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EXHIBIT 10.2
SERVICES AGREEMENT
Dated January 19, 2001
The parties to this Services Agreement (this "Agreement"), effective March
1, 2001 (the "Effective Date"), are ZD Inc., a Delaware corporation ("ZD"), CNET
Networks, Inc., a Delaware corporation, ("CNET"), and Ziff ▇▇▇▇▇ Publishing
Inc., a Delaware corporation ("Publishing").
Pursuant to the Purchase Agreement among ZD, ZD Holdings (Europe) Ltd. and
Publishing, dated December 6, 1999 (the "Purchase Agreement"), Publishing
purchased certain print publications (the "Covered Publications") and other
assets as described in the Purchase Agreement (the "Business"). The Covered
Publications and the Business exclude the Computer Shopper print publication,
its various special editions, including the edition published under the name
eShopper, and any successor publication thereto (collectively, the
"Publication").
Prior to the purchase of assets pursuant to the Purchase Agreement, ZD
provided to the Publication certain services described in Section 2 below
(collectively, the "Services") and ZD and Publishing entered into a Services
Agreement, dated April 5, 2000 (the "Original Services Agreement") pursuant to
which certain Services were provided to ZD in exchange for certain payments
described therein;
Since the date of the Original Services Agreement the circumstances have
changed for both parties and each party now desires to terminate the Original
Services Agreement and to enter into a new Services Agreement, in each case, on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations set forth herein, the parties hereto agree as follows:
SECTION 1. TERMINATION OF ORIGINAL AGREEMENT. The parties hereby agree to
terminate the Original License Agreement in its entirety effective as of
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the Effective Date. As of the Effective Date, the Original Agreement shall be of
no further force or effect, except that all provisions of such agreement which
are stated to survive and ZD's obligation to pay Publishing any fees or other
amounts in respect of periods up to the Effective Date, shall survive such
termination. In consideration of the termination of the Original Agreement, ZD
shall pay to Publishing a non-refundable sum of $2,000,000 (Two Million Dollars)
on March 1, 2001.
SECTION 2. PERFORMANCE OF SERVICES; BUDGET.
(a) Subject to the terms and conditions of this Agreement, Publishing shall
perform for ZD the Services described on Schedule 1(a) attached hereto. As part
of the Services, ZD shall be entitled to receive the benefit of all contractual
arrangements which Publishing has in effect from time to time with third parties
which relate to the functions described in Schedule 1(a) hereto, including,
without limitation, the arrangements with Warner Publisher Services, for
distribution; Centrobe, for fulfillment services; and Direct Media, for list
rental. Publishing shall also manage ZD's relationships under the arrangements
with ▇.▇. ▇▇▇▇▇▇▇▇▇ & Sons, for printing and Bowater Newsprint for paper.
(b) At least ninety (90) days prior to the end of each calendar year during
the Term (as defined in Section6), representatives of Publishing and ZD will
meet to discuss and agree upon a budget for the following year for the Services
to be performed by Publishing. ZD will provide Publishing with reasonable detail
as to the expected nature and extent of the Services desired to be used and
Publishing will provide ZD with projected costs of such Services based on ZD's
stated needs. ZD may notify Publishing of any changes to the nature or extent of
the Services it desires to obtain during any budgeted year and Publishing will
use its commercially reasonable efforts to accommodate ZD's request for
increased or decreased use of the Services as specified by ZD. Publishing shall
promptly (to the extent practicable) notify ZD of any material deviation from
the budget and shall make any changes reasonably requested by ZD to remedy such
deviation.
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SECTION 3. FEES; PAYMENT.
(a) ZD shall pay to Publishing in exchange for the Services, the
out-of-pocket costs of such Services (the "Usage Fees"). The parties acknowledge
that the Usage Fees shall not include any allocated charges (i.e. no internal
costs will be included). Publishing shall provide to ZD all benefits of
Publishing's third party arrangements such that the out-of-pocket costs charged
to ZD shall be the same per unit (or other comparable metric) amounts as those
applicable to the Covered Publications.
(b) The amounts payable for Services under this Agreement do not include
any amounts for sales, use or similar taxes. If any such taxes are found at any
time to be required to be paid, they will be added to the amounts payable by ZD
pursuant to this Agreement.
(c) Publishing shall send an itemized monthly invoice, in a format mutually
agreed to by Publishing and ZD, to ZD for the Usage Fees resulting from Services
provided by Publisher during the previous month. Payment terms are net cash
payable in full by ZD within the later of thirty (30) days after receipt of the
invoice or forty-five (45) days after the end of such previous month (the
"Payment Due Date"). A late charge will be charged each month for any payments
received by Publishing later than this Payment Due Date, except for payments
which ZD disputes in good faith. The late charge will be determined by
multiplying the outstanding balance by X/12 where (X) is the prime rate
announced from time to time by the Bank of New York.
(d) ZD shall have the right, on at least ten (10) days prior notice to
Publishing, to examine or appoint an independent certified public accountant,
who shall agree to hold all information confidential except in connection with
any claim for ZD reimbursement hereunder, to examine and audit, at its own
expense, not more than twice each calendar year, during normal business hours
and for a reasonable duration, the relevant records of Publishing relating to
calculation of the Usage Fees. If such
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audit uncovers an overpayment by ZD, Publishing shall promptly reimburse ZD in
the amount of such overpayment and if the overpayment is five percent (5%) or
greater of the amount that should properly have been charge for such period,
Publishing shall also promptly reimburse ZD for the reasonable costs of such
audit actually incurred by ZD.
SECTION 4. DIRECTION AND CONTROL OF PUBLISHING'S PERSONNEL.
Publishing shall have the exclusive right to direct and control its
employees providing the Services under the terms of this Agreement, free of any
interference by ZD (other than in respect of ZD's right, as the recipient of the
Services, to specify the nature of the Services desired to be performed and the
right to receive and approve strategies and materials created or to be
distributed by such employees, in each case, specifically for the Publication).
All of Publishing's personnel providing the Services herein shall be exclusively
employees of Publishing or its affiliates, and Publishing shall have the sole
right to determine their conditions of employment, their working hours,
employment and vacation policies, seniority, promotions and assignments.
Publishing will be solely responsible for compensation of such employees and for
all withholding taxes, F.I.C.A. and F.U.T.A. taxes, unemployment insurance,
workmen's compensation, and any other insurance and fringe benefits with respect
to its employees. Publishing shall also have the exclusive rights to hire and
fire any such personnel.
SECTION 5. SERVICES TO BE RENDERED CONSISTENT WITH PAST PRACTICES. During
the Term (as defined in Section 6), Publishing shall in all material respects
render the Services and otherwise assist ZD in connection with the Publication
in a manner and of a quality consistent with past practice prior to the closing
under the Purchase Agreement, including, among other things, providing the
Services for the Publication in all respects with the same level of care and
expertise as it provides similar service to the Covered Publications.
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SECTION 6. TERM AND TERMINATION.
(a) The term (the "Term") of this Agreement shall commence as of the date
hereof and, unless earlier terminated pursuant to this Section 6, shall end on
February 28, 2003. Upon termination or expiration, all rights and obligations of
each party hereunder shall cease as of the date of termination and any amounts
owed by either party under this Agreement shall be paid in full in accordance
with Section 3(c).
(b) ZD may terminate this Agreement on at least ninety (90) days prior
notice to Publishing for any reason or for no reason.
(c) Either party may terminate this Agreement in the event that the other
party is in material breach of such other party's obligations under this
Agreement, unless such party is also in material breach of its obligations under
this Agreement, (i) if the defaulting party has not cured the breach within
fifteen (15) days after notice by the non-defaulting party specifying the nature
of the breach, or (ii) if the breach is not amenable to cure, then immediately
upon receipt of such notice by the defaulting party.
(d) Either party may terminate this Agreement as permitted under Section 9
in the event of a force majeure that prevents or materially delays the
performance by the other party of its obligations under this Agreement.
(e) Sections 7, 8, and 10 through 13 shall survive termination or
expiration of this Agreement.
SECTION 7. INDEMNIFICATION.
(a) Publisher, will, at its expense, promptly reform or correct any
Services which do not meet the requirements of this Agreement to the extent that
such errors were caused by Publisher, its equipment, its employees or agents.
Publisher shall not be responsible in any manner for any Services which do not
meet the requirements of this Agreement to the extent that such Services are due
to causes external to Publisher or otherwise beyond Publisher's control.
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(b) Publisher agrees to indemnify and hold ZD and its affiliates,
successors and assigns harmless against and in respect of, and to pay any costs,
damages, claims, losses, settlements, deficiencies, expenses and liabilities
arising from (i) Publisher's failure to have all rights, licenses, and/or
approvals necessary to permit it to perform the Services, (ii) the gross
negligence or willful misconduct of Publisher, its employees or its agents, and
(iii) any breach by Publisher, its employees or its agents of any of Publisher's
obligations hereunder.
(c) ZD and CNET, jointly and severally, agree to indemnify and hold
Publisher and its affiliates, successors and assigns harmless against and in
respect of, and to pay any costs, damages, claims, losses, settlements,
deficiencies, expenses and liabilities arising from (i) any breach by ZD, its
employees or its agents of any of ZD's obligations hereunder and (ii) any claims
arising against Publisher relating to the Publication provided such claims do
not result from the negligence or willful misconduct of Publisher, its employees
or its agents.
(d) The obligation of either party to provide indemnification under this
Agreement shall be contingent upon the party seeking indemnification (i)
providing the other party with prompt written notice of any claim for which
indemnification is sought and (ii) cooperating fully with the other party and,
so long as such other party acknowledges its obligations to indemnify the party
seeking indemnification for such claim, allowing the other party to control the
defense and settlement of such claim. The party seeking indemnification may not
settle any such claim without the other party's prior consent, which consent
shall not be unreasonably withheld. The party seeking indemnification shall have
the right, at its own expense, to participate in the defense of any such claim.
SECTION 8. CONFIDENTIALITY. Confidential or proprietary information
disclosed by either party to the other for the purposes of this Agreement which
is clearly identified as such in writing or which the circumstances surrounding
its disclosure indicate that it is confidential or proprietary (which shall
include, without
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limitation, all circulation strategies and results for the Publication) shall
not be disclosed to any third party and shall be protected by the recipient in
the same manner and to the same degree that the recipient protects its own
confidential information. Such information will be disclosed only to those
employees of the recipient requiring access thereto in order to perform the
party's obligations under this Agreement (it being understood that access in a
manner consistent with past practice will be permitted) and shall not be used in
any manner other than as specifically provided in this Agreement.
SECTION 9. FORCE MAJEURE. Neither ZD nor Publisher shall be responsible for
any failure or delay in performance of its obligations under this Agreement
because of circumstances beyond its reasonable control including, but not
limited to, acts of God, fires, floods, wars, civil disturbances, sabotage,
accidents, labor disputes (whether or not the employees' demands are reasonable
and within the party's power to satisfy), governmental actions or transportation
delays. Either party may terminate this Agreement without any liability to the
other party, subject to Section 6(g), if such other party is substantially
unable, as a result of any circumstance set forth in this Section, to perform
its obligations under this Agreement for a continuous period of thirty (30) days
or for thirty (30) or more days during any sixty-day period.
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SECTION 10. NOTICES.
(a) All notices, requests, instructions, claims, demands, consents and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given (i) when delivered
personally to the recipient, (ii) one business day after being sent to the
recipient by reputable overnight courier service (charges prepaid), (iii) upon
machine-generated acknowledgment of receipt after transmittal by facsimile if so
acknowledged to have been received before 5:00 p.m. on a business day at the
location of receipt and otherwise on the next following business day, provided
that each such notice, demand or other communication is also deposited within 24
hours thereafter with a reputable overnight courier service (charges prepaid)
for delivery to the same Person or (iv) five days after being mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid, to the parties at the following addresses:
If to ZD or CNET, addressed to: ZD Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With a copy to: ZD Inc.'s General Counsel at the same address.
If to Publisher, addressed to: Ziff ▇▇▇▇▇ Publishing Inc.
c/o Ziff ▇▇▇▇▇ Media, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With a copy to: Ziff ▇▇▇▇▇ Media's General Counsel at the same
address
or to such other address or addresses as may be specified from time to time in a
notice given by such party as permitted under this Section 10(a).
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(b) Notwithstanding the foregoing, routine instructions, requests,
directions and notices dealing with day to day operations under this Agreement
may be given in such manner to such persons as may be agreed by the parties from
time to time is reasonable and practicable.
SECTION 11. SCHEDULES. The parties hereto acknowledge and agree that the
Schedules referenced herein and attached hereto are an integral part of this
Agreement. Such Schedules are hereby incorporated by reference herein and made a
part hereof.
SECTION 12. MISCELLANEOUS.
(a) This Agreement constitutes the entire Agreement between the parties
with respect to the provision or performance of Services for ZD by Publisher
during the Term, and is a complete allocation of risks between them as to the
subject matter hereof. This Agreement supersedes and cancels all previous oral
or written communications, negotiations, representations, undertakings and
agreements heretofore made between the parties in respect to the subject matter
hereof.
(b) If any term or provision of this Agreement is held to be invalid or
unenforceable by reason of any rule of law or public policy, then this Agreement
shall be deemed amended to delete therefrom the term or provision held to be
invalid or unenforceable, and all of the remaining terms and provisions of this
Agreement shall remain in full force and effect.
(c) This Agreement shall be interpreted, construed and governed under and
by the laws of the State of New York, without regard to its choice of law rules.
In connection with any proceeding arising from this Agreement or the
transactions contemplated herein, the parties hereby irrevocably consent to the
exclusive jurisdiction of any Federal court or state court located in New York,
NY.
(d) Except as expressly set forth herein, no person not a party hereto
shall be a third-party beneficiary of any provision of this Agreement. Nothing
contained herein shall be construed or deemed to confer any benefit or right
upon any third party.
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(e) The failure of a party to insist upon strict or timely adherence to any
term of this Agreement on any occasion shall not be construed a waiver, or
deprive that party of the right thereafter to insist upon strict or timely
adherence to that term or any other term of this Agreement.
(f) The headings in this Agreement are intended solely for the convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement. No modification of this Agreement shall be effected by the
acknowledgement or acceptance of any purchase order, acknowledgement or other
forms containing terms or conditions at variance with or in addition to those
set forth in this Agreement.
(g) Neither this Agreement nor any provision hereof may be waived,
released, discharged, abandoned, changed or modified in any manner, orally or
otherwise, except by an instrument in writing signed by duly authorized officers
or representatives of the parties.
(h) Nothing in this Agreement shall be construed to place the parties in
the relationship of partners, joint venturers, principal and agent, or employer
and employee.
(i) This Agreement may be executed in counterparts, each of which shall
constitute an original but all of which, taken together, shall constitute a
single instrument.
(j) Each party to this Agreement has reviewed and commented upon or fully
participated in the preparation of this Agreement. In no event will any
provision of this Agreement be interpreted to the disadvantage of any party
based on such party's having been the draftsperson of such provision.
(k) ZD may assign this Agreement to any entity acquiring all or
substantially all of the Publication, provided that the assuming party executes
documents reasonably acceptable to Publisher assuming all of ZD's obligations
hereunder and ZD remains liable hereunder.
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(l) Publisher may assign this Agreement to any entity acquiring all or
substantially all of Publisher's assets, provided that the assuming party
executes documents reasonably acceptable to ZD assuming all of Publisher's
obligations hereunder and Publisher remains liable hereunder.
(SIGNATURE PAGE TO FOLLOW)
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ZIFF ▇▇▇▇▇ PUBLISHING INC. ZD INC.
By: By:
-------------------------------- ---------------------------------
Name: Name:
Title: Title:
CNET NETWORKS, INC.
By:
--------------------------------
Name:
Title:
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SCHEDULE 1
SERVICES DESCRIPTION
(a) Services Description:
(1) Production: paper, printing, prepress operations (e.g., layout,
transmission of pages to the printer etc.) and other similar services.
(2) Circulation: subscription acquisition services, newsstand placement and
management services, list rental management, fulfillment services,
relationships with wholesalers. This includes contractual arrangements
with, among other parties, third party subscription agents and national
distributors.
(3) Distribution: postal service, trucking and other transportation services.
(4) Benchmarks: access to all Benchmark products and services and access to and
participation in the Benchmark intranet Test Site for the Publication, and
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and membership in all Benchmark advisory committees on
the same basis as the Covered Publications. ZD shall be exempt from
compliance with the benchmark disclosure requirements to the same extent
waived for the Covered Publications.
