<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended March 31, 1998
or
[ ] Transition Report Pursuance to Section 13 or 15(d) of the Securities
Exchange act of 1934.
For the transition period from to
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Commission File Number 0-23782
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RENAISSANCE ENTERTAINMENT CORPORATION
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(Exact name of registrant as specified in its charter)
COLORADO 84-1094630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
275 CENTURY CIRCLE, SUITE 102, LOUISVILLE, COLORADO 80027
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(Address of principal executive offices) (Zip Code)
(303) 664-0300
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(Registrant's telephone number, including area code)
4410 ARAPAHOE AVENUE, SUITE 200, BOULDER, COLORADO 80303
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(Former Address)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.
[ X ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 11, 1998, Registrant had 2,089,894 shares of common stock, $.03 Par
Value, outstanding.
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INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
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<S> <C>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
Balance Sheets as of March 31, 1998 (Unaudited)
and December 31, 1997 3
Statements of Operations for the Three Months
Ended March 31, 1998 and 1997
(Unaudited) 4
Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997
(Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION 12
</TABLE>
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This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section 27A of
the Securities Act of 1933, as amended, and is subject to the safe harbors
created by those sections. These forward-looking statements are subject to
significant risks and uncertainties, including those identified in the
section of this Form 10-Q entitled "Factors That May Affect Future Operating
Results," which may cause actual results to differ materially from those
discussed in such forward-looking statements. The forward-looking statements
within this Form 10-Q are identified by words such as "believes,"
"anticipates," "expects," "intends," "may," "will" and other similar
expressions. However, these words are not the exclusive means of identifying
such statements. In addition, any statements which refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements
which may be made to reflect events or circumstances occurring subsequent to
the filing of this Form 10-Q with the Securities and Exchange Commission
("SEC"). Readers are urged to carefully review and consider the various
disclosures made by the Company in this report and in the Company's other
reports filed with the SEC that attempt to advise interested parties of the
risks and factors that may affect the Company's business.
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2
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RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
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(Unaudited)
<S> <C> <C>
Current Assets:
Cash and equivalents $ 237,103 $ 590,022
Accounts receivable (net) 19,358 21,710
Inventory 144,337 143,554
Prepaid expenses and other 671,425 480,320
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Total Current Assets 1,072,723 1,235,606
Property and equipment, net of accumulated depreciation 6,776,359 6,886,872
Covenant not to compete 20,000 25,000
Goodwill 557,478 570,150
Restricted cash 318,804 314,078
Other assets 852,400 845,977
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TOTAL ASSETS $ 9,597,764 $ 9,877,683
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,605,001 $1,182,789
Notes payable, current portion 562,120 115,135
Unearned income 458,972 142,503
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Total Current Liabilities 2,626,093 1,440,427
Lease obligation payable 3,916,074 3,909,696
Notes payable, net of current portion 894,223 918,277
Other 35,075 35,525
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Total Liabilities 7,471,465 6,303,925
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Stockholders' Equity:
Common stock, $.03 par value, 50,000,000
shares authorized, 2,089,894 and 2,051,679 shares
issued and outstanding at March 31, 1998 and
December 31, 1997, respectively 62,696 61,550
Additional paid-in capital 9,418,180 9,372,500
Accumulated earnings (deficit) (7,354,577) (5,860,292)
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Total Stockholders' Equity 2,126,299 3,573,758
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,597,764 $ 9,877,683
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
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1998 1997
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<S> <C> <C>
REVENUE:
Sales $ 41,881 $ 14,873
Faire operating costs (6,038) 23,319
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Gross Profit 47,919 8,446
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OPERATING EXPENSES:
Salaries 712,843 761,177
Depreciation and amortization 141,142 269,641
Advertising 13,804 12,495
Other operating expenses 626,851 701,787
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Total Operating Expenses 1,494,640 1,745,100
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Net Operating (Loss) Income (1,446,721) (1,753,546)
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Other Income (Expenses):
Interest income 18,548 14,711
Interest (expense) (144,991) (91,432)
Other income (expense) 78,881 1,908
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Total Other Income (Expenses) (47,562) (74,813)
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Net Income (Loss) before (Provision)
Credit for Income Taxes (1,494,283) (1,828,359)
(Provision) Credit for Income Taxes -- --
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Net Income (Loss) to Common Stockholders $ (1,494,283) $ (1,828,359)
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Net Income (Loss) per Common Share $ (.72) $ (.95)
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Weighted Average Number of Common Shares
Outstanding 2,067,525 1,885,924
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</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three Months ended
March 31,
----------------------------
1998 1997
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income (Loss) $(1,494,283) $(1,828,359)
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Adjustments to reconcile net income (Loss)
to net cash provided by operating
activities:
Depreciation and amortization 141,142 269,642
Gain (loss) on disposal of assets (1,230) 1,563
(Increase) decrease in:
Accounts Receivable 2,352 201
Inventory (783) 50,600
Prepaid expenses and other (198,112) (418,754)
Increase (decrease) in:
Accounts payable and accrued expenses 422,211 51,223
Unearned revenue and other 316,018 283,065
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Total adjustments 681,598 237,540
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Net Cash Provided by Operating
Activities (812,685) (1,590,819)
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Cash Flows from Investing Activities:
Investment in restricted cash (4,726) (12,271)
Acquisition of property and equipment (11,644) (27,210)
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Net Cash (Used in) Investing Activities (16,370) (39,481)
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Cash Flows from Financing Activities:
Common stock issued and additional
paid-in capital 46,825 945,826
Proceeds from notes payable 451,699 750,000
Principal payments on notes payable (22,390) (129,518)
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Net Cash Provided by Financing Activities 476,134 1,566,308
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Net Increase (Decrease) in Cash (352,921) (63,992)
Cash, beginning of period 590,024 374,289
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Cash, end of period $ 237,103 $ 310,297
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Interest paid $ 144,991 $ 91,432
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</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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RENAISSANCE ENTERTAINMENT CORPORATION AND
CONSOLIDATED SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
1. UNAUDITED STATEMENTS
The balance sheet as of March 31, 1998, the statements of operations and
the statements of cash flows for the three month periods ended March 31,
1998 and 1997, have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and changes in financial position at March 31, 1998 and for all
periods presented, have been made.
These statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
2. CALCULATION OF EARNINGS (LOSS) PER SHARE
The earnings (loss) per share is calculated by dividing the net income
(loss) to common stockholders by the weighted average number of common
shares outstanding.
3. SHORT-TERM NOTES; SUBSEQUENT EVENT
During the first three months of fiscal 1998, the Company raised $448,000
of short-term capital to fund operating capital requirements for the first
six months of the fiscal year. These funds were provided by Charles S.
Leavell ($100,000), Chairman of the Board of Directors, two directors and
two officers of the Company (an aggregate of $198,000) and two other
investors. The loans bear interest at 6% per quarter and are secured by
substantially all of the Company's assets other than its real estate. The
investors also were granted a five-year warrant to purchase one share of
common stock for each $2.50 loaned to the Company at an exercise price of
$1.50 per share. During April 1998, the Company obtained an additional
$50,000 pursuant to the short-term loan program from one investor
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the footnotes for the fiscal period
ended December 31, 1997. On June 21, 1996, the Company changed its fiscal year
end from March 31 to December 31.
The Company operates five Renaissance Faires in the United States. The
Company's 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. The Renaissance Faire is a re-creation of a Renaissance
village, a fantasy experience transporting the visitor back into sixteenth
century England.
Although the Company was profitable in its fiscal year ended March 31, 1995, it
incurred a net loss of ($1,273,671) in the fiscal year ended March 31, 1996, a
net loss of ($1,851,725) for the nine months ended December 31, 1996, a net loss
of ($2,567,097) for the fiscal year ended December 31,1997, and a net loss of
($1,494,283) for the quarter ended March 31, 1998. In addition, the Company
expects to incur a net loss for the fiscal year ending December 31, 1998. The
New York and Virginia Faires operated at a loss during 1996 and 1997. It is
typical for a new faire such as the Virginia Faire to operate at a loss for
several years until it is able to build a significant customer base and
awareness of the faire. Due to the fact that the New York Faire was acquired in
1996, the Company had limited ability to affect the operations of this Faire
during the 1996 faire season. The Company hired a new manager for this Faire
and introduced several new entertainment acts and implement additional
promotional efforts for this faire's 1997 season. The operating loss for the
New York Faire was reduced substantially in 1997 compared to 1996.
The owner of the site for the Company's Northern California Faire is seeking to
develop this site for commercial construction purposes. An extension of the
lease for this site for the 1998 faire season has been obtained. While the
Company is investigating new sites for the Northern California Faire, there can
be no assurance that the Company will be able to secure a new site for this
faire for the 1999 or following faire seasons.
The Company is also negotiating with the owner of its Southern California Faire
for a long-term lease for this site. The ability to enter into a long-term
lease for this site would increase its value to the Company, as the Company
could construct structures on the site and significantly reduce setup costs for
the faire.
The Company had a working capital deficit ($1,553,370) as of March 31, 1998.
During the first four months of fiscal 1998, the Company obtained $498,000 of
additional capital through short-term loans. While the Company believes that it
has adequate working capital to fund anticipated operations for fiscal 1997, it
believes it must obtain additional working capital for future fiscal periods.
See "LIQUIDITY AND CAPITAL RESOURCES."
7
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RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998, COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
The results of operations of the Company for the quarter ended March 31 always
reflect a significant loss, due to the fact that there are no substantial
revenues during this period, while some expenses at each of the Company's five
faire locations continue throughout the year, as do corporate expenses.
Operating expenses decreased $250,460 or 14%, from $1,745,100 in 1997 to
$1,494,640 in 1998. The primary cause of this decrease was a decrease of
$48,334 (6%) in salaries expenses due to reductions in personnel, a decrease of
128,499 (48%) in depreciation and amortization expenses and a decrease of
$74,936 (11%) in other operating expenses. The decrease in depreciation and
amortization is primarily the result of the Company standardizing the
depreciation lives used for buildings effective for the quarter ended June 30,
1997. Previously, depreciation was calculated based on an expected useful life
ranging from between 7 to 30 years to 15 years for temporary buildings and 30
years for permanent buildings. The decrease in other operating expenses is
primarily the result of management's efforts to reduce overall operating
expenses.
As a result of the foregoing, net operating loss (before interest charges and
other income) decreased $306,825 (17%) from a loss of ($1,753,546) for the 1997
period to a loss of ($1,446,721) for the 1998 period.
A 59% increase in interest expense from $91,432 in 1997 to $144,991 in 1998
resulted from an increase in the Company's borrowing levels throughout the 1998
period as compared to the 1997 period as well as an increase in the cost of
borrowed funds. The primary source of the other income in 1998 was $45,000
received for an easement on a faire site and a $19,000 lease termination fee
paid by the landlord to obtain an early termination of the lease for the
Company's Boulder, Colorado offices.
Net (loss) to common stockholders decreased $334,076 (18%), from a loss of
($1,828,359) for the 1997 period, to a loss of ($1,494,283) for the 1998 period.
Finally, net (loss) per common share decreased from a loss of ($.95) for the
1997 period to a loss of ($.72) for the 1998 period, based on 1,885,924 weighted
average shares outstanding during the 1997 period, and 2,067,525 weighted
average shares outstanding during the 1998 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit widened during the quarter ended March 31,
1998, from $204,821 at December 31, 1997 to $1,553,370 at March 31, 1998. The
Company's working capital requirements are greatest during the period from
January 1 through April 30, when it is incurring start-up expenses for its first
faires of the faire season, the Southern California and Virginia Faires. During
the first three months of fiscal 1998, the Company raised $448,000 of short-term
capital. These funds were provided by Charles S. Leavell ($100,000), Chairman
of the Board of Directors, two directors and two officers of the Company (an
aggregate of $198,000) and two other investors. The loans bear interest at 6%
per quarter and are secured by substantially all of the Company's assets other
than its real estate. The investors also were granted a five-year warrant to
purchase one share of common stock for each $2.50 loaned to the Company at an
exercise price of $1.50 per share. During April 1998, the Company obtained an
additional $50,000 pursuant to the short-term loan program from one investor.
While the Company believes it has adequate capital
8
<PAGE>
to fund anticipated operations for fiscal 1998, it believes it must obtain
additional working capital for future periods.
Reviewing the change in financial position over the quarter, current assets,
largely comprised of cash and prepaid expenses, decreased from $1,235,606 at
December 31, 1997 to $1,072,723 at March 31, 1998, a decrease of $162,883 or
13%. Of these amounts, cash and cash equivalents decreased from $590,022 at
December 31, 1997 to $237,103 at March 31, 1998. Prepaid expenses (expenses
incurred on behalf of the faires) increased from $480,320 at December 31, 1997
to $671,925 at March 31, 1998. These costs are expensed once the Faires are
operating.
Current liabilities increased from $1,440,427 at December 31, 1997, to
$2,626,093 at March 31, 1998, an increase of $1,185,666 or 82%. This increase
is due to an increase during the quarter in accounts payable and accrued
expenses of $422,212 as a result of the Company's decision to defer payments of
trade payables and to increased indebtedness during the quarter of $446,985
incurred to cover the Company's operating expenses prior to the opening of the
1998 faire season. Unearned income, which consists of the sale of admission
tickets to upcoming faires, and deposits received from craft vendors for future
faires, increased from $142,503 at December 31, 1997 to $458,972 at March 31,
1998.
Stockholders' Equity decreased from $3,573,758 at December 31, 1997 to
$2,126,299 at March 31, 1998, a decrease of $1,494,459 or 40%. This decrease
resulted from the net loss during the quarter.
Although inflation can potentially have an effect on financial results, during
1997 and the first three months of fiscal 1998 it caused no material affect on
the Company's operations, since the change in prices charged by the Company and
by Company's vendors has not been significant.
The Company has no significant commitment for capital expenses during the fiscal
year ending December 31, 1998.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
In addition to the other information contained in this report, prospective
investors should carefully consider the following factors in evaluating the
Company and its business.
RECENT LOSSES. The Company has incurred substantial operating losses since
fiscal 1995. In addition, the Company expects to incur a net loss for the
fiscal year ending December 31, 1998. There is no assurance that the Company
will return to profitability in any subsequent period. The New York and
Virginia Faires each operated at a loss during 1996 and 1997. If the
performance of these Faires does not improve in subsequent periods, the
Company's ability to achieve and sustain profitability in subsequent periods
will be adversely affected.
NEED FOR ADDITIONAL CAPITAL. The Company had a working capital deficit of
($1,553,370) as of March 31, 1998. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS." While the Company believes that
it has adequate capital to fund anticipated operations for fiscal 1998, it will
need additional working capital to sustain operations after that time.
Additional capital may be sought through borrowings or from additional equity
financing. Such additional equity financing may result in additional dilution
to investors. In any case, there can be no assurance that any additional
capital can be satisfactorily obtained if and when required.
9
<PAGE>
POSSIBLE SUSPENSION OF NORTHERN CALIFORNIA FAIRE. The Company operates its
Northern California Faire during the Fall of each year at a site in Novato,
California. While the Company does not have a written lease for this site for
1998, the owner of the site has indicated that it will be available although it
will be necessary to begin the faire four weeks earlier in 1998 than in 1997.
The Company understands that the owner of the site is seeking to develop the
site for commercial construction purposes, although the owner's efforts to do so
are currently being blocked by pending litigation in which the use of the site
for such purpose is being challenged. The Company is investigating new sites
for the Faire. There is no assurance that the Company will be successful in
locating a new site for the Northern California Faire. In addition, the Company
estimates that it could be required to spend from $500,000 to $1,000,000 for
development of a site prior to the opening of the Faire at a new site.
POSSIBLE RELOCATION OF SOUTHERN CALIFORNIA FAIRE. Since April 1994, the
Company has operated its Southern California Faire in Devore, California. The
Company believes that it either needs to obtain a long-term lease for the
current faire site or relocate the faire to another site for which a long-term
lease would be available. The Company is negotiating with the owner of this
faire site for a long-term lease for the site. This would allow the Company to
construct permanent structures on the site and significantly reduce setup cost
for this faire. As of the date of this report, the Company has not entered into
a long-term lease for the current faire site and there can be no assurance that
it will be able to do so.
COMPETITION. The Company faces significant competition from numerous
organizations throughout the country which offer Renaissance Faires and other
entertainment events, including amusement parks, theme parks, local and county
fairs and festivals, some of which possess significantly greater resources than
the Company and in many cases greater expertise and industry contacts. The
Company estimates that there are currently 20 major Renaissance Faires produced
each year. In addition, the Company estimates that there are 100 minor
Renaissance Faire events held throughout the United States each year, ranging in
duration from one day to two weekends.
LACK OF TRADEMARK PROTECTION. Because of the large number of existing
Renaissance Faires, the Company is not able to rely upon trademark or service
mark protection for the name "Renaissance Faire." As a result, there is no
protection against others using the name "Renaissance Faire" for the production
of entertainment events similar to those produced by the Company. The Company's
own Faires could be negatively impacted by association with substandard
productions.
PUBLIC LIABILITY AND INSURANCE. As a producer of a public entertainment
event, the Company has exposure for claims of personal injury and property
damage suffered by visitors to the Faires. To date, the Company has experienced
only minimal claims which it has been able to resolve without litigation. The
Company maintains comprehensive liability insurance which it considers to be
adequate against this risk; however, there can be no assurance that a
catastrophic event or claim which could result in damage or liability in excess
of this coverage will not occur.
DEPENDENCE UPON VENDORS. A substantial portion of the Company's revenues
generated at each Faire are derived from arrangements that the Company has with
vendors who construct elaborate booths at the Faires and sell a variety of food,
crafts and souvenirs. This arrangement consists of either a fixed rental paid
by the vendors to the Company or a percent of revenues. In either case, the
success of a Faire is dependent upon the Company's ability to attract
responsible vendors who sell high quality goods.
10
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SEASONALITY. The Company's Renaissance Faires are located in traditionally
seasonal areas which attract the greatest number of visitors during the warm
weather months in the spring, summer and early fall. Unless the Company
acquires or develops additional Faire sites in areas which are counter-seasonal
to the present sites located in temperate climates, the Company's revenues and
income will be highly concentrated in the six months ended September 30th of
each year.
DEPENDENCE UPON WEATHER. Each Renaissance Faire operated by the Company is
scheduled for a finite period, typically consecutive weekends during a seven to
nine-week period, which are determined substantially in advance in order to
facilitate advertising and other promotional efforts. The success of each Faire
is directly dependent upon public attendance, which is directly affected by
weather conditions. While each of the Company's faires, other than the Northern
and Southern California faires, are open, rain or shine, poor weather, or even
the forecast of poor weather, can result in substantial declines in attendance
and, as a result, loss of revenues. The Northern and Southern California faires
are closed if it is raining. Further, as the Renaissance Faires are outdoor
events, they are vulnerable to severe weather conditions that can cause damage
to the Faire's infrastructure and buildings, as well as injuries to patrons and
employees. Risks associated with the weather are beyond anyone's control but
have a direct and material impact upon the relative success or failure of a
given Faire.
LICENSING AND OTHER GOVERNMENTAL REGULATION. For each Faire operated by
the Company, it is necessary for the Company to apply for and obtain permits and
other licenses from local governmental authorities controlling the conduct of
the Faire, service of alcoholic beverages, service of food, health and
sanitation and other matters at the Faire sites. Each governmental jurisdiction
has its own regulatory requirements which can impose unforeseeable delays or
impediments in preparing for a Faire production. While the Company has been
able to obtain all necessary permits and licenses in the past, there can be no
assurance that future changes in governmental regulation or the adoption of more
stringent requirements may not have a material adverse impact upon the Company's
future operations.
FAIRE SITES. The Company's Northern and Southern California Faire sites
have been held pursuant to short-term leases. The Bristol Renaissance Faire and
the New York Faire are also operated on leased sites. It is expected that
future Faires that may be developed by the Company, if any, will also be
presented on leased sites. The terms and conditions of each lease will vary
from location and to a large extent are beyond the control of the Company.
Further, there can be no assurance that the Company will be able to continue to
lease existing Faire sites on terms acceptable to the Company, or be successful
in obtaining other sites on favorable locations. The Company's dependence upon
leasing Faire sites creates a substantial risk of fluctuation in the Company's
operations from year to year.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
11
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See Note 3 of the Notes to Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations for information regarding issuance of short-term
notes and warrants representing the right to acquire 199,200 shares of
the Company's common stock. These securities were issued without
registration under the Securities Act of 1933 in reliance upon Section
4(2) of the Act. No underwriters were involved in the issuance of
these securities.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of the Shareholders of the Company was held on
February 10, 1998 to consider a proposal to approve a one-for-five
reverse stock split of the Company's outstanding shares of common
stock. The reverse split was approved by a vote of 1,735,942 shares
for, 60,046 shares against and 4,880 shares abstaining. The reverse
split was effective on February 23, 1998. All share and per share
information in this report has been adjusted for the split.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company was not required to file a report on Form 8-K during the
quarter ended March 31, 1998.
Exhibit 10.1 Form of Loan and Security Agreement for 1998, including
form of Stock-Term Notes and form of Warrant to purchase common stock.
Exhibit 10.2 Employment Agreement dated February 6, 1998 between
Barbara Hope and Donald Gaiti.
Exhibit 10.3 Consulting and Warrant Compensation Agreement between
the Company and Wall Street Financial.
Exhibit 10.4 Lease dated January 21, 1998 by and between Attache
Publishing Services, Inc. and the Company.
Exhibit 27. Financial Data Schedule
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RENAISSANCE ENTERTAINMENT CORPORATION
Dated: May 13, 1998
------------ ------------------------------------------
Charles S. Leavell, Chief Executive and
Chief Financial Officer
------------------------------------------
Sue E. Brophy, Chief Accounting Officer
13
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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is made as of February __, 1998, by
Renaissance Entertainment Corporation, certain individuals and entities
identified below as the "Lenders," and the "Agent" identified below solely in
his capacity as agent for the Lenders.
RECITALS
A. Renaissance Entertainment Corporation is in the business of owning,
constructing and operating Renaissance Faires at various locations in the United
States.
B. Renaissance Entertainment Corporation anticipates that it will need
certain short-term funding for working capital purposes during 1998.
C. Renaissance Entertainment Corporation has made diligent efforts to
obtain such short-term funding from non-related parties, but without success.
D. Renaissance Entertainment Corporation has requested, and the persons
and individuals identified below as the "Lenders" have agreed to provide, such
short-term funding subject to the terms and conditions set forth below.
AGREEMENT
ACCORDINGLY, the parties agree as follows:
1. DEFINITIONS.
The following terms have the meanings set forth below:
"AGENT" means _______________, solely in his capacity as agent for the
Lenders under this Agreement.
"AGREEMENT" means this Loan and Security Agreement, as amended from time to
time.
"CLOSING" means the closing of the Loans under Section 2 below.
"COLLATERAL" means collectively all of REC's right, title and interest in
and to the following property, whether now owned or existing or hereafter
acquired or coming into existence and wherever now or hereafter located: (a)
money, deposit accounts, and all other forms of revenue, including gate
admissions and receipts and revenues and proceeds
<PAGE>
from the sales of merchandise, food and beverages, arising from the operation
of REC's Renaissance Faires, wherever located; (b) accounts, documents,
instruments, investment property, chattel paper, general intangibles,
inventory, equipment, and fixtures; (c) accessions, additions and
improvements to, replacements of, and substitutions for any of the foregoing;
(d) proceeds of any of the foregoing, including proceeds of policies of
insurance covering any of the foregoing; and (e) books, records and data in
any form relating to any of the foregoing.
"COMMITMENT" means the amount of the Loan that each Lender severally agrees
to make to REC under this Agreement as specified on SCHEDULE 1 to this
Agreement, and "COMMITMENTS" means collectively all of such Commitments. Each
Commitment must be in an amount that is an increment of Fifty Thousand and
No/100 Dollars ($50,000.00).
"DOCUMENTS" means collectively this Agreement, the Notes and the Warrant
Agreements.
"EVENT OF DEFAULT" has the meaning specified in Section 8 below.
"LENDER" means an individual or entity identified on SCHEDULE 1 to this
Agreement, and "LENDERS" means collectively and severally all of such Lenders.
"LOAN" means the loan made by a Lender to REC under this Agreement in the
amount of that Lender's Commitment, and "LOANS" means collectively all of such
Loans.
"NOTE" means a Promissory Note in the form attached as EXHIBIT A to this
Agreement issued by REC to a Lender under this Agreement, as amended, extended,
renewed or replaced from time to time, and "NOTES" means collectively all of
such Notes.
"SECURITY INTEREST" means the security interest in the Collateral granted
to each Lender under Section 4 below, and "SECURITY INTERESTS" means
collectively all of such Security Interests.
"OBLIGATIONS" means collectively all obligations, debts and liabilities of
REC to the Lenders and each of them under this Agreement and the Notes.
"REC" means Renaissance Entertainment Corporation.
"WARRANT AGREEMENT" means a Warrant Agreement between REC and a Lender in
the form attached as EXHIBIT B to this Agreement, as amended from time to time,
and "WARRANT AGREEMENTS" means collectively all such Warrant Agreements.
Terms used, but not defined, in this Agreement have the meanings specified in
the Uniform Commercial Code as enacted in the State of Colorado, if defined
therein.
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2. LOANS.
2.1 At the Closing and subject to the satisfaction or waiver in writing of
the preconditions specified in Section 3 below, each Lender will make that
Lender's Loan to REC in immediately available funds.
2.2 At the Closing and subject to the satisfaction or waiver in writing of
the preconditions specified in Section 3 below, REC will execute and deliver to
each Lender a Note in the principal amount of that Lender's Loan. Each Note
will bear simple interest at the rate of twenty-four percent (24%) per annum on
the principal amount thereof and will mature on August 31, 1998.
2.3 At the Closing and subject to the satisfaction or waiver in writing of
the preconditions specified in Section 3 below, REC will execute and deliver to
each Lender a Warrant Agreement granting that Lender warrants to purchase one
share of REC's common stock at a price equal to the average closing bid price
for REC's common stock for the five business days immediately preceding the
Closing for each Five Dollars ($5.00) of the principal amount of that Lender's
Loan.
2.4 REC will use the proceeds of the Loans only for working capital
purposes and for upgrades to its computer systems.
3. PRECONDITIONS TO CLOSING.
3.1 The obligations of Lenders and REC to close the Loans under Section 2
above are subject to the satisfaction of each of the following preconditions,
unless any such precondition is waived in writing by each of Lenders and REC
prior to the Closing:
3.1.1 Lenders have made Commitments aggregating not less than
Four Hundred Thousand and No/100 Dollars ($400,000.00); and
3.1.2 There is no automatic stay in bankruptcy, temporary
restraining order, injunction, or other order of any court binding
upon REC that in any way prohibits, conditions, restricts or restrains
REC from issuing the Notes or the Warrant Agreements to Lenders or
otherwise performing REC's obligations under the Documents.
3.2 The obligations of Lenders to close the Loans under Section 2 above
are subject to the satisfaction of each of the following additional
preconditions, unless any such precondition is waived in writing by each of
Lenders prior to the Closing:
3.2.1 REC executes and delivers to each Lender that Lender's
Note in the principal amount of that Lender's Loan; and
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3.2.2 REC executes and delivers to each Lender that Lender's
Warrant Agreement; and
3.2.3 REC has filed all Uniform Commercial Code financing
statements required to perfect the Security Interests in the
Collateral (except Collateral constituting fixtures) as to each
Lender, to the extent the Security Interests may be perfected by such
filings; and
3.2.4 No Event of Default has occurred and is continuing
under this Agreement.
3.3 The obligation of REC to close the Loans under Section 2 above is
subject to the satisfaction of each of the following preconditions, unless any
such precondition is waived in writing by REC prior to the Closing:
3.3.1 Each Lender has made that Lender's Loan in immediately
available funds.
4. SECURITY INTERESTS.
4.1 To secure the payment and performance of the Obligations, REC grants
to each Lender an undivided Security Interest in the Collateral. The Security
Interests continue in effect until this Agreement is terminated under Section 13
below.
4.2 To secure the payment and performance of the Obligations, REC assigns
to each Lender all money (including proceeds of insurance and refunds of
unearned premiums) due or to become due with respect to, and all other rights of
REC with respect to, all policies of insurance covering the Collateral, and this
assignment constitutes a part of each Lender's Security Interest. REC directs
the issuer of any such insurance to pay all such money directly to each Lender.
4.3 Regardless of any priority otherwise available to any Lender by law or
agreement, other than this Agreement, the Security Interests granted to Lenders
under this Section 4 are pro rata and of co-equal priority.
4.4 The Security Interests may be enforced by Lenders only as and to the
extent provided in Section 10 of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF REC.
REC makes the following representations and warranties to Lenders with
knowledge that Lenders are reasonably relying upon these representations and
warranties in entering into the Documents:
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5.1 REC has full power and authority to enter into the Documents and to
carry out the transactions contemplated thereby; and each of the Documents
constitutes the valid and binding obligation of REC and is enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles of general application; and
5.2 REC is (i) a corporation duly organized and existing and in good
standing under the laws of the State of Colorado, (ii) qualified to do business
in each state in which the manner in which it conducts its business requires
such qualification, and (iii) not in default under or in violation of any of the
provisions of its Articles of Incorporation or By-Laws; and
5.3 Neither the execution or delivery of the Documents nor compliance with
the terms and provisions of the Documents by REC will conflict with or result in
a breach or violation of any of the terms, conditions, or provisions of the
Articles of Incorporation or By-Laws of REC or of the terms and provisions of
any indenture or any other agreement to which REC may be subject, or to any
ruling of any court or governmental authority binding upon REC.
The foregoing representations and warranties will survive the execution,
delivery and performance of the Documents and the creation and payment and
performance of the Obligations.
6. AFFIRMATIVE COVENANTS OF REC.
REC covenants with Lenders that, until all Obligations have been paid and
performed in full and this Agreement has been terminated, REC will perform and
observe all of the following:
6.1 REC will insure itself and all of its insurable properties to such
extent and against such hazards and liabilities as is commonly done by
businesses similarly situated, and will furnish to any Lender, within ten (10)
days after written request from that Lender, full information concerning such
insurance; and
6.2 REC will provide to any Lender forthwith upon that Lender's written
request, such information about the financial condition, budget, properties and
operations of REC as that Lender may from time to time reasonably request; and
6.3 REC will:
6.3.1 At all times keep true and complete financial records
in accordance with generally accepted accounting principles
consistently applied; and
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6.3.2 At all times, permit any Lender to examine any or all
of its financial records and to make excerpts therefrom and
transcripts thereof and permit any Lender to occupy such space as it
needs to examine and inspect REC's records; and
6.3.3 Maintain its books and records at its principal office
now located at the address specified below its signature at the end of
this Agreement; and
6.4 REC will maintain the Renaissance Faires and other fixed and operating
assets in good condition and repair, subject only to normal wear and tear, and
any Lender will have the right to inspect the same from time to time; and
6.5 REC will preserve its corporate existence in good standing and will be
and remain qualified to do business as a foreign corporation in good standing in
all states in which it is required to be so qualified and will maintain all
permits, licenses and other similar matters necessary or appropriate for its
business; and
6.6 REC will cause its President, or another officer designated by the
President of REC, to notify each Lender in writing, within no more than fifteen
(15) days (and without the benefit of any grace period afforded in any provision
of this Agreement) after REC or any of its officers or directors learns of any
of the following:
6.6.1 The existence or occurrence of any Event of Default
under this Agreement; or
6.6.2 Any representation or warranty made in the Documents or
any of them, or in any related instrument or writing, was, for any
reason, in any material respect not true and complete or was
misleading when made; and
6.7 REC will timely comply with all of its respective agreements and valid
obligations, the breach of which would have a materially adverse effect on REC,
to and with all parties, and will not commit or permit to be committed any
material default of any term thereunder (excepting only those defaults, other
than defaults on the Obligations, that are contested in good faith and
concerning which appropriate and timely legal proceedings are commenced or other
action taken to stay the execution or enforcement thereof).
7. NEGATIVE COVENANTS OF REC.
REC covenants with Lenders that, until all Obligations have been paid and
performed in full and this Agreement has been terminated, REC will observe and
comply with each of the following provisions and will not act in contravention
of the following without each Lender's prior written consent:
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7.1 REC will not incur, create, assume or suffer to exist any mortgage,
pledge, lien, charge or other encumbrance of any nature whatsoever on any of the
Collateral, except:
7.1.1 The Security Interests granted by REC to Lenders; and
7.1.2 Any mortgage, pledge, lien, charge or other encumbrance
that exists on the date of this Agreement; and
7.1.3 Liens incurred in the ordinary course of business and
imposed by law, such as artisans' and carriers' liens, not then due
and payable; and
7.1.4 Judgment liens existing during the prosecution of an
appeal and with respect to which REC has secured a stay of execution
pending such appeal; and
7.1.5 Pledges or security deposits in the ordinary course of
business under workmen's compensation laws, unemployment insurance
laws or similar legislation and good faith security deposits in the
ordinary course of business to secure public or statutory obligations
of REC or to secure appeal bonds to which REC is a party; and
7.2 REC will not purchase, acquire, redeem or retire any of its capital
stock or rights with respect thereto; and
7.3 REC will not:
7.3.1 Sell, lease, assign, or otherwise transfer any material
part of its assets, except in the ordinary course of its business; and
7.3.2 Sell, assign or otherwise transfer or dispose of, with
or without recourse, any of its accounts or accounts receivable,
contracts, or notes receivable, except for endorsement of negotiable
instruments for collection in the ordinary course of its business; and
7.3.3 Liquidate, dissolve, or take any action with a view
toward liquidation or dissolution; and
7.4 REC will not purchase all or substantially all of the assets of any
corporation or other business enterprise or acquire any capital stock or other
securities or interest in another corporation, entity or business; and
7.5 REC will not materially change the nature of its business; and
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7.6 REC will not prepay prior to its respective presently existing
maturities any debt(s) or liability(ies), other than to Lenders and trade
accounts payable incurred in the ordinary course of business; and
7.7 Except in the ordinary course of its business, REC will not guarantee
or become directly or contingently liable on any note or other evidence of
indebtedness, letter of credit or contract of any kind for the benefit of
another person, or enter into any contract or agreement requiring it to make
payments regardless of the performance by the other party or that have the
effect of constituting a guarantee; and
7.8 REC will not make any loan or advance any funds whatsoever to any
business, entity, party or individual, except in the ordinary course of
business; and
7.9 REC will not declare or pay any dividends on its stock of any kind,
whether in cash, property or stock.
8. EVENT OF DEFAULT.
The occurrence of any one or more of the following events will constitute
an "Event of Default" under this Agreement and each of the Notes:
8.1 REC fails to pay or perform any of the payment Obligations when due or
(if payable on demand) on demand; or
8.2 REC fails to timely observe or perform any other material covenant or
agreement specified in any of the Documents; or
8.3 Any representation or warranty by REC set forth in this Agreement or
in any Warrant Agreement or in any financial statement or report proves to have
been incorrect, false or misleading in any material respect when made; or
8.4 A garnishment, summons, or writ of attachment is issued against or
served upon any Lender for the attachment of any property of REC or any
indebtedness owing to REC and such garnishment, summons, or writ of attachment
has not been released within thirty (30) days; or
8.5 REC shall (i) be or become insolvent (however defined under applicable
law); or (ii) voluntarily file, or have filed against it involuntarily, a
petition under the United States Bankruptcy Code; or (iii) suffer the
appointment of a receiver, custodian, trustee, or liquidator, voluntarily or
involuntarily, for all or any portion of its assets or property; or
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8.6 REC shall (i) suffer the appointment of a receiver, custodian,
trustee, or liquidator, voluntarily or involuntarily, for the corporation; or
(ii) be dissolved or liquidated; or
8.7 A judgment, decree or order for the payment of money is outstanding
against REC and has been outstanding for more than thirty (30) days from the
date of its entry and has not been discharged in full or stayed; or
8.8 REC at any time suffers a material adverse change in its financial,
operating or business condition, properties or assets.
9. REMEDIES UPON AN EVENT OF DEFAULT.
In the manner and to the extent provided in Section 10 below, upon the
occurrence of an Event of Default, Lenders may:
9.1 Declare any or all unmatured payment Obligations to be immediately due
and payable, and the same will thereupon be immediately due and payable, without
presentment or other notice or demand; and
9.2 Exercise and enforce any or all rights and remedies available under
this Agreement, the Notes or any of them; and
9.3 Exercise and enforce any or all rights and remedies available upon
default to a secured party under the Uniform Commercial Code and other
applicable law, and REC will make the Collateral available to the Agent at a
place or places acceptable to the Agent; and
9.4 Exercise and enforce any or all other rights or remedies available to
Lenders by law or agreement against the Collateral, against REC, or against any
other person or property.
Mere delay or failure to act will not preclude the exercise or enforcement of
any of Lenders' rights or remedies. All rights and remedies of Lenders will be
cumulative to the fullest extent allowed by law and may be exercised or enforced
singularly or concurrently, at the Agent's option, and the exercise or
enforcement of any one such right or remedy will neither be a condition to nor
bar the exercise or enforcement of any other. All advances, charges, costs and
expenses, including reasonable attorneys' fees, incurred or paid by Lenders or
the Agent or any of them in exercising or enforcing any right, power or remedy
conferred by any of this Agreement and the Notes or in the enforcement thereof,
or in the enforcement of any of the Obligations, or in connection with the
insolvency or bankruptcy of REC, and in all cases whether suit be brought or
not, will be paid to the respective Lenders and the Agent by REC immediately
upon demand by the respective Lenders or the Agent with interest thereon until
paid at the rate set forth in the Notes.
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10. ENFORCEMENT OF REMEDIES.
10.1 Upon the occurrence of an Event of Default, any Lender may exercise
the remedies specified in Paragraph 9.1 above with respect only to the payment
Obligations due that Lender and may demand immediate payment by REC of such
payment Obligations. The Lender making such demand for payment must give notice
of such demand to all other Lenders and to the Agent within forty-eight (48)
hours after making such demand upon REC.
10.2 Except as provided in Paragraph 10.1 above, Lenders may not,
individually or collectively, take any action to collect or enforce any of the
Obligations or the Notes or the Security Interests or this Agreement except in
compliance with this Paragraph 10.2.
10.2.1 If all principal and interest due under the Notes have
not been paid in full by August 31, 1998, then the Agent will enforce
Lenders' rights and remedies as specified in Subparagraph 10.2.3
below; provided, however, that such enforcement action need not be
taken if Lenders holding eighty-five percent (85%) or more of the
outstanding principal amount of the Notes vote to the contrary.
10.2.2 If an Event of Default occurs and is continuing,
Lenders holding at least sixty-five percent (65%) of the outstanding
principal amount of the Notes may, by notice to the Agent, instruct
the Agent to enforce Lenders' rights and remedies as specified in
Subparagraph 10.2.3 below.
10.2.3 Upon satisfaction of the preconditions specified in
Subparagraphs 10.2.1 or 10.2.2 above, the Agent will commence and
diligently prosecute on behalf of all Lenders one or more of the
following collection actions as the Agent, in his sole and absolute
discretion, deems necessary or appropriate to obtain satisfaction of
the Obligations:
(a) Take possession of, manage, obtain a receiver for,
foreclose upon, collect, and liquidate all or any portion of
the Collateral, and exercise and enforce all rights and
remedies of a secured party under this Agreement, the Notes,
and applicable law; and
(b) Exercise and enforce all other rights and remedies
under or with respect to this Agreement and the Notes,
including the right to commence or to forbear from
commencing suit to enforce the Obligations and the right to
appear and participate on behalf of Lenders, file proofs of
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claim on behalf of Lenders, and otherwise enforce the
Security Interests and other rights and remedies of Lenders
in any bankruptcy or insolvency proceeding concerning REC.
Notwithstanding any other provision of this Section 10, the Agent may
not modify the interest rate or waive any principal or interest
payments required under any Note without the prior written consent of
the Lender holding each Note affected thereby.
10.2.4 REC irrevocably appoints the Agent (which appointment
is coupled with an interest) as REC's attorney-in-fact, in REC's name
after the occurrence of an Event of Default, to inscribe all necessary
or appropriate endorsements on the items of Collateral, to execute and
deliver proofs of claim, to receive money, to endorse checks and other
instruments representing payment, and to adjust, litigate, compromise
or release any claim against any account debtor on or insurer of any
of the Collateral.
10.2.5 Each Lender agrees that all payments with respect to
the Notes (whether as a prepayment or otherwise), including all
proceeds from collection efforts, will be applied as follows:
(a) first, to the payment of all expenses of
collection incurred in connection with any collection
activities permitted under this Agreement; and
(b) second, to each Lender on a pro rata basis for the
payment of principal and accrued interest on the Notes.
Each Lender will receive a pro rata amount equal to the then
available proceeds multiplied by the following ratio: the
numerator of which is equal to the outstanding accrued
interest and principal owing under the Note of such Lender,
and the denominator of which is the aggregate accrued
interest and outstanding principal then owing under all
Notes.
If any Lender receives any payments or other amounts in contravention
of the terms and provisions of this Agreement, such amounts will be
held in trust for the benefit of the other Lenders for redistribution
and payment to Lenders as required hereunder.
10.2.6 If the Agent is permitted to exercise any collection
rights or other remedies under this Agreement, then upon the request
of the Agent, each Lender will contribute its pro rata percentage
toward the payment of any reasonable costs and expenses incurred in
connection therewith,
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including any related attorneys' fees. In the event any Lender fails
promptly to provide funds for the payment of such amounts, then the other
Lenders are authorized to supply the same and will be reimbursed therefor
from the first funds available for the account of such defaulting Lender.
10.3. Lenders holding at least eighty-five percent (85%) of the
outstanding principal amount of the Notes may, by written consent:
10.3.1 Subordinate the indebtedness represented by the Notes,
including any liability of REC resulting from a default in the
performance of its obligations under the Notes, to the extent set
forth in such written consent; and
10.3.2 Subordinate any Security Interest to the extent set
forth in such written consent; and
10.3.3 Terminate and release any Security Interest or any
Collateral.
10.4 The priority or parity of the rights and claims of the Lenders as
general creditors of REC (rather than as secured parties) will not be affected
or impaired under this Agreement.
10.5 Except as expressly provided herein, the Agent and Lenders will have
no duty under this Agreement to preserve, protect, care for, insure, take
possession of, collect, dispose of, or otherwise realize upon any of the
Collateral.
10.6 Lenders and REC agree to execute, deliver, or endorse any and all
instruments, documents, assignments, financing statements, and other agreements
and writings which may at any time be required to effectuate the terms,
conditions, and rights under this Agreement.
10.7 No Lender will be required to indemnify or hold harmless any other
Lender from and against any and all loss, damage, liability, cost, and expense
to which such Lender or its agents may become subject in connection with any and
all actions taken, or not taken, pursuant to this Agreement by such Lender,
except for the gross negligence or willful misconduct of such Lender.
10.8 The Agent, in his capacity as the Agent, will have no duty,
responsibility or obligation other than as is specifically set forth in this
Section 10. If the Agent also is a Lender, nothing in this Section 10 will
affect his right to vote under this Section 10 in his capacity as a Lender.
10.9 The Agent may exclusively rely upon and will be protected in acting
upon any statement, certificate, notice, request, consent, order or other
document believed by
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him to be genuine and to have been signed or presented by the property party
or parties under this Agreement. The Agent will be under no duty or
obligation to ascertain the accuracy or correctness of any matter set forth
in any notice received by him pursuant to the terms of this Agreement and
will be entitled to fully rely on any such notice alone, without further
documentation or inquiry. The Agent may retain counsel in respect of any
questions arising under this Agreement and the Agent will not be liable for
any action taken or omitted in good faith on advice of such counsel. The
termination of this Agreement will constitute full and complete discharge of
all obligations of the Agent under this Agreement.
10.10 Lenders and REC will indemnify and hold harmless the Agent from
and against any and all loss, damage, liability, cost, and expense to which the
Agent may become subject in connection with any and all actions taken, or not
taken, pursuant to this Agreement by the Agent, except for the gross negligence
or willful misconduct of the Agent.
11. CLOSING.
The Closing of the Loans under Section 2 above will occur at the offices of
REC in Boulder, Colorado on March 16, 1998, or at such other place or time as
REC and all Lenders may agree.
12. NOTICES.
All notices and other communications under this Agreement and the Notes
must be in writing and must be (i) personally delivered, or (ii) sent by
overnight United States express mail, postage prepaid, or (iii) sent by
overnight delivery service, or (iv) transmitted by telecopy, in each case
addressed to the party to whom notice is being given at its address, or, if
telecopied, transmitted to that party at its telecopier number, set forth
beneath its signature at the end of this Agreement, or, as to each party at such
other address or telecopier number as may hereafter be designated in a notice by
that party to the other parties which complies with the terms of this Section.
All such notices or other communications will be deemed to have been given on
(i) the date received if delivered personally, or (ii) the day after it is
mailed if mailed by overnight United States express mail or by overnight
delivery service, or (iii) the date of transmission if delivered by telecopy.
13. TERMINATION.
Provided that no Event of Default has occurred and is continuing, this
Agreement will terminate upon receipt by all Lenders of payment in full of all
principal, interest and other amounts due under the Notes, this Agreement, and
all other Obligations then due and unpaid. Thereafter, Lenders, at the request
and expense of REC, will execute and deliver to REC a proper instrument or
instruments acknowledging satisfaction and
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termination of this Agreement, the Notes, the Security Interests, and any
related financing statements.
14. MISCELLANEOUS.
14.1 This Agreement may not be waived, modified, or amended except by a
written instrument signed by the parties hereto. Any waiver signed by any
Lender will be effective only in the specific instance and for the specific
purpose given.
14.2 This Agreement may not be assigned by REC or the Agent without the
prior written consent of all Lenders.
14.3 This Agreement is binding upon and will inure to the benefit of the
parties hereto and their respective successors, assigns, and personal
representatives.
14.4 This Agreement has been entered into in Boulder, Colorado and will be
governed by and construed and enforced in accordance with the laws of the State
of Colorado. The parties agree that all disputes in any way relating to the
Documents or the transactions contemplated in the Documents will be venued in
the state or federal district courts in the State of Colorado.
14.5 If any provision of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability will not affect other
provisions or applications which can be given effect and this Agreement will be
construed as if the unlawful or unenforceable provision or application had never
been contained herein or prescribed hereby.
14.6 The headings in this Agreement are for convenience of reference only
and do not alter or affect any provision hereof.
14.7 This Agreement may be executed in any number of counterparts, each of
which will be deemed an original but all of which together will constitute one
and the same instrument.
14.8 Lenders and the Agent each acknowledge that Gray, Plant, Mooty, Mooty
& Bennett, P.A., has acted as counsel for REC in connection with the negotiation
and preparation of the Documents and that Gray, Plant, Mooty, Mooty & Bennett,
P.A., has acted and will act as counsel only for REC in all matters relating to
the Documents and all transactions contemplated thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AGENT: REC:
RENAISSANCE ENTERTAINMENT
CORPORATION
By
- ---------------------------------- ---------------------------------
Title
- ---------------------------------- -----------------------------
Telecopier: 4410 Arapahoe Avenue, Suite 200
----------------------- Boulder, CO 80303
Attention: James McDonald
Telecopier: 303 444-8365
LENDERS:
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Telecopier:
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Telecopier:
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Telecopier:
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Telecopier:
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Telecopier:
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Telecopier:
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LOAN AND SECURITY AGREEMENT
SCHEDULE 1
LENDERS
LENDER COMMITMENT
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LOAN AND SECURITY AGREEMENT
EXHIBIT A
NOTE
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PROMISSORY NOTE
$_______________ ______________, 1998
FOR VALUE RECEIVED, Renaissance Entertainment Corporation ("Maker"), promises to
pay to ____________________________, or order, at 4410 Arapahoe Avenue, Suite
200, Boulder, Colorado, or such other place as the holder of this Note may
designate in writing to Maker, the principal sum of ______________________
Dollars ($__________), together with simple interest on the unpaid principal
balance from the date of this Note until fully paid at the rate of twenty-four
percent (24%) per annum. Principal and interest are due and payable in lawful
money of the United States of America.
Principal and interest are due and payable in nine (9) consecutive weekly
installments in the amount of _______________________________Dollars
($_________) each, commencing on July 1, 1998, and continuing on each Wednesday
thereafter through and including August 26, 1998, and on August 31, 1998, the
entire unpaid principal balance and all accrued but unpaid interest under this
Note will be immediately due and payable. Each weekly installment payment will
be applied first to accrued but unpaid interest and the remainder to principal.
This Note may be fully or partially prepaid at any time during the term of this
Note without penalty or premium. Any prepayment will be applied first to
accrued but unpaid interest and the remainder to the principal portions of the
weekly installments due under this Note in the order the weekly installments
become due.
Maker waives presentment, dishonor, protest, demand, diligence, notice of
protest, notice of demand, notice of dishonor, notice of nonpayment, and any
other notice of any kind otherwise required by law in connection with the
delivery, acceptance or performance of this Note and expressly agrees that this
Note, or any payment hereunder, may be extended or subordinated (by forbearance
or otherwise) at any time, without in any way affecting the liability of Maker.
This Note is issued subject to and is secured by the property described in the
Loan and Security Agreement dated ___________, 1998 ("Agreement"). Upon the
occurrence of any "Event of Default," as that term is defined in the Agreement,
the entire principal balance and accrued but unpaid interest will at once become
due and payable, without presentment or other notice or demand, at the option of
the holder of this Note. All other aspects of the default, enforcement, and
collection of this Note are subject to the terms of the Agreement.
This Note is governed by and will be construed and enforced according to the
laws of the State of Colorado.
RENAISSANCE ENTERTAINMENT CORPORATION
By
-----------------------------------
Its
--------------------------------
<PAGE>
LOAN AND SECURITY AGREEMENT
EXHIBIT B
WARRANT AGREEMENT
<PAGE>
No. W-STL-__
Warrant to
Purchase _______
Shares
WARRANT TO PURCHASE COMMON STOCK OF
RENAISSANCE ENTERTAINMENT CORPORATION
THIS CERTIFIES THAT for value received ___________________ is entitled,
subject to the terms and conditions hereinafter set forth, to purchase from
RENAISSANCE ENTERTAINMENT CORPORATION, a Colorado corporation (the "Company"),
_______ fully paid and non-assessable shares of Common Stock of the Company
(herein called the "Common Stock"), upon presentation and surrender of this
Warrant with the Subscription Form duly executed, at any time during the term
hereof, at the principal office of the Company or at such other office as shall
have theretofore been designated by the Company by notice pursuant hereto and
upon payment therefor of the Purchase Price, in lawful money of the United
States of America, determined as set forth below. The term of this Warrant
shall commence on the date hereof, and terminate, if not exercised prior
thereto, at 5:00 p.m. Mountain Time, on March 1, 2003 (the "Expiration Date").
This Warrant is one of a series of Warrants issued pursuant to that certain
Loan Agreement dated ______________, 1998, (the "Loan Agreement").
This Warrant is subject to the following terms and conditions:
1. The purchase rights represented by this Warrant are exercisable at any
time prior to 5:00 p.m. Mountain Time on the Expiration Date, at the option of
the registered holder hereof (the "Holder"), in whole or in part (but not as to
a fractional share of Common Stock). In the case of the purchase of less than
all the shares purchasable under this Warrant, the Company shall cancel this
Warrant upon the surrender hereof and shall execute and deliver a new Warrant of
like tenor for the balance of the shares purchasable hereunder.
2. The purchase price for each share of Common Stock purchasable pursuant
to the exercise of this Warrant shall be _________________________ ($____)
(price reflects one-for-five reverse stock split effective February 23, 1998)
per share (the "Initial Purchase Price") or the adjusted price, if applicable,
determined as set forth in Section 9 hereof. The Initial Purchase Price, and
from time to time the number of shares of Common Stock subject to purchase
hereunder are subject to adjustment in certain circumstances provided for below.
The purchase price, as defined above, is hereinafter referred to as the
"Purchase Price".
(a) In case the Company shall (i) pay a dividend in shares of
its capital stock (other than an issuance of shares of capital stock
to holders of Common Stock who have elected to receive a dividend in
shares in lieu of cash), (ii) subdivide its outstanding shares of
Common Stock, (iii) reduce, consolidate or
<PAGE>
combine its outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its shares of Common Stock
any shares of the Company, the number of shares of Common Stock issuable
upon exercise of this Warrant shall be the number of shares of Common
Stock of the Company which the Warrant Holder would have owned or would
have been entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior to the
happening of such event. Such adjustment shall be made successively
whenever any such effective date or record date shall occur. An
adjustment made pursuant to this subsection (a) shall become effective
retroactively, immediately after the record date in the case of a
dividend and shall become effective immediately after the effective date
in the case of a subdivision, reduction, consolidation, combination or
reclassification.
(b) If the Company shall at any time issue or sell or be deemed
pursuant to the provisions of subsections 2(c) and (d) hereof to have
issued or sold shares of its Common Stock
for consideration per share less than the Initial Purchase Price then
in effect with respect to such Common Stock, then the Initial Purchase
Price shall be reduced by multiplying it by a fraction, the numerator
of which equals the number of shares of Common Stock outstanding prior
to the sale or issuance plus the number of shares of Common Stock
which would have been issued in the transaction if the Initial
Purchase Price had been applied, and the denominator of which equals
the number of shares of Common Stock outstanding after the sale or
issuance plus the number of shares of Common Stock actually issued in
the transaction.
(c) In case at any time after the date hereof the Company shall
in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (such rights or
options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible
Securities") at an option or conversion price per share of Common
Stock (determined by dividing: (i) the total amount, if any, received
or receivable by the Company as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable upon the exercise of such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock of the Company, issuable upon the exercise of such Options and
in the case of Convertible Securities, upon conversion thereof) less
than the Initial Purchase Price then in effect with respect to such
Common Stock, then the total maximum number of shares of Common Stock
issuable upon the exercise and conversion of such Options and
Convertible Securities shall be deemed to be outstanding and to have
been issued and sold by the Company as of the date of the issue or
sale of the
-2-
<PAGE>
Options, for such price per share. No sale, issuance or transfer of
shares of Common Stock shall be deemed to have been made upon the actual
issuance of such Common Stock except as otherwise provided in subsection
2(e) hereof.
(d) In case at any time after the date hereof the Company shall
in any manner issue or sell (whether directly or by assumption in
merger or otherwise) any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable,
and the price per share of Common Stock issuable upon such conversion
or exchange (determined by dividing: (i) the total amount received or
receivable by the Company, as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Initial Purchase
Price then in effect with respect to such Common Stock, then the total
maximum number of shares of Common Stock issuable upon conversion of
all such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Company as of the date of the
issue or sale of the Convertible Securities, for such price per share.
No sale, issuance or transfer of shares of Common Stock shall be
deemed to have been made upon the actual issuance of such Common Stock
except as otherwise provided in subsection 2(e) hereof.
(e) If the purchase price payable or number of shares of Common
Stock subject to purchase as provided for in any Options referred to
in subsection 2(c) hereof, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities
referred to in subsections 2(c) or (d), or the rate at which any
Convertible Securities referred to in subsections 2(c) or (d) are
convertible into Common Stock shall change so as to reduce the deemed
sale price of Common Stock previously calculated under subsections
2(c) and/or (d), then a sale of shares of Common Stock shall be deemed
to have occurred for the purposes of subsections 2(c) and/or (d), as
applicable, with appropriate adjustments to be made to the number of
shares of Common Stock deemed to have been sold to reflect the prior
related deemed sale and such adjustments by the adjustment of the
Initial Purchase Rate and Initial Purchase Price pursuant to
subsections 2(c) or (d), as applicable.
(f) In case of any consolidation of the Company with or merger
of the Company with or into another corporation or in case of any
sale, transfer or lease to another corporation of all or substantially
all of the property of the Company, the Company or such successor or
purchasing corporation, as the case may be, shall execute an agreement
that the Holder of a Warrant shall have the right thereafter upon
payment of the Initial Purchase Price in effect immediately prior to
such action to purchase upon exercise of the Warrant the kind and
amount of shares and other securities and property which the Holder
would have owned or
-3-
<PAGE>
would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had the Warrant been
exercised immediately prior to such action. The Company shall give
prompt written notice of the execution of any such agreement to the
Holder of each Warrant at the address of such Holder as shown on the
records of the Company. Such agreement shall provide for subsequent
adjustments, which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this section 2, after the happening
of such consolidation, merger, sale, transfer or lease. The provisions
of this subsection 2(f) shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
(g) The provisions of this section 2 shall not apply to any
currently outstanding securities of the Company or any management
stock grants or sales, stock options or shares of Common Stock issued
upon exercise of stock options issued to officers, directors,
employees or consultants of the Company pursuant to a plan heretofore
adopted and approved by the Board of Directors of the Company.
(h) Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
issuance of shares of Common Stock, then with respect to any Warrants
which then remain outstanding, the Initial Purchase Price shall be
readjusted to the Initial Purchase Price which would have prevailed
absent the adjustment made as a result of the issuance of such Options
or Convertible Securities.
(i) In case any Options shall be issued in connection with the
issue or sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall
be deemed to have been issued without consideration.
(j) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received therefor by the Company. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair market value of such consideration, as determined by the Board of
Directors of the Company.
3. In case at any time:
(a) The Company shall declare any cash dividend on its Common
Stock at a rate in excess of the rate of the last cash dividend
theretofore paid;
-4-
<PAGE>
(b) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common stock;
(c) The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights;
(d) There shall be any capital reorganization, or
reclassification of the capital stock of the Company or consolidation
or merger of the Company with, or sales of all or substantially all of
its assets to, another corporation; or
(e) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written notice,
by first class mail, postage prepaid, addressed to the Holder at the address of
such holder as shown on the books of the Company, of the date on which (1) the
books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights, or (2) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, as the case may be. Such written notice shall be
given at least 20 days prior to the action in question and not less than 20 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto.
4. If any event occurs as to which, in the sole opinion of the Board of
Directors of the Company, the other provisions of this Warrant are not strictly
applicable or if strictly applicable would not fairly protect the rights of the
Holder in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make such adjustment in the
application of such provisions as may be necessary, in the sole judgment of such
Board, in accordance with such essential intent and principles, to protect such
rights as aforesaid.
5. Exercise of this Warrant shall be made by the surrender hereof by the
Holder to the Company at its principal office together with (i) the attached
Subscription Form designating the number of shares of Common Stock being
purchased, (ii) a certified check or cash in payment for such shares and (iii) a
letter of transmittal setting forth the computation of the amount of said
payment. The Company shall thereafter promptly (in any event within seven (7)
business days after such exercise) issue certificates for the number of shares
of the Common Stock of the Company purchased at the Purchase Price in effect at
the time of such exercise. The Holder shall be deemed to be the record owner of
such shares of Common Stock as of the close of business on the date of such
exercise. The Holder shall not be entitled to receive a fractional share, but
in lieu thereof the Company shall pay in cash an amount equal to the market
value of such fractional share if the Common Stock has a market value, or if
not, the book value of such
-5-
<PAGE>
fractional share. The Company shall thereupon cancel this Warrant; and in
the event that less than the entire number of shares purchasable are
purchased, shall issue a new Warrant for the number not so purchased.
6. The Company covenants and agrees that all shares which may be issued
upon the exercise of this Warrant will, upon issuance, be duly and validly
authorized and issued, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof; and without limiting the
generality of the foregoing, the Company covenants and agrees that it will, from
time to time, take all such action as may be requisite to assure that the par
value or stated value per share of the Common Stock to be acquired upon the
exercise of this Warrant is at all times equal to or less than the then
effective Purchase Price per share of the Common Stock issuable pursuant to
exercise of this Warrant. The Company further covenants and agrees that during
the period within which this Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of the issue upon exercise of
this Warrant a sufficient number of shares of its Common Stock to provide for
such exercise.
7. (a) The Holder represents that he is acquiring this Warrant and,
in the absence of an effective registration statement under the
Securities Act of 1993 (the "1933 Act") for the shares of Common Stock
issuable hereunder, such shares for the purpose of investment and not
with a view to or for sale in connection with any distribution
thereof. The Holder and the holder of any shares of Common Stock
issued upon exercise hereof, by his acceptance hereof, agrees that he
will notify the Company in writing before selling or otherwise
disposing of this Warrant or any shares of Common Stock issued to him
upon exercise hereof, describing briefly the nature of any such sale
or other disposition, and no such sale or other disposition shall be
made unless and until (i) the Company has received an opinion of
counsel reasonably acceptable to it that no registration (or
perfection of an exemption) under the 1933 Act is required with
respect to such sale or disposition (which opinion may be conditioned
upon the transferee's assuming the Holder's obligation under this
section 7) or (ii) an appropriate registration statement with respect
to such Warrant or such Common Stock, or both, has been filed with the
Securities and Exchange Commission (the "Commission") and declared
effective by the Commission. The Company may require that this
Warrant and certificates representing shares of Common Stock issued
upon exercise hereof be stamped or imprinted with an appropriate
legend reflecting the foregoing restrictions. For the purposes of
this section 7, the term "Securities" shall include this Warrant and
the shares of Common Stock issued or issuable upon the exercise
hereof.
(b) The restrictions imposed by this section 7 on the transfer
of the Securities shall terminate as to any portion of the Securities
when:
(i) Such portion of the Securities shall have been
effectively registered under the 1933 Act and sold by the
holder thereof in accordance with such registration or
exemption; or
-6-
<PAGE>
(ii) Written opinions to the effect that such a
registration is no longer required or necessary under any
Federal or State law or regulation of governmental authority
shall have been received from legal counsel for the Company
and counsel for the holder of such portion of the
Securities; or, if a favorable opinion is obtained from
holder's counsel, and counsel for the Company declines to
render such an opinion, upon the holder's undertaking to
indemnify the Company, on terms satisfactory to the Company,
against all liability or loss the Company may sustain in
connection with such transfer; or
Whenever the restrictions imposed by this section 7 shall
terminate, as provided above, any holder of the Securities as to which
such restrictions shall have terminated shall be entitled to receive
promptly from the Company, without expense to him, a new certificate,
not bearing the restrictive legend referred to in clause (a) hereof.
8. The Company will use its best efforts to cause the shares of Common
Stock issuable upon exercise of the Warrants (the "Registerable Securities") to
be registered with the Securities and Exchange Commission, at the Company's
expense, under the Securities Act of 1933 (the "1933 Act") prior to November 11,
1998. The Company will use its best efforts to keep such Registration Statement
effective until the earlier of March 1, 2003 or until all of the Registerable
Securities have been sold pursuant to such Registration Statement. In the event
that the Registration Statement to be filed with the Commission as set forth in
this section 8 has not been declared effective by the Commission by November 11,
1998, the purchase price of the Warrants shall be reduced as follows: the
Initial Purchase Price shall be reduced by 2% for every 30 days following
November 11, 1998, until the Registration Statement is declared effective. In
connection with such registration:
(a) The Company will pay all costs and expenses incurred in
connection with the registration of the Registerable Securities,
including all registration filing fees, printing fees, fees and
disbursements of counsel and accountants of the Company and one set of
counsel for the Investors. Transfer taxes, brokerage commissions and
underwriters' discounts attributable to the Registerable Securities
shall be for the account of the Investors;
(b) The Company will furnish at its expense to the Investors
such number of copies of the preliminary, final, supplemental or
amended prospectus in conformity with the requirements of the 1933 Act
and rules and regulations thereunder, as may be reasonably required in
order to facilitate the disposition of the Registerable Securities;
-7-
<PAGE>
(c) Unless preempted by Federal law, the Company will register
or qualify the Registerable Securities under any applicable state
securities or blue sky laws in such jurisdictions as the Investors
shall reasonably request;
(d) The Company will cause the Registerable Securities to be
listed on the NASDAQ Small Cap Market (or principal exchange if
applicable) on which the Common Stock is then listed; and
(e) The Company shall indemnify and hold harmless, to the full
extent permitted by law, each Investor, its officers and directors and
each person who controls such Investor within the meaning of the 1933
Act and any investment adviser against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any
information with respect to the Investor furnished in writing to the
Company by such Investor expressly for use therein. The Company will
indemnify the underwriters, if any, of the Registerable Securities,
their officers and directors and each person who controls any such
underwriter to the same extent. The Company will reimburse each
indemnified party for all legal expenses incurred in connection with
investigating or defending any such claims. Each Investor severally,
but not jointly, shall indemnify and hold harmless the Company against
all losses, claims, damages, liabilities, and expenses caused by any
untrue or alleged untrue statement or a material fact in any
registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; except that such indemnification shall be available in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon information and in conformity with written
information furnished to the Company by Investor specifically for use
in the preparation thereof. If the indemnification provided for
herein is unavailable or insufficient to hold harmless an indemnified
party, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages, or liabilities referred to above (a) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Investors on the other; or (b)
if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect the
relative benefits referred to in clause (a) above but also the
relative fault of the Company on the one hand and the Investors on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages, or liabilities, as well as any other
relevant equitable considerations. Relative fault shall be determined
by reference to, among other things, whether the untrue statement of a
material fact or the omission to state a material fact relates to
-8-
<PAGE>
information supplied by the Company or the Investor and the parties'
relative intent, knowledge, access to information, and opportunity to
correct or prevent such untrue statement or omission. For purposes of
this subsection, the term "damages" shall include any counsel fees or
other expenses reasonably incurred by the Company or the Investors in
connection with investigating or defending any action or claim which
is the subject of the contribution provisions of this section.
Each party entitled to contribution agrees that upon the service
of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought,
it shall promptly give written notice of such service to the party or
parties from whom contribution may be sought, but the omission so to
notify such party or parties of any such service shall not relieve the
party from whom contribution may be sought from any obligation it may
have hereunder or otherwise.
9. This Warrant is exchangeable, upon the surrender hereof by the Holder
at the principal office of the Company, for new warrants of like tenor and date
representing in the aggregate the right to purchase the number of shares
purchasable hereunder, each of such new Warrants to represent the right to
purchase such number of shares as shall be designated by said Holder at the time
of such surrender. Subject to section 7 hereof, this Warrant and all rights
hereunder are transferable in whole or in part by the Holder, in person or by
duly authorized attorney, upon surrender of this Warrant duly endorsed, at the
principal office of the Company.
10. Upon the receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant.
11. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid or delivered to a telegraph office for
transmission:
(a) If to the Holder at such address as may have been furnished
by such holder to the Company in writing; and
(b) If to the Company at such address as may have been furnished
by the Company to the Holder of this Warrant in writing.
12. This Warrant shall be binding upon any successors or assigns of the
Company.
13. This Warrant shall be construed in accordance with and governed by the
laws of the State of Colorado.
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered as of the date set forth below by one of its officers thereunto
duly authorized.
Dated: ________________, 1998.
RENAISSANCE ENTERTAINMENT CORPORATION
By
-----------------------------------
Its
--------------------------------
______________________________
SUBSCRIPTION FORM
To be signed only upon exercise of Warrant
The undersigned the holder of the within Warrant, hereby irrevocably elects
to exercise the purchase right represented by such Warrant for, and to purchase
thereunder, __________ of the shares of Common Stock of RENAISSANCE
ENTERTAINMENT CORPORATION to which such Warrant relates and herewith makes
payment of $__________, therefor in cash or by certified check and requests that
the certificates for such shares be issued in the name of, and be delivered to,
______________________________, the address for which is set forth below the
signature of the undersigned.
Dated: ____________________
---------------------------------------
(Signature)
---------------------------------------
---------------------------------------
(Address)
---------------------------------------
To be signed only upon transfer of Warrant
-10-
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ ______________________________ the right to purchase shares
of Common Stock of RENAISSANCE ENTERTAINMENT CORPORATION to which the within
Warrant relates and appoints ______________________________, attorney, to
transfer said right on the books of RENAISSANCE ENTERTAINMENT CORPORATION with
full power of substitution in the premises.
Dated: ____________________
---------------------------------------
(Signature)
---------------------------------------
---------------------------------------
(Address)
11
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made this 6th day of February, 1998,
by and between RENAISSANCE ENTERTAINMENT CORPORATION, (REC) a Colorado
Corporation, (the "Company"), and BARBARA HOPE and DONALD GAITI ("Executive").
RECITALS
A. The Company desires to employ Executives as Vice President of New Ventures,
REC, in accordance with the terms and conditions stated in this Agreement.
B. Vice President(s) desires to accept such employment pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual promises
contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT
1.1 EMPLOYMENT AS VICE PRESIDENT. The Company hereby agrees to employ
Executive(s) as Vice President of New Ventures, REC, until October 31, 1998,
unless earlier terminated pursuant to Article 3 hereof. Vice President(s)
accepts such employment pursuant to the terms of this Agreement. Vice
President(s) shall perform the duties and responsibilities set forth in Job
Description attached hereto as SCHEDULE 1.1 and such other duties as may be
reasonably determined by the Board of Directors of the Company, all of which
shall be consistent with Vice President's position as an officer of Renaissance
Entertainment Corporation.
1.2 Vice President's responsibilities may include travel from time to
time.
2. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the period this agreement is in effect, REC shall
pay each Executive a base salary of $30,000, payable twice each month.
2.1a. ADDITIONAL COMPENSATION. For obtaining secured agreements* not
specifically compensated for in this Agreement, and to which REC has agreed to
enter into, Executive(s) shall receive 50% of all **net revenues until
compensation for such totals $200,000. After the $200,000 total is reached,
Executive(s) shall then be entitled to receive 25% of all net revenues from
secured agreements until compensation for such totals $150,000. A three year
time limit for receipt of aforementioned sums shall be in place, after which
Executive(s) is no longer entitled to receive percentages of net revenues for
the securing of additional REC revenue-generating agreements.
<PAGE>
2.1b. OFFICE SPACE. REC will provide Executive(s) with an office at
its offices where Executive(s) may perform the function of Vice President, New
Ventures, REC. REC will also reimburse Executive(s) for home office expenses in
keeping with Company policies.
2.2 DISCRETIONARY BONUSES. REC, in the sole discretion of the Board, may
pay a bonus to Executive(s) in addition to the base salary set forth in 2.1.
2.3 VACATION. Executive(s) shall be entitled to 3 weeks of vacation.
2.4 EMPLOYEE BENEFITS. Executive(s) shall be entitled to the benefits and
perquisites which the Company generally provides to its other executive officers
under applicable Company plans and policies, and to future benefits and
perquisites made generally available to executive officers of the Company.
Executive's participation in such benefit plans shall be on the same basis as
applies to other executive officers of the Company. Executive shall pay any
contributions which are generally required of any employees to receive any such
benefits.
2.5 EXPENSES. During the period this Agreement is in effect, Executives
shall be entitled to receive timely reimbursement from REC (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 Executive in
connection with her services hereunder.
3. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Executive's employment under this
Agreement may be terminated by the Company at any time for any reason; PROVIDED
HOWEVER, that if Executive'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), Executive(s) shall be entitled to continue to receive his or her
base salary under section 2.1 through October 31, 1998. Executive's employment
under this Agreement may be terminated by Executive 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.
This Agreement shall terminate in its entirety immediately upon the death of
Executive. Except as expressly provided to the contrary in this Section or
applicable law, Executive'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) 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 Executive(s) to substantially perform his or her material
duties as an executive under this Agreement (excluding nonperformance resulting
from Executive'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 Executive(s) has become disabled from performing her
duties under this Agreement, and the disability has continued for a period of
more than 60 days, the Board
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may, in its discretion, determine that Executive will not return to work and
terminate her/his employment under this Agreement; PROVIDED, HOWEVER, that
Executive shall in such case be entitled to continue to receive her/his base
salary under Section 2.1 through October 31, 1998.
4. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 AGREEMENT NOT TO COMPETE. In consideration of the covenants and
agreements contained in this Agreement, Executive(s) agrees that, on or before
the date which is nine months after the date of termination of Executive's
employment with the Company, Executive(s) 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, 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 faires, festivals or other similar
entertainment events with a "Renaissance" theme anywhere within a 200 mile
radius of REC's New York Renaissance Faire, except that nothing in this
subsection shall preclude Executive from holding 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.
The restrictions set forth in 4.1 shall be of no force or effect if the
Company terminates Executive's employment for any reason other than Cause on or
prior to October 31, 1998.
4.2 NON-DISCLOSURE OF INFORMATION. During the period of employment
hereunder, and at all times thereafter, Executive(s) 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 Executive(s) of her duties, or
except where such disclosure may be required by law, any material confidential
information obtained by Executive(s) 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 Executive(s) acknowledges are
valuable, special and unique assets, the disclosure of which Executive(s)
acknowledges may be materially damaging to the Company.
4A. CREATION OF SUBSIDIARY
4A.1 WHOLLY-OWNED SUBSIDIARY. Prior to the end of this Agreement, REC
agrees to review the possibility of creating a wholly-owned subsidiary, based
upon a viable business plan, which will be financed by REC. The subsidiary will
include the research and development of additional revenue-generating
entertainment venues that will benefit REC, and continue to incorporate the
technology-based entertainment that is presently underway.
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4B. DEFERRED PAYMENTS.
Deferred payments of $80,316 that are presently owed to Don Gaiti and
Barbara Hope will be paid out over a five (5) month period, commencing June 1,
1998 through October 1, 1998. Any portion of this repayment not paid within
this time frame is subject to 1.5% interest.
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 Executive(s) 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. Executive(s) acknowledges that the
services to be rendered by Executive(s) are unique and personal. Accordingly,
Executive(s) may not assign any of Executive'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 Executive's heirs and the
personal representative of Executive(s) or Executive'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
4410 Arapahoe Avenue, Suite 200, Boulder, CO 80303
If to Executive, to: Donald Gaiti
Barbara Hope
c/o Renaissance Entertainment Corporation
4410 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
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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 the directors of the Company.
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 effect
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 thereto.
5.8 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the Laws of the State of Colorado.
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 Boulder or 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. Executive(s) acknowledges that the Company's
remedy at law for any breach or threatened breach by Executive(s) of Section 4.1
or 4.2 will be inadequate. Therefore, the Company shall be entitled to
injunctive and other equitable relief restraining Executive(s) from violating
those requirements until such time as a final and binding determination is made
by the arbitrator/s.
5.10 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 set forth above.
RENAISSANCE ENTERTAINMENT CORPORATION
By:
-----------------------------------------
Charles S. Leavell
Its: Chairman and Chief Executive Officer
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Accepted:
By:
-----------------------------------------
Barbara Hope
By:
-----------------------------------------
Donald Gaiti
Vice Presidents of New Ventures,
Renaissance Entertainment Corporation
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SCHEDULE 1.1
Job Description for Vice President, New Ventures:
The responsibilities of this job include coordinating merchandise with the
managers at each site, further development of the product line, overseeing the
accounting responsibilities for the merchandising department with adequate
support, development of the merchandising line outside of REC's Renaissance
Faires to include catalog sales, web page development, and other merchandising
sales opportunities.
*Additionally:
*Vice President will pursue the development of the cybercastle site as outlined
in the Simutronics contract with REC, and pursue the development of an agreement
with AOL and other entities, including Design Toscano. See 2.1a, ADDITIONAL
COMPENSATION.
** Net Revenue shall mean gross revenue less the cost of merchandise and all
other related costs, excluding Executive salary.
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EXHIBIT 10.3
CONSULTING AND WARRANT COMPENSATION AGREEMENT
THIS AGREEMENT is executed and made effective this 4th day of November
1997, between Renaissance Entertainment, Inc., a Colorado corporation (the
"Company"), and Wall Street Financial ("Consultant").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties hereto agree as follows:
1. Consultation.
The Company hereby retains the services of Consultant, as an independent
contractor, which retention is accepted and agreed to be performed by
Consultant, subject to and upon the terms and conditions set forth below.
2. Term.
The term of this Agreement shall begin on the date hereof, and shall
continue for a period of 12 months (or such longer period as the Company and the
Consultant may agree in writing) unless earlier terminated by the Company for
Cause, as defined in Section 6.4 hereof
3. Consultant's Status.
It is understood and agreed that Consultant shall be at all times and for
all purposes hereunder an independent contractor to the Company and under no
circumstances shall be deemed an employee, partner or joint venturer of or with
the Company. Consultant agrees that he shall not directly or indirectly imply
or represent to others, or permit another to imply or represent to others that
Consultant has any authority to act for, represent or bind the Company in any
matter by virtue of this Agreement.
4. Services of Consultant.
4.1 Upon the request of the Company, Consultant shall consult with and
advise the Company with respect to matters concerning: (i) investor relations;
(ii) dissemination of quarterly and annual reports as filed by the Company with
the Securities and Exchange Commission; (iii) communications with analysts; and
(iv) potential acquisitions. Said services shall not relate to any capital
raising transaction.
4.2 Consultant agrees to exercise its best efforts, skill and diligence in
the performance of its services hereunder and shall perform all services in a
workmanlike fashion.
4.4 Throughout the term of this Agreement, Consultant shall provide
services to the Company on a part-time basis and may perform the same or similar
services for other persons or entities not inconsistent with its undertakings
hereunder.
<PAGE>
5. Covenants and Acknowledgments of Consultant.
5.1 Consultant covenants and agrees for itself and its Affiliates
(hereinafter defined) that it will not, during the term of this Agreement or
thereafter, communicate, divulge or otherwise disclose to any other person,
firm, association, or corporation, or use, without the express written consent
of the Company, any Confidential Information (hereinafter defined) of the
Company.
5.2 For purposes of this Agreement, Confidential Information shall mean
all information relating to the Company or its subsidiaries provided to the
Consultant in writing except for that information contained (i) in its filings
with the Securities and Exchange Commission and prior press releases or (ii) in
a writing received by the Consultant from the Company which is not marked
"confidential."
5.3 Consultant shall not make an untrue statement of material fact
regarding the Company or omit to state a material fact in the judgment of
Consultant necessary in order to make any statement regarding the Company made
by the Consultant not misleading, providing, however, that the Consultant shall
be entitled to rely on (i) reports filed by the Company with the Securities and
Exchange Commission, (ii) written press releases issued by the Company without
the Consultant's advice or consultation, and (iii) written press releases issued
by the Company with the Consultant's advice or consultation which it has, based
on reasonable investigation, reasonable grounds to believe and believes make no
untrue statement of a material fact and omit to state no material fact necessary
to make any statement made not misleading.
6. Compensation.
6.1 As consideration for all services to be rendered by Consultant
pursuant to Section 4 above, the Company agrees to issue to Consultant Common
Stock Purchase Warrants ("Warrants") exercisable to purchase 200,000 shares of
Common Stock of the Company at $.50.
6.2 All 200,000 Warrants shall be exercisable for a period of 1 year
commencing upon the date hereof and expiring on November 10, 1998, unless the
expiration date of the Warrants shall be extended to a later date in writing by
the Company.
6.3 The warrant certificates (the "Warrant Certificates") to be delivered
pursuant to this Agreement shall be in the form set forth as Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement (Exhibit A to follow).
6.4 Notwithstanding the foregoing, the Warrants described in Section 6.1
above shall terminate and be of no further legal force or effect if, prior to
their exercise, this Agreement is terminated by the Company for Cause. For the
purposes of this Agreement, the term "for Cause" shall mean (i) Consultant shall
commit a material breach of this Agreement unless such breach shall be cured by
the Consultant within a period of thirty (30) days after written notice by the
Company of such breach, (ii) Consultant, or its officers, directors and/or
employees, are shown to have engaged in any act of fraud or dishonesty
detrimental to the Company, or its subsidiaries, or
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any of its customers or clients, or (iii) Consultant has been grossly
negligent in the performance of its duties or responsibilities hereunder.
7. Expenses.
Company agrees to issue an additional 100,000 Shares of Common Stock for
Consultants expenses which will include travel, accommodations, broker
presentations, etc. The Consultant will pay for all of its expenses related to
its work, running its operations including its employees, affiliates, and
general administrative expenses. The Company will be responsible for providing
copies of its normal printed information.
8. Registration Rights.
8.1 On or before November 10, 1997, the Company shall cause to be prepared
and filed with the SEC a Registration Statement on Form S-8 or other appropriate
form registering all the shares of Common Stock issuable upon exercise of the
Warrants (the "Registration Statement").
8.2 In connection with the preparation and filing of the Registration
Statement, the Company agrees to (i) use its bests efforts to cause such
Registration Statement to become and remain effective; (ii) prepare and file
with the SEC such amendments and supplements to such Registration Statement as
may be necessary to keep such Registration Statement effective for the entire
period warrants remain outstanding; (iii) furnish to the Consultant such number
of copies of a prospectus, in conformity with the requirements of the Act, and
such other documents as Consultant may reasonably request in order to facilitate
the disposition of the shares of Common Stock; and (iv) use its best efforts, at
the Consultant's request, to register and qualify the shares of such states that
Consultant gives notice to the Company, provided, however, that the Company
shall not be required in connection therewith to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify, (ii) subject itself to any tax or obligation to collect any tax in any
such jurisdiction, or (iii) consent to general services or process in such
jurisdiction. The Consultant agrees to cooperate in all reasonable respects
with the preparation and filing of the Registration Statement.
8.3 All fees and other expenses incurred in connection with the
registration of the shares of Common Stock underlying the Warrants shall be
borne by the Company, including, without limitation, fees of the Company's legal
counsel, Securities and Exchange Commission filing fees, printing costs,
accounting fees and costs, transfer agent fees and any other miscellaneous costs
and disbursements. The Consultant shall be liable for any and all underwriting
discounts, brokerage commissions or other fees or expenses incurred in
connection with the sale or other disposition by the Consultant of the shares of
Common Stock covered by the Registration Statement.
8.4 To the extent permitted by law, the Company will indemnify and hold
harmless Consultant, including its officers, directors, employees, agents, and
representatives, against any losses, claims, damages, liabilities, or expenses,
including without limitation attorney's fees and disbursements, to which
Consultant may become subject under the Act to the extent that such
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losses, claims, damages or liabilities arise out of or are based upon any
violation by the Company of the Act or under the Securities Exchange Act of
1934, or any rule or regulation promulgated thereunder applicable to the
Company, or arises out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of any violation by the
Company of any rule or regulation promulgated under the Act applicable to the
Company and relating to action or inaction required of the Company in
connection with such Registration Statement; provided, however, that such
indemnity contained in this paragraph shall not apply to any loss, damage or
liability to the extent that same arises out of or is based upon an untrue
statement or omission made in connection with such Registration Statement in
reliance upon and in conformity with information furnished in writing
expressly for use in connection with such Registration Statement by
Consultant.
8.5 Except for the obligations of the Company set forth in Sections 8.1
and 8.2 above, all obligations relating to compliance with applicable laws and
regulations governing the distribution of securities in connection with
Consultant's sale of common stock of the Company acquired pursuant to the
exercise of the Warrants shall be the sole obligation of the Consultant.
9. Representations and Warranties of the Consultant.
The Consultant hereby represents and warrants to the Company that there are
no agreements or binding obligations enforceable against the Consultant which
would be violated by its entering into this agreement or providing the services
to be provided hereunder.
10. Indemnifications.
10.1 The Consultant agrees to indemnify, defend and hold harmless the
Company, and officers, directors, shareholders, agents, employees (hereafter
"Affiliates") of the Company, attorneys, successors and assigns, from and
against, and pay or reimburse each of them for, any and all claims, losses,
damages, judgments, amounts paid in settlement, costs and legal, accounting or
other expenses that any of them may sustain or incur as a result of any
misrepresentation, any inaccuracy in, or any breach of any warranty or
representation or any non-performance of any covenant or other obligation on the
part of the Consultant contained in this Agreement.
10.2 The Company agrees to indemnify, defend and hold harmless the
Consultant, and its Affiliates, attorneys, successors and assigns, from and
against, and pay or reimburse each of them for, any and all claims, losses,
damages, judgments, amounts paid in settlement, costs and legal, accounting or
other expenses that any of them may sustain or incur as a result of any
misrepresentation, any inaccuracy in, or any breach of any warranty or
representation or any nonperformance of any covenant or other obligation on the
part of the Company contained in this Agreement.
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11. Attorneys' Fees.
In the event there is any litigation or arbitration between the parties
concerning this Agreement, the successful party shall be awarded its reasonable
attorneys' fees and litigation costs, including the costs incurred in the
collection of any judgment.
12. Notices.
Any notice, request, instruction, or other document to be given hereunder
by any party hereto to any other party hereto shall be in writing and delivered
personally or by overnight courier or sent by facsimile transmission, if to
Consultant to:
Wall Street Financial
5353 Manhattan Circle, Suite 201
Boulder, CO 80303
Attention: David Lilja
if to the Company:
Renaissance Entertainment Corporation
4410 Arapahoe
Suite 200
Boulder, CO 80303
Attention: Pete Leavell
with a copy to:
Company
Address
City, ST ZIP
Attention:
or at such other address for a party as shall be specified by like notice.
13. Partial Invalidity.
If any provisions of this Agreement are in violation of any statute or rule
of law of any state or district in which it may be sought to be enforced, then
such provisions shall be deemed null and void only to the extent that they may
be in violation thereof, but without invalidating the remaining provisions.
14. Non-Assignability.
14.1 The obligations of the Consultant to perform hereunder shall not be
assignable by it without prior written consent of the Company.
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14.2 This Agreement shall be binding upon the respective parties hereto and
their successors and permitted assigns.
15. Waiver.
No waiver of any breach of any one of the agreements, terms, conditions or
covenants of this Agreement by the Company shall be deemed to imply or
constitute a waiver of any other agreement, term, condition or covenant of this
Agreement. The failure of either party to insist on strict performance of any
agreement, term, condition or covenant, herein set forth, shall not constitute
or become construed as a waiver of the night of either or the other thereafter
to enforce any other default of such agreement, term, condition or covenant;
neither shall such failure to insist upon strict performance be deemed
sufficient grounds to enable either party hereto to forego or subvert or
otherwise disregard any other agreement, term, condition or covenant of this
Agreement.
16. Governing Law.
This Agreement and the rights and duties of the parties shall be construed
enforced in accordance with the laws of the State of Colorado.
17. Fax/Counterparts.
This Agreement may be executed by telex, telecopy or other facsimile
transmission, and such facsimile transmission shall be valid and binding to the
same extent as if it were an original. Further, this Agreement may be signed in
one or more counterparts, all of which when taken together shall constitute the
same document.
18. Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof. There are no representations, warranties,
conditions or obligations except as herein specifically provided. Any amendment
or modification hereof must be in writing.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed this
Agreement effective on the day and year first above written.
RENAISSANCE ENTERTAINMENT
By:
-------------------------------------
Pete Leavell, President
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WALL STREET FINANCIAL
By:
-------------------------------------
Dave Lilja, President
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EXHIBIT 10.4
L E A S E
This Lease ("Lease") is made on this 21st day of January, 1998, by and
between Attache Publishing Services, Inc., a Colorado Corporation ("Landlord"),
and Renaissance Entertainment, Corp. ("Tenant").
1. DEFINITIONS.
A. "LEASED PREMISES" shall mean Suite 102, or if necessary to show
the area leased, the area shown as such on EXHIBIT A attached hereto and made a
part hereof, consisting of 2789 square feet.
B. "BUILDING" shall mean the office building located at
275 CENTURY CIRCLE
--------------------------
LOUISVILLE, CO 80027
--------------------------
C. "LEASE COMMENCEMENT DATE" shall mean the earlier of the date of
completion of required tenant finish or April 15, 1998, or as may be adjusted
pursuant to Paragraph 3(B).
D. "LEASE TERM" shall mean the period beginning on the Lease
Commencement Date and ending five years later.
E. "BASE RENT" shall mean three thousand and six hundred and two
dollars and forty six cents ($3,602.46) per month for the rentable area of
square feet, as defined by the Building Owners and Managers Association
International, as amended, for the first twelve (12) months of the Lease
which shall increase to the Consumers Price Index, All Urban consumers (CPI-U
1982-84-100) over the previous twelve (12) month period per year for each
subsequent year of the Lease Term.
F. "BUILDING OPERATING COSTS" shall mean all expenses, costs and
disbursements which Landlord pays to maintain, repair, replace or operate the
Building, including, but not limited to, the following:
(1) real estate taxes and assessments;
(2) personal property taxes on personal property used in
the common areas of the Building;
(3) Landlord's insurance;
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(4) utilities for common areas or which are not separately
metered to tenants;
(5) redecorating of the Building's common areas (including
painting, carpeting, art work and furnishings);
(6) janitorial services;
(7) snow removal;
(8) landscaping maintenance and replacement;
(9) parking lot maintenance and repairs (including re-surfacing
and re-striping);
(10) trash removal;
(11) elevator and heating and air-conditioning maintenance,
repair and replacement;
(12) roof repairs;
(13) property management costs (including wages, payroll
taxes and employee benefits);
(14) Building Services (including cleaning and building
supplies, provision of security services, if any, and tools and
equipment for the daily operation of the Building);
(15) Repair of parking lot signage or car stops.
Provided, however, that except for the capital improvements
listed above, Building Operating Costs shall not include capital improvements,
unless they are required due to a change in the law or are reasonably expected
to cause a reduction in the cost of operating the Building and, in such event,
such expenses shall be amortized in accordance with generally recognized
accounting principles. Excluded from Building Operating Costs shall be any
expenses incurred by landlord for compliance with Americans with Disabilities
Act requirements.
Building Operating Costs shall include the Tenant's Pro Rata
Share of costs of roof renovation or replacement, and replacement of parking lot
signage or car stops based upon the estimated life of the renovation or
replacement.
G. "TENANT'S PRO RATA SHARE" shall mean twenty seven Percent (27%)
measured in accordance with the standards set by the Building Owners and
Managers Association International, as amended.
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H. "PERMITTED PURPOSE" shall mean use of the Leased Premises for the
following purposes: GENERAL OFFICE USE.
I. "AUTHORIZED NUMBER OF PARKING SPACES" shall mean any designated
parking spaces in the parking lot.
2. RENT.
In consideration of the rents, covenants and agreements contained in
this Lease, Landlord leases to Tenant, and Tenant hires and takes from Landlord,
the Leased Premises with rent payable as follows:
A. Tenant covenants and agrees to pay to Landlord the Base Rent and
Tenant's Pro Rata Share of Building Operating Costs (collectively referred to
hereinafter as "Rent"), without deduction or set-off (unless authorized by this
Lease), due and payable in advance on the first day of each month. Rent not
paid by the third business day of the month shall be subject to a late charge of
Twenty Percent (20%) of the amount due.
B. Within one hundred twenty (120) days after the beginning of each
calendar year, commencing on January 1 of the year following the Lease
Commencement Date, Landlord shall give Tenant a statement of Landlord's estimate
of Building Operating Costs. Annually, after assessing past and estimated
future operating costs data, Landlord may adjust the monthly operating cost
payment provided for herein upward or downward to reflect more accurately the
anticipated monthly costs. All payments are due thirty (30) days after the
revision notice of the new rate.
As of the end of each calendar year, Landlord shall compute the
actual costs of operating the Building for the previous twelve (12) month
period. Tenant shall reimburse Landlord within thirty (30) days after notice of
any deficiency between estimated operating costs and actual costs. In the event
of overpayment by Tenant, Landlord shall pay such excess to Tenant within thirty
(30) days of such notice from Landlord.
Landlord shall, upon Tenant's written request, deliver to Tenant
a written accounting showing how Building Operating Costs were calculated for
the Building for any year. In the event Tenant objects to the statement of
Building Operating Costs for any year, Tenant and Landlord agree to cooperate in
good faith to resolve any such objection. The foregoing notwithstanding, Tenant
shall in no way be relieved of its obligation to pay Tenant's Pro Rata Share of
Building Operating Costs as calculated by Landlord during the period in which it
is cooperating with Landlord to resolve any objections as provided herein.
3. USES.
A. Tenant agrees continuously to use and occupy the Leased Premises
for the Permitted Purpose only, and for no other purpose. Tenant covenants to
comply with all building, zoning, fire and other governmental laws, ordinances,
regulations or rules applicable to the Leased Premises. Tenant shall not do or
permit anything to be done in or about the Leased Premises, or bring or keep
anything in the Leased Premises that may (i) increase the fire and
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extended coverage insurance premium upon the Building; (ii) damage the
Building; or (iii) constitute waste or be a nuisance, public or private, or
menace to tenants of adjoining premises or anyone else.
B. In the event the Leased Premises are not ready as of the Lease
Commencement Date, Tenant's sole remedy shall be the right to an abatement of
the Base Rent of each day following the scheduled Lease Commencement Date, for
so long as the Leased Premises are not ready, and, in such event, the actual
Lease Commencement Date shall be deemed to be the date on which such Leased
Premises are ready. No abatement of Rent shall be due, however, if the cause of
the delay is due to the fault of the Tenant or due to changes to the plans and
specifications by the Tenant.
C. Tenant shall have a non-exclusive right with other tenants in the
Building to use the exterior common areas, including the parking lot, in
accordance with Landlord's rules and regulations.
4. UTILITIES.
Depending upon the location of Leased Premises, Landlord may provide
to the Leased Premises the following utility services: water, sewer, electricity
and gas. Utility charges for which separate billings are not available shall be
treated as Building Operating Costs. If heat, light, water and any other
utility services are supplied to and metered directly to the Leased Premises,
Tenant shall pay the costs thereof, and make any required deposits related
thereto. Separate additional charges may be made to Tenant, if Tenant, in
Landlord's reasonable judgment, makes unusual or excessive utility system
demands where such services are not separately metered. Landlord shall not be
liable in any event, nor shall Rent be abated, because of interruption of
utility services to the Building, except due to gross negligence on its part.
5. BUILDING SERVICES.
Landlord agrees to maintain all parking and common areas, which shall
include lighting, gardening, cleaning, sweeping, painting and window cleaning;
and to provide for the Building such other services, including, but not limited
to, air-cooling, heating and janitorial services (the "Building Services").
Landlord shall maintain and repair the exterior of the Building, its structural
portions and the roof. The cost of Building Services shall be considered a
Building Operating Cost.
Air-cooling and heating shall be furnished by Landlord during normal
business hours (from 7:00 a.m. to 6:00 p.m. weekdays), or at such other times as
requested by Tenant, in which event Tenant agrees to pay the additional cost of
providing such services. Landlord shall not be liable in any event, nor shall
Rent be abated, because of interruption of Building Services.
6. INSURANCE, INDEMNITY.
A. Landlord shall secure and maintain throughout the term of this
Lease the following insurance coverage which Landlord deems reasonable in
amounts and form within Landlord's discretion:
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(1) Fire insurance with extended coverage endorsements
attached in the amount of the full insurable value of the Building;
(2) Comprehensive public liability insurance (including
bodily injury and property damage insurance) for the Building; and
B. Tenant shall, at its own expense, procure and maintain throughout
the term of this Lease:
(1) Comprehensive public liability insurance, without a
deductible, insuring Tenant's activities with respect to the Leased
Premises against loss, damage or liability for personal injury or
death, Landlord's damage to property or commercial loss occurring on
or about the Leased Premises, in amounts no less than One Million,
Five Hundred Thousand Dollars ($1,500,000.00) combined single limit;
and
(2) Workmen's compensation insurance in at least the
statutory amounts with respect to any work or other operation in or
about the Leased Premises.
C. Landlord and Landlord's mortgagee, if any, shall be named as
additional insureds under Tenant's insurance, which shall be primary and
non-contributing with any insurance carried by Landlord. Tenant's insurance
policy shall contain endorsements requiring thirty (30) days' notice to
Landlord prior to any cancellation or any reduction in amount of coverage.
Tenant shall deliver to Landlord, as a condition precedent to its taking
occupancy of the Leased Premises, a Certificate evidencing such insurance.
Tenant, as a material part of the consideration to be rendered to Landlord,
hereby waives all claims against Landlord for injury to persons or property
sustained by Tenant, its agents, employees, invitees, or third persons in or
about the Leased Premises from any cause arising at any time, to the extent
that said injury is covered by collectable insurance.
D. Tenant shall indemnify and hold Landlord harmless from and
against all demands, suits, fines, liabilities, losses, damages, costs and
expenses (including legal expenses) which Landlord may incur or become liable
for as a result of any breach by Tenant, its agents, employees, officers,
contractors, invitees or licensees of the terms or covenants of this Lease.
7. RENEWAL.
Provided that Tenant is not in default of this Lease, Tenant may renew
the Lease Term for a period of two five year options (the "Renewal Term") upon
written notice to Landlord at least one hundred twenty (120) days before the end
of the Lease Term. The renewal shall be upon the same terms and conditions
provided for in this Lease, except for the Base Rent and Lease Term. Tenant
shall accept the Leased Premises in its then "as is" condition and Tenant shall
not be granted any concessions or other privileges as provided for in this Lease
or subsequent amendments unless otherwise agreed by the Landlord. The Base Rent
for the extension shall be at the Fair Market Rental Value ("FMRV"), which shall
be calculated at the
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then prevailing rate for similar space in comparable buildings located in the
same market area as the Building. The Base Rent for the Renewal Term shall
increase yearly at the rate of Six Percent (6%).
Landlord shall notify Tenant of the FMRV within thirty (30) days after
receipt of Tenant's notice to renew. Tenant shall have fifteen (15) days from
the date of Landlord's notice to dispute, in writing, Landlord's finding of
FMRV, and, if not disputed, the FMRV shall be deemed accepted by the parties.
If, within ten (10) working days of Tenant's notice of a dispute, the parties
have not agreed upon FMRV, the parties may submit the dispute to arbitration
under the rules of the American Arbitration Association, whose decision shall be
binding. If the parties do not resolve the dispute thirty (30) days prior to
the end of the Lease Term, either party may, at its option, declare the renewal
notice to be null and void and the Lease shall terminate on the date set forth
in Paragraph 1(D).
8. REPAIRS.
Except for Building Services provided by Landlord, Tenant agrees to
maintain in a clean, orderly and sanitary condition, and keep in good repair,
the interior of the Leased Premises, ordinary wear and tear excepted. Such
maintenance and repair shall be at the sole cost of Tenant and shall include,
but not be limited to, the maintenance and repair of floor coverings, ceilings
and walls, front and rear doors, and all interior glass of the Leased Premises.
If Tenant fails to maintain or keep the Leased Premises in good repair and such
failure continues for five (5) days after written notice from Landlord, Landlord
may perform any such required maintenance and repairs and the cost thereof shall
be additional Rent payable by Tenant within ten (10) day of receipt of any
invoice from Landlord. Tenant shall not be responsible for any repairs to the
leased premises caused by Landlord or Landlord's agents.
9. TENANT'S PROPERTY.
Furnishings, trade fixtures and moveable equipment, if any, paid for
by the Tenant and not affixed to the Leased Premises shall be the property of
Tenant ("Tenant's Property"). Any furnishings, trade fixtures and moveable
equipment paid for by Landlord shall be Tenant's Property, if Tenant has
reimbursed Landlord for the cost of such property. On expiration of this Lease,
if there is then no Event of Default, Tenant may remove Tenant's Property and
shall remove any such property if directed by Landlord. Tenant shall repair or
reimburse Landlord for the cost of repairing any damage and disposal expense
resulting from removal of Tenant's Property. If Tenant fails to remove such
property as required under this Lease, Landlord may do so and Landlord shall not
be liable for any loss or damage of Tenant's Property which may occur during
Landlord's removal thereof.
Tenant's Property attached to the Leased Premises and deemed by
Landlord, in its sole discretion, to be a fixture shall be Landlord's Property,
unless Landlord's written approval is obtained prior to attachment.
Tenant hereby conveys to Landlord all of Tenant's Property as security
for the payment of all sums due hereunder to Landlord. Tenant shall not remove
Tenant's Property
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without the Landlord's consent until all payments due have first been paid
and discharged. It is intended by the parties that this Lease shall have the
effect of a mortgage or lien upon Tenant's Property. On expiration of this
Lease, if there is an Event of Default, Landlord may take possession of
Tenant's Property and either keep it for its own use or sell the same for the
best price that can be obtained at public or private sale. Landlord shall use
the proceeds from a sale to satisfy the amount due Landlord, including all
costs arising from the sale and shall pay the surplus, if any, to Tenant. If
Tenant's Property is offered at a public sale, Landlord may become the
purchaser of it.
10. IMPROVEMENTS AND ALTERATIONS BY TENANT.
Subject to the provisions of this Lease and the Workletter attached
hereto, Tenant may make such additional improvements or alterations to the
Leased Premises which it may deem necessary or desirable, but only with
Landlord's prior written approval (which approval shall not be unreasonably
withheld). Any such improvements or alterations by Tenant shall be done, at
Tenant's expense, by a licensed contractor approved by Landlord, in conformity
with plans and specifications approved by Landlord. If requested by Landlord,
Tenant shall post a bond or other security reasonably satisfactory to Landlord
to protect Landlord against liens arising from work performed for Tenant. All
work performed shall be done in a good and workmanlike manner and with materials
of the quality and appearance comparable to those in the Building, and shall
become the property of Landlord. Prior to the commencement of any work or
delivery of any materials to the Leased Premises, Tenant shall furnish Landlord,
for its approval, copies of the following:
(a) plans and specifications;
(b) names and addresses of contractors or subcontractors,
as applicable;
(c) copies of contracts;
(d) copies of contractor's insurance certificates;
(e) necessary permits; and
(f) such other items as may be reasonably requested by
Landlord to protect itself in connection with the work.
11. CASUALTY.
If the Leased Premises or the Building are destroyed or damaged by
fire, earthquake or other casualty to the extent that they are untenantable in
whole or in part, then Landlord shall, except as provided below, proceed with
reasonable diligence to rebuild and restore the Leased Premises, or such part
thereof as may be destroyed or damaged, and during the period of such rebuilding
and restoration, this Lease shall remain in full force and effect, and Rent
shall be abated in the same ratio as the square footage in the portion of the
Leased Premises rendered untenantable, if any, shall bear to the total square
footage of the Leased Premises. If
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Landlord shall reasonably determine that such destruction or damage cannot be
rebuilt and restored within one hundred eighty (180) days, it shall so notify
Tenant within thirty (30) days after the occurrence of such damage or
destruction. In such event, either Landlord or Tenant may, within twenty
(20) days after such notice, terminate this Lease. If neither party
terminates this Lease during such twenty (20) day period, this Lease shall
remain in effect and Landlord shall diligently proceed to rebuild and restore
the Leased Premises, and Rent shall abate as set forth above.
Anything to the contrary notwithstanding, in the event the Leased
Premises are rendered untenantable due to the fault or neglect of Tenant, its
agents, employees, visitors or licensees, there shall be no abatement of Rent as
provided above.
12. ASSIGNMENT AND SUBLETTING.
Tenant shall not assign or sublet, or permit assigning or subletting
of this Lease, the Leased Premises or any part thereof, respectively, without
first obtaining the written consent of Landlord. Any consent of Landlord,
unless specifically stated therein, shall not relieve Tenant from its
obligations under this Lease. The sale of all or a majority of Tenant's stock,
a majority ownership interest or the sale of all or substantially all of its
assets shall constitute an assignment.
Tenant agrees to pay Landlord's reasonable attorneys' fees in
connection with any proposed assignment or subletting.
13. LIENS.
Tenant shall keep the Leased Premises and the Building free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by Tenant, except the lien contained in Paragraph 9. In the event a
lien is filed against Tenant, the Leased Premises or the Building on account of
any work performed, materials furnished or obligations incurred by Tenant, then
at the written request of Landlord, Tenant shall post a bond, or other security
reasonably satisfactory to Landlord, as protection against any expenses, cost or
liability incurred by Landlord as a result of such lien. The bond shall be
posted (or other security acceptable to Landlord shall be provided) within ten
(10) days of receipt of such written request by Landlord, or Landlord shall have
the option to terminate this Lease in accordance with Paragraph 21 below.
14. CONDEMNATION.
If the whole or any part of the Leased Premises, excluding parking
areas, shall be taken under power of eminent domain or like power, or sold
under imminent threat thereof to any public authority or private entity
having such power, this Lease shall terminate as to the part of the Leased
Premises so taken or sold, effective as of the date possession is required to
be delivered to such authority or entity. Rent for the remaining term shall
be reduced in the proportion that the total square footage of the Leased
Premises is reduced by the taking. If a partial taking or sale of the
Building or the Leased Premises (i) substantially reduces the area of the
Leased Premises, resulting in a substantial inability of Tenant to use the
Leased Premises for the Permitted Purpose, or (ii) renders the Building not
viable to Landlord, Tenant in the case of
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(i), or Landlord in the case of (ii), may terminate this Lease by written
notice to the other party to be effective when the portion is taken or sold.
All condemnation awards and similar payments shall be paid and belong to
Landlord, except any amounts awarded or paid specifically for Tenant's trade
fixtures and relocation costs, provided such awards do not reduce Landlord's
award. Nothing contained herein shall diminish Tenant's right to deal on its
own behalf with the condemning authority.
15. SECURITY DEPOSIT.
The Tenant deposited with the Landlord, simultaneously with the
execution of this Lease, the sum of four thousand and eight hundred and eighty
dollars and seventy five cents ($4,880.75) (the "Security Deposit") as security
for the Rent payable hereunder, for the return of the Leased Premises in good
order and condition, and the performance of each and every one of the covenants,
conditions and agreements herein stipulated. The said sum shall not be
applicable to the payment of Rent by the Tenant, or any other charges for which
it may become liable under this Lease, and such deposit shall, in no way,
relieve Tenant from the faithful performance of all covenants and conditions
hereby imposed upon it. Landlord may use so much or all of the Security Deposit
for payment of past-due obligations of Tenant, and, upon notice and demand from
Landlord, Tenant shall, within five (5) days, pay sufficient sums to restore the
Security Deposit to its original amount. Landlord agrees that at the
termination of this Lease, or at the termination of any extension thereof, the
deposit shall be returned to Tenant thirty (30) days after the Leased Premises
have been vacated in good order and condition, provided that the Tenant shall
have complied in all respects with the terms, covenants and conditions herein.
In the event of a sale or leasing of the Building, Landlord shall have the right
to transfer the Security Deposit to its vendee and Landlord shall thereupon be
released by Tenant from all liability for the return of the Security Deposit.
In such event, Tenant agrees to look solely to the new landlord for the return
of said deposit. The provisions hereof shall apply to every transfer or
assignment made of the Security Deposit to a new landlord.
16. CONDITION OF LEASED PREMISES.
By taking possession hereunder, Tenant acknowledges that it has
examined the Leased Premises and has determined it is suitable for Tenant's
Permitted Purposes.
17. RULES AND REGULATIONS.
Tenant agrees it shall not bring, nor will it allow its agents,
employees, invitees or others claiming under Tenant to bring dogs, cats or any
other animals to the Building or Leased Premises. Tenant and its agents,
employees, invitees, or those claiming under Tenant shall at all times observe,
perform and abide by all rules and regulations promulgated by Landlord, from
time to time.
18. PARKING.
Tenant agrees not to overburden the parking facilities and agrees to
cooperate with Landlord and other tenants in the use of such facilities.
Landlord reserves the right in its absolute
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discretion to determine whether parking facilities are becoming overcrowded
and, in such event, to allocate specific parking spaces among Tenant and
other tenants or to take such other steps necessary to correct such
condition, including, but not limited to, policing and towing. Landlord may,
at its own discretion and with at least thirty (30) days' written notice to
Tenant, change the location and nature of the parking spaces available to
Tenant, its employees and invitees.
19. LANDLORD'S ACCESS.
Tenant shall permit Landlord to enter the Leased Premises at
reasonable times for the purpose of inspecting, altering and repairing the
Leased Premises and ascertaining compliance by Tenant with the provisions of
this Lease. Landlord may also show the Leased Premises to prospective
purchasers or, in the case of renters, commencing ninety (90) days prior to the
termination of this Lease, during regular business hours and upon reasonable
notice, provided that Landlord shall not unreasonably interfere with Tenant's
business operations.
20. SIGNS.
Landlord shall provide all signs on the Building and Leased Premises
at the time of occupancy. Tenant agrees to place no other signs on or about the
Building or Leased Premises. Any subsequent signage changes must be submitted
to the Landlord for approval and shall be at Tenant's expense.
21. TENANT'S DEFAULT.
A. It shall be an "EVENT OF DEFAULT" if:
(a) Tenant shall fail to pay any monthly installment of
Rent or any other charge or payment required of Tenant hereunder
within three (3) days of written notice;
(b) Tenant shall violate or fail to perform any of the
other conditions, covenants or agreements herein made by Tenant, and
such violation or failure shall continue for a period of fifteen (15)
days after written notice thereof to Tenant by Landlord;
(c) Tenant shall make a general assignment for the benefit
of its creditors or shall file a petition for bankruptcy or other
reorganization, liquidation, dissolution or similar relief;
(d) a proceeding is filed against Tenant seeking any relief
mentioned above which is not dismissed within thirty (30) days after
filing;
(e) a trustee, receiver or liquidator shall be appointed
for Tenant or a substantial part of its property;
(f) Tenant shall mortgage, assign (except as otherwise
provided in this Lease) or otherwise encumber its leasehold interest; or
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(g) Tenant shall abandon the Leased Premises.
B. If an Event of Default occurs, then Landlord may either:
(a) give Tenant written notice of Landlord's intention to
terminate this Lease on the date of such given notice or any later
date specified therein, and on such specified date all of Tenant's and
Landlord's rights and obligations under this Lease, except as
expressly reserved, shall cease; Landlord's written notice shall
operate as a notice to quit, and Landlord may proceed to recover
possession of the Leased Premises by any lawful means, including by
reentry and repossession; the obligation of Tenant to pay, and the
right of Landlord to recover, all Rent and other charges accrued up to
the time of termination or recovery of possession by Landlord,
whichever is later, together with the costs of collection, including
attorneys' fees, shall survive termination of the Lease; or
(b) without further notice, except as is required by law,
reenter and take possession of the Leased Premises, or any part
thereof, and repossess the same as Landlord's former estate, and expel
Tenant and those claiming through or under Tenant and remove the
effects of either or both without being deemed guilty of any manner of
trespass, without being deemed to have elected to terminate this
Lease, and without prejudice to any remedies for arrears of rent,
preceding breaches of covenants, or loss of profits; after reentering
and repossessing the Leased Premises without terminating this Lease,
Landlord may, from time to time, without terminating this Lease, relet
the Leased Premises or any part thereof, on behalf of Tenant, for such
term or terms and at such rent or rents, and upon such other terms and
conditions as Landlord may deem advisable in its sole discretion
(including concessions, free rent and payment of commissions), with
the right to make alterations and repairs to the Leased Premises.
C. In the event Landlord does not elect to terminate this Lease,
but, on the contrary, elects to take possession pursuant to Paragraph 21(B)(b),
then such repossession shall not relieve Tenant of its obligations and liability
under this Lease, all of which shall survive such repossession. In the event of
such repossession, at Landlord's option, Tenant shall pay to Landlord:
(a) all Rent which would be payable hereunder if such
repossession had not occurred, less the net proceeds, if any, of any
reletting or the value of Landlord's use, if any, of the Leased
Premises after deducting all of Landlord's expenses in connection with
such reletting, including, but not limited to, all repossession costs,
brokerage commissions, legal expenses, expenses of employees, costs of
alterations, expenses of preparation for reletting, rental concessions
and free rent. Tenant shall pay such Rent to Landlord on the days on
which the Rent would have been payable hereunder if possession had not
been retaken; or
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(b) all damages proximately resulting from the breach,
including the cost of recovering the Leased Premises and the present
value of the Rent for the balance of the Lease over the reasonable
rental value of the Leased Premises for the remainder of the Lease
Term.
D. Any damage or loss sustained by Landlord following Landlord's
election to reenter and repossess the Leased Premises without terminating this
Lease may be recovered by Landlord, at Landlord's option: at the time of
reletting; in separate actions, from time to time, as said damage shall have
been made more easily ascertainable by successive relettings; be deferred until
the expiration of the term of this Lease, in which event the cause of action
shall not be deemed to have accrued until the date of expiration of said term.
E. In addition to the remedies under Paragraphs B and C above,
Landlord may also elect to accelerate the Rent and any other sums due hereunder,
as damages for loss of the bargain and not as a penalty, including attorneys'
fees, reletting expenses, alterations and repair costs, brokerage commissions
and all other like amounts.
F. The provisions contained in this paragraph shall be in addition
to and shall not prevent the enforcement of any claim Landlord may have against
Tenant for anticipatory breach of the unexpired term of this Lease. All rights
and remedies of Landlord under this Lease shall be cumulative and shall not be
exclusive of any other rights and remedies provided to Landlord under applicable
law.
22. REMOVAL OF PROPERTY.
In an Event of Default, Landlord shall have the right, but not the
obligation, to remove from the Leased Premises all personal property, fixtures,
furnishings and other property located therein, and to store such property in
any place selected by Landlord, including, but not limited to, a public
warehouse, at the expense and risk of the owners thereof, with the right to sell
such stored property seven (7) days after notice to Tenant, after it has been
stored for a period of thirty (30) days or more. The proceeds of such sale
shall be applied first to the cost of such sale, second to the payment of the
charges for storage, if any, and third to the payment of other sums of money
which may then be due from Tenant to Landlord under any of the terms hereof, the
balance, if any, to be paid to Tenant.
23. QUIET ENJOYMENT, INABILITY TO PERFORM.
A. If, and so long as, Tenant pays Rent and keeps and performs each
and every term, covenant and condition herein contained on the part and on
behalf of Tenant to be kept and performed, Tenant shall quietly enjoy the Leased
Premises without hindrance or molestation by Landlord, subject to the terms,
covenants and conditions of this Lease and the Superior Instruments, as defined
and provided in Paragraph 32 below.
B. Landlord shall be entitled to contest any tax or assessment which
it deems to be improperly levied against the Building, so long as Tenant's use
of the Leased Premises is not interfered with.
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C. Except as provided in this Lease, this Lease and the obligations
of Tenant to pay Rent and perform all of the terms, covenants and conditions on
the part of Tenant to be performed shall be in no way affected, impaired or
excused because Landlord, due to an unavoidable delay, is (a) unable to fulfill
any of its obligations under this Lease, or (b) unable to make or is delayed in
making any repairs, replacements, additions, alterations or decorations, or (c)
unable to supply or is delayed in supplying any equipment or fixtures. Landlord
shall in each instance exercise reasonable diligence to effect performance when
and as soon as possible.
24. HOLD-OVER TENANCY.
If (without execution of a new lease or written extension) Tenant
shall hold over after the expiration of the term of this Lease, Tenant may, at
Landlord's election, be deemed to be occupying the Leased Premises as a tenant
from month to month, which tenancy may be terminated as provided by law. During
such tenancy, Tenant agrees to pay Tenant's Share of Building Operating Costs
and One Hundred and Fifty Percent (150%) of the then current Rent and to be
bound by all of the terms, covenants and conditions as herein specified, so far
as applicable.
25. ATTORNEYS' FEES.
In the event either party requires the services of an attorney in
connection with enforcing the terms of this Lease, or in the event suit is
brought for the recovery of any Rent due under this Lease, or for the breach of
any covenant or condition of this Lease, or for the restitution of the Leased
Premises to Landlord and/or eviction of Tenant during said Term, or after the
expiration thereof, the party prevailing in any such legal action shall be
entitled to an award for all legal costs and expenses, including, but not
limited to, a reasonable sum for attorneys' fees.
26. AMENDMENT, WAIVER.
This Lease constitutes the entire agreement between the parties. This
Lease shall not be amended or modified except in writing by both parties. No
covenant or term of this Lease shall be waived except with the express written
consent of the waiving party whose forbearance or indulgence in any regard shall
not constitute a waiver of such covenant or term. Failure to exercise any right
in one or more instances shall not be construed as a waiver of the right to
strict performance or as an amendment to this Lease.
27. NOTICES.
All notices required by this Lease shall be in writing and delivered
in person, or mailed by U.S. Registered or Certified Mail, return receipt
requested, postage prepaid, to the address specified below:
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A. If intended for Landlord:
TALAL HAFIZ
ATTACHE PUBLISHING SERVICES, INC.
275 CENTURY CIRCLE, SUITE 202
LOUISVILLE, CO 80027
B. If intended for Tenant:
Renaissance Entertainment, Corp.
275 Century Circle, Suite 102
LOUISVILLE, CO 80027
or to such other addresses as either party designates by notice, as provided in
this paragraph, to the other party, from time to time. Notice shall be
effective as of the date delivered in person or the date postmarked, whichever
is sooner.
28. BINDING EFFECT.
Subject to the provisions in Paragraph 12, this Lease shall be binding
upon and inure to the benefit of the parties and successors and assigns.
29. LIMITATION OF LANDLORD'S LIABILITY.
A. Landlord shall not be liable to Tenant or to Tenant's employees,
agents or visitors, or to any other person or entity, whomsoever, for any injury
to person or damage to or loss of property on or about the Leased Premises or
the Building caused by the negligence or misconduct of Tenant, its employees,
subtenants, licensees or concessionaires, or of any other person entering the
Building under the express or implied invitation of Tenant, or arising out of
the use of the Leased Premises by Tenant and the conduct of its business
therein, or arising out of any breach or default by Tenant in the performance of
its obligations hereunder or resulting from any other cause except Landlord's
negligence, and Tenant hereby agrees to indemnify Landlord and hold it harmless
from any loss, expenses or claims arising out of such damage or injury.
B. The Tenant agrees that it is Tenant's sole obligation to comply
with the provisions of the American's with Disabilities Act ("ADA") with regard
to the Leased Premises. Tenant agrees to indemnify, defend and protect Landlord
from any claim or suit brought against Landlord for Tenant's failure to comply
with the Tenant's obligations to maintain the Leased Premises pursuant to the
ADA. This obligation shall not extend to any other parts of the Building,
including common areas.
C. Tenant shall indemnify Landlord with regard to any loss or
liability that Landlord may incur as a result of Tenant's negligence or acts
with regard to any hazardous substance that is now or hereafter becomes located
in or on the Building or the Leased Premises.
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30. LANDLORD'S RESERVED RIGHTS.
Without notice and without liability to Tenant, Landlord shall have
the right to sell the Building and assign this Lease to the purchaser (and upon
such assignment be released from all of its obligations under this Lease which
accrue after such assignment). Tenant agrees to attorn to such purchaser, or
any other successor or assign of Landlord through foreclosure or deed in lieu of
foreclosure or otherwise and to recognize such person as Landlord under this
Lease, as provided for fully in Paragraph 32 below.
31. ESTOPPEL STATEMENT.
Within twenty (20) days after request by Landlord, its agents,
successors or assigns, Tenant shall deliver, in recordable form, a certificate
to any proposed mortgagee or purchaser, certifying, if applicable (i) that this
Lease is in full force and effect, without modification, (ii) the amount, if
any, of prepaid rent and security deposit paid by Tenant to Landlord, (iii) that
Landlord, as of the date of the certificate, has performed all of its
obligations due to be performed under this Lease and that there are no defenses,
counterclaims, deductions or off-sets outstanding, or other excuses for Tenant's
performance under this Lease, or stating those claimed by Tenant, and (iv) any
other fact reasonably requested by Landlord or such proposed mortgagee or
purchaser, which does not modify or conflict with Tenant's rights under this
Lease. Tenant's failure to deliver such statement in time shall be conclusive
upon Tenant: (a) that this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) that there are no
uncured defaults in Landlord's performance and Tenant has no right of off-set,
counterclaims, defenses or deduction against Rent or Landlord hereunder; and (c)
that no more than one period's rent has been paid in advance.
32. SUBORDINATION.
The rights of Tenant hereunder are, and shall be, at the election of
any mortgagee, subject and subordinate to the lien of any deeds of trust,
mortgages, the encumbrance of any leasehold financing, or the lien resulting
from any other method of financing or refinancing, now or hereafter in force
against the Building of which the Leased Premises are a part, and to all
advances made, or hereafter to be made upon the security thereof (hereafter
referred to as the "SUPERIOR INSTRUMENTS"). The foregoing notwithstanding, for
any liens or Superior Instruments filed of record after the execution of this
Lease, the rights of Tenant under this Lease shall not be subject or
subordinated to such liens or Superior Instruments unless the holders thereof
execute an attornment and non-disturbance agreement. If requested, Tenant
agrees to execute whatever reasonable documentation may be required to further
effectuate the provisions of this paragraph.
Tenant agrees to attorn to any purchaser of the Building, or any other
successor or assign of Landlord through foreclosure or deed in lieu of
foreclosure, in return for and upon delivery to Tenant by such purchaser or
mortgagee, as the case may be, of an attornment and non-disturbance agreement.
-40-
<PAGE>
33. BROKERAGE.
Tenant represents and warrants to Landlord that no broker or agent
negotiated or was instrumental in the negotiation or consummation of this Lease,
except for The Colorado Group, and Tenant agrees to indemnify and hold Landlord
harmless against any loss, expense, cost or liability incurred by Landlord as a
result of a claim by a broker.
34. APPLICABLE LAW.
This Lease shall be construed according to the laws of the State of
Colorado and venue shall be in Boulder County, Colorado.
IN WITNESS WHEREOF, the parties have executed this Lease the day and
year first above written.
LANDLORD:
Attache Publishing Services, Inc.
a Colorado Corporation
By:
---------------------------------
Talal K. Hafiz, President
TENANT:
Renaissance Entertainment, Corp.
By:
---------------------------------
-41-
<PAGE>
EXHIBIT A
LEASED PREMISES
Leased Premises shall mean the area known as Suite 102 or the area shown on
the plan below.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 237103
<SECURITIES> 0
<RECEIVABLES> 22308
<ALLOWANCES> 2950
<INVENTORY> 144337
<CURRENT-ASSETS> 1072723
<PP&E> 9442417
<DEPRECIATION> 2666058
<TOTAL-ASSETS> 9597764
<CURRENT-LIABILITIES> 2626093
<BONDS> 5372417
0
0
<COMMON> 9480876
<OTHER-SE> (7354577)
<TOTAL-LIABILITY-AND-EQUITY> 9597764
<SALES> 41881
<TOTAL-REVENUES> 41881
<CGS> 33
<TOTAL-COSTS> (6038)
<OTHER-EXPENSES> 1494640
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 237103
<INCOME-PRETAX> (1494283)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1494283)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1494283)
<EPS-PRIMARY> (.72)
<EPS-DILUTED> (.72)
</TABLE>
