As filed with the Securities and Exchange Commission on December 19, 1997
Registration No.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8/S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
OUT-TAKES, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4363944
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1419 Peerless Place, Suite 116
Los Angeles, California 90035
(310) 788-9440
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------
OUT-TAKES, INC. AMENDED AND RESTATED 1992 EMPLOYEE STOCK OPTION PLAN
(Full Title of the Plan)
----------------------
Michael C. Roubicek
1419 Peerless Place, Suite 116
Los Angeles, California 90035
(310) 788-9440
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
Hillel T. Cohn, Esq.
Graham & James LLP
801 South Figueroa Street, Suite 1400
Los Angeles, California 90017
(213) 624-2500
----------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 check the following box.
<TABLE>
CALCULATION OF REGISTRATION FEE
Title of Each Class of SecuritiesAmount to be Proposed Proposed Maximum Amount of
Registered Registered(1) Offering Price PerAggregate Offering Registration Fee
<S> <C> <C> <C> <C>
Share(2) Price(3)
Stock Options 1,586,786 $ -- $ -- $ --
Common Stock, $.01 par value 1,586,786 $0.078125 $123,967.66 $36.57(2)
Common Stock, $.01 par value 1,586,786(4) $0.078125 $123,967.66 $ -- (5)
Total $36.57
=============================== ============ ================== ================== ================
</TABLE>
(1) Represents the maximum amount of shares issuable as of the date of this
registration statement. If the amount of issuable shares increases after
the filing of this statement, Registrant will amend this statement and pay
an additional registration fee, if required.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Calculated in accordance with Rule 457(h)(1) on the basis of the average
of the high and low bid prices for the Common Stock on the OTC-
Bulletin BoardSM on December 17, 1997.
(4) Represents the same shares described on the line above, which may be
resold by the holders of options issued or issuable under the Out-Takes,
Inc. Amended and Restated 1992 Employee Stock Option Plan.
(5) Pursuant to Rule 457(h)(3), no additional fee is payable since these
shares, which may be offered for resale, are the same shares being
registered hereby upon their initial issuance pursuant to the Out-Takes,
Inc. Amended and Restated 1992 Employee Stock Option Plan.
<PAGE>
OUT-TAKES, INC.
Cross-Reference Sheet Showing Location in Prospectus
of Information Required by Items of Form S-3
Form S-3 Registration Statement
Item and Heading Heading in Prospectus
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus.......... Facing Page; Cross Reference Sheet;
Outside Front Cover Page of
Prospectus; Additional Information
2. Inside Front and Outside Back Cover Pages of
Prospectus.............................. Inside Front and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges............... The Company; Risk Factors
4. Use of Proceeds......................... Use of Proceeds
5. Determination of Offering Price....... Outside Front Cover Page of Prospectus
6. Dilution................................ Not Applicable
7. Selling Security Holders................ Selling Shareholders
8. Plan of Distribution.................. Outside and Inside Front Cover Pages
of Prospectus; Plan of Distribution
9. Description of Securities to be RegistereOutside Front Cover Page of
Prospectus
10. Interests of Named Experts and Counsel.. Legal Matters; Experts
11. Material Changes........................ Not Applicable
12. Incorporation of Certain Information by
Reference......................... Incorporation of Certain Information by
Reference
13. Disclosure of Commission's Position on
Indemnification for Securities Act LiabilNoteApplicable
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Item 2. Registrant Information and Employee Plan Annual Information.
The document(s) containing the information specified in this Part I will
be sent or given to participants in the Out-Takes, Inc. Amended and Restated
1992 Employee Stock Option Plan to which this Registration Statement relates, as
specified by Rule 428(b) promulgated under the Securities Act of 1933, as
amended, and are not filed as part of this Registration Statement.
<PAGE>
PROSPECTUS
OUT-TAKES, INC.
Common Stock, $.01 par value
This Prospectus covers up to 1,586,786 shares (the "Shares") of common
stock, $.01 par value (the "Common Stock"), of Out-Takes, Inc., a Delaware
corporation (the "Company"). Such Shares have been or may be acquired by certain
officers and directors (the "Selling Shareholders"), who may be deemed to be
affiliates of the Company, pursuant to the terms of the Out-Takes, Inc. Amended
and Restated 1992 Employee Stock Option Plan (the "Stock Option Plan"). The
Company will receive no part of the proceeds of sales by such persons. All
expenses incurred in connection with this offering will be borne by the Company.
The Company has been advised by the Selling Shareholders that they may
sell all or a portion of the Shares offered hereby from time to time through the
facilities of the OTC-Bulletin BoardSM (the "OTC"), or through the facilities of
such exchange or automated quotation system where the Common Stock may be
listed, at prices prevailing at the time of such sales. The Selling Shareholders
may also make private sales at negotiated prices directly or through a broker or
brokers. The Selling Shareholders and any broker executing selling orders on
behalf of the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Act"), in which event
commissions received by any such broker may be deemed to be underwriting
commissions under the Act.
The Common Stock of the Company is traded on the OTC. On December 17,
1997, the average of the high and low bid prices of the Company's Common Stock
was $0.078125 per share.
--------------------
See "Risk Factors" for a discussion of certain factors that should
be considered by prospective purchasers of the Shares.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------
The date of this Prospectus is December 19, 1997.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements, and
other information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza Building,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a Web site at http://www.sec.gov that contains all
electronically filed reports, proxy and information statements and other
information regarding the Company.
The Prospectus constitutes part of a Registration Statement on Form
S-8/S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Act. This
Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement for
further information with respect to the Company and the Shares offered hereby.
Any statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document as filed. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents and any amendments thereto filed by the Company
with the Commission under the Exchange Act are incorporated by reference in this
Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1997, (ii) the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997, (iii) the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1997, (iv) the Company's Quarterly Report on
Form 10-Q/A dated May 22, 1997 for the period ended September 30, 1996, (v) the
Company's Proxy Statement dated June 16, 1997 with respect to its annual meeting
of shareholders held on July 10, 1997, and (vi) the description of the Company's
Common Stock as set forth in the Registration Statement filed by the Company on
Form 8-A pursuant to Section 12 of the Exchange Act, and any amendments or
reports thereto filed with the Commission for the purpose of updating such
description.
All documents and any amendments thereto subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference and to be a part of this
Prospectus from the date of filing of such documents. Any statement contained in
a document incorporated by reference herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained in this
Prospectus, or in any other subsequently filed document which is also
incorporated by reference, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy
(without exhibits) of any and all information incorporated by reference in this
Prospectus. Requests for such copies should be directed to Michael C. Roubicek,
Out-Takes, Inc. (i) if by telephone to (310) 788-9440 and (ii) if by mail to
1419 Peerless Place, Suite 116, Los Angeles, California 90035.
THE COMPANY
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<PAGE>
The Company was incorporated in Delaware on March 18, 1992 to engage in
the sale of photographic portraits of children, adults and family groups. The
Company currently operates and derives substantially all of its revenues from
two retail studios, called Out-Takes(R), the first of which opened on May 24,
1993 and is located in MCA/Universal's CityWalkSM project in Los Angeles,
California (the "CityWalk Studio"). The second studio commenced operations on
December 1, 1995, at the Entertainment Center in the Bazaar at the Irvine
Spectrum located in Irvine, Orange County, California (the "Irvine Studio"). The
Company has also developed a travelling studio (the "Travelling Studio") that
has been used in a number of two-day promotions.
The studios employ proprietary hardware and software developed by, or
specifically for, the Company, which includes digital imaging technology and
automated motion control equipment to position the studio camera and set subject
lighting to the proper levels for each scene (collectively, the "Proprietary
System"). Using the Proprietary System, the Company is able to place pictures it
takes of its clients "into" still photographs prepared in advance from popular
movie scenes and other backgrounds licensed by the Company. Most of the
portraits taken in the CityWalk Studio and the Irvine Studio are presented to
the customer as framed 8" x 10", 5" x 7" and wallet-sized photographs within
about thirty minutes after the portrait session is completed. The remainder
(primarily enlargements and greeting cards based on these photographic images)
are produced and delivered to clients within several weeks using the Company's
order fulfillment capabilities as well as processing arranged through
independent service bureaus.
As used herein the term the "Company" refers to Out-Takes, Inc. and its
subsidiaries and affiliates unless otherwise noted. The Company's principal
executive offices are located at 1419 Peerless Place, Suite 116, Los Angeles,
California 90035.
RISK FACTORS
Prospective investors should consider carefully the following factors
related to the business of the Company and this offering, together with the
information and financial data set forth elsewhere in this Prospectus, before
deciding to invest in the Shares.
1. Operating Losses; No Assurance of Profitability.
The Company is utilizing a newly-developed technology to compete in the
portrait studio industry. Despite the continued operations of the CityWalk
Studio and the Irvine Studio, the Company continues to operate at a net loss.
The Company believes that this failure to achieve profitability is predominantly
due to the poor performance of the Irvine Studio. Based on the length of time
that the Irvine Studio has been open, the continuing poor performance and
negative cash flow generated by the studio, despite the Company's substantial
efforts to improve the studio's profitability, the Company has determined that
the continued operation of the Irvine Studio is not in the best interests of the
Company. Accordingly, the Company has decided to close the Irvine Studio on or
about December 28, 1997. There is, however, no assurance that these efforts to
improve the profitability of the Company will be successful.
The Company hopes to locate additional opportunities and venues and to
continue to reduce operating expenses and minimize overhead costs in order to
improve cash flows, reduce liabilities and enable additional studios to be
opened in the future. Net losses are expected to continue, however, until the
Company opens additional studios or revenues from the CityWalk Studio increase
substantially.
2. Availability of Additional Capital.
-3-
<PAGE>
The Company's operations do not currently generate sufficient funds to
meet the Company's working capital requirements. The Company historically has
depended on the sale of securities and borrowings from Photo Corporation Group
Pty. Limited ("PCG") to fund its working capital requirements. To the extent
that the Company requires additional funds to meet such requirements, it may
seek to raise such funds through the sale of securities or through new
borrowings from PCG. No assurance can be given, however, that the Company will
be able to obtain additional funds from PCG or from any other source. Should the
Company be unable to obtain additional capital when needed, the Company may not
have sufficient financial resources to continue operating as a going concern.
3. Competition.
Competition in the traditional portrait photography industry and the
merchandise licensing business is intense. The Company enjoys limited protection
from competition at its CityWalk Studio because of a restriction in that
studio's lease that provides that during the initial lease term (which runs
through May 31, 1998) the landlord will not lease to third parties nor operate
for its own account a retail store engaged in selling computer-generated
photographs similar to those produced and sold by the Company.
The Company has identified three potential kinds of competition: (1)
traditional photographers, who are likely to compete for retail customers as
well as future locations; (2) photographers who employ digital technologies, who
are likely to compete for retail customers, future locations and merchandising
licensing agreements; and (3) new technologies, which may render the Proprietary
System obsolete or require the Company to incur a substantial expense in order
to remain competitive in terms of product quality, selection, pricing and
customer service.
The Company believes that its portrait photography products are
competitive in terms of product quality, service quality and the selection and
attractiveness of its licensed products. Many of the firms with which the
Company competes, or can reasonably be anticipated to compete in the future,
however, have far greater financial resources, experience and industry
relationships than the Company. In addition, such organizations have proven
operating histories, which may afford these firms significant advantages in
negotiating and obtaining future merchandise licenses and retail leases,
arranging financing, attracting skilled personnel and developing technology and
products. Many of these firms offer their products at substantially lower prices
than the Company sells its products.
4. Dependence on License Agreements.
The Company has merchandise licensing agreements (the "License
Agreements") with Paramount Pictures Corporation ("Paramount"); MCA/Universal
Merchandising, Inc. ("Universal"); Warner Bros. Consumer Products formerly
Turner Home Entertainment, Inc. ("Warner") with respect to several properties
from the Hanna-Barbera and MGM libraries; Twentieth Century Fox Licensing &
Merchandising ("Fox"); Jay P. Morgan Photography ("Morgan"); Tony Stone
Worldwide Stock Agency ("TSW"), Queen Bee Productions ("Queen Bee"), Simon
Kornblit ("Kornblit"), Curtis Archives ("Curtis A"), Curtis Management ("Curtis
M"), King Features ("King"), MTV Networks ("MTV"), Saban Merchandising Inc.
("Saban"), Innerspace Visions ("Visions") and others, individually and
collectively referred to as the "License Agreements" (Paramount, Universal,
Warner, Fox, Morgan, TSW, Queen Bee, Kornblit, Curtis A, Curtis M, King, MTV,
Saban and Visions are individually and collectively referred to herein as
"Licensors").
The License Agreements generally grant the Company the right to
manufacture, sell and distribute in a defined geographic area, computer
generated photographs incorporating a customer's image into a still photograph
("Licensed Products") with the characters, designs and/or visual representations
("Licensed Articles") as they appear
-4-
<PAGE>
in television productions and motion pictures. The Licensed Products may be sold
separately or affixed to items approved by the Licensor, including photographic
enlargements, greeting cards, posters, books, t-shirts, mugs, buttons and other
novelty items, in consideration of payment to the Licensor of a specified
royalty based on a percentage of gross retail sales revenue from each of the
Licensed Products. Most of the License Agreements require a non-refundable
advance payment against future royalties and stipulate a guaranteed minimum
level of royalties that must be paid during each year of their term. The License
Agreements also provide that the Licensor retains approval rights over the use
of the Licensed Articles.
No single License Agreement represents greater than 25% of the Company's
aggregate sales revenues. The Company is materially dependent upon the License
Agreements with Paramount, Universal, Warner, Fox and Morgan, and the appeal of
Licensed Articles from these Licensors in the retail marketplace. Three of these
License Agreements each represents approximately 10% of the Company's revenues.
Although the Company has not commenced to market all Licensed Articles on a
timely basis, the Company has not received any notice that any Licensor intends,
by virtue of this matter, to exercise any of the remedies provided for in its
respective License Agreements. The Company is current with respect to all
payments and required reports to all Licensors and believes that its
relationship with all Licensors is satisfactory.
5. Environmental Regulations.
In order to comply with federal, state and local environmental
regulations, the Company has permanent filtration systems at the CityWalk and
Irvine Studios that lessen the discharge of certain chemicals that may be
harmful to the environment by reducing the concentration of these chemicals to
safe levels before they are disposed. The Company also contracts with a
hazardous waste disposal company with respect to the residue (primarily trace
silver) that the filtration unit produces. The Company believes that this
equipment and these procedures are sufficient to address any environmental
problems associated with its business and has not received any indication that
it is not complying with all applicable regulations. If, however, such measures
prove to be ineffective in preventing environmental contamination, the Company
could incur substantial expenses in developing new hazardous waste disposal
procedures and remediating any resulting contamination.
6. Limited Protection of Intellectual Property and Proprietary Rights;
Risk of Litigation
The Company pursues a policy of obtaining patents for appropriate
inventions related to products marketed or manufactured by the Company. The
Company has filed a document (the "Disclosure Document") with the U.S. Patent
and Trademark Office concerning aspects of its technology that may be
patentable. The Company has also filed an application with the U.S. Patent and
Trademark Office seeking patent protection for certain aspects of the Company's
technology described in the Disclosure Document and has supplemented that
document with a "Continuation in Part" filing, which is currently pending.
There can be no assurance that patents, domestic or foreign, will be
obtained with respect to the Company's technology, or that, if issued, they will
provide substantial protection or be of commercial benefit to the Company. In
addition, the patent laws of foreign countries may differ from those of the
United States as to the patentability of the Company's technology and,
accordingly, the degree of protection afforded by foreign patents may be more or
less than in the United States.
In the United States, although a patent has a statutory presumption of
validity, the issuance of a patent is not conclusive as to such validity or as
to the enforceable scope of its claims therein. The validity and enforceability
of a patent can be attacked by litigation after its issuance by the U.S. Patent
and Trademark Office. If the outcome of such litigation is adverse to the owner
of the patent in that the patent is held to be invalid, other parties may then
use the invention covered by the patent. Accordingly, there can be no assurance
that patents with respect to the
-5-
<PAGE>
Company's technology, if issued, will afford protection against competitors with
similar products, nor can there be any assurance that the patents will not be
infringed upon or designed around by others.
The Company has registered the marks Out-Takes(R), So You Want to be in
Pictures(R), Photomation(R) and Create the Moment(R) with the U.S. Patent and
Trademark Office and has registered the Out-Takes(R) service mark in Japan, in
both Japanese and English.
7. No Dividends.
The Company has not paid any dividends on its Common Stock and has not
adopted any policy with respect to the payment of dividends in the future. It is
anticipated that all or most of the earnings from the Company's operations will
be used to finance its growth for the immediate future.
8. Domicile of Officers and Directors
All of the executive officers and directors of the Company reside outside
of the United States and most or all of their assets are located outside of the
United States. Accordingly, such persons may not be subject to the in personam
jurisdiction of courts in the United States. It is not clear if the courts of
Australia would enforce against such persons a judgment obtained in a United
States court predicated upon the liability provisions of the Federal securities
laws of the United States, nor is it clear whether the courts of Australia would
entertain original actions predicated upon such provisions of the Federal
securities laws of the United States.
USE OF PROCEEDS
If any of the Shares are resold by the Selling Shareholders, the Company
would receive no proceeds from any such sale. The Shares would be offered for
the respective accounts of the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information as of the date of this
prospectus with respect to the Selling Shareholders. The address of each Selling
Stockholder is 1419 Peerless Place, Suite 116, Los Angeles, California 90035.
Number of
Name of Shares Shares to be Beneficially
Beneficial Beneficially Shares to Owned After Sale (1)
--------------------------
Owner Owned (1)(2) be Sold NumberPercent(3)
- ----- ----------- ------- ----------------
Michael C. Roubicek
(1) Unless otherwise indicated, each individual has sole voting and
investment power with respect to all Shares owned by such
individual.
(2) Shares shown in this column include shares of Common Stock currently
owned, Shares issuable pursuant to presently exercisable options and
Shares issuable pursuant to options which are exercisable within 60 days
of the date of this Prospectus.
(3) Based upon 20,495,726 shares of Common Stock outstanding as of November
10, 1997, plus shares of Common Stock issuable pursuant to options held by
the particular Selling Stockholder. Percentages shown after sale are based
upon all Shares registered hereunder being sold. Asterisks denote
ownership of less than one percent.
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<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that they intend
to sell all or a portion of the shares offered hereby from time to time through
the facilities of the OTC, or through the facilities of such exchange or
automated quotation system where the Common Stock may be listed, and that sales
will be made at prices prevailing at the times of such sales. The Selling
Shareholders may also make private sales directly or through a broker or
brokers. The Selling Shareholders will be responsible for payment of any and all
commissions to brokers, which will be negotiated on an individual basis. In
connection with any sales, the Selling Shareholders and any brokers
participating in such sales may be deemed to be underwriters within the meaning
of the Act.
The Company has informed the Selling Shareholders that the
anti-manipulative rules set forth in Regulation M of the Exchange Act may apply
to their sales in the market and has furnished each Selling Stockholder with a
copy of said Regulation.
There is no assurance that any of the Selling Shareholders will sell any
or all of the shares of Common Stock offered by them.
The Company will pay all expenses incident to the offering and sale of the
Common Stock to the public other than brokerage commissions which will be paid
by the Selling Shareholders.
LEGAL MATTERS
Graham & James LLP, special counsel to the Company for this offering, has
rendered an opinion to the Company that the Common Stock offered hereby will be
duly and validly issued, fully paid and nonassessable.
EXPERTS
The consolidated financial statements as of March 31, 1996 and 1997 and
for each of the years in the three-year period ended March 31, 1997 are
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended March 31, 1997, in reliance upon the report of
Moore Stephens, P.C., independent certified public accountants, incorporated by
reference herein and upon the authority of said firm as experts in accounting
and auditing.
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<PAGE>
No dealer, salesman or any other person has been authorized in connection
with this offering to give any information or to make any representations other
than those contained in this Prospectus (including any Prospectus supplement) in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the
company, by any underwriter or by the Selling Shareholders. This Prospectus
(including any Prospectus supplement) does not constitute an offer or a
solicitation in any jurisdiction to any person to whom it is unlawful to make
such an offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
there has been no change in the circumstances of the Company or the facts herein
set forth since the date hereof.
----------
TABLE OF CONTENTS
Page
Available Information..........................................................2
Incorporation of Certain
Information by Reference.....................................................2
The Company...................................................................3
Risk Factors...................................................................3
Use of Proceeds................................................................6
Selling Shareholders...........................................................6
Plan of Distribution...........................................................7
Legal Matters..................................................................7
Experts........................................................................7
----------
Out-Takes, Inc. has filed with the Securities and Exchange
Commission, Washington, D.C., a Registration Statement under the
Securities Act of 1933 with respect to the Shares offered hereby.
This Prospectus omits certain information contained in the Registration
Statement. The information omitted may be obtained from the Securities and
Exchange Commission upon payment of the regular charge therefor.
OUT-TAKES, INC.
1,586,786 Shares
of Common Stock,
$.01 par value
-1-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, and any amendments thereto, filed by Out-Takes,
Inc. (the "Company" or the "Registrant") with the Securities and Exchange
Commission (the "Commission") are incorporated by reference in this Registration
Statement and shall be deemed to be a part hereof from the date of filing such
documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the period ended June
30, 1997;
(d) The Company's Quarterly Report on Form 10-Q/A dated May 22, 1997 for
the period ended September 30, 1996;
(e) The Company's Proxy Statement dated June 16, 1997 with respect to
its annual meeting of shareholders held on July 10, 1997;
(f) The description of the Company's Common Stock as set forth in the
Registration Statement filed by the Company on Form 8-A pursuant to
Section 12(g) of the Exchange Act, and any amendments or reports
thereto filed with the Commission for the purpose of updating such
description; and
(g) All documents filed by the Company pursuant to Sections 13, 14, or
15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Common Stock made
hereby shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of filing of such
documents, except as to any portion of any future Annual or
Quarterly Report to the Shareholders which is not deemed to be filed
under said provisions.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Officers and Directors.
II-2
<PAGE>
The Company's Certificate of Incorporation, as amended, provides that the
Company shall, to the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware, indemnify any and all persons whom it
shall have the power to indemnify under said section from and against any and
all of the expenses, liabilities, or other matters referred to in or covered by
said section. Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation may indemnify any person who was or is or
is threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal or administrative (other
than an action by or in the right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent of the corporation. Such
person must have acted in good faith and in a manner reasonably believed to be
in the best interests of the corporation. With respect to any criminal
proceedings, such person must have had no reasonable cause to believe his
conduct was unlawful. Any such indemnification may only be made upon a
determination by the corporation that such indemnification is proper because the
person met the applicable standard of conduct. Section 145 further provides that
the indemnification authorized thereby shall not be deemed exclusive of any
additional rights to indemnification that any such person may be entitled to
under any bylaw, vote of stockholders or disinterested directors, or otherwise.
Section 145 also authorizes a corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation.
The Company's Bylaws provide that the Company shall indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed proceeding (other than an action by or in the right of this
corporation to procure a judgment in its favor) by reason of the fact that such
person is or was a director, officer, employee, or agent of the Company, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the Company and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4.1 Out-Takes, Inc. Amended and Restated 1992 Employee Stock Option Plan
5.1 Opinion of Graham & James LLP
23.1 Consent of Moore Stephens, P.C.
23.2 Consent of Graham & James LLP (included in Exhibit 5.1) 24.1 Power of
Attorney (see Part II, page 5)
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<PAGE>
xxxxx
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, and each filing of the Plan's annual report pursuant to Section
15(d) of the Exchange Act, that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer, or
controlling person of the Company in the successful defense of any action, suit,
or proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered,the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8/S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 15th day of
September, 1997.
OUT-TAKES, INC.
By: /s/ Peter C. Watt
Peter C. Watt, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below
constitutes and appoints Michael C. Roubicek as his attorney-in-fact, with the
power of substitution for him in any and all capacities, to sign any amendments
to this registration statement, including post-effective amendments, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact, or his substitute or substitutes, may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
/s/ Peter C. Watt Chairman of the Board, September 15, 1997
- ---------------------------
Peter C. Watt President, Chief Executive
Officer, Principal Financial
Officer and Secretary (Principal
Executive Officer and Principal
Accounting Officer)
/s/ Michael C. Roubicek Vice President and Director September 15, 1997
- ---------------------------
Michael C. Roubicek
II-5
<PAGE>
EXHIBIT INDEX
Sequential
Number Exhibit Page No.
4.1 Out-Takes, Inc. Amended and Restated
1992 Employee Stock Option Plan ___
5.1 Opinion of Graham & James LLP
regarding legality ___
23.1 Consent of Moore Stephens, P.C. ___
23.2 Consent of Graham & James LLP
(included in Exhibit 5.1)
24.1 Power of Attorney
(see Part II, page 5)
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<PAGE>
OUT-TAKES, INC.
AMENDED AND RESTATED
1992 EMPLOYEE STOCK OPTION PLAN
1. Purpose.
Effective February 28, 1997, the 1992 Employee Stock Option Plan ("Plan")
is amended and restated in its entirety to reflect the revised rules under
Section 16(b) of the Securities Exchange Act of 1934, as amended. The purpose of
this Plan is to advance the interests of the Company and its stockholders by
providing a means to attract, retain, and reward employees, officers and
directors of, and consultants or advisors to, the Company and its subsidiaries,
by providing for incentives to such persons that will encourage them to
contribute to the Company's future growth and success, and by strengthening the
mutuality of interests between such persons and the Company's stockholders by
enabling such persons to acquire a proprietary interest in the Company.
2. Definitions.
(a) "Affiliate" shall mean any parent corporation or subsidiary
corporation, within the meaning of Section 424(e) and (f), respectively, of the
Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a Committee appointed by the Board in accordance
with Section 3 of the Plan.
(e) "Common Stock" shall mean the $.01 par value Common Stock of the
Company.
(f) "Company" shall mean Out-Takes, Inc., a Delaware corporation.
(g) "Disability" shall mean the condition of an Employee who is unable to
substantially perform the duties of such office.
(h) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(i) "Exercise Price" shall mean the purchase price per share of Common
Stock upon exercise of an Option, which shall be determined in accordance with
Section 7.
(j) "Fair Market Value" of a Share of Common Stock as of a specified date
shall mean the closing price of a Share on the composite reporting tape for
exchange-listed securities on the day immediately preceding the date as of which
Fair Market Value is being determined, or on the next preceding date on which
such Shares are traded if no Shares were traded on such immediately preceding
day, or if the Shares are not traded on a securities exchange, Fair Market Value
shall be deemed to be the average of the high bid and low asked prices of the
Shares in the over-the-counter market on the day immediately preceding the date
as of
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<PAGE>
which Fair Market Value is being determined or on the next preceding date on
which such high bid and low asked prices were recorded. If the Shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of Shares, any distributions with respect thereto which
would be repurchased with the Shares) shall be determined in good faith by the
Board of Directors (or the Committee, if applicable). In no case shall Fair
Market Value be determined with regard to restrictions other than restrictions
which, by their terms, will never lapse. In no case shall Fair Market Value be
less than the par value of a Share of Common Stock.
(k) "Option" shall mean an incentive stock option or a non-statutory stock
option granted pursuant to the Plan.
(l) "Optionee" shall mean a person to whom an Option has been granted.
(m) "Plan" shall mean this Out-Takes, Inc. Amended and Restated 1992
Employee Stock Option Plan.
(n) "Purchase Price" shall mean the Exercise Price times the number of
whole Shares with respect to which an Option is exercised.
(o) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(p) "Share" shall mean one share of Common Stock.
3. Type of Options and Administration.
(a) Types of Options. Grants of Options pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or the Committee,
if applicable) and Options so granted may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the Code
or non-statutory options which are not intended to meet the requirements of
Section 422 of the Code. Except as provided in Sections 16 and 22, Options shall
be granted under the Plan for no consideration other than past and future
services of the Optionee.
(b) Administration. The Plan shall be administered by the Board of
Directors or in its discretion by a committee ("Committee"), comprised of not
less than two non-employee directors appointed by the Board of Directors. Only
non-employee directors (as defined under Rule 16b-3 promulgated under the
Securities Exchange Act) shall be eligible to serve on the Committee. The Board
of Directors may, from time to time, at its sole discretion, remove members
from, or add members to, the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board of Directors. The Committee shall select
one of its members as Chairman, and shall hold meetings at such time and place
as it determines advisable. A majority of the Committee shall constitute the
quorum; and the acts of a majority of the members present at any meeting, or
acts reduced to and approved in writing by a majority of the Committee, shall be
valid acts of the Committee. With the exception of option grants to members of
the Committee which shall be made and administered exclusively by the Board of
Directors pursuant to the express terms and conditions of the Plan, the Board of
Directors (or the Committee, if applicable) shall have the sole power to grant
options pursuant to the Plan, including the determination of the persons to whom
options shall be granted, the times when they shall receive them, the option
price of each option, and the number of shares to be subject to each option. All
such actions by the Board of Directors (or the Committee, if applicable), with
respect to officers and directors of the Company and its Affiliates, shall be
evidenced by written documentation properly executed on its behalf.
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<PAGE>
(c) Indemnification of Board of Directors (or Committee, if applicable). In
addition to such other rights of indemnification as they may have as directors
or as members of the Committee, the members of the Board of Directors (or the
Committee, if applicable) shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding except in relation to matters as of which
it shall be adjudged in such action, suit or proceeding that such Board of
Director (or Committee, if applicable) member is liable for negligence or
misconduct in the performance of his duties; provided that within sixty days
after institution of any such action, suit or proceeding a Board of Director (or
Committee, if applicable) member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
4. Eligibility.
(a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company and/or an Affiliate; provided, that Incentive Stock Options may only be
granted to individuals who are employees of the Company and/or an Affiliate
(within the meaning of Section 3401(c) of the Code). A person who has been
granted an option may, if he or she is otherwise eligible, be granted additional
options if the Board of Directors (or the Committee, if applicable) shall so
determine.
5. Stock Subject to Plan.
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 16 below, the maximum number of Shares which may be issued
and sold under the Plan is 562,000 Shares plus 5% of the number of Shares issued
(other than any issuance under the Plan or any other executive compensation plan
of the Company), except any Shares added under this clause as a result of
further issuances by the Company shall not be available for grants of Incentive
Stock Options under the Plan. The number of Shares subject to Options
outstanding under the Plan at any time may not exceed the number of Shares
remaining available for issuance under the Plan. If an Option granted under the
Plan shall expire, terminate or is cancelled for any reason without having been
exercised in full, the unpurchased Shares subject to such Option shall again be
available for subsequent Option grants under the Plan.
6. Forms of Option Agreements.
As a condition to the grant of an Option under the Plan, each recipient of
an Option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors (or the Committee, if
applicable). Such option agreements may differ among recipients.
7. Purchase Price.
(a) General. The Exercise Price shall be determined by the Board of
Directors (or the Committee, if applicable) at the time of grant of such Option;
provided, however, that in the case of an Incentive Stock Option, the Exercise
Price shall not be less than 100% of the Fair Market Value (as hereinafter
defined) of
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<PAGE>
such stock, at the time of grant of such Option, or less than 110% of such Fair
Market Value in the case of Incentive Stock Options described in Section 12(b)
unless otherwise determined by the Board of Directors (or the Committee, if
applicable), and in the case of non-statutory options, the Exercise Price shall
not be less than 85% of the Fair Market Value.
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the Exercise Price by delivery of cash or a check to the
order of the Company in an amount equal to the Purchase Price, or, to the extent
provided in the applicable option agreement, (i) by delivery to the Company of
Shares of Common Stock of the Company having a Fair Market Value on the date of
exercise equal in amount to the Exercise Price of the Options being exercised,
(ii) by any other means (including, without limitation, by delivery of a
promissory note of the Optionee payable on such terms as are specified by the
Board of Directors (or the Committee if applicable)) which the Board of
Directors (or the Committee, if applicable) determines are consistent with the
purpose of the Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3, Regulations G and T promulgated by the
Federal Reserve Board) and the Delaware General Corporation Law or (iii) by any
combination of such methods of payment. Notwithstanding the foregoing, the right
to pay the option price by delivery of a promissory note shall not be available
to any Optionee who is a person described in Section 16(a) of the Securities
Exchange Act.
8. Option Period.
Subject to earlier termination as provided in the Plan, each Option and all
rights thereunder shall expire on such date as determined by the Board of
Directors (or the Committee, if applicable) and set forth in the applicable
option agreement, provided, that such date shall not be later than (10) ten
years after the date on which the Option is granted.
9. Exercise of Options.
Each Option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be
determined by the Board of Directors (or the Committee, if applicable) set forth
in the option agreement evidencing such Option, subject to the provisions of the
Plan. If an Option is not at the time of grant immediately exercisable, the
Board of Directors (or the Committee, if applicable) may (i) in the agreement
evidencing such Option, provide for the acceleration of the exercise date or
dates of the subject Option upon the occurrence of specified events, and/or (ii)
at any time prior to the complete termination of an Option, accelerate the
exercise date or dates of such Option.
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<PAGE>
10. Nontransferability of Options.
No Option or other derivative security granted under this Plan shall be
assignable or otherwise transferable by the Optionee except by will or by the
laws of descent and distribution or to a beneficiary designated in accordance
with procedures established by the Board of Directors (or the Committee, if
applicable). An Option may be exercised during the lifetime of the Optionee only
by the Optionee.
11. Effect of Termination of Employment or Other Relationship.
Except as otherwise determined by the Board of Directors (or the Committee,
if applicable) at or after grant, with respect to any Option or as otherwise
provided in Section 12(d) with respect to Incentive Stock Options, and subject
to the provisions of the Plan, an Optionee may exercise, to the extent vested at
the time of termination, an Option at any time within three (3) months following
the termination of the Optionee's employment or other relationship with the
Company (or the Affiliate, if applicable) or within one (1) year if such
termination was due to the death or disability of the Optionee, but, except in
the case of the Optionee's death, in no event later than the expiration date of
the Option. If the termination of the Optionee's employment is for cause or is
otherwise attributable to a breach by the Optionee of an employment or
confidentiality or non- disclosure agreement, the Option shall expire
immediately upon such termination. The Board of Directors (or the Committee, if
applicable) shall have the power to determine what constitutes a termination for
cause or a breach of an employment or confidentiality or non-disclosure
agreement, whether an Optionee has been terminated for cause or has breached
such an agreement, and the date upon which such termination for cause or breach
occurs. Any such determinations shall be final and conclusive and binding upon
the Optionee.
12. Incentive Stock Options.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such Option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or an Affiliate (after taking into account
the attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock
Option granted to such individual.
i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market Value
of one share of Common Stock at the time of grant; and
ii) the Option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, Options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company or any Affiliate) which are intended to constitute
Incentive Stock Options shall not constitute Incentive Stock Options to the
extent that such Options, in the aggregate, become exercisable for the first
time in any one calendar year for shares of Common Stock with an aggregate Fair
Market Value, as of the respective date or dates of grant, of more than
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<PAGE>
$100,000. Options which fail to qualify as Incentive Stock Options under this
limitation shall be deemed non-statutory options granted under the Plan.
(d) Termination of Employment, Death or Disability. Unless otherwise
determined by the Board of Directors (or the Committee, if applicable), no
Incentive Stock Option may be exercised unless, at the time of such exercise,
the Optionee is, and has been continuously since the date of grant of his or her
Option, employed by the Company (or the Affiliate, if applicable), except that:
i) an Incentive Stock Option may be exercised, to the extent vested at
the time of cessation of employment, within the period of three months
after the date of Optionee ceases to be an employee of the Company or the
Affiliate (or within such lesser period as may be specified in the
applicable option agreement);
ii) if the Optionee dies while in the employ of the Company (or the
Affiliate, if applicable), or within three months after the Optionee ceases
to be such an employee, the Incentive Stock Option may be exercised by the
person to whom it is transferred by will or the laws of descent and
distribution within the period of one year after the date of death (or
within such lesser period as may be specified in the applicable option
agreement); and
iii) if the Optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) while in the
employ of the Company (or the Affiliate, if applicable), the Incentive
Stock Option may be exercised within the period of one year after the date
the Optionee ceases to be such an employee because of such disability (or
within such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any Option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date and if the agreement with respect to such Option designates a
longer exercise period than permitted in Section 12(d)(i)-(iii), and if such
Option is in fact exercised after such post-termination period, the Option shall
be treated as the exercise of a non-statutory option under the Plan.
13. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors (or the Committee,
if applicable) may, in its sole discretion, include additional provisions in
option agreements covering Options granted under the Plan, including without
limitation restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors (or the Committee,
if applicable); provided, that such additional provisions shall not be
inconsistent with any other term or condition of the Plan and such additional
provisions shall not be applicable to any Incentive Stock Option granted under
the Plan if and to the extent that they would cause such Option to fail to
qualify as an Incentive Stock Option with the meaning of Section 422 of the
Code.
(b) Acceleration, Extension, Etc. The Board of Directors (or the Committee,
if applicable) may, in its sole discretion, (i) accelerate the date or dates on
which all or any particular Option or Options granted under the Plan may be
exercised or (ii) extend the dates during which all, or any particular, Option
or Options granted under the Plan may be exercised; provided, however, that no
such extension shall be permitted if it
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<PAGE>
would cause any Incentive Stock Option to fail to comply with Section 422 of the
Code and, in any event, no extension shall authorize the exercise of any Option
more than ten years after the date of grant.
14. General Restrictions.
(a) Investment Representations. The Company may require any person to whom
an Option is granted, as a condition of exercising such Option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the Option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws, or with covenants or representations made by the Company in
connection with any public offering of its Common Stock.
(b) Compliance With Securities Law. The Company shall not be obligated to
issue Shares or accept surrender of Shares in payment of the Exercise Price. If,
at any time, counsel to the company shall determine that the listing,
registration or qualification of the Shares subject to such Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with the issuance or purchase of Shares
thereunder, such Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors (or the Committee, if applicable). Nothing herein shall
be deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
15. Rights as a Shareholder.
The holder of an Option shall have no rights as a shareholder with respect
to any Shares covered by the Option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such Shares)
until the Option has been validly exercised. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
valid exercise.
16. Adjustment Provisions for Recapitalizations, Reorganizations and Related
Transactions.
(a) Recapitalizations and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction (i) the outstanding shares of Common
Stock are increased,decreased or exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional Shares or new or
different shares or other non-cash assets are distributed with respect to such
Shares or other securities, an appropriate and proportionate adjustment shall be
made in (w) the maximum number and kind of Shares reserved for issuance under
the Plan (x) the number and kind of Shares or other securities automatically
granted under Section 6, (y) the number and kind of Shares or other securities
subject to any then outstanding Options under the Plan, and (z) the price for
each Share subject to any then outstanding Options under the Plan.
Notwithstanding the foregoing , no adjustment shall be made pursuant to this
Section 16 if such adjustment (i) would cause the Plan to fail to comply with
Section 422 of the Code or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. If the Company shall
be the surviving corporation in any reorganization, merger or consolidation of
the Company with one or more other
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<PAGE>
corporations, any then outstanding Option granted pursuant to the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Common Stock subject to such Options would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Purchase Price as to which such Options may be
exercised so that the aggregate Purchase Price as to which such Options may be
exercised shall be the same as the aggregate Purchase Price as to which such
Options may be exercised for the Shares remaining subject to the Options
immediately prior to such reorganization, merger, or consolidation.
(c) Authority to Make Adjustments. Any adjustments under this Section 16
will be made by the Board of Directors (or the Committee, if applicable) in
order to prevent dilution or enlargement of the rights of Optionees, and such
determinations as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional Shares will be
issued under the Plan on account of any such adjustments or otherwise.
17. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in which the
Company is not the surviving corporation, or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity or in the event of a liquidation of the Company (collectively, a
"Corporate Transaction"), the Board of Directors of the Company (or the
Committee, if applicable), or the board of directors of any corporation assuming
the obligations of the Company, may, in its discretion, take any one or more of
the following actions, as to outstanding Options: (i) provide that such Options
shall be assumed, or equivalent Options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any such
Options substituted for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, (ii) upon written notice to the Optionees, provide
that all unexercised Options will terminate immediately prior to the
consummation of such transaction unless exercised by the Optionee within a
specified period following the date of such notice, (iii) in the event of a
Corporate Transaction under the terms of which holders of the Common Stock of
the Company will receive upon consummation thereof a cash payment for each share
surrendered in the Corporation Transaction (the "Transaction Price"), make or
provide for a cash payment to the Optionees equal to the difference between (A)
the Transaction Price times the number of shares of Common Stock subject to such
outstanding Options (to the extent then exercisable at prices not in excess of
the Transaction Price) and (B) the aggregate exercise price of all such
outstanding Options in exchange for the termination of such Options, and (iv)
provide that all or any outstanding Options shall become exercisable in full
immediately prior to such event.
(b) Substitute Options. The Company may grant Options under the Plan in
substitution for Options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as a result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute Options be granted on such terms and
conditions as the Board of Directors (or the Committee, if applicable) considers
appropriate in the circumstances.
18. No Special Employment Rights.
Nothing contained in the Plan or in any Option shall confer upon any
Optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the
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<PAGE>
Company at any time to terminate such employment or to increase or decrease the
compensation of the Optionee.
19. Other Employee Rights.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an Option or the sale of Shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors (or the Committee, if applicable).
20. Amendment of the Plan.
(a) The Board (and not the Committee) may at any time, and from time to
time, modify or amend the Plan in any respect, except that if at any time the
approval of the stockholders of the Company is required by any law, regulation
or contractual provision binding the Company, such modification or amendment
must be approved by the stockholders of the Company not later than one year
after adoption thereof by the Board of Directors.
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(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an Optionee, materially and adversely affect his or her
rights under an Option previously granted to him or her. The Board may amend
outstanding option agreements in a manner not inconsistent with the Plan.
21. Withholding.
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the Optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any Shares issued upon exercise
of Options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the Optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an Option or (ii) by delivering to the Company shares of Common Stock already
owned by the Optionee. The Shares so delivered or withheld shall be valued at
their then-current Fair Market Value as of the date that the amount of tax to be
withheld is to be determined. An Optionee who has made an election pursuant to
this Section 20(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the Optionee (i) to notify the
Company if any or all of such Shares are disposed of by the Optionee within two
years from the date the Option was granted or within one year form the date the
Shares were transferred to the Optionee pursuant to the exercise of the Option,
and (ii) if required by law, to remit to the Company, at the time of and in the
case of any such disposition, an amount sufficient to satisfy the Company's
federal, state and local withholding tax obligations with respect to such
disposition, whether or not, as to both (i) and (ii), the Optionee is in the
employ of the Company at the time of such disposition.
22. Cancellation and New Grant of Options, etc.
The Board of Directors (or the Committee, if applicable) shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionees, (i) the cancellation of any or all outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same of different numbers of shares of Common Stock and having an
Exercise Price which is higher or lower than the then-current Exercise Price of
such outstanding Options or (ii) the amendment of the terms of any and all
outstanding Options under the Plan to provide an Exercise Price which is higher
or lower than the then-current Exercise Price of such outstanding Options.
23. Effective Date and Duration of the Plan.
(a) Effective Date. The effective date of the Plan, as initially adopted,
is July 27, 1993. Amendments to the Plan not requiring stockholder approval
shall become effective when adopted by the Board of Directors; amendments
requiring stockholder approval (as provided in Section 20) shall become
effective when adopted by the Board of Directors, but no Incentive Stock Option
granted after the date of such amendment shall become exercisable (to the extent
that such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular Optionee) unless and until such amendment
shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve months of the Board's adoption of such
amendment, any Incentive Stock Options granted on or after the date of such
amendment shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such Option to a particular Optionee.
Subject to this limitation, Options may be granted under the Plan at any time
after the effective date and before the date fixed for
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termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate upon the date on which all Shares available for
issuance under the Plan shall have been issued under the Plan, and the Company
has not further obligations under the Plan. The foregoing notwithstanding, the
term during which Incentive Stock Options may be granted under this Plan shall
expire on July 26, 2003.
24. Rule 16b-3 Compliance.
(a) Notice of Sale of Shares. Directors and officers who fall within the
definition of "officer" under Rule 16a-1(f) promulgated under the Securities
Exchange Act shall deliver to the Corporate Secretary of the Company an executed
notice of his/her intention to sell Shares of Common Stock of the Company
acquired upon exercise, in whole or in part, of an option granted hereunder.
Such notice, in which there is specified the number of shares which are to be
sold and the date such shares were acquired, shall be provided at least one full
business day in advance of the proposed date of sale.
(b) Reformation To Comply with Rule 16b-3. It is the intent of the Company
that this Plan comply in all respects with applicable provisions of Rule 16b-3
or Rule 16a-1(c)(3) under the Securities Exchange Act in connection with any
grant of Options or related rights to a cash payment to, or other transaction
by, an Optionee who is a Reporting Person (except for transactions exempted
under alternative Securities Exchange Act Rules or acknowledged in writing to be
non-exempt by such Optionee). Accordingly, if any provision of this Plan or any
agreement relating to an Option does not comply with the requirements of Rule
16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) to the extent
required so that such Optionee shall avoid liability under Section 16(b).
25. Provision for Foreign Participants.
The Board of Directors (or the Committee, if applicable) may, without
amending the Plan, modify awards or Options granted to participants who are
foreign nationals or employed outside the United States to recognize differences
in laws, rules, regulations or customs of such foreign jurisdictions with
respect to tax, securities, currency, employee benefit or other matters.
26. Governing Law.
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws and applicable federal law.
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The Board of Directors
Out-Takes, Inc.
October 30, 1997
Page 13
October 30, 1997
The Board of Directors
Out-Takes, Inc.
1419 Peerless Place, Suite 116
Los Angeles, California 90035
Re: Form S-8/S-3 Registration Statement
Our File Reference: 33816.00001
Gentlemen:
We have acted as special securities counsel to Out-Takes, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company of a registration statement on Form S-8/S-3 (the "Registration
Statement") to be filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended, relating to (i) stock options (the
"Options") to purchase up to 1,586,786 shares of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), granted or to be granted pursuant
to the Company's Amended and Restated 1992 Employee Stock Option Plan (the
"Plan"), and (ii) a maximum of 1,586,786 shares (the "Shares") of Common Stock
issuable upon exercise of the Options.
In connection with the opinions expressed herein, we have examined the
following documents: (i) the Certificate of Incorporation of the Company, as
amended, (ii) the By-Laws of the Company, as amended, (iii) an Officer's
Certificate, dated as of November 3, 1997, executed by Michael C. Roubicek, Vice
President of the Company, (iv) a Good Standing Certificate of the Company, dated
October 6, 1997, (v) the Plan, and (vi) the Registration Statement (including
exhibits thereto). We have also made such inquiries, and have examined
originals, certified copies or copies otherwise identified to our satisfaction
of such other documents, corporate records and other instruments, as we have
deemed necessary or appropriate for the purposes of this opinion letter.
<PAGE>
The Board of Directors
Out-Takes, Inc.
October 30, 1997
Page 2
In our examinations, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, photostatic or facsimile copies and the
authenticity of the originals of such documents. For the purpose of rendering
the opinions expressed herein, we have further assumed the truth, accuracy and
completeness of all the representations and other factual statements contained
in such documents, records and other instruments, and that there have been no
changes in the matters represented therein from the respective dates thereof
through the date hereof. We have not undertaken any independent investigation to
determine the truth, accuracy or completeness of any of such factual statements,
although nothing has come to our attention that leads us to believe that any
such factual statement is incorrect. Finally, for purposes of rendering the
opinions expressed herein, we have expressly assumed that the Registration
Statement as filed by the Company with the SEC will be identical to the draft of
the Registration Statement reviewed by us in connection with the preparation of
this opinion letter.
Based upon our examination of the foregoing documents, records and other
instruments, and expressly subject to the assumptions set forth above, it is our
opinion that:
1. The Company has been duly incorporated and is a
corporation in good standing under the laws of the State of Delaware;
and
2. The issuance of the Options and the Shares has been duly and validly
authorized by the Company, and when issued and paid for in the manner
contemplated by the Plan and the Registration Statement, the Options will be
validly issued and the Shares will be validly issued, fully paid and
non-assessable.
We are members of the Bar of the State of California. Our opinions are
limited to matters involving the federal laws of the United States, the laws of
the State of California, and the corporate laws of the State of Delaware, and we
do not express any opinion as to the laws of
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The Board of Directors
Out-Takes, Inc.
October 30, 1997
Page 3
any other jurisdiction. The information set forth in this letter is as of the
date of this letter and we disclaim any undertaking to advise you of changes
which may thereafter be brought or come to our attention. This opinion is
rendered solely for your benefit in connection with the filing of the
Registration Statement with the SEC, and may not be relied upon by any other
person or entity or for any other purpose without our prior written consent in
each instance.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the reference to Graham & James LLP under the
caption "Legal Matters" in the Prospectus contained within the Registration
Statement.
Very truly yours,
/s/ Graham & James LLP
GRAHAM & JAMES LLP
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CONSENT OF INDEPENDENT AUDITOR
The Board of Directors and Stockholders of
Out-Takes, Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8/S-3 of Out-Takes, Inc. of our report dated May 15, 1997 relating to the
balance sheets of Out-Takes, Inc. as of March 31, 1997 and 1996 and the related
statements of operations, stockholders' equity, and cash flows for the three
years in the period ended March 31, 1997 which report appears in the March 31,
1997 annual report on Form 10-K of Out-Takes, Inc.
/s/ Moore Stephens, P.C.
Moore Stephens, P.C.
Certified Public Accountants
Cranford, New Jersey
September 15, 1997
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