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MILLER & BENSON INTERNATIONAL, LTD.
(A DELAWARE CORPORATION)
AS SUCCESSOR TO
OIL SECURITIES, INC.
(A NEVADA CORPORATION)
INF0RMATION PURSUANT TO SECTION 14 (F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This information is being furnished in connection with the proposed
appointment to the Board of Directors of Miller & Benson International, Ltd., a
Delaware corporation ("M&B Delaware" or the "Company"), as successor to Oil
Securities, Inc., a Nevada corporation ("OSI"), of persons who will constitute a
majority of the members of the Board of Directors of the Company, other than at
a meeting of the Company's stockholders, pursuant to the terms of that certain
Stock Exchange Agreement (the "DTG Stock Exchange Agreement") between Digital
Technologies Group Inc., a Delaware corporation ("DTG"), and its shareholders
(collectively, the "DTG Parties"), and M&B Delaware, dated June 28, 1996. No
action is required by the stockholders of M&B Delaware in connection with the
appointment of such directors. However, Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires the filing with
the United States Securities and Exchange Commission (the "SEC") and the mailing
to stockholders of the information set forth herein at least ten days prior to a
change in a majority of the directors.
The DTG Stock Exchange Agreement was entered into as part of a
comprehensive plan to infuse M&B Delaware with new assets subsequent to OSI's
emergence from bankruptcy proceedings, pursuant to OSI's Plan of Reorganization
(the "Plan"), which was approved by the United States Bankruptcy Court for the
Central District of California (the "Court") on June 25, 1991 (the "Bankruptcy
Proceedings"). On May 12, 1993, the OSI Bankruptcy Proceedings were closed by
entry of an Order of Final Decree by the Court. Pursuant to the DTG Stock
Exchange Agreement, on or about July 22, 1996 (the "Closing Date"), the DTG
Parties will transfer 4,230,001 shares of the capital stock of DTG, which
represents 100% of the outstanding capital stock of DTG, to M&B Delaware, in
exchange for 4,000,000 shares of common stock of M&B Delaware. In addition, M&B
Delaware will issue 401,127 shares of common stock on the Closing Date in
exchange for $301,127 of secured promissory notes (including accrued interest)
of DTG and 50,000 DTG stock purchase warrants issued in conjunction with the
secured promissory notes. The aggregate of 4,401,127 shares of common stock of
M&B Delaware to be issued in conjunction with the DTG transaction will represent
approximately 81.5% of M&B Delaware's outstanding equity securities at the
Closing Date.
All common share amounts referred to herein are after giving effect to a 1
for 100 reverse stock split (the "Reverse Stock Split"), as provided for in the
DTG Stock Exchange Agreement. The Reverse Stock Split was authorized by order
of the Court confirming the Plan. As of June 28, 1996, prior to the Reverse
Stock Split and the closing of the DTG Stock Exchange Agreement, M&B Delaware
had 42,000,000 shares of common stock issued and outstanding or to be issued.
Pursuant to the terms of the DTG Stock Exchange Agreement, at the closing,
DTG will become a wholly-owned subsidiary of M&B Delaware, which will change its
name to Digital Technologies Group, Inc., and each of the directors and
executive officers of M&B Delaware will resign. In conjunction with this
transaction, DTG will change its name to DTG Entertainment Group, Inc.
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DTG was founded in April 1995 to capitalize on the growth in the
distribution of multimedia programming. On May 1, 1995, pursuant to a purchase
agreement with Communications Services International, a foreign corporation
("CSI"), DTG issued a $3,000,000 secured convertible debenture with interest at
10% in exchange for certain assets, including accounts receivable, film rights
to several television series, and a distribution network. In November 1995, the
secured convertible debenture was converted into 6% convertible preferred stock
of DTG, and was subsequently converted into a majority of shares of common stock
of DTG on June 28, 1996, in conjunction with the DTG Stock Exchange Agreement.
In conjunction with the CSI transction, Arthur Newberger, the U.S. agent and a
3% minority shareholder of CSI, became the President and Chief Executive Officer
of DTG. DTG's current business is the acquisition and distribution of
multimedia programming worldwide, with DTG's customers consisting of domestic
and foreign television and cable channels, as well as sub-distributors.
PRIOR TRANSACTIONS
OSI, the predecessor of M&B Delaware, entered into a Stock Exchange
Agreement dated as of December 13, 1991, with GIMA S.p.A., an Italian
corporation, and certain affiliated parties (hereinafter collectively referred
to as the "GIMA Parties"), as amended by the First Amendment dated January 27,
1992 (as amended, the "GIMA Stock Exchange Agreement"). Pursuant to the terms
of the GIMA Stock Exchange Agreement, effective as of February 3, 1992, certain
of the GIMA Parties transferred and agreed to deliver 16,524,000 shares of the
capital stock of Miller & Benson S.p.A., an Italian corporation authorized to
engage in a variety of activities related to the real estate industry in Italy
("M&B Italy"), representing 82.62% of the outstanding capital stock of M&B
Italy, to the Company in exchange for 5,092,000 shares of the common stock of
the Company, after giving effect to a 1 for 200 reverse split of OSI's issued
and outstanding shares of common stock that was provided for in the GIMA Stock
Exchange Agreement, which represented 95.77% of the Company's outstanding equity
securities. Also pursuant to the terms of the GIMA Stock Exchange Agreement, on
January 27, 1992, Norman Gross and Maurice A. Hall resigned as officers and
directors of the Company, in conjunction with the expected appointment of three
representatives of the GIMA Parties as officers and/or directors of the Company;
Robert N. Weingarten remained as an officer and director of the Company.
OSI formed M&B Delaware specifically to implement that part of the Plan
authorizing OSI to change its state of incorporation. In conjunction with the
GIMA Stock Exchange Agreement, on January 27, 1992, OSI merged into its wholly-
owned subsidiary, M&B Delaware, with M&B Delaware as the surviving corporation
(the "Merger"). Effective upon the Merger, the corporate existence of OSI
ceased.
Subsequent to February 3, 1992, the shares of capital stock of M&B Italy
and its audited financial statements were never delivered to the Company, and
the representatives of the GIMA Parties did not become officers and/or directors
of the Company. Accordingly, the Company never delivered the shares of its
common stock to the GIMA Parties as called for in the GIMA Stock Exchange
Agreement. In the opinion of management of the Company, the GIMA Parties
abandoned the previously described transaction. As a result of the actions of
the GIMA Parties and since the Company had no assets or operations, nor was
there any trading market for the Company's common stock, management of the
Company considered various other business opportunities, and ultimately decided
to enter into the previously described DTG Stock Exchange Agreement. In order
to fund the costs of the DTG Stock Exchange Agreement and pay certain existing
obligations of the Company, the Company entered into a transaction with Madera
International, Inc. ("Madera"), formerly known as Weaver Arms Corporation, a
public company incorporated in the State of California. The Company agreed to
issue 500,000 shares of its restricted common stock (after giving effect to the
Reverse Stock Split) to Madera at the closing of the DTG Stock Exchange
Agreement in exchange for 166,667 shares of common stock of Madera issued to the
Company as an
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administrative claim under Section 1145 of the U.S. Bankruptcy Code pursuant to
the confirmed Second Amended Plan of Reorganization of Weaver Arms Corporation.
On July 19, 1994, Robert N. Weingarten, the remaining director of the
Company, appointed Norman Gross to the Board of Directors. The reconstituted
Board of Directors then elected Norman Gross as President and Robert N.
Weingarten as Chief Financial Officer and Secretary of the Company. The Board
of Directors also approved a 200 for 1 forward split of the Company's common
stock on July l9, 1994, which became effective on August 9, 1994, thus restoring
the Company's outstanding shares of common stock and shareholder base to that
which existed prior to the transaction with the GIMA Parties that was never
completed.
1. PERSONS PROPOSED TO BE APPOINTED TO THE BOARD OF DIRECTORS PURSUANT TO
THE DTG STOCK EXCHANGE AGREEMENT.
Set forth below are the name, age, business address, present principal
occupation and five year employment history of each of the persons proposed to
be appointed to the Board of Directors of M&B Delaware at the closing of the DTG
Stock Exchange Agreement.
Principal Occupation
and Five Year
Name and Address Age Employment History
- ---------------- --- --------------------
Arthur Newberger 57 See text below
15260 Ventura Boulevard
Suite 2250
Sherman Oaks, CA 91403
David Kekich 53 See text below
247 Shekomeko Boulevard
Johnstown, PA 15905
Ely J. Mandell 40 See text below
955 South Virginia Street
Suite 116
Reno, NV 89502
It is proposed that the following persons will be appointed to the Board of
Directors of the Company at the closing of the DTG Stock Exchange Agreement.
Arthur Newberger has 35 years of experience in the international and
domestic entertainment industry. He was one of the first independent promoters
of live rock music concerts in the United States. As a senior corporate officer
for major agencies such as ICM and Ashley Famous, he was responsible for guiding
the careers of many famous artists and groups. Subsequently, Mr. Newberger
founded Newberger Entertainment Group ("NEG") in order to capitalize on his
years of experience and high level contacts in the entertainment industry.
Under his direction, NEG successfully established itself as a respected
independent distributor of both film and television product. From 1993 to 1995,
Mr. Newberger served as President of the Television Distribution Division of
Hemdale International Television, Inc., which purchased NEG in 1994. Mr.
Newberger has served as President, Chief Executive Officer and Director of DTG
since May 1, 1995.
David Kekich is currently President and founder of Red Tree International,
a marketing and financial consulting company located in Johnstown, Pennsylvania.
From 1985 to 1992, Mr. Kekich was engaged in the public securities markets as a
result of his forming and registering three "blind pool" companies. Mr. Kekich
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holds a Bachelor of Science Degree from Pennsylvania State University and has
been licensed in the insurance and real estate fields in the State of
California. Mr. Kekich has served as a Secretary and a Director of DTG since
its formation in April 1995.
Ely J. Mandell has been President and Chief Executive Officer of B.D.
Brooke & Company, a professional business development consulting group whose
clients consist of small public companies, since January 1990. From January
1994 through December 1995, Mr. Mandell was the Managing Director of BBR Capital
USA, Ltd., a bankruptcy and reorganization consulting group. In connection with
these activities, Mr. Mandell has served as an officer and director of several
public companies during the past six years. Mr. Mandell has served as Chief
Financial Officer and Director of DTG since June 1996.
In November 1991, Mr. Mandell entered into a Consent Decree with the SEC,
pursuant to which Mr. Mandell agreed to refrain from violating Section 5(c) of
the Securities Act of 1933, as amended. Mr. Mandell neither admitted nor denied
guilt under that Consent Decree. During March 1992, Mr. Mandell declared
personal bankruptcy pursuant to Chapter 7 of the United States Bankruptcy Code.
None of the foregoing persons currently is a director of, or holds any
position with, M&B Delaware. Except as set forth herein, to the best knowledge
of the Company, none of the above listed persons beneficially owns any equity
securities or rights to acquire any equity securities of the Company, or has
been involved in any transaction with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules and regulations of the SEC.
2. CERTAIN INFORMATION CONCERNING THE COMPANY.
Immediately subsequent to the closing of the DTG Stock Exchange Agreement,
the authorized capital stock of M&B Delaware will consist of (i) 250,000,000
shares of common stock, $.01 par value per share, of which 5,401,127 shares will
be issued and outstanding or reserved for issuance after the closing of the DTG
Stock Exchange Agreement, the issuance of shares in exchange for secured
convertible promissory notes and stock purchase warrants of DTG, the issuance of
shares to Norman Gross and Robert N. Weingarten, and the issuance of shares to
Madera (all after giving effect to the Reverse Stock Split), and (ii)
100,000,000 shares of preferred stock, $.01 par value, the rights, privileges
and preferences of which are determined by the Board of Directors of M&B
Delaware, none of which will be issued and outstanding.
The Board of Directors is comprised of only one class. At each annual
meeting of stockholders, the entire class of directors is elected to serve for a
one year term. The term of office of the directors will expire at the next
annual meeting of stockholders. The new Board of Directors to be appointed in
conjunction with the closing of the DTG Stock Exchange Agreement is expected to
initially consist of three members.
3. THE CURRENT MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY.
The following table provides information as of June 28, 1996, with respect
to each of the current directors and executive officers of M&B Delaware, both of
whom will resign at the closing of the DTG Stock Exchange Agreement.
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DIRECTORS
---------
Served as Officer
Name Age Position or Director Since
- ---- --- -------- -----------------
Norman Gross 75 Director May 1988 - January
1992 and since
July 1994
Robert N. Weingarten 44 Director May 1988
EXECUTIVE OFFICERS
------------------
Served as Officer
Name Age Position or Director Since
- ---- --- -------- -----------------
Norman Gross 75 President May 1988 - January
1992 and since
July 1994
Robert N. Weingarten 44 Chief May 1988
Financial
Officer
and Secretary
Norman Gross served as a Director and President from May 1988 until January
27, 1992, and as Treasurer from May 1988 through June 1991. Pursuant to the
GIMA Stock Exchange Agreement, Mr. Gross resigned as a Director and President on
January 27, 1992. Mr. Gross was subsequently reappointed as a Director and
President in July 1994. Since 1979, Mr. Gross has been a consultant, assisting
companies in the start-up of their business operations. Mr. Gross has also
provided assistance to several public companies in the course of their
reorganization under Chapter 11 of the U.S. Bankruptcy Code, and has served as a
director and officer, resigning when the reorganization process was successfully
completed.
Robert N. Weingarten has served as a Director since May 1988, as Vice
President from July 1991 until January 27, 1992, as Chief Financial Officer
since July 1991, and as Secretary since July 1994. Mr. Weingarten remained as a
Director and Chief Financial Officer of M&B Delaware subsequent to the
transaction with the GIMA Parties and the Merger. From July 1992 to present,
Mr. Weingarten has been the sole shareholder of Resource One Group, Inc., a
financial consulting and advisory company. From January 1991 through December
1992, Mr. Weingarten served as a general partner of Commerce Partners, a
consulting firm specializing in financial restructurings and business
reorganizations. Since 1979, Mr. Weingarten has served as a consultant with
numerous public companies in various stages of development, operation or
reorganization. Mr. Weingarten currently serves on the Board of Directors of
Fotoball USA, Inc. and Fremont Corporation, both of which are public companies.
Mr. Weingarten holds a Bachelor of Arts Degree in Accounting from the University
of Washington and a Masters Degree in Business Administration from the
University of Southern California.
Officers of M&B Delaware are elected annually by the Board of Directors,
and serve until the earlier of their replacement or resignation.
During the fiscal year ended December 31, 1995 and the period from January
1, 1996 through June 28, 1996, the Board of Directors of M&B Delaware did not
hold any regular or special meetings, with all corporate actions being taken by
the Unanimous Written Consent of Directors.
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During the fiscal year ended December 31, 1995 and the period from January
1, 1996 through June 28, 1996, the Board of Directors of M&B Delaware did not
have established either a Compensation Committee, an Audit Committee, an
Executive Committee or a Nominating Committee.
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth the cash compensation paid by M&B Delaware
to Norman Gross and Robert N. Weingarten during the fiscal year ended December
31, 1995.
Cash
Name Position Compensation
- ---- -------- ------------
Norman Gross President and Director $ 0
Robert N. Weingarten Chief Financial Officer, $ 0
Secretary and Director
At the closing of the DTG Stock Exchange Agreement, Mr. Gross and Mr.
Weingarten will each be issued an additional 40,000 shares of common stock
(after giving effect to the Reverse Stock Split) as compensation for services
rendered through June 28, 1996, and will be reimbursed for their prior operating
advances to the Company aggregating $1,550 through June 28, 1996.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Pursuant to the Bankruptcy Proceedings, Norman Gross and Robert N.
Weingarten and/or their nominees received, in the aggregate, an amount of common
stock of reorganized OSI equal to 25% of the total number of shares of
reorganized OSI's common stock to be issued to or retained by all claimants and
interest holders pursuant to the Plan, equivalent to 10,303,218 shares of common
stock, without giving effect to the Reverse Stock Split.
LEGAL PROCEEDINGS
To the knowledge of M&B Delaware and its officers and directors, neither
M&B Delaware nor its officers or directors are a party to any material legal
proceeding or litigation which would impact the operations of M&B Delaware, and
such persons know of no material legal proceeding, judgments entered, legal
actions or litigation contemplated or threatened which would impair the
operations of M&B Delaware, except for a claim of approximately $50,000 asserted
by the California Franchise Tax Board for unpaid income taxes (including accrued
interest and penalties) for tax periods ended December 31, 1984, which is
currently the subject of settlement negotiations.
4. CERTAIN INFORMATION CONCERNING SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The following tables set forth certain information as of June 28, 1996 with
respect to (a) each person known to the Company to be the beneficial owner of
more than 5% of its common stock, (b) each director of the Company and persons
expected to become directors of the Company pursuant to the DTG Stock Exchange
Agreement, and (c) all directors of the Company and persons expected to become
directors of the Company pursuant to the DTG Stock Exchange Agreement, and
executive officers, as a group.
Table No. 1 sets forth such information with respect to certain beneficial
owners, after giving effect to the Reverse Stock Split, (a) as of June 28, 1996,
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before the closing of the DTG Stock Exchange Agreement and (b) on or about July
22, 1996, after (i) the closing of the DTG Stock Exchange Agreement and the
transfer by the DTG Parties of a portion of the 4,000,000 shares of common stock
to be received to certain other individuals, (ii) the issuance of an aggregate
of 401,127 shares of common stock in exchange for $301,127 of secured
convertible promissory notes (including accrued interest) and 50,000 stock
purchase warrants of DTG, (iii) the issuance of an aggregate of 80,000 shares of
common stock to Norman Gross and Robert N. Weingarten, and (iv) the issuance of
500,000 shares of common stock to Madera (collectively, the "Transaction").
Table No. 2 sets forth such information with respect to M&B Delaware's
management both before and after the Transaction.
TABLE NO. 1
BENEFICIAL OWNERSHIP OF SHAREHOLDERS
BEFORE AND AFTER THE TRANSACTION
Number of Shares(1) Percent of Class
Name and Address ---------------- ----------------
of Beneficial Owner Before After Before After
- ------------------- ------ ----- ------ -----
Magoon Brothers Limited 82,229 82,229 19.6% 1.5%
910 Alakea Street
Honolulu, HI 96813
Rosina Nesbitt 55,150(2) 55,150(2) 13.1% 1.0%
2539 Almaden Court
Los Angeles, CA 90077
Norman Gross 44,766 84,766(3) 10.7% 1.6%
P.O. Box 1741
Studio City, CA 91614
Robert N. Weingarten 44,766 84,766(3) 10.7% 1.6%
5439 Lockhurst Drive
Woodland Hills, CA 91367
The Arkad Group, LLC - 1,080,000(4) - 20.0%
247 Shekomeko Boulevard
Johnstown, PA 15905
B.D. Brooke & Company - 600,000(5) - 11.1%
955 South Virginia Street
Suite 116
Reno, NV 89502
Communications Services - 2,160,000(6) - 40.0%
International
P.O. Box 17298
Encino, CA 91416
Madera International, Inc. - 500,000(7) - 9.3%
23548 Calabasas Road
Suite 205
Calabasas, CA 91302
(1) Number of shares of common stock beneficially owned after giving effect to
a 1 for 100 reverse stock split.
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(2) Includes 953 shares owned by the Rosina Nesbitt & Bertram I. Nesbitt
Charitable Trust dated December 18, 1979, of which Rosina Nesbitt is a trustee.
(3) Includes 40,000 shares issuable at the closing of the DTG Stock Exchange
Agreement for services rendered to the Company.
(4) David Kekich, an officer and director of the Company, is Managing Member of
The Arkad Group, LLC.
(5) The shares of B.D. Brooke & Company are held by Mr. Mandell as custodian
for his three minor children. Mr. Mandell is an officer and director of B.D.
Brooke & Company, but disclaims any beneficial ownership of B.D. Brooke &
Company.
(6) Communications Services International has represented to the Company that
no officer, director or beneficial owner of more than 5% of the Company's
outstanding common stock is a shareholder of Communications Services
International. Arthur Newberger, a 3% minority shareholder of Communications
Services International, does not have the power to vote or direct the vote, or
to dispose or direct the disposition of, such shares.
(7) Represents shares issuable at the closing of the DTG Stock Exchange
Agreement. See "Prior Transactions".
TABLE NO. 2
BENEFICIAL OWNERSHIP OF MANAGEMENT
BEFORE AND AFTER THE TRANSACTION
Number of Shares(1) Percent of Class
---------------- ----------------
Management Before After Before After
- ---------- ------ ----- ------ -----
Norman Gross (2) 44,766 84,766(4) 10.7% 1.6%
Robert N.
Weingarten (2) 44,766 84,766(4) 10.7% 1.6%
Arthur Newberger (3) - - (5) - -
David Kekich (3) - 1,080,000(6) - 20.0%
Ely J. Mandell (3) - 600,000(7) - 11.1%
All directors
and officers as
a group 89,532 1,680,000 21.3% 31.1%
(1) Number of shares of common stock beneficially owned after giving effect to
a 1 for 100 reverse stock split.
(2) Norman Gross and Robert N. Weingarten will resign as officers and directors
of M&B Delaware effective with the closing of the DTG Stock Exchange Agreement.
(3) Arthur Newberger, David Kekich and Ely J. Mandell will be appointed as
officers and directors of M&B Delaware effective with the closing of the DTG
Stock Exchange Agreement.
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(4) Includes 40,000 shares issuable at the closing of the DTG Stock Exchange
Agreement for services rendered to the Company.
(5) Excludes 2,160,000 shares owned by Communications Services International
("CSI"), of which Arthur Newberger is a 3% minority shareholder. Mr. Newberger
is not an officer or director of CSI, and Mr. Newberger does not have the power
to vote or direct the vote, or to dispose or direct the disposition of, such
shares. Accordingly, Mr. Newberger disclaims any beneficial ownership in such
shares of the Company's common stock.
(6) Includes 1,080,000 shares owned by The Arkad Group, LLC, of which Mr.
Kekich is Managing Member.
(7) Includes 600,000 shares owned by B.D. Brooke & Company. The shares of B.D.
Brooke & Company are held by Mr. Mandell as custodian for his three minor
children. Mr. Mandell is an officer and director of B.D. Brooke & Company, but
disclaims any beneficial ownership of B.D. Brooke & Company.
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