<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
THE BOX WORLDWIDE, INC.
(fka Video Jukebox Network, Inc.)
---------------------------------
(Name of Issuer)
Common Stock, $.001 par value
-----------------------------
(Title of Class of Securities)
92656G108
---------
(CUSIP Number)
Stephen M. Brett, Esq., Executive Vice President and General Counsel,
Tele-Communications, Inc.
Terrace Tower II, 5619 DTC Parkway, Englewood, CO 80111, (303-267-5500)
------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 21, 1997
-------------
(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: [_].
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).
Exhibit Index is on Page 12
<PAGE>
Cusip No. 92656G108
- --------------------------------------------------------------------------------
(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
TELE-COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Source of Funds
AF
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [_]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
Number of (7) Sole Voting Power 1,203,464 Shares*
Shares Bene-
ficially --------------------------------------------------------
Owned by (8) Shared Voting Power 0 Shares
Each Report-
ing Person ----------------------------------------------------------
With (9) Sole Dispositive Power 1,203,464 Shares*
----------------------------------------------------------
(10) Shared Dispositive Power 0 Shares
- --------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,203,464 Shares*
- --------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [_]
- --------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
5.0%
- --------------------------------------------------------------------------------
(14) Type of Reporting Person
HC, CO
- ----------------------
* Does not include shares issuable pursuant to anti-dilution and preemptive
rights granted by the Issuer to the Reporting Person. (See Item 6)
2
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 1)
Statement of
TELE-COMMUNICATIONS, INC.
Pursuant to Section 13(d) of the
Securities Exchange Act of 1934
in respect of
THE BOX WORLDWIDE, INC.
(fka Video Jukebox Network, Inc.)
(Commission File No. 0-15445)
ITEM 1. Security and Issuer
-------------------
Tele-Communications, Inc., a Delaware corporation ("TCI"), hereby
amends and supplements its Statement on Schedule 13D (the "Statement") with
respect to the Common Stock, $.001 par value (the "Common Stock"), of The Box
Worldwide, Inc., a Florida corporation (the "Issuer"). In February, 1997, the
Issuer changed its name to The Box Worldwide, Inc. from Video Jukebox Network,
Inc. TCI is the beneficial owner of shares of Common Stock and is filing this
Amendment No. 1 to the Statement as a result of a letter agreement concerning
the merger of the Issuer. (See Items 3, 4 and 7). In addition, pursuant to
Rule 13d-2(c) of the Securities Exchange Act of 1934, as amended, this Amendment
No. 1 also restates the Statement.
The principal executive offices of the Issuer are located at 1221
Collins Avenue, Miami Beach, Florida 33139. Unless otherwise indicated,
capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Statement.
ITEM 2. Identity and Background
-----------------------
This Amendment No. 1 is being filed by TCI, whose principal business
address is 5619 DTC Parkway, Englewood, Colorado 80111.
TCI, through its subsidiaries and affiliates, is principally engaged
in the construction, acquisition, ownership, and operation of cable television
systems and the provision of satellite-delivered video entertainment,
information and home shopping programming services to various video distribution
media, principally cable television systems. TCI also has investments in cable
and telecommunications operations and television programming in certain
international markets as well as investments in companies and joint ventures
involved in developing and providing programming for new television and
telecommunications technologies. TCI is a Delaware corporation and was
incorporated in 1994. TCI Communications, Inc. ("TCIC"), a majority owned
subsidiary of TCI, and its predecessors have been engaged in the cable
television business since the early 1950's. Prior to August 1994, TCI was named
TCI/Liberty Holding Company and TCIC was named Tele-Communications, Inc.
Schedule 1 attached to this Amendment No. 1 to the Statement contains
the following information concerning each director, executive officer or
controlling person of TCI: (i) name and
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residence or business address, (ii) principal occupation or employment; and
(iii) the name, principal business and address of any corporation or other
organization in which such employment is conducted. Schedule 1 is incorporated
herein by reference and replaces the Schedule previously filed with the
Statement.
To the knowledge of TCI, each of the persons named on Schedule 1 (the
"Schedule 1 Persons") is a United States citizen. During the last five years,
neither TCI nor any of the Schedule 1 Persons (to the knowledge of TCI) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, neither TCI nor any of the Schedule
1 Persons (to the knowledge of TCI) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and, as a result of
such proceeding, is or was 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.
August 1994 Business Combination
- --------------------------------
On August 4, 1994, at Special Meetings of Stockholders of TCIC and
Liberty Media Corporation ("LMC"), there was approved and adopted an Agreement
and Plan of Merger, dated as of January 27, 1994, as amended, which provided
for, among other things, the business combination of TCIC and LMC resulting in
the companies becoming wholly owned subsidiaries of TCI (the "Business
Combination"). The Business Combination became effective on August 4, 1994,
upon certain filings with state authorities. Upon the effectiveness of the
Business Combination, TCI became the beneficial owner of all the Common Stock
owned by LMC.
The foregoing summary of the Business Combination is qualified in its
entirety by reference to the complete terms, provisions and conditions thereof
set forth in the Proxy Statement of LMC and TCIC and the Prospectus of TCI filed
on June 23, 1994 (the "Proxy Statement/Prospectus") by such parties as part of a
Registration Statement on Form S-4 (No. 33-54263). The Registration Statement
and Proxy Statement/Prospectus are incorporated herein by reference and were so
filed herewith as Exhibit 7(A) in the original Statement.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
Acquisition Pursuant to the Business Combination
- ------------------------------------------------
TCI currently beneficially owns, indirectly through a subsidiary, a
total of 1,203,464 shares of Common Stock. TCI acquired the Common Stock as a
result of the Business Combination described in Item 2 above. The consideration
for the acquisition of such Common Stock was the consideration given in the
Business Combination which is described in the Proxy Statement/Prospectus under
the heading "THE MERGER AGREEMENT--Consideration to be Received in the Mergers".
Proposed Merger
- ---------------
On July 21, 1997, the Issuer and TCI Music, Inc., a Delaware
corporation and a wholly owned subsidiary of TCI ("TCI Music"), entered into a
letter agreement (the "Agreement") in which the parties thereto intend to merge
the Issuer with a newly formed wholly owned subsidiary of TCI Music, with the
Issuer as the surviving corporation (the "Merger"). Pursuant to the terms of
the proposed Merger, the outstanding shares of Common Stock of the Issuer,
including the shares of Common Stock beneficially owned by TCI, will be
exchanged for shares of a new issue of TCI Music convertible preferred stock
(the "New Stock") with an aggregate initial liquidation value of approximately
$38,500,000, less funds used to purchase fractional shares and to acquire shares
of dissenting shareholders of the Issuer, if any.
4
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Each share of New Stock will be convertible into three shares of
Series A Common Stock, par value $.01 per share, of TCI Music (the "Series A
Stock") at any time at the option of the holder thereof. The New Stock
conversion rate will have anti-dilution rights and will be subject to customary
adjustments for stock splits, dividends, recapitalizations, subdivisions,
combinations, reclassifications and similar events. The New Stock will be
subject to redemption by TCI Music at its election or at the election of the
holders upon the occurrence of certain events. Holders of the New Stock will be
entitled to attend all meetings and will be entitled to the number of votes for
each share of New Stock held equal to the number of shares of the Series A Stock
into which the New Stock is then convertible.
Consummation of the Merger is subject to several conditions precedent,
including, but not limited to: (a) the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, (b) the absence of any material adverse change in the
financial condition or results of operations of either party to the Merger, (c)
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, pertaining to the issuance of the New Stock and the Series A Stock
thereunder, (d) the approval of the Merger by the shareholders of the Issuer and
TCI Music to the extent required by law, and (e) the Issuer's receipt of a
written commitment from TCI that if TCI Music is not able to refinance a
$40,000,000 loan currently owed by TCI Music to TCI prior to its maturity, TCI
will extend the maturity date thereof to allow TCI Music a reasonable period of
time to obtain third-party financing sufficient to repay such loan.
The Issuer and TCI Music agreed that the Agreement is intended to
assist the parties in negotiating the terms of a definitive merger agreement.
If, however, a definitive merger agreement is not prepared, the Agreement will
be treated as the definitive merger agreement. The foregoing summary of the
terms of the proposed Merger is qualified in its entirety by reference to the
text of the Agreement filed as Exhibit 7(F) to this Amendment No. 1 of the
Statement, which is incorporated herein by this reference. TCI did not pay any
new consideration in connection with the Agreement.
ITEM 4. Purpose of Transaction
----------------------
Due to the current financial condition of the Issuer, management of
the Issuer and the board of directors of the Issuer are continually reviewing
alternatives and strategies for improving the financial performance of the
Issuer. The Merger is a result of that review. At this time TCI will maintain
its investment in the Issuer, although no assurance can be given that the final
terms of the Merger or any termination thereof will not require a change in
TCI's present investment in the Issuer. In any event, TCI reserves the right,
depending on other relevant factors, to acquire additional shares of the Common
Stock of the Issuer in open market or privately negotiated transactions, to
dispose of all or a portion of its holdings of shares of the Common Stock of the
Issuer, or to change its intention with respect to any or all of the matters
referred to in this Item 4. Upon consummation of the Merger, TCI, as the
controlling person of TCI Music, will be the beneficial owner of all the Common
Stock and the registration of the Common Stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended, would be terminated.
Except as otherwise described herein, neither TCI nor, to the best of
its knowledge, any of its executive officers, directors or controlling persons,
have any present plans or proposals which relate to or would result in: (i) any
acquisition by any person of additional securities of the Issuer, or any
disposition of securities of the Issuer; (ii) any extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries; (iii) any sale or transfer of a material
amount of assets of the Issuer or any of its subsidiaries; (iv) any change in
the present board of directors or management of the Issuer, including any plans
or proposals to change the number or term of directors or to fill any existing
vacancies on the board; (v) any material change in the present capitalization or
dividend policy of the Issuer; (vi) any other material change in the Issuer's
business or corporate structure; (vii) any changes in the Issuer's charter, by-
laws, or other instruments corresponding thereto or other actions which may
impede the acquisition of control of the Issuer by any person; (viii) any
delisting from a national securities exchange or any loss of authorization for
quotation in an inter-dealer quotation system of a
5
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registered national securities association of a class of securities of the
Issuer; (ix) any termination of registration pursuant to section 12(g)(4) of the
Exchange Act of a class of equity securities of the Issuer; or (x) any action
similar to any of those enumerated above.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
(a) TCI presently beneficially owns 1,203,464 shares of the Common
Stock. The 1,203,464 shares of the Common Stock, beneficially owned by TCI,
represent 5.0% of the 24,001,781 shares of the Common Stock outstanding as of
January 28, 1997, as reported by the Issuer in its Information Statement dated
January 28, 1997. To the knowledge of TCI, none of the Schedule 1 Persons has
any interest in any securities of the Issuer.
Statements made herein concerning the beneficial ownership of the
Common Stock by TCI excludes 14,210,419 shares of Common Stock, which TCI may be
deemed to beneficially own by virtue of TCI's ownership, through certain
affiliates, of 50% of the equity securities of Lenfest Communications, Inc.
("LCI"). TCI disclaims any beneficial ownership of such shares of Common Stock
beneficially owned by LCI or by any of LCI's affiliates, including StarNet, Inc.
and a joint venture of StarNet, Inc. and StarNet/CEA II Partners. Through
contractual arrangements among the stockholders of LCI, H.F. Lenfest, the
President, Chief Executive Officer and a director of LCI, has the exclusive
right to control a majority of the board of directors of LCI and the management
and business affairs of LCI and its affiliates. The beneficial ownership of the
Common Stock by LCI and its affiliates are reported in their respective Schedule
13D filings.
(b) TCI has the sole power to vote, or to direct the voting of, the
shares of the Common Stock that TCI beneficially owns, and to dispose of, or to
direct the disposition of, the shares of the Common Stock that TCI beneficially
owns.
(c) Except for the Merger contemplated by the Agreement, neither TCI
nor, to the knowledge of TCI, any of the persons described on Schedule 1, has
executed transactions in the Common Stock of the Issuer during the past sixty
(60) days.
(d) There is no person that has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of the Common Stock beneficially owned by TCI.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer
---------------------------
As a result of the Business Combination described in Item 2 above, TCI
is a party to that certain Stock Purchase Agreement, dated as of November 21,
1990 (the "Stock Agreement"), between the Issuer and TCI Liberty, Inc. (an
indirect subsidiary of TCI). Pursuant to the terms of the Stock Agreement, TCI
may acquire additional shares of Common Stock if (a) preemptive rights granted
therein are exercised in connection with any future offerings of securities by
the Issuer, or (b) without the payment of any additional consideration, anti-
dilution rights set forth therein are triggered. In addition, the Stock
Agreement grants to TCI certain demand and piggyback registration rights with
respect to the Common Stock held by it. Also, TCI has certain most favored
nations rights (relating to, among other things, anti-dilution, indemnification,
and registration rights) with respect to (a) future issuances and sales of
shares of the Common Stock of the Issuer or rights to acquire Common Stock of
the Issuer, and (b) any amendments, modifications or supplements to existing
rights of the Issuer. This summary of the terms of the Stock
6
<PAGE>
Agreement is qualified in its entirety by reference to the text of the Stock
Agreement attached hereto as Exhibit 7(C) and incorporated herein by this
reference.
In connection with the execution of the Stock Agreement, the Issuer
executed a letter agreement pursuant to which the Issuer agreed not to enter
into certain transactions with Affiliated Persons (as defined in said letter
agreement) without the consent of TCI. In addition, an affiliate of the Issuer,
VJN Partners, executed a letter agreement pursuant to which VJN Partners agreed
to waive certain rights previously granted to it with respect to its Common
Stock and warrants of the Issuer in connection with the transactions
contemplated by the Stock Agreement and to restrictions on the Issuer's ability
to repay certain loans made by such affiliate to the Issuer. The foregoing
summaries of said letter agreements are qualified in their entirety by reference
to the text of said letter agreements filed as Exhibits 7(D) and 7(E),
respectively, to the Statement, each of which is incorporated herein by this
reference.
Except as described above and in Items 3, 4 and 7, hereof, there are
presently no contracts, arrangements, understandings or relationships among TCI
and other persons with respect to the Common Stock of the Issuer.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
(A) Registration Statement on Form S-4, filed by TCI/Liberty Holding
Company on June 23, 1994, and thereafter amended and ordered effective June 23,
1994, under Commission File No. 33-54263, which is hereby incorporated by this
reference. (Previously submitted with the original Statement filed on August 4,
1994, via incorporation by reference.)
(B) Press Release dated August 4, 1994. (Previously submitted with
the original Statement filed on August 4, 1994.)
(C) Stock Purchase Agreement, dated as of November 21, 1990, between
the Issuer and TCI Liberty, Inc., an indirect subsidiary of TCI. (Previously
submitted with the original Statement filed on August 4, 1994, via incorporation
by reference.)
(D) Letter Agreement, dated November 21, 1990, between the Issuer and
TCI Liberty, Inc., an indirect subsidiary of TCI. (Previously submitted with
the original Statement filed on. August 4, 1994, via incorporation by
reference.)
(E) Letter Agreement, dated November 21, 1990, between the Issuer and
TCI Liberty, Inc., an indirect subsidiary of TCI. (Previously submitted with
the original Statement filed on August 4, 1994, via incorporation by reference.)
7(F) Letter Agreement, dated July 21, 1997, between the Issuer and TCI
Music (an indirect subsidiary of TCI), together with attached term sheet.
7
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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 Amendment No. 1 to the Statement
is true, complete and correct.
August 7, 1997 TELE-COMMUNICATIONS, INC.
- --------------
/s/ Stephen M. Brett
-----------------------------
Stephen M. Brett
Executive Vice President and
General Counsel
8
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SCHEDULE 1
----------
Directors, Executive Officers and Controlling Persons
of
Tele-Communications, Inc. ("TCI")
DIRECTORS
---------
<TABLE>
<CAPTION>
Name Principal Occupation & Principal Business or Organization in
- ---- Business Address Which such Employment Is Conducted
----------------------- ----------------------------------
<S> <C> <C>
Tony L. Coelho Director of TCI; Chairman & Chief Executive Cable television & telecommunications
Officer of ETC w/tci, Inc.; & programming services;
Chairman & Chief Executive Officer of Coelho
Associates, LLC Investment consulting firm
1325 Avenue of the Americas
26th Floor
New York, New York 10019
Donne F. Fisher Director of & Consultant to TCI; Business Cable television & telecommunications
Executive & programming services
5619 DTC Parkway
Englewood, CO 80111
John W. Gallivan Director of TCI; Chairman of the Board Newspaper publishing
of Kearns-Tribune Corporation
400 Tribune Building
Salt Lake City, UT 84111
Paul A. Gould Director of TCI; Managing Director of Investment banking services
Allen & Company Incorporated
711 5/th/ Avenue
New York, New York 10022
Leo J. Hindery, Jr. President, Chief Operating Officer and Cable television & telecommunications
Director of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
Jerome H. Kern Director of TCI; Business Consultant; Special Business Consulting; Law
Counsel to Baker & Botts, L.L.P.
5619 DTC Parkway
Englewood, CO 80111
Kim Magness Director of TCI; Business Executive Management of various business
4000 E. Belleview enterprises
Englewood, CO 80111
John C. Malone Chairman of the Board, Chief Executive Officer Cable television & telecommunications
& Director of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
</TABLE>
9
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<TABLE>
<CAPTION>
Name Principal Occupation & Principal Business or Organization in
- ---- Business Address Which such Employment Is Conducted
----------------------- ----------------------------------
<S> <C> <C>
Robert A. Naify Director of TCI; President & Chief Executive Provider of services to the motion picture
Officer of Todd-AO Corporation industry
172 Golden Gate Avenue
San Francisco, CA 94102
J.C. Sparkman Director of & Consultant to TCI; Business Cable television & telecommunications
Executive & programming services
5619 DTC Parkway
Englewood, CO 80111
EXECUTIVE OFFICERS
------------------
Gary K. Bracken Senior Vice President & Controller Cable television & telecommunications
of TCI Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Robert R. Bennett Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
Stephen M. Brett Executive Vice President, General Counsel Cable television & telecommunications
& Secretary of TCI & programming services
5619 DTC Parkway
Englewood, CO 80111
Brendan R. Clouston Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
William R. Fitzgerald Senior Vice President of TCI Cable television & telecommunications
Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Marvin Jones Executive Vice President & Chief Operating Cable television & telecommunications
Officer of TCI Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Larry E. Romrell Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation & Principal Business or Organization in
- ---- Business Address Which such Employment Is Conducted
----------------------- ----------------------------------
<S> <C> <C>
Bernard W. Senior Vice President & Treasurer of TCI Cable television & telecommunications
Schotters, II Communications, Inc. & programming services
5619 DTC Parkway
Englewood, CO 80111
Fred A. Vierra Executive Vice President of TCI Cable television & telecommunications
5619 DTC Parkway & programming services
Englewood, CO 80111
</TABLE>
11
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EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
EXHIBIT EXHIBIT PAGE
NUMBER
- --------------------------------------------------------------------------------
<S> <C> <C>
7(A) Registration Statement on Form S-4, filed by TCI/Liberty Previously
Holding Company on June 23, 1994, and thereafter amended filed
and ordered effective June 23, 1994, under Commission
File No. 33-54263, which is hereby incorporated by this
reference. (Previously submitted with the original
Statement filed on August 11, 1994, via incorporation
by reference.)
7(B) Press Release dated August 4, 1994. (Previously submitted Previously
with the original Statement filed on August 4, 1994.) filed
7(C) Stock Purchase Agreement dated as of November 21, 1990, Previously
between the Issuer and TCI Liberty, Inc., an indirect filed
subsidiary of TCI. (Previously submitted with the
original Statement filed on August 4, 1994, via
incorporation by reference.)
7(D) Letter Agreement, dated November 21, 1990, between the Previously
Issuer and TCI Liberty, Inc., an indirect subsidiary filed
of TCI. (Previously submitted with the original
Statement filed on August 4, 1994, via incorporation by
reference.)
7(E) Letter Agreement, dated November 21, 1990, between the Previously
Issuer and TCI Liberty, Inc., an direct subsidiary of filed
TCI. (Previously submitted with the original Statement
filed on August 4, 1994, via incorporation by reference.)
7(F) Letter Agreement, dated July 21, 1997, between the Issuer 13
and TCI Music. (an indirect subsidiary of TCI), together
with attached term sheet.
</TABLE>
12
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EXHIBIT 7(F)
TCI MUSIC, INC.
8101 East Prentice Avenue, Suite 500
Englewood, CO 80111
July 21, 1997
Board of Directors
The Box Worldwide, 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 TCI
Music, Inc. ("TCIM") and The Box Worldwide, Inc. ("The Box") prior to July 22,
1997, we intend to merge The Box into a newly formed wholly owned subsidiary of
TCIM, with The Box as the surviving corporation, all as more fully described in
the Term Sheet.
The Term Sheet contemplates that the agreements contained therein will be
superseded by a definitive merger agreement 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 The Box and TCIM, 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 The Box and TCIM, the Term Sheet and this
agreement shall constitute such definitive agreements.
13
<PAGE>
Board of Directors
July 21, 1997
Page 2
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,
TCI MUSIC, INC.
By: /s/ David Koff
--------------
Name:
Title: President
ACCEPTED AND AGREED
this 21st day of July, 1997
THE BOX WORLDWIDE, INC.
By: /s/ Alan McGlade
----------------
Name: Alan McGlade
Title: President and CEO
<PAGE>
Term Sheet
Parties
- -------
SELLERS: The Shareholders of The Box Worldwide, Inc. (the "Company").
BUYER: TCI Music, Inc.
Transaction
- -----------
The merger of the Company into a newly created, wholly owned subsidiary of the
Buyer with the Company as the surviving entity.
Securities Being Exchanged
- --------------------------
25,668,448 shares of The Box Worldwide, Inc. Common Stock, $.001 par value per
share, such shares representing all the Company stock outstanding immediately
before the merger (after giving effect to conversion of the Company's
outstanding convertible preferred stock), less shares held by dissenting
minority shareholders ("Dissenting Shareholders") upon exercise of any appraisal
rights such shareholders may be entitled to under applicable state law.
Purchase Price
- --------------
$1.50 per share ("Original Purchase Price")
Amount
- ------
$38,502,672
Instrument
- ----------
A convertible preferred stock ("New Preferred Stock") of Buyer
Number of Shares
- ----------------
The number of shares of New Preferred Stock to be issued will be determined by
dividing $38,502,672 (less the product of $1.50 times the number of shares of
the Company's common stock held by the Dissenting Shareholders) by three times
the average closing bid/ask price of TCI Music Series A Common Stock ("Common
Stock") for a period of 20 consecutive trading days ending on the third trading
day prior to the closing of the Transaction. Cash will be paid in lieu of any
fractional shares of New Preferred Stock. Each share of New Preferred Stock
will be convertible into three shares of Common Stock, as set forth in the
section below captioned "Optional Conversion".
1
<PAGE>
Dividend
- --------
The holders of the New Preferred Stock will receive no dividends other than any
dividends on Common Stock (excluding stock dividends for which an anti-dilution
adjustment is made), which shall also be payable to holders of New Preferred
Stock on a fully converted basis.
Liquidation Preference
- ----------------------
In the event of liquidation, dissolution, or winding-up of the Buyer, the
holders of the New Preferred Stock will be entitled to receive in preference to
the holders of Common Stock an amount equal to the Original Purchase Price plus
the greater of (a) 3% or (b) CPI, with a 5% maximum in any year, compounded
annually. Holders will have the right to convert up until the date of any
liquidation, dissolution or winding up.
A sale of all or substantially all of the Buyer's assets or any consolidation,
merger or other transaction or series of related transactions in which the
stockholders of the Buyer immediately prior to such transaction or transactions
do not retain at least 50% of the voting power of the Buyer shall be deemed to
be a liquidation or winding-up for purposes of the liquidation preference.
Optional Conversion
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The holders of the New Preferred Stock shall have the right, at any time from
the date of issuance at the option of such holder, to convert each share of New
Preferred Stock into three shares of Common Stock and thereafter as subject to
adjustment as provided below with respect to anti-dilution protection. The
Buyer will use its best efforts to cause the shares of Common Stock issuable
upon conversion of the New Preferred Stock to be qualified for quotation on
NASDAQ, it being acknowledged that until the rights ("Rights") issued by Tele-
Communications, Inc. ("TCI") in connection with the Buyer's acquisition of DMX
Inc. shall have expired or been fully exercised, the shares of Common Stock
issuable upon conversion of New Preferred Stock may be required, for the purpose
of such qualification, to be treated as a class of securities separate from the
shares of Common Stock issued by the Buyer in its acquisition of DMX Inc. The
shares of Common Stock issuable upon conversion of the New Preferred Stock will
not be entitled to any Rights, but otherwise will be identical to, and will be
of the same class and series as, the shares of Common Stock held by holders of
the Rights, both before and after the expiration or full exercise of the Rights.
Anti-dilution Protection
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If the Buyer issues or is deemed to issue shares of Common Stock (other than
shares issued or issuable to employees, officers or directors under plans or
arrangements approved by the Board
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of Directors of the Buyer) at a purchase price per share less than the current
market price of shares of New Preferred Stock, the then current conversion price
of shares of New Preferred Stock shall be adjusted based upon a weighted average
anti-dilution adjustment. The conversion price of the New Preferred Stock shall
also be subject to customary adjustments for stock splits, dividends,
recapitalizations, subdivisions, combinations, reclassifications, etc.
Redemption
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The Buyer may redeem, with proper notice, the New Preferred Stock (i) at any
time after the closing sale price of the Common Stock (or, if the Common Stock
is not traded on a securities exchange or the NASDAQ NMS, the average of the
closing bid and asked prices) equals or exceeds, for a period of at least 30
consecutive trading days, 125% of the price used to establish the number of
shares of New Preferred Stock issuable to the Sellers or (ii) during the 30-day
period immediately following the fourth, sixth and eighth anniversary dates of
the issuance and shall be required to redeem the New Preferred Stock on the
tenth anniversary of the issuance, in each case at the Original Purchase Price
plus the greater of (a) 3% or (b) the CPI with a 5% maximum in any year,
compounded annually.
Voting Rights
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Holders of the New Preferred Stock shall be entitled to attend all meetings of
the shareholders of the Buyer and shall be entitled to the number of votes for
each share held equal to the number of shares of Common Stock into which the
shares of New Preferred Stock are then convertible. Holders of the New
Preferred Stock shall vote together as one class with holders of the Common
Stock.
Registration Rights
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The New Preferred Stock and the Common Stock underlying the New Preferred Stock
shall be registered pursuant to the combined registration statement/proxy
statement required to effect the Transaction.
Registration Expenses
- ---------------------
The Buyer shall pay all reasonable registration expenses in connection with the
above registration statement.
The Merger Agreement
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The parties agree to use their best efforts to negotiate in good faith a
definitive merger agreement. If, after exhausting such efforts, the parties
fail within a reasonable period of time to execute and deliver a definitive
merger agreement, then this Term Sheet shall constitute such
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definitive agreement. The merger agreement shall be prepared by counsel for the
Buyer, and shall contain, among other things, representations and warranties of
the Buyer and the Company, covenants of the Buyer and the Company and closing
conditions. The merger agreement (and this Term Sheet to the extent that it
shall be deemed to be the definitive merger agreement as provided for above)
shall be subject: (i) to the requisite approval of the shareholders of the Buyer
and the Company as required by applicable law; (ii) to a condition that the
Company may terminate the Transaction if the Company is presented with an
unsolicited offer for a transaction that is more favorable for the Company's
shareholders than the Transaction, provided that the Company gives the Buyer
reasonable notice of receipt of any unsolicited offer; (iii) to the parties
obtaining all approvals necessary to consummate the Transaction, including
expiration or termination of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act and any approvals or clearances required from
the U.S. Department of Justice, Federal Trade Commission, Securities and
Exchange Commission and Federal Communications Commission; (iv) to the Buyer
entering into the Contribution Agreement with TCI as will be revised on the
terms recently disclosed to the Company; and (v) the Transaction qualifying as a
tax-free reorganization under the Internal Revenue Code. In addition, the
respective obligations of the parties to consummate the Transaction shall be
subject to there being no material adverse change in the other parties'
financial condition, operations, assets, liabilities or business since the end
of the period covered by such party's most recent annual or quarterly report
under Section 13 or 15(d) of the Securities Exchange Act of 1934. Promptly after
execution of the letter agreement to which this Term Sheet is attached, the
Company shall obtain (and it will be a condition to effectiveness of the
obligations of the Buyer under the letter agreement and this Term Sheet that the
Company does obtain) an undertaking in form and substance reasonably
satisfactory to the Buyer from each director of the Company that he will cause
the shares of the Company's Common Stock that he beneficially owns to be voted
in favor of the Transaction pursuant to the terms of the definitive merger
agreement (including, if applicable this Term Sheet) so long as such definitive
merger agreement or such undertaking remains in effect and containing such other
provisions as are customarily included in voting agreements for similar
transactions. If such undertakings are not obtained within 10 business days
after the date the letter agreement is executed by the Buyer and the Company,
the Buyer, at its election, may terminate the letter agreement and this Term
Sheet. The letter agreement and this Term Sheet also may be terminated, at the
election of either the Buyer or the Company, if (i) the Company's Board of
Directors determines that its approval of the letter agreement and this Term
Sheet should be subject to receipt of an opinion of a financial advisor retained
by the Board of Directors or a committee thereof substantially to the effect
that the Transaction is fair to the shareholders of the Company from a financial
point of view (a "Fairness Opinion") and (ii) within 10 business days after the
date the letter agreement is executed by the Buyer and the Company, the Company
has not given the Buyer notice that a Fairness Opinion has been received. If
the Company's Board of Directors elects not to make its approval of the letter
agreement and this Term Sheet subject to receipt of a Fairness Opinion, the
letter agreement and this Term Sheet will be binding on the Company immediately
upon such approval. The Company and the Buyer shall bear their own expenses
(other than the registration expenses
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referred to above) related to the Transaction, including legal expenses.
TCI Loan
- --------
It will be a condition to the Company's obligations to complete the Transaction
that the Buyer shall have delivered to the Company a written commitment from TCI
to the Company that if the Buyer is not able to refinance the $40 million loan
currently owed by the Buyer to TCI before the scheduled maturity thereof, TCI
will extend the time for repayment of such loan to permit the Buyer to have a
reasonable period of time to obtain third-party financing sufficient to repay
the loan.
Digital Multiplex
- -----------------
Buyer shall hire the Company on a contract basis on the date of signing the
letter agreement to which this Term Sheet is attached to develop a four channel
Digital Music Video Multiplex of Buyer which shall be distributed through TCI's
Digital Tier and the Headend In The Sky (HITS). That contract may be terminated
at the Buyer's option if the Transaction is abandoned.
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