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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
CHECK THE APPROPRIATE BOX:
[X] Preliminary Information Statement
[] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[] Definitive Information Statement
VIDEO JUKEBOX NETWORK, INC.
---------------------------
(Name of Registrant As Specified In Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth in the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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VIDEO JUKEBOX NETWORK, INC.
1221 COLLINS AVENUE
MIAMI BEACH, FLORIDA 33139
____________________________________________________________
INFORMATION STATEMENT
____________________________________________________________
TO THE STOCKHOLDERS OF
VIDEO JUKEBOX NETWORK, INC.:
This Information Statement is being furnished to the stockholders of
Video Jukebox Network, Inc. (the "Company") in connection with the following
corporate action:
AN AMENDMENT (THE "AMENDMENT") TO THE COMPANY'S ARTICLES OF
INCORPORATION TO AUTHORIZE THE ISSUANCE OF UP TO 1,800,000 SHARES OF
6% CONVERTIBLE REDEEMABLE PREFERRED STOCK, PAR VALUE $.15 PER SHARE.
The Board of Directors of the Company has approved the Amendment and
has directed that the Amendment be submitted to the Company's stockholders for
their consent. StarNet/CEA II Partners, which has voting control of more than
fifty percent of the Company's common stock, par value $.001 per share (the
"Common Stock"), has informed the Company that it intends to execute a written
stockholder consent on or about the date of this Information Statement
approving the Amendment. See "Security Ownership of Certain Beneficial Owners
and Management" for information regarding the ownership of Common Stock by
StarNet/CEA II Partners. Accordingly, no vote or proxy is required by the
Company's stockholders in connection with the Amendment. You are urged to
review this Information Statement carefully. You are not, however, requested
to send the Company a proxy or take any other action.
This Information Statement is first being mailed to the Company's
stockholders on or about November __, 1996. The Board of Directors of the
Company has established October 30, 1996 as the record date for determining
stockholders entitled to receive this Information Statement. This Information
Statement also serves as the notice required by Section 607.0704 of the Florida
Business Corporation Law for the approval of a corporate action by less than
unanimous written consent of the stockholders of the Company.
The Company has asked brokers and other custodians and fiduciaries to
forward this Information Statement to the beneficial owners of the Common Stock
held of record by such persons and will reimburse such persons for
out-of-pocket expenses incurred in forwarding such materials.
THE AMENDMENT TO THE ARTICLES OF INCORPORATION DISCUSSED HEREIN WILL
BE APPROVED BY STOCKHOLDERS WHO HOLD SUFFICIENT VOTING SECURITIES TO
APPROVE THE ACTION. THIS INFORMATION STATEMENT IS BEING PROVIDED TO
YOU SOLELY FOR YOUR INFORMATION. WE ARE NOT ASKING FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
The date of this Information Statement is November __, 1996
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PROPOSED AMENDMENT
The Board of Directors of the Company has unanimously approved the
following amendment to the Company's Articles of Incorporation, as amended, and
directed that such amendment be submitted to the Company's stockholders for
their consent:
An amendment (the "Amendment") to Article III of the Company's
Articles of Incorporation to authorize the issuance of up to 1,800,000
shares of 6% Convertible Redeemable Preferred Stock, par value $.15
per share.
StarNet/CEA II Partners, a stockholder of the Company that has voting
control of more than fifty percent of the Common Stock, has informed the
Company that it intends to execute a written stockholder consent on or about
the date of this Information Statement approving the proposed Amendment.
ACCORDINGLY, THE VOTE OR CONSENT OF THE OTHER STOCKHOLDERS OF THE
COMPANY IS NOT REQUESTED OR REQUIRED TO APPROVE SUCH AMENDMENT.
REASON FOR THE AMENDMENT
The purpose of the Amendment is to enable the Company to consummate
the stock purchase agreement (the "Preferred Stock Purchase Agreement"), dated
October 30, 1996, between the Company and EMAP plc. Pursuant to the Preferred
Stock Purchase Agreement, EMAP has agreed to acquire 1,666,667 shares (the
"Shares") of Preferred Stock for an aggregate consideration of $2,500,000 or
$1.50 per share. For information regarding the terms of the Preferred Stock,
see "Description of Preferred Stock" below.
The closing (the "Closing") of the Preferred Stock Purchase Agreement
is subject to, among other things, the Company amending its Articles of
Incorporation to authorize the issuance of the Preferred Stock. Pursuant to
the rules and regulations of the Securities and Exchange Commission (the
"Commission"), the Company intends to amend the Articles of Incorporation with
the Florida Department of State as soon as possible after the expiration of a
twenty day period following the mailing of this Information Statement to
stockholders, and immediately thereafter schedule the Closing. In the interim,
EMAP has placed the purchase price for the Shares in escrow pursuant to an
Escrow Agreement, dated October 30, 1996, among the Company, EMAP, and an
appointed escrow agent. The Escrow Agreement provides for the release of the
$2,500,000 of escrowed funds (and any interest thereon) to the Company as soon
as practicable after the Amendment to the Articles of Incorporation has been
filed with the Florida Department of State. The Escrow Agreement further
provides that EMAP may terminate the purchase of the Shares prior to the
Closing if (a) the average of the closing bid and asked prices of the Common
Stock as reported on the Nasdaq Small-Cap market during all of the trading days
of the escrow period is less than $.25 per share, or (b) there is a material
breach by the Company of a representation and warranty in the Preferred Stock
Purchase Agreement which has not been cured by the Company by the date that the
Company submits the Amendment to the Florida Department of State and the
Amendment is accepted for filing. On November __, 1996, the average of such
closing bid and asked prices was $_______.
The securities of the Company to be acquired by EMAP under the
Preferred Stock Purchase Agreement will be granted certain demand registration
rights and preemptive rights. Pursuant to the demand registration rights, EMAP
may cause the Company at its expense to register with the Commission the shares
of Common Stock that EMAP may acquire upon the conversion of the Preferred
Stock. See "Description of Preferred Stock." Pursuant to the preemptive
rights, EMAP may
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purchase its pro rata share of securities issued by the Company (with certain
exceptions) during the five year period after the Closing. Upon purchasing the
Preferred Stock at the Closing, EMAP may appoint one person to the Company's
Board of Directors.
Simultaneous with the execution of the Preferred Stock Purchase
Agreement, the Company consummated a second Stock Purchase Agreement with EMAP
for the sale of the Company's fifty percent interest in Video Jukebox Network
International Limited ("VJNIL"), a subsidiary of the Company operating the
Company's music video channel, THE BOX, in the United Kingdom and the Republic
of Ireland. In exchange for the sale of the Company's fifty percent interest
in VJNIL, EMAP paid the Company U.S.$4,550,000. EMAP also paid the Company an
additional $1,500,000 (plus accrued interest of approximately $200,000) to
reimburse the Company for a loan it had previously made to VJNIL. Concurrent
with the purchase of Company's fifty percent interest in VJNIL, EMAP acquired
the remaining fifty percent interest in VJNIL from Ticketmaster Corporation.
Pursuant to an Intellectual Property Rights Agreement entered into among the
Company, VJNIL and EMAP on October 30, 1996, the Company has agreed to assign
certain trademarks and share certain technology with VJNIL.
The Company intends to use approximately $3,000,000 of the proceeds
from the EMAP transaction to implement the Company's roll-out of digital boxes
and approximately $1,500,000 for working capital purposes. The Board of
Directors of the Company has not yet determined the use of the remaining
proceeds. Pending such determination, the Company intends to invest such funds
in interest-bearing accounts, certificates of deposit, commercial paper or
similar short-term investments.
The issuance of the Shares to EMAP is subject to the preemptive rights
of Liberty VJN, Inc. ("Liberty VJN") pursuant to an agreement, dated November
21, 1990, between the Company and TCI Liberty, Inc. In the event that Liberty
VJN elects to exercise its preemptive rights, the Company will issue
approximately 83,333 shares of Preferred Stock to Liberty VJN for an aggregate
consideration of $125,000 or $1.50 per share. The Company has no plans to
issue any additional shares of Preferred Stock at this time.
DESCRIPTION OF PREFERRED STOCK
The Amendment to the Company's Articles of Incorporation will
authorize the issuance of up to 1,800,000 shares of Preferred Stock. The
following description of the rights, preferences and limitations of the
Preferred Stock is a summary only and is qualified in its entirety by reference
to the entire text of the Amendment which is set forth in Appendix "A" to this
Information Statement.
Voting. The holders of shares of Preferred Stock will be entitled to
cast one vote per share at all stockholders meeting for all purposes. Except
as otherwise required by the Florida Business Corporation Act, the shares of
Preferred Stock will vote with the shares of Common Stock as one voting class.
Conversion. Each share of Preferred Stock will be convertible, at the
election of the holder thereof, into one share of Common Stock. In the event
that there are any accrued and unpaid dividends due on the Preferred Stock at
the time of conversion, then the accrued and unpaid dividends will
automatically be converted into shares of Common Stock at a rate of one share
of Common Stock for each U.S.$1.50 of accrued and unpaid dividends. Subject to
the provisions for redemption discussed below, the right of conversion will be
available at any time.
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Dividends. The holders of the shares of Preferred Stock will be
entitled to receive cumulative dividends, which will accrue at the rate of $.09
per share of the Preferred Stock per annum. No cash dividends may be declared
or paid on any security of the Company until all accrued and unpaid dividends
are paid on the shares of Preferred Stock. All dividends on the Preferred
Stock will cease to accrue on the Election Date, as such term is defined below
under the caption "Redemption."
Liquidation. Upon the liquidation, dissolution or winding up of the
Company, the holders of the shares of Preferred Stock will be entitled to
receive payment equal to $1.50 per share of the outstanding shares of Preferred
Stock plus all accrued and unpaid dividends thereon before any payment will be
made to the holders of the Common Stock. The holders of the shares of
Preferred Stock will not be entitled to participate further in the distribution
of the assets of the Company.
Redemption. Five years after the date of issuance of the Preferred
Stock (the "Election Date"), each share of Preferred Stock will, at the
election of each holder thereof, either be redeemed for cash or converted into
shares of Common Stock (as discussed above). If a holder elects to redeem the
Preferred Stock, such holder will be entitled to receive a cash payment equal
to $1.50 per share of Preferred Stock, together with the amount, as of the
Election Date, of all accrued and unpaid dividends. No right of redemption
will exist prior to the Election Date or if the Company is then insolvent or
would become insolvent as a result of such redemption. Each holder of
Preferred Stock must give written notice to the Company of its election to
either have the Preferred Stock redeemed for cash or converted into shares of
Common Stock within 30 days of the Election Date. If the Company does not
timely receive such notice from any holder of the Preferred Stock, the Company
will have the right to determine whether such Preferred Stock is redeemed or
converted into shares of Common Stock.
EFFECT OF THE AMENDMENT
Prior to the Amendment, the Company was authorized to issue 40,000,000
shares of Common Stock and 200,000 shares of 8% Convertible Preferred Stock,
$1.00 par value per share (the "8% Preferred Stock"). As of the date of this
Information Statement, 24,001,781 shares of Common Stock are issued and
outstanding. No shares of 8% Preferred Stock have been issued and the Company
has no plans at this time to issue any shares of 8% Preferred Stock.
The Preferred Stock and its issuance to EMAP is expected to have the
following effects on the current holders of the Common Stock:
(i) As with any issuance of Common Stock by the Company, the
holders of the Common Stock will experience dilution in their voting power as a
result of the issuance of the Preferred Stock, which has equal voting rights as
the Common Stock.
(ii) The 1,666,667 shares of Preferred Stock to be issued to EMAP
will be entitled to cumulative dividends, which will accrue at the rate of $.09
per share of Preferred Stock per annum. The Amendment provides that no cash
dividends may be declared or paid on any security of the Company until all
accrued and unpaid dividends are paid on the shares of Preferred Stock.
Although the Company has not paid any cash dividends since inception, this
provision may impair the ability of the Company to pay cash dividends to
holders of the Common Stock in the future.
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(iii) The Preferred Stock will have preference over the Common Stock
in the case of the liquidation, dissolution or winding up of the Company.
Under the Amendment, the Preferred Stock is entitled to receive payment equal
to $1.50 per share of Preferred Stock plus all accrued and unpaid dividends
thereon before any payment will be made to the holders of the Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of Common Stock as of the date of this Information
Statement by: (i) each of the Company's directors and executive officers; (ii)
each person who is known by the Company to be the beneficial owner of five
percent or more of the outstanding shares of Common Stock; and (iii) all of the
Company's directors and executive officers as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNER CLASS(1)
---------------- ------------------- ----------
<S> <C> <C>
H.F. Lenfest (2) 14,210,419(3) 59.2%
J. Patrick Michaels, Jr. (4) 14,210,419(3) 59.2%
Alan R. McGlade(4) 351,000(5) 1.4%
Luann M. Hoffman(4) 75,000(6) *
E. Paul Sartain(4) 40,000(7) *
David Burns(4) 10,000 *
Robert Puck(4) 20,000 *
Stanley H. Greene(4) 550(8) *
Joel S. Rudich(9) 22,500(9) *
Leonard J. Sokolow(4) 57,500(10) *
Chris Blackwell(11) 3,500,000(11) 13.9%
Scott Bonn(4) 10,000(12) *
Gino Natalicchio(4) 25,000(13) *
StarNet/CEA II Partners (14) 14,210,419(3) 59.2%
CEA Investors Partnership II, Ltd.(14) 14,210,419(3) 59.2%
CEA Investors, Inc.(14) 14.210,419(3) 59.2%
StarNet Interactive Entertainment, Inc.(5) 14,210,419(3) 59.2%
StarNet, Inc.(15) 14,210,419(3) 59.2%
Lenfest Communications, Inc.(2) 14,210,419(3) 59.2%
Island Trading Company, Inc.(11) 3,500,000(11) 13.9%
Louis Wolfson, III(16) 1,816,131(17) 7.5%
Video Holdings Corporation(16) 1,270,969(18) 5.2%
Andrew Blank(16) 1,381,701(18) 5.7%
Mark Blank(16) 1,381,701(18) 5.7%
Tony Blank(16) 1,367,700(18) 5.6%
Liberty VJN(19) 1,203,464(19) 5.0%
All directors and executive officers 18,321,969 76.3%
as a group (14 persons)
</TABLE>
____________________________
* Indicates a percentage ownership of less than one percent.
(1) As of the date of this Information Statement, the Company had
24,001,781 shares of Common Stock issued and outstanding. As of such
date, the Company had no other capital
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stock issued and outstanding. Any shares of Common Stock that a
person or entity had the right to acquire within 60 days upon exercise
of options, warrants, conversion privileges or other rights will be
deemed outstanding for the purpose of computing the percentage
ownership of the person or entity holding such options, warrants,
conversion privileges or other rights, but will not be deemed
outstanding for the purpose of computing the percentage ownership of
any other person or entity. The information contained in the
preceding table and the footnotes thereto is derived in part from
Statements on Schedule 13D filed with the Commission by the following
persons: H.F. Lenfest, J. Patrick Michaels, Jr., StarNet/CEA II
Partners, CEA Investor Partnership II, Ltd., CEA Investors, Inc.,
StarNet Interactive Entertainment, Inc., StarNet, Inc., Lenfest
Communications, Inc., Venture LW Corporation, Louis Wolfson, III,
Video Holdings Corporation, Andrew Blank, Mark Blank, Tony Blank and
Liberty VJN. The Company expresses no opinion as to the completeness
or accuracy of the information contained in such documents or as to
such reporting persons' compliance with the Securities Exchange Act of
1934 (the "Exchange Act") and the rules and regulations promulgated
thereunder.
(2) The address of such persons is c/o The Lenfest Group, 200 Cresson
Boulevard, Oaks, PA., 19456-0989.
(3) StarNet/CEA II Partners ("StarNet/CEA") is a Delaware general
partnership, consisting of CEA Investors Partnership II, Ltd., a
Florida limited partnership ("CEA Investors II"), and StarNet
Interactive Entertainment, Inc., a Delaware corporation ("StarNet
Interactive"). J. Patrick Michaels, Jr., the Company's Acting Chief
Operating Officer, is the sole director, President and sole
stockholder of CEA Investors, Inc. ("CEA Investors"), which is the
sole general partner of CEA Investors II. StarNet Interactive is a
wholly- owned subsidiary of StarNet, Inc. ("StarNet"), which is a
wholly-owned subsidiary of Lenfest Communications, Inc. ("LCI"). H.
F. Lenfest (together with his children) and Liberty Cable, Inc.
("Liberty Cable"), an affiliate of Liberty Program Investments, Inc.
("Liberty Program") and Liberty Media Corporation ("Liberty Media"),
each beneficially owns 50% of the common stock of LCI. Mr. Lenfest is
the sole director of StarNet and StarNet Interactive and President,
Chief Executive Officer and a director of LCI. Through contractual
arrangements among the stockholders of LCI, Mr. Lenfest has the
exclusive right to control a majority of the Board of Directors of LCI
and the management and business affairs of LCI, StarNet and StarNet
Interactive. J. Patrick Michaels, Jr. has sole voting power as to
71,584 shares of Common Stock, shared voting power as to 12,255,280
shares, sole dispositive power as to 71,584 shares, and shared
dispositive power as to 9,026,470 shares. StarNet/CEA, CEA Investors
II, CEA Investors and StarNet Interactive each has sole voting power
as to no shares, shared voting power as to 12,242,655 shares, sole
dispositive power as to no shares and shared dispositive power as to
9,013,845 shares. StarNet, LCI and Mr. Lenfest each has sole voting
power as to 1,883,555 shares of Common Stock, shared voting power as
to 12,242,655 shares, sole dispositive power as to 1,883,555 shares,
and shared dispositive power as to 9,013,845 shares. LMC Lenfest,
Inc., Liberty Program and Liberty Media (the "Liberty Group") and
David Burns have disclaimed any beneficial interest in the shares of
the Company's Common Stock beneficially owned by StarNet/CEA, CEA
Investors II, CEA Investors, StarNet Interactive, StarNet, LCI, Mr.
Michaels and Mr. Lenfest (the "StarNet/CEA Group"). The StarNet/CEA
Group have disclaimed any beneficial interest in the shares of Common
Stock beneficially owned by The Liberty Group. The shares
beneficially owned by the StarNet/CEA Group includes: 2,834,908 shares
transferred by CEA Investors II to StarNet/CEA
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as a capital contribution, 2,014,520 shares acquired by StarNet/CEA
from New Vision Music, 5,967,972 shares acquired by StarNet/CEA from
the Company, voting rights with respect to 1,647,647 shares acquired
by CEA Investors II from the VLW Group, voting rights with respect to
1,581,163 shares acquired by CEA Investors II from the VHC Group,
80,000 shares acquired from VLW Group and 84,209 shares beneficially
owned by Mr. Michaels.
(4) The address of such persons is c/o Video Jukebox Network, Inc., 1221
Collins Avenue, Miami Beach, Florida 33139.
(5) Includes 51,000 shares of Common Stock, an option granted by StarNet
to purchase 200,000 shares of Common Stock and presently exercisable
options to purchase 100,000 shares of Common Stock. Does not include
an option to purchase 200,000 shares of Common Stock, which vest more
than 60 days from the date hereof.
(6) Represents presently exercisable options to purchase 75,000 shares of
Common Stock.
(7) Represents presently exercisable options to purchase 40,000 shares of
Common Stock.
(8) Does not include options to purchase an aggregate of 10,000 shares of
Common Stock under the 1996 Non-Employee Director Plan which are
subject to the prior approval of Liberty VJN.
(9) Represents presently exercisable options to purchase 22,500 shares of
Common Stock. Does not include options to purchase an aggregate of
20,000 shares of Common Stock under the 1996 and 1995 Non-Employee
Director Plan which are subject to the prior approval of Liberty VJN.
The address of Mr. Rudich is c/o Coaxial Communications, 3770 E.
Livingston Avenue, Columbus, Ohio 43227.
(10) Includes 35,000 shares of Common Stock and presently exercisable
options to purchase 22,500 shares of Common Stock. Does not include
options to purchase an aggregate of 20,000 shares of Common Stock
under the 1996 and 1995 Non-Employee Director Plan which are subject
to the prior approval of Liberty VJN.
(11) Island Trading Company, Inc. ("Island") holds 2,500,000 shares of
Common Stock and an immediately exercisable option to purchase
1,000,000 shares of Common Stock. Pursuant to a request made by
Island on September 20, 1996 pursuant to the Registration Rights
Agreement, dated April 21, 1994 between the Company and Island, the
Company has agreed to file a Registration Statement with the
Commission as soon as practicable hereafter to register 2,500,000
shares of Common Stock owned by Island. Island is a wholly-owned
subsidiary of Island International Limited ("Island International"),
the capital stock of which is held in trust by The Island Settlement
("Island Trust"). Island International and Island Trust have
disclaimed beneficial ownership of the shares of Common Stock
beneficially owned by Island. Mr. Blackwell has shared voting
power and shared dispositive power with respect to all 3,500,000
shares. The address of such persons is c/o Island Trading Company,
Inc., 825 Eighth Avenue, New York, New York 10019.
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(12) Represents presently exercisable options to purchase 10,000 shares of
Common Stock. Does not include options to purchase 5,000 shares of
Common Stock, which vest more than 60 days form the date hereof.
(13) Represents presently exercisable options to purchase 25,000 shares of
Common Stock. Does not include options to purchase 50,000 shares of
Common Stock, which vest more than 60 days form the date hereof.
(14) The address of such persons is c/o Communications Equity Associates,
101 E. Kennedy Boulevard, Suite 3300, Tampa, Florida 33602.
(15) The address of such persons is 1332 Enterprise Drive, Suite 200, West
Chester, Pennsylvania 19380.
(16) The address of such persons is 9350 South Dixie Highway, Suite 900,
Miami, Florida 33156.
(17) Mr. Wolfson has sole voting power as to 4,574 shares of Common Stock,
shared voting power as to 83,910 shares, sole dispositive power as to
314,768 shares, and shared dispositive power as to 1,421,363 shares.
(18) Video Holdings Corporation, a Florida corporation, is wholly-owned in
equal shares by Mark Blank and his brothers, Andrew Blank and Tony
Blank, and has sole voting power as to no shares of Common Stock,
shared voting power as to no shares, sole dispositive power as to no
shares, and shared dispositive power as to 1,270,969 shares. Andrew
Blank and Tony Blank each has sole voting power as to no shares of
Common Stock, shared voting power as to no shares, sole dispositive
power as to 96,731 shares, and shared dispositive power as to
1,270,969 shares. Mark Blank has sole voting power as to no shares of
Common Stock, shared voting power as to 581,163 shares, sole
dispositive power as to 110,732 shares, and shared dispositive power
as to 1,270,969 shares.
(19) Liberty VJN has sole voting power as to 1,203,464 shares of Common
Stock, shared voting power as to no shares, sole dispositive power as
to 1,203,464 shares. Such amounts do not include shares of Common
Stock which may be purchased pursuant to preemptive rights set forth
in the letter agreement dated November 21, 1990, between the Company
and TCI Liberty, Inc., the number of which is indeterminable at this
time. All of the rights and benefits of TCI Liberty under such
agreement have been transferred to Liberty VJN.
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INCORPORATION OF CERTAIN FINANCIAL INFORMATION BY REFERENCE
This Information Statement is accompanied by the Company's 1995 Annual
Report on Form 10-KSB for the year ended December 31, 1995 (the "1995 Form
10-KSB") and its Quarterly Report on Form 10-QSB for the quarter ended June 30,
1996 (the "June 30, 1996 Form 10-QSB"). The following portions of such reports
are hereby incorporated by reference to this Information Statement:
1. The Management's Discussion and Analysis or Plan of Operation
set forth in Item 6 of Part II of the 1995 Form 10-KSB;
2. The Financial Statements set forth in Item 7 of Part II of the
1995 Form 10-KSB;
3. The Management's Discussion and Analysis or Plan of Operation
set forth in Item 2 of Part I of the June 30, 1996 Form 10-QSB; and
4. The Financial Statements set forth in Item I of Part I of the
June 30, 1996 Form 10-QSB.
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APPENDIX "A"
Article III of the Company's Third Amended and Restated Articles of
Incorporation will be amended in its entirety to read as follows:
SECTION 1. Authorized Stock. The maximum number of
shares of stock which this Corporation is authorized to have at any time is:
(i) 40,000,000 shares of common stock, having a par value
of $.001 per share (the "Common Stock");
(b) 200,000 shares of 8% convertible preferred stock,
having a par value of $1.00 per share (the "8% Preferred Stock"); and
(c) 1,800,000 shares of 6% convertible redeemable
preferred stock, having a par value of $.15 per share (the "6% Preferred
Stock").
SECTION 2. Voting. The holders of shares of Common Stock, the 8%
Preferred Stock and the 6% Preferred Stock are entitled to cast one vote per
share at all stockholders meetings for all purposes. Except as otherwise
required by the Florida Business Corporation Act, the shares of 6% Preferred
Stock and the shares of 8% Preferred Stock (collectively, the "Preferred
Stock") shall vote with the shares of Common Stock as one voting class.
SECTION 3. Conversion. The holders of shares of Preferred Stock
shall have the following rights of conversion:
(a) Each share of 8% Preferred Stock shall be
convertible, at the election of the holder thereof, into three shares of Common
Stock.
(b) Each share of 6% Preferred Stock shall be convertible, at
the election of the holder thereof, into one share of Common Stock. In the
event that there are any accrued and unpaid dividends due on the 6% Preferred
Stock at the time of conversion, then the accrued and unpaid dividends shall
automatically be converted into shares of Common Stock at a rate of one share
of Common Stock for each $1.50 of accrued and unpaid dividends, rounded to the
nearest whole share. Subject to the provisions of Section 6 of this Article
III, the right of conversion shall be available at any time.
SECTION 4. Dividends. The holders of shares of Preferred Stock shall
be entitled to the following dividends:
(a) The holders of the shares of 8% Preferred Stock shall
be entitled to receive cumulative cash dividends, which shall accrue at the
rate of 8% per annum of the aggregate par value of the outstanding shares of 8%
Preferred Stock. No cash dividends shall be declared or paid on any shares of
Common Stock until all accrued and unpaid cash dividends are paid on the shares
of 8% Preferred Stock.
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(b) The holders of the shares of 6% Preferred Stock shall
be entitled to receive cumulative cash dividends, which shall accrue at the
rate of $.09 per share of 6% Preferred Stock per annum. No cash dividends
shall be declared or paid on any shares of Common Stock or the 8% Preferred
Stock until all accrued and unpaid dividends are paid on the shares of 6%
Preferred Stock. All dividends on the 6% Preferred Stock shall cease to accrue
on the Election Date, as such term is defined in Section 6 of this Article III.
SECTION 5. Liquidation. Upon the liquidation, dissolution or winding
up of the Corporation, the holders of shares of Preferred Stock shall be
entitled to the following rights:
(a) the holders of the shares of 6% Preferred Stock shall
be entitled upon liquidation, dissolution or winding up to receive a payment
equal to $1.50 per share of 6% Preferred Stock, plus all accrued and unpaid
dividends thereon before any payment shall be made to the holders of the 8%
Preferred Stock or the Common Stock. The holders of the shares of 6% Preferred
Stock shall not be entitled to any further distribution of the assets of the
Corporation.
(b) the holders of the shares of 8% Preferred Stock shall
be entitled upon liquidation, dissolution or winding up to receive all accrued
and unpaid dividends before any distribution of payment to the holders of
Common Stock, which distribution or payment would then be made on a pro rata
basis between holders of the shares of 8% Preferred Stock and the Common Stock.
SECTION 6. Redemption. Five years after the date of issuance of the
6% Preferred Stock (the "Election Date"), each share of 6% Preferred Stock
shall, at the election of each holder thereof, either be redeemed for cash in
accordance with this Section 6 or converted into shares of Common Stock in
accordance with Section 3 of this Article III. If a holder elects to redeem
the 6% Preferred Stock, such holder shall be entitled to receive a cash payment
equal to $1.50 per share of 6% Preferred Stock, together with the amount, as of
the Election Date, of all accrued and unpaid dividends. No right of redemption
shall exist prior to the Election Date or if the Corporation is then insolvent
or would become insolvent as a result of such redemption. Each holder of 6%
Preferred Stock shall give written notice, via facsimile and reputable
overnight courier service, to the Secretary of the Corporation of its election
to either have the 6% Preferred Stock redeemed for cash or converted into
shares of Common Stock within 30 days of the Election Date. If the Corporation
does not timely receive such notice from any holder of the 6% Preferred Stock,
the Corporation shall have the right to determine whether such 6% Preferred
Stock is redeemed in accordance with this Section 6 or converted into shares of
Common Stock in accordance with Section 3 of this Article III.
SECTION 7. Other Rights. Except as otherwise expressly stated
herein, the consideration for the issuance of the Common Stock and Preferred
Stock of this Corporation, and the dividends, the voting rights, the rights of
redemption and the relative rights and preferences of such stock are to be
established by the Board of Directors.
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