CUSIP NO. 92656G 10 8 Page 1 of 25 Pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 16)*
Video Jukebox Network, Inc.
(Name of Issuer)
Common Stock, par value $.001 per share
(Title of Class of Securities)
92656G 10 8
(CUSIP Number)
John G. Igoe, Esq.
Edwards & Angell
250 Royal Palm Way
Palm Beach, Florida 33480
(407) 833-7700
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 16, 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 [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP NO. 92656G 10 8 Page 2 of 25 Pages
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
CEA Investors Partnership II, Ltd.
Employer I.D. No.: 59-2881170
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Florida
Number of Shares Beneficially 7. Sole Voting Power
Owned By Each Reporting Person -0-
With 8. Shared Voting Power
12,242,655
9. Sole Dispositive Power
-0-
10. Shared Dispositive Power
9,013,845
11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,210,419
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
59.3%
14. Type of Reporting Person*
PN (Limited)
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 92656G 10 8 Page 3 of 25 Pages
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
CEA Investors, Inc.
Employer I.D. No.: 59-2827410
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Florida
Number of Shares Beneficially 7. Sole Voting Power
Owned By Each Reporting Person -0-
With 8. Shared Voting Power
12,255,280
9. Sole Dispositive Power
-0-
10. Shared Dispositive Power
9,026,470
11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,210,419
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
59.3%
14. Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 92656G 10 8 Page 4 of 25 Pages
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
J. Patrick Michaels, Jr.
Social Security No.: ###-##-####
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
00
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
United States
Number of Shares Beneficially 7. Sole Voting Power
Owned By Each Reporting Person 71,584
With 8. Shared Voting Power
12,255,280
9. Sole Dispositive Power
71,584
10. Shared Dispositive Power
9,026,470
11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,210,419
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
59.3%
14. Type of Reporting Person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 92656G 10 8 Page 5 of 25 Pages
1. Name of reporting person
S.S. or I.R.S. Identification No. of above person
StarNet/CEA II Partners
Employer I.D. No.: 59-3197398
2. Check the appropriate box if a member of a group*
(a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds*
WC
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
Number of Shares Beneficially 7. Sole Voting Power
Owned By Each Reporting Person -0-
With 8. Shared Voting Power
12,242,655
9. Sole Dispositive Power
-0-
10. Shared Dispositive Power
9,013,845
11. Aggregate Amount Beneficially Owned by Each Reporting Person
14,210,419
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
59.3%
14. Type of Reporting Person*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP NO. 92656G 10 8 Page 6 of 25 Pages
This Amendment No. 16 ("Amendment") to the Statement on Schedule 13D
dated July 7, 1993 (the "July 1993 Statement"), as amended by Amendment No. 1
thereto dated August 9, 1993 ("Amendment No. 1") and as amended by Amendment No.
2 thereto dated September 10, 1993 ("Amendment No. 2") and as amended by
Amendment No. 3 thereto dated September 13, 1993 ("Amendment No. 3") and as
amended by Amendment No. 4 thereto dated December 20, 1993 ("Amendment No. 4")
and as amended by Amendment No. 5 thereto dated January 11, 1994 ("Amendment No.
5") and as amended by Amendment No. 6 thereto dated February 10, 1994
("Amendment No. 6") and as amended by Amendment No. 7 thereto dated
February 23, 1994 ("Amendment No. 7") and as amended by Amendment No. 8 thereto
dated March 9, 1994 ("Amendment No. 8") and as amended by Amendment No. 9
thereto dated May 10, 1994 ("Amendment No. 9") and as amended by Amendment No.
10 thereto dated July 8, 1994 ("Amendment No. 10") and as amended by Amendment
No. 11 thereto dated July 28, 1994 ("Amendment No. 11") and as amended by
Amendment No. 12 thereto dated August 10, 1994 ("Amendment No. 12") and as
amended by Amendment No. 13 thereto dated December 16, 1994 ("Amendment No. 13")
and as amended by Amendment No. 14 thereto dated September 14, 1995 ("Amendment
No. 14") and as amended by Amendment No. 15 thereto dated January 30, 1996
("Amendment No. 15") (the July Statement as amended by Amendment Nos. 1 through
15 is referred to as the "Original Statement"), is jointly filed by the persons
listed on the execution pages hereof (the "Reporting Persons") pursuant to the
Joint Filing Agreement filed as Exhibit 1 to Amendment No. 12.
This Amendment is filed by the Reporting Persons subsequent to filing
by CEA Investors Partnership II, Ltd., CEA Investors, Inc., and J. Patrick
Michaels, Jr. ("Michaels") (the "CEA Group") of Amendment No. 1 dated July 7,
1993, to the Schedule 13D dated June 18, 1993 filed by the CEA Group. The CEA
Group's Schedule 13D dated June 18, 1993 and its exhibits, as amended by
Amendment No. 1 dated July 7, 1993 and its exhibits as well as the Original
Statement and its exhibits are incorporated herein by reference. Capitalized
terms not defined herein shall have the meanings defined in the Original
Statement.
This Amendment is filed to disclose (a) the arrangements relating to
the agreement entered into by StarNet/CEA II Partners (the "Joint Venture") and
StarNet, Inc. ("StarNet, Inc.") with Liberty Media Corporation, a Delaware
corporation ("Liberty Media") for the sale by the Joint Venture, StarNet, Inc.
and others to a wholly owned subsidiary of Liberty Media ("Liberty Purchaser")
of outstanding shares of Video Jukebox Network, Inc. (the "Company") held by
such sellers, the grant of options to Liberty Purchaser for the purchase of
additional outstanding shares of the Company owned by such sellers and others,
the grant of irrevocable proxies for the voting of such shares covered by the
options, and the agreement of certain of the sellers to use their good faith and
best reasonable efforts to cause the Company to grant to Liberty Purchaser
options to purchase newly issued shares of the Company, (b) the anticipated
agreement of Video Holdings Corporation ("VHC") and the Blanks and Puck to
participate in such sale and grant of options and proxies pursuant to the VHC
Tag-Along Agreement (as hereinafter defined) and of the Wolfsons to participate
in such sale and
<PAGE>
CUSIP NO. 92656G 10 8 Page 7 of 25 Pages
grant of options and proxies pursuant to the Wolfson Tag-Along Agreement (as
hereinafter defined), and (c) the right of Island Trading Company, Inc. ("Island
Trading") to participate in the sale and grant of options and proxies in the
event Island Trading exercises its tag-along rights under the Island Tag-Along
Agreement (as hereinafter defined).
Except as specifically modified, amended or supplemented by this
Amendment all of the information in the Original Statement is hereby confirmed.
Item 2 of the Original Statement is amended and supplemented as follows:
ITEM 2. IDENTITY AND BACKGROUND.
Included in the group with the Reporting Persons for purposes of the
sale of shares of the Company's common stock, the grant of options to Liberty
Purchaser for the purchase of shares of the Company's common stock, and the
grant of irrevocable proxies to Liberty Purchaser for the voting of such shares
of the Company's common stock covered by such options (the "Proposed
Transaction", as more fully described below) are (a) VHC, the Blanks and Puck
(the "VHC Group") and (b) the Wolfsons. The shares of the Company's common stock
held by the VHC Group and the Wolfsons have previously been included in shares
beneficially owned by the Reporting Persons by reason of the power to vote such
shares under the VHC Tag-Along Agreement and the Wolfson Tag-Along Agreement,
respectively. The terms of the Proposed Transaction require that the Reporting
Persons and StarNet use their reasonable best efforts to cause the VHC Group and
the Wolfsons to participate. As a result, the Reporting Persons have had
discussions with representatives of the VHC Group and the Wolfsons,
respectively, although no binding agreement has been reached with the VHC Group
and the Wolfsons. Based on such discussions, the Reporting Persons believe that
the members of the VHC Group and the Wolfsons, subject to the conditions set
forth in the Letter Agreement and Term Sheet (as such terms are hereinafter
defined), intend to participate in the Proposed Transaction, to the maximum
extent provided for in the respective VHC Group and Wolfson Tag-Along
Agreements, although no binding agreement has been reached with the VHC Group or
the Wolfsons. In the event the VHC Group and/or the Wolfsons do not participate
in the Proposed Transaction by exercise of their rights under such Tag-Along
Agreements, then they will not be included in the group with the Reporting
Persons for purposes of the transactions disclosed in this Amendment. The VHC
Group and the Wolfsons may disclaim participation in any group. Each of the VHC
Group and the Wolfsons have previously filed a Schedule 13D with respect to
their ownership of the Company's common stock, and each has informed the
Reporting Persons that such persons intend to file amendments thereto with
respect to the Proposed Transaction described herein, in the event they exercise
their rights to participate under such Tag-Along Agreements. Please refer to
such amendments for information concerning the VHC Group and the Wolfsons.
<PAGE>
CUSIP NO. 92656G 10 8 Page 8 of 25 Pages
The disclosures in this Amendment No. 16 are based on the assumption
that the VHC Group and the Wolfsons will so participate.
While representatives of the Reporting Persons have had discussions
with representatives of Island Trading relating to the Proposed Transaction,
Island Trading has not indicated whether Island Trading will participate
pursuant to its rights under the Tag-Along Agreement dated as of April 21, 1994
(the "Island Tag-Along Agreement") between Island Trading, the Joint Venture,
CEA Investors Partnership II, Ltd. (the "Partnership") and StarNet, Inc. As a
result, the disclosures in this Amendment are based on the assumption that
Island Trading will not so participate. In the event Island Trading elects to
participate in the Proposed Transaction by exercising its rights under the
Island Trading Tag-Along Agreement, this Schedules 13D will be subsequently
amended to indicate that Island Trading will be included in the group with the
Reporting Persons for purposes of the Proposed Transaction.
The Reporting Persons believe that Liberty Media, through an affiliate,
currently holds in excess of 5% of the outstanding shares of common stock of the
Company. Reference is hereby made to any Schedule 13D filed by Liberty Media for
information concerning Liberty Media. The Reporting Persons have been informed
that Liberty Media will file an Amendment to Schedule 13D contemporaneously with
this Amendment with respect to the Proposed Transaction.
Item 4 of the Original Statement is amended and supplemented as follows:
ITEM 4. PURPOSE OF TRANSACTION
As previously reported, the Joint Venture has accomplished its original
objective of acquiring control of the Company and effecting changes in the Board
of Directors and management of the Company. The Reporting Persons have now
determined to dispose of a substantial portion of their interest in the
Company's common stock held by them 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 in the Proposed Transaction.
<PAGE>
CUSIP NO. 92656G 10 8 Page 9 of 25 Pages
The Reporting Persons and Liberty Media have negotiated a Term Sheet
(the "Term Sheet") which has been incorporated in a letter agreement (the
"Letter Agreement") between the Joint Venture and StarNet, Inc. as sellers and
Liberty Media, whose wholly owned subsidiary (Liberty Purchaser) would be the
buyer. The Letter Agreement with the Term Sheet attached is filed with this
Amendment as Exhibit 99.16.1. The transactions and other actions contemplated by
the Letter Agreement and the Term Sheet are herein collectively referred to as
the "Proposed Transaction".
The representatives of the sellers on the Board of Directors of the
Company, currently including Michaels, David Burns, and H.F. Lenfest, will
resign at the closing of the Proposed Transaction and will be replaced by
representatives of Liberty Purchaser. Liberty Media has agreed that Liberty
Purchaser will use its best efforts to cause the election of Michaels, as the
designee of the Joint Venture and StarNet, Inc., to the Board of Directors of
the Company.
The terms of the Proposed Transaction are described in Item 6 below.
Information as to the outstanding shares of the Company's common stock owned by
the Reporting Persons at the time of the filing of this Amendment No. 16 and to
be owned on a pro forma basis assuming the Proposed Transaction contemplated by
the Term Sheet is consummated, is set forth in Item 5.
Item 5 of the Original Statement is amended and supplemented as follows:
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The Reporting Persons believe that the aggregate number of shares of
common stock of the Company outstanding as of May 17, 1996 is approximately
23,944,281. The percentage of beneficial ownership of each of the Reporting
Persons included in response to Item 13 on the cover page filed herewith is
computed based on such aggregate number of shares outstanding on May 17, 1996.
While the Joint Venture has voting power over the shares covered by the
VHC and Wolfson Tag-Along Agreements, it does not have dispositive power over
such shares. However, pursuant to the VHC Tag-Along Agreement and the Wolfson
Tag-Along Agreement, the Joint Venture has granted to the VHC Group and the
Wolfsons, respectively, certain rights to participate in the sale of shares of
the Company by the Joint Venture.
<PAGE>
CUSIP NO. 92656G 10 8 Page 10 of 25 Pages
If the Proposed Transaction is consummated, as proposed and without
regard to the possible participation by Island Trading, the number of shares of
the Company's outstanding common stock to be disposed of by, and to be subject
to the Proxies and Liberty Options in favor of Liberty Purchaser granted by, the
Reporting Persons, the VHC Group and the Wolfsons, would be as follows:
ANTICIPATED
ANTICIPATED NUMBER OF SHARES
NUMBER OF SHARES COVERED BY PROXIES
NAME OF SELLER TO BE SOLD AND OPTIONS GRANTED
-------------- ---------------- -------------------
Joint Venture 3,561,716 3,649,362
StarNet, Inc. 744,265 762,579
VHC Group 624,778 640,152
Wolfsons 651,048 667,069
--------- ---------
TOTAL 5,581,807 5,719,162
========= =========
Assuming the Proposed Transaction is consummated, and the Liberty
Options are exercised, the Joint Venture will hold of record 1,802,767 shares,
and StarNet, Inc. will hold of record 376,711 shares of the Company's Common
Stock, and the Reporting Persons and StarNet, Inc. will beneficially own an
aggregate of 2,263,687 shares of the Company's Common Stock.
Assuming the Proposed Transaction is consummated on the basis
contemplated, the VHC and Wolfson Tag-Along Agreements and the irrevocable
voting proxies from the VHC Group and the Wolfsons granted to the Partnership
will terminate. Table 1 below sets forth the present beneficial ownership (as to
sole and shared voting and dispositive power) and the percentage of the
outstanding shares of the Company's common stock so beneficially owned by each
of the Reporting Persons. Table 2 below sets forth the PRO FORMA proposed
beneficial ownership (as to sole and shared voting and dispositive power) and
the percentage of the outstanding shares of the Company's common stock to be so
beneficially owned by each of the Reporting Persons upon the closing of the
Proposed Transaction.
<PAGE>
CUSIP NO. 92656G 10 8 Page 11 of 25 Pages
<TABLE>
<CAPTION>
TABLE 1 - PRESENT BENEFICIAL OWNERSHIP OF THE REPORTING PERSONS.
- - --------------------------------------------------------------------------------
NAME OF REPORTING POWER PERCENTAGE OF POWER TO PERCENTAGE OF
PERSON TO VOTE O/S DISPOSE OF O/S
----------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
1. CEA Investors
Partnership II,
Ltd
-Sole -0- -0- -0- -0-
-Shared 12,242,655 51.1% 9,013,845 37.6%
2. CEA Investors,
Inc
-Sole -0- -0- -0- -0-
-Shared 12,255,280 51.2% 9,026,470 37.7%
3. J. Patrick
Michaels, Jr
-Sole 71,584 0.3% 71,584 0.3%
-Shared 12,255,280 51.2% 9,026,470 37.7%
4. StarNet/CEA II
Partners
-Sole -0- -0- -0- -0-
-Shared 12,242,655 51.1% 9,013,845 37.6%
</TABLE>
<PAGE>
CUSIP NO. 92656G 10 8 Page 12 of 25 Pages
<TABLE>
<CAPTION>
TABLE 2 - PRO FORMA BENEFICIAL OWNERSHIP OF REPORTING PERSONS ASSUMING CLOSING
OF THE PROPOSED TRANSACTION.
- - --------------------------------------------------------------------------------
NAME OF REPORTING POWER PERCENTAGE OF POWER TO PERCENTAGE OF
PERSON TO VOTE O/S DISPOSE OF O/S
----------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
1. CEA Investors
Partnership II,
Ltd.
-Sole -0- -0- -0- -0-
-Shared 1,802,767 7.5% 1,802,767(a) 7.5%
2. CEA Investors,
Inc.
-Sole -0- -0- -0- -0-
-Shared 1,815,392 7.6% 1,815,392(a) 7.6%
3. J. Patrick
Michaels, Jr.
-Sole 71,584 0.3% 71,584 0.3%
-Shared 1,815,392 7.6% 1,815,392(a) 7.6%
4. StarNet/CEA II
Partners
-Sole -0- -0- -0- -0-
-Shared 1,802,767 7.5% 1,802,767(a) 7.5%
<FN>
- - --------------
(a) Does not include Proxy Shares which will be subject to Liberty Options.
</FN>
</TABLE>
Taking into account shares of common stock beneficially owned by
StarNet, Inc., the aggregate amount of shares of common stock of the Company
presently beneficially owned by each Reporting Person is 14,210,419 shares.
The Joint Venture presently has beneficial ownership, by reason of
shared voting power, of 12,242,655 shares (or approximately 51.1% of the
outstanding common stock of the Company), and beneficial ownership, by reason of
shared dispositive power, only as to 9,013,845 shares (or approximately 37.6% of
the outstanding common stock of the Company). The Joint Venture holds shared
voting power (a) in the case of VHC, the Blanks and Puck (hereinafter the "VHC
Group") as to 1,581,163 shares, pursuant to the Irrevocable Proxy, Right of
Refusal and Tag-Along Agreement (the "VHC Tag-Along Agreement") with the
Partnership and joined in by the Joint Venture and (b) in the case of the
Wolfsons, as to 1,647,647 shares, pursuant to the Irrevocable Proxy, Right of
Refusal and Tag-Along Agreement (the "Wolfson Tag-Along Agreement") with the
Partnership and joined in by the Joint Venture. Michaels also beneficially owns,
with sole power to vote and direct the disposition of, 71,584 shares of the
Company's common stock held of record by the John P. Michaels Family Trust.
In 1995, in connection with certain estate planning matters, KIM
Enterprises, L.P. (the "Michaels Family Partnership") controlled by Michaels
through CEA Investors, Inc. ("CEA Investors"), its general partner, acquired
12,625 shares of the Company's common stock (as to
<PAGE>
CUSIP NO. 92656G 10 8 Page 13 of 25 Pages
which Michaels and CEA Investors have shared voting and dispositive power)
previously held by the Kimberly Lynn Michaels Trust (the "Kimberly Trust") as to
which Michaels had shared voting and dispositive power. Such 12,625 shares of
the Company's common stock had previously been reported in the Original
Statement as beneficially owned by Michaels and the Reporting Persons, and
accordingly no change is reflected in this Amendment No. 16 as to the aggregate
number of shares beneficially owned by Michaels or the Reporting Persons. Such
shares were transferred to the Family Partnership in exchange for limited
partnership units of the Family Partnership of equivalent value.
Item 6 of the Original Statement is amended and supplemented as follows:
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
As noted above, the Joint Venture and StarNet, Inc. have entered into
the Letter Agreement pursuant to which Liberty Media has agreed, acting through
a wholly owned subsidiary (Liberty Purchaser), to purchase 5,581,807 shares of
the Company's common stock at a price of $2.00 per share, payable in cash at
closing, on the terms and conditions set forth in the Term Sheet annexed to the
Letter Agreement.
A copy of the Letter Agreement, with the Term Sheet attached, is filed
with this Amendment No. 16 as Exhibit 16.1.
The Proposed Transaction, as contemplated by the Letter Agreement and
the Term Sheet, is summarized below.
A. SECURITIES BEING SOLD. 5,581,807 shares of the Company's common
stock (or approximately 23.3% of the issued and outstanding common stock of the
Company), will be sold to Liberty Purchaser by the Joint Venture (3,561,716
shares), Star/Net, Inc. (744,265 shares), the VHC Group (624,778 shares) and the
Wolfsons (651,048 shares). The Joint Venture and StarNet, Inc. have agreed to
use their reasonable best efforts to cause the VHC Group and the Wolfsons to
participate. While the Reporting Persons believe the VHC Group and the Wolfsons
will participate, they are not presently obligated to do so. If they do not
participate, the Joint Venture and StarNet, Inc. and Liberty Media have agreed
to negotiate in good faith to renegotiate the terms of the Proposed Transaction
contemplated in the Term Sheet in a mutually satisfactory manner.
B. THE PURCHASE PRICE AND PAYMENT. The purchase price for the 5,581,807
shares to be sold is $2.00 per share payable in cash at closing, or an aggregate
of $11,163,614.
C. IRREVOCABLE PROXIES TO BE GRANTED. The Joint Venture, StarNet, Inc.,
the VHC Group and the Wolfsons will grant to Liberty Purchaser irrevocable
proxies (the "Proxies") for the voting of an aggregate of an additional
5,719,162 shares (the "Proxy Shares") of the Company's common stock owned by
such sellers (or approximately 23.9% of the issued and outstanding common stock
of the Company). The Proxies will expire 30 months from the grant of the options
at the closing of the Proposed Transaction. The Joint Venture will grant Proxies
<PAGE>
CUSIP NO. 92656G 10 8 Page 14 of 25 Pages
on 3,649,362 Proxy Shares, StarNet, Inc. will grant Proxies on 762,579 Proxy
Shares, the VHC Group will grant Proxies on 640,152 Proxy Shares and the
Wolfsons will grant Proxies on 667,069 Proxy Shares.
D. OPTIONS TO BE GRANTED BY SELLERS. The Joint Venture, StarNet, Inc.
the VHC Group and the Wolfsons will grant to Liberty Purchaser options (the
"Liberty Options") for the purchase of the 5,719,162 Proxy Shares. Under the
terms of the Liberty Options, Liberty Purchaser will have the option to purchase
all but not less than all of the Proxy Shares, which Liberty Options will be
exercisable for a period of thirty (30) months from the closing date of the
Proposed Transaction at exercise prices of $2.00 per share for the period from
one through six months after the closing, $2.20 per share for the period from
seven through 18 months after the closing, and $2.42 per share for the period
from 19 through 30 months after the closing. The Joint Venture, StarNet, Inc.,
the VHC Group and the Wolfsons will grant the Liberty Options covering all of
the Proxy Shares with respect to which such parties grant Proxies. The Proxy
Shares may not be pledged or sold by the owners prior to the expiration of the
Liberty Options.
E. OPTIONS TO BE GRANTED BY THE COMPANY TO LIBERTY PURCHASER. The Joint
Venture and StarNet, Inc. have agreed to use their good faith and reasonable
best efforts to cause the Company to grant to Liberty Purchaser at the closing
of the Proposed Transaction, for nominal consideration, options (the "Company
Options") to purchase 4,655,341 shares of the Company's newly issued common
stock, which Company Options will be nontransferable, will be exercisable in
whole or in part for a period of thirty (30) months from the closing date of the
Proposed Transaction at exercise prices of $2.00 per share for the period from
one through six months after the closing, $2.20 per share for the period from
seven through 18 months after the closing, and $2.42 per share for the period
from 19 through 30 months after the closing.
F. GRANT OF TAG-ALONG RIGHTS FROM LIBERTY PURCHASER TO SELLERS. In the
event Liberty Purchaser exercises the Liberty Options and the Company Options,
the sellers will have tag-along rights for the remaining shares of the Company's
common stock that they currently own in the event Liberty Purchaser sells all or
substantially all of its shares of the Company's common stock.
G. OTHER TERMS AND CONDITIONS. The sellers and their representatives on
the Board of Directors of the Company will not vote to approve the issuance of
any stock or other equity instrument by the Company prior to the closing of the
Proposed Transaction. The Proposed Transaction is scheduled to close upon
receipt of any required governmental approvals, including any approvals required
under the Hart-Scott-Rodino Antitrust Act and any approvals of the Federal
Communications Commission but in any event on or prior to September 30, 1996.
The representatives of the sellers on the Board of Directors of the
Company, currently including Michaels, David Burns and H.F. Lenfest will resign
at the closing of the Proposed Transaction and will be replaced by
representatives of Liberty Purchaser. Liberty Media has agreed that Liberty
Purchaser will use its best efforts to cause the election of Michaels, as the
designee of the Joint Venture and StarNet, Inc., to the Board of Directors of
the Company.
<PAGE>
CUSIP NO. 92656G 10 8 Page 15 of 25 Pages
The Joint Venture and StarNet, Inc. and Liberty Media have agreed to
use reasonable best efforts and good faith negotiations to execute a definitive
stock purchase agreement, and option agreements containing representations and
warranties and covenants regarding operation of the Company's business customary
for transactions involving a public company, and other terms and conditions
mutually agreeable, within 15 business days of acceptance of the Term Sheet,
which acceptance date was May 16, 1996, subject to (i) the satisfactory
completion by Liberty Purchaser of its due diligence examination of the Company,
(ii) approval of the transactions contemplated thereby by the Board of Directors
of Liberty Purchaser, and (iii) the absence of any material adverse developments
in the financial markets. Liberty Media agreed to commence and complete the due
diligence investigation of the Company within 15 business days of such
acceptance (assuming reasonable cooperation by the management of the Company).
In the Letter Agreement the Joint Venture, StarNet, Inc. and Liberty
Media acknowledged that the obligations of the parties pursuant to the Term
Sheet and the Letter Agreement, subject to the prior acceptance of any required
approvals of the Board of Directors of the Company, will constitute a binding
agreement between them, subject to the terms and conditions set forth in the
Letter Agreement and the Term Sheet, until definitive agreements are executed
and delivered. If definitive agreements are not executed and delivered, then,
subject to the receipt of any such required approvals of the Board of Directors
of the Company, the Term Sheet and the Letter Agreement shall constitute such
definitive agreements.
Upon the execution of definitive stock purchase and other agreements
relating to the Proposed Transaction, this Item 6 of Schedule 13D will be
amended by the Reporting Persons to reflect the terms set forth in such
definitive agreements.
Pursuant to the respective VHC and Wolfson Tag-Along Agreements and
based on discussions between the Reporting Persons and the VHC Group and the
Wolfsons, the Reporting Persons believe that the VHC Group and the Wolfsons (a)
will participate in the Proposed Transaction as set forth in the Letter
Agreement and the Term Sheet on the conditions set forth therein, to the fullest
extent permissible under the terms of the VHC Tag-Along Agreement and Wolfson
Tag-Along Agreement and (b) will agree that upon consummation of the Proposed
Transaction, including the full participation of such persons pursuant to such
Tag-Along Agreements, the respective VHC Tag-Along Agreement and Wolfson
Tag-Along Agreement will be terminated. Accordingly, each of such persons shall
no longer have any tag along or other rights under such Tag-Along Agreements,
and the Partnership will no longer have any rights of refusal or hold any
proxies with respect to the shares of common stock of the Company retained by
the VHC Group and the Wolfsons.
<PAGE>
CUSIP NO. 92656G 10 8 Page 16 of 25 Pages
Item 7 of the Original Statement is amended and supplemented as follows:
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99.16.1 Letter Agreement dated May 15, 1996 and accepted
May 16, 1996 between Liberty Media
Corporation and StarNet/CEA II Partners and
StarNet, Inc., with attached Term Sheet.
Exhibit 99.16.2 Press Release, dated May 16, 1996.
Except as specifically modified, amended or supplemented by this
Amendment No. 16, all of the information in the Original Statement is hereby
confirmed.
<PAGE>
CUSIP NO. 92656G 10 8 Page 17 of 25 Pages
SCHEDULE 13D
SIGNATURES
The undersigned, after reasonable inquiry and to the best of their
knowledge and belief, certify that the information set forth in this statement
is true, complete, and correct.
CEA INVESTORS PARTNERSHIP II, CEA INVESTORS, INC., a Florida
LTD., a Florida limited partnership corporation
By: CEA Investors, Inc.,
General Partner
By: /s/ Thomas W. Cardy
-------------------------------
As: Vice President
By: /s/ Thomas W. Cardy Dated: May 22, 1996
-----------------------------------
As: Vice President
Dated: May 22, 1996
STARNET/CEA II PARTNERS
By: CEA Investors Partnership II,
Ltd., a Florida Limited
Partnership, its General
Partner
/s/ J. Patrick Michaels, Jr.
-----------------------------------
J. Patrick Michaels, Jr. By: CEA Investors, Inc.,
General Partner
Dated: May 22, 1996
By: /s/ Thomas W. Cardy
-------------------------------
As: Vice President
Dated: May 22, 1996
See Exhibit Index (attached)
<PAGE>
CUSIP NO. 92656G 10 8 Page 18 of 25 Pages
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- - ----------- -----------------------
99.16.1 Letter Agreement dated May
15, 1996 and accepted May
16, 1996 between Liberty
Media Corporation and
StarNet/CEA II Partners and
StarNet, Inc., with
attached Term Sheet
99.16.2 Press Release, dated May 16, 1996
CUSIP NO. 92656G 10 8 Page 19 of 25 Pages
EXHIBIT 99.16.1
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 approval 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
<PAGE>
CUSIP NO. 92656G 10 8 Page 20 of 25 Pages
parties shall negotiate in good faith to renegotiate the transactions
contemplated by the Term Sheet in a mutually satisfactory fashion.
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: Vice President
ACCEPTED AND AGREED
this 16th day of May, 1996
STARNET/CEA II PARTNERS
By: /s/ J. PATRICK MICHAELS,
---------------------------------
Name: J. Patrick Michaels
Title: Vice Chairman
STARNET, INC.
By: /s/ H.F. "GERRY" LENFEST
---------------------------------
Name: H.F. Gerry Lenfest
Title: CEO
<PAGE>
CUSIP NO. 92656G 10 8 Page 21 of 25 Pages
PROJECT PUNCH
TERM SHEET
PARTIES: Sellers: StarNet/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 Sellers' Proxy
Shares shall also expire
Sellers agree not to sell or pledge any of their
shares prior to the expiration of the option.
<PAGE>
CUSIP NO. 92656G 10 8 Page 22 of 25 Pages
StarNet/CEA and StarNet, Inc. shall use their good
faith and reasonable best efforts to cause the
Company to grant to 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 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 representations and
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 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 transaction shall close upon receipt of any
required governmental approvals but in no event
later than September 30, 1996
<PAGE>
CUSIP NO. 92656G 10 8 Page 23 of 25 Pages
Sellers' Board representatives will resign at
closing and be replaced by Buyer's
representatives. 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
CUSIP NO. 92656G 10 8 Page 24 of 25 Pages
EXHIBIT 99.16.2
FOR IMMEDIATE RELEASE
MAY 16, 1996
LIBERTY MEDIA CORPORATION SIGNS A LETTER
OF INTENT TO ACQUIRE A CONTROLLING INTEREST
IN VIDEO JUKEBOX NETWORK, INC.
Englewood, Colorado - Liberty Media Corporation today announced that it has
signed a letter of intent to acquire a controlling interest in Video Jukebox
Network, Inc. ("VJN"), which owns and operates THE BOX interactive music video
service.
Liberty Media, which has held a 5% - 10% minority interest in VJN for 5 1/2
years, has signed a letter of intent to increase its position through the
purchase of outstanding shares. Subject to board approval and satisfactory
completion of due diligence by Liberty, Liberty will purchase 5.6 million shares
of VJN stock for $2.00 per share from a selling control group led by StarNet,
Inc. and Communications Equity Associates, Inc. The selling group will also
grant to Liberty an option to acquire an additional 5.7 million shares at an
initial exercise price of $2.00 per share, as well as a proxy entitling Liberty
to vote such shares. In addition, VJN will, subject to board approval, issue to
Liberty options to purchase an additional 4.7 million shares at an initial
exercise price of $2.00.
Upon completion of the first step of the transaction, Liberty will own 28% of
the outstanding shares of VJN and will have 52% of the outstanding votes.
Assuming Liberty exercises its options from the selling group and VJN, Liberty
will own 60% of the outstanding shares (56% on a fully diluted basis).
Peter Barton, President and CEO of Liberty Media, comments, "The implementation
of new digital technology THE BOX has developed and is rolling out, will
differentiate the network from any other service. It will enable THE BOX to
localize programming efficiency while maintaining the leverage of a national
brand. It also positions THE BOX to find new media platforms, including on-line
and digitally compressed tiers."
Alan McGlade, President and CEO of VJN, comments, "Liberty is the ideal partner
for THE BOX, with both substantial resources and an unequaled depth of
experience in the cable programming business. Liberty's history of offering a
supportive environment to creative and entrepreneurial companies such as THE
BOX, will insure that the development of the network's unique identity
continues."
Rick Michaels, Chairman of Communications Equity Associates, speaking for the
StarNet/CEA selling group, commented, "We are pleased to have arranged this
important alliance between
<PAGE>
CUSIP NO. 92656G 10 8 Page 25 of 25 Pages
Liberty Media and VJN. We believe that Liberty Media will be able to build on
the substantial efforts which CEA and StarNet have made since we acquired
operating control of VJN in 1993 for THE BOX to realize its potential."
Liberty Media Group is a division of Tele-Communications, Inc. Liberty has
ownership interests in more than 90 cable television networks, including CNN,
Discovery Channel, TNT, QVC and The Family Channel. Liberty Media Group Series A
and Series B Common Stock are series of Tele-Communications, Inc. common stock
and are traded on the Nasdaq National Market under the symbols LBTYA and LBTYB,
respectively.
Video Jukebox Network, Inc. traded on the Nasdaq Stock Market under the symbol
JUKE, is an interactive entertainment company that owns and operates THE BOX,
the planet's first and only interactive all music video network. A national
network made up of local market affiliates, THE BOX gives viewers the option to
dial a 900 number and request the video of their choice from an on-screen menu,
with the charge for the request billed to their phone, or to watch other callers
selections for free. THE BOX is now available throughout the United States,
Puerto Rico, the UK, Argentina and Holland through locally installed interactive
BOXes and on satellite via Galaxy 7, T13, Digicipher channel 2.
StarNet, Inc. and affiliates of Communications Equity Associates acquired voting
control of VJN in 1993. StarNet is a provider of automated program promotion
using advanced digital technology. CEA is an investment and merchant banking
firm providing advisory and other services to the media and communications
industry worldwide.
CONTACT:
Vivian Carr
Vice President, Investor Relations
Liberty Media Corporation
(303) 721-5400
Susan Ainsworth
Director of Press Relations
Video Jukebox Network, Inc.
(305) 674-5090
David Burns
Executive Vice President
Communications Equity Associates, Inc.
(813) 226-8844
