<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PRIVATE MEDIA GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
Preliminary Proxy Materials
---------------------------
May 30, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held on Friday, June 16, 2000, at 10:00 a.m. at Hotel Novotel, Plaza Xavier,
s/n, 08190 Sant Cugat, Barcelona, Spain.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, I urge you to promptly complete, sign, date
and return the enclosed proxy card in the envelope provided.
Your vote is very important, and we will appreciate a prompt return of your
signed Proxy card. We hope to see you at the meeting.
Cordially,
Berth H. Milton
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
PRIVATE MEDIA GROUP, INC.
_________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, JUNE 16, 2000
To the Shareholders of PRIVATE MEDIA GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Private
Media Group, Inc. (the "Company") will be held on Friday, June 16, 2000, at
10:00 a.m. at Hotel Novotel, Plaza Xavier, s/n, 08190 Sant Cugat, Barcelona,
Spain, for the following purposes:
1. To elect four (4) directors to hold office until the next Annual
Meeting of Shareholders and until their respective successors have been
duly elected and qualified;
2. To approve an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of its Common Stock; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on May 22, 2000 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
Alfredo M. Villa
Corporate Secretary
May 30, 2000
All shareholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving of
your Proxy will not affect your right to vote in person should you later decide
to attend the meeting.
2
<PAGE>
PRIVATE MEDIA GROUP, INC.
Carrettera de Rubi 22-26, 08190
Sant Cugat del Valles, Barcelona, Spain
Telephone 34-93-590-7070
PROXY STATEMENT
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Private Media Group, Inc. (the "Company" or
"Private") for the Annual Meeting of Shareholders to be held on June 16, 2000
(the "Annual Meeting") and any postponements or adjournments thereof. Any
shareholder giving a Proxy may revoke it before or at the meeting by providing a
proxy bearing a later date or by attending the meeting and expressing a desire
to vote in person. All proxies will be voted as directed by the shareholder on
the Proxy card; and, if no choice is specified, they will be voted (1) "FOR" the
four directors nominated by the Board of Directors, (2) "FOR" the adoption of
the proposal authorizing an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock, and in the
discretion of the persons acting as Proxies, for any other matters.
Your cooperation in promptly returning the enclosed Proxy will reduce the
Company's expenses and enable its management and employees to continue their
normal duties for your benefit with minimum interruption for follow-up proxy
solicitation.
Only shareholders of record at the close of business on May 22, 2000, are
entitled to receive notice of and to vote at the meeting. On that date, the
Company had outstanding ____________ shares of Common Stock. The shares of
Common Stock vote as a single class. Holders of shares of Common Stock on the
record date are entitled to one vote for each share held. The presence at the
Annual Meeting, either in person or by proxy, of the holders of a majority of
the shares of Common Stock issued, outstanding and entitled to vote is necessary
to constitute a quorum for the transaction of business.
A plurality of votes by the holders of the Common Stock is required for the
election of directors, while the affirmative vote of a majority of the
outstanding shares of Common Stock is necessary to adopt the proposal to amend
the Company's Articles of Incorporation to increase the number of authorized
shares of Common Stock. In accordance with Nevada law, abstentions and "broker
non-votes" (i.e. proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares as to a matter with respect to which brokers or nominees
do not have discretionary power to vote) will be treated as present for purposes
of determining the presence of a quorum. For purposes of determining approval of
a matter presented at the meeting, abstentions will be deemed present and
entitled to vote and will, therefore, have the same legal effect as a vote
"against" a matter presented at the meeting. Broker non-votes will be deemed not
entitled to vote on the matter as to which the non-vote is indicated and will,
therefore, have no legal effect on the vote on such matter.
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of Proxy are being mailed or delivered to shareholders on or about May 30, 2000.
In the event that sufficient votes in favor of the proposals are not
received by the date of the Annual Meeting, the persons named as proxies may
propose one or more adjournments of the Annual Meeting to permit further
solicitations of proxies. Any such adjournment will require the affirmative
vote of the holders of a
3
<PAGE>
majority of the shares of Common Stock present in person or by proxy at the
Annual Meeting. The persons named as proxies will vote in favor of such
adjournment or adjournments.
The cost of preparing, assembling, printing, and mailing the materials, the
Notice and the enclosed form of Proxy, as well as the cost of soliciting proxies
relating to the Annual Meeting, will be borne by the Company. The Company will
request banks, brokers, dealers, and voting trustees or other nominees to
forward solicitation materials to their customers who are beneficial owners of
shares, and will reimburse them for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone, telegram, personal solicitation or other means by
officers and other regular employees or agents of the Company, but no additional
compensation will be paid to such individuals on account of such activities.
All of the information in this Proxy Statement does not give effect to the
Company's three for one stock dividend for shareholders of record on May 30,
2000, which is being distributed to shareholders on June 9, 2000.
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT AN EARLY
DATE IN THE ENCLOSED POSTAGE PREPAID RETURN ENVELOPE SO THAT, IF YOU ARE
UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE VOTED.
4
<PAGE>
PROPOSAL NO. 1
ELECTION OF FOUR NOMINEES FOR DIRECTOR
Nominees and Voting
The Bylaws of the Company authorize a Board of Directors of between three
and nine directors. The Company has currently fixed the number of directors at
four. Consequently, at the Annual Meeting four directors will be elected to
serve until the next Annual Meeting and until their successors are elected and
qualified. Proxies may not be voted for more than four persons. The Company
has nominated for election as directors the four persons named below. Each of
these nominees has indicated that they are able and willing to serve as
directors.
Under Nevada law and the Company's Articles of Incorporation, shareholders
of record on the record date will be entitled to one vote for each share held
when voting for directors.
Unless otherwise instructed, the Company's Proxy holders intend to vote the
shares of Common Stock represented by the Proxies in favor of the election of
these nominees. If for any reason any of these nominees will be unable or
unwilling to serve, the shares represented by the enclosed Proxy will be voted
for the election of the balance of those named and such other person or persons
as the board of Directors may recommend. The Board of Directors has no reason
to believe that any such nominee will be unable or unwilling to serve.
Directors are elected by a plurality of the votes cast.
The Company's nominees and directors are listed below, together with their
ages, offices with the Company and year in which each became a director of the
Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ELECTION OF THE FOUR NOMINEES FOR DIRECTOR.
<TABLE>
<CAPTION>
Name Age Position Director Since
- ---- --- -------- --------------
<S> <C> <C> <C>
Berth H. Milton 43 Chairman of the Board, 1998
Chief Executive Officer
Alfredo M. Villa 37 Director, Secretary 1996
Bo Rodebrant 45 Director 1998
Robert L. Tremont 54 Director 1998
</TABLE>
Business Experience of Directors and Nominees During the Past Five Years
Berth H. Milton was appointed to the Board of Directors in February 1998 in
conjunction with the beginning of the final phase of due diligence process
related to the acquisition of the Milcap Group by the Company in June 1998, and
was the Corporate Secretary from June 1998 until February 1999. In February
1999 Mr. Milton was appointed Chairman of the Board and Chief Executive Officer
of Private. Mr. Milton is
5
<PAGE>
one of the most well known and reputable figures in the industry, has been
Administrator of MMG since its inception and has been acting as an advisor to
the Milcap Group since 1991. Mr. Milton is also active in several international
industry and real estate projects and developments
Alfredo M. Villa has been a Director of the Company since December 1996,
and served as the Company's President and CEO from December 1996 until February
1999. Mr. Villa holds a masters degree in economics from the University of
Geneva, Switzerland and attended Bocconi University in Milan, Italy. He has over
13 years of experience with the Swiss banking industry. Mr. Villa is currently
Chairman and CEO of SCF Societa di Consulenza Finanziaria S.A., a Swiss
corporation specializing in asset management, mergers, acquisitions, and
investment banking, where he has served since 1994. Prior to that Mr. Villa was
an asset manager with several other European financial institutions. In
addition, Mr. Villa was Chairman of the Board of Alma Grafiche Srl, of Milan,
Italy, a leader in the high quality printing of books and magazines from 1995
until February 1998.
Bo Rodebrant was appointed as a Director of the Company in August 1998.
Mr. Rodebrant has operated his own accountancy and management consulting
services, R&S Ekonomiservice, since 1986. Prior thereto he co-founded an ice
cream business, Hemglass, which was the largest of its kind in Stockholm,
Sweden. The business was sold by Mr. Rodebrant in 1986. Mr. Rodebrant holds a
degree in construction engineering which he received in 1974.
Robert L. Tremont was appointed to the Board of Directors in September
1998. Since 1980 Mr. Tremont has owned and operated a number of businesses in
the adult entertainment industry. Mr. Tremont is a principal in Sundance
Associates and Private Collection International, Inc., which companies are
exclusive distributors for most of the Company's products in the United States
and Mexico. He has also been active in political and lobbying activities for
the adult entertainment industry, serving for several years as President of the
Free Speech Coalition. Mr. Tremont received a Bachelors of Arts degree from the
University of Minnesota and a Masters of Arts degree from the University of the
Americas in Mexico City.
Committees of the Board of Directors and Meetings
The Board of Directors currently has three committees: (i) an Audit
Committee, (ii) a Compensation Committee, and (iii) an Executive Committee.
The Audit Committee is currently comprised of Mr. Villa, Johan Gillborg,
the Company's Chief Financial Officer, and Javier Sanchez. The Audit Committee
reviews and recommends to the Board, as it deems necessary, the internal
accounting and financial controls for the Company and the accounting principles
and auditing practices and procedures to be employed in preparation and review
of financial statements of the Company. The Audit Committee makes
recommendations to the Board concerning the engagement of independent public
accountants and the scope of the audit to be undertaken by such accountants.
The Audit Committee met one time during 1999.
The Compensation Committee is currently comprised of Messrs. Villa, Milton
and Sanchez. The Compensation Committee reviews and, as it deems appropriate,
recommends to the Board policies, practices and procedures relating to the
compensation of the officers and other managerial employees and the
establishment and administration of employee benefit plans. It exercises all
authority under any employee stock option plans of the Company as the Committee
therein specified, unless the Board resolution appoints any other committee to
exercise such authority, and advises and consults with the officers of the
Company as may be requested regarding managerial personnel policies. The
Compensation Committee also has such additional
6
<PAGE>
powers as may be conferred upon it from time to time by the Board. The
Compensation Committee met __ during 1999.
The Executive Committee is comprised of Messrs. Milton, Kull and Sanchez.
The Executive Committee is authorized, subject to certain limitations, to
exercise all of the powers of the Board of Directors during periods between
Board meetings. The Executive Committee met two times during 1999.
The Company's Board of Directors met four times during 1999 (including
actions by unanimous written consent). No director attended less than 75% of
the aggregate of all meetings of the Board of Directors and all Committees on
which he served.
Compensation of Directors
None of the Company's directors received any compensation during the most
recent fiscal year for serving in their position as a director. No plans have
been adopted to compensate directors in the future. However, in 1999 the Company
adopted the 1999 Employee Stock Option Plan which authorizes stock options to be
issued to directors.
The Company's Board of Directors may in the future, at its discretion,
compensate directors for attending Board and Committee meetings and reimburse
the directors for out-of-pocket expenses incurred in connection with attending
such meetings.
7
<PAGE>
MANAGEMENT
Listed below are key employees of the Company who are not directors or
nominees.
Claes Henrik Marten Kull, age 34, joined the Milcap Group in 1992 as a
sales manager, and has been Milcap Group's Marketing Manager since 1993, and was
appointed Chief Marketing Officer of Private Media Group, Inc. in August 1998,
with his main responsibilities being to identify and open up new markets and
negotiate with distributors. Since he began working for the Milcap Group in
1992, approximately 25 new countries have been opened up. From 1991 to 1992 he
operated his own business (his business partner was Johan Gillborg) which acted
as a sub-contracted sales force for Securitas Direct of Sweden, which is one of
Sweden's largest companies. From 1988 to 1991 he managed a private import and
trading corporation, which became the start of his career as an entrepreneur and
sales professional.
Javier Sanchez, age 37, was appointed as the Chief Operating Officer of
Private Media Group, Inc. in August 1998, and has been the General Manager of
MMG, member of the Board of MMG and Private France S.A., and minority
shareholder of Milcap Media Group S.L. since its incorporation in 1991. He has
been a member of the Board of Milcap Publishing Group AB since its incorporation
in 1994 until 1997. From 1988 to 1991 he was the Operations Director of a mid-
size printing company near Barcelona. From 1984 to 1987 he was the Production
Manager of a major printing company in Barcelona.
Johan Gillborg, age 37, was appointed as Chief Financial Officer of
Private Media Group, Inc. in August 1998 and has been the Chairman and Managing
Director of Milcap Publishing Group AB since 1994. Mr. Gillborg joined the group
in 1992 as Marketing Consultant. From 1991 to 1992 he operated his own business
which acted as sub-contracting sales force for Securitas Direct of Sweden
(together with Mr. Kull). From 1988 to 1990, Mr. Gillborg served as General
Manager in the hotel business in the United Kingdom and Portugal. Mr. Gillborg
holds a Bachelor's Degree in Business Administration from Schiller International
University in London.
Alain Araw, age 33, was appointed as Finance Director of Milcap Media Group
S.L. in September 1998. From 1996 to 1998 Mr. Araw served as the Project
Finance Director for Jameson Parker & Co. Ltd., a private company engaged in the
purchase and sale of real estate and providing financial consulting to the real
estate industry. From 1994 to 1996 Mr. Araw was a Manager at the Structured
Finance Department of HSBC Samuel Montagu & Co. Ltd., a British investment bank,
where he was responsible for the origination of senior debt lending projects in
the Spanish market, particularly in connection with leveraged acquisitions and
management buyouts. From 1990 to 1994 Mr. Araw served as Assistant Manager and
Manager for Capital & Management PLC, a British investment firm specializing in
providing venture capital to private industrial companies. Mr. Araw received a
Bachelor of Business Studies degree (with Honors) from the Dublin Business
School, Dublin City University.
No director or executive officer serves pursuant to any arrangement or
understanding between him and any other person.
8
<PAGE>
Executive Compensation
The following table summarizes all compensation paid to the Company's Chief
Executive Officer and to the Company's other most highly compensated executive
officers other than the Chief Executive Officer whose total annual salary and
bonus exceeded $100,000 (the "Named Executive Officers"), for services rendered
in all capacities to the Company during the fiscal years ended December 31,
1999, 1998 and 1997. No other executive officer of the Company earned
compensation in excess of $100,000 in each of these periods.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
-----------------
Name and Securities
Principal Position During Fiscal Annual Compensation Underlying All Other
Fiscal 1999 Year Salary($) Options (#) Compensation($)
- ----------- --------- -------------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Berth H. Milton............... 1999 151,000 --- ---
President and CEO (1) 1998 144,000 --- ---
1997 145,500 --- ---
Javier Sanchez................ 1999 150,262 --- ---
Chief Operating Officer, Private 1998 143,274 --- ---
Media Group, Inc., General 1997 4,000 --- ---
Manager, MMG.
</TABLE>
- ------------------------------
(1) Mr. Milton was appointed as the Company's CEO in February 1999.
9
<PAGE>
Option Grants in the Last Fiscal Year
The following table sets forth certain information at December 31, 1999, and
for the year then ended, with respect to stock options granted to the
individuals named in the Summary Compensation Table above. No options have been
granted at an option price below the fair market value of the Common Stock on
the date of grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total
----------
Options/
-------
Number of Securities SARs
-------------------- ---
Underlying Granted to
---------- ----------
Options/SARs Employees Exercise or Base
------------ --------- ----------------
Name Granted(#) In Fiscal Year Price($/Sh) Expiration Date
---- --------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Berth H. Milton 60,000 6.0% 12.50 March 2009
Javier Sanchez 60,000 6.0% 12.50 March 2009
</TABLE>
The following table summarizes certain information regarding the number and
value of all options to purchase Common Stock of the Company held by the Chief
Executive Officer and those other executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
-------
Number of Securities Unexercised
-------------------- -----------
Underlying In-the-Money
---------- ------------
Unexercised Options/SARs
----------- ------------
Shares Acquired Options/SARs At Fiscal Year End($)*
--------------- ------------ ----------------------
Name On Exercise(#) Value Realized ($) At Fiscal Year End Exercisable/Unexercisable
---- --------------- ------------------ ------------------ -------------------------
<S> <C> <C> <C> <C>
Berth H. Milton - - 60,000 $330,000
Javier Sanchez - - 60,000 $330,000
</TABLE>
*Based on the closing price of the Company's Common Stock on the last day of the
fiscal year ended December 31, 1999.
10
<PAGE>
Certain Relationships
No Director or executive officer of the Company is related to any other
Director or executive officer. None of the Company's officers or Directors hold
any directorships in any other public entity. There are currently two outside
directors on the Company's Board of Directors.
Related Transactions
The Company has a short-term loan to an entity controlled by Mr. Milton in
the amount of SEK 4,946,000 and SEK 5,955,000 at December 31, 1998 and 1999,
respectively. The loan bears interest at the rate of 10% per annum and has no
maturity date.
On March 31, 1998, two of the Company's wholly owned subsidiaries, together
with Zebra Forvaltings AB, Sweden ("Zebra"), an affiliated company of Berth
Milton, purchased all of the outstanding capital stock of Viladalt S.L., Spain
("Viladalt") from its shareholders, none of whom are related to the Company or
Mr. Milton, for the sum of approximately $2,685,000. It was agreed that the
Company's subsidiaries would own 69% of the Viladalt shares, Zebra would own 31%
of the Viladalt shares, and that each party would be responsible for its
proportionate share of the purchase price. To avoid the appearance of a conflict
of interest Zebra has agreed to sell its interest in Viladalt to the Company at
Zebra's cost when and if the Viladalt interest is sold by the Company. The
principal asset of Viladalt is a country house in the Barcelona, Spain area
known as Casa Retol de la Sarra. The Viladalt property was acquired by the
Company as a real estate investment and is presently being utilized as a filming
location for certain of the Company's upcoming releases.
Milcap Publishing Group, a wholly owned subsidiary of the Company, is a
party to an exclusive Distribution Agreement with Sundance Associates, Inc.
("Sundance") which has been in effect since 1995. Robert Tremont, a Director of
the Company, is the sole shareholder of Sundance. Under the terms of the
Distribution Agreement Milcap granted to Sundance the exclusive rights to
distribute in the United States and Mexico specified products, including
magazines, videos and digital media such as CD-ROM's and laser discs. Royalties
are paid by Sundance to Milcap in accordance with an agreed royalty schedule.
The Distribution Agreement automatically renews for successive one year terms
and is cancelable by either party prior to the end of each one year term. During
the 12 month periods ended December 31, 1998 and December 31, 1999 Sundance paid
royalties to Milcap of $2,247,392 and $2,123,564 respectively.
The foregoing transactions were approved by a majority of disinterested
Directors and are believed to be on terms no less favorable to the Company than
could be obtained from unaffiliated third parties on an arms-length basis
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information as of March 31, 2000,
regarding the beneficial ownership of Common Stock by (i) each of the directors
and Named Executive Officers of the Company individually, (ii) all persons
known by the Company to be beneficial owners of five percent or more of the
Common Stock, and (iii) all directors and executive officers of the Company as a
group. Unless otherwise noted, the persons listed below have sole voting and
investment power and beneficial ownership with respect to such shares.
<TABLE>
<CAPTION>
Number of Shares
Name and Address (1) Beneficially Owned (1) Percent Beneficially Owned
- -------------------- ---------------------- --------------------------
<S> <C> <C>
Berth H. Milton (2) 7,842,494 53.7%
Senate Limited (3)
3 Bell Lane, Gibraltar 1,675,000 18.7%
Chiss Limited (4)
3 Bell Lane, Gibraltar 1,400,000 15.7%
Bajari Properties Limited (5)
7 Myrtle Street, Douglas, Isle of Man 625,000 7.0%
Pressmore Licensing Limited
P.O. Box N-341, Nassau, Bahamas 625,000 7.0%
Perrystone Trading Limited
P.O. Box 171, Providenciales, Turks & Caicos 625,000 7.0%
Solidmark (Gibraltar) Ltd.
3 Bell Lane, Gibraltar 625,000 7.0%
Churchbury Limited
3 Bell Lane, Gibraltar 625,000 7.0%
Kingston Finance Ltd.
Wickhams Cay, Road Town, Tortola, BVI 625,000 7.0%
Alfredo M. Villa (6)
Lugano, Switzerland 15,000 *
Marten Kull (7) 132,500 *
Johan Gillborg (8) 92,500 *
Javier Sanchez (9) 70,000 *
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Robert L. Tremont (10) 3,000 *
Bo Rodebrant (11) 40,750 *
All Executive Officers and Directors
as a group (12) 8,196,244 49.1%
</TABLE>
__________________________
* Denotes less than 1%
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
which may be acquired upon exercise or conversion of warrants or Preferred
Stock which are currently exercisable or exercisable within 60 days of
March 31, 2000, are deemed outstanding for computing the beneficial
ownership percentage of the person holding such securities but are not
deemed outstanding for computing the beneficial ownership percentage of any
other person. Except as indicated by footnote, to the knowledge of the
Company, the persons named in the table above have the sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Includes 7,000,000 shares of Common Stock issuable upon conversion of
7,000,000 of the Company's $4.00 Series A Convertible Preferred Stock and
150,494 shares of Common Stock which have accrued as dividends on the
Preferred Stock. Mr. Milton is indirectly the beneficial owner of the
7,000,000 $4.00 Series A Convertible Preferred Stock and 150,494 shares of
Common Stock owned of record by Slingsby Enterprises Limited. Also
includes (i) 625,000 shares of Common Stock owned by Bajari Properties
Limited, of which Mr. Milton is the sole shareholder, (ii) 7,000 shares of
Common Stock issuable upon exercise of Warrants owned by Mr. Milton, and
(iii) 60,000 shares issuable upon exercise of Options issued under the
Employee Stock Option Plan. His address is c/o the Company, Carrettera de
Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona, Spain.
(3) Cornelia Strehl is the sole shareholder of Senate Limited and, therefore,
may be deemed to be the beneficial owner of these shares.
(4) Andrea Armas is the sole shareholder of Chiss Limited and, therefore, may
be deemed to be the beneficial owner of these shares.
(5) Berth Milton is the sole shareholder of Bajari Properties Limited.
Therefore, these shares may be deemed to be beneficially owned by Mr.
Milton and are also reflected as being beneficially owned by Mr. Milton,
individually, in the above table.
(6) Mr. Villa's address is Corso Elvezia 4, CH-6900 Lugano, Switzerland.
(7) Includes 75,000 shares of Common Stock issuable upon exercise of Warrants
owned by Mr. Kull and 57,500 shares issuable upon exercise of Options
issued under the Employee Stock Option Plan. His address is c/o the
Company, Carrettera de Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona,
Spain.
(8) Includes 35,000 shares of Common Stock issuable upon exercise of Warrants
owned by Mr. Gillborg and 57,500 shares issuable upon exercise of Options
issued under the Employee Stock Option Plan. His address is c/o the
Company, Carrettera de Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona,
Spain.
13
<PAGE>
(9) Includes 10,000 shares of Common Stock issuable upon exercise of Warrants
owned by Mr. Sanchez and 60,000 shares issuable upon exercise of Options
issued under the Employee Stock Option Plan. His address is c/o the
Company, Carrettera de Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona,
Spain.
(10) Includes 3,000 shares of Common Stock issuable upon exercise of Warrants
owned by Mr. Tremont. His address is c/o the Company, Carrettera de Rubi
22-26, 08190 Sant Cugat del Valles, Barcelona, Spain.
(11) Includes 2,500 shares of Common Stock issuable upon exercise of Warrants
owned by Mr. Rodebrant. His address is c/o the Company, Carrettera de Rubi
22-26, 08190 Sant Cugat del Valles, Barcelona, Spain.
(12) Includes 7,000,000 shares of Common Stock issuable upon conversion of the
outstanding Series A Preferred Stock, 125,000 shares of Common Stock
issuable upon exercise of outstanding Warrants and 273,250 shares issuable
upon exercise of outstanding Options under the Employee Stock Option Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3 and 5 furnished to the Company
covering its 1999 fiscal year filed under Section 16(a) of the Securities
Exchange Act of 1934, each of the Company's directors, officers and beneficial
owners of more than 10% of the Company's Common Stock who are identified in the
table appearing in Item 11 of this Report did not file Form 5 on a timely basis.
The Board of Directors of the Company recommends that the shareholders vote
"FOR" election of the four nominees for director.
14
<PAGE>
PROPOSAL NO. 2
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
The Board of Directors adopted resolutions effective as of May 10, 2000,
approving an amendment to the Company's Articles of Incorporation to increase
the number of shares of Common Stock, $.001 par value per share, authorized for
issuance from 50,000,000 to 100,000,000 (the "Amendment"), and directing that
the Amendment be presented to the Shareholders for approval at the Annual
Meeting of Shareholders.
As of May 22, 2000, the Company had ________ shares of Common Stock
outstanding. In addition, on such date the Company had approximately ________
shares reserved for issuance, including ________ shares issuable in connection
with the 3:1 Common Stock dividend being distributed to shareholders of record
on May 30, 2000, ______ million shares of Common Stock reserved for issuance
upon conversion of the Series A Preferred Stock, and ___________ reserved for
future issuance upon the possible future conversion or exercise of outstanding
warrants, options and rights of the Company.
Management believes it is both necessary and appropriate to increase the
number of its authorized shares of Common Stock from 50,000,000 to 100,000,000.
Currently, after giving effect to shares reserved for the 3:1 stock dividend
effective May __, 2000, the Company does not have sufficient authorized shares
to reserve for issuance upon conversion of the 7,000,000 outstanding shares of
the Series A Preferred Stock. The increase in authorized shares will also be
available for a number of other purposes, including future stock dividends, a
source for working capital and capital expenditure financing, and to fund future
potential acquisitions and joint ventures.
Therefore, Management believes it is essential that the Shareholders vote
in favor of the proposal to increase the number of authorized shares of Common
Stock from 50,000,000 to 100,000,000. Although the Company presently has no
plans to utilize all of the increased authorized shares which would be available
if the Amendment is approved, Management believes that it is important that the
Company have the flexibility to issue additional shares without further
authorization from the Shareholders. At present, the Company has no specific
plans to utilize any of the increased authorized shares which would be available
if the Amendment is approved. If the Amendment is approved by the Shareholders,
the Company will not seek further authorization from the Shareholders prior to
any issuances of Common Stock, except as may be required by law or applicable
rules of the Nasdaq Stock Market.
The holders of Common Stock have equal rights to dividends when, as and if
declared by the Board of Directors and are entitled to share ratably in all of
the assets of the Company available for distribution to holders of Common Stock
upon the liquidation, dissolution or winding up of the affairs of the Company.
Holders of Common Stock do not have preemptive rights. Holders of Common Stock
are entitled to one vote per share on all matters which Shareholders are
entitled to vote upon at all meetings of Shareholders.
The rights of the holders of Common Stock are subject to the rights of
holders of Preferred Stock which the Company may issue from time to time. The
Company is authorized to issue up to 10,000,000 shares of Preferred Stock, of
which 7,000,000 shares, designated as Series A Preferred Stock, were outstanding
as of May __, 2000.
15
<PAGE>
The affirmative vote of the holders of shares representing a majority of
the outstanding shares of Common Stock on the record date is required to
authorize the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
16
<PAGE>
MISCELLANEOUS
Independent Certified Public Accountants
Ernst & Young AB has audited and reported upon the financial statements of
the Company for the fiscal year ended December 31, 1999 and has been selected to
serve as the Company's independent auditors for the fiscal year ending December
31, 2000. A representative of Ernst & Young AB is expected to be present at the
Annual Meeting with the opportunity to make a statement if he or she desires to
do so and is expected to be available to respond to appropriate questions.
Shareholder Proposals
Shareholder proposals complying with the applicable rules under the
Securities Exchange Act of 1934 intended to be presented at the 2001 Annual
Meeting of Shareholders must be received at the offices of the Company by
February 1, 2001, to be considered by the Company for inclusion in the Company's
proxy statement and form of proxy relating to that meeting. Such proposals
should be directed to the attention of the Corporate Secretary, Private Media
Group, Inc., Carrettera de Rubi 22-26, 08190 Sant Cugat del Valles, Barcelona,
Spain.
Other Matters
Neither the Company no any of the persons named as proxies knows of matters
other than those above stated to be voted on at the Annual Meeting. However, if
any other matters are properly presented at the meeting, it is the intention of
the persons named as proxies to vote in accordance with their judgment on such
matters, subject to direction by the Board of Directors.
The 1999 Annual Report to Shareholders accompanies this Proxy Statement,
but is not to be deemed a part of the proxy soliciting material.
WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY.
17
<PAGE>
$4/NOFOLIO
PRIVATE MEDIA GROUP, INC.
Carrettera de Rubi 22-26, 08190
Sant Cugat del Valles, Barcelona, Spain
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Berth H. Milton and Alfredo M. Villa, and
each of them, Proxies, with full power of substitution in each of them, in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Private Media Group, Inc. on Monday, June 21, 2000, at 10:00
a.m. at the Hotel Novotel, Plaza Xavier, s/n, 08190 Sant Cugat, Barcelona, Spain
or at any adjournment or adjournments thereof, according to the number of votes
that the undersigned would be entitled to vote if personally present, upon the
following matters:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
</TABLE>
Berth H. Milton, Alfredo M. Villa, Bo Rodebrant, Robert L. Tremont
(Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name in the space below.)
________________________________________________________________________________
(Continued on the reverse side)
1
<PAGE>
2. APPROVAL OF THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
DATED:_________________,2000
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
____________________________
Signature
____________________________
Signature if held jointly
[ ] PLAN [ ] DO NOT PLAN TO
ATTEND THE ANNUAL MEETING
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope.
2
