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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
___________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 20, 1997
THE PRODUCERS ENTERTAINMENT GROUP LTD.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
Commission File Number: 0-18410 95-4233050
(I.R.S. Employer
Identification No.)
5757 Wilshire Blvd. - Penthouse One 90036
Los, Angeles, California (Zip Code)
(Address of principal executive offices)
(213) 634-8634
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name or former address, if changed since last report)
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This report comprises eight pages. The exhibit index appears at page seven.
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ITEMS 1. AND 2. CHANGES IN CONTROL OF REGISTRANT; ACQUISITION OR DISPOSITION
OF ASSETS
THE GROSSO-JACOBSON MERGERS
On October 20, 1997, the Registrant consummated a transaction whereby
it acquired 100% of the outstanding capital stock of three entities that
comprise the New York, Los Angeles and Toronto based Grosso-Jacobson Companies
which are engaged in the business of producing television series and other
entertainment products (the "Grosso-Jacobson Mergers"). The acquired companies
are: The Grosso-Jacobson Entertainment Corporation, Grosso-Jacobson
Productions, Inc. and Grosso-Jacobson Music Company, Inc. (the "Grosso-Jacobson
Companies"). To implement the Grosso-Jacobson Mergers, the Registrant formed
three new subsidiaries which merged with and into the Grosso-Jacobson Companies
pursuant to three substantially identical merger agreements (the "Merger
Agreements"which are filed herewith as Exhibits 10.25, 10.26 & 10.27). The
total consideration paid to Salvatore Grosso and Lawrence S. Jacobson, the sole
shareholders of the Grosso-Jacobson Companies, pursuant to the Merger
Agreements was $8,000,000, which amount was paid through the issuance of an
aggregate of 6,666,666 shares of the Registrant's Common Stock valued at an
issue price of $1.20 per share (the "Merger Shares").
The Merger Agreements were negotiated at arms' length between the
Registrant and the principals of the Grosso-Jacobson Companies. The merger
consideration of $8,000,000, payable solely in shares of Common Stock of the
Registrant, reflected, among other factors, the value which the Registrant and
such principals placed upon the Grosso-Jacobson Companies in light of the value
of such Companies' television production series inventory, libraries,
participations in future revenues to be derived from their distribution and
licensing, current projects under development as well as the likely synergies
which management of the Registrant and the Grosso-Jacobson principals believed
could be derived by the combination of business accomplished by the
Grosso-Jacobson Mergers. Pursuant to the Merger Agreements, the number of
shares of the Registrant's Common Stock issuable by the Registrant was based on
the average closing prices of such shares for 30 days prior to the closing of
the Mergers, subject to a maximum price per share of $1.50 and a minimum price
per share of $1.20. (The 6,666,666 shares ultimately issued upon consummation
of the Grosso-Jacobson Mergers were valued at the minimum price per share).
These Merger Shares were issued to Messrs. Grosso and Jacobson in a
private transaction exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the
Merger Agreements, Messrs. Grosso and Jacobson have been granted certain
registration rights under the Securities Act with respect to the Merger Shares
and they have also agreed to certain contractual restrictions on their ability
to sell or otherwise dispose of designated percentages of the Merger Shares
during the next two years.
The Grosso-Jacobson Companies will function as wholly owned
subsidiaries of the Registrant responsible for the Registrant's television
production projects and activities. Grosso-Jacobson Productions, Inc. was
founded in 1980 and (along with the other Grosso-Jacobson Companies) has
produced more than 750 hours of television programming, including "The Big
Easy," the made-for-television series based on the hit movie and created for
the USA Network. Known for their wide variety of prime time series and
made-for-television movies, the Grosso-Jacobson Companies have offices in New
York and Los Angeles and operate a 70,000 sq. ft.
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production facility and office complex in Toronto, Canada. Included in the
Toronto studio is a wardrobe business containing approximately 37,000 costumes
and an extensive prop inventory.
Management of the Registrant plans to combine the Grosso-Jacobson
Companies' business of producing primarily television series with the
Registrant's business of producing theatrical feature and television movies in
order for the Registrant to enlarge its operations in the entertainment
industry. Management of the Registrant intends to expand the Registrant's
movie-of-the-week and series production for television by utilizing
recognizable name talent and experienced creative personnel, and continue to
explore new areas of business and expand its corporate operations into other
synergistic enterprises.
While management of the Registrant believes that the acquisition of
the Grosso-Jacobson Companies will significantly increase its revenues and
enable the Registrant to derive net income from its operations, there can be no
assurance that such positive revenue and earnings results will be achieved as a
result of the Grosso-Jacobson Mergers.
In accordance with the Merger Agreements, Messrs. Grosso and Jacobson
have entered into substantially identical executive employment agreements with
the Registrant for a period of five years (the "Executive Employment
Agreements"which are filed herewith as Exhibits 10.28 & 10.29). In addition,
the Registrant has extended the executive employment agreements of both Irwin
Meyer and Arthur Bernstein for a additional periods of five years each (the
"Employment Extension Agreements"which are filed herewith as Exhibits 10.30 &
10.31). The Registrant has engaged Lawrence Jacobson Associates, Inc. (an
affiliate of Lawrence S. Jacobson) and S.A.G. Productions, Inc. (an affiliate
of Salvatore Grosso) pursuant to two substantially identical production
agreements to provide production services to the Registrant for a period of
five years (the "Production Agreements"which are filed herewith as Exhibits
10.32 & 10.33). Furthermore, the Registrant has extended, for a period of five
years, its existing production agreement with Mountaingate Productions, LLC (an
affiliate of Irwin Meyer, "Mountaingate") (the "Mountaingate Extension
Agreement" which is filed herewith as Exhibit 10.34).
In accordance with the Merger Agreements, Messrs. Grosso and Jacobson
were elected to the Board of Directors of the Registrant. The Board of
Directors of the Registrant (the "Board") then increased the number of
directorships to seven as required by the Merger Agreements and in accordance
with the Registrant's By-laws. (Messrs. Michael Dempsey and Benjamin
Lichtenberg tendered their resignations as Directors of the Registrant on or
about the date of the consummation of the Grosso-Jacobson Mergers). By the
terms of the Merger Agreements, Messrs. Grosso and Jacobson were entitled to
designate one additional Board member and, reciprocally, Messrs. Meyer and
Bernstein were entitled to designate one additional Board member. The three
Grosso-Jacobson designated Board members and the three Meyer-Bernstein
designated Board members together designated and elected a seventh Board
member. Mr. Grosso was elected to serve as the Registrant's Chief Operating
Officer and Co-Chairman of the Board, Mr. Jacobson elected to serve as the
Registrant's President and Co-Chairman of the Board, Mr. Meyer remained the
Registrant's Chief Executive Officer and was also elected to serve as a
Co-Chairman of the Board and Mr. Bernstein was elected to serve as the
Registrant's Executive Vice President.
Contemporaneously with the consummation of the Grosso-Jacobson
Mergers, on October 20, 1997, Messrs. Grosso, Jacobson, Meyer and Bernstein and
Mountaingate entered into the
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Stockholders Voting Agreement for a term of five years (the "Stockholders
Voting Agreement" which is filed herewith as Exhibit 10.35) whereby Mr. Grosso
and Mr. Jacobson agreed to vote their shares of Common Stock for the election
as Directors of the Registrant of Messrs. Meyer and Bernstein or their
designees. In accordance with the Stockholders Voting Agreement, Messrs.
Grosso and Jacobson executed a Proxy and Power of Attorney, appointing Messrs.
Meyer and Bernstein their attorneys-in-fact. Under the Stockholders Voting
Agreement, Messrs. Meyer and Bernstein agreed to vote their shares of Common
Stock for the election as Directors of the Registrant of Messrs. Grosso and
Jacobson, or their designees, and executed an identical instrument appointing
Messrs. Grosso and Jacobson their attorneys-in-fact. Mountaingate is a
signatory to the Stockholders Voting Agreement but did not execute any proxy or
power of attorney in favor of any other signatory, nor was a proxy or power of
attorney executed by any other signatory in favor of Mountaingate.
Prior to the consummation of the Grosso-Jacobson Mergers, effective
operational control of the Registrant was exercised by Messrs. Meyer and
Bernstein, who comprised 50% of the Board of Directors and were the principal
Executive Officers of the Registrant. As a result of (a) the Grosso-Jacobson
Mergers and (b) Messrs. Meyer, Bernstein, Grosso and Jacobson entering into the
Stockholders Voting Agreement, by application of the SEC rules defining
"beneficial ownership", control of the Registrant may now be deemed to be
shared among Messrs. Meyer, Bernstein, Grosso and Jacobson.
In connection with the foregoing and in response to Item 1 of Form 8-K
(Changes in Control of Registrant), the following information is provided in
this Report:
(a) Mr. Salvatore Grosso is the beneficial owner of 3,752,083
shares of Common Stock, or 20% of the Registrant's Common
Stock outstanding, calculated in accordance with Regulation
13d-3(a) and (d).
Of such 3,752,083 shares of Common Stock, (i) 3,333,333 shares
are held directly by Mr. Grosso and as to which Mr. Grosso has
sole dispositive and voting power; and (ii) 418,750 shares are
beneficially owned indirectly by Mr. Grosso by virtue of the
operation of the Stockholders Voting Agreement. Mr. Grosso
has shared voting power with respect to these shares but has
no power to dispose of or to direct their disposition.
(Except for the shared voting power described above, Mr. Grosso does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares or shares underlying options that Mr. Grosso, as
calculated in accordance with Regulation 13d-(3)(a) and (d), may be deemed to
beneficially own by reason of the shared voting power arising under the
Stockholders Voting Agreement.)
(b) Mr. Lawrence S. Jacobson is the beneficial owner of 3,752,083
shares of Common Stock, or 20% of the Registrant's Common
Stock outstanding, calculated in accordance with Regulation
13d-3(a) and (d).
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Of such 3,752,083 shares of Common Stock, (i) 3,333,333 shares
are held directly by Mr. Jacobson and as to which Mr. Jacobson
has sole dispositive and voting power; and (ii) 418,750 shares
are beneficially owned indirectly by Mr. Jacobson by virtue of
the operation of the Stockholders Voting Agreement. Mr.
Jacobson has shared voting power with respect to these shares
but has no power to dispose of or to direct their disposition.
(Except for the shared voting power described above, Mr. Jacobson does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares or shares underlying options that Mr. Jacobson, as
calculated in accordance with Regulation 13d- (3)(a) and (d), may be deemed to
beneficially own by reason of the shared voting power arising under the
Stockholders Voting Agreement.)
(c) Mr. Irwin Meyer is the beneficial owner of 6,666,666 shares of
Common Stock, or 35% of the Registrant's Common Stock
outstanding, calculated in accordance with Regulation
13d-3(a).
Of such 6,666,666 shares of Common Stock, (i) none is held
directly or indirectly by Mr. Meyer nor has Mr. Meyer any sole
dispositive or voting power with respect thereto; and (ii)
6,666,666 shares are beneficially owned indirectly by Mr.
Meyer by virtue of the operation of the Stockholders Voting
Agreement. Mr. Meyer has shared voting power with respect to
these shares but has no power to dispose of or to direct their
disposition.
(Except for the shared voting power described above, Mr. Meyer does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares that Mr. Meyer, as calculated in accordance with
Regulation 13d-(3)(a), may be deemed to beneficially own by reason of the
shared voting power arising under the Stockholders Voting Agreement.)
(d) Mr. Arthur H. Bernstein is the beneficial owner of 7,085,416
shares of Common Stock, or 37% of the Registrant's Common
Stock outstanding, calculated in accordance with Regulation
13d-3(a) and (d).
Of such 7,085,416 shares of Common Stock, (i) 418,750 shares
are held directly by Mr. Bernstein and as to which Mr.
Bernstein has sole dispositive and voting power; and (ii)
6,666,666 shares are beneficially owned indirectly by Mr.
Bernstein by virtue of the operation of the Stockholders
Voting Agreement. Mr. Bernstein has shared voting power with
respect to these shares but has no power to to dispose of or
to direct their disposition.
(Except for the shared voting power described above, Mr. Bernstein
does not have, and expressly disclaims, any direct or indirect economic or
financial interest in any shares that Mr. Bernstein, as calculated in
accordance with Regulation 13d-(3)(a), may be deemed to beneficially own by
reason of the shared voting power arising under the Stockholders Voting
Agreement.)
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(e) Mountaingate is the beneficial owner of 6,666,666 shares of
Common Stock, or 35% of the Registrant's Common Stock
outstanding, calculated in accordance with Regulation
13d-3(a).
Of such 6,666,666 shares of Common Stock, (i) none is held
directly or indirectly by Mountaingate nor has Mountaingate
any sole dispositive or voting power with respect thereto; and
(ii) 6,666,666 shares are beneficially owned indirectly by
Mountaingate by virtue of the operation of the Stockholders
Voting Agreement. Mountaingate has shared voting power with
respect to these shares but has no power to to dispose of or
to direct their disposition.
(Except for the shared voting power described above, Mountaingate does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares that Mountaingate, as calculated in accordance with
Regulation 13d-(3)(a), may be deemed to beneficially own by reason of the
shared voting power arising under the Stockholders Voting Agreement.)
In addition to the foregoing beneficial stock ownership percentages
and voting arrangements and as indicated elsewhere in this Report, Messrs.
Meyer, Bernstein, Grosso and Jacobson constitute a majority of the Board of
Directors of the Registrant and also serve as its principal Executive Officers.
Accordingly, control of the Registrant resides in, and is shared among, the
above-named persons as of the date hereof.
THE FOREGOING INFORMATION CONCERNING THE GROSSO-JACOBSON MERGERS,
CONSUMMATED ON OCTOBER 20, 1997 BY THE REGISTRANT, IS SET FORTH HEREIN IN
RESPONSE TO ITEM 1 "CHANGES IN CONTROL OF REGISTRANT" AND ITEM 2 "ACQUISITION
OR DISPOSITION OF ASSETS" OF FORM 8-K. AS OF THE DATE HEREOF, IT IS
IMPRACTICABLE FOR THE REGISTRANT TO FILE WITH THIS REPORT THE FINANCIAL
STATEMENTS OF THE BUSINESS OF THE ACQUIRED GROSSO- JACOBSON COMPANIES AS
REQUIRED BY ITEM 7 OF FORM 8-K. PURSUANT TO THE PROVISIONS OF ITEMS 7(a)(4)
AND 7(b) OF FORM 8-K, THE REGISTRANT SHALL FILE THE REQUIRED FINANCIAL
STATEMENTS AND THE PRO FORMA FINANCIAL INFORMATION REQUIRED THEREBY (TO THE
EXTENT REQUIRED UNDER THE RELEVANT PROVISIONS OF ITEM 310(c) OF REGULATION S-B)
AS AN AMENDMENT TO THIS FORM 8-K REPORT AS SOON AS PRACTICABLE, BUT NO LATER
THAN SIXTY (60) DAYS AFTER THE DATE HEREOF.
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EXHIBIT INDEX
Exhibit No. Description
10.25 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition
I Corp., The Grosso-Jacobson Entertainment Corporation,
Salvatore Grosso and Lawrence S. Jacobson.
10.26 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition
II Corp., Grosso-Jacobson Productions, Inc., Salvatore Grosso
and Lawrence S. Jacobson.
10.27 Agreement and Plan of Merger, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., TPEG Acquisition
III Corp., Grosso-Jacobson Music Company, Inc., Salvatore
Grosso and Lawrence S. Jacobson.
10.28 Executive Employment Agreement, dated October 20, 1997,
between The Producers Entertainment Group Ltd. and Salvatore
Grosso.
10.29 Executive Employment Agreement, dated October 20, 1997,
between The Producers Entertainment Group Ltd. and Lawrence
Jacobson.
10.30 Employment Extension Agreement, dated October 20, 1997,
between The Producers Entertainment Group Ltd. and Irwin
Meyer.
10.31 Employment Extension Agreement, dated October 20, 1997,
between The Producers Entertainment Group Ltd. and Arthur
Bernstein.
10.32 Production Agreement, dated October 20, 1997, between The
Producers Entertainment Group Ltd. and Lawrence Jacobson
Associates, Inc..
10.33 Production Agreement, dated October 20, 1997, between The
Producers Entertainment Group Ltd. and S.A.G. Productions,
Inc..
10.34 Mountaingate Extension Agreement, dated October 20, 1997,
between The Producers Entertainment Group Ltd. and
Mountaingate Productions, LLC.
10.35 Stockholders Voting Agreement, dated October 20, 1997, by and
among, Irwin Meyer, Arthur Bernstein, Salvatore Grosso,
Lawrence Jacobson and Mountaingate Productions, LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE PRODUCERS ENTERTAINMENT
GROUP LTD.
Date: November 3, 1997 By: /s/ ARTHUR H. BERNSTEIN
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Arthur H. Bernstein,
Executive Vice President
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