<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- ----------------------------
Commission File Number :
0-23008
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AMERICAN TELECASTING, INC.
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(Exact name of registrant as specified in its charter)
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Delaware 54-1486988
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
5575 Tech Center Drive, Colorado Springs, CO 80919
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 260 - 5533
------------------------------------
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of October 31, 1996, 19,852,912 shares of the registrant's Common Stock, par
value $.01 per share, were outstanding.
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AMERICAN TELECASTING, INC.
INDEX
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Page
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1995 and September 30, 1996 . . . . . . . . . . 3
Condensed Consolidated Statements of Operations -
Three Months Ended September 30, 1995 and 1996 and
Nine Months Ended September 30, 1995 and 1996 . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1995 and 1996 . . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 16
Items 2-5. None
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 17
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<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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December 31, September 30,
1995 1996
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(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents .............................................. $ 32,514 $ 16,936
Trade accounts receivable, net ......................................... 2,171 1,503
Prepaid expenses and other current assets .............................. 2,874 2,303
-------- --------
Total current assets .................................................... 37,559 20,742
Property and equipment, net ............................................. 112,377 115,156
Deferred license and leased license acquisition costs, net .............. 143,006 152,664
Goodwill, net ........................................................... 16,030 15,380
Deferred financing costs ................................................ 5,268 4,921
Other assets, net ....................................................... 2,809 2,242
-------- --------
Total assets .................................................... $317,049 $311,105
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .................................. $ 20,003 $ 19,567
Current portion of long-term obligations ............................... 11,062 6,783
Customer deposits ...................................................... 605 423
-------- -- --------
Total current liabilities ............................................... 31,670 26,773
Deferred income taxes ................................................... 6,131 5,858
2004 Notes .............................................................. 116,864 130,606
2005 Notes .............................................................. 100,262 112,211
Other long-term obligations, net of current portion ..................... 8,370 4,972
Minority interest. ...................................................... 16 947
-------- --------
Total liabilities ............................................... 263,313 281,367
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value; 3,000,000 shares authorized;
no shares issued and outstanding ....................................... -- --
Class A Common Stock, $.01 par value; 30,000,000 shares authorized;
16,435,974 and 19,852,912 shares issued and outstanding, respectively .. 164 199
Class B Common Stock, $.01 par value; 10,000,000 shares authorized; no
shares issued and outstanding .......................................... -- --
Additional paid-in capital .............................................. 135,364 168,692
Common Stock warrants outstanding ....................................... 10,130 10,129
Accumulated deficit ..................................................... (91,922) (149,282)
-------- --------
Total stockholders' equity ...................................... 53,736 29,738
-------- --------
Total liabilities and stockholders' equity ...................... $317,049 $311,105
======== ========
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See accompanying Notes to Condensed Consolidated Financial Statements.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
1995 1996 1995 1996
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Revenues:
Service and other................................................. $ 12,641 $ 15,131 $ 32,493 $ 45,295
Installation...................................................... 368 325 947 1,006
---------- ---------- ---------- ----------
Total revenues.................................................... 13,009 15,456 33,440 46,301
Costs and Expenses:
Operating......................................................... 6,678 8,623 17,058 26,011
Marketing......................................................... 2,568 2,091 6,070 6,445
General and administrative........................................ 4,057 4,646 11,492 14,166
Depreciation and amortization..................................... 7,852 11,456 19,855 31,570
---------- ---------- ---------- ----------
Total costs and expenses.......................................... 21,155 26,816 54,475 78,192
---------- ---------- ---------- ----------
Loss from operations.............................................. (8,146) (11,360) (21,035) (31,891)
Interest expense.................................................. (7,032) (9,578) (15,465) (27,465)
Interest income................................................... 733 298 1,518 884
Other income (expense), net....................................... 20 344 (27) 840
---------- ---------- ---------- ----------
Loss before income tax benefit.................................... (14,425) (20,296) (35,009) (57,632)
Income tax benefit................................................ 74 84 2,183 273
---------- ---------- ---------- ----------
Loss before extraordinary charge and cumulative effect of
change in accounting for installation costs, net of income taxes. (14,351) (20,212) (32,826) (57,359)
Extraordinary charge on early retirement of debt.................. (11,541) -- (11,541) --
Cumulative effect of change in accounting
for installation costs, net of income taxes of $369............... -- -- 602 --
---------- ---------- ---------- ----------
Net loss.......................................................... $ (25,892) $ (20,212) $ (43,765) $ (57,359)
========== ========== ========== ==========
Net income (loss) per share - see Note 2:
Loss per share before extraordinary charge and cumulative
effect of accounting change...................................... $ (0.88) $ (1.09) $ (2.07) $ (3.28)
Loss per share from extraordinary charge.......................... (0.70) -- (0.73) --
Income per share from cumulative effect of accounting
change............................................................ -- -- 0.04 --
---------- ---------- ---------- ----------
Net loss per share................................................ $ (1.58) $ (1.09) $ (2.76) $ (3.28)
========== ========== ========== ==========
Weighted average number of shares outstanding..................... 16,385,630 18,583,169 15,833,843 17,506,036
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
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Nine Months Ended
September 30,
-------------------------------
1995 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...................................................... $(43,765) (57,359)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................................ 19,855 31,570
Deferred income taxes ........................................ (2,183) (273)
Amortization of debt discount and deferred financing costs ... 13,406 26,005
Extraordinary charge on early retirement of debt ............. 11,541 --
Cumulative effect of accounting change ....................... (602) --
Other ........................................................ 55 (682)
Changes in operating assets and liabilities .................. (1,864) (2,738)
-------- --------
Net cash used in operating activities ....................... (3,557) (3,477)
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of short-term investments .......................... 20,002 --
Purchases of property and equipment ........................... (31,081) (26,669)
Payments received on loans to related parties and others.... .. -- 252
Additions to deferred license and leased license
acquisition costs ............................................ (3,427) (9,573)
Additions to other intangible assets. ......................... (227) --
Net cash used in acquisitions ................................. (15,596) (1,827)
-------- --------
Net cash used in investing activities ....................... (30,329) (37,817)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock, net of
stock issuance costs ......................................... 510 20,587
Proceeds from issuance of Series B Convertible Preferred
Stock, net of stock issuance costs ........................... -- 9,466
Proceeds from issuance of Common Stock Warrants. .............. 5,480 --
Proceeds from issuance of 2005 Notes. ......................... 91,001 --
Borrowings under revolving credit facilities .................. 24,100 200
Principal payments on revolving credit facilities ............. (35,429) (3,500)
Increase in deferred financing costs .......................... (1,859) --
Minority interest contributions ............................... -- 1,260
Principal payments on notes payable ........................... (2,062) (1,678)
Principal payments on capital lease obligations ............... (386) (619)
-------- --------
Net cash provided by financing activities .................... 81,355 25,716
-------- --------
Net increase (decrease) in cash and cash equivalents ........... 47,469 (15,578)
Cash and cash equivalents, beginning of period ................. 13,329 32,514
-------- --------
Cash and cash equivalents, end of period ....................... $ 60,798 $ 16,936
======== ========
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See accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE> 6
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS DESCRIPTION
History and Organization
American Telecasting, Inc. ("ATI") owns and operates a network of
wireless cable television systems providing subscription television
service. ATI and its subsidiaries are collectively referred to herein as
the "Company." As of September 30, 1996 the Company owned and operated 39
wireless cable systems located throughout the United States. The Company
also has significant channel interests in 16 other markets where it
expects to construct wireless cable systems in the future.
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair
presentation have been included. All significant intercompany accounts
and transactions have been eliminated in consolidation. Operating results
for the nine-month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all short-term investments with original
maturities of 90 days or less to be cash equivalents. As of September 30,
1996, cash equivalents principally consisted of commercial paper and
federal government/agency debt securities.
Net Loss Per Share
Net loss per share is computed on the weighted-average number of
common shares outstanding for the respective periods. The effect of
common stock equivalents on net loss per share is not included as it
would be anti-dilutive. Fully diluted loss per share is not presented as
it would not materially differ from primary loss per share.
3. PENDING ACQUISITION
On June 28, 1996, the Company entered into a definitive agreement to
acquire wireless cable channel rights and certain other subscription
television assets in Cincinnati, Ohio (the "Cincinnati Acquisition") for
aggregate consideration of approximately $5.2 million (of which
approximately $2.2 million has been paid as of September 30, 1996). Also
on June 28, 1996, the Company acquired certain of the Cincinnati
subscription television assets and entered into a management agreement to
operate the subscription television assets that it has not yet acquired.
Completion of the Cincinnati Acquisition is subject to certain
contingencies, such as FCC approvals, the satisfactory completion of due
diligence, and other customary conditions to closing, which may or may
not be satisfied. There can be no assurance that the Cincinnati
Acquisition will be consummated.
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<PAGE> 7
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
4. LONG-TERM DEBT
Long-term debt at September 30, 1996 consists of the following (in
thousands):
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2004 Notes ................. $130,606
2005 Notes ................. 112,211
Revolving credit facility .. 4,950
Notes payable .............. 4,803
Capital leases ............. 2,002
--------
Total ...................... 254,572
Less current portion ....... 6,783
--------
Long-term debt ............. $247,789
========
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Fresno MMDS Associates (the "Fresno Partnership") maintains an $8.5
million revolving credit facility (the "Fresno Facility") that provides
for borrowings for the Fresno, Visalia and Merced systems. As of
September 30, 1996, approximately $5.0 million was outstanding under the
Fresno Facility and no amounts were available for borrowing. Outstanding
borrowings bear interest at the banks' prime rate plus 2.25%. (10.50% at
September 30, 1996). Effective June 30, 1996, the Fresno Facility was
amended (the "Amended Agreement") to, among other things, (i) permit the
incurrence by the Fresno Partnership of up to $2.3 million in
subordinated debt due ATI; (ii) permit the payment to ATI by the Fresno
Partnership of a loan fee of up to $23,000; and (iii) modify certain of
the financial and other operating covenants specified in the original
agreement. In addition, past violations of certain financial and other
operating covenants associated with the Fresno Facility were waived by
the bank. In exchange for the bank's entering into the Amended
Agreement, the Fresno Partnership agreed to cause the bank's
participation in the Fresno Facility to be eliminated, by March 31, 1997,
through prepayment by the Fresno Partnership of all amounts due,
assignment of the bank's participation to a third party lender or
lenders, which may include ATI, or some combination of the foregoing. In
connection therewith, as of September 30, 1996 ATI has purchased, in the
aggregate, a $3.5 million participation in the Fresno Facility from the
bank. The bank's participation in the Fresno Facility is required to be
further reduced by $2.0 million on December 31, 1996, with any remaining
participation by the bank to be fully reduced by March 31, 1997. As of
September 30, 1996, the Fresno Partnership was not in compliance with the
maximum indebtedness per subscriber covenant of the Fresno Facility. The
Fresno Partnership, ATI and the bank have agreed in principle upon the
terms of an amendment to the Credit Facility which would waive such
noncompliance and modify certain future financial covenants. In
connection with the amendment, ATI has agreed to guaranty the Fresno
Partnership's outstanding indebtedness under the Fresno Facility.
Effectiveness of the amendment is subject to definitive documentation.
The Fresno Facility also contains restrictive covenants that, among other
things, prohibit the payment of dividends.
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<PAGE> 8
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. SERIES B CONVERTIBLE PREFERRED STOCK
On August 7, 1996, the Company completed a private placement of
100,000 shares of Series B Convertible Preferred Stock, resulting in net
proceeds to the Company of $9.4 million. The Series B Convertible
Preferred Stock had a preferential, cumulative 5% dividend and was
non-voting. Each share of Series B Preferred Stock was convertible, at
the option of the holder, into that number of shares of Common Stock that
was determined by dividing (a) the sum of (i) the original issuance price
for each such share of Series B Preferred Stock plus (ii) the amount of
all accrued but unpaid dividends on each share of Series B Preferred
Stock so converted, by (b) the Conversion Price (as defined herein) in
effect at the time of conversion. The "Conversion Price" at any given
time was equal to 80% of the prevailing market price of the Common Stock,
provided that the Conversion Price could not exceed $12.50 or be less
than $2.00.
During September 1996, all 100,000 shares of Series B Convertible
Preferred Stock were converted into a total of 1,342,459 shares of the
Company's Class A Common Stock at conversion prices ranging from $7.10 to
$7.87. Aggregate dividends paid to holders of the Series B Convertible
Preferred Stock totaled approximately $68,000 and are included in the
accompanying statements of operations as interest expense. As of
September 30, 1996, no shares of Series B Convertible Preferred Stock
were outstanding and all such shares previously issued had been canceled
pursuant to the conversion described above. On October 25, 1996, the
Company completed a private placement of an additional 150,000 shares of
Series B Convertible Preferred Stock, resulting in net proceeds to the
Company of $14.3 million. The shares issued in the October 1996 private
placement have similar terms and conversion features as those issued in
August 1996.
6. COMMITMENTS AND CONTINGENCIES
Litigation
In January 1996, Videotron (Bay Area) Inc. filed a complaint against
ATI in the Circuit Court of the Thirteenth Judicial Circuit in and for
Hillsborough County, Florida. The Complaint alleges that ATI has caused
certain entities from which ATI leases channels and airtime for its
Bradenton and Lakeland, Florida wireless cable markets (the "ATI
Lessors") to actively oppose Videotron's FCC applications to increase
broadcast power in Videotron's Tampa, Florida wireless cable system (the
"Tampa market") in violation of a Non-Interference Agreement between
Videotron and ATI (the "Non-Interference Agreement"). The complaint
seeks injunctive relief directing ATI to perform all acts, services and
undertakings required under the Non-Interference Agreement, including but
not limited to using reasonable best efforts to cause the ATI Lessors not
to object to Videotron's attempt to increase broadcast power in the Tampa
market and to enter into certain non-interference agreements with respect
thereto. In the alternative, the Complaint seeks damages for breach of
the Non-Interference Agreement (in an unspecified amount but exceeding
$15,000). Recently, in responding to written interrogatories, Videotron
estimated its damages to be approximately $113.5 million. Although the
ultimate outcome of this litigation cannot be predicted at this time,
management believes, based upon its review of the complaint and after
consultation with counsel, that resolution of this matter will not have a
material adverse impact on the Company's financial position or future
results of operations.
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<PAGE> 9
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
AMERICAN TELECASTING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. COMMITMENTS AND CONTINGENCIES -- CONTINUED
In February 1994, a complaint was filed by Fresno Telsat, Inc.
("Fresno Telsat") in the Superior Court of the State of California for
the County of Monterey against two officers of the Company (one of whom
is also a director), the Company, and other named and unnamed defendants.
The complaint seeks compensatory damages (in an unspecified amount but
estimated by the plaintiff to be no less than $5.0 million) and exemplary
damages against all defendants, costs, and other relief. The complaint
alleges, among other claims, that all defendants, including the Company,
participated in a conspiracy to misappropriate corporate opportunities
belonging to Fresno Telsat. Although the ultimate outcome of this matter
cannot be predicted, management believes, based on its review of this
claim and discussion with legal counsel, that the resolution of this
matter will not have a material impact on the Company's financial
position or future results of operations.
BTA Auction
The Company was involved in the recently completed bidding process
for wireless cable channel authorizations in certain basic trading areas
("BTAs"). The Company was the highest bidder in 59 markets. In the
aggregate, the Company's bids in these markets totaled approximately
$10.1 million. Of such amount, approximately $9.3 million has been paid
in the form of upfront fees paid prior to commencement of the auction
(approximately $1.5 million), a downpayment with respect to each BTA for
which the Company was the highest bidder (approximately $500,000), and
required payments upon the FCC's notification to the Company of the
issuance of certain of its BTA licenses (approximately $7.3 million).
The remaining amount (approximately $800,000) is due upon the FCC's
notification to the Company of the issuance of the remainder of its BTA
licenses, which the Company expects will occur before the end of 1996.
As of September 30, 1996, the Company's condensed consolidated balance
sheet reflects approximately $2.5 million as accrued liabilities relating
to the Company's BTA payments (of which $1.7 million was paid in October
1996).
7. NONCASH FINANCING ACTIVITIES
In February 1996, $2.5 million of the notes issued in connection
with the Company's September 1995 acquisition of Superchannels of Las
Vegas, Inc. were converted into 162,854 shares of ATI Common Stock.
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All statements contained herein that are not historical facts,
including but not limited to, statements regarding anticipated future
capital requirements, the Company's future development plans, the
Company's ability to obtain additional debt, equity or other financing,
and the Company's ability to generate cash from system operations or
sales of assets, are based on current expectations. These statements
are forward looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors
that could cause actual results to differ materially are the following:
the availability of sufficient capital to finance the Company's business
plan on terms satisfactory to the Company; competitive factors, such as
the introduction of new technologies and competitors into the
subscription television business; pricing pressures which could affect
demand for the Company's service; changes in labor, equipment and
capital costs; future acquisitions or strategic partnerships; general
business and economic conditions; and the other risk factors described
from time to time in the Company's reports filed with the SEC. The
Company wishes to caution readers not to place undue reliance on any
such forward looking statements, which statements are made pursuant to
the Private Securities Litigation Reform Act of 1995 and, as such, speak
only as of the date made.
BUSINESS FOCUS
During 1996, the Company has focused on managing its existing systems
through more efficient and cost-effective methods, planning for the
implementation of a digital technology strategy for video and other services in
select markets, and developing strategic alliances. During the remainder of
1996 and in 1997, the Company intends to continue the growth of certain of its
analog wireless cable systems that management believes can achieve stable
customer bases with a favorable balance of customer growth, subscriber capital
investment, and expenses. Other systems operated by the Company will not be
managed for customer growth, but rather for optimal cash flow from existing
customers. In these systems, the Company intends to focus its marketing
efforts on new commercial and multiple dwelling unit customers.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations require substantial amounts of capital for (i)
the installation of equipment in new subscribers' homes, (ii) the construction
of additional transmission and headend facilities and related equipment
purchases, (iii) the funding of start-up losses and other working capital
requirements, (iv) the acquisition of additional wireless cable channel rights
and systems, and (v) investments in, and maintenance of, vehicles and
administrative offices. The Company's capital expenditures, exclusive of
acquisitions of wireless cable systems and additions to deferred license and
leased license acquisition costs, during the nine-month periods ended September
30, 1995 and 1996 were approximately $31.1 million, and $26.7 million,
respectively. Such expenditures were primarily for the installation of
equipment in new subscribers' homes and the construction and expansion of the
Company's wireless cable systems.
As of September 30, 1996, the Company had significant channel interests in
16 markets where it expects to construct wireless cable systems in the future,
assuming, among other factors, that sufficient financing is available. There
can be no assurance that the Company will be successful in constructing and
launching these systems. The Company expects to incur significant capital
expenditures in connection with construction and development of these systems,
as well as expansion of existing markets and acquisition activities. There can
be no assurance that the Company's current development plans will not be
altered to respond to specific market opportunities, channel availability,
competitive factors, or other industry developments, or that its capital
requirements will not increase as a result of future acquisitions.
-10-
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company was involved in the recently completed bidding
process for wireless cable channel authorizations in certain basic
trading areas ("BTAs"). The Company was the highest bidder in 59
markets. In the aggregate, the Company's bids in these markets totaled
approximately $10.1 million. Of such amount, a total of approximately
$9.3 million has been paid in the form of upfront fees paid prior to
commencement of the auction (approximately $1.5 million), a downpayment
with respect to each BTA for which the Company was the highest bidder
(approximately $500,000), and required payments upon the FCC's
notification to the Company of the issuance of certain of its BTA
licenses (approximately $7.3 million). The remaining amount
(approximately $800,000) is due upon the FCC's notification to the
Company of the issuance of the remainder of its BTA licenses, which the
Company expects will occur before the end of 1996.
The Company has experienced negative cash flow from operations
in each year since its formation, and although certain of the Company's
more mature systems currently generate positive cash flow from
operations, the Company expects to continue to experience negative
consolidated cash flow from operations due to operating costs associated
with system development, expansion and acquisition activities. Until
sufficient cash flow is generated from operations, the Company will be
required to utilize its current capital resources or external sources of
funding to satisfy its working capital and capital expenditure needs.
Currently, the Company has one credit facility (the Fresno
Facility). No amounts are currently available for borrowing under the
Fresno Facility, which provides for borrowings for the Company's Fresno,
Visalia and Merced systems. Effective June 30, 1996, the Fresno Facility
was amended (the "Amended Agreement") to, among other things (i) permit
the incurrence by the Fresno Partnership of up to $2.3 million in
subordinated debt due ATI; (ii) permit the payment to ATI by the Fresno
Partnership of a loan fee of up to $23,000; and (iii) modify certain of
the financial and other operating covenants specified in the original
agreement. In addition, past violations of certain financial and other
operating covenants associated with the Fresno Facility were waived by
the bank. In exchange for the bank's entering into the Amended
Agreement, the Fresno Partnership agreed to cause the bank's
participation in the Fresno Facility to be eliminated, by March 31,
1997, through prepayment by the Fresno Partnership of all amounts due,
assignment of the bank's participation to a third party lender or
lenders, which may include ATI, or some combination of the foregoing. In
connection therewith, as of September 30, 1996 ATI has purchased, in the
aggregate, a $3.5 million participation in the Fresno Facility from the
bank. The bank's participation in the Fresno Facility is required to be
further reduced by $2.0 million on December 31, 1996, with any remaining
participation by the bank to be fully reduced by March 31, 1997. As of
September 30, 1996, the Fresno Partnership was not in compliance with
the maximum indebtedness per subscriber covenant of the Fresno Facility.
The Fresno Partnership, ATI and the bank have agreed in principle upon
the terms of an amendment to the Credit Facility which would waive such
noncompliance and modify certain future financial covenants. In
connection with the amendment, ATI has agreed to guaranty the Fresno
Partnership's outstanding indebtedness under the Fresno Facility.
Effectiveness of the amendment is subject to definitive documentation.
Future system expansion requirements of the Fresno, Visalia and
Merced systems are expected to be financed from additional cash
contributions or advances from ATI. The Company does not expect that it
will be able to expand the Fresno, Visalia and Merced systems without
additional bank or other financing. System expansion requirements
during 1996 for the Company's other operating wireless cable systems and
its markets not yet launched are expected to be financed from existing
cash and investment balances, additional equity or other financing,
borrowings under future credit facilities, and cash generated from
system operations. While the Company has been able to arrange
satisfactory bank debt facilities to date, there can be no assurance
that sufficient debt financing will continue to be available in the
future, or that it will be available on terms acceptable to the Company.
-11-
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
In May 1996, the Company completed an offering of 1,700,000
shares of its Class A Common Stock resulting in net proceeds of
approximately $19.9 million. In August 1996, the Company completed a
private placement of 100,000 shares of Series B Convertible Preferred
Stock resulting in net proceeds to the Company of $9.4 million. In
October 1996, the Company completed the sale of its Yankton, South
Dakota wireless cable system and its wireless cable channel assets in
Sioux Falls, South Dakota for cash consideration totaling $3.0 million
(of which approximately $400,000 is being held in escrow pending
completion of certain post closing events). On October 25, 1996, the
Company completed a private placement of an additional 150,000 shares of
Series B Convertible Preferred Stock, resulting in net proceeds to the
Company of $14.3 million.
The Company will require additional equity, debt or other
financing during 1997 to fund its projected needs for working capital
(including debt service), as well as its capital expenditure
requirements for its existing systems and markets not yet launched
(including costs associated with the conversion of certain of its
existing systems to digital operation). Management plans to meet its
future cash needs through a combination of equity, subordinated debt and
bank financing, and from cash generated from operations. Without such
additional financing, the Company will be required to significantly
curtail its operations and expansion plans. There can be no assurance
that additional debt, equity or other financing will be available on
terms acceptable to the Company, or at all. As appropriate
opportunities become available, the Company may sell or lease additional
channel rights from its portfolio or may sell certain of its operating
wireless cable systems, subject to certain restrictions described below.
In addition, the Company may finance its future development of wireless
cable systems, acquisitions of wireless cable systems and channel
rights, and general corporate activities through joint ventures or other
arrangements. There can be no assurance that such arrangements will be
available on terms acceptable to the Company, or at all.
The indentures associated with the 2004 Notes and the 2005
Notes contain a number of covenants and other provisions that impose
certain financial and operating constraints on the Company as long as
any 2004 Notes or 2005 Notes remain outstanding. These covenants
include limitations on consolidated debt, limitations on certain
payments, investments and distributions, and limitations on liens and
certain asset sales. As a result of such limitations, the Company's
additional borrowing capacity currently approximates $5.7 million.
Accordingly, the Company's ability to finance ongoing working capital
and system expansion requirements from borrowings under existing or
future credit facilities is currently limited. The Fresno Facility also
contains a number of restrictive covenants, including a restriction on
the ability of certain of ATI's subsidiaries to pay dividends or make
loans to ATI.
Under the terms of a Supplemental Indenture governing the 2004
Notes dated August 10, 1995, the yield to maturity of the 2004 Notes was
to be adjusted to 15 1/2% per annum (from 14 1/2% per annum) if the
Company did not, between August 10, 1995 and November 10, 1996, issue
equity securities having a value at the time of issuance of at least
$50.0 million in the aggregate. Since August 10, 1995, the Company has
issued equity securities on several occasions which had an aggregate
value at the time of issuance in excess of $50.0 million. These
issuances satisfy the condition set forth in the Supplemental Indenture;
accordingly, the yield to maturity of the 2004 Notes will remain at 14 1/2%.
In February 1996, $2.5 million of the notes issued in
connection with the Company's September 1995 acquisition of
Superchannels of Las Vegas, Inc. were converted into 162,854 shares of
ATI Common Stock.
-12-
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company continuously pursues opportunities to acquire, sell
or exchange businesses and channel rights consistent with its business
plan. Except for the Cincinnati Acquisition (as defined below) and the
CS Exchange (as defined below), as of the date of this Report, the
Company has no written agreements, arrangements or understandings to
acquire any material wireless cable businesses or assets. On June 28,
1996, the Company entered into a definitive agreement to acquire
wireless cable channel rights and certain other subscription television
assets in Cincinnati, Ohio (the "Cincinnati Acquisition") for aggregate
consideration of approximately $5.2 million (of which approximately $2.2
million has been paid). Also on June 28, 1996, the Company acquired
certain of the Cincinnati subscription television assets and entered
into a management agreement to operate the subscription television
assets that it has not yet acquired. The subscription television assets
acquired or to be acquired by the Company in connection with the
Cincinnati Acquisition served approximately 3,100 subscribers as of
September 30, 1996. On July 29, 1996, the Company and CS Wireless
Systems, Inc. ("CS") executed a non-binding letter of intent pursuant to
which the Company will exchange all of its wireless cable assets in
Louisville, Kentucky; Little Rock, Arkansas; Oklahoma City, Oklahoma and
Wichita, Kansas (the "ATI Systems") for all of CS's wireless cables
assets in Minneapolis, Minnesota and Stockton, Modesto and Bakersfield,
California (the "CS Markets") plus approximately $5.5 million in cash
(the "CS Exchange"). The ATI Systems currently serve approximately
27,000 customers in service areas consisting of approximately 1.3
million households. The CS Markets currently serve approximately 13,500
subscribers in service areas consisting of approximately 1.5 million
households. In connection with the CS Exchange, ATI will transfer the
BTA license for the Wichita market to CS and CS will cause to be
transferred to ATI the BTA licenses for Minneapolis, Stockton, Modesto
and Bakersfield. Completion of both the Cincinnati Acquisition and the
CS Exchange are subject to certain contingencies, such as FCC approvals,
the satisfactory completion of due diligence, and other customary
conditions to closing, which may or may not be satisfied. There can be
no assurance that a definitive agreement will be reached with respect to
the CS Exchange or that the CS Exchange or the Cincinnati Acquisition
will be consummated. Any future acquisitions may require additional
equity or other financing.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 Compared to Three Months Ended September
30, 1995
Service revenues increased $2.5 million, or 20.0%, during the
three months ended September 30, 1996 to $15.1 million, as compared to
$12.6 million during the same period of 1995. This increase resulted
primarily from the addition of new subscribers. Subscriber increases
resulted primarily from the 1995 acquisitions of the Redding, Las Vegas
and Rapid City systems and the completion of construction and
commencement of operation of systems in Yuba City and Lincoln during
1995 and Anchorage and Portland during 1996. Service price increases
contributed only a small portion of the aggregate increase in service
revenues. The number of subscribers to the Company's wireless cable
systems increased to 179,500 at September 30, 1996 compared to 178,000
at June 30, 1996 (160,700 and 143,900 at September 30, 1995 and June 30,
1995, respectively).
On a "same system" basis (comparing systems that were
operational for all of each of the three-month periods ended September
30, 1995 and 1996), service revenues increased $909,000, or 7.3%, to
$13.4 million, as compared to $12.5 million for the three-month period
ended September 30, 1995. Same systems during this period totaled 30
systems. The average number of same-system subscribers increased
approximately 8.0% during the three months ended September 30, 1996, as
compared to the same period of 1995.
Installation revenues for the three months ended September 30,
1996 totaled $325,000, compared to $368,000 during the same period of
1995. The net decrease in installation revenues of $43,000, or 11.7%,
resulted from fewer installations being performed, net of less
discounting of installation rates. Installation rates vary widely by
system based upon competitive conditions. The Company occasionally
reduces installation charges as part of selected promotional campaigns.
The number of installations completed during the three months ended
September 30, 1996 decreased approximately 29.4% as compared to the same
period during 1995.
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<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Operating expenses, principally programming, site costs and
other direct expenses, aggregated $8.6 million (or 55.8% of total
revenues) during the three months ended September 30, 1996, compared to
$6.7 million (or 51.3% of total revenues) during the same period of
1995. The increase of $1.9 million was primarily the result of
additional systems and subscribers as well as increased programming
costs for additions to channel line-ups and increased pay-per-view
offerings in various systems.
Marketing and selling expenses totaled $2.1 million (or 13.5%
of total revenues) during the three months ended September 30, 1996,
compared to $2.6 million (or 19.7% of total revenues) during the same
period of 1995. The decrease in such expenses of $477,000 resulted from
decreased marketing activity, net of marketing expenses associated with
the addition of new systems. During the three-month period ended
September 30, 1996, general and administrative expenses totaled $4.6
million (or 30.0% of total revenues), a $589,000 increase over the same
period of 1995 ($4.1 million or 31.2% of total revenues). This increase
also resulted from the addition of new systems.
The Company's loss from operations was $11.4 million during the
three-month period ended September 30, 1996, compared to $8.2 million
during the same period of 1995. The increase in the loss from
operations of $3.2 million resulted primarily from increased
depreciation and amortization expense. Depreciation and amortization
expense (principally depreciation of property and equipment and
amortization of deferred license and leased license acquisition costs,
goodwill and covenants not-to-compete) increased $3.6 million due to
increases in deferred license costs, goodwill and subscriber equipment
resulting from the acquisition and addition of new systems and the
addition of equipment installed in new subscribers' homes.
Interest expense increased $2.6 million during the quarter
ended September 30, 1996 to $9.6 million, as compared to $7.0 million
during the same period of 1995. The increase in interest expense
primarily resulted from noncash interest charges associated with the
Company's 14.5% Senior Discount Notes due 2005 (the "2005 Notes") issued
in connection with the Company's August 1995 units offering (the "1995
Units Offering") and the Company's Senior Discount Notes due 2004 (the
"2004 Notes") issued in connection with the Company's June 1994 units
offering (the "1994 Units Offering"). Interest expense associated with
the 2004 Notes also increased due to an increase in the interest rate on
the 2004 Notes from 12.5% to 14.5% effected in conjunction with the 1995
Units Offering. Earnings before interest, taxes, depreciation and
amortization totaled $96,000 for the three months ended September 30,
1996 (including $389,000 attributable to the ATI Systems), as compared
to a loss before interest, taxes, depreciation, and amortization of
$294,000 during the same period of 1995.
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September
30, 1995
Service revenues increased $12.8 million, or 39.4%, during the
nine months ended September 30, 1996 to $45.3 million, as compared to
$32.5 million during the same period of 1995. This increase resulted
primarily from the addition of new subscribers. Subscriber increases
resulted primarily from the 1995 acquisitions of the Medford, Sheridan,
Fresno, Visalia, Merced, Redding, Las Vegas and Rapid City systems and
the completion of construction and commencement of operation of systems
in Ft. Collins, Greeley, Yuba City and Lincoln during 1995 and Anchorage
and Portland during 1996. Service price increases contributed only a
small portion of the aggregate increase in service revenues. The number
of subscribers to the Company's wireless cable systems increased to
179,500 at September 30, 1996 compared to 173,700 at December 31, 1995
(160,700 and 106,500 at September 30, 1995 and December 31, 1994,
respectively).
-14-
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
On a "same system" basis (comparing systems that were
operational for all of each of the nine-month periods ended September
30, 1995 and 1996), service revenues increased $5.7 million, or 19.7%,
to $34.9 million for the nine months ended September 30, 1996, as
compared to $29.2 million for the nine-month period ended September 30,
1995. Same systems during this period totaled 25 systems. The average
number of subscribers in these systems increased approximately 16.8%
during the nine months ended September 30, 1996, as compared to the same
period of 1995.
Installation revenues for the nine months ended September 30,
1996 totaled $1.0 million compared to $947,000 during the same period of
1995. The net increase in installation revenues of $59,000, or 6.2%,
resulted from less discounting of installation rates, net of the impact
of fewer installations being performed. The number of installations
completed during the nine months ended September 30, 1996 decreased
approximately 12.6% as compared to the same period during 1995.
Operating expenses, principally programming, site costs and
other direct expenses, aggregated $26.0 million (or 56.2% of total
revenues) during the nine months ended September 30, 1996, compared to
$17.1 million (or 51.0% of total revenues) during the same period of
1995. The increase of $8.9 million was primarily the result of
additional systems and subscribers as well as increased programming
costs for additions to channel line-ups and increased pay-per-view
offerings in various systems.
Marketing and selling expenses totaled $6.4 million (or 13.9%
of total revenues) during the nine months ended September 30, 1996,
compared to $6.1 million (or 18.2% of total revenues) during the same
period of 1995. The increase in such expenses of $375,000 resulted from
the addition of new systems, net of decreased marketing activity. During
the nine-month period ended September 30, 1996, general and
administrative expenses totaled $14.2 million (or 30.6% of total
revenues), a $2.7 million increase over the same period of 1995 ($11.5
million or 34.4% of total revenues). This increase also resulted from
the addition of new systems.
The Company's loss from operations was $31.9 million during the
nine-month period ended September 30, 1996, compared to $21.0 million
during the same period of 1995. The increase in the loss from
operations of $10.9 million resulted primarily from increased
depreciation and amortization expense. Depreciation and amortization
expense (principally depreciation of property and equipment and
amortization of deferred license and leased license acquisition costs,
goodwill and covenants not-to-compete) increased $11.7 million due to
increases in deferred license costs, goodwill and subscriber equipment
resulting from the acquisition and addition of new systems and the
addition of equipment installed in new subscribers' homes.
Interest expense increased $12.0 million during the quarter
ended September 30, 1996 to $27.5 million, as compared to $15.5 million
during the same period of 1995. The increase in interest expense
primarily resulted from noncash interest charges associated with the
2005 Notes issued in connection with 1995 Units Offering and the 2004
Notes issued in connection with the 1994 Units Offering. Interest
expense associated with the 2004 Notes also increased due to an increase
in the interest rate on the 2004 Notes from 12.5% to 14.5%, effected in
conjunction with the 1995 Units Offering. The loss before interest,
taxes, depreciation and amortization totaled $321,000 for the nine
months ended September 30, 1996, as compared to $1.2 million during the
same period of 1995. During the nine months ended September 30, 1996,
the ATI Systems generated earnings before interest, taxes, depreciation
and amortization totaling approximately $1.3 million.
-15-
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On January 12, 1996, Videotron (Bay Area) Inc. filed a
complaint against American Telecasting, Inc. ("ATI") in the Circuit
Court of the Thirteenth Judicial Circuit in and for Hillsborough County,
Florida. The Complaint alleges that ATI has caused certain entities
from which ATI leases channels and airtime for its Bradenton and
Lakeland, Florida wireless cable markets (the "ATI Lessors") to actively
oppose Videotron's FCC applications to increase broadcast power in
Videotron's Tampa, Florida wireless cable system (the "Tampa market") in
violation of a Non-Interference Agreement between Videotron and ATI (the
"Non-Interference Agreement"). The Complaint seeks injunctive relief
directing ATI to perform all acts, services and undertakings required
under the Non-Interference Agreement, including but not limited to using
reasonable best efforts to cause the ATI Lessors not to object to
Videotron's attempt to increase broadcast power in the Tampa market and
to enter into certain non-interference agreements with respect thereto.
In the alternative, the Complaint seeks damages for breach of the
Non-Interference Agreement (in an unspecified amount but exceeding
$15,000). Recently, in responding to written interrogatories, Videotron
estimated its damages to be approximately $113.5 million. Although the
ultimate outcome of this litigation cannot be predicted at this time,
management of ATI believes, based upon its review of the Complaint and
after consultation with counsel, that resolution of this matter will not
have a material adverse impact on the Company's financial position or
future results of operations.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, the Company is a named
defendant in a lawsuit filed by Fresno Telsat, Inc. ("FTI") in the
Superior Court of the State of California for the County of Monterey
(the "FTI Proceeding"). On August 28, 1996, ATI filed a Cross-Complaint
(the "Cross Complaint") against FTI and certain of its officers and
directors (the "Cross-Defendants"). The Cross-Complaint alleges that
the Cross-Defendants have engaged in a violation of Section 26-1-8-401
of the Indiana Code, conversion, conspiracy, and breach of trust by
failing to acknowledge and record ATI's ownership of shares of FTI's
capital stock purchased by ATI from a former shareholder of FTI, and
continuing to represent that FTI qualifies for Subchapter S status under
the Internal Revenue Code. The Crossclaim seeks specific performance of
the transfer of shares to ATI, compensatory damages, punitive damages,
an injunction against any further actions by the Cross-Defendants in
breach of trust or with the effect of dissipating and diverting the
property and assets of FTI, and the appointment of a receiver to handle
the affairs of FTI during the pendency of the FTI proceeding. Discovery
is ongoing in the FTI Proceeding.
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<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Stock Purchase Agreement dated as of August 6, 1996 by
and among American Telecasting, Inc., Museum Assets Ltd.,
and Ashline, Ltd.
10.2 Stock Purchase Agreement dated as of October 25, 1996 by
and among American Telecasting, Inc. Wartone Property
Holdings Ltd., Haletko Ltd., and Tarian Properties Ltd.
27 Financial Data Schedule
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the quarter
ended September 30, 1996:
(i) Current Report on Form 8-K dated July 29, 1996 to report,
under Item 5, that the Company had entered into a
non-binding letter intent with CS Wireless Systems, Inc. to
exchange certain wireless cable assets.
(ii) Current Report on Form 8-K dated August 7, 1996 to
report, under Item 5, that the Company had completed a
private placement of 100,000 shares of a newly created
series of its preferred stock, designated as "Series B
Convertible Preferred Stock," to two investors in
exchange for $10.0 million in cash.
(iii) Current Report on Form 8-K dated August 7, 1996 to
report, under Item 5, that effective as of August 7,
1996, William J. Blake resigned from the Board of
Directors of American Telecasting, Inc.
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<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN TELECASTING, INC.
Date: November 7, 1996 By:/s/ David K. Sentman
-------------------- -----------------------
David K. Sentman
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 7, 1996 By:/s/ John R. Hager
-------------------- -----------------------
John R. Hager
Controller
(Principal Accounting Officer)
-18-
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
10.1 Stock Purchase Agreement dated as of August 6, 1996 by and among
American Telecasting, Inc., Museum Assets Ltd., and Ashline, Ltd.
10.2 Stock Purchase Agreement dated as of October 25, 1996 by and
among American Telecasting, Inc., Wartone Property Holdings
Ltd., Haletko Ltd., and Tarian Properties Ltd.
27 Financial Data Schedule
</TABLE>
-19-
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 6,
1996, by and among American Telecasting, Inc., a Delaware corporation (the
"Company"), Museum Assets Ltd., a corporation organized under the laws of the
Republic of Ireland, and Ashline Ltd., a corporation organized under the laws
of the Republic of Ireland (each a "Purchaser").
ARTICLE I
Purchase and Sale of Preferred Stock
I.1 Purchase and Sell. Upon the basis of the representations,
warranties and covenants, for the consideration, and subject to the terms and
conditions set forth in this Agreement, the Company hereby sells to each
Purchaser, and each Purchaser purchases from the Company, 50,000 shares of a
series of preferred stock, $.01 par value per share, of the Company (the
"Preferred Stock") designated as the Series B Convertible Preferred Stock and
having the preferences and rights set forth in the form of Certificate of
Designation attached as Exhibit A hereto (the "Certificate"), free and clear of
all claims, liens, charges and encumbrances of any nature whatsoever, and, in
consideration of the sale of the shares of Preferred Stock by the Company to
each Purchaser, such Purchaser is hereby paying cash to the Company in the
aggregate amount of $5,000,000. Each Purchaser hereby acknowledges receipt of
the certificate evidencing the Preferred Stock purchased by it and the Company
hereby acknowledges receipt from each Purchaser of its purchase price.
ARTICLE II
Representations, Warranties and Covenants of the Company
The Company hereby represents, warrants and covenants to each Purchaser
as follows:
II.1 Incorporation and Organization. The Company is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware and has full corporate power and authority to own and operate its
assets and properties and carry on its businesses as presently conducted and is
duly qualified to do business and is in good standing in all jurisdictions in
which the ownership or occupancy of its properties or its activities presently
makes such qualification necessary, except where the failure to so qualify or
be in good standing would not have a material adverse effect upon the
businesses, properties or assets of the Company and its subsidiaries taken as a
whole.
II.2 Authority and Validity. The Company has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, including without limitation the sale and
issuance of the Preferred Stock hereunder and the issuance of shares of the
Company's Class A Common Stock, $.01 par value per share (the "Common Stock"),
upon conversion of the Preferred Stock. The execution and delivery by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The shares of Preferred Stock are,
<PAGE> 2
and any shares of Common Stock when issued upon conversion of the Preferred
Stock in accordance with this Agreement and the Preferred Stock will be, duly
and validly issued, fully paid and nonassessable and free of pre-emptive rights
by any shareholders of the Company.
II.3 Consents and Approvals. Assuming the accuracy of the
representation of each Purchaser set forth in Section 3.5 hereof and except as
may be required pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), in connection with the Company's registration
obligation under Article V hereof, all authorizations, approvals and consents,
if any, required to be obtained from, and all registrations, declarations and
filings, if any, required to be made with all governmental authorities and
regulatory bodies to permit the Company to execute and deliver, and to perform
its obligations under, this Agreement have been obtained or made, as the case
may be, and all such authorizations, approvals, consents, registrations,
declarations and filings (collectively, "Company consents and filings") are in
full force and effect, except where failure to obtain and/or maintain in full
force and effect such Company consents and filings would not have a material
adverse effect upon the execution and delivery of, and upon the performance of
the Company's obligations under, this Agreement.
II.4 No Violations. Neither the execution or delivery by the Company,
nor the consummation by the Company of the transactions herein contemplated,
nor the fulfillment by the Company of the terms and provisions hereof (other
than the requirement that the Company repurchase securities under the
circumstances contemplated by Section 4.1(b) hereof) (i) will conflict with,
violate or result in a breach of, any of the terms, conditions or provisions of
any law, regulation, order, writ, injunction, decree, determination or award of
any court, governmental department, board, agency or instrumentality or any
arbitrator, applicable to the Company, (ii) will conflict with, violate or
result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of the Company's certificate of incorporation,
certificates of designations and by-laws, or (iii) will conflict with, violate
or result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of any material loan agreement, indenture, trust, deed
or other agreement or instrument to which the Company is a party or by which it
is bound, except where such conflict, violation or breach will not have a
material adverse effect on the Company's execution, delivery, consummation or
fulfillment of this Agreement.
II.5 Public Documents. As of the dates on which they were filed, none
of the Company's filings with the Securities and Exchange Commission (the
"SEC") since January 1, 1995 contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has registered the Common
Stock pursuant to Section 12 of the Exchange Act and the Common Stock is
included for trading on the NASDAQ Stock Market. The Company has filed in a
timely manner all material required to be filed pursuant to all applicable
reporting obligations under either Section 13(a) or 15(d) of the Exchange Act
for a period of at least 12 months prior to the date hereof.
II.6 Full Disclosure. There is no fact known to the Company (other
than general economic conditions known to the public generally) that has not
been disclosed in the Company's filings with the SEC that (i) is likely to have
a material adverse effect on the condition (financial or otherwise) or in the
earnings, business affairs, business prospects, properties or assets of the
Company and its subsidiaries taken as a whole or (ii) is likely to materially
and adversely affect the ability of the Company to perform its obligations
pursuant to this Agreement.
II.7 Exemption from Securities Act. Assuming that the
representations, warranties and acknowledgments of each Purchaser provided for
in Article III hereof are true and correct, the sale of the shares of Preferred
Stock to such Purchaser pursuant to this Agreement will be exempt from the
registration provisions of the Securities Act and the registration provisions
of any blue sky or other state securities law or regulation (hereinafter
collectively referred to as "blue sky laws") of any applicable jurisdiction.
2
<PAGE> 3
II.8 Conversion. Subject to compliance by each Purchaser with its
representations, warranties and covenants hereunder, the Company will permit
such Purchaser to exercise its right to convert shares of Preferred Stock by
telecopying an executed and completed Notice of Conversion (as defined in the
Certificate) to the Company and delivering the original Notice of Conversion
and the certificate representing the shares of Preferred Stock to the Company
by express courier. Each date on which a Notice of Conversion is telecopied to
and received by the Company in accordance with the provisions hereof shall be
deemed a Conversion Date (as defined in the Certificate). Subject to
compliance by the Purchaser with its representations, warranties and covenants
hereunder, the Company will transmit the certificates representing shares of
Common Stock issuable upon conversion of any shares of Preferred Stock
(together with the certificates representing the shares of Preferred Stock not
so converted) to the Purchaser via express courier or otherwise within three
business days after the date on which the Company receives the original Notice
of Conversion and certificate for the shares of Preferred Stock being so
converted. In addition to any other remedies which may be available to each
Purchaser, in the event that the Company fails for any reason to transmit such
certificates within such three-business day period, each Purchaser will be
entitled to revoke any relevant Notice of Conversion sent by it by delivering
by telecopy a notice to such effect to the Company not later than the time at
which such Purchaser actually receives such certificates, whereupon the Company
and such Purchaser shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion and the Company
shall not be liable in any manner for such failure.
ARTICLE III
Representations, Warranties and Covenants of the Purchasers
Each Purchaser hereby represents, warrants and covenants to the Company
solely with respect to itself as follows:
III.1 Organization. Such Purchaser has been duly organized and is
subsisting as a corporation under the laws of the Republic of Ireland and has
full power and authority to own and operate its assets and properties and carry
on its businesses as presently conducted.
III.2 Authority. Such Purchaser has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by such Purchaser of this Agreement and the
consummation by such Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary action of such Purchaser. This Agreement
has been duly and validly executed and delivered by such Purchaser and
constitutes a valid and binding obligation of such Purchaser enforceable
against such Purchaser in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be brought.
III.3 Consents and Approvals. Assuming the accuracy of the
representation of the Company set forth in Section 2.3 hereof, all
authorizations, approvals and consents, if any, required to be obtained from,
and all registrations, declarations and filings, if any, required to be made
with, all governmental authorities and regulatory bodies to permit such
Purchaser to execute and deliver, and to perform its obligations under, this
Agreement have been obtained or made, as the case may be, and all such
authorizations, approvals, consents, registrations, declarations and filings
(collectively, "Purchaser consents and filings") are in full force and effect,
except where failure to obtain and/or maintain in full force and effect the
Purchaser consents and filings would not have a material adverse effect upon
the execution and delivery of, and upon the performance of the Purchasers'
obligations
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under, this Agreement.
III.4 No Violations. Neither the execution or delivery by such
Purchaser of this Agreement, nor the consummation by such Purchaser of the
transactions herein contemplated, nor the fulfillment by such Purchaser of the
terms and provisions hereof (i) will conflict with, violate or result in a
breach of, any of the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality or any arbitrator,
applicable to such Purchaser, (ii) will conflict with, violate or result in a
breach of, or constitute a default under, any of the terms, conditions or
provisions of such Purchaser's organizational documents or (iii) will conflict
with, violate or result in a breach of, or constitute a default under, any of
the terms, conditions or provisions of any material loan agreement, indenture,
trust, deed or other agreement or instrument to which such Purchaser is a party
or by which it or he is bound, except where such conflict, violation or breach
will not have a material adverse effect on such Purchaser's execution,
delivery, consummation or fulfillment of this Agreement.
III.5 Investment Representation. Such Purchaser is an accredited
investor within the meaning of Regulation D promulgated under the Securities
Act and is acquiring the shares of Preferred Stock and any shares of Common
Stock issuable upon conversion thereof (collectively, the "Company Securities")
for its own account for investment purposes, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act. Such Purchaser understands that the Company Securities have
not been registered under the Securities Act or any blue sky laws in reliance,
in part, upon the representations, warranties and covenants contained herein.
Such Purchaser also understands that it cannot offer for sale, sell or transfer
the Company Securities except as provided below.
III.6 Transfer Restrictions. Such Purchaser agrees that the following
restrictive legend will be placed on certificates representing any or all of
the Company Securities and that transfer of any or all of the Company
Securities may be refused by the Company's transfer agent unless the Company
Securities for which transfer is sought are registered under the Securities Act
and all other applicable federal securities or blue sky laws or unless such
Purchaser provides information satisfactory to the Company that such
registration is not required:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OTHER THAN (1) TO THE COMPANY, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES."
Such Purchaser agrees that the Company Securities being delivered
pursuant to this Agreement shall not be transferred by such Purchaser except
(i) pursuant to an effective registration statement under the Securities Act,
or (ii) pursuant to an exemption from registration under the Securities Act.
Each Purchaser represents and warrants that it has (i) such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Company Securities, (ii) all
information deemed by it to be necessary or appropriate to evaluate the risks
and merits of an investment in the Company Securities, (iii) received all
information requested from the Company and (iv) had the opportunity to ask
questions of and receive answers from representatives of the Company concerning
the Company.
III.7 Trading in Securities of the Company; Conversion. For so long
as a Purchaser shall hold
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<PAGE> 5
shares of Preferred Stock which remain convertible into shares of Common Stock,
such Purchaser nor any of its affiliates will not directly or indirectly (i)
establish or maintain any short position in any securities of the Company, it
being agreed that its ownership of the Company Securities shall be disregarded
for purposes of determining whether there is a short position, or (ii) within
three business days prior to the giving of a "Conversion Notice" with respect
to the Preferred Stock, sell or otherwise dispose of any shares of Common Stock
or securities convertible into or exercisable for shares of Common Stock.
ARTICLE IV
Registration
IV.1 Registration. (a) The Company agrees to effect the registration
under the Securities Act and relevant blue sky laws of the shares of Common
Stock issuable upon conversion of the Preferred Stock (the "Registration
Shares") in order to permit their resale by the Purchaser, it being agreed for
such purposes that the Company will have complied with its agreement to
register shares hereunder if such registration statement covers the resale of
that number of Registration Shares equal to twice the number of shares of
Common Stock that would be issued if all of the Preferred Stock were to be
converted on the day prior to the initial filing of such registration
statement. The Company and the Purchaser shall cooperate in good faith in
connection with the furnishing of information required for such registration
and the taking of such other actions as may be legally or commercially
necessary in order to effect such registration. Within 20 days following the
date hereof, the Company shall file a registration statement on Form S-3 with
respect to the resale of the Registration Shares and shall use its best efforts
to cause such registration statement to become effective as soon as practicable
thereafter. Such best efforts shall include, but not be limited to, (i)
promptly responding to all comments received from the staff of the SEC, (ii)
providing the Purchasers' counsel with a contemporaneous copy of all written
communications from and to the staff of the SEC with respect to such
registration statement, (iii) promptly preparing and filing amendments to such
registration statement which are responsive to the comments received from the
staff of the SEC, (iv) furnishing to each Purchaser such number of copies of
each prospectus included in the registration statement for the Registration
Shares, including each preliminary prospectus, each of which shall be in
conformity with the requirements of the rules and regulations of the SEC, (v)
notifying each Purchaser at any time when a prospectus relating to such
Registration Shares is required to be delivered under rules and regulations of
the SEC of the happening of any event as a result of which the prospectus
included in the registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of circumstances then existing, and at each Purchaser's request,
preparing and furnishing to it a reasonable number of copies of a supplement to
or amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registration Shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, (vi) using its
reasonable commercial efforts to cause all Registration Shares to be included
for trading on the NASDAQ Stock Market and (vii) in instances where an
exemption from such qualification is not available, using its reasonable best
efforts to register or qualify the Registration Shares under the securities or
blue sky laws of such jurisdictions as each Purchaser shall reasonably request;
provided, that the Company shall not be required to register or qualify under
the blue sky laws in states where the Company is already cleared. Once
declared effective by the SEC, the Company shall cause such registration
statement to remain effective until the earlier of (i) the sale by the
Purchaser of all shares of Common Stock so registered or (ii) the end of the
period during which shares of Preferred Stock remain convertible. In the event
that the Company has not effected the registration of the Registration Shares
within 90 days after the date hereof, the Company shall pay to each Purchaser
by wire transfer, as liquidated damages for such failure and not as a penalty,
an amount in cash equal to $100,000 for each period of 30 consecutive days (or
portion thereof) following the expiration of such 90-day period, such amounts
to be due and payable on the last day of each such period. The payment of such
liquidated damages shall not relieve the
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<PAGE> 6
Company from its obligations to register the Registration Shares pursuant to
this Article IV except as hereinafter provided. In addition to the payment of
such liquidated damages, if the registration of the Registration Shares has not
been effected within 180 days of the date hereof the Company shall, within five
business days of a written request therefor from a Purchaser, repurchase all of
the shares of Preferred Stock or all of the Registration Shares issued upon the
conversion thereof held by such Purchaser, in each case for a cash purchase
price equal to $5,000,000 (ratably reduced to the extent such Purchaser shall
have disposed of shares of Preferred Stock or Registration Shares prior to such
purchase) by wire transfer of immediately available funds to an account
designated by such Purchaser. Upon payment of such amount to such Purchaser,
the obligation of the Company to pay liquidated damages to such Purchaser as a
consequence of the failure to effect the registration of the Registration
Shares shall be terminated prospectively.
(b) In anticipation of the registration of the Registration Shares
under the Securities Act and the rules and regulations promulgated thereunder
pursuant to this Agreement, the Company will: (i) indemnify and hold harmless
each Purchaser and each other person, if any, who controls each Purchaser
within the meaning of the Securities Act (each such party, an "Indemnified
Party"), to the fullest extent permitted by law, against any losses, claims,
damages or liabilities, joint or several, to which any such Indemnified Party
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement under which the
Registration Shares were registered under the Securities Act and the rules and
regulations promulgated thereunder, any preliminary prospectus or final
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and (ii) reimburse each Indemnified Party for any legal or any
other expenses reasonably incurred thereby in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Indemnified Party
specifically for use in the preparation thereof.
(c) Each Purchaser will (i) indemnify and hold harmless the Company
and each other person, if any, who controls the Company within the meaning of
the Securities Act, to the fullest extent permitted by law, against any losses,
claims, damages or liabilities, joint or several, to which the Company or such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which the Registration Shares were registered under the Securities Act and the
rules and regulations promulgated thereunder, any preliminary prospectus or
final prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) reimburse the Company and each other person, if any,
who controls the Company within the meaning of the Securities Act for any legal
or any other expenses reasonably incurred thereby in connection with
investigating or defending any such loss, claim, damage, liability or action,
in each case to the extent and only to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Purchaser specifically for use in
the preparation thereof, provided, however, that the aggregate liability of
each Purchaser to the Company or such controlling person shall be limited
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<PAGE> 7
to the net proceeds received by such Purchaser from the sale of Registration
Shares covered by such registration statement.
(d) In addition to the indemnification and remedies provided above,
each of the Company, on the one hand, and the Purchasers, on the other hand,
agrees to indemnify the other and hold the other harmless from and against any
and all losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other party may sustain or incur in connection with
the breach by the indemnifying party of any representation, warranty or
covenant made by it in this Agreement.
ARTICLE V
Miscellaneous
V.1 Collateral Agreements, Amendments and Waivers. This Agreement
supersedes all prior documents, understandings and agreements, oral or written,
relating to this transaction and constitutes the entire understanding between
the parties with respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement may be made only by
an instrument in writing executed by the party against whom enforcement thereof
is sought.
V.2 Successors and Assigns. Neither the Purchaser's nor the Company's
rights or obligations under this Agreement may be assigned, except that each
Purchaser may assign its rights hereunder to an affiliate, provided that (i)
such affiliate is deemed an "accredited investor" within the meaning of
Regulation D of the Securities Act, (ii) the affiliate certifies to the Company
that it is an "accredited investor" and (iii) the affiliate shall execute and
deliver such documentation as the Company deems necessary to be bound by the
terms of this Agreement. Any assignment in violation of the foregoing shall be
null and void. Subject to the preceding sentences of this Section 5.2, the
provisions of this Agreement (and, unless otherwise expressly provided therein,
of any document delivered pursuant to this Agreement) shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
V.3 Expenses. Each party shall pay all costs and expenses incurred by
it in connection with the negotiation, execution and delivery of this Agreement
and the transactions contemplated hereby. The Company shall pay all costs and
expenses incurred in connection with the registration of the Registration
Shares pursuant to Article IV hereof, except that the Company will not be
responsible for paying either Purchaser's legal costs or brokerage commissions
incurred in connection therewith.
V.4 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, then, if
possible, such illegal, invalid or unenforceable provision will be modified to
such extent as is necessary to comply with such present or future laws and such
modification shall not affect any other provision hereof, provided that if such
provision may not be so modified such illegality, invalidity or
unenforceability will not affect any other provision, but this Agreement will
be reformed, construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein.
V.5 Notices. In any case where any notice or other communication is
required or permitted to be given hereunder (including, without limitation, any
change in the information set forth in this Section 5.5) such notice or
communication shall be in writing and (a) personally delivered, (b) sent by
registered United States mail,, postage prepaid, return receipt requested, (c)
transmitted by telecopy or (d) sent by way of a recognized overnight courier
service, postage prepaid, return receipt requested with instructions to deliver
on the next business day, in each case as follows:
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<PAGE> 8
If to the Company, to:
American Telecasting, Inc.
5575 Tech Center Drive
Suite 300
Colorado Springs, Colorado 80919
Attention: David Sentman
Telecopy: (800) 215-5740
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Randall H. Doud, Esq.
Telecopy: (212) 735-2000
If to the Purchasers, to:
Museum Assets Ltd.
83 Dana Crescent
Thornhill, Ontario
Canada L4J3H9
Telecopy: (416) 667-7677
Ashline Ltd.
18 Troyer Court
Thornhill, Ontario
Canada L4J2M7
Telecopy: (416) 667-7679
with a copy to:
Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, New York 10036-6710
Attention: Jeffrey E. LaGueux, Esq.
Telecopy: (212) 336-2222
V.6 Public Announcement. Neither the Company nor the Purchaser shall
issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be unreasonably
withheld, provided that the Company may make such disclosure as it deems
appropriate pursuant to its reporting obligations under the Exchange Act and
that each party may issue such press releases or public announcements as shall
be required by law.
V.7 No Third-Party Beneficiaries. No person or entity not a party to
this Agreement shall be deemed to be a third-party beneficiary hereunder or
entitled to any rights hereunder.
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V.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAW. EACH OF THE PARTIES CONSENTS TO THE
JURISDICTION OF THE FEDERAL COURTS WHOSE DISTRICTS ENCOMPASSES ANY PART OF THE
STATE OF NEW YORK OR THE STATE COURTS OF THE STATE OF NEW YORK IN CONNECTION
WITH ANY DISPUTE ARISING UNDER THIS AGREEMENT AND HEREBY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION BASED ON FORUM
NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH JURISDICTIONS.
EACH PARTY HEREBY AGREES THAT IF ANOTHER PARTY TO THIS AGREEMENT OBTAINS A
JUDGMENT AGAINST IT IN SUCH A PROCEEDING, THE PARTY WHICH OBTAINED SUCH
JUDGMENT MAY ENFORCE SAME BY SUMMARY JUDGMENT IN THE COURTS OF ANY COUNTRY
HAVING JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT WAS OBTAINED, AND
EACH PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER LOCAL LAW AND
AGREES TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO THIS AGREEMENT
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
V.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which may be executed by one or more of the parties
hereto, but all of which, when taken together, shall constitute but one
agreement binding upon each of the parties hereto.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
AMERICAN TELECASTING, INC.
By:
-----------------------------------
Name:
Title:
MUSEUM ASSETS LTD.
By:
-----------------------------------
Name:
Title:
ASHLINE LTD.
By:
-----------------------------------
Name:
Title:
<PAGE> 1
EXIBIT 10.2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October
25, 1996, by and among American Telecasting, Inc., a Delaware corporation (the
"Company"), Wartone Property Holdings Ltd., a corporation organized under the
laws of the Republic of Ireland, Harletko Ltd., a corporation organized under
the laws of the Republic of Ireland, and Tarian Properties Ltd., a corporation
organized under the laws of the Republic of Ireland (each a "Purchaser").
ARTICLE I
Purchase and Sale of Preferred Stock
1.1 Purchase and Sell. Upon the basis of the representations,
warranties and covenants, for the consideration, and subject to the terms and
conditions set forth in this Agreement, the Company hereby sells to each
Purchaser, and each Purchaser purchases from the Company, 50,000 shares of a
series of preferred stock, $.01 par value per share, of the Company (the
"Preferred Stock") designated as the Series B Convertible Preferred Stock and
having the preferences and rights set forth in the form of Certificate of
Designation attached as Exhibit A hereto (the "Certificate"), free and clear of
all claims, liens, charges and encumbrances of any nature whatsoever, and, in
consideration of the sale of the shares of Preferred Stock by the Company to
each Purchaser, such Purchaser is hereby paying cash to the Company in the
aggregate amount of $5,000,000. Each Purchaser hereby acknowledges receipt of
the certificate evidencing the Preferred Stock purchased by it and the Company
hereby acknowledges receipt from each Purchaser of its purchase price.
ARTICLE II.
Representations, Warranties and Covenants of the Company
The Company hereby represents, warrants and covenants to each
Purchaser as follows;
2.1 Incorporation and Organization. The Company is a
corporation duly formed, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own and
operate its assets and properties and carry on its businesses as presently
conducted and is duly qualified to do business and is in good standing in all
jurisdictions in which the ownership or occupancy of its properties or its
activities presently makes such qualification necessary, except where the
failure to so qualify or, be in good standing would not have a material adverse
effect upon the businesses, properties or assets of the Company and its
subsidiaries taken as a whole.
<PAGE> 2
2.2 Authority and Validity. The Company has all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby, including without limitation the sale and
issuance of the Preferred Stock hereunder and the issuance of shares of the
Company's Class A Common Stock, $.01 par value per share (the "Common Stock"),
upon conversion of the Preferred Stock. The execution and delivery by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of the Company. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The shares of Preferred Stock are, and any
shares of Common Stock when issued upon conversion of the Preferred Stock in
accordance with this Agreement and the Preferred Stock will be, duly and
validly issued, fully paid and nonassessable and free of preemptive rights by
any shareholders of the Company.
2.3 Consents and Approvals. Assuming the accuracy of the
representation of each Purchaser set forth in Section 3.5 hereof and except as
may be required pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), in connection with the Company's registration
obligation under Article V hereof, all authorizations, approvals and consents,
if any, required to be obtained from, and all registrations, declarations and
filings, if any, required to be made with all governmental authorities and
regulatory bodies to permit the Company to execute and deliver, and to perform
its obligations under, this Agreement have been obtained or made, as the case
may be, and all such authorizations, approvals, consents, registrations,
declarations and filings (collectively, "Company consents and filings") are in
full force and effect, except where failure to obtain and/or maintain in full
force and effect such Company consents and filings would not have a material
adverse effect upon the execution and delivery of, and upon the performance of
the Company's obligations under, this Agreement.
2.4 No Violations. Neither the execution or delivery by the
Company, nor the consummation by the Company of the transactions herein
contemplated, nor the fulfillment by the
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<PAGE> 3
Company of the terms and provisions hereof (other than the requirement that the
Company repurchase securities under the circumstances contemplated by Section
4.1(b) hereof) (i) will conflict with, violate or result in a breach of, any of
the terms, conditions or provisions of any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality or any arbitrator, applicable to
the Company, (ii) will conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of the
Company's certificate of incorporation, certificates of designations and
bylaws, or (iii) will conflict with, violate or result in a breach of, or
constitute a default under, any of the terms, conditions or provisions of any
material loan agreement, indenture, trust, deed or other agreement or
instrument to which the Company is a party or by which it is bound, except
where such conflict, violation or breach will not have a material adverse
effect on the Company's execution, delivery, consummation or fulfillment of
this Agreement.
2.5 Public Documents. As of the dates on which they were
filed, none of the Company's filings with the Securities and Exchange
Commission (the "SEC") since January 1, 1995 contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has
registered the Common Stock pursuant to Section 12 of the Exchange Act and the
Common Stock is included for trading on the NASDAQ Stock Market. The Company
has filed in a timely manner all material required to be filed pursuant to all
applicable reporting obligations under either Section 13(a) or 15(d) of the
Exchange Act for a period of at least 12 months prior to the date hereof.
2.6 Full Disclosure. There is no fact known to the company
(other than general economic conditions known to the public generally) that has
not been disclosed in the Company's filings with the SEC that (i) is likely to
have a material adverse effect on the condition (financial or otherwise) or in
the earnings, business affairs, business prospects, properties or assets of the
Company and its subsidiaries taken as a whole, or (ii) is likely to materially
and adversely affect the ability of the Company to perform its obligations
pursuant to this Agreement.
2.7 Exemption from Securities Act. Assuming that the
representations, warranties and acknowledgments of each Purchaser provided for
in Article III hereof are true and correct, the sale of the shares of Preferred
Stock to such Purchaser pursuant to
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<PAGE> 4
this Agreement will be exempt from the registration provisions of the
Securities Act and the registration provisions of any blue sky or other state
securities law or regulation (hereinafter collectively referred to as "blue sky
laws") of any applicable jurisdiction.
2.8 Conversion. Subject to compliance by each Purchaser with
its representations, warranties and covenants hereunder, the Company will
permit such Purchaser to exercise its right to convert shares of Preferred
Stock by telecopying an executed and completed Notice of Conversion (as defined
in the Certificate) to the Company and delivering the original Notice of
Conversion and the certificate representing the shares of Preferred Stock to
the Company by express courier. Each date on which a Notice of Conversion is
telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a Conversion Date (as defined in the Certificate).
Subject to compliance by the Purchaser with its representations, warranties and
covenants hereunder, the company will transmit the certificates representing
shares of Common Stock issuable upon conversion of any shares of Preferred
Stock (together with the certificates representing the shares of Preferred
Stock not so converted) to the Purchaser via express courier or otherwise
within three business days after the date on which the Company receives the
original Notice of Conversion and certificate for the shares of Preferred Stock
being so converted, In addition to any other remedies which may be available to
each Purchaser, in the event that the Company fails for any reason to transmit
such certificates within such three-business day period, each Purchaser will be
entitled to revoke any relevant Notice of Conversion sent by it by delivering
by telecopy a notice to such effect to the Company not later than the time at
which such Purchaser actually receives such certificates, whereupon the Company
and such Purchaser shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion and the Company
shall not be liable in any manner for such failure.
ARTICLE III
Representations, Warranties and Covenants of the Purchasers
Each Purchaser hereby represents, warrants and covenants to the
Company solely with respect to itself as follows:
3.1 Organization. Such Purchaser has been duly organized and
is subsisting as a corporation under the laws of the Republic of Ireland and
has full power and authority to own
-4-
<PAGE> 5
and operate its assets and properties and carry an its businesses as presently
conducted.
3.2 Authority. Such Purchaser has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by such Purchaser of this
Agreement and the consummation by such Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action of such
Purchaser. This Agreement has been duly and validly executed and delivered by
such Purchaser and constitutes a valid and binding obligation of such Purchaser
enforceable against such Purchaser in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
3.3 Consents and Approvals. Assuming the accuracy of the
representation of the Company set forth in Section 2.3 hereof, all
authorizations, approvals and consents, if any, required to be obtained from,
and all registrations, declarations and filings, if any, required to be made
with, all governmental authorities and regulatory bodies to permit such
Purchaser to execute and deliver, and to perform its obligations under, this
Agreement have been obtained or made, as the case may be, and all such
authorizations, approvals, consents, registrations, declarations and filings
(collectively, "Purchaser consents and filings") are in full force and effect,
except where failure to obtain and/or maintain in full force and effect the
Purchaser consents and filings would not have a material adverse effect upon
the execution and delivery of, and upon the performance of the Purchasers'
obligations under, this Agreement.
3.4 No Violations. Neither the execution or delivery by such
Purchaser of this Agreement, nor the consummation by such Purchaser of the
transactions herein contemplated, nor the fulfillment by such Purchaser of the
terms and provisions hereof (i) will conflict with, violate or result in a
breach of, any of the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality or any arbitrator,
applicable to such Purchaser, (ii) will conflict with, violate or result in a
breach of, or constitute a default under, any of the terms, conditions or
provisions of such Purchaser's organizational documents, or (iii) will conflict
with, violate or result in a breach of, or constitute a default under, any of
the terms, conditions or provisions of any material
-5-
<PAGE> 6
loan agreement, indenture, trust, deed or other agreement or instrument to
which such Purchaser is a party or by which it or he is bound, except where
such conflict, violation or breach will not have a material adverse effect on
such Purchaser's execution, delivery, consummation or fulfillment of this
Agreement.
3.5 Investment Representation. Such Purchaser is an
accredited investor within the meaning of Regulation D promulgated under the
Securities Act and is acquiring the shares of Preferred Stock and any shares of
Common Stock issuable upon conversion thereof (collectively, the "Company
Securities") for its own account for investment purposes, and not with a view
to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act. Such Purchaser understands that the Company
Securities have not been registered under the Securities Act or any blue sky
laws in reliance, in part, upon the representations, warranties and covenants
contained herein. Such Purchaser also understands that it cannot offer for
sale, sell or transfer the Company Securities except as provided below.
3.6 Transfer Restrictions. Such Purchaser agrees that the
following restrictive legend will be placed on certificates representing any or
all of the Company Securities and that transfer of any or all of the Company
Securities may be refused by the Company's transfer agent unless the Company
Securities for which transfer is sought are registered under the Securities Act
and all other applicable federal securities or blue sky laws or unless such
Purchaser provides information satisfactory to the Company that such
registration is not required:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED OTHER THAN (1) TO THE COMPANY, (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES."
Such Purchaser agrees that the Company Securities being delivered
pursuant to this Agreement shall not be transferred by such Purchaser except
(i) pursuant to an effective registration statement under the Securities Act,
or (ii) pursuant to an
-6-
<PAGE> 7
exemption from registration under the Securities Act. Each Purchaser
represents and warrants that it has (i) such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Company Securities, (ii) all information deemed
by it to be necessary or appropriate to evaluate the risks and merits of an
investment in the Company Securities, (iii) received all information requested
from the Company, and (iv) had the opportunity to ask questions of and receive
answers from representatives of the Company concerning the Company.
3.7 Trading in Securities Of the Company; Conversion. For so
long as a Purchaser shall hold shares of Preferred Stock which remain
convertible into shares of Common Stock, such Purchaser nor any of its
affiliates will not directly or indirectly (i) establish or maintain any short
position in any securities of the Company, it being agreed that its ownership
of the Company Securities shall be disregarded for purposes of determining
whether there is a short position, or (ii) within three business days prior to
the giving of a "Conversion Notice" with respect to the Preferred Stock, sell
or otherwise dispose of any shares of Common Stock or securities convertible
into or exercisable for shares of Common Stock.
ARTICLE IV
Registration
4.1 Registration. (a) The Company agrees to effect the
registration under the Securities Act and relevant blue sky laws of the shares
of Common Stock issuable upon conversion of the Preferred Stock (the
"Registration Shares") in order to permit their resale by the Purchaser, it
being agreed for such purposes that the Company will have complied with its
agreement to register shares hereunder if such registration statement covers
the resale of that number of Registration Shares equal to twice the number of
shares of Common Stock that would be issued if all of the Preferred Stock were
to be converted on the day prior to the initial filing of such registration
statement. The Company and the Purchaser shall cooperate in good faith in
connection with the furnishing of information required for such registration
and the taking of such other actions as may be legally or commercially
necessary in order to effect such registration. Within 20 days following the
date hereof, the Company shall file a registration statement on Form S-3 with
respect to the resale of the Registration Shares and shall use its best efforts
to cause such registration statement to become effective as soon as practicable
thereafter. Such best efforts shall include, but not be limited to, (i)
promptly responding to all comments received
-7-
<PAGE> 8
from the staff of the SEC, (ii) providing the Purchasers' counsel with a
contemporaneous copy of all written communications from and to the staff of the
SEC with respect to such registration statement, (iii) promptly preparing and
filing amendments to such registration statement which are responsive to the
comments received from the staff of the SEC, (iv) furnishing to each Purchaser
such number of copies of each prospectus included in the registration statement
for the Registration Shares, including each preliminary prospectus, each of
which shall be in conformity with the requirements of the rules and regulations
of the SEC, (v) notifying each Purchaser at any time when a prospectus relating
to such Registration Shares is required to be delivered under rules and
regulations of the SEC of the happening of any event as a result of which the
prospectus included in the registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of circumstances then existing, and at each Purchaser's
request, preparing and furnishing to it a reasonable number of copies of a
supplement to or amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registration Shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, (vi) using its reasonable commercial efforts to cause all
Registration Shares to be included for trading on the NASDAQ Stock Market, and
(vii) in instances where an exemption from such qualification is not available,
using its reasonable best efforts to register or qualify the Registration
Shares under the securities or blue sky laws of such jurisdictions as each
Purchaser shall reasonably request; provided, that the Company shall not be
required to register or qualify under the blue sky laws in states where the
Company is already cleared. Once declared effective by the SEC, the Company
shall cause such registration statement to remain effective until the earlier
of (A) the sale by the Purchaser of all shares of Common Stock so registered,
or (B) the end of the period during which shares of Preferred Stock remain
convertible. In the event that the Company has not effected the registration of
the Registration Shares within 90 days after the date hereof, the Company shall
pay to each Purchaser by wire transfer, as liquidated damages for such failure
and not as a penalty, an amount in cash equal to $100,000 for each period of 30
consecutive days (or portion thereof) following the expiration of such 90-day
period, such amounts to be due and payable on the last day of each such period.
The payment of such liquidated damages shall not relieve the Company from its
obligations to register the Registration Shares pursuant to this Article IV
-8-
<PAGE> 9
except as hereinafter provided. In addition to the payment of such liquidated
damages, if the registration of the Registration Shares has not been effected
within 180 days of the date hereof the Company shall, within five business days
of a written request therefor from a Purchaser, repurchase all of the shares of
Preferred Stock or all of the Registration Shares issued upon the conversion
thereof held by such Purchaser, in each case for a cash purchase price equal to
$5,000,000 (ratably reduced to the extent such Purchaser shall have disposed of
shares of Preferred Stock or Registration Shares prior to such purchase) by
wire transfer of immediately available funds to an account designated by such
Purchaser. Upon payment of such amount to such Purchaser, the obligation of
the Company to pay liquidated damages to such Purchaser as a consequence of the
failure to effect the registration of the Registration Shares shall be
terminated prospectively.
(b) In anticipation of the registration of the
Registration Shares under the Securities Act and the rules and regulations
promulgated thereunder pursuant to this Agreement, the Company will: (i)
indemnify and hold harmless each Purchaser and each other person, if any, who
controls each Purchaser within the meaning of the Securities Act (each such
party, an "Indemnified Party"), to the fullest extent permitted by law, against
any losses, claims, damages or liabilities, joint or several, to which any such
Indemnified Party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which the Registration Shares were registered under the Securities Act and the
rules and regulations promulgated thereunder, any preliminary prospectus or
final prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and (ii) reimburse each Indemnified Party for any legal or any
other expenses reasonably incurred thereby in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus, said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Indemnified Party
-9-
<PAGE> 10
specifically for use in the preparation thereof.
(c) Each Purchaser will (i) indemnify and hold harmless
the Company and each other person, if any, who controls the Company within the
meaning of the Securities Act, to the fullest extent permitted by law, against
any losses, claims, damages or liabilities, joint or several, to which the
Company or such controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which the Registration Shares were registered under the
Securities Act and the rules and regulations promulgated thereunder, any
preliminary prospectus or final prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) reimburse the Company and
each other person, if any, who controls the Company within the meaning of the
Securities Act for any legal or any other expenses reasonably incurred thereby
in connection with investigating or defending any such loss, claim, damage,
liability or action, in each case to the extent and only to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such Purchaser
specifically for use in the preparation thereof; provided, however, that the
aggregate liability of each Purchaser to the Company or such controlling person
shall be limited to the net proceeds received by such Purchaser from the sale
of Registration Shares covered by such registration statement.
(d) in addition to the indemnification and remedies
provided above, each of the Company, on the one hand, and the Purchasers, on
the other hand, agrees to indemnify the other and hold the other harmless from
and against any and all losses, damages, liabilities, costs and expenses
(including reasonable attorneys' fees) which the other party may sustain or
incur in connection with the breach by the indemnifying party of any
representation, warranty or covenant made by it in this Agreement.
-10-
<PAGE> 11
ARTICLE V
Miscellaneous
5.1 Collateral Agreements, Amendments and Waivers. This
Agreement supersedes all prior documents, understandings and agreements, oral
or written, relating to this transaction and constitutes the entire
understanding between the parties with respect to the subject matter hereof.
Any modification or amendment to, or waiver of, any provision of this Agreement
may be made only by an instrument in writing executed by the party against whom
enforcement thereof is sought.
5.2 Successors and Assigns. Neither the Purchasers' nor the
Company's rights or obligations under this Agreement may be assigned, except
that each Purchaser may assign its rights hereunder to an affiliate, provided
that (i) such affiliate is deemed an "accredited investor" within the meaning
of Regulation D of the Securities Act, (ii) the affiliate certifies to the
Company that it is an "accredited investor," and (iii) the affiliate shall
execute and deliver such documentation as the Company deems necessary to be
bound by the terms of this Agreement. Any assignment in violation of the
foregoing shall be null and void. Subject to the preceding sentences of this
Section 5.2, the provisions of this Agreement (and, unless otherwise expressly
provided therein, of any document delivered pursuant to this Agreement) shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.3 Expenses. Each party shall pay all costs and expenses
incurred by it in connection with the negotiation, execution and delivery of
this Agreement and the transactions contemplated hereby. The Company shall pay
all costs and expenses incurred in connection with the registration of the
Registration Shares pursuant to Article IV hereof, except that the Company will
not be responsible for paying either Purchaser's legal costs or brokerage
commissions incurred in connection therewith.
5.4 Invalid Provisions. If any provision of this Agreement is
held to he illegal, invalid or unenforceable under present or future laws,
then, if possible, such illegal, invalid or unenforceable provision will be
modified to such extent as is necessary to comply with such present or future
laws and such modification shall not affect any other provision hereof,
provided that if such provision may not be so modified such illegality,
invalidity or unenforceability will not affect any other provision, but this
Agreement will be reformed, construed and
-11-
<PAGE> 12
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
5.5 Notices. In any case where any notice or other
communication is required or permitted to be given hereunder (including,
without limitation, any change in the information set forth in this Section
5.5) such notice or communication shall be in writing and (i) personally
delivered, (ii) sent by registered United States mail, postage prepaid, return
receipt requested, (iii) transmitted by telecopy, or (iv) sent by way of a
recognized overnight courier service, postage prepaid, return receipt requested
with instructions to deliver on the next business day, in each case as follows:
if to the Company, to:
American Telecasting, Inc.
5575 Tech Center Drive
Suite 300
Colorado Springs, Colorado 80919
Attention: David Sentman
Telecopy: (800) 215-5740
with a copy to:
McDermott, Will & Emery
1850 K Street
Washington, D.C. 20006
Attention: Robert N. Jensen, Esq.
Telecopy: (212) 778-8087
if to any Purchaser, to such Purchaser:
c/o Larkin Corporate Consultants, Ltd.
20 Clanwilliam Terrace
Dublin 2
Republic of Ireland
Telecopy: (___) _____________
with a copy to:
Law Offices of Dan Brecher
909 3rd Avenue
New York, New York 10022
Attention: Dan Brecher, Esq.
Telecopy: (212) 593-5408
-12-
<PAGE> 13
5.6 Public Accountant. Neither the Company nor the
Purchasers, shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld, provided that the Company may make such disclosure as it
deems appropriate pursuant to its reporting obligations under the Exchange Act
and that each party may issue such press releases or public announcements as
shall be required by law.
5.7 No Third-Party Beneficiaries. No person or entity not a
party to this Agreement shall be deemed to be a third-party beneficiary
hereunder or entitled to any rights hereunder.
5.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW. EACH OF THE PARTIES CONSENTS TO
THE JURISDICTION OF THE FEDERAL COURTS WHOSE DISTRICTS ENCOMPASSES ANY PART OF
THE STATE OF NEW YORK OR THE STATE COURTS OF THE STATE OF NEW YORK IN
CONNECTION WITH ANY DISPUTE ARISING UNDER THIS AGREEMENT AND HEREBY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION
BASED ON FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH
JURISDICTIONS. EACH PARTY HEREBY AGREES THAT IF ANOTHER PARTY TO THIS
AGREEMENT OBTAINS A JUDGMENT AGAINST IT IN SUCH A PROCEEDING, THE PARTY WHICH
OBTAINED SUCH JUDGEMENT MAY ENFORCE SAME BY SUMMARY JUDGMENT IN THE COURTS OF
ANY COUNTRY HAVING JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT WAS
OBTAINED, AND EACH PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER LOCAL
LAW AND AGREES TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO THIS
AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
5.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which may be executed by one or more of the parties
hereto, but all of which, when taken together, shall constitute but one
agreement binding upon each of the parties hereto.
[signatures on the following page]
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have duly executive this
Agreement as of the date first above.
AMERICAN TELECASTING, INC.
By:
----------------------------
Name:
----------------------
Title:
---------------------
WARTONE PROPERTY HOLDINGS LTD.
By:
----------------------------
Name:
----------------------
Title:
---------------------
HARLEKO LTD.
By:
----------------------------
Name:
----------------------
Title:
---------------------
TARIAN PROPERTIES LTD.
By:
----------------------------
Name:
----------------------
Title:
---------------------
-14-
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<ARTICLE> 5
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 16,936
<SECURITIES> 0
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<CURRENT-ASSETS> 20,742
<PP&E> 115,156
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<CURRENT-LIABILITIES> 26,773
<BONDS> 242,817
0
0
<COMMON> 168,891
<OTHER-SE> (139,153)
<TOTAL-LIABILITY-AND-EQUITY> 311,105
<SALES> 0
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<INCOME-TAX> (273)
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