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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 19, 2000
AMONG
XXXX-XXXXX INC.,
CNET NETWORKS, INC.
AND
TD MERGER SUB, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS....................................................... 2
1.1 The Merger...................................................................... 2
1.2 Closing......................................................................... 3
1.3 Effective Time.................................................................. 3
1.4 Effects of the Merger........................................................... 3
1.5 Charter and Bylaws.............................................................. 3
1.6 Officers and Directors.......................................................... 3
1.7 Effect on Common Stock.......................................................... 4
1.8 Treatment of Stock Options and Other Equity-Based Awards........................ 5
1.9 Certain Adjustments............................................................. 5
ARTICLE II
EXCHANGE OF CERTIFICATES.................................................................. 6
2.1 Exchange Fund................................................................... 6
2.2 Exchange Procedures............................................................. 6
2.3 Distributions with Respect to Unexchanged Shares................................ 7
2.4 No Further Ownership Rights in Z-D Common Stock................................. 7
2.5 No Fractional Shares of CNET Common Stock....................................... 7
2.6 Termination of Exchange Fund.................................................... 8
2.7 No Liability.................................................................... 8
2.8 Investment of the Exchange Fund................................................. 8
2.9 Lost Certificates............................................................... 8
2.10 Withholding Rights.............................................................. 9
2.11 Further Assurances.............................................................. 9
2.12 Stock Transfer Books............................................................ 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................................ 9
3.1 Representations and Warranties of CNET and Merger Sub........................... 9
3.2 Representations and Warranties of Z-D.......................................... 17
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS................................................ 29
4.1 Covenants of CNET.............................................................. 29
4.2 Covenants of Z-D............................................................... 31
4.3 Governmental Filings........................................................... 35
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ARTICLE V
ADDITIONAL AGREEMENTS..................................................................... 36
5.1 Preparation of Proxy Statement; Stockholders Meetings........................... 36
5.2 Access to Information........................................................... 38
5.3 Reasonable Best Efforts......................................................... 39
5.4 Acquisition Proposals........................................................... 40
5.5 Fees and Expenses............................................................... 42
5.6 Directors' and Officers' Indemnification and Insurance.......................... 43
5.7 Public Announcements............................................................ 43
5.8 Accountant's Letters............................................................ 44
5.9 Board of Directors.............................................................. 44
5.10 Listing of Shares of CNET Common Stock.......................................... 44
5.11 Affiliates...................................................................... 44
5.12 The Spin-Off and Cash Dividend.................................................. 44
ARTICLE VI
CONDITIONS PRECEDENT...................................................................... 45
6.1 Conditions to Each Party's Obligation to Effect the Merger...................... 45
6.2 Additional Conditions to Obligations of CNET.................................... 46
6.3 Additional Conditions to Obligations of Z-D..................................... 47
ARTICLE VII
TERMINATION AND AMENDMENT................................................................. 48
7.1 Termination..................................................................... 48
7.2 Effect of Termination........................................................... 50
7.3 Amendment....................................................................... 52
7.4 Extension; Waiver............................................................... 52
ARTICLE VIII
GENERAL PROVISIONS........................................................................ 52
8.1 Non-Survival of Representations, Warranties and Agreements...................... 52
8.2 Notices......................................................................... 52
8.3 Interpretation.................................................................. 53
8.4 Counterparts.................................................................... 54
8.5 Entire Agreement; No Third Party Beneficiaries.................................. 54
8.6 Governing Law................................................................... 54
8.7 Severability.................................................................... 54
8.8 Assignment...................................................................... 55
8.9 Submission to Jurisdiction; Waivers............................................. 55
8.10 Enforcement..................................................................... 55
8.11 Further Assurances.............................................................. 55
8.12 Definitions..................................................................... 56
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LIST OF EXHIBITS
Exhibit Title
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Exhibit A Form of Z-D Stockholder Voting Agreement
Exhibit B Form of CNET Stockholder Voting Agreement
Exhibit C Form of Stockholder Agreement
Exhibit D Form of Certificate of Incorporation of Surviving Corporation
Exhibit 6.2(c)(1) Form of Representations Letter of CNET
Exhibit 6.2(c)(2) Form of Representations Letter of Z-D
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AGREEMENT AND PLAN OF MERGER, dated as of July 19, 2000 (this
"Agreement"), among Xxxx-Xxxxx Inc., a Delaware corporation ("Z-D"), CNET
Networks, Inc., a Delaware corporation ("CNET"), and TD MERGER SUB, INC., a
Delaware corporation ("Merger Sub").
RECITALS
Merger Sub is a wholly owned direct subsidiary of CNET that was
organized by CNET solely as a vehicle to effect the Merger (as defined below)
and has engaged in no other business activities and has conducted its business
activities and operations only as contemplated hereby;
The Boards of Directors of Z-D, CNET and Merger Sub deem it
advisable and in the best interests of each corporation and its respective
stockholders that Merger Sub merge into Z-D, upon the terms and subject to the
conditions of this Agreement;
Approval of the Merger and this Agreement requires a vote for
adoption of this Agreement by the holders of shares of Xxxx-Xxxxx Inc. -- Z-D
Common Stock, par value $0.01 per share, of Z-D (the "Z-D Common Stock") and
Xxxx-Xxxxx Inc. -- Z-D Net Common Stock, par value $0.01 per share, of Z-D (the
"Z-D Net Common Stock"), entitled to cast a majority of the votes entitled to be
cast by the holders of all outstanding Z-D Common Stock and Z-D Net Common
Stock, voting together as a single class, at a meeting at which a quorum is
present, in the manner specified in the amended and restated certificate of
incorporation of Z-D and otherwise in accordance with the law of the State of
Delaware (the "Z-D Stockholder Approval"), and (y) the approval of the issuance
of Common Stock, par value $0.0001 per share, of CNET (the "CNET Common Stock")
pursuant to this Agreement, by the holders of a majority of the shares of CNET
Common Stock entitled to vote thereon represented, in person or by proxy, at a
meeting at which a quorum is present, in accordance with the rules of the NASDAQ
Stock Market and the law of the State of Delaware (the "CNET Stockholder
Approval");
In furtherance thereof, the Board of Directors of each of Z-D, CNET
and Merger Sub have approved the Merger, upon the terms and subject to the
conditions set forth in this Agreement, pursuant to which each share of Z-D
Common Stock and Z-D Net Common Stock will be converted into the right to
receive the Merger Consideration (as defined below);
Key3Media Group, Inc., a subsidiary of Z-D ("Spin Co."), has filed,
as part of a registration statement on Form S-1 (as amended from time to time,
the "Spin-Off S-1"), a preliminary prospectus (such preliminary prospectus, as
amended through the date hereof, the "Preliminary Spin-Off Prospectus")
describing Z-D's current plans to recapitalize and spin off its trade show and
conference business (the "Spin-Off") and to pay a cash dividend to the holders
of Z-D Common Stock (the "Cash Dividend");
As a condition and inducement to CNET's willingness to enter into
this Agreement, SOFTBANK America Inc., a Delaware corporation ("Z-D Majority
Stockholder"), is entering into an agreement dated as of the date hereof
substantially in the form of Exhibit A (the "Z-D Stockholder Voting Agreement")
pursuant to which Z-D Majority Stockholder has agreed,
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among other things, to vote all shares of Z-D Common Stock owned or acquired by
it in favor of the adoption of this Agreement and the transactions contemplated
hereby;
As a condition and inducement of Z-D's willingness to enter into
this Agreement, certain stockholders of CNET are entering into an agreement
dated as of the date hereof substantially in the form of Exhibit B (the "CNET
Stockholder Voting Agreement" and collectively with the Z-D Stockholder Voting
Agreement, the "Voting Agreements") pursuant to which such stockholders have
agreed, among other things, to vote all shares of CNET Common Stock owned or
acquired by them in favor of approval of the issuance of CNET Common Stock
pursuant to this Agreement;
As a further condition and inducement to CNET and Z-D's willingness
to enter into this Agreement, Z-D Majority Stockholder and CNET desire to enter
into a stockholder agreement substantially in the form of Exhibit C (the
"Stockholder Agreement"); and
For federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, and intending to be legally bound hereby and thereby, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time:
(a) The Surviving Corporation. Upon the terms and subject to the
conditions of this Agreement, Merger Sub shall merge with and into Z-D (the
"Merger"), the separate existence of Merger Sub shall cease and Z-D (sometimes
hereinafter referred to as the "Surviving Corporation") shall survive the
Merger. The name of the Surviving Corporation shall be "CNET Networks, Inc.".
The Surviving Corporation shall continue to be governed by the laws of the State
of Delaware, and the separate corporate existence of the Surviving Corporation
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger.
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1.2 Closing.
Upon the terms and subject to the conditions set forth in Article
VI and the termination rights set forth in Article VII, the closing of the
Merger (the "Closing") will take place on the second Business Day after the
satisfaction or waiver (subject to applicable law) of the conditions (excluding
conditions that, by their nature, cannot be satisfied until the Closing Date (as
defined below)) set forth in Article VI, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another time or date is
agreed to in writing by the parties hereto (the actual time and date of the
Closing being referred to herein as the "Closing Date"). The Closing shall be
held at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000, unless another place is agreed to in writing by the
parties hereto.
1.3 Effective Time.
As soon as practicable following the satisfaction or waiver
(subject to applicable law) of the conditions set forth in Article VI, at the
Closing the parties shall file a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware in such form as is
required by and executed and acknowledged in accordance with the relevant
provisions of the DGCL and make all other filings or recordings required under
the DGCL. The Merger shall become effective at (i) the date and time the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or (ii) such subsequent time as CNET, Merger Sub and Z-D shall agree
and as shall be specified in the Certificate of Merger (such time as the Merger
becomes effective being the "Effective Time").
1.4 Effects of the Merger.
At and after the Effective Time, the Merger will have the effects
set forth in the applicable provisions of the DGCL.
1.5 Charter and Bylaws.
(a) Certificate of Incorporation. At the Effective Time, and
without any further action on the part of CNET or Merger Sub, the certificate of
incorporation of Z-D as in effect at the Effective Time shall be amended and
restated to read in its entirety as set forth in Exhibit D, which shall be the
certificate of incorporation of the Surviving Corporation.
(b) Bylaws. At the Effective Time, and without any further action
on the part of CNET or Merger Sub, the bylaws of Merger Sub as in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
1.6 Officers and Directors.
The officers of Z-D immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their
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respective successors are duly elected and qualified, as the case may be. The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
1.7 Effect on Common Stock.
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Z-D Common Stock, Z-D Net
Common Stock or of any shares of Merger Sub Common Stock (as defined below):
(a) Common Stock of Merger Sub. Each issued and outstanding share
of common stock, par value $0.01 per share, of Merger Sub (the "Merger Sub
Common Stock") shall, by virtue of the Merger, be converted into one share of
common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Merger Sub-Owned Z-D Common Stock and Z-D Net
Common Stock. Each share of Z-D Common Stock and Z-D Net Common Stock that is
owned by CNET or Merger Sub shall automatically be canceled and retired and
shall cease to exist, and no cash, CNET Common Stock or other consideration
shall be delivered or deliverable in exchange therefore.
(c) Conversion of Z-D Common Stock and Z-D Net Common Stock.
Subject to Section 2.5, (i) each issued and outstanding share of Z-D Common
Stock (other than shares canceled pursuant to Section 1.7(b)), shall be
converted into the right to receive a fraction equal to the Z-D Exchange Ratio
of a share of CNET Common Stock and (ii) each issued and outstanding share of
Z-D Net Common Stock (other than shares canceled pursuant to Section 1.7(b))
shall be converted into the right to receive a fraction equal to the Z-D Net
Exchange Ratio of a share of CNET Common Stock. The "Z-D Exchange Ratio" means
0.3397 and the "Z-D Net Exchange Ratio" means 0.5932. The amount of CNET Common
Stock into which each such share of Z-D Common Stock and Z-D Net Common Stock,
as the case may be, is converted is referred to herein as the "Merger
Consideration".
(d) Cancellation and Retirement of Z-D Common Stock and Z-D Net
Common Stock. As a result of the Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Z-D Common Stock and
Z-D Net Common Stock shall cease to be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such shares of Z-D
Common Stock or Z-D Net Common Stock (such certificate or other evidence of
ownership, a "Certificate") shall thereafter cease to have any rights with
respect to such shares of Z-D Common Stock or Z-D Net Common Stock, except the
right (subject to Section 1.9) to receive the applicable Merger Consideration
(and cash in lieu of fractional shares of CNET Common Stock) to be issued or
paid in consideration therefore upon surrender of such Certificate in accordance
with Article II.
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(e) Cancellation of Treasury Stock. Subject to Section 2.5, each
share of Z-D Common Stock and Z-D Net Common Stock issued and owned or held by
Z-D or any Subsidiary of Z-D at the Effective Time shall, by virtue of the
Merger, cease to be outstanding and shall be canceled and retired, and no
consideration shall be delivered in exchange therefor.
1.8 Treatment of Stock Options and Other Equity-Based Awards.
Each outstanding option to purchase Z-D Common Stock (a "Z-D Common
Stock Option") or Z-D Net Common Stock (a "Z-D Net Stock Option") granted prior
to the Effective Time and which remains outstanding immediately prior to the
Effective Time shall cease to represent a right to acquire shares of Z-D Common
Stock or Z-D Net Common Stock, as the case may be, and shall be converted (each,
as so converted, a "Z-D Converted Option"), at the Effective Time, into an
option to acquire, on the same terms and conditions as were applicable under the
Z-D Common Stock Option or Z-D Net Stock Option, as the case may be (but taking
into account any change thereto, including the acceleration thereof provided for
in the Z-D Stock Option Plans (as defined in Section 3.2(b)) or in any award
agreement by reason of this Agreement or the transactions contemplated hereby)
that number of shares of CNET Common Stock determined by (i) in the case of each
Z-D Common Stock Option, multiplying the number of shares of Z-D Common Stock
subject to such Z-D Common Stock Option by the Z-D Exchange Ratio, rounded, if
necessary, to the nearest whole share of CNET Common Stock, at a price per share
(rounded to the nearest one-hundredth of a cent) equal to the per share exercise
price specified in such Z-D Common Stock Option divided by the Z-D Exchange
Ratio and (ii) in the case of each Z-D Net Stock Option, multiplying the number
of shares of Z-D Net Common Stock subject to such Z-D Net Stock Option by the
Z-D Net Exchange Ratio, rounded, if necessary, to the nearest whole share of
CNET Common Stock, at a price per share (rounded to the nearest one-hundredth of
a cent) equal to the per share exercise price specified in such Z-D Net Stock
Option divided by the Z-D Net Exchange Ratio; provided, however, that in the
case of any Z-D Common Stock Option or Z-D Net Stock Option to which Section 421
of the Code applies by reason of its qualification under Section 422 of the
Code, the option price, the number of shares subject to such option and the
terms and conditions of exercise of such option shall be determined in a manner
consistent with the requirements of Section 424(a) of the Code.
1.9 Certain Adjustments.
If, between the date of this Agreement and the Effective Time (and
as permitted by Sections 4.1 and 4.2), the outstanding shares of CNET Common
Stock or the outstanding shares of Z-D Common Stock or Z-D Net Common Stock
shall have been increased, decreased, changed into or exchanged for a different
number of shares or different class, in each case, by reason of any
reclassification, recapitalization, stock split, reverse stock split, split-up,
combination or exchange of shares or a stock dividend or dividend payable in any
other securities (other than the Spin-Off) shall be declared with a record date
within such period, or any similar event shall have occurred, the Merger
Consideration (as defined in Section 1.7(c)) shall be appropriately adjusted to
provide to the holders of Z-D Common Stock, Z-D Net Common Stock, Z-D Common
Stock Options, Z-D Net Stock Options and CNET Common Stock the same economic
effect as contemplated by this Agreement prior to such event.
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ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund.
Prior to the Effective Time, CNET shall appoint a commercial bank
or trust company reasonably acceptable to Z-D, or a subsidiary thereof, to act
as exchange agent hereunder for the purpose of exchanging Certificates for the
applicable Merger Consideration (the "Exchange Agent"). At or prior to the
Effective Time, CNET shall deposit with the Exchange Agent, in trust for the
benefit of holders of shares of Z-D Common Stock and Z-D Net Common Stock,
certificates representing the shares of CNET Common Stock issuable pursuant to
Section 1.7 in exchange for outstanding shares of Z-D Common Stock and Z-D Net
Common Stock, as the case may be. CNET agrees to make available to the Exchange
Agent from time to time, as needed, cash sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.5 and any dividends and other
distributions pursuant to Section 2.3. Any cash and certificates representing
CNET Common Stock deposited with the Exchange Agent shall hereinafter be
referred to as the "Exchange Fund".
2.2 Exchange Procedures.
Promptly after the Effective Time, CNET shall cause the Exchange
Agent to mail to each holder of a Certificate (i) a letter of transmittal which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such other
provisions as Z-D may reasonably specify (such letter to be reasonably
acceptable to Z-D prior to the Effective Time) and (ii) instructions for
effecting the surrender of such Certificates in exchange for the applicable
Merger Consideration, together with any dividends and other distributions with
respect thereto and any cash in lieu of fractional shares. Upon surrender of a
Certificate to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefore (A) one
or more shares of CNET Common Stock representing, in the aggregate, the whole
number of shares that such holder has the right to receive pursuant to Section
1.7 (after taking into account all shares of Z-D Common Stock and Z-D Net Common
Stock then held by such holder) and (B) a check in the amount equal to the cash
that such holder has the right to receive pursuant to the provisions of this
Article II, including cash in lieu of any fractional shares of CNET Common Stock
pursuant to Section 2.5 and dividends and other distributions pursuant to
Section 2.3. No interest will be paid or will accrue on any cash payable
pursuant to Section 2.3 or Section 2.5. In the event of a transfer of ownership
of Z-D Common Stock or Z-D Net Common Stock which is not registered in the
transfer records of Z-D a certificate evidencing, in the aggregate, the proper
number of shares of CNET Common Stock, a check in the proper amount of cash in
lieu of any fractional shares of CNET Common Stock pursuant to Section 2.5 and
any dividends or other distributions to which such holder is entitled
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pursuant to Section 2.3, may be issued with respect to such Z-D Common Stock or
Z-D Net Common Stock, as applicable, to such a transferee if the Certificate
representing such shares of Z-D Common Stock or Z-D Net Common Stock, as
applicable, is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
2.3 Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of CNET Common Stock that such holder would be entitled to
receive upon surrender of such Certificate and no cash payment in lieu of
fractional shares of CNET Common Stock shall be paid to any such holder pursuant
to Section 2.5 until such holder shall surrender such Certificate in accordance
with Section 2.2. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the record holder thereof
without interest, (a) promptly after the time of such surrender, the amount of
any cash payable in lieu of fractional shares of CNET Common Stock to which such
holder is entitled pursuant to Section 2.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of CNET Common Stock, and (b) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time and a payment date subsequent to such surrender payable
with respect to such shares of CNET Common Stock.
2.4 No Further Ownership Rights in Z-D Common Stock.
All shares of CNET Common Stock issued and cash paid upon
conversion of shares of Z-D Common Stock and Z-D Net Common Stock in accordance
with the terms of Article I and this Article II (including any cash paid
pursuant to Sections 2.3 or 2.5) shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to the shares of Z-D Common Stock and
Z-D Net Common Stock, as the case may be.
2.5 No Fractional Shares of CNET Common Stock.
(a) No certificates or scrip or shares of CNET Common Stock
representing fractional shares of CNET Common Stock or book-entry credit of the
same shall be issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to vote or to have
any rights of a stockholder of CNET or a holder of shares of CNET Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Z-D Common Stock or Z-D Net Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of CNET Common Stock (determined after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to the product of (i) such fractional part
of a share of CNET Common Stock multiplied by (ii) the closing price for a share
of CNET Common
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Stock as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on the first trading day following the date on which
the Effective Time occurs. As promptly as practicable after the determination of
the amount of cash, if any, to be paid to holders of fractional interests, the
Exchange Agent shall so notify CNET, and CNET shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to such
holders of fractional interests subject to and in accordance with the terms
hereof.
2.6 Termination of Exchange Fund.
Any portion of the Exchange Fund which remains undistributed to the
holders of Certificates for six months after the Effective Time shall, at CNET's
request, be delivered to CNET or otherwise on the instruction of CNET, and any
holders of the Certificates who have not theretofore complied with this Article
II shall after such delivery look only to CNET for the Merger Consideration with
respect to the shares of Z-D Common Stock and Z-D Net Common Stock formerly
represented thereby to which such holders are entitled pursuant to Sections 1.7
and 2.2, any cash in lieu of fractional shares of CNET Common Stock to which
such holders are entitled pursuant to Section 2.5 and any dividends or
distributions with respect to shares of CNET Common Stock to which such holders
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of Z-D Common Stock or Z-D Net Common
Stock, as the case may be, immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity (as defined
in Section 3.1(c)(iii)) shall, to the extent permitted by law, become the
property of CNET free and clear of any claims or interest of any Person
previously entitled thereto.
2.7 No Liability.
None of CNET, Merger Sub, Z-D, Z-D Majority Stockholder or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
2.8 Investment of the Exchange Fund.
The Exchange Agent shall invest any cash included in the Exchange
Fund as directed by CNET on a daily basis; provided that no such investment or
loss thereon shall affect the amounts payable to Z-D stockholders pursuant to
Article I and the other provisions of this Article II. Any interest and other
income resulting from such investments shall promptly be paid to CNET.
2.9 Lost Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by CNET, the posting by such
Person of a bond in such reasonable amount as CNET may direct as indemnity
against any claim that may be made against it with respect to such
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Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Z-D Common Stock and Z-D Net Common Stock formerly represented
thereby, any cash in lieu of fractional shares of CNET Common Stock, and unpaid
dividends and distributions on shares of CNET Common Stock deliverable in
respect thereof, pursuant to this Agreement.
2.10 Withholding Rights.
CNET shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Z-D Common Stock such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by CNET, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Z-D Common Stock or Z-D Net Common Stock in
respect of which such deduction and withholding was made by CNET.
2.11 Further Assurances.
At and after the Effective Time, the officers and directors of
CNET will be authorized to execute and deliver, in the name and on behalf of
Merger Sub or Z-D, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of Merger Sub or Z-D, any other actions
and things to vest, perfect or confirm of record or otherwise in CNET any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by CNET as a result of, or in connection with,
the Merger.
2.12 Stock Transfer Books.
The stock transfer books of Z-D shall be closed immediately upon
the Effective Time and there shall be no further registration of transfers of
shares of Z-D Common Stock or Z-D Net Common Stock thereafter on the records of
Z-D. On or after the Effective Time, any Certificates presented to the Exchange
Agent or CNET for any reason shall be converted into the right to receive the
applicable Merger Consideration with respect to the shares of Z-D Common Stock
or Z-D Net Common Stock formerly represented thereby (including any cash in lieu
of fractional shares of CNET Common Stock to which the holders thereof are
entitled pursuant to Section 2.5 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.3).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of CNET and Merger Sub.
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Except as disclosed in the CNET Filed SEC Reports (as defined in
Section 3.1(d)(ii)) or as set forth in the CNET Disclosure Schedule delivered by
CNET to Z-D prior to the execution of this Agreement (the "CNET Disclosure
Schedule"), CNET and Merger Sub jointly and severally represent and warrant to
Z-D as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) CNET is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each Subsidiary (as defined in Section 8.12) of
CNET, including Merger Sub, is a corporation or other organization duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
(as defined in Section 8.12) on CNET or Merger Sub. CNET and each Subsidiary of
CNET is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary other than in such jurisdictions
where the failure so to qualify or to be in good standing, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on CNET or Merger Sub. The copies of the certificate of incorporation and
bylaws of CNET and Merger Sub that were previously furnished or made available
to Z-D are true, complete and correct copies of such documents as in effect on
the date of this Agreement.
(ii) Exhibit 21 to CNET's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 includes all the Subsidiaries of CNET which
as of the date of this Agreement are Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC")). All the outstanding shares of capital stock of, or other equity
interests in, each such Significant Subsidiary have been duly authorized,
validly issued and are fully paid and nonassessable and are, except as set forth
in such Form 10-K, owned directly or indirectly by CNET, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively "Liens") and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), except for restrictions
imposed by applicable securities laws.
(b) Capital Structure.
(i) As of July 17, 2000, the authorized capital stock of CNET
consists of (A) 400,000,000 shares of CNET Common Stock, of which (v) 85,451,249
shares were issued and outstanding, (w) no shares were held in treasury, (x)
13,343,501 shares were reserved for future issuance pursuant to outstanding
stock options and shares reserved under stock option plans, (y) 1,400,000 shares
were reserved for issuance pursuant to an employee stock purchase plan, and (z)
4,622,623 shares were reserved for issuance upon conversion of CNET's 5%
convertible notes due 2006; and (B) 5,000,000 shares of preferred stock, par
value $0.01 per share, of which no
15
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shares are issued and outstanding. Except as described in this Section 3.1(b),
as of the date of this Agreement, no shares of capital stock of CNET are
reserved for any purpose. All issued and outstanding shares of capital stock of
CNET are duly authorized, validly issued, fully paid and nonassessable, and have
not been issued in violation of (nor are any of the authorized shares of capital
stock of CNET subject to) any preemptive or similar rights created by statute,
the certificate of incorporation or bylaws of CNET, or any agreement to which
CNET is a party or bound.
(ii) No bonds, debentures, notes or other indebtedness of CNET
having the right to vote on any matters on which holders of capital stock of
CNET may vote are issued or outstanding.
(iii) Except as set forth in this Section 3.1(b), as of the date
of this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which CNET or any of its
Significant Subsidiaries is a party relating to the issued or unissued capital
stock of CNET or any of its Significant Subsidiaries or obligating CNET or any
of its Significant Subsidiaries to grant, issue or sell any shares of the
capital stock of CNET or any of its Significant Subsidiaries, by sale, lease,
license or otherwise. As of the date of this Agreement, there are no
obligations, contingent or otherwise, of CNET or any of its Significant
Subsidiaries to repurchase, redeem or otherwise acquire any shares of CNET
Common Stock or other capital stock of CNET or any of its Significant
Subsidiaries. As of July 17, 2000, there were 10,614,999 CNET Stock Options
outstanding with an exercise price below $32.1875 per share and those options
have an average exercise price of $13.3148 per share.
(iv) Shareholders of CNET Common Stock have the right to vote on
all matters put forth to the shareholders of CNET.
(v) The authorized capital stock of Merger Sub consists of 1,000
shares of Merger Sub Common Stock. As of the date of this Agreement, 100 shares
of Merger Sub Common Stock were issued and outstanding and held by CNET, all of
which are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, Merger Sub's certificate of
incorporation or bylaws or any agreement to which Merger Sub is a party or is
bound.
(vi) The shares of CNET Common Stock to be issued pursuant to the
Merger will be duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights created by statute, CNET's certificate of
incorporation or bylaws or any agreement to which CNET is a party or is bound.
(c) Authority; No Conflicts.
(i) CNET and Merger Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and thereby, subject, in the case of the consummation of the
Merger, to the approval by the CNET Stockholder Approval. The execution and
delivery of this Agreement and the consummation of
16
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the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of CNET and Merger Sub and no other corporate
proceedings on the part of CNET or Merger Sub are necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and the
other transactions contemplated hereby, subject in the case of the consummation
of the Merger, to the CNET Stockholder Approval. This Agreement has been duly
executed and delivered by CNET and Merger Sub and constitutes a valid and
binding agreement of CNET and Merger Sub, enforceable against each of CNET and
Merger Sub in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by CNET and
Merger Sub do not, and the consummation by CNET and Merger Sub of the Merger and
the other transactions contemplated hereby will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result by its terms in the
termination, amendment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a Lien, charge, "put" or
"call" right or other encumbrance on, or the loss of, any assets, including
Intellectual Property (any such conflict, violation, default, right of
termination, amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the certificate of incorporation
or bylaws or similar organizational document of CNET, Merger Sub or any
Significant Subsidiary of CNET, or (B) except as (1) individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
CNET or Merger Sub or (2) would not prevent or materially delay the consummation
of the Merger, subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(iii) below, and except with respect to employee stock options and other awards,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to CNET, Merger Sub or any Subsidiary of CNET or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal, local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority (a "Governmental Entity")
or any other Person, is required by or with respect to CNET, Merger Sub or any
Subsidiary of CNET in connection with the execution and delivery of this
Agreement by CNET or Merger Sub, as applicable, or the consummation by CNET and
Merger Sub of the Merger and the other transactions contemplated hereby, except
for those required under or in relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) state securities or
"blue sky" laws (the "Blue Sky Laws"), (C) the Securities Act of 1933, as
amended (the "Securities Act"), (D) the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (E) the DGCL with respect to the filing of the
Certificate of Merger, (F) the rules and
17
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regulations of the NASDAQ or of The New York Stock Exchange, (G) antitrust or
other competition laws of other jurisdictions and (H) such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to make or obtain, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on CNET. Consents, approvals,
orders, authorizations, registrations, declarations and filings required under
or in relation to any of the foregoing clauses (A) through (G) are hereinafter
referred to as "Necessary Consents".
(d) Reports and Financial Statements of CNET.
(i) CNET has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents required
to be filed by it with the SEC since December 31, 1997 (collectively, the "CNET
SEC Reports"). No Subsidiary of CNET is required to file any form, report,
registration statement, prospectus or other document with the SEC. None of the
CNET SEC Reports, as of their respective dates (and, if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing),
contained or will contain any untrue statement of a material fact or omitted or
will omit 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. Each of the financial statements (including the related
notes) included or incorporated by reference in the CNET SEC Reports presents
fairly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of CNET and its consolidated
Subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with United States generally accepted accounting
principles ("GAAP") consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements of CNET, to the absence of notes and normal year-end
adjustments that have not been and are not expected to be material in amount.
All of such CNET SEC Reports, as of their respective dates (and as of the date
of any amendment to the respective CNET SEC Report), complied as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the CNET SEC Reports filed and
publicly available prior to the date hereof (the "CNET Filed SEC Reports"), CNET
and its Subsidiaries have not incurred any liabilities that are of a nature that
would be required to be disclosed on a balance sheet of CNET and its
Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other
than (A) liabilities incurred in the ordinary course of business, (B)
liabilities incurred in accordance with Section 4.1 or (C) liabilities that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on CNET.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by CNET for
inclusion or incorporation by reference in (A) the Form S-4 (as defined in
Section 5.1) will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or
18
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omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (B) the Joint Proxy Statement/Prospectus (as defined in
Section 5.1) will, on the date it is first mailed to Z-D stockholders or CNET
stockholders or at the time of the Z-D Stockholders Meeting or the CNET
Stockholders Meeting (each as defined in Section 5.1), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4 and
the Joint Proxy Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by CNET with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Z-D for inclusion or
incorporation by reference therein.
(f) Board Approvals.
(i) CNET Board Approval. The Board of Directors of CNET, by
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the "CNET
Board Approval"), has duly (A) determined that this Agreement and the Merger are
fair to and in the best interests of CNET and its stockholders and declared the
Merger to be advisable, (B) approved this Agreement, the CNET Stockholders
Voting Agreement and the Merger and the consummation of the transactions
contemplated hereby, (C) approved the acquisition of CNET Common Stock by Z-D
Majority Stockholder pursuant to the Merger for purposes of Section 203 of the
DGCL and (D) recommended that the stockholders of CNET approve the issuance of
CNET Common Stock pursuant to this Agreement and directed that such matter be
submitted for consideration by CNET's stockholders at the CNET Stockholders
Meeting. The CNET Board Approval constitutes approval of this Agreement and the
Merger and the transactions contemplated hereby for purposes of Section 203 of
the DGCL. To the knowledge of CNET, except for Section 203 of the DGCL (which
has been rendered inapplicable by the approval described in clause (C) above),
no state takeover statute is applicable to this Agreement or the Merger or the
other transactions contemplated hereby.
(ii) Merger Sub Board Approval. The Board of Directors of Merger
Sub, by resolutions duly adopted by unanimous vote of those voting at a meeting
duly called and held and not subsequently rescinded or modified in any way (the
"Merger Sub Board Approval"), has duly (A) determined that this Agreement and
the Merger are fair to and in the best interests of Merger Sub and its
stockholders and declared the Merger to be advisable, and (B) approved this
Agreement, the Merger, the CNET Stockholders Voting Agreement and the
consummation of the transactions contemplated hereby. The Merger Sub Board
Approval constitutes approval of this Agreement and the Merger and the
transactions contemplated hereby for purposes of Section 203 of the DGCL. To the
knowledge of Merger Sub, except for Section 203 of the DGCL (which has been
rendered inapplicable by the approval described in clause (ii)(B) above), no
state takeover
19
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statute is applicable to this Agreement or the Merger or the other transactions
contemplated hereby.
(g) Vote Required. The CNET Stockholder Approval as required by
the rules of the NASDAQ is the only vote of the holders of any class or series
of CNET capital stock necessary to approve or adopt this Agreement and the
Merger and to consummate the Merger and the other transactions contemplated
hereby.
(h) Litigation; Compliance with Laws.
(i) There are no suits, actions, judgments or proceedings
(collectively, "Actions") pending or, to the knowledge of CNET, threatened,
against or affecting CNET or any Subsidiary of CNET or any property or asset of
CNET or any Subsidiary of CNET which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on CNET, nor are there
any judgments, decrees, injunctions, rules or orders of any Governmental Entity
or arbitrator outstanding against CNET or any Subsidiary of CNET which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on CNET.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on CNET, CNET and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Entities which are necessary for the
operation of the businesses as now being conducted of CNET and its Subsidiaries,
taken as a whole (the "CNET Permits"), and no suspension or cancellation of any
of the CNET Permits is pending or, to the knowledge of CNET, threatened. CNET
and its Subsidiaries are in compliance with the terms of the CNET Permits,
except where the failure to so comply, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on CNET. Neither
CNET nor its Subsidiaries is in violation of, and CNET and its Subsidiaries have
not received any notices of violations with respect to, any laws, statutes,
ordinances, rules or regulations of any Governmental Entity, except for
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on CNET.
(i) Absence of Certain Changes or Events.
Except for liabilities permitted to be incurred in accordance with
this Agreement or the transactions contemplated hereby, since December 31, 1999,
CNET and its Subsidiaries (including Merger Sub) have conducted their business
only in the ordinary course and in a manner consistent with past practice and,
since December 31, 1999, there have not been any changes, circumstances or
events which, individually or in the aggregate, have had, or would reasonably be
expected to have, a Material Adverse Effect on CNET.
(j) Intellectual Property.
Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on CNET: (i) CNET and each of its
Subsidiaries owns, or is
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licensed to use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) used in or necessary for the conduct of its business
as currently conducted; (ii) to the knowledge of CNET, the use of any
Intellectual Property by CNET and its Subsidiaries does not infringe on or
otherwise violate the rights of any Person; (iii) the use of the Intellectual
Property by CNET or any Subsidiary of CNET is in accordance with applicable
licenses pursuant to which CNET or any Subsidiary of CNET acquired the right to
use any such Intellectual Property; and (iv) to the knowledge of CNET, no Person
is challenging, infringing on or otherwise violating any right of CNET or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to CNET or its Subsidiaries or has received notice of any alleged
infringement. As of the date of this Agreement except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
CNET, neither CNET nor any of its Subsidiaries has knowledge of any pending
claim, order or proceeding with respect to any Intellectual Property used by
CNET and its Subsidiaries and to its knowledge no Intellectual Property owned
and/or licensed by CNET or its Subsidiaries is being used or enforced in a
manner that would reasonably be expected to result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
internet domain names, brand names, certification marks, trade dress and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not,
in any jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights.
(k) Opinion of CNET Financial Advisor.
CNET has received the opinion of Lazard Freres & Co., dated the
date of this Agreement, to the effect that, as of such date, the Z-D Exchange
Ratio and the Z-D Net Exchange Ratio are fair to CNET, from a financial point of
view, a copy of which opinion will be made available to Z-D promptly after the
date of this Agreement.
(l) Taxes.
(i) Each of CNET and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained), has paid
all Taxes required to have been paid by it (whether or not shown as due on any
Tax Return), and has established an appropriate accrual for all Taxes not yet
paid through March 31, 2000; (ii) all Tax Returns filed by CNET and its
Subsidiaries are true, complete and correct in all material respects; (iii) no
material claim for unpaid Taxes has become a lien against the property of CNET
or any of its Subsidiaries or is being asserted against CNET or any of its
Subsidiaries; (iv) no material audit or other proceeding with respect to any
Taxes due from CNET or any of its Subsidiaries or any Tax Return of CNET
21
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or any of its Subsidiaries is pending or threatened in writing, or being
conducted by a Tax authority; (v) none of CNET or any of its Subsidiaries (A)
has, since January 1, 1997, been a member of a Consolidated Group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was CNET) or had any liability arising from the application of Treasury
Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law, or (B) has any other liability for the Taxes of any person as a
transferee or successor, by contract, or otherwise; (vi) no consent under
Section 341(f) of the Code has been filed with respect to CNET or any of its
Subsidiaries; (vii) all material Taxes required to be withheld, collected or
deposited by or with respect to CNET and each of its Subsidiaries have been
timely withheld, collected or deposited, as the case may be, and, to the extent
required, have been paid to the relevant taxing authority; (viii) none of CNET
or any of its Subsidiaries has been a party to any distribution occurring during
the last two years in which the parties to such distribution treated the
distribution as one to which section 355 of the Code is applicable; (ix) none of
CNET or any of its Subsidiaries has agreed to make or is required to make any
adjustment under section 481(a) of the Code by reason of a change in accounting
method or otherwise or is otherwise required to include any amounts in income
for a period following the Closing that was economically accrued in a period
prior to the Closing; (x) none of CNET or any of its Subsidiaries is a party to,
is bound by or has any obligation under, any Tax sharing agreement or similar
contract or arrangement; and (xi) no closing agreement pursuant to section 7121
of the Code (or any similar provision of state, local or foreign law) has been
entered into by or with respect to CNET or any of its Subsidiaries.
(m) Brokers or Finders.
No agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other similar commission or fee in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
CNET, except Lazard Freres & Co., whose fees and expenses will be paid by CNET.
CNET has provided to Z-D a true, correct and complete copy of CNET's agreement
with Lazard Freres & Co. relating to this Agreement and the Merger.
3.2 Representations and Warranties of Z-D.
Except as disclosed in the Z-D Filed SEC Reports (as defined in
Section 3.2(d)(ii)) or as set forth in the Z-D Disclosure Schedule delivered by
Z-D to CNET prior to the execution of this Agreement (the "Z-D Disclosure
Schedule"), Z-D represents and warrants to CNET as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Z-D is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each Subsidiary of Z-D is a corporation or
other organization duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as is now being
22
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conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Z-D. Each
of Z-D and its Subsidiaries is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify or to be in good
standing, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Z-D. The copies of the certificate of
incorporation and bylaws of Z-D which were previously furnished or made
available to CNET are true, complete and correct copies of such documents as in
effect on the date of this Agreement.
(ii) Section 3.2(a)(ii) of the Z-D Disclosure Schedule lists all
the Subsidiaries of Z-D as of the date of this Agreement. Except as set forth in
Schedule 3.2(a)(ii) of the Z-D Disclosure Schedule, all the outstanding shares
of capital stock of, or other equity interests in, each such Significant
Subsidiary have been duly authorized, validly issued and are fully paid and
nonassessable and are owned directly or indirectly by Z-D, free and clear of all
Liens and free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), except for restrictions imposed by applicable securities laws. Other
than as set forth on Schedule 3.2(a)(ii), as of the date of this Agreement,
neither Z-D nor any of its Subsidiaries directly or indirectly owns any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity (other than Subsidiaries).
(b) Capital Structure.
(i) As of July 17, 2000, the authorized capital stock of Z-D
consists of (A) 210,000,000 shares of Z-D Common Stock of which (1) 106,620,886
shares of Z-D Common Stock were issued and outstanding and (2) 16,834,581 shares
of Z-D Net Common Stock were issued and outstanding and (B) 10,000,000 shares of
preferred stock, par value $0.01 per share, none of which are issued or
outstanding. From July 17, 2000 to the date of this Agreement, there have been
no issuances of shares of the capital stock of Z-D or any other securities of
Z-D other than issuances of shares pursuant to options or rights outstanding as
of July 17, 2000. All issued and outstanding shares of the capital stock of Z-D,
including the Z-D Net Common Stock, are duly authorized, validly issued, fully
paid and nonassessable, and free of any preemptive rights. None of the
Subsidiaries of Z-D own any shares of Z-D capital stock. As of July 17, 2000
there were no options, warrants or other rights outstanding to acquire capital
stock from Z-D other than the Z-D Stock Options (as defined in the next
sentence). The options and other rights to acquire Z-D Common Stock or Z-D Net
Common Stock from Z-D representing the right to purchase shares of Z-D Common
Stock or Z-D Net Common Stock, as the case may be, together with other employee
stock options issued by Z-D after the date hereof in accordance with the Z-D
Stock Option Plans (as defined in the next sentence) and Section 4.2, are
referred to herein collectively as the "Z-D Stock Options"). The Z-D Stock
Options have been granted under the Z-D 1998 Incentive Compensation Plan (the
"Z-D Stock Option Plans"). As of July 17, 2000, (i) there were 9,101,828 options
to purchase Z-D Net Common Stock outstanding with an exercise price below
$19.0936 per share and those options have an average exercise price of $6.5806
per
23
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share and (ii) there were 3,007,914 options to purchase Z-D Common Stock
outstanding with an exercise price below $16.4350 per share and those options
have an average exercise price of $8.7994 per share.
(ii) No bonds, debentures, notes or other indebtedness of Z-D
having the right to vote on any matters on which holders of capital stock of Z-D
may vote ("Z-D Voting Debt") are issued or outstanding.
(iii) Except as set forth in this Section 3.2(b) and Section 3.2(b)
of the Z-D Disclosure Schedule, and other than in connection with the Spin-Off,
as of the date of this Agreement, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which Z-D or
any of its Subsidiaries is a party relating to the issued or unissued capital
stock of Z-D or any of its Significant Subsidiaries or obligating Z-D or any of
its Subsidiaries to grant, issue or sell any shares of the capital stock of Z-D
or any of its Significant Subsidiaries, by sale, lease, license or otherwise. As
of the date of this Agreement, except as set forth in Section 3.2(b) of the Z-D
Disclosure Schedule, there are no obligations, contingent or otherwise, of Z-D
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of Z-D Common Stock or Z-D Net Common Stock or other capital stock of Z-D or any
of its Significant Subsidiaries.
(iv) As of the date hereof, assuming the number of votes per share
of Z-D Net Common Stock at the Z-D Stockholders Meeting (as determined in
accordance with the Amended and Restated Certificate of Incorporation of Z-D)
equals the Z-D Net Exchange Ratio divided by the Z-D Exchange Ratio, Z-D
Majority Stockholder will for purposes of the Z-D Stockholders Meeting own of
record at least a majority of the voting power of the shares of Z-D Common Stock
and Z-D Net Common Stock entitled to vote at the Z-D Stockholders Meeting.
(c) Authority; No Conflicts.
(i) Z-D has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby,
subject, in the case of the consummation of the Merger, to the Z-D Stockholder
Approval. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Z-D and no other corporate proceedings on the
part of Z-D are necessary to authorize the execution and delivery of the
Agreement or to consummate the Merger and the other transactions contemplated
hereby, subject in the case of the consummation of the Merger, to the Z-D
Stockholder Approval. This Agreement has been duly executed and delivered by Z-D
and constitutes a valid and binding agreement of Z-D, enforceable against Z-D in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
24
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(ii) The execution and delivery of this Agreement by Z-D does not,
and the consummation by Z-D of the Merger and the other transactions
contemplated hereby will not, conflict with, or result in a Violation pursuant
to: (A) any provision of the certificate of incorporation or bylaws or similar
organizational document of Z-D or any Significant Subsidiary of Z-D or (B)
except as (1) individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Z-D or (2) would not prevent or materially
delay the consummation of the Merger, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below and except with respect to employee
stock options and other awards, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Z-D or any Subsidiary of Z-D or
their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
Person is required by or with respect to Z-D or any Subsidiary of Z-D in
connection with the execution and delivery of this Agreement by Z-D or the
consummation of the Merger and the other transactions contemplated hereby,
except the Necessary Consents and such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
make or obtain, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Z-D.
(iv) For so long as this Agreement may be in effect, Z-D will not
consummate the merger contemplated by the Agreement and Plan of Merger dated as
of February 7, 2000, between Z-D and Z-D Merger Subsidiary Inc.
(d) Reports and Financial Statements.
(i) Z-D has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents required
to be filed by it with the SEC since December 31, 1997 (collectively, the "Z-D
SEC Reports"). No Subsidiary of Z-D is required to file any form, report,
registration statement, prospectus or other document with the SEC other than in
connection with the Spin-Off. None of the Z-D SEC Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), contained or will contain any
untrue statement of a material fact or omitted or will omit 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. Each
of the financial statements (including the related notes) included or
incorporated by reference in the Z-D SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated results
of operations and cash flows of Z-D and its consolidated Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements of Z-D, to the absence of notes and normal year-end
adjustments that have not been and are not expected to be material in amount.
All of such Z-D SEC Reports, as of their respective dates (and as of the date of
any amendment to the respective Z-D SEC Report), complied as to form in all
material respects with the applicable
25
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requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.
(ii) Except as disclosed in the Z-D SEC Reports filed and publicly
available prior to the date hereof (the "Z-D Filed SEC Reports"), Z-D and its
Subsidiaries have not incurred any liabilities that are of a nature that would
be required to be disclosed on a balance sheet of Z-D and its Subsidiaries or
the footnotes thereto prepared in conformity with GAAP, other than (A)
liabilities incurred in the ordinary course of business, (B) liabilities
incurred in accordance with Section 4.2, or (C) liabilities that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Z-D.
(iii) A registration statement on Form S-1, as amended through the
date hereof and as may be subsequently amended (the "Spin Co. S-1"), with
respect to the common stock, par value $.01 per share (the "Spin Co. Common
Stock"), of Spin Co. to be offered in connection with the Spin-Off have (i) been
prepared by Spin Co. in conformity with the requirements of the Securities Act
and the rules and regulations (the "Rules and Regulations") of the SEC
thereunder, and (ii) been filed with the SEC under the Securities Act. Copies of
the Spin Co. S-1 have been delivered by Z-D to CNET. The Spin Co. S-1 conforms
(and any prospectus and any further amendments or supplements to the Spin Co.
S-1, when they become effective or are filed with the SEC, as the case may be,
will conform) in all material respects with the applicable requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Spin Co. S-1 and any amendment thereto) and
as of the applicable filing date (as to any prospectus and any amendment or
supplement thereto) contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
(iv) The financial statements (including the related notes filed as
part of the Spin Co. S-1 or included in any prospectus) present fairly, in all
material respects, the combined financial condition and combined results of
operations of Spin Co., at the dates and for the periods indicated, and have
been prepared in conformity with GAAP applied on a consistent basis throughout
the periods involved, except as otherwise noted therein.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by Z-D for
inclusion or incorporation by reference in (A) the Form S-4 will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented or
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (B) the Joint
Proxy Statement/Prospectus will, on the date it is first mailed to Z-D
stockholders or CNET stockholders or at the time of the Z-D Stockholders Meeting
or the CNET Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
26
-22-
under which they were made, not misleading. The Joint Proxy Statement/Prospectus
will comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act and the Rules and Regulations of the SEC
thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Z-D with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by or on behalf of CNET for
inclusion or incorporation by reference therein.
(f) Board Approval.
The Board of Directors of Z-D, by resolutions duly adopted by
unanimous vote of those voting at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Z-D Board Approval"), has
duly (i) determined that this Agreement and the Merger are fair to and in the
best interests of Z-D, the holders of Z-D Common Stock and the holders of Z-D
Net Common Stock and declared the Merger to be advisable, (ii) approved this
Agreement, the Merger and the consummation of the transactions contemplated
hereby and (iii) recommended that the stockholders of Z-D adopt this Agreement
and directed that such matter be submitted for consideration by Z-D's
stockholders at the Z-D Stockholders Meeting. The Z-D Board Approval constitutes
approval of this Agreement, the Merger and the consummation of the transactions
contemplated hereby (including, without limitation, the Z-D Stockholder Voting
Agreement) for purposes of Section 203 of the DGCL. To the knowledge of Z-D,
except for Section 203 of the DGCL (which has been rendered inapplicable by the
approval in clause (ii) above), no state takeover statute is applicable to this
Agreement or the Merger or the other transactions contemplated hereby (including
the Z-D Stockholder Voting Agreement).
(g) Vote Required.
The Z-D Stockholder Approval is the only vote of the holders of any
class or series of Z-D capital stock necessary to approve or adopt this
Agreement and the Merger and to consummate the Merger and the other transactions
contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as set forth in Section 3.2(h) of the Z-D Disclosure
Schedule, there are no Actions pending or, to the knowledge of Z-D, threatened,
against or affecting Z-D or any Subsidiary of Z-D or any property or asset of
Z-D or any Subsidiary of Z-D which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Z-D, nor are there
any judgments, decrees, injunctions, rules or orders of any Governmental Entity
or arbitrator outstanding against Z-D or any Subsidiary of Z-D which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Z-D.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Z-D, Z-D and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Entities
27
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which are necessary for the operation of the businesses as now being conducted
of Z-D and its Subsidiaries, taken as a whole (the "Z-D Permits"), and no
suspension or cancellation of any of the Z-D Permits is pending or, to the
knowledge of Z-D, threatened. Z-D and its Subsidiaries are in compliance with
the terms of the Z-D Permits, except where the failure to so comply,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Z-D. Neither Z-D nor its Subsidiaries is in violation
of, and Z-D and its Subsidiaries have not received any notices of violations
with respect to, any laws, statutes, ordinances, rules or regulations of any
Governmental Entity, except for violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Z-D.
(i) Absence of Certain Changes or Events.
Except for liabilities permitted to be incurred in accordance with
this Agreement or the transactions contemplated hereby and except as described
in the Z-D SEC Reports, since December 31, 1999, Z-D and its Subsidiaries have
conducted their business only in the ordinary course and in a manner consistent
with past practice and, since December 31, 1999, there have not been any
changes, circumstances or events which, individually or in the aggregate, have
had, or would reasonably be expected to have, a Material Adverse Effect on Z-D.
(j) Intellectual Property.
Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Z-D: (i) Z-D and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), all Intellectual Property used in or necessary for the conduct of its
business as currently conducted; (ii) to the knowledge of Z-D, the use of any
Intellectual Property by Z-D and its Subsidiaries does not infringe on or
otherwise violate the rights of any Person; (iii) the use of the Intellectual
Property by Z-D or any Subsidiary of Z-D is in accordance with applicable
licenses pursuant to which Z-D or any Subsidiary of Z-D acquired the right to
use any such Intellectual Property; and (iv) to the knowledge of Z-D, no Person
is challenging, infringing on or otherwise violating any right of Z-D or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Z-D or its Subsidiaries or has received notice of any alleged or
threatened infringement. As of the date of this Agreement, except as would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Z-D, neither Z-D nor any of its Subsidiaries has knowledge of
any pending claim, order or proceeding with respect to any Intellectual Property
used by Z-D and its Subsidiaries and to its knowledge no Intellectual Property
owned and/or licensed by Z-D or its Subsidiaries is being used or enforced in a
manner that would reasonably be expected to result in the abandonment,
cancellation or unenforceability of such Intellectual Property. Section 3.2(j)
of the Z-D Disclosure Schedule sets forth (i) a list of any written claim that
Intellectual Property used by Z-D and its Subsidiaries infringes on or otherwise
violates the rights of any Person; and (ii) a list of any written claim by Z-D
that another Person is infringing on or otherwise violating, any right of Z-D or
any of its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Z-D or its Subsidiaries.
28
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(k) Opinion of Z-D Financial Advisor.
Z-D has received the opinion of Xxxxxx Xxxxxxx Xxxx Xxxxxx, dated
the date of this Agreement, to the effect that, as of such date, the Z-D
Exchange Ratio is fair, from a financial point of view, to the holders of Z-D
Common Stock, and the Z-D Net Exchange Ratio is fair, from a financial point of
view, to the holders of the Z-D Net Common Stock. A copy of such opinion will be
made available to CNET promptly after the date of this Agreement.
(l) Taxes.
(i) Except as set forth in Section 3.2(l) of the Z-D Disclosure
Schedule, each of Z-D and its Subsidiaries has filed all Tax Returns required to
have been filed (or extensions have been duly obtained), has paid all Taxes
required to have been paid by it (whether or not shown as due on any Tax
Return), and has established an appropriate accrual for all Taxes not yet paid
through March 31, 2000; (ii) all Tax Returns filed by Z-D and its Subsidiaries
are true, complete and correct in all material respects; (iii) no material claim
for unpaid Taxes has become a lien against the property of Z-D or any of its
Subsidiaries or is being asserted against Z-D or any of its Subsidiaries; (iv)
no material audit or other proceeding with respect to any Taxes due from Z-D or
any of its Subsidiaries or any Tax Return of Z-D or any of its Subsidiaries is
pending or threatened in writing, or being conducted by a Tax authority; (v)
none of Z-D or any of its Subsidiaries (A) has, since January 1, 1997, been a
member of a Consolidated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Z-D) or had any liability
arising from the application of Treasury Regulation section 1.1502-6 or any
analogous provision of state, local or foreign law, or (B) has any other
liability for the Taxes of any person as a transferee or successor, by contract,
or otherwise; (vi) no consent under Section 341(f) of the Code has been filed
with respect to Z-D or any of its Subsidiaries; (vii) all material Taxes
required to be withheld, collected or deposited by or with respect to Z-D and
each of its Subsidiaries have been timely withheld, collected or deposited, as
the case may be, and, to the extent required, have been paid to the relevant
taxing authority; (viii) none of Z-D or any of its Subsidiaries has been a party
to any distribution occurring during the last two years in which the parties to
such distribution treated the distribution as one to which section 355 of the
Code is applicable; (ix) none of Z-D or any of its Subsidiaries has agreed to
make or is required to make any adjustment under section 481(a) of the Code by
reason of a change in accounting method or otherwise or is otherwise required to
include any amounts in income for a period following the Closing that was
economically accrued in a period prior to the Closing; (x) none of Z-D or any of
its Subsidiaries is a party to, is bound by or has any obligation under, any Tax
sharing agreement or similar contract or arrangement; (xi) no closing agreement
pursuant to section 7121 of the Code (or any similar provision of state, local
or foreign law) has been entered into by or with respect to Z-D or any of its
Subsidiaries.
(m) Certain Contracts.
As of the date hereof, except as disclosed in the Z-D Filed SEC
Reports or on Schedule 3.2(m) of the Z-D Disclosure Schedule, neither Z-D nor
any of its Subsidiaries (other than Z-D Events, Inc.) is a party to or bound by
(i) any "material contracts" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC); (ii) any joint ventures, partnerships, or similar
arrangements; (iii) other agreements or arrangements that give rise to a right
of the other
29
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parties thereto to terminate such material contract or to a right of first
refusal or similar right thereunder as a result of the execution and delivery of
this Agreement and the consummation by Z-D of the Merger and the other
transactions contemplated hereby; or (iv) any agreements, licenses or other
arrangements that contain exclusive grants of rights that could, after the
Effective Time, restrict CNET or any of its Affiliates or any successor thereto,
from engaging in or competing with any line of business or in any geographic
area (collectively, the "Z-D Material Contracts"). All Z-D Material Contracts
are valid and in full force and effect except to the extent they have previously
expired in accordance with their terms or if the failure to be in full force and
effect, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Z-D. Neither Z-D nor any of its Subsidiaries
has violated any provision of, or committed or failed to perform any act which,
with or without notice, lapse of time or both, would constitute a default under
the provisions of, any Z-D Material Contract, except in each case for those
violations and defaults which, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect on Z-D.
(n) Employee Benefits.
(i) Section 3.2(n) of the Z-D Disclosure Schedule contains a true
and complete list of each "employee benefit plan" (within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of ERISA section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefore now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether legally binding or not, under which any employee or former
employee of Z-D or any of its Subsidiaries has any present or future right to
benefits and under which Z-D or any of its Subsidiaries has any present or
future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Z-D Benefit Plans".
Section 3.2(n)(i) of the Z-D Disclosure Schedule lists each employment agreement
in effect on the date of this Agreement.
(ii) With respect to each Z-D Benefit Plan, Z-D has delivered or
made available to CNET a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description) thereof and, to the extent
applicable: (A) any related trust agreement or other funding instrument; (B) the
most recent determination letter, if applicable; (C) any current summary plan
description and other written communications (or a description of any oral
communications) by Z-D or any of its Subsidiaries within the last year or any
communication that modifies or amends benefits under a Z-D Benefit Plan to their
employees concerning the extent of the benefits provided under a Z-D Benefit
Plan; and (D) for the two most recent years the Form 5500 and attached
schedules, audited financial statements, actuarial valuation reports and
attorney's response to an auditor's request for information.
(iii) (A) Each Z-D Benefit Plan has been established and
administered in accordance with its terms, and in substantial compliance with
the applicable provisions of ERISA,
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the Code and other applicable laws, rules and regulations; (B) each Z-D Benefit
Plan which is intended to be qualified within the meaning of Code section 401(a)
is so qualified and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that could reasonably be expected to cause the loss of such qualification; (C)
no event has occurred and no condition exists that would subject Z-D or any of
its Subsidiaries, either directly or by reason of their affiliation with any
member of their "Controlled Group" (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
sections 414(b), (c), (m) or (o)), to any material tax, fine, lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (D) for each Z-D Benefit Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; (E) no "reportable event" (as
such term is defined in ERISA section 4043), or "accumulated funding deficiency"
(as such term is defined in ERISA section 302 and Code section 412 (whether or
not waived)) has occurred with respect to any Z-D Benefit Plan; (F) neither Z-D
nor any of its Subsidiaries has engaged in a transaction with respect to any Z-D
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof, could subject the Company or any subsidiary to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material; (G) no Z-D Benefit Plan provides retiree welfare
benefits and neither Z-D nor any of its Subsidiaries have any obligation to
provide any retiree welfare benefits other than as required by Section 4980B of
the Code; (H) neither Z-D nor any member of its Controlled Group has engaged in,
or is a successor or parent corporation to an entity that has engaged in, a
transaction described in Sections 4069 or 4212(c) of ERISA; and (I) the
compensation of each employee of Z-D or any of its Subsidiaries has been, or
will be, fully deductible by Z-D or any of its Subsidiaries notwithstanding the
provisions of Section 162(m) of the provisions of the Code and the regulations
promulgated thereunder.
(iv) No Z-D Benefit Plan is subject to Title IV of ERISA (including
without limitation any multiemployer plan within the meaning of section
4001(a)(3) of ERISA, and none of Z-D, its Subsidiaries or any member of their
Controlled Group has incurred any liability under Title IV of ERISA that remains
unsatisfied.
(v) With respect to any Z-D Benefit Plan, (A) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of Z-D, threatened, (B) no facts or circumstances
exist to the knowledge of Z-D that could reasonably be expected to give rise to
any such actions, suits or claims, and (C) no written or oral communication has
been received from the PBGC in respect of any Z-D Benefit Plan subject to Title
IV of ERISA concerning the funded status of any such plan or any transfer of
assets and liabilities from any such plan in connection with the transactions
contemplated herein.
(vi) Except as set forth on Schedule 3.2(n), no Z-D Benefit Plan
exists that could result in the payment to any present or former employee of Z-D
or any of its Subsidiaries of any money or other property or accelerate or
provide any other rights or benefits to any present or former employee of Z-D or
any of its Subsidiaries as a result of the transaction contemplated by this
Agreement. Except as set forth on Schedule 3.2(n), there is no contract, plan or
arrangement (written or otherwise) covering any employee or former employee of
Z-D or any of
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its Subsidiaries that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
(o) Insurance.
All primary, excess and umbrella policies, bonds and other forms of
insurance currently owned or held by or on behalf of and/or providing insurance
coverage to Z-D and its Subsidiaries and their respective directors, officers,
agents and employees are in full force and effect, except for any such forms of
insurance the absence of which would not likely have a Material Adverse Effect
on Z-D. Z-D has not received a notice of default under any such policy and has
not received written notice of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium increase
with respect to any such policy. Except as set forth in Section 3.2(o) of the
Z-D Disclosure Schedule, no letters of credit have been posted and no cash has
been restricted to support any reserves for insurance.
(p) Properties.
Except for properties and assets disposed of in the ordinary course
of business consistent with past practices, since December 31, 1999, Z-D and its
Significant Subsidiaries have good and marketable title, free and clear of all
liabilities and liens, to all their material properties and assets, whether
tangible or intangible, real, personal or mixed. All material buildings,
fixtures, equipment and other property and assets held under leases by Z-D or
any of its Significant Subsidiaries are held under valid instruments enforceable
by Z-D or such Significant Subsidiary in accordance with their respective terms.
Substantially all of Z-D's and its Significant Subsidiaries' equipment in
regular use has been well maintained and is in good and serviceable condition,
reasonable wear and tear excepted.
(q) Affiliate Transactions.
Except as set forth on Section 3.2(q) of the Z-D Disclosure
Schedule there is no agreement, arrangement or transaction between Z-D or any
Subsidiary of Z-D (other than Z-D Events, Inc.) and Z-D Majority Stockholder or
any Subsidiary of Z-D Majority Stockholder. Z-D has no loans in excess of
$25,000 of principal and interest outstanding to any of its employees, officers
or directors, except as disclosed in the Z-D Filed SEC Reports.
(r) Restructuring Transactions.
(i) In accordance with the plan of restructuring previously
approved by the Board of Directors and stockholders of Z-D, prior to the date
hereof Z-D has sold all of the businesses listed on Section 3.2(r) of the Z-D
Disclosure Schedule (the "Divested Businesses"). Set forth on Section 3.2(r) of
the Z-D Disclosure Schedule is a list of all agreements, arrangements and
understandings to which Z-D or any of its Subsidiaries is a party or pursuant to
which they may have any obligations or liabilities (whether absolute, contingent
or otherwise and whether or not required to be set forth or reflected in a
consolidated balance sheet of Z-D prepared in accordance with GAAP) relating to
the Divested Businesses or the sale thereof other
32
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than obligations or liabilities against which Z-D is indemnified by the buyer
thereof (the "Divestiture Agreements"). Z-D has provided to CNET true and
correct copies of the Divestiture Agreements. All of the Divestiture Agreements
are in full force and effect and are unmodified. Except for obligations and
liabilities arising under or described in the Divestiture Agreements, neither
Z-D nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether absolute, contingent or otherwise and whether or not required to be set
forth or reflected in a consolidated balance sheet of Z-D prepared in accordance
with GAAP) arising out of or relating to the Divested Businesses or their
respective businesses, assets, liabilities or obligations or the sale thereof
other than obligations or liabilities against which Z-D is indemnified by the
buyer thereof. Except as set forth in Section 3.2(r) of the Z-D Disclosure
Schedule, no claims have been asserted or threatened against Z-D or any of its
Subsidiaries under any of the Divestiture Agreements (including, without
limitation, any claims in respect of a breach of any term of any such agreement
or for any indemnification provided by Z-D or any of its Subsidiaries in any
Divestiture Agreement) nor to the knowledge of Z-D is there any basis for any
such claim, in each case other than immaterial claims arising following the date
hereof and prior to the Effective Time.
(ii) Except as disclosed in the Spin Co. S-1 as filed with the SEC
prior to the date hereof, (A) Spin Co. and its Subsidiaries do not own or have
any rights to use any properties, assets or other rights used in the conduct of
the business of Z-D or any of Z-D's Subsidiaries (other than Spin Co. and Spin
Co.'s Subsidiaries), (B) there are no agreements, arrangements, understandings
or other transactions between Spin Co. or any of its Subsidiaries, on the one
hand, and Z-D and any of its Subsidiaries (other than Spin Co. and its
Subsidiaries) on the other and (C) since December 31, 1999 no officer or key
employee of Z-D or any of its Subsidiaries (other than Spin Co. and its
Subsidiaries) has transferred to, or otherwise become an employee or consultant
of, Spin Co. or any of its Subsidiaries. The assets of Spin Co. and its
Subsidiaries consist entirely of (i) assets reflected as "Net assets of
discontinued operations" on the consolidated balance sheets of Z-D included in
the Z-D Filed SEC Reports (the "Z-D Financial Statements") and (ii) assets
acquired by Spin Co. and its Subsidiaries after the date of the Z-D Financial
Statements. Since the date of the Z-D Financial Statements, neither Z-D nor any
of its Subsidiaries (other than Spin Co. and its Subsidiaries) has transferred
any assets or other rights to Spin Co. and its Subsidiaries except cash
transfers prior to the date hereof that are fully reflected in the net
inter-company payable from Spin Co. and its Subsidiaries to Z-D. Z-D and its
Subsidiaries (other than Spin Co. and its Subsidiaries) do not have any
liabilities or other obligations (whether absolute, contingent or otherwise and
whether or not required to be set forth in or reflected on a balance sheet
prepared in accordance with GAAP) arising out of or relating to Spin Co. or its
Subsidiaries or their respective properties, assets and other activities other
than (i) those to be expressly provided for in the Distribution Agreement (as
defined below) and (ii) those for which Spin Co. will indemnify Z-D and its
Subsidiaries pursuant to the Distribution Agreement. For all purposes of this
Agreement, the Subsidiaries of Spin Co. will include those entities being
transferred to Spin Co. pursuant to the Distribution Agreement. All outstanding
indebtedness of Spin Co. and its Subsidiaries (including the $150,000,000
interim debt facility) is non-recourse to Z-D and its Subsidiaries (other than
Spin Co. and its Subsidiaries). The Preliminary Spin-Off Prospectus included as
part of the Spin Co. S-1 as filed with the SEC prior to the date hereof
accurately describes in all material respects Z-D's current plans with respect
to the Spin-Off and the Cash
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Dividend. Section 3.2(r)(ii) of the Z-D Disclosure Schedule sets forth Z-D's
good faith estimate of the amounts set forth therein and Z-D knows of no other
fees or expenses payable by Z-D relating to the Spin-Off, the restructuring or
the Merger which have not been included therein. At the time of the Spin-Off and
after giving effect to the contemplated borrowings and the payment of the
proceeds thereof to Z-D, Spin Co. will be Solvent (as defined in Section 8.12)
and will have a net worth (fair market value of assets minus fair market value
of liabilities) of at least $1.00.
(s) Valuation Methodology.
Section 3.2(s) of the Z-D Disclosure Schedule sets forth the
valuation methodology used to establish the relationship between the Z-D
Exchange Ratio and the Z-D Net Exchange Ratio.
(t) Brokers or Finders.
No agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other similar commission or fee in connection with any of the transactions
contemplated by this Agreement, based upon arrangements made by or on behalf of
Z-D, except Xxxxxx Xxxxxxx Xxxx Xxxxxx, whose fees and expenses will be paid by
Z-D. Z-D has provided to CNET a true, correct and complete copy of Z-D's
agreement with Xxxxxx Xxxxxxx Xxxx Xxxxxx relating to this Agreement, the
Merger, the Spin-Off and the Divestitures.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of CNET.
During the period from the date of this Agreement and continuing
until the Effective Time, CNET agrees as to itself and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement or Section 4.1
(including its subsections) of the CNET Disclosure Schedule or to the extent
that Z-D shall otherwise consent in writing, such consent not to be unreasonably
withheld):
(a) Ordinary Course.
CNET and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use its
reasonable best efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships with
customers, suppliers and others having business dealings with them to the end
that their ongoing businesses shall not be impaired in any material respect at
the Effective Time.
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(b) Dividends; Repurchases of Share Capital.
CNET shall not, and shall not propose to, (i) declare or pay any
dividends on or make other distributions in respect of any of its outstanding
shares of capital stock; (ii) 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
(iii) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock pursuant to any tender offer or exchange offer.
(c) Governing Documents.
Except to the extent required to comply with their respective
obligations under this Agreement or with applicable law, CNET and Merger Sub
shall not amend or propose to amend their respective certificates of
incorporation or bylaws in a manner that could reasonably be expected to
materially and adversely affect CNET's or Merger Sub's ability to effect the
consummation of the Merger.
(d) No Acquisitions.
CNET shall not acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association, joint venture or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (excluding the acquisition of assets used in the operations of the
business of CNET and its Subsidiaries in the ordinary course, which assets do
not constitute a business unit, division or all or substantially all of the
assets of the transferor) to the extent such acquisition could reasonably be
expected to materially delay or interfere with the consummation of the Merger;
provided, however, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of CNET or (y)
the creation of new Subsidiaries of CNET organized to conduct or continue
activities otherwise permitted by this Agreement; provided, further, however,
that CNET shall not be permitted to acquire that certain company set forth on
Section 4.1(d) of the CNET Disclosure Schedule. For the avoidance of doubt, the
parties agree that an acquisition would "materially delay" consummation of the
Merger if pro forma financial statements would be required to be included in the
relevant disclosure document relating to such acquisition and complying with
such a requirement would delay clearance of the Form S-4 (as defined below) by
the SEC.
(e) Qualification.
CNET shall use its reasonable best efforts not to, and shall use
its reasonable best efforts not to permit any of its Subsidiaries to, take any
action (including any action otherwise permitted by this Section 4.1) that would
prevent or impede the Merger from qualifying as a reorganization under Section
368(a) of the Code.
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(f) Benefits Maintenance.
CNET shall maintain for a period of one year after the Effective
Time, without interruption, employee compensation and benefit plans, programs
and policies and fringe benefits (including post-employment welfare benefits but
excluding equity-based arrangements and compensation plans) that will provide
benefits to each employee of Z-D who continues employment with CNET after the
Effective Time that are in the aggregate no less favorable than those provided
to similarly situated CNET employees pursuant to employee compensation and
benefit plans, programs and policies, and fringe benefits of CNET as in effect
from time to time. Employees of Z-D who continue employment with CNET shall be
given credit for all service with Z-D (or service credited by Z-D for similar
plans, programs or policies) under all employee compensation and benefit plans,
programs and policies and fringe benefits of CNET in which they become
participants for purposes of eligibility, vesting and benefit accrual (other
than benefit accrual under tax qualified defined benefit plans which would
provide a duplication of benefits to employees of Z-D).
(g) Income Tax Elections.
CNET shall not (i) change its fiscal year, (ii) make or change any
Tax election, (iii) change any method of Tax accounting, (iv) enter into any
closing agreement relating to any Tax, or (v) surrender any right to claim a Tax
Refund, that, individually or in the aggregate, in the United States or
elsewhere, would be material to CNET.
(h) No Related Actions.
CNET will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
4.2 Covenants of Z-D.
During the period from the date of this Agreement and continuing
until the Effective Time, Z-D agrees as to itself and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement or Section 4.2
(including its subsections) of the Z-D Disclosure Schedule or to the extent that
CNET shall otherwise consent in writing, which consent shall not be unreasonably
withheld):
(a) Ordinary Course.
(i) Except in connection with the Spin-Off and the Cash Dividend,
Z-D and its Subsidiaries shall carry on their respective businesses in the
usual, regular and ordinary course in all material respects, in substantially
the same manner as heretofore conducted, and shall use their reasonable best
efforts to preserve intact their present lines of business, maintain their
rights and franchises and preserve their relationships with customers, suppliers
and others having business dealings with them (including, without limitation, by
delaying payment of accounts payable) and
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retain the services of their respective officers and key employees and
consultants, to the end that their ongoing businesses shall not be impaired in
any material respect at the Effective Time.
(ii) Other than in connection with acquisitions permitted by
Section 4.2(e) or investments permitted by Section 4.2(g), Z-D shall not, and
shall not permit any of its Subsidiaries to, (A) enter into any new material
line of business or (B) incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith other than capital
expenditures and obligations or liabilities in connection therewith as disclosed
in Section 4.2(a) of the Z-D Disclosure Schedule or obligations or liabilities
in non-material amounts incurred or committed to in the ordinary course of
business consistent with past practice.
(b) Dividends; Changes in Share Capital.
Z-D shall not, and shall not permit any of its Subsidiaries to, and
shall not propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except the Spin-Off and
the Cash Dividend in the manner provided in Section 5.12; (ii) 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, except for any such transaction by a wholly
owned Subsidiary of Z-D which remains a wholly owned Subsidiary after
consummation of such transaction; or (iii) except as set forth in Section 4.2(b)
of the Z-D Disclosure Schedule, repurchase, redeem or otherwise acquire any
shares of its capital stock or any securities convertible into or exercisable
for any shares of its capital stock, except for the purchase from time to time
by Z-D of Z-D Common Stock and Z-D Net Common Stock in connection with the Z-D
Benefit Plans in the ordinary course of business consistent with past practice.
(c) Issuance of Securities.
Z-D shall not, and shall not permit any of its Subsidiaries to,
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock of any class, any Z-D Voting Debt or any
securities convertible into or exercisable for, or any rights, warrants, calls
or options to acquire, any such shares or Z-D Voting Debt, or enter into any
commitment, arrangement, undertaking or agreement with respect to any of the
foregoing, other than (i) the issuance of Z-D Common Stock and Z-D Net Common
Stock upon the exercise of Z-D Stock Options in accordance with their present
terms or pursuant to Z-D Stock Options or other stock based awards granted
pursuant to clause (ii) below, (ii) the granting of up to 100,000 Z-D Stock
Options or other stock based awards of or to acquire shares of Z-D Net Common
Stock granted under Z-D Stock Option Plans outstanding on the date hereof in the
ordinary course of business consistent with past practice, (iii) issuances by a
wholly owned Subsidiary of Z-D of capital stock to such Subsidiary's parent or
another wholly owned Subsidiary of Z-D, (iv) pursuant to acquisitions and
investments as disclosed in Section 4.2(e) or 4.2(g) of the Z-D Disclosure
Schedule or the financings therefore, (v) in connection with the Spin-Off, or
(vi) issuances disclosed in Section 4.2(c) of the Z-D Disclosure Schedule.
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(d) Governing Documents.
Except as set forth in Section 4.2(d) of the Z-D Disclosure
Schedule or to the extent required to comply with their respective obligations
hereunder or with applicable law, Z-D and its Subsidiaries shall not amend or
propose to amend their respective certificates of incorporation or bylaws.
(e) No Acquisitions.
Other than acquisitions disclosed in Section 4.2(e) of the Z-D
Disclosure Schedule and the restructurings required in connection with the
Spin-Off, Z-D shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merger or consolidation, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (excluding the acquisition of assets used
in the operations of the business of Z-D and its Subsidiaries in the ordinary
course, which assets do not constitute a business unit, division or all or
substantially all of the assets of the transferor); provided, however, that
notwithstanding anything herein to the contrary, (i) between the date hereof and
120 days after the date hereof, Z-D shall be permitted to make acquisitions
provided that (x) no cash consideration is to be paid or debt incurred in
connection therewith unless Z-D reasonably believes that it will not have any
debt outstanding at the Effective Time, following payment of all expenses set
forth in Section 3.2(r) of the Z-D Disclosure Schedule, and (y) the
consideration to be paid by Z-D in any individual acquisition is less than $25
million; and provided further that the aggregate consideration to be paid by Z-D
in all such acquisitions is not more than $50 million and (ii) if the Closing
does not take place within 120 days of the date hereof, the $50 million referred
to in clause (i) above shall be increased to $70 million and (iii) in any event,
the acquired company shall not be an Affiliate of Z-D Majority Stockholder;
provided, further, that issuance of such shares would not cause Z-D Majority
Stockholder to own of record, for purposes of the Z-D Stockholders Meeting, less
than a majority of the voting power of the shares of Z-D Common Stock and Z-D
Net Common Stock entitled to vote at the Z-D Stockholders Meeting; and provided,
further, however, that Z-D shall not be permitted to acquire that certain
company set forth in Schedule 4.1(d) of the CNET Disclosure Schedule prior to
the Effective Time. Without limiting the foregoing, Z-D shall not, and shall not
permit any of its Subsidiaries to, engage in (x) internal reorganizations or
consolidations involving existing Subsidiaries of Z-D (other than required in
connection with the Spin-Off contemplated by the Distribution Agreement) or (y)
the creation of new Subsidiaries of Z-D organized to conduct or continue
activities otherwise permitted by this Agreement.
(f) No Dispositions.
Other than as disclosed in Section 4.2(f) of the Z-D Disclosure
Schedule, Z-D shall not, and shall not permit any of its Subsidiaries to, sell,
lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of,
any of its assets (including capital stock of Subsidiaries of Z-D) except for
the Spin-Off or the Cash Dividend and for sales in the ordinary course of
business.
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(g) Investments; Indebtedness.
Z-D shall not, and shall not permit any of its Subsidiaries to,
other than as disclosed in Section 4.2(g) of the Z-D Disclosure Schedule, make
any loans, advances or capital contributions to, or investments in, any Person,
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another Person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Z-D or any of its Subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another Person (other than any
wholly owned Subsidiary) or enter into any arrangement having the economic
effect of any of the foregoing (collectively, "Z-D Indebtedness"), except for
the financings by Spin Co. that are non-recourse to Z-D and its Subsidiaries
(other than Spin Co. and its Subsidiaries) in connection with the Spin-Off and
except that Z-D may, with the prior consent of CNET, which will not be
unreasonably withheld, enter into and borrow up to $10 million in indebtedness
pursuant to a line of credit facility that by its terms is not due until at
least six months following the Closing.
(h) Tax-Free Qualification.
Z-D shall use its reasonable best efforts not to, and shall use its
reasonable best efforts not to permit any of its Subsidiaries to, take any
action (including any action otherwise permitted by this Section 4.2)(a) that
would prevent or impede the Merger from qualifying as a reorganization under
Section 368(a) of the Code.
(i) Compensation.
Except as required by law or by the terms of any collective
bargaining agreement or other agreement currently in effect between Z-D or any
Subsidiary of Z-D and any executive officer or employee thereof, Z-D shall not
increase the salary of any director, executive officer or key employee of Z-D or
any Significant Subsidiary of Z-D (except in the ordinary course of business
consistent with past practice), or make any increase in or commitment to
increase any employee benefits or bonuses, accelerate the exercisability of any
Z-D Stock Options, provide any current or former employee a cash payment in
cancellation of any Z-D Stock Option, make any severance payments, adopt or
amend or make any commitment to adopt or amend any Z-D Benefit Plan or any plan,
program or arrangement that would be a Z-D Benefit Plan if in effect as of the
date hereof or make any contribution, other than regularly scheduled
contributions, to any Z-D Benefit Plan. Any option granted or committed to be
granted after the date hereof shall not accelerate as a result of the approval
or consummation of any transaction contemplated by this Agreement.
(j) Accounting Methods; Income Tax Elections.
Except as disclosed in the Z-D SEC Reports filed prior to the date
of this Agreement, or as required by a Governmental Entity, Z-D shall not change
its methods of accounting in effect at December 31, 1999, except as required by
changes in GAAP as concurred in by Z-D's independent public accountants. Z-D
shall not (i) change its fiscal year, (ii) make or
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change any Tax election, (iii) change any annual Tax accounting period, (iv)
change any method of Tax accounting, (v) file any amended Tax Return, (vi) enter
into any closing agreement relating to any Tax, (vii) settle any material Tax
claim or assessment, or (viii) surrender any right to claim a Tax Refund, that,
individually or in the aggregate, in the United States or elsewhere, would be
material to Z-D or the Surviving Corporation.
(k) Certain Agreements and Arrangements.
Except as set forth in Section 4.2(k) of the Z-D Disclosure
Schedule, Z-D shall not, and shall not permit any of its Subsidiaries to, enter
into any agreements or arrangements that (i) provide exclusive rights to any
third party, including in any territory; (ii) could, after the Effective Time,
reasonably be expected to limit or restrict CNET or any of its Affiliates
(including CNET) or any successor thereto, from engaging or competing in any
line of business or in any geographic area; or (iii) would be a "material
contract" or would have been required to be included in Section 3.2(m) of the
Z-D Disclosure Schedule had such contract been in existence on the date of this
Agreement.
(l) Settlements.
Z-D shall not, and shall not permit any of its Subsidiaries to,
settle or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit, controversy or similar dispute or proceeding.
(m) Spin Co.
Z-D will not, and will not permit any of its Subsidiaries to, take
any action that would result in the representations and warranties contained in
Section 3.2(r) being untrue in any respect immediately prior to the Effective
Time nor will Z-D or any Subsidiary of Z-D (other than Spin Co.) transfer any
property, assets, employees or other rights to Spin Co. or any of its
Subsidiaries (other than assets primarily related to Spin Co. and reflected on
the Z-D Financial Statements as "net assets of discontinued operations" and cash
transfers to Spin Co. that are reflected in Section 5.12).
(n) No Related Actions.
Z-D will not, and will not permit any of its Subsidiaries to, agree
or commit to do any of the foregoing.
4.3 Governmental Filings.
Each party shall (a) confer on a reasonable basis with the other
and (b) report to the other (to the extent permitted by law or regulation or any
applicable confidentiality agreement) on operational matters. Z-D and CNET shall
file all reports required to be filed by each of them with the SEC (and all
other Governmental Entities) between the date of this Agreement and the
Effective Time and shall, if requested by the other party and to the extent
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permitted by law or regulation or any applicable confidentiality agreement,
deliver to the other party copies of all such reports, announcements and
publications promptly after such request.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date
hereof, CNET and Z-D shall cooperate in preparing and each shall cause to be
filed with the SEC mutually acceptable proxy materials which shall constitute
the joint proxy statement/prospectus relating to the matters to be submitted to
the CNET stockholders at the CNET Stockholders Meeting (as defined in Section
5.1(c)) and the matters to be submitted to the Z-D stockholders at the Z-D
Stockholders Meeting (defined in Section 5.1(b)) (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and CNET shall prepare and file with the SEC a
registration statement on Form S-4 with respect to the issuance of CNET Common
Stock in the Merger (such Form S-4, and any amendments or supplements thereto,
the "Form S-4"). The Joint Proxy Statement/Prospectus will be included as a
prospectus in and will constitute a part of the Form S-4 as CNET's prospectus.
Each of CNET and Z-D shall use reasonable best efforts to have the Joint Proxy
Statement/Prospectus cleared by the SEC and the Form S-4 declared effective by
the SEC and to keep the Form S-4 effective as long as is necessary to consummate
the Merger and the transactions contemplated hereby and thereby. CNET and Z-D
shall, as promptly as practicable after receipt thereof, provide the other party
copies of any written comments and advise the other party of any oral comments,
with respect to the Joint Proxy Statement/Prospectus or Form S-4 received from
the SEC. The parties shall cooperate and provide the other with a reasonable
opportunity to review and comment on any amendment or supplement to the Joint
Proxy Statement/Prospectus and the Form S-4 prior to filing such with the SEC,
and will provide each other with a copy of all such filings made with the SEC.
Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation by reference) to the Joint Proxy
Statement/Prospectus or the Form S-4 shall be made without the approval of both
parties, which approval shall not be unreasonably withheld or delayed; provided
that with respect to documents filed by a party which are incorporated by
reference in the Form S-4 or Joint Proxy Statement/Prospectus, this right of
approval shall apply only with respect to information relating to the other
party or its business, financial condition or results of operations. CNET will
use reasonable best efforts to cause the Joint Proxy Statement/Prospectus to be
mailed to CNET stockholders, and Z-D will use reasonable best efforts to cause
the Joint Proxy Statement/Prospectus to be mailed to Z-D's stockholders, in each
case as promptly as practicable after the Form S-4 is declared effective under
the Securities Act. CNET shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file a
general consent to service of process) required to be taken under any applicable
state securities laws in connection with the Merger and each of Z-D and CNET
shall furnish all information concerning it and the holders of its capital stock
as may be reasonably requested in connection with any such action. Each party
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will advise the other party, promptly after it receives notice thereof, of the
time when the Form S-4 has become effective, the issuance of any stop order, the
suspension of the qualification of the CNET Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If at
any time prior to the Effective Time any information relating to CNET or Z-D, or
any of their respective affiliates, officers or directors, should be discovered
by CNET or Z-D, which information should be set forth in an amendment or
supplement to either the Form S-4 or the Joint Proxy Statement/Prospectus so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and, to the extent required by law, rules or regulations, an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and disseminated to the stockholders of CNET and Z-D.
(b) Z-D shall duly take all lawful action to call, give notice of,
convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of Z-D and CNET (the "Z-D Stockholders
Meeting") for the purpose of obtaining the Z-D Stockholder Approval and shall
its use reasonable best efforts to solicit the Z-D Stockholder Vote; and the
Board of Directors of Z-D shall recommend adoption of this Agreement by the
stockholders of Z-D (the "Z-D Recommendation"), and shall not, unless CNET makes
a change in the CNET Recommendation, (x) withdraw, modify or qualify (or propose
to withdraw, modify or qualify) in any manner adverse to CNET such
recommendation or (y) take any action or make any statement (other than any
action described in the foregoing clause (x)) in connection with the Z-D
Stockholders Meeting inconsistent with such recommendation (collectively, a
"Change in the Z-D Recommendation"); provided, however, any action or statement
under clause (y) will not be deemed a Change in the Z-D Recommendation provided
(I) such action or statement is taken or made pursuant to advice from Xxxxxxxx &
Xxxxxxxx, counsel to Z-D, to the effect that such action or statement is
required by applicable law, (II) if a Z-D Public Proposal has been made and not
rescinded, such action or statement shall not relate to such Z-D Public Proposal
other than any factual statement required by any regulatory authority (including
the SEC) and shall in any event include a rejection of such Z-D Public Proposal
and (III) such action or statement also includes a reaffirmation of the Z-D
Board of Directors' approval of the Merger and the other transactions
contemplated hereby and recommendation to the Z-D stockholders to adopt this
Agreement provided further, however, that, notwithstanding clause (I), (II) or
(III), the Board of Directors of Z-D may make a Change in the Z-D Recommendation
pursuant to Section 5.4 hereof. Notwithstanding any Change in the Z-D
Recommendation, this Agreement shall be submitted to the stockholders of Z-D at
the Z-D Stockholders Meeting for the purpose of adopting this Agreement and
nothing contained herein shall be deemed to relieve Z-D of such obligation.
(c) CNET shall duly take all lawful action to call, give notice of,
convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of CNET and Z-D (the "CNET Stockholders
Meeting") for the purpose of obtaining the CNET Stockholder Approval with
respect to the transactions contemplated by this Agreement and shall use its
reasonable best efforts to solicit the CNET Stockholder Vote, and the Board of
Directors of CNET shall recommend approval of the issuance of CNET Common Stock
pursuant to this
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Agreement by the stockholders of CNET (the "CNET Recommendation"), and shall
not, unless Z-D makes a Change in the Z-D Recommendation, (x) withdraw, modify
or qualify (or propose to withdraw, modify or qualify) in any manner adverse to
Z-D such recommendation or (y) take any action or make any statement (other than
any action described in the foregoing clause (x)) in connection with the CNET
Stockholders Meeting inconsistent with such recommendation (collectively, a
"Change in the CNET Recommendation"); provided, however, any action or statement
under clause (y) will not be deemed a Change in the CNET Recommendation provided
(I) such action or statement is taken or made pursuant to advice from Xxxxxxx
Xxxxxxx & Xxxxxxxx, counsel to CNET, to the effect that such action or statement
is required by applicable law, (II) if a CNET Public Proposal has been made and
not rescinded, such action or statement shall not relate to such CNET Public
Proposal other than any factual statement required by any regulatory authority
(including the SEC) and shall in any event include a rejection of such CNET
Public Proposal and (III) such action or statement also includes a reaffirmation
of the CNET Board of Directors' approval of the Merger and the other
transactions contemplated hereby and recommendation to the CNET stockholders to
approve the issuance of CNET Common Stock pursuant to this Agreement; provided
further, however, that, notwithstanding clause (I), (II) or (III), the Board of
Directors of CNET may make a Change in the CNET Recommendation pursuant to
Section 5.4 hereof. Notwithstanding any Change in the CNET Recommendation, this
Agreement shall be submitted to the stockholders of CNET at the CNET
Stockholders Meeting for the purpose of approving the issuance of CNET Common
Stock pursuant to this Agreement and nothing contained herein shall be deemed to
relieve CNET of such obligation.
5.2 Access to Information.
Upon reasonable notice, each party shall (and shall cause its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of the other party reasonable
access during normal business hours, during the period prior to the Effective
Time, to all its properties, books, contracts, commitments, records, officers
and employees and, during such period, such party shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state securities laws and the HSR Act and (b) all other information concerning
it and its business, properties and personnel as such other party may reasonably
request; provided, however, that either party may restrict the foregoing access
to the extent that (i) any law, treaty, rule or regulation of any Governmental
Entity applicable to such party or any contract requires such party or its
Subsidiaries to restrict or prohibit access to any such properties or
information or (ii) the information is subject to confidentiality obligations to
a third party. The parties will hold any such information obtained pursuant to
this Section 5.2 in confidence in accordance with, and shall otherwise be
subject to, the provisions of the confidentiality letter dated June 28, 2000,
between Z-D and CNET (the "Confidentiality Agreement"), which Confidentiality
Agreement shall continue in full force and effect. Any investigation by either
of CNET or Z-D shall not affect the representations and warranties of the other.
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5.3 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under this Agreement and applicable laws and regulations to consummate
the Merger and the other transactions contemplated by this Agreement as soon as
practicable after the date hereof, including (i) preparing and filing as
promptly as practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as
practicable all Necessary Consents and all other consents, waivers, licenses,
orders, registrations, approvals, permits, rulings, authorizations and
clearances necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement (collectively, the "Required
Approvals") and (ii) taking all reasonable steps as may be necessary to obtain
all such Necessary Consents and the Required Approvals. In furtherance and not
in limitation of the foregoing, each party hereto agrees to make, as promptly as
practicable, (i) an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby
(which filing shall be made in any event within 10 Business Days of the date
hereof), and (ii) all other necessary filings with other Governmental Entities
relating to the Merger, and, in each case, to supply as promptly as practicable
any additional information and documentary material that may be requested
pursuant to such laws or by such authorities and to use reasonable best efforts
to cause the expiration or termination of the applicable waiting periods under
the HSR Act and the receipt of Required Approvals under such other laws or from
such authorities as soon as practicable. Notwithstanding the foregoing, nothing
in this Section or the other provisions of this Agreement shall require, or be
deemed to require, (x) CNET or Z-D or any of their respective Subsidiaries to
agree to divest or hold separate any business or assets or to effect any such
divestiture or action, except in each case that the parties agree after
consultation is not material and does not affect any of the contemplated
benefits of the Merger, (y) CNET or Z-D or any of their Subsidiaries to agree to
any restriction or condition on the conduct of their or their Subsidiaries'
businesses, except in each case that the parties agree after consultation is not
material and does not affect any of the contemplated benefits of the Merger or
(z) CNET or Z-D to take any other action if doing so would, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect on
CNET after the Merger. Neither Z-D nor CNET shall take or agree to take any
action identified in clause (x), (y) or (z) of the immediately preceding
sentence without the prior written consent of the other party.
(b) Each of Z-D and CNET shall, in connection with the efforts
referenced in Section 5.3(a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) promptly inform the other party of any communication received by
such party from, or given by such party to, the Antitrust Division of the
Department of Justice (the "DOJ"), the Federal Trade Commission (the "FTC") or
any other Governmental Entity and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby; and (iii) consult with
each other in advance to the extent
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practicable of any meeting or conference with, the DOJ, the FTC or any such
other Governmental Entity or, in connection with any proceeding by a private
party, with any other Person, and to the extent permitted by the DOJ, the FTC or
such other applicable Governmental Entity or other Person, give the other party
the opportunity to attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.3(a) and (b), if any administrative or judicial
action or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Regulatory Law (as defined below), or if any
statute, rule, regulation, executive order, decree, injunction or administrative
order is enacted, entered, promulgated or enforced by a Governmental Entity
which would make the Merger or the other transactions contemplated hereby
illegal or would otherwise prohibit or materially impair or delay the
consummation of the Merger or the other transactions contemplated hereby, each
of Z-D and CNET shall cooperate in all respects with each other and, subject to
Section 5.3(a), seek to contest and resist any such action or proceeding and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the Merger or the other
transactions contemplated by this Agreement and to have such statute, rule,
regulation, executive order, decree, injunction or administrative order
repealed, rescinded or made inapplicable so as to permit consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Section 5.3 shall limit a
party's right to terminate this Agreement pursuant to Section 7.1(b) or 7.1(c)
so long as such party has up to then complied with its obligations under this
Section 5.3. For purposes of this Agreement, "Regulatory Law" means the Xxxxxxx
Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate (i) mergers, acquisitions or other business combinations, (ii) foreign
investments or (iii) actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition.
(d) Each of Z-D and CNET and its respective Board of Directors
shall, if any state takeover statute or similar statute becomes applicable to
this Agreement, the Merger or any other transactions contemplated hereby or
thereby, take all action reasonably necessary to ensure that the Merger and the
other transactions contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated hereby and otherwise to minimize the
effect of such statute or regulation on this Agreement, the Merger and the other
transactions contemplated hereby.
5.4 Acquisition Proposals.
(a) Without limitation on any of such party's other obligations
under this Agreement (including under Article IV hereof), each of CNET and Z-D
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it
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shall direct and use its reasonable best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, (i) initiate, solicit, encourage or knowingly
facilitate any inquiries or the making of any proposal or offer with respect to,
or a transaction to effect, a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving it or any of its Significant Subsidiaries, or
any purchase or sale of 20% or more of the consolidated assets (including
without limitation stock of its Subsidiaries) of such party and its
Subsidiaries, taken as a whole, or any purchase or sale of, or tender or
exchange offer for, the equity securities of such party that, if consummated,
would result in any Person (or the stockholders of such Person) beneficially
owning securities representing 20% or more of the total voting power of such
party (or of the surviving parent entity in such transaction) or any of its
Significant Subsidiaries (any such proposal, offer or transaction (other than a
proposal or offer made by the other party or an Affiliate thereof) being
hereinafter referred to as an "Acquisition Proposal"), (ii) have any discussion
with or provide any confidential information or data to any Person relating to
an Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal, (iii) approve or recommend, or propose publicly to approve
or recommend, any Acquisition Proposal or (iv) approve or recommend, or propose
to approve or recommend, or execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any of
the foregoing related to any Acquisition Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, (i)
each of CNET and Z-D and its respective Board of Directors shall be permitted
to, to the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal, and (ii) each of
CNET and Z-D and their respective Board of Directors shall be permitted to
comply with federal securities laws, and (iii) each of CNET and Z-D or their
respective Board of Directors shall be permitted to engage in the matters set
forth in clauses (a) (ii) to (iv) above (other than executing or entering into,
any letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement) and to make a Change in
the CNET Recommendation or a Change in the Z-D Recommendation, as the case may
be, in connection with an Acquisition Proposal by any such Person, to the extent
that: (x) such Acquisition Proposal was not solicited by such party and such
party's Board of Directors, after consultation with outside counsel, determines
in good faith that the failure to take such action would be inconsistent with
its fiduciary duties under applicable law; (y) prior to providing any
information or data to any Person or entering into discussions or negotiations
with any Person, the subject party promptly notifies the other party of such
inquiries, proposals or offers received by, any such information requested from,
or any such discussions or negotiations sought to be initiated or continued
with, any of its representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any inquiries,
proposals or offers; and (z) the Board of Directors of the subject party shall
have received from such Person, prior to providing any information or data to
any Person in connection with an Acquisition Proposal by any such Person, an
executed confidentiality agreement having provisions that are customary in such
agreements, as advised by counsel, provided that if such
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confidentiality agreement contains provisions that are less restrictive than the
comparable provision, or omits restrictive provisions, contained in the
Confidentiality Agreement, then the Confidentiality Agreement will be deemed to
be amended to contain only such less restrictive provisions or to omit such
restrictive provisions, as the case may be.
(c) Each of Z-D and CNET agrees that it will promptly keep the
other party informed of the status and terms of any such proposals or offers and
the status and terms of any such discussions or negotiations, and that prior to
the time that this Agreement is terminated in accordance with its terms, it will
not sign any agreement inconsistent with the consummation of the Merger. Each of
CNET and Z-D agrees that it will, and will cause its officers, directors and
representatives to, immediately cease and cause to be terminated any activities,
discussions or negotiations existing as of the date of this Agreement with any
parties conducted heretofore with respect to any Acquisition Proposal. Each of
CNET and Z-D agrees that it will use reasonable best efforts to promptly inform
its directors, officers, key employees, agents and representatives of the
obligations undertaken in this Section 5.4. Nothing in this Section 5.4 shall
permit CNET or Z-D to terminate this Agreement (except as specifically provided
in Article VII hereof) or affect any other obligation of CNET or Z-D under this
Agreement. Z-D shall not submit to the vote of its stockholders any Acquisition
Proposal other than the Merger and CNET shall not submit to the vote of its
stockholders any Acquisition Proposal (other than the Merger) that is not a
Qualifying Acquisition Proposal.
(d) Notwithstanding anything contained in this Agreement to the
contrary, CNET shall be permitted to undertake any of the actions set forth in
clauses (a) (i) to (iv) relating to any Qualifying Acquisition Proposal (as
defined in Section 8.12).
5.5 Fees and Expenses.
Subject to Section 7.2, whether or not the Merger is consummated,
all Expenses (as defined below) incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
Expenses, except (a) if the Merger is consummated, the Surviving Corporation
shall pay, or cause to be paid, any and all property or transfer taxes imposed
in connection with the Merger and (b) Expenses incurred in connection with the
filing, printing and mailing of the Joint Proxy Statement/Prospectus and Form
S-4, which shall be shared equally by CNET and Z-D. As used in this Agreement,
"Expenses" includes all out-of-pocket 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 a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the Voting
Agreements and the transactions contemplated hereby and thereby, including the
preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and Form S-4 and the solicitation of stockholder approvals
and all other matters related to the transactions contemplated hereby and
thereby.
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5.6 Directors and Officers Indemnification and Insurance.
(a) The certificate of incorporation and bylaws of the Surviving
Corporation shall contain provisions no less favorable with respect to
exculpation and indemnification than are set forth in Article VIII of the
Amended and Restated Certificate of Incorporation of Z-D and Section 6.4 of the
bylaws of Z-D, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers or employees of Z-D.
(b) CNET shall cause to be maintained in effect for six years from
the Effective Time the current policies of the directors' and officers'
liability insurance maintained by Z-D (provided that CNET may substitute
therefore policies of at least the same coverage containing terms and conditions
which are not materially less advantageous) with respect to matters or events
occurring prior to the Effective Time to the extent available; provided,
however, that in no event shall CNET be required to expend more than an amount
per year equal to $750,000 to maintain or procure insurance coverage pursuant
hereto; and, provided, further that if the annual premiums of such insurance
coverage exceed such amount, CNET shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
(c) After the Effective Time, CNET agrees that it will or will
cause the Surviving Corporation to indemnify and hold harmless each present and
former director and officer of Z-D, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters relating to their duties
or actions in their capacity as officers and directors and existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent permitted under applicable law
(and CNET shall, or shall cause the Surviving Corporation to, also advance fees
and expenses (including reasonable attorneys' fees) as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses are
advanced provides a customary undertaking complying with applicable law to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification).
(d) Nothing in this Agreement is intended to, shall be construed to
or shall release, waive or impair any rights to directors' and officers'
insurance claims under any policy that is or has been in existence with respect
to Z-D or any of its officers, directors or employees, it being understood and
agreed that the indemnification provided for this Section 5.6 is not prior to or
in substitution for any such claims under such policies.
5.7 Public Announcements.
The initial press release pertaining to the transactions
contemplated by this Agreement shall be a joint press release and thereafter
CNET and Z-D shall consult with each other before issuing communications to
employees regarding the transactions contemplated by this Agreement or any press
release or otherwise making any public statements with respect to
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this Agreement or the Merger and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by law or any listing agreement with its securities exchange. Z-D and CNET shall
each provide to the other a copy of each press release or other public statement
relating to its business reasonably in advance of making such release or
statement.
5.8 Accountants Letters.
Each of Z-D and CNET shall use its reasonable best efforts to cause
to be delivered to the other party a letter of its independent public
accountants, dated a date within two business days before the date on which the
S-4 shall become effective and addressed to the other, in form and substance
reasonably satisfactory to the other and customary in scope and substance for
comfort letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
5.9 Board of Directors.
Effective at the Effective Time, CNET shall increase the size of
its Board of Directors by adding one directorship and creating one vacancy, and
CNET shall elect to its Board of Directors one designee of Z-D Majority
Stockholder and one designee of Z-D, in each case reasonably acceptable to the
Board of Directors of CNET. If, prior to the first anniversary of the Effective
Time, CNET further increases the size of its Board to nine directors, one
vacancy shall be filled by a designee appointed by the Board of Directors of
CNET who is reasonably acceptable to Z-D Majority Stockholder.
5.10 Listing of Shares of CNET Common Stock.
CNET shall use its reasonable best efforts to cause the shares of
CNET Common Stock to be issued in the Merger and the shares of CNET Common Stock
to be reserved for issuance upon exercise of the Z-D Stock Options to be
approved for listing on the NASDAQ, subject to official notice of issuance,
prior to the Closing Date.
5.11 Affiliates.
Not less than 45 days prior to the date of the Z-D Stockholders
Meeting, Z-D shall deliver to CNET a letter identifying all persons who, in the
judgment of Z-D, may be deemed at the time this Agreement is submitted for
adoption by the stockholders of Z-D, "affiliates" of Z-D for purposes of Rule
145 under the Securities Act and applicable SEC rules and regulations, and such
list shall be updated as necessary to reflect changes from the date thereof. Z-D
shall use its reasonable best efforts to cause each person identified on such
list to deliver to CNET not less than 30 days prior to the Effective Time a
written agreement in form and substance reasonably satisfactory to CNET and Z-D.
5.12 The Spin-Off and Cash Dividend.
(a) Z-D shall use its reasonable best efforts to consummate the
Spin-Off as soon as practicable and in any event prior to the Z-D Stockholders
Meeting, in a manner that will
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not cause a breach of the representation set forth in Section 3.2(r)(ii) hereof.
Without limiting the foregoing, to the extent necessary to consummate the
Spin-Off prior to the Z-D Stockholders Meeting, Z-D and Spin Co. will reduce or,
to the extent necessary, eliminate the borrowings by Spin Co. described in the
Spin Co. S-1 as filed with the SEC prior to the date hereof.
(b) Prior to the Effective Time, Z-D may declare and pay the Cash
Dividend in an aggregate amount of $2.50 per share of Z-D Common Stock, provided
that in the event that the Net Cash Transfers (as defined below) from Spin Co.
and its Subsidiaries to Z-D after the date hereof are less than $275 million,
the amount of the Cash Dividend per share of Z-D Common Stock will be reduced so
that the aggregate Cash Dividend paid in respect of all shares of Z-D Common
Stock equals the amount of the Net Cash Transfers. As used herein, "Net Cash
Transfers" means the sum of (i) the aggregate cash amount transferred by Spin
Co. and its Subsidiaries to Z-D after the date hereof in repayment of the net
inter-company payable of Spin Co. and its Subsidiaries to Z-D, plus (ii) the
aggregate amount of any cash dividends paid by Spin Co. and its Subsidiaries to
Z-D after the date hereof, minus (iii) all cash transfers from Z-D or its
Subsidiaries to Spin Co. or its Subsidiaries from and after the date of this
Agreement and on or prior to the date that the Cash Dividend is declared. Prior
to the declaration of the Cash Dividend, Z-D will deliver a certificate of the
Chief Financial Officer of Z-D certifying as to the calculation of the amount of
the Cash Dividend that is permitted pursuant to this Section 5.12(b) and setting
forth such calculation in reasonable detail. If the Net Cash Transfers pursuant
to clause (i) are insufficient to repay all net inter-company payables of Spin
Co. and its Subsidiaries to Z-D, then Z-D will forgive all remaining net
inter-company payables owed by Spin-Co. and its Subsidiaries. Z-D agrees that
the Net Cash Transfers will be no less than zero.
(c) Z-D and its Subsidiaries will not make any cash transfers to
Spin Co. or its Subsidiaries after the date the Cash Dividend is declared.
(d) As promptly as practicable following the date hereof, Z-D and
Spin Co. shall enter into a distribution agreement with respect to the Spin Off,
substantially in the form of the draft dated July 11, 2000 which was previously
provided to CNET (except as set forth on Section 5.12(d) of the CNET Disclosure
Schedule) with such changes as are reasonably acceptable to CNET and Z-D (the
"Distribution Agreement").
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of Z-D and CNET to effect the Merger
and the transactions contemplated hereby are subject to the satisfaction or
waiver on or prior to the
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Closing Date of the following conditions:
(a) Stockholder Approval.
(i) Z-D shall have obtained the Z-D Stockholder Approval and (ii)
CNET shall have obtained the CNET Stockholder Approval.
(b) No Injunctions or Restraints; Illegality.
No Laws shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect, having the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) HSR Act.
The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
(d) NASDAQ.
The shares of CNET Common Stock to be issued in the Merger and
such other shares of CNET Common Stock to be reserved for issuance in connection
with the Merger shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.
(e) Effectiveness of the Form S-4.
The Form S-4 shall have been declared effective by the SEC under
the Securities Act and no stop order suspending the effectiveness of the Form
S-4 shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(f) Spin-Off and Cash Dividend.
The Spin-Off shall have been consummated and, to the extent
permitted by Section 5.12, the Cash Dividend shall have been paid.
6.2 Additional Conditions to Obligations of CNET.
The obligation of CNET to effect the Merger and the transactions
contemplated hereby is subject to the satisfaction, or waiver by CNET, on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties.
(i) The representations and warranties of Z-D set forth in this
Agreement that are qualified as to Material Adverse Effect shall be true and
correct as of the date of this Agreement and as of immediately prior to the
Effective Time (except to the extent such
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representations and warranties shall have been made as of an earlier date, in
which case such representations and warranties shall have been so true and
correct as of such earlier date) with the same force and effect as if then made
and (ii) the representations and warranties of Z-D set forth in this Agreement
that are not qualified as to Material Adverse Effect shall be true and correct
in all respects as of the date of this Agreement and immediately prior to the
Effective Time (except to the extent such representations and warranties shall
have been made as of an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects as of such
earlier date) with the same force and effect as if then made, except where the
failure of such representations and warranties (other than the representation
contained in Section 3.2(b), which shall be true and correct in all material
respects) to be true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Z-D; and CNET shall
have received a certificate of a senior executive officer and a senior financial
officer of Z-D to such effect.
(b) Performance of Obligations of Z-D.
Z-D shall have performed or complied in all material respects with
all agreements and covenants required to be performed by it under this Agreement
at or prior to the Closing Date, and CNET shall have received a certificate of a
senior executive officer and a senior financial officer of Z-D to such effect.
(c) Tax Opinion.
CNET shall have received from Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel
to CNET, on the Closing Date, a written opinion to the effect that for federal
income tax purposes the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel to
CNET shall be entitled to rely upon information, representations and assumptions
provided by CNET and Z-D substantially in the form of Exhibits 6.2(c)(1) and
6.2(c)(2), respectively (allowing for such amendments to the representations as
counsel to CNET deems reasonably necessary).
(d) Solvency of Spin Co.; Cash Received from Spin Co.
Z-D shall have delivered to CNET reasonably satisfactory evidence
to the effect that Spin Co. was, at the time of the Spin-Off, Solvent.
6.3 Additional Conditions to Obligations of Z-D.
The obligations of Z-D to effect the Merger and the transactions
contemplated hereby is subject to the satisfaction, or waiver by Z-D, on or
prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties.
(i) The representations and warranties of CNET and Merger Sub, as
applicable, set forth in this Agreement that are qualified as to Material
Adverse Effect shall be true
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and correct as of the date of this Agreement and as of immediately prior to the
Effective Time (except to the extent such representations and warranties shall
have been made as of an earlier date, in which case such representations and
warranties shall have been so true and correct as of such earlier date) with the
same force and effect as if then made and (ii) the representations and
warranties of CNET and Merger Sub, as applicable, set forth in this Agreement
that are not qualified as to Material Adverse Effect shall be true and correct
in all respects the date of this Agreement and immediately prior to the
Effective Time (except to the extent such representations and warranties shall
have been made as of an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects as of such
earlier date) with the same force and effect as if then made, except where the
failure of such representations and warranties (other than the representation
contained in Section 3.1(b), which shall be true and correct in all material
respects) to be true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on CNET; and Z-D shall
have received a certificate of a senior executive officer and a senior financial
officer of each of CNET and Merger Sub to such effect.
(b) Performance of Obligations of CNET and Merger Sub.
Each of CNET and Merger Sub shall have performed or complied in all
material respects with all agreements and covenants required to be performed by
it under this Agreement at or prior to the Closing Date, and Z-D shall have
received a certificate of a senior executive officer and a senior financial
officer of each of CNET and Merger Sub to such effect.
(c) Tax Opinion.
Z-D shall have received from Xxxxxxxx & Xxxxxxxx, counsel to Z-D,
on the Closing Date, a written opinion to the effect that for federal income tax
purposes the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, counsel to Z-D shall be
entitled to rely upon information, representations and assumptions provided by
CNET and Z-D substantially in the form of Exhibits 6.2(c)(1) and 6.2(c)(2),
respectively (allowing for such amendments to the representations as counsel to
X-X xxxxx reasonably necessary).
(d) CNET Conditions.
The conditions set forth in Section 6.2 shall have been satisfied
or waived by CNET.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time by action taken or authorized by the Board of Directors of the terminating
party or parties and,
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except as provided below, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of Z-D or CNET:
(a) By mutual written consent of CNET and Z-D;
(b) By either Z-D or CNET, if the Effective Time shall not have
occurred on or before January 31, 2001 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement (including without limitation such party's obligations set
forth in Section 5.3) has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) By either Z-D or CNET, if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action (which the
parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, in accordance with and subject to Section 5.3) permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree or
ruling or to take any other action, and such denial of a request to issue such
order, decree, ruling or take such other action shall have become final and
nonappealable (which order, decree, ruling or other action the parties shall
have used their reasonable best efforts to obtain, in accordance with and
subject to Section 5.3), in the case of each of (i) and (ii) which is necessary
to fulfill the conditions set forth in Sections 6.1(c), (d) or (e), as
applicable; provided, however, that the right to terminate this Agreement under
this Section 7.1(c) shall not be available to any party whose failure to comply
with Section 5.3 has been the cause of such action or inaction;
(d) By either Z-D or CNET, if the approvals of the stockholders of
either CNET or Z-D contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
stockholders or of any adjournment thereof at which the vote was taken;
(e) By CNET, if Z-D shall have (i) failed to make the Z-D
Recommendation or (ii) materially breached its obligations under this Agreement
by reason of a failure to call the Z-D Stockholders Meeting in accordance with
Section 5.1(b) or if Z-D shall have failed to prepare and mail to its
stockholders the Joint Proxy Statement/Prospectus in accordance with Section
5.1(a);
(f) By Z-D, if CNET shall have (i) failed to make the CNET
Recommendation or (ii) materially breached its obligations under this Agreement
by reason of a failure to call the CNET Stockholders Meeting in accordance with
Section 5.1(c), or if CNET shall have failed to
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prepare and mail to its stockholders the Joint Proxy Statement/Prospectus in
accordance with Section 5.1(a);
(g) By Z-D, if CNET shall have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained in this
Agreement, such that the conditions set forth in Section 6.2(a) or (b) are not
capable of being satisfied on or before the Termination Date; or
(h) By CNET, if Z-D shall have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained in this
Agreement, such that the conditions set forth in Section 6.3(a) or (b) are not
capable of being satisfied on or before the Termination Date.
7.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Z-D or
CNET as provided in Section 7.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of CNET or Z-D or their
respective officers or directors (i) except with respect to the second sentence
of Section 5.2, Section 5.5, this Section 7.2 and Article VIII, which provisions
shall survive such termination, (ii) except that, notwithstanding anything to
the contrary contained in this Agreement, neither CNET nor Z-D shall be relieved
or released from any liabilities or damages arising out of its willful breach of
this Agreement and (iii) except that the non-solicitation agreement between Z-D
and CNET dated as of July 14, 2000 (the "Non-Solicit Agreement") shall remain in
full force and effect in accordance with its terms.
(b) If (A) (I) either party shall terminate this Agreement pursuant
to Section 7.1(d) (provided that the basis for such termination is the failure
of Z-D to obtain the Z-D Stockholder Approval) or pursuant to Section 7.1(b)
without the Z-D Stockholders Meeting having occurred, (II) at any time after the
date of this Agreement and before such termination an Acquisition Proposal with
respect to Z-D shall have been publicly announced or otherwise communicated to
the senior management, Board of Directors or stockholders of Z-D (a "Z-D Public
Proposal") and (III) within twelve months of such termination Z-D or any of its
Subsidiaries enters into any definitive agreement with respect to, or
consummates, any Acquisition Proposal (for purposes of this clause (III), the
term "Acquisition Proposal" shall have the meaning assigned to such term in
Section 5.4(a) except that references to "20%" therein shall be deemed to be
references to "40%") or (B) CNET shall terminate this Agreement pursuant to
Section 7.1(e); then Z-D shall promptly, but in no event later than the date of
such termination (or in the case of clause (A), if later, the date Z-D or its
Subsidiary enters into such agreement with respect to or consummates such
Acquisition Proposal), pay CNET an amount equal to $58 million by wire transfer
of immediately available funds (less any amounts previously paid or payable by
Z-D pursuant to Section 7.2(d)), by wire transfer of immediately available
funds).
(c) If (A) (I) either party shall terminate this Agreement pursuant
to Section 7.1(d) (provided that the basis for such termination is the failure
of CNET to obtain the CNET Stockholder Approval) or pursuant to Section 7.1(b)
without the CNET Stockholders
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Meeting having occurred, (II) at any time after the date of this Agreement and
before such termination an Acquisition Proposal (other than a Qualifying
Acquisition Proposal) with respect to CNET shall have been publicly announced or
otherwise communicated to the senior management, Board of Directors or
stockholders of CNET (an "CNET Public Proposal") and (III) within twelve months
of such termination CNET or any of its Subsidiaries enters into any definitive
agreement with respect to, or consummates, any Acquisition Proposal (for
purposes of this clause (III), the term "Acquisition Proposal" shall have the
meaning assigned to such term in Section 5.4(a) except that references to "20%"
therein shall be deemed to be references to "40%") or (B) Z-D shall terminate
this Agreement pursuant to Section 7.1(f); then CNET shall promptly, but in no
event later than the date of such termination (or in the case of clause (A), if
later, the date CNET or its Subsidiary enters into such agreement with respect
to or consummates such Acquisition Proposal), pay Z-D an amount equal to $105
million (less any amounts previously paid or payable by CNET pursuant to Section
7.2(d)), by wire transfer of immediately available funds.
(d) If either party shall terminate this Agreement pursuant to
Section 7.1(d) and the basis for such termination is the failure of CNET to
obtain CNET Stockholder Approval, then, if the Z-D Stockholder Approval has been
obtained and CNET is not then entitled to terminate this Agreement pursuant to
Section 7.1(h), CNET shall (i) pay Z-D an amount equal to $60 million, by wire
transfer of immediately available funds and (ii) make an unsecured loan to Z-D
in the principal amount of $15 million, such loan to be due and payable in full
at Z-D's option in cash or Z-D Common Stock (based on the average closing price
during the 30 trading days preceding such repayment) on the earlier of the
second anniversary thereof or consummation by any person of an Acquisition
Proposal with respect to Z-D, together with interest thereon at the applicable
federal rate; provided that no payment or loan shall be made pursuant to this
sentence if a termination fee has been paid to Z-D pursuant to Section 7.2(c).
If either party shall terminate this Agreement pursuant to Section 7.1(d) and
the basis for such termination is the failure of Z-D to obtain the ZD
Stockholder Approval, then, if the CNET Stockholder Approval has been obtained
and Z-D is not then entitled to terminate this Agreement pursuant to Section
7.1(g), Z-D shall pay CNET an amount equal to $33 million, by wire transfer of
immediately available funds; provided that no payment shall be made pursuant to
this sentence if a termination fee has been paid to CNET pursuant to Section
7.2(b). CNET and Z-D's rights hereunder are in addition to any rights CNET or
Z-D may have under the Voting Agreements.
(e) The parties acknowledge that the agreements contained in this
Section 7.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither party would enter into
this Agreement; accordingly, if either party fails promptly to pay any amount
due pursuant to this Section 7.2, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against such party for
the fee set forth in this Section 7.2, such party shall pay to the other party
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank, N.A. in effect on the date such payment was required to be
made notwithstanding the provisions of Section 5.5. The parties agree that any
remedy or amount payable pursuant to this Section 7.2 shall not preclude any
other remedy or
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amount payable hereunder and shall not be an exclusive remedy for any willful
breach of any representation, warranty, covenant or agreement contained in this
Agreement.
7.3 Amendment.
This Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at any time before
or after approval of the matters presented in connection with the Merger by the
stockholders of Z-D and CNET, but, after any such approval, no amendment shall
be made which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4 Extension; Waiver.
At any time prior to the Effective Time, the parties hereto, by
action taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants, agreements and other provisions, shall
survive the Effective Time, except for those covenants, agreements and other
provisions contained herein (including Section 5.6 and Section 5.9) that by
their terms apply or are to be performed in whole or in part after the Effective
Time and this Article VIII.
8.2 Notices.
All notices and other communications hereunder shall be in writing
and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the tenth Business Day
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following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to CNET to:
CNET Networks, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Xxxxxx Xxxxxxx, Esq.
(b) if to Z-D to:
Xxxx-Xxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
8.3 Interpretation.
When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference shall be to an Article or Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
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In addition, each Section of this Agreement is qualified by the matters set
forth with respect to such Section on the CNET Disclosure Schedule, the Z-D
Disclosure Schedule and the Schedules to this Agreement, as applicable, to the
extent specified therein and such other Sections of this Agreement to the extent
a matter in such Section is disclosed in such a way as to make its relevance
called for by such other Section readily apparent.
8.4 Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries .
(a) This Agreement, the Non-Solicit Agreement, the Confidentiality
Agreement and the exhibits and schedules hereto and the other agreements and
instruments of the parties delivered in connection herewith constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
(b) 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, other than
Section 5.6 (which is intended to be for the benefit of the Persons covered
thereby).
8.6 Governing Law.
This Agreement shall be governed and construed in accordance with
the laws of the State of Delaware applicable to contracts executed and to be
performed entirely within that state.
8.7 Severability.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other
terms 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 in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
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8.8 Assignment.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other party, and any attempt to make any such assignment without
such consent shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
8.9 Submission to Jurisdiction; Waivers.
Each of CNET and Z-D irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of
any judgment in respect hereof brought by the other party hereto or its
successors or assigns may be brought and determined in the Chancery or other
Courts of the State of Delaware, and each of CNET and Z-D hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the nonexclusive jurisdiction
of the aforesaid courts. Each of CNET and Z-D hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts for
any reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts and (d) any right to a trial by jury.
8.10 Enforcement.
The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is accordingly agreed that the parties shall be
entitled to specific performance of the terms hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
8.11 Further Assurances.
Notwithstanding anything to the contrary herein, any breach by Z-D
of a representation, warranty, agreement or covenant other than Sections
3.2(r)(ii), 4.2(m) and 5.12, which breach relates solely to the trade show and
conference business that will be the subject of the Spin-Off and which could not
reasonably be expected to have any adverse impact on CNET and its Subsidiaries
(including Z-D) after the Effective Time, shall not be deemed a breach of such
representation, warranty, agreement or covenant.
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8.12 Definitions.
As used in this Agreement:
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2 of
the rules and regulations promulgated under the Exchange Act.
(b) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(c) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required
or authorized to close in the City of New York.
(e) "known" or "knowledge" means, with respect to any party, the
knowledge of such party's executive officers after reasonable inquiry.
(f) "Material Adverse Effect" means, with respect to any entity
any event, change, circumstance or effect that is or is reasonably likely to be
materially adverse to (i) the business, assets, liabilities, financial condition
or results of operations of such entity and its Subsidiaries taken as a whole or
(ii) the ability of such entity to consummate the transactions contemplated by
this Agreement.
(g) "the other party" means, with respect to Z-D, CNET and, with
respect to CNET, Z-D.
(h) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(i) "Qualifying Acquisition Proposal" means any Acquisition
Proposal involving CNET or its Subsidiaries (x) which the Board of Directors of
CNET concludes in good faith is in the best interests of CNET and could not
reasonably be expected to materially delay (including an event referred to in
Section 4.1(d)) or interfere with the consummation of the Merger in accordance
with the terms of this Agreement and (y) in which all parties to such
Acquisition Proposal expressly and unconditionally provide (and to the extent
such Acquisition Proposal is publicly disclosed, publicly disclose) that (1) the
consummation of the transaction contemplated by such Acquisition Proposal is not
conditioned on the cancellation, termination, amendment or other modification of
this Agreement, the Merger or the other agreements and transactions contemplated
hereby and (2) they will support and seek the consummation of the Merger and the
other transactions contemplated hereby.
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(j) "Solvent" means, when used with respect to any Person, as of
any date of determination, that (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
(k) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(l) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or add
on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any taxing authority or any
obligation to pay Taxes imposed on any entity for which a party to this
Agreement is liable as a result of any indemnification provision or other
contractual obligation.
(m) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
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IN WITNESS WHEREOF, CNET, Z-D and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CNET NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
XXXX-XXXXX INC.
By: /s/ Xxxx Xxxxxxx
-----------------
Name: Xxxx Xxxxxxx
Title: Chairman and CEO
TD MERGER SUB, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
