives to
enter the Premises at all reasonable times and (except in an emergency when
no prior notice shall be required) upon reasonable notice for the purpose of
(a) inspecting the same, and (b) if SFC so elects, making any necessary
repairs to the Premises.
SECTION 15.02. Nothing in this Article 15 or elsewhere in this Agreement
shall imply any duty or obligation upon the part of SFC to do any work on the
Premises and performance thereof by SFC shall not constitute assumption of
such a duty or obligation.
SECTION 15.03. Provided that it does not materially interfere with CFL's
operation of the Faire or the Forest of Fear, SFC may enter the Leased
Premises in non-emergency situations to operate or to effect repairs to or to
maintain water or wastewater utilities infrastructure on the Premises, or to
gain access to or egress from SFC's adjacent lands or
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improvements (including, but not limited to, access and egress in connection
with SFC's timber harvesting operations.)
ARTICLE 16
PERMITTED USE; NO UNLAWFUL OCCUPANCY
SECTION 16.01. Subject to the provisions of law and this Agreement, CFL
shall use the Leased Premises only for the purpose of conducting the Faire
and the Forest of Fear, and the Licensed Premises only for the incidental
purposes enumerated in Article 2.02, and for no other purposes. Anything in
the foregoing sentence that may be construed to the contrary notwithstanding,
no living accommodations shall be permitted on or about the Premises, except
that camping for CFL personnel is permitted on the Leased Premises in the
rear, near the Portomod Building, subject to all applicable laws, rules and
regulations that govern such use.
SECTION 16.02. CFL shall not use or occupy, and shall use commercially
reasonable efforts to prohibit the use or occupancy of any part of the Leased
Premises, and of the Licensed Premises when CFL is in occupancy thereof,
other than as permitted in Section 16.01, or in such manner as to constitute
a nuisance of any kind (public or private). CFL shall immediately take all
necessary steps, legal and equitable, to abate any nuisance at the Premises
resulting from CFL's use or occupancy thereof.
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ARTICLE 17
EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES, ETC.
SECTION 17.01. Each of the following events shall be an "Event of Default"
hereunder:
(a) if CFL shall fail to pay the Rent, Additional Rent or any other
payment required to be paid by CFL when the same shall become due and payable;
(b) if CFL shall fail to acquire and maintain in effect insurance
coverage in the types and amounts required by this Lease;
(c) if CFL shall abandon the Leased Premises or cease operating the
Faire;
(d) if CFL fails to maintain the Premises in a neat and clean condition
and in good repair; or
(e) failure by CFL to timely and fully perform any other obligation
under this Agreement on CFL's part to be performed.
SECTION 17.02. If an Event of Default shall occur, SFC may elect to (a)
perform the obligations of CFL in accordance with the provisions of Article 29,
or (b) proceed by appropriate judicial proceedings, either at law or in
equity, to enforce performance and observance by CFL of the applicable
provisions of this Agreement, or to recover damages for breach thereof, or
both.
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SECTION 17.03. If an Event of Default shall occur, SFC may at any time
thereafter give written notice to CFL stating that this Agreement and the
Term shall expire and terminate on the date specified in such notice, which
date shall be not less than ten (10) days after the giving of such notice (or
three (3) days after the giving of such notice if the Event of Default is the
failure to pay Rent), if on or before such date CFL shall have failed to cure
the default which was the basis for the Event of Default. If the Default
shall remain uncured as of the date specified in the notice, or if CFL shall
not be diligently pursuing the cure of an Event of Default that is inherently
incapable of being cured within the ten (l0) day cure period, then this
Agreement shall terminate without further notice, and SFC may proceed by
summary proceeding or other action at law or in equity to recover possession
of the Leased Premises.
SECTION 17.04. If this Agreement shall be terminated as provided in
Section 17.03 hereof CFL shall pay to SFC (a) all Rent and Additional Rent
payable under this Agreement to the date of such termination, and (b) on
demand, all costs and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, incurred by SFC in any action or
proceeding to recover possession of the Leased Premises.
SECTION 17.05. Each right and remedy of SFC provided for in this
Agreement shall be cumulative and in addition to every other right or remedy
provided for this Agreement or now or hereafter existing at law or in equity
or by statute or otherwise. The exercise or
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beginning of the exercise by SFC of any one or more of the rights or
remedies provided for in this Article 17 or elsewhere in this Agreement, or
now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by SFC of any or all
other rights or remedies provided for in this Article 17, this Agreement, or
now or hereafter existing at law or in equity or by statute or otherwise.
ARTICLE 18
NOTICES
SECTION 18.01. Whenever it is provided herein that notice, demand,
consent, approval, or other communication shall or may be given to or served
upon either of the parties, or whenever either of the parties shall desire to
give or serve upon the other any notice, demand, request, consent, approval,
or other communication with respect hereto, or to the Premises, each such
notice, demand, request, consent, approval, or other communication shall be
in writing and, any law or statute to the contrary notwithstanding, shall be
effective for any purpose if given or served as follows:
(a) If by CFL, by personal delivery to SFC; by recognized overnight
delivery service; by fax, followed by mailing as hereinafter set forth; or by
mailing the same to SFC by certified mail, postage prepaid, return receipt
requested, addressed to SFC at the
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address shown on the first page hereof, with a copy thereof to such other
address(es) and such other Persons as SFC may from time to time designate by
notice given to CFL.
(b) If by SFC, by personal delivery to CFL at the Premises; or by
recognized overnight delivery service; by fax, followed by mailing as
hereinafter set forth; or by mailing the same to CFL by certified mail,
postage prepaid, return receipt requested, addressed to CFL at the
Premises or at the address shown on the first page hereof, or to such other
address(es) and Persons as CFL may from time to time designate by notice
given to SFC.
SECTION 18.02. Every notice, demand, request, consent, approval, or
other communication hereunder shall be deemed to have been given or served at
the earliest of (a) the time that the same is personally delivered to or
actually received by the other party; (b) delivery by the recognized
overnight delivery service; or (c) three (3) days after being deposited in
the United States mails, postage prepaid, in the manner aforesaid.
ARTICLE 19
ESTOPPEL CERTIFICATES
CFL agrees that, at any time and from time to time upon not less than
ten (1O) days' prior notice by SFC, CFL shall execute, acknowledge and
deliver to SFC or any other Person specified by SFC, a statement in writing
certifying that this Agreement is
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unmodified and in full force and effect (or if there have been modifications,
that the same, as modified, is in full force and effect, stating the
modifications) and the date to which each item payable by CFL hereunder has
been paid, and stating whether or not to the best knowledge of the signer of
such certificate SFC is in default in performance of any covenant, agreement
or condition contained in this Agreement, and, if so, specifying in detail
each such default of which CFL may have knowledge.
ARTICLE 20
SURRENDER AT END OF TERM
On the Expiration Date CFL shall surrender and deliver up to SFC the
Leased Premises in good order, condition and repair, reasonable wear and tear
excepted, free and clear of all CFL improvements to the Leased Premises
(other than alterations to or fixtures installed in SFC-owned improvements,
which shall be the property of SFC) and of all liens and encumbrances other
than those, if any, existing as of the date hereof. Without limiting the
generality of the foregoing, CFL will remove all CFL improvements from the
Leased Premises, and will deliver the Leased Premises to SFC restored,
regraded and reseeded. Unless otherwise expressly agreed to the contrary by
SFC in writing, all approved repairs, improvements, fixtures or additions
made by CFL to the Licensed Premises or to any other SFC-owned property or
improvements shall be the
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property of SFC, and shall remain at the Premises after the Expiration Date,
free and clear of all liens and encumbrances.
ARTICLE 21
ENTIRE AGREEMENT, NO ORAL MODIFICATIONS
This Agreement contains all the promises, agreements, conditions,
inducements and understandings between SFC and CFL relative to the Premises
and to their respective rights and obligations, and there are no promises,
agreements, conditions, understandings, inducements, warranties or
representations, oral or written, expressed or implied, between them other
than as herein set forth. This Agreement may not be orally modified, waived,
changed, canceled or amended. All such alterations of this Agreement require
a writing signed by both SFC and CFL.
ARTICLE 22
QUIET ENJOYMENT
Subject to the rights of any fee mortgagee and the rights of access
herein reserved, SFC covenants that if and as long as CFL shall faithfully
perform the agreements, terms, covenants and conditions hereof, CFL shall and
may peaceably and quietly have, hold and enjoy the Leased Premises for the
term hereby granted without molestation or disturbance by or from SFC and
free of any encumbrance created or suffered by SFC.
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ARTICLE 23
INVALIDITY OF CERTAIN PROVISIONS
If any term or provision of this Agreement or the application thereof to
any Person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such
term or provision to any Person or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
ARTICLE 24
NO RECORDING OF MEMORANDUM OF AGREEMENT
This Agreement or a Memorandum thereof shall not be recorded by either
party to the Agreement.
ARTICLE 25
LIMITATION OF LIABILITY
SECTION 25.01.
(a) SFC's liability hereunder (including, for purposes of this Section,
any parent or subsidiary of SFC) for damages or otherwise, if any, shall in
all events be limited to
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SFC's interest in the Leased Premises, this Agreement, the Rent, proceeds of
any insurance policies covering or relating to the Leased Premises, and any
awards payable to SFC in connection with a condemnation of the Leased
Premises. Neither SFC nor any of the directors, officers, employees,
shareholders, agents or servants of SFC shall have any liability (personal or
otherwise) hereunder except as set forth herein. No other property or asset
of SFC, or any property or asset of the directors, officers, employees,
shareholders, agents or servants of SFC, is subject to levy, execution or
other enforcement procedure for the satisfaction of CFL's remedies hereunder.
The provisions of this Section 25.01(a) shall survive the expiration of the
Term or other termination of this Agreement.
SECTION 25.02. When a party exercises any of the rights or renders or
performs any of its obligation hereunder, it hereby acknowledges that it
shall do so at its sole cost and expense, except to the extent this Agreement
expressly provides to the contrary.
ARTICLE 26
MISCELLANEOUS
SECTION 26.01. The captions of this Agreement are for convenience of
reference only and in no way define, limit or describe the scope or intent of
this Agreement or in any way affect this Agreement.
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SECTION 26.02. The Table of Contents is for the purpose of convenience
of reference only and is not to be deemed or construed in any way as part of
this Agreement or as supplemental thereto or amendatory thereof.
SECTION 26.03. The use herein of the neuter pronoun in any reference to
SFC or CFL shall be deemed to include any individual landlord or licensor and
tenant or licensee, and the use herein of the words "successors and assigns"
or "successors or assigns" of SFC or CFL shall be deemed to include the
heirs, legal representatives and assigns of any individual landlord or
licensor or tenant or licensee.
SECTION 26.04. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 26.05. The agreements, terms, covenants and conditions herein
shall be binding upon and shall inure to the benefit of, SFC and CFL and
their respective successors and assigns.
SECTION 26.06. All references in this Agreement to "Articles" or
"Sections" shall refer to the designated Article(s) or Section(s), as the
case may be, of this Agreement.
SECTION 26.07. The unconditional guarantee of CFL's obligations under
this Agreement by Renaissance Entertainment Corporation is a material
inducement for SFC to enter into this Agreement. This Agreement shall not be
binding upon SFC (i) unless and until it shall be executed by the parties
hereto and unconditionally delivered by SFC
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to CFL, and (ii) the guarantee hereof is fully and properly executed and
delivered to SFC by the guarantor, Renaissance Entertainment Corporation. A
copy of the duly adopted resolution of the board of directors of Renaissance
Entertainment Corporation accepting and agreeing to the terms and authorizing
the execution thereof must be affixed to the executed guarantee.
SECTION 26.08. This Agreement may not be orally modified, waived,
changed, canceled or amended.
ARTICLE 27
HAZARDOUS MATERIALS
SECTION 27.01.
(a) CFL shall be responsible for Hazardous Materials (as defined in
subparagraph (d) below) that come to be located on the Leased Premises during
the Term or on the Licensed Premises during CFL's occupancy thereof, as a
result of CFL's acts or omissions.
(b) CFL agrees that CFL shall not cause, suffer or permit any Hazardous
Material (as defined in subparagraph (d) below) to come to be located on and
then be stored on or about, be used in or about, or be discharged from the
Premises during the Term, except as legally and properly used or stored in
the normal course of CFL's
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permitted uses under this Agreement. CFL shall comply with the laws, rules,
regulations and orders of any federal, state or local authority or other
governmental authority in the storage and use of, and in promptly removing
any such Hazardous Materials and otherwise promptly complying with the laws,
rules, regulations and orders (collectively called "Government Requirements")
of such authority, all at the sole cost and expense of CFL. Without limiting
the foregoing, CFL agrees to remove and clean-up the Premises of all such
Hazardous Materials of the nature described in Section 27.01 above in
compliance with the Governmental Requirements, upon the earlier to occur of:
(i) the Expiration Date or earlier termination of this Agreement, or (ii)
CFL's ceasing to conduct permitted activities at the Premises.
(c) In the event of any storage, use or disposal of Hazardous Materials
for which CFL is responsible under paragraphs (a) and (b) of Section 27.01,
CFL shall defend, indemnify and hold SFC harmless from and against any and
all claims, loss, damage and expense, including, but not limited to,
reasonable attorney's fees and costs, that SFC may incur as a result of or
arising out of: (i) any such alleged storage, use or discharge of such
Hazardous Materials from the Premises; (ii) the removal and disposal of any
such Hazardous Material on, about or from the Premises; (iii) compliance with
any Governmental Requirements relating to the presence or removal of such
Hazardous Materials from the Premises; or (iv) any combination of the
foregoing.
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(d) As used herein, "Hazardous Materials" means any hazardous or toxic
material, substance or waste which is defined by those or similar terms or is
regulated as such under any Governmental Requirements, including, but not
limited to, any material, substance or waste which is (a) defined as a
hazardous substance under Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. Section 1317) as the same has been and may be amended;
(b) defined as a hazardous waste under Section 1004 of the Federal Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.) as the same
has been and may be amended; or (c) defined as a hazardous substance under
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et. seq.) as the same has been and may
be amended.
(e) Any costs, penalties, fines, and/or expenses paid or incurred by SFC
arising out of CFL's failure to comply with the foregoing provisions shall
constitute, at SFC's option, Additional Rent under the Agreement, and shall
be paid to SFC by CFL on demand. The provisions hereof shall survive the
expiration or early termination of the Agreement and are intended to
supplement SFC's rights and remedies against CFL at law with respect to
Hazardous Materials.
(f) SFC shall be entitled to injunctive relief against CFL with respect
to any threatened storage, use or discharge of any Hazardous Material from,
on, about or in the
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Premises in violation of the provisions of subparagraphs (a) and (b) of
Section 27.01 herein.
(g) The provisions of Article 27 of this Agreement shall survive the
expiration of the Term or other termination of this Agreement.
(h) If either party to this Agreement becomes aware of any Hazardous
Material on the Premises, that party will immediately notify the other party
of possibility that Hazardous Materials are present.
(i) To the best of SFC's knowledge, and without SFC conducting an
environmental audit of the Premises, there are no Hazardous Materials
presently on the Premises in violation of any Governmental Requirements. CFL
represents and warrants that it has no knowledge of Hazardous Materials on
the Premises in violation of any Governmental Regulations, and that CFL has
not caused, or knowingly suffered or permitted any Hazardous Materials to
come to be located at the Premises in violation of any Governmental
Regulations during CFL's possessions of the Premises during the eighteen
years preceding this Agreement. At the expiration of the Term or other
termination of this Agreement, at CFL's option and sole expense, CFL may
cause an environmental audit of the Premises to be made by a qualified New
York State licensed Professional Engineer, satisfactory to SFC, to determine
the presence of any Hazardous Materials on the Premises. If CFL elects to
have the environmental audit performed in
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accordance with this provision, and if the environmental audit reveals there
are no Hazardous Materials on the Premises, or that any Hazardous Materials
found can conclusively be demonstrated to be attributable to an incident or
source other than one for which CFL would bear responsibility hereunder, then
upon SFC's written acceptance of and concurrence with such report CFL shall
have no continuing obligation under this Article following the expiration or
other termination of this Lease. If the environmental audit reveals the
presence of Hazardous Materials on the Premises for which CFL may be
responsible hereunder, CFL shall have the obligation to remediate the
Premises by the removal of the Hazardous Materials immediately following the
completion of the environmental audit. In the event CFL elects to cause such
environmental audit to be made, CFL will instruct the Professional Engineer
making the audit to provide a copy of the same to SFC at the same time that a
copy is provided to CFL.
ARTICLE 28
WAIVER OF TRIAL BY JURY
AND COUNTERCLAIMS IN SUMMARY PROCEEDINGS;
JURISDICTION AND VENUE; SERVICE OF PROCESS
SECTION 28.01. It is mutually agreed by and between SFC and CFL that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on
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ARTICLE 29
FEES AND EXPENSES
If CFL shall default in the observance or performance of any term or
covenant on CFL's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this Agreement, then, unless
otherwise provided elsewhere in this Agreement, SFC may immediately or at any
time thereafter and upon notice to CFL, perform the obligation of CFL
thereunder. If SFC, in connection with the foregoing or in connection with
any default by CFL in the covenant to pay Rent hereunder, makes any
expenditure or incurs any obligations for the payment of money, including but
not limited to reasonable attorney's fees, in instituting, prosecuting or
defending any action or proceeding, then CFL will reimburse SFC for all such
sums so paid or obligations incurred, with interest and costs. The foregoing
expenses incurred by reason of CFL's default shall be Additional Rent
hereunder and shall be paid by CFL to SFC on demand. If the Term shall have
expired at the time of making of such expenditures of incurring of such
obligations, such sums shall be recoverable by SFC as damages. If SFC
commences summary proceedings or other litigation to enforce this Agreement,
and such proceedings or actions are resolved on the merits in favor of CFL,
then SFC shall reimburse CFL for CFL's reasonable attorneys fees and cost
incurred in CFL's defense.
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ARTICLE 30
WAIVER OF REDEMPTION
CFL hereby expressly waives any and all rights of redemption granted by
or under any present or future laws (including, but not limited to, Section
761 of the Real Property Actions and Proceedings Law) in the event of CFL
being evicted or dispossessed for any cause, or in the event of SFC obtaining
possession of the Leased Premises by reason of the violation by CFL of any of
the covenants and conditions of this Agreement or otherwise.
ARTICLE 31
SUBORDINATION
This Agreement shall be subordinate to any mortgage or mortgages
hereinafter placed upon the Premises. SFC will attempt in good faith, and
will use all commercially reasonable efforts, to procure non-disturbance
ageement(s) in favor of CFL from the mortgagor or mortgagors.
ARTICLE 32
INSURANCE
SECTION 33.01. Throughout the Term CFL shall continually provide and
maintain in full force and effect general liability insurance and motor
vehicle insurance protecting
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against any and all liability or property damage whatever resulting directly
or proximately from CFL's operations or occupancy of the Premises, including,
but not limited to, liability arising out of or in connection with
products/completed operations, premises operations, contractual liability,
personal and advertising injury liability and all operations of CFL. Such
general liability insurance shall name SFC as an additional insured and have
a combined single limit of not less than $5,000,000 for personal injury and
property damage and no less than $5,000,000 for liquor law legal liability.
Such motor vehicle insurance shall name SFC as an additional insured and
shall have a combined single limit of not less than $1,000,000 for personal
injury and property damage. In addition, CFL will obtain and maintain in
effect throughout the Term business interruption insurance, in a form and
amount sufficient to ensure that CFL will be able to pay the Rent hereunder
if the operation of the Faire or the Forest of Fear is interrupted. Evidence
of all of the required insurance coverage, together with proof of the payment
of premiums, shall be provided to SFC no less than thirty (30) days prior to
the Commencement Date and the term of each such policy shall be no less than
one year from the Commencement Date. Each such policy be in a form and issued
by a company authorized to underwrite insurance in the State of New York and
approved by SFC, and shall further provide that it may not be canceled or
materially changed except upon thirty (30) days prior written notice to SFC.
Prior to the Commencement Date, CFL will also provide to SFC evidence
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of workers compensation insurance coverage for CFL's personnel, for not less
than one year from the Commencement Date, and CFL agrees to waive subrogation
in favor of SFC if SFC so requests. CFL shall make all policies of insurance
which CFL maintains pursuant to the provisions of this Article available to
SFC for SFC's inspection in the event SFC makes a request for such an
inspection.
IN WITNESS WHEREOF, SFC and CFL have executed this Agreement as of the
day and year first above written.
STERLING FOREST CORPORATION
By:
-----------------------------------------
Louis Heimbach, Chairman, President & CEO
CREATIVE FAIRES, LTD
By: /s/ DONALD C. GAITI
-----------------------------------------
Donald C. Gaiti, President
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GUARANTY
1. RENAISSANCE ENTERTAINMENT CORPORATION ("REC") is a corporation
organized under the laws of the State of Colorado, with its principal
offices at 4440 Arapahoe #26A, Bolder, Colorado. REC recognizes
that STERLING FOREST CORPORATION would not enter into the foregoing
Agreement with CFL dated June __, 1996 with CFL unless REC unconditionally
guarantees CFL's payment and performance of its obligations under the
Agreement. REC has requested SFC to enter into the Agreement with CFL.
REC has a substantial interest in making sure that SFC enters into the
Agreement with CFL, and recognizes that the Agreement shall not become
effective unless and until REC executes and delivers this Guaranty to SFC.
The resolution of the board of directors of REC accepting and agreeing to
the terms of this Guaranty and authorizing the execution of this Guaranty
is attached hereto as Exhibit "A".
2. The following is REC's Guaranty:
REC guarantees the full performance of the Agreement by CFL, including but
not limited to payment in full of all amounts to be paid by CFL under the
Agreement. This Guaranty is absolute and without any condition.
In addition, REC agrees to these other terms:
3. This Guaranty will not be affected by any change in the Agreement,
whatsoever. The Guaranty will bind REC even if REC is not a party to these
changes.
4. REC does not have to be informed about any default by CFL. REC waives
notice of nonpayment or other default.
5. If CFL defaults, SFC may require REC to perform CFL's obligations without
first demanding that CFL perform.
6. This Guaranty shall be governed by and construed in accordance with the
laws of the State of New York, without regard to New York's conflicts of
laws provisions. REC hereby waives its right to trial by jury in any claim
related to the Agreement or this Guaranty, consents and submits to the IN
PERSONAM jurisdiction of any United States court sitting in New York City
or White Plains, New York, or any court of the State of New York sitting in
Orange County, New York, having subject matter jurisdiction over the causes
of action asserted arising out of or in connection with this Guaranty or
the Agreement. REC irrevocably and waives all
<PAGE>
present and future objections to Orange County, New York, New York City or
White Plains, New York as the exclusive venue of any action or proceeding
arising out of or in connection with this Agreement. REC agrees to service
of process by certified mail, return receipt requested, in any proceeding
or action arising out of or in connection with this Agreement.
7. This Guaranty can be changed only by written agreement signed by all
parties to the Agreement and this Guaranty.
Dated: June 12, 1996 GUARANTOR:
RENAISSANCE ENTERTAINMENT CORP.
By: /s/ Miles Silverman
------------------------------
State of Colorado)
) ss.:
County of Boulder)
On the 12th day of June in the year 1996 before me personally came Miles
Silverman to me known, who, being by me duly sworn, did depose and say that
he resides in Boulder, Colorado; that he is the President of RENAISSANCE
ENTERTAINMENT CORPORATION, the corporation described in and which executed
the above instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the board of directors of said corporation, and that
he signed his name thereto by like authority.
/s/ Deborah K. Johnson
------------------------
Notary Public
<PAGE>
EXHIBIT "A"
"CORPORATE RESOLUTION
OF
RENAISSANCE ENTERTAINMENT CORPORATION"
<PAGE>
SCHEDULE "A"
[MAP]
<PAGE>
RESOLUTION
WHEREAS, Prospect Mountain Corporation, University Forest Corporation and
Fletcher Lake Corporation have made application to the Zoning Board of
Appeals of the Town of Tuxedo, New York for a special permit for the use of
their premises as a social/recreation/visitor center and outdoor recreational
facility pursuant to Section 5.2 of the Zoning Law of the Town of Tuxedo, and
WHEREAS, a portion of the applicants' premises consisting of about 471
acres of land is already used for the aforesaid purposes and is known as
Sterling Forest Gardens and Ski Center, and
WHEREAS, the lands already in use for such purposes are in R-1 and R-2
Zones of the Town in accordance with the aforementioned Town Zoning Law, and
WHEREAS, the applicants have requested a special permit to add to the
aforementioned land an additional parcel of land consisting of about 192
acres all of which are located in an R-O Zone under the Town Zoning Law to be
devoted exclusively to social/recreation/visitor center and outdoor
recreational facility uses as permitted under the Town Zoning Law, and
WHEREAS, the aforesaid two parcels of land for which the application has
been made consists in total of approximately 665.7 acres of land for which
applicant seeks a special permit as aforesaid, and
WHEREAS, the Planning Board of the Town of Tuxedo has given site plan
approval to the lands of the applicants already in use as a
social/recreation/visitor center and outdoor recreational facility, and
WHEREAS, it appears to the satisfaction of the Zoning Board
SCHEDULE "B"
<PAGE>
of Appeals that the structures, facilities, equipment and materials presently
in use by the applicants for such facilities: are readily accessible to fire
and police protection; are of such location, size and character so as to be
in harmony with the appropriate and orderly development of the districts in
which they are situated and not detrimental to the orderly development of
adjacent properties; are of such location and size and so laid out on the
site so that pedestrian and vehicular and the assembly of persons in
connection therewith is not hazardous or inconvenient to or incongruous with
the residential district in which the use is located and the location and
height of the buildings already in use together with the location, nature and
height of the walls and the fences and landscaping already in existence do not
hinder or discourage the appropriate development and use of adjacent lands and
buildings, and
WHEREAS, the Zoning Board of Appeals has held a public hearing on such
application on October 20, 1976 after giving due and proper notice thereof,
and
WHEREAS, the Zoning Board of Appeals has given due consideration to all
statements made at said public hearing and all communications received in
connection therewith and has given due deliberation to said application.
NOW, THEREFORE; BE IT RESOLVED as follows:
1. Pursuant to Section 3.2 and 8.2.3 of the Zoning Law of the Town of
Tuxedo, a special permit is hereby granted to the applicant for the use of
their premises presently used as a social/recreation/ visitor center and
outdoor recreational facility known as Sterling
-2-
<PAGE>
Forest Gardens and Ski Center and consisting of an occupying at the present
time approximately 471 acres of land.
2. The applicant is hereby granted a special permit pursuant to Section
3.2 and 8.2.5 of the Zoning Law to use the additional acreage consisting of
about 192 acres as part of the social/recreation/visitor center and outdoor
recreational facility presently in use by the applicants and known as
Sterling Forest Gardens and Ski Center.
3. This Resolution and the special permit hereby granted are subject to
the following terms and conditions:
a. The special permit herein granted is for a parcel of land consisting
of approximately 663 acres as bounded and described by the applicants in the
exhibits and documents attached to the application.
b. All future development on the lands covered by this permit shall be in
strict accordance with the Zoning Law of the Town of Tuxedo as amended and
except as the terms may have been duly varied.
c. The lands covered by the permit located in an R-O Zone under the Town
Zoning Law shall be used for parking facilities only.
d. All future development of the lands covered by this permit shall be
subject to site plan review by the Planning Board of the Town of Tuxedo and
no building permit shall be issued for any future facility or structure
requiring a building permit under the laws of the Town of Tuxedo unless and
until site plan approval has been granted by the said Planning Board.
e. All future development of the lands covered by this permit
-3-
<PAGE>
shall be in compliance with the provisions of Section 8.2.3.1 of the Town
Zoning Law and applicant will demonstrate in connection with such future
development that such development does not and will not have an unreasonably
adverse effect upon the ecology and environment of the site, the adjoining
properties and the Town of Tuxedo.
f. In the development of additional parking areas on the lands covered
by this permit applicant shall demonstrate that the existing public roads
required for access to such parking facilities and the lands of the applicant
are adequate to safely accommodate the estimated traffic which it is
anticipated will result from the expansion of such parking facilities and the
future development of applicants' lands.
g. No building permit shall be issued to the applicant for the
development of the land covered by this permit except in accordance with the
provisions of this permit and resolution.
The foregoing constitutes a true and complete copy of a resolution
duly made and adopted at a regular meeting of the Zoning Board of
Appeals of the Town of Tuxedo on October 27, 1976. The said resolution
was made by Mr. and seconded by Mr. and was adopted
by the following votes: Ayes 5 Nos
--- ---
/s/ John Hofmann
---------------------------
John Hofmann
Chairman
Zoning Board of Appeals
-4-
<PAGE>
STERLING FOREST CORPORATION
Schedule of Electric Meters
Billed to Creative Faires, Ltd.
Meter Location Base Month
and Number June 28, 1978
- ---------------- -------------
Upper Parking Lot 4.77
1530-5736-2960.1
Garden Sewer 251.26
1530-5736-3020.1
Garden Club 9.02
1530-5736-3440.1
Camel Barn 0.00
1530-5736-3450.1
Irrigation 221.53
1530-5736-3560.1
Peacock Patio 172.31
1530-5736-3620.4
Rt. 17A Traffic Light 169.82
1530-5736-3660.1
Warming Hut 94.45
1530-5736-3680.3 -------
$927.93
SCHEDULE"C"
<PAGE>
UNION BANK & TRUST
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer, Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$3,500,000.00 11-07-1995 06-07-2011 1C1 81385 JCN
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
Borrower: RENAISSANCE ENTERTAINMENT CORPORATION LENDER: UNION BANK AND TRUST COMPANY
(TIN: 64-1094630) BOWLING GREEN
4440 ARAPAHOE ROAD, SUITE 200 211 N. MAIN STREET
BOULDER, CO 80303 P.O. 446
BOWLING GREEN, VA 22427
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Principal Amount: $1,500,000.00 Initial Rate: 8.650% Date of Note: November 7, 1995
</TABLE>
PROMISE TO PAY, RENAISSANCE ENTERTAINMENT CORPORATION ("Borrower") promises to
pay to Union Bank and Trust Company ("Lender"), or order, in lawful money of
the United States of America, the principal amount of One Million Five
Hundred Thousand & 00/100 Dollars ($1,500,000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding principal
balance of each advance, interest shall be calculated from the date of each
advance until repayment of each advance.
PAYMENT, Borrower will pay this loan in accordance with the following
payment schedule:
Interest only until June 30, 1996 (payable quarterly). Then 12
consecutive monthly principal and interest payments of $14,903.28
each, beginning July 30, 1996, with interest calculated on the
unpaid principal balances at an interest rate of 8.65% per annum;
12 consecutive monthly principal and interest payments of $15,155.92
each, beginning July 30, 1997, with interest calculated on the
unpaid principal balances at an interest rate of 8.95% per annum;
12 consecutive monthly principal and interest payments of $15,396.69
each, beginning July 30, 1998, with interest calculated on the unpaid
principal balances at an interest rate of 9.25% per annum; and 144
consecutive monthly principal and interest payments of $15,394.63
each, beginning July 30, 1999, with interest calculated on the
unpaid principal balances at an interest rate of 9.26% per
annum. Borrower's final payment of $15,394.83 will be due on
May 7, 2011. This estimated final payment is based on the assumption
that all payments will be made exactly as scheduled; the actual
final payment will be for all principal and accrued interest not
yet paid, together with any other unpaid amounts under this Note.
Interest on this Note is computed on a 365/365 simple interest basis, that
is, by applying the ratio of the annual interest rate over the number of
days in a year (366 during leap years), multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to
any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the NO INDEX (the
"Index"). INTEREST RATE FROM NOVEMBER 7, 1995 TO JULY 30, 1997 WILL BE 8.65%;
INTEREST RATE FROM JULY 30, 1997 TO JULY 30, 1998 WILL BE 8.95%; INTEREST
RATE FROM JULY 30, 1998 TO MAY 7, 2011 WILL BE 9.25%. Lender will tell
Borrower the current index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each _____________. The Index currently
is 8.650% per annum. The interest rate to be applied to the unpaid principal
balance of this Note will be at a rate equal to the Index, resulting in an
initial rate of 8.650% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by applicable
law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment
of this Note, Borrower understands that Lender is entitled to a minimum
interest charge of $25.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due.
LATE CHARGE. If a payment is 7 days or more late, Borrower will be charged
6.000% of the regularly scheduled payment.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or
furnished. (d) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws. (e) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with
Lender; (f) Any of the events described in this default section occurs with
respect to any guarantor of this Note. (g) A material adverse change occurs
in Borrower's financial condition, or Lender believes the prospect of payment
or performance of the indebtedness is impaired. (h) Lender in good faith
deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this Note
within the preceding twelve (12) months, it may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (a) cures the default within ten (10)
days; or (b) if the cure required more than ten (10) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest, together with all other
applicable fees, costs and charges, if any, immediately due and payable,
without notice, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest rate
on this Note to 18.500% per annum. The interest will not exceed the maximum
rate permitted by applicable law. Furthermore, subject to any limits under
applicable law, upon default, Borrower also agrees to pay Lender's attorneys'
fees, and all of Lender's other collection expenses, whether or not there is
a lawsuit and including without limitation legal for bankruptcy proceedings.
This Note shall be governed by, construed and enforced in accordance with the
laws of the Commonwealth of Virginia.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all of Borrower's right, title and interest in and to, Borrower's
accounts with Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with someone else and
all accounts Borrower may open in the future, excluding however all IRA,
Keogh, and trust accounts. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts.
COLLATERAL. This note is secured by CREDIT LINE DEED OF TRUST DATED NOVEMBER
7, 1995 IN THE AMOUNT OF $1,500,000.00 ON 250.0 ACRES LOCATED IN STAFFORD
COUNTY, VIRGINIA AND THE ASSIGNMENT OF UNION BANK AND TRUST CERTIFICATES OF
DEPOSIT #009-0078138 AND #009-0078188 EACH IN THE AMOUNT OF $250,000.00 AND
UNION BANK AND TRUST CERTIFICATES OF DEPOSIT #009-0078191, #009-0078192 AND
#009-0078193, EACH IN THE AMOUNT OF $25,000.00. TWO CERTIFICATES OF DEPOSIT
TOTALLING $275,000.00 WILL BE RELEASED ANNUALLY BEGINNING MARCH 1, 1997 UPON
BORROWER REACHING NET OPERATING INCOME GOALS AS SET FORTH IN "VIRGINIA
FAIRE--PROJECTED FINANCIALS - NOVEMBER 3, 1995". NET OPERATING INCOME IS
DEFINED AS TOTAL REVENUES LESS TOTAL OPERATING EXPENSES, BEFORE TAXES AND
PAYMENT OF PRINCIPAL OR INTEREST ON UNION BANK AND TRUST COMPANY LOAN. FIRST
YEAR (1996) GOAL IS $93,333, SECOND YEAR (1997) GOAL IS $412,054 AND THIRD
YEAR (1998) GOAL IS $1,130,978. IF THE CERTIFICATES OF DEPOSIT HAVE NOT BEEN
RELEASED FOR ANY PREVIOUS YEAR BUT THE GOAL IS REACHED FOR THE CURRENT YEAR,
THE CERTIFICATES OF DEPOSIT FOR THE PREVIOUS YEAR AND THE CURRENT YEAR SHALL
BE RELEASED. IF THE CERTIFICATES OF DEPOSITS ARE NOT RELEASED BY YEAR THREE,
IT SHALL BE RELEASED IN ANY SUBSEQUENT YEAR THAT THE NET OPERATING INCOME
TARGET OF $1,130,978 IS REACHED. A VARIANCE OF 10% WILL BE PERMITTED,
VERIFICATION OF REACHING GOALS TO BE PROVIDED BY RENAISSANCE ENTERTAINMENT
CORPORATION FORM 10-Q QUARTERLY REPORT FILED FOR THE 12/31 QUARTER ENDING
EACH YEAR SUPPORTED BY THE CORPORATION'S INTERNAL FINANCIAL REPORTS PROVIDED
IN THE SAME FORMAT AS "VIRGINIA FAIRE-PROJECTED FINANCIALS - NOVEMBER 3, 1995".
LINE OF CREDIT. This note evidences a straight line of credit. Once the
total amount of principal has been advanced, Borrower is not entitled to
further loan advances. Advances under this Note, as well as directions for
payment from Borrower's accounts, may be requested orally in writing by
Borrower or by an authorized person. Lender may, but need not, require that
all oral requests be confirmed in writing. The following party or parties are
authorized to request advances under the line of credit until Lender receives
from Borrower at Lender's address shown above written notice of revocation of
their authority. MILES SILVERMAN, PRESIDENT AND CEO. Borrower agrees to be
liable for all sums either: (a) advanced in accordance with the instructions
of an authorized person or (b) credited to any of Borrower's accounts with
Lender. The unpaid principal balance
<PAGE>
11-07-1995 PROMISSORY NOTE PAGE 2
LOAN NO. (CONTINUED)
===============================================================================
owing on this Note at any time may be evidenced by endorsements on this Note
or by Lender's internal records, including daily computer print-outs. Lender
will have no obligation to advance funds under this Note II: (a) Borrower or
any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made
in connection with the signing of this Note; (b) Borrower or any guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attemps to limit, modify or revoke such guarantor's guaranties of
this Note or any other loan with Lender; (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or
any other agreement between Lender and Borrower.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protect and notice of dishonor. Upon
any changes in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lendor without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THE NOTE.
BORROWER:
RENAISSANCE ENTERTAINMENT CORPORATION
By: /s/ Miles Silverman (SEAL)
------------------------------------------
MILES SILVERMAN, PRESIDENT AND CEO
===============================================================================
<PAGE>
[LETTERHEAD]
ASSIGNMENT OF DEPOSIT ACCOUNT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,500,000.00 11-07-1995 05-07-2011 1C1 81385 JCN
- ----------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item.
- ----------------------------------------------------------------------------------------------------
BORROWER: RENAISSANCE ENTERTAINMENT CORPORATION LENDER: UNION BANK AND TRUST COMPANY
(TIN: 54-1094630) BORROWING GREEN
4440 ARAPAHOE ROAD SUITE 200 211 N. MAIN STREET
BOULDER, CO 80203 P.O. BOX 446
BOWLING GREEN, VA 22427
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
THIS ASSIGNMENT OF DEPOSIT ACCOUNT is entered into between RENAISSANCE
ENTERTAINMENT CORPORATION (referred to below as "Grantor"); and Union Bank
and Trust Company (referred to below as "Lender").
ASSIGNMENT. For valuable consideration, Grantor assigns and grants to Lender
a security interest in the Collateral, including without limitation the
deposit accounts described below, to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
ACCOUNT. The work "Account" means the deposit accounts described below
in the definition for "Collateral."
AGREEMENT. The word "Agreement" means this Assignment of Deposit
Account, as this Assignment of Deposit Account may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Assignment of Deposit Account from time to time.
COLLATERAL. The word "Collateral" means the following described
deposit accounts:
UNION BANK AND TRUST CERTIFICATE #009-0078136 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $250,000.00
UNION BANK AND TRUST CERTIFICATE #009-0078139 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $250,000.00
UNION BANK AND TRUST CERTIFICATE #009-0078188 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $250,000.00
UNION BANK AND TRUST CERTIFICATE #009-0078191 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $25,000.00
UNION BANK AND TRUST CERTIFICATE #009-0078192 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $25,000.00
UNION BANK AND TRUST CERTIFICATE #009-0078193 ISSUED BY LENDER IN AN
AMOUNT NOT LESS THAN $25,000.00
together with (a) all interest, whether now accrued or hereafter
accruing; (b) all additional deposits hereafter made to the Account;
(c) any and all proceeds from the Account; and (d) all renewals,
replacements and substitutions for any of the foregoing.
In addition, the word "Collateral" includes all property of Grantor
(however owned if owned by more than one person), in the possession of
Lender (or in the possession of a third party subject to the control of
Lender), whether existing now or later and whether tangible or
intangible in character, including without limitation each and all of
the following:
(a) ALL PROPERTY TO WHICH LENDER ACQUIRES TITLE OR DOCUMENTS OF TITLE.
(b) ALL PROPERTY ASSIGNED TO LENDER.
(c) ALL PROMISSORY NOTES, BILLS OF EXCHANGE, STOCK CERTIFICATES,
BONDS, SAVINGS PASSBOOKS, TIME CERTIFICATES OF DEPOSIT, INSURANCE
POLICIES, AND ALL OTHER INSTRUMENTS AND EVIDENCES OF AN OBLIGATION.
(d) ALL RECORDS RELATING TO ANY OF THE PROPERTY DESCRIBED IN THIS
COLLATERAL SECTION, WHETHER IN THE FORM OF WRITING, MICROFILM,
MICROFICHE, OR ELECTRONIC MEDIA.
EVENT OF DEFAULT. The words "Event of Default" means and include
without limitation any of the Events of Default set forth below in the
section titled "Events of Default."
GRANTOR. The word "Grantor" means RENAISSANCE ENTERTAINMENT
CORPORATION, its successors and assigns.
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties
in connection with the indebtedness and their personal representatives,
successors and assigns.
INDEBTEDNESS. The word "Indebtedness' means the indebtedness
evidenced by the Note, including all principal, interest, and fees,
costs, and expenses, if any, together with all modifications of and
renewals, replacements and substitutions for any of the foregoing.
"Indebtedness" also includes all other present and future liabilities
and obligations of Grantor to Lender, whether direct or indirect,
matured or unmatured, and whether absolute or contingent, joint, several
or joint and several, and no matter how the same may be evidenced or
shall arise.
LENDER. The word "Lender" means Union Bank and Trust Company, its
successors and assigns.
NOTE: The word "Note" means the note or credit agreement dated
November 7, 1995. In the principal amount of $1,500,000.00 from Grantor
to Lender, together with all modifications of and renewals,
replacements, and substitutions for the note or credit agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the indebtedness.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
With respect to the Collateral, Grantor represents and warrants to
Lender that:
OWNERSHIP. Grantor is the lawful owner of the Collateral free and
clear of all loans, liens, encumbrances, and claims except as disclosed
to and accepted by Lender in writing.
RIGHT TO GRANT SECURITY INTEREST. Grantor has the full right, power,
and authority to enter into this Agreement and to assign the Collateral
to Lender.
NO FURTHER TRANSFER. Grantor will not sell, assign, encumber, or
otherwise dispose of any of Grantor's rights in the Collateral except as
provided in this Agreement.
NO DEFAULTS. There are no defaults relating to the Collateral, and
there are no offsets or counterclaims to the same. Grantor will strictly
and promptly do everything required of Grantor under the terms,
conditions, promises, and agreements contained in or relating to the
Collateral.
PROCEEDS. Any and all replacement or renewal certificates,
instruments, or other benefits or proceeds related to the Collateral that
are received by Grantor shall be held by Grantor in trust for Lender and
immediately shall be delivered by Grantor to Lender to be held as part
of the Collateral.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. While
this Agreement is in effect, Lender may retain the rights to possession
of the Collateral, together with any and all evidence of the Collateral,
such as certificates or passbooks. This Agreement will remain in effect
until (a) there no longer is any indebtedness owing to Lender; (b) all
other obligations secured by this Agreement have been fulfilled; and (c)
Grantor, in writing, has requested from Lender a release of this
Agreement.
EXPENDITURES BY LENDER, if not discharged or paid when due, Lender may
(but shall not be obligated to) discharge or pay any amounts required to
be discharged or paid by Grantor under this Agreement, including without
limitation of taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining
and preserving the Collateral. All such expenditures incurred or paid by
Lender for such purposes will then bear interest at the rate charged
under the Note from the date incurred or paid by Lender to the date of
repayment by Grantor. All such expenses shall become a part of the
indebtedness and, at Lender's option, will (a) be payable on demand, (b)
be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either (i)
the term of any applicable insurance policy or (ii) the remaining term
of the Note, or (c) be treated as balloon payment which will be due and
payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event
of Default.
<PAGE>
11-07-1995 ASSIGNMENT OF DEPOSIT ACCOUNT PAGE 2
LOAN NO (CONTINUED)
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LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable
care in the physical preservation and custody of any certificate or passbook
for the Collateral but shall have no other obligation to protect the
Collateral or its value. In particular, but without limitation, Lender shall
have no responsibility (a) for the collection or protection of any income on
the Collateral, (b) for the preservation of rights against issuers of the
Collateral or against third persons; (c) for ascertaining any maturities,
conversions, exchanges, offers, tenders, or similar matters relating to the
Collateral; nor (d) for informing the Grantor about any of the above, whether
or not Lender has or is deemed to have knowledge of such matters.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when
due on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any
other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or in any other agreement
between Lender and Grantor. If any default, other than a Default on
Indebtedness, is curable and if Grantor has not been given a prior
notice of a breach of the same provision of this Agreement, it may be
cured (and no Event of Default will have occurred) if Grantor, after
Lender sends written notice demanding cure of such default, (a) cures the
default within ten (10) days; or (b), if the cure requires more than ten
(10) days, immediately initiates steps which Lender deems in Lender's
sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to
produce compliance as soon as reasonably practical.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected security
interest or lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor or Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor's
deposit accounts with Lender. However, this Event of Default shall not
apply if there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor
dies or becomes incompetent.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default,
or at any time thereafter, Lender may exercise any one or more of the
following rights and remedies, in addition to any rights or remedies that may
be available at law, in equity, or otherwise:
ACCELERATE INDEBTEDNESS. Lender may declare all indebtedness of Grantor
to Lender immediately due and payable, without notice of any kind to
Grantor.
APPLICATION OF ACCOUNT PROCEEDS. Lender may obtain all funds in the
Account from the Issuer of the Account and apply them to the
Indebtedness in the same manner as if the Account had been issued by
Lender. If the Account is subject to an early withdrawal penalty, that
penalty shall be deducted from the Account before its application to the
Indebtedness, whether the Account is with Lender or some other
institution. Any excess funds remaining after application of the
Account proceeds to the Indebtedness will be paid to Grantor as the
Interests of Grantor may appear. Grantor agrees, to the extent permitted
by law, to pay any deficiency after application of the proceeds of the
Account to the Indebtedness.
COLLECT THE COLLATERAL. Lender may collect any of the Collateral and,
at Lender's option and to the extent permitted by applicable law, may
retain possession of the Collateral while suing on the Indebtedness.
REGISTER SECURITIES. Lender may register any securities included in the
Collateral in Lender's name and exercise any rights normally incident to
the ownership of securities.
SELL SECURITIES. Lender may sell any securities included in the
Collateral in a manner consistent with applicable federal and state
securities laws, notwithstanding any other provision of this or any
other agreement. If, because of restrictions under such laws, Lender is
or believes it is unable to sell the securities in an open market
transaction, Grantor agrees that (a) Lender shall have no obligation to
delay sale until the securities can be registered, (b) Lender may make a
private sale to a single person or restricted group of persons, even
though such sale may result in a price that is less favorable than might
be obtained in an open market transaction, and (c) such a sale shall be
considered commercially reasonable. If any securities held as
Collateral are "restricted securities" as defined in the Rules of the
Securities and Exchange Commission (such as Regulation D or rule 144) or
state securities departments under state "Blue Sky" laws, or if Grantor,
or any of them (if more than one), is an affiliate of the Issuer of the
securities, Grantor agrees that Grantor will neither sell nor dispose of
any securities or such Issuer without obtaining Lender's prior written
consent.
TRANSFER TITLE. Lender may affect transfer of title upon sale of all or
part of the Collateral. For this purpose, Grantor irrevocably appoints
Lender as its attorney-in-fact to execute endorsements, assignments and
instruments in the name of Grantor and each of them (if more than one)
as shall be necessary or reasonable.
APPLICATION OF PROCEEDS. Lender may apply any cash which is part of the
Collateral, or which is received from the collection or sale of the
Collateral, to (a) reimbursement of any expenses, including any costs of
any securities registration, commissions incurred in connection with a
sale, attorney fees as provided below and court costs, whether or not
there is a lawsuit and including any fees on appeal, incurred by Lender
in connection with the collection and sale of such Collateral, and (b)
to the payment of the Indebtedness of Grantor to Lender, with any excess
funds to paid to Grantor as the Interests of Grantor may appear.
OTHER RIGHTS AND REMEDIES. Lender shall have and may exercise any or
all of the rights and remedies of a secured creditor under the
provisions of the Virginia Uniform Commercial Code, at law, in equity,
or otherwise.
DEFICIENCY JUDGMENT. If permitted by applicable law, Lender may obtain
a judgment for any deficiency remaining in the Indebtedness due to
Lender after application of all amounts received from the exercise of
the rights provided in this section.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by Lender to
pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure to perform,
shall not affect Lender's right to declare a default and to exercise its
remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provision are a part
of this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
APPLICABLE LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the Commonwealth of Virginia.
ATTORNEYS' FEES; EXPENSES. Grantor agrees that if Lender hires an
attorney to help enforce this Agreement or to collect any sums owing
under this Agreement, Grantor will pay, subject to any limits under
applicable law, Lender's attorneys' fees, and all of Lender's other
collection expenses, whether or not there is a lawsuit and including
without limitation additional legal expenses for bankruptcy proceedings.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective
when actually delivered if hand delivered or when deposited with a
nationally recognized overnight courier or deposited as certified or
registered mail in the United States mail, first class, postage
prepaid, addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is more
than one Grantor, notice to any Grantor will constitute notice to all
Grantors. For notice purposes, Grantor agrees to keep Lender informed
at all times of Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and
lawful attorney-in-fact, irrevocably, with full power of substitution to
do the following: (a) to demand, collect, receive, receipt for, sue and
recover all sums of money or other property which may now or hereafter
become due, owing or payable from the Collateral; (b) to execute, sign
and endorse any and all claims, instruments, receipts, checks, drafts or
warrants
<PAGE>
11-07-1995 ASSIGNMENT OF DEPOSIT ACCOUNT PAGE 3
LOAN NO. (CONTINUED)
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- -------------------------------------------------------------------------------
issued in payment for the Collateral; (c) to settle or compromise any
and all claims arising under the Collateral, and, in the place and
stead of Grantor, to execute and deliver its release and settlement for
the claims; and (d) to file any claim or claims or to take any
action or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise, which in the discretion of
Lender may seem to be necessary or advisable. This power is given as
security for the indebtedness, and the authority hereby conferred is and
shall be irrevocable and shall remain in full force and effect until
renounced by Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstances, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity, however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on
transfer of the Collateral, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Grantor, shall constitute a waiver
of any of Lender's rights or of any of Grantor's obligations as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases consent may be granted or withheld in the sole
discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT OF
DEPOSIT ACCOUNT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED NOVEMBER 7,
1995.
GRANTOR:
RENAISSANCE ENTERTAINMENT CORPORATION
By: MILES SILVERMAN (SEAL)
-----------------------------------
MILES SILVERMAN, PRESIDENT AND CEO
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<PAGE>
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 631,063
<SECURITIES> 0
<RECEIVABLES> 392,814
<ALLOWANCES> 0
<INVENTORY> 116,221
<CURRENT-ASSETS> 2,119,867
<PP&E> 6,528,277
<DEPRECIATION> (1,372,060)
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0
0
<COMMON> 5,797,438
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<TOTAL-LIABILITY-AND-EQUITY> 10,433,469
<SALES> 12,810,617
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<CGS> 3,826,868
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<INTEREST-EXPENSE> 28,384
<INCOME-PRETAX> (1,467,474)
<INCOME-TAX> 193,803
<INCOME-CONTINUING> (1,273,671)
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