<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
SCHEDULE 14A INFORMATION
Filed by Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
CNET, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BOARD OF DIRECTORS OF CNET, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total Fee Paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CNET, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
As a stockholder of CNET, Inc. (the "Company"), you are hereby given
notice of and invited to attend in person or by proxy the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the offices
of the Company, 150 Chestnut Street, San Francisco, California 94111, on
Wednesday, May 20, 1998, at 9:00 a.m., local time, for the following purposes:
1. To elect two Class II Directors for a three-year term;
2. To amend the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock, $.0001 par value per share
(the "Common Stock"), from 25,000,000 shares to 50,000,000 shares;
3. To approve an amendment to the CNET, Inc. 1997 Stock Option Plan
to increase the number of shares of Common Stock authorized for issuance
under such plan;
4. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for fiscal year 1998; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on April 10,
1998 as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof.
Only stockholders of record at the close of business on the record date are
entitled to notice of and to vote at the Annual Meeting. The transfer books
of the Company will not be closed.
You are cordially invited to attend the Annual Meeting. However,
whether or not you expect to attend the Annual Meeting, management desires to
have the maximum representation at the Annual Meeting and respectfully
requests that you date, execute and mail promptly the enclosed proxy in the
enclosed stamped envelope for which no additional postage is required if
mailed in the United States. A proxy may be revoked by a stockholder any time
prior to its use as specified in the enclosed proxy statement.
By Order of the Board of Directors
SHELBY W. BONNIE,
EXECUTIVE VICE PRESIDENT, CHIEF OPERATING
OFFICER AND SECRETARY
San Francisco, California
April 30, 1998
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED HEREIN.
<PAGE>
CNET, INC.
150 Chestnut
San Francisco, California 94111
_____________
PROXY STATEMENT
_____________
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
_____________
TO OUR STOCKHOLDERS:
This Proxy Statement is furnished to stockholders of CNET, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at the
offices of the Company, 150 Chestnut Street, San Francisco, California 94111,
on Wednesday, May 20, 1998, at 9:00 a.m., local time, or at any adjournment
or adjournments thereof (the "Annual Meeting"). The enclosed proxy is being
solicited by the Board of Directors of the Company (the "Board") and is
subject to revocation at any time prior to the voting of the proxy. Unless a
different choice is indicated, all duly executed proxies received by the
Company will be voted in accordance with the instructions set forth on the
back side of the proxy card. The record of stockholders entitled to vote at
the Annual Meeting was taken at the close of business on April 10, 1998 (the
"Record Date"). This Proxy Statement and the enclosed proxy card are being
sent or given to stockholders on or about April 30, 1998.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on the Record Date to vote with respect to
the election of directors, the approval of an amendment to the Company's
Certificate of Incorporation (the "Charter Amendment") to increase the number
of authorized shares of the Company's common stock, $.0001 par value per
share (the "Common Stock"), the approval of an amendment to the CNET, Inc.
1997 Stock Option Plan (the "1997 Plan") to increase the number of shares of
Common Stock authorized for issuance thereunder (the "Plan Amendment"), the
ratification of the Company's independent auditors, and on any other proposal
properly brought before the Annual Meeting. The proxy card provides space
for a stockholder to (a) vote in favor of or to withhold voting for each
nominee for the Board, (b) vote for or against each proposal to be considered
at the Annual Meeting, or (c) abstain from voting on any proposal other than
the election of directors. The election of directors will be decided by a
plurality of the votes cast at the Annual Meeting by the holders of the
Common Stock. The Charter Amendment must be approved by holders of a
majority of the shares of Common Stock issued and outstanding as of the
Record Date. In order for options granted under the 1997 Plan in excess of
1,000,000 shares to qualify as incentive stock options ("ISOs") under
applicable tax law, and in order for any expense associated with the exercise
of non-qualified options by executive officers of the Company to be fully
deductible by the Company for federal income tax purposes, the Plan Amendment
must be approved by holders of a majority of the shares of Common Stock
issued and outstanding as of the Record Date. In all other matters, the
affirmative vote of a majority of the votes present or represented by proxy
and entitled to be cast at the Annual Meeting by holders of the Common Stock
is required to take stockholder action.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the votes entitled to be cast by all holders of the
Common Stock will constitute a quorum for the transaction of business at the
Annual Meeting. If a quorum is not present, in person or by proxy, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
Shares as to which authority to vote has been withheld with respect to any
matter brought to a vote before the stockholders will not be counted as a
vote in favor of such matter. Abstentions and broker nonvotes will be
counted for purposes of determining the presence or absence of a quorum for
the transaction of business. With respect to all matters other than the
election of directors, an abstention will have the same effect as a vote
against any specified proposal. A broker nonvote will have the same effect
as a vote against the Charter Amendment and the Plan Amendment and will have
no effect on the outcome of any other vote of the stockholders. Stockholders
are urged to sign the accompanying proxy card and return it promptly.
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<PAGE>
When a signed proxy card is returned with choices specified with
respect to voting matters, the shares represented will be voted by the
proxies designated on the proxy card in accordance with the stockholder's
instructions. The proxies for the stockholders are Halsey M. Minor, Shelby
W. Bonnie and Douglas N. Woodrum. A stockholder wishing to name another
person as his or her proxy may do so by crossing out the names of the
designated proxies and inserting the name of such other person to act as his
or her proxy. In that case, it will be necessary for the stockholder to sign
the proxy card and deliver it to the person named as his or her proxy and for
the person so named to be present and vote at the Annual Meeting. Proxy
cards so marked should not be mailed to the Company.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted (a)
for the election of the two nominees for Class II Director, (b) for the
Charter Amendment, (c) for the Plan Amendment, (d) for the ratification of
KPMG Peat Marwick LLP as the Company's independent auditors for fiscal 1997,
and (e) at the discretion of the proxies on any other matter that may
properly come before the Annual Meeting or any adjournment of the Annual
Meeting. Valid proxies will be voted at the Annual Meeting and at any
adjournment of the Annual Meeting in the manner specified.
Any stockholder giving a proxy has the unconditional right to revoke it
at any time before it is voted by any act inconsistent with the proxy,
including notifying the Secretary of the Company in writing, executing a
subsequent proxy or personally appearing at the Annual Meeting and casting a
contrary vote. However, no revocation will be effective unless notice of
such revocation has been received by the Company at or prior to the Annual
Meeting.
The total issued and outstanding shares of common stock, $.0001 par
value per share (the "Common Stock"), as of April 10, 1998 consisted of
14,871,913 shares.
MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE - ELECTION OF CLASS II DIRECTORS
Two persons, John C. "Bud" Colligan and William Savoy, each of whom is
currently a Class II Director, are proposed to be re-elected as Class II
Directors at the Annual Meeting. If elected, each of these directors will
hold office until the annual meeting of stockholders in the year 2001 or
until his successor is duly elected and qualified. The election of directors
will be decided by a plurality of the votes entitled to be cast at the
meeting by holders of the Common Stock. All nominees have consented to serve
if elected, but, if any nominee becomes unable to serve, the persons named as
proxies may exercise their discretion to vote for a substitute nominee.
Management has no reason to believe that any of the nominees will be unable
to serve.
Other nominations for election to the Board may be made by the Board, a
nominating committee appointed by the Board or by any stockholder that has
been the beneficial owner of at least $1,000 of Common Stock for at least one
year. Nominations made by stockholders for next year's annual meeting must
be made by written notice, certified mail, return-receipt requested and
received by the Secretary of the Company by December 23, 1998. For
information regarding each of the nominees for Class II Director, see
"Management".
THE BOARD URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
PROPOSAL TWO - APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
The Board has adopted, subject to stockholder approval, an amendment to
the Company's Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 25,000,000 shares to 50,000,000 shares.
The additional Common Stock to be authorized by adoption of the Charter
Amendment would have rights identical to the currently outstanding Common
Stock. Adoption of the Charter Amendment and issuance of the Common Stock
would not affect the rights of the holders of currently outstanding Common
Stock, except for effects incidental to increasing the number of shares of
Common Stock outstanding, such as dilution of the earnings per share and
voting rights of current holders of Common Stock. The Common Stock has no
preemptive rights. If the Charter Amendment is adopted, it will become
effective upon filing of a
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Certificate of Amendment of the Company's Certificate of Incorporation with
the Secretary of the State of Delaware.
If the Charter Amendment is approved, the increased number of
authorized shares of Common Stock will be available for issuance, from time
to time, for such purposes and consideration, and on such terms, as the Board
may approve and no further vote of the stockholders of the Company will be
sought, except as required by applicable law or by the rules of the Nasdaq
Stock Market. Management believes that the limited number of currently
authorized but unissued shares of Common Stock unduly restricts the Company's
ability to respond to business needs and opportunities. The availability of
additional shares of Common Stock for issuance will afford the Company
flexibility in the future by increasing the number of authorized but unissued
shares of Common Stock available for possible acquisitions, financing
requirements, stock splits and other corporate purposes. The Company has no
definite plans for the use of the Common Stock for which authorization is
sought.
Pursuant to the requirements of the Nasdaq Stock Market, on which the
Common Stock is traded, stockholder approval is required (in addition to the
initial authorization of the shares) for the issuance of Common Stock (or
securities convertible into Common Stock) under certain circumstances. These
circumstances include the issuance in connection with an acquisition of a
number of shares equal to or in excess of 20% of the number of shares
outstanding before such issuance, the adoption of certain types of stock
option or purchase plans or other arrangements in which stock may be acquired
by officers or directors of the Company and certain issuances that would
result in a change of control of the Company.
The existence of additional authorized shares of Common Stock could
have the effect of rendering more difficult or discouraging hostile takeover
attempts. The Company is not aware of any existing or planned effort on the
part of any party to accumulate material amounts of voting stock, or to
acquire the Company by means of a merger, tender offer, solicitation of
proxies in opposition to management or otherwise, or to change the Company's
management, nor is the Company aware of any person having made any offer to
acquire the voting stock or assets of the Company.
As of April 10, 1998, 14,871,913 shares of Common Stock were
outstanding, and the Board had reserved an aggregate of 4,608,203 additional
shares for future issuance, consisting of the following: (a) 666,700 shares
reserved for issuance upon exercise of outstanding warrants; (b) 1,442,128
shares reserved for issuance upon exercise of outstanding options granted
under the 1994 CNET, Inc. Stock Option Plan (the "1994 Plan"); and (c)
999,375 shares reserved for issuance upon exercise of outstanding stock
options granted under the 1997 Plan (without giving effect to the Plan
Amendment), of which options to purchase 743,056 shares were outstanding as
of April 10, 1998. An additional 1,500,000 shares were reserved for issuance
under the 1997 Plan in connection with the Board's adoption of the Plan
Amendment. As a result, the Company currently has 5,519,884 authorized but
unissued and unreserved shares of Common Stock available for future issuance.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock will be required to approve the Charter Amendment. As
a result, abstentions and broker non-votes will have the same effect as votes
against this proposal.
THE BOARD RECOMMENDS A VOTE "FOR"
THE CHARTER AMENDMENT TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL THREE - APPROVAL OF THE PLAN AMENDMENT
THE 1997 PLAN
GENERAL. Effective as of April 16, 1997, the Board adopted the CNET,
Inc. 1997 Stock Option Plan, which was approved by the Company's stockholders
at the Company's annual meeting held May 22, 1997. The purpose of the 1997
Plan is to attract and retain the best available personnel for positions of
substantial responsibility and to provide incentives to such personnel to
promote the success of the business of the Company. The 1997 Plan provides
for the grant of stock options ("Options") to certain directors and to
officers, employees and consultants of the Company and its subsidiaries. The
1997 Plan is administered by the Compensation Committee of the Board or by
the Board as a whole.
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<PAGE>
ADMINISTRATION OF THE 1997 PLAN. The Board or the Compensation
Committee administers the 1997 Plan and has authority to select the
participants that are granted Options, based on its own determinations and
the recommendations of management with respect to the contributions of each
participant to the success of the Company. The Board or the Compensation
Committee also has authority to terminate the 1997 Plan or to accelerate the
vesting of Options, to determine the nature, extent, timing, exercise price,
vesting and duration of Options, to prescribe all other terms and conditions
consistent with the 1997 Plan, to interpret the 1997 Plan, to establish any
rules or regulations relating to the 1997 Plan that it determines to be
appropriate, and to make any other determination that it believes necessary
or advisable for the proper administration of the 1997 Plan.
GRANT OF OPTIONS. The Board or the Compensation Committee may grant
nonqualified stock options or incentive stock options (ISOs) to purchase
shares of Common Stock; provided that, if the Compensation Committee does not
consist entirely of non-employee directors, then grants of Options to
officers, directors, and ten percent stockholders must be approved by the
Board as a whole. The grant of Options will be evidenced by option
agreements containing such terms and provisions as are determined and
approved by the Board or the Compensation Committee, including, but not
limited to, the term of the Option, vesting of the Option, and the exercise
price of the Option. The Option exercise price may be paid in cash, or, at
the Company's option, in shares of Common Stock. In no event may any
optionee be granted Options to purchase more than the total number of shares
authorized for issuance under the 1997 Plan (2,500,000 shares) during any
calendar year. Options that lapse or are cancelled or forfeited continue to
count against this limit, and a repriced Option is treated as if it had been
cancelled and a new Option granted.
OPTION EXPIRATION AND TERMINATION. Subject to the expiration and
termination provisions of individual option agreements, ISOs expire ten years
after the date of grant or, if held by a ten percent stockholder, ISOs expire
five years after the date of grant. The expiration and termination periods
of nonqualified stock options are determined by the Board or the Compensation
Committee and set forth in the individual Option agreements. Subject to the
expiration and termination provisions of individual option agreements, if a
participant dies or becomes disabled, all vested Options may be exercised at
any time within one year (or the remaining term of the Option, if less). If
a participant ceases to be a Company employee for any other reason, he or she
must exercise any vested Options within ninety days (or the remaining term of
the Option, if less).
AMENDMENTS TO THE 1997 PLAN. The Board of Directors may amend or
discontinue the 1997 Plan at any time, subject to certain restrictions set
forth in the 1997 Plan. Pursuant to this authority, on April 15, 1998, the
Board approved and adopted the Plan Amendment, which increased the number of
shares of Common Stock authorized for issuance under the 1997 Plan from
1,000,000 shares to 2,500,000 shares. The Board could amend the 1997 Plan in
the future to increase further the number of shares reserved for issuance
thereunder. Except in limited circumstances, no amendment or discontinuation
of the 1997 Plan may adversely affect any previously granted Option award
without the consent of the recipient thereof.
FEDERAL INCOME TAX CONSEQUENCES. The following general description of
federal income tax consequences is based upon current statutes, regulations
and interpretations and does not purport to be complete. Reference should be
made to the applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"). There also may be state, local and foreign income tax
consequences applicable to transactions involving Options. In addition, the
following description does not address specific tax consequences applicable
to an individual participant who receives an ISO and does not address special
rules that may be applicable to directors and officers.
Under existing federal income tax provisions, a participant who
receives stock options will not normally realize any income, nor will the
Company normally receive any deduction for federal income tax purposes, upon
the grant of an Option.
When a non-qualified stock option granted pursuant to the 1997 Plan is
exercised, the employee generally will realize ordinary income (compensation)
measured by the difference between the aggregate purchase price of the Common
Stock as to which the option is exercised and the aggregate fair market value
of the Common Stock on the exercise date, and the Company generally will be
entitled to a deduction in the year the Option is exercised equal to the
amount the employee is required to treat as ordinary income. Any taxable
income recognized in connection with a non-qualified stock option exercised
by an optionee who is also an employee of the Company will be subject to tax
withholding by the Company. The basis for determining gain or loss upon a
subsequent disposition of Common Stock acquired upon the exercise of a
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non-qualified stock option will be the purchase price paid to the Company for
the Common Stock increased by an amount included in the optionee's taxable
income resulting from the exercise of such option. The holding period for
determining the maximum tax rate applicable to gain on such disposition
begins on the date on which the optionee acquires the Common Stock.
An employee generally will not recognize any income upon the exercise
of an ISO, but the exercise may, depending on particular factors relating to
the employee, subject the employee to the alternative minimum tax. An
employee will recognize capital gain or loss in the amount of the difference
between the exercise price and the sale price on the sale or exchange of
stock acquired pursuant to the exercise of an ISO, provided that the employee
does not dispose of such stock within two years from the date of grant and
one year from the date of exercise of the ISO (the "Required Holding
Periods"). An employee disposing of such shares before the expiration of the
Required Holding Periods will recognize ordinary income equal to the lesser
of (i) the difference between the option price and the fair market value of
the stock on the date of exercise, or (ii) the total amount of gain realized.
The maximum federal income tax rate on the remaining gain or loss generally
depends on how long the shares are held. The Company will not be entitled to
a federal income tax deduction in connection with the exercise of an ISO,
except where the employee disposes of the shares of Common Stock received
upon exercise before the expiration of the Required Holding Periods.
REASONS FOR PROPOSAL
GENERAL. The 1997 Plan is designed to attract and retain the best
available personnel for positions of substantial responsibility and to
provide incentives to such personnel to promote the success of the business
of the Company. The Company is recommending the Plan Amendment in order to
ensure that sufficient shares are available under the 1997 Plan to reward and
motivate existing employees and to attract new employees in the future,
particularly in light of the rapid growth experienced by the Company.
SHARES ISSUABLE UNDER THE 1997 PLAN. A total of 1,000,000 shares of
Common Stock were originally authorized and reserved for issuance upon
exercise of Options granted under the 1997 Plan, subject to proportionate
adjustments in the event of any recapitalization, stock dividend, stock
split, combination of shares or other change in the Common Stock. The Board
or the Compensation Committee may also provide additional anti-dilution
protection to a participant under the terms of such participant's Option
agreement. Shares of Common Stock subject to Options that are canceled,
terminated or forfeited will again be available for issuance under the 1997
Plan.
As of April 10, 1998, Options were outstanding under the 1997 Plan to
purchase a total of 743,056 shares of Common Stock, and an additional 256,319
shares were available for future grants under the 1997 Plan. In addition,
the Company had options outstanding under the 1994 Plan to purchase a total
of 1,442,128 shares of Common Stock, and no additional shares were available
for future grants under the 1994 Plan.
At a meeting held on April 15, 1998, the Board of Directors of the
Company approved and adopted the Plan Amendment, which increased the number
of shares of Common Stock authorized for issuance under the 1997 Plan from
1,000,000 shares to 2,500,000 shares. Following adoption of the Plan
Amendment, the Compensation Committee granted Options to purchase an
additional 436,400 shares under the 1997 Plan (the "April 1998 Options"),
leaving 1,319,919 shares available for future grants. Under the terms of the
1997 Plan, the Plan Amendment did not require the approval of the Company's
stockholders, and the grant of the April 1998 Options was not made contingent
upon such approval. However, unless the Plan Amendment is approved by
holders of a majority of the outstanding shares of Common Stock, any options
granted in excess of the 1,000,000 shares originally approved by the
Company's stockholders would not be eligible for treatment as ISOs.
Consequently, the Board is asking stockholders to approve the Plan Amendment
in order to allow the Compensation Committee to grant additional ISOs under
the 1997 Plan.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
In considering whether to vote for approval of the Plan Amendment,
stockholders should be aware that each of the Company's directors and
executive officers will be eligible for Option grants under the 1997 Plan. If
the Plan Amendment is not approved by holders of a majority of the
outstanding shares of Common Stock, additional Options granted under the 1997
Plan will not be eligible for ISO treatment, which will have negative tax
consequences to the recipients of such Options.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PLAN
AMENDMENT
PROPOSAL FOUR - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS.
KPMG Peat Marwick LLP, independent certified public accountants, served
as independent auditors for the Company for the fiscal year ended December
31, 1997 and has reported on the Company's financial statements. The Board,
upon the recommendation of the Audit Committee, has selected KPMG Peat
Marwick LLP as the Company's independent auditors for fiscal year 1998 and
recommends that the stockholders ratify this selection. The Board has been
advised that KPMG Peat Marwick LLP has no relationship with the Company or
its subsidiaries.
A representative of KPMG Peat Marwick LLP is expected to be present at
the Annual Meeting, will have an opportunity to make a statement if he
desires to do so and is expected to be available to respond to appropriate
questions.
Stockholder ratification is not required for the selection of KPMG Peat
Marwick LLP as the Company's independent auditors for fiscal year 1998
because the Board has responsibility for selection of the Company's
independent auditors. The selection is being submitted for ratification with
a view toward soliciting the opinion of stockholders, which opinion will be
taken into consideration in future deliberations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF KPMG PEAT MARWICK LLP
AS THE COMPANY'S INDEPENDENT AUDITORS
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information
with respect to the beneficial ownership of the Company's Common Stock as of
April 10, 1998 by (a) the "Named Executive Officers" identified under the
caption "Executive Compensation and Other Information," (b) each director of
the Company, (c) each person known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, and (d) all executive officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) SHARES
- ----------------------------------------- -------------------- ------------
<S> <C> <C>
Halsey M. Minor.......................... 2,699,488(2) 18.2%
Shelby W. Bonnie......................... 2,948,946(3) 19.8
Douglas N. Woodrum....................... 12,800 *
Gregory J. Osberg........................ - -
Robin Wolaner............................ - -
Jonathan Rosenberg....................... 48,127(4) *
John C. "Bud" Colligan................... 25,000(5) *
Mitchell Kertzman........................ 25,000(5) *
Douglas Hamilton......................... 531,631(6) 3.5
Eric Robison............................. 2,822,727(7) 18.8
William Savoy............................ 2,822,727(7) 18.8
Kevin Wendle............................. 574,392(8) 3.9
Vulcan Ventures Incorporated............. 2,797,727(9) 18.7
Intel Corporation........................ 801,253(10) 5.4
All executive officers and directors as a
group (12 persons)....................... 9,713,111(11) 62.6%
</TABLE>
- -----------------
* Less than one percent
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(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Percentages for each person are based on
the 14,871,913 shares outstanding at April 10, 1998, plus the total number of
outstanding options or warrants held by such person that are exercisable
within 60 days of such date. Shares issuable upon exercise of outstanding
options and warrants, however, are not deemed outstanding for purposes of
computing the percentage ownership of any other person. Except as indicated
in the footnotes to this table and pursuant to applicable community property
laws, each stockholder named in the table has sole voting and investment
power with respect to the shares set forth opposite such stockholder's name.
(2) Includes 120,000 shares held by a trust for the benefit of Mr. Minor's
descendants, as to which he disclaims beneficial ownership.
(3) Includes 8,735 shares held by a trust for Mr. Bonnie's benefit, 66,069
shares held by a partnership controlled by Mr. Bonnie, and 14,700 shares
issuable upon exercise of a warrant held by such partnership.
(4) Includes 45,627 shares subject to options that are exercisable within 60
days.
(5) Consists of shares subject to options that are exercisable within 60
days.
(6) Includes 144,906 shares held by USA Networks and 361,725 shares subject
to the currently exercisable portion of a warrant held by USA Networks, as to
which Mr. Hamilton, an officer of USA Networks, disclaims beneficial
ownership. Also includes 25,000 shares subject to options that are
exercisable within 60 days.
(7) Includes 2,797,727 shares held by Vulcan or issuable upon exercise of
warrants held by Vulcan, as to which such director, who serves as an office
of Vulcan, disclaims beneficial ownership. See Note (9) below. Also
includes 25,000 shares subject to options that are exercisable within 60
days. The address of Mr. Robison, Mr. Savoy and Vulcan is 110 110th Avenue,
Suite 350, Bellevue, WA 98004.
(8) Includes 8,100 shares subject to options that are exercisable within 60
days and 566,292 shares held by two trusts as to which Mr. Wendle has voting
and dispositive authority.
(9) Includes 110,250 shares issuable upon exercise of warrants held by
Vulcan.
(10) Intel Corporation's address is 2200 Mission College Blvd., Santa
Clara, California 95052.
(11) Includes a total of 665,402 shares subject to options and warrants
that are exercisable within _60 days.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's executive officers and directors and persons
who own more than ten percent of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports. The
Company believes that all filings required to be made by the Reporting
Persons during the fiscal year ended December 31, 1997 were made on a timely
basis.
7
<PAGE>
MANAGEMENT
The following table sets forth the names, ages and positions of the
executive officers and directors of the Company as of April 1, 1998. Their
respective backgrounds are described following the table:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ----------------------------- ----- ------------------------------------
<S> <C> <C>
Halsey M. Minor(3) 33 Chairman of the Board, President, and Chief Executive Officer
Shelby W. Bonnie(1) 33 Executive Vice President, Chief Operating Officer, Secretary and Director
Douglas N. Woodrum(3) 40 Executive Vice President, Chief Financial Officer and Director
Gregory J. Osberg 40 President of Sales and Marketing
Robin Wolaner 43 Executive Vice President of Technology Publishing
Jonathan Rosenberg 46 Executive Vice President of Technology
John C. "Bud" Colligan(2) 43 Director
Douglas Hamilton(1) 58 Director
Mitchell Kertzman(3) 49 Director
Eric Robison(1) 38 Director
William Savoy(2) 33 Director
Kevin Wendle(2) 39 Director
</TABLE>
- ------------------------
(1) Class I Director (term expires in 2000)
(2) Class II Director (term expires at the Annual Meeting)
(3) Class III Director (term expires in 1999)
HALSEY M. MINOR founded CNET in December 1992 and has served as
Chairman of the Board, President and Chief Executive Officer since that time.
From October 1991 until founding CNET, Mr. Minor was employed by Russell
Reynolds Associates, Inc., an executive search firm, where he worked directly
for Russell Reynolds, Jr., the founder, Chairman and Chief Executive Officer.
From July 1989 to June 1990, Mr. Minor was the Chief Executive Officer of
Global Publishing Corporation, a producer of computer-based multimedia
business training applications distributed over computer networks. Prior to
founding Global Publishing Corporation, Mr. Minor spent two years working as
an investment banker for Merrill Lynch Capital Markets in New York.
SHELBY W. BONNIE has served as Executive Vice President, Chief
Operating Officer, Chief Financial Officer and a director of the Company
since July 1993. From 1990 until joining the Company in 1993, Mr. Bonnie was
a Managing Director of Tiger Management Corporation, a New York based
investment managing firm. From 1992 to 1993, Mr. Bonnie also served as a
General Partner of Lynx Capital, where he was responsible for oversight of a
$90 million private equity fund. From 1986 to 1988, Mr. Bonnie worked as a
financial analyst in the mergers and acquisitions department at Morgan
Stanley & Co. Inc.
DOUGLAS N. WOODRUM joined the Company as Executive Vice President and
Chief Financial Officer and was elected as a director in December 1997. Prior
to joining the Company, Mr. Woodrum served as Executive Vice President and
Chief Financial Officer of Heritage Media Corporation, a diversified media
company which he helped found in 1987 and which was sold to The News
Corporation for $1.4 billion in August 1997.
GREGORY J. OSBERG joined the Company as President of Sales and Marketing
in October 1997. From 1990 until joining the Company, Mr. Osberg was a
senior marketing & sales executive at Newsweek magazine, where he served most
recently as Vice President, Associate Publisher of Advertising. Prior to
Newsweek he served as Vice President, Ad Sales at U.S. News & World Report.
Mr. Osberg currently represents the Company as member of the Board of the
Internet Advertising Bureau (IAB). The IAB is exclusively dedicated to
maximizing the use and effectiveness of advertising on the Internet.
ROBIN WOLANER joined the Company in October 1997 as Executive Vice
President in charge of the Company's technology publishing operations. Ms.
Wolaner founded Parenting Magazine in 1986 as a joint venture with Time Inc.,
which purchased her interest in 1990. From 1990 to 1992, she continued as
President of Parenting and also served as Vice President of Development for
Time Publishing Ventures. From 1992 until 1995, Ms. Wolaner served as
President and Chief Executive Officer of Sunset Publishing Corporation, a
subsidiary of Time Publishing Ventures. From 1996 until she joined the
Company, Ms. Wolaner was an advisor to early-stage electronic publishing
ventures. Ms. Wolaner is Chairman of Online Partners, an Internet affinity
group marketing company, and serves as a director of Burnham Pacific
Properties, a publicly-traded real estate investment trust.
-8-
<PAGE>
JONATHAN ROSENBERG has served as the Executive Vice President of
Technology for CNET since joining the Company in February 1995. Prior to
joining CNET, Mr. Rosenberg worked as project manager for Bellcore's
Multimedia and Information Access division, where he was involved in a range
of projects, including low-bandwidth multimedia, multimedia e-mail,
electronic magazines, video dialtone and server research. Prior to joining
Bellcore, Mr. Rosenberg was associate director of Carnegie Mellon
University's Information Technology Center, where he led a team that designed
and implemented the networking and computer infrastructure for the
university, which is still in use today. Mr. Rosenberg received a Ph.D in
computer science from Carnegie Mellon University in 1983, where he was a
Hertz Fellow from 1981 to 1983.
KEVIN WENDLE has served as a director of the Company since December
1993, and his service as a director will end at the Annual Meeting. An
Emmy-award winning television producer, Mr. Wendle joined the Company in
December 1993 as Executive Vice President and President of the Company's
television division, and he became Executive Producer of the Company's
Internet division in 1995. From March 1991 to December 1993, Mr. Wendle
operated his own independent production company, Kevin Wendle Productions,
Inc. From November 1989 to March 1991, Mr. Wendle was the Chief Operating
Officer of Quincy Jones Entertainment Company, a joint venture between Quincy
Jones and Time Warner. Prior to joining Quincy Jones Entertainment Company,
Mr. Wendle was one of the six founding members of the team that launched the
Fox Broadcasting Company.
JOHN C. "BUD" COLLIGAN became a director of the Company in May 1996.
From December 1992 to November 1996, Mr. Colligan was Chief Executive Officer
of Macromedia, Inc., a multimedia software company. Mr. Colligan is
currently Chairman of the Board of Macromedia, Inc. From 1988 to 1992, Mr.
Colligan was Chief Executive Officer of Authorware, Inc., which merged with
Macromind.Paracamp in March 1992 to form Macromedia. From May 1983 to
December 1988, Mr. Colligan was employed by Apple Computer, Inc. in a variety
of positions, most recently as Director of Marketing and Sales for Higher
Education. Mr. Colligan is a director of Macromedia, Inc. and S3 Corporation.
DOUGLAS HAMILTON became a director of the Company in 1996. Since
January 1994, Mr. Hamilton has served as Chief Financial Officer and Senior
Vice President of Administration of USA Networks, and from April 1986 to
January 1994, Mr. Hamilton servedas Vice President of Finance and
Administration of USA Networks. For the eighteen years prior to joining USA
Networks, Mr. Hamilton was employed by W.R. Grace & Co., where he worked in a
variety of positions, including, most recently, Vice President of Finance and
Administration for GHL Management, Inc.
MITCHELL E. KERTZMAN became a director of the Company in May 1996.
Since July 1996, Mr. Kertzman has served as Chairman of the Board and Chief
Executive Officer of Sybase, Inc., a leading provider of enterprise database
software which Mr. Kertzman joined in February 1995 as Executive Vice
President. Prior to joining Sybase, Inc., Mr. Kertzman served as Chief
Executive Officer and a director of Powersoft Corporation, a leading provider
of application development tools since its organization in 1974. Powersoft
Corporation was acquired by Sybase, Inc. in February 1995.
ERIC ROBISON became a director of the Company in December 1994. Since
January 1994, Mr. Robison has served as Business Development Associate of
Vulcan Ventures Inc. ("Vulcan"), a venture capital firm owned by Paul Allen,
a co-founder of Microsoft Corporation. Prior to joining Vulcan, Mr. Robison
was co-founder and Vice President of The Stanton Robison Group, Inc., a
business development, marketing and advertising consultant firm. Mr. Robison
also served in key marketing management positions with SGS, Inc.,
Ashton-Tate, Inc. and Denny's Inc. Mr. Robison serves on the Board of
Directors of Egghead Corporation and ARI Network Services, Inc.
WILLIAM SAVOY became a director of the Company in December 1994. Since
1990, Mr. Savoy has served as Vice President of Vulcan. Since 1990, Mr.
Savoy has also served as President of Vulcan Northwest Inc., a company
wholly-owned by Paul Allen, a co-founder of Microsoft Corporation. Mr. Savoy
serves on the Board of Directors of Harbinger Corporation, Metricom, Inc.,
Telescan, Inc., Ticket Master, Inc. and U.S. Satellite Broadcasting.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The business of the Company is managed under the direction of the
Board. The Board meets during the Company's fiscal year to review significant
developments affecting the Company and to act on matters requiring Board
approval. The Board held seven formal meetings and acted by unanimous
written consent one
-9-
<PAGE>
time during the fiscal year ended December 31, 1997. All of the directors
attended at least 75% of the Board meetings, except that Mr. Hamilton was
unable to attend three meetings.
The Board of Directors has established an Audit Committee and a
Compensation Committee to devote attention to specific subjects and to assist
the Board in the discharge of its responsibilities. The functions of these
committees and their current members are described below.
AUDIT COMMITTEE. During the fiscal year, the Audit Committee was
comprised of John C. "Bud" Colligan, Douglas Hamilton and Eric Robison. The
Audit Committee reviews, acts on and reports to the Board of Directors with
respect to various auditing and accounting matters, including the selection
of the Company's independent accountants, the scope of the annual audits,
fees to be paid to the independent accountants and the accounting practices
of the Company. The Audit Committee held two formal meetings during 1997.
COMPENSATION COMMITTEE. During the fiscal year, the Compensation
Committee was comprised of Mitchell Kertzman and William Savoy. The
Compensation Committee advises the Board of Directors and consults with
management concerning salaries, incentives and other forms of compensation
for the officers and other employees of the Company and administers the
Company's existing stock option plans and its employee stock purchase plan.
The Compensation Committee did not hold any formal meetings during 1997 but
acted by unanimous consent 12 times.
The Board of Directors does not have a standing nominating committee or
any other committee performing a similar function. The function customarily
attributable to a nominating committee is performed by the Board of Directors
as a whole.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the
compensation paid by the Company to its chief executive officer and to each
other executive officer of the Company who received at least $100,000 in
salary and bonus during 1997 (the "Named Executive Officers"). Three of the
Company's executive officers -- Mr. Woodrum, Mr. Osberg and Ms. Wolaner --
joined the Company during the fourth quarter of 1997 and, therefore, did not
receive $100,000 in salary and bonus during 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
------------------------ -------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- --------------------------- -------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Halsey M. Minor 1997 $175,000 - - -
Chairman of the Board, 1996 175,000 - - -
President and Chief 1995 175,000 - - -
Executive Officer
Shelby W. Bonnie 1997 160,000 - - -
Executive Vice President, 1996 160,000 - - -
Chief Operating Officer 1995 160,000 - - -
and Secretary
Lon E. Otremba 1997 183,990(2) - - -
Executive Vice President of 1996 199,000 - 10,000 -
Network Sales (2) 1995 172,000 - - -
Jonathan Rosenberg 1997 165,000 - - -
Executive Vice President of 1996 142,500 - 27,500 -
Technology 1995 111,000(3) - 45,000 -
</TABLE>
- --------------
(1) In each case, the aggregate value of other annual compensation,
including perquisites and other personal benefits, does not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported
for the Named Executive Officer.
(2) Mr. Otremba resigned as an executive officer of the Company effective
October 15, 1997.
(3) Mr. Rosenberg joined the Company in February 1995.
-10-
<PAGE>
During 1997, options to purchase an aggregate of 1,263,073 shares of
Common Stock at fair market value on the date of grant were granted under the
Company's stock options plans. The following table provides information
regarding stock options granted during 1997 to the Named Executive Officers.
OPTION GRANTS DURING 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM (1)
OPTIONS DURING PRICE EXPIRATION ----------------------
NAME GRANTED (#) 1997 ($/SHARE) DATE 5% 10%
- --------------------- ------------- ---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Halsey M. Minor........ - - - - - -
Shelby W. Bonnie....... - - - - - -
Lon E. Otremba......... - - - - - -
Jonathan Rosenberg..... 27,500 2.2% $21.63 5/5/07 $374,082 $947,998
</TABLE>
- --------------
(1) The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by the rules of the Securities and Exchange
Commission. The actual value, if any, that an executive officer may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised. There is no assurance the
value realized by an executive officer will be at or near the assumed 5%
or 10% levels.
The following table sets forth information regarding the exercise of
stock options by the Named Executive Officers during 1997 and year-end option
values:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR-END OPTIONS AT YEAR-END
ACQUIRED ON VALUE ------------------------------ -----------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Halsey M. Minor......... - - - - - -
Shelby W. Bonnie........ - - - - - -
Lon E. Otremba.......... - - 92,501 - $2,529,842 -
Jonathan Rosenberg 14,999 $360,403 14,377 70,624 $ 328,676 $1,202,301
</TABLE>
DIRECTOR COMPENSATION
The Company does not pay cash compensation to its directors, but does
reimburse directors for expenses incurred in attending board and committee
meetings. Under the Company's 1994 Plan, each non-employee director received
an automatic grant of nonqualified stock options on June 5, 1996 to purchase
20,000 shares of Common Stock at an exercise price of $14.00 per share.
Non-employee directors elected to the Board in the future will automatically
receive, upon such election, nonqualified stock options to purchase 20,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of grant. In addition, each non-employee
director serving on June 30 of each year (beginning on June 30, 1997)
automatically receives nonqualified stock options to purchase 5,000 shares of
Common Stock. All of the options granted pursuant to these provisions are
immediately exercisable on the date of grant, but the Common Stock issued
upon exercise is subject to repurchase by the Company at original cost. This
repurchase right lapses, and the optionee's rights with respect to each grant
vest, in a series of 48 equal monthly installments following the date of
grant, for so long as the optionee remains a director of the Company. In
addition, vesting will automatically accelerate upon any sale of the Company
through a merger, recapitalization, reorganization, asset sale, tender offer
or similar event. The 1997 Plan contains identical terms and provisions with
respect to automatic grants of nonqualified stock options to non-employee
directors; provided that, to the extent a non-employee director receives
option grants under the 1994 Plan, such director will not receive a duplicate
option grant under the 1997 Plan.
-11-
<PAGE>
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Mr. Minor and Mr.
Bonnie in October 1994, pursuant to which Mr. Minor agreed to serve as Chief
Executive Officer of the Company and Mr. Bonnie agreed to serve as Chief
Operating Officer and Chief Financial Officer. The employment agreements
provided that Mr. Minor and Mr. Bonnie would receive annual base salaries of
$175,000 and $160,000, respectively, as well as bonuses in the discretion of
the Board of Directors. These agreements terminated on October 19, 1997.
The Company entered into an employment agreement with Mr. Otremba in
August 1994, which was amended and extended in April 1996. The agreement
provided for an annual base salary of $215,000 for the year ended August 21,
1997 and terminated on such date.
The Company entered into an employment agreement with Mr. Rosenberg in
February 1995, which was amended and extended in September 1995. The term of
the agreement expires on February 20, 1999 unless Mr. Rosenberg's employment
is terminated earlier for cause. The agreement provides for an annual base
salary of $136,500 through February 21, 1997, increasing to $143,300 for the
year ended February 20, 1998 and $149,000 for the year ended February 20,
1999. As of January 6, 1997, the Company increased Mr. Rosenberg's annual
base salary to $165,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions concerning the executive officers of the Company
for 1997 were made by the Compensation Committee of the Board, subject to the
terms of any pre-existing employment agreements between the Company and such
executive officers. Mr. Kertzman and Mr. Savoy served as members of the
Compensation Committee during 1997.
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for recommending to the full
Board salary amounts for the Company's executive officers and making the
final determination regarding bonus arrangements for such persons. The
Compensation Committee is also responsible for making the final determination
regarding awards of stock options to such persons.
Compensation to executive officers is designed to attract and retain
highly capable executives, to motivate the performance of executives in
support of the achievement of the Company's strategic financial and operating
performance objectives and to reward performance that meets this standard.
The Company is engaged in a highly competitive business and must attract and
retain qualified executives in order to be successful. In 1997, executive
compensation was comprised of the following elements:
BASE SALARY. To the extent not determined pursuant to pre-existing
employment agreements, the base salary for the Company's executive
officers was determined afterreview of publicly available information
concerning the base salaries of executives with similar responsibilities
in companies engaged in businesses similar to the Company's, the
responsibilities of each executive officer and the subjective evaluation
of each officer's contribution and potential contribution to the
Company. The Compensation Committee also has the authority to grant
year-end cash bonuses to motivate the executive officers to achieve
annual financial and other goals. No incentive bonus program or
objectives were adopted for 1997, and no cash bonuses were paid with
respect to performance during 1997.
STOCK OPTION PLANS. The Company's stock option plans form the basis
of its long-term incentive plan for executive officers and other key
employees. The Compensation Committee believes that a significant
portion of executive compensation should be dependent on value created
for the stockholders. In selecting recipients for option grants and in
determining the size of such grants, the Compensation Committee
considers various factors such as the performance of the Company and the
contributions of the individual recipient to the Company. To date, Mr.
Minor and Mr. Bonnie, who have purchased substantial equity interests in
the Company, have elected not to receive stock options pursuant to the
Company's plans.
BENEFITS. Executive officers also receive benefits typically
offered to executives by companies engaged in businesses similar to the
Company's, as well as various benefits generally
-12-
<PAGE>
available to employees of the Company (such as health insurance). The
Compensation Committee intends to design the Company's compensation
programs so that compensation paid to executive officers will qualify
for deductibility under applicable provisions of the Internal Revenue
Code, including Section 162(m). However, the Company may pay
compensation which is not deductible in limited circumstances when
prudent management of the Company so requires.
1997 COMPENSATION OF CHIEF EXECUTIVE OFFICER. Mr. Minor's base
salary for 1997 was $175,000. For most of 1997, this salary was
established by Mr. Minor's employment agreement, which expired in
October 1997. The Compensation Committee believes that Mr. Minor's
salary is substantially below competitive salaries paid to executives
with similar qualifications and responsibilities.
Mitchell Kertzman
William Savoy
Members of the Compensation Committee
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return of the Common
Stock during the period commencing July 2, 1996, the date public trading of
the Common Stock began following the Company's initial public offering, to
December 31, 1997, with the Standard & Poor's 500 Stock Index (the "S&P 500
Index") and the H&Q Interest Index (the "Peer Group Index"). The S&P 500
Index includes 500 United States companies in the industrial, transportation,
utilities and financial sectors and is weighted by market capitalization.
The graph depicts the results of investing $100 in the Common Stock, the S&P
500 Index and the Peer Group Index at closing prices on April 17, 1996, and
assumes that all dividends were reinvested.
<TABLE>
<CAPTION>
July 2, 1996 December 31, 1996 December 31, 1997
------------ ----------------- -----------------
<S> <C> <C> <C>
CNET, Inc. $100.00 $181.25 $184.38
S&P 500 Index 100.00 117.48 156.82
Peer Group Index 100.00 83.94 112.52
</TABLE>
THE STOCK PRICE PERFORMANCE DEPICTED IN THE CORPORATE PERFORMANCE GRAPH
IS NOT NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE. THE CORPORATE
PERFORMANCE GRAPH WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE IN ANY
FILING BY THE COMPANY UNDER THE SECURITIES ACT OR THE EXCHANGE ACT.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 21, 1997, the Company sold 201,253 shares of common stock to
Intel Corporation in a private placement for an aggregate purchase price $5.3
million. This purchase, combined with 600,000 shares previously owned by
Intel Corporation, increased Intel Corporation's ownership of the outstanding
Common Stock to approximately 5.4%. The terms of this transaction were
negotiated at arms' length between the Company and Intel Corporation.
On December 18, 1997, the Company sold 733,000 shares of common stock
at $24.75 per share in a private placement to three "accredited investors"
(as defined in Rule 501 under the Securities Act of 1933). Of these shares,
700,000 were sold to an investment advisory client of Amerindo Investment
Advisors, Inc. ("Amerindo"), and the terms of the transaction were negotiated
at arms' length between the Company and Amerindo. Of the remaining shares,
25,000 were purchased by USA Networks. Douglas Hamilton, a director of the
Company, is an officer of USA Networks. The remaining 8,000 shares were
purchased by Douglas N. Woodrum, an executive officer and director of the
Company.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with
applicable rules and regulations for presentation at the Company's next
annual meeting that is received at the Company's principal executive office
by December 23, 1998 will be included in the Company's proxy statement and
form of proxy for that meeting.
-13-
<PAGE>
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The cost of soliciting proxies in the accompanying form will be
paid by the Company. Officers of the Company may solicit proxies by mail,
telephone or telegraph. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of shares
of the Common Stock.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, independent certified public accountants, has
been selected by the Board of Directors as the Company's independent auditor
for the current year. A representative of KPMG Peat Marwick LLP is expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if he or she desires to do so and is expected to be available to
respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any
other matter requiring a vote of stockholders arise, the proxies in the
enclosed form confer upon the person or persons entitled to vote the shares
represented by such proxies discretionary authority to vote the same in
accordance with their best judgment in the interest of the Company.
FINANCIAL STATEMENTS
The Company will provide, without charge, to each person to whom a copy
of this Proxy Statement is delivered, upon the written or oral request of
such person and by first class mail or other equally prompt means within one
business day of receipt of such request, a copy of the Company's Annual
Report on Form 10-K. Requests should be directed to Investor Relations,
CNET, Inc., 150 Chestnut, San Francisco, California 94111; Telephone number:
(415) 395-7800; Fax number: (415) 395-9205.
By Order of the Board of Directors,
SHELBY W. BONNIE,
EXECUTIVE VICE PRESIDENT, CHIEF OPERATING
OFFICER AND SECRETARY
April 30, 1997
-14-
<PAGE>
<TABLE>
<S><C>
(FRONT OF PROXY CARD)
CNET, INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
9:00 A.M., WEDNESDAY, MAY 20, 1998
CNET, INC., 150 CHESTNUT STREET, SAN FRANCISCO, CALIFORNIA 94111
The undersigned stockholder of CNET, Inc. (the "Company") hereby appoints Halsey M. Minor, Shelby W. Bonnie and Douglas N.
Woodrum, or any of them, as proxies, each with full powers of substitution, to vote the shares of the undersigned at the
above-stated Annual Meeting and at any adjournment(s) thereof:
(1) Election of Class I Directors:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as provided to the contrary below) to vote for all nominees listed below
John C. "Bud" Colligan and William Savoy
(INSTRUCTION: To withhold authority to vote for any individual nominee(s), write that nominee's name on the
space provided below):
-------------------------------------------------------------------------------------------------------------------------
(2) Approval of an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of
common stock:
FOR / / AGAINST / / ABSTAIN / /
(3) Approval of an amendment to the Company's 1997 Stock Option Plan to increase the number of shares of common stock
authorized for issuance thereunder:
FOR / / AGAINST / / ABSTAIN / /
(4) Ratification of KPMG Peat Marwick LLP, independent certified public accountants, to serve as the Company's independent
auditors for the fiscal year ending December 31, 1998:
FOR / / AGAINST / / ABSTAIN / /
(5) On any other business that may properly come before the meeting; hereby revoking any proxy or proxies heretofore given by
the undersigned.
(PLEASE SIGN ON THE REVERSE SIDE)
- ------------------------------------------------------------------------------------------------------------------------------------
(FRONT OF PROXY CARD)
(CONTINUED FROM REVERSE SIDE)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON
THE REVERSE SIDE. IF A CHOICE IS NOT INDICATED WITH RESPECT TO ITEMS (1), (2), (3) AND (4), THIS PROXY WILL BE VOTED "FOR" SUCH
ITEMS. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (5). THIS PROXY IS REVOCABLE AT ANY
TIME BEFORE IT IS EXERCISED.
Receipt herewith of the Company's Annual Report and Notice of Meeting and Proxy Statement, dated April 30, 1998, is hereby
acknowledged.
Dated: , 1998
--------------------------------------------
--------------------------------------------------
--------------------------------------------------
(Signature of Stockholder(s))
(Joint owners must EACH sign. Please sign EXACTLY
as your name(s) appear(s) on this card. When
signing as attorney, trustee, executor,
administrator, guardian or corporate officer,
please give your FULL title.)
PLEASE SIGN, DATE AND MAIL TODAY.
</TABLE>
