<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 17, 1998
PREVIEW TRAVEL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 000-23177 94-2965892
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
747 Front Street, San Francisco, CA 94111
(Address of principal executive offices) (Zip code)
(415) 439-1200
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
-1-
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 17, 1998, Preview Travel, Inc. (the "Company") entered into an
agreement with NewsNet Central, Inc. ("NNC"), under which substantially all of
the assets of the Company's television business, as operated by the Company's
wholly owned subsidiary, News Travel Network, Inc. ("NTN"), will be transferred
to NNC (the "TV Disposition"). Prior to the closing of the TV Disposition,
which is expected to occur on December 31, 1998, the Company will contribute
certain assets to NTN, including the following: (a) cash in the amount of
$88,000, (b) certain assets related to NTN's business, including a library of
travel video content, and (c) assignment of the Company's rights and obligations
under certain contracts related to NTN's business.
In consideration of the transfer of the assets of NTN to NNC, the Company will
receive from NNC the following: (a) a convertible promissory note in the
principal amount of $250,000 (the "Note"), (b) a subordinated promissory note in
the principal amount of $1,000,000 (the "Subordinated Note"), which will bear
interest at the rate of 6% per annum and will be secured by certain portions of
the assets of NNC, including its fixed assets and the video library, and (c) a
warrant to purchase up to 2,275,445 shares of Common Stock of NNC at an exercise
price of $0.45 per share (the "Warrant"). The Note will be due and payable upon
demand by the Company on December 31, 1999; provided, however, that the Note
will be automatically converted into shares of Series A Preferred Stock of NTN
at a conversion price of $4.50 per share upon the occurrence of certain
conditions.
NNC was incorporated under the laws of Delaware on October 19, 1998. As of
December 17, 1998, James Hornthal, the Company's founder and Chairman holds
800,000 shares and the Company holds 829,000 shares of Common Stock of NNC,
which each purchased on November 15, 1998 at a price of $0.015 per share.
Following the closing of the TV Disposition and the conversions of all
outstanding convertible promissory notes, including the Note, the Company will
own approximately 19.7% of NNC's Common Stock (assuming conversion of the Series
A Preferred Stock into Common Stock).
In addition, the Company and NNC will enter into a Services Agreement that will
provide for, among other things, the following: (a) the sublease to NNC of the
Company's facilities at One Beach Street in San Francisco, (b) the Company's
right to act as the co-exclusive advertising sales representative for NTN's
Travel Update programs, (c) a perpetual, nonexclusive, royalty-free license to
use NTN's travel video library (including any enhancements thereto), and (d) the
continued branding of NTN's "Travel News" and "Travel Update" programs with
"Preview Travel" marks. NNC will agree not to provide online travel services for
a period of five years following the termination of the Services Agreement.
As the historical operations of the Company's television business were not
profitable, and due to the significant risks inherent in the independent
television business, the Company has attributed no value to the Subordinated
Note and the Warrant. The net value of the Company's investment in NNC will be
recorded at $250,000.
As of the closing of the TV Disposition, substantially all of the Company's
employees engaged in NTN's business are expected to become employees of NNC.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable.
(b) Pro Forma Financial Information.
-------------------------------
Introduction to Pro Forma Financial Information (Unaudited)
-----------------------------------------------------------
Pro Forma Condensed Consolidated Balance Sheet
The following unaudited Pro Forma Condensed Consolidated Balance Sheet
reflects the historical condensed consolidated balance sheet of
Preview Travel, Inc. and subsidiaries (the "Company") at September 30,
1998, as adjusted to give effect to the TV Disposition.
The unaudited Pro Forma Condensed Consolidated Balance Sheet should be
read in conjunction with the historical financial statements of the
Company and notes thereto and the narrative sections included
elsewhere herein. Because the TV Disposition will occur subsequent to
September 30, 1998, actual adjustments and balances will vary from
those presented in the Pro Forma Condensed Consolidated Balance Sheet.
However, management believes that any differences between actual
adjustments and pro forma adjustments will not be material.
Pro Forma Condensed Consolidated Statements of Operations
The unaudited Pro Forma Condensed Consolidated Statements of
Operations for the three years ended December 31, 1997 and the nine
months ended September 30, 1998 are based upon the historical
condensed consolidated statements of operations of the Company for the
respective periods after giving effect to pro forma adjustments
described in the notes thereto as if the TV Disposition had been
consummated on January 1, 1995.
The unaudited Pro Forma Condensed Consolidated Statements of
Operations should be read in conjunction with the historical financial
statements of the Company and notes thereto and the narrative sections
included elsewhere herein. The Pro Forma Condensed Consolidated
Statements of Operations are not necessarily indicative of what actual
results of operations would have been for the period had the TV
Disposition occurred on January 1, 1995 and do not purport to indicate
the results of future operations.
-3-
<PAGE>
Pro Forma Financial Information
-------------------------------
-4-
<PAGE>
PREVIEW TRAVEL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical TV Disposition As Adjusted
---------- -------------- -----------
<S> <C> <C> <C>
Assets
Cash and cash equivalents $ 27,130 $ (88)(1) $ 27,042
Marketable securities 41,843 41,843
Accounts receivable, net 3,099 3,099
Other assets 2,735 (78)(2) 2,657
-------- --------
Total current assets 74,807 74,641
Film library, net 2,026 (2,026)(2) -
Property & equipment, net 5,409 (1,384)(2) 4,025
Investment in NewsNet Central - 250 (3) 250
-------- --------
Total assets $ 82,242 $ 78,916
======== ========
Liabilities & Stockholders' Equity
Accounts payable 506 506
Accrued liabilities 3,595 720 (4) 4,315
Deferred revenue 166 166
Current portion of capital lease obligations 1,357 1,357
-------- --------
Total current liabilities 5,624 6,344
Capital lease obligations, less current portion 2,051 2,051
-------- --------
Total liabilities 7,675 8,395
-------- --------
Stockholders' equity:
Common stock 14 14
Additional paid-in capital 115,161 115,161
Other stockholders' equity (393) (393)
Accumulated deficit (40,215) (4,046)(5) (44,261)
-------- --------
Total stockholders' equity 74,567 70,521
-------- --------
Total liabilities and stockholders' equity $ 82,242 $ 78,916
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
-5-
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
The TV Disposition pro forma adjustments have been made to reflect the
following:
(1) Cash consideration paid by the Company to NNC upon disposition.
(2) Elimination of assets included in TV Disposition.
(3) Value of investment in NNC in exchange for assets and other consideration.
(4) Additional liabilities for transaction costs associated with TV Disposition
and loss on the sublet of the TV facility to NNC over the remaining term of
the Company's lease.
(5) Loss on TV Disposition.
-6-
<PAGE>
PREVIEW TRAVEL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical TV Disposition As Adjusted
---------- -------------- -----------
<S> <C> <C> <C>
Revenues:
Online $ 9,435 $ 9,435
Television 5,000 $ (4,769) (A) 231
--------- ---------
Total revenues 14,435 9,666
Cost of revenues:
Online 4,293 4,293
Television 3,882 (3,882) (B) -
--------- ---------
Total cost of revenues 8,175 4,293
Gross profit 6,260 5,373
Operating expenses:
Marketing and sales 15,148 (1,132) (C) 14,016
Research and development 2,619 2,619
General and administrative 4,711 (627) (D) 4,084
--------- ---------
Total operating expenses 22,478 20,719
Loss from operations (16,218) (15,346)
Interest income (expense), net 1,822 1,822
--------- ---------
Loss before income taxes (14,396) (13,524)
Income tax expense (36) (36)
--------- ---------
Net Loss $ (14,432) $ (13,560)
========= =========
Basic and diluted net loss per share $ (1.15) $ (1.08)
========= =========
Weighted average shares outstanding
used in per share calculation 12,528 12,528
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
-7-
<PAGE>
PREVIEW TRAVEL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical TV Disposition As Adjusted
---------- -------------- -----------
<S> <C> <C> <C>
Revenues:
Online $ 6,010 $ 6,010
Television 7,634 $ (7,388) (A) 246
--------- ---------
Total revenues 13,644 6,256
Cost of revenues:
Online 3,648 3,648
Television 5,751 (5,751) (B) -
--------- ---------
Total cost of revenues 9,399 3,648
Gross profit 4,245 2,608
Operating expenses:
Marketing and sales 8,668 (1,643) (C) 7,025
Research and development 1,825 1,825
General and administrative 4,184 (564) (D) 3,620
--------- ---------
Total operating expenses 14,677 12,470
Loss from operations (10,432) (9,862)
Interest income (expense), net 266 266
--------- ---------
Loss before income taxes (10,166) (9,596)
Income tax expense (2) (2)
--------- ---------
Net Loss $ (10,168) $ (9,598)
========= =========
Basic and diluted net loss per share $ (3.54) $ (3.35)
========= =========
Weighted average shares outstanding
used in per share calculation 2,869 2,869
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
-8-
<PAGE>
PREVIEW TRAVEL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical TV Disposition As Adjusted
---------- -------------- -----------
<S> <C> <C> <C>
Revenues:
Online $ 2,573 $ 2,573
Television 9,801 $ (9,203) (A) 598
--------- ---------
Total revenues 12,374 3,171
Cost of revenues:
Online 2,308 2,308
Television 7,000 (7,000) (B) -
--------- ---------
Total cost of revenues 9,308 2,308
Gross profit 3,066 863
Operating expenses:
Marketing and sales 4,373 (1,558) (C) 2,815
Research and development 1,314 1,314
General and administrative 2,880 (1,440) (D) 1,440
--------- ---------
Total operating expenses 8,567 5,569
Loss from operations (5,501) (4,706)
Interest income (expense), net (89) (89)
--------- ---------
Loss before income taxes (5,590) (4,795)
Income tax expense (2) (2)
--------- ---------
Net Loss $ (5,592) $ (4,797)
========= =========
Basic and diluted net loss per share $ (3.43) $ (2.94)
========= =========
Weighted average shares outstanding
used in per share calculation 1,631 1,631
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
conxdensed consolidated financial statements.
-9-
<PAGE>
PREVIEW TRAVEL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical TV Disposition As Adjusted
---------- -------------- -----------
<S> <C> <C> <C>
Revenues:
Online $ 579 $ 579
Television 9,564 $ (9,163) (A) 401
--------- ---------
Total revenues 10,143 980
Cost of revenues:
Online 1,078 1,078
Television 8,393 (8,393) (B) -
--------- ---------
Total cost of revenues 9,471 1,078
Gross profit 672 (98)
Operating expenses:
Marketing and sales 2,687 (2,150) (C) 537
Research and development 626 626
General and administrative 2,026 (1,620) (D) 406
--------- ---------
Total operating expenses 5,339 1,569
Loss from operations (4,667) (1,667)
Interest income (expense), net (264) (264)
--------- ---------
Loss before income taxes (4,931) (1,931)
Income tax expense (2) (2)
--------- ---------
Net Loss $ (4,933) $ (1,933)
========= =========
Basic and diluted net loss per share $ (4.02) $ (1.57)
========= =========
Weighted average shares outstanding
used in per share calculation 1,228 1,228
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
-10-
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The TV Disposition pro forma adjustments have been made to reflect the
following:
(A) Reduction in revenue associated with TV operations, offset by assumed
Travel Update sales commission revenue under the Sales Representation
Agreement.
(B) Reduction in cost of revenues associated with TV operations.
(C) Reduction in marketing and sales expenses associated with TV operations.
(D) Reduction in general and administrative expenses associated with TV
operations.
-11-
<PAGE>
(c) Exhibits.
--------
2.1 Note and Warrant Purchase Agreement dated December 17,
1998 among the Company, News Travel Network, Inc., a wholly
owned subsidiary of the Company, and NewsNet Central, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PREVIEW TRAVEL, INC.
(Registrant)
Date: December 23, 1998 By: /s/ Kenneth R. Pelowski
------------------------------------------
Kenneth R. Pelowski
Executive Vice President, Finance and
Administration and Chief Financial Officer
-12-
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- --------------
2.1 Note and Warrant Purchase Agreement dated
December 17, 1998 among the Company, News
Travel Network, Inc., a wholly owned subsidiary
of the Company, and NewsNet Central, Inc.
-13-
<PAGE>
EXHIBIT 2.1
NEWSNET CENTRAL, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
-----------------------------------
This Note and Warrant Purchase Agreement (the "Agreement") is made as of
---------
December 17, 1998 by and among NewsNet Central, Inc., a Delaware corporation
(the "Company"), Preview Travel, Inc., a Delaware corporation ("Preview") and
-------
News Travel Network, Inc., a California corporation and a wholly-owned
subsidiary of Preview (the "Purchaser").
---------
RECITALS
--------
The Company desires to issue and sell and the Purchaser desires to purchase a
convertible promissory note in substantially the form attached to this Agreement
as Exhibit A which shall be convertible on the terms stated therein into equity
---------
securities of the Company (the "Convertible Note"), a secured subordinated
----------------
promissory note in substantially the form attached to this Agreement as Exhibit
-------
B (the "Secured Note" and, collectively with the Convertible Note, the "Notes")
- - ------------ -----
and a warrant to purchase Common Stock of the Company in substantially the form
attached to this Agreement as Exhibit C (the "Warrant"). The Notes, the Warrant
--------- -------
and the equity securities issuable upon conversion or exercise thereof are
collectively referred to herein as the "Securities."
----------
AGREEMENT
---------
In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:
1. Purchase and Sale of Notes and Warrants.
---------------------------------------
(a) Sale and Issuance of Notes and Warrants. Subject to the terms and
---------------------------------------
conditions of this Agreement, the Purchaser agrees to purchase at the Closing
and the Company agrees to sell and issue to the Purchaser a Convertible Note in
the principal amount of $250,000, a Secured Note in the principal amount of
$1,000,000 and a Warrant to purchase 2,275,445 shares of Common Stock. The
purchase price of each Note shall be equal to 100% of the principal amount of
such Note and the exercise price of the shares issuable upon exercise of the
Warrant shall be $0.45 per share.
(b) Closing; Delivery. The purchase and sale of the Notes and the
-----------------
Warrant shall take place at the offices of Venture Law Group, 2800 Sand Hill
Road, Menlo Park, California, at 2:00 p.m., on December 31, 1998 or at such
other time and place as the Company and the Purchasers mutually agree upon,
orally or in writing (which time and place are designated as the "Closing"). At
-------
the Closing, the Company shall deliver to the Purchaser the Notes and Warrant
in exchange for consideration consisting of the following: (i) $88,000, to be
paid by check or wire transfer, and (ii) the assets of the Purchaser specified
in Exhibit D attached
---------
<PAGE>
hereto, free and clear of all liens, claims, interests and
encumbrances (collectively, the "Assigned Assets"). In addition, at the Closing
---------------
the Company shall assume the liabilities of the Purchaser specified in Exhibit E
---------
attached hereto to the extent set forth thereon (collectively, the "Assumed
-------
Liabilities"). At the Closing, the Purchaser shall deliver to the Company a
- -----------
general bill of sale and assumption agreement substantially in the form attached
hereto as Exhibit F (the "Bill of Sale and Assumption Agreement") with respect
--------- -------------------------------------
to each Assigned Asset, in each case duly executed by the Purchaser, assigning
to the Company all of Purchaser's right, title and interest in the Assigned
Assets.
2. Security Interest. The indebtedness represented by the Secured Note
-----------------
shall be secured by certain assets of the Company in accordance with the
provisions of a security agreement between the Company and the Purchaser in the
form attached to this Agreement as Exhibit G (the "Security Agreement").
--------- ------------------
3. Stock Purchase Agreement. The Purchaser understands and agrees that
------------------------
the conversion of the Convertible Notes into, and exercise of the Warrant for,
equity securities of the Company may require such Purchaser's execution of
certain agreements (in form negotiated by the lead investor in such financing)
relating to the purchase and sale of such securities as well as registration,
co-sale and voting rights, if any, relating to such equity securities.
4. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that:
(a) Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted.
(b) Authorization. All corporate action on the part of the Company,
-------------
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement in the
form attached hereto as Exhibit H (the "Investors' Rights Agreement"), and the
--------- ---------------------------
Services and License Agreement in the form attached hereto as Exhibit I (the
---------
"Services and License Agreement" and, collectively with this Agreement and the
- -------------------------------
Investors' Rights Agreement, the "Agreements") and the authorization, sale,
----------
issuance and delivery of the Notes and the Warrant, the shares of the Company's
capital stock issuable on conversion or exercise thereof, and the performance of
all obligations of the Company hereunder and thereunder has been taken or will
be taken prior to the Closing. The Agreements, the Notes and the Warrant, when
executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
-2-
<PAGE>
relief, or other equitable remedies, , or (ii) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
(c) Capitalization. The authorized capital of the Company consists,
--------------
or will consist, immediately prior to the Closing, of:
(i) 300,000 shares of Preferred Stock, all of which have been
designated Series A Preferred Stock, none of which are issued and outstanding
immediately prior to the Closing. All of the outstanding shares of Preferred
Stock have been duly authorized, fully paid and are nonassessable and issued in
compliance with all applicable federal and state securities laws. The Company
has reserved 55,555 shares of Preferred Stock for issuance upon conversion of
the Convertible Note.
(ii) 10,000,000 shares of Common Stock, 4,211,000 shares of which are
issued and outstanding immediately prior to the Closing. All of the outstanding
shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws. The Company has reserved 55,555 shares of Common Stock for
issuance upon conversion of the Preferred Stock issuable upon conversion of the
Convertible Note and 2,275,445 shares of Common Stock for issuance upon exercise
of the Warrant.
(iii) The Company has reserved 902,445 shares of Common Stock for
issuance to officers, directors, employees and consultants of the Company
pursuant to its 1998 Stock Plan, duly adopted by the Board of Directors and
approved by the Company's stockholders (the "Stock Plan"). Of such reserved
----------
shares of Common Stock, as of December 17, 1998, no shares have been issued
pursuant to restricted stock purchase agreements, options to purchase zero
shares have been granted and are currently outstanding, and 902,445 shares of
Common Stock remain available for issuance to officers, directors, employees and
consultants pursuant to the Stock Plan.
(iv) Except for outstanding options issued pursuant to the Stock Plan,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, for the purchase or acquisition from the Company of any
shares of its capital stock.
5. Representations and Warranties of Preview and the Purchaser. Each of
-----------------------------------------------------------
Preview and the Purchaser hereby represents and warrants to the Company that:
(a) Organization of the Purchaser. The Purchaser is a corporation duly
-----------------------------
organized, validly existing and in good standing under the laws of the
State of Delaware. The Purchaser has the corporate power to own its
properties and to carry on its business as now being conducted.
-3-
<PAGE>
(b) Authorization. The Purchaser and Preview each have all requisite
-------------
power and authority to enter into this Agreement and any Related Agreements (as
hereinafter defined) to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and any Related Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Purchaser and Preview, and no
further action is required on the part of the Purchaser or Preview to authorize
the Agreement, any Related Agreements to which it is a party and the
transactions contemplated hereby and thereby. This Agreement and any Related
Agreements to which the Purchaser or Preview is a party have been duly executed
and delivered by the Purchaser or Preview, as the case may be, and, assuming the
due authorization, execution and delivery by the other parties hereto and
thereto, constitute the valid and binding obligation of the Purchaser or
Preview, as the case may be, enforceable in accordance with their respective
terms, subject to (a) the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and to rules of law governing specific
performance, injunctive relief or other equitable remedies or (b) to the extent
the indemnification provisions contained in the Investor's Rights Agreement may
be limited by applicable federal or state securities laws. The "Related
-------
Agreements" shall mean all such ancillary agreements required in this Agreement
- ----------
to be executed and delivered in connection with the transactions contemplated
hereby.
(c) Purchase Entirely for Own Account. The Securities to be acquired
---------------------------------
by the Purchaser will be acquired for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser has not been formed for the specific purpose of acquiring any of the
Securities.
(d) Knowledge. The Purchaser is aware of the Company's business
---------
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
securities.
(e) Restricted Securities. The Purchaser understands that the
---------------------
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth with respect to Registrable Securities in the Investors'
Rights Agreement. The Purchaser further acknowledges
-4-
<PAGE>
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser's control, and which
the Company is under no obligation and may not be able to satisfy.
(f) No Public Market. The Purchaser understands that no public market
----------------
now exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Securities.
(g) Legends. The Purchaser understands that the Securities, and any
-------
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(ii) Any legend set forth in the other Agreements.
(iii) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
(h) Accredited Investor. The Purchaser is an accredited investor as
-------------------
defined in Rule 501(a) of Regulation D promulgated under the Act.
(i) Financial Information. The Purchaser has delivered to the Company
---------------------
a schedule of assets and liabilities of the Purchaser at November 30, 1998,
which schedule will be updated to reflect the Purchaser's assets and liabilities
as of the Closing (the "Closing Date Schedule"). The monetary amounts for the
---------------------
accounts included in the Closing Date Schedule were prepared in accordance with
GAAP. The Closing Date Schedule accurately and correctly discloses the amounts
of the Assigned Assets and Assumed Liabilities as of the Closing.
(j) No Undisclosed Liabilities. The Purchaser does not have any
--------------------------
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, in excess of $5,000 individually or $25,000 in the
aggregate, whether accrued, absolute, contingent,
-5-
<PAGE>
matured, unmatured or other (whether or not required to be reflected in
financial statements in accordance with GAAP) which has not been reflected in
the Closing Date Balance Sheet.
(k) Third Party Consents. Schedule 5(k) sets forth each agreement,
-------------------- -------------
contract or other instrument binding upon Purchaser requiring a consent as a
result of the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except such consents as
would not, individually or in the aggregate, have an effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations, or prospects of the
Company if not received by the Closing Date (each a "Required Consent").
----------------
(l) Assigned Assets.
---------------
(i) The Assigned Assets include all of the assets, properties and
rights of every type and description, real, personal, tangible and intangible,
and only such properties, of the Purchaser incorporated in, used by or necessary
to the operation of the Purchaser's business as currently conducted and as
proposed to be conducted, including without limitation the video library of the
Purchaser and such other tangible assets located at the Purchaser's facilities
at One Beach Street, San Francisco, California, as of the Closing Date (the
"Business"). Other than the Required Consents and the permits, authorizations,
- ---------
consents or approvals of any governmental entity which are a condition to the
lawful consummation of the transactions contemplated hereby, each of which is
listed on Schedule 5(k), no licenses or other consents from, or payments to, any
-------------
other person are or will be necessary for the Company to operate the Business
and use the Assigned Assets in the manner in which the Purchaser has operated
the same.
(ii) The Purchaser holds good and marketable title, license to or
leasehold interest in all of the Assigned Assets and has the complete and
unrestricted power and the unqualified right to sell, assign and deliver the
Assigned Assets to the Company. Upon consummation of the transactions
contemplated by this Agreement, the Company will acquire good and marketable
title, license or leasehold interest to the Assigned Assets free and clear of
any liens and there exists no restriction on the use or transfer of the Assigned
Assets, except as may be assumed hereunder by the Company as an Assumed
Liability. No person other than the Purchaser has any right or interest in the
Assigned Assets, including the right to grant interests in the Purchased Assets
to third parties, except for Assigned Assets licensed or leased from third
parties which are set forth in Schedule 5(l) and identified as such.
-------------
(iii) None of the Assigned Assets that constitute tangible personal
property is held under any lease, security agreement, conditional sales
contract, lien, or other title retention or security arrangement except as set
forth in Schedule 5(l).
-------------
(iv) Except as provided in the Agreements, no restrictions will exist
on the Company's right to sell, resell, license or sublicense any of the
Assigned Assets or engage in
-6-
<PAGE>
the Business, nor will any such restrictions be imposed on the Company as a
consequence of the transactions contemplated by this Agreement or by any
agreement referenced in this Agreement.
(m) No Conflict. Except as set forth in Schedule 5(m), the
----------- -------------
execution and delivery of this Agreement and any Related Agreements to which the
Purchaser or Preview is a party by either the Purchaser or Preview does not,
and, the consummation of the transactions contemplated hereby and thereby will
not, conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or
loss of any benefit under (any such event, a "Conflict") (i) any provision of
--------
the Articles of Incorporation and Bylaws of the Purchaser, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which the Purchaser or Preview or any of their
respective properties or assets are subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Purchaser
or Preview or their respective properties or assets.
(n) Title of Properties.
-------------------
(i) The Purchaser does not own any real property. Schedule 5(n)
-------------
sets forth a list of all real property currently leased or subleased by
Purchaser, the name of the lessor, the date of the lease and each amendment
thereto and, with respect to any current lease or sublease, the aggregate annual
rental and/or other fees payable under any such lease or sublease. The Purchaser
has delivered to the Company correct and complete copies of the leases and
subleases listed on Schedule 5(n). With respect to each lease and sublease
-------------
listed on Schedule 5(n):
-------------
(A) the lease or sublease is in full force and effect, is valid and
effective in accordance with its terms, and there is not, under such lease or
sublease, any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default);
(B) upon obtaining any required consents of the landlord the lease or
sublease will continue to be legal, valid, binding and enforceable against the
Company and against the other party thereto, and is in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to above);
(C) to the knowledge of the Purchaser and Preview, no party to the
lease or sublease has repudiated any provisions thereof;
(D) Neither Purchaser nor Preview has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
-7-
<PAGE>
(o) Representations Complete. None of the representations or
------------------------
warranties made by the Purchaser or Preview (as modified by the Schedules
attached hereto), nor any statement made in any Schedule or certificate
furnished by the Purchaser or Preview pursuant to this Agreement contains or
will contain at the Closing Date, any untrue statement of a material fact, or
omits or will omit at the Closing Date to state any material fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
6. Conditions of the Purchasers' Obligations at Closing. The obligations
----------------------------------------------------
of the Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 4 shall be true in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
(b) Qualifications. All authorizations, approvals or permits, if any,
--------------
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.
(c) Performance. The Company shall have performed and complied with
-----------
all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
(d) Investors' Rights Agreement. The Company and the Purchaser shall
---------------------------
have executed and delivered the Investors' Rights Agreement in substantially the
form attached as Exhibit H.
---------
(e) Services and License Agreement. The Company and the Purchaser
------------------------------
shall have executed and delivered the Services and License Agreement in
substantially the form attached as Exhibit I.
---------
(f) Sales Representative Agreement. The Company and the Purchaser
------------------------------
shall have executed and delivered the Sales Representative Agreement in
substantially the form attached as Exhibit J.
---------
6. Conditions of the Company's Obligations at Closing. The obligations of
--------------------------------------------------
the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
-8-
<PAGE>
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Purchaser and Preview contained in Section 5 shall be true in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
(b) Qualifications. All authorizations, approvals or permits, if any,
--------------
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.
(c) Performance. All covenants, agreements and conditions contained
-----------
in this Agreement to be performed by the Purchaser on or prior to the Closing
shall have been performed or complied with in all material respects.
(d) Investors' Rights Agreement. The Company, the Purchaser and the
---------------------------
Founders shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as Exhibit H.
---------
(e) Services and License Agreement. The Company and the Purchaser
------------------------------
shall have executed and delivered the Services and License Agreement in
substantially the form attached as Exhibit I.
---------
(f) Bill of Sale and Assignment Agreement. The Purchaser shall have
-------------------------------------
executed and delivered the Bill of Sale and Assignment Agreement in
substantially the form attached hereto as Exhibit F.
---------
(h) Closing Date Schedule. The Company shall have received from the
---------------------
Purchaser at least 2 days prior to the Closing Date the Closing Date Schedule
certified as to correctness by the Purchaser.
(i) Third Party Consents. Any and all Required Third Party Consents
--------------------
shall have been obtained, except to the extent waived by the Company.
(j) No Material Adverse Change. There shall not have occurred any
--------------------------
material adverse change in the business assets (including intangible assets),
results of operations, liabilities (contingent or accrual), financial conditions
or prospects of the Purchaser since the date of this Agreement.
(k) Sales Representative Agreement. The Company and the Purchaser
------------------------------
shall have executed and delivered the Sales Representative Agreement in
substantially the form attached as Exhibit J.
---------
-9-
<PAGE>
(l) Employee Matters. Preview shall pay to each employee of the
----------------
Purchaser who agrees to become an employee of the Company a one-time cash bonus,
the amount of which shall be mutually agreed upon by the Company and Preview.
7. Other Agreements.
----------------
(a) Conduct Prior to the Closing Date. During the period from the
---------------------------------
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing Date, each of the Purchaser and Preview agree
(except to the extent that Company shall otherwise consent in writing), to carry
on the Purchaser's business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay the debts and
Taxes of the Purchaser when due, to pay or perform other obligations when due,
and, to the extent consistent with such business, use their reasonable best
efforts consistent with past practice and policies to preserve intact the
Purchaser's present business organizations, keep available the services of the
Purchaser's present officers and key employees and preserve the Purchaser's
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, all with the goal of preserving
unimpaired the Purchaser's goodwill and ongoing businesses at the Closing Date.
The Purchaser shall promptly notify the Company of any material event or
occurrence or emergency not in the ordinary course of business of the Purchaser
and any material event involving the Purchaser.
(b) Post-Closing Covenants.
----------------------
(i) To the extent that the Purchaser and the Company have not
obtained all of the third party consents set forth on Schedule 5(k) attached
-------------
hereto, each of the Purchaser, the Company and Preview agrees to use its
reasonable best efforts to obtain such consents as soon as practicable after
the Closing.
(ii) Preview agrees to use reasonable commercial efforts to
cooperate with the Company to assist the Company in mitigating the Company's
obligations pursuant to Section 10 of the Television Program Representation
Agreement dated as of January 1, 1998 between the Preview and Roy F.
Walkenhorst, which agreement shall be an Assigned Contract (as defined herein).
8. Miscellaneous.
-------------
(a) Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies,
-10-
<PAGE>
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(b) Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(c) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(d) Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. Any notice required or permitted by this Agreement shall
-------
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address or facsimile number as set forth below or
as subsequently modified by written notice.
(f) Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finder's fee or commission in connection with this
transaction. Each of Preview and the Purchaser agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which Preview, the Purchaser or any of
their respective officers, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless each of Preview and the Purchaser
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which Preview, the Company or any of their respective
officers, employees or representatives is responsible.
(g) Amendments and Waivers. Any term of this Agreement may be amended
----------------------
or waived only with the written consent of the Company and the holders of at
least a majority in interest of the Notes. Any amendment or waiver effected in
accordance with this Section 8(g) shall be binding upon the Purchaser and each
transferee of the Securities, each future holder of all such Securities, and the
Company.
(h) Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that
-11-
<PAGE>
under the provision rendered unenforceable. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
(i) Entire Agreement. This Agreement, and the documents referred to
----------------
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
(j) Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
------------------------
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
(k) Waiver of Conflicts. Each party to this Agreement acknowledges
-------------------
that Venture Law Group, counsel for Preview and the Purchaser, has in the past
performed and may continue to perform legal services for the Company.
Accordingly, each party to this Agreement hereby (a) acknowledges that they have
had an opportunity to ask for information relevant to this disclosure; and (b)
gives its informed consent to Venture Law Group's representation of the Company
in such other matters and to Venture Law Group's representation of Preview and
the Purchaser in connection with this Agreement and the transactions
contemplated hereby.
-12-
<PAGE>
The parties have executed this Note and Warrant Purchase Agreement as of
the date first written above.
COMPANY:
NEWSNET CENTRAL, INC.
By: /s/ JAMES HORNTHAL
--------------------------------
James Hornthal, President
Address: One Beach Street, Suite 300
San Francisco, CA 94133
Facsimile Number: (415) 421-3635
PURCHASER:
NEWS TRAVEL NETWORK, INC.
By: /s/ KEN PELOWSKI
----------------------------------
Name: Ken Pelowksi
--------------------------------
(print)
Title: EVP & CFO
-------------------------------
PREVIEW TRAVEL, INC.
By: /s/ KEN PELOWSKI
----------------------------------
Name: Ken Pelowski
--------------------------------
(print)
Title: EVP & CFO
-------------------------------
