<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
/ / Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
The Producers Entertainment Group Ltd.
- --------------------------------------------------------------------------------
(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):
/X/ 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 transactions 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:
------------------------------------------------------------------------
<PAGE>
(2) Form, Schedule or Registration Statement no.:
------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
------------------------------------------------------------------------
<PAGE>
THE PRODUCERS ENTERTAINMENT GROUP LTD.
___________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 2, 1999
___________
TO OUR STOCKHOLDERS:
Notice is hereby given that the 1999 Special Meeting of Stockholders of
The Producers Entertainment Group Ltd. ("TPEG " or the "Company") will be
held at the offices of the Company at 5757 Wilshire Boulevard, Los Angeles,
California 90036, on February 2, 1999 at 10:00 a.m., California time. The
Special Meeting is being held for the following purposes:
1. Pursuant to the stockholder approval requirements of the Nasdaq
SmallCap Market, to consider and vote upon a proposal to approve the
issuance of a number of shares of the Company's Common Stock as
consideration for the acquisition of MWI Distribution, Inc., which,
together with the shares of Common Stock previously issued, will, upon
issuance, be in excess of 20% of the number of shares of Common Stock
outstanding before the issuance;
2. To consider and vote upon a proposed amendment to the Company's
Restated Certificate of Incorporation to effect a reverse stock split
of the Company's issued and outstanding Common Stock, whereby each
four (4) shares of Common Stock issued as of the effective date of the
reverse split will be converted into one (1) share of Common Stock;
3. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Only stockholders of record of the Common Stock of the Company at the
close of business on January 4, 1999 are entitled to notice of and to vote at
the Special Meeting and at any adjournments or postponements thereof.
All stockholders are cordially invited to attend the Special Meeting in
person. However, to ensure your representation at the Special Meeting, you
are urged to mark, sign and return the enclosed Proxy as promptly as possible
in the postage prepaid envelope enclosed for that purpose. Any stockholder
of record attending the Special Meeting may vote in person, even though he or
she has returned a Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Arthur H. Bernstein
SECRETARY
Los Angeles, California 90036
___________, 1998
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY
AS POSSIBLE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE
YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
THE PRODUCERS ENTERTAINMENT GROUP LTD.
___________
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 2, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of The Producers
Entertainment Group Ltd., a Delaware corporation ("TPEG" or the "Company"),
for use at the Special Meeting of Stockholders (the "Special Meeting") to be
held at the offices of the Company, 5757 Wilshire Boulevard, Los Angeles,
California 90036, on February 2, 1999 at 10:00 a.m., California time, and at
any adjournments or postponements thereof, for the purposes set forth herein
and in the attached Notice of Special Meeting of Stockholders. Accompanying
this Proxy Statement is the Board's Proxy for the Special Meeting, which you
may use to indicate your vote on the proposals described in this Proxy
Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Special Meeting, and which have not been revoked, will,
unless otherwise directed by the stockholder, be voted in accordance with the
recommendations of the Board set forth in this Proxy Statement. A
stockholder may revoke his or her Proxy at any time before it is voted either
by filing with the Secretary of the Company, at its principal executive
offices, a written notice of revocation or a duly executed proxy bearing a
later date, or, with respect to stockholders of record, by attending the
Special Meeting and expressing a desire to vote his or her shares in person.
The close of business on January 4, 1999 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote
at the Special Meeting or at any adjournments or postponements of the Special
Meeting. At the record date, ____________ shares of common stock, par value
$0.001 per share (the "Common Stock"), were outstanding. At the close of
business on December 17, 1998, 8,431,547 shares of the Common Stock were
outstanding. The Common Stock is the only outstanding class of securities of
the Company entitled to vote at the Special Meeting.
A stockholder is entitled to cast one vote for each share held of record
on the record date on all matters to be considered at the Special Meeting.
The issuance of a number of shares of the Company's Common Stock in excess of
20% of the number of shares of the Company's Common Stock outstanding before
the issuance requires the affirmative vote of a majority of the total votes
cast on the proposal in person or by proxy. With respect to this proposal,
abstentions will be counted toward the tabulation of votes cast and will have
the same effect as negative votes. However, broker non-votes, while included
in the determination of shares present at the Meeting for purposes of
determining a quorum, will not be counted as votes cast for or against
approval of this proposal. The amendment of the Certificate of Incorporation
to effect a reverse stock split requires the affirmative vote of a majority
of the outstanding shares of the Company's Common Stock. For purposes of the
vote to amend the Certificate of Incorporation, abstentions and broker
non-votes will be counted as votes cast against approval of the amendment of
the Certificate of Incorporation.
This Proxy Statement and the accompanying Proxy were mailed to
stockholders on or about _____________.
<PAGE>
FINANCIAL AND RELATED INFORMATION
The information relating to financial and related information is herein
incorporated by reference to the Company's Special Report on Form 10-KSB for
the fiscal year ended June 30, 1998, under Item 5 - Market for Common Equity
and Related Stockholder Matters, Item 6 - Management's Discussion and
Analysis of Financial Condition and Results of Operations, and under the
caption "Financial Statements," the index to which appears on page F-1 of the
Company's Special Report.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board approved the engagement of Singer Lewak
Greenbaum & Goldstein LLP as its independent auditors for the year ending
June 30, 1998 to replace Kellogg & Andelson Accountancy Corporation ("Kellogg &
Andelson"), who resigned as auditors of the Company effective June 22, 1998.
Kellogg & Andelson advised TPEG that Kellogg & Andelson could no longer
provide services as independent accountants for publicly held companies. The
Company reported this change in independent public accountants in its Current
Report on Form 8-KJ filed with the Commission on June 29, 1998.
Kellogg & Andelson audited the financial statements of TPEG as of June 30,
1996 and 1997, and the related statements of operations, stockholders' equity
and cash flows for the years ended June 30, 1996 and 1997 (collectively, the
"Financial Statements"). Kellogg & Andelson's reports on the Financial
Statements for the past two years did not contain an adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles.
In connection with the audits of TPEG's financial statements for the
years ended June 30, 1996 and 1997, and in the subsequent interim period
through June 22, 1998, there were no disagreements with Kellogg & Andelson on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which disagreements, if not
resolved to the satisfaction of Kellogg & Andelson would have caused Kellogg &
Andelson to make reference to the subject matter of the disagreements in their
reports.
Representatives of Singer Lewak Greenbaum & Goldstein LLP are expected
to be present at the Special Meeting of Stockholders. They will have the
opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
<PAGE>
PROPOSAL 1
APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK
IN EXCESS OF 20% OF THE NUMBER OF SHARES OF COMMON STOCK
CURRENTLY OUTSTANDING
On July 15, 1998, the Company acquired, pursuant to a Merger Agreement
by and among the Company, TPEG Merger Company, a wholly owned subsidiary of
the Company, MWI Distribution, Inc. and the stockholders of MWI
Distribution, Inc., 100% of the outstanding capital stock of MWI
Distribution, Inc. (doing business as MediaWorks International) ("MediaWorks
International"). MediaWorks International provides international television
and video distribution, specializing in the licensing of children's and
family programming and animation. MediaWorks International is also a
co-production and co-financing partner in various animated and live-action
programming ventures and engages in worldwide sales of direct-to-video series
and specials. The Board believes that the acquisition of MediaWorks
International will expand the Company's distribution business to include the
international market and will provide increased opportunities to expand the
international co-production activities of MediaWorks International.
The consideration paid at closing to Thomas A. Daniels and Craig
Sussman, the stockholders of MediaWorks International (the "MW
Stockholders"), was 763,889 shares of the Company's Common Stock. In
addition, the Company issued in the name of the MW Stockholders 439,815
shares of the Company's Common Stock (the "Escrow Stock").
In addition to the payment of the shares described above, the Company
agreed to pay to the MW Stockholders up to 1,375,662 shares of Series B
Preferred Stock or Common Stock contingent upon the performance of MediaWorks
International (the "Contingent Shares"), subject to certain additional
conditions. Pursuant to the terms of the Merger Agreement, the shares to be
paid as consideration in the merger shall be paid in Common Stock until the
issuance of one additional share would require approval of the Company's
stockholders under the rules of the Nasdaq SmallCap Market, after which the
shares to be paid as consideration shall be paid in shares of Series B
Preferred Stock. Each share of Series B Preferred Stock issued by the Company
is convertible into one share of Common Stock upon approval by the
stockholders of this Proposal 1.
The Company's Common Stock is listed on the Nasdaq SmallCap Market. The
Nasdaq SmallCap Market requires stockholder approval prior to the issuance by
the Company of Common Stock which would constitute 20% or more of the Common
Stock outstanding on the date of issuance. In addition, the Merger Agreement
requires that the Company request stockholder approval at this Special
Meeting, pursuant to Nasdaq Rule 4310(c)(25), of the issuance of the Common
Stock. The Merger Agreement was filed with the Securities and Exchange
Commission as Exhibit 2.1 to the Company's Current Report on Form 8-K, filed
on July 31, 1998.
The contingent consideration to be paid to the MW Stockholders is
described herein. If MediaWorks International earns pre-tax net income (as
defined in the Merger Agreement) of $750,000 for the fiscal year ended June
30, 1999, the Company will pay the MW Stockholders a number of Contingent
Shares determined by dividing $850,000 by the greater of (a) the 30-day
average trading price of the Common Stock ("Common Stock Average Price") and
(b) $2.3625. If MediaWorks International earns pre-tax net income of
$900,000 for the fiscal year ended June 30, 2000, the Company will pay the MW
Stockholders a number of Contingent Shares determined by dividing $1,150,000
by the greater of (a) the Common Stock Average Price and (b) $2.3625. If
MediaWorks International earns pre-tax net income of $1,100,000 for the
fiscal year ended June 30, 2001, the Company will pay the MW Stockholders the
balance of the Contingent Shares. If MediaWorks International fails to
achieve the minimum projected pre-tax net income during any period, the
portion of the Contingent Shares not used shall be added to the amount
contingently payable in the next year. However, if all of the Contingent
Shares have not been earned by June 30, 2002, and MediaWorks International
achieves average pre-tax net income of $500,000 for each of the fiscal years
ended June 30, 1999, 2000 and 2001 and earns pre-tax net income of $1,325,000
for the fiscal year ended June 30, 2002, the Company will deliver to the MW
Stockholders any remaining Contingent Shares.
Further, if MediaWorks International earns at least 75% of the targeted
pre-tax net income in any given year, then the MW Stockholders will be
entitled to receive a pro rata portion of their Contingent Shares. In
addition, if MediaWorks International achieves pre-tax net income in excess
of the agreed upon target, then the MW Stockholders will receive additional
Contingent Shares equal to the percentage that actual pre-tax net income
exceeds the agreed
<PAGE>
upon minimum target amount. The increase cannot, however, exceed 50% of the
specified maximum number of Contingent Shares for such payment.
In addition to the contingent consideration described above, the Merger
Agreement also provides for the issuance of up to 109,428 shares of the
Company's Common Stock if the Common Stock Average Price does not equal or
exceed $3.80 per share at any time between July 15, 1998 and June 30, 1999.
The exact number of shares of Common Stock to be issued pursuant to this
requirement equals 0.0908 multiplied by the total number of shares of Common
Stock issued at the Closing plus the number of shares of Escrow Stock
released by June 30, 1999.
The effect of the rules of the Nasdaq SmallCap Market is to require
stockholder approval prior to the issuance by the Company of _____ shares of
Common Stock as consideration in the merger, based on the number of shares of
Common Stock outstanding as of the date hereof. Without stockholder approval
of this Proposal 1, the MW Stockholders will be entitled to only ___ shares
of Common Stock, with the balance of the consideration for the merger being
paid in shares of Series B Preferred Stock.
EFFECT OF THE ISSUANCE OF ADDITIONAL COMMON STOCK.
The issuance of Common Stock as consideration in the Merger will
increase the number of outstanding shares of Common Stock. As a result of
the issuance of the Common Stock, the economic interests and voting rights of
each stockholder will be diluted.
RECOMMENDATION AND REQUIRED VOTE
The issuance of a number of shares of the Company's Common Stock in
excess of 20% of the number of shares of the Company's Common Stock
outstanding before the issuance requires the affirmative vote of a majority
of the total votes cast on the proposal in person or by proxy. With respect
to this proposal, abstentions will be counted toward the tabulation of votes
cast and will have the same effect as negative votes. However, broker
non-votes, while included in the determination of shares present at the
Meeting for purposes of determining a quorum, will not be counted as votes
cast for or against approval of this proposal. The Board is of the opinion
that the issuance of the Common Stock is advisable and in the best interests
of the Company and recommends a vote FOR the approval of this Proposal 1. All
proxies will be voted to approve this Proposal 1 unless a contrary vote is
indicated on the enclosed proxy card.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
PROPOSAL 1, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
<PAGE>
PROPOSAL 2
APPROVAL OF AN AMENDMENT
TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A
ONE-FOR-FOUR REVERSE STOCK SPLIT
The Board of the Company has approved, subject to stockholder approval,
a proposed amendment to the Company's Restated Certificate of Incorporation
(the "Amendment") which will effect a one-for-four reverse stock split (the
"Reverse Split") of the issued and outstanding shares of Common Stock. The
complete text of the Amendment is set forth as Exhibit "A" to this Proxy
Statement.
If the Reverse Split is approved by the requisite vote of the Company's
stockholders, the Reverse Split will be effective upon the close of business
on the date of filing of the Amendment with the Delaware Secretary of State
and each certificate representing shares of Common Stock outstanding
immediately prior to the Reverse Split (the "Old Shares") will be deemed,
automatically and without any action on the part of the stockholders, to
represent one-fourth the number of shares of Common Stock after the Reverse
Split (the "New Shares").
No fractional New Shares will be issued as a result of the Reverse
Split. In lieu thereof, each stockholder whose Old Shares are not evenly
divisible by four will receive one additional share of Common Stock. After
the Reverse Split becomes effective, stockholders of record will be requested
to surrender certificates representing the Old Shares in accordance with the
procedures set forth in a letter of transmittal to be sent by the Company.
Upon such surrender, a certificate representing the New Shares will be issued
and forwarded to the stockholders. Until surrender, each certificate
representing Old Shares will continue to be valid and represent New Shares
equal to one-fourth the number of Old Shares.
Persons who hold their shares in brokerage accounts or "street name"
will not be required to take any further actions to effect the exchange of
their certificates.
The Common Stock issued pursuant to the Reverse Split will be fully paid
and nonassessable. The voting and other rights that currently characterize
the Common Stock will not be altered by the Reverse Split.
PURPOSES OF THE PROPOSED REVERSE SPLIT. The Board believes that the
Reverse Split is desirable for several reasons. Since 1991, the closing
sales price of the Common Stock has never exceeded $5.50. It is expected
that, as a result of the Reverse Split, the market price of the Common Stock
should increase. The Board believes that this increase in price should
enhance the acceptability of the Common Stock by institutional investors
(many of whom will not invest in securities which trade at a price of under
$5 per share), as well as the financial community and the investing public at
large.
A variety of brokerage house policies and practices tend to discourage
individual brokers within those firms from dealing with lower priced stocks.
Some of those policies and practices pertain to the payment of brokers'
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 commission on
a sale of lower priced stock generally represents a higher percentage of the
sales price than the commission on a relatively higher priced issue. The
proposed Reverse Split should result in a price level for the Common Stock
that will reduce, to some extent, the effect of these policies and practices
of brokerage firms and diminish the adverse impact of trading commissions on
the market for the Common Stock. The expected increased price level may also
encourage interest and trading in the Common Stock and possibly promote
greater liquidity for the Company's stockholders, although liquidity could be
adversely affected by the reduced number of shares outstanding after the
Reverse Split is effected.
On October 9, 1998, the Company received notification from Nasdaq that
due to the Company's insufficient minimum bid price the Company may be
delisted from the Nasdaq SmallCap Market unless it raises the Company's
minimum bid price. Nasdaq rules require that the Company have a minimum bid
price of $1.00 or greater for ten consecutive trading days during a ninety
calendar day period. If the Company fails to meet SmallCap Market listing
requirements, including the requirement that the Company have a minimum bid
price of $1.00, the Company's Common Stock could be subject to delisting from
the Nasdaq SmallCap Market.
<PAGE>
The Board believes that a delisting of the Common Stock from the Nasdaq
SmallCap Market could, among other things, adversely affect the Company's
ability to attract new investors and to make acquisitions by issuing shares
of Common Stock. A delisting also would decrease the liquidity of the
outstanding shares of Common Stock and consequently, reduce the trading price
and increase transaction costs of trading such shares. The Board believes
that if the Reverse Split is approved, the bid price may increase over the
$1.00 minimum bid price which should permit the Company to maintain its
listing on the SmallCap Market.
Stockholders should note that the Board cannot predict what effect the
Reverse Split will have on the market price of the Common Stock. The Company
is aware that some companies which have effected reverse stock splits have
experienced a decline in their market value and there can be no assurance
that the market price per New Share after the Reverse Split will approximate
four times the market price per Old Share before the Reverse Split, or that
any of the other effects will occur.
EFFECT OF THE REVERSE SPLIT. The Reverse Split will be effected by
means of filing the Amendment with the Delaware Secretary of State. Assuming
approval of the Reverse Split by the requisite vote of the stockholders at
the Special Meeting, the Amendment thereafter will be filed with the Delaware
Secretary of State as promptly as practicable and the Reverse Split will
become effective as of 5:00 p.m., Pacific time, on the date of that filing
(the "Reverse Split Effective Date"). After the Reverse Split, without any
further action on the part of the Company or the stockholders, certificates
representing Old Shares will thereafter represent New Shares equal to
one-fourth of the number of Old Shares.
The Company currently has authorized capital stock of 50,000,000 shares
of Common Stock and 20,000,000 shares of Preferred Stock. The Amendment will
not reduce the number of authorized shares of Common Stock or of Preferred
Stock.
As of the Record Date, the number of issued and outstanding Old Shares
was _________. The following table illustrates the principal effects of the
proposed Reverse Split and decrease in outstanding Common Stock assuming no
additional shares of Common Stock are issued prior to the Reverse Split
Effective Date as a result of the exercise of any options or warrants:
<TABLE>
<CAPTION>
SHARES OF PRIOR TO PROPOSED AFTER PROPOSED
COMMON STOCK REVERSE SPLIT REVERSE SPLIT
------------ ------------- -------------
<S> <C> <C>
AUTHORIZED 50,000,000 50,000,000
OUTSTANDING
</TABLE>
The Common Stock is currently registered under Section 12(g) of the
Exchange Act and, as a result, the Company is subject to the periodic
reporting and other requirements of the Exchange Act. The Common Stock is
admitted for trading on the Nasdaq SmallCap Market and the Boston Stock
Exchange. The Reverse Split will not affect the registration of the Common
Stock under the Exchange Act or its status as a security registered on the
Nasdaq SmallCap Market and the Boston Stock Exchange.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT. The Company has
not sought and will not seek an opinion of counsel or a ruling from the
Internal Revenue Service regarding the federal income tax consequences of the
Reverse Split. However, the Company believes that because the Reverse Split
is not part of a plan to periodically increase a stockholder's proportionate
interest in the assets or earnings and profits of the Company, the Reverse
Split will have the following effects. The receipt of Common Stock in the
Reverse Split should not result in any taxable gain or loss to stockholders
for federal income tax purposes. If the Reverse Split is approved, the tax
basis of Common Stock received as a result of the Reverse Split will be
equal, in the aggregate, to the basis of the shares exchanged for the Common
Stock. For tax purposes, the holding period of the shares immediately prior
to the effective date of the Reverse Split will be included in the holding
period of the Common Stock received as a result of the Reverse Split.
CERTIFICATES AND FRACTIONAL SHARES. As soon as practicable after the
Reverse Split Effective Date, the Company will send a letter of transmittal
to each holder of record of Old Shares outstanding on the Reverse Split
<PAGE>
Effective Date. The letter of transmittal will contain instructions for the
surrender of certificate(s) representing such Old Shares to Oxford Transfer &
Registrar, the Company's transfer agent (the "Exchange Agent"). Upon proper
completion and execution of the letter of transmittal and return thereof to
the Exchange Agent, together with the certificate(s) representing Old Shares,
a stockholder will be entitled to receive a certificate representing the
number of New Shares into which his or her Old Shares have been reclassified
and changed as a result of the Reverse Split.
Stockholders should not submit any certificates until requested to do
so. No new Certificate will be issued to a stockholder until he or she has
surrendered his or her outstanding certificate(s), together with the properly
completed and executed letter of transmittal, to the Exchange Agent.
No fractional shares of Common Stock will be issued. In lieu thereof,
stockholders holding a number of shares of Common Stock not evenly divisible
by four, upon surrender of their certificates representing the Old Shares,
will receive one additional share of Common Stock.
MISCELLANEOUS. The Board may abandon the proposed Reverse Split at any
time before or after the Special Meeting and prior to the Reverse Split
Effective Date if for any reason the Board deems it advisable to abandon the
proposal. The Board may consider abandoning the proposed Reverse Split if it
determines, in its sole discretion, that the Reverse Split would adversely
affect the ability of the Company to raise capital or the liquidity of the
Common Stock, among other things. In addition, the Board may make any and
all changes to the Amendment that it deems necessary to file the Amendment
with the Delaware Secretary of State to give effect to the Reverse Split.
RECOMMENDATION AND REQUIRED VOTE
The amendment of the Certificate of Incorporation to effect a reverse
stock split requires the affirmative vote of a majority of the outstanding
shares of the Company's Common Stock. For purposes of the vote to amend the
Certificate of Incorporation, abstentions and broker non-votes will be
counted as votes cast against approval of the amendment of the Certificate of
Incorporation. The Board is of the opinion that the Amendment is advisable
and in the best interests of the Company and recommends a vote FOR the
approval of this Proposal 2. All proxies will be voted to approve the
Amendment unless a contrary vote is indicated on the enclosed proxy card.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO EFFECT A ONE-FOR-FOUR REVERSE STOCK SPLIT, AND
YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
PRINCIPAL STOCKHOLDERS
The information relating to principal stockholders is herein
incorporated by reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1998, under Item 11 - Security Ownership of
Certain Beneficial Owners and Management.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder who intends to present a proposal at the next Annual
Meeting of stockholders for inclusion in the Company's Proxy Statement and
Proxy form relating to such Annual Meeting was required to submit such
proposal to the Company at its principal executive offices by December 12,
1998.
SOLICITATION OF PROXIES
It is expected that the solicitation of proxies will be primarily by
mail. The cost of solicitation by management will be borne by the Company.
The Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their reasonable disbursements in forwarding
solicitation material to such beneficial owners. Proxies may also be
solicited by certain of the Company's directors and officers, without
additional compensation, personally or by mail, telephone, telegram or
otherwise for the purpose of soliciting such proxies.
<PAGE>
ANNUAL REPORT ON FORM 10-K
THE COMPANY INCORPORATES HEREIN BY REFERENCE INFORMATION SET FORTH IN
THE ANNUAL REPORT ON FORM 10-KSB, WHICH HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1998. THE COMPANY
IS PROVIDING TO STOCKHOLDERS THE AFOREMENTIONED DOCUMENT ALONG WITH THIS
PROXY STATEMENT.
ON BEHALF OF THE BOARD OF DIRECTORS
Arthur H. Bernstein
Secretary
Los Angeles, California 90036
_____________________________
<PAGE>
Exhibit A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE PRODUCERS ENTERTAINMENT GROUP LTD.
The undersigned, being the President and Secretary, respectively, of The
Producers Entertainment Group Ltd. (the "Corporation") DO HEREBY CERTIFY as
follows:
1. The name of the Corporation is The Producers Entertainment Group Ltd.
2. The Certificate of Incorporation of the Corporation is hereby amended to
effect a one (1) for four (4) reverse split of all of the Corporation's
issued common stock, par value $0.001 per share (the "Common Stock"),
whereby, automatically upon the filing of this Amendment with the Secretary
of State of the State of Delaware, each four (4) issued shares of Common
Stock shall be changed into one (1) share of Common Stock, and, in that
connection, to reduce the stated capital of the Corporation.
3. In order to effectuate the amendment set forth in Paragraph 2 above:
(a) All of the Corporation's issued Common Stock, having a par value of
$.001 per share, is hereby changed into new Common Stock, having a par
value of $.001 per share, on the basis of one (1) new share of Common
Stock for each four (4) shares of Common Stock issued as of the date
of filing of the Amendment with the Secretary of State for the State
of Delaware, provided, however, that no fractional shares of Common
Stock shall be issued pursuant to such change. Each shareholder who
would otherwise be entitled to a fractional share as a result of such
change shall have only a right to receive, in lieu of any fractional
shares otherwise issuable upon conversion, the number of outstanding
shares issued is rounded up to the next whole share.
(b) The Corporation's 50,000,000 authorized shares of Common Stock, having
a par value of $.001 per share, shall not be changed;
(c) The Corporation's 20,000,000 authorized shares of preferred stock,
having a par value of $.001 per share, shall not be changed; and
(d) The Corporation's stated capital shall be reduced by an amount equal
to the aggregate par value of the shares of Common Stock issued prior
to the effectiveness of this Amendment which, as a result of the
reverse split provided for herein, are no longer issued shares of
Common Stock.
4. The foregoing amendments of the Certificate of Incorporation of the
Corporation have been duly adopted by the Corporation's Board of Directors
and Stockholders in accordance with the provisions of Section 242 of the
Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned have subscribed this document on the date
set forth below.
Dated: ___________________; Attest:
_______________________________ _______________________________
Lawrence S. Jacobson, President Arthur Bernstein, Secretary
<PAGE>
THE PRODUCERS ENTERTAINMENT GROUP LTD.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
The undersigned, a shareholder of THE PRODUCERS ENTERTAINMENT GROUP LTD.,
a Delaware corporation, (the "Company") hereby appoints Irwin Meyer and
Arthur Bernstein, and each of them, the proxy of the undersigned, with full
power of substitution, to attend, vote and act for the undersigned at the
Company's Special Meeting of Stockholders (the "Special Meeting"), to be held
on February 2, 1999, and at any of its postponements or adjournments, to vote
and represent all of the shares of the Company which the undersigned would be
entitled to vote, as follows:
The Board of Directors recommends a FOR vote on Proposal 1 and a FOR
vote on Proposal 2.
1. The approval of the issuance of a number of shares of the Company's
Common Stock as consideration for the acquisition of MWI
Distribution, Inc.
____ FOR ____ AGAINST ____ ABSTAIN
2. The approval of an amendment to The Producers Entertainment Group Ltd.
Restated Certificate of Incorporation to effect a reverse stock split
of the issued and outstanding Common Stock, $0.001 par value per
share, whereby each four (4) shares of Common Stock issued as of the
effective date of the reverse split will be converted into one (1)
share of Common Stock.
____ FOR ____ AGAINST ____ ABSTAIN
The undersigned hereby revokes any other proxy to vote at the Special
Meeting, and hereby ratifies and confirms all that the proxy holder may
lawfully do by virtue hereof. AS TO ANY OTHER BUSINESS THAT MAY PROPERLY
COME BEFORE THE SPECIAL MEETING AND ANY OF ITS POSTPONEMENTS OR ADJOURNMENTS,
THE PROXY HOLDER IS AUTHORIZED TO VOTE IN ACCORDANCE WITH ITS BEST JUDGMENT.
This Proxy will be voted in accordance with the instructions set forth
above. THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
APPROVAL OF THE ISSUANCE OF A NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK
AS CONSIDERATION FOR THE ACQUISITION OF MWI DISTRIBUTION, INC. AND THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION, AND AS THE PROXY HOLDER SHALL DEEM ADVISABLE ON SUCH OTHER
BUSINESS AS MAY COME BEFORE THE SPECIAL MEETING, UNLESS OTHERWISE DIRECTED.
<PAGE>
The undersigned acknowledges receipt of a copy of the Notice of Special
Meeting and accompanying Proxy Statement dated ____________, ____ relating to
the Special Meeting.
Date: ______________________________, ____
__________________________________________
__________________________________________
Signature(s) of Shareholder(s)
(See Instructions Below)
The signature(s) hereon should correspond
exactly with the name(s) of the
shareholder(s) appearing on the Stock
Certificate. If stock is jointly held, all
joint owners should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as
such. If signer is a corporation, please
sign the full corporation name, and give
title of signing officer.
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS OF
THE PRODUCERS ENTERTAINMENT GROUP LTD.
