Item 1.01 Entry into a Material Definitive Agreement.
On January 11, 2008, the Board of Directors of CNET Networks, Inc. (the
Company
) declared a dividend of one preferred share
purchase right (a
Right
) for each outstanding share of common stock, par value $0.0001 per share (the
Common Shares
), of the Company. The dividend is payable on January 21, 2008 (the
Record
Date
) to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (the
Preferred Shares
), of the Company at a price of $35 per one one-thousandth of a Preferred Share (the
Purchase Price
), subject to adjustment. The description and terms of the Rights are set forth in the Rights
Agreement, dated January 11, 2008 (the
Rights Agreement
), between the Company and Computershare Trust Company, N.A. as Rights Agent (the
Rights Agent
).
Distribution Date; Exercisability
Initially, the
Rights will be attached to all Common Share certificates and no separate Rights certificates will be issued. Separate certificates evidencing the Rights (
Right Certificates
) will be mailed to holders of record of the Common Shares
as of the close of business on the earlier to occur of (i) the tenth business day following the public announcement that a person or group of affiliated or associated persons (an
Acquiring Person
) has acquired beneficial
ownership of 15% or more of the outstanding Common Shares or (ii) the tenth business day (or such later day as the Board of Directors of the Company may determine prior to such time as any person becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding Common Shares (the earlier of such
dates being the
Distribution Date
).
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), (i) the Rights will be transferred with and only with the Common Shares, (ii) new Common Share certificates issued after the Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common Shares outstanding as of the Record Date will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The Rights will expire on
January 11, 2018 (the
Expiration Date
), unless the Expiration Date is amended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below.
Flip-In
If a person or group becomes an Acquiring
Person at any time after the date of the Rights Agreement (with certain limited exceptions) each holder of a Right will thereafter have the right to receive, upon exercise, Common Shares (or, in certain circumstances, Preferred Shares or other
similar securities of the Company) having a value equal to two times the exercise price of the Right. Notwithstanding any of the foregoing, following the existence of an Acquiring Person, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.
For example, at an exercise
price of $35 per Right, each Right not owned by an Acquiring Person following an event set forth in the preceding paragraph would entitle its holder to purchase $70 worth of Common Shares (or other consideration, as noted above). Assuming a value of
$17.50 per Common Share at such time, the holder of each valid Right would be entitled to purchase four Common Shares for $35.
Flip-Over
In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated
assets or earning power are sold after a person or group has become an
Acquiring Person, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock of the acquiring company, which at the time of such transaction will have a market value of two times the exercise price of the Right.
Exchange
At any time after any person or group
becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Common Shares, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one Common Share, or one one-thousandth of a Preferred Share (or of a share of a class or series of the Companys preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
At any time prior to the Distribution Date, the Board of Directors of the Company may redeem the Rights, in whole but not in part, at a price of $0.01 per Right (the
Redemption Price
). The
redemption of the Rights may be made effective at such time on such basis with such conditions as the Board of Directors, in its sole discretion, may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the Redemption Price.
Amendment
The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, except that from and
after the Distribution Date no such amendment may adversely affect the interests of the holders of the Rights (other than the Acquiring Person).
Adjustment
The number of outstanding Rights and the number of one one-thousandths of a Preferred Share issuable upon
exercise of each Right are subject to adjustment under certain circumstances.
Preferred Stock
Because of the nature of the Preferred Shares dividend, liquidation and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of one Common Share.
Rights of Holders
Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
Certain Anti-Takeover Effects
The Rights will not prevent a takeover of the Company. However, the Rights may cause substantial dilution to a person or group that acquires 15% or more of the outstanding Common Shares. The Rights however, should not
interfere with any merger or other business combination approved by the Board of Directors of the Company.
Further Information
A copy of the Rights Agreement is attached as Exhibit 4.2 to this Current Report on Form 8-K. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.