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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) December 18, 1997
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VISUAL EDGE SYSTEMS INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20995 13-3778895
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2424 North Federal Highway, Suite 100, Boca Raton, FL 33431
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(Address of principal executive offices) (Zip Code)
(561) 750-7559
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On December 18, 1997, Visual Edge Systems Inc. (the "Company") and the
Cadillac Motor Car Division of General Motors Corporation ("Cadillac")
entered into an Amended and Restated Guarantee and Agreement (the "Amended
Agreement"), which amended the terms of the Company's prior agreement with
Cadillac entered into on August 5, 1997 (the "Original Agreement").
As was the case with the Original Agreement, the Amended Agreement grants
Cadillac the U.S. dealership showroom rights to the Company's One-on-One with
Greg Norman concept, allowing Cadillac to offer its customers a free video
golf lesson personally analyzed by Greg Norman if they test drive a Cadillac.
Such dealership showroom rights had been granted exclusively to Cadillac,
subject to the limitations on exclusivity set forth below. The Amended
Agreement extended the rights to the concept to other General Motors
divisions. The Company is to provide each participating Cadillac or General
Motors dealership with all marketing materials related to this promotion,
including creative for print and radio advertisements, banners and posters.
While the Original Agreement provided for a test phase period ending on
December 31, 1997, after which Cadillac had the right to terminate the
Original Agreement at any time through January 31, 1998, the term of the
Amended Agreement runs through December 31, 2000, without any reference to a
test phase. Provided the Company has enough vans in operation to service all
of the Cadillac or General Motors dealers on a nationwide basis, for the
period from December 18, 1997 through December 31, 1998, Cadillac has
guaranteed to purchase a total of 1,500 "Event Days" from the Company. Each
"Event Day" is a day on which one of the Company's One-on-One vans appears at
a Cadillac dealership to provide up to 150 instructional videotapes for
Cadillac's customers. On or prior to August 31, 1998, the Company must
notify Cadillac as to whether the guaranteed number of "Event Days" are
scheduled to be conducted by December 31, 1998. If 1,500 "Event Days" are
not scheduled and conducted by December 31, 1998, then the Company is no
longer obligated to provide its product exclusively to Cadillac, and may
offer its product to auto dealerships other than Cadillac and General Motors
dealerships. In each of the periods from January 1, 1999 through December
31, 1999 and January 1, 2000 through December 31, 2000, the terms of the
Amended Agreement remain the same, except that the number of "Event Days"
guaranteed by Cadillac increases to 2,500 in each of such periods. In the
event that in any given year the number of actual "Event Days" conducted by
the Company is less than the number of "Event Days" guaranteed by Cadillac
(1,500 or 2,500, as the case may be), then the Company is no longer obligated
to provide its product exclusively to Cadillac; in such event Cadillac,
however, has no obligation to pay the Company for the difference between the
guaranteed number of "Event Days" and the actual number of "Event Days"
provided by the Company to Cadillac dealerships.
The Company currently has 15 vans in operation, though it believes it
will need approximately 25 vans to potentially realize the minimum guarantee
of 1500 "Event Days" for 1998. The Company believes that it will require 30
to 35 vans in the years 1999 and 2000 to potentially realize the minimum
guarantee of 2500 "Event Days."
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(c) Exhibits
99.1 Amended and Restated Guarantee and Agreement, dated as of
December 18, 1997, between Visual Edge Systems Inc. and Cadillac
Motor Car Division of General Motors Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISUAL EDGE SYSTEMS INC.
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(Registrant)
By: /s/ Earl T. Takefman
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Earl T. Takefman
Chief Executive Officer
Date: December 30, 1997
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EXHIBIT INDEX
No.
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99.1 Amended and Restated Guarantee and Agreement, dated as of
December 18, 1997, between Visual Edge Systems Inc. and Cadillac
Motor Car Division of General Motors Corporation.
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Exhibit 99.1
December 18, 1997
AMENDED AND RESTATED GUARANTEE AND AGREEMENT
Amended and Restated Guarantee and Agreement, dated as of December
18, 1997, between VISUAL EDGE SYSTEMS INC. ("VES"), a Delaware corporation
("VES"), and CADILLAC MOTOR CAR DIVISION OF GENERAL MOTORS CORPORATION, a
Delaware corporation ("Cadillac").
RECITALS
WHEREAS, Cadillac desires to implement a test drive program in which
Cadillac Dealers nationwide will have the opportunity to invite potential
customers to take a "personalized golf lesson with Greg Norman" if they test
drive a new Cadillac (the "Test Drive Program"); and
WHEREAS, Cadillac desires that VES provide, and VES is willing to
provide, certain services relating to the production of Greg Norman
personalized video golf lessons in connection with the Test Drive Program on
the terms and conditions hereinafter set forth;
WHEREAS, VES and Cadillac executed a Guarantee and Agreement on
August 5, 1997 and desire to amend and restate such agreement in its entirety;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Definitions. The following terms shall have the
meanings set forth below. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
"Cadillac" means Cadillac Motor Car Division, a Division of General
Motors Corporation.
"Cadillac Dealers" means an independent automotive dealer that sells
Cadillac automobiles that is in a state that is serviced by VES in accordance
with Schedule II.
"CDMA" means the Cadillac Dealers Marketing Association, a regional group
of independent Cadillac dealers.
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"Event Day" means any day on which VES vans have been scheduled to appear
at a Participating Dealership in connection with the Test Drive Program, and
that is no longer than the time it takes to complete up to 150 instruction
tapes, including videotaping and production time.
"Greg Norman Appearance" shall have the meaning set forth in Section 2(e).
"Marketing Material" shall have the meaning set forth in Schedule III
hereto.
"Minimum Guarantees" shall have the meaning set forth in Section 3(c).
"Participating Dealership" means any Cadillac Dealer participating in the
Test Drive Program.
"Product" shall mean a One-on-One with Greg Norman personalized videotape
golf lesson of approximately 45 minutes.
"Scheduling Party" shall have the meaning set forth in Section 3.
"Services" shall have the meaning set forth in Schedule I hereto.
"Term" shall have the meaning set forth in Section 4.
"Territory" means the continental United States.
"Test Drive Program" shall have the meaning set forth in the recitals
hereto.
Section 2. Exclusivity; Product and Services
(a) Exclusive Nature. During the Term of this Agreement and in the
Territory, subject to the terms of the Services set forth in Schedule I
hereto, VES shall not itself or through others directly or indirectly sell or
provide (or cause to be sold or provided) the Product in automotive
dealership of any other automobile manufacturer; provided that VES may
provide the Product to any automobile manufacturer in connection with
non-dealership events, including, but not limited to, events
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taking place on golf courses, as well as charity tournaments, sales meetings,
trade shows, conventions and corporate outings. Cadillac has agreed to
expand this Agreement to permit VES to provide the Product to the dealerships
of other General Motors divisions.
(b) Product and Services. During the Term (defined below), VES
shall provide to Cadillac the Product and the Services described in Schedule
I hereof; provided that VES shall not be obligated to provide any Services
that would be in contravention of law.
(c) Scheduling. Cadillac, CDMA or a Cadillac Dealer must advise
VES of its intention to use the Services no less than sixty (60) days prior
to the requested Event Day(s). VES will use its best efforts to accommodate
the Scheduling Party (as defined below) within its schedule.
(d) Quality. The Services to be provided hereunder shall be
consistent in kind and quality with those customarily provided by VES.
(e) Greg Norman Appearance. If Cadillac is in compliance with the
terms and conditions of this Agreement (including, with respect to each
calendar year beginning January 1, 1999, the attainment of the Minimum
Guarantee provided for in Section 3(c)), VES will create an annual event at
which VES will make Greg Norman available to play a round of golf at The
Medalist Golf Course in Hobe Sound, Florida with an individual designated by
Cadillac.
(f) Extent of Services. VES shall use its reasonable efforts to
provide the Services to all Cadillac Dealers, subject to the availability and
location in the United States of VES personnel, vans and other equipment and
in accordance with the scheduling guidelines set forth herein. As VES
expands its fleet of vans to states other than those listed in Schedule II,
it will notify Cadillac quarterly by delivering an updated Schedule II,
listing the states with VES vans and information regarding availability and
other factors limiting the availability of Services. Each such expansion to
additional states shall increase the aggregate number of Event Days per
Cadillac Dealer per calendar year included in the Minimum Guarantee referred
to in Section 3(c).
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Section 3. Financial Arrangements.
(a) Billed Parties. The party that schedules an Event Day (a
"Scheduling Party") shall be the party that is billed for such Event Day. A
Scheduling Party may include Cadillac, a Participating Dealer, CDMA, or other
General Motors divisions, their dealers or DMAs.
(b) Fees. The Scheduling Party will pay VES fees for each Event
Day conducted during the periods described below as follows:
Time Period Amount Per Event Day
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Through December 31, 1998 $5,300
January 1, 1999 through $5,625
December 31, 1999
January 1, 2000 through $5,900
December 31, 2000
(c) Cadillac Guarantee. For the time period from the execution of
this contract to December 31, 1998, Cadillac (together with the CDMAs and
Participating Dealerships) guarantees to purchase a total of 1,500 Event Days
from VES. Throughout the Term, VES shall notify Cadillac on a monthly basis
of the number of Event Days conducted and scheduled to date. No later than
August 31, 1998, VES shall notify Cadillac as to whether the guaranteed
number of Event Days is scheduled to be conducted during the period. If
1,500 Event Days (unless such number is reduced in accordance with Section
13) are not scheduled and conducted by December 31, 1998 then VES shall no
longer be obliged to provide the Product exclusively to Cadillac in
accordance with Section 2(a) of this Agreement and, notwithstanding Section
2(a), may provide the Product to automotive dealerships of other automobile
manufacturers. In such event, however, Cadillac shall have no financial
obligation to VES with respect to the difference between the guaranteed 1,500
Event Days and the actual number of Event Days conducted during the period.
For January 1, 1999 to December 31, 1999, Cadillac (together with
the CDMAs and Participating Dealerships) guarantees to purchase a total of
2,500 Event Days from VES.
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Throughout the Term, VES shall notify Cadillac on a monthly basis of the
number of Event Days conducted and scheduled to date for calendar year 1999.
No later than August 31, 1999, VES shall notify Cadillac as to whether the
guaranteed number of Event Days is scheduled to be conducted during the
calendar year 1999. If 2,500 Event Days (unless such number is reduced in
accordance with Section 13) are not scheduled and conducted in calendar year
1999, then VES shall no longer be obliged to provide the Product exclusively
to Cadillac in accordance with Section 2(a) of this Agreement and,
notwithstanding Section 2(a), may provide the Product to automotive
dealerships of other automobile manufacturers. In such event, however,
Cadillac shall have no financial obligation to VES with respect to the
difference between the guaranteed 2,500 Event Days and the actual number of
Event Days conducted during the period.
For January 1, 2000 to December 31, 2000, Cadillac (together with
the CDMAs and Participating Dealerships) guarantees to purchase a total of
2,500 Event Days from VES. Throughout the Term, VES shall notify Cadillac on
a monthly basis of the number of Event Days conducted and scheduled to date
for calendar year 2000. No later than August 31, 2000, VES shall notify
Cadillac as to whether the guaranteed number of Event Days is scheduled to be
conducted during the calendar year 2000. If 2,500 Event Days (unless such
number is reduced in accordance with Section 13) are not scheduled and
conducted in calendar year 2000, then VES shall no longer be obliged to
provide the Product exclusively to Cadillac in accordance with Section 2(a)
of this Agreement and, notwithstanding Section 2(a), may provide the Product
to automotive dealerships of other automobile manufacturers. In such event,
however, Cadillac shall have no financial obligation to VES with respect to
the difference between the guaranteed 2,500 Event Days and the actual number
of Event Days conducted during the period.
(d) Expenses. Travel, lodging and similar costs and expenses of
VES employees and third parties performing the Services shall be borne by VES.
(e) Payments. During the Term, VES will invoice the Scheduling
Party for fees payable hereunder as follows: (i) 50% 30 days after the
booking of an Event Day and (ii) 50% to be payable 30 days after the Event
Day, or as otherwise agreed between VES and the Scheduling Party. Any
additional charges are due and payable upon presentation.
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(f) Third Parties. VES will have the right to retain third parties
to provide services on its behalf from time to time, in accordance with VES's
customary practice in the ordinary course of business. The use by VES of any
such third party will be subject to approval by Cadillac, which shall not be
unreasonably withheld; provided that if requested by Cadillac, VES will keep
Cadillac advised quarterly regarding any significant use of such third
parties. VES shall be responsible for the payment of any fees and expenses of
third parties retained by VES.
Section 4. Term.
(a) Term. This Agreement shall continue in effect until December
31, 2000, unless terminated in accordance with Section 3(c) or 4(b) below
(the "Term").
(b) Non-payment. In the event that any Scheduling Party hereunder
fails to make a payment to VES hereunder, and such failure has not been cured
within fifteen (15) days after receipt of written notice from VES, VES may
terminate this Agreement by notice to Cadillac which (unless Cadillac is the
Scheduling Party) shall have thirty (30) additional days to cure the failure
by such Scheduling Party.
Section 5. Independent Contractor.
(a) Selection of Employees. VES shall select the VES employees and
third parties to provide Services hereunder on a basis consistent with its
normal practice, and such individuals shall not be deemed to be employees of
Cadillac or any of its subsidiaries. All work performed hereunder by VES
shall be performed by VES as an independent contractor.
(b) No Joint Venture. Notwithstanding anything herein to the
contrary, no partnership or joint venture has been created in or by this
Agreement or as a result of the provision of Services hereunder.
Section 6. Trademarks. It is expressly agreed by the parties that
neither Cadillac shall acquire any rights to any of VES's proprietary
information (whether owned or licensed), including, but not limited to, its
software, technology,
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concepts, the "One-on-One with Greg Norman" trade name or other trade names,
or other intellectual property, and that VES shall not acquire any rights to
any Cadillac trade names or trademarks or other intellectual property
pursuant to this Agreement. Each party agrees that it will obtain prior
written approval before using the other's trade names, trademarks or other
intellectual property.
Section 7. Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
Section 8. Notices. All notices and other written communications
hereunder shall be in writing and shall be delivered personally against
written receipt, by a nationally recognized overnight courier service or by
prepaid, registered or certified mail, return receipt requested, to the
following persons and addresses (or to such other persons or addresses as any
party may request by notice to the other parties):
If to VES: Visual Edge Systems Inc.
24-24 North Federal Highway
Suite 100
Boca Raton, Florida 33431
Attention: Mr. Earl Takefman
With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: David W. Pollak, Esq.
If to Cadillac: Cadillac Motor Car Division
30009 Van Dyke
Warren, MI
Attention: Mr. Brian Small
With a copy to: DMB&B
3310 W. Big Beaver
P.O. Box 5012
Troy, MI 48007-5012
Attention: Mr. Gust Kouvaris
Section 9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the
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State of Michigan without giving effect (to the fullest extent permitted by
law) to any choice of law rule that would cause the application of the laws
of any other jurisdiction.
Section 10. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
Section 11. Arbitration. Any dispute or controversy arising under
this Agreement and relating to an amount in dispute of less than $100,000,
which cannot be settled amicably by the parties, shall be referred to a
single arbitrator to be chosen by the rules of the American Arbitration
Association and the arbitration shall be conducted in New York, New York in
accordance with the applicable rules and procedures of the American
Arbitration Association. The arbitrator's decision shall be in writing,
shall be final and shall be binding upon the parties.
Section 12. Schedules. The Schedules to this Agreement are deemed
a part of this Agreement and are subject to all of the provisions herein.
Section 13. Force Majeure. Any delay or failure of either party to
perform its obligations hereunder shall be excused to the extent that it is
caused by an event or occurrence beyond its reasonable control, such as, by
way of example and not by way of limitation, acts of God, actions by
governmental authority (whether valid or invalid), fires, floods, windstorms,
explosions, riots, natural disasters, wars, sabotage or labor problems;
provided the party claiming force majeure promptly notifies the other party
of the event of force majeure, the anticipated duration of the event of force
majeure, and the steps being taken to remedy the failure.
Section 14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument, and all signatories
need not appear on any one counterpart.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
VISUAL EDGE SYSTEMS INC.
By: /s/ Earl Takefman
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Earl Takefman
Chief Executive Officer
Date:
CADILLAC MOTOR CAR DIVISION OF
GENERAL MOTORS CORPORATION
By: /s/ Gust Kouvaris
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Date:
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SCHEDULE I
DESCRIPTION OF SERVICES TO BE PROVIDED
On the agreed upon Event Day, VES will arrive 2 hours prior to the
scheduled time for set up purposes. VES shall provide the following services
to the Participating Dealer:
1. The Marketing Materials as listed in Schedule III.
2. The One-on-One with Greg Norman van, trailer and all hardware and
software needed to execute the Product.
3. Two VES employees to videotape Cadillac participants and execute the
Product.
4. An indoor hitting cage (if indoors) which requires a floor area of 20'
x 20' and 12' high.
An Event Day shall consist of the time it takes (excluding set-up time)
to complete up to 150 instruction tapes, including video taping and
production time, for the fee detailed in Section 3(b).
Each Participating Dealer shall receive up to a maximum of 150 videotapes
of the Product per Event Day. Additional videotapes may be purchased for
$25.00 per tape.
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SCHEDULE II
STATES COVERED BY VES VANS
AS OF December 31, 1997
STATES
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Arizona
California
Connecticut
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Michigan
Nevada
New Jersey
New York
Pennsylvania
Rhode Island
South Carolina
Texas
Virginia
West Virginia
VES will update Cadillac quarterly of new states in which it has
vans available for service. VES will use its best efforts to provide
additional vans in other states if the confirmed demand for vans exists.
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SCHEDULE III
DESCRIPTION OF MARKETING MATERIALS TO BE PROVIDED
Marketing Materials: VES will provide marketing materials to each
Participating Dealership to be used in the Test Drive Program. Such
marketing materials shall be supplied at least forty-five days prior to the
Event Day and shall include for each Event Day:
(i) creative approved by Cadillac for print, radio and television
advertisements for use by the Participating Dealerships at their
option.
(ii) on-site promotional materials, such as banners and posters in an
amount to be mutually agreed upon.
(iii) a sales video and a How to Guarantee Your Success manual to be given
to each Participating Dealership to educate their staff on
preparation for an Event Day.
(iv) customized Cadillac videotape sleeves and labels for each video tape
provided to a Participating Dealership customer.
All such marketing materials shall be pre-approved by Cadillac. Before
finalizing the form of any and all marketing material, VES shall forward to
Cadillac a written proposal setting forth: (i) the proposed final form of
the material and (ii) the proposed manner in which the material is designed
to be used. Cadillac's approval of any such material submitted by VES must
be given to VES by Cadillac in writing.
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