STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
June 4, 1997 by and between Intel Corporation, a Delaware corporation
("Intel"), and CNET, Inc., a Delaware corporation (the "Company"). The
Company desires to sell, and Intel desires to purchase, shares of the
Company's common stock, $.0001 par value per share (the "Common Stock"), for
an aggregate purchase price of $5,300,000. Accordingly, Intel and the
Company hereby agree as follows:
1. AGREEMENT TO PURCHASE. At the Closing (as defined below), and
subject to the terms and conditions set forth in this Agreement, Intel will
purchase from the Company, and the Company will issue and sell to Intel,
201,253 shares of Common Stock (the "Shares") for an aggregate purchase price
of $5,300,000.
2. CLOSING. The closing of the purchase and sale of the Shares (the
"Closing") shall take place at the principal offices of the Company (or such
other place as the parties may agree) as soon as reasonably practicable (but
not later than five business days) after satisfaction of the conditions
specified in SECTION 5.5 and SECTION 6.4 (the "HSR Conditions"). Upon
payment of the purchase price for the Shares in full in immediately available
funds by Intel to the Company (to an account specified in writing by the
Company to Intel prior to the Closing), the Company will deliver to Intel a
certificate or certificates representing the Shares, in such denominations
and registered in such names as Intel shall request.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Intel that the statements in this SECTION 3 are
true and correct, except as set forth in the Disclosure Letter from the
Company to Intel, dated as of the date hereof (the "Disclosure Letter").
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority
required to (a) carry on its business as presently conducted and (b) enter
into this Agreement and consummate the transactions contemplated hereby. The
Company is qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means a
material adverse effect on, or a material adverse change in, or a group of
such effects on or changes in, the business, operations, financial condition,
results of operations, assets or liabilities of the Company.
3.2 CAPITALIZATION. As of the date of this Agreement, the
capitalization of the Company is as follows:
(a) PREFERRED STOCK. A total of 5,000,000 authorized shares
of preferred stock, $.01 par value per share (the "Preferred Stock"), none of
which is issued or outstanding.
1
(b) COMMON STOCK. A total of 25,000,000 authorized shares of
Common Stock, of which 13,333,847 shares were issued and outstanding as of
the close of business on June 3, 1997. All of such outstanding shares are
validly issued, fully paid and nonassessable. No such outstanding shares
were issued in violation of any preemptive rights.
(c) OPTIONS, WARRANTS, RESERVED SHARES. Except as set forth
in the Disclosure Letter, there are not outstanding any options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Company of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or exercisable
for any shares of the Company's capital stock. Except for any stock
repurchase rights of the Company under its stock option and employee stock
purchase plans, no shares of the Company's outstanding capital stock, or
stock issuable upon exercise, conversion or exchange of any outstanding
options, warrants or rights, or other stock issuable by the Company, are
subject to any rights of first refusal or other rights to purchase such stock
(whether in favor of the Company or any other person), pursuant to any
agreement, commitment or other obligation of the Company.
3.3 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, association or other entity.
3.4 DUE AUTHORIZATION. All corporate action on the part of the
Company and its officers, directors and stockholders necessary for the
authorization, execution, delivery of and performance of all obligations of
the Company under this Agreement, and the authorization, issuance,
reservation for issuance and delivery of all of the Shares being sold under
this Agreement, has been taken or will be taken prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as may be limited by (a) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (b) the effect of rules of law governing the
availability of equitable remedies.
3.5 VALID ISSUANCE OF STOCK. The Shares, when issued, sold and
delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully
paid and nonassessable.
3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part
of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except (a) as required in
connection with the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and (b) the filing of any qualifications or filings
under the Securities Act of 1933, as amended (the "Securities Act"), and the
regulations thereunder and all applicable state securities laws that may be
required in connection with the transactions contemplated by this Agreement.
2
All such qualifications and filings will, in the case of qualifications, be
effective on the Closing and will, in the case of filings, be made within the
time prescribed by law.
3.7 NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement, and the consummation by the Company of the transactions
contemplated hereby, do not and will not (i) contravene or conflict with the
Certificate of Incorporation or Bylaws of the Company; (ii) constitute a
violation of any provision of any federal, state, local or foreign law
binding upon or applicable to the Company; or (iii) constitute a default or
require any consent under, give rise to any right of termination,
cancellation or acceleration of, or to a loss of any benefit to which the
Company is entitled under, or result in the creation or imposition of any
lien, claim or encumbrance on any assets of the Company under, any contract
to which the Company is a party or any permit, license or similar right
relating to the Company or by which the Company may be bound or affected in
such a manner as, together with all other such matters, would have Material
Adverse Effect.
3.8 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending: (a) against the Company,
its activities, properties or assets or, to the best of the Company's
knowledge, against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship with,
or actions taken on behalf of, the Company or (b) that seeks to prevent,
enjoin, alter or delay the transactions contemplated by this Agreement.
There is no Action pending or, to the best of the Company's knowledge,
threatened or for which any reasonable basis exists, relating to the current
or prior employment of any of the Company's current or former employees or
consultants, their use in connection with the Company's business of any
information, technology or techniques allegedly proprietary to any of their
former employers, clients or other parties, or their obligations under any
agreements with prior employers, clients or other parties. The Company is
not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. No
Action by the Company is currently pending nor does the Company intend to
initiate any Action which is reasonably likely to have a Material Adverse
Effect.
3.9 INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT. To the
best knowledge of the Company, each employee and consultant or independent
contractor of the Company whose duties include the development of products or
Intellectual Property (as defined below), and each former employee and
consultant or independent contractor whose duties included the development of
products or Intellectual Property, has entered into and executed an invention
assignment and confidentiality agreement in customary form or an employment
or consulting agreement containing substantially similar terms.
3.10 INTELLECTUAL PROPERTY.
(a) OWNERSHIP OR RIGHT TO USE. The Company has sole title to
and owns, or is licensed or otherwise possesses legally enforceable rights to
use, all patents or patent applications, software, know-how, registered or
unregistered trademarks and service marks and any applications therefor,
registered or unregistered copyrights, trade names, and any
3
applications therefor, trade secrets or other confidential or proprietary
information ("Intellectual Property") necessary to enable the Company to
carry on its business as currently conducted, except where any deficiency
therein would not have a Material Adverse Effect. The Company represents and
warrants that it will, where the Company, in the exercise of reasonable
judgment deems it appropriate, use reasonable business efforts to seek
copyright and patent registration, and other appropriate intellectual
property protection, for Intellectual Property of the Company.
(b) LICENSES; OTHER AGREEMENTS. The Company is not currently
subject to any exclusive licenses (whether such exclusivity is temporary or
permanent) to any material portion of the Intellectual Property of the
Company. To the best of the Company's knowledge, there are not outstanding
any licenses or agreements of any kind relating to any Intellectual Property
of the Company, except for agreements with customers of the Company entered
into in the ordinary course of the Company's business. The Company is not
obligated to pay any royalties or other payments to third parties with
respect to the marketing, sale, distribution, manufacture, license or use of
any Intellectual Property, except as the Company may be so obligated in the
ordinary course of its business or as disclosed in the Company's SEC
Documents (as defined below).
(c) NO INFRINGEMENT. The Company has not violated or
infringed and is not currently violating or infringing, and the Company has
not received any communications alleging that the Company (or any of its
employees or consultants) has violated or infringed, any Intellectual
Property of any other person or entity, to the extent that any such violation
or infringement, either individually or together with all other such
violations and infringements, would have a Material Adverse Effect.
(d) EMPLOYEES AND CONSULTANTS. To the best of the Company's
knowledge, no employee of or consultant to the Company is in default under
any term of any employment contract, agreement or arrangement relating to
Intellectual Property of the Company or any non-competition arrangement,
other contract, or any restrictive covenant relating to the Intellectual
Property of the Company. The Intellectual Property of the Company (other
than any Intellectual Property duly acquired or licensed from third parties)
was developed entirely by the employees of or consultants to the Company
during the time they were employed or retained by the Company, and to the
best knowledge of the Company, at no time during conception or reduction to
practice of such Intellectual Property of the Company were any such employees
or consultants operating under any grant from a government entity or agency
or subject to any employment agreement or invention assignment or
non-disclosure agreement or any other obligation with a third party that
would materially and adversely affect the Company's rights in the
Intellectual Property of the Company. Such Intellectual Property of the
Company does not, to the best knowledge of the Company, include any invention
or other intellectual property of such employees or consultants made prior to
the time such employees or consultants were employed or retained by the
Company nor any intellectual property of any previous employer of such
employees or consultants nor the intellectual property of any other person or
entity.
3.11 COMPLIANCE WITH LAW AND CHARTER DOCUMENTS. The Company is not
in violation or default of any provisions of its Certificate of Incorporation
or Bylaws, both as
4
amended, except for any violations that would not, either individually or in
the aggregate, have a Material Adverse Effect. The Company has complied and
is in compliance with all applicable statutes, laws, and regulations and
executive orders of the United States of America and all states, foreign
counties and over governmental bodies and agencies having jurisdiction over
the Company's business or properties.
3.12 REGISTRATION RIGHTS. Except as provided herein, the Company
is not currently subject to any grant or agreement to grant to any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the United States Securities and
Exchange Commission ("SEC") or any other governmental authority.
3.13 TITLE TO PROPERTY AND ASSETS. The properties and assets of
the Company are owned by the Company free and clear of all mortgages, deeds
of trust liens, charges, encumbrances and security interests except for
statutory liens for the payment of current taxes that are not yet delinquent
and liens, encumbrances and security interests that arise in the ordinary
course of business and do not affect material properties and assets of the
Company. With respect to the property and assets it leases, the Company is in
compliance with such leases in all material respects.
3.14 SEC DOCUMENTS.
(a) The Company has furnished to Intel prior to the date
hereof copies of the prospectus included in the Company's registration
statement on Form SB-2 (Registration No. 333-4752-LA), the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996 and the Company's
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997
(collectively, the "SEC Documents"). Each of the SEC Documents, as of the
respective date thereof, did not, and each of the registration statements,
reports and proxy statements filed by the Company with the SEC after the date
hereof and prior to the Closing will not, as of the date thereof, contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading. The Company is not
a party to any material contract, agreement or other arrangement which was
required to have been filed as an exhibit to the SEC Documents that is not so
filed.
(b) The SEC Documents include the Company's audited financial
statements (the "Audited Financial Statements") for the year ended December
31, 1996 and its unaudited financial statements for the three-month period
ended March 31, 1997 (the "Balance Sheet Date"). Since the Balance Sheet
Date, the Company has duly filed with the SEC all registration statements,
reports and proxy statements required to be filed by it under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the 1933 Act. The
audited and unaudited consolidated financial statements of the Company
included in the SEC Documents filed prior to the date hereof fairly present,
in conformity with generally accepted accounting principles ("GAAP") (except
as permitted by Form 10-Q) applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as at the date thereof and the
consolidated results of
5
their operations and cash flows for the periods then ended (subject to normal
year and audit adjustments in the case of unaudited interim financial
statements).
(c) Except as and to the extent reflected or reserved against
in the Company's Audited Financial Statements (including the notes thereto),
the Company has no material liabilities (whether accrued or unaccrued,
liquidated or unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined or determinable) other
than: (i) liabilities incurred in the ordinary course of business since the
Balance Sheet Date, (ii) liabilities with respect to agreements to which the
Company is a party, and (iii) other liabilities that either individually or
in the aggregate, would not result in a Material Adverse Effect.
3.15 ABSENCE OF CERTAIN CHANGES SINCE BALANCE SHEET DATE. Since
the Balance Sheet Date, the business and operations of the Company have been
conducted in the ordinary course consistent with past practice, and there has
not been:
(a) any declaration, setting aside or payment of any dividend
or other distribution of the assets of the Company with respect to any shares
of capital stock of the Company, or any repurchase, redemption or other
acquisition by the Company or any subsidiary of the Company of any
outstanding shares of the Company's capital stock;
(b) any damage, destruction or loss, whether or not covered
by insurance, except for such occurrences that have not resulted, and are not
expected to result, in a Material Adverse Effect;
(c) any waiver by the Company of a valuable right or of a
material debt owed to it, except for such waivers that have not resulted, and
are not expected to result, in a Material Adverse Effect;
(d) any material change or amendment to, or any waiver of any
material rights under, a material contract or arrangement by which the
Company or any of its assets or properties is bound or subject, except for
changes, amendments, or waivers that are expressly provided for or disclosed
in this Agreement or that have not resulted, and are not expected to result,
in a Material Adverse Effect;
(e) any change by the Company in its accounting principles,
methods or practices or in the manner in which it keeps its accounting books
and records, except any such change required by a change in GAAP; and
(f) any other event or condition of any character, except for
such events and conditions that have not resulted, and are not expected to
result, either individually or collectively, in a Material Adverse Effect.
6
3.16 EMPLOYEE BENEFITS.
(a) As used in this SECTION 3.16 the following terms have the
following meanings: (1) "BENEFIT ARRANGEMENT" means any material benefit
arrangement that is not an Employee Benefit Plan, including (i) each material
employment or consulting agreement, (ii) each material arrangement providing
for insurance coverage or workers' compensation benefits, (iii) each material
bonus or deferred bonus arrangement, (iv) each material arrangement providing
any termination allowance, severance or similar benefits, (v) each equity
compensation plan, (vi) each deferred compensation plan and (vii) each
material compensation policy and practice maintained by the Company covering
the employees, former employees, officers, former officers, directors and
former directors of the Company, and the beneficiaries of any of them; (2)
"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement; (3)
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, as set forth in Section 4980B of the Internal Revenue Code of 1986,
as amended (the "Code"), and Part 6 of Title I of ERISA; (4) "EMPLOYEE
BENEFIT PLAN" means any employee benefit plan, as defined in Section 3(3) of
ERISA that is sponsored or contributed to by the Company or any ERISA
Affiliate covering employees or former employees of the Company; (5)
"EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is regulated under Title IV of ERISA,
other than a Multiemployer Plan; (6) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended; (7) "ERISA AFFILIATE" of the Company
means any other person or entity that, together with the Company as of the
relevant measuring date under ERISA, was or is required to be treated as a
single employer under Section 4.14 of the Code; (8) "GROUP HEALTH PLAN" means
any group health plan, as defined in Section 5000(b)(1) of the Code; (9)
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section 3(37)
and 4001(a)(3) of ERISA; and (10) "PROHIBITED TRANSACTION" means a
transaction that is prohibited under Section 4975 of the Code or Section 406
of ERISA and not exempt under Section 4975 of the Code or Section 408 of
ERISA, respectively.
(b) Neither the Company nor any of its ERISA Affiliates
sponsors or has sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit Plan (whether or
not terminated). Neither the Company nor any of its ERISA Affiliates sponsors
or has sponsored, maintained, contributed to, or incurred an obligation to
contribute to, any Multiemployer Plan (whether or not terminated).
(c) No Employee Benefit Plan has participated in, engaged in
or been a party to any Prohibited Transaction, and neither the Company nor
any of its ERISA Affiliates has had asserted against it any claim for any
material tax or material penalty imposed under ERISA or the Code with respect
to any Employee Benefit Plan nor, to the best of the Company's knowledge, is
there a basis for any such claim. To the best of the Company's knowledge, no
officer, director or employee of the Company has committed a material breach
of any responsibility or obligation imposed upon fiduciaries by Title I of
ERISA with respect to any Employee Benefit Plan, with respect to which breach
the Company is directly or indirectly liable.
(d) Other than routine claims for benefits, there is no
material claim pending involving any Benefit Plan by any Person against such
plan or the Company or any
7
ERISA Affiliate, nor, to the best of the Company's knowledge, is any such
material claim threatened. There is no pending, or to the best of the
Company's knowledge, threatened proceeding involving any Employee Benefit
Plan before the IRS, the United States Department of Labor or any other
governmental authority.
(e) No material violation of any reporting or disclosure
requirement imposed by ERISA or the Code exists with respect to any Employee
Benefit Plan.
(f) Each Benefit Plan has been maintained in all material
respects, by its terms and in operation, in accordance with ERISA (if
applicable), the Code and all other applicable federal, state, local and
foreign laws. The Company and its ERISA Affiliates have made full and timely
payment of all amounts required to be (i) contributed under the terms of each
Benefit Plan and such laws, or (ii) required to be paid as expenses under
such Benefit Plan. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code either has received a favorable
determination letter with respect to such qualified status from the IRS or
has filed a request for such a determination letter with the IRS within the
remedial amendment period such that such determination of qualified status
will apply from and after the effective date of any such Employee Benefit
Plan.
(g) With respect to any Group Health Plans maintained by the
Company or its ERISA Affiliates, whether or not for the benefit of the
Company's employees, the Company and its ERISA Affiliates have complied in
all material respects with the provisions of COBRA.
(h) Except pursuant to the provisions of COBRA, neither the
Company nor any ERISA Affiliate maintains any Employee Benefit Plan that
provides benefits described in Section 3(1) of ERISA for any former employees
or retirees, or the beneficiaries of any of them, of the Company or its ERISA
Affiliates.
3.17 TAX MATTERS.
(a) All deficiencies asserted or assessments made as a result
of any examinations by the Internal Revenue Service or any state, local or
foreign taxing authority have been fully paid, or are fully reflected as a
liability in the Audited Financial Statements. The Company has filed on a
timely basis all Tax Returns required to have been filed by it and has paid
on a timely basis all Taxes required to be shown thereon as due. All such
Tax Returns are true, complete and correct in all material respects. The
provisions for taxes in the Audited Financial Statements have been determined
in accordance with GAAP. No liability for Taxes has been incurred by the
Company since the Balance Sheet Date other than in the ordinary course of its
business. No director, officer or employee of the Company having
responsibility for Tax matters has reason to believe that any Taxing
authority has valid grounds to claim or assess any additional Tax with
respect to the Company in excess of the amounts shown in the Audited
Financial Statements for the periods covered thereby. As used in this
Agreement, (l) "TAXES" means (x) all federal, state, local and other net
income, gross income, gross receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, transfer, franchise, profits, license,
8
lease, service, service use, withholding, backup withholding, payroll,
employment, estimated, excise, severance, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatsoever
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (y) any liability for payment of amounts
described in clause (x) whether as a result of transferee liability, of being
a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law and (z) any liability for the
payment of amounts described in clauses (x) or (y) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person for Taxes; and the term "TAX"
means any one of the foregoing Taxes; and (2) "TAX RETURNS" means all
returns, reports, forms or other information required to be filed with
respect to any Tax.
(b) With respect to all amounts in respect of Taxes imposed
upon the Company or for which the Company is or could be liable, whether to
taxing authorities (as, for example, under law) or to other persons or
entities (as, for example, under tax allocation agreements), and with respect
to all taxable periods or portions of periods ending on or before the Closing
Date, all applicable Tax laws and agreements have been fully complied with,
and all such amounts required to be paid by the Company to taxing authorities
or others have been paid.
(c) The Company has not received notice that the Internal
Revenue Service or any other taxing authority has asserted against the
Company any deficiency or claim for additional Taxes in connection with any
Tax Return, and no issues have been raised (and are currently pending) by any
taxing authority in connection with any Tax Return. The Company has not
received notice that it is or may be subject to Tax in a jurisdiction in
which it has not filed or does not currently file Tax Returns.
3.18 LABOR AGREEMENTS AND ACTIONS.
(a) No collective bargaining agreement exists that is binding
on the Company, and no petition has been filed or proceedings instituted by
an employee or group of employees with any labor relations board seeking
recognition of a bargaining representative. To the best of the Company's
knowledge, no organizational effort is currently being made or threatened by
or on behalf of any labor union to organize any employees of the Company.
(b) There is no labor strike, dispute, slow down or stoppage
pending or threatened against or directly affecting the Company. No
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is pending, and no claims therefor exist. The Company
has not received any notice, and has no knowledge of any threatened labor or
civil rights dispute, controversy or grievance or any other unfair labor
practice proceeding or breach of contract claim or action with respect to
claims of, or obligations to, any employee or group of employees of the
Company.
(c) All individuals who are performing or have performed
services for the Company and are or were classified by the Company as
"independent contractors" qualify for
9
such classification under Section 5.30 of the Revenue Act of 1978 or Section
17.06 of the Tax Reform Act of 1986, as applicable, except for such instances
which would not, in the aggregate, have a Material Adverse Effect.
3.19 REAL PROPERTY HOLDING CORPORATION STATUS. Since its inception
the Company has not been a "United States real property holding corporation",
as defined in Section 897(c)(2) of the U.S. Internal Revenue Code of 1986, as
amended, and in Section 1.897-2(b) of the Treasury Regulations issued
thereunder (the "REGULATIONS"), and the Company has filed with the Internal
Revenue Service all statements, if any, with its United States income tax
returns which are required under Section l.897-2(h) of the Regulations.
3.20 FULL DISCLOSURE. The representations and warranties contained
in this Agreement, as modified or qualified by the Disclosure Letter, are
true and complete in all material respects and do not omit to state any
materiel fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF INTEL. Intel represents and
warrants, as of the date hereof and as of the Closing, as follows:
4.1 INVESTMENT INTENT. Intel is acquiring the Shares for its own
account for investment purposes and not with a view to the distribution
thereof within the meaning of the Securities Act.
4.2 RESTRICTED SECURITIES. Intel understands that the Shares
constitute "restricted securities" within the meaning of Rule 144 under the
Securities Act and may not be sold, pledged or otherwise disposed of unless
they are subsequently registered under the Securities Act and applicable
state securities laws or unless an exemption from registration is available.
4.3 ACCREDITED INVESTOR. Intel is an "accredited investor" within
the meaning of Rule 501 under the Securities Act.
4.4 DUE AUTHORIZATION. All corporate action on the part of Intel
and its officers and directors necessary for the authorization, execution,
delivery of and performance of all obligations of Intel under this Agreement
has been taken or will be taken prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of Intel, enforceable
against Intel in accordance with its terms, except as may be limited by (a)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (b) the effect of rules of law governing the availability of
equitable remedies.
4.5 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part
of Intel is required in connection with the consummation of
10
the transactions contemplated by this Agreement, except as required in
connection with the HSR Act.
5. CONDITIONS TO INTEL'S OBLIGATIONS AT CLOSING. The obligations of
Intel under SECTIONS 1 and 2 of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES TRUE. Except as set forth in
the Disclosure Letter, the representations and warranties of the Company
contained in SECTION 3 will be true and correct in all material respects on
and as of the date hereof and on and as of the date of the Closing, with the
same effect as though such representations and warranties had been made as of
the Closing, except with respect to representations and warranties that are
made expressly as of a particular date, which will be true and correct in all
material respects on and as of such date only.
5.2 PERFORMANCE. The Company will have performed and complied in
all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing and will have obtained all approvals,
consents and qualifications necessary to complete the purchase and sale
described herein.
5.3 COMPLIANCE CERTIFICATE. The Company will have delivered to
Intel at the Closing a certificate signed on its behalf by its Chief
Executive Officer or Chief Financial Officer certifying that the conditions
specified in SECTIONS 5.1 and 5.2 hereof have been fulfilled.
5.4 SECURITIES EXEMPTIONS. The offer and sale of the Shares to
Intel pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act and the registration or qualification
requirements of all applicable state securities laws.
5.5 HSR ACT. The required waiting period under the HSR Act shall
have expired or been terminated without any threat or commencement of
antitrust proceedings with respect to the transactions contemplated by this
Agreement.
5.6 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto will be reasonably satisfactory in form
and substance to Intel, and Intel will have received all such counterpart
originals and certified or other copies of such documents as it may
reasonably request. Such documents shall include (but not be limited to) the
following:
(a) CERTIFIED CHARTER DOCUMENTS. A copy of (i) the
Certificate of Incorporation of the Company certified as of a recent date by
the Secretary of State of Delaware as a complete and correct copy thereof,
and (ii) the Bylaws of the Company (as amended through the date of the
Closing) certified by the Secretary of the Company as true and correct copy
thereof as of the Closing.
11
(b) BOARD RESOLUTIONS. A copy, certified by the Secretary of
the Company, of the resolutions of the Board of Directors of the Company
providing for the approval of this Agreement and the issuance of the Shares
contemplated hereby.
5.7 OPINION OF COMPANY COUNSEL. Intel will have received an
opinion on behalf of the Company, dated as of the date of the Closing, from
Xxxxxx & Xxxx, L.L.P., in form and substance reasonably satisfactory to Intel.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company under SECTIONS 1 and 2 of this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of
the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Intel contained in SECTION 4 will be true and correct in all
material respects on and as of the date hereof and on and as of the date of
the Closing, with the same effect as though such representations and
warranties had been made as of the Closing, except with respect to
representations and warranties that are made expressly as of a particular
date, which will be true and correct in all material respects on and as of
such date only.
6.2 PERFORMANCE. Intel will have performed and complied in all
material respects with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on
or before the Closing, including without limitation the payment of the
purchase price as specified in SECTION 1.
6.3 SECURITIES EXEMPTIONS. The offer and sale of the Shares to
Intel pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act and the registration or qualification
requirements of all applicable state securities laws.
6.4 HSR ACT. The required waiting period under the HSR Act shall
have expired or been terminated without any threat or commencement of
antitrust proceedings with respect to the transactions contemplated by this
Agreement.
6.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto will be reasonably satisfactory in form
and substance to the Company and to the Company's legal counsel, and the
Company will have received all such counterpart originals and certified or
other copies of such documents as it may reasonably request.
7. COVENANTS.
7.1 HSR ACT. Promptly after the execution hereof, the Company and
Intel shall each complete and file their respective premerger notification
report forms under the HSR Act, and the Company and Intel will use reasonable
efforts to complete and file such forms as soon as practicable after the date
of this Agreement. After the filing thereof, the Company and Intel shall use
all reasonable efforts to satisfy the HSR Conditions; provided, however, that
12
neither the Company nor Intel shall be under any obligation to comply with
any request or requirement imposed by the Federal Trade Commission (the
"FTC"), the Department of Justice (the "DOJ") or any other governmental
authority in connection with the satisfaction of the HSR Conditions if the
Company or Intel, in the exercise of such entity's reasonable discretion,
elects not to do so. Without limiting the generality of the foregoing,
neither the Company nor Intel shall be obligated to comply with any request
by, or any requirement of, the FTC, the DOJ or any other governmental
authority: (i) to disclose confidential information the Company or Intel, as
the case may be, desires to keep confidential; (ii) to dispose of any assets
or operations; or (iii) to comply with any restriction on the manner in which
they conduct their respective operations.
7.2 LOCK-UP AGREEMENT. Intel hereby agrees that, without the
prior written consent of the Company, Intel will not, during the one year
period commencing on the date hereof: (a) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any of the Shares,
or (b) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
Shares, whether or not any such transaction described in clause (a) or (b)
above is to be settled by delivery of such Shares, in cash or otherwise. The
undersigned agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of the Shares except
in compliance with the terms and conditions of this Agreement.
8. REGISTRATION RIGHTS.
8.1 PRIOR AGREEMENT. The parties agree that the provisions of
this SECTION 8 will supersede and replace the provisions of Section 8 of the
Stock Purchase Agreement, dated as of July 1, 1996, between Intel and the
Company (the "1996 Agreement").
8.2 DEFINITIONS. For purposes of this SECTION 8, the following
terms have the meanings indicated:
"Commission" means the Securities and Exchange Commission.
"Registrable Securities" means the Shares and the 600,000
shares of Common Stock purchased by Intel pursuant to the 1996 Agreement
(as adjusted to reflect any stock dividend or stock split); provided, that
any such shares will cease to be Registrable Securities when (i) a
registration statement covering such shares has been declared effective by
the Commission and such shares have been disposed of pursuant to such
effective registration statement, (ii) such shares are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act are met or (iii)
such shares have been otherwise transferred and the Company has delivered a
new certificate in substitution for such shares, which new certificate does
not bear a restrictive legend and which shares may be freely resold without
subsequent registration under the Securities Act.
13
"Underwriter" means a securities dealer that purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
8.3 SHELF REGISTRATION RIGHTS. At any time beginning six months
after the date of the Closing, Intel may request in writing that the Company
effect a shelf registration on Form S-3 (or any successor to such form) of
all or any portion of the Registrable Securities. Upon receipt of such a
request, the Company will use its best efforts to effect, as soon as
practicable, the registration of such Registrable Securities on such form
(the "Shelf Registration Statement"). The Company will file in a timely
manner all reports required to be filed by the Company under the Securities
Act and the Exchange Act and will otherwise use its best efforts to qualify
and maintain its qualification for eligibility to use Form S-3 to register
the sale of the Registrable Securities by Intel. If the Company fails to
qualify or maintain such qualification to use Form S-3, then, at any time
beginning six months after the date of the Closing that the Company is not
eligible to use Form S-3 for such purposes, Intel may, on a single occasion,
request in writing that the Company effect the registration of all or any
portion of the Registrable Securities for sale in an underwritten offering by
Intel, and upon receipt of such a request, the Company will, as soon as
practicable, use its best efforts to effect the registration of such
Registrable Securities, on the applicable form for which the Company is
eligible, as necessary to permit the disposition of such Registration
Securities in accordance with the intended method of disposition.
8.4 INCIDENTAL REGISTRATION RIGHTS. If the Company at any time
proposes to file on its behalf or on behalf of any of any of its stockholders
a registration statement under the Securities Act relating to the Common
Stock, the Company will give written notice to Intel setting forth the terms
of the proposed offering and offer to include in such filing any Registrable
Securities that Intel may request; provided that such incidental registration
rights will not apply to any registration statement (i) on Form S-4 or S-8 or
any successor form, (ii) for a transaction covered by Rule 145 under the
Securities Act or (iii) covering only securities to be issued in connection
with a dividend reinvestment and stock purchase plan. If Intel desires to
include Registrable Securities in any such registration, it must advise the
Company in writing within 15 business days after receipt of such notice,
indicating the number of Registrable Securities for which registration is
requested. Subject to SECTION 8.5, the Company will include in such filing
the number of Registrable Securities for which registration is so requested
and will use its best efforts to effect the registration thereof under the
Securities Act.
8.5 PRIORITY. If the lead managing Underwriter of an underwritten
offering governed by SECTION 8.4 notifies the Company in writing that, in its
opinion, the number of shares requested to be included in such offering is
sufficiently large to materially and adversely affect the success of such
offering, then the number of shares to be sold in such offering will be
reduced to the maximum number that can be sold without any such material
adverse effect, and the Registrable Securities and other shares proposed to
be included in such offering will be included in the following priority: (i)
shares to be offered by the Company will have priority over shares to be
offered by selling stockholders and (ii) Registrable Securities to be offered
by Intel and any shares to be offered by other selling stockholders will be
treated equally, with any
14
reduction being applied to all such selling stockholders in proportion to the
number of shares requested by such stockholders to be included in such
offering.
8.6 LIMITATIONS. The Company's obligations under this SECTION 8
are qualified and limited by the following provisions:
(a) With respect to an offering in which Intel is exercising its
incidental registration rights under SECTION 8.4 above, the Company will
have the right to select the managing Underwriter(s) for such offering.
(b) If, during the period that a Shelf Registration Statement is
effective, the Company commences an underwritten offering of Common Stock
on its own behalf or on behalf of selling stockholders, Intel will refrain
from selling Registrable Securities pursuant to such Shelf Registration
Statement for a period of time beginning ten days before the anticipated
effective date of the Company's offering (as disclosed by the Company to
Intel in writing) and ending 120 days after such effective date (or, if
later, the expiration of any lock-up agreement executed by Intel in
connection with such offering); provided that Intel is given the
opportunity to sell Registrable Securities in such offering on an
equivalent basis with any other selling stockholders pursuant to SECTION
8(d) above; and provided further that this limitation will terminate if the
Company ceases to diligently pursue such offering.
(c) Intel's registration rights under this SECTION 8 will
terminate at the first time at which Intel is entitled to sell all of the
Registrable Securities in a single three month period pursuant to Rule 144
under the Securities Act.
(d) Intel will notify the Company two business days prior to
selling any Registrable Securities pursuant to a Shelf Registration
Statement. During the time that a Shelf Registration Statement is
effective, Intel will refrain from selling stock pursuant to such Shelf
Registration Statement, if requested in writing by the Company, during one
or more time periods totaling not more than 30 days in the aggregate during
any calendar year.
(e) In connection with any underwritten offering pursuant to
these provisions in which Intel desires to participate, Intel will complete
and execute all questionnaires, custody agreements, powers of attorney,
indemnities, underwriting agreements, lock-up agreements and other
documents reasonably required by the Underwriters in connection with such
offering.
(f) Intel will furnish to the Company such information regarding
the Registrable Securities and the intended method of disposition thereof
by Intel as is legally required in connection with any action required to
be taken by the Company hereunder in connection with the registration of
the Registrable Securities.
15
8.7 REGISTRATION PROCEDURES. In connection with any registration of
Registrable Securities under this SECTION 8, the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become and remain
effective, including by preparing and filing with the Commission any
necessary amendments and supplements to such registration statement and the
prospectus used in connection therewith, until the earlier of (A) such time
as all Registrable Securities subject to such registration statement have
been disposed of or (B) the expiration of 90 days after the effective date
of such registration statement; provided that such 90 day limitation shall
not apply to any Shelf Registration Statement;
(b) furnish to Intel such number of copies of the registration
statement and prospectus (including any preliminary prospectus and any
amendments or supplements) as may be reasonably requested by Intel;
(c) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions within the United States and Puerto
Rico as Intel reasonably requests, and take such other actions as may be
reasonably required of it to enable Intel to consummate the disposition in
such jurisdictions of the Registrable Securities covered by such
registration statement; provided that the Company will not be required to
(A) qualify to transact business as a foreign corporation in any
jurisdiction in which it would not otherwise be required to be so
qualified; (B) take any action that would subject it to general service of
process in any such jurisdictions where it is not then so subject, or (C)
subject itself to any type of taxation in any jurisdiction in which it is
not then so subject;
(d) use its best efforts to cause all such Registrable
Securities to be listed or quoted on each securities exchange or automated
quotation system on which the Common Stock is then listed or quoted;
(e) if requested by the Underwriters for any underwritten
offering of Registrable Securities, enter into an underwriting agreement
with such Underwriters containing such representations and warranties by
the Company and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary
distributions, including without limitation provisions with respect to
indemnities and contribution as are reasonably satisfactory to the Company,
such Underwriters and Intel;
(f) during the period when the registration statement is
required to be effective, notify Intel of any event as a result of which
the prospectus included in the registration statement contains an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will
16
not contain an 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 not misleading; and
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission with respect to such offering and
take all such actions as may be reasonably requested by Intel to facilitate
the sale by Intel of such Registrable Securities pursuant to such
registration statement.
8.8 EXPENSES. Except as provided in the following sentence, the
Company will bear all expenses arising or incurred in connection with any
registration of Registrable Securities pursuant to this SECTION 8, including
without limitation (a) registration fees; (b) filing fees charged by the
National Association of Securities Dealers, Inc.; (c) printing expenses; (d)
the Company's accounting and legal fees and expenses; (e) expenses of any
special audits or comfort letters incident to or required by such
registration or qualification; and (f) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification. Intel will bear the expense of all
underwriting fees, discounts or commissions applicable to its sale of
Registrable Securities and the fees and expenses of any separate legal
counsel or accounting firm engaged by Intel.
8.9 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Intel and
each person who controls Intel within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) arising out of or
based upon based on any untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable
Securities or in any amendment or supplement thereto, or arising out of or
based on any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages or
liabilities are caused by (i) any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to
Intel furnished to the Company in writing by Intel or on Intel's behalf
expressly for use therein or (ii) with respect to any offering that is not
underwritten, any failure by Intel to deliver or cause to be delivered a
copy of the final prospectus relating to such offering (as then amended or
supplemented) to the person asserting such claim if such final prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Intel agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to Intel, but only with respect to the matters
specified in clauses (i) and (ii) of the preceding paragraph.
17
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to any of the two preceding paragraphs,
such person (the "Indemnified Party") shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party, upon request of the Indemnified Party,
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the Indemnifying Party shall not, in respect of the legal
expenses of any Indemnified Party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel),
and that all such fees and expenses shall be reimbursed as they are
incurred. The Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by this paragraph,
the Indemnifying Party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (A) such settlement
is entered into more than 30 days after receipt by such Indemnifying Party
of the aforesaid request and (B) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to
the date of such settlement. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from any liability on
claims that are the subject matter of such proceeding.
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. The terms and conditions of this Agreement
represent the entire agreement between the parties with respect to the subject
matter hereof and supersede any prior agreements or understandings, whether
written or oral, between the parties respecting such subject matter. This
Agreement may be modified only in writing and with the consent of both parties.
18
9.2 ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other.
9.3 CHOICE OF LAW. This Agreement shall be construed and enforced in
accordance with the laws of the state of Delaware applicable to agreements
between residents of Delaware wholly executed and wholly performed therein.
9.4 CONFIDENTIALITY. Each party shall maintain the confidentiality
of this Agreement and the transactions contemplated hereby, and neither party
shall make any press release or other public disclosure concerning this
Agreement or the transactions contemplated hereby, except as required by law or
as agreed upon by the parties. In the case of any disclosure required by law,
the disclosing party will provide the other party a reasonable opportunity to
review any disclosure and a reasonable opportunity to comment upon such
disclosure or to request confidential treatment.
9.5 TERMINATION. If the Closing has not occurred within 120 days
after the date of this Agreement, then either party may terminate this Agreement
by written notice to the other party.
IN WITNESSES WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
INTEL CORPORATION
By: /s/ Xxxx Xxxx
------------------------------
Name: Xxxx Xxxx
Title: Assistant Treasurer
CNET, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Operating Officer
19
