SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) October 28, 1998
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OUT-TAKES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21322 95-4363944
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1419 Peerless Place, Suite 116, Los Angeles, CA 90035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 788-9440
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Not Applicable
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
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Effective as of October 26, 1998, Out-Takes, Inc., a Delaware corporation
(the "Company") has entered into an Asset Lease Agreement (the "Lease") with
Colorvision International, Inc., a Florida corporation ("CVI"), pursuant to
which CVI will lease certain assets of the Company described in the Lease and
held at the Company's photographic studio located on Universal City Walk,
Universal City, California and certain other locations (the "Leased Assets").
The Leased Assets constitute substantially all of the photographic business
assets owned by the Company. Along with the lease of the Leased Assets, the
Company assigned to CVI its interests in the Business Lease (the "Studio
Lease"), dated as of November 13, 1992, between the Company and MCA Development
Company, a division of MCA, Inc. (the "Landlord"), in which most of the Leased
Assets are used. Although CVI has agreed to be responsible for all of the
Company's liabilities under the Lease, and has indemnified the Company against
any liabilities arising under the Lease from the date of its assignment to CVI,
the Company remains contingently liable for its obligations to the Landlord
under the Studio Lease notwithstanding CVI's express assumption of those
liabilities. The Studio Lease expires on May 30, 2005.
Under the Lease, CVI paid a deposit to the Company in the amount of Fifty
Thousand Dollars ($50,000), and shall pay a monthly rental amount equal to seven
percent of the gross revenues generated from the use of the Leased Assets, or
the conduct of any other business, at the photographic studio covered by the
Studio Lease. CVI has agreed to use its best efforts to operate its business at
the photographic studio profitably, although there can be no assurance that
profitable operations will result from CVI's use of the Leased Assets, and if
none occur, then no monthly rental may be paid under the Lease. The Lease also
included a license for CVI to use the trade name of the Company at such
photographic studio.
In addition to the assumption of the Company's obligations under the Studio
Lease, the Lease provides for CVI to assume the Company's obligations under a
number of license agreements between the Company and third-party licensees,
primarily motion picture studios for the use of certain film images in its
photographic business. These licenses contain certain use-based royalties, as
well as minimum annual payment guarantees, which CVI has expressly assumed
responsibility for, including in respect of certain past due payments owed by
the Company to some of these third-party licensees.
The entry by the Company into the Lease with CVI is intended by management
of the Company to provide for the productive use of its photographic studio
assets, while permitting management to focus on its plans for the Company,
through its wholly-owned subsidiary Los Alamos Energy, LLC ("LAE"), to become an
important independent power producer, and to benefit as a principal provider of
electricity to consumers in California and elsewhere as deregulation of the
electric utility markets is implemented. The Company acquired LAE in August,
1998
(c) Exhibit Index.
Exhibit 10.32 Asset Lease Agreement by and between Out-Takes, Inc. and
Colorvision International, Inc., effective as of October 26, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OUT-TAKES, INC.
By: /s/ James C. Harvey__________________
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James C. Harvey
President and acting Chief Financial Officer
(Principal Financial and Accounting Officer)\
3
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ASSET LEASE AGREEMENT
This is an Asset Lease Agreement ("Agreement"), effective as of October
___, 1998, by and between Colorvision International, Inc., a Florida
corporation, located at 8250 Exchange Drive, Suite 132, Orlando, Florida 32809
(hereinafter referred to as "Lessee") and Out-Takes, Inc., a Delaware
corporation located at 1419 Peerless Place, Suite 116, Los Angeles, California
90035 (hereinafter referred to as "Lessor").
BACKGROUND
Lessor owns and operates the Out Takes photo store (the "Business") located
at Universal Studios California City Walk (the "Location"). Lessee seeks to
lease from Lessor, and Lessor seeks to lease to Lessee certain of the assets of
the Business for use at the Location as set forth in this Agreement, subject to
the terms and conditions set forth below. Accordingly, in consideration of the
mutual covenants and agree-ments set forth below, the parties agree as follows:
TERMS
1. LEASE OF ASSETS. The parties hereby agree that, at Closing (as defined
below), Lessor shall lease the assets of the Business set forth on Schedule 1 to
this Agreement (collectively the "Assets") provided, however, that within thirty
(30) days from the date of this Agreement they shall jointly prepare an item by
item list of the Assets being leased hereunder, and the agreed-upon value
thereof, which list will then be attached to this Agreement as a revised
Schedule 1. Lessor further agrees that the Assets shall be used only at the
Location during the Lease Term, as hereafter defined. Upon the expiration of
the Lease Term, or its earlier termination, all of the Assets shall be returned
to Lessor hereunder in the same condition as they are being delivered to Lessee
at the Closing, normal wear and tear excepted, and free and clear of any lien,
charge, security interest, claim or other encumbrance. The Assets are being
leased to Lessee on an "as is-where is" basis, and Lessor makes no
representation or warranty to Lessee, express or implied, as to the condition of
any Asset or suitability to the Business or the contemplated use thereof by
Lessee.
Throughout the entire Lease Term, Lessee hereby agrees with and covenants
to Lessor that it shall not do any of the following, nor suffer or permit any of
the following to occur to the extent the same shall be within its discretion or
control, without having obtained the prior written consent of Lessor:
(a) sell, lease, sublease, exchange, transfer or otherwise dispose of
any of the Assets;
(b) subject any of the Assets to any lien, security interest or
encumbrance;
(c) take any action which would materially destroy, injure, alter or
modify any Asset, or the right of Lessor to use any Asset, or which would render
defective or otherwise encumber good and marketable title to any such Asset, to
the extent such title exists in respect of such Asset at the Closing.
2. ASSIGNMENT OF LEASE. At Closing (as defined below), Lessor shall assign
and transfer to Lessee all of its right, title and interest in and to that
certain Business Lease executed as of November 13, 1992 ("Lease") between Lessor
and MCA Development Company, a division of MCA Inc. ("Landlord") pursuant to an
Assignment of Lease substantially in the form attached to this Agreement as
Exhibit "A" ("Assignment"), which Assignment requires the written consent of the
Landlord.
3. LEASE PRICE. The rental price for the Assets (the "Lease Price") shall
be a monthly amount equal to seven percent (7%) of the gross revenues (less
applicable sales taxes due on goods sold at the Location) ("Gross Revenues")
derived by Lessee from the Business, or any other business conducted or engaged
in by Lessee at the Location during each month, or portion thereof, that Lessee
shall be in possession of the Assets, for the duration of the Lease, as
currently extended through May 30, 2005 (the "Lease Term"). In the event Lessee
ceases to conduct any business at the Location: (i) for reasons of bankruptcy or
insolvency, (ii) acts of God, emergencies, strikes or other causes out of
Lessee's control; (iii) any loss of the right of Lessor to lease the Assets to
Lessee prior to the conclusion of the Lease Term; or (iv) any termination of
Lease by Landlord if through no fault of the Lessee, then no further payments
shall be due Lessor hereunder from the date Lessee ceases to operate at the
Location until Lessee resumes business at the Location, if such a resumption of
business occurs. Lessee acknowledges to Lessor by its execution of this
Agreement that it intends in good faith to operate at the Location profitably in
accordance with the Lease, and shall use its best efforts throughout the Lease
term to do so, and Lessor acknowledges to Lessee that it understands such
profitable operation cannot be guaranteed.
4. PAYMENT OF LEASE PRICE. Subject to the terms of this Agreement and in
reliance on the representations and warranties of Lessor set forth below, Lessee
shall lease, at Closing, the Assets and, in full consideration therefor, shall:
(a) pay $50,000.00 as a deposit ("Deposit") to Lessor at Closing.
Lessee shall have the option of making the payment by cashier's check or bank
wire. Lessor shall provide bank wire instructions to Lessee if requested by
Lessee; and
(b) pay the entire amount of the Lease Price due and payable to Lessor
(together with the applicable amount of any taxes as may be required in
connection with payments of the Lease Price) on or before the fifteenth day of
the month following each month of the Lease Term; provided, however, that Lessee
may deduct up to $4,166.67 each month from any sum otherwise payable to Lessee
pursuant to this subsection 4(b) until the entire amount of the Deposit has been
repaid to Lessee; further provided that the amount of any security deposits
shown on Schedule 2 to this Agreement which are transferred to, or credited to
the account of, Lessee by the holders of such deposits shall be deemed
repayments of the Deposit to Lessee and shall thereby reduce, by a corresponding
amount, any deductions from the Gross Revenues otherwise payable to Lessor which
Lessee may make pursuant to this Subsection 4(b).
5. LICENSE TO USE TRADE NAME. In further consideration of the payment of
the Lease Price to Lessor as set forth above, the Lessor hereby grants to Lessee
a license (the "License") to use the trade name "Out-Takes" (the "Trade Name")
only in connection with the Business at the Location and for so long as Lessee
operates the Business at the Location. Lessee shall have no right to use the
Trade Name in connection with any other present or future operations of Lessee.
Lessee recognizes and acknowledges Lessor's ownership of and prior rights in the
Trade Name and shall not take any action inconsistent with Lessor's ownership of
and prior rights in the Trade Name or which would otherwise destroy or impair
Lessor's interest in such rights.
Notwithstanding any other provisions contained in this Agreement concerning
the rights of Lessor to indemnification hereunder, and without limiting or
excluding any of such rights, Lessee hereby expressly agrees with Lessor that in
the event Lessor shall be named in any lawsuit or other proceeding solely by
virtue of Lessee's use of the Trade Name hereunder (and not in connection with
any actual liability or specific claim against Lessor in such lawsuit or
proceeding), then Lessee shall provide to the Lessor directly, and promptly upon
its request therefor, the full amount of any fees or expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by Lessor
in having itself dismissed from any such action.
The license to use the Trade Name granted hereunder shall be co-terminous
with the Lease Term or such shorter period as Lessee shall actually operate the
Business at the Location. Lessor agrees that, for so long as this Agreement
shall be in effect, it shall not take any action, or omit to take any action
which would have the effect of impairing any of Lessor's rights in the Trade
Name, or the value thereof to Lessor. Lessor covenants that it shall not enter
into any agreement, arrangement or undertaking, the effect of which would be to
result in the transfer, assignment, mortgage, hypothecation, dilution or
extinguishment of the Trade Name or any rights of Lessor therein.
6. CLOSING. The closing of the transaction contemplated by this Agreement
(the "Closing") shall take place in Los Angeles, California on October ___,
1998, or such other date and/or place as the parties mutually agree in writing
(the "Closing Date").
7. DELIVERIES BY LESSOR. At Closing, Lessor shall deliver to Lessee:
(a) an originally executed copy of this Agreement;
(b) the Assignment, duly executed by Lessor;
(c) a certificate of actions by Board of Directors of Lessor
authorizing the transaction contemplated by this Agreement to be undertaken by
Lessor.
8. DELIVERIES BY LESSEE. At Closing, Lessee shall deliver to Lessor (1) an
originally executed copy of this Agreement; (2) the Deposit in accordance with
subsection 4(a) hereof; (3) the Assignment, duly executed by Lessee; and (4) a
certificate of action by the Board of Directors of Lessee authorizing the
transactions contemplated by the Agreement to be undertaken by Lessee.
9. LIABILITIES OF LESSOR. Except with respect to the Assignment and except
as provided in Schedule 3 to this Agreement, Lessee will not assume any trade
and accounts payable that are, or have become due for payment as of the Closing
date or any other liabilities not incurred by Lessor in the ordinary course of
business through the Closing Date. Without limiting the generality of the
foregoing, Lessee will not assume intercompany liabilities, payables or
obligations of Lessor, nor will it assume any of Lessor's liabilities or
obligations arising out of employment agreements between Lessor and any of
Lessor's employees or Lessor's liabilities or obligations relating to the
negotiation and/or closing of the transaction contemplated herein including, but
not limited to, any broker commission payable in connection with the
transaction. Lessee shall be solely and exclusively liable for, and Lessor
expressly does not agree to assume any of the obligations created or liabilities
imposed upon Lessee by virtue of its use of the Assets after the Closing.
Lessee further covenants to and agrees with Lessor that in the use of the Assets
as contemplated herein, it shall not disturb any agreement to which such Assets
are subject nor by which they are bound, nor create, nor suffer or permitted to
be created or imposed, any lien, charge or other liability to, upon or for the
account of, Lessor.
10. INDEMNIFICATION.
(a) Except as otherwise contemplated herein, Lessor shall indemnify and
hold Lessee harmless from, against, and in respect of the following:
(i) any and all liabilities, obligations, debts, contracts or
other commitments of Lessor of any kind, known or unknown, whether fixed or
contingent, and whether arising in contract, in tort, or otherwise from the
operation of the Business at the Location prior to Closing including, but not
limited to, any liability of Lessor for sales and use taxes;
(ii) any damage or deficiency resulting from any misrepresentation
in or omission from any certificate or other instrument furnished or to be
furnished to Lessee by Lessor pursuant to this Agreement;
(iii) any and all losses, liabilities, claims, damages and
expenses, including court costs and reasonable attorney's fees, arising out of
any claim for brokerage or other commissions relative to this Agreement or the
transactions contemplated hereby insofar as any such claim arises by reason of
services alleged to have been rendered to or at the instance of Lessor;
(iv) any material breach by Lessor of this Agreement; and
(v) all actions, suits, proceedings, claims, demands, assessments,
judgments, legal fees, costs and expenses incident to any of the foregoing or
arising out of any act or omission of Lessor in the conduct of the Business
before the Closing.
(b) Lessee shall indemnify and hold Lessor harmless from, against, and
in respect of the following:
(i) any and all liabilities, obligations, debts, contracts or
other commitments of Lessee of any kind, known or unknown, whether fixed or
contingent, and whether arising in contract, in tort, or otherwise from the
operation of the Business (or any other business or activity conducted) at the
Location after the Closing including, but not limited to, any liability of
Lessee for sales and use taxes and any use of the Trade Name at any location by
Lessee in breach of Section 5 hereof; and
(ii) any material breach by Lessee of this Agreement.
(iii) any liability or obligation arising out of the inclusion in
the list of Assets of the license agreements set forth on Schedule 1 hereto,
including without limitation for the failure of Lessor to obtain the consent of
any licensor thereunder prior to leasing such licenses to Lessee, or any
liability or obligation which may be agreed upon between Lessee and any of such
licensors subsequent to the date of the Closing.
(c) Each party agrees to give notice to the other party of the
assertion of any claim or demand or the institution of any action, suit, or
proceeding in respect of which indemnification may be claimed hereunder and the
party receiving such notice shall have the right to undertake the defense or
settlement of such action, suit or proceeding ("Litigation") at it's own
expense. If the party receiving such notice does not undertake (or, within ten
(10) days thereafter, express its intention to so undertake) the defense or
settlement of the Litigation, the party giving such notice may control the
defense or settlement of the Litigation, provided, that if at any time during
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the pendency of such Litigation it shall be deemed in good faith by either
party, or its respective counsel, that the interests of the respective parties
in respect of such Litigation are or may become adverse, or otherwise conflict
in any material way, then each party shall be entitled to separate counsel
thereafter, and, provided, further, that in no event shall either party be
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entitled to make any offer or agreement of settlement in respect of any such
Litigation which is or will or could become binding upon the other party hereto,
without having obtained such other party's prior written consent to be bound
thereby. In the event Lessee is controlling the defense or settlement of
Litigation pursuant to this Subsection 10(c), and provided that Lessor is not
entitled to indemnification in respect of such Litigation pursuant to Section
10(b) above, Lessor hereby authorizes Lessee to deduct the costs of such defense
or settlement from any sums due Lessor pursuant to subsection 4(b) hereof. In
the event such costs exceed any sums due Lessor pursuant to subsection 4(b)
hereof, Lessor shall remit the amount of such costs directly to Lessee.
(d) Notwithstanding anything else contained in this Section 10, Lessee shall
promptly notify Lessor in the manner set forth in Section 16(d) below in the
event it becomes aware of any threatened or pending litigation involving or
relating to the Business, any other business or activity conducted at the
Location, the Assets (or any part thereof) or the Lease.
11. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor represents and
warrants to Lessee as follows:
(a) Organization and Standing. Lessor is a corporation organized under
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the laws of the State of Delaware and its status is active.
(b) Power and Authority. Lessor has the requisite corporate authority
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to enter into this Agreement and to incur and perform its obligations under this
Agreement. Lessor has all necessary corporate power to own, lease, hold, and
operate all of its properties and assets and to carry on the Business as it is
now being conducted. The execution, delivery and performance by Lessor of this
Agreement has been authorized by all necessary corporate action. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding agreement of Lessor, enforceable against Lessor in accordance
with its terms, subject only to applicable bankruptcy, moratorium and similar
laws.
(c) Title to Assets. Except for any licenses listed on Schedule 7
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hereto with respect to which Lessor makes no representation or warranty as to
title, quality or validity thereof, Lessor has good and marketable title to all
of the Assets, free and clear from all liens, encumbrances, security interests
or claims of any kind or nature, other than liens incurred in the ordinary
course of the Business for trade or in connection with the purchase of assets,
or for services rendered to Lessor by materialmen or other similar persons, or
for taxes not yet due and payable, or which otherwise do not have a material
adverse impact upon the financial condition of the Business. With respect to any
security interests by a third party in the Assets, Lessor shall deliver to
Lessee at closing (or as soon thereafter as Lessor may become aware thereof) a
copy of a duly filed UCC Form 3 terminating the security interest of any third
party in the Assets.
(d) Approvals and Consents. The execution, delivery and performance of
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this Agreement (and the transactions contemplated by this Agreement) do not and
will not: (i) contravene any provision of the articles of incorporation or
bylaws of Lessor; (ii) result in a material breach of, constitute a material
default under, result in the modification or cancellation of, or give rise to
any right of termination, modification or acceleration in respect of any
indenture, loan agreement, mortgage, lease or any other contract, or agreement
to which Lessor or any of the Assets are bound (other than in respect of the
Lease); (iii) other than as may apply to Lessee, result in the creation of any
security interest, pledge, lien, charge, claim, option, right to acquire,
encumbrance, restriction on transfer, or adverse claim of any nature whatsoever
upon any of the Assets; (iv) violate any writ, order, injunction or decree of
any court or any federal, state, municipal or other domestic or foreign
governmental department, commission, board, bureau, agency or instrumentality,
which violation or default in any such case would have a material adverse effect
on the Business; (v) require approval of the shareholders of Lessor; or (vi)
require any authorization, consent or approval of, or filing with or notice to,
any governmental or judicial body or agency, or any other entity or person,
including, without limitation, any filing with the Securities and Exchange
Commission ("SEC") other than any obligation Lessor may have to file a Form 8-K
as contemplated by Section 15 of this Agreement.
(d) Litigation. There are no actions or suits at law or in equity now
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pending or, to the actual knowledge of Lessor, threatened which could have a
material adverse effect on the Business or any of the Assets, or the ability of
Lessor to consummate the transactions contemplated by this Agreement.
(e) Collective Bargaining Agreements. There are no collective
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bargaining agreements to which Lessor is a party or by which Lessor is bound,
and there is no pending or threatened labor dispute, labor union organizing
attempt, strike, or work stoppage affecting either Lessor or the Business.
(f) Benefit Plans. There are no benefit plans applicable to any of the
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employees of the Business that are currently in effect or which, with respect to
the Business, Lessor has committed to implement prior to the Closing, except as
shown on Schedule 4 to this Agreement.
(g) Contracts. Schedule 5 to this Agreement lists all material
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contracts (including contracts with consultants), leases (where Lessor is lessor
or lessee) except the Lease, licenses, agreements, and undertakings of Lessor to
which it is or at the Closing Date will be a party and bound, or to which any of
its properties or Assets are or will be subject, and, if written, Lessor shall
have supplied Lessee with copies of such documents. Except as shown on Schedule
6 to this Agreement, each such contract, undertaking or other commitment listed
in Schedule 5 is, and upon the Closing will be (except as completed or expired
by its terms), valid and enforce-able in accordance with its terms, and no party
is in default under any material provision thereof.
(h) Trade Name. Lessor has adopted and uses the Trade Name in
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connection with the Business. Lessor has not been notified that Lessor's use of
the trade name or logo infringes the rights of a third party. No proceedings
have been or will at the Closing Date have been instituted or threatened which
assert infringement of rights of any third party against Lessor pursuant to its
use of the Trade Name.
(i) Compliance with Laws. As of the date of this Agreement, to the
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actual knowledge of Lessor, (i) there is no violation of any applicable laws,
regulations or orders relating to the conduct of the Business, and (ii) there is
no use of the Assets by Lessor in the Business which violates any applicable
laws, codes, ordinances and regulations, whether federal, state or local, which,
in either case, would have a material adverse effect on the Business.
(j) Conditions Affecting the Business. Other than as applicable to
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Gerry Wersh, who is deemed to be essential to the technical aspects of the
Business as currently being conducted, Lessor is not aware of any extraordinary
or unusual conditions in existence on the date hereof with respect to the
markets, services, facili-ties, personnel, or supplies of Lessor that is not
public information or known generally in Lessor's industry or which has not been
disclosed in writing to Lessee and which Lessor believes will result in a
material and adverse effect on the Business not experienced by others in similar
businesses.
(k) No Misrepresentations. None of the representa-tions and warranties
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of Lessor set forth in this Agreement or in the attached exhibits and schedules
nor any information or statements contained in the lists or documents provided
or to be provided by Lessor to Lessee, notwithstanding any investigation thereof
by Lessee, contains or will contain any untrue statement of a material fact, or
omits or will omit the statement of any material fact necessary to render the
same not misleading.
(l) Conveyance Not Fraudulent. Lessor is not making the transactions
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contemplated by this Agreement with the intent to hinder, delay, or defraud
either its present or future creditors.
(m) Discontinuance of Business. Upon consummation of the transactions
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contemplated hereby, Lessor will discontinue its operation of the Business, but
not of any other business owned or operated by Lessor.
12. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants to Lessor as follows:
(a) Organization and Standing. Lessee is a corporation organized and
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existing under the laws of the State of Florida and its status is active.
(b) Power and Authority. Lessee has the requisite corporate authority
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to enter into this Agreement and to incur and perform its obligations under this
Agreement. Lessee has all necessary corporate power to own, lease, hold, and
operate the Assets and carry on the Business as it is now being conducted. The
execution, delivery, and performance by Lessee of this Agreement has been
authorized by all necessary corporate action. Upon the execution and delivery
of this Agreement, this Agreement shall constitute a valid and binding agreement
of Lessee, enforceable against Lessee in accordance with its terms, subject only
to applicable bankruptcy, moratorium, and similar laws.
(c) Approvals and Consents. The execution, delivery and performance of
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this Agreement (and the transactions contemplated by this Agreement) do not and
will not: (i) contravene any provision of the articles of incorporation or
bylaws of Lessee; (ii) result in a breach of, constitute a default under, result
in the modification or cancellation of, or give rise to any right of
termination, modification, or acceleration in respect of any indenture, loan
agreement, mortgage, lease or any other contract, or agreement to which Lessee
is bound; (iii) require any authorization, consent or approval of, or filing
with or notice to, any governmental or judicial body or agency, or any other
entity or person.
(d) No Misrepresentations. None of the representations and warranties
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of Lessee set forth in this Agreement or in the attached exhibits and schedules,
nor any information or statements included in the lists or documents to be
provided by Lessee to Lessor, notwithstanding any investigation thereof by
Lessor, contains or will contain any untrue statement of a material fact, or
omits or will omit the statement of any material fact necessary to render the
same not misleading.
(e) Brokers' Fees. Lessee has no liability or obligation to pay any fees or
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commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
13.
SURVIVAL OF PROVISIONS. All representations, warranties, agreements, covenants,
assignments and licenses made or granted herein by Lessor or Lessee in
connection with the transactions contemplated by or set forth in this Agreement
or contained in any certificate, schedule, exhibit, or other document delivered
pursuant to this Agreement shall survive the Closing.
14. DISCLOSURE AND NON-INTERFERENCE. The parties agree not to make any
independent press releases or to disclose the terms of this Agreement except to
their attorneys and other necessary parties. The parties further agree to
prepare and issue a mutually agreeable press release upon Closing of this
transac-tion, provided that Lessee understands that Lessor may be obligated to
file with the SEC on Form 8-K within five days following the Closing. Further,
the parties agree not to interfere in each other's businesses, nor to make any
statements which would adversely impact the other's business interests.
15. RELATIONSHIP CREATED; INDEPENDENT CONTRACTOR. No provision of this
Agreement is intended to make Lessee an employee or agent of Lessor for any
purpose whatsoever, nor shall the execution of this Agreement be deemed to
create any partnership, joint venture or other form of business association
between the parties other than that of independent contractors. Lessor
acknowledges that it shall not have the right to require Lessee to make any
specific amount or number of sales, to attend sales meetings, to conform to any
fixed or minimum number of hours devoted to selling effort, to follow prescribed
itineraries, or do anything else which would jeopardize the relationship being
created between the parties. Notwithstanding the foregoing, Lessor shall have
the right to request Lessee to, and Lessee shall, provide Lessor with such
reports or information regarding the Assets as Lessor may reasonably request
from time to time during the Lease Term.
16. GENERAL PROVISIONS.
(a) Further Assurances. The parties agree that, from time to time
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hereafter and upon request, each of them will execute, acknowledge and deliver
such other instruments as may be reasonably required to carry out the terms and
conditions of this Agreement.
(b) Benefit and Assignment. This Agreement shall be binding upon and
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inure to the benefit of the parties hereto and their respective successors and
assigns. The rights of Lessee hereunder may not be assigned without the prior
written consent of Lessor which shall not unreasonably be withheld. The rights
of Lessor hereunder may be assigned, provided that any such assignment shall in
no way relieve Lessor of its obligations and responsibilities to Lessee under
this Agreement.
(c) Governing Law; Venue. This Agreement shall be governed by and
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construed in accordance with the laws of the State of California, excluding
those laws of California relating to conflicts of laws of different
jurisdictions. The parties hereby expressly submit to the jurisdiction of any
court of competent jurisdiction sitting in and for the County of Los Angeles,
State of California.
(d) Notices. All notices, requests, demands and other communications
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hereunder shall be in writing, and shall be deemed to have been duly given if
delivered by overnight delivery service or hand delivered, addressed as follows:
If to Lessor:
Out-Takes, Inc.
1419 Peerless Place, Suite 116
Los Angeles, California 90035
With a copy (which shall not constitute notice) to:
Feldhake, August & Roquemore
600 Anton Boulevard, Suite 1730
Costa Mesa, California 92626
Attention: Kenneth S. August, Esquire
If to Lessee:
Colorvision International, Inc.
8250 Exchange Drive, Suite 132
Orlando, Florida 32809
With a copy (which shall not constitute notice) to:
Holland & Knight LLP
Post Office Box 1526
Orlando, Florida 32802
Attention: John R. Dierking, Esquire
(e) Expenses. Any expenses in connection with this Agreement or the
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transactions contemplated herein shall be paid for by the party incurring such
expenses following the Closing. Lessee shall not assume any obligations of
Lessor, nor Lessor assume any obligations of Lessee, in connection with any such
expenses.
(f) Sales and Other Taxes. Any sales and other applicable taxes with
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respect to the lease of the Assets hereunder shall be borne by Lessee, and shall
be paid by Lessee as and when such taxes become due consistent with the lease of
the Assets set forth on Schedule 1 attached hereto.
(g) Headings. All paragraph headings herein are inserted for
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convenience only and shall not modify or affect the construction or
interpretation of any provision of this Agreement.
(h) Counterparts; Faxes. This Agreement may be signed in one or more
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counterparts, each of which shall be considered an original copy but all of
which together shall be deemed to be but one and the same instrument. Wherever
in this Agreement an original signature shall be required, a facsimile of an
original signature shall be deemed an original signature for all purposes.
(i) Schedules and Exhibits. The schedules and exhibits attached to
----------------------
this Agreement are hereby incorporated herein as an integral part hereof as
fully as if they had been written into the body of this Agreement in their
entirety.
(j) Amendment, Modification and Waiver. This Agreement may be
-------------------------------------
modified, amended and supplemented only by the mutual written agreement of both
of the parties hereto. Each party may waive in writing any condition intended
to be for its benefit.
(k) Validity. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect, nor shall the invalidity or unenforceability of a portion of any
provision of this Agreement affect the validity or enforceability of the balance
of such provision.
(l) Entire Agreement. This Agreement and the Schedules and Exhibits
----------------
delivered herewith represent the entire Agreement of the parties and supersede
all prior negotiations and discussions by and among the parties hereto with
respect to the subject matter hereof. No provision or document of any kind
shall be included in or form a part of this Agreement unless in writing and
delivered to the other party by the party to be charged. This agreement
supersedes and replaces the Letter which shall terminate upon the execution of
this Agreement by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year set forth above.
LESSOR:
OUT-TAKES, INC. ATTEST:
By: By: __________________________
James C. Harvey James C. Harvey
President Secretary
LESSEE:
COLORVISION INTERNATIONAL, INC. ATTEST:
By: _____________________________ By:
__________________________
President Secretary
-3-
EXHIBIT "A"
ASSIGNMENT, ASSUMPTION OF LEASE AND LANDLORD CONSENT AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of October, 1998
by and between Out-Takes, Inc. ("Assignor"), Colorvision International, Inc.
("Assignee") and Universal CityWalk Hollywood, a Unit of Universal Studios,
Inc., as successor in interest to MCA Development, a division of MCA Inc.
("Landlord").
R E C I T A L S
A. Landlord and Assignor, as Tenant, entered into that certain written
Lease dated as of November 12, 1992 (" 1992 Lease") pursuant to which Landlord
leased to Assignor certain premises located in Universal City, California as
described in such 1992 Lease (the "Premises"), which was subsequently amended by
that certain First Amendment to Lease dated March, 1993. The 1992 Lease and the
First Amendment to Lease are collectively referred to herein as the "Lease".
B. Simultaneously as of November 13, 1992 Guarantor executed and delivered
a Guarantee of Lease (the "Guarantee") with respect to Assignor's obligations
under the 1992 Lease, which Guarantee remains in full force and effect.
C. Effective as of the date first written above, Assignor wishes to assign
and Assignee wishes to accept such assignment and assume all of Assignor's
rights and obligations under the Lease.
NOW, THEREFORE, in consideration of the above and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Assignor hereby assigns, conveys and transfers all of its right, title and
interest in the Lease, a copy of which is attached and incorporated
herein by reference.
2. Assignee hereby assumes, agrees to be bound by and undertakes to
perform each and every one of the terms, covenants and conditions contained in
the Lease. The Assignee further assumes all obligations and liabilities of the
Assignor under the Lease in all respects as if Assignee were the original party
to the Lease.
3. Assignee shall be liable for all amounts due under the Lease on or after
the date hereof. In the event of a default under the Lease, Lessor shall have
the right to proceed directly and immediately against the Assignee without first
proceeding against the property and such proceeding is not deemed to be an
irrevocable election of remedies.
4. Subject to the terms and conditions herein, Lessor consents to the
assignment of the Lease from Assignor to Assignee. Assignor acknowledges that
this consent by Lessor is given without releasing Assignor from its obligations
under the Lease. This consent by Lessor shall not be deemed to be or construed
as a consent to any subsequent assignment of the Lease.
5. Assignee and Lessor agree that Assignee shall replace Robert Shelton as
Guarantor under said Lease, and shall assume all obligations of Guarantor
consistent with the terms of the Lease.
6. Assignee shall deposit with Lessor a Security Deposit of two months
Minimum Rent (as defined in the Lease) in the amount of Twenty Thousand Seven
Hundred Forty Five Dollars and Seventy Cents ($20,745.70). Landlord hereby
agrees that, notwithstanding the foregoing, Assignor shall transfer its Security
Deposit currently held by Landlord in the amount of Eighteen Thousand Seven
Hundred Twenty Two Thousand Dollars Sixty Six Cents ($18,722.66), less any
amounts owed to Landlord prior to the Effective Date, to Assignee's Security
Deposit account, and Assignee shall remit to Landlord on or before the Effective
Date any balance remaining in order to satisfy the Security Deposit requirement
of Assignee.
7. Assignor represents, warrants and agrees that all furniture, fixtures and
equipment which are the property of Assignor (including but not limited to
property which Assignor leases to Assignee as part of the assignment
transaction) and used in the Premises will be owned by Assignor, free and clear
of any lien or encumbrance, and further that in the event of a default by
Assignee which results in the loss of the right of Assignee to occupy the
Premises and the re-entry by Assignor, all of Assignor's furniture, fixtures and
equipment located in the Premises will be left in the Premises for Assignor's
use without compensation until the obligations of Assignor to Landlord under the
Lease have been satisfied.
8. Except as modified hereby, all terms and conditions of the Lease shall
remain in full force and effect.
9. All of the terms and provisions of this Agreement shall be binding and
shall insure to the benefit of the parties, their respective successors and
assigns.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
as of the date first written above.
ASSIGNOR: OUT-TAKES, INC.
By ________________________________
Name: ______________________________
Title: _______________________________
ASSIGNEE: Colorvision International, Inc.
By: ________________________________
Name: ______________________________
Title: _______________________________
LANDLORD: Universal CityWalk Hollywood,
a Unit of Universal Studios, Inc.
By:___________________________________
Larry Kurzweil
Senior Vice President & General Manager
-2-
SCHEDULE 1
ASSETS OF BUSINESS
1. All items remaining in the Out Takes store at Universal City Walk as of
October ___ , 1998, excluding the Sticker Machine belonging to paradise
Creations.
2. All items remaining in the Panorama City storage facility including
equipment previously used by Lessor in operating its Irvine, California
location.
3. The licenses listed on Schedule 7 hereof.
[The parties shall prepare a definitive list of the above-referenced Assets
being leased hereunder within thirty (30) days from the date of this Agreement
in accordance with the provisions of Section 1 hereof.]
-3-
SCHEDULE 2
SECURITY DEPOSITS
City Walk premises deposit $18,722.66
Board of Equalization deposit $ 1,000.00
City Walk electricity deposit $ 700.00
4
4
SCHEDULE 3
LIABILITIES OF LESSOR TO BE ASSUMED BY LESSEE
Lessee assumes all liabilities in connection with royalties on the below named
contracts, as of October ___, 1998. Lessee will assume financial responsibility
and liability for any and all existing or future guarantees or other commitments
in respect of the below named contracts:
1. MTV Networks
2. King Features
3. Stan Gorman
4. Young Kwon
5. Simon Kornblit
6. Gerry Wersh/Watkins
7. 20th Century Fox
8. Curtis Archives
9. CMC
10. Universal Studios
11. Tony Stone Images
12. Paramount
13. JP Morgan
14. Queen B
15. Saban
16. Baywatch
17. Warner Brothers
5
5
SCHEDULE 4
BENEFIT PLANS OF LESSOR
1. Group health insurance plan in effect as of September 30, 1998
6
6
SCHEDULE 5
SCHEDULE OF CONTRACTS
1. License Agreements listed on Schedule 3
7
7
SCHEDULE 6
CONTRACT DEFAULTS
License agreements with:
1. JP Morgan
2. 20th Century Fox
3. Curtis Archives
4. CMC
4. Universal Studios
6. Warner Brothers
11
11
SCHEDULE 7
LICENSE AGREEMENTS
1. MTV Networks
2. King Features
3. Stan Gorman
4. Young Kwon
5. Simon Kornblit
6. Gerry Wersh/Watkins
7. 20th Century Fox
8. Curtis Archives
9. CMC
10. Universal Studios
11. Tony Stone Images
12. Paramount
13. JP Morgan
14. Queen B
15. Saban
16. Baywatch
17. Warner Brothers
OUT TAKES, INC.
WRITTEN CONSENT
of the
SOLE DIRECTOR
October 26, 1998
This Written Consent of the Sole Director of Out Takes, Inc., a Delaware
Corporation (the "Corporation") is made as of the date set forth above in
accordance with the Bylaws of the Corporation. The Sole Director hereby
consents, pursuant to the provisions of Section 141(f) of the Delaware
Corporations Code, to the adoption of the following Resolutions, effective as of
5:00 p.m. on October 26, 1998, which are to be filed with the Minutes of the
Board of Directors:
WHEREAS, it is in the best interests of the Corporation to lease to others
certain of its assets; and
WHEREAS, it is in the best interests of the Corporation to divest itself of
certain of its liabilities:
RESOLVED, that the Corporation enter into an Asset Lease Agreement with
Colorvision International, Inc.
FURTHER RESOLVED, that all of the actions taken by the executive officers
of the Corporation since the last meeting of the Board of Directors are hereby
specifically authorized, ratified and approved by the Sole Director.
APPROVED:
____________________
James C. Harvey
Sole Director
