<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998
REGISTRATION NO. 333-58479
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
COLLEGE TELEVISION NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<S> <C>
DELAWARE 13-3557317
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
5784 LAKE FORREST DRIVE, SUITE 275
ATLANTA, GEORGIA 30328
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JASON ELKIN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
5784 LAKE FORREST DRIVE, SUITE 275
ATLANTA, GEORGIA 30328
(800) 256-1636
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
NEIL H. DICKSON, ESQ.
ROSEMARIE A. THURSTON, ESQ.
MORRIS, MANNING & MARTIN, L.L.P.
1600 ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, N.E.
ATLANTA, GEORGIA 30326
(404) 233-7000
(404) 365-9532 (FAX)
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered in this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] .
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [X] 333-58479.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
- - ------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF TO BE PRICE AGGREGATE AMOUNT OF
SHARES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value... 6,250,000 $1.60 $10,000,000 $3,448.28
- - ------------------------------------------------------------------------------------------------
Common Stock issuable upon
exercise of Warrant............ 152,100 $1.60 $243,360 $83.92
- - ------------------------------------------------------------------------------------------------
</TABLE>
- - -------------------------------------------------------------------------------
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
COLLEGE TELEVISION NETWORK, INC.
COMMON STOCK
College Television Network, Inc. ("CTN" or the "Company") is distributing to
holders of record as of the close of business on July 17, 1998 (the "Record
Date"), of its common stock, $.005 par value per share (the "Common Stock"),
one nontransferable right (each, a "Right") for each 1.2825 shares of Common
Stock held on the Record Date, with each such Right entitling the holder
thereof (a "Holder") to subscribe for and purchase one share of Common Stock
(the "Basic Subscription Privilege") for a price of $1.60 per share (the
"Subscription Price"). The Rights will expire at 5:00 p.m. New York City time,
on September 10, 1998, unless extended as described herein (the "Expiration
Date"). If shares of Common Stock offered hereby are not purchased by Holders
pursuant to the Basic Subscription Privilege (collectively, such shares are
sometimes hereinafter referred to as the "Excess Shares"), any Holder
purchasing all of the shares of Common Stock available to it pursuant to the
Basic Subscription Privilege may purchase the number of Excess Shares
specified by the Holder in the Subscription Documents (as defined below),
subject to proration (the "Oversubscription Privilege"). See "The Rights
Offering--Basic Subscription Privilege; Oversubscription Privilege."
The Company has entered into a Standby Stock Purchase Agreement (the
"Purchase Agreement") with U-C Holdings, L.L.C. ("U-C Holdings"), the holder
of 5,818,181 shares of Common Stock, representing approximately 72.6% of the
outstanding shares of the Company, pursuant to which U-C Holdings has agreed
to subscribe for and purchase all of the 4,536,593 shares of Common Stock
issuable to it upon exercise of the Rights distributed to U-C Holdings, for an
aggregate purchase price of $7,258,549 (the "Purchase Commitment"). Pursuant
to the Purchase Agreement, U-C Holdings has also agreed that, in the event
that any shares of Common Stock offered hereby (the "Standby Shares") are not
purchased by the other Holders pursuant to the Basic Subscription Privilege or
the Oversubscription Privilege, U-C Holdings will purchase the unsubscribed
Standby Shares at the Subscription Price (the "Standby Commitment"). The
Company will issue a Class C Warrant to U-C Holdings as compensation for its
Standby Commitment pursuant to the Purchase Agreement (the "Warrant"), which
will entitle U-C Holdings to acquire an additional 152,100 shares of Common
Stock at the Subscription Price. The Rights Offering will terminate if U-C
Holdings does not purchase the Common Stock issuable to it pursuant to the
Purchase Commitment and the Standby Commitment.
The Company's Common Stock is listed on The Nasdaq SmallCap Market under the
symbol "UCTN." The closing price of the Common Stock on July 21, 1998 was
$1.69 per share. The shares of Common Stock issued upon the exercise of the
Rights have been approved for trading on The Nasdaq SmallCap Market.
The proceeds of this offering (the "Rights Offering") will be used by the
Company for general corporate purposes. In the event the Rights Offering is
terminated, all subscription payments will be returned promptly, without
interest or deduction. See "Use of Proceeds."
This Prospectus relates to the shares of Common Stock issuable upon exercise
of the Rights and the 152,100 shares of the Common Stock issuable upon
exercise of the Warrant. Accompanying this Prospectus are certain documents
(collectively, the "Subscription Documents") that must be completed and
returned by a Holder in accordance with the related instructions in order to
exercise the Basic Subscription Privilege or the Oversubscription Privilege.
Once a Holder has exercised any Right, such exercise may not be revoked. See
"The Rights Offering--No Revocation."
PRIOR TO DECIDING TO EXERCISE RIGHTS AND PURCHASE SHARES OF THE COMMON
STOCK, POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH IN
"RISK FACTORS" ON PAGES 8 THROUGH 14 IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS. STOCKHOLDERS WHO DO NOT EXERCISE THEIR RIGHTS IN
FULL WILL SUFFER SIGNIFICANT DILUTION IN THEIR PROPORTIONATE INTEREST IN THE
EQUITY OWNERSHIP AND VOTING POWER OF THE COMPANY. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO THE
PRICE TO PUBLIC COMMISSIONS COMPANY(1)
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........... $1.60 N/A $1.60
- - -------------------------------------------------------------------------------
Total............... $10,243,360(2) N/A $10,243,360(2)
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses of the offering payable by the Company,
estimated to be $200,000.
(2) Includes proceeds from exercise of the Warrant.
The date of this Prospectus is July 28, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20546; New York Regional Office, Public Reference Room,
7 World Trade Center, 13th Floor, New York, New York 10048; and Chicago
Regional Office, Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates. The Commission maintains a Website
that contains reports, proxy and information statements and other information
regarding the Company that is filed electronically with the Commission which
may be found at http://www.sec.gov. The Company's Common Stock is listed on
The Nasdaq SmallCap Market, and reports, proxy statements and other
information concerning the Company may be inspected at the office of The
Nasdaq Stock Market, 1735 K Street, NW, Washington, D.C. 20006-1500. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, are
available for inspection and copying as set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
under the Exchange Act are incorporated herein by reference: (a) Annual Report
on Form 10-KSB for the year ended October 31, 1997; (b) Current Report on Form
8-K dated November 24, 1997; (c) Transition Report on Form 10-QSB for the two-
month period ended December 31, 1997; and (d) Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS THERETO)
ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY PERSON TO
WHOM THIS PROSPECTUS HAS BEEN DELIVERED, FROM COLLEGE TELEVISION NETWORK,
INC., 5784 LAKE FORREST DRIVE, SUITE 275, ATLANTA, GEORGIA 30328; ATTENTION:
CHIEF FINANCIAL OFFICER (TELEPHONE (800) 256-1636).
2
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and consolidated financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus.
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"), WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "MAY," "BELIEVE," "SHOULD," "EXPECT," "INTEND,"
"ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER
VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION, THE STATEMENTS UNDER "PROSPECTUS SUMMARY," "RISK FACTORS," "RECENT
DEVELOPMENTS," AND "FEDERAL INCOME TAX CONSEQUENCES" LOCATED ELSEWHERE HEREIN
REGARDING THE COMPANY'S FINANCIAL POSITION AND LIQUIDITY, THE VOLUME OF ITS
BUSINESS, ITS STRATEGIC PLANS INCLUDING ITS ABILITY TO INCREASE INSTALLATION
SITES AND SELL ADVERTISING AND OTHER MATTERS ARE FORWARD-LOOKING STATEMENTS.
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-
LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS. SHOULD ONE OR MORE OF THESE RISKS
OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR
PROJECTED.
THE COMPANY
The Company owns and operates the College Television Network ("CTN"), a
proprietary commercial television network operating on college and university
campuses, through a single-channel television system (the "System") placed free
of charge primarily in campus dining facilities and student unions.
Substantially all of the Company's revenues are derived from advertising
displayed on CTN. At May 30, 1998, CTN was installed or contracted for
installation at approximately 394 locations at approximately 291 colleges and
universities throughout the United States. The Company believes that CTN is the
largest college and university private commercial television network in the
United States, and that CTN reaches a viewership of approximately 800,000 daily
impressions during the academic year.
The Company's overall strategy is to expand the number of institutions in
which CTN is being offered and to expand the number of advertisers utilizing
CTN. As additional institutions are added, the Company expects to attract
additional advertisers as well as to increase its advertising rates.
The Company was incorporated under the laws of the State of Delaware in 1989.
The mailing address of the Company's executive offices is 5784 Lake Forrest
Drive, Suite 275, Atlanta, Georgia 30328. Its telephone number is (800) 256-
1636.
THE RIGHTS OFFERING
Rights...................... Each stockholder of the Company (each a
"Holder" and collectively "Holders") will
receive one nontransferable right (the
"Rights") for each 1.2825 shares of the
Common Stock held by such Holder as of the
close of business on July 17, 1998 (the
"Record Date"). The number of Rights
distributed to each Holder will be rounded
down to the nearest whole number and no
fractional rights, fractional shares of
Common Stock or cash will be distributed or
paid in lieu thereof. U-C Holdings will
purchase the number of whole shares resulting
from the aggregate of such fractional shares
3
<PAGE>
pursuant to the Standby Commitment. An
aggregate of 6,250,000 Rights will be
distributed pursuant to the Rights Offering.
Subscription Price.......... $1.60 in cash per share of Common Stock
subscribed for pursuant to the Basic
Subscription Privilege, the Oversubscription
Privilege, the Purchase Commitment, or the
Standby Commitment.
Basic Subscription Each Right entitles the Holder thereof to
Privilege................... purchase one share of Common Stock upon
payment of the Subscription Price (the "Basic
Subscription Privilege"). See "The Rights
Offering--Basic Subscription Privilege;
Oversubscription Privilege."
Oversubscription Privilege.. If any shares of Common Stock offered hereby
are not purchased pursuant to the Basic
Subscription Privilege (such shares, in the
aggregate, are sometimes hereinafter referred
to as the "Excess Shares"), any Holder, other
than U-C Holdings, purchasing all of the
shares of Common Stock available to it
pursuant to the Basic Subscription Privilege
may purchase the number of Excess Shares
specified by the Holder in the Subscription
Documents, subject to proration and subject
to the limitation that no Holder may
subscribe for more than 100% of the shares
purchased by such Holder in the Basic
Subscription Privilege (the "Oversubscription
Privilege"). See "The Rights Offering--Basic
Subscription Privilege; Oversubscription
Privilege."
Non-Transferability of The Rights are nontransferable.
Rights......................
Record Date................. July 17, 1998, at 5:00 p.m. New York City
time.
Expiration Date............. September 10, 1998, at 5:00 p.m. New York
City time, unless extended (the "Expiration
Date"). The Expiration Date will not be
extended beyond September 30, 1998, and if
the conditions to the Rights Offering have
not been satisfied by the Expiration Date or
the Rights Offering is otherwise terminated,
all subscription payments will be returned
promptly, without interest or deduction. See
"The Rights Offering--Expiration Date."
Purchase Commitment......... U-C Holdings has agreed, subject to the terms
and conditions of the Purchase Agreement, to
purchase at the Subscription Price, 4,536,593
shares of Common Stock issuable upon exercise
of the Rights, for an aggregate purchase
price of $7,258,549 (the "Purchase
Commitment"). See "The Rights Offering--
Purchase Commitment" and "Risk Factors--
Control by Principal Stockholder."
Standby Commitment.......... U-C Holdings has agreed, subject to the terms
and conditions of the Purchase Agreement, to
purchase all of the shares of Common Stock
offered hereby that are not purchased by the
Holders pursuant to the Basic Subscription
Privilege and the Oversubscription Privilege.
See "The Rights Offering--Standby Commitment"
and "Risk Factors--Control by Principal
Stockholder."
4
<PAGE>
Warrant..................... As compensation for the Standby Commitment,
the Company will issue a Class C Warrant to
U-C Holdings (the "Warrant"), entitling U-C
Holdings during a seven year period to
purchase 152,100 shares of Common Stock at
the Subscription Price. See "The Rights
Offering--Warrant" and "Risk Factors--Control
by Principal Stockholder."
Procedure for Exercising Rights may be exercised by the Holder by
Rights...................... properly completing and signing the
Subscription Documents and forwarding such
Subscription Documents (or following the
Guaranteed Delivery Procedures described
herein), with payment of the Subscription
Price for each share of Common Stock
subscribed for pursuant to the Basic
Subscription Privilege and Oversubscription
Privilege, if any, to American Stock Transfer
& Trust Company (the "Subscription Agent") on
or prior to the Expiration Date. If the mail
is used to forward Subscription Documents, it
is recommended that insured, registered mail
be used. No interest will be paid on funds
delivered in payment of the Subscription
Price. ONCE A HOLDER HAS EXERCISED ANY
RIGHTS, SUCH EXERCISE MAY NOT BE REVOKED. See
"The Rights Offering--Exercise of Rights" and
"The Rights Offering--No Revocation."
Procedure for Exercising
Rights by Foreign and
Certain Other Stockholders..
Subscription Documents will not be mailed to
Holders of Common Stock whose addresses are
outside the United States or who have an APO
or FPO address, but will be held by the
Subscription Agent for their account. To
exercise the Rights represented thereby, such
Holders must contact the Subscription Agent
on or prior to 5:00 p.m. New York City time,
on September 10, 1998. See "The Rights
Offering--Foreign and Certain Other
Stockholders."
Persons Holding Common
Stock and Wishing to
Exercise Rights Through
Others......................
Persons holding Common Stock and receiving
the Rights distributed with respect thereto
through a broker, dealer, commercial bank,
trust company or other nominee should contact
the appropriate institution or nominee and
request it to effect the transactions for
them. See "The Rights Offering--Exercise of
Rights."
Issuance of Common Stock.... Certificates representing shares of the
Common Stock purchased pursuant to the valid
exercise of the Rights will be delivered to
subscribers as soon as practicable after the
Expiration Date. See "The Rights Offering--
Basic Subscription Privilege;
Oversubscription Privilege."
Certain Federal Income Tax
Considerations..............
For United States federal income tax
purposes, Holders generally will not
recognize taxable income in connection with
the issuance to them or exercise by them of
Rights. Holders may incur a gain or loss upon
the sale of the shares of Common Stock
acquired upon
5
<PAGE>
exercise of the Rights. See "Federal Income
Tax Considerations."
Subscription Agent.......... American Stock Transfer & Trust Company 40
Wall Street, 46th Floor New York, New York
10005 Telephone number: (212) 936-5100
(718) 234-5001
Common Stock to be
Outstanding After the
Rights Offering; Percentage
to be Owned by U-C
Holdings....................
The number of shares outstanding after
completion of the Rights Offering, assuming
the issuance of 100% of the shares offered
pursuant to exercise of the Rights, will be
14,265,153 shares. If no shares are
subscribed for pursuant to the Basic
Subscription Privilege or the
Oversubscription Privilege other than shares
purchased by U-C Holdings pursuant to its
Purchase Commitment and Standby Commitment,
then U-C Holdings will own approximately
84.6% of the issued and outstanding Common
Stock. Following the exercise of the Warrant,
U-C Holdings will own approximately 84.8% of
the issued and outstanding Common Stock. U-C
Holdings currently holds a warrant to
purchase an additional 772,732 shares of
Common Stock at a current exercise price of
$2.75 per share, which would increase its
ownership to 85.5% of the issued and
outstanding Common Stock if such warrant is
exercised following the Rights Offering and
following exercise of the Warrant. U-C
Holdings has also entered into certain Equity
Protection Agreements which allow it to
acquire additional shares of Common Stock at
$2.75 per share, to avoid dilution upon the
exercise of certain other warrants and
options.
Nasdaq Symbol for the UCTN
Common Stock................
Use of Proceeds............. The net proceeds from the sale of the Common
Stock in the Rights Offering, and from the
exercise by U-C Holdings of the Warrant, will
be used by the Company for general corporate
purposes. See "Use of Proceeds."
Conditions to the Rights The issuance of shares pursuant to the Rights
Offering.................... Offering is subject to (i) the absence of any
suit or other action seeking to enjoin the
Rights Offering which, in the judgment of the
Company, makes it inadvisable to proceed with
the Rights Offering and (ii) the absence of
any stop order issued or threatened by the
Commission suspending the effectiveness of
the Registration Statement. In addition, the
Rights Offering will terminate if U-C
Holdings does not purchase the Common Stock
issuable to it pursuant to the Purchase
Commitment and the Standby Commitment. In the
event that the Rights Offering is terminated,
all subscription payments will be returned
promptly, without interest or deduction. See
"The Rights Offering--Conditions to the
Rights Offering."
6
<PAGE>
Amendments and Termination.. The Company may extend the Rights Offering
and otherwise amend the terms of the Rights
Offering or terminate the Rights Offering at
any time prior to the Expiration Date or
thereafter if the conditions to the Rights
Offering have not been satisfied. See "The
Rights Offering--Amendment and Termination."
Risk Factors................ A purchase of the Common Stock involves a
substantial degree of risk. See "Risk
Factors" for certain factors that a potential
investor should carefully consider.
7
<PAGE>
RISK FACTORS
Prospective purchasers of the securities offered hereby, prior to making an
investment decision, should carefully consider, along with other matters
referred to herein, the following risk factors:
NET LOSSES AND EXPECTATION OF CONTINUING LOSSES
Since inception, the Company has experienced, and is continuing to
experience, operating losses and negative cash flow from operations. The
Company's statements of operations for the fiscal year ended October 31, 1997,
for the two-month transition period ended December 31, 1997, and for the
three-month period ended March 31, 1998, reflect net losses of approximately
$4,003,590, $1,135,927, and $2,165,334, respectively, or approximately $.77
and $.14, and $.27 per share, respectively. In addition, the Company expects
to incur operating losses through the fiscal year ended December 31, 1998.
SUBSTANTIAL CAPITAL REQUIREMENTS
The development of the Company's business will continue to require
substantial expenditures for additional installations and maintenance of
installations. The Company's future financial results will depend primarily on
its ability to increase the number of installations, maintain existing
installations and increase advertising revenues. There can be no assurance
that the Company will achieve or sustain profitability or positive cashflows
from future operating activities. If the Company fails to increase the number
of installation sites, experiences operating difficulties or if advertising
revenues do not increase substantially, it is likely that the Company may be
required to obtain additional financing to fund its operations. No assurance
can be given that such financing will be available.
U-C Holdings' obligation to fulfill the Standby Commitment is subject to
certain limited closing conditions. If such conditions are not satisfied or
waived, U-C Holdings will not be obligated to fulfill the Standby Commitment.
If U-C Holdings fails to close the Standby Commitment, the Rights Offering
will be terminated and the Company's operating activities would be
significantly limited. See "Use of Proceeds" and "The Rights Offering--
Amendment and Termination" and "The Rights Offering--Conditions to the Rights
Offering" and "The Rights Offering--Standby Commitment."
RELIANCE ON ADVERTISING REVENUES
The Company derives its revenues from advertisers displaying their
commercials on CTN. Although the Company has agreements with certain national
advertisers and has held discussions or had prior agreements with other
national advertisers, no assurance can be given that these advertisers will
continue to purchase advertising from the Company, that new advertisers will
purchase advertising from the Company, or that future significant advertising
revenues will be generated. Because certain advertisers may discontinue or
reduce advertising on CTN from time to time, the Company anticipates that it
could experience fluctuations in operating results and revenues. The failure
to attract and enter into new and/or additional agreements with national
advertisers and to derive significant revenues therefrom would have a material
adverse effect on the Company and its results of operations, financial
condition and cash flows.
DEPENDENCE ON SECURING NEW INSTALLATIONS AND MAINTAINING EXISTING
INSTALLATIONS
The Company's growth is dependent upon its ability to increase the number of
installation sites at colleges and universities. If the Company increases its
installation sites, it will have increased viewership and should be able to
increase its advertising revenue. In addition, as the Company increases its
installation sites, it becomes more difficult for a competitor to enter the
market. The Company has found that it can be a difficult and lengthy process
to convince the administration of a college or university to install or
maintain the System. The Company has increased its number of installations,
including contracts for future installations, from approximately 239 as of May
30, 1997, to approximately 394 as of May 30, 1998. Although the Company has
been successful in
8
<PAGE>
increasing its installation sites, there are no assurances that this growth
will continue and that colleges and universities will not require the removal
of the System from current locations. The Company's contracts with colleges
and universities for installation sites are terminable at will by the colleges
and universities. The failure to increase installation sites would have a
material adverse effect on the Company and its results of operations,
financial condition and cash flows.
RELIANCE ON SATELLITE TECHNOLOGY
The ability of CTN to transmit its programming, and thereby derive
advertising revenue, is dependent upon proper performance of the satellite
transmission equipment upon which CTN's programming delivery is based. The
Company's contract with Public Broadcasting Service provides for the sublease
by the Company of transponder capacity on a satellite owned and operated by GE
American Communications, Inc. The Company is entitled to limited protected
service under the sublease in the event the satellite fails, which would
enable CTN's programming to be redirected to a different satellite under
certain circumstances and subject to certain limitations. However, in the
event that CTN's programming is required to be redirected to a different
satellite, the Company's satellite dishes installed in each of its
installations would be required to be redirected in order for the programming
signals to be received from the satellite. This redirection procedure could
take up to 30 days for completion and would involve significant cost to the
Company. The Company has obtained insurance for certain of the costs
associated with such a satellite failure, including redirecting the satellite
dishes, securing a new satellite transponder, and lost advertising revenues
resulting from the interruption in programming.
RELIANCE ON THIRD-PARTY CONTRACTS
The ability of CTN to transmit its programming and to maintain and install
its equipment is dependent upon performance by certain third parties under
contracts with the Company. The Company is substantially dependent upon
performance by unaffiliated companies for its day-to-day programming
operations and System installation and maintenance. The Company is currently
negotiating with third parties for the execution of contracts integral to the
Company's future operations, including a contract for the retrofit of existing
equipment, removal of obsolete equipment and installation of new equipment in
order to allow the equipment to meet the requirements of the Company's
proposed new broadcast platform, and a contract for the transmission via
satellite of the System's ongoing daily programming. There is no assurance
that the Company will be successful in negotiating these operational
contracts, or, if entered into, what the contract terms will be. Failure of
the Company to secure these contracts on reasonable terms would have a
material adverse effect on the Company and its results of operations,
financial condition and cash flows. See "Recent Developments--Conversion of
System; Recent Third-Party Operational Contracts."
UNCERTAINTY OF MARKET ACCEPTANCE
The Company's prospects will be significantly affected by the success of its
affiliate marketing efforts, the acceptance of its programming by potential
viewers and its ability to attract advertisers. Achieving market acceptance
for CTN will require significant effort and expenditures by the Company to
enhance awareness and demand by viewers and advertisers. The Company's current
strategy and future marketing plans may be subject to change as a result of a
number of factors, including progress or delays in the Company's affiliate
marketing efforts, the nature of possible affiliation and other broadcast
arrangements which may become available to it in the future and factors
affecting the direct broadcast industry. There can be no assurance that the
Company's strategy will result in initial or continued market acceptance for
CTN.
ACCESS TO MUSIC VIDEOS
The Company believes that its ability to maintain access to music and other
videos on a regular, long-term basis, on terms favorable to the Company is
important to its future success and profitability. The Company obtains music
videos pursuant to written agreements or informal arrangements with music
companies. The Company has such agreements or arrangements with a number of
the major music company labels, which include
9
<PAGE>
Sony, Warner Elektra, EMI, Columbia, MCA and BMG. Such agreements and
arrangements are terminable by the music companies on short notice.
Termination of substantially all or a large number of the agreements would
have a material adverse effect on the Company and its results of operations,
financial condition and cash flows.
RELIANCE ON KEY PERSONNEL AND MANAGEMENT
The Company is substantially dependent on the efforts of Jason Elkin, its
Chairman and Chief Executive Officer, Joseph Gersh, its Chief Operating
Officer, and Peter Kauff, its Vice Chairman. The loss of one or more of these
executives could have a material adverse effect on the Company and its results
of operations, financial condition and cash flows. Each of these executives
has entered into an employment agreement with the Company.
COMPETITION
CTN competes for advertisers with many other forms of advertising media,
including television, radio, print, direct mail and billboard. There are no
meaningful intellectual property barriers to prevent competitors from entering
into this market, and thus there is no assurance that a competitor with
greater resources will not enter into the market. The Company believes that
competition could increase as other organizations perceive the potential for
commercial application of the Company's products or services. However, an
obstacle to other companies entering the market is the difficulty and lengthy
process of securing site locations with colleges and universities.
BROAD MANAGEMENT DISCRETION AS TO USE OF PROCEEDS
The net proceeds to be received by the Company pursuant to the Rights
Offering will be used for working capital and general corporate purposes.
Accordingly, management will have broad discretion with respect to the
expenditure of such proceeds. Purchasers of shares of Common Stock offered
hereby will be entrusting their funds to the Company's management, upon whose
judgment they must depend. See "Use of Proceeds."
IMPACT OF TECHNOLOGICAL CHANGES
The Company expects technological developments and enhancements to continue
at a rapid pace in the direct broadcast satellite network industry and related
industries, and there can be no assurance that technological developments will
not cause the Company to switch to a different transmission technology or
cause the Company's technology and products to be rendered obsolete. The
Company has not yet determined what impact, if any, the advent of digital
television will have on the Company's technology or broadcast system. The
Company's future success could be largely dependent upon its ability to adapt
to technological change and remain competitive.
CONTROL BY PRINCIPAL STOCKHOLDER
Following the completion of the Rights Offering, assuming exercise by U-C
Holdings of its Purchase Commitment and the Standby Commitment, U-C Holdings
will beneficially own between approximately 72.6% and 84.6% of the outstanding
Common Stock depending on the number of Rights exercised by the other Holders.
Following the exercise of the Warrant, U-C Holdings will beneficially own an
additional 152,100 shares, or a total of up to 84.8% (on an as adjusted basis
as of June 15, 1998) of the outstanding Common Stock depending on the number
of Rights exercised by the other Holders. In addition, if U-C Holdings
exercises the warrant to purchase an additional 772,732 shares which it
currently holds, U-C Holdings would beneficially own up to 85.5% (on an as
adjusted basis as of June 15, 1998) of the Common Stock depending on the
number of Rights exercised by the other Holders. As a result of its ownership,
U-C Holdings has, and will continue to have, sufficient voting power to
determine the direction and policies of the Company, the election of the
directors of the Company, the outcome of any other matter submitted to a vote
of stockholders and to prevent or cause a change in control of the Company.
10
<PAGE>
POTENTIAL CONFLICTS OF INTEREST; RELATED PARTY TRANSACTIONS
Certain conflicts of interest may arise as a result of the beneficial
ownership interests in U-C Holdings, the majority stockholder of the Company,
held by a majority of the directors of the Company, including its chairman and
chief executive officer. Avy Stein and Beth Johnston, each a director of the
Company, may be deemed to be an indirect beneficial owner of the securities
beneficially owned by U-C Holdings. Conflicts of interest may arise as a
result of these affiliated relationships. Although no specific measures to
resolve such conflicts of interest have been formulated, management of the
Company has a fiduciary obligation to deal fairly and in good faith with the
Company, and will exercise reasonable judgment in resolving any specific
conflict of interest that may occur. The terms and conditions of the Rights
Offering and the Purchase Agreement have been negotiated with and approved by
a special committee made up of members of the Board who are not affiliated
with U-C Holdings (the "Special Committee"). Any time stockholder approval is
sought, U-C Holdings, as majority stockholder, has, and will continue to have
following the Rights Offering, the ability to approve any matter without the
affirmative vote of any other stockholder of the Company, subject to any
applicable Delaware law requirement of disinterested stockholder approval for
certain matters. See "The Rights Offering--Determination of Subscription
Price."
MARKET CONSIDERATIONS
The market price for the Common Stock could be subject to significant
fluctuations in response to the Company's operating results and other factors,
including the size of the public float of the Common Stock (which will depend,
in part, on the percentage of the Rights that are exercised by Holders) after
the Rights Offering. There can be no assurance that, following the issuance of
the Rights and of the underlying shares upon exercise of the Rights, a
subscribing Holder will be able to sell shares of Common Stock purchased in
the Rights Offering at a price equal to or greater than the Subscription
Price.
The Company currently satisfies the conditions for continued listing on The
Nasdaq SmallCap Market, but, depending on the trading price of the Common
Stock following the Rights Offering and certain other factors, the Company may
fail to meet certain Nasdaq SmallCap Market requirements following completion
of the Rights Offering. There can be no assurance that the market price of the
Common Stock will not decline after the Rights Offering to a level below its
current trading value. Further, there can be no assurance that The Nasdaq
SmallCap Market will not undertake to suspend the Common Stock from trading or
delist the Common Stock in the future.
SEASONALITY
The Company's revenues are affected by the pattern of seasonality common to
most school-related businesses. Historically, the Company generates a
significant portion of its revenues during the period of September through May
and substantially less revenues during the summer months when most colleges
and universities do not hold regular classes.
IRREVOCABILITY OF SUBSCRIPTIONS
The election of a Holder to exercise Rights in the Rights Offering is
irrevocable. Moreover, until certificates are delivered, subscribing Holders
may not be able to sell the Common Stock that they have purchased in the
Rights Offering. Certificates representing shares of the Common Stock
purchased pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege will be delivered as soon as practicable after the
Expiration Date. No interest will be paid to Holders on funds delivered to the
Subscription Agent pursuant to the exercise of Rights pending delivery of
Common Stock acquired upon exercise of the Rights.
RIGHTS NOT TRANSFERABLE; NO MARKET FOR RIGHTS
The Rights are not transferable, and thus there will be no market or other
means for Holders of the Rights to directly realize any value associated with
the Rights. Holders must exercise the Rights and acquire additional shares of
the Common Stock in order to realize any such value.
11
<PAGE>
EFFECT OF OUTSTANDING WARRANTS AND OPTIONS
As of June 15, 1998, there are outstanding options to purchase 667,518
shares of Common Stock granted to certain officers and directors of the
Company pursuant to stock option plans of the Company. In addition, there are
additional options and warrants outstanding permitting their holders to
purchase 1,955,887 shares of Common Stock. U-C Holdings has entered into
certain Equity Protection Agreements, dated April 25, 1997, which allows U-C
Holdings to purchase additional shares of Common Stock upon the exercise of
options or warrants which were outstanding on April 25, 1997 at a price of
$2.75 per share (as adjusted). U-C Holdings has registration rights which it
has waived in connection with the Rights Offering. Certain other holders of
options and warrants also have demand and piggy-back registration rights. In
addition, while such rights, warrants and options are outstanding, they may
(i) adversely affect the market price of the Common Stock and (ii) impair the
ability of the Company to, and restrict the terms on which it can, raise
additional equity capital or obtain debt financing.
OUTSTANDING RIGHT OF FIRST REFUSAL
In connection with a private placement of securities of the Company, the
Company issued to Barington Capital Group, L.P. ("Barington") on April 26,
1996, a right of first refusal to purchase for its account or to sell for the
account of the Company or any of the Company's stockholders owning at least
three percent of the unregistered capital stock of the Company ("Principal
Stockholders"), any securities of the Company which the Company or any of the
Company's Principal Stockholders may seek to sell (other than sales
aggregating less than $1 million in gross proceeds), whether pursuant to an
offering registered under the Securities Act or otherwise. The Company is
required to offer Barington the opportunity to purchase or sell any such
securities on comparable terms, and Barington is entitled to accept such offer
within thirty (30) business days (ten (10) business days with respect to any
sale to be effected other than through the public market) after such notice.
Barington's right of first refusal terminates on or about May 31, 1999.
Barington waived in writing its right of first refusal with respect to the
purchase of the Common Stock offered pursuant to this Prospectus. As a result
of this outstanding right of first refusal, the Company's ability to raise
capital through the offering of its securities will be subject to compliance
with the terms of the right of first refusal during the period in which the
rights of first refusal is outstanding, which could limit the Company's
ability to raise capital. If the Company proposes an offering of securities
which is subject to the terms of the right of first refusal, and if Barington
exercises its right of first refusal in connection with such proposed
securities offering, stockholders would experience dilution in their
percentage ownership interest in the Company without an opportunity to
participate in the offer and sale of the securities, and such transaction
could possibly result in a change of control of the Company.
DETERMINATION OF SUBSCRIPTION PRICE AND TERMS OF PURCHASE AGREEMENT
The Subscription Price was arbitrarily determined by the Special Committee.
The Subscription Price does not necessarily bear any relationship to the book
value of the Company's assets, past operations, cashflow, results of
operations, financial condition or any other established criteria for value
and should not be considered an indication of the underlying value of the
Company. See "The Rights Offering--Determination of Subscription Price."
IMPACT OF RIGHTS OFFERING ON HOLDERS OF COMMON STOCK; DILUTION
The Rights entitle the holders of the Common Stock to purchase shares of the
Common Stock at a price below the prevailing market price of the Common Stock
immediately prior to the announcement of the Rights Offering. Holders of the
Common Stock who exercise their Rights will preserve their proportionate
interest in the equity ownership and voting power of the Company. Holders who
do not exercise their Rights will experience a decrease in their proportionate
interest in the equity ownership and voting power of the Company. The
consummation of the sale of the shares offered hereby would increase the
number of shares of Common
12
<PAGE>
Stock outstanding (on an as adjusted basis as of June 15, 1998), assuming all
of the shares offered hereby are issued, by 6,250,000 shares (or 78%) to
14,265,153 shares. If no Rights are exercised other than those that are
exercised by U-C Holdings, the percentage of shares owned by shareholders
other than U-C Holdings will decrease from approximately 27.4% to 15.4%.
Exercise by U-C Holdings of the Warrant and of the other warrant that it
holds will cause a decrease in the proportionate interest in the equity
ownership and voting power of the other Holders, and increase the
proportionate interest of U-C Holdings by 924,832 shares (or 1.7% of the
outstanding shares of the Common Stock on an as adjusted basis as of June 15,
1998). Both of the warrants are subject to adjustment based upon certain
conditions.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public market
following the Rights Offering could adversely affect the market price of the
Common Stock prevailing from time to time. Upon completion of this Rights
Offering, all outstanding shares of the Company's Common Stock, including
shares held by U-C Holdings and the shares issuable to U-C Holdings upon
exercise of the Warrant, will be freely tradable without restriction, or may
be sold subject to Rule 144 under the Securities Act. The sale of the shares
of Common Stock acquired by U-C Holdings are subject to certain limitations
set forth in Rule 144 under the Securities Act. As of June 15, 1998, options
to purchase 667,518 shares and warrants to purchase 1,955,887 shares of Common
Stock were outstanding, of which options to purchase 393,868 shares and
warrants to purchase 1,955,887 shares were exercisable.
RISKS RELATING TO POSSIBLE ACQUISITIONS
The Company may seek to expand or complement its operations through the
possible acquisition of companies or licensing of programs or programming
libraries which the Company believes are compatible with its business. While
the Company explores acquisition opportunities from time to time, as of the
date of this Prospectus, the Company has no definitive plans, agreements,
commitments, arrangements or understandings with respect to any significant
acquisition. The Company has not established any minimum criteria for any
acquisition and management and the Board of Directors will have complete
discretion in determining the terms of any such acquisition. Consequently,
there is no basis for the investors in this Rights Offering to evaluate the
specific merits or risks of any potential acquisitions that the Company may
undertake. There can be no assurance that the Company will be able to
ultimately effect any acquisition or successfully integrate into its
operations any business which it may acquire. Under Delaware law, various
forms of business combinations can be effected without shareholder approval
and, accordingly, stockholders will, in all likelihood, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
which may be made available to the Company in connection with any acquisition
and must rely entirely upon the ability of management in selecting,
structuring, and consummating acquisitions that are consistent with the
Company's business objectives.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, over the
next two years, computer systems and/or software used by many companies may
need to be upgraded to comply with such "Year 2000" requirements. The Company
is dependent upon vendors to ensure that its computer systems are compliant;
therefore, its ability to assure Year 2000 compliance is limited. The Company
has required certain of its computer systems and software vendors to represent
that the services and products provided are, or will be, Year 2000 compliant,
but has not obtained any such representations from Public Broadcasting Service
under its Transponder Use Agreement described herein under "Recent
Developments--Conversion of System; Recent Third-Party Operational Contracts."
13
<PAGE>
Consequently, no assurance can be given that the Company will not experience
Year 2000 problems, including, but not limited to, disruption of the CTN
network programming delivery. Year 2000 issues could cause significant costs
and uncertainties that might affect the Company's future financial results or
cause reported financial information not to be necessarily indicative of
future operating results or future financial condition.
AUTHORIZED PREFERRED STOCK
The Board of Directors has authority to issue up to 2,000,000 shares of
preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of the preferred stock without further
vote or action by the Company's stockholders. The rights of the holders of the
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any preferred stock that may be issued in the future. While
the Company has no present intention to issue shares of preferred stock, such
issuance, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding
voting stock of the Company.
14
<PAGE>
RECENT DEVELOPMENTS
RECENT GROWTH IN OPERATIONS
The Company has significantly increased its personnel, from 14 full time
employees as of May 30, 1997 to 53 full time employees as of May 30, 1998. The
Company has also increased its affiliate base from approximately 239 locations
at which the System was installed or contracted for installation as of May 30,
1997 to approximately 394 locations as of May 30, 1998. The Company's revenues
have increased from $1,392,644 for the five month period ended May 31, 1997 to
$3,207,337 for the five month period ended May 31, 1998, and its net loss has
increased from $612,930 to $2,901,221 for the same respective periods.
ANNUAL MEETING OF SHAREHOLDERS
On April 24, 1998, the Company held its Annual Meeting of Stockholders (the
"Meeting"). At the Meeting, the Shareholders elected Messrs. Elkin, Gersh, Ms.
Johnston and Messrs. Kauff, Rademacher, Roberts, Stein and Wood as Directors.
Effective June 3, 1998, the Board of Directors appointed C. Thomas McMillen as
a director of the Company to serve until the 1999 Annual Meeting of
Stockholders to fill the vacancy created by the increase in the size of the
Board of Directors by the Action of the Majority Stockholder discussed below.
ACTION OF MAJORITY STOCKHOLDER IN LIEU OF A MEETING
On May 4, 1998, U-C Holdings, as the majority stockholder of the Company,
approved the following corporate actions: (i) fixing the number of members of
the Company's Board of Directors at eleven; (ii) adoption of amendments to the
Company's 1996 Stock Incentive Plan and Outside Director's 1996 Stock Option
Plan; and (iii) adoption of an amendment to the Company's Restated Certificate
of Incorporation reducing the number of authorized shares of Common Stock from
100,000,000 to 50,000,000 shares. The effective date of these actions was June
3, 1998, and an Information Statement disclosing these actions was mailed to
the holders of Common Stock of the Company on May 14, 1998. At the meeting of
the Board of Directors held on May 28, 1998, the Board appointed C. Thomas
McMillen to fill one of the vacancies created by the increase in the number of
members of the Company's Board of Directors, in accordance with the Company's
Bylaws and effective as of June 3, 1998.
TERMINATION OF FORMER EXECUTIVE OFFICER AND HIRING OF NEW EXECUTIVE OFFICER
On March 21, 1998, the employment of John Dobson with the Company was
terminated and Mr. Dobson ceased acting as President and as a director of the
Company. Pursuant to an arrangement with the Company, Mr. Dobson will continue
to receive his base salary and certain other benefits through April 29, 2001.
The Company hired George Giatzis to act as Executive Vice President of
Advertising Sales on March 23, 1998. Mr. Giatzis is responsible for all
advertising sales of the Company. Mr. Giatzis' base salary is $250,000 per
year, subject to increase each year and he is entitled to a bonus based upon
the gross revenue of the Company. Mr. Giatzis' employment agreement terminates
on December 31, 2000, subject to earlier termination for cause. If the Company
achieves certain revenue goals in 1998 and 1999, the Company and U-C Holdings
(as majority stockholder) have agreed to elect Mr. Giatzis as President and as
a director of the Company. Mr. Giatzis also received a beneficial ownership
interest in U-C Holdings pursuant to his employment agreement.
CONVERSION OF SYSTEM; RECENT THIRD-PARTY OPERATIONAL CONTRACTS
From April 1997 through May 1998, CTN operated as a kiosk/file server based
network under a Content Delivery Agreement with Hughes Network Systems, Inc.
("Hughes") and rented substantially all equipment for installation at each
location from Hughes pursuant to an Equipment Rental Agreement. The Company
terminated these contracts with Hughes in May 1998 and, in connection with
such termination, will be required to pay Hughes a termination fee with
respect to termination of the Equipment Rental Agreement. The Company
terminated the contract with Hughes in order to convert the System to a new
real-time, digital satellite
15
<PAGE>
distribution system, which will provide increased quality of signals coupled
with expanded programming opportunities. Under the new broadcast platform, CTN
will have the ability to deliver live broadcasts as well as to send up to
three types of programming to various installations and to decrease the
advance preparation and transmission of the programming. The new System will
no longer be interactive at the installation, in order to ensure consistency
in programming delivery without interference by users at the various locations
and will be installed in such a way so as to make it more difficult for
students or the college or university to tamper with the equipment. The
Company estimates that the conversion of 500 Systems will cost approximately
$6,000,000, of which approximately $1,900,000 has already been paid. The
Company currently has reserved funds to pay for the conversion. In order to
implement the new broadcast platform, the Company has entered into contracts
with Crawford Communications, Inc. and Public Broadcasting Service. Pursuant
to the Installation Agreement (Phase I) (the "Phase I Installation Agreement")
which was executed as of March 13, 1998 with Crawford, Crawford has commenced
the conversion of the System to satellite distribution by installing new
satellite dishes and preparing the rest of the System at the installation site
for conversion. This Phase I conversion process has been completed by
Crawford.
The Company is currently negotiating with Crawford for the execution of an
Installation Agreement (Phase II) (the "Phase II Installation Agreement"),
which, if entered into, would provide that Crawford will complete the retrofit
of the Company's existing equipment in all locations, remove old equipment and
install new equipment in order to allow the equipment to meet the requirements
of the new broadcast platform. The Company is in the process of determining
the impact on results of operations of the disposal of the equipment rendered
obsolete. The Company is also negotiating with Crawford for the execution of
an Origination Services Contract pursuant to which Crawford would be
responsible for the transmission via satellite of CTN's ongoing daily
programming, including encoding signals, testing, maintaining CTN's
programming library, and obtaining programming from Turner Private Networks,
Inc. ("Turner") pursuant to the Company's programming agreement with Turner as
well as other programming from other CTN sources. If the Company enters into
the Origination Services Contract with Crawford, Crawford will be responsible
for the uplink of the programming to a satellite as well as the downlink or
receipt of the signal from the satellite at each installation site. The
Company expects that each of these two contracts would have a five-year term.
The Company also will enter into agreements with other third parties relating
to the purchase of new equipment and the installation and configuration of the
equipment at the Crawford facility, the disposal of obsolete equipment and
other related matters. See "Risk Factors--Reliance on Third-Party Contracts."
Pursuant to a Transponder Use Agreement with Public Broadcasting Service
("PBS"), the Company has subleased capacity on a satellite owned and operated
by GE American Communications, Inc. ("GE") and leased to PBS by GE. This
contract terminates on July 31, 2003. The Company has protected status on this
satellite, which means that if there is a satellite failure or the satellite
experiences a performance problem, the Company's programming will preempt
transmissions of other users on this satellite or on another satellite. See
"Risk Factors--Reliance on Satellite Technology." The Company believes that
the new System is similar to the delivery systems used by other networks, such
as the CNN Airport Network, and will improve the quality of programming,
quality of signal and reliability of the System.
PROGRAMMING CONTENT
As of January 1, 1998 the Company entered into a new Programming and
Services Agreement with Turner to provide general news segments, sports
segments and cartoon or animated programming. This new contract increases the
number of sports and news segments from one per day to two per day and added
animated programming. The term of the new agreement was extended to December
31, 2002, and the aggregate cost to CTN over this five year term is
$2,900,000.
LINK MAGAZINE
In January 1998 the Company acquired certain assets of Link Magazine from
Creative Media Generations, Inc. Link Magazine is a free publication sent to
college students through a proprietary mailing process which is patented. The
Company believes over 1,000,000 students receive Link Magazine at more than
700 colleges and universities. In the year ended December 31, 1997, Link
Magazine had total sales of $1.1 million. For the three month period ended
March 31, 1998, Link Magazine accounted for $271,708, or 15%, of the total
revenues of
16
<PAGE>
the Company. The Company intends to use Link Magazine to increase the
awareness of College Television Network and to provide diversified sales media
to potential advertisers. There are no assurances that these goals will be
achieved.
OFFICE LEASE
The Company entered into a lease in May 1998 for new space to be occupied in
October 1998 in New York, New York at 32 East 57th Street in the borough of
Manhattan. The lease term is for ten (10) years and the initial annual rental
is $249,900, subject to increase annually based upon certain economic factors.
The landlord is required to pay for certain tenant improvements in accordance
with the lease. The Company currently has two locations in the New York City
area, one for CTN and one for the Link Magazine operations. The Company
intends to move into the new space in October 1998 and to consolidate the CTN
and Link Magazine offices into this location.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the maximum number of
shares of Common Stock to be issued with respect to the Rights are estimated
to be approximately $9,800,000, after deducting the estimated offering
expenses payable by the Company. The net proceeds to the Company from the
exercise by U-C Holdings of the Warrant, if and when exercised, would be an
additional $243,360. The Company will use the net proceeds of the Rights
Offering and the exercise of the Warrant for general corporate purposes
(including funding operating losses) and to pay related fees and expenses. The
following table illustrates the estimated sources and uses of funds, assuming
the issuance of all of the shares of Common Stock offered hereby and the
exercise of the Warrant.
<TABLE>
<CAPTION>
AMOUNT
-----------
(IN
THOUSANDS)
<S> <C>
SOURCES OF FUNDS:
Common Stock offered hereby........................................ $10,000,000
Common Stock issuable upon exercise of the Warrant................. 243,360
-----------
Total Sources of Funds........................................... $10,243,360
===========
USES OF FUNDS:
Fees and expenses.................................................. $ 200,000
General corporate purposes......................................... $10,043,360
-----------
Total Uses of Funds.............................................. $10,243,360
===========
</TABLE>
17
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
at March 31, 1998; (ii) the adjusted capitalization of the Company at March
31, 1998, assuming the Rights Offering is fully subscribed, after deducting
the estimated offering expenses and the application of the net proceeds; and
(iii) the adjusted capitalization of the Company at March 31, 1998, assuming
exercise of the Warrant following the Rights Offering.
<TABLE>
<CAPTION>
ADJUSTED FOR ADJUSTED FOR
RIGHTS EXERCISE OF
HISTORICAL OFFERING(2) WARRANT(3)
------------ ------------ ------------
(AMOUNTS IN THOUSANDS EXCEPT SHARE
DATA)
<S> <C> <C> <C>
Long-term portion of capital lease
obligation.......................... $ 73,291 $ 73,291 $ 73,291
Stockholders' equity
Preferred Stock, $.001 par value,
2,000,000 shares authorized, no
shares issued and outstanding..... 0 0 0
Common stock, $.005 par value,
50,000,000 shares authorized,
8,015,153 shares issued and
outstanding(/1/).................. 40,076 71,326 72,087
Additional paid-in capital........... 30,241,704 40,210,454 40,453,053
Accumulated deficit.................. (19,022,060) (19,022,060) (19,022,060)
Total stockholders' equity........... 11,259,720 21,259,720 21,503,080
------------ ------------ ------------
Total long-term obligations and
stockholders' equity................ $ 11,333,011 $ 21,333,011 $ 21,576,371
============ ============ ============
</TABLE>
- - --------
(1) Prior to the Rights Offering, 8,015,153 shares will be issued and
outstanding; not including shares issuable pursuant to currently
exercisable options and warrants to purchase Common Stock, which aggregate
1,850,673 shares--Historical and 2,002,773 shares--Adjusted. Adjusted for
Rights Offering, 14,265,153 shares will be issued and outstanding;
Adjusted for Exercise of Warrant following the Rights Offering, 14,417,253
shares will be issued and outstanding.
(2) Assumes 6,250,000 shares issued in connection with a fully subscribed
Rights Offering.
(3) Assumes 152,100 shares issued in connection with the exercise of the
Warrant.
18
<PAGE>
COMMON STOCK DIVIDENDS AND PRICE RANGE
The Company has never declared cash dividends on its Common Stock. Any
payment of future dividends will be at the discretion of the Company's Board
of Directors and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, extent of indebtedness and
contractual restrictions with respect to payment of dividends and stock
repurchases.
The Company's Common Stock is listed on The Nasdaq SmallCap Market under the
symbol "UCTN" and appears in the market reports in The Wall Street Journal as
"UCTN."
The following table sets forth, for the periods indicated, the high and low
sales prices of the Common Stock as reported by Nasdaq:
<TABLE>
<CAPTION>
QUARTERLY STOCK PRICES
-----------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1998
High........................................ $3 N/A N/A N/A
Low......................................... 2 1/4 N/A N/A N/A
1997(/1/)
High........................................ $4 17/32 $4 1/16 $3 7/16 $2 1/8
Low......................................... 2 1/32 2 13/16 2 1/2 1 5/8
1996(/1/)
High........................................ $6 7/8 $8 19/32 $7 1/32 $4 11/16
Low......................................... 5 5/8 5 4 11/16 2 3/16
</TABLE>
- - --------
(1) Prices above for 1996 through 1997 have been adjusted to account for the
one-for-five reverse stock split effected November 12, 1997.
19
<PAGE>
THE RIGHTS OFFERING
THE RIGHTS
The Company is distributing nontransferable Rights, at no cost, to the
record holders ("Holders") of outstanding shares of the Common Stock as of the
Record Date (5:00 p.m. New York City time, on July 17, 1998). The Company will
distribute one Right for each 1.2825 shares of the Common Stock held on the
Record Date. Each such Right entitles the holder thereof to subscribe for one
share of the Common Stock (the "Basic Subscription Privilege"). See "The
Rights Offering--Basic Subscription Privilege; Oversubscription Privilege." No
fractional rights will be distributed and no cash in lieu thereof will be
paid. U-C Holdings has agreed to purchase the whole number of shares of Common
Stock represented by the aggregate of all fractional rights pursuant to the
Standby Commitment.
The Subscription Price of $1.60 per share of the Common Stock represents a
discount of 15% from the average closing price of $1.88 per share as reported
on The Nasdaq SmallCap Market for the ten day period from June 10, 1998
through June 23, 1998, which was the period immediately prior to public
announcement of the Rights Offering. There can be no assurance that shares of
the Common Stock will trade at prices above the Subscription Price. See "Risk
Factors--Market Considerations."
SUBSCRIPTION PRICE
The Subscription Price is $1.60 in cash per share of Common Stock subscribed
for pursuant to the Basic Subscription Privilege, the Oversubscription
Privilege, the Purchase Commitment, the Standby Commitment or exercise of the
Warrant.
DETERMINATION OF SUBSCRIPTION PRICE
The Subscription Price was arbitrarily determined by the Special Committee.
In determining the Subscription Price, the Special Committee considered such
factors as the alternatives available to the Company for raising capital, the
amount of proceeds desired by the Company, the market price of the Common
Stock, the pro rata nature of the offering, pricing of similar transactions,
the business prospects of the Company and the general condition of the
securities markets. There can be no assurance, however, that the market price
of the Common Stock will not decline during the subscription period or that,
following the issuance of the Rights and of the Common Stock upon exercise of
the Rights, a subscribing Holder will be able to sell the Common Stock
purchased in the Rights Offering at a price equal to or greater than the
Subscription Price.
NO BOARD RECOMMENDATION
The Board of Directors and the Special Committee have expressed no opinion,
nor have they made any recommendations, as to whether the holders of the
Common Stock should exercise their Rights. Any investment in the Common Stock
of the Company must be made pursuant to each subscriber's evaluation of the
Rights Offering, including the factors discussed under "Risk Factors," in the
context of his, her or its best interest.
METHOD OF OFFERING
The Rights Offering is being made directly by the Company. The Company will
pay no underwriting discounts or commissions, finders fees or other
remuneration in connection with any distribution of the Rights or sales of the
shares of Common Stock offered hereby, other than fees paid to American Stock
Transfer & Trust Company, as Subscription Agent, and the issuance of the
Warrant to U-C Holdings. See "The Rights Offering--Warrant." The Company
anticipates that the expenses of the Rights Offering will total approximately
$200,000.
20
<PAGE>
EXPIRATION DATE
The Rights will expire at 5:00 p.m. New York City time, on September 10,
1998, unless extended by the Company (the "Expiration Date"), after which time
all unexercised Rights will be null and void. The Company will not be
obligated to honor any purported exercise of Rights received by the
Subscription Agent after 5:00 p.m. New York City time on the Expiration Date,
regardless of when the documents relating to such exercise were transmitted,
except when timely transmitted pursuant to the Guaranteed Delivery Procedures
described below. The Expiration Date will not be extended beyond September 30,
1998, and if the conditions to the Rights Offering have not been satisfied by
the Expiration Date, or the Rights Offering is otherwise terminated, all
subscription payments will be returned promptly, without interest or
deduction. See "The Rights Offering--Amendment and Termination."
BASIC SUBSCRIPTION PRIVILEGE; OVERSUBSCRIPTION PRIVILEGE
The Basic Subscription Privilege entitles the Holder of each Right to
purchase one share of the Common Stock upon payment of the Subscription Price.
No interest will be paid on funds delivered in connection with the payment of
the Subscription Price. If any shares of Common Stock offered hereby are not
purchased pursuant to the Basic Subscription Privilege (such shares, in
aggregate, are sometimes hereinafter referred to as the "Excess Shares"), any
Holder (other than U-C Holdings) purchasing all of the shares of Common Stock
available to such Holder pursuant to the Basic Subscription Privilege may
purchase the number of Excess Shares specified by the Holder in the
Subscription Documents, subject to proration (the "Oversubscription
Privilege"). In no event, however, may the Holder oversubscribe for more than
one hundred percent (100%) of the shares purchased by the Holder in the Basic
Subscription Privilege. If the number of shares available taking into account
the aforementioned restrictions are not sufficient to satisfy the
oversubscriptions, the available shares will be allocated pro rata (subject to
elimination of fractional shares) among the Holders who exercise the
Oversubscription Privilege, in proportion, not to the number of shares
requested pursuant to the Oversubscription Privilege, but to the number of
shares each Holder has purchased pursuant to the Basic Subscription Privilege;
provided, however, that if such pro rata allocation results in any Holder
being allocated a greater number of shares than such Holder subscribed for
pursuant to the exercise of such Holder's Oversubscription Privilege, then
such Holder will be allocated only such number of shares as such Holder
subscribed for and the remaining shares will be allocated among all other
Holders exercising the Oversubscription Privilege.
Holders desiring to exercise their Oversubscription Privilege should
indicate in the space provided on their Subscription Certificate the number of
additional shares they would like to subscribe for. As soon as practicable
following the Expiration Date, the Company will determine the number of shares
of Common Stock that may be purchased pursuant to the Oversubscription
Privilege. Holders must tender with their Subscription Documents the full
amount due on exercise of their Oversubscription Privilege for that number of
shares they have so subscribed for (in addition to the payment due on the
Basic Subscription Privilege). Certificates representing shares of Common
Stock issuable upon exercise of the Basic Subscription Privilege and
Oversubscription Privilege will be mailed as soon as practicable after the
Expiration Date. The Company will also return to subscribing Holders, without
interest, any overpayment on the amount determined to be due with respect to
such subscriber's Oversubscription Privilege. Banks, brokers, and other
nominee holders of Rights who exercise the Basic Subscription Privilege and
the Oversubscription Privilege on behalf of beneficial owners of Rights will
be required to certify to the Subscription Agent and the Company, in
connection with the exercise of the Oversubscription Privilege, the number of
Rights to which the Basic Subscription Privilege has been exercised on behalf
of each such beneficial owner, that each such beneficial owner's Basic
Subscription Privilege held in the same capacity has been exercised in full
and the number of shares of Common Stock subscribed for pursuant to the
Oversubscription Privilege by each such beneficial owner, and to record
certain other information received from each such beneficial owner.
PURCHASE COMMITMENT
U-C Holdings has agreed, subject to the terms and conditions of the Purchase
Agreement, to subscribe for and purchase 4,536,593 shares of Common Stock
issuable to it upon exercise of the Rights, for an aggregate
21
<PAGE>
purchase price of $7,258,549 (the "Purchase Commitment"). See "Risk Factors--
Control by Principal Stockholder." The rights and obligations of the Company
and U-C Holdings under the Purchase Agreement are subject to certain customary
conditions, including the absence of any litigation or governmental action
challenging or seeking to enjoin the Rights Offering or the Purchase Agreement
which in the judgment of the Company or U-C Holdings makes it inadvisable to
proceed with the Rights Offering.
STANDBY COMMITMENT
U-C Holdings has agreed, subject to the terms and conditions of the Purchase
Agreement, that in the event that any shares of Common Stock offered hereby
(the "Standby Shares") are not purchased by Holders other than U-C Holdings
pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege, U-C Holdings will purchase the Standby Shares at the Subscription
Price (the "Standby Commitment"). As a part of the Standby Commitment, U-C
Holdings has agreed to purchase the whole number of shares of Common Stock
equal to the aggregate of the fractional shares which would be available for
purchase by the other holders as fractional shares pursuant to the issuance of
the Rights but for the fact that fractional shares are not being offered to
such Holders pursuant to the Rights Offering. The rights and obligations of
the Company and U-C Holdings under the Purchase Agreement are subject to
certain customary conditions, including the absence of any litigation or
governmental action challenging or seeking to enjoin the Rights Offering or
the Purchase Agreement which in the judgment of the Company or U-C Holdings
makes it inadvisable to proceed with the Rights Offering.
WARRANT
The Company has agreed, subject to the terms and conditions of the Purchase
Agreement, to issue a Class C Warrant to U-C Holdings (the "Warrant") for the
purchase by U-C Holdings of 152,100 shares of Common Stock at the Subscription
Price at any time during a seven year period from the date of issuance of the
Warrant (which will be concurrent with the purchase by U-C Holdings of the
Standby Shares). The Warrant contains certain antidilution provisions. The
terms and conditions of the Warrant were approved by the independent members
of the Company's board of directors who determined that the issuance of the
Warrant was fair and reasonable compensation to U-C Holdings for providing the
Standby Commitment. The number of shares subject to the Warrant was determined
using the Black-Scholes valuation method of the Warrant of approximately
$220,000, representing approximately eight percent of the maximum purchase
price pursuant to the Standby Commitment. The Company's objective in issuing
the Warrant was to fairly compensate U-C Holdings for its Standby Commitment,
which commitment will ensure that the Rights Offering is fully subscribed and
thereby accommodate the Company's interest in determining in advance the
proceeds of the Rights Offering.
EXERCISE OF RIGHTS
Rights may be exercised by delivering to the Subscription Agent, at or prior
to the Expiration Date (5:00 p.m. New York City time, on September 10, 1998,
unless extended), the properly completed and executed Subscription Documents
evidencing those Rights with any required signature guarantees, together with
payment in full of the Subscription Price for each share of the Common Stock
subscribed for pursuant to the Basic Subscription Privilege. Such payment must
be made by (a) check or bank draft drawn upon a U.S. bank or postal,
telegraphic, or express money order payable to American Stock Transfer & Trust
Company, as Subscription Agent, or (b) wire transfer of same day funds to the
account maintained by the Subscription Agent for such purpose at Chase
Manhattan Bank, ABA No. 021-000-021, Account No. 323-836-925 (marked: "College
Television Network, Inc. Subscription"). Payment of the Subscription Price
will be deemed to have been received by the Subscription Agent only upon (i)
clearance of any uncertified check, (ii) receipt by the Subscription Agent of
any certified check or bank draft drawn upon a U.S. bank or any postal,
telegraphic or express money order or (iii) receipt of good funds in the
Subscription Agent's account designated above. HOLDERS WISHING TO PAY BY
UNCERTIFIED PERSONAL CHECK SHOULD NOTE THAT SUCH A CHECK MAY TAKE UP TO FIVE
BUSINESS DAYS TO CLEAR AND SHOULD TRANSMIT THE CHECK SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO ENSURE THAT IT IS RECEIVED AND CLEARS BY SUCH DATE
OR CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR
WIRE TRANSFER OF FUNDS.
22
<PAGE>
The address to which the Subscription Documents and payment of the
Subscription Price should be delivered is:
<TABLE>
<S> <C> <C>
American Stock Transfer
& Trust Company
40 Wall Street, 46th To Confirm Receipt and for General Information:
Floor (212) 936-5100
New York, New York 10005 (718) 921-8200
By Facsimile:
(718) 234-5001
</TABLE>
If a Rights holder wishes to exercise Rights, but time will not permit such
Holder to cause the Subscription Documents evidencing such Rights to reach the
Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:
(i) such Holder has caused payment in full of the Subscription Price for
each share of the Common Stock being subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege to be received
(in the manner set forth above) by the Subscription Agent on or prior to
the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration Date,
a guarantee notice (a "Notice of Guaranteed Delivery"), substantially in
the form provided with the Instructions as to Use of College Television
Network, Inc. Subscription Certificates (the "Instructions") distributed
with the Subscription Documents, from a member firm of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or from a commercial bank or trust company having
an office or correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Holder, the number of
Rights represented by the Subscription Documents held by such exercising
Holder, the number of shares of the Common Stock being subscribed for
pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege, and guaranteeing the delivery to the Subscription Agent of any
Subscription Documents evidencing such Rights within three Nasdaq trading
days following the date of the Notice of Guaranteed Delivery; and
(iii) the properly completed Subscription Documents evidencing the Rights
being exercised, with any required signatures guaranteed, is received by
the Subscription Agent within three Nasdaq trading days following the date
of the Notice of Guaranteed Delivery relating thereto. The Notice of
Guaranteed Delivery may be delivered to the Subscription Agent in the same
manner as Subscription Documents at the addresses set forth above, or may
be transmitted to the Subscription Agent by facsimile transmission (fax no.
(718) 921-8325). Additional copies of the form of Notice of Guaranteed
Delivery are available upon request from Patrick G. Doran, Chief Financial
Officer of the Company, whose address and telephone number are set forth
below:
Mr. Patrick G. Doran
Chief Financial Officer
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
(800) 256-1636
Funds received in payment of the Subscription Price for shares subscribed
for pursuant to the Rights will be held in a segregated account pending
issuance of such shares.
Holders who hold shares of the Common Stock for the account of others, such
as brokers, trustees or depositories for securities, should notify the
respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the record Holder of such
Right should complete Subscription Documents and submit them to the
Subscription Agent with the proper payment. In addition, beneficial owners of
shares of the Common Stock
23
<PAGE>
or Rights held through such a Holder should contact the Holder and request the
Holder to effect transactions in accordance with the beneficial owner's
instructions.
The instructions accompanying the Subscription Documents should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION DOCUMENTS TO THE
COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION DOCUMENTS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK
OF THE HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH SUBSCRIPTION
DOCUMENTS AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO
5:00 P.M. NEW YORK CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE UP TO FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY
URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company in its sole discretion may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines in its sole discretion. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect
or irregularity in connection with the submission of Subscription Documents or
incur any liability for failure to give such notification.
The Company will pay the fees and expenses of the Subscription Agent, and
has also agreed to indemnify the Subscription Agent from any liability which
it may incur in connection with the Rights Offering.
Any questions or requests for assistance concerning the method of exercising
Rights or additional copies of this Prospectus, the Instructions or the Notice
of Guaranteed Delivery may be directed to:
Mr. Patrick G. Doran
Chief Financial Officer
College Television Network, Inc.
5784 Lake Forrest Drive, Suite 275
Atlanta, Georgia 30328
(800) 256-1636
NO REVOCATION
ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE OR
THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED.
CONDITIONS TO THE RIGHTS OFFERING
The issuance of shares pursuant to the exercise of the Rights is subject to
a (i) the absence of any suit or other action seeking to enjoin or otherwise
challenging the Rights Offering which, in the judgment of the Company, makes
it inadvisable to proceed with the Rights Offering and (ii) the purchase by U-
C Holdings of shares pursuant to the Purchase Commitment and, unless all of
the shares being offered pursuant to the Rights Offering to the other Holders
are purchased by such Holders, the purchase by U-C Holdings of Standby Shares
pursuant to the Standby Commitment. In the event that the foregoing conditions
to the Rights Offering have not been satisfied by the Expiration Date all
subscription payments will be returned promptly, without interest or
deduction.
24
<PAGE>
AMENDMENT AND TERMINATION
The Company may, at any time and from time to time, extend the Rights
Offering (but not beyond September 30, 1998) and otherwise amend the terms of
the Rights Offering or terminate the Rights Offering at any time prior to the
Expiration Date, in its sole discretion, if the conditions to the Rights
Offering have not been satisfied.
SHARES OF THE COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Assuming the issuance of all of the shares offered hereby, approximately
6,250,000 shares of the Common Stock will be issued in connection with the
Rights Offering and 152,100 shares will be issued upon exercise of the
Warrant. Based on the 8,015,153 shares of the Common Stock outstanding as of
June 15, 1998, the issuance of such shares pursuant to the Rights Offering
would result (on an as adjusted basis as of such date) in a 78% increase in
the number of outstanding shares of the Common Stock, and the issuance of the
152,100 shares pursuant to exercise of the Warrant would result (on an as
adjusted basis of such date) in an additional 2% increase in the number of
outstanding shares of the Common Stock prior to the Rights Offering.
The following table shows the shares of Common Stock to be outstanding
(without giving effect to outstanding stock options or the warrant to purchase
772,732 shares of Common Stock currently held by U-C Holdings) and the change
in percentage ownership of U-C Holdings and the other Holders (i) as a result
of the consummation of the Rights Offering and (ii) as a result of the
exercise of the Warrant following consummation of the Rights Offering:
<TABLE>
<CAPTION>
U-C HOLDINGS, L.L.C. OTHER HOLDERS
----------------------- ----------------------
<S> <C> <C> <C> <C>
Post-Rights Offering (assuming
only U-C Holdings
participates).................. 12,068,181 shares 84.6% 2,196,972 shares 16.4%
Post-Rights Offering (assuming
only U-C Holdings participates)
and following exercise of the
Warrant........................ 12,220,281 shares 84.8% 2,196,972 shares 15.2%
Post-Rights Offering (assuming
full participation by all
Holders)....................... 10,354,774 shares 72.6% 3,910,379 shares 27.4%
Post-Rights Offering (assuming
full participation by all
Holders) and following exercise
of the Warrant................. 10,506,874 shares 72.9% 3,910,379 shares 27.1%
</TABLE>
Therefore, upon completion of the Rights Offering (without exercise of the
Warrant), the Company will have 14,265,153 shares of Common Stock outstanding
and U-C Holdings' ownership will be between 72.6% and 84.6% (on an as adjusted
basis as of June 15, 1998).
FOREIGN AND CERTAIN OTHER STOCKHOLDERS
Subscription Certificates will not be mailed to holders whose addresses are
outside the United States or who have an APO or FPO address, but will be held
by the Subscription Agent for their account. To exercise such Rights, such
holders must notify the Subscription Agent on or prior to 5:00 p.m. New York
City time, on the Expiration Date.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Morris, Manning & Martin, L.L.P., the material United
States federal income tax consequences to holders of shares of the Common
Stock upon the issuance (the "Issuance") of the Rights, and to holders of the
Rights upon the exercise, lapse or disposition of the Rights, will be as set
forth below. This opinion is based upon laws, regulations, rulings and
decisions currently in effect. This opinion does not discuss all aspects of
federal income taxation that may be relevant to a particular investor or to
certain types of investors
25
<PAGE>
subject to special treatment under the federal income tax laws (for example,
banks, dealers in securities, life insurance companies, tax exempt
organizations and foreign taxpayers), and does not discuss any aspect of
state, local or foreign tax laws. This opinion is limited to holders who will
hold the Rights and any shares of the Common Stock received therefor upon
exercise as capital assets.
Issuance of the Rights. Holders of shares of the Common Stock will not
recognize taxable income, for federal income tax purposes, in connection with
the receipt of the Rights.
Basis and Holding Period of the Rights. Except as provided in the following
sentence, the basis of the Rights received by a Holder of Common Stock as a
distribution with respect of such Holder's shares of the Common Stock will be
zero. If either (i) the fair market value of the Rights on the date of
Issuance is 15% or more of the fair market value (on the date of Issuance) of
the shares of the Common Stock with respect to which they are received or (ii)
the Holder of Common Stock elects, in his or her federal income tax return for
the taxable year in which the Rights are received, to allocate part of the
basis of such shares of the Common Stock to the Rights, then upon exercise of
the Rights, the Holder's basis in such shares of the Common Stock will be
allocated between the shares of the Common Stock and the Rights in proportion
to the respective fair market values of each on the date of Issuance. The
holding period of the Rights received by a Holder as a distribution on such
Holder's shares of the Common Stock will include the Holder's holding period
(as of the date of Issuance) for the shares of the Common Stock with respect
to which the Rights were issued.
Lapse of the Rights. Holders of shares of the Common Stock who allow the
Rights received by them at the Issuance to lapse will not recognize any gain
or loss, and no adjustment will be made to the basis of the shares of the
Common Stock, if any, owned by such Holders of the Rights.
Exercise of the Rights; Basis and Holding Period of Shares of the Common
Stock. Holders of the Rights will not recognize any gain or loss upon the
exercise of such Rights. The basis of the shares of the Common Stock acquired
through exercise of the Rights will generally be equal to the sum of the
Subscription Price therefor and the Holder's basis in such Rights (if any).
The holding period for the shares of the Common Stock acquired through
exercise of the Rights will begin on the date such Rights are exercised.
THE FOREGOING IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH
HOLDER OF SHARES OF THE COMMON STOCK IS URGED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON HIS
OR HER OWN PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF
STATE AND LOCAL INCOME AND OTHER TAXES.
STATE AND FOREIGN SECURITIES LAWS
The Rights Offering is not being made in any state or other jurisdiction in
which it is unlawful to do so, nor is the Company selling or accepting any
offers to purchase any shares of the Common Stock from Holders who are
residents of any such state or other jurisdiction. The Company may delay the
commencement of the Rights Offering in certain states or other jurisdictions
in order to comply with the securities law requirements of such states or
other jurisdictions. It is not anticipated that there will be any changes in
the terms of the Rights Offering. The Company, if it so determines in its sole
discretion, may decline to make modifications to the terms of the Rights
Offering requested by certain states or other jurisdictions, in which event
Holders resident in those states or jurisdictions will not be eligible to
participate in the Rights Offering.
26
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following general summary of the material terms of the capital stock of
the Company does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the pertinent portions of the Company's
Certificate of Incorporation.
GENERAL
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.005 par value per share and 2,000,000 shares of Preferred
Stock. As of June 15, 1998, there were 8,015,153 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. The Company has designated a
Series A Redeemable Preferred Stock, pursuant to certain provisions of its
Certificate of Incorporation (a description of the terms of this designation
is set forth below under "Series A Redeemable Preferred Stock").
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters on
which the holders of Common Stock are entitled to vote and do not have any
cumulative voting rights. The holders of Common Stock are entitled to receive
such dividends as may be declared from time to time by the Board of Directors.
The Company has not had sufficient earnings to pay cash dividends on the
Common Stock to date, and has determined for the foreseeable future not to pay
cash dividends on the Common Stock in order to reinvest future earnings to
support its business operations. See "Common Stock Dividends and Price Range."
Holders of Common Stock have no preemptive, conversion, redemption or
sinking fund rights. In the event of a liquidation, dissolution or winding-up
of the Company, holders of Common Stock are entitled to share equally and
ratably in the assets of the Company, if any, remaining after the payment of
all debts and liabilities of the Company. The outstanding shares of Common
Stock are, and the shares of Common Stock issuable upon exercise of the Rights
when issued will be, fully paid and nonassessable.
PREFERRED STOCK
General. The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the
provisions of the Restated Certificate of Incorporation, as amended, and the
limitations prescribed by law, the Board of Directors is expressly authorized
by adopting resolutions prior to issuance, to create each series of Preferred
Stock, to issue the shares, fix the number of shares and change the number of
shares constituting any series, and to provide for or change the voting
rights, designations, stated value, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof, including dividend rights (and whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption price or prices, conversion rights and liquidation preferences of
the shares constituting any class or series of the Preferred Stock, without
any further action or vote by the stockholders. The Company has no current
plans to issue any further shares of Preferred Stock.
One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby protect the continuity of the Company's
management. The issuance of shares of the Preferred Stock pursuant to the
Board of Directors' authority described above may adversely affect the rights
of the holders of Common Stock. For example, Preferred Stock issued by the
Company may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock.
Series A Redeemable Preferred Stock. 2,000,000 shares of the Company's
authorized Preferred Stock have been designated "Series A Redeemable Preferred
Stock." As of the date of this Prospectus, no shares of Series A Redeemable
Preferred Stock were issued and outstanding.
All, but not less than all, of the shares of Series A Redeemable Preferred
Stock are redeemable, at the option of the Company at any time, at a price
equal to the aggregate of the amount of all declared but unpaid dividends
thereon, if any, without interest, plus $1.00 per share. The holders of Series
A Redeemable Preferred Stock have
27
<PAGE>
no voting rights except as otherwise from time to time required by law. Upon
the liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, the holders of Series A Redeemable Preferred Stock are
entitled to receive out of the assets of the Company an amount equal to the
dividends declared and unpaid thereon, if any, as of the date of final
distribution to such holders, without interest, and a sum equal to $1.00 per
share, before any payment shall be made or any assets distributed to the
holders of Common Stock or any other class or series of the Company's capital
stock ranking junior as to liquidation rights to the Series A Redeemable
Preferred Stock; provided, however, that such rights shall accrue to the
holders of Series A Redeemable Preferred Stock only in the event that the
Company's payments with respect to the liquidation preferences of the holders
of capital stock of the Company ranking senior as to liquidation rights to the
Series A Redeemable Preferred Stock (the "Senior Liquidation Stock") are fully
met. The entire assets of the Company available for distribution after the
liquidation preferences of the Senior Liquidation Stock are fully met shall be
distributed ratably among the holders of the Series A Redeemable Preferred
Stock and any other class or series of the Company's capital stock which may
be created after issuance of the Series A Preferred Stock having parity as to
liquidation rights with the Series A Redeemable Preferred Stock in proportion
to the respective preferential amounts to which each is entitled (but only to
the extent of such preferential amounts). The holders of shares of Series A
Preferred Stock are entitled to receive dividends in an amount equal to $.10
per share per year as and when declared by the Board of Directors out of the
funds legally available for such purpose.
Notwithstanding the foregoing, the Board of Directors of the Company is
under no obligation to pay dividends with respect to the Series A Redeemable
Preferred Stock; the dividend rights of the holders of Series A Redeemable
Preferred Stock are operative only at such time as the Board of Directors may
decide to pay, declare or set aside for payment any dividends on any shares of
the Company. All dividends of Series A Redeemable Preferred Stock are
noncumulative, whether or not earned, and all right shall be lost to any
dividend not declared and paid in any given year regardless of whether the
Company's earnings were sufficient to cover a dividend in that year.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
Stockholders' rights and related matters are governed by the Delaware
General Business Law and the Company's Restated Certificate of Incorporation,
as amended (the "Certificate"), and the Amended and Restated Bylaws of the
Company (the "Bylaws"). Certain provisions of the Certificate and Bylaws of
the Company, which are summarized below, could either alone or in combination
with each other, have the effect of preventing a change in control of the
Company or making changes in management more difficult.
Issuance of Preferred Stock. The Company's Certificate permits the Board of
Directors to issue shares of preferred stock of the Company without
stockholder approval, with the rights and privileges of such preferred stock
determined by the Board of Directors. Through the issuance of such preferred
stock, the Board could confer rights upon existing stockholders that may make
a takeover of the Company less desirable.
Corporate Takeover Provisions. The Bylaws require stockholder approval in
the following situations: (a) when a stock option or purchase plan is to be
established or when some other arrangement is to be made pursuant to which
stock may be acquired by officers or directors of the Company, except for (i)
warrants or rights issued generally to security holders of the Company, (ii)
broadly based plans or arrangements including employees other than officers
and directors or (iii) where the amount of securities which may be issued does
not exceed the lesser of 1% of the number of shares of Common Stock
outstanding or 25,000 shares; (b) when the issuance of securities will result
in a Change of Control (as defined below) of the Company; (c) prior to the
issuance of securities in connection with the acquisition of the stock or
assets of another company if: (i) (A) any director, officer or Substantial
Stockholder (as defined below) of the Company has a 5% or greater interest (or
such persons collectively have a 10% or greater interest), directly or
indirectly, in the company or assets to be acquired or in the consideration to
be paid in the transaction or series of related transactions and (B) the
present or potential issuance of the Company's Common Stock, or securities
convertible into or exercisable for the Company's Common Stock, could result
in an increase in outstanding common shares or voting power of 5% or more; or
(ii) due to the present or potential issuance of the Company's Common Stock or
securities convertible into or exercisable for the Company's Common Stock,
other than a public offering for cash: (A) the Common
28
<PAGE>
Stock of the Company to be issued in such transaction will have upon issuance,
voting power equal to or in excess of 20% of the voting power outstanding
before the issuance of the stock or securities convertible into or exercisable
for the Company's Common Stock; or (B) the number of shares of Common Stock to
be issued in such transaction is or will be equal to or in excess of 20% of
the number of shares of the Company's Common Stock outstanding before the
issuance of the stock or securities; or (d) prior to the issuance of
securities in connection with a transaction other than a public offering
involving: (i) the sale or issuance by the Company of its Common Stock (or
securities convertible into or exercisable for its Common Stock) at a price
less than the greater of book or market value which together with sales by
officers, directors or Substantial Stockholders of the Company equals 20% or
more of the issued and outstanding Common Stock of the Company or 20% or more
of the voting power outstanding before such sale or issuance; or (ii) the sale
or issuance by the Company of its Common Stock (or securities convertible into
or exercisable for its Common Stock) equal to 20% or more of the Company's
Common Stock or 20% or more of the voting power outstanding before such sale
or issuance for less than the greater of book or market value of the stock.
"Market value" of the Common Stock shall be equal to the average closing price
per share as reported on the Nasdaq SmallCap Market for the 20 trading days
ending the trading day that occurs 10 trading days prior to the date of
issuance of the securities.
"Change of Control" shall be deemed to have occurred upon the happening of
any of the following:
(i) The consummation of any merger, reverse stock split, recapitalization
or other business combination of the Company, with or into another
corporation, or an acquisition of securities or assets by the Company,
pursuant to which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock of the Company
would be converted into cash, securities or other property, other than a
transaction in which the majority of the holders of Common Stock of the
Company immediately prior to such transaction will own at least 25% of the
voting power of the then-outstanding securities of the surviving
corporation immediately after such transaction, or any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company
(other than a transfer of assets as collateral to secure a debt of the
Company), or the liquidation or dissolution of the Company; or
(ii) A transaction in which any person (as such term is defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other
entity (other than the Company or any profit-sharing, employee ownership or
other employee benefit plan sponsored by the Company or any subsidiary, or
any trustee of or fiduciary with respect to any such plan when acting in
such capacity, or any group comprised solely of such entities): (A) shall
purchase any Common Stock of the Company (or securities convertible into
Common Stock of the Company) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board of Directors of the Company, or (B) shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly (in one transaction or a series of
transactions), of securities of the Company representing 50% or more of the
total voting power of the then-outstanding securities of the Company
ordinarily (and apart from the rights accruing under special circumstances)
having the right to vote in the election of directors (calculated as
provided in Rule 13d-3(d) in the case of rights to acquire the Company's
securities).
"Substantial Stockholder" means any person or entity with a beneficial
ownership interest consisting of at least 5% of the number of issued and
outstanding shares of the Company's Common Stock or 5% of the Company's
outstanding voting power.
Special Meeting Call Provisions. The Bylaws provide that special meetings of
the Board of Directors may be called by the Chairman of the Board, Vice
Chairman or Chief Executive Officer of the Company or any two members of the
Board of Directors or an Investor Director. An "Investor Director" is a
director designated by U-C Holdings. At all meetings of the Board of
Directors, a majority of the numbers of the Board of Directors and at least
one Investor Director must be present to constitute a quorum.
The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer & Trust Company, 40 Wall Street, 46th Floor, New York, New York
10005.
29
<PAGE>
PLAN OF DISTRIBUTION
The Company is distributing non-transferable Rights, at no cost, to the
Holders of the Common Stock outstanding as of the Record Date. See "The Rights
Offering--The Rights." Each Right will entitle the holder thereof to receive
one share of Common Stock upon payment of the Subscription Price and execution
of the Subscription Documents. U-C Holdings has agreed to purchase from the
Company all unsubscribed shares pursuant to its Standby Commitment. See "The
Rights Offering--Standby Commitment." No underwriters, brokers or dealers have
been retained by the Company in connection with the Rights Offering.
The Company anticipates receiving approximately $9,800,000 in net cash
proceeds from the Rights Offering including U-C Holdings' Purchase Commitment
and Standby Commitment, and after payment of approximately $200,000 of fees
and expenses incurred in connection with the Rights Offering but before
deducting approximately $220,000 payable in the form of issuance of the
Warrant to U-C Holdings as compensation for its Standby Commitment. See "Use
of Proceeds."
LEGAL MATTERS
The legality of the Common Stock offered hereby has been passed upon for the
Company by Morris, Manning & Martin, L.L.P., Atlanta, Georgia.
EXPERTS
The financial statements as of and for the year ended October 31, 1997,
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-KSB for the year ended October 31, 1997, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The financial statements for the year ended October 31, 1996, incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-KSB
for the year ended October 31, 1997, have been so incorporated in reliance on
the report of Richard A. Eisner & Company, LLP, independent auditors, given on
the authority of said firm as experts in auditing and accounting.
30
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
Risk Factors............................................................... 8
Recent Developments........................................................ 15
Use of Proceeds............................................................ 17
Capitalization............................................................. 18
Common Stock Dividends and Price Range..................................... 19
The Rights Offering........................................................ 20
Description of Capital Stock............................................... 27
Plan of Distribution....................................................... 30
Legal Matters.............................................................. 30
Experts.................................................................... 30
</TABLE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
6,402,100 SHARES
COLLEGE TELEVISION NETWORK, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
JULY 28, 1998
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses of the sale of the shares of Common Stock are as follows:
<TABLE>
<S> <C>
Registration Fee................................................... $ 3,600
Nasdaq Application Fee............................................. 7,500
Blue Sky Fees and Expenses......................................... 2,500
Printing and Engraving............................................. 14,100
Subscription Agent's Fees and Expenses............................. 10,000
Legal Fees and Expenses............................................ 125,000
Accounting Fees and Expenses....................................... 32,000
Miscellaneous Disbursements........................................ 5,300
--------
TOTAL............................................................ $200,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation (the "Certificate") of the Company
contains a provision which, subject to certain exceptions described below,
eliminates the liability of a director to the Company or its stockholders for
monetary damages for any breach of duty as a director. This provision does not
eliminate the liability of a director (i) for any breach of such director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law (the "Delaware Corporation Law") relating to unlawful dividends and
distributions, or (iv) for any transaction from which such director derived an
improper personal benefit.
The Certificate and the Bylaws (the "Bylaws") of the Company require the
Company to indemnify any person who was, is, or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (other than action
by or in the right of the corporation), by reason of service by such person as
a director, officer, employee or agent of the Company or any other corporation
for which he served as such at the request of the Company. Such persons are
entitled to be indemnified against judgments, fines, settlements, and
reasonable expenses actually incurred by the person in connection with the
proceeding, except that no payments may be made with respect to liability
which is not eliminated pursuant to the provision of the Certificate described
in the preceding paragraph. Such persons are also entitled to have the Company
advance any such expenses prior to final disposition of the proceeding, upon
delivery of an undertaking to repay the amounts advanced if it is ultimately
determined that such person is not entitled to be indemnified by the Company.
In addition to the Certificate and Bylaws of the Company, Section 145(c) of
the Delaware Corporation Law requires the Company to indemnify any director
who has been successful on the merits or otherwise in defending any proceeding
described above. The Delaware Corporation Law also provides that a court may
order indemnification of a director if it determines that the director is
fairly and reasonably entitled to such indemnification.
The Company has the power, under the Bylaws, to purchase and obtain
insurance on its behalf and on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the Company or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against or incurred by such person in any such capacity,
whether or not the Company has the power to indemnify such person against such
liability at that time under the Bylaws.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1* Restated Certificate of Incorporation of the Registrant, as amended.
3.2* Amended and Restated Bylaws of the Registrant, as amended.
4.1* Class C Warrant No. C-1, dated April 25, 1997, issued to U-C Holdings,
L.L.C. (incorporated by reference to Exhibit 4.1 to the Company's
Form 10-KSB for the fiscal year ended October 31, 1997).
4.2* Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.2 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.3* Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.3 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.4* Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.4 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.5* Equity Protection Agreement, dated April 25, 1997, between the
Registrant and U-C Holdings, L.L.C. (incorporated by reference to
Exhibit 4.5 to the Company's Form 10-KSB for the fiscal year ended
October 31, 1997).
4.6* Specimen certificate representing Common Stock (incorporated herein by
reference to Exhibit 4.3 to the Registrant's Registration Statement
on Form S-1 (No. 33-44935), as amended, declared effective on June
10, 1992).
4.7* Letter to Stockholders.
4.8* Letter to Securities Dealers, Commercial Banks, Trust Companies and
other Nominees.
4.9* Instructions as to the Use of College Television Network, Inc.
Subscription Certificates.
4.10+ Subscription Certificate.
4.11* Form of Letter to Clients from Securities Dealers, Commercial Banks,
Trust Companies and other Nominees.
4.12+ Notice of Guaranteed Delivery.
4.13* Nominee Holder Certification.
4.14* Form of Class C Warrant No. C-2 issued to U-C Holdings, L.L.C.
pursuant to the Standby Stock Purchase Agreement dated July 2, 1998.
4.15+ Notice to California Residents.
5.1* Form of Opinion of Morris, Manning & Martin, L.L.P. as to the legality
of the securities being registered.
10.1* Standby Stock Purchase Agreement, dated July 2, 1998, between U-C
Holdings, L.L.C. and the Registrant.
23.1+ Consent of Richard A. Eisner & Company.
23.2+ Consent of PricewaterhouseCoopers LLP.
Consent of Morris, Manning & Martin, L.L.P. (contained in the opinion
23.3* included at Exhibit 5.1).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
24.1* Power of Attorney of certain officers and directors of the Company.
99.1* Subscription Agent Agreement, dated July 20, 1998, between the
Registrant and American Stock Transfer & Trust Company.
</TABLE>
- - --------
* Previously filed.
+ Filed herewith.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) To file, during any period in which it offers or sells the securities
registered hereby, a post-effective amendment to this registration statement
to include any additional or changed material information on the plan of
distribution.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
If the Company makes any public offering of the Rights on terms different
from those on the cover page of the Prospectus, the Company will file a post-
effective amendment to state the terms of such offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to officers, directors and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned or his or her attorney-in-fact, thereunto duly authorized, in the
City of Atlanta, State of Georgia, on July 30, 1998.
COLLEGE TELEVISION NETWORK, INC.
/s/ Jason Elkin
By: _________________________________
Jason Elkin
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Jason Elkin Chairman and Chief Executive July 30, 1998
____________________________________ Officer (principal
Jason Elkin executive officer) and
Director
/s/ Patrick G. Doran Chief Financial Officer July 30, 1998
____________________________________ (principal financial
Patrick G. Doran officer and principal
accounting officer)
/s/ Peter Kauff* Vice Chairman, Director July 30, 1998
____________________________________
Peter Kauff
/s/ Joseph D. Gersh* Chief Operating Officer and July 30, 1998
____________________________________ Director
Joseph D. Gersh
/s/ Beth F. Johnston* Director July 30, 1998
____________________________________
Beth F. Johnston
/s/ C. Thomas McMillen* Director July 30, 1998
____________________________________
C. Thomas McMillen
/s/ Hollis W. Rademacher* Director July 30, 1998
____________________________________
Hollis W. Rademacher
/s/ Stephen Roberts* Director July 30, 1998
____________________________________
Stephen Roberts
/s/ Avy H. Stein* Director July 30, 1998
____________________________________
Avy H. Stein
/s/ James W. Wood* Director July 30, 1998
____________________________________
James W. Wood
</TABLE>
/s/ Patrick G. Doran
*By: __________________________
Patrick G. Doran
as Attorney-in-Fact
II-4
<PAGE>
EXHIBIT 4.10
COLLEGE TELEVISION NETWORK, INC.
SUBSCRIPTION CERTIFICATE FOR RIGHTS OFFERING
FOR HOLDERS OF RECORD ON JULY 17, 1998.
College Television Network, Inc. (the "Company") is conducting a rights
offering (the "Rights Offering") which entitles each holder of the Company's
common stock, $.005 par value per share (the "Common Stock"), on July 17, 1998
(the "Record Date"), to receive one nontransferable right (collectively, the
"Rights") for each 1.2825 shares of Common Stock held of record on the Record
Date. No fractional Rights will be issued and no cash in lieu thereof will be
paid. Each Right is exercisable, upon payment of $1.60 in cash (the
"Subscription Price"), to purchase one share of Common Stock (the "Basic
Subscription Privilege"). In addition, each Right also carries the right to
subscribe for a number of shares of Common Stock (the "Oversubscription
Privilege") at the Subscription Price to the extent that all the shares are
not subscribed for through the exercise of the Basic Subscription Privilege by
the Expiration Date (the "Excess Shares"). Set forth on the label above is the
registered holder's name and address as it appears on the books of the
Company's transfer agent and the number of shares to which such holder is
entitled to subscribe pursuant to the Basic Subscription Privilege. Such
number of shares also is equal to the number of shares to which such holder is
entitled to subscribe pursuant to the Oversubscription Privilege.
FOR A MORE COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS OF THE RIGHTS
OFFERING, PLEASE REFER TO THE PROSPECTUS DATED JULY 28, 1998 (THE
"PROSPECTUS"), WHICH IS INCORPORATED HEREIN BY REFERENCE. COPIES OF THE
PROSPECTUS ARE AVAILABLE UPON REQUEST FROM PATRICK G. DORAN AT COLLEGE
TELEVISION NETWORK, INC., 5784 LAKE FORREST DRIVE, ATLANTA, GEORGIA 30328
(TOLL FREE (800) 256-1636). CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN
SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED TO SUCH TERMS IN THE PROSPECTUS.
THIS SUBSCRIPTION ORDER FORM MUST BE RECEIVED BY AMERICAN STOCK TRANSFER &
TRUST COMPANY (THE "SUBSCRIPTION AGENT") WITH PAYMENT IN FULL BY 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 10, 1998, UNLESS EXTENDED IN THE SOLE
DISCRETION OF THE COMPANY TO A TIME NOT LATER THAN 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 30, 1998 (AS IT MAY BE EXTENDED, THE "EXPIRATION DATE").
DEPOSITORY TRUST COMPANY ("DTC") PARTICIPANTS MUST SUBMIT THEIR SUBSCRIPTION
INSTRUCTIONS TO DTC AT OR PRIOR TO 2:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE. ANY RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION DATE WILL
EXPIRE. ANY SUBSCRIPTION FOR SHARES OF COMMON STOCK IN THE RIGHTS OFFERING
MADE HEREBY IS IRREVOCABLE UNLESS THE TERMS OF THE OFFERING ARE SUBSEQUENTLY
AMENDED.
INFORMATION: Complete Part I of the Subscription Certificate and, if
applicable, the Part II Special Issuance and Delivery Instructions, SIGN THIS
SUBSCRIPTION CERTIFICATE, provide the holder's state of residence and complete
the enclosed Substitute Form W-9. All questions concerning the timeliness,
validity, form and eligibility of Subscription Certificate received or any
exercise of Rights will be determined by the Company, whose determination will
be final and binding.
---------
SUBSCRIPTION PRICE: $1.60 PER SHARE
<PAGE>
PART I--SUBSCRIPTION FOR SHARES OF COMMON STOCK IN THE RIGHTS OFFERING: THE
UNDERSIGNED HEREBY IRREVOCABLY SUBSCRIBES FOR THE NUMBER OF SHARES OF COMMON
STOCK IN THE RIGHTS OFFERING AS INDICATED BELOW, ON THE TERMS AND SUBJECT TO
THE CONDITIONS SPECIFIED HEREIN AND IN THE PROSPECTUS, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED.
<TABLE>
<CAPTION>
NUMBER OF SUBSCRIPTION
SHARES PRICE PAYMENT
--------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Basic Subscription
Right: X $1.60 = $ (Line 1)
----- ------
Oversubscription Right: X $1.60 = $ (Line 2)
----- ------
Total Payment Required $ (Sum of Lines 1 and 2;
must equal total of
amounts in Lines 3 and 4
below)*
</TABLE>
* If the aggregate Subscription Price paid by an exercising Rights Holder is
insufficient or exceeds the amount necessary to purchase the number of
Shares of Common Stock that such holder indicates are being subscribed for,
or if an exercising Rights Holder does not specify the number of shares of
Common Stock to be purchased, then such Rights Holder will be deemed to have
exercised the Subscription Privilege to the full extent of the payment
tendered, subject to the limits set forth in the Prospectus. If the
aggregate Subscription Price paid by a Rights Holder exceeds the amount
necessary to purchase the number of shares of Common Stock for which the
Rights Holder has indicated an intention to subscribe, the Rights Holder
will receive promptly by mail a refund equal to the excess payment without
interest or deduction.
METHOD OF PAYMENT (check and complete appropriate box(es)):
<TABLE>
<S> <C> <C> <C>
[_]Uncertified, certified or cashier's check, bank draft
or money order payable to American Stock Transfer &
Trust Company or Notice of Guaranteed Delivery in the
amount of: $ (Line 3)
------
[_]Wire transfer directed to Chase Manhattan Bank, ABA No.
021-000-021, Account No. 323-836-925 (Marked: College
Television Network, Inc. Subscription by [Name of
Rights Holder]) (Indicate name of the institution wire
transferring funds: ) in the amount of: $ (Line 4)
------
Total Payments: $
------
</TABLE>
PART II--SPECIAL ISSUANCE OR DELIVERY INSTRUCTIONS FOR RIGHTS HOLDERS:
UNLESS OTHERWISE INDICATED BELOW, THE SUBSCRIPTION AGENT IS HEREBY AUTHORIZED
TO ISSUE AND DELIVER CERTIFICATES FOR COMMON STOCK TO RIGHTS HOLDERS AT THE
ADDRESS ON THE LABEL ABOVE.
(a) To be completed ONLY if the certificate representing the Common Stock is
to be issued in a name other than the registered holder shown above. (See
Paragraphs 2 and 3(c) of the Instructions.) COMPLETE THE GUARANTEE OF
SIGNATURE(S) SECTION BELOW.
- - ------------------------------------- -------------------------------------
NAME(S) IN WHICH STOCK IS TO BE STREET ADDRESS
REGISTERED (PLEASE PRINT)
- - ------------------------------------- -------------------------------------
SOCIAL SECURITY OR TAX ID# CITY STATE ZIP CODE
(b) To be completed ONLY if the certificate representing the Common Stock is
to be sent to an address other than that shown above. (See Paragraphs 2
and 3(c) of the Instructions.) COMPLETE THE GUARANTEE OF SIGNATURE(S)
SECTION BELOW.
MAIL AND DELIVER TO:
-------------------------------------
NAME: _______________________________ STREET ADDRESS
(PLEASE PRINT) -------------------------------------
- - ------------------------------------- CITY STATE ZIP CODE
SOCIAL SECURITY OR TAX ID#
2
<PAGE>
ACKNOWLEDGMENT
THE SUBSCRIPTION ORDER FORM IS NOT VALID UNLESS YOU SIGN BELOW
I/We acknowledge receipt of the Prospectus and understand that after
delivery to the Company, I/we may not modify or revoke this Subscription
Certificate. Under penalties of perjury, I/we certify that the information
contained herein, including the social security number or taxpayer
identification number given above, is correct. If Part II Special Issuance
Instructions are completed, I/we certify that although the certificate
representing the Common Stock is to be issued in a name other than the
registered holder, beneficial ownership of the Common Stock will not change.
The signature below must correspond with the name of the registered holder
exactly as it appears on the books of the Company's transfer agent without any
alteration or change whatsoever. Each subscribing holder must identify his,
her or its state of residence and date this subscription certificate below.
Registered Holder's State of Residence:
SIGN HERE _____________________________ SIGN HERE
SIGNATURE(S) OF REGISTERED HOLDER
DATED: _______ , 1998
If signature is by trustee(s), executor(s), administrator(s), guardian(s),
attorney(s)-in-fact, agent(s), officer(s) of a corporation or another acting
in a fiduciary or representative capacity, please provide the following
information (Please Print). See Instructions.
Name(s): ____________________________ Daytime Phone: ( ) _______________
Capacity (Full Title) _______________ Evening Phone: ( ) ________________
Address _____________________________ Taxpayer Identification
(Including Zip Code) or Social Security Number: __________
GUARANTEE OF SIGNATURE(S)
All Rights Holders who specify special issuance or delivery instructions
pursuant to Part II of this Subscription Order Form must have their
signatures guaranteed by an Eligible Institution. An "Eligible Institution"
for this purpose is a bank, stockbroker, savings and loan association and
credit union with membership in an approved signature guaranteed medallion
program, pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934.
Authorized Signature _______________ Name of Firm _______________________
Name _______________________________ Address ____________________________
Title ______________________________ Area Code and Telephone Number _____
Dated: _______________________, 1998
3
<PAGE>
EXHIBIT 4.12
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION CERTIFICATIONS
ISSUED BY
COLLEGE TELEVISION NETWORK, INC.
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated July
28, 1998, (the "Prospectus"), of College Television Network, Inc., a Delaware
corporation (the "Company"), if a holder of Rights cannot deliver the
Subscription Certificate(s) evidencing the Rights (the "Subscription
Certificate(s)"), to the Subscription Agent listed below (the "Subscription
Agent") at or prior to 5:00 p.m. New York City time on September 10, 1998,
unless extended (the "Expiration Date"). Such form must be delivered by hand
or sent by facsimile transmission or mail to the Subscription Agent, and must
be received by the Subscription Agent on or prior to the Expiration Date. See
"The Rights Offering--Exercise of Rights" in the Prospectus. Payment of the
Subscription Price of $1.60 per share for each share of Common Stock
subscribed for upon exercise of such Rights must be received by the
Subscription Agent in the manner specified in the Prospectus at or prior to
5:00 p.m. New York City time on the Expiration Date even if the Subscription
Certificate evidencing such Rights is being delivered pursuant to the
procedure for guaranteed delivery thereof.
The Subscription Agent is
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Fax: (718) 234-5001
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Certificate(s) representing Rights and that such
Subscription Certificate(s) cannot be delivered to the Subscription Agent at
or before 5:00 p.m., New York City time on the Expiration Date. Upon the terms
and subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise the
Subscription Privilege to subscribe for one share of Common Stock per Right
with respect to each of Rights represented by such Subscription
Certificate. The undersigned understands that payment of the Subscription
Price of $1.60 per share for each Common Share subscribed pursuant to the
Subscription Privilege must be received by the Subscription Agent at or before
5:00 p.m. New York City time on the Expiration Date and represents that such
payment, in the aggregate amount of $ , either (check appropriate box):
[_]is being delivered to the Subscription Agent herewith; or
[_]has been delivered separately to the Subscription Agent; and is or was
delivered in the manner set forth below (check appropriate box and
complete information relating thereto):
[_]wire transfer of funds
-- name of transferor institution ___________________________________
-- date of transfer _________________________________________________
-- confirmation number (if available) _______________________________
[_]uncertified check (Payment by uncertified check will not be deemed
to have been received by the Subscription Agent until such check has
cleared. Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such
payment clears by such date.)
[_]certified check
[_]bank draft (cashier's check)
[_]money order
-- name of maker ____________________________________________________
-- date of check, draft or money order ______________________________
-- check, draft or money order number _______________________________
-- bank on which check is drawn or issuer of money order ____________
SIGNATURE(S) ________________________
ADDRESS _____________________________
- - ------------------------------------- -------------------------------------
NAME(S) _____________________________
-------------------------------------
- - ------------------------------------- AREA CODE AND TEL NO(S). ____________
PLEASE TYPE OR PRINT
SUBSCRIPTION CERTIFICATE NO(S). (IF
AVAILABLE) __________________________
2
<PAGE>
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SUBSCRIPTION CERTIFICATE SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, guarantees that the undersigned will deliver to the
Subscription Agent the certificates representing the Rights being exercised
hereby, with any required signature guarantees and any other required
documents, all within three Nasdaq Stock Market trading days after the date
hereof.
- - ------------------------------------- DATED:_______________________ , 1998
- - ------------------------------------- -------------------------------------
- - ------------------------------------- (NAME OF FIRM)
(ADDRESS) -------------------------------------
- - ------------------------------------- (AUTHORIZED SIGNATURE)
(AREA CODE AND TELEPHONE NUMBER)
The institution which completes this form must communicate the guarantee to
the Subscription Agent and must deliver the Subscription Certificate(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
3
<PAGE>
EXHIBIT 4.14
COLLEGE TELEVISION NETWORK, INC.
RIGHTS OFFERING
DTC PARTICIPANT OVERSUBSCRIPTION EXERCISE FORM
THIS FORM IS TO BE USED ONLY BY DEPOSITORY TRUST COMPANY PARTICIPANTS TO
EXERCISE THE OVERSUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO
WHICH THE BASIC SUBSCRIPTION PRIVILEGE WAS EXERCISED AND DELIVERED THROUGH THE
FACILITIES OF THE DEPOSITORY TRUST COMPANY. ALL OTHER EXERCISES OF
OVERSUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF SUBSCRIPTION
DOCUMENTS.
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
COMPANY'S PROSPECTUS DATED JULY 22, 1998 (THE "PROSPECTUS") AND ARE
INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON
REQUEST FROM THE INFORMATION AGENT AND THE SUBSCRIPTION AGENT.
VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL BY 5:00
P.M., NEW YORK CITY TIME, ON SEPTEMBER 10, 1998, UNLESS EXTENDED (THE
"EXPIRATION DATE").
1. The undersigned hereby certifies to the Company and the Subscription
Agent that it is a participant in The Depository Trust Company ("DTC") and
that it has either (i) exercised the Basic Subscription Privilege in respect
of Rights and delivered such exercised Rights to the Subscription Agent by
means of transfer to the DTC account of the Subscription Agent or (ii)
delivered to the Subscription Agent a Notice of Guaranteed Delivery in respect
of the exercise of the Basic Subscription Privilege and will deliver the
Rights called for in such Notice of Guaranteed Delivery to the Subscription
Agent by means of transfer to such DTC account of the Subscription Agent.
2. The undersigned hereby exercises the Oversubscription Privilege to
purchase, to the extent available, shares of Common Stock and certifies to the
Company and the Subscription Agent that such Oversubscription Privilege is being
exercised for the account or accounts of persons (which may include the
undersigned) on each of whose behalf the Basic Subscription Privilege has been
fully exercised.
The undersigned understands that payment of the Subscription Price of $1.60
per share for each share of Common Stock subscribed for pursuant to the
Oversubscription Privilege must be received by the Subscription Agent at or
before 5:00 p.m. New York City time on the Expiration Date and represents that
such payment, in the aggregate amount of $ either (check appropriate box):
[_] has been or is being delivered to the Subscription Agent pursuant to the
Notice of Guaranteed Delivery referred to above;
or
[_] is being delivered to the Subscription Agent herewith;
1
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-effective Amendment No. 1
to the Registration Statement on Form S-3 of our report dated January 13, 1997
on the financial statements of College Television Network, Inc. (the "Company")
for the year ended October 31, 1996, included in the Company's Annual Report on
Form 10-KSB for the year ended October 31, 1997, and to the reference to our
firm under the caption "Experts" included in the Prospectus.
/s/ Richard A. Eisner & Company, LLP
New York, New York
July 30, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
December 19, 1997, appearing on page F-1 of College Television Network, Inc.'s
Annual Report on Form 10-KSB for the year ended October 31, 1997. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
Pricewaterhouse Coopers LLP
Atlanta, Georgia
July 30, 1998
