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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
VIDEO JUKEBOX NETWORK, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001
(Title of Class of Securities)
92656G 10 8
(CUSIP Number)
Lawrence Mestel
Director
Island Trading Company, Inc.
825 Eighth Avenue
24th Floor
New York, New York 10019
(212) 333-6789
(Name, Address and Telephone Number
of Person Authorized to Receive Notices
and Communications)
June 3, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ]
Check the following box if a fee is being paid with the statement [ ]
<PAGE>2
1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Island Trading Company, Inc.
Taxpayer Identification No. 13-3170327
2) Check Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
3) SEC Use Only
4) Source of Funds
WC
5) Check Box if Disclosure of Legal Proceeding is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6) Citizenship or Place of Organization
New York
7) Sole Voting Power
Number of
Shares
Beneficially 8) Shared Voting Power
Owned By 3,500,000
Each
Reporting 9) Sole Dispositive Power
Person
With
10) Shared Dispositive Power
3,500,000
11) Aggregate Amount Beneficially Owned By Each Reporting Person
3,500,000
12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
13) Percent of Class Represented By Amount in Row (11)
14.62%
14) Type of Reporting Person
CO
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This amended and restated statement (the "Statement") is filed
to disclose the participation of Island Trading Company, Inc., a New York
corporation ("Island Trading"), in a sale of outstanding shares of the Company
(as defined below) to a wholly owned subsidiary of Liberty Media Corporation, a
Delaware corporation ("Liberty Media"). Pursuant to a letter agreement and term
sheet (together, the "Letter Agreement") between StarNet/CEA II Partners and
StarNet, Inc. (the "StarNet Group"), as sellers, and Liberty Media, through a
wholly owned subsidiary ("Liberty Purchaser"), as buyer, the holders of
outstanding shares of the Company have negotiated an arrangement to sell certain
outstanding shares and to grant irrevocable proxies and options with regard to
certain other outstanding shares to Liberty Purchaser. Island Trading,
exercising its Tag Along Rights (as defined below) granted to it under, and
pursuant to, the Tag Along Agreement (as defined below) is participating in this
transaction to the fullest extent permissible under the terms of the Tag Along
Agreement.
Item 1. Security and Issuer.
This Statement relates to the common stock, $.001 par value
per share (the "Common Stock"), of Video Jukebox Network, Inc., a Florida
corporation (the "Company"). The address of the principal executive offices of
the Company is 12000 Biscayne Boulevard, Miami, Florida 33181.
Item 2. Identity and Background.
(a)-(c) and (f). This Statement is being filed by Island
Trading, a wholly-owned subsidiary of Island International Limited, a Bahamian
corporation ("Island International"), the capital stock of which is held by The
Island Settlement, a Bahamian trust (the "Island Trust") for the benefit of
certain beneficiaries. Island Trading and Island International are each engaged
in music, entertainment and real estate-related ventures. The address of Island
Trading's principal executive offices is 400 Lafayette Street, New York, New
York 10003. The address of Island International's principal executive offices,
and the address of the Island Trust, is c/o Mees Pierson (Bahamas) Limited, Bank
America House, 308 East Bay Street, Nassau, Bahamas.
The names, business addresses, principal occupations and
citizenship of the executive officers and directors of Island Trading and the
trustee of the Island Trust are set forth on Annex A hereto and are incorporated
herein by reference.
(d) and (e). During the last five years, Island Trading,
Island International, the Island Trust and, to the best
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knowledge of Island Trading, the persons listed on Annex A have not (i)
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of April 21, 1994, between the Company and Island Trading
(a copy of which, including exhibits, was filed in paper format as Exhibit 1 and
is incorporated herein by reference), Island Trading acquired from the Company
on such date (i) 2,500,000 newly-issued shares of Common Stock, (ii) an
immediately exercisable option to purchase 500,000 shares of Common Stock at an
exercise price of $2.00 per share expiring on April 20, 1995, (iii) an
immediately exercisable option to purchase 1,000,000 shares of Common Stock at
an exercise price of $5.00 per share expiring on April 20, 1996 and (iv) an
immediately exercisable option to purchase 1,000,000 shares of Common Stock at
an exercise price of $6.00 per share expiring on April 20, 1997 ((ii), (iii) and
(iv) collectively, the "Options"). The aggregate purchase price paid by Island
Trading was $5,000,000, which was provided from working capital.
Item 4. Purpose of Transaction.
The shares of Common Stock and the Options beneficially owned
by Island Trading on the date of this Statement were acquired for investment by
Island Trading.
Island Trading may from time to time acquire additional shares
of Common Stock and Options through open market or privately negotiated
transactions depending on existing market conditions and other considerations
discussed below. Island Trading intends to review its investment in the Company
on a continuing basis and, depending upon the price and availability of the
Common Stock and Options, subsequent developments affecting the Company, the
Company's business and prospects, other investment and business opportunities
available, general stock market and economic conditions, tax considerations and
other factors considered relevant, may decide at any time to increase, or to
decrease, the size of its investment in the Company.
Pursuant to a Registration Rights Agreement (the "Registration
Rights Agreement"), dated as of April 21, 1994, between the Company and Island
Trading, Island Trading was granted certain demand and piggyback registration
rights with
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respect to the shares of Common Stock and the 500,000 shares
of Common Stock underlying the $2.00 Options, as well as certain piggyback
registration rights with respect to the 2,000,000 shares of Common Stock
underlying the $5.00 and $6.00 Options.
Pursuant to a Consulting Agreement (the "Consulting
Agreement"), dated as of April 21, 1994, between the Company and Island Trading,
Island Trading agreed to provide the Company with music and merchandising
consulting services as well as assistance in developing its programming and
on-air look for a term of two years. In exchange for Island Trading's services,
the Company agreed to pay Island Trading a monthly fee of $20,833, payable in
three-month installments either in cash or shares of Common Stock at the sole
discretion of the Company. If the Company decides to pay Island Trading in
shares of Common Stock, the number of shares will be determined by taking the
average of the closing bid and asked prices of the shares of Common Stock over a
period of sixty consecutive business days preceding the end of each three-month
period.
Pursuant to and as a condition of the Stock Purchase
Agreement, Chris Blackwell, a consultant to Island Trading, was appointed to the
Company's Board of Directors on April 21, 1994.
Pursuant to a Lease Agreement (the "Lease Agreement"), dated
as of April 21, 1994, between the Company and Island Trading, the Company agreed
to lease from Island Trading approximately 16,000 square feet of space in two
adjoining premises in South Beach, Miami Beach, Florida. The term of the lease
is for seven years, which term commences upon the substantial completion of the
premises by Island Trading. Payment of rent by the Company commences six months
thereafter at a base rental rate of $22.00 per square foot for the first year of
the lease term and ranging up to $39.00 per square foot for the seventh and
final year of the lease term. The base rental rate does not include certain
operating expenses to be borne by the Company for the entire term of the lease
and capped for the first three years of the lease term. After the second year of
the lease, the Company has agreed to lease an additional 1,800 square feet in
one of the premises at a base rental rate of $13.00 per square foot (not
including the operating expenses referred to above) with a $.50 per square foot
escalation each year thereafter. Under the Lease Agreement, the Company has the
right to renew the lease subject to the negotiation of a new rental rate.
Pursuant to a Tag-Along Agreement (the "Tag-Along Agreement"),
dated as of April 21, 1994, by and among Island Trading, CEA Investors
Partnership II, Ltd. ("CEA II, Ltd."), StarNet Interactive Entertainment, Inc.
("StarNet") and StarNet/CEA II Partners ("StarNet/CEA"), Island Trading was
granted the right, under certain circumstances in which (i) shares of Common
Stock held by StarNet/CEA or (ii) interests in
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StarNet/CEA, StarNet or CEA II, Ltd., are to be sold, to
include a proportionate number of shares of Common Stock held by Island Trading
in such sale on the same terms and conditions on which StarNet/CEA proposes to
sell the shares of Common Stock held by it or the appropriate party proposes to
sell its interests in StarNet/CEA, StarNet or CEA II, Ltd. (the "Tag-Along
Rights"). Reciprocal Tag-Along Rights were granted by Island Trading to
StarNet/CEA, StarNet and CEA II, Ltd. with respect to (i) the sale by Island
Trading of shares of Common Stock purchased from the Company or held upon
exercise of the Options or (ii) the sale of interests in a limited purpose
Island Trading affiliate holding such Common Stock. The reciprocal Tag-Along
Rights granted by Island Trading are effective upon the earlier of (i) April 21,
1995 or (ii) the date Island Trading has exercised Options for no less than
500,000 shares of Common Stock. StarNet/CEA agreed to vote its shares of Common
Stock in favor of Chris Blackwell or such other Island Trading designee to the
Board of Directors of the Company as is reasonably acceptable.
Island Trading has determined to dispose of a portion of its
interest in the Company's common stock held by it in a proposed sale thereof to
Liberty Purchaser and to grant to Liberty Purchaser options for the purchase of
and irrevocable proxies for the voting of additional shares of the Company's
common stock. The StarNet Group and Liberty Media have negotiated the Letter
Agreement describing the details of the proposed transaction, a copy of which is
filed with this Statement as Exhibit 2.
Item 5. Interest in Securities of Issuer.
On April 21, 1996, Island Trading's immediately exercisable
option to purchase 1,000,000 shares of Common Stock at an exercise price of
$5.00 per share expired. As a result of the expiration of such option, each of
Island Trading, Island International and the Island Trust may be deemed to
beneficially own 3,500,000 shares of Common Stock, or approximately 14.62% of
the Common Stock outstanding (based on approximately 23,944,281 shares
outstanding as of May 13, 1996), consisting of 2,500,000 shares of Common Stock
(or approximately 10.44% of the Common Stock outstanding) and Options to
purchase 1,000,000 shares of Common Stock at an exercise price of $6.00 per
share. For purposes of Sections 13(d) and (g) of the Securities Exchange Act of
1934, each of Island International and the Island Trust disclaims beneficial
ownership of any securities covered by this Statement. Island Trading, Island
International and the Island Trust have shared voting and dispositive power over
the Common Stock and Options held by Island Trading.
If the proposed transaction is consummated as contemplated by
the Letter Agreement, Island Trading's participation as permitted under, and
pursuant to, the Tag Along Agreement would be approximately as follows:
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Anticipated Number of
Anticipated Number of Shares Covered by
Shares to be Sold Options and Proxies
833,333 833,333
Upon closing of the proposed transaction (including the shares
subject to the options and proxies), Island Trading would have
beneficial ownership of approximately 1,833,334 shares of which it has shared
voting power and shared dispositive power.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the Registration Rights Agreement, the Consulting
Agreement, the Lease Agreement and the Tag-Along Agreement, each as described in
response to Item 4 (which response is incorporated herein by reference), and the
Letter Agreement, and the transactions contemplated thereby, there are no
contracts, arrangements, understandings or relationships between Island Trading,
Island International or the Island Trust and any other person, or, to the best
knowledge of Island Trading, among any of the persons listed on Annex A or
between any of the persons listed on Annex A and any other person, with respect
to securities of the Company.
As noted above, the StarNet Group has entered into the Letter
Agreement with Liberty Purchaser, pursuant to which Liberty Purchaser has agreed
to purchase certain outstanding shares of the Company's common stock. Island
Trading is participating in the proposed transaction to the fullest extent
permissible under, and pursuant to, the Tag Along Agreement. The details of the
proposed transaction are contained in the Letter Agreement, a copy of which is
attached hereto as Exhibit 2, and which is hereby incorporated by reference.
Item 7. Material to be filed as Exhibits.
Exhibit 1 Stock Purchase Agreement, dated
as of April 21, 1994, between
the Company and Island
Trading, including exhibits
thereto
Exhibit 2 Letter Agreement dated May 15,
1996 between StarNet/CEA II
Partners and StarNet, Inc., and
Liberty Media Corporation, with
attached Term Sheet.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement is
true, complete and correct.
Dated: June 10, 1996 ISLAND TRADING COMPANY, INC.
By: /s/ LAWRENCE MESTEL
Name: Lawrence Mestel
Title: Director
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ANNEX A
IDENTITY AND BACKGROUND
Listed below are the names, addresses and
principal occupations of the executive officers and directors of Island
Trading and the trustee of the Island Trust. Except as noted below, each of
the persons listed below is a United States citizen.
A. Island Trading
1. Executive Officers
<TABLE>
<S> <C> <C>
Name Address Principal Occupation
Jeff Dalla Betta Island Trading Company, Inc. Vice President
400 Lafayette Street
New York, NY 10003
Dan Genetti Island Trading Company, Inc. Vice President
400 Lafayette Street
New York, NY 10003
Wendy Hart Island Trading Company, Inc. Vice President
400 Lafayette Street
New York, NY 10003
Glen Hutloff Island Trading Company, Inc. Vice President
400 Lafayette Street
New York, NY 10003
Andrew Terentjev Island Trading Company, Inc. Vice President
400 Lafayette Street
New York, NY 10003
Doreen Crujerias Island Trading Company, Inc. Secretary
400 Lafayette Street
New York, NY 10003
2. Directors
Name Address Principal Occupation
Ian D. Fair Mees Pierson (Bahamas) Limited Chairman of Mees
(Citizen of United Kingdom) Bank America House Pierson (Bahamas)
308 East Bay Street Limited
Nassau, Bahamas
Alastair Macbeath Island Trading Company, Ltd. Financial Controller--
(Citizen of United Kingdom) 22 St. Peter's Square Island Trading Company, Ltd.
London W69NW England
Lawrence Mestel Island Records, Inc. Senior Vice President and Chief
400 Lafayette Street Financial Officer
New York, NY 10003
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B. Island Trust
1. Trustee
Name Address Principal Occupation
Mees Pierson Bank America House --
(Bahamas) Limited 308 East Bay Street
Nassau, Bahamas
2. Executive Officers
Ian D. Fair Mees Pierson Chairman of Mees
(Bahamas) Limited Pierson (Bahamas) Limited
Bank America House
308 East Bay Street
Nassau, Bahamas
</TABLE>
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EXHIBIT INDEX
Page Number in
Sequentially
Exhibit No. Name Numbered Copy
Exhibit 1 Stock Purchase Agreement, dated as Previously filed
of April 21, 1994, between the in Paper Format
Company and Island Trading,
including exhibits thereto
Exhibit 2 Letter Agreement, dated as of May 12
15, 1996, between StarNet/CEA II
Partners, StarNet, Inc. and Liberty
Media Corporation, including
attached Term Sheet
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Exhibit 2
LIBERTY MEDIA CORPORATION
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
May 15, 1996
StarNet/CEA II Partners StarNet, Inc.
c/o Communications Equity Associates
101 E. Kennedy Blvd., Suite 3300
Tampa, Florida 33602
Dear Sirs:
Reference is made to the Term Sheet attached hereto pursuant
to which, subject to the prior receipt of any required approvals of the Board of
Directors of Video Jukebox Network, Inc. ("VJN"), we have entered into certain
agreements with respect to the equity securities of VJN, all as more fully
described in the Term Sheet.
The Term Sheet contemplates that the agreements contained
therein will be superseded by definitive agreements and instruments which will
contain provisions incorporating and expanding upon the agreements set forth
therein, together with other provisions customary in the case of transactions of
this type, and such other provisions as are reasonable and appropriate in the
context of the transactions contemplated hereby. Notwithstanding the foregoing,
the parties expressly acknowledge that the obligations of the parties pursuant
to the Term Sheet and this agreement, subject to the prior receipt of any such
required approvals of the Board of Directors of VJN, will constitute a binding
agreement between them, subject to the terms and preconditions set forth herein
and in the Term Sheet, until such definitive agreements are executed and
delivered. If such definitive agreements are not executed and delivered, then,
subject to the receipt of any such required approvals of the Board of Directors
of VJN, the Term Sheet and this agreement shall constitute such definitive
agreements.
Upon acceptance, we shall commence and complete our due
diligence investigation of the Company within 15 business days (assuming
reasonable cooperation by the management of the Company). You agree to use your
reasonable best efforts to obtain any required board approvals within such 15
business day period.
By executing this agreement, you agree to use your reasonable
best efforts to cause Wolfson and Blank to fully participate in the proposed
transactions (as contemplated by the Term Sheet); provided, that if
notwithstanding such efforts, such persons do not so participate, the parties
shall negotiate in good faith to renegotiate the transactions contemplated by
the Term Sheet in a mutually satisfactory fashion.
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If the foregoing is acceptable to you, please execute the copy
of this agreement in the space below, at which time this instrument will
constitute a binding agreement between us.
Very truly yours,
LIBERTY MEDIA CORPORATION
By: /s/ DAVID KOFF
Name: David Koff
Title: V.P.
ACCEPTED AND AGREED
this 16th day of May, 1996
StarNet/CEA II Partners
By:
Name:
Title:
StarNet, Inc.
By: /s/ H. F. LENFEST
Name: H. F. "Gerry" Lenfest
Title: CFO
0128682.03
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PROJECT PUNCH
TERM SHEET
Parties: Sellers: Star Net/CEA II Partners, StarNet,
Inc. and (subject to exercise of
tag-along rights) the Wolfsons, Video
Holdings Corp. and its affiliates. and
Island Trading Co., Inc.
Buyer: Wholly owned subsidiary of Liberty
Media Corporation
Securities Being Sold: 5,581,807 shares of Video Jukebox Network, Inc.
(the "Company") common stock, $.001 par value
(the "Shares"), representing no less than
approximately one third of the shares held by
each Seller participating. It is a condition to
closing that all of the Sellers, except Island
Trading, fully participate. If Island Trading
does not participate Buyer will purchase
additional shares from the other Sellers at
$2.00 per share provided that the total number
of shares equals 5,581,807.
Purchase Price: $11,163,614 in cash ($2.00 per share)
Other Terms and Conditions: Sellers shall grant Buyer an irrevocable
(subject to the expiration date mentioned
below) proxy on 5,719,162 shares (the "Proxy
Shares").
Sellers shall grant Buyer an option to purchase
all but not less than all of the Proxy Shares
for thirty (30) months from the closing date
and shall be exercisable at the following prices
per share:
Months after Closing Exercise Price Per Share
1-6 $2.00
7-18 $2.20
19-30 $2.42
If Buyer allows the options to expire at the
end of thirty (30) months the proxy on
Seller's Proxy Shares shall also expire.
Sellers agree not to sell or pledge any of
their shares prior to the expiration of the
option.
StarNet/CEA and StarNet, Inc. shall use their
good faith and reasonable best efforts to
cause the Company to grant to the Buyer at
the closing, for a nominal
consideration, options (the "Company
Options") to purchase 4,655,341 shares of
newly issued Common Stock of the Company.
The Company Options shall be non-transferable,
shall expire thirty (30) months after the
closing, and shall be exercisable in whole or
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in part at the following prices per share
during the time period after closing indicated
below:
Months after Closing Exercise Price Per Share
1-6 $2.00
7-18 $2.20
19-30 $2.42
In the event that Buyer exercises the
option on the Proxy Shares and the Company
Options, Sellers will have tag-along rights
for the shares that they currently own in the
event that Buyer sells all or substantially all
of its shares.
Sellers and their board representatives will not
approve the issuance of any stock or other
equity rights prior to closing.
Coordination of Schedule 13(D) filings, press
releases, and other public materials.
Sellers and Buyer agree to use reasonable best
efforts and good faith negotiations to execute
a definitive stock purchase agreement, and
option agreements containing representation
& warranties and covenants regarding operation
of the business customary for transactions
involving a public company and other terms
and conditions mutually agreeable to the
parties within 15 business days of the
acceptance of this Term Sheet, subject to
(i) the satisfactory completion by the
Buyer of its due diligence examination of
the Company, (ii) approval of such definitive
stock purchase agreement and the transactions
contemplated thereby by the board of
directors of the Buyer and (iii)
material adverse developments in the
financial markets.
The transactions shall close upon receipt of any
required governmental approvals but in no event
later than September 30, 1996.
Seller's board representatives will resign at
closing and be replaced by Buyer's
representatives. The Buyer shall use its best
efforts to cause the election of J. Patrick
Michaels, as the designee of StarNet/CEA and
StarNet, Inc., to the board of directors.
