Filed Pursant to 424(b)(3)
REGISTRATION NO. 333-83751
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P R O S P E C T U S
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5,362,786 shares
COMMON STOCK
The 5,362,786 shares of common stock, $.001 par value, of Platinum
Entertainment, Inc. covered by this prospectus may be sold from time to time by
the stockholders listed in this prospectus under "Selling Stockholders," or
their pledgees, donees, transferees or distributees, or their respective
successors in interest. This prospectus relates to the shares that may be
issued to certain selling stockholders upon exercise of warrants and certain
other shares of common stock held by other selling stockholders that are
currently restricted. We will not receive any proceeds from the sale of shares
by the selling stockholders, but we will receive the proceeds from the exercise
of the warrants by the selling stockholders, unless the selling stockholders opt
to exercise their warrants on a cashless basis. See "Use of Proceeds."
PTET -- Nasdaq National Market
INVESTING IN THE SHARES COVERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE
OF RISK. CONSIDER CAREFULLY THE RISK FACTORS THAT BEGIN ON PAGE 4 IN THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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August 9, 1999
<PAGE>
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
the Exchange Act we file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). You can read and
copy such reports, proxy statements and other information at the Commission's
Public Reference Room at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549. You can obtain information on the operations of the
Commission's Pubic Reference Room by calling 1-800-SEC-0330. The reports,
proxy statements and other information that we file with the Commission
electronically are available at the Commission's web site at
http://www.sec.gov. Our common stock is traded on the Nasdaq National
Market. Reports, proxy statements and other information about us also may be
inspected at the offices of The Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006. We also maintain a website at
http://www.PlatinumCD.com.
We have filed with the Commission a registration statement on Form S-3
(which, together with all amendments and exhibits, is referred to in this
prospectus as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"). This prospectus is only a part of the
Registration Statement. For further information, you should refer to the
Registration Statement which you can inspect and copy in the manner and at
the sources described above. Any statements we make in this prospectus or
that we incorporate by reference concerning the provisions of any document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete and, in each instance, reference is
made to the copy of such document so filed. Each such statement is qualified
in its entirety by such reference.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company and
are made a part of this prospectus:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999;
4. Our Current Reports on Form 8-K dated July 1, 1999, and July 19,
1999; and
5. The description of our common stock contained in our Registration
Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act and all amendments thereto and reports filed for the
purpose of updating such description.
All of the documents we have filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering made by this prospectus is deemed to be incorporated
by reference in this prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated herein by reference 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 which is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement 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, to whom a copy of this prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits thereto, unless such exhibits are
specifically incorporated by reference into the information that this prospectus
incorporates). Written or telephone requests for such copies should be directed
to our principal office: Platinum Entertainment, Inc., 2001 Butterfield Road,
Downers Grove, Illinois 60515, Attention: Secretary (telephone: 630-769-0033)
<PAGE>
RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors, together with all of the other information included or
incorporated by reference into this prospectus, before you decide whether to
purchase shares of our common stock.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can
identify these statements by forward-looking words such as "anticipate,"
"believe," "estimate" and "expect" or similar words. You should read
statements that contain these words because they (1) discuss our future
expectations, (2) contain projections of our future results of operations or
of our financial condition, or (3) state other "forward-looking" information.
We believe it is important to communicate our expectations to our investors.
There may be events in the future, however, that we are not accurately able
to predict or over which we have no control. The risk factors listed in this
section, as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results
to differ materially and adversely from the expectations we describe in our
forward-looking statements. In such case, the trading price of our common
stock could decline and you may lose all or part of your investment.
HISTORICAL OPERATING LOSSES
We have experienced operating and net losses each fiscal year since
inception. We may continue to incur operating and net losses. There can be
no assurance that we will ever achieve profitable operations or generate
significant revenue with our current products and strategy. Our future
operating results depend on many factors, including demand for our products,
the level of competition, our ability to acquire, develop and market new
artists and products and the ability of our officers and key employees to
manage our business and control costs.
MANAGEMENT OF GROWTH
We have grown rapidly and we intend to continue growing in the future.
Our rapid growth presents numerous challenges and places significant
additional pressure on our managerial, financial and other resources. To
manage such growth it is necessary that we continue to implement our strategy
and improve our operating systems, attract and train more qualified
personnel, integrate acquired businesses and products, and expand our
facilities. If we fail to effectively manage our growth, our business,
results of operation and financial condition may be materially adversely
affected.
RISKS OF INADEQUATE FINANCING
Successful implementation of our strategy will require continued access
to capital. If we do not have sufficient cash resources, our growth could be
limited unless we are able to obtain capital through additional debt or
equity financings. We cannot assure that such debt or equity financings will
be obtained or that, if obtained, such financing will be on terms that are
more favorable to us or sufficient for our needs.
With respect to our acquisition strategy, we currently intend to finance
future acquisitions by using our common stock for all or a portion of the
consideration to be paid. In the event that our common stock does not
maintain sufficient value, or potential acquisition candidates are unwilling
to accept common stock as consideration for the sale of their businesses, we
may be required to utilize more of our cash resources or obtain other
financing. If we are unable to obtain sufficient financing, we may be unable
to fully implement our acquisition or other strategies.
HIGHLY COMPETITIVE MARKET
The recorded music industry is highly competitive. We face competition
for discretionary consumer purchases of our products from other record
companies, entertainment companies and multimedia companies that seek to
offer recorded music to the public. The market for pre-recorded music is
dominated by five major record companies in the United States (BMG
Entertainment, EMI Recorded Music, Sony Music Group, Universal Music Group
and Warner Music). Our ability to compete in this market depends largely on:
- the skill and creativity of our employees and their relationships with
artists;
- our ability to sign new and established artists and songwriters;
- the expansion and utilization of our catalog;
- the acquisition of licenses to enable us to create compilation
packages;
<PAGE>
- the effective and efficient distribution of our products; and
- our ability to build upon and maintain our reputation for producing,
licensing, acquiring, marketing and distributing high quality music.
Results and the future success of our sales and marketing efforts
through the Internet will be affected by existing competition and by
additional entrants to the electronic commerce market. Many of our
competitors have significantly longer operating histories, greater financial
resources and larger music catalogs. We cannot assure that we will continue
to compete successfully with our competitors in the future.
RISKS INHERENT IN THE RECORDED MUSIC INDUSTRY
The recorded music industry, like other creative industries, involves a
substantial degree of risk. Each recording is an individual artistic work,
and its commercial success is primarily determined by consumer taste, which
is unpredictable and constantly changing. As a result, we cannot assure the
financial success of any particular release, the timing of success or the
popularity of any particular artist. We may be unable to generate sufficient
revenues from successful releases to cover the costs of unsuccessful
releases.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS AND SEASONALITY
Our results of operations are subject to seasonal variations. In
particular, our revenues and operating income are affected by end-of-the-year
holiday sales. In accordance with industry practice, we record revenues for
music products when the products are shipped to retailers. In anticipation
of holiday sales, retailers purchase products from us prior to December. As
a result, our revenues and operating income typically decline during
December, January and February. In addition, timing of a new release may
materially affect our business, financial condition and results of
operations. For example, if releases planned for the peak holiday season are
delayed, our business, financial results and operating results could be
materially adversely affected.
RISKS RELATED TO OUR DISTRIBUTION SYSTEMS
We distribute pre-recorded music in various formats to traditional
retail through Platinum Distribution, one of our proprietary distribution
systems, and through the Internet. We distribute our Christian music
products through Platinum Christian Distribution, also one of our proprietary
distribution systems. We also serve as a distributor for various third party
music labels located in the United States and Europe.
We are significantly dependent on our existing distribution systems,
particularly Platinum Distribution, which generated 70% and 83% of our total
gross product sales during fiscal 1998 and the quarter ended March 31, 1999,
recpectively. We also distributed some of our music products through
Universal Music and Video Distribution, however, we have provided Universal
with a notification of termination of our distribution agreement. See
"Material Changes." Should we encounter difficulty with our existing
distribution methods, or are unable to further develop our proprietary
distribution systems successfully in the future, our business, results of
operation and financial condition may be materially adversely affected.
We also sell our products through the Internet through our website
PLATINUMCD.COM. Revenues from PLATINUMCD.COM are not currently a significant
part of our business. The future success of on-line sales and marketing
efforts cannot be adequately determined at this time, particularly due to the
short history of the electric commerce market and the challenges to the
protection of music files transmitted through the Internet. Results will
also be affected by existing competition and by additional entrants to the
market, many of whom may have substantially greater resources.
<PAGE>
RISKS ASSOCIATED WITH HAVING OUR INTELLECTUAL PROPERTY RIGHTS INFRINGED UPON
We consider our trademarks, copyrights and other similar intellectual
property to be a valuable part of our business. To protect our intellectual
property rights, we rely upon copyright and trademark laws, as well as
confidentiality agreements with our employees and consultants. There can be
no assurance that our use of these contracts and the application of existing
law will provide sufficient protection from misappropriation or infringement
of our intellectual property rights. There can also be no assurance that
third parties will not claim infringement by us with respect to others'
current or future intellectual property rights. It is also possible that
third parties will obtain and use our content or technology without
authorization.
RISKS ASSOCIATED WITH PRODUCT RETURNS
Our products are sold on a returnable basis which is standard music
industry practice. We set reserves for future returns of products estimated
based on return policies and experience. We expect that our actual return
experience will be within standard industry parameters. However, we may
experience an increase in returns over our established reserves. If this
occurs our business, results of operations and financial condition could be
materially adversely affected.
RISKS RELATED TO OUR LICENSING ACTIVITY
We license the rights to numerous master recordings and compositions
from third parties for recording and re-recording of music to produce
compilations and to expand our catalog. We also seek to license the rights
to our master recordings and compositions to third parties for use in albums,
films, and televisions programs for a royalty or a flat fee. These
cross-licensing arrangements are generally made possible by existing industry
practices based on reciprocity. If these practices change, we cannot assure
that we will be able to obtain licenses from third parties on satisfactory
terms, or at all, and our business, financial condition and operating
results, particularly with respect to compilation products, could be
materially and adversely affected.
RISKS RELATED TO OUR ACQUISITION STRATEGY
While we are not currently a party to any agreements or understandings
for any material acquisitions, we expect to continue to seek to acquire
master recordings, music publishing rights and other record companies.
Acquisitions involve risks that could cause our actual growth to differ from
our expectations. For example:
- We may not be successful in identifying attractive acquisitions. We
compete with other companies to acquire master recordings, music
publishing rights and other record companies. We expect that this
competition will continue, which may inhibit our ability to complete
suitable acquisitions on favorable terms.
- We may issue equity securities in future acquisitions that could be
dilutive to our shareholders. We also may incur additional debt and
amortization expense related to music catalog, publishing rights and
other intangible assets we may acquire. This additional debt and
amortization expense may materially adversely affect our business,
financial condition and results of operations. In addition,
acquisitions will require the consent of our current lender and
certain financial covenants in our credit agreement may limit our
ability to incur debt in connection with acquisitions.
- We may be unable to successfully integrate acquired businesses and
realize anticipated economic, operational and other benefits in a
timely manner. If we are unable to successfully integrate acquired
businesses, product lines and personnel, we may incur substantial
costs and delays or other operational, technical or financial
problems. In addition, efforts to integrate or failure to
successfully integrate acquisitions may divert management's attention
from our existing business and may damage our relationships with our
key employees and customers.
<PAGE>
DEPENDENCE ON KEY PERSONNEL
Our success depends largely on the skills, experience and efforts of our
executive officers and key employees. The loss of the services of Mr. Devick
or other members of our senior management, could materially
adversely affect our business, financial condition or results of operations.
In addition, in large part, our success will depend on our ability to attract
and retain qualified management, marketing and sales personnel. We
experience competition for qualified personnel with other companies and
organizations. Our inability to hire or retain qualified personnel could
have a material adverse effect on our business, financial condition or
results of operations. We have entered into employment agreements with
certain members of our senior management team, including Mr. Devick, Douglas
C. Laux, Chief Operations Officer and Chief Financial Officer, and Thomas R.
Leavens, Senior General Counsel and Executive Vice President. We also
maintain a key man life insurance policy in the aggregate of $10 million on
the life of Mr. Devick.
YEAR 2000 RISKS
Many existing computer programs use only two digits (rather than four)
to identify a year in the date field. These programs were designed and
developed without considering the impact of the upcoming change in the
century. If not corrected, many computer applications could fail or create
erroneous results by or at the Year 2000.
We cannot be sure that our efforts to address Year 2000 issues are
appropriate, adequate or complete. We have not verified that all of our key
business partners are Year 2000 compliant. Any Year 2000 compliance problem
of our business operations, our current and any future vendors, distributors
or other key business partners could have a material adverse effect on our
business, results of operations and financial condition.
ANTI-TAKEOVER CONSIDERATIONS
Our Certificate of Incorporation and Bylaws and Delaware law contain
provisions that may delay, defer or inhibit a future acquisition of us not
approved by the Board of Directors. This could occur even if our
shareholders are offered an attractive value for their shares or if a
substantial number or even a majority of our shareholders believe the
takeover is in their best interest. These provisions are intended to
encourage any person interested in acquiring us to negotiate with and obtain
the consent of the Board of Directors. These provisions include: (1)
limitations on our stockholders' ability to nominate directors or act by
written consent, (2) a staggered Board of Directors and (3) the ability of
the Board of Directors to issue shares of preferred stock with such
designations, powers, preferences and rights as it determines, without any
further vote or action by our shareholders. These provisions also could
discourage bids for your shares of common stock at a premium and have a
material adverse effect on the market price of your shares. Also, Section
203 of the Delaware General Corporation Law restricts certain business
combinations with any "interested stockholder" as defined by such statute.
VOLATILITY OF OUR STOCK PRICE
Our common stock is traded on the Nasdaq National Market. The market
price of our common stock has historically been volatile. We believe the
market price of our common stock could fluctuate substantially, based on a
variety of factors, including quarterly fluctuations in results of
operations, timing of product releases, announcements of new products and
acquisitions or acquisitions by our competitors, changes in earnings
estimates by research analysts, and changes in accounting treatments or
principles. The market price of our common stock may be affected by our
ability to meet or exceed analysts' or "street" expectations, and any failure
to meet or exceed such expectations could have a material adverse effect on
the market price of our common stock. Furthermore, stock prices for many
companies, particularly entertainment companies, fluctuate widely for reasons
that may be unrelated to their operating results. These fluctuations and
general economic, political and market conditions, such as recessions or
international currency fluctuations and demand for our products, may
adversely affect the market price of our common stock.
<PAGE>
THE COMPANY
Our primary business is the production, distribution, marketing and sale
of music. Our music products include new releases, typically by artists
established in a particular genre, as well as compilations featuring various
artists and repackagings of previously recorded music from our master music
catalog and under licenses from third party record companies. We sell music
products in the form of compact discs, tape cassettes and digital versatile
discs (DVDs) mainly to retailers and wholesalers in the United States and
internationally. We release music in a variety of genres including classical,
urban, adult contemporary, blues, gospel and country on our Intersound
Classical, Platinum, River North, House of Blues, CGI Platinum and Platinum
Nashville labels.
Expansion and exploitation of our music catalog and publishing rights is
an integral part of our business and growth strategy. We currently own or
control a music catalog with more than 13,000 master recordings and add to
the catalog through strategic and complementary acquisitions, as well as
through the signing of established artists with a history of album sales and
new artists. We also target the producers of film, television and video
projects as potential licensees of our proprietary and controlled recordings.
Our catalog contains releases by many established artists including those
listed below.
The Beach Boys Peter Cetera John Denver Dionne Warwick
The Blues Brothers The Band Roger Daltrey Taylor Dayne
Juice Newton Phoebe Snow Rick Springfield Mighty Clouds of Joy
Otis Rush The Bellamy Brothers Eddie Rabbitt Crystal Gayle
Kansas T. Graham Brown George Clinton Lakeside
Cameo Dazz Band Vickie Winans Andrae Crouch
We distribute our products to traditional retail through Platinum
Distribution and Platinum Christian Distribution, our proprietary
distribution systems, and the Internet. We also serve as a distributor for
various third party music labels located in the United States and Europe. We
have also increased our international sales efforts by establishing
additional licensing agreements as well as production and distribution
agreements on a territory-by-territory basis.
We believe that continued consolidation in the entertainment industry,
particularly the largest merger in music history between MCA/Universal and
PolyGram, presents significant opportunities for growth for niche music
companies like ours, as established artists become available to sign to our
labels. We believe that our artist roster of both established and new
artists, our music catalog and our expanding proprietary and Internet
distribution capabilities positions us to take advantage of the opportunities
that may become available due to changes in the music business.
We were incorporated in Delaware in 1991. Our principal executive
offices are located at 2001 Butterfield Road, Suite 1400, Downers Grove,
Illinois 60515, and our telephone number is (630) 769-0033.
MATERIAL CHANGES
On May 28, 1999, PolyGram Group Distribution, Inc. filed an action
against Platinum Entertainment, Inc. in the Superior Court of the State of
California for the County of Los Angeles captioned POLYGRAM GROUP
DISTRIBUTION, INC. -V- PLATINUM ENTERTAINMENT, INC., Case No. B C211091,
seeking injunctive relief, restitution, and disgorgement of profits arising
out of PolyGram's claim that the distribution agreement between us and
PolyGram Group Distribution bars the distribution of our recordings through
our own distribution facilities and requires that they be distributed by
PolyGram. On June 25, 1999, PolyGram filed an amended complaint that
additionally seeks the recovery of an unspecified amount of damages. We have
not filed an answer to this complaint. In addition, on July 19, 1999,
<PAGE>
PolyGram filed an application for a writ of attachment to recover payments
claimed due under the distribution agreement. We have rejected earlier
demands to cease and desist selling our recording through our own
distribution facilities on the grounds that an amendment to the distribution
agreement with PolyGram Group Distribution specifically allows us to
distribute records through our own distribution company. We will also pursue
claims against PolyGram concerning damages incurred in connection with the
production of a compilation album by PolyGram entitled "Essential Southern
Rock" and for the failure of PolyGram's successor, Universal Music, to
properly pay royalties to us pursuant to the terms of a foreign licensing
agreement between us and Universal. We have also provided PolyGram with
notice of PolyGram's breach of the distribution agreement. In addition, on
July 21, 1999, we provided Polygram with a notification of termination of the
distribution agreement. Because this litigation is at a very early stage, we
are unable to predict its outcome with any accuracy, however, we believe
PolyGram's claims are without merit and we intend to vigorously defend this
action and pursue our claims against PolyGram.
For the quarter ended June 30, 1999, we were in violation of one of the
financial covenants contained in our bank credit agreement. This violation
was waived by the bank in July 1999. Our fiscal 1999 plan, if achieved,
would allow us to comply with our financial covenants. However, under the
current provisions of the bank credit agreement and based on actual results
to date, it is likely that we will be in violation of the same financial
covenant for the third and fourth quarters of fiscal 1999. We are currently
in negotiations with our lender to amend the bank credit agreement. We
believe that based on the increase in value of our investment in
musicmaker.com it is likely that we will be able to amend the bank credit
agreement on satisfactory terms. Musicmaker.com completed its initial public
offering on July 7, 1999, and accordingly, the value of our investment in
musicmaker.com increased from $750,000 to $11,184,000 based on the initial
offering price of $14.00 per share. The closing trading price of
musicmaker.com common stock on July 22, 1999 was $16.50. If an agreement to
amend the bank credit agreement is reached on satisfactory terms, we believe
we will not be in violation of any financial covenants for the third and
fourth quarters of fiscal 1999.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
common stock covered by this prospectus; all of the proceeds will be received
by the selling stockholders. See "Selling Stockholders." If and when all or
a part of the warrants are exercised and the shares of common stock are
issued to the selling stockholders, we will receive the proceeds from the
exercise of the warrants by the selling stockholders, unless the selling
stockholders opt to exercise their warrants on a cashless basis. Assuming
the selling stockholders exercise all of their warrants for cash, we will
receive $35,193,283. We will use such proceeds for working capital and other
general corporate purposes.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth, as of July 22, 1999, certain information
regarding the beneficial ownership of the Company's common stock by each
selling stockholder, both before this offering and as adjusted to reflect the
sale of the shares of common stock. The shares offered hereby may be offered
from time to time in whole or in part by the selling stockholders, their
pledgees, donees, transferees or distributees, or their respective
successors-in-interest. Except where otherwise noted, each person named in
the following table has, to our knowledge, sole voting and investment power
with respect to the shares shown as beneficially owned by such person.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PRIOR TO NUMBER BENEFICIAL OWNERSHIP
OFFERING OF SHARES AFTER OFFERING (2)
------------------------------ OFFERED (1) ------------------------------
NUMBER OF SHARES PERCENT NUMBER PERCENT
OF SHARES
---------------- ------- ----------- --------- -------
<S> <C> <C> <C> <C> <C>
MAC Music L.L.C. 2,016,000(3) 21.6 2,016,000 - -
SK-Palladin Partners, L.P 2,016,000(4) 21.6 2,016,000 - -
Steven D. Devick 1,771,659(5) 20.0 504,167 1,267,492 15.2
Andrew J. Filipowski 1,033,122(6) 13.2 88,330 944,792 12.3
Craig J. Duchossois 487,567(7) 6.5 201,667 285,900 3.9
Special Situations Fund III, L.P. 363,563(8) 5.0 236,863 126,700 1.7
Special Situations Private Equity 210,116(8) 2.9 111,450 98,666 1.3
Fund, L.P.
Special Situations Cayman Fund, L.P. 120,420(8) 1.6 78,954 41,466 *
Special Situations Technology Fund, 70,899(8) 1.0 46,356 24,533 *
L.P.
Carl D. Harnick 52,900(9) * 50,000 2,900 *
William J. Benedict, Jr. 6,666(10) * 6,666 - -
Michael Lloyd 3,333(11) * 3,333 - -
Web Solutions Technology, Inc. 2,400(12) * 2,400 - -
Robert D. Pappas 450(12) * 450 - -
Michael L. Vena 150(12) * 150 - -
__________________
</TABLE>
* Less than 1%.
(1) Represents the maximum number of shares that may be sold by each of the
selling stockholders pursuant to this prospectus.
(2) Assumes the selling stockholders sell all of their shares pursuant to this
prospectus. The selling stockholders may sell all or part of their shares.
(3) Represents shares issuable upon the exercise of vested warrants, which were
issued to MAC Music L.L.C. ("MAC") in transactions exempt from the
registration requirements of the Securities Act. Alpine Equity Partners,
L.P. ("AEP, LP") and Maroley Media Group, L.L.C. ("Maroley") are the
managing members of MAC. Alpine Equity Partners L.L.C. ("AEP, L.L.C.") is
the general partner of AEP, L.P. Robert J. Morgado, a director of the
Company is a managing member of Maroley and has the ability to direct the
investment and voting decisions of Maroley. As such Mr. Morgado may be
deemed to have shared investment and voting discretion with respect to
securities beneficially owned by Maroley.
(4) Represents shares issuable upon the exercise of vested warrants, which were
issued to SK-Palladin Partners, L.P. ("Palladin") in transactions exempt
from the registration requirements of the Securities Act. SK-Palladin
Holdings, L.P. ("Palladin Holdings") is the general partner of SK-Palladin
Partners, L.P. ("Palladin"). SK-
<PAGE>
Palladin Gen Par, Inc. ("Palladin Gen Par") is the general partner of
Palladin Holdings. Mark Schwartz, a director of the Company, is the
sole executive officer of Palladin Gen Par in his capacity as Chief
Executive Officer, President, Secretary and Treasurer. Mr. Schwartz,
in his capacity as the sole executive officer and controlling stockholder
of Palladin Gen Par, has discretion to direct the investment and voting
decisions of Palladin Gen Par. As such Mr. Schwartz may have shared
investment and voting discretion with respect to securities beneficially
owned by Palladin Gen Par through Palladin Holdings and Palladin.
(5) Includes 504,167 shares issuable upon the exercise of a vested warrant,
which was issued to this selling stockholder in transactions exempt from
the registration requirements of the Securities Act; if the Company's
Series D Preferred Stock is redeemed prior to April 15, 2000, Mr. Devick
will be required to return a prorata portion of such warrant (or the
equivalent shares of common stock representing shares received upon
exercise of such warrant), but in no event shall Mr. Devick be required
to return greater than that portion of such warrant exercisable into an
aggregate 60,500 shares of common stock. Includes 84,375 shares of
common stock underlying a warrant which is currently exercisable. Also
includes 940,578 shares underlying stock options that are exercisable
within 60 days. Mr. Devick is Chairman of the Board, Chief Executive
Officer and President of the Company.
(6) Includes 88,330 shares issuable upon the exercise of a vested warrant,
which was issued to this selling stockholder in transactions exempt from
the registration requirements of the Securities Act; if the Company's
Series D Preferred Stock is redeemed prior to April 15, 2000, Mr.
Filipowski will be required to return a prorata portion of such warrant
(or the equivalent shares of common stock representing shares received
upon exercise of such warrant), but in no event shall Mr. Filipowski be
required to return greater than that portion of such warrant exercisable
into an aggregate 10,600 shares of common stock. Includes 99,067 shares
held by Platinum Venture Partners I, L.P. ("PVP I"). Mr. Filipowski is
the President, Chief Executive Officer and a stockholder of the general
partner of PVP I, and in such capacities may be deemed to have voting
and investment power with respect to shares held by PVP I. Mr.
Filipowski disclaims beneficial ownership of such shares. Includes
365,625 shares of Common Stock underlying a warrant held in the name of
Platinum Venture Partners II, L.P. ("PVP II"), which is currently
exercisable. Mr. Filipowski is the President and Chief Executive
Officer, a sole director, and a stockholder of the general partner of
PVP II and in such capacities may be deemed the beneficial owner with
respect to shares held by PVP II. Mr. Filipowski disclaims beneficial
ownership of such shares. Also includes 31,900 shares underlying stock
options that are exercisable within 60 days. Mr. Filipowski is a
director of the Company.
(7) Includes 201,667 shares issuable upon the exercise of a vested warrant,
was was issued in transactions exempt from the registration requirements
of the Securities Act to this selling stockholder; if the Company's
Series D Preferred Stock is redeemed prior to April 15, 2000, Mr.
Duchossois will be required to return a prorata portion of such warrant
(or the equivalent shares of common stock representing shares received
upon exercise of such warrant), but in no event shall Mr. Duchossois be
required to return greater than that portion of such warrant exercisable
into an aggregate 24,200 shares of common stock. Also includes 35,900
shares underlying stock options that are exercisable within 60 days.
Mr. Duchossois is a director of the Company.
(8) Includes shares issued to this selling stockholder in transactions exempt
from the registration requirements of the Securities Act pursuant to a
Stock Purchase Agreement, dated December 31, 1998 and a Stock Purchase
Agreement, dated May 18, 1999.
(9) Includes shares issuable upon the exercise of a vested warrant, which
was issued to this selling stockholder in transactions exempt from the
registration requirements of the Securities Act. Also includes 2,900
shares underlying stock options that are exercisable within 60 days.
Carl Harnick is a director of the Company.
(10) Represents shares issued to this selling stockholder in transactions exempt
from the registration requirements of the Securities Act pursuant to an
agreement for professional services.
(11) Represents shares issued to this selling stockholder in transactions exempt
from the registration requirements of the Securities Act pursuant to an
agreement for production services.
(12) Represents shares issued to this selling stockholder in transactions exempt
from the registration requirements of the Securities Act pursuant to an
agreement for website consulting services.
<PAGE>
PLAN OF DISTRIBUTION
Any or all of the shares covered by this prospectus may be sold from time
to time by the selling stockholders, their pledgees, donees, transferees or
distributees, or their respective successors-in-interest. The selling
stockholders may sell all or a portion of the shares held by them from time to
time while the registration statement of which this prospectus is a part remains
effective. The aggregate proceeds to the selling stockholders from the sale of
shares offered by the selling stockholders hereby will be the prices at which
such securities are sold, less any commissions. There is no assurance that the
selling stockholders will sell any or all of the shares offered hereby.
The selling stockholders may sell the shares on the Nasdaq National Market,
in privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. The shares may be sold by the
selling stockholders by one or more of the following methods, including, without
limitation: (a) block trades in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction, (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this prospectus, (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers, (d) privately negotiated transactions and
(e) a combination of any such methods of sale. In effecting sales, brokers and
dealers engaged by selling stockholders may arrange for other brokers or dealers
to participate. Brokers or dealers may receive commissions or discounts from
selling stockholders (or, if any such broker or dealer acts as agent for the
purchaser of such shares, from such purchaser) in amounts to be negotiated.
Brokers and dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share, and, to the extent such
broker or dealer is unable to do so acting as agent for a selling stockholder,
to purchase as principal any unsold shares at the price required to fulfill the
broker's or dealer's commitment to such selling stockholder. Brokers and dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve block transactions and sales to and
through other brokers and dealers, including transactions of the nature
described above) in the over-the-counter market or otherwise at prices and on
terms then prevailing at the time of sale, at prices then related to the
then-current market price or in negotiated transactions and, in connection with
such resales, may pay to or receive from the purchasers of such shares
commissions as described above. The selling stockholders may also sell the
shares in accordance with Rule 144 under the Securities Act rather than pursuant
to this prospectus.
In connection with distributions of the shares or otherwise, the selling
stockholders may enter into hedging transactions with broker and dealers or
other financial institutions. In connection with such transactions, broker and
dealers or other financial institutions may engage in short sales of our common
stock in the course of hedging the positions they assume with selling
stockholders. The selling stockholders may also sell our common stock short and
redeliver the shares to close out such short positions. The selling stockholders
may also enter into option or other transactions with brokers and dealers or
other financial institutions which require the delivery to such broker or dealer
or other financial institution of shares offered hereby, which shares such
broker or dealer or other financial institution may resell pursuant to this
prospectus. The selling stockholders may also pledge shares to a broker or
dealer or other financial institution, and, upon a default, such broker or
dealer or other financial institution may effect sales of the pledged shares
pursuant to this prospectus.
The selling stockholders and any broker or dealers or agents that
participate with the selling stockholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In such event, any commissions received by such broker or dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of
<PAGE>
the shares may not bid for or purchase shares of our common stock during a
period which commences one business day prior to such person's participation
in the distribution, subject to certain exceptions, including passive market
making activities.
We are responsible for the expenses incident to the offering and sale of
the shares (other than commissions, discounts and fees of underwriters,
dealers or agents) in accordance with the agreements pursuant to which
registration rights were granted to the selling stockholders. We have agreed
to indemnify the selling stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares will be
passed upon for us by Katten Muchin & Zavis, Chicago, Illinois.
EXPERTS
The consolidated financial statements of Platinum Entertainment, Inc.
appearing in the Platinum Entertainment, Inc. Annual Report on Form 10-K for
the year ended December 31, 1998, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt
about Platinum Entertainment, Inc.'s ability to continue as a going concern
as described in Note 1 to the consolidated financial statements) included
therein and incorporated by reference herein. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
<PAGE>
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We have not authorized any dealer,
salesman or other person to give any
information or to make any representation 5,362,786 Shares
not contained in or incorporated by
reference to this prospectus. This prospectus
does not constitute an offer, or a
solicitation of an offer to buy the shares Common Stock
by anyone in any jurisdiction in which such
offer or solicitation is not authorized, or
in which the person making the offer or
solicitation is not qualified to do so, or to
any person to whom it is unlawful to make such
offer or solicitation. Under no circumstances
shall the delivery of this prospectus or any
sale made pursuant to this prospectus, create
any implication that the information contained
in this prospectus is correct as of any time
subsequent to its date.
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________________ P R O S P E C T U S
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE 3
RISK FACTORS 4
THE COMPANY 8
USE OF PROCEEDS 8
SELLING STOCKHOLDERS 9
PLAN OF DISTRIBUTION 10
LEGAL MATTERS 11
EXPERTS 11
August 9, 1999
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