<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 'SS' 240.14a-11(c) or 'SS' 240.14a-12
ENTERTAINMENT INTERNATIONAL, LTD.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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>
ENTERTAINMENT INTERNATIONAL, LTD.
7380 SAND LAKE ROAD
ORLANDO, FLORIDA 32819
--------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 28, 2000
--------------------
To the Shareholders of
ENTERTAINMENT INTERNATIONAL, LTD.
You are cordially invited to attend a special meeting (the
"Special Meeting") of shareholders of Entertainment International, Ltd. (the
"Company") to be held at 7380 Sand Lake Road, Orlando, Florida 32819 on December
28, 2000, at 10:00 a.m., local time.
At the Special Meeting, you will be asked to consider and vote
upon an amendment to the Company's Certificate of Incorporation which will
effect a one-for-twenty reverse stock split of all of the Company's issued and
outstanding common stock (the "Charter Amendment"). There are presently
110,000,000 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock") authorized for issuance by the Company's Certificate of
Incorporation. The number of authorized shares of Common Stock will not be
reduced by the Reverse Stock Split. As of the Record Date, there were
69,597,282 shares of Common Stock issued and outstanding and 2,665,000 shares
of Common Stock reserved for issuance upon the conversion or exercise of
outstanding warrants and options and a total of 37,737,718 shares authorized
but unissued. Upon implementation of the Reverse Stock Split, the number of
shares of Common Stock issued and outstanding will be reduced to approximately
3,479,864 and the number of shares of Common Stock reserved for issuance in
connection with outstanding warrants and options will be approximately
133,250, which will increase the number of shares that are authorized but
unissued to 106,386,886.
The increase in the number of authorized shares of Common
Stock available for issuance by the Company is required to consummate, among
other matters, the transactions contemplated by the stock purchase agreement,
a wholly owned subsidiary of the Company, dated as of August 1, 2000, by and
among the Company, ENTI Acquisition Corp., a wholly owned subsidiary of the
Company, WeBeCD, Inc. ("WeBeCD"), a New York-based advanced software company
start-up that markets its services to the entertainment industry and Fortune
500 companies, and the sellers identified therein (the "Stock Purchase
Agreement"), pursuant to which the Company agreed to acquire all of the
issued and outstanding shares of the common stock, par value $.001 per
share, of WeBeCD (the "Transaction"). IN ACCORDANCE WITH APPLICABLE LAW,
THE SHAREHOLDERS OF THE COMPANY ARE NOT BEING ASKED TO VOTE UPON THE
PROPOSED TRANSACTION. For further information regarding the Transaction,
please see "Summary of Proposed Transaction with WeBeCD," below.
The additional authorized but unissued shares of Common Stock
that results from the Reverse Stock Split can also be used for any proper
corporate purposes, including issuance in connection with any of the Company's
stock option or stock purchase plans, the acquisition of other businesses, or
the raising of additional capital for use in the Company's business. On October
25, 2000, the Company executed a Letter of Intent with EMG Holdings, a Swedish
company that provides content in the premium and special products markets and
coordinates music products for direct response television, to acquire all of the
issued and outstanding shares of EMG in exchange for shares of the Company's
Common Stock, upon terms to be negotiated between the parties.
<PAGE>
You are not being asked to vote upon or submit proxies with
respect to the approval and adoption of the Stock Purchase Agreement or the
Transaction. The Transaction is an important decision for the Company and its
shareholders. The accompanying proxy statement explains the Transaction and
provides specific information concerning the Special Meeting. We encourage
you to read this entire document carefully.
It is important that your shares be represented at the Special
Meeting regardless of the number you hold. Therefore, please sign, date and
return your proxy card as soon as possible, whether or not you plan to attend
the Special Meeting. This will not prevent you from voting your shares in person
if you subsequently choose to attend.
Sincerely,
Louis J. Pearlman
Chairman of the Board,
Chief Executive Officer and President
Orlando, Florida
November 27, 2000
<PAGE>
ENTERTAINMENT INTERNATIONAL, LTD.
7380 SAND LAKE ROAD
ORLANDO, FLORIDA 32819
--------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 28, 2000
--------------------
NOTICE IS HEREBY GIVEN that a special meeting (the "Special
Meeting") of shareholders of Entertainment International, Ltd. (the "Company")
will be held at 7380 Sand Lake Road, Orlando, Florida 32819 on December 28,
2000, at 10:00 a.m., local time, for the following purposes, all as more fully
described in the attached Proxy Statement:
I. To ratify and approve an amendment to the Company's
Certificate of Incorporation (the "Charter Amendment") to effect a
one-for-twenty reverse stock split (the "Reverse Stock Split") of the issued and
outstanding shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"); and
II. To transact such other business as may properly come
before the Special Meeting and any and all adjournments thereof.
YOU ARE NOT BEING REQUESTED TO VOTE UPON OR SUBMIT PROXIES
WITH RESPECT TO THE PROPOSED TRANSACTION BETWEEN THE COMPANY AND WeBeCD, INC.,
AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
The accompanying Proxy Statement forms a part of this Notice.
The Board of Directors has fixed the close of business on
November 21, 2000 as the record date (the "Record Date") for the determination
of shareholders entitled to notice of, and to vote at, the Special Meeting or
any adjournment thereof. A list of the Company's shareholders entitled to vote
at the Special Meeting will be available for examination by any Company
shareholder for any purpose germane to the Special Meeting, during ordinary
business hours, at the Company's principal offices in Orlando, Florida for ten
(10) days prior to the Special Meeting and will also be available at the Special
Meeting.
YOU ARE EARNESTLY REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT
PURPOSE (TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES)
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON. THE PROXY IS
REVOCABLE BY YOU AT ANY TIME PRIOR TO ITS EXERCISE AND WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE SPECIAL MEETING. THE PROMPT
RETURN OF THE PROXY WILL BE OF ASSISTANCE IN PREPARING FOR THE SPECIAL MEETING
AND YOUR COOPERATION IN THIS RESPECT WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
Scott Bennett
Secretary
Orlando, Florida
November 27, 2000
<PAGE>
TABLE OF CONTENTS
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Page
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INTRODUCTION.....................................................................................................1
THE SPECIAL MEETING..............................................................................................1
Purpose of the Meeting..................................................................................1
Record Date and Voting at the Special Meeting...........................................................1
Votes Required..........................................................................................2
Solicitation and Proxy Solicitor........................................................................2
Revocation and Use of Proxies...........................................................................2
Adjournments or Postponements...........................................................................2
PROPOSAL I. APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION..............................3
General.................................................................................................3
Purposes of the Reverse Stock Split.....................................................................3
Potential Effects of the Reverse Stock Split............................................................4
Effectiveness of the Reverse Stock Split................................................................5
Required Affirmative Vote...............................................................................6
SUMMARY OF PROPOSED TRANSACTION WITH WEBECD.............................................................7
The Parties.............................................................................................7
Terms of the Transaction................................................................................7
Registration Rights.....................................................................................8
Conditions to the Transaction; Termination..............................................................8
Waiving and Amending Provisions of the Stock Purchase Agreement ........................................8
Management After the Transaction........................................................................8
Operation of WeBeCD after the Transaction...............................................................8
THE PROPOSED TRANSACTION WITH WEBECD AND THE STOCK PURCHASE AGREEMENT...................................9
Reasons for the Transaction.............................................................................9
Recommendation of the Board of Directors................................................................9
Certain Effects of the Transaction.....................................................................10
Effective Time.........................................................................................10
Consideration..........................................................................................10
Federal Income Tax Consequences........................................................................10
Fees and Expenses......................................................................................11
Representations and Warranties.........................................................................11
Conduct of Business Prior to the Transaction...........................................................11
Negotiations with Others...............................................................................12
Indemnification........................................................................................12
Conditions to the Transaction..........................................................................12
Termination of the Stock Purchase Agreement............................................................12
Extension, Waiver and Amendment........................................................................13
Interests of Certain Persons in the Transaction........................................................13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................................................13
WHO CAN HELP ANSWER YOUR QUESTIONS..............................................................................15
CAUTIONARY STATEMENTS CONCERNING FORWARD LOOKING STATEMENTS.....................................................15
</TABLE>
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<TABLE>
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................................................................16
OTHER MATTERS...................................................................................................16
ADDITIONAL INFORMATION..........................................................................................16
APPENDICES......................................................................................................17
</TABLE>
Appendix A - Amendment to the Certificate of Incorporation of the Company
<PAGE>
ENTERTAINMENT INTERNATIONAL, LTD.
7380 SAND LAKE ROAD
ORLANDO, FLORIDA 32819
-----------------------------
PROXY STATEMENT
FOR A
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 28, 2000
INTRODUCTION
-----------------------------
This Proxy Statement and the accompanying proxy are being furnished to
shareholders of Entertainment International, Ltd. (the "Company") in connection
with the solicitation of proxies by the Board of Directors for use in voting at
a Special Meeting of Shareholders to be held at 7380 Sand Lake Road, Orlando,
Florida 32819, on December 28, 2000, at 10:00 a.m., local time, and at any and
all adjournments thereof (the "Special Meeting"). This Proxy Statement, the
attached Notice of Special Meeting of Shareholders, and the accompanying proxy,
are first being mailed or delivered to shareholders of the Company on or about
November 27, 2000.
THE SPECIAL MEETING
PURPOSE OF THE MEETING
At the Special Meeting, holders of the Company's common stock of record
as of the close of business on November 21, 2000 will be eligible to vote upon:
I. an amendment to the Company's Certificate of Incorporation (the
"Charter Amendment") to effect a one-for-twenty reverse stock split of the
issued and outstanding shares of the Company's Common Stock; and
II. to transact such other business as may properly come before the
annual meeting or any adjournment or postponement.
YOU ARE NOT BEING REQUESTED TO VOTE UPON OR SUBMIT PROXIES WITH RESPECT
TO THE PROPOSED TRANSACTION BETWEEN THE COMPANY AND WeBeCD, INC., AS DESCRIBED
IN THIS PROXY STATEMENT.
RECORD DATE AND VOTING AT THE SPECIAL MEETING
The Board of Directors has fixed the close of business on November 21,
2000, as the record date (the "Record Date") for the determination of the
shareholders entitled to notice of, and to vote at, the Special Meeting and any
adjournments and postponements of the Special Meeting. On that day, there were
69,597,282 shares of Common Stock outstanding, which shares were held by
approximately 1,712 shareholders of record. Holders of the Company's Common
Stock are entitled to one vote per share. A majority of the issued and
outstanding shares of the Company's Common Stock on the Record Date, represented
in person or by proxy, will constitute a quorum for the transaction of business
at the Special Meeting. If a quorum is not present, the Special Meeting may be
adjourned from time to time, until a quorum is present. Abstentions and broker
non-votes are counted as present for purposes of determining the presence of a
quorum at the Special Meeting for the transaction of business. Any shareholder
has the right to vote against approval of the proposals before the Special
Meeting.
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VOTES REQUIRED
Approval of any Proposal requires the affirmative vote of holders of a
majority of the outstanding shares entitled to vote at the Special Meeting. A
failure to vote, abstention from voting, or a broker non-vote will have the same
legal effect as a vote cast against approval of any Proposal. Brokers, and in
many cases nominees, will not have discretionary power to vote on the proposals
to be presented at the Special Meeting. Accordingly, beneficial owners of shares
must instruct their brokers or nominees how to vote their shares.
SOLICITATION AND PROXY SOLICITOR
The Company will bear all expenses of the solicitation of proxies in
connection with this Proxy Statement, including the cost of preparing and
mailing this Proxy Statement. The Company will reimburse brokers, fiduciaries,
custodians and their nominees for reasonable out-of-pocket expenses incurred in
sending this Proxy Statement and other proxy materials to, and obtaining
instructions relating to such materials from, beneficial owners of the Company's
Common Stock. Shareholder proxies may be solicited by directors, officers and
employees of the Company in person or by telephone, facsimile or by other means
of communication. However, such individuals will not be paid for soliciting
proxies.
REVOCATION AND USE OF PROXIES
The enclosed proxy card is solicited on behalf of the Company's Board
of Directors. A shareholder giving a proxy has the power to revoke it at anytime
before it is exercised by (i) delivering a written notice revoking the proxy to
the Company before the vote at the Special Meeting; (ii) executing a proxy with
a later date and delivering it to the Company before the vote at the Special
Meeting; or (iii) attending the Special Meeting and voting in person. Any
written notice of revocation should be delivered to the attention of Scott
Bennett at 7380 Sand Lake Road, Orlando, Florida 32819. Attendance at the
Special Meeting without casting a ballot will not, by itself, constitute
revocation of a proxy. Subject to proper revocation, all shares of Common Stock
represented at the Special Meeting by properly executed proxies received by the
Company will be voted in accordance with the instructions contained in such
proxies. Executed, but unmarked, proxies will be voted "FOR" approval of the
Proposals.
ADJOURNMENTS OR POSTPONEMENTS
Although it is not expected, the Special Meeting may be adjourned
or postponed for the purpose of soliciting additional proxies. Any
adjournment or postponement of the Special Meeting may be made without notice,
other than by an announcement made at the Special Meeting, by approval of the
holders of a majority of the votes present in person or represented by proxy at
the Special Meeting, whether or not a quorum exists. Any signed proxies received
by the Company will be voted in favor of an adjournment or postponement of the
Special Meeting in these circumstances, unless either a written note on the
proxy delivered by the shareholder directs otherwise or the shareholder has
voted against the Charter Amendment. Thus, proxies voting against the Charter
Amendment will not be used to vote for adjournment of the Special Meeting for
the purpose of providing additional time to solicit votes to approve the Charter
Amendment. Any adjournment or postponement of the Special Meeting for the
purpose of soliciting additional proxies will allow shareholders who have
already sent in their proxies to revoke them at any time prior to their use.
2
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PROPOSAL I.
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION
GENERAL
In connection with the execution of the Stock Purchase Agreement,
the Company's Board of Directors approved an amendment to the Company's
Certificate of Incorporation to effect a reverse stock split of twenty (20)
shares of the Company's issued and outstanding Common Stock into one (1) new
share of Common Stock (the "Reverse Stock Split"). In this regard, the Board of
Directors has unanimously approved, and recommends to shareholders that they
approve the Reverse Stock Split, as described herein. The Reverse Stock Split
will be effected by the filing of an amendment to the Company's Certificate of
Incorporation, which contains the changes relating to the Reverse Stock Split,
substantially as set forth in Appendix A to this Proxy Statement.
If the Reverse Stock Split is approved, each of twenty shares of the
Company's Common Stock would be changed into one share of Common Stock. The par
value of the Common Stock would not be changed from $.01 per share. In lieu of
issuing any fractional shares as a result of the Reverse Stock Split, the
Company will round the number of shares each shareholder is entitled to receive
as a result of the Reverse Stock Split to the newest whole number of shares.
There are presently 110,000,000 shares of Common Stock authorized by
the Company's Certificate of Incorporation, as amended. The number of authorized
shares of Common Stock will not be reduced by the Reverse Stock Split. As of the
Record Date, there were 69,597,282 shares of Common Stock issued and
outstanding and 2,665,000 shares of Common Stock reserved for issuance upon the
conversion or exercise of outstanding warrants and options. Upon adoption of the
Reverse Stock Split, the number of shares of Common Stock issued and outstanding
will be approximately 3,479,864 and the number of shares of Common Stock
reserved for issuance in connection with outstanding warrants and options will
be approximately 133,250.
PURPOSES OF THE REVERSE STOCK SPLIT
As a result of the Reverse Stock Split, there will be a reduction in
the number of shares of Common Stock issued and outstanding and an associated
increase in the number of authorized shares which would be unissued and
available for future issuances after the Reverse Stock Split (the "Increased
Available Shares"). The increased shares are required for the issuance of shares
of Common Stock pursuant to the proposed Transaction with WeBeCD. In addition,
the Increased Available Shares could be used for any proper corporate purpose
approved by the Board of Directors of the Company, including, among others,
financing growth, stock dividends, providing shares for employee benefit plans,
dividend reinvestment plans, possible future acquisitions and other general
corporate purposes related to the development and expansion of the corporate
enterprise. In that context, on October 25, 2000, the Company executed a Letter
of Intent with EMG Holdings, a Swedish company that provides content in the
premium and special products markets and coordinates music products for direct
response television, to acquire all of the issued and outstanding shares of
EMG in exchange for shares of the Company's Common Stock, upon terms to be
negotiated between the parties. The Board of Directors believes it will be
advantageous to have the desired flexibility to be able to act promptly with
respect to investment or acquisition opportunities without the expense and
delay involved in covering special shareholder meetings to authorize
additional shares which may be issued in connection with such opportunities.
On November 21, 2000, the last reported closing price of the Common
Stock on the OTC Bulletin Board was $0.19 per share. By decreasing the number of
shares of Common Stock otherwise
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outstanding without altering the aggregate economic interest in the Company
represented by such shares, the Board of Directors believes that the trading
price for the Common Stock will be increased. However, since there are numerous
factors and contingencies that could affect the bid price of the Common Stock,
there can be no assurance that such increase in the price will occur.
In addition, the Board of Directors believes that the Reverse Stock
Split should, although there can be no assurance, enhance the acceptability of
the Common Stock by the financial community and investing public. The reduction
in the number of issued and outstanding shares of Common Stock caused by the
Reverse Stock Split is anticipated initially to increase proportionately the per
share market value of the Common Stock. The Board also believes that the Reverse
Stock Split may result in a broader market for the Common Stock than that which
currently exists. The expected increase price level may encourage interest and
trading in the Common Stock and possibly promote greater liquidity for the
Company's stockholders, although such liquidity could be adversely affected by
the reduced number of shares of Common Stock outstanding after the Effective
Date (as defined herein) of the Reverse Stock Split.
The Board of Directors believes that some of the practices and policies
of brokerage firms tend to discourage individual brokers within those firms from
dealing with lower priced stocks. Some of those practices and policies pertain
to the payment of broker's commissions and to time consuming procedures that
function to make the handling of lower priced stocks economically unattractive
to brokers. In addition, the structure of trading commissions also tends to have
an adverse impact upon holders of lower priced stock because the brokerage
commissions on the sale of lower priced stocks generally represent a higher
percentage of the sales price than the commissions on relatively higher priced
stocks. The Reverse Stock Split could result in a price level for the Common
Stock that will reduce, to some extent, the effect of the above-referenced
policies and practices of brokerage firms and diminish the adverse impact of
trading commissions on the market for the Common Stock.
The Board makes no assurance that the market value of the Common Stock
will rise in proportion to the reduction in the number of outstanding shares
resulting from the Reverse Stock Split. Accordingly, there can be no assurance
that the foregoing objectives will be achieved or that the market price of the
Common Stock resulting upon implementation of the Reverse Stock Split will be
maintained for any period of time.
POTENTIAL EFFECTS OF THE REVERSE STOCK SPLIT
Pursuant to the Reverse Stock Split, each holder of twenty shares of
Common Stock, par value $.01 per share ("Old Common Stock"), immediately prior
to the effectiveness of the Reverse Stock Split, would become the holder of one
share of Common Stock, par value $.01 per share ("New Common Stock"), after
consummation of the Reverse Stock Split. On the Effective Date, the interest of
each shareholder of record who owns fewer than twenty shares of Common Stock
will thereby be terminated, and he, she or it will have no right to vote as a
shareholder or share in the assets or any future earnings of the Company. Shares
of Common Stock no longer outstanding as a result of the fractional share
settlement procedure will be returned to authorized but unissued shares of the
Company.
Consummation of a Reverse Stock Split will not alter the number of
authorized shares of Common Stock, which will remain at 110,000,000 shares. The
Reverse Stock Split will not change the proportionate equity interests of the
Company's shareholders, nor will the respective voting rights and other rights
of shareholders be altered (other than possible immaterial changes due to the
rounding up of fractional shares to the newest whole share, as described above).
The total number of shares of Common Stock issuable upon the exercise of options
and warrants to acquire such shares, and the exercise price thereof, shall be
proportionately adjusted to reflect the Reverse Stock Split.
If approved, the Reverse Stock Split will result in some shareholders
owning odd lots of less than 100 shares of Common Stock. Brokerage commissions
and other costs of transactions in odd lots are
4
<PAGE>
generally somewhat higher, particularly on a per share basis, than the costs of
transactions in round lots of even multiples of 100 shares.
Because the Reverse Stock Split will create the Increased Available
Shares, the Board of Directors realizes that the Reverse Stock Split may be
construed as having an anti-takeover effect, as the Company could issue
additional shares to make more difficult or discourage an attempt to acquire
control of the Company. Neither the Board of Directors nor the management of the
Company is aware of any effort to accumulate its securities or obtain control by
means of a tender offer, proxy contest or otherwise. The Reverse Stock Split is
being proposed to provide additional flexibility to finance growth.
Additionally, shareholders should note that certain disadvantages may
result from the creation of the Increased Available Shares. In the event the
Reverse Stock Split is approved by the shareholders and effected by the Board of
Directors, the number of outstanding shares of Common Stock would be decreased
as a result of the Reverse Stock Split, but the number of authorized shares of
Common Stock would not be so decreased. The Company would therefore have the
authority to issue a greater number of shares of Common Stock following the
Reverse Stock Split without the need to obtain shareholder approval to authorize
additional shares. Any such additional shares may have the effect of
significantly reducing the interest of the existing shareholders of the Company
with respect to earnings per share, voting, liquidation value and book and
market value per share.
EFFECTIVENESS OF THE REVERSE STOCK SPLIT
The Reverse Stock Split, if approved by the Company's stockholders,
would become effective (the "Effective Date") upon the filing with the Secretary
of State of the State of New York the Certificate of Amendment of the Company's
Certificate of Incorporation. It is expected that such filing will take place on
or shortly after the date of the Special Meeting, assuming shareholders approve
the Reverse Stock Split. However, the exact timing of the filing of the
Amendment to the Certificate of Incorporation will be determined by the Board of
Directors based upon its evaluation as to when such action will be most
advantageous to the Company and its shareholders.
Shortly after the Effective Date, shareholders will be asked to
surrender certificates representing shares of Old Common Stock in accordance
with the procedures set forth in a letter of transmittal to be sent by the
Company. Upon such surrender, a certificate representing shares of Common Stock
resulting from the Reverse Stock Split will be issued and forwarded to the
shareholders; however, each certificate representing shares of Old Common Stock
will continue to be valid and represent the number of shares of New Common Stock
equal to the number of shares of Old Common Stock that such shareholder is
entitled to receive as a consequence of the Reverse Stock Split. Shareholders
should not send their Stock Certificates until they receive a transmittal
letter.
5
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REQUIRED AFFIRMATIVE VOTE
For the reasons stated above, the Board of Directors of the Company has
determined that the proposed amendment to the Certificate of Incorporation is
advisable and unanimously recommends it to the Company's shareholders for
adoption. Approval of the amendment to the Certificate of Incorporation requires
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock, voting by proxy or in person, which are entitled to vote at the
Special Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE
ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
6
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SUMMARY OF PROPOSED TRANSACTION WITH WEBECD
As mentioned above in Proposal I, the Company is recommending the
Reverse Stock Split to provide for sufficient shares to effectuate and
consummate, among other matters, the transactions contemplated pursuant to the
Stock Purchase Agreement. Set forth below is a summary of the proposed
transaction with WeBeCD and a summary of the Stock Purchase Agreement. IN
ACCORDANCE WITH APPLICABLE LAW, THE SHAREHOLDERS OF THE COMPANY ARE NOT BEING
ASKED TO VOTE UPON THE PROPOSED TRANSACTION WITH WEBECD. For instructions on
obtaining more information, see "Who can help answer your questions."
<TABLE>
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Parties to the Acquisition:
The Company: Entertainment International, Ltd.
(OTC-ENTI). The principal executive
offices of the Company are located at
7380 Sand Lake Road, Orlando, Florida
32819. The telephone number is (407)
351-0011.
WeBeCD, Inc.: WeBeCD, Inc. is a startup New York-based
advanced software company that markets
its services to the entertainment
industry and Fortune 500 companies.
WeBeCD software includes an enriched,
customizable-user interface, a user-
configurable multi-media suite, and can
support seamless Internet access through
a regular CD or DVD. The multi-platform
WeBeCD package is designed to transform
regular CDs, DVDs, and other electronic
media into intelligent e- commerce
vehicles. Upon the closing of the
Transaction, it is intended that WeBeCD
will work with Trans Continental
Records, an affiliate of the Company,
through a license arrangement, to deploy
WeBeCD technology on Trans Continental
album releases, rebroadcast Trans
Continental artists' content via video
and audio streaming from the WeBeCD Web
site, as well as sell CDs, DVDs and
other merchandise from the Trans
Continental Web sites as available.
WeBeCD, Inc. currently employs eight
people and the principal executive
offices of WeBeCD, Inc. are located at
26 West 36th Street, 10th Floor, New
York, New York 10019.
Terms of the Transaction: The current shareholders of WeBeCD will
receive one (1) share (following the
Reverse Stock Split - see Proposal I,
above) of the Company's Common Stock for
each share of WeBeCD common stock they
own, resulting in the issuance by the
Company of a total of approximately
5,000,000 shares of its Common Stock to
the WeBeCD shareholders.
</TABLE>
7
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Registration Rights The Stock Purchase Agreement provides
that Common Stock issued to the WeBeCD
shareholders is subject to certain
registration rights in accordance with a
registration rights agreement to be
executed at or prior to the closing of
the Transaction on terms and conditions
mutually acceptable to the parties.
Conditions to the Transaction; In addition to the approval of the
Termination Charter Amendment, (see Proposal I,
above), consummation of the Transaction
is subject to a number of conditions,
including the receipt of legal opinions
from counsel for WeBeCD and the Company,
as well as the execution of certain
other agreements as set forth in the
Stock Purchase Agreement. In addition,
the final terms and the amount of the
consideration to be paid to the
shareholders of WeBeCD are subject to
market conditions at the time of the
closing and certain other business and
financial considerations. Such terms
will be mutually agreed upon by the
Company and the shareholders of WeBeCD
and the parties will, if necessary,
execute an amendment to the Stock
Purchase Agreement reflecting such
understanding.
The Stock Purchase Agreement will
terminate by its terms if the closing
has not occurred on or prior to December
31, 2000 or five (5) business days
following the satisfaction or waiver of
all the conditions described therein.
The Transaction may also be abandoned by
mutual consent, and in certain other
circumstances. See "The Proposed
Transaction With WeBeCD and the Stock
Purchase Agreement - Conditions to the
Transaction," below.
Waiving and Amending provisions Any condition to a party's obligation
of the Stock Purchase Agreement under the Stock Purchase Agreement may
be waived in writing by such party. The
Stock Purchase Agreement may be amended,
modified and supplemented by the mutual
written agreement of the parties at any
time prior to the closing date.
Management After the Transaction The Company's Board of Directors
currently consists of Louis J. Pearlman
and James J. Ryan. Until the Transaction
is consummated, the current directors of
the Company will remain on and continue
to serve on the Company's Board of
Directors.
Operation of WeBeCD after the It is contemplated that, as a result of
Transaction the Transaction, the Company will
operate WeBeCD as a wholly-owned
subsidiary. See "The Proposed
Transaction With WeBeCD and the Stock
Purchase Agreement," below.
</TABLE>
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<PAGE>
THE PROPOSED TRANSACTION WITH WEBECD AND THE
STOCK PURCHASE AGREEMENT
The following is a brief summary of the proposed transaction with WeBeCD and the
Stock Purchase Agreement, a copy of which can be secured from the Company (see
"Who can help answer your questions").
THE COMPANY CAN MAKE NO ASSURANCE THAT THE PROPOSED TRANSACTION WITH WeBeCD WILL
BE CONSUMMATED. IN ADDITION, THE FINAL TERMS AND THE AMOUNT OF THE CONSIDERATION
TO BE PAID TO THE SHAREHOLDERS OF WeBeCD ARE SUBJECT TO MARKET CONDITIONS AT THE
TIME OF THE CLOSING AND CERTAIN OTHER BUSINESS AND FINANCIAL CONSIDERATIONS.
SUCH TERMS WILL BE MUTUALLY AGREED UPON BY THE COMPANY AND THE SHAREHOLDERS OF
WeBeCD AND THE PARTIES WILL, IF NECESSARY, EXECUTE AN AMENDMENT TO THE STOCK
PURCHASE AGREEMENT REFLECTING SUCH UNDERSTANDING.
REASONS FOR THE TRANSACTION
The Company was originally incorporated in 1982 and commenced
operations shortly thereafter. Since 1995, the Company generally has had no
operations and no opportunity to conduct significant operations in the industry
in which it has historically conducted its business operations. As a result of
the Company not conducting significant operations for the past several years in
the industry in which it has historically conducted business, the Company has
changed its focus to concentrate on new industries, and the Company believes
that various sectors of the entertainment industry offer the Company its best
opportunities. After careful consideration, the Board of Directors concluded
that the opportunity for the Company to acquire WeBeCD was in the best interests
of the Company's shareholders and, accordingly, approved the Transaction.
This discussion of the information and factors considered by the
Company's Board of Directors is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the
Transaction, the Company's Board of Directors did not find it practicable to,
and did not quantify or otherwise assign relative weight to, the specific
factors considered in reaching its determination. Further, individual members of
the Board of Directors may have given differing weights to differing factors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has unanimously approved the Stock Purchase
Agreement, and the transactions contemplated thereby and recommends that the
shareholders vote "FOR" approval and adoption of the Charter Amendment so the
Transaction can be consummated. The Board of Directors believes that the
consideration to be received by the Company is fair and in the best interests of
its shareholders.
The recommendation of the Board of Directors is based upon the
following factors: (i) information concerning the Company's and WeBeCD's
respective businesses, prospects, financial performances, financial conditions
and operations; (ii) an analysis of the respective prospects and pro forma
operations of the combined companies; (iii) the terms and conditions of the
Stock Purchase Agreement and the other agreements and instruments to be executed
pursuant thereto; and (iv) that the Company's Chairman, Chief Executive Officer
and President, certain other officers of the Company and the president of WeBeCD
have certain interests in the Transaction that are in addition to those of the
shareholders of the Company.
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<PAGE>
CERTAIN EFFECTS OF THE TRANSACTION
Upon the closing of the Transaction, it is intended that WeBeCD will
work with Trans Continental Records, an affiliate of the Company, to deploy
WeBeCD technology on Trans Continental album releases, rebroadcast Trans
Continental artists' content via video and audio streaming from the WeBeCD Web
site, as well as sell CDs, DVDs and other merchandise from the Trans Continental
Web sites as available. The mission of the new entity will be to distribute, on
a worldwide basis, the WeBeCD technology for all labels to use. The WeBeCD
technology combines powerful direct marketing capabilities for music and film
companies to target their consumers. The technology also allows full motion
video, integrated e-commerce and red book quality audio on a regular CD or DVD.
The Company believes that WeBeCD's new approach for integrating
advanced web-based software engineering into existing CDs and DVDs allows
seamless communication from the desktop to targeted e-commerce Web sites, as
well as outstanding video and audio streaming capabilities. WeBeCD will also
allow consumers to effect intelligent interaction with its Web site where
consumers will be able to archive their personal media collections and access
them over the World Wide Web. The Company believes that this enabling e-commerce
technology will provide consumers with a personal jukebox that will allow
thousands of CDs or videos to be stored, randomly selected and enjoyed from
virtually any computer connected to the Internet.
WeBeCD software includes an enriched, customizable-user interface, a
user- configurable multi-media suite, and can support seamless Internet access
through a regular CD or DVD. The multi-platform WeBeCD package is designed to
transform regular CDs, DVDs, and other electronic media into intelligent e-
commerce vehicles. CDs and DVDs featuring the WeBeCD enhancement will allow
users to broaden their "e-media" experience beyond the simple audio component of
a music CD or DVD by providing a valuable e-commerce bridge to an array of
products and services tailored to the specific interests of the user.
Additionally, the Company believes that the WeBeCD technology will allow artists
to sell more music by enabling the playback of extremely high-quality video on
over 300 million PCs worldwide, a significantly larger market than even MTV's in
the United States.
EFFECTIVE TIME
If the Charter Amendment is approved at the Special Meeting by the
holders of a majority of all outstanding shares of Common Stock, and if the
other conditions to the Transaction are satisfied or waived, it is currently
anticipated that the Transaction will become effective as soon as practicable
after the Special Meeting; however, the Company can make no assurance as to the
timing of the consummation of the Transaction or that the Transaction will be
consummated.
THE CONSIDERATION
Upon the closing of the Transaction, WeBeCD will become a wholly-owned
subsidiary of the Company. Pursuant to the Stock Purchase Agreement, the Company
will issue approximately 5,000,000 restricted shares of its Common Stock to the
current shareholders of WeBeCD.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material United
States federal income tax consequences of the Transaction. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the "Code"),
regulations promulgated by the United States Treasury Department, judicial
authorities, and current rulings and administrative practice of the Internal
Revenue Service (the "Service"), as currently in effect, all of which are
subject to change at anytime, possibly with retroactive effect. This discussion
does not address all aspects of federal income taxation that might be
10
<PAGE>
relevant to particular holders of the Company's common stock in light of their
status or personal investment circumstances; nor does it discuss the
consequences to such holders who are subject to annual treatment under the
federal income tax laws such as foreign persons, dealers in securities,
regulated investment companies, or to persons who have received their common
stock as compensation. Further, this discussion does not address the state,
local or foreign tax consequences of the Transaction.
The Company has not requested an opinion, nor does the Company intend
to request an opinion to the effect that the acquisition will be treated as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code. However, the Company has attempted to structure the Transaction as a
reorganization for tax purposes. Since the Company's stockholders will not be
receiving shares in the Transaction, management determined that it would not
request such an opinion.
If the Acquisition qualifies as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, then, subject to the assumptions,
limitations and qualifications referred to herein, the Transaction should result
in the following federal income tax consequence:
No gain or loss will be recognized by the stockholders of WeBeCD in
receipt of shares of the Company's common stock as the result of exchanging
WeBeCD shares for the Company's shares.
A successful Internal Revenue Service challenge to the reorganization
status of the Transaction would result in the stockholders of WeBeCD recognizing
taxable gain or loss with respect to each share of stock surrendered equal to
the difference between such stockholder's basis in such share and the fair
market value, as of the effective time of the Transaction, of the Company's
common stock received in exchange therefor. In such event, such stockholder's
aggregate basis in the Company's common stock so received would equal its fair
market value as of the effective time of the Transaction, and such stockholder's
holding period for such stock would begin the day after the Transaction. The
gain or loss generally will be a capital gain or loss.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC
TAX CONSEQUENCES OF THE TRANSACTION, INCLUDING THE APPLICABILITY TO YOUR
PARTICULAR SITUATION OF THE TAX CONSIDERATIONS CONTAINED IN THIS SUMMARY AND THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
FEES AND EXPENSES
The Company and WeBeCD will each bear their respective costs and
expenses incurred in connection with the Transaction.
REPRESENTATIONS AND WARRANTIES
In the Stock Purchase Agreement, the Company made customary
representations and warranties to WeBeCD with respect to its business,
organization, operations and financial condition and other matters. The Stock
Purchase Agreement also contains customary representations and warranties of
WeBeCD relating to, among other things, the following matters: (i) its
capitalization; (ii) the absence of certain changes or events having a material
adverse effect on its financial condition, business or results of operation; and
(iii) the absence of any material infringement of any intellectual property
owned by or licensed to WeBeCD.
CONDUCT OF BUSINESS PRIOR TO THE TRANSACTION
WeBeCD has agreed that, until the completion or termination of the
Transaction, unless the Company consents in writing, WeBeCD will conduct its
businesses in the ordinary course of business in substantially the manner
conducted prior to the date of the Stock Purchase Agreement. The Company has
also agreed to use reasonable efforts to preserve intact its present business
organization and structure,
11
<PAGE>
keep available the services of its present officers, agents and full-time
employees and preserve and maintain its assets and its relationships with
customers, suppliers, and others having business dealings with it.
NEGOTIATIONS WITH OTHERS
WeBeCD and its shareholders have agreed that none of them, directly or
indirectly, will (i) solicit, engage in discussions or engage in negotiations
with any person (other than the Company or any of its affiliates) with respect
to any transaction inconsistent with the Transaction or which would render the
Transaction impossible or impracticable to consummate; or (ii) provide
information to any person (other than the Company or any of its representatives)
in connection with any such other transaction.
INDEMNIFICATION
The Stock Purchase Agreement provides that, to the fullest extent
permitted under applicable law and subject to certain conditions, the Company
will indemnify and hold harmless WeBeCD's shareholders, officers and directors
and WeBeCD's shareholders and cross-indemnity and hold harmless the Company and
its shareholders, officers and directors for (i) any inaccuracy in any
representation or certification, or breach of any warranty made pursuant to the
Stock Purchase Agreement; (ii) any breach of the covenants and agreements made
in the Stock Purchase Agreement; or (iii) the ownership or operation of WeBeCD
or the Company, as the case may be, prior to the closing of the Transaction.
CONDITIONS TO THE TRANSACTION
The Company's and WeBeCD's respective obligations to complete the
Transaction are subject to the satisfaction of usual and customary closing
conditions before completion of the Transaction including, but not limited to,
receipt of opinions from counsel to both WeBeCD and the Company, compliance with
representations and warranties, receipt of consents, if necessary, no pending
legal proceedings and the execution of various license agreements, all as more
fully described in the Stock Purchase Agreement attached hereto.
TERMINATION OF THE STOCK PURCHASE AGREEMENT
The Stock Purchase Agreement may be terminated at any time before the
closing of the Transaction, whether before or after approval of the matters
presented in connection with the Transaction as summarized below:
*by mutual written consent of the Company and WeBeCD;
*by WeBeCD or the Company, as the case may be, if (i) there has been a material
misrepresentation or breach of warranty on the part of any party in the
representations and warranties contained in the Stock Purchase Agreement and
such material misrepresentation or breach of warranty, if curable, is not cured
within 30 days after written notice thereof; (ii) any party has committed a
material breach of any covenant imposed upon it and fails to cure such breach
within 30 days after written notice thereof; or (iii) any condition to any
party's obligations become incapable of fulfillment through no fault of such
party and is not waived by such party, provided that, on the date of
termination, such party shall then be otherwise ready, willing and able to
proceed with the Closing;
*by either party, if there shall be any law that makes consummation of the
Transaction illegal or otherwise prohibited, or if any order enjoining the
parties from consummating the Transaction is entered and such order shall have
become final and nonappealable; and
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<PAGE>
*by either party if the Closing shall not have occurred on or prior to December
31, 2000, provided that if so terminated, certain specified conditions shall
have been satisfied on the date of termination and the parties shall be then
otherwise ready, willing and able to proceed with the Closing.
EXTENSION, WAIVER AND AMENDMENT
The Stock Purchase Agreement, or any provision therein, may be amended,
superseded, cancelled, renewed or extended only by a written instrument signed
by the parties.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
Some members of the Company's management and the Company's Board of
Directors may have interests in the Transaction that are in addition to, or
different from, the interests of shareholders. The Company's Board of Directors
was aware of these interests and considered them in approving the Stock Purchase
Agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned, as of the Record Date, by (i) all persons known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock; (ii) each director of the Company; (iii) each of the "named
executive officers" as defined under the rules and regulations of the Securities
Act of 1933, as amended; and (iv) all directors and executive officers of the
Company as a group (2 persons).
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Class
---------------- ---------------- ----------------
<S> <C> <C>
Louis J. Pearlman(1)(2)(4)............. 18,469,153 26.53%
James J. Ryan(1)(3).................... 530,000 *
Trans Continental Airlines, Inc.(4).... 7,666,862 11.01%
All officers and directors as a group
(2 persons)............................ 18,999,153 27.29%
</TABLE>
------------------------
* Less than 1%.
(1) The business address of each person is c/o Entertainment International,
Ltd., 7380 Sand Lake Road, Orlando, Florida 32819.
(2) Represents (i) 8,802,291 shares of the Company's common stock; (ii)
warrants exercisable for 2,000,000 shares of the Company's Common Stock;
and (iii) 7,666,562 shares of the Company's common stock owned of record
by Trans Continental Airlines, Inc. ("Trans Continental"). Mr. Pearlman is
the President and Chief Operating Officer, a director and an approximately
21% owner of the issued and outstanding shares of Trans Continental.
(3) Includes options to purchase 500,000 shares of the Company's common stock.
(4) Represents (i) 3,666,862 shares of common stock were issued to Trans
Continental in consideration for its guaranty of the Company's obligations
aggregating in excess of $7 million under the loans with Allstate
Financial Corporation, Phoenixcor., Inc., Senstar Capital Corporation, the
Argentina Lease Agreement and the Argentina Operations Agreement with
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<PAGE>
Mastellone Hnos, S.A.; and (ii) 1,000,000 shares of common stock issued to
Trans Continental for entering into a line of credit with the Company in
July 1998, and (iii) 3,000,000 shares of the Company's common stock issued
to Trans Continental in consideration for continuing to provide lines of
credit and funding the ongoing costs and expenses of the Company.
14
<PAGE>
WHO CAN HELP ANSWER YOUR QUESTIONS
IF YOU HAVE MORE QUESTIONS ABOUT THE PROPOSALS OR THE
TRANSACTION OR WOULD LIKE ADDITIONAL COPIES OF THE PROXY STATEMENT OR A COPY OF
THE STOCK PURCHASE AGREEMENT WITH WEBECD, YOU SHOULD CONTACT:
ENTERTAINMENT INTERNATIONAL LTD.
7380 Sand Lake Road
Orlando, Florida 32819
Attention: Investor Relations Department
Telephone Number: (407) 351-0011
CAUTIONARY STATEMENT CONCERNING
FORWARD LOOKING STATEMENTS
This proxy statement and the documents to which we refer you
to in this Proxy Statement contain forward-looking statements. In addition, from
time to time, we or our representatives may make forward-looking statements
orally or in writing. We base these forward-looking statements on our
expectations and projections about future events, which we derive from the
information currently available to us. Such forward-looking statements relate to
future events or our future performance, including:
our financial performance and projections;
our growth in revenue and earnings; and
our business prospects and opportunities.
You can identify forward-looking statements by those that are
not historical in nature, particularly those that use terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes", "plans," "projected," "predicts," "potential" or "continue" or the
negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including:
our ability to retain the business of our significant
customers;
our ability to keep pace with new technology and
changing market needs; and
the competitive environment of our business.
These and other factors may cause our actual results to differ
materially from any forward-looking statement.
Forward-looking statements are only predictions. The
forward-looking events discussed in this proxy statement, the documents to which
we refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about us. We
are not obligated to publicly update or revise any forward-looking statement,
whether as a result of uncertainties and assumptions, the forward-looking events
discussed in this proxy statement, the documents to which we refer you and other
statements made from time to time by us or our representatives, might not occur.
15
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by us with the Securities and
Exchange Commission pursuant to the Exchange Act of 1934 are hereby incorporated
by reference, except as superseded or modified herein:
1. Our Annual Report on Form 10-K for the year ended December 31,
1999.
2. Our Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.
3. In addition, all documents filed by us pursuant to Sections13(a),
13(c), 14 and 15(d) of the Exchange Act of 1934 after the date of
this prospectus and prior to the termination of the offering of
the shares of common stock shall be deemed to be incorporated in
and made a part of this prospectus by reference from the date of
filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in
any subsequently filed document that is also incorporated by
reference herein modifies or replaces such statement. Any
statements so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
prospectus.
We will provide without charge to each person, including any
beneficial owner of shares of common stock, to whom this prospectus is
delivered, on written or oral request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than exhibits
to such documents). Written or oral requests for such copies should be directed
to us at 7380 Sand Lake Road, Orlando, Florida 32819, Telephone Number: (407)
351-0011, attention Scott Bennett.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters
before the Special Meeting and does not know of any other matters that are to be
presented for consideration at the Special Meeting. Should any other matters
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy on behalf of the shareholders
they represent in accordance with their best judgment.
ADDITIONAL INFORMATION
The Company will make available to any shareholder, without charge, and
upon a written request therefor, additional copies of the Company's Report on
Form 10-K for the fiscal year ended December 31, 1999. Any such request should
be directed to ENTERTAINMENT INTERNATIONAL LTD. Attention: Scott Bennett at the
following address: 7380 Sand Lake Road, Orlando, Florida 32819.
Scott Bennett
Secretary
Orlando, Florida
November 27, 2000
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<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
ENTERTAINMENT INTERNATIONAL, LTD.
(UNDER SECTION 805 OF THE NEW YORK BUSINESS CORPORATION LAW)
The undersigned, being the President and Secretary of Entertainment
International, Ltd., a New York corporation, hereby certify as follows:
FIRST: The name of the Corporation is Entertainment International, Ltd.
(the "Corporation"). The name under which the Corporation was formed was Airship
International, Ltd.
SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State on June 9, 1982.
THIRD: The Certificate of Incorporation is hereby amended to effect a
one-for-twenty reverse split of the Corporation's Common Stock issued and
outstanding or held in the Corporation's treasury.
FOURTH: To accomplish the foregoing, Article FOURTH of the Certificate
of Incorporation is hereby amended to read as follows:
"FOURTH: The aggregate number of shares of stock which the Corporation
shall be authorized to issue is 110,000,000, all of which shall be common stock,
par value $.01 per share. On the Split Effective Date (as defined below), the
Corporation shall effect a one-for-twenty reverse stock split pursuant to which
every twenty shares of the Corporation's Common Stock issued and outstanding or
held in treasury will be automatically converted into one new share of
<PAGE>
Common Stock (the "Reverse Stock Split"). The Reverse Stock Split shall be
effective as of the close of business on such date that the Amendment is filed
with the New York Department of State, as determined by the Corporation's Board
of Directors, but in no event later than December 31,2001 (the "Split Effective
Date"). The Corporation shall not issue fractional shares to the shareholders
entitled to a fractional interest in a share of Common Stock issued pursuant to
the Reverse Stock Split but shall round each fractional share up to the next
whole number of shares. On the Split Effective Date, each certificate
representing existing shares of Common Stock will automatically be deemed for
all purposes to evidence ownership of the appropriate reduced number of new
shares of Common Stock without any action by the shareholder thereof. As soon as
practicable after the Split Effective Date, the Corporation or its agent shall
notify the shareholders and request the surrender of their certificates for
their existing shares with instructions as to how to receive new certificates
and/or payment for their fractional new share interest. The shares of Common
Stock issued pursuant to the Reverse Stock Split shall be identical to the
shares of Common Stock they are exchanged for.
FIFTH: The foregoing amendment of the Certificate of Incorporation of
the Corporation was authorized by the unanimous consent of the Board of
Directors of the Corporation, followed by the vote of the holders of at least a
majority of all of the outstanding shares of the Corporation entitled to vote on
the said amendment of the Certificate of Incorporation.
IN WITNESS WHEREOF, the undersigned have subscribed this document on
the date set forth below and do hereby affirm, under the penalties of perjury,
that the statements contained therein have been examined by the undersigned and
are true and correct.
Date: December __, 2000
ENTERTAINMENT INTERNATIONAL, LTD.
By:______________________________
Louis J. Pearlman, President
By:______________________________
Scott Bennett, Secretary
<PAGE>
PROXY
ENTERTAINMENT INTERNATIONAL, LTD.
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis J. Pearlman and James J. Ryan
(with full power to act without the other and with power to appoint his or her
substitute) as the undersigned's proxies to vote all of the undersigned's shares
of common stock of ENTERTAINMENT INTERNATIONAL, LTD., a New York corporation
(the "Company"), which the undersigned would be entitled to vote at the Special
Meeting of Shareholders of the Company (the "Special Meeting") to be held at
7380 Sand Lake Road, Orlando, Florida 32819, on December 28, 2000 at 10:00 a.m.,
local time, and at any and all adjournments thereof as follows:
I. Proposal to ratify and approve an amendment to the Company's Certificate of
Incorporation to effect a one-for-twenty reverse split of the Company's
Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
II. In their discretion, such other business as may properly come before the
Special Meeting and any and all adjournments thereof.
--------------------------------------------------------------------------------
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE FOREGOING INSTRUCTIONS. IN THE ABSENCE OF ANY
INSTRUCTIONS, SUCH SHARES WILL BE VOTED FOR THE PROPOSAL IN ITEM I.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders to be held on December 28, 2000, and the Proxy
Statement of the Company, each dated November 27, 2000, each of which has
been enclosed herewith.
The undersigned hereby revokes any proxy to vote shares of common stock of
the Company heretofore given by the undersigned.
Dated:
----------------------------------------------
----------------------------------------------
Signature
----------------------------------------------
Signature, if held jointly
----------------------------------------------
Title (if applicable)
Please date, sign exactly as your name appears on
this Proxy and promptly return in the enclosed
envelope. In the case of joint ownership, each joint
owner must sign. When signing as guardian, executor,
administrator, attorney, trustee, custodian, or in
any other similar capacity, please give full title.
If a corporation, sign in full corporate name by
president or other authorized officer, giving title,
and affix corporate seal. If a partnership, sign in
partnership name by authorized person.
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as...................................'SS'
