<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
COLLEGE TELEVISION NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C>
DELAWARE 13-3557317
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
5784 LAKE FORREST DRIVE, SUITE 275
ATLANTA, GEORGIA 30328
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JASON ELKIN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
5784 LAKE FORREST DRIVE, SUITE 275
ATLANTA, GEORGIA 30328
(800) 256-1636
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
NEIL H. DICKSON, ESQ.
ROSEMARIE A. THURSTON, ESQ.
MORRIS, MANNING & MARTIN, L.L.P.
1600 ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, N.E.
ATLANTA, GEORGIA 30326
(404) 233-7000
(404) 365-9532 (FAX)
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered in this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _________.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF TO BE PRICE AGGREGATE AMOUNT OF
SHARES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value... 6,250,000 $1.60 $10,000,000 $3,448.28
- ------------------------------------------------------------------------------------------------
Common Stock issuable upon
exercise of Warrant............ 152,100 $1.60 $243,360 $83.92
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
COLLEGE TELEVISION NETWORK, INC.
COMMON STOCK
College Television Network, Inc. ("CTN" or the "Company") is distributing to
holders of record as of the close of business on July 17, 1998 (the "Record
Date"), of its common stock, $.005 par value per share (the "Common Stock"),
one nontransferable right (each, a "Right") for each 1.2825 shares of Common
Stock held on the Record Date, with each such Right entitling the holder
thereof (a "Holder") to subscribe for and purchase one share of Common Stock
(the "Basic Subscription Privilege") for a price of $1.60 per share (the
"Subscription Price"). The Rights will expire at 5:00 p.m. New York City time,
on , 1998, unless extended as described herein (the "Expiration
Date"). If shares of Common Stock offered hereby are not purchased by Holders
pursuant to the Basic Subscription Privilege (collectively, such shares are
sometimes hereinafter referred to as the "Excess Shares"), any Holder
purchasing all of the shares of Common Stock available to it pursuant to the
Basic Subscription Privilege may purchase the number of Excess Shares
specified by the Holder in the Subscription Documents (as defined below),
subject to proration (the "Oversubscription Privilege"). See "The Rights
Offering--Basic Subscription Privilege."
The Company has entered into a Standby Stock Purchase Agreement (the
"Purchase Agreement") with U-C Holdings, L.L.C. ("U-C Holdings"), the holder
of 5,818,181 shares of Common Stock, representing approximately 72.6% of the
outstanding shares of the Company, pursuant to which U-C Holdings has agreed
to subscribe for and purchase all of the 4,536,593 shares of Common Stock
issuable to it upon exercise of the Rights distributed to U-C Holdings, for an
aggregate purchase price of $7,258,549 (the "Purchase Commitment"). Pursuant
to the Purchase Agreement, U-C Holdings has also agreed that, in the event
that any shares of Common Stock offered hereby (the "Standby Shares") are not
purchased by the other Holders pursuant to the Basic Subscription Privilege or
the Oversubscription Privilege, U-C Holdings will purchase the unsubscribed
Standby Shares at the Subscription Price (the "Standby Commitment"). The
Company will issue a Class C Warrant to U-C Holdings as compensation for its
Standby Commitment pursuant to the Purchase Agreement (the "Warrant"), which
will entitle U-C Holdings to acquire an additional 152,100 shares of Common
Stock at the Subscription Price. The Rights Offering will terminate if U-C
Holdings does not purchase the Common Stock issuable to it pursuant to the
Purchase Commitment and the Standby Commitment.
The Company's Common Stock is listed on The Nasdaq SmallCap Market under the
symbol "UCTN." The closing price of the Common Stock on , 1998 was $ per
share. The Company anticipates that the shares of Common Stock issued upon the
exercise of the Rights will be approved for trading on The Nasdaq SmallCap
Market.
The proceeds of this offering (the "Rights Offering") will be used by the
Company for general corporate purposes. In the event the Rights Offering is
terminated, all subscription payments will be returned promptly, without
interest or deduction. See "Use of Proceeds."
This Prospectus relates to the shares of Common Stock issuable upon exercise
of the Rights and the 152,100 shares of the Common Stock issuable upon
exercise of the Warrant. Accompanying this Prospectus are certain documents
(collectively, the "Subscription Documents") that must be completed and
returned by a Holder in accordance with the related instructions in order to
exercise the Basic Subscription Privilege or the Oversubscription Privilege.
Once a Holder has exercised any Right, such exercise may not be revoked. See
"The Rights Offering--No Revocation."
PRIOR TO DECIDING TO EXERCISE RIGHTS AND PURCHASE SHARES OF THE COMMON
STOCK, POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH IN
"RISK FACTORS" ON PAGES 8 THROUGH 14 IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS. STOCKHOLDERS WHO DO NOT EXERCISE THEIR RIGHTS IN
FULL WILL SUFFER SIGNIFICANT DILUTION IN THEIR PROPORTIONATE INTEREST IN THE
EQUITY OWNERSHIP AND VOTING POWER OF THE COMPANY. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO THE
PRICE TO PUBLIC COMMISSIONS COMPANY(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........... $1.60 N/A $1.60
- -------------------------------------------------------------------------------
Total............... $10,243,360(2) N/A $10,243,360(2)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses of the offering payable by the Company,
estimated to be $200,000.
(2) Includes proceeds from exercise of the Warrant.
The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20546; New York Regional Office, Public Reference Room,
7 World Trade Center, 13th Floor, New York, New York 10048; and Chicago
Regional Office, Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates. The Commission maintains a Website
that contains reports, proxy and information statements and other information
regarding the Company that is filed electronically with the Commission which
may be found at http://www.sec.gov. The Company's Common Stock is listed on
The Nasdaq SmallCap Market, and reports, proxy statements and other
information concerning the Company may be inspected at the office of The
Nasdaq Stock Market, 1735 K Street, NW, Washington, D.C. 20006-1500. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, are
available for inspection and copying as set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the Exchange Act are incorporated herein by reference: (a) the Company's
Annual Report on Form 10-KSB for the year ended October 31, 1997; (b) the
Company's Current Report on Form 8-K dated November 24, 1997; (c) Transition
Report on Form 10-QSB for the two-month period ended December 31, 1997; and
(d) the Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS THERETO)
ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY PERSON TO
WHOM THIS PROSPECTUS HAS BEEN DELIVERED, FROM COLLEGE TELEVISION NETWORK,
INC., 5784 LAKE FORREST DRIVE, SUITE 275, ATLANTA, GEORGIA 30328; ATTENTION:
CHIEF FINANCIAL OFFICER (TELEPHONE (800) 256-1636).
2
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and consolidated financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus.
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"), WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "MAY," "BELIEVE," "EXPECT," "INTEND," "ANTICIPATE,"
"ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT
INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION, THE STATEMENTS UNDER
"PROSPECTUS SUMMARY," "RISK FACTORS," "RECENT DEVELOPMENTS," AND "FEDERAL
INCOME TAX CONSEQUENCES" LOCATED ELSEWHERE HEREIN REGARDING THE COMPANY'S
FINANCIAL POSITION AND LIQUIDITY, THE VOLUME OF ITS BUSINESS, ITS STRATEGIC
PLANS INCLUDING ITS ABILITY TO INCREASE INSTALLATION SITES AND SELL ADVERTISING
AND OTHER MATTERS ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES
THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR
SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR PROJECTED.
THE COMPANY
The Company owns and operates the College Television Network ("CTN"), a
proprietary commercial television network operating on college and university
campuses, through a single-channel television system (the "System") placed free
of charge primarily in campus dining facilities and student unions.
Substantially all of the Company's revenues are derived from advertising
displayed on CTN. At May 30, 1998, CTN was installed or contracted for
installation at approximately 394 locations at approximately 291 colleges and
universities throughout the United States. The Company believes that CTN is the
largest college and university private commercial television network in the
United States, and that CTN reaches a viewership of approximately 800,000 daily
impressions during the academic year.
The Company's overall strategy is to expand the number of institutions in
which CTN is being offered and to expand the number of advertisers utilizing
CTN. As additional institutions are added, the Company expects to attract
additional advertisers as well as to increase its advertising rates.
The Company was incorporated under the laws of the State of Delaware in 1989.
The mailing address of the Company's executive offices is 5784 Lake Forrest
Drive, Suite 275, Atlanta, Georgia 30328. Its telephone number is (800) 256-
1636.
THE RIGHTS OFFERING
Rights...................... Each stockholder of the Company (each a
"Holder" and collectively "Holders") will
receive one nontransferable right (the
"Rights") for each 1.2825 shares of the
Common Stock held by such Holder as of the
close of business on July 17, 1998 (the
"Record Date"). The number of Rights
distributed to each Holder will be rounded
down to the nearest whole number and no
fractional rights, fractional shares of
Common Stock or cash will be distributed or
paid in lieu thereof. U-C Holdings will
purchase the number of whole shares resulting
from the aggregate of such fractional shares
3
<PAGE>
pursuant to the Standby Commitment. An
aggregate maximum of 6,250,000 Rights will be
distributed pursuant to the Rights Offering.
Subscription Price.......... $1.60 in cash per share of Common Stock
subscribed for pursuant to the Basic
Subscription Privilege, the Oversubscription
Privilege, the Purchase Commitment, or the
Standby Commitment.
Basic Subscription Each Right entitles the Holder thereof to
Privilege................... purchase one share of Common Stock upon
payment of the Subscription Price (the "Basic
Subscription Privilege"). See "The Rights
Offering--Basic Subscription Privilege;
Oversubscription Privilege."
Oversubscription Privilege.. If any shares of Common Stock offered hereby
are not purchased pursuant to the Basic
Subscription Privilege (such shares, in the
aggregate, are sometimes hereinafter referred
to as the "Excess Shares"), any Holder, other
than U-C Holdings, purchasing all of the
shares of Common Stock available to it
pursuant to the Basic Subscription Privilege
may purchase the number of Excess Shares
specified by the Holder in the Subscription
Documents, subject to proration and subject
to the limitation that no Holder may
subscribe for more than 100% of the shares
purchased by such Holder in the Basic
Subscription Privilege (the "Oversubscription
Privilege"). See "The Rights Offering--Basic
Subscription Privilege; Oversubscription
Privilege."
Non-Transferability of The Rights are nontransferable.
Rights......................
Record Date................. July 17, 1998, at 5:00 p.m. New York City
time.
Expiration Date............. , 1998, at 5:00 p.m. New York
City time, unless extended (the "Expiration
Date"). The Expiration Date will not be
extended beyond , 1998, and if
the conditions to the Rights Offering have
not been satisfied by , 1998, or
the Rights Offering is otherwise terminated,
all subscription payments will be returned
promptly, without interest or deduction. See
"The Rights Offering--Expiration Date."
Purchase Commitment......... U-C Holdings has agreed, subject to the terms
and conditions of the Purchase Agreement, to
purchase at the Subscription Price, 4,536,593
shares of Common Stock issuable upon exercise
of the Rights, for an aggregate purchase
price of $7,258,549 (the "Purchase
Commitment"). See "The Rights Offering--
Purchase Commitment" and "Risk Factors--
Control by Principal Stockholder."
Standby Commitment.......... U-C Holdings has agreed, subject to the terms
and conditions of the Purchase Agreement, to
purchase all of the shares of Common Stock
offered hereby that are not purchased by the
Holders pursuant to the Basic Subscription
Privilege or the Oversubscription Privilege.
See "The Rights Offering--Purchase Agreement"
and "Risk Factors--Control by Principal
Stockholder."
4
<PAGE>
Warrant..................... As compensation for the Standby Commitment,
the Company will issue a Class C Warrant to
U-C Holdings (the "Warrant"), entitling U-C
Holdings to purchase 152,100 shares of Common
Stock at the Subscription Price on or before
, 2005. See "The Rights Offering--
Purchase Agreement" and "Risk Factors--
Control by Principal Stockholder."
Procedure for Exercising Rights may be exercised by the Holder by
Rights...................... properly completing and signing the
Subscription Documents and forwarding such
Subscription Documents (or following the
Guaranteed Delivery Procedures described
herein), with payment of the Subscription
Price for each share of Common Stock
subscribed for pursuant to the Basic
Subscription Privilege and Oversubscription
Privilege, if any, to American Stock Transfer
& Trust Company (the "Subscription Agent") on
or prior to the Expiration Date. If the mail
is used to forward Subscription Documents, it
is recommended that insured, registered mail
be used. No interest will be paid on funds
delivered in payment of the Subscription
Price. ONCE A HOLDER HAS EXERCISED ANY
RIGHTS, SUCH EXERCISE MAY NOT BE REVOKED. See
"The Rights Offering--Exercise of Rights" and
"The Rights Offering--No Revocation."
Procedure for Exercising
Rights by Foreign and
Certain Other Stockholders..
Subscription Documents will not be mailed to
Holders of Common Stock whose addresses are
outside the United States or who have an APO
or FPO address, but will be held by the
Subscription Agent for their account. To
exercise the Rights represented thereby, such
Holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time,
on , 1998. See "The Rights
Offering--Foreign and Certain Other
Stockholders."
Persons Holding Common
Stock and Wishing to
Exercise Rights Through
Others......................
Persons holding Common Stock and receiving
the Rights distributed with respect thereto
through a broker, dealer, commercial bank,
trust company or other nominee should contact
the appropriate institution or nominee and
request it to effect the transactions for
them. See "The Rights Offering--Exercise of
Rights."
Issuance of Common Stock.... Certificates representing shares of the
Common Stock purchased pursuant to the valid
exercise of the Rights will be delivered to
subscribers as soon as practicable after the
Expiration Date. See "The Rights Offering--
Basic Subscription Privilege;
Oversubscription Privilege."
Certain Federal Income Tax
Considerations..............
For United States federal income tax
purposes, Holders generally will not
recognize taxable income in connection with
the issuance of them or exercise by them of
Rights. Holders may incur a gain or loss upon
the sale of the shares of Common Stock
acquired upon
5
<PAGE>
exercise of the Rights. See "Certain Federal
Income Tax Considerations."
Subscription Agent.......... American Stock Transfer & Trust Company 40
Wall Street, 46th Floor New York, New York
10005 Telephone number: (212) 936-5100
(718) 234-5001
Common Stock to be
Outstanding After the
Rights Offering; Percentage
to be Owned by U-C
Holdings.................... The number of shares outstanding after
completion of the Rights Offering, assuming
the issuance of 100% of the shares offered
pursuant to exercise of the Rights, will be
14,265,153 shares. If no shares are
subscribed for pursuant to the Basic
Subscription Privilege or the
Oversubscription Privilege other than shares
purchased by U-C Holdings pursuant to its
Purchase Commitment and Standby Commitment,
then U-C Holdings will own approximately
84.6% of the issued and outstanding Common
Stock. Following the exercise of the Warrant,
U-C Holdings will own approximately 84.8% of
the issued and outstanding Common Stock. U-C
Holdings currently holds a warrant to
purchase an additional 772,732 shares of
Common Stock at a current exercise price of
$2.75 per share, which would increase its
ownership to 85.5% of the issued and
outstanding Common Stock if such warrant is
exercised following the Rights Offering. U-C
Holdings has also entered into certain Equity
Protection Agreements which allow it to
acquire additional shares of Common Stock at
$2.75 per share, to avoid dilution upon the
exercise of certain warrants and options.
Nasdaq Symbol for the
Common Stock................ UCTN
Use of Proceeds............. The net proceeds from the sale of the Common
Stock in the Rights Offering, and from the
exercise by U-C Holdings of the Warrant, will
be used by the Company for general corporate
purposes. See "Use of Proceeds."
Conditions to the Rights
Offering.................... The issuance of shares pursuant to the Rights
Offering is subject to (i) the absence of any
suit or other action seeking to enjoin the
Rights Offering which, in the judgment of the
Company, makes it inadvisable to proceed with
the Rights Offering and (ii) the absence of
any stop order issued or threatened by the
Commission suspending the effectiveness of
the Registration Statement. In the event that
the Rights Offering is terminated, all
subscription payments will be returned
promptly, without interest or deduction. See
"The Rights Offering--Conditions to the
Rights Offering." The Rights Offering will
terminate if U-C Holdings does not purchase
the Common Stock issuable to it pursuant to
the Purchase Agreement and the Standby
Commitment.
6
<PAGE>
Amendments and Termination.. The Company may extend the Rights Offering
and otherwise amend the terms of the Rights
Offering or terminate the Rights Offering at
any time prior to the Expiration Date or
thereafter if the conditions to the Rights
Offering have not been satisfied. See "The
Rights Offering--Amendment and Termination."
Risk Factors................ A purchase of the Common Stock involves a
substantial degree of risk. See "Risk
Factors" for certain factors that a potential
investor should carefully consider.
7
<PAGE>
RISK FACTORS
Prospective purchasers of the securities offered hereby, prior to making an
investment decision, should carefully consider, along with other matters
referred to herein, the following risk factors:
NET LOSSES AND EXPECTATION OF CONTINUING LOSSES
Since inception, the Company has experienced, and is continuing to
experience, operating losses and negative cash flow from operations. The
Company's statements of operations for the fiscal year ended October 31, 1997,
for the two-month transition period ended December 31, 1997, and for the
three-month period ended March 31, 1998, reflect net losses of approximately
$4,003,590, $1,135,927, and $2,165,334, respectively, or approximately $.77
and $.14, and $.27 per share, respectively. In addition, the Company expects
to incur operating losses through the fiscal year ended December 31, 1998 and
until such time as operations generate sufficient revenues to cover its costs.
SUBSTANTIAL CAPITAL REQUIREMENTS
The development of the Company's business will continue to require
substantial expenditures for additional installations and maintenance of
installations. The Company's future financial results will depend primarily on
its ability to increase the number of installations, maintain existing
installations and increase advertising revenues. There can be no assurance
that the Company will achieve or sustain profitability or positive cashflows
from future operating activities. If the Company fails to increase the number
of installation sites, experiences operating difficulties or if advertising
revenues do not increase substantially, it is likely that the Company may be
required to obtain additional financing to fund its operations. No assurance
can be given that such financing will be available.
U-C Holdings' obligations to provide the Standby Commitment are subject to
certain limited closing conditions. If such conditions are not satisfied or
waived, U-C Holdings will not be obligated to fulfill the Standby Commitment.
If U-C Holdings fails to close the Standby Commitment, the Rights Offering
will be terminated and the Company's operating activities would be
significantly limited. See "Use of Proceeds" and "The Rights Offering--
Amendment and Termination" and "The Rights Offering--Conditions to the Rights
Offering."
RELIANCE ON ADVERTISING REVENUES
The Company derives its revenues from advertisers displaying their
commercials on CTN. Although the Company has agreements with certain national
advertisers and has held discussions or had prior agreements with other
national advertisers, no assurance can be given that these advertisers will
continue to purchase advertising from the Company, that new advertisers will
purchase advertising from the Company, or that future significant advertising
revenues will be generated. Because certain advertisers may discontinue or
reduce advertising on CTN from time to time, the Company anticipates that it
could experience fluctuations in operating results and revenues. The failure
to attract and enter into new and/or additional agreements with national
advertisers and to derive significant revenues therefrom would have a material
adverse effect on the Company and its results of operations, financial
condition and cash flows.
DEPENDENCE ON SECURING NEW INSTALLATIONS AND MAINTAINING EXISTING
INSTALLATIONS
The Company's growth is dependent upon its ability to increase the number of
installation sites at colleges and universities. If the Company increases its
installation sites, it will have increased viewership and should be able to
increase its advertising revenue. In addition, as the Company increases its
installation sites, it becomes more difficult for a competitor to enter the
market. The Company has found that it can be a difficult and lengthy process
to convince the administration of a college or university to install or
maintain the System. The Company has increased its number of installations,
including contracts for future installations, from approximately 239 as of May
30, 1997, to approximately 394 as of May 30, 1998. Although the Company has
been successful in
8
<PAGE>
increasing its installation sites, there are no assurances that this growth
will continue and that colleges and universities will not require the removal
of the System from current locations. The Company's contracts with colleges
and universities for installation sites are terminable at will by the colleges
and universities. The failure to increase installation sites would have a
material adverse effect on the Company and its results of operations,
financial condition and cash flows.
RELIANCE ON SATELLITE TECHNOLOGY
The ability of CTN to transmit its programming, and thereby derive
advertising revenue, is dependent upon proper performance of the satellite
transmission equipment upon which CTN's programming delivery is based. The
Company's contract with Public Broadcasting Service provides for the sublease
by the Company of transponder capacity on a satellite owned and operated by GE
American Communications, Inc. The Company is entitled to limited protected
service under the sublease in the event the satellite fails, which would
enable CTN's programming to be redirected to a different satellite under
certain circumstances and subject to certain limitations. However, in the
event that CTN's programming is required to be redirected to a different
satellite, the Company's satellite dishes installed in each of its
installations would be required to be redirected in order for the programming
signals to be received from the satellite. This redirection procedure could
take up to 30 days for completion and would involve significant cost to the
Company. The Company has obtained insurance for certain of the costs
associated with such a satellite failure, including redirecting the satellite
dishes, securing a new satellite transponder, and lost advertising revenues
resulting from the interruption in programming.
RELIANCE ON THIRD-PARTY CONTRACTS
The ability of CTN to transmit its programming and to maintain and install
its equipment is dependent upon performance by certain third parties under
contracts with the Company. The Company is substantially dependent upon
performance by unaffiliated companies for its day-to-day programming
operations and System installation and maintenance. The Company is currently
negotiating with third parties for the execution of contracts integral to the
Company's future operations, including a contract for the retrofit of existing
equipment, removal of obsolete equipment and installation of new equipment in
order to allow the equipment to meet the requirements of the Company's
proposed new broadcast platform, and a contract for the transmission via
satellite of the System's ongoing daily programming. There is no assurance
that the Company will be successful in negotiating these operational
contracts, or, if entered into, what the contract terms will be. Failure of
the Company to secure these contracts on reasonable terms would have a
material adverse effect on the Company and its results of operations,
financial condition and cash flows. See "Recent Developments--Recent Third-
Party Operational Contracts."
UNCERTAINTY OF MARKET ACCEPTANCE
The Company's prospects will be significantly affected by the success of its
affiliate marketing efforts, the acceptance of its programming by potential
viewers and its ability to attract advertisers. Achieving market acceptance
for CTN will require significant effort and expenditures by the Company to
enhance awareness and demand by viewers and advertisers. The Company's current
strategy and future marketing plans may be subject to change as a result of a
number of factors, including progress or delays in the Company's affiliate
marketing efforts, the nature of possible affiliation and other broadcast
arrangements which may become available to it in the future and factors
affecting the direct broadcast industry. There can be no assurance that the
Company's strategy will result in initial or continued market acceptance for
CTN.
ACCESS TO MUSIC VIDEOS
The Company believes that its ability to maintain access to music and other
videos on a regular, long-term basis, on terms favorable to the Company is
important to its future success and profitability. The Company obtains music
videos pursuant to written agreements or informal arrangements with music
companies. The Company has such agreements or arrangements with a number of
the major music company labels, which include
9
<PAGE>
Sony, Warner Elektra, EMI, Columbia, MCA and BMG. Such agreements and
arrangements are terminable by the music companies on short notice.
Termination of substantially all or a large number of the agreements would
have a material adverse effect on the Company and its results of operations,
financial condition and cash flows.
RELIANCE ON KEY PERSONNEL AND MANAGEMENT
The Company is substantially dependent on the efforts of Jason Elkin, its
Chairman and Chief Executive Officer, Joseph Gersh, its Chief Operating
Officer, and Peter Kauff, its Vice Chairman. The loss of one or more of these
executives could have a material adverse effect on the Company and its results
of operations, financial condition and cash flows. Each of these executives
has entered into an employment agreement with the Company.
COMPETITION
CTN competes for advertisers with many other forms of advertising media,
including television, radio, print, direct mail and billboard. There are no
meaningful intellectual property barriers to prevent competitors from entering
into this market, and thus there is no assurance that a competitor with
greater resources will not enter into the market. The Company believes that
competition could increase as other organizations perceive the potential for
commercial application of the Company's product or service. However, an
obstacle to other companies entering the market is the difficulty and lengthy
process of securing site locations with colleges and universities.
BROAD MANAGEMENT DISCRETION AS TO USE OF PROCEEDS
The net proceeds to be received by the Company pursuant to the Rights
Offering will be used for working capital and general corporate purposes.
Accordingly, management will have broad discretion with respect to the
expenditure of such proceeds. Purchasers of shares of Common Stock offered
hereby will be entrusting their funds to the Company's management, upon whose
judgment they must depend. See "Use of Proceeds."
IMPACT OF TECHNOLOGICAL CHANGES
The Company expects technological developments and enhancements to continue
at a rapid pace in the direct broadcast satellite network industry and related
industries, and there can be no assurance that technological developments will
not cause the Company to switch to a different transmission technology or
cause the Company's technology and products to be rendered obsolete. The
Company has not yet determined what impact, if any, the advent of digital
television will have on the Company's technology or broadcast system. The
Company's future success could be largely dependent upon its ability to adapt
to technological change and remain competitive.
CONTROL BY PRINCIPAL STOCKHOLDER
Following the completion of the Rights Offering, assuming exercise by U-C
Holdings of its Purchase Commitment and the Standby Commitment, U-C Holdings
will beneficially own between approximately 72.6% and 84.6% of the outstanding
Common Stock depending on the number of Rights exercised by the other Holders.
Following the exercise of the Warrant, U-C Holdings will beneficially own an
additional 152,100 shares, or a total of 84.8% (on an as adjusted basis as of
June 15, 1998) of the outstanding Common Stock. In addition, if U-C Holdings
exercises the warrant to purchase an additional 772,732 shares which it
currently holds, U-C Holdings would beneficially own approximately 85.5% (on
an as adjusted basis as of June 15, 1998) of the Common Stock. As a result of
its ownership, U-C Holdings has, and will continue to have, sufficient voting
power to determine the direction and policies of the Company, the election of
the directors of the Company, the outcome of any other matter submitted to a
vote of stockholders and to prevent or cause a change in control of the
Company.
10
<PAGE>
POTENTIAL CONFLICTS OF INTEREST; RELATED PARTY TRANSACTIONS
Certain conflicts of interest may arise as a result of the beneficial
ownership interests in U-C Holdings, the majority stockholder of the Company,
held by a majority of the directors of the Company, including its chairman and
chief executive officer. Avy Stein and Beth Johnston, each a director of the
Company, may be deemed to be an indirect beneficial owner of the securities
beneficially owned by U-C Holdings. Conflicts of interest may arise as a
result of these affiliated relationships. Although no specific measures to
resolve such conflicts of interest have been formulated, management of the
Company has a fiduciary obligation to deal fairly and in good faith with the
Company, and will exercise reasonable judgment in resolving any specific
conflict of interest that may occur. The terms and conditions of the Rights
Offering and the Standby Commitment have been negotiated with and approved by
a special committee made up of members of the Board who are not affiliated
with U-C Holdings (the "Special Committee"). Any time stockholder approval is
sought, U-C Holdings, as majority stockholder, has, and will continue to have
following the Rights Offering, the ability to approve any matter without the
affirmative vote of any other stockholder of the Company, subject to any
applicable Delaware law requirement of disinterested stockholder approval for
certain matters. See "The Rights Offering--Determination of Subscription
Price."
MARKET CONSIDERATIONS
The market price for the Common Stock could be subject to significant
fluctuations in response to the Company's operating results and other factors,
including the size of the public float of the Common Stock (which will depend,
in part, on the percentage of the Rights that are exercised by Holders) after
the Rights Offering. There can be no assurance that, following the issuance of
the Rights and of the underlying shares upon exercise of the Rights, a
subscribing Holder will be able to sell shares of Common Stock purchased in
the Rights Offering at a price equal to or greater than the Subscription
Price.
The Company currently satisfies the conditions for continued listing on The
Nasdaq SmallCap Market, but, depending on the trading price of the Common
Stock following the Rights Offering and certain other factors, the Company may
fail to meet certain Nasdaq SmallCap Market requirements following completion
of the Rights Offering. There can be no assurance that the market price of the
Common Stock will not decline after the Rights Offering to a level below its
current trading value. Further, there can be no assurance that The Nasdaq
SmallCap Market will not undertake to suspend the Common Stock from trading or
delist the Common Stock in the future.
SEASONALITY
The Company's revenues are affected by the pattern of seasonality common to
most school-related businesses. Historically, the Company generates a
significant portion of its revenues during the period of September through May
and substantially less revenues during the summer months when most colleges
and universities do not hold regular classes.
IRREVOCABILITY OF SUBSCRIPTIONS
The election of a Rights Holder to exercise Rights in the Rights Offering is
irrevocable. Moreover, until certificates are delivered, subscribing Rights
Holders may not be able to sell the Common Stock that they have purchased in
the Rights Offering. Certificates representing shares of the Common Stock
purchased pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege will be delivered as soon as practicable after the
Expiration Date. No interest will be paid to Rights holders on funds delivered
to the Subscription Agent pursuant to the exercise of Rights pending delivery
of Common Stock acquired upon exercise of the Rights.
RIGHTS NOT TRANSFERABLE; NO MARKET FOR RIGHTS
The Rights are not transferable, and thus there will be no market or other
means for holders of the Rights to directly realize any value associated with
the Rights. Holders of the Rights must exercise them and acquire additional
shares of the Common Stock in order to realize any such value.
11
<PAGE>
EFFECT OF OUTSTANDING WARRANTS AND OPTIONS
As of June 15, 1998, there are outstanding options to purchase 667,518
shares of Common Stock granted to certain officers and directors of the
Company pursuant to stock option plans of the Company. In addition, there are
additional options and warrants outstanding permitting their holders to
purchase 1,955,887 shares of Common Stock. U-C Holdings has entered into
certain Equity Protection Agreements, dated April 25, 1997, which allow U-C
Holdings to purchase additional shares of Common Stock upon the exercise of
options or warrants which were outstanding on April 25, 1997 at a price of
$2.75 per share (as adjusted). U-C Holdings has registration rights which it
has waived in connection with the Rights Offering. Certain other holders of
options and warrants also have demand and piggy-back registration rights. The
Company has notified holders of options and warrants to purchase Common Stock
who have piggy-back registration rights that the Company intends to file a
Registration Statement, of which this Prospectus is a part, to register the
shares of Common Stock issuable pursuant to the Rights Offering, together with
the shares of Common Stock issuable upon exercise of the Warrant, and that
such persons have the right to register such options, warrants, or Common
Stock issuable upon exercise of the options and warrants (collectively, the
"Registrable Securities") concurrently with the registration of the Common
Stock offered pursuant to this Prospectus. Such holders of registration rights
have the right, exercisable within a certain limited time period, to request
registration of such Registrable Securities by the Company, at the Company's
expense, to the extent necessary to permit the public offering and sale of the
Registrable Securities. Because the exercise price of the options and warrants
subject to registration rights is, in each case, substantially higher than the
current market price of the Common Stock, the Company does not anticipate that
holders of registration rights will exercise their options and warrants and
demand piggy-back registration of their Registrable Securities with the Common
Stock offered pursuant to this Prospectus. However, if the Company is required
to include Registrable Securities in the Registration Statement, such
requirement would increase the expense to the Company of the Rights Offering,
and could delay the Rights Offering. In addition, while such rights, warrants
and options are outstanding, they may (i) adversely affect the market price of
the Common Stock and (ii) impair the ability of the Company to, and restrict
the terms on which it can, raise additional equity capital or obtain debt
financing.
OUTSTANDING RIGHT OF FIRST REFUSAL
In connection with a private placement of securities of the Company, the
Company issued to Barington Capital Group, L.P. ("Barington") on April 26,
1996, a right of first refusal to purchase for its account or to sell for the
account of the Company or any of the Company's stockholders owning at least
three percent of the unregistered capital stock of the Company ("Principal
Stockholders"), any securities of the Company which the Company or any of the
Company's Principal Stockholders may seek to sell (other than sales
aggregating less than $1 million in gross proceeds), whether pursuant to an
offering registered under the Securities Act or otherwise. The Company is
required to offer Barington the opportunity to purchase or sell any such
securities on comparable terms, and Barington is entitled to accept such offer
within thirty (30) business days (ten (10) business days with respect to any
sale to be effected other than through the public market) after such notice.
Barington's right of first refusal terminates on or about May 31, 1999.
Barington waived in writing its right of first refusal with respect to the
purchase of the Common Stock offered pursuant to this Prospectus. As a result
of this outstanding right of first refusal, the Company's ability to raise
capital through the offering of its securities will be subject to compliance
with the terms of the right of first refusal during the period in which the
rights of first refusal is outstanding, which could limit the Company's
ability to raise capital. If the Company proposes an offering of securities
which is subject to the terms of the right of first refusal, and if Barington
exercises its right of first refusal in connection with such proposed
securities offering, stockholders would experience dilution in their
percentage ownership interest in the Company without an opportunity to
participate in the offer and sale of the securities, and such transaction
could possibly result in a change of control of the Company.
12
<PAGE>
DETERMINATION OF SUBSCRIPTION PRICE AND TERMS OF PURCHASE AGREEMENT
The Subscription Price was arbitrarily determined by the Special Committee.
The Subscription Price does not necessarily bear any relationship to the book
value of the Company's assets, past operations, cashflow, results of
operations, financial condition or any other established criteria for value
and should not be considered an indication of the underlying value of the
Company. See "The Rights Offering--Determination of Subscription Price."
IMPACT OF RIGHTS OFFERING ON HOLDERS OF COMMON STOCK; DILUTION
The Rights entitle the holders of the Common Stock to purchase shares of the
Common Stock at a price below the prevailing market price of the Common Stock
immediately prior to the announcement of the Rights Offering. Holders of the
Common Stock who exercise their Rights will preserve their proportionate
interest in the equity ownership and voting power of the Company. Holders who
do not exercise their Rights will experience a decrease in their proportionate
interest in the equity ownership and voting power of the Company. The
consummation of the sale of the shares offered hereby would increase the
number of shares of Common Stock outstanding (on an as adjusted basis as of
June 15, 1998), assuming all of the shares offered hereby are issued, by
6,250,000 shares (or 78%) to 14,265,153 shares. If no Rights are exercised
other than those that are exercised by U-C Holdings, the percentage of shares
owned by shareholders other than U-C Holdings will decrease from approximately
27.4% to 15.4%.
Exercise by U-C Holdings of the Warrant and of the other warrant that it
holds will cause a decrease in the proportionate interest in the equity
ownership and voting power of the other Holders, and increase the
proportionate interest of U-C Holdings by 924,832 shares (or 1.7% of the
outstanding shares of the Common Stock on an as adjusted basis as of June 15,
1998). Both of the warrants are subject to adjustment based upon certain
conditions.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public market
following the Rights Offering could adversely affect the market price of the
Common Stock prevailing from time to time. Upon completion of this Rights
Offering, all shares of the Company's Common Stock, including shares held by
U-C Holdings and the shares issuable to U-C Holdings upon exercise of the
Warrant, will be freely tradable without restriction, or may be sold pursuant
to Rule 144 under the Securities Act. The sale of the shares of Common Stock
acquired by U-C Holdings are subject to certain limitations set forth in Rule
144 under the Securities Act. As of June 15, 1998, options to purchase 667,518
shares and warrants to purchase 1,955,887 shares of Common Stock were
outstanding, of which options to purchase 393,868 shares and warrants to
purchase 1,955,887 shares were exercisable.
RISKS RELATING TO POSSIBLE ACQUISITIONS
The Company may seek to expand or complement its operations through the
possible acquisition of companies or licensing of programs or programming
libraries which the Company believes are compatible with its business. While
the Company explores acquisition opportunities from time to time, as of the
date of this Prospectus, the Company has no definitive plans, agreements,
commitments, arrangements or understandings with respect to any significant
acquisition. The Company has not established any minimum criteria for any
acquisition and management and the Board of Directors will have complete
discretion in determining the terms of any such acquisition. Consequently,
there is no basis for the investors in this Rights Offering to evaluate the
specific merits or risks of any potential acquisitions that the Company may
undertake. There can be no assurance that the Company will be able to
ultimately effect any acquisition or successfully integrate into its
operations any business which it may acquire. Under Delaware law, various
forms of business combinations can be effected without shareholder approval
and, accordingly, stockholders will, in all likelihood, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
which may be made available to the Company
13
<PAGE>
in connection with any acquisition and must rely entirely upon the ability of
management in selecting, structuring, and consummating acquisitions that are
consistent with the Company's business objectives.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the Year
2000, these date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, over the
next two years, computer systems and/or software used by many companies may
need to be upgraded to comply with such "Year 2000" requirements. Because the
Company is dependent on vendor compliance, its ability to assure Year 2000
compliance is limited. The Company has required certain of its computer system
and software vendors to represent that the services and products provided are,
or will be, Year 2000 compliant, but has not obtained any such representations
from Public Broadcasting Service under its Transponder Use Agreement described
herein under "Recent Developments--Recent Third-Party Operational Contracts".
Consequently, no assurance can be given that the Company will not experience
Year 2000 problems, including, but not limited to, disruption of the CTN
network programming delivery. Year 2000 issues could cause significant costs
and uncertainties that might affect the Company's future financial results or
cause reported financial information not to be necessarily indicative of
future operating results or future financial condition.
AUTHORIZED PREFERRED STOCK
The Board of Directors has authority to issue up to 2,000,000 shares of
preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of the preferred stock without further
vote or action by the Company's stockholders. The rights of the holders of the
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of a preferred stock that may be issued in the future. While
the Company has no present intention to issue shares of preferred stock, such
issuance, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding
voting stock of the Company.
14
<PAGE>
RECENT DEVELOPMENTS
RECENT GROWTH IN OPERATIONS
The Company has significantly increased its personnel, from 14 full time
employees as of May 30, 1997 to 53 full time employees as of May 30, 1998. The
Company has also increased its affiliate base from approximately 239 locations
at which the System was installed or contracted for installation as of May 30,
1997 to approximately 394 locations as of May 30, 1998. The Company's revenues
have increased from $1,392,644 for the five month period ended May 31, 1997 to
$3,207,337 for the five month period ended May 31, 1998, and its net loss has
increased from $612,930 to $2,901,221 for the same respective periods.
ANNUAL MEETING OF SHAREHOLDERS
On April 24, 1998, the Company held its Annual Meeting of Stockholders (the
"Meeting"). At the Meeting, the Shareholders elected Messrs. Elkin, Gersh, Ms.
Johnston and Messrs. Kauff, Rademacher, Roberts, Stein and Wood as Directors.
Effective June 3, 1998, the Board of Directors appointed C. Thomas McMillen as
a director of the Company to serve until the 1999 Annual Meeting of
Stockholders to fill the vacancy created by the increase in the size of the
Board of Directors by the Action of the Majority Stockholder discussed below.
ACTION OF MAJORITY STOCKHOLDER IN LIEU OF A MEETING
On May 4, 1998, U-C Holdings, as the majority stockholder of the Company,
approved the following corporate actions: (i) fixing the number of members of
the Company's Board of Directors at eleven; (ii) adoption of amendments to the
Company's 1996 Stock Incentive Plan and Outside Director's 1996 Stock Option
Plan, and (iii) adoption of an amendment to the Company's Restated Certificate
of Incorporation reducing the number of authorized shares of Common Stock from
100,000,000 to 50,000,000 shares. The effective date of these actions was June
3, 1998, and an Information Statement disclosing these actions was mailed to
the holders of Common Stock of the Company on May 14, 1998. At the meeting of
the Board of Directors held on May 28, 1998, the Board appointed C. Thomas
McMillen to fill one of the vacancies created by the increase in the number of
members of the Company's Board of Directors, in accordance with the Company's
Bylaws and effective as of June 3, 1998.
TERMINATION OF FORMER EXECUTIVE OFFICER AND HIRING OF NEW EXECUTIVE OFFICER
On March 21, 1998, the employment of John Dobson with the Company was
terminated and Mr. Dobson ceased acting as President and as a director of the
Company. Pursuant to an arrangement with the Company, Mr. Dobson will continue
to receive his base salary and certain other benefits through April 29, 2001.
The Company hired George Giatzis to act as Executive Vice President of
Advertising Sales on March 23, 1998. Mr. Giatzis is responsible for all
advertising sales of the Company. Mr. Giatzis' base salary is $250,000 per
year, subject to increase each year and he is entitled to a bonus based upon
the gross revenue of the Company. Mr. Giatzis' employment agreement terminates
on December 31, 2000, subject to earlier termination for cause. If the Company
achieves certain revenue goals in 1998 and 1999, the Company and U-C Holdings
(as majority stockholder) have agreed to elect Mr. Giatzis as President and as
a director of the Company. Mr. Giatzis also received a beneficial ownership
interest in U-C Holdings pursuant to his employment agreement.
CONVERSION OF SYSTEM; RECENT THIRD-PARTY OPERATIONAL CONTRACTS
From April 1997 through May 1998, CTN operated as a kiosk/file server based
network under a Content Delivery Agreement with Hughes Network Systems, Inc.
("Hughes") and rented substantially all equipment for installation at each
location from Hughes pursuant to an Equipment Rental Agreement. The Company
terminated these contracts with Hughes in May 1998 and, in connection with
such termination, will be required to pay Hughes a termination fee with
respect to termination of the Equipment Rental Agreement. The Company
terminated the contract with Hughes in order to convert the System to a new
real-time, digital satellite
15
<PAGE>
distribution system, which will provide increased quality of signals coupled
with expanded programming opportunities. Under the new broadcast platform, CTN
will have the ability to deliver live broadcasts as well as to send up to
three types of programming to various installations and to decrease the
advance preparation and transmission of the programming. The new System will
no longer be interactive at the installation, in order to ensure consistency
in programming delivery without interference by users at the various locations
and will be installed in such a way so as to make it more difficult for
students or the college or university to tamper with the equipment. In order
to implement the new broadcast platform, the Company has entered into
contracts with Crawford Communications, Inc. and Public Broadcasting Service.
Pursuant to the Installation Agreement (Phase I) (the "Phase I Installation
Agreement") which was executed as of March 13, 1998 with Crawford, Crawford
has commenced the conversion of the System to satellite distribution by
installing new satellite dishes and preparing the rest of the System at the
installation site for conversion. This Phase I conversion process has been
completed by Crawford.
The Company is currently negotiating with Crawford for the execution of an
Installation Agreement (Phase II) (the "Phase II Installation Agreement"),
which, if entered into, would provide that Crawford will complete the retrofit
of the Company's existing equipment in all locations, remove old equipment and
install new equipment in order to allow the equipment to meet the requirements
of the new broadcast platform. The Company is in the process of determining
the impact on results of operations of the disposal of the equipment rendered
obsolete. The Company is also negotiating with Crawford for the execution of
an Origination Services Contract pursuant to which Crawford would be
responsible for the transmission via satellite of CTN's ongoing daily
programming, including encoding signals, testing, maintaining CTN's
programming library, and obtaining programming from Turner Private Networks,
Inc. ("Turner") pursuant to the Company's programming agreement with Turner as
well as other programming from other CTN sources. If the Company enters into
the Origination Services Contract with Crawford, Crawford will be responsible
for the uplink of the programming to a satellite as well as the downlink or
receipt of the signal from the satellite at each installation site. The
Company expects that each of these two contracts would have a five-year term.
See "Risk Factors--Reliance on Third-Party Contracts."
Pursuant to a Transponder Use Agreement with Public Broadcasting Service
("PBS"), the Company has subleased capacity on a satellite owned and operated
by GE American Communications, Inc. ("GE") and leased to PBS by GE. This
contract terminates on July 31, 2003. The Company has protected status on this
satellite, which means that if there is a satellite failure or the satellite
experiences a performance problem, the Company's programming will preempt
transmissions of other users on this satellite or on another satellite. See
"Risk Factors--Reliance on Satellite Technology." The Company believes that
the new System is similar to the delivery systems used by other networks, such
as the CNN Airport Network and will improve the quality of programming,
quality of signal and reliability of the System.
PROGRAMMING CONTENT
As of January 1, 1998 the Company entered into a new Programming and
Services Agreement with Turner to provide general news segments, sports
segments and cartoon or animated programming. This new contract increases the
number of sports and news segments from one per day to two per day and added
animated programming. The term of the new agreement was extended to December
31, 2002, and the aggregate cost to CTN over this five year term is
$2,900,000.
LINK MAGAZINE
In January 1998 the Company acquired certain assets of Link Magazine from
Creative Media Generations, Inc. Link Magazine is a free publication sent to
college students through a proprietary mailing process which is patented. The
Company believes over 1,000,000 students receive Link Magazine at more than
700 colleges and universities. In the year ended December 31, 1997, Link
Magazine had total sales of $1.1 million. For the three month period ended
March 31, 1998, Link Magazine accounted for $271,708, or 15%, of the total
revenues of
16
<PAGE>
the Company. The Company intends to use Link Magazine to increase the
awareness of College Television Network and to provide diversified sales media
to potential advertisers. There are no assurances that these goals will be
achieved.
OFFICE LEASE
The Company entered into a lease in May 1998 for new space to be occupied in
October 1998 in New York, New York at 32 East 57th Street in the borough of
Manhattan. The lease term is for ten (10) years and the initial annual rental
is $249,900, subject to increase annually, based upon certain economic
factors. The landlord is required to pay for certain tenant improvements in
accordance with the lease. The Company currently has two locations in the New
York City area, one for CTN and one for the Link Magazine operations. The
Company intends to move into the new space in October 1998 and to consolidate
the CTN and Link Magazine offices into this location.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the maximum number of
shares of Common Stock to be issued with respect to the Rights are estimated
to be approximately $9,800,000, after deducting the estimated offering
expenses payable by the Company. The net proceeds to the Company from the
exercise by U-C Holdings of the Warrant, if and when exercised, would be an
additional $ 243,360. The Company will use the net proceeds of the Rights
Offering and the exercise of the Warrant for general corporate purposes
(including funding operating losses) and to pay related fees and expenses. The
following table illustrates the estimated sources and uses of funds, assuming
the issuance of all of the shares of Common Stock offered hereby and the
exercise of the Warrant.
<TABLE>
<CAPTION>
AMOUNT
-----------
(IN
THOUSANDS)
<S> <C>
SOURCES OF FUNDS:
Common Stock offered hereby........................................ $10,000,000
Common Stock issuable upon exercise of the Warrant................. 243,360
-----------
Total Sources of Funds........................................... $10,243,360
===========
USES OF FUNDS:
Fees and expenses.................................................. $ 200,000
General corporate purposes......................................... $10,043,360
-----------
Total Uses of Funds.............................................. $10,243,360
===========
</TABLE>
17
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
at March 31, 1998; (ii) the adjusted capitalization of the Company at March
31, 1998, assuming the Rights Offering is fully subscribed, after deducting
the estimated offering expenses and the application of the net proceeds; and
(iii) the adjusted capitalization of the Company at March 31, 1998, assuming
exercise of the Warrant following the Rights Offering.
<TABLE>
<CAPTION>
ADJUSTED FOR ADJUSTED FOR
RIGHTS EXERCISE OF
HISTORICAL OFFERING(2) WARRANT(3)
------------ ------------ ------------
(AMOUNTS IN THOUSANDS EXCEPT SHARE
DATA)
<S> <C> <C> <C>
Long-term portion of capital lease
obligation.......................... $ 73,291 $ 73,291 $ 73,291
Stockholders' equity
Preferred Stock, $.001 par value,
2,000,000 shares authorized, no
shares issued and outstanding..... 0 0 0
Common stock, $.005 par value,
50,000,000 shares authorized,
8,015,153 shares issued and
outstanding(1).................... 40,076 71,326 72,087
Additional paid-in capital........... 30,241,704 40,210,454 40,453,053
Accumulated deficit.................. (19,022,060) (19,022,060) (19,022,060)
Total stockholders' equity........... 11,259,720 21,259,720 21,503,080
------------ ------------ ------------
Total long-term obligations and
stockholders' equity................ $ 11,333,011 $ 21,333,011 $ 21,576,371
============ ============ ============
</TABLE>
- --------
(1) Does not include shares issuable pursuant to currently exercisable options
and warrants to purchase Common Stock, which aggregate 1,850,673 shares--
Historical and 2,002,773 shares--Adjusted.
(2) Assumes 6,250,000 shares issued in connection with a fully subscribed
Rights Offering.
(3) Assumes 152,100 shares issued in connection with the exercise of the
Warrant.
18
<PAGE>
COMMON STOCK DIVIDENDS AND PRICE RANGE
The Company has never declared cash dividends on its Common Stock. Any
payment of future dividends will be at the discretion of the Company's Board
of Directors and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, extent of indebtedness and
contractual restrictions with respect to payment of dividends and stock
repurchases.
The Company's Common Stock is listed on The Nasdaq SmallCap Market under the
symbol "UCTN" and appears in the market reports in The Wall Street Journal as
"UCTN". The following table sets forth, for the periods indicated, the high
and low sales prices of the Common Stock as reported by Nasdaq:
<TABLE>
<CAPTION>
QUARTERLY STOCK PRICES
-----------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1998
High........................................ $3 $N/A N/A N/A
Low......................................... 2 1/4 N/A N/A N/A
1997(/1/)
High........................................ $4 17/32 $4 1/16 $3 7/16 $2 1/8
Low......................................... 2 1/32 2 13/16 2 1/2 1 5/8
1996(/1/)
High........................................ $6 7/8 $8 19/32 $7 1/32 $4 11/16
Low......................................... 5 5/8 5 4 11/16 2 3/16
</TABLE>
- --------
(1) Prices above for 1996 through 1997 have been adjusted to account for the
one-for-five reverse stock split effected November 12, 1997.
The ten day average closing price of the Common Stock from June 10, 1998
through June 23, 1998 on Nasdaq was $1.88 per share.
19
<PAGE>
THE RIGHTS OFFERING
THE RIGHTS
The Company is distributing nontransferable Rights, at no cost, to the
record holders of outstanding shares of the Common Stock as of the Record Date
(5:00 p.m. New York City time, on July 17, 1998). The Company will distribute
one Right for each 1.2825 shares of the Common Stock held on the Record Date.
Each such Right entitles the holder thereof to subscribe for one share of the
Common Stock (the "Basic Subscription Privilege"). See "The Rights Offering--
Basic Subscription Privilege; Oversubscription Privilege." No fractional
rights will be distributed and no cash in lieu thereof will be paid. U-C
Holdings has agreed to purchase the whole number of shares of Common Stock
represented by the aggregate of all fractional rights pursuant to the Standby
Commitment.
The Subscription Price of $1.60 per share of the Common Stock represents a
discount of 15% from the closing price of $1.88 for the shares of the Common
Stock listed on The Nasdaq SmallCap Market based upon a ten day average
closing price from June 10, 1998 through June 23, 1998, which was the period
immediately prior to public announcement of the Rights Offering. There can be
no assurance that shares of the Common Stock will trade at prices above the
Subscription Price. See "Risk Factors--Market Considerations."
SUBSCRIPTION PRICE
The Subscription Price is $1.60 in cash per share of Common Stock subscribed
for pursuant to the Basic Subscription Privilege, the Oversubscription
Privilege, the Purchase Commitment, the Standby Commitment or exercise of the
Warrant.
DETERMINATION OF SUBSCRIPTION PRICE
The Subscription Price was arbitrarily determined by the Special Committee.
In determining the Subscription Price, the Special Committee considered such
factors as the alternatives available to the Company for raising capital, the
amount of proceeds desired by the Company, the market price of the Common
Stock, the pro rata nature of the offering, pricing of similar transactions,
the business prospects of the Company and the general condition of the
securities markets. There can be no assurance, however, that the market price
of the Common Stock will not decline during the subscription period or that,
following the issuance of the Rights and of the Common Stock upon exercise of
the Rights, a subscribing Holder will be able to sell the Common Stock
purchased in the Rights Offering at a price equal to or greater than the
Subscription Price.
NO BOARD RECOMMENDATION
The Board of Directors and the Special Committee have expressed no opinion
nor have they made any recommendations as to whether the holders of the Common
Stock should exercise their Rights. Any investment in the Common Stock of the
Company must be made pursuant to each subscriber's evaluation of the Rights
Offering, including the factors discussed under "Risk Factors," in the context
of his or her best interest.
METHOD OF OFFERING
The Rights Offering is being made directly by the Company. The Company will
pay no underwriting discounts or commissions, finders fees or other
remuneration in connection with any distribution of the Rights or sales of the
shares of Common Stock offered hereby, other than fees paid to American Stock
Transfer & Trust Company, as Subscription Agent, and the issuance of the
Warrant to U-C Holdings. See "The Rights Offering--Warrant." The Company
anticipates that the expenses of the Rights Offering will total approximately
$200,000.
20
<PAGE>
EXPIRATION DATE
The Rights will expire at 5:00 p.m. New York City time, on ,
1998, unless extended by the Company (the "Expiration Date"), after which time
all unexercised Rights will be null and void. The Company will not be
obligated to honor any purported exercise of Rights received by the
Subscription Agent after 5:00 p.m. New York City time on the Expiration Date,
regardless of when the documents relating to such exercise were transmitted,
except when timely transmitted pursuant to the Guaranteed Delivery Procedures
described below. The Expiration Date will not be extended beyond ,
1998, and if the conditions to the Rights Offering have not been satisfied by
such date, or the Rights Offering is otherwise terminated, all subscription
payments will be returned promptly, without interest or deduction. See "The
Rights Offering--Amendment and Termination."
BASIC SUBSCRIPTION PRIVILEGE; OVERSUBSCRIPTION PRIVILEGE
The Basic Subscription Privilege entitles the Holder of each Right to
purchase one share of the Common Stock upon payment of the Subscription Price.
No interest will be paid on funds delivered in connection with the payment of
the Subscription Price. If any shares of Common Stock offered hereby are not
purchased pursuant to the Basic Subscription Privilege (such shares, in
aggregate, are sometimes hereinafter referred to as the "Excess Shares"), any
Holder (other than U-C Holdings) purchasing all of the shares of Common Stock
available to it pursuant to the Basic Subscription Privilege may purchase the
number of Excess Shares specified by the Holder in the Subscription Documents,
subject to proration (the "Oversubscription Privilege"). In no event, however,
may the Holder oversubscribe for more than one hundred percent (100%) of the
shares purchased by the Holder in the Basic Subscription Privilege. If the
number of shares available taking into account the aforementioned restrictions
are not sufficient to satisfy the oversubscriptions, the available shares will
be allocated pro rata (subject to elimination of fractional shares) among the
Holders who exercise the Oversubscription Privilege, in proportion, not to the
number of shares requested pursuant to the Oversubscription Privilege, but to
the number of shares each Holder has purchased pursuant to the Basic
Subscription Privilege; provided, however, that if such pro rata allocation
results in any Holder being allocated a greater number of shares than such
Holder subscribed for pursuant to the exercise of such Holder's
Oversubscription Privilege, then such Holder will be allocated only such
number of shares as such Holder subscribed for and the remaining shares will
be allocated among all other Holders exercising the Oversubscription
Privilege.
Holders desiring to exercise their Oversubscription Privilege should
indicate in the space provided on their Subscription Certificate the number of
additional shares they would like to subscribe for. As soon as practicable
following the Expiration Date, the Company will determine the number of shares
of Common Stock that may be purchased pursuant to the Oversubscription
Privilege. Holders must tender with their Subscription Documents the full
amount due on exercise of their Oversubscription Privilege for that number of
shares they have so subscribed for (in addition to the payment due on the
Basic Subscription Privilege). Certificates representing shares of Common
Stock issuable upon exercise of the Basic Subscription Privilege and
Oversubscription Privilege will be mailed as soon as practicable after the
Expiration Date. The Company will also return to subscribing Holders, without
interest, any overpayment on the amount determined to be due with respect to
such subscriber's Oversubscription Privilege. Banks, brokers, and other
nominee holders of Rights who exercise the Basic Subscription Privilege and
the Oversubscription Privilege on behalf of beneficial owners of Rights will
be required to certify to the Subscription Agent and the Company, in
connection with the exercise of the Oversubscription Privilege, the number of
Rights to which the Basic Subscription Privilege has been exercised on behalf
of each such beneficial owner, that each such beneficial owner's Basic
Subscription Privilege held in the same capacity has been exercised in full
and the number of shares of Common Stock subscribed for pursuant to the
Oversubscription Privilege by each such beneficial owner, and to record
certain other information received from each such beneficial owner.
PURCHASE COMMITMENT
Subject to the terms and conditions of the Purchase Agreement, U-C Holdings
has agreed to subscribe and purchase 4,536,593 shares of Common Stock issuable
to it upon exercise of the Rights, for an aggregate purchase
21
<PAGE>
price of $7,258,549 (the "Purchase Commitment"). See "Risk Factors--Control by
Principal Stockholder." The rights and obligations of the Company and U-C
Holdings under the Purchase Agreement are subject to certain customary
conditions, including the absence of any litigation or governmental action
challenging or seeking to enjoin the Rights Offering or the Purchase
Agreement, which in the judgment of the Company or the Purchaser makes it
inadvisable to proceed with the Rights Offering.
STANDBY COMMITMENT
U-C Holdings has agreed, subject to the terms and conditions of the Purchase
Agreement, that in the event that any shares of Common Stock offered hereby
(the "Standby Shares") are not purchased by Holders other than U-C Holdings
pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege, U-C Holdings will purchase the Standby Shares at the Subscription
Price (the "Standby Commitment"). As a part of the Standby Commitment, U-C
Holdings has agreed to purchase the whole number of shares of Common Stock
equal to the aggregate of the fractional shares which would be available for
purchase by the other holders as fractional shares pursuant to the issuance of
the Rights but for the fact that fractional shares are not being offered to
such Holders pursuant to the Rights Offering. The rights and obligations of
the Company and U-C Holdings under the Purchase Agreement are subject to
certain customary conditions, including the absence of any litigation or
governmental action challenging or seeking to enjoin the Rights Offering or
the Purchase Agreement which in the judgment of the Company or the Purchaser
makes it inadvisable to proceed with the Rights Offering.
WARRANT
The Company has agreed, subject to the terms and conditions of the Purchase
Agreement, to issue a Class C Warrant to U-C Holdings (the "Warrant") for the
purchase by U-C Holdings of 152,100 shares of Common Stock at the Subscription
Price at any time from the date of issuance of the Warrant (which will be
commensurate with the purchase by U-C Holdings of the Standby Shares) until
, 2005. The Warrant contains certain antidilution provisions. The
terms and conditions of the Warrant were approved by the independent members
of the Company's board of directors who determined that the issuance of the
Warrant was fair and reasonable compensation to U-C Holdings for providing the
Standby Commitment. The number of shares subject to the Warrant was determined
using the Black-Scholes valuation method of the Warrant of approximately
$220,000, representing approximately eight percent of the maximum purchase
price pursuant to the Standby Commitment. The Company's objective in issuing
the Warrant was to fairly compensate U-C Holdings for its Standby Commitment,
which commitment will ensure that the Rights Offering is fully subscribed and
thereby accommodate the Company's interest in determining in advance the
proceeds of the Rights Offering.
EXERCISE OF RIGHTS
Rights may be exercised by delivering to the Subscription Agent, at or prior
to the Expiration Date (5:00 p.m. New York City time, on , 1998,
unless extended), the properly completed and executed Subscription Documents
evidencing those Rights with any required signature guarantees, together with
payment in full of the Subscription Price for each share of the Common Stock
subscribed for pursuant to the Basic Subscription Privilege. Such payment must
be made by (a) check or bank draft drawn upon a U.S. bank or postal,
telegraphic, or express money order payable to American Stock Transfer & Trust
Company, as Subscription Agent, or (b) wire transfer of same day funds to the
account maintained by the Subscription Agent for such purpose at Chase
Manhattan Bank, ABA No. 021-000-021, Account No. 323-836-925 (marked: "College
Television Network, Inc. Subscription"). Payment of the Subscription Price
will be deemed to have been received by the Subscription Agent only upon (i)
clearance of any uncertified check, (ii) receipt by the Subscription Agent of
any certified check or bank draft drawn upon a U.S. bank or any postal,
telegraphic or express money order or (iii) receipt of good funds in the
Subscription Agent's account designated above. HOLDERS WISHING TO PAY BY
UNCERTIFIED PERSONAL CHECK SHOULD NOTE THAT SUCH A CHECK MAY TAKE UP TO FIVE
BUSINESS DAYS TO CLEAR AND SHOULD TRANSMIT THE CHECK SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO ENSURE THAT IT IS RECEIVED AND CLEARS BY SUCH DATE
OR CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR
WIRE TRANSFER OF FUNDS.
22
<PAGE>
The address to which the Subscription Documents and payment of the
Subscription Price should be delivered is:
<TABLE>
<S> <C>
BY MAIL: BY HAND:
American Stock Transfer &
Trust Company American Stock Transfer & Trust Company
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, New York 10005 New York, New York 10005
By Facsimile: To Confirm Receipt and for General Information:
(718) 234-5001 (212) 936-5100
(718) 921-8200
</TABLE>
If a Rights holder wishes to exercise Rights, but time will not permit such
Holder to cause the Subscription Documents evidencing such Rights to reach the
Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:
(i) such Holder has caused payment in full of the Subscription Price for
each share of the Common Stock being subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege to be received
(in the manner set forth above) by the Subscription Agent on or prior to
the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration Date,
a guarantee notice (a "Notice of Guaranteed Delivery"), substantially in
the form provided with the Instructions as to Use of College Television
Network, Inc. Subscription Certificates (the "Instructions") distributed
with the Subscription Documents, from a member firm of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. (the "NASD"), or from a commercial bank or trust
company having an office or correspondent in the United States (each, an
"Eligible Institution"), stating the name of the exercising Holder, the
number of Rights represented by the Subscription Documents held by such
exercising Holder, the number of shares of the Common Stock being
subscribed for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege, and guaranteeing the delivery to the
Subscription Agent of any Subscription Documents evidencing such Rights
within three Nasdaq trading days following the date of the Notice of
Guaranteed Delivery; and
(iii) the properly completed Subscription Documents evidencing the Rights
being exercised, with any required signatures guaranteed, is received by
the Subscription Agent within three Nasdaq trading days following the date
of the Notice of Guaranteed Delivery relating thereto. The Notice of
Guaranteed Delivery may be delivered to the Subscription Agent in the same
manner as Subscription Documents at the addresses set forth above, or may
be transmitted to the Subscription Agent by telegram or facsimile
transmission (fax no. (718) 921-8325). Additional copies of the form of
Notice of Guaranteed Delivery are available upon request from Patrick G.
Doran, Chief Financial Officer of the Company, whose address and telephone
number are set forth below:
Mr. Patrick G. Doran
Chief Financial Officer
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
(800) 256-1636
Funds received in payment of the Subscription Price for shares subscribed
for pursuant to the Rights will be held in a segregated account pending
issuance of such shares.
Unless a Subscription Document (i) provides that the shares of the Common
Stock to be issued pursuant to the exercise of Rights represented thereby are
to be delivered to the record holder of such Rights or (ii) is submitted for
the account of an Eligible Institution, signatures on such Subscription
Document must be
23
<PAGE>
guaranteed by a commercial bank, trust company, securities broker or dealer,
credit union, savings association or other eligible guarantor institution
which is a member of or a participant in a signature guarantee program
acceptable to the Subscription Agent.
Holders who hold shares of the Common Stock for the account of others, such
as brokers, trustees or depositories for securities, should notify the
respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the record Holder of such
Right should complete Subscription Documents and submit them to the
Subscription Agent with the proper payment. In addition, beneficial owners of
shares of the Common Stock or Rights held through such a Holder should contact
the Holder and request the Holder to effect transactions in accordance with
the beneficial owner's instructions.
The instructions accompanying the Subscription Documents should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION DOCUMENTS TO THE
COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION DOCUMENTS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK
OF THE HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH SUBSCRIPTION
DOCUMENTS AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO
5:00 P.M. NEW YORK CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE UP TO FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY
URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company in its sole discretion may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines in its sole discretion. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect
or irregularity in connection with the submission of Subscription Documents or
incur any liability for failure to give such notification.
The Company will pay the fees and expenses of the Subscription Agent, and
has also agreed to indemnify the Subscription Agent from any liability which
it may incur in connection with the Rights Offering.
Any questions or requests for assistance concerning the method of exercising
Rights or additional copies of this Prospectus, the Instructions or the Notice
of Guaranteed Delivery may be directed to:
Mr. Patrick G. Doran
Chief Financial Officer
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
(800) 256-1636
NO REVOCATION
ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE OR
THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED.
24
<PAGE>
CONDITIONS TO THE RIGHTS OFFERING
The issuance of shares pursuant to the exercise of the Rights is subject to
a (i) the absence of any suit or other action seeking to enjoin or otherwise
challenging the Rights Offering which, in the judgment of the Company, makes
it inadvisable to proceed with the Rights Offering and (ii) the purchase by U-
C Holdings of shares pursuant to the Purchase Commitment and, unless all of
the shares being offered pursuant to the Rights Offering to the other Holders
are purchased by such Holders, the purchase by U-C Holdings of Standby Shares
pursuant to the Standby Commitment. In the event that the foregoing conditions
to the Rights Offering have not been satisfied by , 1998, all
subscription payments will be returned promptly, without interest or
deduction.
AMENDMENT AND TERMINATION
The Company may, at any time and from time to time, extend the Rights
Offering and otherwise amend the terms of the Rights Offering or terminate the
Rights Offering at any time prior to the Expiration Date or thereafter, in its
sole discretion, if the conditions to the Rights Offering have not been
satisfied.
SHARES OF THE COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Assuming the issuance of all of the shares offered hereby, approximately
6,250,000 shares of the Common Stock will be issued in connection with the
Rights Offering and 152,100 shares will be issued upon exercise of the
Warrant. Based on the 8,015,153 shares of the Common Stock outstanding as of
June 15, 1998, the issuance of such shares pursuant to the Rights Offering
would result (on an as adjusted basis as of such date) in a 78% increase in
the number of outstanding shares of the Common Stock, and the issuance of the
152,100 shares pursuant to exercise of the Warrant would result (on an as
adjusted basis of such date) in an additional 2% increase in the number of
outstanding shares of the Common Stock.
The following table shows the shares of Common Stock to be outstanding
(without giving effect to outstanding stock options or the warrant to purchase
772,732 shares of Common Stock currently held by U-C Holdings) and the change
in percentage ownership of U-C Holdings and the other Holders (i) as a result
of the consummation of the Rights Offering and (ii) as a result of the
exercise of the Warrant following consummation of the Rights Offering:
<TABLE>
<CAPTION>
U-C HOLDINGS, L.L.C. OTHER HOLDERS
---------------------- ---------------------
<S> <C> <C> <C> <C>
Post-Rights Offering (assuming
only U-C Holdings
participates).................. 12,068,181 shares 84.6% 2,196,972 shares 16.4%
Post-Rights Offering (assuming
only U-C Holdings participates)
and following exercise of the
Warrant........................ 12,220,281 shares 84.8% 2,196,972 shares 15.2%
Post-Rights Offering (assuming
full participation by all
Holders)....................... 10,354,774 shares 72.6% 3,910,379 shares 27.4%
Post-Rights Offering (assuming
full participation by all
Holders) and following exercise
of the Warrant................. 10,506,874 shares 72.9% 3,910,379 shares 27.1%
</TABLE>
Therefore, upon completion of the Rights Offering (without exercise of the
Warrant), the Company will have approximately 14,265,153 shares of Common
Stock outstanding and U-C Holdings' ownership will be between 72.6% and 84.6%
(on an as adjusted basis as of June 15, 1998).
FOREIGN AND CERTAIN OTHER STOCKHOLDERS
Subscription Certificates will not be mailed to holders whose addresses are
outside the United States or who have an APO or FPO address, but will be held
by the Subscription Agent for their account. To exercise such Rights, such
holders must notify the Subscription Agent on or prior to 5:00 p.m. New York
City time, on , 1998.
25
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Morris, Manning & Martin, L.L.P., the material United
States federal income tax consequences to holders of shares of the Common
Stock upon the issuance (the "Issuance") of the Rights, and to holders of the
Rights upon the exercise, lapse or disposition of the Rights, will be as set
forth below. This opinion is based upon laws, regulations, rulings and
decisions currently in effect. This opinion does not discuss all aspects of
federal income taxation that may be relevant to a particular investor or to
certain types of investors subject to special treatment under the federal
income tax laws (for example, banks, dealers in securities, life insurance
companies, tax exempt organizations and foreign taxpayers), and does not
discuss any aspect of state, local or foreign tax laws. This opinion is
limited to holders who will hold the Rights and any shares of the Common Stock
received therefor upon exercise as capital assets.
Issuance of the Rights. Holders of shares of the Common Stock will not
recognize taxable income, for federal income tax purposes, in connection with
the receipt of the Rights.
Basis and Holding Period of the Rights. Except as provided in the following
sentence, the basis of the Rights received by a Holder of Common Stock as a
distribution with respect of such Holder's shares of the Common Stock will be
zero. If either (i) the fair market value of the Rights on the date of
Issuance is 15% or more of the fair market value (on the date of Issuance) of
the shares of the Common Stock with respect to which they are received or (ii)
the Holder of Common Stock elects, in his or her federal income tax return for
the taxable year in which the Rights are received, to allocate part of the
basis of such shares of the Common Stock to the Rights, then upon exercise of
the Rights, the Holder's basis in such shares of the Common Stock will be
allocated between the shares of the Common Stock and the Rights in proportion
to the respective fair market values of each on the date of Issuance. The
holding period of the Rights received by a Holder as a distribution on such
Holder's shares of the Common Stock will include the Holder's holding period
(as of the date of Issuance) for the shares of the Common Stock with respect
to which the Rights were issued.
Lapse of the Rights. Holders of shares of the Common Stock who allow the
Rights received by them at the Issuance to lapse will not recognize any gain
or loss, and no adjustment will be made to the basis of the shares of the
Common Stock, if any, owned by such Holders of the Rights.
Exercise of the Rights; Basis and Holding Period of Shares of the Common
Stock. Holders of the Rights will not recognize any gain or loss upon the
exercise of such Rights. The basis of the shares of the Common Stock acquired
through exercise of the Rights will generally be equal to the sum of the
Subscription Price therefor and the Holder's basis in such Rights (if any).
The holding period for the shares of the Common Stock acquired through
exercise of the Rights will begin on the date such Rights are exercised.
THE FOREGOING IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH
HOLDER OF SHARES OF THE COMMON STOCK IS URGED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON HIS
OR HER OWN PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF
STATE AND LOCAL INCOME AND OTHER TAXES.
STATE AND FOREIGN SECURITIES LAWS
The Rights Offering is not being made in any state or other jurisdiction in
which it is unlawful to do so, nor is the Company selling or accepting any
offers to purchase any shares of the Common Stock from Holders who are
residents of any such state or other jurisdiction. The Company may delay the
commencement of the Rights Offering in certain states or other jurisdictions
in order to comply with the securities law requirements of such states or
other jurisdictions. It is not anticipated that there will be any changes in
the terms of the Rights Offering. The Company, if it so determines in its sole
discretion, may decline to make modifications to the terms of the Rights
Offering requested by certain states or other jurisdictions, in which event
Holders resident in those states or jurisdictions will not be eligible to
participate in the Rights Offering.
26
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following general summary of the material terms of the capital stock of
the Company does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the pertinent portions of the Company's
Certificate of Incorporation.
GENERAL
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.005 par value per share and 2,000,000 shares of Preferred
Stock. As of June 15, 1998, there were 8,015,153 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. The Company has designated a
Series A Redeemable Preferred Stock, pursuant to certain provisions of its
Certificate of Incorporation (a description of the terms of this designation
is set forth below under "Series A Redeemable Preferred Stock").
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters on
which the holders of Common Stock are entitled to vote and do not have any
cumulative voting rights. The holders of Common Stock are entitled to receive
such dividends as may be declared from time to time by the Board of Directors.
The Company has not had sufficient earnings to pay cash dividends on the
Common Stock to date, and has determined for the foreseeable future not to pay
cash dividends on the Common Stock in order to reinvest future earnings to
support its business operations. See "Common Stock Dividends and Price Range."
Holders of Common Stock have no preemptive, conversion, redemption or
sinking fund rights. In the event of a liquidation, dissolution or winding-up
of the Company, holders of Common Stock are entitled to share equally and
ratably in the assets of the Company, if any, remaining after the payment of
all debts and liabilities of the Company. The outstanding shares of Common
Stock are, and the shares of Common Stock issuable upon exercise of the Rights
when issued will be, fully paid and nonassessable.
PREFERRED STOCK
General. The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the
provisions of the Restated Certificate of Incorporation, as amended, and the
limitations prescribed by law, the Board of Directors is expressly authorized
by adopting resolutions prior to issuance, to create each series of Preferred
Stock, to issue the shares, fix the number of shares and change the number of
shares constituting any series, and to provide for or change the voting
rights, designations, stated value, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof, including dividend rights (and whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption price or prices, conversion rights and liquidation preferences of
the shares constituting any class or series of the Preferred Stock, without
any further action or vote by the stockholders. The Company has no current
plans to issue any further shares of Preferred Stock.
One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby protect the continuity of the Company's
management. The issuance of shares of the Preferred Stock pursuant to the
Board of Directors' authority described above may adversely affect the rights
of the holders of Common Stock. For example, Preferred Stock issued by the
Company may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock.
Series A Redeemable Preferred Stock. 2,000,000 shares of the Company's
authorized Preferred Stock have been designated "Series A Redeemable Preferred
Stock." As of the date of this Prospectus, no shares of Series A Redeemable
Preferred Stock were issued and outstanding.
27
<PAGE>
All, but not less than all, of the Series A Redeemable Preferred Stock are
redeemable, at the option of the Company at any time, at a price equal to the
aggregate of the amount of all declared but unpaid dividends thereon, if any,
without interest, plus $1.00 per share. The holders of Series A Redeemable
Preferred Stock have no voting rights except as otherwise from time to time
required by law. Upon the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Series A Redeemable
Preferred Stock are entitled to receive out of the assets of the Company an
amount equal to the dividends declared and unpaid thereon, if any, as of the
date of final distribution to such holders, without interest, and a sum equal
to $1.00 per share, before any payment shall be made or any assets distributed
to the holders of Common Stock or any other class or series of the Company's
capital stock ranking junior as to liquidation rights to the Series A
Redeemable Preferred Stock; provided, however, that such rights shall accrue
to the holders of Series A Redeemable Preferred Stock only in the event that
the Company's payments with respect to the liquidation preferences of the
holders of capital stock of the Company ranking senior as to liquidation
rights to the Series A Redeemable Preferred Stock (the "Senior Liquidation
Stock") are fully met. The entire assets of the Company available for
distribution after the liquidation preferences of the Senior Liquidation Stock
are fully met shall be distributed ratably among the holders of the Series A
Redeemable Preferred Stock and any other class or series of the Company's
capital stock which may be created after issuance of the Series A Preferred
Stock having parity as to liquidation rights with the Series A Redeemable
Preferred Stock in proportion to the respective preferential amounts to which
each is entitled (but only to the extent of such preferential amounts). The
holders of shares of Series A Preferred Stock are entitled to receive
dividends in an amount equal to $.10 per share per year as and when declared
by the Board of Directors out of the funds legally available for such purpose.
Notwithstanding the foregoing, the Board of Directors of the Company is
under no obligation to pay dividends with respect to the Series A Redeemable
Preferred Stock; the dividend rights of the holders of Series A Redeemable
Preferred Stock are operative only at such time as the Board of Directors may
decide to pay, declare or set aside for payment any dividends on any shares of
the Company. All dividends of Series A Redeemable Preferred Stock are
noncumulative, whether or not earned, and all right shall be lost to any
dividend not declared and paid in any given year regardless of whether the
Company's earnings were sufficient to cover a dividend in that year.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
The Amended and Restated Bylaws of the Company (the "Bylaws") require
stockholder approval in the following situations: (a) when a stock option or
purchase plan is to be established or when some other arrangement is to be
made pursuant to which stock may be acquired by officers or directors of the
Company, except for (i) warrants or rights issued generally to security
holders of the Company, (ii) broadly based plans or arrangements including
employees other than officers and directors or (iii) where the amount of
securities which may be issued does not exceed the lesser of 1% of the number
of shares of Common Stock outstanding or 25,000 shares; (b) when the issuance
of securities will result in a Change of Control (as defined below) of the
Company; (c) prior to the issuance of securities in connection with the
acquisition of the stock or assets of another company if: (i) (A) any
director, officer or Substantial Stockholder (as defined below) of the Company
has a 5% or greater interest (or such persons collectively have a 10% or
greater interest), directly or indirectly, in the company or assets to be
acquired or in the consideration to be paid in the transaction or series of
related transactions and (B) the present or potential issuance of the
Company's Common Stock, or securities convertible into or exercisable for the
Company's Common Stock, could result in an increase in outstanding common
shares or voting power of 5% or more; or (ii) due to the present or potential
issuance of the Company's Common Stock or securities convertible into or
exercisable for the Company's Common Stock, other than a public offering for
cash: (A) the Common Stock of the Company to be issued in such transaction
will have upon issuance, voting power equal to or in excess of 20% of the
voting power outstanding before the issuance of the stock or securities
convertible into or exercisable for the Company's Common Stock; or (B) the
number of shares of Common Stock to be issued in such transaction is or will
be equal to or in excess of 20% of the number of shares of the Company's
Common Stock outstanding before the issuance of the stock or securities; or
(d) prior to the issuance of securities in connection with a transaction other
than a public offering involving: (i) the sale or issuance by
28
<PAGE>
the Company of its Common Stock (or securities convertible into or exercisable
for its Common Stock) at a price less than the greater of book or market value
which together with sales by officers, directors or Substantial Stockholders
of the Company equals 20% or more of the issued and outstanding Common Stock
of the Company or 20% or more of the voting power outstanding before such sale
or issuance; or (ii) the sale or issuance by the Company of its Common Stock
(or securities convertible into or exercisable for its Common Stock) equal to
20% or more of the Company's Common Stock or 20% or more of the voting power
outstanding before such sale or issuance for less than the greater of book or
market value of the stock. "Market value" of the Common Stock shall be equal
to the average closing price per share as reported on the Nasdaq SmallCap
Market for the 20 trading days ending the trading day that occurs 10 trading
days prior to the date of issuance of the securities.
"Change of Control" shall be deemed to have occurred upon the happening of
any of the following:
(i) The consummation of any merger, reverse stock split, recapitalization
or other business combination of the Company, with or into another
corporation, or an acquisition of securities or assets by the Company,
pursuant to which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock of the Company
would be converted into cash, securities or other property, other than a
transaction in which the majority of the holders of Common Stock of the
Company immediately prior to such transaction will own at least 25% of the
voting power of the then-outstanding securities of the surviving
corporation immediately after such transaction, or any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company
(other than a transfer of assets as collateral to secure a debt of the
Company), or the liquidation or dissolution of the Company; or
(ii) A transaction in which any person (as such term is defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other
entity (other than the Company or any profit-sharing, employee ownership or
other employee benefit plan sponsored by the Company or any subsidiary, or
any trustee of or fiduciary with respect to any such plan when acting in
such capacity, or any group comprised solely of such entities): (A) shall
purchase any Common Stock of the Company (or securities convertible into
Common Stock of the Company) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board of Directors of the Company, or (B) shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly (in one transaction or a series of
transactions), of securities of the Company representing 50% or more of the
total voting power of the then-outstanding securities of the Company
ordinarily (and apart from the rights accruing under special circumstances)
having the right to vote in the election of directors (calculated as
provided in Rule 13d-3(d) in the case of rights to acquire the Company's
securities).
"Substantial Stockholder" means any person or entity with a beneficial
ownership interest consisting of at least 5% of the number of issued and
outstanding shares of the Company's Common Stock or 5% of the Company's
outstanding voting power.
The Bylaws provide that special meetings of the Board of Directors may be
called by the Chairman of the Board, Vice Chairman or Chief Executive Officer
of the Company or any two members of the Board of Directors or an Investor
Director. An "Investor Director" is a director designated by U-C Holdings. At
all meetings of the Board of Directors, a majority of the numbers of the Board
of Directors and at least one Investor Director must be present to constitute
a quorum.
The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer & Trust Company, 40 Wall Street, 46th Floor, New York, New York
10005.
29
<PAGE>
PLAN OF DISTRIBUTION
The Company is distributing non-transferable Rights, at no cost, to the
Holders of the Common Stock outstanding as of the Record Date. See "The Rights
Offering--The Rights." Each Right will entitle the holder thereof to receive,
upon payment of the Subscription Price, one share of Common Stock. U-C
Holdings has agreed to purchase from the Company all unsubscribed shares
pursuant to its Standby Commitment. See "The Rights Offering--Standby
Commitment." No underwriters, brokers or dealers have been retained by the
Company in connection with the Rights Offering.
The Company anticipates receiving approximately $9,800,000 in net cash
proceeds from the Rights Offering including U-C Holdings' Purchase Commitment
and Standby Commitment, and after payment of approximately $200,000 of fees
and expenses incurred in connection with the Rights Offering but before
deducting approximately $220,000 payable in the form of issuance of the
Warrant to U-C Holdings as compensation for its Standby Commitment. See "Use
of Proceeds."
LEGAL MATTERS
The legality of the Common Stock offered hereby has been passed upon for the
Company by Morris, Manning & Martin, L.L.P., Atlanta, Georgia.
EXPERTS
The financial statements as of and for the year ended October 31, 1997,
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-KSB for the year ended October 31, 1997, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The financial statements for the year ended October 31, 1996, incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-KSB
for the year ended October 31, 1997, have been so incorporated in reliance on
the report of Richard A. Eisner & Company, LLP, independent auditors, given on
the authority of said firm as experts in auditing and accounting.
30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
Risk Factors............................................................... 8
Recent Developments........................................................ 15
Use of Proceeds............................................................ 17
Capitalization............................................................. 18
Common Stock Dividends and Price Range..................................... 19
The Rights Offering........................................................ 20
Description of Capital Stock............................................... 27
Plan of Distribution....................................................... 30
Legal Matters.............................................................. 30
Experts.................................................................... 30
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6,402,100 SHARES
COLLEGE TELEVISION NETWORK, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses of the sale of the shares of Common Stock are as follows:
<TABLE>
<S> <C>
Registration Fee................................................... $ 3,600
Nasdaq Application Fee............................................. 7,500
Blue Sky Fees and Expenses......................................... 2,500
Printing and Engraving............................................. 14,100
Subscription Agent's Fees and Expenses............................. 10,000
Legal Fees and Expenses............................................ 125,000
Accounting Fees and Expenses....................................... 32,000
Miscellaneous Disbursements........................................ 5,300
--------
TOTAL............................................................ $200,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation (the "Certificate") of the Company
contains a provision which, subject to certain exceptions described below,
eliminates the liability of a director to the Company or its stockholders for
monetary damages for any breach of duty as a director. This provision does not
eliminate the liability of a director (i) for any breach of such director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law (the "Delaware Corporation Law") relating to unlawful dividends and
distributions, or (iv) for any transaction from which such director derived an
improper personal benefit.
The Certificate and the Bylaws (the "Bylaws") of the Company require the
Company to indemnify any person who was, is, or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (other than action
by or in the right of the corporation), by reason of service by such person as
a director, officer, employee or agent of the Company or any other corporation
for which he served as such at the request of the Company. Such persons are
entitled to be indemnified against judgments, fines, settlements, and
reasonable expenses actually incurred by the person in connection with the
proceeding, except that no payments may be made with respect to liability
which is not eliminated pursuant to the provision of the Certificate described
in the preceding paragraph. Such persons are also entitled to have the Company
advance any such expenses prior to final disposition of the proceeding, upon
delivery of an undertaking to repay the amounts advanced if it is ultimately
determined that such person is not entitled to be indemnified by the Company.
In addition to the Certificate and Bylaws of the Company, Section 145(c) of
the Delaware Corporation Law requires the Company to indemnify any director
who has been successful on the merits or otherwise in defending any proceeding
described above. The Delaware Corporation Law also provides that a court may
order indemnification of a director if it determines that the director is
fairly and reasonably entitled to such indemnification.
The Company has the power, under the Bylaws, to purchase and obtain
insurance on its behalf and on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the Company or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against or incurred by such person in any such capacity,
whether or not the Company has the power to indemnify such person against such
liability at that time under the Bylaws.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant, as amended.
3.2 Amended and Restated Bylaws of the Registrant, as amended.
4.1 Class C Warrant No. C-1, dated April 25, 1997, issued to U-C Holdings,
L.L.C. (incorporated by reference to Exhibit 4.1 to the Company's
Form 10-KSB for the fiscal year ended October 31, 1997).
4.2 Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.2 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.3 Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.3 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.4 Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.4 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.5 Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.5 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.6 Specimen certificate representing Common Stock (incorporated herein by
reference to Exhibit 4.3 to the Registrant's Registration Statement
on Form S-1 (No. 33-44935), as amended, declared effective on June
10, 1992).
4.7 Form of Letter to Stockholders.
4.8 Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and other Nominees.
4.9 Form of Instructions as to the Use of College Television Network, Inc.
Subscription Certificates.
4.10 Form of Subscription Certificate.
4.11 Form of Letter to Clients from Securities Dealers, Commercial Banks,
Trust Companies and other Nominees.
4.12 Form of Notice of Guaranteed Delivery.
4.13 Form of Nominee Holder Certification.
4.14 Form of DTC Participant Oversubscription Exercise Form
4.15 Form of Class C Warrant No. C-2, dated , 1998, issued to U-C
Holdings, L.L.C. pursuant to the Standby Stock Purchase Agreement
dated , 1998.
5.1 Form of Opinion of Morris, Manning & Martin, L.L.P. as to the legality
of the securities being registered.
10.1 Form of Standby Stock Purchase Agreement, dated , 1998,
between U-C Holdings, L.L.C. and the Registrant.
23.1 Consent of Richard A. Eisner & Company.
23.2 Consent of Price Waterhouse LLP.
Consent of Morris, Manning & Martin, L.L.P. (contained in the opinion
23.3 included at Exhibit 5.1).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
24.1 Power of Attorney of certain officers and directors of the Company
(see page II-5).
99.1 Form of Subscription Agent Agreement, dated , 1998, between
the Registrant and American Stock Transfer & Trust Company.
</TABLE>
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) To file, during any period in which it offers or sells the securities
registered hereby, a post-effective amendment to this registration statement
to include any additional or changed material information on the plan of
distribution.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
If the Company makes any public offering of the Rights on terms different from
those on the cover page of the Prospectus, the Company will file a post-
effective amendment to state the terms of such offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to officers, directors and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on June 22, 1998.
COLLEGE TELEVISION NETWORK, INC.
/s/ Jason Elkin
By: _________________________________
Jason Elkin
Chairman and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jason Elkin and Patrick G. Doran, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Jason Elkin Chairman and Chief Executive June 22, 1998
____________________________________ Officer (principal
Jason Elkin executive officer) and
Director
/s/ Patrick G. Doran Chief Financial Officer June 22, 1998
____________________________________ (principal financial
Patrick G. Doran officer and principal
accounting officer)
/s/ Peter Kauff Vice Chairman, Director June 22, 1998
____________________________________
Peter Kauff
/s/ Joseph D. Gersh Chief Operating Officer and June 22, 1998
____________________________________ Director
Joseph D. Gersh
/s/ Beth F. Johnston Director June 24, 1998
____________________________________
Beth F. Johnston
/s/ C. Thomas McMillen Director June 22, 1998
____________________________________
C. Thomas McMillen
/s/ Hollis W. Rademacher Director June 23, 1998
____________________________________
Hollis W. Rademacher
/s/ Stephen Roberts Director June 23, 1998
____________________________________
Stephen Roberts
/s/ Avy H. Stein Director June 23, 1998
____________________________________
Avy H. Stein
/s/ James W. Wood Director June 22, 1998
____________________________________
James W. Wood
</TABLE>
II-4
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
COLLEGE TELEVISION NETWORK, INC.
1. (a) The present name of the corporation (hereinafter called the
"Corporation") is College Television Network, Inc.
(b) The name under which the Corporation was originally incorporated
is Light Technologies, Inc., and the date of filing the original certificate of
incorporation of the Corporation with the Secretary of State of the State of
Delaware is August 17, 1989.
2. The certificate of incorporation of the Corporation is hereby amended
by (i) striking out Article FIRST thereof and by substituting in lieu therefor
new Article FIRST which is set forth in the Restated Certificate of
Incorporation hereinafter provided for, (ii) amending the par value of the
Corporation's authorized common stock from $.001 to $.005 per share, as set
forth in Article FOURTH of the Restated Certificate of Incorporation as
hereinafter provided for, and (iii) striking out Article SEVENTH thereof and by
substituting in lieu thereof new Article SEVENTH which is set forth in the
Restated Certificate of Incorporation hereinafter provided for. The foregoing
amendment to Article FOURTH reflects a reverse stock split of the Corporation's
authorized common stock such that each five (5) of the previously issued shares
of $.001 par value common stock shall be consolidated into one (1) share of
common stock having a par value of $.005, with payment in cash to the registered
holders of all resulting fractional issued shares of the fair value of the
shares as of the effective date of such consolidation, which shall be the date
this Restated Certificate of Incorporation is duly filed with the Secretary of
State of the State of Delaware.
3. The provisions of the certificate of incorporation as heretofore
amended and/or supplemented, and as herein amended, are hereby restated and
integrated into the single instrument which is hereinafter set forth, and which
is entitled Restated Certificate of Incorporation of College Television Network,
Inc., without any further amendment other than the amendment certified herein
and without any discrepancy between the provisions of the certificate of
incorporation as heretofore amended and supplemented and the provisions of the
said single instrument hereinafter set forth.
4. The amendment and restatement of the certificate of incorporation
herein certified have been duly adopted by the stockholders in accordance with
the provisions of Sections 228, 242 and 245 of the General Corporation Law of
the State of Delaware. Prompt written notice of the adoption of the amendment
and of the restatement of the certificate of incorporation herein certified has
been given to those stockholders who have not consented in writing thereto, as
provided in Section 228 of the General Corporation Law of the State of Delaware.
5. The certificate of incorporation of the Corporation, as amended and
restated herein, shall at the effective time of this Restated Certificate of
Incorporation, read as follows:
<PAGE>
"FIRST: The name of the Corporation is College Television Network,
Inc.
SECOND: The address of the Corporation's registered office in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Prentice
Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the laws of the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is One Hundred and Two Million
(102,000,000) shares, of which One Hundred Million (100,000,000) shares
shall be Common Stock, par value $.005 per share, and Two Million
(2,000,000) shares shall be Preferred Stock, par value $.001 per share.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby expressly authorized to provide,
by resolution or resolutions duly adopted by it prior to issuance, for the
creation of each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions relating
to the shares of each such series. The authority of the Board of Directors
with respect to each such series of Preferred Stock shall include, but not
be limited to, determining the following:
(a) the designation of such series, the number of shares to
constitute such series and the stated value if different from the
par value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the
terms of such voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable,
and the preference or relation which such dividends shall bear to
the dividends payable on any shares of stock of any other class
or any other series of Preferred Stock;
(d) whether the shares of such series shall be subject to redemption
by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
-2-
<PAGE>
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent
to and manner in which any such retirement or sinking fund shall
be applied to the purchase or redemption of the shares of such
series for retirement or other corporate purposes and the terms
and provisions relating to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other
series of Preferred Stock or any other securities and, if so, the
price or prices or the rate or rates of conversion or exchange
and the method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of,
the Common Stock or shares of stock of any other class or any
other series of Preferred Stock;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any
additional stock, including additional shares of such series or
of any other series of Preferred Stock or of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications,
limitations and restrictions, thereof.
The powers, preferences and relative, participating, optional and
other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. All shares
of any one series of Preferred Stock shall be identical in all respects
with all other shares of such series, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereof shall be cumulative.
FIFTH: Unless required by law or determined by the Chairman of the
meeting to be advisable, the vote by stockholders on any matter, including
the election of directors, need not be by written ballot.
-3-
<PAGE>
SIXTH: The Corporation reserves the right to increase or decrease
its authorized capital stock, or any class or series thereof, and to
reclassify the same, and to amend, alter, change or repeal any provisions
contained in the Certificate of Incorporation under which the Corporation
is organized or in any amendment thereto, in the manner now or hereafter
prescribed by law, and all rights conferred upon stockholders in said
Certificate of Incorporation or any amendment thereto are granted subject
to the aforementioned reservation.
SEVENTH: The Bylaws of the Corporation may be altered, amended or
repealed, and new Bylaws may be adopted, only by the stockholders holding a
majority of the outstanding common stock of the Corporation.
EIGHTH: All persons who the Corporation is empowered to indemnify
pursuant to the provisions of Section 145 of the General Corporation Law of
the State of Delaware (or any similar provision or provisions of applicable
law at the time in effect), shall be indemnified by the Corporation to the
full extent permitted thereby. The foregoing right of indemnification
shall not be deemed to be exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. No repeal or
amendment of this Article EIGHTH shall adversely affect any rights of any
person pursuant to this Article EIGHTH which existed at the time of such
repeal or amendment with respect to acts or omissions occurring prior to
such repeal or amendment.
NINTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for any monetary damages for breaches
of fiduciary duty as a director, provided that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under Section 174 of the General
Corporation Law of the State of Delaware; or (iv) for any transaction from
which the director derived an improper personal benefit. No repeal or
amendment of this Article NINTH shall adversely affect any rights of any
person pursuant to this Article NINTH which existed at the time of such
repeal or amendment with respect to acts or omissions occurring prior to
such repeal or amendment."
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the
Corporation, has executed this Restated Certificate of Incorporation this 6th
day of October, 1997.
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Jason Elkin
------------------------------------------
Jason Elkin, Chief Executive Officer
and Chairman of the Board
-4-
<PAGE>
ARTICLES OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
COLLEGE TELEVISION NETWORK, INC.
College Television Network, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
1.
The Restated Certificate of Incorporation of the Corporation is hereby
amended by deleting in its entirety the first paragraph of Article Four of the
Restated Certificate of Incorporation in its present form and substituting in
lieu thereof a new first paragraph of Article Four in the following form:
"FOURTH: The total number of shares of capital stock which
the Corporation shall have authority to issue is Fifty Two
Million (52,000,000) shares, of which Fifty Million
(50,000,000) shares shall be Common Stock, par value $0.005,
and Two Million (2,000,000) shares will be Preferred Stock,
par value $0.001 per share."
2.
The amendment to the Restated Certificate of Incorporation set forth in
these Articles of Amendment has been duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware, (a) in lieu of a meeting and vote of directors, all of the
directors having duly consented in writing to the adoption of such amendment,
and (b) in lieu of a meeting and vote of the shareholders, a majority of the
shareholders of the Corporation who would have been entitled to vote upon such
amendment if a meeting of shareholders were called and held having duly
consented in writing to the adoption of such amendment.
3.
The effective date of these Articles of Amendment shall be June 3, 1998.
In witness whereof, the undersigned, a duly authorized officer of the
Corporation, has executed these Articles of Amendment and does hereby declare
and certify, under the penalties of perjury, that this is his act and deed and
the facts herein are true, as of this 29th day of May, 1998.
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Jason Elkin
------------------------------------------
Jason Elkin, Chief Executive Officer
<PAGE>
EXHIBIT 3.2
COLLEGE TELEVISION NETWORK, INC.
AMENDED AND RESTATED
BY-LAWS
NOVEMBER 10, 1997
ARTICLE I
OFFICES
The location of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle,
and the name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
The Corporation shall in addition to its registered office in the State of
Delaware establish and maintain an office or offices at such place or places as
the Board of Directors may from time to time find necessary or desirable.
ARTICLE II
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the name
of the Corporation and may be in such form as the Board of Directors may
determine. Such seal may be used by causing it or a facsimile thereof to be
impressed, affixed or otherwise reproduced.
ARTICLE III
MEETINGS OF STOCKHOLDERS
1. All meetings of the stockholders shall be held at the registered
office of the Corporation in the State of Delaware or at such other place as
shall be determined from time to time by the Board of Directors.
2. The annual meeting of stockholders shall be held on such day and at
such time as may be determined from time to time by resolution of the Board of
Directors, when the stockholders shall elect by plurality vote, a Board of
Directors to hold office until the annual meeting of stockholders held next
after their election and their successors are respectively elected and qualified
or until their earlier resignation or removal. Any other proper business may be
transacted at the annual meeting.
3. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the
<PAGE>
stockholders for the transaction of business, except as otherwise expressly
provided by statute, by the Certificate of Incorporation or by these By-Laws.
If, however, such majority shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting (except as otherwise provided by
statute). At such adjourned meeting at which the requisite amount of voting
stock shall be represented any business may be transacted which might have been
transacted at the meeting as originally notified, provided a quorum is present.
4. At all meetings of the stockholders each stockholder having the right
to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not more
than three years prior to said meeting, unless such instrument provides for a
longer period.
5. At each meeting of the stockholders each stockholder shall have one
vote for each share of capital stock having voting power, registered in his name
on the books of the Corporation at the record date fixed in accordance with
these By-Laws, or otherwise determined, with respect to such meeting. Except as
otherwise expressly provided by statute, by the Certificate of Incorporation or
by these By-Laws, all matters coming before any meeting of the stockholders
shall be decided by the vote of a majority of the number of shares of stock
present in person or represented by proxy at such meeting and entitled to vote
thereat, a quorum being present.
6. Notice of each meeting of the stockholders shall be mailed to each
stockholder entitled to vote thereat not less than 10 nor more than 60 days
before the date of the meeting. Such notice shall state the place, date and hour
of the meeting and, in the case of a special meeting, the purposes for which the
meeting is called.
7. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the Chairman, Chief
Executive Officer, Vice-Chairman or by the Board of Directors, and shall be
called by the Secretary at the request in writing of stockholders owning a
majority of the amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote. Such request by stockholders shall state the
purpose or purposes of the proposed meeting.
8. Business transacted at each special meeting shall be confined to the
purpose or purposes stated in the notice of such meeting.
9. The order of business at each meeting of stockholders shall be
determined by the presiding officer.
10. No business may be transacted at an annual meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors (or
any other duly authorized committee thereof) or (c) otherwise properly brought
2
<PAGE>
before the annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Paragraph 10 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) complies with the notice
procedures set forth in this Paragraph 10.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
be set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, (iii) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Paragraph 10; provided, however, that, once business has been
properly brought before the annual meeting in accordance with such procedures,
nothing in this Paragraph 10 shall be deemed to preclude discussion by any
stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare that the
business was not properly brought before the meeting and such business shall not
be transacted.
11. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or, prior to the record date, entitled to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any
3
<PAGE>
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any such other corporate
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
12. Any action to be taken at any annual or special meeting of
stockholders, or any action which may be taken at an annual special meeting of
such stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the actions
taken shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such an
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
any officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty (60) days of the earliest dated consent delivered in the manner required
by this section to the Corporation, written consents signed by sufficient number
of holders to take action are delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the Corporation having custody of the book in which
proceedings of meeting of stockholders are recorded. Delivery to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at the meeting, would have been entitled to notice of the meeting
if the record date for such meeting had been the date that written consent
signed by sufficient number of holders to take the action were delivered to the
Corporation as provided above. In the event that the action which is consented
to is such as would have required the filing of a certificate under the General
Corporation Law of the State of Delaware, if such action had been voted on by
stockholders at a meeting thereof, such certificate shall state, in lieu of any
statement concerning any vote of stockholders, that written consent has been
given in accordance with the General Corporation Law of the State of Delaware
and the By-Laws of the Corporation.
ARTICLE IV
DIRECTORS
1. The business and affairs of the Corporation shall be managed under the
direction of a Board of Directors, which may exercise all such powers and
authority for and on behalf of the Corporation as shall be permitted by law, the
Certificate of Incorporation and these By-Laws. Each of the directors shall hold
office until the next annual meeting of stockholders and until his successor has
been elected and qualified or until his earlier resignation or removal.
4
<PAGE>
2. The Board of Directors may hold their meetings within or outside of
the State of Delaware, at such place or places as it may from time to time
determine.
3. The Board of Directors as of the date of these Amended and Restated
By-Laws shall consist of no more than eleven (11) directors. Any change in the
number of directors comprising the Board of Directors shall be only by
resolution or consent of the stockholders holding a majority of the outstanding
common stock of the Corporation. In case of any such increase, the stockholders
holding a majority of the outstanding common stock of the Corporation shall have
power to elect each additional director(s) to hold office until the next meeting
of stockholders relating to the election of the Board of Directors and until his
successor is elected and qualified or his earlier resignation or removal. Any
such decrease in the number of directors shall take effect at the time of such
action by the stockholders holding a majority of the outstanding common stock of
the Corporation only to the extent that vacancies then exist; to the extent that
such decrease exceeds the number of such vacancies, the decrease shall not
become effective, except as further vacancies may thereafter occur, until the
time of and in connection with the election of directors at the next succeeding
meeting of the stockholders.
4. If the office of any director becomes vacant, by reason of death,
resignation, disqualification, removal or otherwise, a majority of the directors
then in office, although less than a quorum, may fill the vacancy by electing a
successor who shall hold office until the next annual meeting of stockholders
and until his successor is elected and qualified or his earlier resignation or
removal; provided, however, that any vacancy may only be filled by a candidate
nominated by the Nominating Committee; provided further that if the Board
receives written notice from the stockholders holding a majority of the
outstanding common stock of the Corporation as to who they request as a new
appointee, the stockholders shall fill such vacancy.
5. Any director may resign at any time by giving written notice of his
resignation to the Board of Directors. Any such resignation shall take effect
upon receipt thereof by the Board, or at such later date as may be specified
therein. Any such notice to the Board shall be addressed to it in care of the
Secretary.
6. The directors of the Corporation shall hold office until their
successors are elected and qualified, or until their earlier resignation or
removal. Any Director may be at any time removed from office only by the
stockholders holding a majority of the outstanding common stock of the
Corporation, with or without cause.
ARTICLE V
COMMITTEES OF DIRECTORS
1. By resolutions adopted by a majority of the whole Board of Directors,
the Board may designate an Executive Committee and one or more other committees
and shall designate a Nominating Committee, each such committee to consist of
three or more directors of the Corporation. The Nominating Committee shall
consist of the Chairman of the Board and each of the Investor Directors. For
purposes hereof, "Investor Directors" shall mean no more than two
5
<PAGE>
directors designated as the "Investor Directors" hereunder from time to time in
a written notice delivered to the Corporation by U-C Holdings, L.L.C., a
Delaware limited liability company ("Holdings"); provided that the right of
Holdings to designate any Investor Director shall terminate at such time as
Holdings shall cease to hold any common stock of the Corporation. The Executive
Committee shall consist of no more than five (5) members, two of which members
shall be Investor Directors, and the Executive Committee shall have and may
exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation (except as otherwise expressly limited
by statute), including the power and authority to declare dividends and to
authorize the issuance of stock, and may authorize the seal of the corporation
to be affixed to all papers which may require it. Each such committee shall have
such of the powers and authority of the Board as may be provided from time to
time in resolutions adopted by a majority of the whole Board.
2. The requirements with respect to the manner in which the Executive
Committee and each such other committee shall hold meetings and take actions
shall be set forth in the resolutions of the Board of Directors designating the
Executive Committee or such other committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The directors shall receive such compensation for their services as may be
authorized by resolution of the Board of Directors, which compensation may
include an annual fee and a fixed sum for expense of attendance at regular or
special meetings of the Board or any committee thereof. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE VII
MEETINGS OF DIRECTORS; ACTION WITHOUT A MEETING
1. Regular meetings of the Board of Directors may be held without notice
at such time and place, either within or without the State of Delaware, as may
be determined from time to time by resolution of the Board, and a copy of such
resolution has been sent to all directors at least twenty-four (24) hours prior
to the next regular meeting.
2. Special meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board, Vice Chairman or Chief Executive Officer of
the Corporation or any two members of the Board of Directors or any Investor
Director on at least 24 hours' notice to each director. Except as may be
otherwise specifically provided by statute, by the Certificate of Incorporation
or by these By-Laws, the purpose or purposes of any such special meeting need
not be stated in such notice, although the time and place of the meeting shall
be stated.
6
<PAGE>
3. At all meetings of the Board of Directors, the presence in person of
both (i) a majority of the members of the Board of Directors and (ii) at least
one Investor Director shall be necessary and sufficient to constitute a quorum
for the transaction of business, and, except as otherwise provided by statute,
by the Certificate of Incorporation or by these By-Laws, if a quorum shall be
present the act of a majority of the directors present shall be the act of the
Board.
4. At any meeting, of the Board of Directors or any committee thereof,
any Investor Director shall have the power to adjourn the meeting at any time
(including prior to the taking of any certain action or vote at such meeting)
for a period of no more than fifty (50) days.
5. Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
all the members of the Board or such committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the Board of committee. Any director may participate in a meeting
of the Board, or any committee designated by the Board, by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this sentence shall constitute presence in person at such meeting.
ARTICLE VIII
OFFICERS
1. The officers of the Corporation shall be chosen by the Board of
Directors and shall be a Chief Executive Officer, President, Chief Operating
Officer, one or more Vice Presidents, a Secretary, and a Treasurer. The Board
may also choose a Chairman, one or more Vice Chairmen, one or more Assistant
Secretaries and Assistant Treasurers, and such other officers as it shall deem
necessary. Any number of offices may be held by the same person.
2. The salaries of all officers of the Corporation shall be fixed by the
Board of Directors, or in such manner as the Board may prescribe.
3. The officers of the Corporation shall hold office until their
successors are elected and qualified, or until their earlier resignation or
removal. Any officer may be at any time removed from office by the Board of
Directors, with or without cause. If the office of any officer becomes vacant
for any reason, the vacancy may be filled by the Board of Directors.
4. Any officer may resign at any time by giving written notice of his
resignation to the Board of Directors. Any such resignation shall take effect
upon receipt thereof by the Board or at such later date as may be specified
therein. Any such notice to the Board shall be addressed to it in care of the
Secretary.
7
<PAGE>
ARTICLE IX
CHAIRMAN
The Chairman shall be the chief executive officer of the Corporation,
unless otherwise determined by the Board of Directors. Subject to the
supervision and direction of the Board of Directors, he shall be responsible for
managing the affairs of the Corporation. He shall have supervision and direction
of all of the other officers of the Corporation and shall have the powers and
duties usually and customarily associated with the office of chief executive
officer. He shall preside at meetings of the stockholders and of the Board of
Directors.
ARTICLE X
VICE CHAIRMAN
The Vice Chairman shall have such powers and perform such duties as shall
be assigned to him (them) by the chief executive officer or the Board of
Directors.
ARTICLE XI
PRESIDENT
The President shall have such powers and perform such duties as shall be
assigned to him by the chief executive officer or the Board of Directors.
ARTICLE XII
CHIEF OPERATING OFFICER
The Chief Operating Officer shall have such powers and perform such duties
as shall be assigned to him by the chief executive officer or the Board of
Directors.
ARTICLE XIII
VICE PRESIDENTS
The Vice Presidents shall have such powers and duties as may be delegated
to them by the chief executive officer.
ARTICLE XIV
SECRETARY AND ASSISTANT SECRETARY
1. The Secretary shall attend all meetings of the Board of Directors and
of the stockholders, and shall record the minutes of all proceedings in a book
to be kept for that purpose. He shall perform like duties for the committees of
the Board when required.
8
<PAGE>
2. The Secretary shall give, or cause to be given, notice of meetings of
the stockholders, of the Board of Directors and of the committees of the Board.
He shall keep in safe custody the seal of the Corporation, and when authorized
by the Chief Executive Officer, President, an Executive Vice President or a Vice
President, shall affix the same to any instrument requiring it, and when so
affixed it shall be attested by his signature or by the signature of an
Assistant Secretary. He shall have such other powers and duties as may be
delegated to him by the Chief Executive Officer.
3. The Assistant Secretary shall, in case of the absence of the
Secretary, perform the duties and exercise the powers of the Secretary, and
shall have such other powers and duties as may be delegated to them by the Chief
Executive Officer.
ARTICLE XV
TREASURER AND ASSISTANT TREASURER
1. The Treasurer shall have the custody of the corporate funds and
securities, and shall deposit or cause to be deposited under his direction all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors
or pursuant to authority granted by it. He shall render to the Chief Executive
Officer and the Board whenever they may require it an account of all his
transactions as Treasurer and of the financial condition of the Corporation. He
shall have such other powers and duties as may be delegated to him by the Chief
Executive Officer.
2. The Assistant Treasurer shall, in case of the absence of the
Treasurer, perform the duties and exercise the powers of the Treasurer, and
shall have such other powers and duties as may be delegated to them by the Chief
Executive Officer.
ARTICLE XVI
CERTIFICATES OF STOCK
The certificates of stock of the Corporation shall be numbered and shall be
entered in the books of the Corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the Chief
Executive Officer, President or Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary.
ARTICLE XVII
CHECKS
All checks, drafts and other orders for the payment of money and all
promissory notes and other evidences of indebtedness of the Corporation shall be
signed by such officer or officers or such other person as may be designated by
the Board of Directors or pursuant to authority granted by it.
9
<PAGE>
ARTICLE XVIII
FISCAL YEAR
The fiscal year of the Corporation shall be as determined from time to time
by resolution duly adopted by the Board of Directors.
ARTICLE XIX
NOTICES AND WAIVERS
1. Whenever by statute, by the Certificate of Incorporation or by these
By-Laws it is provided that notice shall be given to any director or
stockholder, such provision shall not be construed to require personal notice,
but such notice may be given in writing, by mail, by depositing the same in the
United States mail, postage prepaid, directed to such stockholder or director at
his address as it appears on the records of the Corporation, and such notice
shall be deemed to be given at the time when the same shall be thus deposited.
Notice of regular or special meetings of the Board of Directors may also be
given to any director by telephone or by telex, telegraph or cable, and in the
latter event the notice shall be deemed to be given at the time such notice,
addressed to such director at the address hereinabove provided, is transmitted
by telex (with confirmed answerback), or delivered to and accepted by an
authorized telegraph or cable office.
2. Whenever by statute, by the Certificate of Incorporation or by these
By-Laws a notice is required to be given, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of any stockholder or director
at any meeting thereof shall constitute a waiver of notice of such meeting by
such stockholder or director, as the case may be, except as otherwise provided
by statute.
ARTICLE XX
INDEMNIFICATION
1. All persons who the Corporation is empowered to indemnify pursuant to
the provisions of Section 145 of the General Corporation Law of the State of
Delaware (or any similar provision or provisions of applicable law at the time
in effect) shall be indemnified by the Corporation to the full extent permitted
thereby. The foregoing right of indemnification shall not be deemed to be
exclusive of any other such rights to which those seeking indemnification from
the Corporation may be entitled, including, but not limited to, any rights of
indemnification to which they may be entitled pursuant to any agreement,
insurance policy, other by-law or charter provision, vote of stockholders or
directors, or otherwise. No repeal or amendment of this Article XX shall
adversely affect any rights of any person pursuant to this Article XX which
existed at
10
<PAGE>
the time of such repeal or amendment with respect to acts or omissions occurring
prior to such repeal or amendment.
2. Any indemnification of a director or officer of the Corporation under
Section 1 of this Article XX or advance of expenses under Section 5 of this
Article XX shall be made promptly, and in any event within thirty (30) days,
upon the written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this Article XX is required, and the Corporation fails to respond within
sixty (60) days to a written request for indemnity, the Corporation shall be
deemed to have approved the request. If the Corporation denies a written
request for indemnification or advancing of expenses, in whole or in part, or if
payment in full pursuant to such request is not made within thirty (30) days,
the right to indemnification or advances as granted by this Article XX shall be
enforceable by the director or officer in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the Corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its board of directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standards of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
3. The rights to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article XX shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
4. The Corporation may purchase and maintain insurance on its own behalf
and on behalf of any person who is or was a director, officer, employee,
fiduciary, or agent of the Corporation or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity,
whether or not the Corporation would have the power to indemnify such person
against such liability under this Article XX.
5. Expenses incurred by any person described in Section 1 of this Article
XX in defending a proceeding shall be paid by the Corporation in advance of such
proceeding's final
11
<PAGE>
disposition upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
6. Persons who are not covered by the foregoing provisions of this
Article XX and who are or were employees or agents of the Corporation, or who
are or were serving at the request of the Corporation as employees or agents of
another corporation, partnership, joint venture, trust or other enterprise, may
be indemnified to the extent authorized at any time or from time to time by the
board of directors.
7. The provisions of this Article XX shall be deemed to be a contract
right between the Corporation and each director or officer who serves in any
such capacity at any time while this Article XX and the relevant provisions of
the General Corporation Law of the State of Delaware or other applicable law are
in effect, and any repeal or modification of this Article XX or any such law
shall not affect any rights or obligations then existing with respect to any
state of facts or proceeding then existing.
8. For purposes of this Article XX, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this Article XX with respect to the resulting of
surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
ARTICLE XXI
ALTERATION OF BY-LAWS
The By-Laws of the Corporation may be altered, amended or repealed, and new
By-Laws may be adopted, only by the stockholders holding a majority of the
outstanding common stock of the Corporation.
12
<PAGE>
AMENDMENTS TO BY-LAWS
OF COLLEGE TELEVISION NETWORK, INC.
Article III, Paragraph 6 of the Amended and Restated By-Laws of College
Television Network, Inc. is amended by deleting such Paragraph in its entirety
and substituting in lieu thereof the following:
"6. Notice of each meeting of the stockholders shall be mailed to
each stockholder entitled to vote thereat not less than 10 nor more
than 60 days before the date of the meeting. Such notice shall state
the place, date and hour of the meeting and, in the case of a special
meeting, the purposes of which the meeting is called.
The Corporation shall require stockholder approval in the
following situations: (a) when a stock option or purchase plan is to
be established or when some other arrangement is to be made pursuant
to which stock may be acquired by officers or directors of the
Corporation, except for (i) warrants or rights issued generally to
security holders of the Corporation, (ii) broadly based plans or
arrangements including employees other than officers and directors or
(iii) where the amount of securities which may be issued does not
exceed the lesser of 1% of the number of shares of common stock
outstanding or 25,000 shares; (b) when the issuance of securities will
result in a Change of Control (as defined herein) of the Corporation;
(c) prior to the issuance of securities in connection with the
acquisition of the stock or assets of another company if: (i) (A) any
director, officer or Substantial Stockholder (as defined herein) of
the Corporation has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly,
in the company or assets to be acquired or in the consideration to be
paid in the transaction or series of related transactions and (B) the
present or potential issuance of the Corporation's common stock, or
securities convertible into or exercisable for the Corporation's
common stock, could result in an increase in outstanding common shares
or voting power of 5% or more; or (ii) due to the present or potential
issuance of the Corporation's common stock or securities convertible
into or exercisable for the Corporation's common stock, other than a
public offering for cash: (A) the common stock of the Corporation to
be issued in such transaction will have upon issuance, voting power
equal to or in excess of 20% of the voting power outstanding before
the issuance of the stock or securities convertible into or
exercisable for the Corporation's common stock; or (B) the number of
shares of common stock to be issued in such transaction is or will be
equal to or in excess of 20% of the number of shares of the
Corporation's common stock outstanding before the issuance of the
stock or securities; or (d) prior to the issuance of securities in
connection with a transaction
13
<PAGE>
other than a public offering involving: (i) the sale or issuance by
the Corporation of its common stock (or securities convertible into or
exercisable for its common stock) at a price less than the greater of
book or market value which together with sales by officers, directors
or Substantial Stockholders of the Corporation equals 20% or more of
the issued and outstanding common stock of the Corporation or 20% or
more of the voting power outstanding before such sale or issuance; or
(ii) the sale or issuance by the Corporation of its common stock (or
securities convertible into or exercisable for its common stock) equal
to 20% or more of the Corporation's common stock or 20% or more of the
voting power outstanding before such sale or issuance for less than
the greater of book or market value of the stock. For purposes of this
Article III, Section 6, "market value" of the common stock shall be
equal to the average closing price per share as reported on the Nasdaq
SmallCap Market for the 20 trading days ending the trading day that
occurs 10 trading days prior to the date of issuance of the
securities.
For purposes of this Article III, Section 6, "Change of Control" shall
be deemed to have occurred upon the happening of any of the following:
(i) The consummation of any merger, reverse stock split,
recapitalization or other business combination of the Corporation,
with or into another corporation, or an acquisition of securities or
assets by the Corporation, pursuant to which the Corporation is not
the continuing or surviving corporation or pursuant to which shares of
common stock of the Corporation would be converted into cash,
securities or other property, other than a transaction in which the
majority of the holders of common stock of the Corporation immediately
prior to such transaction will own at least 25 percent of the voting
power of the then-outstanding securities of the surviving corporation
immediately after such transaction, or any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Corporation (other than a transfer of assets as collateral to secure a
debt of the Corporation), or the liquidation or dissolution of the
Corporation; or
(ii) A transaction in which any person (as such term is defined
in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), corporation or other entity
(other than the Corporation or any profit-sharing, employee ownership
or other employee benefit plan sponsored by the Corporation or any
subsidiary, or any trustee of or fiduciary with respect to any such
plan when acting in such capacity, or any group comprised solely of
such entities): (A) shall purchase any common stock of the Corporation
(or securities convertible into common stock of the Corporation) for
cash, securities or any other consideration pursuant to a tender offer
or exchange offer, without the
14
<PAGE>
prior consent of the Board of Directors of the Corporation, or (B)
shall become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly (in one
transaction or a series of transactions), of securities of the
Corporation representing 50% or more of the total voting power of the
then-outstanding securities of the Corporation ordinarily (and apart
from the rights accruing under special circumstances) having the right
to vote in the election of directors (calculated as provided in Rule
13d-3(d) in the case of rights to acquire the Corporation's
securities); or
The term "Substantial Stockholder" means any person or entity with a
beneficial ownership interest consisting of at least 5% of the number
of issued and outstanding shares of the Corporation's common stock or
5% of the Corporation's outstanding voting power."
Article V, Section 1 of the Amended and Restated Bylaws is amended by
deleting the first sentence thereof and substituting the following sentence in
lieu thereof:
By resolutions adopted by a majority of the whole Board of Directors,
the Board may designate an Executive Committee and one or more other
committees and shall designate a Nominating Committee, each committee
to consist of not less than the lesser of three directors or the
number of independent directors of the Corporation then in office.
15
<PAGE>
EXHIBIT 4.7
COLLEGE TELEVISION NETWORK, INC.
6,250,000 SHARES OF COMMON STOCK
OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
COLLEGE TELEVISION NETWORK, INC.
, 1998
This notice is being distributed to all holders of shares of the Common
Stock, par value $.005 per share (the "Common Stock"), of record on July 17,
1998 (the "Record Date"), of College Television Network, Inc. (the "Company"),
in connection with a distribution of nontransferable subscription rights (the
"Rights") to acquire shares of the Common Stock at a subscription price of
$1.60 per share.
Each beneficial owner of Common Stock is entitled to one Right for each
1.2825 shares of Common Stock owned on the Record Date. No fractional Rights
will be issued and no cash in lieu thereof will be paid.
Enclosed are copies of the following documents (the "Subscription
Documents")*:
1. The Prospectus;
2. A Subscription Certificate representing your Rights;
3. The "Instructions as to Use of College Television Network, Inc.
Subscription Documents" (including Guidelines For Certification of Taxpayer
Identification Number on Substitute Form W-9 and a Substitute Form W-9);
4. A Notice of Guaranteed Delivery for Subscription Documents issued by
College Television Network, Inc.; and
5. A return envelope addressed to American Stock Transfer & Trust
Company, the Subscription Agent.
*Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time, on , 1998.
Your prompt action is requested. The Rights will expire at 5:00 p.m., New
York City time, on , 1998, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, properly completed and executed Subscription
Documents (unless the guaranteed delivery procedures are complied with) and
payment in full for all Rights exercised must be delivered to the Subscription
Agent as indicated in the Prospectus prior to 5:00 p.m., New York City time,
on the Expiration Date.
Additional copies of the enclosed materials may be obtained from Patrick G.
Doran of the Company. Mr. Doran's toll-free telephone number is (800) 256-
1636.
By Order of the Board of Directors
<PAGE>
EXHIBIT 4.8
COLLEGE TELEVISION NETWORK, INC.
6,250,000 SHARES OF COMMON STOCK
OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
COLLEGE TELEVISION NETWORK, INC.
To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial banks,
trust companies and other nominees in connection with the offering by College
Television Network, Inc. (the "Company") of 6,250,000 shares of common stock,
par value $.005 per share (the "Common Stock"), of the Company, at a
subscription price of $1.60 per share, pursuant to nontransferable
subscription rights (the "Rights") distributed to holders of record of Common
Stock as of the close of business on July 17, 1998 (the "Record Date"). The
Rights are described in the Prospectus and evidenced by a Subscription
Certificate registered in your name or the name of your nominee.
Each beneficial owner of Common Stock registered in your name or the name of
your nominee is entitled to one Right for each 1.2850 shares of Common Stock
owned by such beneficial owner. No fractional Rights will be issued and no
cash in lieu thereof will be paid.
We are asking you to contact your clients for whom you hold Common Stock
registered in your name or in the name of your nominee to obtain instructions
with respect to the Rights. Enclosed are copies of the following documents
(the "Subscription Documents"):
1. The Prospectus;
2. Subscription Certificate(s) evidencing Rights;
3. The "Instructions as to Use of College Television Network, Inc.
Subscription Documents" (including Guidelines For Certification of Taxpayer
Identification Number on Substitute Form W-9 and a Substitute Form W-9);
4. A form of letter which may be sent to your clients for whose accounts
you hold Common Stock registered in your name or the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Rights;
5. A Notice of Guaranteed Delivery for Subscription Documents issued by
College Television Network, Inc.;
6. A return envelope addressed to American Stock Transfer & Trust
Company, the Subscription Agent;
7. A DTC Participant Oversubscription Form; and
8. Nominee Holder Certification.
Your prompt action is requested. The Rights will expire at 5:00 p.m., New
York City time, on , 1998, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, properly completed and executed applicable
Subscription Documents (unless the guaranteed delivery procedures are complied
with) and payment in full for all Rights exercised must be delivered to the
Subscription Agent as indicated in the Prospectus prior to 5:00 p.m., New York
City time, on the Expiration Date.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time, on , 1998.
<PAGE>
Additional copies of the enclosed materials, as well as the certification
needed to round up fractional shares, may be obtained from Patrick G. Doran,
of the Company. Mr. Doran's toll-free telephone number is (800) 256-1636.
Very truly yours,
COLLEGE TELEVISION NETWORK, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF COLLEGE TELEVISION NETWORK, INC. OR ANY OTHER
PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE COMMON SHARES ISSUABLE UPON
VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR
STATEMENTS MADE IN THE PROSPECTUS.
<PAGE>
EXHIBIT 4.9
INSTRUCTIONS AS TO USE OF COLLEGE TELEVISION NETWORK, INC.
SUBSCRIPTION DOCUMENTS
CONSULT MR. DORAN OF THE COMPANY, YOUR BANK OR BROKER
AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by College Television Network, Inc., a Delaware corporation (the
"Company"), to the holders of shares of its common stock, par value $.005 per
share (the "Common Stock"), as described in the Company's Prospectus dated
, 1998 (the "Prospectus"). Holders of record of Common Stock at the close
of business on July 17, 1998 (the "Record Date"), are receiving one
nontransferable subscription right (collectively, the "Rights") for each
1.2825 shares of Common Stock held by them on the Record Date. No fractional
Rights will be issued and no cash in lieu thereof will be paid. Each Right is
exercisable, upon payment of $1.60 in cash (the "Subscription Price"), to
purchase one share of Common Stock (the "Basic Subscription Privilege"). In
addition, each Right also carries the right to subscribe (the
"Oversubscription Privilege") at the Subscription Price for a number of shares
of Common Stock as specified in the Subscription Certificate to the extent
that all the shares are not subscribed for through the exercise of the Basic
Subscription Privilege by the Expiration Date (the "Excess Shares"). No
fractional shares will be issued pursuant to the exercise of the
Oversubscription Privilege. If the number of Excess Shares is not sufficient
to satisfy all subscriptions pursuant to the Oversubscription Privilege, the
Excess Shares will be allocated pro rata (subject to the elimination of
fractional shares) among the holders of Rights who exercise the
Oversubscription Privilege in proportion to the number of shares such holders
have purchased pursuant to the Basic Subscription Privilege. See "The Rights
Offering" in the Prospectus.
The Rights will expire at 5:00 p.m., New York City time, on , 1998,
unless extended (the "Expiration Date").
The number of Rights to which you are entitled and the number of shares
purchasable thereunder are printed on the face of your Subscription
Certificate. You should indicate your wishes with regard to the exercise of
your Rights by completing the Subscription Certificate and returning it to the
Subscription Agent in the envelope provided.
YOUR PROPERLY EXECUTED SUBSCRIPTION DOCUMENTS MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR
SUBSCRIPTION DOCUMENTS MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION
PRICE, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT, ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE. YOU MAY NOT REVOKE ANY EXERCISE OF A RIGHT.
1. SUBSCRIPTION PRIVILEGES.
To exercise Rights, send your properly completed and executed applicable
Subscription Documents, together with payment in full of the Subscription
Price for each share of Common Stock subscribed for, pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege, to the Subscription
Agent. The Subscription Documents submitted to the Subscription Agent should
include, as may be applicable, the completed and executed (i) Subscription
Certificate, (ii) Substitute Form W-9, (iii) DTC Participant Oversubscription
Form, (iv) a Notice of Guaranteed Delivery, and (v) a Nominee Holder
Certificate. Payment of the Subscription Price must be made in U.S. dollars
for the full number of shares of Common Stock being subscribed for by (a)
check or bank draft drawn upon a U.S. bank or postal, telegraphic or express
money order payable to American Stock Transfer & Trust Company, as
Subscription Agent, or (b) wire transfer of same day funds to the account
maintained by the Subscription Agent for such purpose at Chase Manhattan Bank,
ABA No. 021-000-021, Account No. 323-836-925 (marked: "College Television
Network, Inc. Subscription"). The
<PAGE>
Subscription Price will be deemed to have been received by the Subscription
Agent only upon (i) the clearance of any uncertified check, (ii) the receipt
by the Subscription Agent of any certified check or bank draft drawn upon a
U.S. bank or any postal, telegraphic or express money order or (iii) the
receipt of good funds in the Subscription Agent's account designated above. If
paying by uncertified personal check, please note that the funds paid thereby
may take at least five business days to clear. Accordingly, holders of Rights
who wish to pay the Subscription Price by means of uncertified personal check
are urged to make payment sufficiently in advance of the Expiration Date to
ensure that such payment is received and clears by such date and are urged to
consider payment by means of certified or cashier's check, money order or wire
transfer of fund. Alternatively, you may cause a written guarantee
substantially in the form delivered with these instructions (the "Notice of
Guaranteed Delivery") from a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being an "Eligible Institution"), to be
received by the Subscription Agent at or prior to the Expiration Date together
with payment in full of the applicable Subscription Price. Such Notice of
Guaranteed Delivery must state your name, the number of Rights represented by
your Subscription Certificate and the number of shares of Common Stock being
purchased pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege, and will guarantee the delivery to the
Subscription Agent of your properly completed and executed Subscription
Certificate within three Nasdaq Stock Market trading days following the date
of the Notice of Guaranteed Delivery. If this procedure is followed, your
Subscription Documents must be received by the Subscription Agent within three
Nasdaq Stock Market trading days of the Notice of Guaranteed Delivery.
Additional copies of the Notice of Guaranteed Delivery may be obtained upon
request from Mr. Doran at the address, or by calling the telephone number,
indicated below.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time, on , 1998.
BANKS, BROKERS AND OTHER NOMINEE HOLDERS OF RIGHTS WHO EXERCISE RIGHTS ON
BEHALF OF BENEFICIAL OWNERS OF RIGHTS WILL BE REQUIRED TO CERTIFY TO THE
SUBSCRIPTION AGENT AND THE COMPANY (BY DELIVERING TO THE SUBSCRIPTION AGENT A
NOMINEE HOLDER CERTIFICATION SUBSTANTIALLY IN THE FORM AVAILABLE FROM THE
SUBSCRIPTION AGENT) THE AGGREGATE NUMBER OF RIGHTS THAT HAVE BEEN EXERCISED,
AND THE NUMBER OF SHARES THAT ARE BEING SUBSCRIBED FOR PURSUANT TO THE
OVERSUBSCRIPTION PRIVILEGE, BY EACH BENEFICIAL OWNER OF RIGHTS ON WHOSE BEHALF
SUCH NOMINEE HOLDER IS ACTING. IF MORE SHARES OF COMMON STOCK ARE SUBSCRIBED
FOR PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE THAN ARE AVAILABLE FOR SALE,
SUCH SHARES WILL BE ALLOCATED, AS DESCRIBED ABOVE, AMONG PERSONS EXERCISING
THE OVERSUBSCRIPTION PRIVILEGE IN PROPORTION TO SUCH PERSONS' EXERCISE OF
RIGHTS PURSUANT TO THE BASIC SUBSCRIPTION PRIVILEGE.
The address and fax numbers of the Subscription Agent are as follows:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET, 46TH FLOOR
NEW YORK, NEW YORK 10005
FAX: (718) 234-5001
The address and telephone number of Patrick G. Doran of the Company, is as
follows:
COLLEGE TELEVISION NETWORK, INC.
5784 LAKE FORREST DRIVE, SUITE 275
ATLANTA, GEORGIA 30328
CALL TOLL-FREE
(800) 256-1636
2
<PAGE>
If you have not indicated the number of Rights being exercised, or if you
have not forwarded full payment of the Subscription Price for the number of
Rights that you have indicated are being exercised, you will be deemed to have
exercised the Basic Subscription Privilege with respect to the maximum number
of whole Rights which may be exercised for the Subscription Price payment
delivered by you. To the extent that the Subscription Price payment delivered
by you exceeds the product of the Subscription Price multiplied by the number
of Rights evidenced by the Subscription Documents delivered by you (such
excess being the "Subscription Excess"), you will be deemed to have exercised
your Oversubscription Privilege to purchase, to the extent available, that
number of whole shares of Common Stock equal to the quotient obtained by
dividing the Subscription Excess by the Subscription Price, up to the maximum
number of shares purchasable by you pursuant to your Oversubscription
Privilege. Any portion of the Subscription Excess not applied toward the
purchase of shares of Common Stock pursuant to the exercise of your
Oversubscription Privilege will be refunded to you, without interest or
deduction.
2. DELIVERY OF COMMON SHARES.
The following deliveries and payments will be made to the address shown on
the face of your Subscription Certificate unless you provide instructions to
the contrary in Part II of the Subscription Certificate.
(a) Shares of Common Stock. As soon as practicable after the Expiration
Date, the Subscription Agent will mail to each Rights holder who validly
exercises Rights the number of shares of Common Stock issuable to such Rights
holder pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege. See "The Rights Offering--Subscription Privilege" in the
Prospectus.
(b) Cash Payments. As soon as practicable after the Expiration Date, the
Subscription Agent will mail to each Rights holder who exercises the
Oversubscription Privilege any excess funds received in payment of the
Exercise Price for Excess Shares that are subscribed for by such Rights holder
but not allocated to such Rights holder pursuant to the Oversubscription
Privilege.
3. EXECUTION.
(a) Execution by Registered Holder. The signature on the Subscription
Certificate must correspond with the name of the registered holder exactly as
it appears on the face of the Subscription Certificate without any alteration
or change whatsoever. Persons who sign the Subscription Certificate in a
representative or other fiduciary capacity must indicate their capacity when
signing and, unless waived by the Subscription Agent in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of
their authority to so act.
(b) Execution by Person Other than Registered Holder. If the Subscription
Certificate is executed by a person other than the holder named on the face of
the Subscription Certificate, proper evidence of authority of the person
executing the Subscription Certificate must accompany the same unless, for
good cause, the Subscription Agent dispenses with proof of authority.
(c) Signature Guarantees. Your signature must be guaranteed by an Eligible
Institution if you specify special payment or delivery instructions pursuant
to Part II of the Subscription Certificate.
4. METHOD OF DELIVERY.
The method of delivery of Subscription Documents and payment of the Exercise
Price to the Subscription Agent will be at the election and risk of the Rights
holder, but, if sent by mail, it is recommended that they be sent by
registered mail, properly insured, with return receipt requested, and that a
sufficient number of days be allowed to ensure delivery to the Subscription
Agent and the clearance of any checks sent in payment of the Exercise Price
prior to 5:00 p.m., New York City time, on the Expiration Date.
3
<PAGE>
5. FOREIGN AND CERTAIN OTHER STOCKHOLDERS.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time, on , 1998.
6. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE
DEPOSITORY TRUST COMPANY.
In the case of holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the Basic Subscription
Privilege (but not the Oversubscription Privilege) may be effected by
instructing DTC to transfer Rights (such Rights being "DTC Exercised Rights")
from the DTC account of such holder to the DTC account of the Subscription
Agent, together with payment of the Subscription Price for each Common Share
subscribed for pursuant to the Basic Subscription Privilege. The
Oversubscription Privilege in respect of DTC Exercised Rights may not be
exercised through DTC. The holder of a DTC Exercised Right may exercise the
Oversubscription Privilege in respect of such DTC Exercised Right by properly
executing and delivering to the Subscription Agent at or prior to 5:00 p.m.,
New York City time on the Expiration Date, a DTC Participant Oversubscription
Exercise Form, in the form available from the Subscription Agent, together
with payment of the appropriate Subscription Price for the number of shares of
Common Stock for which the Oversubscription Privilege is to be exercised.
If a Notice of Guaranteed Delivery relates to Rights with respect to which
exercise of the Basic Subscription Privilege will be made through DTC and such
Notice of Guaranteed Delivery also relates to the exercise of the
Oversubscription Privilege, a DTC Participant Oversubscription Exercise Form
must also be received by the Subscription Agent in respect of such exercise of
the Oversubscription Privilege on or prior to the Expiration Date.
7. SUBSTITUTE FORM W-9.
Each Rights holder who elects to exercise Rights should provide the
Subscription Agent with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is included as Exhibit A hereto. Additional copies
of Substitute Form W-9 may be obtained upon request from the Subscription
Agent or Mr. Doran. Failure to provide the information on the form may subject
such holder to 31% federal income tax withholding with respect to dividends or
other distributions that may be paid by the Company on shares of Common Stock
purchased upon the exercise of Rights.
4
<PAGE>
EXHIBIT A
IMPORTANT TAX INFORMATION
Under United States federal income tax law, dividend payments and other
distributions that may be made by the Company on Common Shares issued upon the
exercise of Rights may be subject to backup withholding, and each Rights
holder who either exercises Rights should provide the Subscription Agent (as
the Company's agent) with such Rights holder's correct taxpayer identification
number on Substitute Form W-9 below. If such Rights holder is an individual,
the taxpayer identification number is his social security number. If the
Subscription Agent, which is also the transfer agent for the Company, is not
provided with the correct taxpayer identification number in connection with
such payments, the Rights holder may be subject to a $50 penalty imposed by
the Internal Revenue Service.
Exempt Rights holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In general, in order for a foreign individual to qualify as an
exempt recipient, such Rights holder must submit a statement, signed under the
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Subscription Agent. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Company or the Subscription Agent, as the
case may be, will be required to withhold 31 percent of any such payments made
to the Rights holder. Backup withholding is not an additional tax. Rather, the
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding, a Rights holder is required to notify the
Subscription Agent of his correct taxpayer identification number by completing
the form below certifying that the taxpayer identification number provided on
Substitute Form W-9 is correct (or that such Rights holder is awaiting a
taxpayer identification number).
WHAT NUMBER TO GIVE THE SUBSCRIPTION AGENT
Each Rights holder is required to give the Subscription Agent the social
security number or employer identification number of the record owner of the
Rights. If the Rights are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report.
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
PART I--TAXPAYER PART II--For Payees
IDENTIFICATION NO. Exempt from Backup
Withholding (see en-
closed Guidelines)
----------------------------
-------------------------
Enter your taxpayer
identification number in
the appropriate box. For
most individuals, this is
your social security
number. If you do not have
a number, see How to Obtain
a "TIN" in the enclosed
Guidelines.
--------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify
that:
----------------------
Social Security
Number
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and
SUBSTITUTE ----------------------
(2) I am not subject to backup withholding either
because I have not been notified by the
Internal Revenue Service ("IRS") that I am
subject to backup withholding as a result of a
failure to report all interest or dividends,
or the IRS has notified me that I am no longer
subject to backup withholding.
FORM W-9 NOTE: If the account is in Employer
more than one name, see the
chart on page 2 of enclosed
Guidelines to determine
what number to give.
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
--------------------------------------------------------
CERTIFICATION GUIDELINES--You must cross out item (2)
above if you have been notified by the IRS that you
are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out item (2).
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU. PLEASE REVIEW ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
--------------------------------------------------------
SIGNATURE ______________________ DATE ________, 1998
5
<PAGE>
GUIDELINES FOR CERTIFICATE OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF
- --------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust (grantor trustee(1)
is also trustee)
b. The so-called trust The actual
account that is not a owner(1)
legal or valid trust
under State law
5. Sole proprietorship The owner(4)
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF
---
<S> <C>
6. A valid trust, estate, Legal entity (do
or pension trust not furnish the
identification
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title)(3)
7. Corporation The corporation
8. Association, club, The organization
religious, charitable,
education or other
tax-exempt
organization
9. Partnership The partnership
10. A broker or registered The broker or
nominee nominee
11. Account with the The public
department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
---
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) List first and circle the name of the legal trust, estate, or pension
trust.
(4) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
6
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A dealer in securities or commodities registered in the United States or a
possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the Payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see the regulations under sections 6041,
6041(a), 6042, 6044, 6045, 6049, 6050A and 6060N. Privacy Act Notice. Section
6109 requires most recipients of dividends, interest or other payments to give
taxpayer identification numbers to payers who must report the payments to IRS.
The IRS uses the numbers for identification purposes, and to help verify the
accuracy of your tax return. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividends, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
r7
<PAGE>
EXHIBIT 4.10
INSTRUCTIONS AS TO USE OF COLLEGE TELEVISION NETWORK, INC.
SUBSCRIPTION DOCUMENTS
CONSULT MR. DORAN OF THE COMPANY, YOUR BANK OR BROKER
AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights Offering")
by College Television Network, Inc., a Delaware corporation (the "Company"), to
the holders of shares of its common stock, par value $.005 per share (the
"Common Stock"), as described in the Company's Prospectus dated
________________, 1998 (the "Prospectus"). Holders of record of Common Stock at
the close of business on ________________, 1998 (the "Record Date"), are
receiving ___ nontransferable subscription rights (collectively, the "Rights")
for each ___ shares of Common Stock held by them on the Record Date. No
fractional Rights will be issued and no cash in lieu thereof will be paid. Each
Right is exercisable, upon payment of $_____ in cash (the "Subscription Price"),
to purchase one share of Common Stock (the "Basic Subscription Privilege"). In
addition, each Right also carries the right to subscribe (the "Oversubscription
Privilege") at the Subscription Price for a number of shares of Common Stock as
specified in the Subscription Certificate to the extent that all the shares are
not subscribed for through the exercise of the Basic Subscription Privilege by
the Expiration Date (the "Excess Shares"). No fractional shares will be issued
pursuant to the exercise of the Oversubscription Privilege. If the number of
Excess Shares is not sufficient to satisfy all subscriptions pursuant to the
Oversubscription Privilege, the Excess Shares will be allocated pro rata
(subject to the elimination of fractional shares) among the holders of Rights
who exercise the Oversubscription Privilege in proportion to the number of
shares such holders have purchased pursuant to the Basic Subscription Privilege.
See "The Rights Offering" in the Prospectus.
The Rights will expire at 5:00 p.m., New York City time, on _______, 1998,
unless extended (the "Expiration Date").
The number of Rights to which you are entitled and the number of shares
purchasable thereunder are printed on the face of your Subscription Certificate.
You should indicate your wishes with regard to the exercise of your Rights by
completing the Subscription Certificate and returning it to the Subscription
Agent in the envelope provided.
YOUR PROPERLY EXECUTED SUBSCRIPTION DOCUMENTS MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR
SUBSCRIPTION DOCUMENTS MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION
PRICE, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE
SUBSCRIPTION AGENT, ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE. YOU MAY NOT REVOKE ANY EXERCISE OF A RIGHT.
1. SUBSCRIPTION PRIVILEGES.
To exercise Rights, send your properly completed and executed applicable
Subscription Documents, together with payment in full of the Subscription Price
for each share of Common Stock subscribed for pursuant to the Basic Subscription
Privilege and the Oversubscription Privilege, to the Subscription Agent. The
Subscription Documents submitted to the Subscription Agent should include, as
may be applicable, the completed and executed (i) Subscription Certificate, (ii)
Substitute Form W-9, (iii) DTC Participant Oversubscription Form, (iv) a Notice
of Guaranteed Delivery, and (v) a Nominee Holder Certificate. Payment of the
Subscription Price must be made in U.S. dollars for the full number of shares of
Common Stock being subscribed for by (a) check or bank draft drawn upon a U.S.
bank or postal, telegraphic or express money order payable to American Stock
Transfer & Trust Company, as Subscription Agent, or (b) wire transfer of same
day funds to the account maintained by the Subscription Agent for such purpose
at Chase Manhattan Bank, ABA No. 021-000-021, Account No. 323-836-925 (marked:
"College Television Network, Inc. Subscription"). The Subscription Price will
be deemed to have been received by the Subscription Agent only upon (i) the
clearance of any uncertified check, (ii) the receipt by the Subscription Agent
of any certified check or bank draft drawn upon a U.S. bank or any postal,
telegraphic or express money order or (iii) the receipt of good funds in the
Subscription Agent's account designated above. If paying by uncertified
personal check, please note that the funds paid thereby may take at least five
business days to clear. Accordingly, holders of Rights who wish to pay the
Subscription Price by means of uncertified personal check are urged to make
payment sufficiently in advance of the Expiration Date to ensure that such
payment is received and clears by such date and are
<PAGE>
urged to consider payment by means of certified or cashier's check, money order
or wire transfer of fundS. Alternatively, you may cause a written guarantee
substantially in the form delivered with these instructions (the "Notice of
Guaranteed Delivery") from a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being an "Eligible Institution"), to be
received by the Subscription Agent at or prior to the Expiration Date together
with payment in full of the applicable Subscription Price. Such Notice of
Guaranteed Delivery must state your name, the number of Rights represented by
your Subscription Certificate and the number of shares of Common Stock being
purchased pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege, and will guarantee the delivery to the Subscription Agent of your
properly completed and executed Subscription Certificate within three Nasdaq
Stock Market trading days following the date of the Notice of Guaranteed
Delivery. If this procedure is followed, your Subscription Documents must be
received by the Subscription Agent within three Nasdaq Stock Market trading days
of the Notice of Guaranteed Delivery. Additional copies of the Notice of
Guaranteed Delivery may be obtained upon request from Mr. Doran at the address,
or by calling the telephone number, indicated below.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent on
or prior to 5:00 p.m. New York City time, on ___________, 1998.
BANKS, BROKERS AND OTHER NOMINEE HOLDERS OF RIGHTS WHO EXERCISE RIGHTS ON
BEHALF OF BENEFICIAL OWNERS OF RIGHTS WILL BE REQUIRED TO CERTIFY TO THE
SUBSCRIPTION AGENT AND THE COMPANY (BY DELIVERING TO THE SUBSCRIPTION AGENT A
NOMINEE HOLDER CERTIFICATION SUBSTANTIALLY IN THE FORM AVAILABLE FROM THE
SUBSCRIPTION AGENT) THE AGGREGATE NUMBER OF RIGHTS THAT HAVE BEEN EXERCISED, AND
THE NUMBER OF SHARES THAT ARE BEING SUBSCRIBED FOR PURSUANT TO THE
OVERSUBSCRIPTION PRIVILEGE, BY EACH BENEFICIAL OWNER OF RIGHTS ON WHOSE BEHALF
SUCH NOMINEE HOLDER IS ACTING. IF MORE SHARES OF COMMON STOCK ARE SUBSCRIBED
FOR PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE THAN ARE AVAILABLE FOR SALE, SUCH
SHARES WILL BE ALLOCATED, AS DESCRIBED ABOVE, AMONG PERSONS EXERCISING THE
OVERSUBSCRIPTION PRIVILEGE IN PROPORTION TO SUCH PERSONS' EXERCISE OF RIGHTS
PURSUANT TO THE BASIC SUBSCRIPTION PRIVILEGE.
The address and fax numbers of the Subscription Agent are as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Fax: (718) 234-5001
The address and telephone number of Patrick G. Doran of the Company, is as
follows:
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
CALL TOLL-FREE
(800) 256-1636
If you have not indicated the number of Rights being exercised, or if you have
not forwarded full payment of the Subscription Price for the number of Rights
that you have indicated are being exercised, you will be deemed to have
exercised the Basic Subscription Privilege with respect to the maximum number of
whole Rights which may be exercised for the Subscription Price payment delivered
by you. To the extent that the Subscription Price payment delivered by you
exceeds the product of the Subscription Price multiplied by the number of Rights
evidenced by the Subscription Documents delivered by you (such excess being the
"Subscription Excess"), you will be deemed to have exercised your
Oversubscription Privilege to purchase, to the extent available, that number of
whole shares of Common Stock equal to the quotient obtained by dividing the
Subscription Excess by the Subscription Price, up to the maximum number of
shares purchasable by you pursuant to your Oversubscription Privilege. Any
portion of the Subscription Excess not applied toward the purchase of shares of
2
<PAGE>
Common Stock pursuant to the exercise of your Oversubscription Privilege will be
refunded to you, without interest or deduction.
2. DELIVERY OF COMMON SHARES.
The following deliveries and payments will be made to the address shown on
the face of your Subscription Certificate unless you provide instructions to the
contrary in Part II of the Subscription Certificate.
(a) Shares of Common Stock. As soon as practicable after the Expiration
Date, the Subscription Agent will mail to each Rights holder who validly
exercises Rights the number of shares of Common Stock issuable to such Rights
holder pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege. See "The Rights Offering - Subscription Privilege" in the
Prospectus.
(b) Cash Payments. As soon as practicable after the Expiration Date, the
Subscription Agent will mail to each Rights holder who exercises the
Oversubscription Privilege any excess funds received in payment of the Exercise
Price for Excess Shares that are subscribed for by such Rights holder but not
allocated to such Rights holder pursuant to the Oversubscription Privilege.
3. EXECUTION.
(a) Execution by Registered Holder. The signature on the Subscription
Certificate must correspond with the name of the registered holder exactly as it
appears on the face of the Subscription Certificate without any alteration or
change whatsoever. Persons who sign the Subscription Certificate in a
representative or other fiduciary capacity must indicate their capacity when
signing and, unless waived by the Subscription Agent in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of
their authority to so act.
(b) Execution by Person Other than Registered Holder. If the Subscription
Certificate is executed by a person other than the holder named on the face of
the Subscription Certificate, proper evidence of authority of the person
executing the Subscription Certificate must accompany the same unless, for good
cause, the Subscription Agent dispenses with proof of authority.
(c) Signature Guarantees. Your signature must be guaranteed by an Eligible
Institution if you specify special payment or delivery instructions pursuant to
Part II of the Subscription Certificate.
4. METHOD OF DELIVERY.
The method of delivery of Subscription Documents and payment of the
Exercise Price to the Subscription Agent will be at the election and risk of the
Rights holder, but, if sent by mail, it is recommended that they be sent by
registered mail, properly insured, with return receipt requested, and that a
sufficient number of days be allowed to ensure delivery to the Subscription
Agent and the clearance of any checks sent in payment of the Exercise Price
prior to 5:00 p.m., New York City time, on the Expiration Date.
5. FOREIGN AND CERTAIN OTHER STOCKHOLDERS.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent on
or prior to 5:00 p.m. New York City time, on ___________, 1998.
6. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE
DEPOSITORY TRUST COMPANY.
In the case of holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the Basic Subscription Privilege
(but not the Oversubscription Privilege) may be effected by instructing DTC to
transfer Rights (such Rights being "DTC Exercised Rights") from the DTC account
of such holder to the DTC account of the Subscription Agent, together with
payment of the Subscription Price for each Common Share subscribed for pursuant
to the Basic Subscription Privilege. The Oversubscription Privilege in
3
<PAGE>
respect of DTC Exercised Rights may not be exercised through DTC. The holder of
a DTC Exercised Right may exercise the Oversubscription Privilege in respect of
such DTC Exercised Right by properly executing and delivering to the
Subscription Agent at or prior to 5:00 p.m., New York City time on the
Expiration Date, a DTC Participant Oversubscription Exercise Form, in the form
available from the Subscription Agent, together with payment of the appropriate
Subscription Price for the number of shares of Common Stock for which the
Oversubscription Privilege is to be exercised.
If a Notice of Guaranteed Delivery relates to Rights with respect to which
exercise of the Basic Subscription Privilege will be made through DTC and such
Notice of Guaranteed Delivery also relates to the exercise of the
Oversubscription Privilege, a DTC Participant Oversubscription Exercise Form
must also be received by the Subscription Agent in respect of such exercise of
the Oversubscription Privilege on or prior to the Expiration Date.
7. SUBSTITUTE FORM W-9.
Each Rights holder who elects to exercise Rights should provide the
Subscription Agent with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is included as Exhibit A hereto. Additional copies
of Substitute Form W-9 may be obtained upon request from the Subscription Agent
or Mr. Doran. Failure to provide the information on the form may subject such
holder to 31% federal income tax withholding with respect to dividends or other
distributions that may be paid by the Company on shares of Common Stock
purchased upon the exercise of Rights.
4
<PAGE>
EXHIBIT A
IMPORTANT TAX INFORMATION
Under United States federal income tax law, dividend payments and other
distributions that may be made by the Company on Common Shares issued upon the
exercise of Rights may be subject to backup withholding, and each Rights holder
who either exercises Rights should provide the Subscription Agent (as the
Company's agent) with such Rights holder's correct taxpayer identification
number on Substitute Form W-9 below. If such Rights holder is an individual,
the taxpayer identification number is his social security number. If the
Subscription Agent, which is also the transfer agent for the Company, is not
provided with the correct taxpayer identification number in connection with such
payments, the Rights holder may be subject to a $50 penalty imposed by the
Internal Revenue Service.
Exempt Rights holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In general, in order for a foreign individual to
qualify as an exempt recipient, such Rights holder must submit a statement,
signed under the penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Subscription Agent. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Company or the Subscription Agent, as
the case may be, will be required to withhold 31 percent of any such payments
made to the Rights holder. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding, a Rights holder is required to notify the
Subscription Agent of his correct taxpayer identification number by completing
the form below certifying that the taxpayer identification number provided on
Substitute Form W-9 is correct (or that such Rights holder is awaiting a
taxpayer identification number).
WHAT NUMBER TO GIVE THE SUBSCRIPTION AGENT
Each Rights holder is required to give the Subscription Agent the social
security number or employer identification number of the record owner of the
Rights. If the Rights are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
<TABLE>
<CAPTION>
PAYER'S NAME: American Stock Transfer & Trust Company
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I - Taxpayer Identification No. Part II - For Payees
FORM W-9 Exempt from Backup
Withholding (see
enclosed Guidelines)
---------------------------------------------------------------------
<S> <C> <C> <C>
Department of the Treasury Enter your taxpayer identification number
Internal Revenue Service in the appropriate box. For most
individuals, this is your social security
number. If you do not have a number, see ----------------------
How to Obtain a "TIN" in the enclosed Social Security Number
Guidelines.
Payer's Request for Taxpayer Note: If the account is in more than one
name, see the chart on page 2 of enclosed ----------------------
Identification Number (TIN) Guidelines to determine what number to Employer
give. Identification Number
- ------------------------------------------------------------------------------------------------------------------------------------
Certification - Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has
notified me that I am no longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
Certification Guidelines - You must cross out item (2) above if you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2).
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE____________________________ DATE_________________, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
A-1
<PAGE>
GUIDELINES FOR CERTIFICATE OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND
SOCIAL SECURITY NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Individual The individual
- ------------------------------------------------------------------------------------------------------------------------------------
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, the first individual on the
account (1)
- ------------------------------------------------------------------------------------------------------------------------------------
3. Custodian account of a minor (Uniform Gift to Minors Act) The minor (2)
- ------------------------------------------------------------------------------------------------------------------------------------
4. a. The usual revocable savings trust (grantor is also trustee) The grantor-trustee (1)
- ------------------------------------------------------------------------------------------------------------------------------------
b. The so-called trust account that is not a legal or valid trust under
State law The actual owner (1)
- ------------------------------------------------------------------------------------------------------------------------------------
5. Sole proprietorship The owner (4)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND
EMPLOYER IDENTIFICATION NUMBER OF
- ------------------------------------------------------------------------------------------------------------------------------------
6. A valid trust, estate or pension trust Legal entity (do not furnish the
identification number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
7. Corporation The corporation
- ------------------------------------------------------------------------------------------------------------------------------------
8. Association, club, religious, charitable, education or other tax-exempt
organization The organization
- ------------------------------------------------------------------------------------------------------------------------------------
9. Partnership The partnership
- ------------------------------------------------------------------------------------------------------------------------------------
10. A broker or registered nominee The broker or nominee
- ------------------------------------------------------------------------------------------------------------------------------------
11. Account with the department of Agriculture in the name of a public entity
(such as a State or local government, school district, or prison) that
receives agricultural program payments. The public entity
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) List first and circle the name of the legal trust, estate or pension trust.
(4) Show the name of the owner.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
. An international organization or any agency or instrumentality
thereof.
. A dealer in securities or commodities registered in the United States
or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940
. A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section
1441.
. Payments to partnerships not engaged in a trade or business in the
United States and which have at least one non-resident partner.
. Payments of patronage dividends where the amount received is not paid
in money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the Payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see the regulations under sections 6041,
6041(a), 6042, 6044, 6045, 6049, 6050A and 6060N. Privacy Act Notice. Section
6109 requires most recipients of dividends, interest or other payments to give
taxpayer identification numbers to payers who must report the payments to IRS.
The IRS uses the numbers for identification purposes, and to help verify the
accuracy of your tax return. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT
OR THE INTERNAL REVENUE SERVICE
A-2
<PAGE>
EXHIBIT 4.11
COLLEGE TELEVISION NETWORK, INC.
6,250,000 SHARES OF COMMON STOCK
OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
COLLEGE TELEVISION NETWORK, INC.
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1998, a
Subscription Certificate evidencing the rights specified herein, and the
"Instructions as to Use of College Television Network, Inc. Subscription
Documents" relating to the offer by College Television Network, Inc. (the
"Company") of 6,250,000 shares of Common Stock, par value $.005 per share (the
"Common Stock"), of the Company, at a subscription price of $1.60 per share
for each share of Common Stock, in cash, pursuant to nontransferable
subscription rights (the "Rights") initially distributed to holders of record
("Record Owners") of Common Stock as of the close of business on July 17, 1998
(the "Record Date").
As described in the accompanying Prospectus, you will receive one
nontransferable Right for each 1.2825 shares of Common Stock carried by us in
your account as of the Record Date. Each Right will entitle you to subscribe
for one share of Common Stock (the "Basic Subscription Privilege") at a
subscription price of $1.60 per share (the "Subscription Price"). In addition,
if you elect to exercise all or part of your Basic Subscription Privilege, you
will also have the right (the "Oversubscription Privilege") to subscribe for a
number of shares of Common Stock as specified in the Subscription Certificate
available after satisfaction of all subscriptions pursuant to Basic
Subscription Privileges ("Excess Shares"), subject to proration, at the
Subscription Price. If there are insufficient Excess Shares to satisfy all
exercised Oversubscription Privileges, Excess Shares will be allocated pro
rata among all holders of Rights exercising Oversubscription Privileges. Such
pro rata allocation will be based upon the number of shares of Common Stock
subscribed for pursuant to each holder's Basic Subscription Privilege relative
to the aggregate shares of Common Stock subscribed for pursuant to Basic
Subscription Privileges by all such holders then being prorated.
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF
COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME.
EXERCISES OF RIGHTS MAY BE MADE BY ONLY US AS THE RECORD OWNER AND PURSUANT TO
YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish
us to elect to subscribe for any shares of Common Stock, to which you are
entitled pursuant to the terms and subject to the conditions set forth in the
enclosed Prospectus and the related Instructions as to Use of College
Television Network, Inc. Subscription Documents. However, we urge you to read
these documents carefully before instructing us to exercise Rights.
Subscription Documents will not be mailed to holders of Common Stock whose
addresses are outside the United States or who have an APO or FPO address, but
will be held by the Subscription Agent for their account. To exercise the
Rights represented thereby, such holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time, on , 1998.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED AS PROMPTLY AS POSSIBLE IN ORDER
TO PERMIT US TO EXERCISE RIGHTS ON YOUR BEHALF IN ACCORDANCE WITH THE
PROVISIONS OF THE OFFERING. THE OFFERING WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS THE OFFERING IS EXTENDED BY THE COMPANY.
ONCE YOU HAVE EXERCISED A RIGHT, SUCH EXERCISE MAY NOT BE REVOKED.
If you wish to have us, on your behalf, exercise the Rights for any shares
of Common Stock, please so instruct us by completing, executing and returning
to us the instruction form on the reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING SHOULD BE
DIRECTED TO PATRICK G. DORAN OF THE COMPANY AT THE FOLLOWING TELEPHONE NUMBER:
(800) 256-1636.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of common
stock, par value $.005 per share (the "Common Stock"), of College Television
Network, Inc. (the "Company").
This will instruct you whether to exercise Rights to purchase shares of
Common Stock distributed with respect to the Company's Common Stock held by
you for the account of the undersigned, pursuant to the terms and subject to
the conditions set forth in the Prospectus and the related Instructions as to
Use of College Television Network, Inc. Subscription Documents.
Box 1. [_] Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box 2. [_] Please EXERCISE RIGHTS for shares of Common Stock as set forth
below.
<TABLE>
<CAPTION>
NUMBER OF SUBSCRIPTION
SHARES PRICE PAYMENT
--------- ------------ -------
<S> <C> <C> <C> <C>
Basic Subscription
Right: X $ 1.60 (Line 1)
------
Oversubscription Right: X $ 1.60 (Line 2)
------
Total Payment Required $ (Sum of Lines
------ 1 and 2; must equal
total of amounts in
Boxes 3 and 4)
</TABLE>
Box 3. [_] Payment in the amount of $ _________ has been
arranged by:
. enclosing a check
(bank and account number: _________________________)
. wire transfer of funds
(name of transferor institution: __________________)
Box 4. [_] Please deduct payment from the following account maintained by you
as follows:
- ------------------------------------- -------------------------------------
TYPE OF ACCOUNT ACCOUNT NO.
DATE: _________________________, 1998 AMOUNT TO BE DEDUCTED: $ ____________
-------------------------------------
-------------------------------------
SIGNATURE(S)
(PLEASE TYPE OR PRINT NAME(S) BELOW
-------------------------------------
-------------------------------------
2
<PAGE>
EXHIBIT 4.12
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION CERTIFICATIONS
ISSUED BY
COLLEGE TELEVISION NETWORK, INC.
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated
, 1998, (the "Prospectus"), of College Television Network, Inc., a
Delaware corporation (the "Company"), if a holder of Rights cannot deliver the
Subscription Certificate(s) evidencing the Rights (the "Subscription
Certificate(s)"), to the Subscription Agent listed below (the "Subscription
Agent") at or prior to 5:00 p.m. New York City time on , 1998, unless
extended (the "Expiration Date"). Such form must be delivered by hand or sent
by facsimile transmission or mail to the Subscription Agent, and must be
received by the Subscription Agent on or prior to the Expiration Date. See
"The Rights Offering--Exercise of Rights" in the Prospectus. Payment of the
Subscription Price of $1.60 per share for each share of Common Stock
subscribed for upon exercise of such Rights must be received by the
Subscription Agent in the manner specified in the Prospectus at or prior to
5:00 p.m. New York City time on the Expiration Date even if the Subscription
Certificate evidencing such Rights is being delivered pursuant to the
procedure for guaranteed delivery thereof.
The Subscription Agent is
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Fax: (718) 234-5001
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Certificate(s) representing Rights and that such
Subscription Certificate(s) cannot be delivered to the Subscription Agent at
or before 5:00 p.m., New York City time on the Expiration Date. Upon the terms
and subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise the
Subscription Privilege to subscribe for one share of Common Stock per Right
with respect to each of Rights represented by such Subscription
Certificate. The undersigned understands that payment of the Subscription
Price of $ per share for each Common Share subscribed pursuant to the
Subscription Privilege must be received by the Subscription Agent at or before
5:00 p.m. New York City time on the Expiration Date and represents that such
payment, in the aggregate amount of $ , either (check appropriate box):
. is being delivered to the Subscription Agent herewith; or
. has been delivered separately to the Subscription Agent; and is or was
delivered in the manner set forth below (check appropriate box and
complete information relating thereto):
. wire transfer of funds
-- name of transferor institution ___________________________________
-- date of transfer _________________________________________________
-- confirmation number (if available) _______________________________
. uncertified check (Payment by uncertified check will not be deemed
to have been received by the Subscription Agent until such check has
cleared. Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such
payment clears by such date.)
. certified check
. bank draft (cashier's check)
. money order
-- name of maker ____________________________________________________
-- date of check, draft or money order ______________________________
-- check, draft or money order number _______________________________
-- bank on which check is drawn or issuer of money order ____________
SIGNATURE(S) ________________________
ADDRESS _____________________________
- ------------------------------------- -------------------------------------
NAME(S) _____________________________
-------------------------------------
- ------------------------------------- AREA CODE AND TEL NO(S). ____________
PLEASE TYPE OR PRINT
SUBSCRIPTION CERTIFICATE NO(S). (IF
AVAILABLE) __________________________
2
<PAGE>
EXHIBIT 4.13
COLLEGE TELEVISION NETWORK, INC.
NOMINEE HOLDER CERTIFICATION
The undersigned, a bank, broker or other nominee holder of Rights ("Rights")
to purchase shares of common stock, par value $.005 per share (the "Common
Stock"), of College Television Network, Inc. (the "Company") pursuant to the
Rights Offering described and provided for in the Company's Prospectus dated
, 1998 (the "Prospectus"), hereby certifies to the Company and to
American Stock Transfer & Trust Company, as Subscription Agent for such Rights
Offering, that the undersigned has exercised, on behalf of the beneficial
owners thereof (which may include the undersigned), the number of Rights
specified below pursuant to the Subscription Privilege (as described in the
Prospectus) listing separately below each such Subscription (without
identifying any such beneficial owner):
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
PURCHASED PURSUANT PURCHASED PURSUANT
TO EXERCISE OF TO EXERCISE OF
BASIC SUBSCRIPTION OVERSUBSCRIPTION RIGHTS CERTIFICATE
PRIVILEGE PRIVILEGE NUMBER
- ----------------------------------------------------------------
<S> <C> <C> <C>
1.
- ----------------------------------------------------------------
2.
- ----------------------------------------------------------------
3.
- ----------------------------------------------------------------
4.
- ----------------------------------------------------------------
5.
- ----------------------------------------------------------------
6.
- ----------------------------------------------------------------
7.
- ----------------------------------------------------------------
8.
- ----------------------------------------------------------------
9.
- ----------------------------------------------------------------
10.
</TABLE>
(ATTACH ADDITIONAL BENEFICIAL OWNER LIST IF NECESSARY)
- ------------------------------------- -------------------------------------
PROVIDE THE FOLLOWING INFORMATION IF (NAME OF NOMINEE HOLDER)
APPLICABLE:
-------------------------------------
- ------------------------------------- (ADDRESS)
DEPOSITORY TRUST COMPANY ("DTC")
PARTICIPANT NUMBER
BY: _________________________________
- ------------------------------------- -------------------------------------
DTC BASIC SUBSCRIPTION CONFIRMATION (PLEASE PRINT NAME)
NUMBER(S)
-------------------------------------
DATED: _______________________, 1995 (TITLE)
-------------------------------------
(DATE)
<PAGE>
EXHIBIT 4.14
COLLEGE TELEVISION NETWORK, INC.
RIGHTS OFFERING
DTC PARTICIPANT OVERSUBSCRIPTION EXERCISE FORM
THIS FORM IS TO BE USED ONLY BY DEPOSITORY TRUST COMPANY PARTICIPANTS TO
EXERCISE THE OVERSUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO
WHICH THE BASIC SUBSCRIPTION PRIVILEGE WAS EXERCISED AND DELIVERED THROUGH THE
FACILITIES OF THE DEPOSITORY TRUST COMPANY. ALL OTHER EXERCISES OF
OVERSUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF SUBSCRIPTION
DOCUMENTS.
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
COMPANY'S PROSPECTUS DATED ___________________, 1998 (THE "PROSPECTUS") AND ARE
INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON
REQUEST FROM THE INFORMATION AGENT AND THE SUBSCRIPTION AGENT.
VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00
P.M., NEW YORK CITY TIME, ON ___________________, 1998, UNLESS EXTENDED (THE
"EXPIRATION DATE").
1. The undersigned hereby certifies to the Company and the Subscription
Agent that it is a participant in The Depository Trust Company ("DTC") and that
it has either (i) exercised the Basic Subscription Privilege in respect of
Rights and delivered such exercised Rights to the Subscription Agent by means of
transfer to the DTC account of the Subscription Agent or (ii) delivered to the
Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of
the Basic Subscription Privilege and will deliver the Rights called for in such
Notice of Guaranteed Delivery to the Subscription Agent by means of transfer to
such DTC account of the Subscription Agent.
2. The undersigned hereby exercises the Oversubscription Privilege to
purchase, to the extent available, _______________ shares of Common Stock and
certifies to the Company and the Subscription Agent that such Oversubscription
Privilege is being exercised for the account or accounts of persons (which may
include the undersigned) on each of whose behalf the Basic Subscription
Privilege has been fully exercised.
3. The undersigned understands that payment of the Subscription Price of
$_____ per share for each share of Common Stock subscribed for pursuant to the
Oversubscription Privilege must be received by the Subscription Agent at or
before 5:00 p.m. New York City time on the Expiration Date and represents that
such payment, in the aggregate amount of $___________, either (check appropriate
box):
. has been or is being delivered to the Subscription Agent pursuant
to the Notice of Guaranteed Delivery referred to above;
or
. is being delivered to the Subscription Agent herewith;
1
<PAGE>
EXHIBIT 4.15
CLASS C WARRANT
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THE WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH
WARRANT, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH WARRANT MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE
MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
COLLEGE TELEVISION NETWORK, INC.
Warrant for the Purchase of Shares of Common Stock,
par value $0.005 per share
THIS WARRANT EXPIRES ON ___________, 2005
No. C-2 152,100 Shares
THIS CERTIFIES that, for value received, U-C Holdings, L.L.C., a
Delaware limited liability company, with an address at 227 West Monroe Street,
Suite 4300, Chicago, IL 60606, c/o Willis Stein & Partners (including any
transferee, the "Holder"), is entitled to subscribe for and purchase from
College Television Network, Inc., a Delaware corporation (the "Company"), upon
the terms and conditions set forth herein, at any time or from time to time
after the Commencement Date (as defined below) and before 5:00 p.m. on
________________, 2005, New York time (the "Exercise Period"), 152,100 shares of
the Company's Common Stock (as hereinafter defined) at a price per share equal
to $1.60 (as the same may be adjusted from time to time in accordance with the
terms of this Warrant, the "Exercise Price"). This Warrant is the Class C
Warrant (collectively, including any warrants issued upon the exercise or
transfer of this Warrant in whole or in part, the "Warrants") issued pursuant to
that certain Standby Stock Purchase Agreement, dated as of ________, 1998, by
and between the Company and the original Holder of this Warrant (the "Standby
Agreement"). As used herein
<PAGE>
the term "this Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.
For purposes of this Warrant, the following terms shall have the
meanings set forth below:
(A) the term "Closing Date" shall have the meaning ascribed to such
term in the Standby Agreement;
(B) the term "Common Stock" shall mean the Company's common stock, par
value $.005 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company;
(C) the term "Commencement Date" means the earlier of (i) the Closing
Date, (ii) the date of the consummation of any Sale of the Company and (iii) the
date of any Public Offering;
(D) the term "Sale of the Company" shall mean the sale of the Company
to an Independent Third Party or group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, recapitalization, sale or
transfer of the Company's capital stock or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
(E) the term "Independent Third Party" shall mean any person or entity
who, immediately prior to the contemplated transaction, does not own in excess
of 5% of the Company's Common Stock on a fully-diluted basis (a "5% Owner"), who
is not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendent (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons or
entities;
(F) the term "Public Offering" shall mean the sale in an underwritten
public offering registered under the Securities Act of shares of the Company's
Common Stock;
(G) the term "Existing Warrants" shall mean, collectively, all
warrants to purchase shares of Common Stock of the Company outstanding as of the
date hereof and any warrant or warrants issued as a consequence of the exercise
or transfer of such warrants in whole or part, including, without limitation,
any of the Company's Class A Redeemable Warrants, Class B Redeemable Warrants,
Class C Redeemable Warrants, any of the warrants issued pursuant to the private
placement of securities of the Company on April 26, 1996 and May 28, 1996, the
unit purchase option issued to Barington Capital Group, L.P. ("Barington") on
April 26, 1996 and any warrants subsequently issued to Barington or its
transferees pursuant to the exercise of such unit purchase option;
2
<PAGE>
(H) the term "Existing Options" shall mean, collectively, all options
and other rights to purchase shares of Common Stock of the Company (other than
the Existing Warrants) outstanding as of the date hereof and any option or
options issued as a consequence of the exercise or transfer of such options in
whole or part, including, without limitation, any options granted pursuant to
the Company's 1990 Performance Equity Plan, 1996 Stock Incentive Plan, Outside
Directors 1996 Stock Option Plan and the nonqualified option for 337,500 shares
of Common Stock granted to Peter Kauff (as such nonqualified option shall be
amended or modified);
(I) the term "Purchase Rights" shall mean the right to purchase shares
of the Company's Common Stock granted pursuant to those certain Equity
Protection Agreements, dated April 25, 1997, between the Company and the
original Holder; and
(J) the term "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants.
1. This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by the surrender of this
Warrant (with the "Election to Exercise" attached hereto, duly executed) to the
Company at its office at 5784 Lake Forrest Drive, Suite 275, Atlanta, Georgia
30328, or at such other place as is designated in writing by the Company. In
connection with any exercise of this Warrant, the Holder shall deliver to the
Company either (a) cash (by wire transfer of immediately available funds to the
Company's account) or a certified or bank cashier's check payable to the order
of the Company in an amount equal to the product of the Exercise Price
multiplied by the number of Warrant Shares being purchased upon such exercise
(the "Aggregate Exercise Price"), (b) the surrender to the Company of debt or
equity securities of the Company having a Current Market Price (as defined in
Section 5(e)) equal to the Aggregate Exercise Price of the Common Stock being
purchased upon such exercise (provided that for purposes of this subparagraph,
the Current Market Price of any note or other debt security or any preferred
stock shall be deemed to be equal to the aggregate outstanding principal amount
or liquidation value thereof plus all accrued and unpaid interest thereon or
accrued or declared and unpaid dividends thereon) or (c) a written notice to the
Company that the Holder is exercising this Warrant (or a portion thereof) by
authorizing the Company to withhold from issuance a number of shares of Common
Stock issuable upon such exercise of this Warrant which when multiplied by the
Current Market Price of the Common Stock is equal to the Aggregate Exercise
Price (and such withheld shares shall no longer be issuable under this Warrant).
Each Warrant not exercised prior to 5:00 p.m. on _____________, 2005 New York
time shall become null and void and all rights thereunder shall cease as of such
time. At least 30 days prior to the end of the Exercise Period, the Company
shall give the Holder written notice of (i) the expiration of the Exercise
Period, (ii) the number of Warrant Shares issuable upon exercise of this Warrant
as of the date of such notice and (iii) the Exercise Price in effect as of such
date.
2. Upon receipt by the Company of this Warrant, the "Election to
Exercise," and the Aggregate Exercise Price for the Warrant Shares, the Holder
shall be deemed to be the
3
<PAGE>
holder of record of the Warrant Shares issuable upon such exercise; provided,
however, that if the date of such receipt is a date upon which the transfer
books of the Company are closed, the Holder shall be deemed to be the record
holder on the next succeeding business day on which such books are open. The
Company shall not close its books against the transfer of this Warrant or of any
Warrant Shares issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and cause to be delivered to the Holder a certificate or certificates for the
Warrant Shares issuable upon such exercise, registered in the name of the Holder
or its designee. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the right of the Holder to purchase the remaining
unexercised balance of the Warrant Shares (or portions thereof) subject to
purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the
knowledge of such facts that its participation therein amounts to bad faith.
This Warrant shall not be transferable without the prior written consent of the
Company except in connection with (i) any Sale of the Company; or (ii) a sale
of all Common Stock owned by the Holder. This Warrant shall be transferable
only on the books of the Company upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment, or authority to transfer. In all
cases of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his or its authority shall
be produced. Upon any registration of transfer, the Company shall cause to be
delivered a new Warrant or Warrants to the person entitled thereto. This
Warrant may be exchanged, at the option of the Holder thereof, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing, in the aggregate, the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder.
(b) The Holder acknowledges that such Holder has been advised by the
Company that this Warrant has not been registered under the Act, that this
Warrant is being or has been issued on the basis of the statutory exemption
provided by Section 4(2) of the Act or Regulation D promulgated thereunder, or
both, relating to transactions by an issuer not involving any public offering,
and that the Company's reliance thereon is based in part upon the
representations made by the original Holder in the Standby Agreement. The Holder
acknowledges that such Holder is familiar with the nature of the limitations
imposed by the Act
4
<PAGE>
and the rules and regulations thereunder on the transfer of securities. In
particular, the Holder agrees that no sale, assignment or transfer of this
Warrant issuable upon exercise hereof shall be valid or effective, and the
Company shall not be required to give any effect to any such sale, assignment or
transfer, unless (i) the sale, assignment or transfer of this Warrant is
registered under the Act, it being understood that this Warrant is currently
registered for sale and that the Company has no obligation or intention to so
register this Warrant, or (ii) this Warrant is sold, assigned or transferred in
accordance with all the requirements and limitations of Rule 144 under the Act,
it being understood that no assurance is made that Rule 144 sales will be
available at any subsequent time, or (iii) such sale, assignment, or transfer is
otherwise exempt from registration under the Act. Notwithstanding any other
provision hereof, if an exercise of this Warrant or any portion hereof is to be
made in connection with a registered public offering or the sale of the Company,
the exercise of this Warrant or any portion hereof may, at the election of the
Holder, be conditioned upon the consummation of the public offering or sale of
the Company in which case such exercise shall not be deemed to be effective
until the consummation of such transaction. The Company shall assist and
cooperate with any Holder required to make any governmental filings or obtain
any governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
4. The Company covenants that the Warrant Shares, upon receipt by the
Company of the Aggregate Exercise Price therefor, shall be validly issued, fully
paid, nonassessable, and free of preemptive rights, liens, taxes and charges
with respect to the issuance thereof. The Company shall take all such actions
as may be necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or market upon which shares of
Common Stock may be listed (except for official notice of issuance which shall
be immediately delivered by the Company upon each such issuance). The Company
shall from time to time take all such action as may be necessary to assure that
the par value per share of the unissued Common Stock acquirable upon exercise of
this Warrant is at all times equal to or less than the Exercise Price then in
effect. The Company shall at all times thereafter reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
providing for the exercise of the Warrants, such number of shares of Common
Stock as shall, from time to time, be sufficient therefor and the Company shall
not thereafter take any action which would cause the number of authorized but
unissued shares of Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon exercise of the Warrants.
5. (a) In case the Company shall at any time after the date this
Warrant is first issued (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, then, in each case, the Exercise Price, and the number of Warrant
Shares issuable upon exercise of this Warrant, in effect at the time of the
record date for such dividend or of the effective date of such subdivision, or
combination, shall be proportionately
5
<PAGE>
adjusted so that the Holder after such time shall be entitled to receive the
aggregate number and kind of shares for such consideration which, if such
Warrant had been exercised immediately prior to such time at the then current
exercise price, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, or combination. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of any class of Capital Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per share of
Common Stock on such record date, then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of such class of Common Stock which the aggregate offering price of the total
number of shares of such class of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); provided, however, that no such adjustment shall
be made which results in an increase in the Exercise Price. Such adjustment
shall become effective at the close of business on such record date; provided,
however, that, to the extent the shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) are not delivered,
the Exercise Price shall be readjusted after the expiration of such rights,
options, or warrants (but only with respect to Warrants exercised after such
expiration), to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock) actually
issued. In case any subscription price may be paid in a consideration, part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the board of directors of the Company,
whose determination shall be conclusive absent manifest error. Shares of Common
Stock owned by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any such
computation.
(c) In case the Company shall distribute to all holders of any class
of Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an
6
<PAGE>
adjustment of the Exercise Price is provided pursuant to section 5(b) hereof),
then, in each case, the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Current Market Price per share of
such class of Common Stock on such record date, less the fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash, applicable to one share, and the denominator of which shall be such
Current Market Price per share of such class of Common Stock. Such adjustment
shall become effective at the close of business on such record date.
(d) In case the Company shall issue shares of Common Stock or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or exchangeable for Common Stock (excluding shares, rights,
options, warrants, or convertible or exchangeable securities issued or issuable
(i) in any of the transactions with respect to which an adjustment of the
Exercise Price is provided pursuant to Sections 5(a), 5(b), or 5(c) above, (ii)
upon any issuance of securities pursuant to the Standby Agreement, (iii) upon
exercise of any of the Existing Warrants, (iv) upon exercise of any of the
Existing Options or (v) upon exercise of any of the Purchase Rights), at a price
per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants, or convertible or exchangeable securities,
plus the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of shares of such class of Common Stock
so issued in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by multiplying the Exercise Price in effect immediately
prior to such issuance by a fraction, (1) the numerator of which shall be an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance; provided,
however, that no such adjustment shall be made which results in an increase in
the Exercise Price. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration
7
<PAGE>
or the termination of such rights, options, or warrants, or the termination of
such right to convert or exchange, the Exercise Price shall be readjusted (but
only with respect to Warrants exercised after such expiration or termination) to
such Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable
securities been made upon the basis of the delivery of only the number of shares
of Common Stock actually delivered upon the exercise of such rights, options, or
warrants or upon the conversion or exchange of any such securities; and on any
change of the number of shares of Common Stock deliverable upon the exercise of
any such rights, options, or warrants or conversion or exchange of such
convertible or exchangeable securities or any change in the consideration to be
received by the Company upon such exercise, conversion, or exchange, including,
without limitation, a change resulting from the antidilution provisions thereof.
In case the Company shall issue shares of Common Stock or any such rights,
options, warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 5(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held
for the account of the Company or any majority-owned subsidiary shall not be
deemed outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 5, the
Current Market Price per share of any class of Capital Stock on any date shall
be deemed to be the average of the daily closing prices for shares of such class
for the 30 consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way, or in case no such reported sales takes place on such date, the closing bid
price regular way on the principal national securities exchange (including, for
purposes hereof, The Nasdaq National Market System or the Nasdaq SmallCap
Market) on which shares of such class of Common Stock are listed or admitted to
trading or, if such class of Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for such
class of Common Stock as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is no longer
reporting such information. If on any such date such class of Common Stock is
not listed or admitted to trading on any national securities exchange and is not
quoted by Nasdaq or any similar organization, the fair value of a share of such
class of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
(f) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(g) Upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b), 5(c), or 5(d) hereof, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
8
<PAGE>
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(h) Whenever there shall be an adjustment as provided in this Section
5, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(i) The Company shall not be required to issue fractions of shares of
Common Stock of the Company upon the exercise of this Warrant. If any fraction
of a share would be issuable on the exercise of this Warrant (or specified
portions thereof), the Company shall purchase such fraction for an amount in
cash equal to the same fraction of the Current Market Price of such share of
Common Stock on the date of exercise of this Warrant.
6. (a) In case of any consolidation with or merger of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, the Company
shall (i) execute with the Holder an agreement providing that the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance, and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as practicable to the adjustments in Section 5.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and amount
of shares of stock and other securities, property, cash, or any combination
thereof receivable upon such reclassification, change, consolidation, or merger
by a holder of the number of shares of
9
<PAGE>
Common Stock for which this Warrant might have been exercised immediately prior
to such reclassification, change, consolidation, or merger. Thereafter,
appropriate provision shall be made for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(d) If any event occurs of the type contemplated by the provisions of
this Section 6 but not expressly provided for by such provisions, then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the Number of Warrant Shares obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such adjustment shall increase the Exercise Price or decrease the Number
of Warrant Shares obtainable as otherwise determined pursuant to this Warrant
without the prior written consent of the holders of a majority of the Warrant
Shares issued or issuable upon exercise of the Warrants (which consent will not
be unreasonably withheld).
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or
(b) issue any rights, warrants, or other securities to all holders of
Common Stock entitling them to purchase any additional shares of Common Stock or
any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares of
Capital Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution, or winding-up of the Company;
or
(e) take any other action which would cause an adjustment to the
Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance
10
<PAGE>
of property, liquidation, dissolution, or winding-up is expected to become
effective, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reclassification, change of
outstanding shares, consolidation, merger, sale, lease, conveyance of property,
liquidation, dissolution, or winding-up, or (iii) the date of such action which
would require an adjustment to the Exercise Price.
8. The issuance of any shares or other securities upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance or for any
other cost of the Company incurred in connection with such issuance and
delivery. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer or delivery of this Warrant to a person
other than, or the issuance and delivery of any certificate in a name other than
that of the registered Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless Holder, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any such
person within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 10, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in any
of the Warrants. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities arising
under any of the Warrants.
If any action is brought against the Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability under this Section 9 unless the Company shall have been materially
prejudiced by such failure or relieve the Company from any liability other than
pursuant to this Section 9) and the Company shall promptly assume the defense of
such action, including the employment of counsel (reasonably satisfactory to
such indemnified party or parties) and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have employed counsel reasonably
satisfactory to such indemnified party or
11
<PAGE>
parties to have charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 9 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld.
10. Unless registered under the Act, the certificate or certificates
evidencing the Warrants, and any Warrants issued upon transfer or any new
Warrants issued, shall bear the following legend:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS AND NEITHER THE WARRANT NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH WARRANT,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH WARRANT MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED
IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS."
11. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), including an affidavit of the Holder thereof that this
Warrant has been lost, stolen, destroyed or mutilated, together with an
indemnity against any claim that may be made against the Company on account of
such lost stolen, destroyed or mutilated Warrant, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor, and denomination.
12. The Holder of any Warrant shall not have solely on account of
such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant. No provision hereof, in the
absence of affirmative action by the Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
12
<PAGE>
13. This Warrant shall be construed in accordance with the laws of
the State of Delaware applicable to contracts made and performed within such
State, without regard to principles governing conflicts of law.
14. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to the Company, at 5784 Lake Forrest Drive, Suite
275, Atlanta, Georgia 30328, Attention: President, (ii) if to the Holder, at
its address set forth on the first page hereof, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 14. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 14. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 14 shall be deemed given at the time of receipt
thereof.
15. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
16. This Warrant may be amended only by a written instrument executed
by the Company and the Holder hereof. Any amendment shall be endorsed upon this
Warrant, and all future Holders shall be bound thereby.
* * * * *
Dated: ______________, 1998
COLLEGE TELEVISION NETWORK, INC.
By: ________________________
Its:
___________________________
_______________, Secretary
13
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto ___________________ a Warrant to purchase __________ shares of
Common Stock, par value $0.005 per share, of College Television Network, Inc.
(the "Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint the secretary of the Company attorney
to transfer such Warrant on the books of the Company, with full power of
substitution.
Dated: ____________________
Signature: ____________________________
_______________________________________
Signature Guarantee
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
14
<PAGE>
To: COLLEGE TELEVISION NETWORK, INC.
5784 Lake Forrest Drive
Suite 275
Atlanta, Georgia 30328
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _____
Warrant Shares covered by the within Warrant and tenders payment herewith of the
Aggregate Exercise Price in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
Dated: ____________________
Name: -----------------------------------
(Print)
-----------------------------------------
(Signature)
-----------------------------------------
(Signature Guarantee)
-----------------------------------------
(Signature Guarantee)
15
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MORRIS, MANNING & MARTIN APPEARS HERE]
___________, 1998
The Stockholders of College Television Network, Inc. as of July 17, 1998
Ladies and Gentlemen:
We have served as counsel to College Television Network, Inc., a Delaware
corporation (the "Company"), in connection with (i) the distribution to the
holders of record (each, a "Holder") as of July 17, 1998 of its common stock,
$.005 par value per share (the "Common Stock"), certain nontransferable rights
(each, a "Right"), with each such Right entitling the Holder thereof to exercise
a Basic Subscription Privilege and an Oversubscription Privilege (as such terms
are defined in the Registration Statement, defined below); (ii) the execution by
the Company of a Standby Stock Purchase Agreement (the "Standby Agreement") with
U-C Holdings, L.L.C., the Company's principal stockholder ("U-C Holdings"); and
(iii) the issuance of a Class C Warrant No. C-2 to U-C Holdings to purchase
152,100 shares of Common Stock as a commitment fee for entering into the Standby
Agreement (the "Warrant").
Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Registration Statement.
In the foregoing capacities, we have examined manually-signed copies of the
Registration Statement on Form S-3 filed by the Company with the Securities and
Exchange Commission on July 2, 1998 (which Registration Statement, as amended
by Amendment No. 1 thereto filed on _______ , 1998, and Amendment No. 2 thereto
filed on _______, 1998, and as declared effective by the Securities and Exchange
Commission on ______, 1998, is referred to herein as the "Registration
Statement"), and copies of the Prospectus dated __________, 1998. We have also
examined the Standby Agreement, the Warrant, the Restated Certificate of
Incorporation of the Company, as amended (the "Certificate of Incorporation"),
and the Amended and Restated Bylaws of the Company, as amended (the "Bylaws"), a
form of the Subscription Certificate evidencing the Rights and related
subscription documents (collectively, the "Subscription Documents") and the
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, corporate records, certificate of officers of the Company
and certificates of public officials as we have deemed appropriate for the
purposes of providing this Opinion.
<PAGE>
June 29, 1998
Page 2
In our examination, we assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to any facts material to
the statements expressed below that we did not independently establish or
verify, we have relied upon certificates or written representations of
responsible officers or other appropriate representatives of the Company, and we
have no reason to believe that such reliance is not reasonable.
Whenever used in any statement set forth in this opinion, "to our
knowledge" and other words of similar meaning qualify and limit such statement
to the current awareness of the lawyers in our firm who have had responsibility
for devoting substantive attention to the representation of the Company in the
preparation of the Registration Statement and any due diligence in connection
therewith, or any other substantive matters we are handling for the Company, of
factual matters that are relevant to the statement so qualified and limited.
In furnishing this letter, we do not render any opinion, by implication or
otherwise, regarding the laws of jurisdictions other than the State of Georgia,
the Delaware Business Corporation Code and the United States of America.
Based upon the foregoing, and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth herein, we are of the
opinion that:
(i) the Registration Statement is effective under the Securities Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and no
stop order suspending the effectiveness of the Registration Statement or
any amendment thereto has been issued and, to the best of our knowledge, no
proceedings for that purpose are pending or threatened by the Commission;
(ii) the original Registration Statement and each amendment thereto, any
Rule 462(b) Registration Statement and the Prospectus (in each case, other
than the financial statements and other financial information contained
therein) comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission thereunder;
(iii) the Company has an authorized, issued and outstanding capitalization
as set forth in the Prospectus; the Rights, the Common Stock issuable upon
exercise of the Rights (the
<PAGE>
June 29, 1998
Page 3
"Rights Shares"), the Common Stock issuable upon exercise of the Warrant
(the "Warrant Shares"), and the Common Stock issuable pursuant to the
Standby Agreement (the "Standby Shares") have been duly authorized by all
necessary corporate action of the Company and, when such Common Stock is
issued and delivered to and paid for by the Holders in accordance with the
Subscription Documents and issued to and paid for by U-C Holdings in
accordance with the Standby Agreement or the Warrant, as the case may be,
will be validly issued, fully paid and nonassessable; no holders of
outstanding shares of capital stock of the Company are entitled as such to
any preemptive or other rights that have not been waived to subscribe for
any of the Rights Shares, the Standby Shares and the Warrant Shares
(collectively, the "Offering Shares"); and no holder of securities of the
Company has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any securities owned
by such holder under the Securities Act in the offering contemplated by the
Registration Statement;
(iv) all of the Offering Shares have been duly authorized and accepted
for quotation on The Nasdaq SmallCap Market, subject to official notice of
issuance;
(v) the Company has been duly organized and is a validly existing
corporation in good standing under the laws of the State of Delaware; the
Company has full power and authority to own, lease and operate its
properties and assets and conduct its business as described in the
Registration Statement and the Prospectus, and the Company has corporate
power to enter into the Standby Agreement and the Warrant and to carry out
all the terms and provisions thereof to be carried out by it;
(vi) the statements set forth under the heading "Description of Capital
Stock" in the Prospectus, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company, provide a fair
summary of such provisions;
(vii) to the best of our knowledge, the Company is not in violation of its
Certificate of Incorporation or Bylaws and no default by the Company exists
in the due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectus or filed as
an exhibit to the Registration Statement;
(viii) the execution and delivery of the Standby Agreement and the Warrant
have been duly authorized by all necessary corporate action of the Company
and the Standby Agreement and the Warrant have been duly executed and
delivered by the Company;
<PAGE>
June 29, 1998
Page 4
(ix) the compliance by the Company with the provisions of the Standby
Agreement and the Warrant, the consummation of the transactions
contemplated in the Standby Agreement, the Warrant and in the Registration
Statement (including the sale of the Offering Shares) do not (x) require
the consent, approval, authorization, registration or qualification of or
with any governmental authority, except such as may be required by the
securities or Blue Sky laws of the various states of the United States of
America and other U.S. jurisdictions in connection with the offer and sale
of the Offering Shares, or (y) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other agreement or
instrument, known to us, to which the Company is a party or by which the
Company or any of its properties are bound, or the Certificate of
Incorporation or Bylaws of the Company, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator known to us and applicable to the Company,
except as the provisions of the Certificate of Incorporation and Bylaws
respecting indemnification for securities laws violations may be deemed to
conflict with or violate applicable securities laws;
(x) to the best of our knowledge, there are no legal or governmental
proceedings or investigations pending or threatened to which the Company is
a party or to which the property of the Company is subject that are
required to be described in the Registration Statement or the Prospectus
and are not described therein or any statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described therein or filed as required;
This opinion has been furnished only to the Holders and is intended solely
for its benefit, and may not be used, circulated, quoted, relied upon or
otherwise referred to for any other purpose without our prior written consent.
We do consent, however, to the inclusion of this opinion in sets of closing
documents and to references to this opinion in any index of such closing
documents.
MORRIS, MANNING & MARTIN
a Limited Liability Partnership
By: _____________________________
A Partner
<PAGE>
EXHIBIT 10.1
------------
STANDBY STOCK PURCHASE AGREEMENT
THIS STANDBY STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of July 2, 1998, by and between College Television Network,
Inc., a Delaware corporation (the "Company"), and U-C Holdings, L.L.C., a
Delaware limited liability company (the "Purchaser").
WITNESSETH:
WHEREAS, the Company anticipates issuing to its stockholders holding Common
Stock on July 17, 1998 (the "Record Date"), subscription rights (the "Rights")
to subscribe for and purchase an aggregate of 6,250,000 shares (the "Rights
Shares") of the Company's Common Stock, $.005 par value per share (the "Common
Stock"), at the per share price (the "Subscription Price") of $1.60 (the "Rights
Offering"); and
WHEREAS, in connection with the Rights Offering, the Purchaser agrees,
pursuant to the terms and conditions hereof, to purchase and the Company agrees,
pursuant to the terms and conditions hereof, to sell and issue at the
Subscription Price to the Purchaser (i) all Rights Shares which the Purchaser is
eligible to subscribe for by virtue of its ownership of Common Stock on the
Record Date and (ii) any and all Rights Shares not subscribed for by the holders
of the Rights;
WHEREAS, in consideration for the above-referenced agreements of the
Purchaser set forth herein, the Company has agreed to issue to the Purchaser a
Class C Warrant to purchase an additional 152,100 shares of Common Stock at the
Subscription Price;
WHEREAS, the Purchaser and the Company desire to enter into this Agreement
regarding (i) the issuance, sale and purchase of the Purchase Shares (as defined
herein) and the Standby Shares (as defined herein) and (ii) the issuance of the
Class C Warrant (as defined herein);
NOW, THEREFORE, in and for consideration of the premises, and other good
and valuable consideration the receipt and sufficiency of all of which is hereby
acknowledged, intending to be legally bound, the parties agree as follows:
I. CERTAIN DEFINITIONS.
A. Capitalized terms not otherwise defined herein have the meanings
ascribed to them in the Prospectus contained in the Company's Registration
Statement (as defined below).
B. The following terms have the meanings specified:
"Class C Warrant" shall mean the Class C Warrant No. C-2 to be issued to
the Purchaser to purchase 152,100 shares of Common Stock, subject to
adjustment, in the form of Exhibit "A" attached hereto.
"Common Stock" shall mean the Common Stock, $.005 par value per share, of
the Company.
"Commission" means the United States Securities and Exchange Commission.
"Prospectus" means the prospectus constituting a part of the Registration
Statement (including all information incorporated therein by reference), as
from time to time amended or supplemented. If any revised prospectus shall
be filed by the Company at the Commission on or after the Effective Date of
the Registration Statement, the term "Prospectus" shall refer to each such
revised prospectus from and after the time it is first used.
<PAGE>
"Registration Statement" means the registration statement filed by the
Company with the Commission on Form S-3, including all exhibits thereto,
and as the same may be amended (at the date on which it became or becomes
effective) and, in the event any post-effective amendment thereto is filed
with the Commission prior to the Closing Date (as defined herein), the term
"Registration Statement" shall also mean such registration statement as so
amended.
II. PURCHASE AND SALE OF SHARES; ISSUANCE OF WARRANT.
Subject to the terms and conditions herein set forth, the Company hereby
agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company, at the Subscription Price, (a) all of the 4,536,593
shares of Common Stock issuable to the Purchaser upon exercise of the
nontransferable subscription rights distributed to the Purchaser pursuant to the
Rights Offering (the "Purchase Shares"), and (b) up to 1,713,407 shares of the
Common Stock (the "Standby Shares"), with the exact number of the Standby Shares
to be calculated by subtracting (i) the number of Rights Shares sold pursuant to
the Rights Offering (including pursuant to the Oversubscription Privilege) from
(ii) the 6,250,000 Rights Shares available for sale pursuant to the Rights
Offering. Subject to the terms and conditions herein set forth, the Company
hereby agrees to issue to the Purchaser, and the Purchaser does hereby subscribe
for and accept from the Company, the Class C Warrant issuable to the Purchaser
at the Closing (hereinafter defined).
III. THE CLOSING.
The Purchaser shall subscribe for and purchase the Purchase Shares within
the time period prior to the expiration of the Rights Offering set forth in the
Prospectus. As soon as practicable following its determination of the number of
Rights Shares subject to Rights that expire without being exercised, the Company
shall notify the Purchaser of the number of Standby Shares, if any, to be
purchased by the Purchaser. The delivery of and payment for the Standby Shares
(the "Closing"), if any, and the delivery of the Class C Warrant shall occur on
the fifth business day following the Expiration Date (or such later date as the
Company and the Purchaser may agree, the "Closing Date") at the office of
Morris, Manning & Martin, L.L.P., 1600 Atlanta Financial Center, 3343 Peachtree
Road, N.E., Atlanta, Georgia 30326, at 10:00 a.m. Atlanta time (the "Closing
Time").
IV. DELIVERY OF THE STANDBY SHARES.
At the Closing, (a) the Standby Shares, registered in the name of the
Purchaser or such nominee(s) as the Purchaser may have specified in writing,
shall be delivered by or on behalf of the Company to the Purchaser, for the
Purchaser's account, against delivery by the Purchaser of the aggregate
Subscription Price therefor in immediately available funds in the form of one or
more certified checks or a wire transfer to an account designated by the
Company, and (b) the Class C Warrant, registered in the name of the Purchaser,
shall be delivered by or on behalf of the Company to the Purchaser.
V. CLOSING CONDITIONS.
The obligation of the Company to consummate its issuance and sale of the
Purchase Shares, the Standby Shares and the Class C Warrant, and the obligation
of the Purchaser to consummate its purchase of the Purchase Shares and the
Standby Shares and to accept the Class C Warrant, shall be subject to the
conditions that (1) no litigation or governmental action shall be pending
challenging or seeking to enjoin the Rights Offering which, in the judgment of
the Company or the Purchaser, makes it inadvisable to proceed with the Rights
Offering and (2) no stop order suspending the effectiveness of the Registration
Statement or any amendment or supplement thereto shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission.
VI. WAIVER OF REGISTRATION RIGHTS.
The Purchaser hereby waives any and all registration rights to which the
Purchaser may be entitled by virtue of the filing of the Registration Statement,
pursuant to that certain Registration Rights Agreement, dated as
-2-
<PAGE>
of April 25, 1997, between the Company and the Purchaser. This waiver of
registration rights shall not affect any rights which the Purchaser may have
with respect to any subsequently filed registration statement or otherwise.
VII. ENTIRE AGREEMENT.
This Agreement represents the entire understanding of the parties with
respect to the matters addressed herein and supersedes all prior written and
oral understandings concerning the subject matter hereof.
VII. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such respective counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound, the Company and the
Purchaser has each signed or caused to be signed its name as of the day and year
first above written.
COLLEGE TELEVISION NETWORK, INC. U-C HOLDINGS, L.L.C.
By:/s/ Jason Elkin By: WILLIS STEIN & PARTNERS, L.P.
------------------------------ Its: Managing Member
Jason Elkin
Chairman and Chief Executive Officer By: Willis Stein & Partners, L.L.C.
Its: General Partner
By: /s/ Avy H. Stein
-----------------------------
Avy H. Stein
Its: Manager
-3-
<PAGE>
Exhibit 23.1
INDEPEDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of our report dated January 13, 1997 on the financial statements of
College Television Network, Inc. (the "Company") for the year ended October 31,
1996, included in the Company's Annual Report on Form 10-KSB for the year ended
October 31, 1997, and to the reference to the firm under the caption "Experts"
included in the Prospectus.
/s/ Richard A. Eisner & Company, LLP
New York, New York
June 19, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
December 19, 1997, appearing on page F-1 of College Television Network, Inc.'s
Annual Report on Form 10-KSB for the year ended October 31, 1997. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Atlanta, Georgia
June 30, 1998
<PAGE>
EXHIBIT 99.1
------------
SUBSCRIPTION AGENT AGREEMENT
----------------------------
This Subscription Agent Agreement (the "Agreement") is made as of the __
day of ______, 1998, by and between College Television Network, Inc. (the
"Company") and American Stock Transfer & Trust Company, as subscription agent
(the "Agent"). All terms not defined herein shall have the meaning given in the
prospectus (the "Prospectus") included in the Registration Statement on Form S-
3, File No. 333-____________ filed by the Company with the Securities and
Exchange Commission (the "Commission") on July ___, 1998, as amended by any
amendment filed with respect thereto (collectively the "Registration
Statement").
RECITALS
--------
WHEREAS, the Company has caused the Registration Statement to be filed with
the Commission relating to a proposed distribution by the Company of
nontransferable subscription rights (the "Rights") to purchase shares of the
Company's common stock, par value $.005 per share (the "Common Stock"), upon the
exercise of such Rights (the distribution of the Rights and the sale of shares
of Common Stock upon the exercise thereof as contemplated by the Registration
Statement is referred to herein as the "Rights Offering");
WHEREAS, the Rights will be distributed to holders of record of shares of
Common Stock (the "Holders") as of the close of business on July 17, 1998 (the
"Record Date") at a rate of one Right for each 1.2825 shares of Common Stock
held on the Record Date;
WHEREAS, the Company has authorized the issuance of an aggregate number of
authorized and unissued shares of Common Stock (the "Underlying Shares") equal
to the aggregate number of rights to be distributed pursuant to the Rights
Offering;
WHEREAS, Holders will be entitled to subscribe to purchase at a per share
price of $1.60 (the "Subscription Price") one Underlying Share for each Right
held (the "Basic Subscription Privilege");
WHEREAS, Holders will also be entitled to subscribe to purchase any
Underlying Shares that are not subscribed for through the Basic Subscription
Privilege, subject to proration by the Company, if necessary (the
"Oversubscription Privilege"), which right to subscribe for such Underlying
Shares pursuant to the Oversubscription Privilege is not transferable;
WHEREAS, U-C Holdings, L.L.C., the Company's principal stockholder ("U-C
Holdings") will be entitled to subscribe to purchase any Underlying Shares that
are not subscribed for through the Basic Subscription Privilege or the
Oversubscription Privilege (the "Standby Purchase Commitment");
WHEREAS, the Company wishes the Agent to perform certain acts on behalf of
the Company, and the Agent is willing to so act, in connection with the Rights
Offering as set forth
<PAGE>
herein, and the issuance and exercise of the Rights to subscribe therein set
forth, and the issuance of the Underlying Shares all upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
AGREEMENT
---------
ARTICLE 1: APPOINTMENT OF AGENT
1.1 The Company hereby appoints the Agent to act as agent for the Company
in accordance with the instructions set forth in this Agreement, and the Agent
hereby accepts such appointment.
ARTICLE 2: ISSUANCE OF SECURITIES
2.1 The Company has authorized the issuance of the Rights and, following
Record Date and the effectiveness of the Registration Statement, will issue such
Rights to the Holders as contemplated by the Registration Statement. The
Company will promptly notify the Agent upon the effectiveness of the
Registration Statement. As transfer agent and registrar for the shares of
Common Stock, the Agent shall provide such assistance as the Company may require
in order to effect the distribution of the Rights to Holders, including
assistance in determining the number of Rights to be distributed to each such
Holder and assistance in distributing the Subscription Documents (as defined in
Section 5.2 hereof) evidencing the Rights and all other ancillary documents and
issuance of the Underlying Shares.
2.2 The Company has authorized the issuance of and will hold in reserve
the Underlying Shares, and upon the valid exercise of Rights, the Company will
issue Underlying Shares to validly exercising Holders as set forth in the
Registration Statement.
ARTICLE 3: RIGHTS AND ISSUANCE OF SUBSCRIPTION DOCUMENTS
3.1 Each set of Subscription Documents shall contain a Subscription
Certificate which shall be irrevocable and non-transferable. The Agent shall, in
its capacity as transfer agent and registrar of the Company, maintain a register
of Subscription Certificates and the holders of record thereof. Each
Subscription Certificate shall, subject to the provisions thereof, entitle the
Holder in whose name it is recorded to the following:
(a) With respect to Holders only, the right to acquire prior to the
Expiration Date (as defined in the Prospectus) the Underlying Shares at the
Subscription Price a number of shares of Common Stock equal to one Right for
every 1.2825 shares of Common Stock held by each Holder on the Record Date (the
"Basic Subscription Privilege"); and
(b) With respect to Holders only, the right to subscribe for additional
shares of Common Stock, subject to the availability of such shares and to the
allotment of such shares as
-2-
<PAGE>
may be available among Holders who exercise Oversubscription Rights on the basis
specified in the Prospectus; provided, however, that such Holder has exercised
all Basic Subscription Privilege Rights issued to him or her (the
"Oversubscription Privilege").
ARTICLE 4: FRACTIONAL RIGHTS AND SHARES
4.1 The Company shall not issue fractions of Rights nor shall the Agent
distribute Subscription Certificates which evidence fractional Rights. The
number of Rights issued to each Holder will be rounded down to the nearest whole
number. All questions as to the validity and eligibility of any rounding of
fractional Rights shall be determined by the Company in its sole discretion, and
its determination shall be final and binding. The aggregate of all fractional
Rights not distributed to Holders that represent Rights to purchase while shares
of Common Stock shall be distributed to U-C Holdings for exercise pursuant to
the Standby Purchase Commitment.
4.2 The Company shall not issue fractional shares of Common Stock to
exercising Holders upon exercise of Rights.
ARTICLE 5: FORM AND EXECUTION OF SUBSCRIPTION DOCUMENTS
5.1 Each Subscription Certificate shall evidence the Rights of the Holder
therein named to purchase Common Stock upon the terms and conditions set forth
in the Subscription Documents.
5.2 Upon the written advice of the Company, signed by any of its duly
authorized officers, as to the Record Date, the Agent shall, from a list of the
Company stockholders as of the Record Date to be prepared by the Agent in its
capacity as transfer agent of the Company, prepare and record Subscription
Certificates in the names of the Holders, setting forth the number of Rights to
subscribe for the Company's Common Stock calculated on the basis of one Right
for each 1.2825 shares of Common Stock recorded on the books in the name of each
such Holder. Each Subscription Certificate shall be dated as of the Record Date
and shall be executed manually or by facsimile signature of a duly authorized
officer of the Agent. Upon the written advice, signed as aforesaid, as to the
effective date of the Registration Statement, the Agent shall promptly
countersign and deliver the Subscription Certificate, together with a copy of
the Prospectus, instruction letter, instructions for use of the Substitute Form
W-9, a Substitute Form W-9 and any other document as the Company deems necessary
or appropriate (collectively the "Subscription Documents"), to all Holders with
record addresses in the United States (including its territories and possessions
and the District of Columbia). No Subscription Documents shall be valid for any
purpose unless so executed. Delivery shall be by first class mail (without
registration or insurance).
5.3 Subscription Documents will not be mailed to Holders having a
registered address outside the United States, or to those Holders having APO or
FPO addresses. The Rights to which such Subscription Certificates relate will
be held by the Agent for such Holders' accounts until instructions are received
to exercise the Rights.
-3-
<PAGE>
ARTICLE 6: EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE
6.1 Each Holder may exercise some or all of the Rights evidenced by the
Subscription Certificate (but not in amounts of less than one Right or an
integral multiple thereof) by delivering to the Agent, on or prior to 5:00 p.m.,
New York City time, on ______, 1998 (the "Expiration Date"), properly completed
and executed Subscription Documents evidencing such Rights (with signatures
guaranteed, if necessary, by a commercial bank or trust company having an office
or correspondent in the United States or a member firm of a national securities
exchange or a member of the National Association of Securities Dealers, Inc.
(each, an "Eligible Institution")), together with payment of the Subscription
Price for each Underlying Share subscribed for pursuant to the Basic
Subscription Privilege, the Oversubscription Privilege and the Standby Purchase
Commitment, as the case may be.
6.2 In the case of Holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the Basic Subscription Privilege
may be effected by instructing DTC to transfer Rights from the DTC account of
such Holder to the DTC account of the Agent, together with payment of the
Subscription Price for each Underlying Share subscribed for pursuant to the
Basic Subscription Privilege. Exercises of the Oversubscription Privilege may be
effected by properly executing and delivering to the Agent a DTC Participant
Oversubscription Exercise Form (a form of which is included in the Subscription
Documents), together with payment of the appropriate Subscription Price for the
number of Underlying Shares for which the Oversubscription Privilege is to be
exercised. Alternatively, a Holder may exercise the Rights evidenced by the
Subscription Certificate by effecting compliance with the procedures for
guaranteed delivery set forth in Section 6.3 below.
6.3 If a Holder wishes to exercise Rights, but time will not permit such
Holder to cause the Subscription Certificate evidencing such Rights to reach the
Agent on or prior to the Expiration Date, such Rights may nevertheless be
exercised if all of the following conditions (the "Guaranteed Delivery
Procedures") are met:
(a) such Holder has caused payment in full of the Subscription Price for
each Underlying Share being subscribed for pursuant to the Basic Subscription
Privilege and the Oversubscription Privilege to be received (in the manner set
forth in Section 6.5 hereof) by the Agent on or prior to the Expiration Date;
(b) the Agent receives, on or prior to the Expiration Date, a guarantee
notice (a "Notice of Guaranteed Delivery"), substantially in the form provided
with the Subscription Documents, from an Eligible Institution, stating the name
of the exercising Holder, the number of Rights represented by the Subscription
Certificate or Subscription Certificates held by such exercising Holder, the
number of Underlying Shares being subscribed for pursuant to the Basic
Subscription Privilege and the number of Underlying Shares, if any, being
subscribed for pursuant to the Oversubscription Privilege, and guaranteeing the
delivery to the Agent of the Subscription Certificate evidencing such Rights at
or prior to 5:00 p.m., New York City time, on the date three Nasdaq Stock Market
("Nasdaq") trading days following the date of the Notice of Guaranteed Delivery;
and
-4-
<PAGE>
(c) the properly completed Subscription Certificate(s) evidencing the
Rights being exercised, with any required signatures guaranteed, are received by
the Agent, or such Rights are transferred into the DTC account of the Agent, at
or prior to 5:00 p.m., New York City time, on the date three Nasdaq trading days
following the date of the Notice of Guaranteed Delivery relating thereto. The
Notice of Guaranteed Delivery may be delivered to the Agent in the same manner
as Subscription Certificates at the addresses set forth above, or may be
transmitted to the Agent by telegram or facsimile transmission (facsimile (718)
234-5001).
6.4 The Rights shall expire at 5:00 p.m., New York City time, on the
Expiration Date.
6.5 If an exercising Holder has not indicated the number of Rights being
exercised, or if the Subscription Price payment forwarded by such Holder to the
Agent is not sufficient to purchase the number of shares subscribed for, the
Holder will be deemed to have exercised the Basic Subscription Privilege with
respect to the maximum number of whole Rights which may be exercised for the
Subscription Price delivered to the Agent and, to the extent that the
Subscription Price payment delivered by such Holder exceeds the Subscription
Price multiplied by the maximum number of whole Rights which may be exercised
(such excess being the "Subscription Excess"), the Holder will have been deemed
to exercise its Oversubscription Privilege to purchase, to the extent available,
that number of whole shares of Common Stock equal to the quotient obtained by
dividing the Subscription Excess by the Subscription Price, up to the maximum
number of shares purchasable by such Holder. The Agent, as soon as practicable
after the exercise of the Rights, shall mail to such Holders any portion of the
Subscription Excess not applied to the purchase of Common Stock pursuant to the
Oversubscription Privilege, without interest or deduction.
6.6 The Agent shall pay to credit to the account of or otherwise transfer
to the Company all funds received by the Agent in payment of the Subscription
Price for Underlying Shares subscribed for pursuant to the Basic Subscription
Privilege, as soon as practicable following the Expiration Date.
6.7 Funds received by the Agent in payment of the Subscription Price for
Excess Shares subscribed for pursuant to the Oversubscription Privilege shall be
held in a segregated account pending issuance of such Excess Shares.
6.8 Upon receipt by the Agent of a notice of satisfaction or waiver of the
conditions to the Standby Purchase Commitment from the Company substantially in
the form of Exhibit A hereto on or before the Expiration Date, the Agent shall
---------
and is hereby directed to withdraw from the segregated bank account in which the
proceeds of the Rights Offering have been held by Agent (the "Bank Account") and
pay to, credit to the account of or otherwise transfer to the Company all such
Funds on _________, 1998 (the "Closing Date"). Upon receipt by the Agent of a
notice of failure to satisfy or waive the conditions to the Standby Purchase
Commitment from the Company substantially in the form of Exhibit B hereto on or
---------
before the Expiration Date, the Agent shall and is hereby directed to withdraw
from the Bank Account and return to exercising Holders all such Funds as
promptly as practicable following the Expiration Date.
-5-
<PAGE>
6.9 The Agent is authorized to accept only Subscription Certificates
(other than Subscription Certificates delivered in accordance with the procedure
for guaranteed delivery set forth in Section 6.3, or transfers of Rights to its
account at DTC), received prior to 5:00 p.m., New York City time, on the
Expiration Date.
6.10 Once a Holder has exercised a Right, such exercise may not be
revoked.
6.11 Unless a Subscription Certificate (i) provides that the Underlying
Shares to be issued pursuant to the exercise of Rights represented thereby are
to be delivered to the Holder or (ii) is submitted for the account of an
Eligible Institution, signatures on such Subscription Certificate must be
guaranteed by an Eligible Institution.
ARTICLE 7: VALIDITY OF SUBSCRIPTIONS
7.1 Irregular subscriptions not otherwise covered by specific instructions
herein shall be submitted to an appropriate officer of the Company (or the
Company's Administrator) and handled in accordance with his or her instructions.
Such instructions will be documented by the Agent indicating the instructing
officer and the date thereof.
ARTICLE 8: OVERSUBSCRIPTION
8.1 To the extent Holders do not exercise all of the Rights issued to them
pursuant to the Basic Subscription Privilege, any Underlying Shares represented
by such Rights will be offered by means of the Oversubscription Privilege to the
Holders (other than U-C Holdings) who have exercised all of the Rights issued to
them pursuant to the Basic Subscription Privilege and who wish to acquire more
than the number of Shares to which they are entitled. Only Holders who exercise
all the Rights issued to them pursuant to the Basic Subscription Privilege may
indicate, on the Subscription Certificate, which they submit with respect to the
exercise of the Rights issued to them, how many Shares they desire to purchase
pursuant to the Oversubscription Privilege. If sufficient Shares remain after
completion of the Basic Subscription Privilege, all oversubscription requests
will be honored in full. If sufficient Shares are not available to honor all
oversubscription requests, the available shares will be allocated pro rata
(subject to elimination of fractional shares) among Holders who exercise the
Oversubscription Privilege in proportion to the number of shares each Holder
purchased pursuant to the Basic Subscription Privilege; provided, however, that
if such pro rata allocation results in any Holder being allocated a greater
number of shares than such Holder subscribed for pursuant to the exercise of
such Holder's Oversubscription Privilege, then such Holder will be allocated
only such number of shares as such Holder subscribed for and the remaining
shares will be allocated among all other Holders exercising the Oversubscription
Privilege.
ARTICLE 9: Delivery of Stock Certificates
Stock certificates for all Shares acquired in the Basic Subscription
Privilege will be mailed promptly after the Expiration Date and full payment for
the subscribed Shares has been
-6-
<PAGE>
received and cleared. Certificates representing Shares acquired pursuant to the
Oversubscription Privilege will be mailed as soon as practicable after full
payment has been received and cleared and all allocations have been effected.
Holders whose shares of Common Stock are held of record by any other depository
or nominee on their behalf or their broker-dealers' behalf will have any Shares
acquired pursuant to the Basic Subscription Privilege credited to the account of
such other depository or nominee. Shares acquired pursuant to the
Oversubscription Privilege will be certificated and stock certificates
representing such Shares will be sent directly to such other depository or
nominee.
ARTICLE 10: REPORTS
10.1 The Agent shall notify both the Company and its designated
representatives by telephone as requested during the period commencing with the
mailing of Subscription Documents and ending on the Expiration Date (and in the
case of guaranteed deliveries pursuant to Section 6.3 the period ending three
Nasdaq trading days after the Expiration Date), which notice shall thereafter be
confirmed in writing, of (i) the number of Rights exercised on the day of such
request, (ii) the number of Underlying Shares subscribed for pursuant to the
Basic Subscription Privilege and the Oversubscription Privilege, if any, and the
number of such Rights for which payment has been received, (iii) the number of
Rights subject to guaranteed delivery pursuant to Section 6.3 on such day, (iv)
the number of Rights for which defective exercises have been received on such
day and (v) cumulative totals derived from the information set forth in clauses
(i) through (iv) above. At or before 5:00 p.m., New York City time, on the
first Nasdaq trading day following the Expiration Date, the Agent shall certify
in writing to the Company the cumulative totals through the Expiration Date
derived from the information set forth in clauses (i) through (iv) above. The
Agent shall also maintain and update a listing of Holders who have fully or
partially exercised their Rights and Holders who have not exercised their
Rights. The Agent shall provide the Company or its designated representatives
with the information compiled pursuant to this Article 10 as any of them shall
request. The Agent hereby represents, warrants and agrees that the information
contained in each notification referred to in this Article 10 shall be accurate
in all material respects.
ARTICLE 11: LOSS OR MUTILATION
11.1 Upon receipt by the Company and the Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Subscription Certificate, and, in case of loss, theft or destruction, of
indemnity and/or security satisfactory to them, which may be in the form of an
open penalty bond, and reimbursement to the Company and the Agent of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Subscription Certificate if mutilated, the Company will make and deliver a
new Subscription Certificate of like tenor to the Agent for delivery to the
registered owner in lieu of the Subscription Certificate so lost, stolen,
destroyed or mutilated. If required by the Company or the Agent an indemnity
bond must be sufficient in the judgment of both to protect the Company, the
Agent or any agent thereof from any loss which any of them may suffer if a
Subscription Certificate is replaced.
-7-
<PAGE>
ARTICLE 12: COMPENSATION FOR SERVICES
12.1 The Company agrees to pay to the Agent a fee in the amount of Ten
Thousand and No/100 Dollars ($10,000) as compensation for its services in acting
as Agent.
ARTICLE 13: INSTRUCTIONS AND INDEMNIFICATION
13.1 The Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any written instructions or
directions furnished to it by an executive officer of the Company, whether in
conformity with the provisions of this Agreement or constituting a modification
hereof or a supplement hereto. Without limiting the generality of the foregoing
or any other provision of this Agreement, the Agent, in connection with its
duties hereunder, shall not be under any duty or obligation to inquire into the
validity or invalidity or authority or lack thereof of any instruction or
direction from an executive officer of the Company which conforms to the
applicable requirements of this Agreement and which the Agent reasonably
believes to be genuine and shall not be liable for any delays, errors or loss of
data occurring by reason of circumstances beyond the Agent's control.
(b) The Company also agrees to indemnify and hold the Agent harmless
against any losses, claims, actions, damages, liabilities, costs or expenses
(including reasonable fees and disbursements of legal counsel) (collectively,
"Claims") that the Agent may incur or become subject to, arising from or out of
any claim or liability resulting from actions taken as Agent pursuant to this
Agreement; provided, however, that such covenant and agreement does not extend
to, and the Agent shall not be indemnified or held harmless with respect to,
such Claims incurred or suffered by the Agent as a result, or arising out, of
the Agent's negligence, misconduct, bad faith or breach of this Agreement. In
connection therewith: (i) in no case shall the Company be liable with respect to
any Claim against the Agent unless the Agent shall have notified the Company in
writing, of the assertion of a Claim against it, promptly after the Agent shall
have notice of a Claim or shall have been served with the summons or other legal
process giving information as to the nature and basis of the Claim; provided,
however, that the failure of the Agent to notify the Company in the above manner
will absolve the Company of liability only when such failure will result or has
resulted in prejudice to the Company with respect to such Claim; (ii) the
Company shall be entitled to control the defense of any suit brought to enforce
any such Claim; and (iii) the Agent agrees not to settle or compromise any Claim
with respect to which it may seek indemnification from the Company without the
prior written consent of the Company. In no event shall the Company be liable
for the fees and expenses of any additional counsel that the Agent may retain.
(c) The Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it without negligence and in
good faith in connection with its administration of this Agreement in reliance
upon any Subscription Certificate, or written power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document reasonably believed by it to be genuine and to
-8-
<PAGE>
be signed, executed and, where necessary, verified or acknowledged by the proper
person or persons.
ARTICLE 14: FUTURE INSTRUCTIONS AND INTERPRETATION
14.1 All questions as to the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company whose determinations
shall be final and binding. The Company in its sole discretion may waive any
defect or irregularity, permit a defect or irregularity to be corrected within
such time as it may determine or reject the purported exercise of any Right.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within such time as the Company
determines in its sole discretion. Neither the Company nor the Agent shall be
under any duty to give notification of any defect or irregularity in connection
with the submission of Subscription Documents or incur any liability for failure
to give such notification.
14.2 The Agent is hereby authorized and directed to accept written
instructions with respect to the performance of its duties hereunder from an
authorized officer of the Company, and to apply to such officers for written
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with written instructions of any such officer.
ARTICLE 15: PAYMENT OF TAXES
15.1 The Company covenants and agrees that it will pay when due and
payable all documentary, stamp and other taxes, if any, which may be payable in
respect of the issuance or delivery of any Subscription Certificate or of the
Underlying Shares; provided, however, that the Company shall not be liable for
any tax liability arising out of any transaction which results in, or is deemed
to be, an exchange of Rights or shares or a constructive dividend with respect
to the Rights or shares, and provided further, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect the issuance or delivery of certificates for shares of Common Stock in a
name other than that of the registered Holder of such Subscription Certificate
evidencing the Rights exercised, and the Agent shall not issue any such
certificate until such tax or governmental charge, if required, shall have been
paid.
ARTICLE 16: CANCELLATION AND DESTRUCTION OF SUBSCRIPTION CERTIFICATES
16.1 All Subscription Certificates surrendered for the purpose of
exercise, exchange, or substitution shall be canceled by the Agent, and no
Subscription Certificates shall be issued in lieu thereof except as expressly
permitted by provisions of this Agreement. The Company shall deliver to the
Agent for cancellation and retirement, and the Agent shall so cancel and return,
any other Subscription Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Agent shall deliver all canceled
Subscription Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Subscription Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
-9-
<PAGE>
ARTICLE 17: CHANGES IN SUBSCRIPTION CERTIFICATE
The Agent may, without the consent or concurrence of the Holders in whose
names Subscription Certificates are registered, by supplemental agreement or
otherwise, concur with the Company in making any changes or corrections in a
Subscription Certificate that it shall have been advised by counsel (who may be
counsel for the Company) is appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or manifest
error therein or herein contained, and which shall not be inconsistent with the
provision of the Subscription Certificate except insofar as any such change may
confer additional rights upon the Holders.
ARTICLE 18: ASSIGNMENT AND DELEGATION
18.1 Neither this Agreement nor any rights or obligations hereunder may be
assigned or delegated by either party without the prior written consent of the
other party.
18.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns. Nothing in this
Agreement is intended or shall be construed to confer upon any other person any
right, remedy or claim or to impose upon any other person any duty, liability or
obligation.
ARTICLE 19: NOTICES TO THE COMPANY, HOLDERS AND AGENT.
19.1 All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, prepaid certified first-class mail
(return receipt requested), or telecopier (with written confirmation of
receipt):
(a) if to the Company, to:
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
Attention: Patrick G. Doran, Chief Financial Officer
CALL TOLL FREE AT: (800) 256-1636
(b) if to the Agent, to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: _________________________
Telecopier: (718) 921-8334
(c) if to a Holder, at the address shown on the registry books of the
Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when by certified mail,
two business days after being
-10-
<PAGE>
deposited in the mail, postage prepaid, if mailed as aforesaid; and when receipt
is acknowledged, if telecopied.
ARTICLE 20: MISCELLANEOUS PROVISIONS
20.1 Governing Law. The validity, interpretation and performance of this
-------------
Agreement shall be governed by the law of the State of Georgia, without regard
to its principles of conflicts of law.
20.2 Severability. The parties hereto agree that if any of the provisions
------------
contained in this Agreement shall be determined invalid, unlawful or
unenforceable to any extent, such provisions shall be deemed modified to the
extent necessary to render such provisions enforceable. The parties hereto
further agree that this Agreement shall be deemed severable, and the invalidity,
unlawfulness or unenforceability of any term or provision thereof shall not
affect the validity, legality or enforceability of this Agreement or of any term
or provision hereof.
20.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
20.4 Captions. The captions and descriptive headings herein are for the
--------
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
20.5 Facsimile Signatures. Any facsimile signature of any party hereto
--------------------
shall constitute a legal, valid and binding execution hereof by such party.
20.6 Further Actions. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effect the purposes of this
Agreement.
20.7 Additional Provisions. Except as specifically modified by this
---------------------
Agreement, the Agent's rights and responsibilities set forth in the Agreement
for Stock Transfer Agent Services between the Company and the Agent are hereby
ratified and confirmed and continue in effect.
[SIGNATURES ON FOLLOWING PAGE]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals, as
of the day and year first above written.
COLLEGE TELEVISION NETWORK, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: ___________________________________
Name: _________________________________
Title: ________________________________
-12-
