<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of
1934
For the Quarterly period from January 1, 1998 to March 31, 1998
--------------- --------------
Commission file number 0-19997
-------
College Television Network, Inc.
--------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3557317
-------- -------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5784 Lake Forrest Drive. Suite 275 Atlanta, GA 30328
-----------------------------------------------------
(Address of Principal Executive Offices)
(404) 256-9630
--------------
(Issuer's Telephone Number, Including Area Code)
N/A
---
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of common stock outstanding as of May 13, 1998: 8,015,153
Transitional Small Business Disclosure Format (check one): Yes No X
-- --
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
College Television Network, Inc.
BALANCE SHEET
March 31, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................ $ 9,348,397
Accounts receivable, net of allowance of $25,000..................................... 1,445,632
Prepaid expenses..................................................................... 97,418
Other current assets................................................................. 73,139
------------
Total current assets.............................................................. 10,964,586
Property and equipment, net............................................................. 2,514,183
Other assets............................................................................ 26,788
Intangible assets, net.................................................................. 364,918
------------
Total assets...................................................................... $ 13,870,475
LIABILITIES
Current liabilities:...................................................................
Accounts payable.................................................................... $ 451,993
Accrued expenses.................................................................... 1,747,800
Deferred revenue.................................................................... 155,626
Dividends payable................................................................... 2,309
Current portion of capital lease obligation......................................... 176,403
Total current liabilities......................................................... 2,534,131
Long-term portion of capital leases..................................................... 73,291
Redeemable preferred stock.............................................................. 3,333
Total liabilities................................................................. 2,610,755
STOCKHOLDERS' EQUITY
Capital stock:
Preferred stock-$.001 par; authorized 2,000,000 shares
Common stock - $.005 par; authorized 100,000,000 shares;
issued and outstanding 8,015,153 shares............................................ 40,076
Additional paid in capital............................................................ 30,241,704
Accumulated deficit................................................................... (19,022,060)
Total stockholders' equity........................................................ 11,259,720
Total liabilities, redeemable preferred stock and stockholders' equity............ $ 13,870,475
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
COLLEGE TELEVISION NETWORK, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Revenues........................................................................... $ 1,770,978 $ 872,383
Interest........................................................................... 145,292 2,732
----------- -----------
Total revenues............................................................ 1,916,270 875,115
----------- ----------
Expenses
Operating................................................................. 611,474 178,660
Selling, general and administrative....................................... 3,263,321 601,729
Depreciation and amortization............................................. 206,809 189,737
----------- ----------
4,081,604 970,126
----------- ----------
Net loss........................................................................... $(2,165,334) $ (95,011)
=========== ==========
Loss per share (1997 share information restated for one-for-five stock
split occurring on October 6, 1997)............................................. $(0.27) $(0.04)
Weighted average number of common shares outstanding............................... 8,015,153 2,196,971
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
COLLEGE TELEVISION NETWORK, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................................... $(2,165,334) $(95,011)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization............................................ 206,809 189,737
Changes in operating assets and liabilities, net of the effect of
acquisition.............................................................
(Increase) decrease in accounts receivable............................ (265,664) 38,083
(Increase) decrease in prepaid expenses .............................. (21,857) 6,594
(Increase) decrease in other current assets........................... (42,614) 18,687
Decrease in accounts payable ......................................... (111,095) (98,731)
Increase (decrease) in accrued expenses............................... 904,084 (138,024)
Decrease in deferred revenue.......................................... (80,626) -0-
Increase in capital lease obligations................................. -0- 188,861
----------- --------
Net cash (used in) provided by operating activities................. (1,576,297) 110,196
=========== ========
Cash flows used in investing activities:
Purchases of property and equipment......................................... (622,804) (247,935)
Cash acquired through acquisition........................................... 109,209 -0-
----------- --------
Net cash used in investing activities.................................... (513,595) (247,935)
=========== ========
Net decrease in cash and cash equivalents...................................... (2,089,892) (137,739)
Cash and cash equivalent, beginning of period.................................. 11,438,289 734,353
----------- --------
Cash and cash equivalents, end of period....................................... $ 9,348,397 $ 596,614
=========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
COLLEGE TELEVISION NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the Company's financial statements for the fiscal year ended October 31,
1997 included in the Annual Report as filed on Form 10-KSB with the United
States Securities and Exchange Commission.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 1998 and the
results of operations and the statements of cash flows for the three months
ended March 31, 1998 and 1997.
The results of operations for the three months ended March 31, 1998 and
1997 are not necessarily indicative of the results of operations for a full
fiscal year of the Company.
NOTE (A) - THE COMPANY
- ----------------------
College Television Network, Inc. ("the Company"), is a broadcasting company
which owns and operates the College Television Network ("CTN"), a proprietary
commercial television network operating on college and university campuses,
through single channel television systems placed primarily in campus dining
facilities and student unions. Substantially all of the Company's revenues are
derived from advertising displayed on CTN. At March 31, 1998 and 1997, the
Company had an installed base of approximately 272 and 214 entertainment
systems, respectively at various colleges and universities throughout the United
States.
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 colleges and
universities do not hold regular classes.
NOTE (B) - ACQUISITION
- ----------------------
On January 12, 1998, the Company acquired Link Magazine ("Link"), a New
York City-based publication to college students, from Creative Media
Generations, Inc., a New Jersey corporation ("Creative Media"). Founded in 1993,
Link Magazine is a free publication sent to approximately 1,000,000 college
students at 358 colleges and universities, through a proprietary distribution
process. The magazine generates revenues through advertising sales.
The Company acquired substantially all of the assets of Link in exchange
for the assumption of certain liabilities in the approximate amount of $370,000.
The acquisition has been accounted for under the purchase method of accounting.
Goodwill in the approximate amount of $345,000 relating to this transaction will
be amortized over fifteen years on a straight line basis. The Company entered
into two employment agreements and a consulting agreement with certain officers
of Creative Media.
Link's results of operations are not considered material to the Company's
financial statements. The results of operations of Link are included in the
Company's statement of operations from the acquisition date through March 31,
1998.
NOTE (C) - COMMITMENTS AND CONTINGENCIES
- ----------------------------------------
The Company executed an equipment rental agreement with Hughes Network
Systems on November 6, 1996. The agreement calls for the installation of 200
systems for receiving satellite transmissions with payments aggregating $328,032
over a three-year period. At the end of such period, the Company may purchase
the equipment for $1.00. The equipment is accounted for as a capital lease with
the related asset of $242,060 and
-5-
<PAGE>
liability of $249,694 included in the balance sheet at March 31, 1998. Future
minimum lease payments are contingent upon the total number of systems leased at
any given time. The Company is currently in negotiations with two companies
regarding services related to Direct Video Broadcast ("DVB") platform for CTN.
The impact of this potential change in delivery methods to the financial
statements cannot be determined at this time.
On March 21, 1998, the Company entered into a severance agreement with one
of its senior executives. The agreement provides for payments of approximately
$870,000 over a three year period ending in April, 2001. A provision for this
obligation is included in the Company's statement of operations for the three
months ended March 31, 1998. As of March 31, 1998, the Company has paid
approximately $21,500 of this obligation.
On March 27, 1998, the Company signed an agreement with Turner Private
Networks, Inc., effective as of January 1, 1998, to provide news and sports
programming on CTN through December 31, 2002. The total license fee is
approximately $2,900,000. This agreement supercedes the prior programming
agreement entered into on November 5, 1996.
NOTE (D) - PROPERTY AND EQUIPMENT
- ---------------------------------
Property and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, 1998
<S> <C>
Entertainment systems, completed $ 3,989,066
Entertainment systems, in progress 55,902
Machinery and equipment 825,828
Furniture and fixtures 254,747
DVB equipment 313,910
-----------
5,439,453
Less accumulated depreciation and amortization (2,925,270)
-----------
Property and equipment, net $ 2,514,183
-----------
</TABLE>
As discussed in Note C, amounts related to DVB equipment result from the
anticipated change in the Company's delivery methodology from the current send
and store method to a direct video broadcast method.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's financial statements appearing elsewhere in this report.
Information contained or incorporated by reference in this report contains
"forward looking statements" which can be identified by the use of forward-
looking terminology such as "believes," "expects," "may," "will," "should" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy. No assurance can be given that the
future results covered by the forward-looking statements will be achieved.
RESULTS OF OPERATIONS
The Company is a broadcasting company which owns and operates the College
Television Network ("CTN"), a proprietary commercial television network
operating on college and university campuses, through single-channel television
systems (collectively, the "Systems" and individually, a "System") placed
primarily in campus dining facilities and student unions. Substantially all of
the Company's revenues are derived from advertising displayed on CTN. At March
31, 1998, CTN was installed or contracted for installation at approximately 331
locations at various colleges and universities throughout the United States.
The Company believes CTN currently reaches a viewership of approximately 800,000
daily impressions.
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<PAGE>
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 colleges and
universities do not hold regular classes.
The following table sets forth certain financial data derived from the
Company's statement of operations for the three months ended March 31, 1998 and
March 31, 1997:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1998 March 31, 1997
-------------- --------------
% of % of
$ Revenues $ Revenues
-------------------------------------------
<S> <C> <C> <C> <C>
Revenues................................ 1,770,978 100% 872,383 100%
Operating expenses...................... 611,474 35 178,660 20
Selling, general and administrative..... 3,263,321 184 601,729 69
Depreciation and amortization........... 206,809 12 189,737 22
Interest income......................... 145,292 8 2,732 -
Net loss................................ 2,165,334 122 95,011 11
</TABLE>
Revenues increased by 103% to 1,770,978 for the three months ended March
31, 1998 from $872,383 for the comparable period last year. Increased
commitments from existing customers combined with new customers and the addition
of "Link" magazine revenue was the primary source of this increase. In addition,
the Company increased its advertising rates charged during the fiscal year ended
October 31, 1997 ("Fiscal 1997"). The Company recently changed its fiscal year
end for years subsequent to Fiscal 1997, to December 31. The Company anticipates
continued sales growth during the year ending December 31, 1998 ("Fiscal 1998")
by continuing to expand its advertiser base and by further increasing the amount
charged for its advertising spots to reflect the anticipated increase in
viewership. Although the Company has agreements with national advertisers and
has held discussions or had prior agreements with other national advertisers, no
assurance can be given that these or other advertisers will continue to purchase
advertising time from the Company, or that future significant advertising
revenues will ever be generated. A failure to significantly increase advertising
revenues could have a material impact on the operations of the Company.
Operating expenses increased to $611,474 for the three month period ended
March 31, 1998 from $178,660 for the same period last year. The increase over
the comparable prior year period is primarily attributable to additional
programming costs for improved programming for CTN. Furthermore, the Company
incurred expenses in 1998 directly related to the commencement of satellite
transmission of the network.
Selling, general and administrative expenses increased to $3,263,321 for
the three month period ended March 31, 1998 from $601,729 for the same period
last year. A significant portion of this increase is directly attributable to
severance obligations for a senior executive of the Company. (See Note C for
additional information). Other reasons for this increase are attributable to the
Company's efforts to increase market awareness for the network. This is being
achieved by expanding the Company's management team, advertising and affiliate
sales forces, opening additional regional sales offices, and instituting a more
aggressive advertising and marketing campaign for CTN.
Depreciation and amortization expense totaled $206,809 for the three month
period ended March 31, 1998 as compared to $189,737 for the comparable prior
year period. The 1998 increase is primarily attributable to the installation of
systems in new schools and equipment for the addition of staff.
-7-
<PAGE>
Interest income increased to $145,292 for the three month period ended
March 31, 1998 as compared to $2,732 for the comparable prior year period. The
significant increase in 1998 is attributable to higher interest rates and
greater average cash balances directly related to the April 1997 purchase of a
majority of the Company's Common Stock by U-C Holdings, L.L.C., a Delaware
limited liability company.
The Company has incurred substantial losses since commencement of its
operations and anticipates that such losses will continue in Fiscal 1998. The
net loss increased to $2,165,334 for the three month period ended March 31, 1998
as compared to $95,011 for the comparable prior year period. Approximately
forty percent of the net loss for the quarter is directly attributable to the
severance obligation discussed in Note C. The increase in the 1998 net loss for
this three month period is reflective of the Company's continued efforts to
expand the advertising and affiliate bases. The Company has spent more on
programming, system installation, maintenance and overhead expenses as the
number of employees has increased significantly. Management of the Company
believes this expansion is necessary in order to grow the advertising and
affiliate levels to a point where the Company will achieve profitability.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 1998, the Company had working capital of $8,430,455. At such
date, the Company's cash and cash equivalents totaled $9,348,397.
Cash (used in) provided by operations increased to $(1,576,297) during the
three months ended March 31, 1998 from $110,196 for the comparable period last
year, net of the effect of the Link acquisition. The impact of increased sales
during the three month period ended March 31, 1998 was more than offset by
additional expenditures related to personnel added as part of the Company's
effort to expand its network and advertiser base and the timing of collections
of accounts receivable and payments of accounts payable.
Purchases of property and equipment, net of the effect of the Link
acquisition, increased to $622,804 during the three months ended March 31, 1998
from $247,935 for the comparable period last year due to the purchase of
additional network systems, equipment associated with the commencement of the
DVB broadcast platform, coupled with the purchase of furniture and equipment
needed for the addition of new regional offices and additional employees hired
during the fiscal year.
On March 27, 1998, the Company signed an agreement with Turner Private
Networks, Inc. to provide news and sports programming on CTN through December
31, 2002. The total license fee is approximately $2,900,000. This agreement
supercedes the prior programming agreement entered into on November 5, 1996.
The Company has incurred substantial losses since commencement of its
operations and anticipates that such losses will continue in Fiscal 1998. In
order to reach the stage where the Company is profitable, it is expected that
additional expenditures will be required to increase the affiliate base and to
market the network properly to attract more advertisers.
Although to this point the Company has not achieved profitability, the
Company believes it has sufficient working capital available to continue
operating as a going concern through the end of Fiscal 1998.
-8-
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
By written consent on January 30, 1998, of U-C Holdings, LLC, the
majority stockholder which holds 5,818,181 shares of common stock
of the Company, representing approximately 72.6% of the total
shares of common stock then outstanding, the Company adopted (i)
amendments to the Company's 1996 Stock Incentive Plan, Outside
Directors' 1996 Stock Option Plan, and 1990 Performance Equity
Plan; and (ii) amendments to the Company's Amended and Restated
Bylaws. The Company mailed a Schedule 14C Information Statement
to beneficial holders of the Company's common stock on or about
February 23, 1998 in connection with such actions.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
Exhibit 3(ii) Amended and Restated Bylaws of the Registrant, as amended
Exhibit 10.1 First Amendment to Outside Directors' 1996 Stock Option Plan
Exhibit 10.2 First Amendment to 1990 Performance Equity Plan
Exhibit 10.3 First Amendment to 1996 Stock Incentive Plan
Exhibit 10.4 Programming and Services Agreement, dated effective as of January 1, 1998, between
Registrant and Turner Private Networks, Inc.
Exhibit 10.5 Installation Agreement (Phase I), dated March 13, 1998, between the Registrant and
Crawford Communications, Inc.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
</TABLE>
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COLLEGE TELEVISION NETWORK, INC.
Registrant
Date: May 14, 1998 /s/ Jason Elkin
---------------
Jason Elkin
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Date: May 14, 1998 /s/ Patrick Doran
-----------------
Patrick Doran
Chief Financial Officer, Secretary and
Treasurer (Principal Accounting
and Financial Officer)
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<PAGE>
EXHIBIT 3(ii)
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.
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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
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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
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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.
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EXHIBIT 10.1
FIRST AMENDMENT TO
OUTSIDE DIRECTORS' 1996 STOCK OPTION PLAN
The Outside Directors' 1996 Stock Option Plan (the "Plan") of College
Television Network, Inc. (the "Company") (formerly Laser Video Network, Inc.) is
hereby amended as follows:
1.
All references in the Plan to Laser Video Network, Inc. are deleted, and
the name "College Television Network, Inc." is substituted therefor in each
instance.
2.
Section 3(a) of the Plan is amended by deleting the second sentence thereof
in its entirety and substituting therefor the following new second sentence:
"Subject to Section 3(b), the aggregate number of shares of Common Stock of the
Company which may be transferred pursuant to the Plan shall be 180,000."
3.
Sections 5 of the Plan is deleted in its entirety, and the following new
Section 5 is substituted therefor:
The Board of Directors shall have the authority, from time to time, in its
unfettered discretion, to grant options to Eligible Directors, in such
amounts as the Board of Directors shall deem appropriate. A director's
status as an Eligible Director shall not be deemed to require that any
options be granted to him or her under the Plan, and the Board shall not be
required to grant the same number of options to different Eligible
Directors. Every option granted under the Plan shall be subject to the
terms and conditions set forth in the Plan, and shall be evidenced by an
option agreement approved by the Board which shall not be inconsistent with
the provisions of the Plan.
4.
Section 9(a) of the Plan is deleted in its entirety, and the following new
Section 9(a) is substituted therefor:
(a) For purposes of this Section 9, a "Change in 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,
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pursuant to which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted
into cash, securities or other property, other than a transaction in which
the majority of the holders of Common Stock 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 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 (or securities convertible into Common Stock) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Board, 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).
5.
Section 14 of the Plan is deleted in its entirety, and the following new
Section 14 is substituted therefor: "All rights and obligations under the Plan
shall be construed and interpreted in accordance with the laws of the State of
Delaware (without regard to choice of law provisions)."
The foregoing amendment shall be effective as of the date which is 20 days
after mailing an Information Statement to Shareholders disclosing the approval
of the amendment by the holder of a majority of the outstanding common stock of
the Company, in the manner required by Section 14(c) of the Securities Exchange
Act of 1934, as amended.
-2-
<PAGE>
EXHIBIT 10.2
FIRST AMENDMENT TO
1990 PERFORMANCE EQUITY PLAN
The 1990 Performance Equity Plan (the "Plan") of College Television
Network, Inc. (the "Company") (formerly Laser Video Network, Inc.) is hereby
amended as follows:
1.
All references in the Plan to Laser Video Network, Inc. are deleted, and
the name "College Television Network, Inc." is substituted therefor in each
instance.
2.
All references to "Change of Control" in the Plan are deleted, and the term
"Change in Control" is substituted therefor in each instance.
3.
Section 1.2 of the Plan is amended by deleting the term "$.001" from the
definition of "Common Stock" in item (f) and substituting therefor the term
"$.005."
4.
Section 1.2 of the Plan is amended by deleting the term "Section 422A" from
the definition of "Incentive Stock Option" in item (o) and substituting therefor
the term "Section 422."
5.
Section 1.2 of the Plan is amended by deleting the term "Section 425(f)"
from the definition of "Subsidiary" in item (w) and substituting therefor the
term "Section 424(f)."
6.
Section 2.3 of the Plan is amended by deleting the term "Section 422A" from
the second sentence thereof and substituting therefor the term "Section 422."
7.
Section 3 of the Plan is amended by deleting the first sentence thereof in
its entirety and substituting therefor the following new first sentence: "The
total number of shares of Common Stock reserved and available for distribution
under the Plan shall be 142,833 shares."
<PAGE>
8.
Section 5.2(a) of the Plan is amended by deleting the term "Sections 425(e)
and (f)" therefrom and substituting therefor the term "Sections 424(e) and (f)."
9.
Section 10.1 is amended by deleting the introductory sentence of Section
10.1 prior to subsection (a) and substituting the following therefor:
10.1 Acceleration Upon Change of Control. Except as provided in Section
-----------------------------------
10.5, the Board may determine, in its discretion, that, in the event of a
Change of Control (as hereinafter defined):
10.
Section 10.2 of the Plan is deleted in its entirety, and the following new
Section 10.2 is substituted therefor:
A "Change in Control" shall be deemed to have occurred upon the
happening of any of the following:
(a) 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 would be converted
into cash, securities or other property, other than a transaction in which
the majority of the holders of Common Stock 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 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
(b) 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 (or securities convertible into Common Stock) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Board, or (B) shall become
the "beneficial owner" (as such term is
-2-
<PAGE>
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).
11.
Section 10 is amended by adding a new Section 10.5, which shall read as
follows:
10.5 Certain Mergers. In the event of a Change of Control in which
---------------
the Company is merged into another company and the Company is not the
surviving entity and the only principal consideration exchanged is stock of
either entity or any affiliated entity of either entity, the Board of
Directors and officers of the Company shall use their best efforts to
negotiate the rollover of all options and awards granted under this Plan to
options and awards under an incentive plan of the surviving entity in the
merger or replacement options and awards with respect to the surviving
entity, in a manner consistent with section 424 of the Code and the
regulations promulgated thereunder, in order to ensure that incentive stock
options granted under this Plan shall continue to be incentive stock
options, and the other options and awards shall continue to have
essentially equivalent economic value and features following the merger. In
the event such a rollover or replacement is not successfully negotiated,
then all options and other awards granted under this Plan shall become
fully vested and immediately exercisable prior to the merger, and all
restrictions and limitations under this Plan related to restricted stock or
other stock-based awards shall be deemed to have expired immediately prior
to the merger, in which event the Company shall notify the grantees of
their rights to exercise their options or other rights as holders of
unrestricted awards under this Plan. Notwithstanding any other provision of
this Plan, in the event of a Change of Control in which the Company is the
surviving entity in a merger and the only principal consideration exchanged
is stock of either entity or any affiliated entity of either entity, the
outstanding options and awards granted under this Plan shall remain in full
force and effect, with no acceleration as to their vesting or
exercisability.
12.
Section 13.10 of the Plan is amended by deleting therefrom the term
"Section 422A" each time it appears and substituting therefore the term "Section
422."
The foregoing amendment shall be effective as of the date which is 20 days
after mailing an Information Statement to Shareholders disclosing the approval
of the amendment by the
-3-
<PAGE>
holder of a majority of the outstanding common stock of the Company, in the
manner required by Section 14(c) of the Securities Exchange Act of 1934, as
amended.
-4-
<PAGE>
EXHIBIT 10.3
FIRST AMENDMENT TO
1996 STOCK INCENTIVE PLAN
The 1996 Stock Incentive Plan (the "Plan") of College Television Network,
Inc. (the "Company") (formerly Laser Video Network, Inc.) is hereby amended as
follows:
1.
All references in the Plan to Laser Video Network, Inc. are deleted, and
the name "College Television Network, Inc." is substituted therefor in each
instance.
2.
Section 1.2.1 of the Plan is amended by deleting the first three sentences
thereof and substituting therefor the following:
Subject to Section 1.2.6, the Plan shall be administered by the Stock
Option and Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board"), which Committee shall consist of
not fewer than two directors and to which the Board shall grant power to
authorize the issuance of the Company's capital stock pursuant to awards
granted under the Plan. The members of the Committee shall be appointed
by, and serve at the pleasure of, the Board. The membership of the
Committee shall at all times be constituted so as not to adversely affect
the compliance of the Plan with the requirements of Rule 16b-3 ("Rule 16b-
3") promulgated under the Securities Exchange Act of 1934 (the "1934 Act"),
to the extent it is applicable, or with the requirements of any other
applicable law, rule or regulation.
3.
Section 1.5.1 of the Plan is amended by deleting the first sentence thereof
in its entirety and substituting therefor the following new first sentence:
"The total number of shares of common stock of the Company, par value $.005 per
share ("Common Stock"), with respect to which awards may be granted pursuant to
the Plan shall be 300,000 shares."
4.
Section 3.7 of the Plan is amended by deleting in its entirety Section
3.7.1 and substituting therefor the following new Section 3.7.1:
Except as provided in Section 3.7.3, the Board may determine, in its
discretion, that, in the event of a Change in Control, all options granted
under this Plan shall be fully vested and immediately exercisable. For
purposes of this Section 3.7, a "Change in Control" shall be deemed to have
occurred upon the happening of any of the following:
<PAGE>
(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 would be converted
into cash, securities or other property, other than a transaction in which
the majority of the holders of Common Stock 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 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 (or securities convertible into Common Stock) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Board, 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).
5.
Section 3.7 of the Plan is further amended by adding a new Section 3.7.3,
which shall read as follows:
In the event of a Change of Control in which the Company is merged
into another company and the Company is not the surviving entity and the
only principal consideration exchanged is stock of either entity or any
affiliated entity of either entity, the Board of Directors and officers of
the Company shall use their best efforts to negotiate the rollover of all
options and awards granted under this Plan to options and awards under an
incentive plan of the surviving entity in the merger or replacement options
and awards with respect to the surviving entity, in a manner consistent
with section 424 of the Code and the regulations promulgated
-2-
<PAGE>
thereunder, in order to ensure that incentive stock options granted under
this Plan shall continue to be incentive stock options, and the other
options and awards shall continue to have essentially equivalent economic
value and features following the merger. In the event such a rollover or
replacement is not successfully negotiated, then all options and other
awards granted under this Plan shall become fully vested and immediately
exercisable prior to the merger, and all restrictions and limitations under
this Plan related to restricted stock or other stock-based awards shall be
deemed to have expired immediately prior to the merger, in which event the
Company shall notify the grantees of their rights to exercise their options
or other rights as holders of unrestricted awards under this Plan.
Notwithstanding any other provision of this Plan, in the event of a Change
of Control in which the Company is the surviving entity in a merger and the
only principal consideration exchanged is stock of either entity or the
merged entity, the outstanding options and awards granted under this Plan
shall remain in full force and effect, with no acceleration as to their
vesting or exercisability.
6.
Section 3.14 of the Plan is deleted in its entirety, and the following new
Section 3.14 is substituted therefor: "All rights and obligations under the
Plan shall be construed and interpreted in accordance with the laws of the State
of Delaware (without regard to choice of law provisions)."
The foregoing amendment shall be effective as of the date which is 20 days
after mailing an Information Statement to Shareholders disclosing the approval
of the amendment by the holder of a majority of the outstanding common stock of
the Company, in the manner required by Section 14(c) of the Securities Exchange
Act of 1934, as amended.
-3-
<PAGE>
EXHIBIT 10.4
PROGRAMMING AND SERVICES AGREEMENT
----------------------------------
This Programming Agreement (the "Agreement") is effective as of the 1st day
of January, 1998 ("Effective Date") by and between College Television Network,
Inc. (formerly known as UC Television Network Corp.) ("CTN"), a Delaware
corporation with its principal place of business at 5784 Lake Forrest Drive,
Suite 275, Atlanta, Georgia 30328, and Turner Private Networks, Inc., a Georgia
corporation with its principal place of business at One CNN Center, P.O. Box
105366, Atlanta, Georgia 30348-5366 ("Turner"). (CTN and Turner are
collectively referred to herein as the "Parties").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, CTN owns and operates the College Television Network (formerly
known as UCTV) (the "Network") which provides television programming targeted to
college students in a place-based single channel viewing environment in common
areas on college campuses "Network Facilities");
WHEREAS, CTN desires that Turner provide certain program and editorial
content to CTN for exhibition on the Network as further described below
("Programs");
WHEREAS, Turner desires to provide such Programs to CTN on the terms set
forth in this Agreement for exhibition on the Network;
THEREFORE, in consideration of the mutual covenants contained herein and
the mutual benefits to be derived therefrom and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
I. Turner Obligations.
------------------
(a) Production. Turner shall produce and provide to CTN for distribution
----------
on the Network a fully produced and packaged Program for each non-
holiday school day (based upon a mutually agreed upon school calendar
running from approximately mid-August to mid-May) during the Term of
this Agreement. Each Program shall contain: (i) two (2) general news
segments, each of which shall be approximately two and a half minutes
in duration; (ii) two (2) sports segments, each of which shall be
approximately two and a half minutes in duration; (iii) one (1)
animated "short" or cartoon, which shall be subject to the reasonable
approval of CTN and shall be approximately seven (7) minutes in
duration; (iv) opening and closing graphics for each segment; and (v)
anchor backgrounds behind the news and sports segments.
The Programs shall be of broadcast quality according to generally
accepted industry standards and shall be comparable in production
quality to other Turner-produced programs. The host, the format and
the set for the Programs, as well as the graphics included as part of
the Programs, shall be subject to the reasonable
-1-
<PAGE>
approval of CTN. The Programs shall be produced accordingly; any
changes that would impact the budget must be agreed upon and Turner
will only be obligated to implement the same if commercially
reasonable and for an agreed upon increase in the Fee. Turner shall
have absolute and complete editorial discretion with respect to the
content, production, editing and updating of the Programs. In
addition, it is expressly acknowledged and agreed that the Cable News
Network ("CNN") or other appropriate TPNI-affiliated logo ("Turner
Marks") shall appear on-screen at all times in the Programs to
identify the source for the same and that such logos shall be of a
size generally accepted in the television industry; such Turner Marks
may not be used with any other on-air programming or elements included
in the Network.
Without assuming any obligation whatsoever, from time to time during
the Term, Turner agrees to consider requests from CTN to permit CTN to
air live breaking news appearing on CNN on the Network in lieu of
Programs. Such permission shall be granted, if at all, on a case-by-
case basis and pursuant to any limitations CNN deems appropriate. All
technology and costs associated with carriage of the live CNN feed
shall be the responsibility of CTN; Turner will use reasonable efforts
to inform CTN of the costs (to the extent of its knowledge) in
advance.
(b) Administrative Responsibilities. From January 1, 1998, through the
-------------------------------
completion of the school year in May 1998 ("Interim Period"), Turner
hereby agrees to perform certain administrative and distribution
responsibilities on behalf of CTN. Specifically, Turner agrees to
receive a reasonable amount of third party programming elements from
CTN ("CTN Content") for inclusion on the Network and encode and
transmit the same with the Programs as further provided in Paragraph
(c) below. In no event shall the CTN Content encoding and
distribution process require more than one hundred twenty (120)
minutes of distribution time per month, inclusive of any
retransmission of said CTN Content, absent the separate written
agreement of both parties. After May 1998, Turner shall have no
responsibility whatsoever to encode, distribute or otherwise process
any CTN Content for the Network.
(c) Delivery. Turner shall deliver the Programs and the CTN Content
--------
(during the Interim Period only) to CTN for distribution on the
Network on the dates set forth on the Delivery Schedule attached
hereto as Exhibit "X' and incorporated herein by reference. During
the Interim Period, Turner shall deliver the Programs, along with any
CTN Content, to CTN for daily (school day only) broadcast prior to the
scheduled air time via internet feed (or other mutually acceptable
means) to the Hughes satellite facilities in Germantown, Maryland for
CTN's subsequent distribution to the Network Facilities.
After the Interim Period, Turner shall deliver the Programs to CTN on
a daily school day basis prior to the scheduled air time on a mutually
agreed upon schedule via fiber or other appropriate means of delivery
selected by Turner to the
-2-
<PAGE>
Crawford Production facility in Atlanta, Georgia, or such other
location as directed by CTN so long as CTN agrees to pay any cost
differential to Turner associated with the alternate place of
delivery, for CTN's inclusion on the Network and distribution to the
Network Facilities. CTN shall provide Turner a commercially reasonable
period of time to switch to an alternate location should CTN elect to
use a facility other than Crawford so that Turner can make all
necessary arrangements.
(d) In addition, Turner agrees to provide CTN one (1) crew day (up to five
(5) hours) per month for use by CTN in producing the CTN Content so
long as CTN provides Turner seven (7) days' advanced written notice of
the need for such crew and with the express understanding that the
crew will be made available in the Atlanta metropolitan area only. In
addition, Turner will provide a maximum of five (5) hours edit time
per month for use by CTN in the production of the CTN Content. Such
edit time will include use of an editor and facilities at times and
locations designated by Turner in its reasonable sole discretion.
Neither the production nor the edit time will accumulate from month to
month; accordingly, such time will be forfeited if CTN fails to use
such services in any given month.
II. CTN Obligations
---------------
(a) CTN Content. The CTN Content provided by CTN hereunder may include
-----------
music videos, commercials and other programming elements for
distribution on the Network as CTN deems appropriate; provided,
however, CTN agrees that the CTN Content shall be generally consistent
with the production quality and journalistic integrity of the Programs
and in compliance with all applicable laws, rules and regulations. At
Turner's discretion, certain CTN Content may be included in the
Programs. CTN shall be solely responsible for providing a host and
graphics for any CTN Content at its sole cost and such person shall
have no right whatsoever to represent himself or herself as a
representative or employee of Turner or any of its affiliates. It is
further agreed that CTN may, at its sole cost, secure an anchor to
work with Turner to host the segments contained in the Programs at no
charge to Turner, subject to Turner's reasonable approval. Subject to
the details in Paragraph I above, CTN shall be solely responsible for
the CTN Content including the production thereof (and all rights,
licensing, clearance and payment issues related thereto), the assembly
of the same with the Programs, and distribution of the Network to the
Network Facilities.
(b) Distribution of CTN Content. During the Interim Period, CTN shall be
---------------------------
solely responsible for providing the CTN Content to Turner in a timely
manner for encoding and distribution to the Hughes facility.
(c) Reception and Re-Distribution to Network Facilities. During the
---------------------------------------------------
Interim Period, CTN shall be solely responsible for the reception of
Programs and CTN Content at the Hughes NOC and all equipment and costs
related thereto. Following the
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<PAGE>
Interim Period and throughout the remainder of the Term, CTN shall be
solely responsible for delivering any CTN Content to the Crawford
facility or any alternate facility selected by CTN as contemplated by
Paragraph I(c) above. At all times during the Term, subject to
Turner's performance of its delivery obligations hereunder, CTN shall
be responsible for assembling the Network and distributing the same to
the Network Facilities, as well as all costs associated with the
foregoing activities.
(d) Quality of Signal. It shall be CTN's responsibility to ensure that
-----------------
the Network signal meets generally accepted broadcast industry
standards for DBS such that the signal provided to the Network
Facilities is generally consistent with the quality of signal provided
by Turner (excluding any HDTV standards) for its other cable
programming services.
(e) Installation of Network Facilities. Subject to Turner's express
----------------------------------
distribution obligations set forth in Paragraph l(c) above, CTN shall
be solely responsible for the installation of all equipment necessary
to distribute and exhibit the Network at the Network Facilities as
contemplated hereunder. CTN shall use its reasonable best efforts to
use first rate quality equipment and shall include a sound system
sufficient to deliver a clear and audible signal to the intended
viewing area. It is expressly understood that CTN shall have no
rights whatsoever to use any Turner Marks on the television monitors
or other equipment installed by or on behalf of CTN at the Network
Facilities.
(f) Encoding and Related Equipment. CTN has provided Turner with certain
------------------------------
MPEG encoding and related equipment necessary for Turner's performance
of its obligations hereunder, which equipment is identified on
Schedule I attached hereto ("CTN Equipment"). CTN shall maintain all
such CTN Equipment in good working order throughout the Term and shall
repair or replace any m functioning equipment in a timely manner upon
notice from Turner. Turner shall not be responsible for any delays
caused by problems with the CTN Equipment. After the Interim Period,
Turner shall return the CTN Equipment to CTN in substantially the same
condition CTN delivered to Turner, normal wear and tear excepted.
III. Representations and Authorizations
----------------------------------
(a) By CTN:
------
CTN represents and warrants to Turner: (i) that it is the owner and
operator of the Network; (ii) that it has the full power and authority
to execute, deliver and perform under this Agreement and to consummate
any and all transactions provided for herein; (iii) that the
execution, delivery and performance of this Agreement and the
consummation of any and all transactions contemplated by this
Agreement, and the fulfillment of and compliance with the terms and
conditions of this Agreement do not and will not violate or conflict
with, or
-4-
<PAGE>
constitute a material breach of or default under, any existing
contracts or commitments to which CTN is a party or by which it may be
bound; (iv) to the best of CTN's knowledge, neither the CTN Content
nor TPNI's use and distribution of the same as authorized hereunder
will violate or infringe any third party's right of copyright,
trademark, service mark, patent or other proprietary rights or
constitute to defamation or invasion of privacy or publicity rights of
any person or entity; and (v) it will secure all rights and licenses
from and make all necessary payments to any third party in connection
with use of the CTN Content as contemplated hereunder (including,
without limitation, guild payments).
(b) By Turner:
---------
Turner represents and warrants to CTN: (i) that it has the full power
and authority to execute, deliver and perform under this Agreement and
to consummate any and all transactions provided for herein; (ii) that
the execution, delivery and performance of this Agreement and the
consummation of any and all transactions contemplated by this
Agreement, and the fulfillment of and compliance with the terms and
conditions of this Agreement do not and will not violate or conflict
with, or constitute a material breach of or default under, any
existing contracts or commitments to which Turner is a party or by
which it may be bound; (iii) that, to the best of Turner's knowledge,
the Programs (excluding any CTN Content therein) and CTN's use thereof
as authorized hereunder do not violate any third party's right of
copyright, trademark, service mark, patent or other proprietary rights
or constitute a defamation or invasion of privacy or publicity rights
of any person or entity; (iv) it will secure all rights and licenses
from and make all necessary payments to any third party in connection
with the use of the Programs (excluding any CTN Content included
therein) as contemplated hereunder (including guild payments, but
expressly excluding any public performance licenses or payments); and
(v) that the non-dramatic performing rights to each musical
composition in each Program (excluding any CTN Content included
therein) are: (a) controlled by ASCAP, BMI or SESAC; (b) controlled by
Turner to the extent necessary to permit CTN's use of the Programs as
authorized hereunder; or (c) in the public domain. To the extent
public performance rights and clearances to musical compositions and
recordings necessary for CTN's use of the Programs are not controlled
by Turner, CTN acknowledges that such public performances rights and
clearances are not granted herein, and CTN shall, at its sole cost and
expense, secure all public performance licenses (and pay related fees)
necessary for the exhibition by CTN of each musical composition
contained in any Program.
IV. Term
----
The term of this Agreement shall commence on the Effective Date and shall
continue for a period of five (5) years through December 31, 2002 (the
"Term").
-5-
<PAGE>
V. Fee and Payment Schedule
------------------------
(a) Fee. As consideration for the Programs supplied to CTN under this
---
Agreement, CTN agrees to pay Turner an annual fee of Five Hundred
Thousand Dollars ($500,000) (the "Fee") during each of the first three
(3) years of the Term, and an annual Fee of Seven Hundred Thousand
Dollars ($700,000) in years 4 and 5 of the Term.
(b) Payment. The annual Fee shall be payable in twelve (12) equal monthly
-------
installments, with the first monthly payment payable on January 10,
1998, and each monthly installment thereafter payable on or before the
10th day of each subsequent calendar month during the Term.
(c) Nonpayment. In addition to its other contractual rights and rights at
----------
law or in equity, in the event of CTN's continuing failure after
written notice to pay Turner the Fee payable hereunder for a period of
forty-five (45) days after the due date, Turner may, at its
discretion, suspend performance of its obligations hereunder until
full payment has been received.
VI. Ownership
---------
(a) Ownership and Copyright of the Programs. It is expressly acknowledged
---------------------------------------
and agreed that, as between CTN and Turner, Turner shall own and
retain, throughout the universe, and in perpetuity, the exclusive
ownership of all rights and title in and to the Programs and the
Turner Marks, including all rights of trademark, copyright and
copyright renewal. Turner's exclusive ownership and control of the
Programs and Turner Marks shall be absolute and without any further
obligation whatsoever to CTN or to any third party except as
specifically provided herein. All goodwill associated with the
Programs and the Turner Marks and the distribution of the same on the
Network shall inure to the sole benefit of Turner.
It is expressly acknowledged and agreed that, as between CTN and
Turner, CTN shall own and retain, throughout the universe, and in
perpetuity, the exclusive ownership of all rights and title in and to
the CTN Content and the CTN Marks, including all rights of trademark,
copyright and copyright renewal. CTN's exclusive ownership and control
of the CTN Content and CTN Marks shall be absolute and without any
further obligation whatsoever to Turner or to any third party except
as specifically provided herein. All goodwill associated with the CTN
Content and the CTN Marks and the distribution of the same on the
Network shall inure to the sole benefit of CTN.
(b) Turner Content License. Turner hereby grants to CTN a license to
----------------------
distribute the Programs and any Turner Marks contained therein on the
Network during the scheduled air dates solely for display on
television monitors located in the
-6-
<PAGE>
Network Facilities without the assessment of any viewing charge or
access fee. CTN shall air the Programs in their entirety as delivered
by Turner and shall not edit, insert material into, or otherwise alter
the material contained in the Programs. CTN may not exhibit, display,
distribute or otherwise use any Programs or any portion thereof on
the Network in any respect after the date upon which such Programs are
initially exhibited without the written consent of Turner. In addition
to the foregoing, CTN may also use portions of the Programs and the
designated Turner Marks to advertise or promote the Network, subject
to Turner's prior written approval as to the specific use. Such
promotional rights may include use of limited, non-time sensitive
portions of the Programs on a promotional CTN website subject to
Turner's prior written approval. Notwithstanding the foregoing, during
the Term, CTN may use Turner's name and/or Mark solely to identify
Turner as a programming source for the Network in its promotional
materials without Turner's prior written consent as to each such use
with the understanding that such use shall not be derogatory to or
critical of Turner or its affiliates and must be consistent with the
terms of the relationship established hereunder ( M.., no
endorsement).
No other rights in or to the Programs or the Turner Marks are granted
or implied to CTN by this Agreement. Turner hereby reserves all rights
in and to the programming footage and other material included in the
Programs (excluding any CTN Content) and, hereby reserves the right to
exercise, market, exploit or otherwise dispose of such rights in any
manner it deems appropriate without limitation or restriction;
provided, however, in no event will Turner use any customized
programming elements created specifically for CTN or the Network for
any purpose other than marketing or promotional activities without the
prior approval of CTN.
(c) Withdrawal Rights. Turner may, in its absolute discretion,
-----------------
permanently or temporarily withdraw any Program or any portion thereof
from distribution on the Network by written notice to CTN at any time
as it deems necessary or advisable in the exercise of its sound
business judgment and any such withdrawals, interruption, delay or
interference shall not constitute or be deemed to be a breach of this
Agreement; provided, however, that Turner agrees to use its best
efforts to deliver a substitute Program as soon as possible.
In the event Turner withdraws (and fails to replace) or fails to
deliver any Programs in a timely manner, Turner shall, upon the
written demand of CTN, reimburse or credit CTN for: (i) the pro-rata
portion of the Fee allocable to such Program; and (ii) actual lost
advertising revenue from advertising time which actually has been sold
with respect to such Program to the extent make goods are unavailable,
provided that CTN can document and verify such loss to Turner's
reasonable satisfaction.
-7-
<PAGE>
VII. Advertising Time and Content
----------------------------
Except as provided in this paragraph, CTN shall have the right to sell all
advertising time on the Network and to retain all revenue derived
therefrom. Nonetheless, CTN will use reasonable efforts to avoid placing
any advertising on the Network in or adjacent to the Programs for any
twenty-four hour news network. Notwithstanding CTN's control of the
advertising on the Network, it is expressly acknowledged and agreed that
CTN shall provide Turner with two (2) thirty second promotional spots per
day on the Network (at no charge) for promotional advertising for products
or services or cable networks owned and/or operated by Time Warner. Turner
will receive one of the promotional spots in the morning daypart and the
other in the afternoon daypart, with rotational placement (as scheduled by
CTN) within each daypart so as to provide exposure during different time
slots within each daypart. CTN further agrees to provide Turner additional
thirty (30) second spots on the Network (at no charge) for its promotional
spots on an as available basis out of advertising inventory (up to a
maximum of one (1) thirty second spot per hour). CTN will make available
to Turner upon reasonable request reports tracking the -placement of all
such promotional spots on the Network. Finally, without assuming any
obligation whatsoever, from time to time during the Term, CTN will explore
the possibility of providing additional promotional opportunities to
Turner in other media vehicles utilized by CTN in connection with the
Network.
VIII. Exclusivity, Right of First Negotiation
---------------------------------------
CTN hereby agrees that Turner shall be the exclusive programming supplier
of news programming and a non-exclusive provider of sports and cartoon
programming for the Network during the Term of this Agreement; provided,
however, that such exclusivity shall not prevent CTN from obtaining and
exhibiting local news segments produced by colleges and universities.
Furthermore, though Turner is a nonexclusive provider of sports
programming for the Network, CTN agrees that Turner shall provide the
majority of all sports news programming Q e., daily sports news reporting
with an anchor) on the Network.
CTN hereby grants Turner a right of first negotiation to continue as a
news and sports programming provider for the Network after the Term of
this Agreement. Accordingly, at least sixty (60) and no more than one
hundred twenty (120) days prior to the expiration of the Term, CTN shall
notify Turner in writing of its intent to include news and/or sports
programming on the Network after the Term and shall negotiate in good
faith with Turner on an exclusive basis for a period of not more than
thirty (30) days from Turner's receipt of such notice to arrive at an
agreement pertaining to Turner's continuing as a news and sports
programming supplier for the Network. If CTN and Turner are unable to
reach an agreement within said thirty (30) day period, CTN may then pursue
negotiations with a third party. The foregoing right of first negotiation
shall be null and void and of no further force or effect if this Agreement
is terminated early in accordance with its terms.
-8-
<PAGE>
IX. Indemnification
---------------
(a) By Turner. Turner hereby agrees to indemnify, defend, protect, save
---------
and hold harmless CTN, and its agents, officers, directors, employees,
successors, licensees, assignees and attorneys, from and against, any
and all liabilities, losses, damages, costs or expenses of any nature
whatsoever, including, without limitation, reasonable attorneys' fees
(including, without limitation, an applicable share of in-house
attorneys' costs and expenses) and court costs, whether fixed or
contingent, threatened or actual, known or unknown, liquidated or
unliquidated, of any kind or nature whatsoever (collectively,
"Claims"), imposed on, incurred by, or asserted against CTN or the
foregoing individuals arising out of or related to a third party claim
that (i) the Programs (excluding any CTN Content included therein)
infringe or violate any copyright, trademark, patent or other
intellectual property right of any third party or are considered
libelous or defamatory to a third party; (ii) any Turner Mark
infringes any copyright, trademark, patent or other intellectual
property fight of any third party; (iii) Turner is in breach or
alleged breach of any representation, warranty, covenant or obligation
by it contained in or made pursuant to this Agreement; (iv) the
Programs (excluding any CTN Content contained therein) fail to comply
with any applicable laws, rules or regulations; or (v) Turner's
activities hereunder caused any bodily injury and/or property damage.
(b) By CTN. CTN hereby agrees to indemnify, defend, protect, save and
------
hold harmless Turner and its agents, officers, directors, employees,
successors, licensees, assignees and attorneys, from and against, any
and all Claims imposed on, incurred by, or asserted against Turner or
any of the foregoing individuals arising out of or related to a third
party claim that (i) the CTN Content infringes or violates any
copyright, trademark, patent or other intellectual property right of
any third party or are considered libelous or defamatory to a third
party; (ii) any CTN trademark, service mark, tradename or logo
provided by CTN for the Network infringes any copyright, trademark,
patent or other intellectual property right of any third party; (iii)
the Network and/or CTN's distribution of the same fails to comply with
any applicable laws, rules or regulations (except to the extent such
noncompliance relates solely to the Programs); (iv) any equipment or
installation activities related to the distribution and/or exhibition
of the Network caused any bodily injury and/or property damage; or (v)
CTN is in breach or alleged breach of any representation, warranty,
covenant or obligation by it contained in or made pursuant to this
Agreement.
X. Termination. This Agreement may be terminated as follows:
-----------
(a) By Either Party. Either Party may terminate this Agreement if the
---------------
other party is in material default in the performance of its material
obligations hereunder or in material breach of its representations,
warranties and/or covenants hereunder if
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<PAGE>
such default or breach remains uncured after receipt of thirty (30)
days' written notice from the non-defaulting party.
(b) By Turner. Turner may terminate this Agreement:
---------
(i) on ninety (90) days prior written notice to CTN if the quality
and/or content of the CTN Content or the advertising included on
the Network significantly deteriorates from the current quality,
or if the operations of the Network are significantly below the
level of the current operations, so as to have a material adverse
affect on the goodwill of Turner or one of its programming
affiliates. For purposes of this Paragraph, significant
deterioration in quality and/or content of the CTN Content shall
mean changes that are objectionable such that colleges and
universities are canceling their affiliation with CTN and which
are materially below the quality of any programming currently
being provided by Turner or one of its programming affiliates; or
(ii) on ninety (90) days written notice to CTN in the event of a
proposed CTN assignment to a Turner "Competitor" as defined in
Paragraph XII(g) below.
(c) By CTN. CTN may terminate this Agreement:
------
(i) on ninety (90) days written notice to Turner if the quality
and/or content of the Programs (taken as a whole in each case)
delivered by Turner significantly deteriorates from the current
quality of the Programs. For purposes of this Paragraph,
significant deterioration in quality of the Programs shall mean
changes that are materially below the quality of any programming
currently being provided by Turner or one of its news programming
affiliates; or
(ii) upon the effective date of any sale or other disposition of
substantially all of the CTN assets or CTN stock to any third
party or the merger of CTN with any third party entity
unaffiliated with CTN, by ninety (90) days prior written notice
to Turner, provided that, CTN pays Turner an aggregate amount
equal to nine (9) monthly payments at the applicable Fee rate for
the period commencing on the effective date of termination or the
amount representing the unpaid portion of the aggregate Fee
payable through expiration of the Term, whichever is less. It is
expressly agreed that such amount shall be deemed to be
liquidated damages, not a penalty, for CTN's early termination of
this Agreement. It is further expressly agreed and understood
that Turner shall have no production or other obligations to CTN
as of the effective termination date.
(d) Effect. In the event of termination of this Agreement by Turner for a
------
CTN breach or pursuant to Paragraph X(b)(i) above, Turner shall (in
addition to its other legal
-10-
<PAGE>
and equitable rights and remedies available) be entitled to receive
payment for all outstanding costs and expenses incurred by Turner in
connection with producing the Programs to date, as well as all actual
out-of-pocket closing costs associated with terminating production and
delivery of the Programs to CTN (such costs to include, without
limitation, severance payments, if necessary, in accordance with
Turner standard policies, and remaining capital costs outstanding),
upon presentment of proper documentation; provided, however, that in
no event shall CTN's payment pursuant to this provision exceed the
amount representing the unpaid portion of the aggregate Fee payable
through expiration of the Term. It is expressly understood and agreed
that such payment shall be deemed to be liquidated damages, not a
penalty, for CTN's failure to fulfill its obligations hereunder.
XI. Non-Compete. During the term of this Agreement, Turner agrees that it will
-----------
not provide a customized news product developed specifically for college
students to any college or university for exhibition on a place-based
television network or program service that is directly or indirectly
competitive with the Network. Without modifying the foregoing, it is
expressly understood and agreed that the delivery of Turner-affiliated
programming services to colleges and universities in the normal course of
business without further customization shall not violate the foregoing
covenant. Furthermore, Turner's non-compete shall continue for a period of
six (6) months following any termination of this Agreement by CTN as a
result of a material breach by Turner or pursuant to Paragraph X(c)(i) of
this Agreement.
XII. General Provisions
------------------
(a) Force Majeure. Neither party shall be liable to the other for any
-------------
failure to perform under this Agreement caused by or due to an event
of force majeure, such as any act of God, inevitable accident, fire,
lockout, strike or other labor dispute, riot or civil commotion, act
of public enemy, failure of transportation facilities, enactment,
rule, order or act of government or governmental instrumentality
(whether domestic or international and whether federal, state or
local, or the international equivalent thereof), failure of technical
facilities, including satellite failures or feed failures, or any
other cause of any nature whatsoever beyond the control of the Parties
hereto which was not avoidable.
(b) Notices. All notices which either party hereto is required or may
-------
desire to give to the other party hereunder shall be in writing and
shall be given either by personal delivery (including by means of
overnight delivery services), telegram, telex (toll prepaid), telecopy
or other electronic means with confirmation of delivery or by
registered or certified mail (postage prepaid). Such notices shall be
deemed given on the date delivered, telegraphed, telexed, telecopied
or otherwise delivered by electronic means or, if mailed, on the date
received. Until further notice in accordance with this provision, all
notices given hereunder shall be addressed to Turner and CTN as
follows:
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<PAGE>
TO TURNER:
---------
Turner Private Networks, Inc.
Ms. Deborah Cooper
One CNN Center
Box 105366
Atlanta, Georgia 30303
Telephone: (404) 827-4820
Facsimile: (404) 827-4434
cc: Office of the General Counsel
Turner Broadcasting System, Inc.
One CNN Center, 13 North
P.O. Box 105366
Atlanta, Georgia 30348-5366
Attn.: General Counsel
Telephone (404) 827-3470
Facsimile (404) 827-1995
TO CTN:
------
College Television Network, Inc.
5784 Lake Forrest Drive
Suite 275
Atlanta, Georgia 30328
Attn.: Mr. Jason Elkin
Telephone (404) 256-4444
Facsimile (404) 257-9517
cc: Neil H. Dickson, Esq.
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, Georgia 30326
Telephone (404) 233-7000
Facsimile (404) 365-9532
(c) Severability. Nothing contained in this Agreement shall be construed
------------
to require the commission of any act contrary to law, statute,
ordinance, order or regulation, and wherever there is any conflict
between any provision of this Agreement and any of the foregoing,
contrary to which the Parties hereto have no legal right to contract,
such law, statute, ordinance, order or regulation shall prevail;
provided, however, in such event: (a) the provision of this Agreement
so affected shall be limited only to the extent necessary to permit
compliance with the minimum legal requirement; (b) no other provisions
of this Agreement shall be affected thereby; and (c) all such other
provisions shall continue in full force and effect. The
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<PAGE>
Parties shall negotiate in good faith to replace any invalid, illegal
or unenforceable provision with a valid provision, the effect of which
comes as close as possible to that of such invalid, illegal or
unenforceable provision.
(d) Further Documents. Each party hereto shall execute any and all
-----------------
further instruments which either party may deem reasonably necessary,
desirable or proper to carry out the purposes of this Agreement.
(e) Prior Agreements, Waivers, Paragraph Headings, Modification. This
-----------------------------------------------------------
Agreement supersedes all prior agreements and understandings between
the Parties hereto, whether oral or written, pertaining to the subject
matter hereof No waiver of any term or condition of this Agreement
shall be construed as a waiver of any other term or condition hereof,
nor shall any waiver of any default under this Agreement be construed
as a waiver of any other default hereunder. The descriptive headings
of the paragraphs of this Agreement are for convenience only and do
not constitute a part of this Agreement. This Agreement may be
modified only by a written instrument executed by the Parties hereto.
(f) Governing Law. This Agreement shall in all respects be governed by,
-------------
and construed in accordance with, the laws of the State of Georgia
applicable to contracts.
(g) Assignments. Neither Party shall voluntarily assign any of its rights
-----------
or obligations hereunder, without the prior written consent of the
other party; however, in the event of a merger or a sale of all or
substantially all of the assets or stock by a Party or its
shareholders, such Party may assign this Agreement to such entity
without the prior approval of the other Party upon ninety (90) days
advance written notice to the other Party and subject to the other
Party's termination right hereunder if the proposed assignee is a
"Competitor." For purposes of this provision and the termination
right, a "Competitor" shall be defined as any entity reasonably deemed
to compete with the primary business of CTN, in the case of a Turner
assignment, or any entity in the business of providing national news
and/or sports programming in the United States, in the case of a CTN
assignment. Any attempted assignment, delegation or transfer in
derogation hereof shall be null and void. Subject to the foregoing,
this Agreement shall be binding upon the successors and assigns of the
Parties.
(h) Confidentiality. During the term of this Agreement and for a period
---------------
of three (3) years thereafter, neither CTN nor Turner shall disclose
to any third party any information regarding the terms and conditions
of this Agreement or any other confidential, non-public information
disclosed by a party to the other party during the Term, except: (i)
to the minimum extent necessary to comply with the law or valid court
order; (ii) as part of its normal reporting or review procedure to its
board members, shareholders, lenders, auditors and attorneys; or (iii)
in order to enforce its rights or perform its obligations under this
Agreement.
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<PAGE>
(i) Publicity. Any information released to the public regarding this
---------
Agreement or the matters covered hereby, including, without
limitation, press releases, must be agreed upon and approved by both
Parties in writing in advance as to timing, content and the necessity
therefor. Notwithstanding the foregoing, each Party may disclose
information related to this Agreement to its owners or investors as
required under applicable securities laws.
(j) Survival. All representations, warranties and indemnities contained
--------
herein or made by either party in connection herewith shall survive
the execution, delivery, suspension, expiration and termination of
this Agreement or any provision hereof.
(k) Relationship of Parties. Nothing herein shall be deemed to create an
-----------------------
employment, joint venture, agency or partnership relationship between
the parties hereto. The Parties hereto acknowledge and represent that
they are independent contractors with respect to each other.
COLLEGE TELEVISION NETWORK, INC. TURNER PRIVATE NETWORKS, INC.
By: /s/ Jason Elkin By: /s/ Deborah Cooper
---------------------------- --------------------------
Title: Chief Executive Officer Title: Senior Vice President
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<PAGE>
EXHIBIT "A"
DELIVERY SCHEDULE
It is understood that Turner shall, on average, provide 154 Programs per
school year. Such Programs shall be provided for each non-holiday school day.
It is understood and agreed that no Programs shall be produced or delivered
during the months of June or July of any year of the Term. Delivery shall begin
in mid-August and continue through Mid-May (with the exception of holiday
breaks), with exact dates to be agreed upon by the parties. Delivery of each
Program is currently scheduled to take place on the day before the scheduled air
date; such time may be changed by the mutual agreement of the Parties.
Specifically, after the Interim Period, Turner will use commercially reasonable
efforts to deliver one (1) general news segment and one (1) sports segment each
morning for exhibition that afternoon on the Network, with the remaining general
news segment and sports segment to be delivered that afternoon for exhibition
the following morning on the Network.
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<PAGE>
SCHEDULE 1
CTN EQUIPMENT
See Attached
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<PAGE>
. Goldstar VGA monitor model 1423 Plus, s/n MC-30901684
. SONY video monitor model PVM-1350, s/n 2000927
. SONY video cassette player model UVW-1600, s/n 10827
. Optimus stereo amplified speakers
. Archer four-input A/V switcher
. Archer one-to-three video distribution amplifier
. Cisco 2524 router with DSU/CSU T1 module, 14ft RJ45 patch cable
. Henry Systems Match Box impedance matching interface adapter
. IBM Server 320 model 8640 OYO, s/n 2363527
1.2 GB Quantum Fireball hard drive
Optibase MPEG Lab Suite Encoder, s/n 1500694
Keyboard and Mouse
Optibase PCMotion Decoder, s/n 1251801
Artisoft AE-2 Ethernet controller card
IBM 14.4 modem
Hughes DirecPC adapter, s/n 027008
Diamond Stealth 64 VGA adapter
BusLogic PCI SCSI-2 adapter
9 GB Micropolis hard drive model 1991 AV
2 GB Micropolis hard drive model 3221 AV
Colorado Jumbo 250 QIC-80 tape drive
Pioneer 4X CD-ROM drive, IDE interface
. Mastercom Audio Interactive, Stereo MultiBand, Dynamics Processor Model MDX
4000, s/n 61139825
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<PAGE>
EXHIBIT 10.5
INSTALLATION AGREEMENT (PHASE I)
---------------------------------
THIS INSTALLATION AGREEMENT (the "Agreement") made and entered into as of the
13th day of March, 1998, by and between COLLEGE TELEVISION NETWORK, INC., a
Delaware corporation ("CTN"); and CRAWFORD COMMUNICATIONS, INC., a Georgia
corporation ("CCI").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, CTN operates a college/youth oriented music video network and is in
the process of converting its Kiosk/file server based network to a real-time,
digital satellite distribution system (the "Network"); and
WHEREAS, CTN requires the gathering of site survey information and the
installation and pointing of two hundred fifty-three (253) television receive
only reflectors with Ku Band feeds, together with related mounts, mounting,
mounting pads for 1.0m and 1.2m antennas, LNBs, conduit (if required), cabling,
grounds and snow cover (if required) (individually, a "TVRO" and collectively,
the "TVROs"); and
WHEREAS, CTN desires to retain CCI to perform the site surveys and to procure
and install two hundred fifty-three (253) TVROs and CCI desires to accept such
appointment;
NOW, THEREFORE, FOR AND IN CONSIDERATION OF the mutual promises herein
contained, and for other good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto,
each intending to be legally bound, do hereby agree as follows:
I. APPOINTMENT. CTN hereby appoints CCI to procure the TVROs and perform the
-----------
services specifically set forth herein (collectively the "Phase I Services") and
CCI hereby accepts such appointment and agrees to perform the Phase I Services
in accordance with the terms and conditions set forth herein. An itemization of
the Phase I Services is set forth on EXHIBIT "A" attached hereto and by this
reference made an integral part hereof.
2. INSTALLATION OF TVROS. CCI hereby agrees to install the two hundred
---------------------
fifty-three (253) TVROs at the locations (individually, a "Site" and
collectively, the "Sites") set forth on EXHIBIT "B" attached hereto and by this
reference made an integral part hereof, at the times established therefor by
CTN. CCI hereby acknowledges that the TVRO size for each Site, as well
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<PAGE>
as any required snow covers, are set forth on EXHIBIT "B" attached hereto. CCI
further acknowledges that fifty-seven (57) of the Sites will require RG-6 cables
to be installed from the TVRO to the primary video distribution location (not to
exceed 200 feet per Site), which Sites are identified on EXHIBIT "B" attached
hereto under the column "Needs Cable", and that as many as thirteen (13)
additional Sites may require such cabling. CCI acknowledges that the Sites set
forth on EXHIBIT "B" may change during the term of this Agreement, by deleting
certain of the Sites and by the addition of certain new Sites. In that event,
the parties agree that the installation cost shall be adjusted, upwards or
downwards, by Six Hundred Three and No/100 Dollars ($603.00) per Site added or
deleted during the installation process.
3. TRANSPONDER. CCI acknowledges that the TVROs must be installed to utilize
-----------
fractional Ku Band capacity (a) on the GE-3 Satellite, Transponder number 20,
located at 87 degrees; and (b) in the event of a satellite failure, after being
"repeaked" at CTN's expense but without relocation of the TVRO, on the GE-1
Satellite, which is designated as the back-up satellite for the Network, located
at 103 degrees west longitude.
4. INSTALLATION SCHEDULE. Subject to the provisions of PARAGRAPH 13 hereof,
---------------------
CCI hereby agrees to complete installation of the two hundred fifty-three (253)
TVROs no later than May 5, 1998. It is anticipated that CCI shall utilize
twenty (20) or more teams of qualified engineers to provide the installation
services. If there is currently more than one (1) satellite dish installed for
multiple systems in the same building, all efforts shall be made to install only
one (1) new TVRO to feed all existing systems. If, during the course of
installation, any discrepancies are found with existing TVRO installations, all
efforts shall be made to inform CTN and correct said discrepancies while on
Site. If additional work is required to correct said deficiencies, such
additional work shall be billed as set forth in PARAGRAPH 7 below. Upon
completion of the installation, Site audits shall be performed by CCI at up to
ten percent (10%) of the Sites, to be mutually agreed upon by CTN and CCI.
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<PAGE>
5. SITE SURVEYS; PHASE II ACTIVITIES. CCI shall cause Site surveys to be
---------------------------------
completed at each Site at the time of installation of the TVRO at such Site.
The Site surveys shall be in a form substantially similar to that attached
hereto as EXHIBIT "C" and by this reference made an integral part hereof. The
Site survey shall be completed in such a way that it will allow the effective
planning and future implementation of Phase II installation of IRDs, control
computers, RF distribution systems, enclosures for TV monitors as well as
necessary receive, distribution and control equipment, preparation of Site and
infrastructure including power, cable runs, structures for mounting monitors,
enclosures and equipment and the removal of existing Direct PC, Kiosk and non
standard TVs from each Site (which activities are hereinafter collectively
referred to as the "Phase II Activities"). A copy of each Site survey, together
with the Site completion sign-off, shall be sent to CTN within five (5) days of
CCI's completion of the survey and TVRO installation. CCI shall perform the
Phase II Activities if and only to the extent that CCI and CTN shall have
entered into a further written agreement providing for the terms, conditions and
compensation to be paid to CCI for the performance of such Phase II Activities.
6. COMPENSATION. CTN agrees to pay CCI the sum of Five Hundred Thousand
------------
Seventy-Three and No/100 Dollars ($500,073.00) (the "Contract Cost"), which
Contract Cost is itemized on EXHIBIT "D" attached hereto and by this reference
made an integral part hereof. The Contract Cost is comprised of two (2)
components, the TVRO Subtotal in the amount of Two Hundred Sixty-Eight Thousand
Two Hundred Sixty-Eight and No/100 Dollars ($268,268.00) and the purchase price
for 259 IRDs (the "IRD Purchase Price"), being Two Hundred Thirty-One Thousand
Eight Hundred Five and No/100 Dollars ($231,805.00);
(a) The TVRO Subtotal shall be paid as follows:
(i) Thirty percent (30%) of the TVRO Subtotal (Eighty Thousand Four
Hundred Eighty and 40/100 Dollars ($80,480.40)) shall be paid
upon execution of this Agreement;
(ii) Fifty-five percent (55%) of the TVRO Subtotal shall be paid at
the time that the TVROs are shipped to the relevant Site
installation contractor, on a monthly basis. On the fifth (5th)
day of each calendar month commencing in April, 1998 and
continuing until the installations are completed, CCI shall
provide an invoice to CTN which summarizes TVROs shipped during
the previous month and the amount to be paid by CTN therefor.
CTN shall pay the invoice within fifteen (15) days of the date
the invoice is received;
(iii) Fifteen percent (15%) of the TVRO Subtotal shall be paid to CCI
upon CTN's receipt of a completed Site survey for each installed
TVRO, on a per Site basis as follows: on the fifth (5th) and
twentieth (20th) days of each calendar month commencing in
April, 1998, CCI shall invoice CTN based upon the
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<PAGE>
completed Site surveys, together with Site completion sign-offs,
which CCI believes CTN has received since the date of the last
invoice and the amount to be paid by CTN therefor. CTN shall pay
the invoice within fifteen (15) days of the date the invoice is
received.
(b) The Purchase Price for the IRDs shall be paid as follows (which
coincides with the payment terms from the manufacturer to CCI):
(i) Fifty percent (50%) of the IRD Purchase Price shall be paid
upon execution of this Agreement;
(ii) Fifty percent (50%) of the IRD Purchase Price shall be paid
at the time that the IRDs are shipped to the relevant Site
installation contractor, on a monthly basis. On the fifth
(5th) day of each calendar month commencing in April, 1998
and continuing until the installations are completed, CCI
shall provide an invoice to CTN which summarizes IRDs
shipped during the previous month and the amount to be paid
by CTN therefor. CTN shall pay the invoice within fifteen
(15) days of the date the invoice is received.
(c) CTN shall pay all freight charges for shipping to and from each
Site and/or other third party locations designated by CCI. All overnight and
second day deliveries must be pre-approved by CTN, in writing.
(d) All invoices remitted by CCI to CTN shall be transmitted by
facsimile, with confirmed transmission report, and mailed by U.S. Mail on the
same day as the invoice was transmitted by facsimile.
(e) Any amounts due to CCI that are not paid by CTN within fifteen
(15) days of the date of receipt of any invoice shall accrue interest from the
due date at a rate of one and one-half percent (1 1/2%) per month or at the
highest lawful rate from the date such amounts were first due until they are
paid, whichever is the lesser of these two rates. At any time that CTN shall be
delinquent in its payment obligations to CCI, CCI shall, in addition to all
other legal rights and remedies available to it, have the right to suspend
services under this Agreement until CTN shall become current with its
obligations hereunder. Any period of time during which CCI suspends services
shall be deemed to extend, on a day by day basis, all times for the performance
of its obligations hereunder.
(f) Notwithstanding the foregoing, interest shall not accrue, CCI
may not suspend services and it shall not be a default hereunder if CTN has not
paid the invoice when due based upon a legitimate, good faith dispute between
the parties relating to the amount of the invoice ,the services or goods
provided thereto or the lack of sufficient documentation, and CTN has
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<PAGE>
notified CCI in writing as to its claim and specified the nature of the dispute,
and the parties shall at all times thereafter diligently and in good faith
attempt to resolve such dispute with CCI.
7. ADDITIONAL SERVICES. In addition to performing the Phase I Services,
CCI shall provide the following services and materials to CTN if requested on or
before May 5, 1998, on an as requested basis, to CTN:
Service/Material Cost
---------------- ----
Labor not included in Basic Installation $50.00/hr
Work performed by outside contractors (i.e., roofers,
electricians, union or "must use" contractors) Cost plus 10%
Material and Labor for RG-6 PVC cable in excess of
13 additional Sites $80.00per Site
Material and labor for RG-6 PVC cable over 200 feet $1.00/ft
Material and labor for RG-6 plenum rated Teflon cable
under 200 feet $.42/ft
Material and labor for RG-6 plenum rated Teflon cable
over 200 feet $1.50/ft
Material and labor for PVC conduit over 30 feet $2.50/ft
Material and labor for wire molding $2.00/ft
Wall and pole mounts Cost plus 10%
Roof pads for 1.8 meter TVRO Cost plus 10%
Ballast required in excess of EXHIBIT "A" weight Cost plus 10%
IRDs (not exceeding 20 additional) $895 per IRD
Line equipment (i.e., line amp, power supply, and
power block) Cost plus 5%
Core drilling Cost plus 10%
-5-
<PAGE>
<TABLE>
<S> <C>
Physical Engineer drawings Cost
TVROs over 253 (if order placed prior per unit price on
to May 5, 1998 for not more than 13 additional TVROs) EXHIBIT "D"
Charge for Site visit where installation denied,
Site survey necessary for 1.8m TVRO or other
than NPRM needed for 1.0m or 1.2m TVRO installation $200.00
TVRO over 266 (if order placed prior to May 5, 1998) per unit price on
EXHIBIT "D", except
install cost is $683.00
except for 1.8m,
which will be $883.00
</TABLE>
CCI shall invoice CTN for such additional services on a monthly basis, on the
fifth (5th) day of each calendar month commencing in April, 1998 for services
rendered during the preceding month and CTN shall pay the amount shown within
fifteen (15) days of the date the invoice is received. In the event that CTN
does not make timely payment to CCI, then CTN shall be in default hereunder and
CCI shall be entitled to late fees and such further rights as are extended to it
pursuant to this Agreement, subject, in any event, to the provisions of
PARAGRAPH 6(F) hereof.
8. SUBCONTRACTS. CCI shall have no right to employ subcontractors to furnish
------------
any portion of the Phase I Services without the prior written consent of CTN,
which consent shall not be unreasonably withheld or delayed. As a condition to
approving any subcontractor, such subcontractor shall be required to maintain
workman's compensation insurance in such amounts as may be required by the State
in which such subcontractor operates and to provide, upon request to CTN or CCI,
Certificates of Insurance evidencing such fact. CTN hereby consents to CCI's use
of Com Services and Management of Marietta, Georgia as a CCI subcontractor.
Notwithstanding the foregoing, CCI shall remain responsible for the performance
of work by any approved subcontractors. CTN shall notify CCI of any workmen or
supervisory person who, in the opinion of CTN, is uncooperative, careless or
incompetent. CCI shall be allowed five (5) days from such notice to correct such
situation. In the event that such situation is not corrected, such person shall
be reassigned or removed by CCI upon CTN's written request and shall not be
reemployed to perform any work specified within this Agreement.
9. GENERAL PROCEDURES; WARRANTY.
----------------------------
(a) Within fourteen (14) days of the date of this Agreement, CCI shall
present a detailed project plan to CTN, detailing, among other things, the
proposed scheduling for installation of the TVROs by CCI. CCI shall give
weekly reports regarding the status of installations and
-6-
<PAGE>
outstanding invoices. Site installations shall be coordinated with CTN in order
that CTN may provide prior notice to client locations, as well as arrange Site
contacts, meeting times and locations. CTN and CCI shall each nominate a Project
Manager to oversee the performance of all services hereunder and such person
shall have operational authority for their respective companies for all purposes
under this Agreement.
(b) CCI hereby warrants all installation work shall be free from defects
in material and workmanship on the date that CTN completes the retrofit of its
current Network system and installation of the new system so that when such
retrofit and/or new installation is completed, the new system will be
operational. The parties hereto do hereby agree that the next step of
retrofitting and installation of the new Network system (called Phase II) is
intended to be performed by CCI and that if CCI performs such services, CCI's
warranty for such services shall encompass the work and services performed under
this Agreement. If any Site failures are experienced within that period, CCI
shall respond and dispatch service personnel within forty-eight (48) hours of
receipt of CTN's notification at no cost to CTN. CCI's obligation under this
warranty is limited to replacing or repairing, at its option, any equipment
proven to be defective in material or workmanship under normal use. Defective
products shall be returned to CCI to obtain warranty service or replacement.
Except as set forth herein, there shall be no further warranty of any kind,
whether express or implied, including any warranty of merchantability.
10. EQUIPMENT. All equipment identified on EXHIBIT "B" attached hereto shall
---------
be purchased by CCI at the direction of CTN, shall be new and of good quality
and CCI shall deliver all manufacturer's warranties to CTN with respect to said
equipment. Title to said equipment shall pass from CCI to CTN in the case of
the TVROs, at the time that CTN has made payment in full under PARAGRAPHS
6(a)(i) AND (ii) hereof, and in the case of the IRDs, after CTN has made payment
in full to CCI of the IRD Purchase Price. New equipment shall be accepted to
manufacturer's published specifications, even if such specifications are more
stringent than the FCC specifications. The acceptance test results for the
equipment shall be available for inspection by CTN, on request. CCI shall retain
the test results at all times during the term of this Agreement.
-7-
<PAGE>
11. OBLIGATIONS OF CTN. CTN hereby agrees that it shall be primarily
------------------
responsible for all of the following:
(a) CTN shall obtain access to the Sites, as well as making available to
CCI all necessary power, access and cable runs at each Site; and
(b) CTN shall cooperate with CCI at all times in scheduling matters, in
assisting CCI with resolving any disputes which arise at any Sites and in making
timely inspections at Sites required hereunder.
12. OBLIGATIONS OF CCI. CCI hereby agrees that, in addition to its other
------------------
duties hereunder, it shall be primarily responsible for all of the following:
(a) CCI agrees to comply with good engineering practices in the system
design, selection of equipment, Site surveys, installation and commissioning of
all equipment provided for CTN;
(b) CCI agrees to undertake the design of the system in selecting and
installing equipment materials to meet or exceed 99.99% reliability;
(c) CCI shall be responsible for obtaining all licenses and permits
necessary for proper completion of the work;
(d) CCI shall take all steps necessary to ensure that the equipment and
materials are selected and installed in a way which meet the manufacturer's
requirements and comply with all applicable building code requirements and that
each technician shall carry the necessary consumable materials, tools and spare
parts to assure maximum utilization of time during visits; and
(e) CCI shall "peak" each TVRO to the Ku Band operation on Transponder
number 20 of GE-3 Satellite (which is located at 87 degrees orbital location).
13. FORCE MAJEURE. Neither CTN nor CCI shall be liable for any failure of
-------------
performance hereunder due to causes beyond its control, including , but not
limited to, acts of God (including, without limitation, weather, fire, flood, or
other catastrophes); transportation delays; supplier delays; change in the
substance or application of any law, order or regulation of any local, state or
federal government having jurisdiction over CCI or CTN or any instrumentality of
any one or more of said governments; insurrections, riots, wars, strikes,
lockouts, and work stoppages. In the event that a force majeure event occurs to
either party, it shall be the obligation of such party to immediately thereafter
notify the other party thereof and state the ramifications of such force majeure
event and what alternate arrangements such party intends to take as a result of
such force
-8-
<PAGE>
majeure event. The party claiming a force majeure event shall at all times have
the obligation to act promptly and reasonably to make alternate arrangements so
as to carry out the intent of this Agreement; provided, however, that to the
-------- -------
extent that such alternate arrangements would increase the cost of such party
hereunder, it shall not be obligated to make such alternate arrangements unless
the other party shall agree to pay any increased cost occasioned thereby.
14. CTN DEFAULT. CTN shall be deemed to have committed a default of this
-----------
Agreement upon the occurrence of any of the following events (a "CTN Event of
Default"):
(a) CTN's failure to timely pay any sums required to be paid pursuant to
PARAGRAPHS 6 OR 7 hereof;
(b) CTN's failure to comply with any term, provision or condition of this
Agreement other than as provided in PARAGRAPH 14(A) above, which failure shall
not have been cured by CTN within ten (10) days of CTN's receipt of written
notice thereof from CCI alleging such a default; or
(c) CTN's filing a petition for bankruptcy, in any federal or state
proceeding, or having an involuntary petition filed against it in any federal
bankruptcy proceeding which petition shall not have been dismissed within sixty
(60) days of the filing thereof, or User becoming insolvent or consenting to the
appointment of a trustee or receiver or either or both is appointed for User.
Upon the occurrence of a CTN Event of Default, CCI shall be entitled to
(i) terminate this Agreement; and (ii) exercise any other rights or remedies
available to it under this Agreement or under applicable law. All rights or
remedies hereunder shall be cumulative.
15. CCI'S DEFAULT. CCI shall be deemed to have committed a default of this
-------------
Agreement upon the occurrence of either of the following events (a "CCI Event of
Default"):
(a) CCI's failure to comply in any material respect with any term,
provision or condition of this Agreement, which failure shall not have been
cured by CCI within ten (10) days of CCI's receipt of written notice thereof
from CTN alleging such a default; or
(b) CCI's filing a petition for bankruptcy, in any federal or state
proceeding, or having an involuntary petition filed against it in any federal
bankruptcy proceeding which petition shall not have been dismissed within sixty
(60) days of the filing thereof, or CCI becoming insolvent or consenting to the
appointment of a trustee or receiver, or either or both is appointed for CCI.
Upon the occurrence of a CCI Event of Default, CTN shall be entitled to
(i)
-9-
<PAGE>
terminate this Agreement; and (ii) exercise any other rights or remedies
available to it under this Agreement or under applicable law. All remedies
hereunder shall be cumulative.
-10-
<PAGE>
16. INDEMNIFICATION.
---------------
(a) CTN shall indemnify and hold CCI harmless from and against all
losses, liabilities, damages, costs and expenses, including reasonable
attorneys' fees, court costs and disbursements, incurred by CCI and arising out
of or in connection with any breach of any covenant or agreement made herein by
CTN or from any act, omission or conduct of CTN, its agents, officers, employees
or representatives, asserted against CCI.
(b) CCI shall indemnify and hold CTN harmless from and against all
claims, losses, liabilities, costs and expenses, including reasonable attorneys'
fees and disbursements, incurred by CTN and arising out of or in connection with
any breach of any covenant or agreement made herein by CCI, or from any act,
omission or conduct of CCI, its agents, officers, employees or representatives,
asserted against CTN.
(c) In no event shall either party be liable to the other for incidental
or consequential damages or loss of anticipated profits.
17. CONFIDENTIALITY. CCI shall not disclose to any third party other than
---------------
those of its employees and permitted subcontractors on a "need to know basis",
any material information relating to this Agreement, or the Phase I Services to
be performed hereunder, or information proprietary to CTN with respect to its
Network, without the prior written consent of CTN.
18. INSURANCE. CCI shall maintain or cause to maintained, property damage
---------
insurance in effect covering the TVRO equipment and the IRDs for their full
replacement value until such time as title to such equipment passes to CTN. CCI
and CTN shall each maintain in effect liability insurance, covering themselves,
agents and subcontractors, for the performance of their respective obligations
under this Agreement. CCI shall maintain such workman's compensation insurance
as shall be required by the laws of the states in which CCI operates and shall
furnish to CTN, upon request, Certificates of Insurance evidencing such fact.
19. FURTHER AGREEMENTS. CCI and CTN do hereby each acknowledge that further
------------------
agreements relating to the provision of the Phase II Activities and Network
origination services are intended to be entered into between CCI and CTN. CCI
and CTN do hereby agree to negotiate, in good faith, the terms and conditions of
such further agreements so as to accommodate a "hard" launch of the Network on
August 15, 1998. CTN hereby further acknowledges that a portion of the
consideration to be received by CCI under this Agreement is CTN's agreement to
enter into such further agreements relating to the Phase II Activities and
Network origination.
20. ASSIGNMENT OF AGREEMENT. Neither party shall have the right to assign
-----------------------
any of its rights, duties, or obligations under this Agreement without the prior
written consent of the other party, which may not be unreasonably withheld or
delayed.
-11-
<PAGE>
21. MODIFICATIONS. This Agreement shall not be modified, except by written
-------------
instrument duly executed by the authorized representatives of CCI and CTN.
22. WAIVER. The failure of either CCI or CTN to object to or take action
------
with respect to any conduct of the other, which is in violation of the terms of
this Agreement, shall not be construed as a waiver of such violation or breach,
or of any prior or subsequent breach, violation or wrongful conduct.
23. HEADINGS. The headings in this Agreement are solely for convenience and
--------
ease of reference and shall have no effect in interpreting the meaning of any
provision of this Agreement.
24. CHOICE OF LAW. This Agreement shall be construed in accordance with the
-------------
laws of the State of Georgia. The courts of general jurisdiction of Fulton
County, Georgia, shall be the exclusive forum for the resolution of all
litigation between CTN and CCI arising from or concerning this Agreement.
25. BINDING EFFECT. This Agreement and its rights, privileges, duties and
--------------
obligations shall inure to the benefit of and be binding upon each of the
parties hereto, together with their respective successors and permitted assigns.
26. NOTICES. Any notice required or permitted to be given under this
-------
Agreement shall be in writing and either shall be mailed by certified mail,
postage prepaid, return receipt requested, or sent by overnight air courier
service, or personally delivered to a representative of the receiving party, or
sent by facsimile (provided an identical notice is also sent simultaneously by
mail, overnight courier, or personal delivery as otherwise provided in this
PARAGRAPH 26). All such communications shall be mailed, sent or delivered,
addressed to the party for whom it is intended, at its address set forth below:
CCI: Crawford Communications, Inc.
535 Plasamour Drive
Atlanta, Georgia 30324
Attn: James L. Schuster, Vice President
with a copy to: Wagner, Johnston & Rosenthal, P.C.
3340 Peachtree Street, N.E.
Suite 1200/Tower Place
Atlanta, Georgia 30326
Attn: Craig A. Wagner, Esq.
CTN: College Television Network, Inc.
-12-
<PAGE>
5784 Lake Forrest Drive
Suite 275
Atlanta, Georgia 30328
Attn: Joe Gersh, C.O.O.
Fax: 404/257-9517
with a copy to: Morris, Manning & Martin
3343 Peachtree Road, N.E.
Suite 1600
Atlanta, Georgia 30326-1044
Attn: Neil H. Dickson, Esq.
27. COUNTERPARTS. This Agreement may be executed in counterparts, which
------------
shall together constitute one and the same agreement.
28. ENTIRE AGREEMENT. This Agreement represents the full and complete
----------------
agreement between the parties hereto with respect to the subject matter
contained herein and supersedes all prior written or oral agreements between
said parties with respect to said subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or have
caused this Agreement to be executed by their duly authorized officers, as of
the day and year first above written.
CTN:
COLLEGE TELEVISION NETWORK, INC.
BY: /s/ Joseph Gersh
---------------------------------------
ITS: Chief Operating, Officer
CCI:
CRAWFORD COMMUNICATIONS, INC.
BY: /s/ James L. Schuster
---------------------------------------
ITS: Vice President/SAT Services
-13-
<PAGE>
EXHIBIT "A"
Basic installation to include the following:
All travel expenses (based on current Sites)
Site survey for Phase II installation
Time invoiced for "walk-thru permission"
Antenna and snow shields installation
Point and peak antenna
Antenna mount and assembly labor (to include NPRM)
Ballast material and labor up to 500 lbs for 1.0 or 1.2 meter installs and
up to 1,200 lbs for 1.8 meter install
Material and labor for up to 50 feet of grounding wire (if required)
Material and labor for up to 200 feet RG-6 cable
Material and labor for up to 30 feet of PVC conduit (all exterior cable must
be run in PVC conduit)
All miscellaneous hardware (i.e. splitters, connectors, wall plates, etc.)
Site completion sign-off
All CCI supplied materials management
Site installation project management
Weekly updates and reporting
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS TABLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS CONTAINED IN THE MARCH 31, 1998 REPORT FILED ON FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,348,397
<SECURITIES> 0
<RECEIVABLES> 1,470,632
<ALLOWANCES> 25,000
<INVENTORY> 0
<CURRENT-ASSETS> 10,964,586
<PP&E> 5,439,453
<DEPRECIATION> 2,925,270
<TOTAL-ASSETS> 13,870,475
<CURRENT-LIABILITIES> 2,534,131
<BONDS> 0
3,333
3
<COMMON> 40,076
<OTHER-SE> 11,219,644
<TOTAL-LIABILITY-AND-EQUITY> 13,870,475
<SALES> 1,770,978
<TOTAL-REVENUES> 1,916,270
<CGS> 0
<TOTAL-COSTS> 4,081,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,165,334)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)
</TABLE>
