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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CNET, INC.
SUMO, INC.
AND
THE STOCKHOLDERS OF
SUMO, INC.
APRIL 30, 1999
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TABLE OF CONTENTS
Page No.
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ARTICLE I THE MERGER..........................................................i
SECTION 1.01. The Merger.................................................i
SECTION 1.02. Closing; Closing Date; Effective Time......................i
SECTION 1.03. Effect of the Merger......................................ii
SECTION 1.04. Certificate of Incorporation; Bylaws......................ii
SECTION 1.05. Directors and Officers....................................ii
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES................ii
SECTION 2.01. Consideration; Conversion and Cancellation of Securities..ii
SECTION 2.02. Exchange and Surrender of Certificates...................iii
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS...........................................................iii
SECTION 3.01. Organization and Qualification............................iv
SECTION 3.02. Articles and Bylaws.......................................iv
SECTION 3.03. Capitalization............................................iv
SECTION 3.04. Authority..................................................v
SECTION 3.05. No Conflict; Required Filings and Consents.................v
SECTION 3.06. Permits; Compliance........................................v
SECTION 3.07. Financial Statements......................................vi
SECTION 3.08. Absence of Certain Changes or Events......................vi
SECTION 3.09. No Undisclose Liabilitiesd...............................vii
SECTION 3.10. Absence of Litigation....................................vii
SECTION 3.11. Taxes....................................................vii
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SECTION 3.12. Tax Matters; Pooling......................................ix
SECTION 3.13. Brokers...................................................ix
SECTION 3.14. Certain Business Practices................................ix
SECTION 3.15. Leased Properties.........................................ix
SECTION 3.16. Certain Material Contracts................................ix
SECTION 3.17. Competing Interests........................................x
SECTION 3.18. Intellectual Property......................................x
SECTION 3.19. Investor Representations..................................xi
SECTION 3.20. Year 2000 Compliance......................................xi
SECTION 3.21. Information Supplied.....................................xii
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..........................xii
SECTION 4.01. Organization and Qualification...........................xii
SECTION 4.02. Authority................................................xii
SECTION 4.03. No Conflict; Required Filings and Consent................xii
SECTION 4.04. SEC Documents...........................................xiii
SECTION 4.05. Financial Statements....................................xiii
SECTION 4.06. Tax Matters; Pooling....................................xiii
SECTION 4.07. Valid Issuance of Buyer Common Stock....................xiii
SECTION 4.08 Absence of Certain Changes or Events.....................xiv
SECTION 4.09. Year 2000 Compliance.....................................xiv
ARTICLE V COVENANTS.........................................................xiv
SECTION 5.01. Affirmative Covenants of the Company.....................xiv
SECTION 5.02. Negative Covenants of the Company.........................xv
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SECTION 5.03. Restrictive Covenant......................................xv
SECTION 5.04. Confidential Information.................................xvi
SECTION 5.05. Access and Information..................................xvii
SECTION 5.06. Appropriate Action; Consents; Filings..................xviii
SECTION 5.07. Pooling; Tax Treatment.................................xviii
SECTION 5.08. Public Announcements...................................xviii
SECTION 5.09. Fees, Expenses and Other Payments........................xix
SECTION 5.10. EmploymentAgreements.....................................xix
SECTION 5.11. Option Agreements........................................xix
SECTION 5.12. Financial Review.........................................xix
SECTION 5.13. Affiliate Transactions...................................xix
SECTION 5.14 Apportionment of Taxes Between Pre-Closing and Post-
Closing Tax Periods......................................xix
ARTICLE VI CLOSING CONDITIONS................................................xx
SECTION 6.01. Conditions to Obligations of Buyer........................xx
SECTION 6.02. Conditions to Obligations of the Company and the
Stockholders.............................................xxi
ARTICLE VII INDEMNIFICATION................................................xxii
SECTION 7.01. Indemnification of Buyer................................xxii
SECTION 7.02. Indemnification of Stockholders.........................xxii
SECTION 7.03. Survival...............................................xxiii
SECTION 7.04. Notice.................................................xxiii
SECTION 7.05. Defense of Claims......................................xxiii
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.............................xxiv
SECTION 8.01. Termination.............................................xxiv
SECTION 8.02. Effect of Termination....................................xxv
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SECTION 8.03. Amendment................................................xxv
SECTION 8.04. Waiver...................................................xxv
ARTICLE IX REGISTRATION RIGHTS..............................................xxv
SECTION 9.01. Registration Statement...................................xxv
SECTION 9.02. Limitations on Sale......................................xxv
SECTION 9.03. Information.............................................xxvi
SECTION 9.04. Expenses................................................xxvi
SECTION 9.05. Indemnification.........................................xxvi
ARTICLE X GENERAL PROVISIONS..............................................xxvii
SECTION 10.01. Notices...............................................xxvii
SECTION 10.02. Certain Definitions..................................xxviii
SECTION 10.03. Headings...............................................xxix
SECTION 10.04. Severability...........................................xxix
SECTION 10.05. Entire Agreement.......................................xxix
SECTION 10.06. Assignment.............................................xxix
SECTION 10.07. Parties in Interest....................................xxix
SECTION 10.08. Specific Performance...................................xxix
SECTION 10.09. Failure or Indulgence Not Waiver; Remedies Cumulative...xxx
SECTION 10.10. Further Assurances......................................xxx
SECTION 10.11. Governing Law; Venue....................................xxx
SECTION 10.12. Attorneys Fees..........................................xxx
SECTION 10.13. Counterparts............................................xxx
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EXHIBITS:
Exhibits A - A2 Form of Employment Agreements
Exhibit B Form of Closing Certificate
Exhibit C Form of Legal Opinion of Company's Counsel
Exhibit D Form of Legal Opinion of Buyer's Counsel
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 30, 1999 (this
"Agreement"), is by and among CNET, Inc., a Delaware corporation ("Buyer"),
Sumo, Inc., a Florida corporation (the "Company"), and each of ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Stockholders of the Company ("Stockholders").
WHEREAS, Buyer and the Company have determined that the merger of the
Company with and into Buyer ("Merger"), with Buyer surviving, and conversion of
the issued and outstanding shares of $1.00 par value common stock of the
Company (the "Company Common Stock") into the right to receive shares of common
stock of Buyer (the "Buyer Common Stock"), on the terms and subject to the
conditions of this Agreement and in accordance with the General Business
Corporation Act of the State of Florida ("Florida Law") and the General
Corporation Law of the State of Delaware ("Delaware Law") would be advantageous
and beneficial to their respective corporations and stockholders;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for financial accounting purposes;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with applicable
federal and state law, at the Effective Time (as defined in Section 1.02), the
Company shall be merged with and into Buyer. As a result of the Merger, the
separate corporate existence of the Company shall cease and Buyer shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). Certain terms used in this Agreement (and not otherwise defined)
are defined in Section 10.02.
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
Agreement is terminated pursuant to Section 8.01, and subject to the
satisfaction or waiver of the conditions set forth in Article VI, the
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Buyer as soon
as practicable (but in any event within five business days) after the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other date, time and place as Buyer and the Company may agree; provided, that
the conditions set forth in Article VI shall have been satisfied or waived at
or prior to such time. The date on which the Closing takes place is referred
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to herein as the "Closing Date." As promptly as practicable on the Closing
Date, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger with the Secretary of State of the State of Delaware, in
such form as required by, and executed in accordance with the relevant
provisions of, Delaware Law (the date and time of such filing, or such later
date or time agreed upon by Buyer and the Company and set forth therein, being
the "Effective Time"). As promptly as practicable on the Closing Date, the
parties shall also file articles of merger with the Secretary of State of the
State of Florida, in such form as required by, and executed in accordance with
the relevant provisions of, Florida Law.
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Florida Law and Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges and powers of the Company and Buyer will vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the Buyer
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; Bylaws. At the
Effective Time, the Certificate of Incorporation and bylaws of Buyer, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and bylaws of the Surviving Corporation unless and until amended
as provided therein and pursuant to Delaware Law.
SECTION 1.05. Directors and Officers. The directors and officers
of Buyer immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation at the Effective Time, each to hold
office in accordance with the bylaws of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Buyer, the Company or their respective stockholders:
(a) Subject to the other provisions of this Article II,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time shall be converted into 2,347.42 shares of Buyer Common
Stock (the "Conversion Ratio"), which equals thirty million dollars
($30,000,000) divided by $127.80 (the average last sales price of the Buyer
Common Stock on the Nasdaq National Market System as reported in the West Coast
Edition of the Wall Street Journal for the five trading days preceding (but not
including) the date of this Agreement, divided by 100, which is the number of
outstanding shares of Company Common Stock immediately prior to the Effective
Time. All references to stock amounts in this Agreement are prior to giving
effect to the stock split anticipated for May 28, 1999.
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(b) All shares of Company Common Stock shall cease to be
outstanding and shall automatically be canceled and retired, and each
certificate previously evidencing the Company Common Stock outstanding
immediately prior to the Effective Time (the "Converted Shares") shall
thereafter represent the right to receive Buyer Common Stock in accordance with
this Article II. The stockholders shall cease to have any rights with respect
to such Converted Shares except as otherwise provided herein or by law.
Certificates previously evidencing Converted Shares shall be exchanged for
Buyer Common Stock upon the surrender of such certificates in accordance with
the provisions of Section 2.02, without interest.
SECTION 2.02. Exchange and Surrender of Certificates.
(a) Each Stockholder shall be entitled to receive, upon
surrender to Buyer or its transfer agent of certificates previously evidencing
Converted Shares, as soon as practicable after the Closing Date, a certificate
representing the Converted Shares so surrendered, registered in the name of
such Stockholder. Until so surrendered and exchanged, each certificate
previously evidencing Converted Shares shall represent solely the right to
receive Buyer Common Stock.
(b) All shares of Buyer Common Stock issued upon the
surrender for exchange of certificates previously representing Converted Shares
in accordance with the terms hereof (including any adjustments pursuant to
Section 2.02(c)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such Converted Shares. At and after the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of Company Common Stock that was outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates which previously evidenced Converted Shares are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
(c) No certificates or scrip evidencing fractional
shares of Buyer Common Stock shall be issued upon the surrender for exchange of
certificates, and such fractional share interests will not entitle the owner
thereof to any rights as a stockholder of Buyer. In lieu of any such fractional
shares, the number of shares of Buyer Common Stock issuable to any Stockholder
in connection with the Merger shall be rounded to the nearest whole share.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Except as otherwise disclosed in a document dated as of the date of
this Agreement and delivered by the Company to Buyer prior to the execution and
delivery of this Agreement ("Company Disclosure Letter") and referring to the
representations and warranties in this Agreement, the Company and the
Stockholders hereby jointly and severally represent and warrant to Buyer that:
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SECTION 3.01. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of Florida, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary.
SECTION 3.02. Articles and Bylaws. The Company has furnished to
Buyer complete and correct copies of its Articles of Incorporation and bylaws,
in each case as amended or restated, of the Company. The Company is not in
violation of any of the provisions of its Articles of Incorporation or bylaws.
SECTION 3.03. Capitalization.
(a) The authorized capital stock of the Company consists
of 1,000 shares of Company Common Stock, of which 100 shares are issued and
outstanding. All of the outstanding capital stock of the Company is held of
record and beneficially as indicated in Schedule 3.03, free and clear of all
security interests, liens, claims, pledges, agreements, charges, or other
encumbrances (a "Lien") of any nature whatsoever. All of the outstanding
capital stock of the Company is duly authorized, validly issued, fully paid and
nonassessable, and has not been issued in violation of (nor are any of the
authorized shares of capital stock of the Company subject to) any preemptive or
similar rights created by statute, the Articles of Incorporation or bylaws of
the Company or any agreement to which the Company is a party or bound.
(b) No shares of capital stock of the Company are
reserved for any purpose or held in treasury by the Company and, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which the Company is a party relating to the issued or
unissued capital stock of the Company or obligating the Company to grant, issue
or sell any shares of the capital stock of the Company.
(c) There are no obligations, contingent or otherwise,
of the Company to (i) repurchase, redeem or otherwise acquire any shares of the
capital stock of the Company or (ii) provide material funds to, or make any
material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of, any
other person. There are no agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company. There are no voting trusts,
proxies or other agreements or understandings to which the Company is a party
or by which the Company is bound with respect to the voting of any shares of
capital stock of the Company.
(d) The Company (i) does not directly or indirectly own,
(ii) has not agreed to purchase or otherwise acquire and (iii) does not hold
any interest convertible into or exchangeable or exercisable for, greater than
1% of the capital stock (or equivalent equity interest) of any corporation,
partnership, joint venture or other business association or entity.
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SECTION 3.04. Authority. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The Stockholders have the requisite legal capacity, power and authority to
enter into this Agreement and to perform their respective obligations
hereunder. The execution and delivery of this Agreement by the Company and the
Stockholders and the consummation by the Company and the Stockholders of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
or the Stockholders are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and the Stockholders and constitutes the legal, valid
and binding obligation of the Company and the each of the Stockholders
enforceable against the Company and the Stockholders in accordance with its
terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company does not, and the consummation of the transactions contemplated hereby
will not (i) conflict with or violate the Articles of Incorporation or bylaws,
in each case as amended or restated, of the Company, (ii) conflict with or
violate any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment, or decree (collectively, "Laws") applicable to the
Company or by which any of its properties or assets is bound or subject or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or require payment under, or result in the creation of any Lien or encumbrance
on any of the properties or assets of the Company pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company is a party or by or to
which the Company or any of its properties or assets is bound or subject. The
Board of Directors of the Company has taken or caused to be taken all actions
necessary under Florida Law, including approving the transactions contemplated
by this Agreement and taking appropriate actions under Florida Law or any other
applicable stockholder protection laws, to ensure that any restrictions on
business combinations or the owning or voting of the capital stock of the
Company do not, and will not, apply with respect to or as a result of the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by the
Company does not, and consummation of the transactions contemplated hereby will
not, require the Company to obtain any consent, license, permit, approval,
waiver, authorization or order of, or to make any filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each
individually, a "Governmental Entity," and collectively "Governmental
Entities"), except for the filing and recordation of appropriate merger
documents as required by Florida Law and Delaware Law.
SECTION 3.06. Permits; Compliance. The Company does not require
any franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents,
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certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted. The
Company and its assets and operations are currently and have at all times been
in compliance with all Laws applicable to the Company and its operations or by
or to which any of its assets is bound or subject, including without limitation
all Laws related to environmental protection, employee benefits, labor and
employment and occupational health and safety. The Company has not received
from any Governmental Entity any written notification with respect to possible
violations of Laws.
SECTION 3.07. Financial Statements.
(a) Schedule 3.07(a) includes (i) the unaudited balance
sheet data of the Company as of December 31, 1998, and the unaudited income and
cash flow statements of the Company for the year ended on such date and (ii)
contains the unaudited balance sheet of the Company (the "Latest Balance
Sheet") as of April 30, 1999 (the "Latest Balance Sheet Date"), and the
unaudited income and cash flow statement for the three month period ended on
such date.
(b) Each of the foregoing financial statements (i) has
been prepared on a cash accounting basis applied consistently throughout the
periods involved and (ii) fairly present in all material respects the financial
position of the Company as of the respective dates thereof and the results of
its operations and cash flows for the periods indicated, except that the
interim financial statements are subject to normal and recurring year-end
adjustments, which will not be material individually or in the aggregate.
(c) All accounts receivable reflected in the Latest
Balance Sheet or generated since the Latest Balance Sheet Date arose in the
ordinary course of business and are fully collectible in the ordinary course of
business, without resort to litigation, at the face amount thereof less any
reserve reflected in the Latest Balance Sheet, and will not be subject to
counterclaim, set-off or other reduction.
SECTION 3.08. Absence of Certain Changes or Events. Since the
Latest Balance Sheet Date, the Company has conducted its business only in the
ordinary course and in a manner consistent with past practice and there has not
been: (a) any damage, destruction or loss (whether or not covered by insurance)
with respect to any material assets of the Company; (b) any change by the
Company in its accounting methods, principles or practices; (c) any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of the capital stock of the Company or any redemption,
purchase or other acquisition by the Company of any of its securities; (d) any
increase in the benefits under, or the establishment or amendment of, any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing or other employee benefit plan, or any increase in the compensation
payable or to become payable to directors, officers or employees of the
Company, except for annual bonuses or merit increases in salaries or wages in
the ordinary course of business and consistent with past practice; (e) any
payment or other transfer of assets by the Company to any Stockholder, other
than compensation payments in the ordinary course of business and consistent
with past practice; (f) any revaluation by the Company of any of its assets,
including the writing down or off of notes or accounts
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receivable, other than in the ordinary course of business and consistent with
past practices; (g) any entry by the Company into any commitment or transaction
material to the Company including, without limitation, incurring or agreeing to
incur capital expenditures in excess of $10,000; (h) any incurrence of
indebtedness for borrowed money other than trade payables incurred in the
ordinary course of business; (i) the termination of employment (whether
voluntary or involuntary) of any officer or key employee of the Company; or (j)
any change, occurrence or circumstance having or reasonably likely to have,
individually or in the aggregate, a material adverse effect on the business,
operations, assets, financial condition, results of operations or prospects of
the Company.
SECTION 3.09. No Undisclosed Liabilities. The Company does not
have any direct or indirect debts, liabilities or obligations, whether known or
unknown, absolute, accrued, contingent or otherwise ("Liabilities"), except (a)
Liabilities fully reflected in the Latest Balance Sheet and related financial
statement notations; (b) accounts payable and Liabilities incurred in the
ordinary course of business and consistent with past practice since the Latest
Balance Sheet Date; and (c) obligations to be performed in the ordinary course
of business, consistent with past practice, under the Material Contracts (as
defined in Section 3.14) or under agreements not required to be disclosed
pursuant to Section 3.14. The Company does not and will not have any
obligations for severance costs, vacation pay or sick leave associated with any
employee of the Company, other than obligations that are satisfied prior to the
Effective Time.
SECTION 3.10. Absence of Litigation. There is no claim, action,
suit, litigation, proceeding, arbitration or investigation of any kind, at law
or in equity (including actions or proceedings seeking injunctive relief),
pending or, to the Company's knowledge, threatened against the Company or any
assets or rights of the Company. The Company is not subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, continuing investigation by, any Governmental Entity, or
any judgment, order, writ, injunction, decree or award of any Government Entity
or arbitrator, including, without limitation, cease-and-desist or other orders.
SECTION 3.11. Taxes.
(a) All returns and reports ("Tax Returns") of or with
respect to any Tax which is required to be filed on or before the Closing Date
(taking into account extensions of filing dates) by or with respect to the
Company have been or will be duly and timely filed. All items of income, gain,
loss, deduction and credit or other items required to be included in each such
Tax Return have been or will be so included and all information provided in
each such Tax Return is true, correct and complete. All Taxes which have become
or will become due with respect to the period covered by each such Tax Return
have been or will be timely paid in full, other than any Taxes for which
adequate reserves have been established on the Latest Balance Sheet. All
withholding Tax requirements imposed on or with respect to the Company have
been or will be satisfied in full in all respects. No penalty, interest or
other charge is or will become due with respect to the late filing of any such
Tax Return or late payment of any such Tax.
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(b) There are no Tax Returns of or with respect to the
Company with extended or waived statutes of limitations that have not been
audited by the applicable governmental authority.
(c) There is not in force any extension of time with
respect to the due date for the filing of any Tax Return of or with respect to
the Company or any waiver or agreement for any extension of time for the
assessment, collection or payment of any Tax of or with respect to the Company.
(d) The Company has previously delivered to Buyer true
and complete copies of each written Tax allocation or sharing agreement and a
true and complete description of each unwritten Tax allocation or sharing
arrangement affecting the Company, if any.
(e) There are no pending audits, actions, proceedings,
investigations, disputes or claims with respect to or against the Company for
or with respect to any Taxes of the Company; no assessment, deficiency or
adjustment has been assessed or proposed with respect to any Tax Return of or
with respect to the Company; and there is no reasonable basis on which any
claim for material Taxes can be asserted against the Company.
(f) Except for statutory liens for current Taxes not yet
due, no liens for Taxes exist upon the assets of any of the Company.
(g) The Company will not be required to include any
amount in income for any taxable period beginning after the Closing Date as a
result of a change in accounting method for any taxable period ending on or
before the Closing Date or pursuant to any agreement with any Tax authority
with respect to any such taxable period.
(h) None of the transactions contemplated by this
Agreement will result in any Tax liability or the recognition of any item of
income or gain to the Company.
(i) None of the property of the Company is held in an
arrangement for which partnership Tax Returns are being filed, and the Company
does not own any interest in any controlled foreign corporation (as defined in
section 957 of the Code), passive foreign investment company (as defined in
section 1296 of the Code) or other entity the income of which is required to be
included in the income of the Company.
(j) The Company has never been subject to Taxes in any
jurisdiction outside the United States.
(k) The Company has had in effect since its corporate
inception a valid, binding, timely filed election to be taxed pursuant to
Subchapter S of the Code, is not liable for any federal income taxes as a "C
corporation" and has no net unrealized built in gain potentially subject to tax
under Section 1374 of the Code.
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SECTION 3.12. Tax Matters; Pooling. Neither the Company nor any of
its stockholders or other affiliates has taken or agreed to take any action
that would prevent the Merger from (i) constituting a reorganization qualifying
under the provisions of section 368(a) of the Code or (ii) being treated for
financial accounting purposes as a "pooling of interests" (the "Pooling
Transaction") in accordance with generally accepted accounting principles and
the rules, regulations and interpretations of the Securities and Exchange
Commission (the "SEC").
SECTION 3.13. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
SECTION 3.14. Certain Business Practices. Neither the Company, the
Stockholders nor their agents or other representatives has, directly or
indirectly, made or authorized any payment, contribution or gift of money,
property or services, in contravention of applicable law.
SECTION 3.15. Leased Properties. Schedule 3.15 sets forth a
description (including the street address) of all real property leased by the
Company (the "Leased Properties"). No premises other than the Leased Properties
are used in the business of the Company.
SECTION 3.16. Certain Material Contracts.
(a) Schedule 3.16 lists and briefly describes the
material terms of each agreement and arrangement (whether written or oral and
including all amendments thereto) to which the Company is a party or a
beneficiary or by which the Company is bound that is material, directly or
indirectly, to the business of the Company (collectively, the "Material
Contracts"), including without limitation (i) any licensing, advertising,
promotion, consulting or services agreements pursuant to which the Company
earns revenue; (ii) any licensing, supply, or services agreements pursuant
which the Company is entitled or obligated to acquire any assets or services
from any person; (iii) any insurance policies; (iv) any employment, consulting,
non-competition, separation, collective bargaining, union or labor agreements
or arrangements; (v) any agreement evidencing, securing, guarantying or
otherwise relating to any indebtedness for which the Company has any Liability,
(vi) any agreement with or for the benefit of any stockholder of the Company,
or any affiliate or family member thereof (which agreements are specifically
identified as such in Schedule 3.16); (vii) any real property leases or any
capital or operating leases or conditional sales agreements relating to
vehicles or equipment; and (viii) any other agreement or arrangement pursuant
to which the Company could be required to make or be entitled to receive
aggregate payments in excess of $10,000.
(b) The Company has performed in all material respects
all of its obligations under each Material Contract and there exists no breach
or default (or event that with notice or lapse of time would constitute a
breach or default) under any Material Contract.
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(c) Each Material Contract is valid, binding and in full
force and effect and enforceable in accordance with its respective terms. There
has been no termination or, to the Company's knowledge, threatened termination
or notice of default under any Material Contract. The Company has delivered to
Buyer a copy of each written Material Contract and a written summary of the
material terms of each oral Material Contract.
SECTION 3.17. Competing Interests. None of the Stockholders, the
Company, nor any director or officer of the Company owns, directly or
indirectly, an interest in any entity that is a competitor, customer or
supplier of the Company or that otherwise has material business dealings with
the Company, provided that the foregoing will not apply to any investment in
publicly traded securities constituting less than 1% of the outstanding
securities in such class.
SECTION 3.18. Intellectual Property.
(a) For purposes of this Agreement, "Intellectual
Property" means all (i) patents, copyrights and copyrightable works,
trademarks, service marks, trade names, service names, brand names, logos,
trade dress, Internet domain names and all goodwill symbolized thereby and
appurtenant thereto; (ii) trade secrets, inventions, technology, know-how,
proprietary information, research material, specifications, surveys, designs,
drawings and processes; (iii) computer software and related documentation,
including without limitation operating software, network software, firmware,
middleware, design software, design tools, management information systems,
systems documentation and instructions, databases and the tangible objects in
which the foregoing rights are embodied (collectively, "Software"); (iv)
artwork, photographs, editorial copy and materials, formats and designs,
including without limitation all content currently or previously displayed
through Internet sites operated by the Company; (v) customer, partner, prospect
and marketing lists, market research data, sales data and traffic and user
data; (vi) registrations, applications, recordings, common law rights, "moral"
rights of authors, licenses (to or from the Company) and other agreements
relating to any of the foregoing; (vii) rights to obtain renewals, reissues,
extensions, continuations, divisions or equivalent extensions of legal
protection pertaining to the foregoing; and (viii) claims, causes of action or
other rights at law or in equity arising out of or relating to any
infringement, misappropriation, distortion, dilution or other unauthorized use
or conduct in derogation of the foregoing occurring prior to the Closing.
(b) All source code for Software used by the Company is,
or within 90 days will be, fully documented. The Company has accurate and
complete records of all such documented source code. There are no licenses (to
or from the Company) with respect to any registered Intellectual Property. The
Company has registered all trademarks, service marks and copyrights used in the
Company's business as presently conducted.
(c) The Company owns or has the right to use pursuant to
Material Contracts all Intellectual Property used by the Company in connection
with or necessary to the operation of its business, without infringing on or
otherwise acting adversely to the rights or claimed rights of any person. The
Company is not obligated to pay any royalty or other consideration to any
person in connection with the use of any such Intellectual Property.
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(d) No claim has been asserted against the Company to
the effect that the use of any Intellectual Property by the Company infringes
the rights of any person. To the Company's knowledge, no other person is
currently infringing upon the rights of the Company with respect to the
Company's Intellectual Property.
SECTION 3.19. Investor Representations.
(a) The Company and the Stockholders understand that the
Buyer Common Stock to be issued to them in the Merger will constitute
"restricted securities" under the Securities Act of 1933, as amended (the
"Securities Act"). Consequently, the Stockholders will be able to resell such
Buyer Common Stock only (i) pursuant to an effective registration statement
covering such resale or (ii) pursuant to an exemption from registration, such
as the exemption provided under rule 144 under the Securities Act ("Rule 144").
(b) Each Stockholder (i) has a preexisting personal or
business relationship with the Company and (ii) by reason of such Stockholder's
business or financial experience or the business or financial experience of
such Stockholder's professional advisors who are unaffiliated with and who are
not compensated by Buyer or any affiliate or selling agent of Buyer, directly
or indirectly, could be reasonably assumed to have the capacity to protect such
Stockholder's interests in connection with this Agreement.
(c) The Stockholders acknowledge receipt of the SEC
Documents (as defined in Section 4.04) and acknowledge that they have been
given the opportunity to ask questions of representatives of Buyer and to
receive reasonable additional information to the extent requested in connection
with their evaluation of an investment in the Buyer Common Stock.
(d) The Stockholders acknowledge that the Buyer Common
Stock will bear a restrictive legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND THE HOLDER HEREOF CANNOT MAKE ANY SALE,
ASSIGNMENT, OR OTHER TRANSFER OF SUCH SECURITIES WITHOUT REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACTS AND LAWS. THE ISSUER MAY REQUIRE
EVIDENCE OF SUCH REGISTRATION OR EXEMPTION PRIOR TO ANY SUCH TRANSFER.
IN NO EVENT WILL THESE SECURITIES BE SOLD PRIOR TO JUNE 3, 1999."
SECTION 3.20. Year 2000 Compliance. Except as described in the
Company Disclosure Letter, all hardware, firmware, software and computer
systems of the Company and to the knowledge of the Company, their respective
material customers and suppliers, are, or will be by the Effective Time, Year
2000 Compliant (as hereinafter defined) and shall continue to function in
accordance with their intended purpose without material error or material
interruption
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as a result of the transition to the year 2000. As used herein, "Year 2000
Compliant" means, with respect to any person, that the hardware, firmware,
software and computer systems of such person (a) will completely and accurately
address, produce, store and calculate data involving dates before, on and after
January 1, 2000 and will not produce abnormally ending or incorrect results
involving such dates as used in any forward or regression dated based
functions; and (b) will provide that all "date"-related functionalities and
data fields include the indication of century and millennium, and will perform
calculations which involve a four-digit year.
SECTION 3.21. Information Supplied. Without limiting any of the
representations and warranties contained herein, no written representation or
written warranty of the Company or the Stockholders and no statement by the
Company or the Stockholders contained in the Schedules to this Agreement
contains any untrue statement of material fact, or omits to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which such statements were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company and the
Stockholders that:
SECTION 4.01. Organization and Qualification. Buyer is a
corporation duly organized, validly existing and in good standing under
Delaware Law and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary.
SECTION 4.02. Authority. Buyer has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consent.
(a) The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not (i) conflict with or violate the charter or Certificate of
Incorporation, in each case as amended or restated, of Buyer, (ii) conflict
with or violate any Laws applicable to Buyer or by which any of its properties
or assets is bound or subject, or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under any note, bond, mortgage, indenture,
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contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer is a party or by or to which Buyer or any of its
properties is bound or subject.
(b) The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not, require Buyer to obtain any consent, license, permit, approval,
waiver, authorization or order of, or to make any filing with or notification
to, any Governmental Entities, except for the filing and recordation of
appropriate merger documents as required by Florida Law or Delaware Law.
SECTION 4.04. SEC Documents. Buyer has filed all forms, reports
and documents required to be filed by Buyer with the SEC as of the date hereof
and Buyer has delivered to the Company and the Stockholders a true and complete
copy of Buyer's Annual Report on Form 10-K for the year ended December 31,
1997, its quarterly reports on Form 10-Q for the quarter ended September 30,
1998, and its definitive proxy statement for its annual meeting of stockholders
held in 1998 (together, the "SEC Documents"). As of their respective dates, the
SEC Documents complied in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, and none of the Buyer SEC Documents contained any untrue statement
of a material fact or omitted to state 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.
SECTION 4.05. Financial Statements. The financial statements of
Buyer, including the notes thereto, included in the SEC Documents (the "Buyer
Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and have been prepared in accordance with
United States generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto). The Buyer Financial
Statements fairly present the consolidated financial condition and operating
results of Buyer and its subsidiaries at the dates and during the periods
indicated therein (subject, in the case of unaudited statements, to normal,
recurring year-end adjustments). There has been no material change in Buyer
accounting policies except as described in the notes to the Buyer Financial
Statements.
SECTION 4.06. Tax Matters; Pooling. Neither Buyer nor, to the
knowledge of Buyer, any of its affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of section 368(a) of the Code.
SECTION 4.07. Valid Issuance of Buyer Common Stock. The shares of
Buyer Common Stock to be issued pursuant to the Merger have been duly
authorized and reserved for issuance and, when issued in accordance with the
terms of this Agreement will be validly issued, fully paid, and non-assessable
and not subject to any preemptive rights and issued in compliance with all
applicable federal or state securities laws. The authorized, issued and
outstanding capitalization of Buyer is as set forth in the Buyer SEC Documents
as of the dates of the financial statements or other information included in
the Buyer SEC Documents.
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SECTION 4.08. Absence of Certain Changes or Events. There has been
no change, occurrence or circumstance having or reasonably likely to have,
individually or in the aggregate, a material adverse effect on the business,
operations, assets, financial condition, results of operations or prospects of
the Buyer; provided, however, that any occurrences directly attributable to
conditions affecting the economy in general or the Buyer's industry in general
or fluctuations in the stock market shall not be taken into account in
determining whether there has been or would be an occurrence having a material
adverse effect with respect to the Buyer.
SECTION 4.09. Year 2000 Compliance. Except as disclosed in Buyer's
SEC Documents, all hardware, firmware, software and computer systems of Buyer
and to the knowledge of Buyer, their respective material customers and
suppliers, are, or will be by the Effective Time, Year 2000 Compliant (as
hereinafter defined) and shall continue to function in accordance with their
intended purpose without material error or material interruption as a result of
the transition to the year 2000.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company. The Company
hereby covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Buyer,
the Company will:
(a) operate its business only in the usual and ordinary
course consistent with past practices;
(b) use commercially reasonable efforts to preserve
substantially intact its business organization, maintain its Material
Contracts, and Intellectual Property and other material rights, retain the
services of its respective officers and key employees and maintain its
relationships with its material customers and suppliers;
(c) maintain and keep its assets in as good repair and
condition as at present, ordinary wear and tear excepted;
(d) maintain and keep in full force and effect insurance
comparable in amount and scope of coverage to that currently in effect; and
(e) from the date of this Agreement and to the Effective
Time, promptly supplement or amend the Schedules to this Agreement with respect
to any matter that arises or that is required to be set forth or listed in the
Schedules or is necessary to complete or correct any information in the
Schedules; provided, that for purposes of determining the rights and
obligations of the parties hereunder (other than the obligation of the Company
under this Section 5.01(e)), any such supplemental or amended disclosure will
not be deemed to have been disclosed to Buyer unless Buyer otherwise expressly
consents in writing.
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SECTION 5.02. Negative Covenants of the Company. Except as
expressly contemplated by this Agreement or otherwise consented to in writing
by Buyer, from the date of this Agreement until the Effective Time, the Company
will not do any of the following:
(a) amend or otherwise modify any of the Material
Contracts;
(b) (i) effect any reorganization or recapitalization;
(ii) issue any capital stock or any option, warrant or similar agreement with
respect to its capital stock; (iii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock; or (iv) adopt or propose to adopt any amendments to its
Certificate of Incorporation or bylaws;
(c) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its assets, except for dispositions of
inventories and of assets in the ordinary course of business and consistent
with past practice;
(d) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy;
(e) take (and will use reasonable best efforts to prevent
any affiliate of the Company from taking) any action that, in the judgment of
KPMG LLP would cause the Merger not to be treated as a Pooling Transaction for
financial accounting purposes;
(f) take any action that would result in a breach (as of
the Closing) of any of the representations and warranties set forth in Section
3.08;
(g) pay or agree to pay any dividend, distribution, or
other payment to any of its stockholders;
(h) pay or agree to pay any bonus, incentive compensation,
or similar payment to any of its employees or increase the compensation of any
stockholder or other employee;
(i) make any material expenditure or commitment except in
the ordinary course of business consistent with past practice; or
(j) agree in writing or otherwise to do any of the
foregoing.
SECTION 5.03. Restrictive Covenant The Stockholders acknowledge
that each was a beneficial owner of the goodwill of the Company. In
consideration of the purchase of all of the Stockholders' stock in the Company
and the delivery of Confidential Information to the Stockholders, each of the
Stockholders hereby agrees that, for a period of three years from the Closing
Date, the Stockholders will not (except in the course of performing authorized
duties as an employee of CNET:
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(a) own, manage, operate, join, control or participate in,
directly or indirectly, or derive any financial benefits whatever from, or be
an officer, director, employee, partner, consultant or shareholder of, any
profit or non-profit business which engages in (i) the development, design,
implementation or operation of an Internet site or other e-commerce or web
development related service, (ii) the creation of content or complementary
services for, or the sale of advertising for, such a site or service or (iii)
any other business that competes with the primary business activities of Buyer
(collectively, a "Competing Business") in North America, or the European Union.
(b) directly or indirectly solicit or attempt to solicit
any customer or potential customer of Buyer to purchase advertising or other
goods or services that are competitive with those offered by Buyer from any
person or entity other than Buyer; or
(c) recruit or solicit for employment any person who is,
or within the 12 month period preceding the date of such activity was, an
employee of Buyer.
Notwithstanding the foregoing, the Stockholders may own, directly, or
indirectly, solely as an investment, up to one percent (1%) of any class of
publicly traded securities of any entity that owns a Competing Business.
(d) Should a Stockholder violate paragraph (a) above, such
Stockholder and Buyer agree that any financial benefits whatever received by
the Stockholder from the Competing Business shall be turned over to Buyer for a
period of twelve (12) months after the commencement of participation in such
Competing Business.
(e) Each Stockholder represents to Buyer that he is
willing and able to engage in businesses that are not Competing Businesses
hereunder and that enforcement of the restrictions set forth in this Section
5.03 would not be unduly burdensome to him. Buyer and the Stockholders
acknowledge and agree that the restrictions set forth this Section 5.03 are
reasonable as to time, geographic area and scope of activity and do not impost
a greater restraint than is necessary to protect the legitimate business
interests of Buyer.
If the provisions of this Section 5.03 below are found by a
court of competent jurisdiction to contain limitations as to time, geographic
area or scope of activity that are not reasonable or not necessary to protect
the legitimate business interests of Buyer, then such court is hereby directed
to reform such provisions to the minimum extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be reasonable and to impose a restraint that is not greater than
necessary to protect the legitimate business interests of Buyer.
SECTION 5.04. Confidential Information.
(a) The assets of the Company include certain commercially
valuable technical and non-technical confidential or proprietary information of
the Company (collectively,
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"Confidential Information"). Confidential Information means all information
used by the Company in connection with operating its business that is not
generally known to others in similar areas of business, including without
limitation (i) trade secrets, software, work product, processes, analyses and
know-how related to the architecture and operation of the Company's business or
the submission, collection or organization of its contents; (ii) customer and
prospect lists and other marketing, advertising, pricing, strategic and
business plans and information related to the Company's business; and (iii)
information concerning traffic at the Company's Internet sites and financial
information concerning the operation of the Company's business.
(b) Each of the Stockholders acknowledges and agrees that,
following the Closing, the Confidential Information will be the sole and
exclusive property of the Surviving Corporation. Following the Closing, neither
of the Stockholders will, directly or indirectly, use any Confidential
Information for his own benefit or disclose any Confidential Information to any
person (except in the course of performing authorized duties for Buyer or the
Surviving Corporation). At Buyer's request after the Closing, the Stockholders
will promptly deliver to Buyer or the Surviving Corporation all documents,
computer disks and other computer storage devices, computer printouts, manuals
and other papers and materials (including all copies thereof in whatever form)
containing or incorporating any Confidential Information that are in his
possession or under his control. Confidential Information will not include
information that is (i) already known or in the possession of a party as of the
date of disclosure; (ii) is already in the public domain or becomes public
other than through the act or omission of the party; (iii) is required to be
disclosed pursuant to a court order or other governmental rule or regulation;
or (iv) is acquired independently form a third party who had the right to
disclose it to the party.
SECTION 5.05. Access and Information.
(a) The Company shall (i) afford to Buyer and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, the "Buyer Representatives")
reasonable access at reasonable times, upon reasonable prior notice, to the
officers, employees, agents, properties, offices and other facilities of the
Company and to the books and records thereof, (ii) furnish promptly to Buyer
and the Buyer Representatives such information concerning the business,
properties, contracts, records and personnel of the Company (including, without
limitation, financial, operating and other data and information) as may be
reasonably requested, from time to time, by Buyer, and (iii) authorize Buyer to
contact and obtain relevant information from the Company's accountants,
material customers and suppliers and any governmental agencies having dealings
with the Company.
(b) No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and warranties of the
parties which are herein contained and each such representation and warranty
shall survive such investigation.
(c) Buyer will maintain all tax records relating to the
Company for a period of four years after the Closing Date. The Stockholders
shall be afforded reasonable access at reasonable times upon reasonable prior
notice to such records to assist the Stockholders in complying with any inquiry
or audit of the Internal Revenue Service.
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SECTION 5.06. Appropriate Action; Consents; Filings.
(a) Each of Buyer, the Stockholders and the Company
shall use (and shall cause each of their respective subsidiaries to use, as
applicable) all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under applicable Law or otherwise to consummate and make effective
the transactions contemplated by this Agreement, and (ii) obtain from any
Governmental Entities or other third parties any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Buyer or the Company or any of their subsidiaries or affiliates, as applicable,
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including,
without limitation, the Merger. The Stockholders, the Company and Buyer shall
furnish all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection with
the transactions contemplated by this Agreement.
(b) Each of Buyer, the Stockholders and the Company
shall give (or shall cause their respective subsidiaries and affiliates, as
applicable, to give) any notices to third parties, and use (and cause their
respective subsidiaries and affiliates, as applicable, to use) all reasonable
efforts to obtain any third party consents (i) necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, or (ii)
otherwise required under any Material Contracts, or other agreements in
connection with, or in order to allow the Company to continue to be entitled to
the benefits thereof following, the consummation of the transactions
contemplated hereby. In the event that any party shall fail to obtain any third
party consent described above and the parties agree to consummate the Merger
without such consent, such party shall use commercially reasonable efforts, and
shall take any such actions reasonably requested by the other parties, to limit
the adverse effect upon the Company and Buyer, their respective subsidiaries,
and their respective businesses resulting, or which could reasonably be
expected to result after the Effective Time, from the failure to obtain such
consent.
SECTION 5.07. Pooling; Tax Treatment.
(a) The Company and the Stockholders will use all
reasonable efforts to cause the Merger to be treated for financial accounting
purposes as a Pooling Transaction, and shall not take, and shall use all
reasonable efforts to prevent any of their affiliates from taking, any actions
which could prevent the Merger from being treated for financial accounting
purposes as a Pooling Transaction.
(b) Each party hereto shall use all reasonable efforts
to cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any affiliate of such party from taking, any
actions which could prevent the Merger from qualifying as a reorganization
under the provisions of section 368(a) of the Code.
SECTION 5.08. Public Announcements. Buyer will issue a press
release regarding the Merger and shall provide notice to the Company before
issuing any press release or otherwise
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making any public statements with respect to the Merger. Neither party shall
issue any press release or make any public statement prior to such press
release, except as otherwise required by applicable Law.
SECTION 5.09. Fees, Expenses and Other Payments. Except as
otherwise expressly provided in this Agreement, each of the parties will pay
their own transaction costs and expenses (including, without limitation, all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by the Company, the
Stockholders or Buyer in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby. Any trade payables in excess of $50,500 will
be paid by the Stockholders of the Company through a pro rata reduction in the
number of shares of Buyer Common Stock to be issued in the Merger (based upon
the Conversion Ratio).
SECTION 5.10. Employment Agreements. At the Closing, the Surviving
Corporation will enter into an employment agreement with each of ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Key Sumo Employees") in substantially the
form of Exhibits A-1 to A-2 attached hereto.
SECTION 5.11. Option Agreements. Buyer will grant an aggregate of
8,000 incentive stock options to be distributed as determined by the Key Sumo
Employees upon joining Buyer as full-time employees. The options will be issued
pursuant to Buyer's standard employee option plan with all the customary terms,
with an exercise price equal to the fair market value of Buyer's Common Stock
on the date of the grant.
SECTION 5.12. Financial Review.Prior to Closing, Buyer shall
engage, at Buyer's expense, KPMG, LLP, or such other national accounting firm
as Buyer may select, to perform a financial review of the Company and the
results of this review will be provided to Buyer.
SECTION 5.13. Affiliate Transactions. Prior to Closing, the
Company shall repay or cancel all affiliate indebtedness, including but not
limited to certain loans from ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the amount of $140,000.
The Company may use cash on hand to pay such amount.
SECTION 5.14. Apportionment of Taxes Between Pre-Closing and
Post-Closing Tax Periods. In order to apportion appropriately any Taxes
relating to any taxable year or any other period that is treated as a taxable
year (a "Tax Period") that includes the Closing Date, the parties hereto will,
unless specifically prohibited by applicable law, elect with the relevant
taxing authority to treat for all purposes the Closing Date as the last day of
a taxable period of the Company, and such Tax Period will be treated as a short
Tax Period and a pre-Closing Tax Period for purposes of this Agreement. Buyer
shall assume all liability for Taxes relating to revenues actually collected
during any post-Closing Tax Period (regardless of whether such revenues were
accrued prior to the Closing Date) and shall hold the Stockholders harmless
with respect to payment of such Taxes. The Stockholders shall be liable and
shall hold Buyer harmless for Taxes relating to revenues actually collected
during any pre-Closing Tax Period.
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ARTICLE VI
CLOSING CONDITIONS
SECTION 6.01. Conditions to Obligations of Buyer. The obligations
of Buyer to effect the Merger and the other transactions contemplated hereby
are also subject to the satisfaction at or prior to the Closing Date of the
following conditions, any or all of which may be waived in writing by Buyer, in
whole or in part:
(a) Each of the representations and warranties of the
Company and the Stockholders contained in this Agreement shall be true and
correct in all material respects as of the Closing Date as though made on and
as of the Closing Date (except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date). Buyer shall have received a certificate
signed by the President of the Company, dated the Closing Date, to such effect.
(b) Each of the Company and the Stockholders shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. Buyer shall have received a certificate signed by
the President of the Company, dated the Closing Date, to such effect.
(c) Since the Latest Balance Sheet Date, there has not
occurred any material adverse change in the condition (financial or otherwise),
results of operations, business, site traffic, prospects, assets or Liabilities
of the Business.
(d) Buyer shall have received a closing certificate signed
by the President of the Company substantially in the form of Exhibit B attached
hereto.
(e) No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect
and which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger (an "Order"); and no such Governmental Entity or
third party shall have initiated or threatened to initiate any proceeding
seeking an Order.
(f) Counsel to the Company shall have delivered to Buyer
its written opinion substantially in the form of Exhibit C attached hereto.
(g) Each of the Company and the Stockholders shall have
obtained each consent and approval necessary in order that the transactions
contemplated hereby do not constitute a material breach or violation of, or
result in a right of termination or acceleration of any encumbrance on any
material portion of the Company's properties or assets, any Material Contract,
material arrangement or understanding.
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(h) The results of a financial review of the Company shall
be satisfactory to Buyer in Buyer's sole discretion.
(i) Buyer shall have received reasonably satisfactory
assurances from KPMG LLP on the Closing Date that the Merger should be treated
for financial accounting purposes as a Pooling Transaction.
(j) The total Liabilities of the Company of the type
that would be reflected in a balance sheet of the Company prepared as of the
Closing Date in accordance with cash basis accounting shall not exceed $50,500.
(k) All proceedings taken by the Company and all
instruments executed and delivered by the Company, the Stockholders and the
stockholders, as applicable, on or prior to the Closing Date in connection with
the transactions herein contemplated shall be reasonably satisfactory in form
and substance to Buyer.
(l) Buyer has completed its due diligence investigation of
the Company's technology and related Intellectual Property, and Buyer is
satisfied with the results of its investigation in its sole discretion.
(m) Each of the Key Sumo Employees shall have delivered to
Buyer the executed employment agreements described in Section 5.09 of this
Agreement.
SECTION 6.02. Conditions to Obligations of the Company and the
Stockholders. The obligation of the Company and the Stockholders to effect the
Merger and the other transactions contemplated hereby is also subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived in writing by the Company and the Stockholders,
in whole or in part:
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date (except to
the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date.
(b) Buyer shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date. The
Company shall have received a certificate of the President of the Buyer, dated
the Closing Date, to that effect.
(c) No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Order which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger; and no such
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Governmental Entity or third party shall have initiated or threatened to
initiate any proceeding seeking an Order.
(d) Counsel to Buyer shall have delivered to the Company
its written opinion substantially in the form of Exhibit D attached hereto.
(e) All proceedings taken by Buyer and all instruments
executed and delivered by Buyer on or prior to the Closing Date in connection
with the transactions herein contemplated shall be reasonably satisfactory in
form and substance to the Company.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Indemnification of Buyer. Notwithstanding any
investigation by Buyer or the Buyer Representatives, the Stockholders will
indemnify and hold Buyer, its subsidiaries and their respective affiliates,
directors, officers, employees and agents (collectively, the "Buyer Indemnified
Parties") harmless from any and all Liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all court costs and
reasonable attorneys' fees (collectively, "Losses"), that any Buyer Indemnified
Party may suffer or incur as a result of or relating to:
(a) the breach of any representation or warranty made by
the Company or the Stockholders in this Agreement or pursuant hereto or any
allegation by a third party that, if true, would constitute such a breach; or
(b) the breach of any covenant or agreement of the
Company or the Stockholders under this Agreement or any allegation by a third
party that, if true, would constitute such a breach;
provided that (i) the Buyer Indemnified Parties will not be entitled to
indemnification under paragraph (a) or (b) of this Section 7.01 unless the
aggregate amount of all Losses for which indemnification is sought by the Buyer
Indemnified Parties pursuant to such paragraph exceeds $50,000, in which case
the Buyer Indemnified Parties will be entitled to indemnification for the full
amount of all such Losses; and (ii) the Buyer Indemnified Parties will not be
entitled to indemnification under paragraph (a) or (b) of this Section 7.01 in
an aggregate amount exceeding the value of the total consideration paid by
Buyer hereunder.
SECTION 7.02. Indemnification of Stockholders. Buyer will
indemnify and hold the Stockholders, their subsidiaries and their respective
affiliates, directors, officers, employees and agents (collectively, the
"Seller Indemnified Parties") harmless from any and all Losses, that any Seller
Indemnified Party may suffer or incur as a result of or relating to:
(a) the breach of any representation or warranty made by
the Buyer in this Agreement or pursuant hereto or any allegation by a third
party that, if true, would constitute such a breach;
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(b) the breach of any covenant or agreement of Buyer under
this Agreement or any allegation by a third party that, if true, would
constitute such a breach; or
(c) claims arising from actions of Buyer in respect of the
conduct of the business after the Effective Time;
provided that (i) the Seller Indemnified Parties will not be entitled to
indemnification under paragraph (a), (b) or (c) of this Section 7.02 unless the
aggregate amount of all Losses for which indemnification is sought by the
Seller Indemnified Parties pursuant to such paragraph exceeds $50,000, in which
case the Seller Indemnified Parties will be entitled to indemnification for the
full amount of all such Losses; and (ii) the Seller Indemnified Parties will
not be entitled to indemnification under paragraph (a), (b) or (c) of this
Section 7.02 in an aggregate amount exceeding the value of the total
consideration paid by Buyer hereunder.
SECTION 7.03. Survival. The parties' rights to indemnification
under this Article VII will survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated for a period of
two years after the Closing Date.
SECTION 7.04. Notice. The Buyer Indemnified Parties or Seller
Indemnified Parties entitled to receive indemnification under this Article VII
agree to give prompt written notice to the other party upon the occurrence of
any indemnifiable Loss or the assertion of any claim or the commencement of any
action or proceeding in respect of which such a Loss may reasonably be expected
to occur (a "Claim"), but the parties' failure to give such notice will not
affect their rights to indemnification under this Article VII, except to the
extent that the non-claiming person is materially prejudiced thereby. Such
written notice will include a reference to the event or events forming the
basis of such Loss or Claim and the amount involved, unless such amount is
uncertain or contingent, in which event the Parties will give a later written
notice when the amount becomes fixed.
SECTION 7.05. Defense of Claims. An indemnifying party may elect
to assume and control the defense of any Claim, including the employment of
counsel reasonably satisfactory to the indemnified parties and the payment of
expenses related thereto, if (a) the indemnifying party acknowledges the
obligation to indemnify the indemnified party for any Losses resulting from
such Claim and provide reasonable evidence to the indemnified party of his
financial ability to satisfy such obligation; (b) the Claim does not seek to
impose any liability or obligation on the indemnified parties other than for
money damages; and (c) the Claim does not relate to the indemnified parties'
relationship with their customers or employees. If such conditions are
satisfied and the indemnified party elects to assume and control the defense of
a Claim, then (i) the interest represented by the indemnifying party will not
be liable for any settlement of such Claim effected without the consent of the
indemnifying party, which consent will not be unreasonably withheld; (ii) the
indemnifying party may settle such Claim without the consent of the indemnified
parties; and (iii) the indemnified party may employ separate counsel and
participate in the defense thereof, but the indemnified party will be
responsible for the fees and expenses of such counsel unless (A) the
indemnifying party has failed to adequately assume
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the defense of such Claim or to employ counsel with respect thereto or (B) a
conflict of interest exists between the interests of the indemnified party and
the interests represented by the indemnifying party that requires
representation by separate counsel, in which case the fees and expenses of such
separate counsel will be paid by the indemnifying party. If such conditions are
not satisfied, the indemnified party may assume and control the defense of the
Claim; provided that the indemnified party may not settle any such Claim
without the consent of the indemnifying party, which consent will not be
unreasonably withheld, and further provided that the indemnifying party is
given a reasonable opportunity to participate in such defense (at the
indemnifying party's expense).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, as follows:
(a) by mutual consent of Buyer and the Company;
(b) by Buyer, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in Sections
6.01(a) or (b) would be incapable of being satisfied by May 15, 1999; provided
that, in any case, a willful breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this Section 8.01(b);
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Buyer set forth in this
Agreement, or if any representation or warranty of Buyer shall have become
untrue, in either case such that the conditions set forth in Sections 6.02(a)
or (b) would be incapable of being satisfied by May 15, 1999; provided that, in
any case, a willful material breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this Section 8.01(c);
(d) by either Buyer or the Company, if there shall be
any Order that is final and nonappealable preventing the consummation of the
Merger, except if the party relying on such Order to terminate this Agreement
has not complied with its obligations under Section 5.05 of this Agreement;
(e) by either Buyer or the Company, if the Merger shall
not have been consummated before May 15, 1999.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
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SECTION 8.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void, there shall be no liability on the part of the parties
to the other parties and all rights and obligations of any party hereto shall
cease, except that nothing herein shall relieve any party of any liability for
any breach of such party's representations, warranties, covenants or agreements
contained in this Agreement.
SECTION 8.03. Amendment. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time,
Buyer, on the one hand, and the Company, on the other hand, may (a) extend the
time for the performance of any of the obligations or other acts of the other
party hereto, (b) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document delivered pursuant
hereto and (c) waive compliance by the other party with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby.
ARTICLE IX
REGISTRATION RIGHTS
SECTION 9.01. Registration Statement. Within fifteen (15) days of
the Closing Date, Buyer will prepare and file with the SEC, pursuant to the
Securities Act, a registration statement on Form S-3 (the "Registration
Statement") covering the resale of 5% of the Buyer Common Stock issued to the
Stockholders in the Merger (collectively, the "Registered Shares") in a
continuous offering. Buyer will use commercially reasonable efforts to cause
the Registration Statement to become effective as soon as practicable
thereafter and to remain effective until the earlier of (i) the date that all
of the Registered Shares have been sold by the Stockholders or (ii) the first
anniversary of the Closing. The Stockholders will not sell any Registered
Shares under the Registration Statement before June 3, 1999 and unless, at the
time of sale, the Registration Statement (and the most recently filed
post-effective amendment thereto, if any) has been declared effective. The
period of time during which the Registration Statement is effective is referred
to as the "Registration Period."
SECTION 9.02. Limitations on Sale.
(a) Each Stockholder will notify Buyer two business days
prior to selling any Registered Shares pursuant to the Registration Statement.
If, upon receipt of such a notice, Buyer certifies to such Stockholder in
writing that (i) due to a change in circumstances or a pending transaction, the
Registration Statement contains 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 and (ii) the public disclosure required to
correct such misstatement or omission would be impracticable or injurious to
Buyer, then the Stockholder will refrain from selling any Registered Shares
pursuant to the Registration Statement for the period of time requested by
Buyer (a "Blackout Period"). Buyer may impose no more than four Blackout
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Periods, which may not exceed 45 calendar days each and may not exceed 60
calendar days in the aggregate. Buyer will use reasonable efforts to minimize
the time period during which the Stockholders are required to refrain from
selling under this paragraph.
(b) In addition to the foregoing restrictions, the
Stockholders will not sell, transfer or otherwise dispose of any shares of
Buyer Common Stock or otherwise reduce their risk of loss with respect to any
of the Buyer Common Stock issued to them in the Merger until Buyer has publicly
released earnings covering at least 30 days of combined operations of the
Surviving Corporation. Buyer will use commercially reasonable efforts to
release such earnings as soon as reasonably practicable after the Closing;
provided that Buyer will not be required to publicly release earnings for a
period other than a full calendar quarter.
SECTION 9.03. Information. Each Stockholder will furnish to Buyer,
at Buyer's reasonable request, such information regarding the ownership of
Registered Shares by such Stockholder and the intended method of disposition
thereof as is required in connection with the preparation of a registration
statement covering the Registered Shares.
SECTION 9.04. Expenses. Buyer will bear all expenses arising or
incurred in connection with any registration of the Registered Shares
hereunder, including without limitation registration fees, printing expenses
and Buyer's accounting and legal fees and expenses; provided that each
Stockholder will bear the expense of any underwriting fees, discounts or
commissions applicable to its sale of the Registered Shares and the fees and
expenses of any separate legal counsel or accounting firm engaged by such
Stockholder.
SECTION 9.05. Indemnification.
(a) Buyer agrees to indemnify the Stockholders and each
underwriter and selling broker of the Registered Shares registered hereunder
and their respective officers and directors and each person or entity, if any,
who controls any of the foregoing within the meaning of Section 15 of the
Securities Act and their respective successors against all Losses arising out
of or relating to any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or any prospectus
included therein or incident thereto or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and agrees to reimburse the
Stockholders and such other persons for any legal and other expenses reasonably
incurred by them in connection with investigating or defending any claim or
action related to such a Loss; provided, however, that Buyer will not be liable
in any such case if and to the extent that (i) such statement or omission was
made in reliance upon information (including, without limitation, written
negative responses to inquiries) furnished to Buyer in writing by a Stockholder
expressly for use in the Registration Statement or such a prospectus or (ii) a
Stockholder fails to deliver or cause to be delivered a copy of the final
prospectus relating to such offering (as then amended or supplemented) to the
person asserting such claim and such final prospectus would have cured the
defect giving rise to such Loss.
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(b) Each Stockholder will indemnify Buyer, the other
Stockholders and their respective officers and directors and each person or
entity, if any, who controls any of the foregoing within the meaning of Section
15 of the Securities Act and their respective successors against all Losses
arising out of or relating to any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement or any
prospectus included therein or incident thereto or any omission (or alleged
omission) to state therein a material fact required to be stated or necessary
to make the statements therein not misleading, and will reimburse Buyer, the
other Stockholders and such other persons for any legal and any other expenses
reasonably incurred by them in connection with investigating or defending any
claim or action related to such a Loss; provided, however, that this
subparagraph (b) shall apply only in the case of and to the extent specified in
clauses (i) and (ii) of the preceding paragraph.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to any of the two preceding paragraphs, the
indemnified and indemnifying parties shall comply with the notice and defense
of claims provisions of Sections 7.03 and 7.04 with respect to such proceeding.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally (and recipient executes a
receipt) or by overnight delivery service or if mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
facsimile number specified below:
(a) If to Buyer, to:
CNET, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to the Stockholders, to:
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (as representative for
the stockholders)
with a copy to:
▇▇▇▇▇▇ and Poliakoff
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
Attention:
SECTION 10.02. Certain Definitions. For the purposes of this
Agreement, the term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person.
(b) "business day" means any day other than a day on which
banks in the State of Florida are authorized or obligated to be closed.
(c) "control" (including the terms "controlled,"
"controlled by," and "under common control with") means the possession,
directly or indirectly, or as trustee or executor, of the power to direct or
cause the direction of the management or policies of a person, whether through
the ownership of stock or as trustee or executor, by contract or credit
arrangement or otherwise.
(d) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(e) "knowledge" of or "known" by a person, with respect to
any matter in question, means (i) in the case of the Company, if any director
or executive officer of the Company has actual knowledge of such matter or
would have knowledge of such matter following due inquiry, and (ii) in the case
of Buyer, if any director or executive officer of Buyer has actual knowledge of
such matter or would have knowledge of such matter following due inquiry.
(f) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as used in Section 13(d) of the Exchange Act).
(g) "Securities Act" means the Securities Act of 1933, as
amended.
(h) "Tax" or "Taxes" means any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any federal,
state, local or foreign taxing
xxviii
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authority or agency, including, without limitation, (i) income, franchise,
profits, gross receipts, minimum, alternative minimum, estimated, ad valorem,
value added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social security, workers
compensation, unemployment compensation, utility, severance, excise, stamp,
windfall profits, transfer and gains taxes, (ii) customs, duties, imposts,
charges, levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto.
SECTION 10.03. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement Section references herein are, unless the
context otherwise requires, references to sections of this Agreement.
SECTION 10.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 10.05. Entire Agreement. This Agreement (together with the
Exhibits and the Schedules to this Agreement) constitutes the entire agreement
of the parties, and supersede all prior agreements and undertakings, both
written and oral, among the parties or between any of them, with respect to the
subject matter hereof.
SECTION 10.06. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 10.07. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, except as expressly provided herein.
SECTION 10.08. Specific Performance. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
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SECTION 10.09. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive to,
and not exclusive of, any rights or remedies otherwise available.
SECTION 10.10. Further Assurances. Each party hereto agrees to
execute any and all documents and to perform such other acts as may be
necessary or expedient to further the purposes of this Agreement and the
transactions contemplated hereby.
SECTION 10.11. Governing Law; Venue. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law and except to the extent that Florida Law
mandatorily provides. The parties agree that venue for any action brought to
enforce this Agreement shall be a court of competent jurisdiction in San
Francisco, California.
SECTION 10.12. Attorneys Fees. In the event legal action is
required to enforce the rights of the parties hereunder, the prevailing party
shall be awarded reasonable attorneys' fees, costs and expenses incident to
such action.
SECTION 10.13. Counterparts. This Agreement may be executed in
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CNET, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Title: Chief Executive Officer
------------------------
SUMO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Title: Vice President
------------------------
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer and Secretary of CNET,
Inc. hereby certify that this agreement has been adopted by CNET, Inc. pursuant
to Section 251(f) of the Delaware General Corporation Law, and that all of the
conditions specified in the first sentence of such subsection have been
satisfied by CNET, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial
Officer and Secretary of CNET, Inc.
xxxi