U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For year ended December 31, 1999 Commission File No. 0-28575
RENEGADE VENTURE (NEV.) CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 84-1108499
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
90 Madison Street, Suite 707
Denver, Colorado 80206 (303) 355-3000
(Address of Principal's Executive Offices) (Registrant's Telephone No.
incl. area code)
Securities registered pursuant to
Section 12(b) of the Act: NONE
Securities registered pursuant to
Section 12(g) of the Act: Common stock, $.001 par value
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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes ____ No X
Indicate by check mark if no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Yes X No ____
The registrant's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the 122,875 shares of common stock of the
registrant held by non-affiliates on December 31, 1999, was not determinable.
At December 31, 1999, a total of 320,000 shares of common stock were
outstanding.
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TABLE OF CONTENTS
PART I
Item 1. Description of Business ....................................... 3
Item 2. Description of Property ....................................... 11
Item 3. Legal Proceedings ............................................. 11
Item 4. Submission of Matters to a Vote of Security Holders ........... 11
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters ......................................... 12
Item 6. Management's Discussion and Analysis or Plan of Operation...... 12
Item 7. Financial Statements .......................................... 14
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ...................... 14
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act ........... 14
Item 10. Executive Compensation ........................................ 17
Item 11. Security Ownership of Certain Beneficial Owners and Management 19
Item 12. Certain Relationships and Related Transactions ................ 19
Item 13. Exhibits and Reports on Form 8-K .............................. 20
Index to Financial Statements ................................. 21
Financial Statements .......................................... F-1
Signatures .................................................... 22
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FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information
relating to Renegade that are based on the beliefs of its management as well as
assumptions made by and information currently available to its management. When
used in this report, the words "anticipate", "believe", "estimate", "expect",
"intend", "plan" and similar expressions, as they relate to Renegade or its
management, are intended to identify forward-looking statements. These
statements reflect management's current view of Renegade concerning future
events and are subject to certain risks, uncertainties and assumptions,
including among many others: a general economic downturn; a downturn in the
securities markets; a general lack of interest for any reason in going public by
means of transactions involving public blank check companies; federal or state
laws or regulations having an adverse effect on blank check companies,
Securities and Exchange Commission regulations which affect trading in the
securities of "penny stocks," and other risks and uncertainties. Should any of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in this
report as anticipated, estimated or expected. Readers should realize that
Renegade is in the development stage, with only very limited assets, and that
for Renegade to succeed requires that it either originate a successful business
(for which it lacks the funds) or acquire a successful business. Renegade's
realization of its business aims as stated herein will depend in the near future
principally on the successful completion of its acquisition of a business, as
discussed below.
PART I
Item 1. DESCRIPTION OF BUSINESS.
BACKGROUND
Renegade Venture (Nev.) Corporation, a Nevada corporation ("Renegade" or
the "Company"), is in the development stage in accordance with Financial
Accounting Standards Board Standard No. 7, and is the successor by merger to
Renegade Venture Corporation, a Colorado corporation ("Renegade Colorado"). The
merger occurred effective September 22, 1997, for the sole purpose of
reincorporating the Company from the State of Colorado to the State of Nevada.
Renegade has not been operational, other than occasionally searching for a
business or venture to acquire, as described below, or had revenues other than
interest income since its inception. On May 4, 1990, Renegade Colorado completed
a small public offering of its securities made pursuant to a registration
statement of Form S-18, selling 5,000,000 of 7,500,000 units offered, at the
price of $.02 per unit. In this offering Renegade Colorado realized net proceeds
of $61,476 on gross proceeds of $100,000 raised in the offering. Each unit sold
consisted of TWO shares of common stock of Renegade Colorado, $.0001 par value,
and ONE Class A Common Stock Purchase Warrant, exercisable until December 7,
1991, at a price of $.02 to purchase one share of Renegade Colorado common stock
and one Class B Common Stock Purchase Warrant. All of the Class A and Class B
warrants expired without having been exercised.
EXCHANGE ACT REGISTRATION
Renegade has voluntarily a registration statement on Form 8-A with the
Securities and Exchange Commission ("SEC" or "Commission") in order to register
Renegade's common stock under Section 12(g) of the Securities Exchange Act of
1934, as amended ("Exchange Act"). Renegade is required to file quarterly,
annual and other reports and other information with the SEC as required by the
Exchange Act. If Renegade's duty to file reports under the Exchange Act is
suspended, Renegade intends to nonetheless continue filing reports on a
voluntary basis if it is able to do so.
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PROPOSED BUSINESS
Renegade intends to enter into a business combination with one or more as
yet unidentified privately held businesses. Management believes that Renegade
will be attractive to privately held companies interested in becoming publicly
traded by means of a business combination with Renegade, without offering their
own securities to the public. Renegade will not be restricted in its search for
business combination candidates to any particular geographical area, industry or
industry segment, and may enter into a combination with a private business
engaged in any line of business. Management's discretion is, as a practical
matter, unlimited in the selection of a combination candidate. Renegade has not
entered into any agreement, arrangement or understanding of any kind with any
person regarding a business combination.
Depending upon the nature of the transaction, the current officers and
directors of Renegade probably will resign their directorship and officer
positions with Renegade in connection with Renegade's consummation of a business
combination. See "Form of Acquisition" below. Renegade's current management will
not have any control over the conduct of Renegade's business following
Renegade's completion of a business combination.
It is anticipated that business opportunities will come to Renegade's
attention from various sources, including its management, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. Renegade has no
plans, understandings, agreements, or commitments with any individual or entity
to act as a finder of or as a business consultant in regard to any business
opportunities for Renegade. There are no plans to use advertisements, notices or
any general solicitation in the search for combination candidates.
PRE-COMBINATION ACTIVITIES. Renegade is a "blank check" company, defined as
an inactive, publicly quoted company with nominal assets and liabilities. With
these characteristics, management believes that Renegade will be attractive to
privately held companies interested in becoming publicly traded by means of a
business combination with Renegade, without offering their own securities to the
public. The term "business combination" (or "combination") means the result of
(i) a statutory merger of a combination candidate into or its consolidation with
Renegade or a wholly owned subsidiary of Renegade formed for the purpose of the
merger or consolidation, (ii) the exchange of securities of Renegade for the
assets or outstanding equity securities of a privately held business, or (iii)
the sale of securities by Renegade for cash or other value to a business entity
or individual, and similar transactions.
A combination may be structured in one of the foregoing ways or in any
other form which will result in the combined entity being a publicly held
corporation. It is unlikely that any proposed combination will be submitted for
the approval of Renegade's shareholders prior to consummation. Pending
negotiation and consummation of a combination, Renegade anticipates that it will
have no business activities or sources of revenues and will incur no significant
expenses or liabilities other than expenses related to ongoing filings required
by the Exchange Act, or related to the negotiation and consummation of a
combination.
Renegade anticipates that the business opportunities presented to it will
(1) be recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (2) be experiencing
financial or operating difficulties; (3) be in need of funds to develop a new
product or service or to expand into a new market; (4) be relying upon an
untested product or marketing concept; or (5) have a combination of the
foregoing characteristics. Given the above factors, it should be expected that
any acquisition candidate may have a history of losses or low profitability.
Renegade will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business, including service, finance, mining, manufacturing, real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other. Management's discretion is, as a practical matter,
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unlimited in the selection of a combination candidate. Management of Renegade
will seek combination candidates in the United States and other countries, as
available time permits, through existing associations and by word of mouth.
Renegade has not entered into any agreement or understanding of any kind
with any person regarding a business combination. There is no assurance that
Renegade will be successful in locating a suitable combination candidate or in
concluding a business combination on terms acceptable to Renegade. Renegade's
Board of Directors has not established a time limitation by which it must
consummate a suitable combination; however, if Renegade is unable to consummate
a suitable combination within a reasonable period, such period to be determined
at the discretion of Renegade's Board of Directors, the Board of Directors will
probably recommend its liquidation and dissolution. It is anticipated that
Renegade will not be able to diversify, but will essentially be limited to one
such venture because of Renegade's lack of capital. This lack of diversification
will not permit Renegade to offset potential losses from one acquisition against
profits from another, and should be considered an adverse factor affecting any
decision to purchase Renegade's securities.
Renegade's board of directors has the authority and discretion to complete
certain combinations without submitting them to the stockholders for their prior
approval. Renegade's shareholders should not anticipate that they will have any
meaningful opportunity to consider or vote upon any candidate selected by
Renegade management for acquisition. Generally, the prior approval of Renegade's
shareholders will be required for any statutory merger of Renegade with or into
another company, but shareholder approval will not be required if the following
requirements are met: (1) Renegade's articles of incorporation will not change
as a result of the merger; (2) following the merger, each person who was a
Renegade shareholder immediately prior to the merger will on the effective date
of the merger continue to hold the same number of shares, with identical
designations, preferences, limitations and relative rights; and (3) the number
of Renegade voting and participating shares which are outstanding prior to the
merger is not increased more than 20% as a result of the merger, giving effect
to the conversion of convertible securities and the exercise of warrants,
options and other rights issued in the merger. It is likely, however, in
management's opinion that any combination entered into by Renegade that takes
the form of a merger will result in the issuance of additional shares exceeding
the 20% limitation. Shareholder approval also will not be required as to any
"short-form merger," meaning the merger into Renegade of a company in which
Renegade already owns 90% or more of the equity securities. Moreover, in the
event that a business combination occurs in the form of a stock-for-stock
exchange or the issuance of stock to purchase assets, the approval of Renegade's
shareholders will not be required by law so long as it is Renegade that acquires
the shares or assets of the other company.
However, it is anticipated that Renegade's shareholders will, prior to
completion of any combination, be given information about the candidate
company's business, financial condition, management and other information
required by ITEMs 6(a), (d), (e), 7 and 8 of Schedule 14A of Regulation 14A
under the Exchange Act, which is substantially the same information as required
in a proxy statement.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies will
be undertaken by or under the supervision of Renegade's President, who is not a
professional business analyst. See "MANAGEMENT" below.
To a large extent, a decision to participate in a specific combination may
be made upon management's analysis of the quality of the candidate company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the candidate will derive from becoming a publicly held entity, and numerous
other factors which are difficult, if not impossible, to objectively quantify or
analyze. In many instances, it is anticipated that the historical operations of
a specific candidate may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
management, or make other changes. Renegade will be dependent upon the owners
and management of a candidate to identify any such problems which may exist and
to implement, or be primarily responsible for the implementation of, required
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changes. Because Renegade may participate in a business combination with a newly
organized candidate or with a candidate which is entering a new phase of growth,
it should be emphasized that Renegade will incur further risks, because
management in many instances will not have proved its abilities or
effectiveness, the eventual market for the candidate's products or services will
likely not be established, and the candidate may not be profitable when
acquired.
Otherwise, Renegade anticipates that it may consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. Renegade's perception of how any particular candidate will be received
by the investment community and by Renegade's stockholders;
3. Whether, following the business combination, the financial condition
of the candidate would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of
Renegade to qualify for listing on an exchange or on NASDAQ, so as to
permit the trading of such securities to be exempt from the
requirements of the federal "penny stock" rules adopted by the SEC.
4. Capital requirements and anticipated availability of required funds,
to be provided by Renegade or from operations, through the sale of
additional securities, through joint ventures or similar arrangements,
or from other sources;
5. The extent to which the candidate can be advanced;
6. Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
7. Strength and diversity of existing management, or management prospects
that are scheduled for recruitment;
8. The cost of participation by Renegade as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required
items.
No one of the factors described above will be controlling in the selection
of a candidate. Potentially available candidates may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. It should be recognized that, because of
Renegade's limited capital available for investigation and management's limited
experience in business analysis, Renegade may not discover or adequately
evaluate adverse facts about the opportunity to be acquired. Renegade cannot
predict when it may participate in a business combination. It expects, however,
that the analysis of specific proposals and the selection of a candidate may
take several months or more.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with Renegade to be attractive.
These include acquisition candidates desiring to create a public market for
their shares in order to enhance liquidity for current shareholders, acquisition
candidates which have long-term plans for raising capital through the public
sale of securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition candidates
which plan to acquire additional assets through issuance of securities rather
than for cash, and believe that the possibility of development of a public
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market for their securities will be of assistance in that process. Acquisition
candidates which have a need for an immediate cash infusion are not likely to
find a potential business combination with Renegade to be an attractive
alternative.
Prior to consummation of any combination (other than a mere sale by
Renegade insiders of a controlling interest in Renegade's common stock) Renegade
intends to require that the combination candidate provide Renegade the financial
statements required by ITEM 310 of Regulation S-B, including at the least an
audited balance sheet as of the most recent fiscal year end and statements of
operations, changes in stockholders' equity and cash flows for the two most
recent fiscal years, audited by certified public accountants acceptable to
Renegade's management, and the necessary unaudited interim financial statements.
Such financial statements must be adequate to satisfy Renegade's reporting
obligations under Section 15(d) or 13 of the Exchange Act. If the required
audited financial statements are not available at the time of closing, Renegade
management must reasonably believe that the audit can be obtained in less than
60 days. This requirement to provide audited financial statements may
significantly narrow the pool of potential combination candidates available,
since most private companies are not already audited. Some private companies
will either not be able to obtain an audit or will find the audit process too
expensive. In addition, some private companies on closer examination may find
the entire process of being a reporting company after a combination with
Renegade too burdensome and expensive in light of the perceived potential
benefits from a combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which
Renegade may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and desires of
Renegade and the promoters of the opportunity and, upon the basis of that review
and the relative negotiating strength of Renegade and such promoters, the legal
structure or method deemed by management to be suitable will be selected. Such
structure may include, but is not limited to leases, purchase and sale
agreements, licenses, joint ventures and other contractual arrangements.
Renegade may act directly or indirectly through an interest in a partnership,
corporation or other form of organization. Implementing such structure may
require the merger, consolidation or reorganization of Renegade with other
corporations or forms of business organization, and although it is likely, there
is no assurance that Renegade would be the surviving entity. In addition, the
present management and stockholders of Renegade most likely will not have
control of a majority of the voting shares of Renegade following a
reorganization transaction. As part of such a transaction, Renegade's existing
directors may resign and new directors may be appointed without any vote or
opportunity for approval by Renegade's shareholders.
It is likely that Renegade will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of
Renegade. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, Renegade's
current stockholders would retain in the aggregate 20% or less of the total
issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of Renegade prior to such
reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in Renegade by the current officers, directors and principal
shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, Renegade may
agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in Renegade's securities may have a depressive
effect upon such market.
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Renegade will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, Renegade anticipates that it, and/or its officers and
principal shareholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither Renegade nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of Renegade to pay until an indeterminate future time may make it
impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following
consummation of a combination, control of Renegade will change as a result of
the issuance of additional Common Stock to the shareholders of the business
acquired in the combination. Once ownership control has changed, it is likely
that the new controlling shareholders will call a meeting for the purpose of
replacing the incumbent directors of Renegade with candidates of their own, and
that the new directors will then replace the incumbent officers with their own
nominees. Rule 14f-1 under the Exchange Act requires that, if in connection with
a business combination or sale of control of Renegade there should arise any
arrangement or understanding for a change in a majority of Renegade's directors
and the change in the board of directors is not approved in advance by
Renegade's shareholders at a shareholder meeting, then none of the new directors
may take office until at least ten (10) days after an information statement has
been filed with the Securities and Exchange Commission and sent to Renegade's
shareholders. The information statement furnished must as a practical matter
include the information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule
14A of Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that
Renegade will file a current report on Form 8-K with the Commission which
discloses among other things the date and manner of the combination, material
terms of the definitive agreement, the assets and consideration involved, the
identity of the person or persons from whom the assets or other property was
acquired, changes in management and biographies of the new directors and
executive officers, identity of principal shareholders following the
combination, and contains the required financial statements. Such a Form 8-K
report also will be required to include all information as to the business
acquired called for by ITEM 101 of Regulation S-B.
POTENTIAL BENEFITS to INSIDERS
In connection with a business combination, it is possible that shares of
common stock constituting control of Renegade may be purchased from the current
principal shareholders ("insiders") of Renegade by the acquiring entity or its
affiliates. If stock is purchased from the insiders, the transaction is very
likely to result in substantial gains to them relative to the price they
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originally paid for the stock. In Renegade's judgment, none of its officers and
directors would as a result of such a sale become an "underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933, as amended. No bylaw
or charter provision Renegade prevents insiders from negotiating or consummating
such a sale of their shares. The sale of a controlling interest by Renegade
insiders could occur at a time when the other shareholders of the Company remain
subject to restrictions on the transfer of their shares, and it is unlikely that
Renegade shareholders generally will be given the opportunity to participate in
any such sale of shares. Moreover, Renegade shareholders probably will not be
afforded any opportunity to review or approve any such buyout of shares held by
an officer, director or other affiliate, should such a buyout occur.
Renegade may require that a company being acquired repay all advances made
to Renegade by Renegade shareholders and management, at or prior to closing of a
combination. Otherwise, there are no conditions that any combination or
combination candidate must meet, such as buying stock from Renegade insiders or
paying compensation to any Renegade officer, director or shareholder or their
respective affiliates.
POSSIBLE ORIGINATION of a BUSINESS
The Board of Directors has left open the possibility that, instead of
seeking a business combination, Renegade may instead raise funding in order to
originate an operating business, which may be in any industry or line of
business, and could involve Renegade's origination of a start-up business,
purchase and development of a business already originated by third parties,
joint venture of a new or existing business, or take any other lawful form. It
is also possible that Renegade may engage in one or more combinations, as
discussed above, and originate a business in addition. Potential shareholders
should consider that management has the widest possible discretion in choosing a
business direction for Renegade.
Any funds needed to originate and develop a business would almost certainly be
raised from the sale of Renegade's securities, since Renegade lacks the
creditworthiness to obtain a loan. Management does not believe that the
principal shareholders, directors or executive officers of Renegade would be
willing to guarantee any debt taken on, and obtaining a loan without personal
guarantees is unlikely. Capital could possibly be raised from the sale of debt
instruments convertible into common stock upon the occurrence of certain defined
events, but no such funding has been offered. Renegade has no current plans to
offer or sell its securities, but would be agreeable do so if a worthy business
opportunity presents itself and adequate funding then appears to be available.
USE OF CONSULTANTS and FINDERS
Although there are no current plans to do so, Renegade management might
hire and pay an outside consultant to assist in the investigation and selection
of candidates, and might pay a finder's fee to a person who introduces a
candidate with which Renegade completes a combination. Since Renegade management
has no current plans to use any outside consultants or finders to assist in the
investigation and selection of candidates, no policies have been adopted
regarding use of consultants or finders, the criteria to be used in selecting
such consultants or finders, the services to be provided, the term of service,
or the structure or amount of fees that may be paid to them. However, because of
the limited resources of Renegade, it is likely that any such fee Renegade
agrees to pay would be paid in stock and not in cash. Renegade has had no
discussions, and has entered into no arrangements or understandings, with any
consultant or finder. Renegade's officers and directors have not in the past
used any particular consultant or finder on a regular basis and have no plan to
either use any consultant or recommend that any particular consultant be engaged
by Renegade on any basis.
It is possible that compensation in the form of common stock, options,
warrants or other securities of Renegade, cash or any combination thereof, may
be paid to outside consultants or finders. No securities of Renegade will be
paid to officers, directors or promoters of Renegade nor any of their respective
affiliates. Any payments of cash to a consultant or finder would be made by the
business acquired or persons affiliated or associated with it, and not by
Renegade. It is possible that the payment of such compensation may become a
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factor in any negotiations for Renegade's acquisition of a business opportunity.
Any such negotiations and compensation may present conflicts of interest between
the interests of persons seeking compensation and those of Renegade's
shareholders, and there is no assurance that any such conflicts will be resolved
in favor of Renegade's shareholders.
RISK FACTORS
At this time the shares of Renegade are speculative and involve a high
degree of risk, for the reasons following. Renegade is in the development stage
with no operations or revenues, thus there are no financial results upon which
anyone may base an assessment of its potential. No combination candidate has
been identified for acquisition by management, nor has any determination been
made as to any business for Renegade to enter, and shareholders will have no
meaningful voice in any such determinations. There is no assurance that Renegade
will be successful in completing a combination or originating a business, nor
that Renegade will be successful or that its shares will have any value even if
a combination is completed or a business originated.
Renegade's officers and directors, who serve only on a part-time basis,
have had limited experience in the business activities contemplated by Renegade,
yet Renegade will be solely dependent on them. Renegade lacks the funds or other
incentive to hire full-time experienced management. Each of Renegade's
management members has other employment or business interests to which he
devotes his primary attention and will continue to do so, devoting time to
Renegade only on an as-needed basis. Moreover, members of management are
involved in other companies also seeking to engage in a combination, and
conflicts of interest could arise in the event they come across a desirable
combination candidate. No assurance exists that all or any such conflicts will
be resolved in favor of Renegade.
After completion of a combination, the current shareholders of Renegade may
experience severe dilution of their ownership due to the issuance of shares in
the combination. Any combination effected by Renegade almost certainly will
require its existing management and board members to resign, thus shareholders
have no way of knowing what persons ultimately will direct Renegade and may not
have an effective voice in their selection.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
that involve the sale of a "covered security." The term "covered security" is
defined in Section 18 to include among other things transactions by "any person
not an issuer, underwriter or dealer," (in other words, secondary transactions
in securities already outstanding) that are exempted from registration by
Section 4(1) of the Securities Act of 1933, provided the issuer of the security
is a "reporting company," meaning that it files reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
Section 18 as amended preserves the authority of the states to require
certain limited notice filings by issuers and to collect fees as to certain
categories of covered securities, specifically including Section 4(1) secondary
transactions in the securities of reporting companies. Section 18 expressly
provides, however, that a state may not "directly or indirectly prohibit, limit,
or impose conditions based on the merits of such offering or issuer, upon the
offer or sale of any (covered) security." This provision prohibits states from
requiring registration or qualification of securities of an Exchange Act
reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that
prohibit secondary trading in the securities of "blank check" companies like
Renegade. Section 18, however, of the Act preempts state law as to covered
securities of reporting companies. Thus, while the states may require certain
limited notice filings and payment of filing fees by Renegade as a precondition
to secondary trading of its shares in those states, they cannot, so long as
Renegade is a reporting issuer, prohibit, limit or condition trading in
Renegade's securities based on the fact that Renegade is or ever was a blank
check company. Renegade will comply with such state limited notice filings as
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may be necessary in regard to secondary trading. At this time, Renegade's stock
is not actively traded in any market, and an active market in its common stock
is not expected to arise, if ever, until after completion of a business
combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, Renegade will not engage in the business
of investing or reinvesting in, or owning, holding or trading in securities, or
otherwise engaging in activities which would cause it to be classified as an
"investment company" under the 1940 Act. To avoid becoming an investment
company, not more than 40% of the value of Renegade's assets (excluding
government securities and cash and cash equivalents) may consist of "investment
securities," which is defined to include all securities other than U.S.
government securities and securities of majority-owned subsidiaries. Because
Renegade will not own less than a majority of any assets or business acquired,
it will not be regulated as an investment company. Renegade will not pursue any
combination unless it will result in Renegade owning at least a majority
interest in the business acquired.
COMPETITION
Renegade will be in direct competition with many entities in its efforts to
locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
entities will possess greater financial resources and will be able to assume
greater risks than those which Renegade, with its limited capital, could
consider. Many of these competing entities will also possess significantly
greater experience and contacts than Renegade's Management. Moreover, Renegade
also will be competing with numerous other blank check companies for such
opportunities.
EMPLOYEES
Renegade has no full-time employees, and its only employees currently are
its officers. It is not expected that Renegade will have additional full-time or
other employees except as a result of completing a combination.
Item 2. DESCRIPTION OF PROPERTY.
Renegade neither owns nor leases any real estate or other properties.
Renegade's offices are located in the offices of Brasher and Company, counsel to
the Company, and are provided at no charge. This arrangement will continue and
is believed to be adequate for Renegade's needs until Renegade completes an
acquisition of an operating business, in which latter event the offices of
Renegade undoubtedly will be the same as those of the acquired company.
Item 3. LEGAL PROCEEDINGS.
There are no legal proceedings which are pending or have been threatened
against Renegade or any officer, director or control person of which management
is aware.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote or for the written consent of security
shareholders for the year ended December 31, 1999, and no meeting of
shareholders was held.
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PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
PRICE RANGE OF COMMON STOCK
During the fiscal year ended December 31, 1999, the Common Shares were
quoted under symbol "RDVN" on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc., but few transactions have taken place,
and there is no market for the Common Shares at this time. The common shares are
quoted at a bid price of $.01, with no asked price.
There currently is no public market for Renegade's common stock, and no
assurance can be given that a market will develop or that a shareholder ever
will be able to liquidate his investment without considerable delay, if at all.
If a market should develop, the price may be highly volatile. Unless and until
Renegade's common shares are quoted on the NASDAQ system or listed on a national
securities exchange, it is likely that the common shares will be defined as
"penny stocks" under the Exchange Act and SEC rules thereunder. The Exchange Act
and penny stock rules generally impose additional sales practice and disclosure
requirements upon broker-dealers who sell penny stocks to persons other than
certain "accredited investors" (generally, institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 jointly with spouse) or in transactions
not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must
make a suitability determination for each purchaser and receive the purchaser's
written agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the SEC. So long as Renegade's common shares are
considered "penny stocks", many brokers will be reluctant or will refuse to
effect transactions in Renegade's shares, and many lending institutions will not
permit the use of penny stocks as collateral for any loans.
HOLDERS
Renegade had approximately 51 shareholders of record as of December 31,
1999, which number may not include shareholders whose shares are held in street
or nominee names.
DIVIDENDS
Renegade does not expect to pay a cash dividend upon its capital stock in
the foreseeable future. Payment of dividends in the future will depend on
Renegade's earnings (if any) and its cash requirements at that time.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN of OPERATION
Renegade is a blank check company whose plan of operation over the next
twelve months is to seek and, if possible, acquire an operating business or
valuable assets by entering into a business combination.. Renegade will not be
restricted in its search for business combination candidates to any particular
geographical area, industry or industry segment, and may enter into a
combination with a private business engaged in any line of business, including
service, finance, mining, manufacturing, real estate, oil and gas, distribution,
transportation, medical, communications, high technology, biotechnology or any
other. Management's discretion is, as a practical matter, unlimited in the
selection of a combination candidate. Management of Renegade will seek
combination candidates in the United States and other countries, as available
time and resources permit, through existing associations and by word of mouth.
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This plan of operation has been adopted in order to attempt to create value for
Renegade's shareholders. For further information on Renegade's plan of operation
and business, see PART I, Item 1 above.
Renegade does not intend to do any product research or development.
Renegade does not expect to buy or sell any real estate, plant or equipment
except as such a purchase might occur by way of a business combination that is
structured as an asset purchase, and no such asset purchase currently is
anticipated. Similarly, Renegade does not expect to add additional employees or
any full-time employees except as a result of completing a business combination,
and any such employees likely will be persons already then employed by the
company acquired.
RESULTS OF OPERATIONS
1999. For the year ended December 31, 1999, Renegade had no revenues and
incurred a net loss of $10,076 as compared to a net loss of $7,997 for the year
ended December 31, 1998. Expenses in calendar 1999 related primarily to
miscellaneous filing fees, accounting fees and legal fees, as they did in 1998.
1998. For the year ended December 31, 1998, Renegade had no revenues and
incurred a net loss of $7,997 as compared to a net loss of $46,246 for the year
ended December 31, 1997. Expenses in calendar 1998 related primarily to
miscellaneous filing fees, accounting fees and legal fees, as they did in 1997.
LIQUIDITY and CAPITAL RESOURCES
Renegade had $8,855 in cash on hand at December 31, 1999 and had no other assets
to meet ongoing expenses or debts that may accumulate. Since inception, Renegade
has accumulated a deficit (net loss) of $101,374. Renegade has debts totalling
$47,104, principally fees owed to its legal counsel for services rendered.
Renegade has no commitment for any capital expenditure and foresees none.
However, Renegade will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur expenses in finding and
investigating possible acquisitions and other fees and expenses in the event it
makes an acquisition or attempts but is unable to complete an acquisition.
Renegade's cash requirements for the next twelve months are relatively modest,
principally accounting expenses and other expenses relating to making filings
required under the Securities Exchange Act of 1934 (the "Exchange Act"), which
should not exceed $10,000 in the fiscal year ending December 31, 2000. Any
travel, lodging or other expenses which may arise related to finding,
investigating and attempting to complete a combination with one or more
potential acquisitions could also amount to thousands of dollars.
Renegade's current management and its counsel have informally agreed to
continue rendering services to Renegade and to not demand payment of sums owed
unless and until Renegade completes an acquisition. The terms of any such
payment will have to be negotiated with the principals of any business acquired.
The existence and amounts of Renegade debt may make it more difficult to
complete, or prevent completion of, a desirable acquisition. In addition,
offices are provided to Renegade without charge.
Renegade will only be able to pay its future debts and meet operating
expenses by raising additional funds, acquiring a profitable company or
otherwise generating positive cash flow. As a practical matter, Renegade is
unlikely to generate positive cash flow by any means other than acquiring a
company with such cash flow. Renegade believes that management members or
shareholders will loan funds to Renegade as needed for operations prior to
completion of an acquisition. Management and the shareholders are not obligated
to provide funds to Renegade, however, and it is not certain they will always
want or be financially able to do so. Renegade shareholders and management
members who advance money to Renegade to cover operating expenses will expect to
be reimbursed, either by Renegade or by the company acquired, prior to or at the
time of completing a combination. Renegade has no intention of borrowing money
to reimburse or pay salaries to any Renegade officer, director or shareholder or
their affiliates. There currently are no plans to sell additional securities of
Renegade to raise capital, although sales of securities may be necessary to
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obtain needed funds. Renegade's current management and its counsel have agreed
to continue their services to Renegade and to accrue sums owed them for services
and expenses and expect payment reimbursement only
Should existing management or shareholders refuse to advance needed funds,
however, Renegade would be forced to turn to outside parties to either loan
money to Renegade or buy Renegade securities. There is no assurance whatever
that Renegade will be able at need to raise necessary funds from outside
sources. Such a lack of funds could result in severe consequences to Renegade,
including among others:
(1) failure to make timely filings with the SEC as required by the Exchange
Act, which also probably would result in suspension of trading or quotation
in Renegade's stock and could result in fines and penalties to Renegade
under the Exchange Act;
(2) curtailing or eliminating Renegade's ability to locate and perform
suitable investigations of potential acquisitions; or
(3) inability to complete a desirable acquisition due to lack of funds to
pay legal and accounting fees and acquisition-related expenses.
Renegade hopes to require potential candidate companies to deposit funds
with Renegade that it can use to defray professional fees and travel, lodging
and other due diligence expenses incurred by Renegade's management related to
finding and investigating a candidate company and negotiating and consummating a
business combination. There is no assurance that any potential candidate will
agree to make such a deposit.
YEAR 2000 ISSUES
Renegade has not suffered any Year 2000 ("Y2K") computer-related problems
and does not anticipate that it will suffer any losses as a result of Y2K
problems. However, if general economic problems resulting from Y2K issues were
to be severe and prolonged, demand for blank check companies such as Renegade
could be reduced or eliminated for an unknown period of time. Because Renegade
regularly backs up its records and documents maintained on computer, any
computer failure should not directly cause Renegade more than a modest
inconvenience at worst.
Item 7. FINANCIAL STATEMENTS.
The index to the financial statements appears at page 21.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
IDENTIFICATION of CURRENT
DIRECTORS and EXECUTIVE OFFICERS
The persons who serve as directors and executive officers of Renegade,
their ages, positions and tenure held in Renegade, are listed below. Each
director will serve until the next annual meeting of shareholders, or until
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their respective successors have been elected and duly qualified. Directors
serve one-year terms. Officers hold office at the pleasure of the Board of
Directors, absent any employment agreement, of which none currently exist or are
contemplated. There are no family relationships between any director or
executive officer.
Name Age Position
---- --- --------
Randy J. Sasaki 41 Director and Chairman of the Board, President,
Chief Executive Officer, Chief Financial and
Accounting Officer, since April 13, 1994
John D. Brasher Jr. 48 Director since October 29, 1997
Thomas M. Liston 45 Secretary, Treasurer, Director since April 13, 1994
BIOGRAPHICAL INFORMATION
The following is a brief account of the business experience during at least
the past five years of each person who is a director and executive officer at
the time of filing this report, indicating the principal occupation and
employment during that period, and the name and principal business of the
organization in which such occupation and employment were carried out. None of
such persons has ever devoted full time or any significant time to Renegade's
business. These persons have agreed to devote only such time to Renegade's
business as seems reasonable and necessary from time to time.
RANDY J. SASAKI. Mr. Sasaki currently is the owner and director of Pacific
Consulting Group, Inc., a Nevada corporation headquartered in Newport Beach,
California, which provides business consulting services. Formerly, he was
engaged as a private consultant by JDK & Associates, Inc., a public relations
firm based in Newport Beach, California since mid-1993. From January 1992 to
mid-1993, Mr. Sasaki attended Metropolitan State University in Denver, where he
was working toward a masters degree in finance. Since 1990 he has been an owner
and director of Ceiling Systems BV, a Netherlands company established to market
and sublicense patented technology and equipment associated with the renovation
of commercial buildings, and from 1989 to 1992, he served as manager of Ceiling
Systems, Inc., a corporation headquartered in Denver which developed patented
technology used in the renovation of commercial building ceilings. From 1988 to
1989, Mr. Sasaki was sales manager and a minority owner of Manhattan
Corporation, a Denver-based company engaged in the business of switching mutual
funds, primarily managing retirement plans of United Airlines pilots. In 1985,
while working part-time at Continental Airlines as a customer service
representative, Mr. Sasaki began trading futures on the New York Futures
Exchange for his own account. He and an associate were ranked 12th in the United
States during the 1986 U.S. Trading Championship sponsored by and reported
Investor's Daily on January 6, 1986, also reported in Barron's and Stocks &
Commodities. Mr. Sasaki holds a B.S. degree in Aeronautical Engineering from
Metropolitan State College in Denver, Colorado. Mr. Sasaki is a Director and
President of Proquest Capital Corporation, a Nevada corporation with a business
plan similar to that of Renegade.
JOHN D. BRASHER JR. Mr. Brasher is an attorney engaged since February 1988
in the practice of law in Denver, Colorado, as proprietor of Brasher & Company
and concentrates in the fields of corporate and securities law. From February
1987 to February 1988 he practiced law as a profit-sharing partner in the firm
of Pred and Miller, Denver, Colorado, concentrating in corporate and securities
law. From August 1982 until February 1987, Mr. Brasher practiced corporate and
securities law as an associate and later as a partner of Broadhurst, Brook,
Mangham and Hardy, of Lafayette, Louisiana. Mr. Brasher received a B.A. degree
in English in 1979, and in 1982 received a law degree (J.D.), both from
Louisiana State University. He is admitted to practice in the States of Colorado
and Louisiana and is a member of the bar of the United States Supreme Court. He
is also CEO and President of CERXnet Incorporated, a public holding company
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headquartered in Denver, Colorado. Mr. Brasher also is a director and officer of
Fontenot Development Corporation, a Louisiana corporation with a business plan
similar to that of Renegade.
THOMAS M. LISTON. In November 1994, Mr. Liston and others formed Visions
Incorporated, a Denver company of which he is Vice President, which engages in
the development, manufacture and marketing of new products for the law
enforcement and securities industry. In 1992 and 1993, Mr. Liston was associated
with Business Appraisal Associates in Denver, Colorado, as a real estate
appraiser and financial consultant. In 1990 and 1992, Mr. Liston was a part-time
salesman for Ceiling Systems, Inc. in Denver and acted as an independent
financial consultant. Mr. Liston is a Colorado Registered Appraiser (Real
Estate) and, though currently inactive, holds securities licenses as a
registered representative and registered principal. From 1988 to 1990, Mr.
Liston was manager and an owner of Inter-Cap Investments, Inc., a securities
brokerage firm in Aurora, Colorado. Mr. Liston graduated in 1976 from Southwest
Missouri State University (Springfield, Missouri) with a B.S. degree in Business
Management.
SIGNIFICANT EMPLOYEES
None, other than officers of Renegade listed above.
POTENTIAL CONFLICTS of INTEREST
Certain of the Company's officers and directors are now and may in the
future from time to time be affiliated with other blank check companies having a
similar business plan to that of Renegade ("Affiliated Companies") which may
compete directly or indirectly with Renegade. Renegade has not identified a
specific business area, industry or industry segment in which it will seek
combination candidates. Renegade has made a determination that it will not
concentrate its search for combination candidates in any particular business,
industry or industry segment, since any such determination is potentially
limiting and confers no advantage to Renegade or its shareholders. Certain
specific conflicts of interest may include those discussed below.
1. The interests of any Affiliated Companies from time to time may be
inconsistent in some respects with the interests of Renegade. The nature of
these conflicts of interest may vary. There may be circumstances in which an
Affiliated Company may take advantage of an opportunity that might be suitable
for Renegade. Although there can be no assurance that conflicts of interest will
not arise or that resolutions of any such conflicts will be made in a manner
most favorable to Renegade and its shareholders, the officers and directors of
Renegade have a fiduciary responsibility to Renegade and its shareholders and,
therefore, must adhere to a standard of good faith and integrity in their
dealings with and for Renegade and its shareholders.
2. The officers and directors of Renegade serve as officers or directors of
one or more Affiliated Companies and may serve as officers and directors of
other Affiliated Companies in the future. Renegade's officers and directors are
required to devote only so much of their time to Renegade's affairs as they deem
appropriate, in their sole discretion. As a result, Renegade's officers and
directors may have conflicts of interest in allocating their management time,
services, and functions among Renegade and any current and future Affiliated
Companies which they may serve, as well as any other business ventures in which
they are now or may later become involved.
3. The Affiliated Companies may compete directly or indirectly with that of
Renegade for the acquisition of available, desirable combination candidates.
There may be factors unique to Renegade or an Affiliated Company which
respectively makes it more or less desirable to a potential combination
candidate, such as age of the company, name, capitalization, state of
incorporation, contents of the articles of incorporation, etc. However, any such
direct conflicts are not expected to be resolved through arm's-length
negotiation, but rather in the discretion of management. While any such
resolution will be made with due regard to the fiduciary duty owed to Renegade
and its shareholders, there can be no assurance that all potential conflicts can
be resolved in a manner most favorable to Renegade as if no conflicts existed.
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Members of Renegade's management who also are members of management of another
Affiliated Company will also owe the same fiduciary duty to the shareholders of
the other Affiliated Company.
Should a potential acquisition be equally available to and desirable for
both renegade and the Affiliated Companies, no guideline exists for determining
which company would make the acquisition. This poses a risk to Renegade
shareholders that a desirable acquisition available to Renegade may be made by
an Affiliated Company, whose shareholders would instead reap the rewards of the
acquisition. An Affiliated Company's shareholders of course face exactly the
same risk. Any persons who are officers and directors of both Renegade and an
Affiliated Company do not have the sole power (nor the power through stock
ownership) to determine which company would acquire a particular acquisition. No
time limit exists in which an acquisition may or must be made by Renegade, and
there is no assurance when - or if - an acquisition ever will be completed.
4. Certain conflicts of interest exist and will continue to exist between
Renegade and its officers and directors due to the fact that each has other
employment or business interests to which he devotes his primary attention. Each
officer and director is expected to continue to do so in order to make a living,
notwithstanding the fact that management time should be devoted to Renegade's
affairs. Renegade has not established policies or procedures for the resolution
of current or potential conflicts of interest between Renegade and its
management.
As a practical matter, such potential conflicts could be alleviated only if
the Affiliated Companies either are not seeking a combination candidate at the
same time as the Company, have already identified a combination candidate, are
seeking a combination candidate in a specifically identified business area, or
are seeking a combination candidate that would not otherwise meet Renegade's
selection criteria. It is likely, however, that the combination criteria of
Renegade and any Affiliated Companies will be substantially identical.
Ultimately, Renegade's shareholders ultimately must rely on the fiduciary
responsibility owed to them by Renegade's officers and directors.
There can be no assurance that members of management will resolve all
conflicts of interest in Renegade's favor. The officers and directors are
accountable to Renegade and its shareholders as fiduciaries, which means that
they are legally obligated to exercise good faith and integrity in handling
Renegade's affairs and in their dealings with Renegade. Failure by them to
conduct Renegade's business in its best interests may result in liability to
them. The area of fiduciary responsibility is a rapidly developing area of law,
and persons who have questions concerning the duties of the officers and
directors to Renegade should consult their counsel.
EXCLUSION of DIRECTOR LIABILITY
Pursuant to the General Corporation Law of Nevada, Renegade's Certificate
of Incorporation excludes personal liability on the part of its directors to
Renegade for monetary damages based upon any violation of their fiduciary duties
as directors, except as to liability for any acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or for improper
payment of dividends. This exclusion of liability does not limit any right which
a director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
Item 10. EXECUTIVE COMPENSATION.
CASH and OTHER COMPENSATION
During the year ended December 31, 1999, Renegade paid no cash or cash
equivalent compensation to its executive officers and directors. Renegade has no
other agreement or understanding, express or implied, with any director or
executive officer concerning employment or cash or other compensation for
services.
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COMPENSATION PURSUANT to PLANS
Renegade President Randy J. Sasaki and Renegade counsel John Brasher each
have been granted options until May 4, 2002 to purchase 500,000 shares of
Renegade common stock at a price of $.05 per share pursuant to the 1997
Compensatory Stock Option Plan. Otherwise, no director or executive officer has
received compensation from Renegade pursuant to any compensatory or benefit
plan. There is no plan or understanding, express or implied, to pay any
compensation to any director or executive officer pursuant to any compensatory
or benefit plan of Renegade, although Renegade anticipates that it will
compensate its officers and directors for services to Renegade with stock or
options to purchase stock, in lieu of cash.
Renegade currently has in place an employee stock compensation plan and
compensatory stock option plan. Renegade has no long-term incentive plans, as
that term is defined in the rules and regulations of the Securities and Exchange
Commission. There are no other compensatory or benefit plans, such as retirement
or pension plans, in effect or anticipated to be adopted, although other plans
may be adopted by new management following completion of a business combination.
EMPLOYEE STOCK COMPENSATION PLAN
Renegade has adopted the 1997 Employee Stock Compensation Plan for
employees, officers, directors of Renegade and advisors to Renegade (the "ESC
Plan"). Renegade has reserved a maximum of 1,000,000 Common Shares to be issued
upon the grant of awards under the ESC Plan. Employees will recognize taxable
income upon the grant of Common Stock equal to the fair market value of the
Common Stock on the date of the grant and Renegade will recognize a compensating
deduction at such time. The ESC Plan will be administered by the Board of
Directors. No Common Stock has been awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN
Renegade has adopted the 1997 Compensatory Stock Option Plan for officers,
employees, directors and advisors (the "CSO Plan"). Renegade has reserved a
maximum of 2,000,000 Common Shares to be issued upon the exercise of options
granted under the CSO Plan. The CSO Plan will not qualify as an "incentive stock
option" plan under Section 422A of the Internal Revenue Code of 1986, as
amended. Options will be granted under the CSO Plan at exercise prices to be
determined by the Board of Directors or other CSO Plan administrator. With
respect to options granted pursuant to the CSO Plan, optionees will not
recognize taxable income upon the grant of options granted at or in excess of
fair market value. Renegade will be entitled to a compensating deduction (which
it must expense) in an amount equal to any taxable income realized by an
optionee as a result of exercising the option. The CSO Plan will be administered
by the Board of Directors or a committee of directors. Options to purchase an
aggregate of 1,000,000 shares of Renegade common stock have been granted under
the CSO Plan, as described above.
COMPENSATION OF DIRECTORS
Renegade has no standard arrangements in place or currently contemplated to
compensate Renegade directors for their service as directors or as members of
any committee of directors.
EMPLOYMENT CONTRACTS
No person has entered into any employment or similar contract with
Renegade. It is not anticipated that Renegade will enter into any employment or
similar contract unless in conjunction with or following completion of a
business combination.
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Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 31, 1999, the stock
ownership of each officer and director of Renegade, of all officers and
directors of Renegade as a group, and of each person known by Renegade to be a
beneficial owner of 5% or more of its Common Stock, $.001 par value per share.
Except as otherwise noted, each person listed below is the sole beneficial owner
of the shares and has sole investment and voting power as such shares. No person
listed below has any option, warrant or other right to acquire additional
securities of Renegade, except as noted.
Amount
Name and Address of Common Stock Owned Percent of Common
of Beneficial Owner Beneficially Stock Outstanding
------------------- ------------ -----------------
*Randy J. Sasaki ......................... 512,500 (1) 38.8%
2439 West Coast Highway, Suite 202
Newport Beach, California 92663
*John D. Brasher Jr. ..................... 525,000 (1) 39.7%
90 Madison Street
Suite 707
Denver, Colorado 80206
*Thomas Liston ........................... -0- -0-
2604 South Xanadu Way
Aurora, Colorado 80014
*All directors and executive
executive officers (3 persons) ..... 1,037,500 78.5%
(1) Includes 500,000 shares subject to purchase upon the exercise of
options granted under the 1997 Compensatory Stock Option Plan.
The percentages reflected in the above table were calculated as if all the
1,000,000 stock options had been exercised. The current officers and directors
of Renegade may be deemed to be "promoters" or "founders" of Renegade.
CHANGES in CONTROL
A change of control of Renegade probably will occur upon consummation of a
business combination, which is anticipated to involve significant change in
ownership of Renegade and in the membership of the board of directors. The
extent of any such change of control in ownership or board composition cannot be
predicted at this time.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Renegade is not indebted to any current or former officer, director,
promoter or control person, except for $46,823 owed to its counsel, director
John D. Brasher Jr., for legal services rendered. Renegade has no understanding
with its officers, directors or shareholders, pursuant to which such persons are
required to contribute capital to Renegade, loan money or otherwise provide
funds to Renegade, although management expects that one or more of such persons
may make funds available to Renegade in the event of need to cover operating
expenses.
19
<PAGE>
No officer, director or employee of Renegade or its predecessor received a
salary of $60,000 or more in 1999 or 1998. There were no transactions, or series
of transactions, for the years ended December 31, 1999 or 1998, nor are there
any currently proposed transactions, or series of transactions, to which
Renegade is (or Renegade or its predecessor was) a party, in which the amount
exceeds $60,000, and in which to the knowledge of Renegade any director,
executive officer, nominee, five percent or greater shareholder, or any member
of the immediate family of any of the foregoing persons, have or will have any
direct or indirect material interest.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits are filed with this report, except
those indicated as having previously been filed with the Securities and Exchange
Commission and incorporated by reference to another report, registration
statement or form. As to any shareholder of record requesting a copy of this
report, Renegade will furnish any exhibit indicated in the list below as filed
with report upon payment to Renegade of its expenses in furnishing the
information.
3.1 Articles of Incorporation of Renegade Venture Corporation,
incorporated by reference to Exhibit 3.1 to registration
statement on Form S-18, file No. 33-30476 dated August 11,
1989 ........................................................ 1
3.2 Bylaws of Renegade Venture Corporation, incorporated by
reference to Exhibit 3.2 to registration statement on form
S-18, file No. 33-30476 dated August 11, 1989 ............... 1
3.5 Amendment to Articles of Incorporation of Renegade Venture
Corporation, incorporated by reference from Exhibit 3.5 to
Form 8-K dated August 16, 1996 .............................. 1
3.6 Articles and Certificate of Merger dated September 18, 1997,
between Renegade Venture Corporation and Renegade Venture
(Nev.) Corporation, a Nevada corporation, with Merger
Agreement attached thereto as Exhibit A, incorporated by
reference to Exhibit 2.1 to Form 8-K dated October 2, 1997 .. 1
3.7 Certificate of Incorporation of Renegade Venture (Nev.)
Corporation, incorporated by reference to Exhibit 3.1 to
Form 8-K dated October 2, 1997 .............................. 1
3.8 Bylaws of Renegade Venture (Nev.) Corporation, incorporated
by reference to Exhibit 3.2 to Form 8-K dated October 2,
1997 ........................................................ 1
4.1 Specimen common stock certificate, incorporated by reference
to Exhibit 4.1 to registration statement of Form S-18, file
No. 33-30476 dated August 11, 1989 .......................... 1
10.1 1997 Compensatory Stock Option Plan, incorporated by
reference to Exhibit 10.1 to Form 8-K dated October 2, 1997 . 1
10.2 1997 Employee Stock Compensation Plan, incorporated by
reference to Exhibit 10.2 to Form 8-K dated October 2, 1997 . 1
10.3 Common Stock Option granted to Randy J. Sasaki .............. 2
10.4 Common Stock Option granted to John D. Brasher Jr. .......... 2
27 Financial Data Schedule ..................................... 2
20
<PAGE>
1 - Incorporated by reference to another registration statement,
report or document.
2 - Included as part of this Report.
(b) Reports on Form 8-K. NONE
Index to Financial Statements:
INDEPENDENT AUDITOR's REPORT ......................................... F-1
BALANCE SHEET as of December 31, 1999 ................................ F-2
STATEMENTS OF OPERATIONS for years ended
December 31, 1999 and 1998 and from Inception
(February 13, 1989) through December 31, 1999 ....................... F-3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
from Inception (February 13, 1989) through
December 31, 1999 ................................................... F-4
STATEMENTS OF CASH FLOWS for years ended
December 31, 1999 and 1998 and from Inception
(February 13, 1989) through December 31, 1999 ...................... F-5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ........................... F-6
NOTES TO FINANCIAL STATEMENTS ........................................ F-6
21
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
Auditor's Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in
Stockholders' Equity (Deficit) F-4
Statement of Cash Flows F-5
Notes to the Financial Statements F-6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors
Renegade Venture (Nev.) Corporation
Denver, Colorado
I have audited the accompanying balance sheet of Renegade Venture (Nev.)
Corporation (a development stage company) as of December 31, 1999, and the
related statements of operations, changes in stockholders' equity (deficit) and
cash flows for each of the years ended December 31, 1999 and 1998, and the
related cumulative amounts for the period from inception (February 13, 1989) to
December 31, 1999. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit of the financial statements provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly the
financial position of Renegade Venture (Nev.) Corporation as of December 31,
1999 and the results of its operations, changes in stockholders' equity
(deficit) and cash flows for each of the years ended December 31, 1999 and 1998,
and the related cumulative amounts for the period from inception (February 13,
1989) to December 31, 1999 in conformity with generally accepted accounting
principles.
/s/ Brian J. Wilcomb, CPA, P.C.
- -------------------------------
Brian J. Wilcomb, CPA, P.C. January 12, 2000
Louisville, Colorado
F-1
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
------
CURRENT ASSETS:
Cash held by trustee $ 8,855
---------
TOTAL ASSETS $ 8,855
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- ----------------------------------------------
CURRENT LIABILITIES:
Accounts payable (note 2) $ 47,104
---------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock (note 3), .001 par value,
50,000,000 shares authorized, 320,000
shares issued and outstanding 320
Additional paid-in capital 62,805
Preferred stock (note 3), .001 par value,
5,000,000 shares authorized, no shares
issued or outstanding --
Deficit accumulated during
development stage (101,374)
---------
Stockholders' Equity (Deficit) (38,249)
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 8,855
=========
The accompanying notes are an integral part of this financial statement.
F-2
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF OPERATIONS
Year Ended Period From Inception
December 31, (February 13, 1989)
1999 1998 to December 31, 1999
---- ---- --------------------
REVENUE $ 0 $ 0 $ 0
--------- --------- ---------
EXPENSES:
Legal and accounting 8,590 6,720 76,508
Stock transfer and
promotion 1,166 958 25,876
Office and postage 320 319 5,284
Amortization -- -- 1,760
--------- --------- ---------
Total expenses 10,076 7,997 109,428
--------- --------- ---------
Loss from operations (10,076) (7,997) (109,428)
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income -- -- 8,054
--------- --------- ---------
NET LOSS INCURRED DURING
DEVELOPMENT STAGE ($ 10,076) ($ 7,997) ($101,374)
========= ========= =========
NET LOSS PER SHARE (a) ($ 0.03) ($ 0.02) ($ 0.34)
========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 320,000 320,000 301,427
========= ========= =========
DIVIDENDS DECLARED
PER SHARE -- -- --
========= ========= =========
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE>
<TABLE>
<CAPTION>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM INCEPTION
(FEBRUARY 13, 1989)
TO DECEMBER 31, 1998
Deficit
Accumulated
Common stock During
No. of Shs Paid-in Development
(000's) Dollars Capital Stage Total
------- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Issuance of common
stock, net of
issuance costs 32,000 $ 3,200 $ 59,925 $ 63,125
Reverse stock-split
August 9, 1996 -
Cancel outstanding
shares (32,000)
Issue replacement
shares 320
Eliminate par value
August 9, 1996 59,925 (59,925) --
Reinstate par value upon
redomiciliation to Nevada (62,805) 62,805 --
Loss for the period from
inception (February 13, 1989)
to December 31, 1997 ($ 83,301) ($ 83,301)
--------- --------- --------- --------- ---------
Balance -
December 31, 1997 320 320 62,805 (83,301) (20,176)
Loss for the period ended
December 31, 1998 (7,997) (7,997)
--------- --------- --------- --------- ---------
Balance -
December 31, 1998 320 320 62,805 (91,298) (28,173)
Loss for the period ended
December 31, 1999 (10,076) (10,076)
--------- --------- --------- --------- ---------
Balance -
December 31, 1999 320 $ 320 $ 62,805 ($101,374) ($ 38,249)
========= ========= ========= ========= =========
The accompanying notes are an integral part of this financial statement.
F-4
</TABLE>
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
Year Ended Period From Inception
December 31, (February 13, 1989)
1999 1998 to December 31, 1999
---- ---- --------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss ($ 10,076) ($ 7,997) ($101,374)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization -- -- 1,760
Increase in accounts payable 6,031 3,269 47,104
--------- --------- ---------
Net cash used by operating
activities (4,045) (4,728) (52,510)
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from issuance of
common stock -- -- 63,125
--------- --------- ---------
Net cash provided by
financing activities 0 0 63,125
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Organization costs incurred -- -- (1,760)
--------- --------- ---------
Net cash used by
investing activities 0 0 (1,760)
--------- --------- ---------
NET INCREASE (DECREASE)
IN CASH (4,045) (4,728) 8,855
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 12,900 17,628 0
--------- --------- ---------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 8,855 $ 12,900 $ 8,855
========= ========= =========
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE>
RENEGADE VENTURE (Nev.) CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. General and Summary of Significant Accounting Policies
- ---------------------------------------------------------
Renegade Venture (Nev.) Corporation, formerly Renegade Venture Corporation, (the
"Company") was incorporated on February 13, 1989. The Company was formed as a
Blank Check Company to obtain funding from a public offering in order to provide
a vehicle to acquire or engage in business opportunities that management
believes have potential for profitability. Through December 31, 1999 the Company
had been seeking a viable prospective opportunity and had not engaged in any
other activities.
During 1997, the Company was redomiciled as a Nevada corporation through a
merger with a newly formed Nevada corporation, Renegade Venture (Nev.)
Corporation, a wholly-owned subsidiary of Renegade Venture Corporation.
The financial statements of the Company have been prepared on the accrual basis.
Following is a summary of significant accounting policies.
Development stage - The Company is in the development stage, as defined in the
Statement of Financial Accounting Standards No. 7, as revenues have not yet been
generated from planned operations.
The Company intends to continue its efforts to find a suitable merger candidate
in accordance with its original operating plan.
Cash and cash equivalents - Cash held by trustee, certificates of deposit and
checking accounts are considered cash and cash equivalents for purposes of the
statement of cash flows.
Organization costs - Certain costs incurred to set up the Company were
capitalized and amortized over five years. These costs are fully amortized.
Income taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109 ("FASB No. 109"). Temporary differences
are differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements that will result in taxable or
deductible amounts in future years. The Company's temporary difference consists
of net operating loss carryforwards.
2. Related Party Transactions
- -----------------------------
Through April 9, 1994 the Company maintained its office at the office of the
former president of the Company. No rent was ever paid by the Company to this
former president. Bookkeeping and office management duties were performed by the
spouse of the former president of the Company. Fees of $90 to $125 per month
were paid from 1991 through March, 1994 for these services.
F-6
<PAGE>
2. Related Party Transactions (cont.)
- -------------------------------------
Since 1994, the Company has maintained its office at the office of the Company's
legal counsel, who is also a director of the Company. No rent is charged to the
company for the use of this office space. During 1999 and 1998, this director
charged the Company $5,500 and $2,950, respectively, for legal services
performed during each year. All of these fees are unpaid and included in
accounts payable the accompanying financial statements. Of the accounts payable
totals included on the financial statements, $46,823 and $41,073 was due to this
director for legal fees and related expenses as of December 31, 1999 and 1998,
respectively. This director does not intend to be paid for these fees and
expenses from the Company's current operating capital.
3. Common Stock Transactions
- ----------------------------
During 1989, the Company completed a public offering. The Company sold 5,000,000
units consisting of 2 shares of $.0001 par value common stock and one Class A
common stock purchase warrant at $.02 per unit. The Class A warrants entitled
the holder to purchase one share of common stock at $.02 per share, and receive
one Class B warrant which entitled the holder to purchase one share of common
stock at $.04 per share. In addition, the underwriter was issued warrants which
entitled them to purchase 500,000 of the public offering units discussed above
with an exercise price of $.024 per unit for a flat fee of $50. A total of
$100,050 was raised in this initial public offering, less $37,425 in offering
costs.
Prior to the initial public offering, 22,000,000 common shares were issued to
the founder and other insiders for their efforts in setting up the Company.
During 1989, an additional 7,500,000 Class A warrants were issued to
non-affiliated individuals for $500.
All warrants discussed above, including the Class A and B and Underwriter
warrants, have since expired unexercised.
No additional shares have been issued since this initial public offering
described above. On April 9, 1994, the majority shareholder and founder of the
Company sold 90% of his interest to an unaffiliated group. At that time, the
former officers and directors resigned and control of the company shifted to the
new majority shareholders.
Effective August 9, 1996 the Company's articles of incorporation were amended,
making several changes affecting common stock. A reverse-stock split was
approved, whereby 100 shares of the original common stock were replaced with one
share of common stock. This action reduced the number of outstanding common
shares from 3,200,000 to 320,000. The par value of the common stock was changed
from $.0001 to no par value. What was formerly reported as "Additional paid-in
capital" which totaled $59,925 was reclassified as common stock.
F-7
<PAGE>
3. Common Stock Transactions (cont.)
- ------------------------------------
The number of authorized common shares was increased from 32,000,000 to
50,000,000. Finally, the number of authorized preferred shares was changed to
5,000,000 and the original par value of $.10 was changed to no par value. No
preferred shares have ever been issued by the Company.
As part of the 1997 redomiciliation to Nevada (see below), statutory par value
of $.001 for both common and preferred stock was established.
During 1996, the Company's shareholders approved the 1994 Compensatory Stock
Option Plan. The plan provides for options to purchase up to 2,000,000 shares of
common stock, after the reverse-stock split discussed above. The options give
the right to purchase common stock at "fair market value" as determined by the
Board of Directors at the date of issuance for a period of up to five years.
During 1996, the Company's shareholders also approved the 1994 Employee Stock
Compensation Plan. This plan allows for up to 1,000,000 shares of common stock,
after the reverse-stock split discussed above, to be issued to key employees,
officers, directors and certain other persons affiliated with the Company as
compensation.
As part of the 1997 redomiciliation to Nevada (see below), the 1994 plans
described above were adopted and renamed the 1997 Compensatory Stock Option Plan
and the 1997 Employee Stock Compensation Plan.
On May 5, 1999, the Company issued 1,000,000 stock options to two directors
under the 1997 Compensatory Stock Option plan. The option price is $.05 per
share and the options expire May 4, 2002. As of December 31, 1999, no common
shares of stock under the Employee Stock Compensatory Plan had been issued.
During 1997, the company redomiciled to the state of Nevada by merging with a
newly formed Nevada corporation, Renegade Venture (Nev.) Corporation. Each share
of Renegade Venture Corporation was converted into one fully paid,
non-assessable share of the new corporation.
4. Income Taxes
- ---------------
The difference between the tax basis of assets and liabilities gives rise to a
net deferred tax asset of approximately $20,000 consisting of the tax effects of
net operating loss carryforwards. As of December 31, 1999, a valuation allowance
equal to the net deferred tax asset recognized has been recorded, as it was
determined that the deferred tax asset may never be realized.
At December 31, 1999, the Company has a net operating loss carryforward of
approximately $100,000 which expires between the years ended December 31, 2005
and 2015.
F-8
<PAGE>
5. Use of Estimates in the Preparation of Financial Statements
- --------------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual amounts could differ from those estimates.
F-9
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report on Form 10-KSB to be signed on its
behalf by the undersigned, thereto duly authorized individual.
Date: February 29, 2000
RENEGADE VENTURE (NEV.) CORPORATION
By /s/ Randy J. Sasaki
--------------------------------------
Randy J. Sasaki, President,
Chief Executive Officer,
Chief Financial and Accounting Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Randy J. Sasaki Director, President, Chief 2/29/2000
- ------------------- Executive Officer, Chief
Randy J. Sasaki Financial Officer, Chief
Accounting Officer
/s/ Thomas Liston Secretary, Director 2/29/2000
- -----------------
Thomas Liston
/s/ John D. Brasher Jr. Director 2/29/2000
- -----------------------
John D. Brasher Jr.
22
EXHIBIT 10.3
RENEGADE VENTURE (NEV.) CORPORATION
=============
Compensatory
STOCK OPTION
=============
OPTION TO PURCHASE
------------------
No. CSO - 001 **500,000** SHARES
Under the RENEGADE VENTURE (NEV.) CORPORATION
1997 Compensatory Stock Option Plan
This COMPENSATORY STOCK OPTION, dated as of May 5, 1999 ("Date of Grant"),
is granted by RENEGADE VENTURE (NEV.) CORPORATION, a Nevada corporation
("Company"), to RANDY J. SASAKI ("Optionee"), whose status under such plan is:
executive officer and director.
WHEREAS, the Optionee is now an employee or director of the Company or a
parent or subsidiary thereof, or an attorney, consultant, adviser or other
provider of services to the Company or parent or subsidiary thereof and the
Company desires to have the Optionee remain in its employ or service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company's success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, so that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Pursuant to its 1997 Compensatory Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option (the "Option") to purchase
500,000 shares of the Company's common stock, $0.001 par value per share (the
"Option Shares") at the price of $0.05 per share (the "Purchase Price" or
"Exercise Price"). Both the Purchase Price and the number of Option Shares
purchasable may be adjusted pursuant to Paragraph 8 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the date
of grant and is exercisable in whole or from time to time in part during the
period beginning on the Date of Grant, ending at 5:00 o'clock p.m. (Mountain
Time) on May 4, 2002, except as provided in Paragraph 6 hereof or otherwise
herein.
3. Exercise of Option. (a) During the Optionee's life, this Option may only
be exercised by Optionee or a permitted assign. This Option may only be
exercised by presentation at the principal offices of the Company of written
notice to the Company's Secretary advising the Company of the Optionee's
election to purchase Option Shares, specifying the number of Option Shares being
purchased, accompanied by payment. No Option Shares shall be issued until full
payment is made therefor. Payment shall be made by any one or more of the
following means: (i) in cash, represented by bank or cashier's check, certified
check or money order, or made by bank wire transfer; (ii) by offsetting against
the purchase price a cash obligation of the Company owed to Optionee which is
1
<PAGE>
both liquidated (meaning the dollar amount is fixed and known or easily
determinable) and uncontested; (iii) with the prior approval of the Committee,
by delivering shares of the Company's Common Stock which have been beneficially
owned by the Optionee, the Optionee's spouse or both of them, for a period of at
least six (6) months prior to the time of exercise (the "Delivered Stock"), the
Delivered Stock to be valued by the Committee in good faith at its Fair Market
Value on the date of exercise; (iv) with the prior approval of the Committee, by
delivery of shares of corporate stock which are freely tradeable without
restriction and which are part of a class of securities which has been listed
for trading on the Nasdaq National Market System, the Nasdaq Small Cap Market or
a national securities exchange, with an aggregate Fair Market Value on the date
of exercise equal to or greater than the exercise price of the Option Shares
being purchased under this Option ("Other Shares"); or (v) with the prior
approval of the Committee, by delivering to the Company the Optionee's personal
recourse promissory note, adequately secured by property other than the Option
Shares thereby purchased, containing such terms and conditions as the Committe
shall determine. The "fair market value" of a share of common stock as of a
given date shall be: (i) the last sale price of a share of the Company's Common
Stock on the principal exchange, Nasdaq National Market System, Nasdaq Small Cap
Market, or other quotation medium on which shares of the stock are then traded
or quoted, or (ii) if the stock is not publicly traded, the fair market value
established by the Committee acting in good faith.
(b) An Option shall be deemed exercised when written notice thereof,
accompanied by the appropriate payment in full, is received by the Company. No
holder of an Option shall be, or have any of the rights and privileges of, a
shareholder of the Company in respect of any Option Shares purchasable upon
exercise of an Option unless and until certificates evidencing such shares shall
have been issued by the Company to him, her or it.
4. Issuance of Option Shares; Registration. Upon proper exercise of this
Option, the Company shall mail or deliver to the Optionee, as promptly as
practicable, a stock certificate or certificates representing the Option Shares
purchased. The Company shall not be required to sell or issue any shares under
the Option if the issuance of such shares shall constitute a violation of any
applicable law or regulation or of any requirements of any securities exchange
or quotation medium upon which the Company's common stock may be listed. If the
Option Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), at the time of issuance, then the shares shall be deemed
"restricted securities" within the meaning of Rule 144 under the Act, and all
certificates evidencing the Option Shares shall, until removed in accordance
with law, bear an appropriate legend restricting transfer thereof, and a stop
order shall be placed in the Company's transfer records in respect of the
shares. In addition to such restrictions, Optionee must satisfy the Company, by
appropriate investment representations or otherwise, that the Option Shares are
being acquired for investment and not with a view to the resale or distribution
of them.
The Company agrees that it will at its expense register the Option Shares,
prior to their issuance, under the Act under cover of Form S-8, if such form is
available. If Form S-8 has been withdrawn and no similar form then is available,
then the Company shall, upon registering any of its authorized but unissued
shares for sale for cash, be required to register the Option Shares at its
expense along with such other shares on the same registration statement,
provided Optionee timely and fully provides any information and documentation
requested by the Company and required for purposes of such registration
statement or the included prospectus. Optionee shall in such event be given
prior notice of such registration statement and adequate time to provide such
information and documentation and to review the registration statement and
included prospectus. This Paragraph shall not be deemed to limit any obligations
of the Company to register the Option Shares existing under any other contract
or agreement.
5. Limitations on Transfer or Encumbrance of this Option. This Option may
not be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death, or under the laws of descent and distribution,
or pursuant to a "qualified domestic relations order" as defined in Title I of
2
<PAGE>
the Employee Retirement Income Security Act. The same restrictions on transfer
or assignment shall apply to any heirs, devisees, beneficiaries, legal
representatives or other persons acquiring this Option or an interest herein
under such an instrument or by operation of law. Further, this Option shall not
be pledged, hypothecated or otherwise encumbered, by operation of law or
otherwise, nor shall it be subject to execution, attachment or similar process.
Any attempt to transfer or otherwise dispose of this Option in contravention of
its terms shall void this Option.
6. Termination of Service, Death, or Disability. (a) Except as may be
otherwise expressly provided in this Agreement, this Option shall terminate
automatically:
(i) Upon termination of the Optionee's employment with the Company for
cause;
(ii) At the expiration of two (2) months from the date of the Optionee's
resignation or termination of the Optionee's employment or
relationship as a consultant or director with the Company without
cause, for any reason other than death; provided, that if the Optionee
dies within such period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of death of
the Optionee.
However, if termination is due to the Optionee's "permanent and total
disability" within the meaning of Section 422(c)(6) of the Code, this Option may
be exercised at any time within twelve (12) months following termination of
employment or relationship as a consultant or director.
(b) "Employment with the Company" shall include employment or relationship
as consultant, adviser or director with the Company or any parent or subsidiary
of the Company, and this Option shall not be affected by the Optionee's transfer
of employment among the Company and any parent or subsidiary thereof. An
Optionee's employment with the Company shall not be deemed interrupted or
terminated by a bona fide leave of absence (such as sabbatical leave or
employment by the Government) duly approved, military leave or sick leave. This
Option shall not be affected in the event the Optionee suffers a significant
diminution in his duties or any significant reduction in his overall
compensation. As to consultants, advisers or other non-employee providers of
services, employment with the Company shall be deemed to cease upon formal
termination of the Optionee's engagement. Further, if this Option vests over
time, any portion not vested at the time of termination of employment or
relationship as a director or consultant with the Company shall lapse as if
never granted.
(c) After the death of the Optionee, his executors, administrators or
personal representatives, or any person or persons to whom the Option may be
transferred by will, trust or by the laws of descent and distribution, shall
have the right, at any time prior to termination hereof, to exercise this Option
pursuant to its terms. However, nothing contained in this Option shall be
construed to extend its term or to permit exercise of this Option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which this Option is exercisable from the amount exercisable on the
date of termination of the Optionee's employment or relationship as a consultant
or director.
(d) This Option confers no right upon the Optionee with respect to the
continuation of his employment (or his position as an officer, director or other
provider of services) with the Company or any parent or subsidiary of the
Company, and shall not interfere with the right of the Company, or any parent or
subsidiary of the Company, to terminate such relationship(s) at any time in
accordance with law and any agreements then in force.
7. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Paragraph 9, shall be made if the record date therefor is prior
to the date of exercise of such Option.
3
<PAGE>
8. Changes in the Company's Capital Structure. The existence of this Option
shall not limit or affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
The Option Shares are shares of the Common Stock of the Company as currently
constituted. In certain instances, the number of Option Shares purchasable and
the exercise price of this Option shall be adjusted as provided herein. Every
adjustment in this Option shall be made without change in the total exercise
price payable but with a corresponding adjustment in the exercise price per
share and number (and if applicable, kind) of Option Shares purchasable. In the
event of the dissolution or liquidation of the Company, any outstanding and
unexercised options shall terminate as of a future date to be fixed by the
Committee.
(a) If, prior to the Company's delivery of all the Option Shares subject to
this Option, the Company shall effect a subdivision (split) or combination
(reverse split) of shares or other capital readjustment, the payment of a common
stock dividend, or other increase or reduction of the number of shares of common
stock outstanding, without receiving compensation therefor in money, services or
property, then (i) in the event of an increase in the number of such shares
outstanding, the Purchase Price shall be proportionately reduced and the number
of Option Shares then still purchasable shall be proportionately increased; and
(ii) in the event of a reduction in the number of such shares outstanding, the
Purchase Price payable per share shall be proportionately increased and the
number of Option Shares then still purchasable shall be proportionately reduced.
If the Company shall effect any change in the nature of a recapitalization or
reclassification which changes the Common Shares into a different class or type
of shares, then this Option shall thereafter permit the purchase of such number
of the different class or type of shares into which the number of Option Shares
purchasable (if then outstanding) would have been changed as of the date of the
change.
(b) If, prior to the Company's delivery of all the Option Shares subject to
this Option, the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of
reorganization, merger, consolidation, share exchange or other business
combination in which the Company is the surviving parent corporation,
appropriate adjustment shall be made in the number and kind of shares as to
which this Option shall be exercisable, to the end that the proportionate
interest of the Optionee shall, to the extent practicable, be maintained as
before the occurrence of such event.
(c) For purposes of this Paragraph, the term "Reorganization" shall mean
any reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company, and the term
"Reorganization Agreement" shall mean a plan or agreement with respect to a
Reorganization. Nothing herein shall require the Company to adopt a
Reorganization Agreement, or to make provision for the adjustment, change,
conversion, or exchange of any Options, or the shares subject thereto, in any
Reorganization Agreement which it does adopt. In the event of a Reorganization
(as hereinafter defined), then,
(i) If there is no Reorganization Agreement, or if the Reorganization
Agreement does not specifically provide for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash
4
<PAGE>
or other property or securities of another corporation, then any
outstanding and unexercised options shall terminate as of a future date to
be fixed by the Committee; or,
(ii) If there is a Reorganization Agreement, and the Reorganization
Agreement specifically provides for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for cash or other
property or securities of another corporation, the Committee shall adjust
the shares under such outstanding and unexercised options, and shall adjust
the shares remaining under the Plan which are then available for the
issuance of options under the Plan if the Reorganization Agreement for the
adjustment, change, conversion, or exchange of such options and shares.
(iii) The Committee shall provide to each Optionee then holding an
outstanding and unexercised Option not less than thirty (30) calendar Days'
advance written notice of any date fixed by the Committee pursuant to this
Paragraph 13 and of the terms of any Reorganization Agreement providing for
the adjustment, change, conversion, or exchange of outstanding and
unexercised Options. Except as the Committee may otherwise provide, each
Optionee shall have the right during such period to exercise his Option
only to the extent that the Option was exercisable on the date such notice
was provided to the Optionee.
(d) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the Purchase Price or the number of Option Shares then
subject to this Option.
9. Withholding Taxes. Pursuant to applicable federal and state laws, the
Company may be required to collect withholding taxes upon any exercise of this
Option. The Company may require, as a condition to any exercise of this Option,
that the Optionee concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Committee of
the Board in its discretion may determine. In lieu of part or all of any such
payment, the Optionee may elect, with the consent of the Board of Directors or
Compensation Committee, to have the Company withhold from the Option Shares to
be issued upon exercise of this Option that number of shares having a fair
market value equal to the amount which the Company is required to withhold.
10. Notices, etc. Any notice hereunder by the Optionee shall be given to
the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 90 Madison Street, Suite 707, Denver, Colorado 80206, or at
such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in
writing and shall be deemed duly given or made if mailed or delivered to the
Optionee at the last address as the Optionee may have on file with the Company's
Secretary. This Option shall be governed under and construed in accordance with
the laws of the State of Nevada (or applicable successor law if the Company
should redomicile). This address shall be binding on the Company and the
Optionee and all successors, assigns, heirs, devisees and personal
representatives thereof.
11. Litigation. By accepting this Option, the Optionee agrees that, in the
event Optionee or Optionee's successor should bring any lawsuit or other action
or proceeding ("Action") against the Company or an Affiliated Company based upon
or arising in relation to this Option and Optionee or Optionee's successor does
5
<PAGE>
not prevail in such Action, Optionee or successor shall be required to reimburse
the Company or Affiliated Company's costs and expenses, including reasonable
attorneys' fees, incurred in defending such action and appealing any award by a
lower court.
NOTE: This Option must match the Control copy maintained by the Company, in
all particulars.
IN WITNESS WHEREOF, the Company has executed this Stock Option as of May 5,
1999.
RENEGADE VENTURE (NEV.) CORPORATION
ATTEST: By /s/ Randy J. Sasaki
-------------------------------------
Randy J. Sasaki
Authorized Officer
By /s/ Elisabeth M. Crosse
- --------------------------------------
Elisabeth M. Crosse
Secretary or Assistant Secretary
(SEAL)
6
<PAGE>
=====================================
E X E R C I S E F O R M
=====================================
To the Corporate Secretary,
RENEGADE VENTURE (NEV.) CORPORATION:
No. of Shares______________________
I hereby irrevocably elect to purchase, pursuant to the terms of the
foregoing Compensatory Stock Option ("Option"), the above number of shares of
the common stock of the Company at the price of $0.05 per share and herewith
make payment in the amount of $____________________ payable to the order of
RENEGADE VENTURE (NEV.) CORPORATION, or its successor, and request that a
certificate(s) evidencing such shares be issued in the name of:
Please insert Soc. Security or Exact Name of Person
other tax I.D. number: Exercising Option:
- ---------------------------------- ------------------------------------
- --------------------------------------------------------------------------------
(please print address, including zip code)
and, if such number of shares shall not be all of the shares purchasable under
the Option, that a new Option of like tenor for the balance of the remaining
common shares purchasable under the Option be delivered to the undersigned at
the address stated above. I elect to make payment by the other method stated
below (check one):
[ ] Cash, in the form of bank or cashier's check, certified check or money
order;
[ ] If permitted in the Option, by a personal recourse promissory note whose
form and content already have been approved by the Committee/Board of
Directors;
[ ] Offset against a liquidated (amount known) and uncontested cash obligation
owed to me by the Company.
[ ] Transfer of qualifying securities of another issuer to the Company (I
understand that the Committee/Board of Directors must approve both the
securities and the valuation thereof), with the stock certificate signed by
me or accompanied by a stock power signed by me, with signature medallion
guaranteed;
[ ] Surrender of shares of the common stock of the Company (the number being
surrendered must be the same as the number of shares being purchased upon
this exercise of the Option) which are beneficially owned and held of
record by me, my spouse or both of us, with the certificate or a stock
power properly executed and with signature medallion guaranteed;
DATED:________________________, 19_____
X______________________________________
Signature of Option Holder
7
EXHIBIT 10.4
RENEGADE VENTURE (NEV.) CORPORATION
===================
Compensatory
STOCK OPTION
===================
OPTION TO PURCHASE
------------------
No. CSO - 002 **500,000** SHARES
Under the RENEGADE VENTURE (NEV.) CORPORATION
1997 Compensatory Stock Option Plan
This COMPENSATORY STOCK OPTION, dated as of May 5, 1999 ("Date of Grant"),
is granted by RENEGADE VENTURE (NEV.) CORPORATION, a Nevada corporation
("Company"), to JOHN D. BRASHER JR. ("Optionee"), whose status under such plan
is: attorney and director.
WHEREAS, the Optionee is now an employee or director of the Company or a
parent or subsidiary thereof, or an attorney, consultant, adviser or other
provider of services to the Company or parent or subsidiary thereof and the
Company desires to have the Optionee remain in its employ or service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company's success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, so that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Pursuant to its 1997 Compensatory Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option (the "Option") to purchase
500,000 shares of the Company's common stock, $0.001 par value per share (the
"Option Shares") at the price of $0.05 per share (the "Purchase Price" or
"Exercise Price"). Both the Purchase Price and the number of Option Shares
purchasable may be adjusted pursuant to Paragraph 8 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the date
of grant and is exercisable in whole or from time to time in part during the
period beginning on the Date of Grant, ending at 5:00 o'clock p.m. (Mountain
Time) on May 4, 2002, except as provided in Paragraph 6 hereof or otherwise
herein.
3. Exercise of Option. (a) During the Optionee's life, this Option may only
be exercised by Optionee or a permitted assign. This Option may only be
exercised by presentation at the principal offices of the Company of written
notice to the Company's Secretary advising the Company of the Optionee's
election to purchase Option Shares, specifying the number of Option Shares being
purchased, accompanied by payment. No Option Shares shall be issued until full
payment is made therefor. Payment shall be made by any one or more of the
following means: (i) in cash, represented by bank or cashier's check, certified
check or money order, or made by bank wire transfer; (ii) by offsetting against
the purchase price a cash obligation of the Company owed to Optionee which is
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<PAGE>
both liquidated (meaning the dollar amount is fixed and known or easily
determinable) and uncontested; (iii) with the prior approval of the Committee,
by delivering shares of the Company's Common Stock which have been beneficially
owned by the Optionee, the Optionee's spouse or both of them, for a period of at
least six (6) months prior to the time of exercise (the "Delivered Stock"), the
Delivered Stock to be valued by the Committee in good faith at its Fair Market
Value on the date of exercise; (iv) with the prior approval of the Committee, by
delivery of shares of corporate stock which are freely tradeable without
restriction and which are part of a class of securities which has been listed
for trading on the Nasdaq National Market System, the Nasdaq Small Cap Market or
a national securities exchange, with an aggregate Fair Market Value on the date
of exercise equal to or greater than the exercise price of the Option Shares
being purchased under this Option ("Other Shares"); or (v) with the prior
approval of the Committee, by delivering to the Company the Optionee's personal
recourse promissory note, adequately secured by property other than the Option
Shares thereby purchased, containing such terms and conditions as the Committee
shall determine. The "fair market value" of a share of common stock as of a
given date shall be: (i) the last sale price of a share of the Company's Common
Stock on the principal exchange, Nasdaq National Market System, Nasdaq Small Cap
Market, or other quotation medium on which shares of the stock are then traded
or quoted, or (ii) if the stock is not publicly traded, the fair market value
established by the Committee acting in good faith.
(b) An Option shall be deemed exercised when written notice thereof,
accompanied by the appropriate payment in full, is received by the Company. No
holder of an Option shall be, or have any of the rights and privileges of, a
shareholder of the Company in respect of any Option Shares purchasable upon
exercise of an Option unless and until certificates evidencing such shares shall
have been issued by the Company to him, her or it.
4. Issuance of Option Shares; Registration. Upon proper exercise of this
Option, the Company shall mail or deliver to the Optionee, as promptly as
practicable, a stock certificate or certificates representing the Option Shares
purchased. The Company shall not be required to sell or issue any shares under
the Option if the issuance of such shares shall constitute a violation of any
applicable law or regulation or of any requirements of any securities exchange
or quotation medium upon which the Company's common stock may be listed. If the
Option Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), at the time of issuance, then the shares shall be deemed
"restricted securities" within the meaning of Rule 144 under the Act, and all
certificates evidencing the Option Shares shall, until removed in accordance
with law, bear an appropriate legend restricting transfer thereof, and a stop
order shall be placed in the Company's transfer records in respect of the
shares. In addition to such restrictions, Optionee must satisfy the Company, by
appropriate investment representations or otherwise, that the Option Shares are
being acquired for investment and not with a view to the resale or distribution
of them.
The Company agrees that it will at its expense register the Option Shares,
prior to their issuance, under the Act under cover of Form S-8, if such form is
available. If Form S-8 has been withdrawn and no similar form then is available,
then the Company shall, upon registering any of its authorized but unissued
shares for sale for cash, be required to register the Option Shares at its
expense along with such other shares on the same registration statement,
provided Optionee timely and fully provides any information and documentation
requested by the Company and required for purposes of such registration
statement or the included prospectus. Optionee shall in such event be given
prior notice of such registration statement and adequate time to provide such
information and documentation and to review the registration statement and
included prospectus. This Paragraph shall not be deemed to limit any obligations
of the Company to register the Option Shares existing under any other contract
or agreement.
5. Limitations on Transfer or Encumbrance of this Option. This Option may
not be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death, or under the laws of descent and distribution,
2
<PAGE>
or pursuant to a "qualified domestic relations order" as defined in Title I of
the Employee Retirement Income Security Act. The same restrictions on transfer
or assignment shall apply to any heirs, devisees, beneficiaries, legal
representatives or other persons acquiring this Option or an interest herein
under such an instrument or by operation of law. Further, this Option shall not
be pledged, hypothecated or otherwise encumbered, by operation of law or
otherwise, nor shall it be subject to execution, attachment or similar process.
Any attempt to transfer or otherwise dispose of this Option in contravention of
its terms shall void this Option.
6. Termination of Service, Death, or Disability. (a) Except as may be
otherwise expressly provided in this Agreement, this Option shall terminate
automatically:
(i) Upon termination of the Optionee's employment with the Company for
cause;
(ii) At the expiration of two (2) months from the date of the Optionee's
resignation or termination of the Optionee's employment or
relationship as a consultant or director with the Company without
cause, for any reason other than death; provided, that if the Optionee
dies within such period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of death of
the Optionee.
However, if termination is due to the Optionee's "permanent and total
disability" within the meaning of Section 422(c)(6) of the Code, this Option may
be exercised at any time within twelve (12) months following termination of
employment or relationship as a consultant or director.
(b) "Employment with the Company" shall include employment or relationship
as consultant, adviser or director with the Company or any parent or subsidiary
of the Company, and this Option shall not be affected by the Optionee's transfer
of employment among the Company and any parent or subsidiary thereof. An
Optionee's employment with the Company shall not be deemed interrupted or
terminated by a bona fide leave of absence (such as sabbatical leave or
employment by the Government) duly approved, military leave or sick leave. This
Option shall not be affected in the event the Optionee suffers a significant
diminution in his duties or any significant reduction in his overall
compensation. As to consultants, advisers or other non-employee providers of
services, employment with the Company shall be deemed to cease upon formal
termination of the Optionee's engagement. Further, if this Option vests over
time, any portion not vested at the time of termination of employment or
relationship as a director or consultant with the Company shall lapse as if
never granted.
(c) After the death of the Optionee, his executors, administrators or
personal representatives, or any person or persons to whom the Option may be
transferred by will, trust or by the laws of descent and distribution, shall
have the right, at any time prior to termination hereof, to exercise this Option
pursuant to its terms. However, nothing contained in this Option shall be
construed to extend its term or to permit exercise of this Option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which this Option is exercisable from the amount exercisable on the
date of termination of the Optionee's employment or relationship as a consultant
or director.
(d) This Option confers no right upon the Optionee with respect to the
continuation of his employment (or his position as an officer, director or other
provider of services) with the Company or any parent or subsidiary of the
Company, and shall not interfere with the right of the Company, or any parent or
subsidiary of the Company, to terminate such relationship(s) at any time in
accordance with law and any agreements then in force.
7. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Paragraph 9, shall be made if the record date therefor is prior
to the date of exercise of such Option.
3
<PAGE>
8. Changes in the Company's Capital Structure. The existence of this Option
shall not limit or affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
The Option Shares are shares of the Common Stock of the Company as currently
constituted. In certain instances, the number of Option Shares purchasable and
the exercise price of this Option shall be adjusted as provided herein. Every
adjustment in this Option shall be made without change in the total exercise
price payable but with a corresponding adjustment in the exercise price per
share and number (and if applicable, kind) of Option Shares purchasable. In the
event of the dissolution or liquidation of the Company, any outstanding and
unexercised options shall terminate as of a future date to be fixed by the
Committee.
(a) If, prior to the Company's delivery of all the Option Shares subject to
this Option, the Company shall effect a subdivision (split) or combination
(reverse split) of shares or other capital readjustment, the payment of a common
stock dividend, or other increase or reduction of the number of shares of common
stock outstanding, without receiving compensation therefor in money, services or
property, then (i) in the event of an increase in the number of such shares
outstanding, the Purchase Price shall be proportionately reduced and the number
of Option Shares then still purchasable shall be proportionately increased; and
(ii) in the event of a reduction in the number of such shares outstanding, the
Purchase Price payable per share shall be proportionately increased and the
number of Option Shares then still purchasable shall be proportionately reduced.
If the Company shall effect any change in the nature of a recapitalization or
reclassification which changes the Common Shares into a different class or type
of shares, then this Option shall thereafter permit the purchase of such number
of the different class or type of shares into which the number of Option Shares
purchasable (if then outstanding) would have been changed as of the date of the
change.
(b) If, prior to the Company's delivery of all the Option Shares subject to
this Option, the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation, by reason of
reorganization, merger, consolidation, share exchange or other business
combination in which the Company is the surviving parent corporation,
appropriate adjustment shall be made in the number and kind of shares as to
which this Option shall be exercisable, to the end that the proportionate
interest of the Optionee shall, to the extent practicable, be maintained as
before the occurrence of such event.
(c) For purposes of this Paragraph, the term "Reorganization" shall mean
any reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company, and the term
"Reorganization Agreement" shall mean a plan or agreement with respect to a
Reorganization. Nothing herein shall require the Company to adopt a
Reorganization Agreement, or to make provision for the adjustment, change,
conversion, or exchange of any Options, or the shares subject thereto, in any
Reorganization Agreement which it does adopt. In the event of a Reorganization
(as hereinafter defined), then,
(i) If there is no Reorganization Agreement, or if the Reorganization
Agreement does not specifically provide for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash
4
<PAGE>
or other property or securities of another corporation, then any
outstanding and unexercised options shall terminate as of a future date to
be fixed by the Committee; or,
(ii) If there is a Reorganization Agreement, and the Reorganization
Agreement specifically provides for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for cash or other
property or securities of another corporation, the Committee shall adjust
the shares under such outstanding and unexercised options, and shall adjust
the shares remaining under the Plan which are then available for the
issuance of options under the Plan if the Reorganization Agreement for the
adjustment, change, conversion, or exchange of such options and shares.
(iii) The Committee shall provide to each Optionee then holding an
outstanding and unexercised Option not less than thirty (30) calendar Days'
advance written notice of any date fixed by the Committee pursuant to this
Paragraph 13 and of the terms of any Reorganization Agreement providing for
the adjustment, change, conversion, or exchange of outstanding and
unexercised Options. Except as the Committee may otherwise provide, each
Optionee shall have the right during such period to exercise his Option
only to the extent that the Option was exercisable on the date such notice
was provided to the Optionee.
(d) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the Purchase Price or the number of Option Shares then
subject to this Option.
9. Withholding Taxes. Pursuant to applicable federal and state laws, the
Company may be required to collect withholding taxes upon any exercise of this
Option. The Company may require, as a condition to any exercise of this Option,
that the Optionee concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Committee of
the Board in its discretion may determine. In lieu of part or all of any such
payment, the Optionee may elect, with the consent of the Board of Directors or
Compensation Committee, to have the Company withhold from the Option Shares to
be issued upon exercise of this Option that number of shares having a fair
market value equal to the amount which the Company is required to withhold.
10. Notices, etc. Any notice hereunder by the Optionee shall be given to
the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 90 Madison Street, Suite 707, Denver, Colorado 80206, or at
such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in
writing and shall be deemed duly given or made if mailed or delivered to the
Optionee at the last address as the Optionee may have on file with the Company's
Secretary. This Option shall be governed under and construed in accordance with
the laws of the State of Nevada (or applicable successor law if the Company
should redomicile). This address shall be binding on the Company and the
Optionee and all successors, assigns, heirs, devisees and personal
representatives thereof.
11. Litigation. By accepting this Option, the Optionee agrees that, in the
event Optionee or Optionee's successor should bring any lawsuit or other action
or proceeding ("Action") against the Company or an Affiliated Company based upon
or arising in relation to this Option and Optionee or Optionee's successor does
5
<PAGE>
not prevail in such Action, Optionee or successor shall be required to reimburse
the Company or Affiliated Company's costs and expenses, including reasonable
attorneys' fees, incurred in defending such action and appealing any award by a
lower court.
NOTE: This Option must match the Control copy maintained by the Company, in
all particulars.
IN WITNESS WHEREOF, the Company has executed this Stock Option as of May 5,
1999.
RENEGADE VENTURE (NEV.) CORPORATION
ATTEST: By /s/ Randy J. Sasaki
----------------------
Randy J. Sasaki
Authorized Officer
By /s/ Elisabeth M. Crosse
- --------------------------
Elisabeth M. Crosse
Secretary or Assistant Secretary
(SEAL)
6
<PAGE>
===============================
E X E R C I S E F O R M
===============================
To the Corporate Secretary,
RENEGADE VENTURE (NEV.) CORPORATION:
No. of Shares______________________
I hereby irrevocably elect to purchase, pursuant to the terms of the
foregoing Compensatory Stock Option ("Option"), the above number of shares of
the common stock of the Company at the price of $0.05 per share and herewith
make payment in the amount of $____________________ payable to the order of
RENEGADE VENTURE (NEV.) CORPORATION, or its successor, and request that a
certificate(s) evidencing such shares be issued in the name of:
Please insert Soc. Security or Exact Name of Person
other tax I.D. number: Exercising Option:
- ---------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
(please print address, including zip code)
and, if such number of shares shall not be all of the shares purchasable under
the Option, that a new Option of like tenor for the balance of the remaining
common shares purchasable under the Option be delivered to the undersigned at
the address stated above. I elect to make payment by the other method stated
below (check one):
[ ] Cash, in the form of bank or cashier's check, certified check or money
order;
[ ] If permitted in the Option, by a personal recourse promissory note whose
form and content already have been approved by the Committee/Board of
Directors;
[ ] Offset against a liquidated (amount known) and uncontested cash obligation
owed to me by the Company.
[ ] Transfer of qualifying securities of another issuer to the Company (I
understand that the Committee/Board of Directors must approve both the
securities and the valuation thereof), with the stock certificate signed by
me or accompanied by a stock power signed by me, with signature medallion
guaranteed;
[ ] Surrender of shares of the common stock of the Company (the number being
surrendered must be the same as the number of shares being purchased upon
this exercise of the Option) which are beneficially owned and held of
record by me, my spouse or both of us, with the certificate or a stock
power properly executed and with signature medallion guaranteed;
DATED:________________________, 19_____
X___________________________________
Signature of Option Holder
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DEC. 31,
1999 FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,855
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,855
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,855
<CURRENT-LIABILITIES> 47,104
<BONDS> 0
0
0
<COMMON> 320
<OTHER-SE> (32,249)
<TOTAL-LIABILITY-AND-EQUITY> 8,855
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,076
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,076)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,076)
<EPS-BASIC> 0.03
<EPS-DILUTED> (0.03)
</TABLE>
