CNET INC /DE, 10-Q, 1999-08-16

CNET INC /DE
10-Q, 1999-08-16
MOTION PICTURE & VIDEO TAPE PRODUCTION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM 10-Q

(MARK ONE)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____ to ________

COMMISSION FILE NUMBER: 0-20939

CNET, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-3696170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

150 CHESTNUT STREET
SAN FRANCISCO, CA 94111
(Address of principal executive officers) (zip code)

TELEPHONE NUMBER (415) 395-7800
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes /X/ No / /

As of July 31, 1999 there were 72,900,105 shares of the registrant's common
stock outstanding.

===============================================================================

Part 1. Financial Information
Item 1. Financial Statements

CNET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's OMITTED)

<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . $99,081 $51,538
Marketable securities . . . . . . . . . . . 320,785 -
Accounts receivable, net. . . . . . . . . . 18,945 15,075
Accounts receivable, related party. . . . . - 1,710
Other current assets. . . . . . . . . . . . 13,074 1,705
Restricted cash . . . . . . . . . . . . . . 855 945
------------- -------------
Total current assets . . . . . . . . . 452,740 70,973

Property and equipment, net. . . . . . . . . . . 18,816 15,325
Other assets . . . . . . . . . . . . . . . . . . 31,250 2,060
------------- -------------
$502,806 $88,358
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . $6,250 $3,477
Accrued liabilities . . . . . . . . . . . . 9,978 6,727
Current portion of long-term debt . . . . . - 1,112
Deferred tax liability. . . . . . . . . . . 57,337 -
------------- -------------
Total current liabilities. . . . . . . 73,565 11,316

Long-term debt . . . . . . . . . . . . . . . . . 178,665 569
------------- -------------
Total liabilities. . . . . . . . . . . 252,230 11,885

Stockholders' equity:
Common stock. . . . . . . . . . . . . . . . 7 7
Additional paid in capital. . . . . . . . . 131,878 127,357
Other comphrehensive income . . . . . . . . 137,564 -
Accumulated deficit . . . . . . . . . . . . (18,873) (50,891)
------------- -------------
Total stockholders' equity . . . . . . 250,576 76,473
------------- -------------
$502,806 $88,358
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements

<PAGE>
CNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000's OMITTED)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Internet. . . . . . . . . . . . . $23,779 $11,395 $42,203 $19,512
Television. . . . . . . . . . . . 1,773 1,898 3,424 3,650
------------- ------------ ------------ -------------
Total revenues . . . . . . . . 25,552 13,293 45,627 23,162

Cost of revenues:
Internet. . . . . . . . . . . . . 7,467 5,885 14,456 11,193
Television. . . . . . . . . . . . 1,768 1,790 3,375 3,537
------------- ------------ ------------ -------------
Total cost of revenues . . . . 9,235 7,675 17,831 14,730
------------- ------------ ------------ -------------
Gross profit . . . . . . . . . . . . 16,317 5,618 27,796 8,432

Operating expenses:
Sales and marketing . . . . . . . 6,996 3,262 12,117 5,741
Development . . . . . . . . . . . 1,656 641 3,165 1,417
General and administrative. . . . 2,408 1,484 3,995 3,133
Amortization of goodwill. . . . . 931 - 1,237 -
------------- ------------ ------------ -------------
Total operating expenses . . . 11,991 5,387 20,514 10,291
------------- ------------ ------------ -------------
Operating income(loss) . . . . . . . 4,326 231 7,282 (1,859)

Other income (expense):
Equity losses . . . . . . . . . . - (4,968) - (8,647)
Gain on sale of equity investments 4,700 5,123 24,575 5,123
Interest income (expense), net. . 186 (46) 425 151
------------- ------------ ------------ -------------
Total other income (expense). . . 4,886 109 25,000 (3,373)
------------- ------------ ------------ -------------
Net income (loss ). . . . . . . . $9,212 $340 $32,282 ($5,232)
============= ============ ============ =============

Other comprehensive income, net of tax:

Unrealized holding gains arising
during the period. . . . . . . . 10,556 - 137,564 -
------------- ------------ ------------ -------------
Comprehensive income(loss) $19,768 $340 $169,846 ($5,232)
============= ============ ============ =============

Basic net income (loss) per share. . $0.13 $0.01 $0.46 ($0.09)
============= ============ ============ =============

Diluted net income (loss) per share. $0.11 $0.01 $0.41 ($0.09)
============= ============ ============ =============

Shares used in calculating
basic per share data . . . . . . . 71,651 60,964 70,556 60,291
============= ============ ============ =============

Shares used in calculating
diluted per share data . . . . . . 80,112 68,002 78,534 60,291
============= ============ ============ =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.

<PAGE>

CNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's OMITTED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . $32,282 ($5,232)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization. . . . . . . . . . 4,968 3,247
Amortization of program costs. . . . . . . . . . 3,294 2,019
Allowance for doubtful accounts. . . . . . . . . (296) 441
Gain on investments . . . . . . . . . . . . . (24,579) -
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . (1,729) (2,391)
Other current assets. . . . . . . . . . . . . (11,284) 192
Other assets. . . . . . . . . . . . . . . . . 739 (225)
Accounts payable. . . . . . . . . . . . . . . 2,768 421
Accrued liabilities . . . . . . . . . . . . . 3,225 (2,392)
------------ -----------
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . 9,388 (3,920)
------------ -----------
Cash flows from investing activities:
Purchase of marketable securities . . . . . . . . . (100,562) -
Investments . . . . . . . . . . . . . . . . . . . . (13,906) -
Cash paid for acquisitions. . . . . . . . . . . . . (7,840) -
Purchases of equipment, excluding capital leases. . (6,689) (2,443)
Purchases of programming assets . . . . . . . . . . (3,577) (1,857)
Deferred interest . . . . . . . . . . . . . . . . . (690) -
------------ -----------
Net cash used in investing activities. . . (133,264) (4,300)
------------ -----------
Cash flows from financing activities:
Net proceeds from issuance of convertible debt. . . 167,479 -
Net proceeds from issuance of stock . . . . . . . . - 25,984
Net proceeds from employee stock purchase plan. . . 419 409
Net proceeds from exercise of options . . . . . . . 5,203 1,720
Principal payments on capital leases. . . . . . . . (42) (178)
Principal payments on equipment note. . . . . . . . (1,640) (647)
------------ -----------
Net cash provided by financing activities. 171,419 27,288
------------ -----------
Net increase (decrease) in cash and cash equivalents. 47,543 19,068
Cash and cash equivalents at beginning of period . . 51,538 22,591
------------ -----------
Cash and cash equivalents at end of period . . . . . $99,081 $41,659
============ ===========
Supplemental disclosure of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . $165 $131
============ ===========
Supplemental disclosure of noncash transactions:
Issuance of debt for acquisitions . . . . . . . . . $5,098 $3,066
============ ===========
Equity investments. . . . . . . . . . . . . . . . . $195,113 $ -
============ ===========
Deferred tax liability. . . . . . . . . . . . . . . $57,337 $ -
============ ===========

</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>

CNET, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

In the opinion of management, the accompanying unaudited
condensed consolidated financial statements reflect all adjustments,
consisting only of normal recurring adjustments, considered
necessary for a fair presentation of the financial condition,
results of operations and cash flows for the periods presented.
These condensed financial statements should be read in conjunction
with the audited consolidated financial statements included in the
Company's most recent annual report on Form 10-K, as filed with the
Securities and Exchange Commission, which contains additional
financial and operating information and information concerning the
significant accounting policies followed by the Company.

The condensed consolidated results of operations for the three
and six months ended June 30, 1999 are not necessarily indicative of the
results to be expected for the current year or any other period.

Net Income (Loss) Per Share

Basic net income per share is computed using the weighted average
number of shares of common stock outstanding during the period and diluted
net income per share is computed using the weighted average number of shares
of common stock and common stock equivalents outstanding during the period.
Diluted net income per share for the period ended June 30, 1999 does not
include the effect of the potential conversion of convertible debt to
approximately 4,622,160 common shares because their effect is anti-dilutive.
Diluted net loss per share for the six months ended June 30, 1998
does not include the effect of approximately 10,603,800 stock options
because their effect is anti-dilutive.

The following table sets forth the computation of net income
(loss) per share (in thousands, except per share data):

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) per share:
Basic net income (loss) per share $0.13 $0.01 $0.46 ($0.09)
============= ============= ============= =============
Diluted net income (loss) per share $0.11 $0.01 $0.41 ($0.09)
============= ============= ============= =============

Net income (loss) $9,212 $340 $32,282 ($5,232)
------------- ------------- ------------- -------------
Basic and diluted shares:
Weighted average common shares outstanding
used in computing basic net income
per share 71,651 60,964 70,556 60,291
------------- ------------- ------------- -------------
Common stock equivalents:

Stock options and awards 8,461 7,038 7,978 -
------------- ------------- ------------- -------------

Weighted average common shares and common
stock equivalents outstanding used in
computing diluted net income (loss)
per share 80,112 68,002 78,534 60,291
------------- ------------- ------------- -------------
</TABLE>

Income Taxes

No income tax provision has been provided as the Company has
sufficient net operating losses for which no benefit has been
recognized, to cover anticipated taxable income for fiscal 1999.

Stock Split

On May 10, 1999, the Company effected a two-for-one split of
its common stock. The accompanying consolidated financial statements
have been retroactively adjusted to reflect the stock split.

Marketable Securities

The Company adopted Statement of Financial SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
The Company determines the appropriate classification of debt and
equity securities at the time of purchase and reevaluates such
designation as of each balance sheet date. Investments classified
as available for sale are reported at market value, with the
unrealized gains and losses, net of tax, reported as a separate
component of shareholders' equity. Realized gains and losses
on sales of investments and declines in value determined to be other
than temporary are included in operating results.

Recent Accounting Pronouncements

The FASB recently issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No.
137 in June 1999, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts (collectively referred to as derivatives), and for
hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position
and measure those instruments at fair value. For a derivative not
designated as a hedging instrument, changes in the fair value of the
derivative are recognized in earnings in the period of change. The Company
will be required to adopt SFAS No. 133 for the year ended December 31, 2001.
Management does not believe the adoption of SFAS No. 133 will have a
material effect on the financial position or operations of the Company.

(2) Comprehensive Income

The Company has adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income," which established standards for
reporting and disclosures of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general
purpose financial statements. Financial statements for earlier
periods have been reclassified for comparative purposes.

During the second quarter of 1999 the Company reported unrealized
holding gains arising from investments classified as available for sale.
The Company has an investment in Vignette Corporation ("Vignette"), which
completed an initial public offering during the first quarter of 1999,
owns approximately 755,000 shares of beyond.com, a public corporation,
and has an investment in Mail.com, Inc. ("Mail.com"), which completed
an initial public offering during the second quarter of 1999. The
Company's investments in Vignette, beyond.com and Mail.com were recorded
at market value based on the closing price of each stock on June 30, 1999,
and the increase in value of each stock was recorded as unrealized
holding gains in comprehensive income.

(3) Segment Information

The Company has adopted the provisions of SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the reporting by public business enterprises
of information about operating segments, products and services,
geographic areas and major customers. The method for determining what
information to report is based on the way that management organizes the
operating segments within the Company for making operating decisions and
assessing financial performance.

The Company's chief operating decision maker is considered to be the
Company's Chief Executive Officer ("CEO"). The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information about revenue and cost of revenue by operating segment for
purposes of making operating decisions and assessing financial performance.
The consolidated information reviewed by the CEO is identical to the
information presented in the accompanying financial statement of
operations. The Company operates in two segments, television and CNET
Online, the Company's Internet operation. Asset information regarding
television and CNET online operations is as follows:

<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
--------- ---------
<S> <C> <C>
Television 2,695 2,951
CNET Online 500,111 74,712
--------- ---------
Consolidated Total 502,806 77,663
========= =========

</TABLE>

(4) Sumo Acquisition

On April 30, 1999, the Company completed the acquisition of Sumo,
Inc., a Florida Corporation ("Sumo") through a merger of Sumo into the
Company. Pursuant to the merger, the Company issued 469,484 shares of
common stock in exchange for all of the outstanding shares of Sumo. Sumo
developed Internet service directories, including webhostlist.com,
webdesignlist.com and webisplist.com. The Company recorded this transaction
using the pooling-of-interests accounting method and recorded the financial
results of Sumo in its consolidated financial statements for all
periods presented. The consolidated financial statements of the Company
for prior periods have been adjusted for the consolidated financial results
of Sumo.

(5) Subsequent Events

On July 27, 1999, the Company completed the acquisition of GDT S.A.,
a Swiss Societe Anonyme, ("GDT") through a merger of GDT into the Company.
Pursuant to the merger, the Company paid $30.0 million in cash and issued
429,185 shares of common stock to GDT shareholder in exchange for all of
the outstanding shares of GDT. GDT is based in Switzerland and has built a
multi-language, multi-market database of product information. GDT's database
of product information will be used to enhance CNET's Shopping services.
The Company will record this transaction using purchase accounting.

On July 29, 1999, the Company completed the acquisition of Nordby
International, Inc., a Colorado corporation, ("Nordby") through a merger of
Nordby into the Company. Pursuant to the merger, the Company paid $5.0 million
in cashm issued a note payable due July 29, 2001 for $5.0 million and issued
230,017 sharees of common stock to Nordby shareholders in exchange for all
outstanding shares of Nordby. Nordby is a provider of customized financial
information to online and print partners. Nordby's financial information will
be used to enhance the Company's coverage of technology stocks through its News
and Investing channel. The Company will record this transaction using purchase
accounting.

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations

General

CNET, Inc. (the Company, which may be referred to as we, us or
our) is a leading media company that provides consumers with
authoritative information online and on television regarding computers,
the Internet and digital technologies. We seek to use our editorial,
technical, product database and programming expertise to engage
consumers and attract advertisers. Based on the volume of traffic over
our branded online network, we believe that we have an established
leadership position in our market. We believe that our online network
is the most frequently used source of technology information online,
with an average of approximately 10.8 million pages viewed daily during
the second quarter of 1999.

Results of Operations

Revenues

Total Revenues

Total revenues were $25.6 million and $13.3 million for the three
months and $45.6 million and $23.2 million for the six months ended
June 30, 1999 and 1998, respectively.

Internet Revenues

Total Internet revenues were $23.8 million and $11.4 million for
the three months and $42.2 million and $19.5 million for the six months
ended June 30, 1999 and 1998, respectively. Internet revenues consist
primarily of revenues derived from the sale of advertisements on pages
delivered to users of our Internet network. Advertising programs
are generally delivered on either an "impression" based program
or a "performance" based program. An impression based program earns
revenues when an advertisement is delivered to a user of our Internet
network. A performance based program earns revenues when a user
of our Internet network responds to an advertisement by linking to an
advertiser's Internet network. Performance based programs include
revenues generated from lead-based compensation from our shopping services,
which commenced in the fourth quarter of 1998. Advertising rates
vary depending upon whether a program is impression or performance based,
where advertisements are placed and the amount and length of the
advertiser's committment. Advertising revenues are recognized in the period
in which the advertisements are delivered. Our ability to sustain or increase
revenues for Internet advertising will depend on numerous factors,
which include, but are not limited to, our ability to increase our
inventory of delivered Internet pages on which advertisements can be
displayed and our ability to maintain or increase advertising rates.

The increase in Internet revenues of $12.4 million for the three
month and $22.7 million for the six month periods ended June 30,
1999 compared to the same periods in 1998 were attributable to
increased pages delivered, increased advertisements sold on our
network and an increase in our average revenue yield per page
delivered. Also contributing to our increased revenues and increased
revenue yield per page were performance-based advertising on our shopping
services. These lead-based programs which were offered during the three
and six month periods ended June 30, 1999, were not offered during the same
period in 1998. In addition, average daily pages delivered on our
network were approximately 10.8 million for the three month and 10.1
for the six month periods ended June 30, 1999 as compared to 6.3
million for each of the three month and six month periods ended June
30, 1998, or an increase of 71% and 60%, respectively. The increased
traffic from the three and six month periods ended June 30, 1998 to the
three and six month periods ended June 30, 1999 was primarily related
to an increase in the number of users of our network.

A portion of our Internet revenues were derived from barter
transactions whereby we delivered advertisements on our Internet
channels in exchange for advertisements on the Internet sites of other
companies. Barter transactions accounted for $1.5 million and $611,000
for the three months and $2.7 million and $1.1 million for the six
months ended June 30, 1999 and 1998, respectively.

Television Revenues

Television revenues were $1.8 million and $1.9 million for the
three months and $3.4 million and $3.7 million for the six months ended
June 30, 1999 and 1998, respectively. Pursuant to our agreement with
USA Networks, USA Networks licensed the right to carry the two hour
programming block, Digital Domain, on its networks for a fee equal to
the cost of production of those programs up to a maximum of $5.5
million from July 1, 1997 to June 30, 1998 and $5.9 million from July
1, 1998 to June 30, 1999. This agreement with USA Networks, which was
scheduled to expire on June 30, 1999, has been extended through
September 30, 1999.

We also produce a television program, TV.com, which is
exclusively distributed by Trans World International ("TWI"). Through
February 28, 1998, TWI sold the advertisements on TV.com and these
revenues were used to offset the costs of distribution and production
of the program. Beginning March 1, 1998, we assumed responsibility for
the sale of advertisements on TV.com and began paying a distribution
fee to TWI. The decrease in revenues related to our television
operations primarily related to decreased revenues for TV.com.

Television operations accounted for 7% and 14% of total revenues
and Internet operations accounted for 93% and 86% of total revenues for
the three months ended June 30, 1999 and 1998, respectively.
Television operations accounted for 8% and 16% of total revenues and
Internet operations accounted for 92% and 84% of total revenues for the
six months ended June 30, 1999 and 1998, respectively. We expect to
experience fluctuations in television and Internet revenues in the
future as a result of many factors, including demand for the Company's
Internet sites and television programming and our ability to develop,
market and introduce new and enhanced Internet content and television
programming.

Cost of Revenues

Total Cost of Revenues

Total cost of revenues were $9.2 million and $7.7 million for the
three months and $17.8 million and $14.7 million for the six months
ended June 30, 1999 and 1998, respectively. Cost of revenues includes
costs associated with the production and delivery of television
programming and the production of our Internet channels. The principal
elements of cost of revenues for our television operations have been
the production costs of our television programs, which primarily
consist of payroll and related expenses for the editorial and
production staff and costs for facilities and equipment. The principal
elements of cost of revenues for our Internet operations have been
payroll and related expenses for the editorial, production and
technology staff, and costs for facilities and equipment.

Cost of Internet Revenues

Cost of Internet revenues were $7.5 million and $5.9 million for
the three months and $14.5 million and $11.2 million for the six months
ended June 30, 1999 and 1998, respectively, representing 31%, 52%, 34%
and 57% of the related revenues, respectively. The increase of $1.6
million and $3.3 million for the three month and six month periods
ended June 30, 1999 as compared to the same periods in 1998 was
primarily attributable to increases in personnel and personnel related
costs. In addition, costs of approximately $611,000 and $1.2 million
were recognized in the three month and six month periods ended June 30,
1999 which related to cost of revenues associated with the acquisitions
of Netventures, Inc., a California corporation, AuctionGate
Interactive, Inc., a California corporation, substantially
all of the assets of Jenesys LLC, a Washington limited liability
company ("Winfiles"), KillerApp corporation, a California corporation
and Sumo, Inc., a Florida corporation.

Cost of Television Revenues

Cost of television revenues were $1.8 million for each of the
three month periods and $3.4 million and $3.5 million for the six
months ended June 30, 1999 and 1998, representing approximately 100%,
94%, 99% and 97% of the related revenues.

Sales and Marketing

Sales and marketing expenses consist primarily of payroll and
related expenses, consulting fees and advertising expenses. Sales and
marketing expenses were $7.0 million and $3.3 million for the three
months and $12.1 million and $5.7 million for the six months ended June
30, 1999 and 1998, respectively, representing 27%, 25%, 27% and 25% of
total revenues for each of the periods. Sales and marketing expenses
increased $3.7 million and $6.4 million for the three month and six
month periods ended June 30, 1999 respectively, compared to the same
periods in 1998.

These increases were primarily related to additional personnel in
sales and sales support roles which accounted for approximately $1.4 million
and $2.6 million for the three and six month periods, respectively,
and increased expenses for advertising of approximately $2.1 million and
$3.2 million which included an increase in barter transactions of $560,000
and $805,000 for the three and six month periods, respectively. We expect
sales and marketing expenses to increase significantly in the future. On
July 1, 1999 we announced the launch of a multi-media advertising campaign.
We currently expect to spend approximately $100.0 million within the next
six to eighteen months in connection with this campaign. The
anticipated cost of the campaign may vary depending on its effectiveness.

Development

Development expenses include expenses for the development and
production of new Internet channels and for the research and
development of new or improved technologies to enhance the features and
functionality of our Internet network, including payroll and related
expenses for editorial, production and technology staff, as well as
costs for facilities and equipment. Costs associated with the
development of a new Internet channel are no longer recognized as
development expenses when the new channel begins generating revenue.

Development expenses were $1.7 million and $641,000 for the three
months and $3.2 million and $1.4 million for the six months ended June
30, 1999 and 1998, respectively, representing 6%, 5%, 7% and 6% of
total revenues for each of the periods. The increase in development
expenses of approximately $1.0 million for the three months and $1.7
million for the six months ended June 30, 1999 as compared to the same
periods in 1998 were primarily attributable to additional personnel
costs related to the enhancement of the functionality of our Internet
network.

General and Administrative

General and administrative expenses consist of payroll and
related expenses for executive, finance and administrative personnel,
professional fees and other general corporate expenses. General and
administrative expenses were $2.4 million and $1.5 million for the
three months and $4.0 million and $3.1 million for the six months ended
June 30, 1999 and 1998, respectively, representing 9%, 11%, 9% and 14%
of total revenues, respectively. The increases in general and
administrative expenses were primarily related to additional personnel
costs and other costs related to facilitating our growth.

Goodwill Amortization

We acquired Winfiles.com on February 26, 1999 for a total
purchase price of $11.5 million. The acquisition was a purchase of
assets and approximately $11.0 million of the purchase price was
attributable to goodwill. We are amortizing the goodwill related to
the purchase of Winfiles.com over three years.

Other Income (Expense)

Total other income (expense) was $4.9 million and $109,000 for
the three months and $25.0 million and $(3.4) million for the six
months ended June 30, 1999 and 1998, respectively. Other income
(expense) consists of equity losses, gain on the sale of equity
investments and net interest income (expense).

Equity losses included our interest in SNAP! LLC ("snap").
Pursuant to an agreement in June 1998 between NBC Multimedia and us,
snap was formed as a limited liability company. Based on the structure
of the Board of snap and considering that we have no obligation for
future funding of snap, we do not control snap and accordingly do not
consolidate its results. We have recorded snap's financial results
using the equity method of accounting effective January 1, 1998. We had
no equity losses for the three and six months ended June 30, 1999, and
equity losses were $5.0 million for the three months and $8.6 million
for the six months ended June 30, 1998. All of the equity losses in
1998 were related to snap.

Gain on the sale of equity investments were $4.7 million and
$5.1 million for the three months and $24.6 million and $5.1 million
for the six months ended June 30, 1999 and 1998, respectively. The gain
on the sale of equity investments of $4.7 million for the three month period
ended June 30, 1999 related to the sale of a portion of our holdings of
Vignette Corporation. The gains on sales of equity investments of $24.6
million for the six month period ended June 30, 1999 included the gain
related to the sale of the Vignette shares and a gain of approximately
$19.2 million related to the merger agreement between beyond.com and
BuyDirect.com, which resulted in our owning approximately 755,000
shares of beyond.com due to our ownership interest in BuyDirect.com. We
recorded a gain related to shares we received on the date of the
merger. Our investment in beyond.com is classified as available
for sale and fluctuations in the value of this investment are
recorded as unrecognized gain (loss) on investments in
the stockholders' equity section of our balance sheet.

Income (Loss)

We recorded net income of $9.2 million or $0.11 per diluted share
and $340,000 or $0.01 per diluted share for the three months ended June
30, 1999 and 1998, respectively. We recorded net income of $32.3
million or $0.41 per diluted share for the six months ended June 30,
1999 compared to net losses of $5.2 million or 0.09 per share for the
comparable period in 1998. Net income increased $8.9 million for the
three months and $37.5 million for the six months ended June 30, 1999
as compared to the comparable periods in 1998, respectively.

Liquidity and Capital Resources

As of June 30, 1999, we had cash and cash equivalents of $99.1
million and marketable securities of $320.8 million. Cash provided by
operating activities of $9.4 million for the six months ended June 30,
1999 was primarily due to earnings of $32.3 million, depreciation,
amortization and the amortization of program costs of $8.3 million, a
gain on sale of investments of $24.6 million and an increase in other
current assets of $11.3 million. Net cash used in operating activities
of $3.9 million for the six months ended June 30, 1998 was primarily
attributable to net losses in the period. Net cash used in investing
activities of $133.3 million for the six months ended June 30, 1999
were primarily attributable to purchases of marketable securities and
purchases of equipment and programming assets. Net cash used in
investing activities of $4.3 million for the six months ended June 30,
1998 were primarily attributable to purchases of equipment and
programming assets. Cash flows provided by financing activities of
$171.4 million in 1999 consisted primarily of the issuance of
convertible debt with net proceeds of $167.5 million and the issuance
of common stock through our stock option plans. Cash flows
provided by financing activities in 1998 consisted primarily of
proceeds from the issuance of common stock. We believe that existing
funds will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.

As of June 30, 1999 we had obligations outstanding under notes
payable totaling $179 million. Notes payable include $173 million of
5% Convertible Subordinated Notes, due 2006. Such obligations were
incurred to obtain proceeds for general corporate purchases, to finance
acquisitions and increases in marketing expenditures.

Seasonality and Cyclicality

We believe that advertising sales in traditional media, such as
television, are generally lower in the first and third calendar
quarters of each year than in the respective preceding quarters and
that advertising expenditures fluctuate significantly with economic
cycles. Depending on the extent to which the Internet is accepted as
an advertising medium, seasonality and cyclicality in the level of
advertising expenditures generally could become more pronounced for
Internet advertising. Advertising expenditures account for
substantially all of our revenues, and seasonality and cyclicality in
advertising expenditures generally, or with respect to Internet-based
advertising specifically, could therefore have a material adverse
effect on our business, financial condition or operating results. We
may also experience seasonality in connection with our shopping
services, which may reflect seasonal trends in the retail industry.
The level of consumer retail spending generally decreases in the first
and third calendar quarters.

Year 2000 Compliance

We are aware of the issues associated with the programming code
and embedded technology in existing systems as the year 2000 approaches.
The "Year 2000 Issue" arises from the potential for computers to fail or
operate incorrectly because their programs incorrectly interpret the two
digit date fields "00" as 1900 or some other year, rather than the year
2000. The year 2000 issue creates risk for us from unforeseen problems
in our computer systems and from third parties, including our customers,
vendors and manufacturers. Failures of our and/or third parties'
computer systems could result in an interruption in, or a failure of,
our normal business activities or operations. Such failures could
materially and adversely affect our business prospects, financial
condition and operating results.

To mitigate this risk, we have established a formal year 2000
program to oversee and coordinate the assessment, remediation, testing
and reporting activities related to this issue. We are currently in
the assessment phase of its year 2000 program. As part of this
assessment, we will review the following systems to determine if they
are year 2000 compliant:

* our application systems (financial systems, various custom-
developed business applications)

* technology infrastructure (networks, servers, desktop
equipment)

* facilities (security systems, fire alarm systems)

* vendors/partners and products.

This review will include:

* the collection of documentation from software and hardware
manufacturers

* the detailed review of programming code for custom applications

* the physical testing of desktop equipment using software
designed to test for year 2000 compliance

* the examination of key vendors'/partners' year 2000 programs

* the ongoing testing of our products as part of normal quality
assurance activities.

We anticipate that we will complete the assessment and
remediation phase and begin the testing phase of our year 2000 program
by the third quarter of 1999. We have not made estimates for the costs
associated with completing our year 2000 program, but will do so after
completion of the assessment phase of the project. Costs incurred to
date, including costs of personnel, have not been material. We can
offer no assurance that we will not experience serious unanticipated
negative consequences and/or additional material costs caused by
undetected errors or defects in the technology used in our internal
systems, or by failures of our vendors/partners to address their year
2000 issues in a timely and effective manner.

Should miscalculations or other operational errors occur as a
result of the year 2000 issue, we or the parties on which we depend may
be unable to produce reliable information or to process routine
transactions. Furthermore, in the worst case, we or the parties on
which we depend may be incapable of conducting critical business
activities which include, but are not limited to, the production and
delivery of our Internet channels, invoicing customers and paying
vendors, which could have a material adverse effect on our business,
prospects, financial condition and operating results.

Special Note Regarding Forward-Looking Statements and Risk Factors

Certain statements in this Quarterly Report on Form 10-Q contain
"forward-looking statements." Forward-looking statements are any
statements other than statements of historical fact. Examples of
forward-looking statements include projections of earnings, revenues or
other financial items, statements of the plans and objectives of
management for future operations, statements concerning proposed new
products or services, statements regarding future economic conditions
or performance and any statement of assumptions underlying any of the
foregoing. In some cases, you can identify forward-looking statements
by the use of words such as "may," "will," "expects," should,
"believes", "plans," "anticipates," "estimates," predicts, "potential"
or "continue," and any other words of similar meaning.

The risks, uncertainties and other factors to which forward-
statements are subject include, among others, those set forth under the
caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, which is available from us, from the
Securities and Exchange Commission at prescribed rates and at the web-
site www.sec.gov. Such factors include, without limitation, the
following: limited operating history; fluctuations in quarterly
operating results; failure to compete; risks associated with
anticipated growth; risks related to potential Year 2000 problems;
risks associated with technological change; availability of key
personnel and changes in governmental regulations. All subsequent
written or oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety
by such factors.

Any or all of our forward-looking statements in this report and
in any other public statements we make may turn out to be wrong. They
can be affected by inaccurate assumptions we might make or by known or
unknown risks and uncertainties. Many factors mentioned in the
discussion in this report will be important in determining future
results. Consequently, no forward-looking statement can be guaranteed.
Actual future results may vary materially. We undertake no obligation
to publicly update any forward-looking statements, whether as a result
of new information, future events or otherwise. You are advised,
however, to consult any further disclosures we make on related subjects
in our reports to the SEC. Also note that we provide the following
cautionary discussion of risks, uncertainties and possibly inaccurate
assumptions relevant to our businesses. These are factors that we think
could cause our actual results to differ materially from expected and
historical results. Other factors besides those listed here could also
adversely affect us. This discussion is provided as permitted by the
Private Securities Litigation Reform Act of 1995.

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Effective July 23, 1999, we acquired GDT S.A., a Swiss Societe Anonyme,
for approximately $50 million in cash and stock. In connection with this
acquisition, we issued 429,185 shares of our common stock to certain
shareholders of GDT. No underwriters were involved in the transaction,
and we did not pay any underwriting discounts or commissions. The issuance
of shares in this transaction was exempt from the registration requirements of
the Securities Act of 1933 pursuant to Section 4(2) thereof.

Effective July 29, 1999, we acquired Nordby International, Inc.,
a Colorado corporation ("Nordby") for a total purchase price of
approximately $20 million, through a merger of Nordby into the Company
(the "Merger"). In connection with the Merger, the Company issued
230,017 shares, or approximately $10 million, of its common stock to
the sole shareholder of Nordby. No underwriters were involved in the
transaction, and we did not pay any underwriting discounts or
commissions. The issuance of shares in this transaction was exempt from
the registration requirements of the Securities Act of 1933 pursuant to
Section 4(2) thereof.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

3.1* Amended and Restated Bylaws of CNET, Inc.

10.1* Employment Agreement, dated as of April 27, 1999, by and
between Richard Marino and CNET, Inc.

27.1* Financial Data Schedule

____________________
*Filed herewith

(b) Reports on Form 8-K

On April 1, 1999, the Company filed a Current Report on Form 8-K
with respect to its acquisition of KillerApp Corporation.

On April 23, 1999, the Company filed a Current Report on Form 8-K
with respect to its first quarter earnings and 2 for 1 split of
its common stock.

On May 14, 1999, the Company filed a Current Report on Form 8-K
with respect to its acquisition of Sumo, Inc.

On May 17, 1999, the Company filed a Current Report on Form 8-K
relating to its agreement to contribute its effective 40%
ownership in Snap.com into a new company called NBC Internet.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

CNET, INC.
(Registrant)

/s/ Douglas N. Woodrum
________________________
Douglas N. Woodrum
Executive Vice President,
Chief Financial Officer

August 16, 1999

Date

Exhibit 3.1

AMENDED AND RESTATED BYLAWS
OF
C|NET, INC.

C|NET, Inc. (the "Corporation"), pursuant to the provisions of
Section 109 of the Delaware General Corporation Law (the "DGCL"),
hereby adopts these Amended and Restated Bylaws, which restate, amend
and supersede the bylaws of the Corporation in their entirety as
described below:

ARTICLE I

Offices

Section 1. Registered Office. The registered office of the
Corporation shall be established and maintained at 1013 Centre Road,
Wilmington, New Castle County, Delaware 19805-1297.

Section 2. Other Offices. The Corporation may also have
offices at such other places, both within and without the State of
Delaware, as the Board of Directors may from time to time determine
or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

Section 1. Place of Meetings. Meetings of stockholders may
be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.

Section 2. Annual Meetings. An annual meeting of
stockholders shall be held on such day in each fiscal year of the
Corporation and at such time and place as may be fixed by the Board
of Directors, at which meeting the stockholders shall (i) elect
directors to fill the class of directors whose terms are expiring at
such meeting and (ii) transact such other business as may properly
be brought before the meeting.

Section 3. Notice of Annual Meeting. Written or printed
notice of the annual meeting, stating the place, day and hour
thereof, shall be given to each stockholder entitled to vote thereat
at such address as appears on the books of the Corporation, not less
than ten days nor more than sixty days before the date of the
meeting. Any stockholder of the Corporation that has been the
beneficial owner of at least $1,000 of securities entitled to vote
at an annual meeting for at least one year may seek to transact
other corporate business at the annual meeting, provided that such
business is set forth in a written notice and mailed by certified
mail to the Secretary of the Corporation and received no later than
120 calendar days in advance of the date of the Corporation's proxy
statement released to security-holders in connection with the
previous year's annual meeting of security holders (or, if no annual
meeting was held in the previous year or the date of the annual
meeting has been changed by more than 30 calendar days from the date
contemplated at the time of the previous year's proxy statement, a
reasonable time before the solicitation is made). Notwithstanding
the foregoing, such notice must also comply with any applicable
federal securities laws establishing the circumstances under which
the Corporation is required to include the proposal in its proxy
statement or form of proxy.

Section 4. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or the certificate of incorporation, may be
called only by the Chief Executive Officer, and shall be called by
the Chief Executive Officer or the Secretary at the request in
writing of a majority of the Board of Directors. Such request shall
state the purpose or purposes of the proposed meeting.

Section 5. Notice of Special Meetings. Written or printed
notice of a special meeting of stockholders, stating the place, day
and hour and purpose or purposes thereof, shall be given to each
stockholder entitled to vote thereat at such address as appears on
the books of the Corporation, not less than ten days nor more than
sixty days before the date of the meeting.

Section 6. Business at Special Meetings. Business transacted
at all special meetings of stockholders shall be confined to the
purpose or purposes stated in the notice thereof.

Section 7. Stockholder List. At least ten days before each
meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number
of voting shares held by each, shall be prepared by the Secretary.
Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours,
for such ten day period, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the
meeting is to be held. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to
the inspection of any stockholder during the meeting.

Section 8. Quorum. The holders of a majority of the votes
attributed to the shares of capital stock issued and outstanding and
entitled to vote thereat, represented in person or by proxy, shall
constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute, the
certificate of incorporation or these bylaws. Abstentions and broker
non-votes will be counted for purposes of determining the presence
or absence of a quorum. The stockholders present may adjourn the
meeting despite the absence of a quorum. When a meeting is
adjourned for less than thirty days in any one adjournment and a new
record date is not fixed for the adjourned meeting, it shall not be
necessary to give any notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been
transacted on the original date of the meeting. When a meeting is
adjourned for thirty days or more, or when after the adjournment a
new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given as in the case of an original
meeting.

Section 9. Majority Vote. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares having
voting power with respect to a question brought before the meeting
that are represented in person or by proxy at the meeting shall
decide such question, unless the question is one upon which, by
express provision of statute, the certificate of incorporation or
these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such
question. In determining the total number of shares having voting
power with respect to a question brought before the meeting that are
represented in person or by proxy at the meeting, broker non-votes
on such question will not be counted.

Section 10. Proxies. (a) Each stockholder entitled to vote
at a meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another
person or persons to act for him by proxy, but no such proxy shall
be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.

(b) Without limiting the manner in which a stockholder
may authorize another person or persons to act for him as proxy
pursuant to subsection (a) of this Section, the following shall
constitute a valid means by which a stockholder may grant such
authority:

(i) A stockholder may execute a writing
authorizing another person or persons to act for him as proxy.
Execution may be accomplished by the stockholder or his
authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such
writing by any reasonable means including, but not limited to,
by facsimile signature.

(ii) A stockholder may authorize another person
or persons to act for him as proxy by transmitting or
authorizing the transmission of a telegram, cablegram, or
other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm,
proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy
to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must
either set forth or be submitted with information from which
it can be determined that the telegram, cablegram or other
electronic transmission was authorized by the stockholder. If
it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if
there are no inspectors, such other persons making that
determination shall specify the information upon which they
relied.

(c) Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission created
pursuant to subsection (b) of this Section may be substituted or
used in lieu of the original writing or transmission for any and all
purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original
writing or transmission.

(d) Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission created
pursuant to subsection (b) of this Section may be substituted or
used in lieu of the original writing or transmission for any and all
purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original
writing or transmission.

Section 11. Voting. Unless otherwise provided by statute or
the certificate of incorporation, each stockholder shall have one
vote for each share of stock having voting power, registered in his
name on the books of the Corporation.

Section 12. Consent of Stockholders in Lieu of Meeting. Any
action required to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or
special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were present
and voted and such consent or consents are delivered to the
Corporation. Every written consent shall bear the date of
signatures of each stockholder and no written consent shall be
effective to take the corporate action referred to therein unless,
within sixty days of the earliest dated consent, written consents
signed by a sufficient number of holders to take action are
delivered to the Corporation. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented
in writing.

Section 13. Inspectors. (a) The Corporation may, in advance
of any meeting of stockholders, appoint one or more inspectors to
act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders,
the chairman of the meeting shall appoint one or more inspectors to
act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and
according to the best of his ability.

(b) The inspectors shall (i) ascertain the number of
shares outstanding and the voting power of each, (ii) determine the
shares represented at a meeting and the validity of proxies and
ballots, (iii) count all votes and ballots, (iv) determine and
retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v)
certify their determination of the number of shares represented at
the meeting, and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist
the inspectors in the performance of the duties of the inspectors.

(c) The date and time of the opening and the closing
of the polls for each matter upon which the stockholders will vote
at a meeting shall be announced at the meeting. No ballot, proxies
or votes, nor any revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless the
Delaware Court of Chancery, upon application by a stockholder, shall
determine otherwise.

(d) In determining the validity and counting of
proxies and ballots, the inspectors shall be limited to an
examination of the proxies, any envelopes submitted with those
proxies, any information provided in accordance with Article II,
Section 10(b)(ii), ballots and the regular books and records of the
corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and
ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons that represent more votes than the holder of a
proxy is authorized by the record owner to cast, or more votes than
the stockholder holds of record. If the inspectors consider other
reliable information for the limited purpose permitted herein, the
inspectors at the time they make their certification pursuant to
subsection (b)(v) of this Section shall specify the precise
information considered by them including the person or persons from
whom they obtained the information, when the information was
obtained, the means by which the information was obtained and the
basis for the inspector's belief that such information is accurate
and reliable.

ARTICLE III

Board of Directors

Section 1. Powers. The business and affairs of the
Corporation shall be managed by a Board of Directors. The Board may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute, by the certificate of
incorporation or these bylaws directed or required to be exercised
or done by the stockholders.

Section 2. Number of Directors.

(a) The Board of Directors shall be divided into three
classes, designated Class I, Class II and Class III, which
shall be as nearly as equal in number as possible. Initially,
Class I directors shall hold office for a term expiring at the
next succeeding annual meeting of stockholders, Class II
directors shall hold office for a term expiring at the second
succeeding annual meeting of stockholders and Class III
directors shall hold office for a term expiring at the third
succeeding annual meeting of stockholders. At each annual
meeting of stockholders following this initial classification,
the respective successors of each class shall be elected for
three year terms.

(b) The number of directors shall be fixed from time to
time by resolution of the Board of Directors. In case of any
increase in the number of directors in advance of an annual
meeting of stockholders, each additional director shall be
elected by the directors then in office, although less than a
quorum, to hold office until the next election of the class for
which such director shall have been chosen (as provided in the
last sentence of this subsection (b)), or until his successor
shall have been duly chosen. No decrease in the number of
directors shall shorten the term of any incumbent director. Any
newly created or eliminated directorships resulting from an
increase or decrease shall be apportioned by the Board among the
three classes of directors so as to maintain such classes as
nearly equal in number as possible.

Section 3. Election and Term. Except as provided in Section
4 of this Article III, directors to fill the class of directors
whose terms are expiring at such meeting shall be elected at the
annual meeting of the stockholders, and each director shall be
elected to serve for a three year term and until his successor shall
have been elected and shall qualify, or until his death, resignation
or removal from office. Directors need not be stockholders of the
Corporation.

Section 4. Vacancies and Newly Created Directorships. If the
office of any director or directors becomes vacant by reason of
death, resignation, retirement, disqualification, removal from
office, or otherwise, or the number of directors constituting the
whole Board shall be increased, a majority of the remaining or
existing directors, though less than a quorum, may choose a
successor or successors, or the director or directors to fill the
new directorship or directorships, who shall hold office for the
unexpired term in respect to which such vacancy occurred or, in the
case of a new directorship or directorships, until the next annual
meeting of the stockholders at which members of the director's class
are elected.

Section 5. Removal. A director of the Corporation may be
removed by the stockholders of the Corporation only for cause and only
by the affirmative vote of a majority of the stockholders then
entitled to vote in the election of directors. For this purpose,
"cause" means (i) the director's commission of an act of fraud or
embezzlement against the Corporation, (ii) conviction of the
director of a felony or a crime involving moral turpitude, (iii) the
director's gross negligence or willful misconduct in performing the
director's duties to the Corporation or its stockholders or (iv) a
director's breach of fiduciary duty owed to the Corporation.

Section 6. Nominations for Directors. Nominations for
election to the Board of Directors of the Corporation at a meeting
of the stockholders may be made by the Board of Directors, or on
behalf of the Board of Directors by a Nominating Committee appointed
by the Board of Directors, or by any stockholder of the Corporation
that has been the beneficial owner of at least $1,000 of securities
entitled to vote at such meeting for at least one year. Any
nomination by such a stockholder must be set forth in a written
notice and mailed by certified mail to the Secretary of the
Corporation and received no later than (a) with respect to an annual
meeting, 120 calendar days in advance of the date of the
Corporation's proxy statement released to security-holders in
connection with the previous year's annual meeting of security
holders (or, if no annual meeting was held in the previous year or
the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous
year's proxy statement, a reasonable time before the solicitation is
made) or (b) with respect to a special meeting, a reasonable time
before the solicitation is made. Notwithstanding the foregoing, any
such notice by a stockholder must also comply with any applicable
federal securities laws establishing the circumstances under which
the Corporation is required to include such stockholder's nomination
in its proxy statement or form of proxy for such meeting. Any such
notice by a stockholder must set forth as to each proposed nominee
who is not an incumbent director (i) the name, age, business address
and, if known, residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each such
nominee, (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee and the nominating
stockholder, and (iv) any other information concerning the nominee
that must be disclosed of nominees in proxy solicitations pursuant
to Rule 14(a) of the Securities and Exchange Act of 1934, as
amended.

The Chairman of the Board, or in his absence the Vice Chairman
of the Board or the President, may, if the facts warrant, determine
and declare to the meeting of stockholders that nomination was not
made in accordance with the foregoing procedure and that the
defective nomination shall be disregarded.

ARTICLE IV

Meetings of the Board

Section 1. Regular Meetings. Regular meetings of the Board
may be held at such times and at such places, either within or
without the State of Delaware, as from time to time shall be
determined by the Board of Directors. Notice of the time and place
of each meeting must be given to all directors at least 24 hours
prior to the meeting.

Section 2. Special Meetings. Special meetings of the Board
may be called by the President or the Chairman of the Board on 24
hours' notice to each director, delivered either personally or by
mail or by telegram or telecopier. Special meetings shall be called
by the President or the Secretary in like manner and on like notice
on the written request of one director.

Section 3. Quorum and Voting. At all meetings of the Board, a
majority of the directors at the time in office shall be necessary
and sufficient to constitute a quorum for the transaction of
business; and the act of a majority of directors present at any
meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by
statute, the certificate of incorporation or these bylaws. If a
quorum shall not be present at any meeting of director, the
directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.

Section 4. Telephone Meetings. Directors may attend any
meeting of the Board or any committee thereof by conference
telephone, radio, television or similar means of communication by
means of which all persons participating in the meeting can hear
each other, and all members so attending shall be deemed present at
the meeting for all purposes including the determination of whether
a quorum is present.

Section 5. Action by Written Consent. Any action required or
permitted to be taken by the Board or any committee thereof, under
the applicable provisions of any statute, the certificate of
incorporation, or these bylaws, may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by
all the members of the Board or committee, as the case may be.

ARTICLE V

Committees

Section 1. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate
one or more directors to constitute an Executive Committee, which
Committee, to the extent provided in such resolution, shall have and
may exercise all of the authority of the Board of Directors in the
business and affairs of the corporation except where action by the
Board of Directors is expressly required by statute. The Executive
Committee shall keep regular minutes of its proceedings and report
the same to the Board when required.

Section 2. Other Committees. The Board of Directors may
similarly create other committees for such terms and with such
powers and duties as the Board deems appropriate.

Section 3. Committee Rules; Quorum. Each committee may adopt
rules governing the method of calling and time and place of holding
its meetings. Unless otherwise provided by the Board of Directors,
a majority of any committee shall constitute a quorum for the
transaction of business, and the act of a majority of the members of
such committee present at a meeting at which a quorum is present
shall be the act of such committee.

ARTICLE VI

Compensation of Directors

The Board of Directors shall have authority to determine, from
time to time, the amount of compensation, if any, which shall be
paid to its members for their services as directors and as members
of committees. The Board shall also have power in its discretion to
provide for and to pay to directors rendering services to the
Corporation not ordinarily rendered by directors as such, special
compensation appropriate to the value of such services as
determined by the Board from time to time. Nothing herein contained
shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor.

ARTICLE VII

Notices

Section 1. Methods of Notice. Whenever any notice is
required to be given to any stockholder, director or committee
member under the provisions of any statute, the certificate of
incorporation or these bylaws, such notice shall be given in writing
(a) by mail addressed to such stockholder, director or committee
member at such address as appears on the books of the corporation,
which notice shall be deemed to be given at the time it is deposited
in the United States mail with postage thereon prepaid; (b) by
telegram, which notice shall be deemed to be given at the time it is
delivered to the telegraph office; (c) by telecopy, which notice
shall be deemed to be given at the time it is transmitted; or (d) in
person, which notice shall be deemed to be given when received.

Section 2. Waiver of Notice. Whenever any notice is required
to be given to any stockholder, director or committee member under
the provisions of any statute, the certificate of incorporation or
these bylaws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice. Attendance at any meeting shall constitute a waiver of
notice thereof except as otherwise provided by statute.

ARTICLE VIII

Officers

Section 1. Executive Officers. The executive officers of the
corporation shall consist of a Chairman of the Board, a Vice
Chairman of the Board, a President, and a Secretary, each of whom
shall be elected by the Board of Directors. The Board of Directors
may also elect as officers of the corporation one or more Vice
Presidents, one or more of whom may be designated Executive or
Senior Vice Presidents and may also have such descriptive titles as
the Board shall deem appropriate, and a Treasurer. Any two or more
offices may be held by the same person.

Section 2. Election and Qualification. The Board of
Directors at its first meeting after each annual meeting of
stockholders shall elect the officers of the Corporation.

Section 3. Other Officers and Agents. The Board may elect or
appoint Assistant Vice Presidents, Assistant Secretaries and
Assistant Treasurers, and such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.

Section 4. Salaries. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors except as
otherwise directed by the Board.

Section 5. Term, Removal and Vacancies. The officers of the
Corporation shall hold office until their successors are chosen and
qualify. Any officer or agent of the Corporation may be removed at
any time by the affirmative vote of a majority of the Board of
Directors, or by the President. Any vacancy occurring in any office
of the Corporation may be filled by the Board of Directors or
otherwise as provided in this Article.

Section 6. Execution of Instruments. The Chairman of the
Board, the Vice Chairman of the Board, and the President (and such
other officers as are authorized thereunto by resolution of the
Board of Directors) may execute in the name of the Corporation
bonds, notes, debentures and other evidences of indebtedness, stock
certificates, deeds, mortgages, deeds of trust, indentures,
contracts, leases, agreements and other instruments, requiring a
seal under the seal of the corporation, and may execute such
documents where not requiring a seal, except where such documents
are required by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be exclusively
delegated to some other officer or agent of the corporation.

Section 7. Duties of Officers. The duties and powers of the
officers of the Corporation shall be as provided in these bylaws, or
as provided for pursuant to these bylaws, or (except to the extent
inconsistent with these bylaws or with any provision made pursuant
hereto) shall be those customarily exercised by corporate officers
holding such offices.

Section 8. Chairman of the Board. The Chairman of the Board
shall be the Chief Executive Officer of the Corporation and shall,
in general, supervise and control all of the business and affairs of
the Corporation. The Chairman of the Board shall preside when
present at all meetings of the Board of Directors. He shall advise
and counsel the other officers of the corporation and shall exercise
such powers and perform such duties as shall be assigned to or
required of him from time to time by the Board of Directors. The
Chairman of the Board shall have all of the powers granted by the
bylaws to the Vice Chairman of the Board or the President and from
time to time may delegate all, or any, of his powers to the Vice
Chairman of the Board or the President.

Section 9. Vice Chairman of the Board. The Vice Chairman of
the Board shall report to the Chairman of the Board and shall have
all necessary powers to discharge responsibilities as may be
assigned to the Vice Chairman of the Board by the Chairman of the
Board or the Board of Directors, from time to time, including
general supervision of the affairs of the Corporation and active
control of all of its business. The Vice Chairman of the Board
shall perform all the duties and have all of the powers of the
Chairman of the Board in the absence of the Chairman of the Board.

Section 10. President. The President shall have general
powers of oversight, supervision and management of the business and
affairs of the Corporation as the Chairman of the Board or the Board
of Directors may from time to time designate. The Chairman of the
Board shall provide for the division of the duties among himself,
the Vice Chairman of the Board and the President from time to time
upon any basis that the Chairman of the Board shall determine is
necessary or advisable and in the best interest of the Corporation.

Section 11. Vice Presidents. The Vice Presidents in the
order determined by the Board of Directors shall, in the absence or
disability of the President, perform the duties and exercise the
powers of the President, and shall perform such other duties as the
Board of Directors, the Chairman of the Board, the Vice Chairman of
the Board, and the President may prescribe.

Section 12. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of the
stockholders and record all votes and the minutes of all proceedings
in a book to be kept for that purpose and shall perform like duties
for the committees of the Board of Directors when required. Except
as may be otherwise provided in these bylaws, he shall give, or
cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors, the
Chairman of the Board, the Vice Chairman of the Board, and the
President. He shall keep in safe custody the seal of the
corporation, if any, and shall have authority to affix the same to
any instrument requiring it, and when so affixed it may be attested
by his signature. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature. In the absence of the
Treasurer and all Assistant Treasurers, the Secretary shall perform
all the duties and have all the powers of the Treasurer.

Section 13. Assistant Secretaries. The Assistant Secretaries
in the order determined by the Board of Directors shall, in the
absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, and the President may prescribe.
Assistant secretaries may be appointed by the President without
prior approval of the board of directors.

Section 14. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all monies and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, and the President, whenever they may
require it, an account of all of his transactions as Treasurer and
of the financial condition of the Corporation.

Section 15. Assistant Treasurers. The Assistant Treasurers
in the order determined by the Board of Directors shall, in the
absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, and the President may prescribe.

ARTICLE IX

Shares and Stockholders

Section 1. Certificates Representing Shares. Every holder of
stock in the Corporation shall be entitled to have a certificate,
signed by, or in the name of the Corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the President or a Vice
President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, certifying
the number of shares owned by him in the corporation. The signature
of any such officer may be facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer at the date of its issuance.
If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to
represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the DGCL, in lieu of the
foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent
such class or series of stock a statement that the corporation will
furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or
other special rights of each class or series thereof and the
qualifications, limitations or restrictions of such preferences
and/or rights.

Section 2. Transfer of Shares. Subject to valid transfer
restrictions and to stop-transfer orders directed in good faith by
the Corporation to any transfer agent to prevent possible violations
of federal or state securities laws, rules or regulations, or for
any other lawful purpose, upon surrender to the Corporation of a
certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record
the transaction upon its books.

Section 3. Fixing Record Date.

(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may
fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the Board
of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day
next preceding the date on which notice is given, or, if notice is
waived, at the close of business on the date next preceding the day
on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the
adjourned meeting.

(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the
date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the
Board of Directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required
by this Section, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in
which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by statute, the record
date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of
business on the day on which the Board of Directors adopts the
resolution taking such prior action.

(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled
to receive any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than
sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.

Section 4. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on
its books as the owner of any share or shares to receive dividends,
and to vote as such owner, and for all other purposes as such owner;
and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the
State of Delaware.

Section 5. Lost Certificates. The Board of Directors may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.

ARTICLE X

Indemnification

(a) Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or
a person of whom he or she is the legal representative, is or was a
director or executive officer of the Corporation or is or was serving
at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as an executive officer or
director or in any other capacity while serving as an officer or
director shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the DGCL, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines, ERISA excise taxes or penalties,
and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to
be a director or executive officer and shall inure to the benefit of
the indemnitee's heirs, executors, and administrators; provided,
however, that, except as provided in paragraph (b) hereof with respect
to proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding
(or part thereof) was authorized by the board of directors of the
Corporation. The right to indemnification conferred in this Article X
shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the DGCL requires, an
advancement of expenses incurred by an indemnitee in his or her
capacity as a director or executive officer (and not in any other
capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by
final judicial decision from which there is no further right to appeal
(hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expense under this Article or
otherwise.

(b) If a claim under paragraph (a) of this Article X is not
paid in full by the Corporation within sixty days after a written
claim has been received by the Corporation (except in the case of a
claim for an advancement of expenses, in which case the applicable
period shall be twenty days), the indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such
suit, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in
a suit brought by the indemnitee to enforce a right to an advancement
of expenses) it shall be a defense that the indemnitee has not met the
applicable standard of conduct set forth in the DGCL, and in any suit
by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that the indemnitee
has not met the applicable standard of conduct set forth in the DGCL.
Neither the failure of the Corporation (including its board of
directors, independent legal counsel or its stockholders) to have made
a determination prior to the commencement of such suit that the
indemnitee has not met the applicable standard set forth in the DGCL,
nor an actual determination by the Corporation (including its board of
directors, independent legal counsel or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall
create a presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement
of expenses hereunder or by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified or to
such advancement of expenses under this Article or otherwise shall be
on the Corporation.

(c) The rights to indemnification and to the advancement of
expenses conferred in this Article X shall not be exclusive of any
other right that any person may have or hereafter acquire under this
Amended and Restated Certificate of Incorporation or any other bylaw,
agreement, vote of stockholders or disinterested directors, or
otherwise.

(d) The Corporation may maintain insurance, at its expense, to
protect itself and any director or officer of the Corporation or
another corporation, partnership, joint venture, trust, or other
enterprise against any expense, liability, or loss, whether or not the
Corporation would have the power to indemnify such person against such
expense, liability or loss under the DGCL.

(e) The Corporation may, to the extent authorized from time to
time by the board of directors, grant rights to indemnification and to
the advancement of expenses to any employee or agent of the
Corporation to the fullest extent of the provisions of this Article X
with respect to the indemnification and advancement of expenses of
directors and executive officers of the Corporation.

ARTICLE XI

General

Section 1. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the certificate of
incorporation, if any, or of the resolutions, if any, providing for
any series of stock, may be declared by the Board of Directors at
any meeting thereof, or by the Executive Committee at any meeting
thereof. Dividends may be paid in cash, in property or in shares of
the capital stock of the Corporation, subject to the provisions of
the certificate of incorporation or of the resolutions, if any,
providing for any series of stock.

Section 2. Reserves. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, deem proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other
purpose or purposes as the directors shall think conducive to the
interests of the Corporation, and the directors may modify or
abolish any such reserve in the manner in which it was created.

Section 3. Shares of Other Corporations. The Chairman of the
Board, the President and any Vice President is authorized to vote,
represent and exercise on behalf of the Corporation all rights
incident to any and all shares of any other corporation or other
entity standing in the name of the Corporation. The authority herein
granted to said officer may be exercised either by said officer in
person or by any person authorized so to do by proxy or power of
attorney duly executed by said officer. Notwithstanding the above,
however, the Board of Directors, in its discretion, may designate by
resolution any additional person to vote or represent said shares of
other corporations and other entities.

Section 4. Checks. All checks, drafts, bills of exchange or
demands for money of the Corporation shall be signed by such officer
or officers or such other person or persons as the Board of
Directors may from time to time designate.

Section 5. Corporate Records. The Corporation shall keep at
its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its
stockholders giving the names and addresses of all stockholders and
the number and class and series, if any, of shares held by each.
All other books and records of the Corporation may be kept at such
place or places within or without the State of Delaware as the Board
of Directors may from time to time determine.

Section 6. Fiscal Year. The fiscal year of the Corporation
shall be fixed by the Board of Directors; if not so fixed, it shall
be the calendar year.

ARTICLE XII

Amendments

These bylaws may be altered, amended or repealed or new bylaws
may be adopted at any annual meeting of the stockholders or at any
special meeting of the stockholders at which a quorum is present or
represented, by the affirmative vote of the holders of 66-2/3
percent of the shares entitled to vote at such meeting and present
or represented thereat, or by the affirmative vote of a majority of
the entire Board of Directors at any regular meeting of the Board or
at any special meeting of the Board.

Amended through April 28, 1999

Exhibit 10.1

April 27, 1999

Mr. Richard Marino
4 Hastings Court
Morago, CA 94556

Dear Rich,

On behalf of CNET, Inc., I am pleased to offer you the position of
President of CNET, Inc. Here are the details of your offer:

Position: President of CNET, Inc., reporting to the CEO.

General
Duties: You will be responsible for the overall direction and
management of Sales and Marketing, CNET Online, CNET
Television and Human Resources, directly reporting to
the CEO of CNET, Inc. and will observe and abide by
all policies of the Company and all directives of the
Board of Directors or the Chief Executive Officer.
Other duties may be assigned to you by CNET from time
to time in the Company's discretion. You will be
expected to devote your full time, attention and
knowledge to the performance of your duties under this
Agreement. It is agreed that you will not engage in
any other business activity, whether or not for profit
during the term of your employment with CNET.
Provided, however, you may invest in securities of
publicly-traded companies as long as your interest in
each company does not exceed two percent. Your
participation in reasonable charitable, educational or
religious activities will not violate the terms of
this agreement, as long as your participation does not
interfere with your duties under this contract. You
will be expected to abide by and comply with all
policies and procedures of CNET and all applicable
laws and regulations, including, but not limited to,
those relating to antitrust.

Initial Salary: $350,000 per year, paid biweekly.

Signing Offer:
Upon beginning employment with CNET, you have the
choice of one of the following options: a) receiving a
one time payment of $160,000, less deductions
authorized or required by law or requested in writing
by you, paid within your first week as a CNET
employee, or b) purchasing 25,000 shares of the
Company's common stock, $.0001 par value (the "Option"
and the "Common Stock" respectively), pursuant to the
then existing Company's Stock Option Agreement. The
exercise price of the Option will be the price of
Company Common Stock on your first day of employment
at CNET. The option will vest on your 6 month
anniversary as a CNET employee. You must notify the
COO of the Company, in writing, of your choice of
these two options within the first 3 business days of
employment.

Term: The term of this Agreement will be four years and will
commence on the day you begin your employment with
CNET.

Termination For Cause:
During the term of this Agreement, the Company may
terminate your employment at any time for cause. For
purposes of this Agreement, "cause" is defined as any
conduct by you or any set of circumstances which
constitute cause under applicable judicial or arbitral
precedence, including but not limited to the
following:
(i) Your material breach of any term of this
Agreement and your failure to remedy such breach
within 20 days after being notified, in writing,
of such breach; provided, however, that no
notice is required where the breach cannot
reasonably be cured within 30 days;
(ii) Your failure, refusal or inability to perform
your duties as President, or such other duties
and responsibilities as you are assigned by the
Company; where appropriate and reasonable, the
Company will provide you with written notice of
such failure, refusal or inability and you will
have 30 days thereafter to cure the breach, it
being understood that notice and an opportunity
to cure will not be appropriate and reasonable
in all such cases;
(iii) Any breach or fiduciary duty, dishonesty,
embezzlement, fraud or similar serious
misconduct;;
(iv) The appropriation or attempted appropriation of
a business opportunity of the Company, including
attempting to secure or securing any personal
profit in connection with any transaction by the
Company;
(v) The conviction of a crime or any act of moral
turpitude which could have a material adverse
impact on the business operations, reputation or
financial condition of CNET.

In the event of a termination for cause, your base salary and benefits
will cease on the date of your termination; all unvested stock options are
forfeited upon termination and no pro rata bonus will be paid.

The existence of cause shall be determined in good faith by the
Company's Board of Directors or the CEO, but shall be subject to review
by an arbitrator in accordance with the attached CNET Alternative Dispute
Resolution policy.

Termination Without Cause:
If your employment is terminated for any reason other
than cause or the nature and scope your job
responsibilities substantially and materially change
due to and within a six month period after CNET
acquires, merges or is acquired by another company and
you choose to terminate your employment with the
company at that time, you will receive: (a) your base
salary through the end of the term of this Agreement;
(b) a pro rata bonus as of the date of your
termination; (c) stock vesting measured as of six
months following the date of your termination; and (d)
the Company will make COBRA continuation payments for
you and your dependents for six months after the date
of your termination.

Death or Disability:
In the event of your death or inability to perform the
essential functions of your position, with or
without reasonable accommodation, due to a physical
or mental disability and such inability is certain
or likely to continue for a period of time more than
120 days, this Agreement will terminate and you will
receive:
(a) your base salary for six months following the date
of termination; (b) a pro rata bonus as of the date of
your termination; and (c) stock vesting measured as of
six months following the date of your termination.

Incentive:
Each year, you are eligible to earn up to a $250,000
incentive bonus, less deductions authorized or
required by law, based on your meeting of mutually
agreed upon performance objectives, provided you are
still an active CNET employee. In the first year,
$150,000 of this incentive is guaranteed. The
guaranteed portion of the incentive in the first year
will be paid over the course of the year on a bi-
weekly basis.

Start Date: TBD but no later than May 24, 1999.

Stock Options:
We are offering an employee stock option grant
of 200,000 (two hundred thousand) shares of CNET stock
under the terms of the 1997 Stock Option Plan at a
valuation as determined by the special meeting of the
Compensation Committee. Your options will vest with
the following schedule: 25% end of year one, 25% end
of year two, 25% at the end of year three, and fully
vested at the end year four, provided you remain an
employee of CNET until that time (except as otherwise
provided herein).

We are also offering an employee stock option grant of
25,000 (twenty-five thousand) shares of CNET stock
under the terms of the 1997 Stock Option Plan at a
valuation as determined by the special meeting of the
Compensation Committee. Your options will vest with
the following schedule: 100% end of year one of your
employment, provided you remain an employee of CNET
until that time (except as otherwise provided herein).

At least annually, the Compensation Committee of the
Board will review the equity portion of your compensation package to
determine in good faith if that portion of your package provides the
appropriate equity compensation, taking into account as one factor
the then current stock price and its relation to the strike price
on your options, and make any adjustments or additional grants,
as appropriate.

Benefits: You will be eligible to participate in any Company
benefits plan package offered to regular full time
employees of the Company as such benefits exist now or
may be amended or deleted by the Company. CNET
currently offers medical, dental, vision, life
insurance, and an employee assistance program. You
will be eligible to participate in these plans on the
first day of the month, following your initial start
date.

CNET also offers its regular full time employees a
401(k) Plan, as well as an Employee Stock Purchase
Plan. These benefits will be available to you on the
first day of the calendar quarter following your first
90 days at work.

PTO: You may accrue up to 15 days PTO (paid time off)
during your first year of employment with CNET.

Attorneys Fees:
In the event of a dispute between you and CNET which
proceeds to arbitration in accordance with the
attached Alternative Dispute Resolution Policy, the
prevailing party, as determined by the arbitrator,
shall be entitled to recover his/its reasonable
attorney's fees.

If you accept our offer and have read and reviewed the CNET
Alternative Dispute Resolution Policy and Procedures attached
hereto, and agree to be bound by and comply with the terms of the
CNET Alternative Dispute Resolution Policy and Procedures, please
sign and date this copy and return it to me. All of us are
delighted at the prospect of having you become a member of the
CNET team.

Sincerely,

/s/ HALSEY M. MINOR
Halsey M. Minor
CEO
CNET: The Computer Network

Agreed:

/s/RICHARD M. MARINO April 28, 1999
____________________ ____________________
Richard M. Marino

CNET ALTERNATIVE DISPUTE RESOLUTION POLICY

In the event of any dispute arising out of or related to an employee's
employment with CNET, or the termination thereof, in which the parties
are unable to come to a resolution (excluding claims for workers
compensation, unemployment insurance, and any matter within the exclusive
jurisdiction of the Labor Commissioner or the National Labor Relations
Board), the employee and CNET agree to submit the dispute to final and
binding arbitration pursuant to the then current California Employment
Dispute Resolution Rules of the American Arbitration Association (AAA) or
the comparable rules of the AAA if the employee is located in a state
other than California; provided, however, that the cost of the
arbitration borne by the employee will not exceed the cost to the
employee if the dispute had been submitted to a court of law.
A Request for Arbitration is initiated by submitting a request in writing
to CNET's Human Resources Department within the statute of limitations
period which would apply if the employee had filed a complaint in a court
of law.

The Request for Arbitration shall include a description of the dispute,
the date on which it first arose, the names of any co-workers or
supervisors with knowledge of the dispute, and the relief requested by
the employee.

Prior to selecting an arbitrator, CNET and the employee requesting
arbitration will submit their dispute to non-binding mediation. The cost
of the mediation will be borne by CNET. If the parties are unable to
agree on a mediator, the parties will request a panel of mediators from
JAMS/Endispute and will alternately strike names until one name remains.

The arbitrator selected by the parties is authorized to award any relief
which could be awarded by a court of law hearing the same dispute. The
arbitrator's award will be reviewed by a court of law under the
deferential standard of review applicable to most arbitration awards
(see, e.g., Cal. Code Civ. Proc. 1286.2); provided, however, that
rulings of law may be appealed to a court of law subject to a clearly
erroneous standard of review.

Nothing in this Policy shall preclude either the employee or CNET from
applying to a court of competent jurisdiction for injunctive relief
pending final resolution of the underlying dispute through arbitration.

This agreement may not be modified or amended except in writing signed
by the affected employee and the Chief Operating Officer of CNET.

If any provision of this agreement is declared illegal or unenforceable,
the remaining provisions shall remain in effect. In such an event, the
court is authorized to conform this agreement to existing law.

This agreement constitutes a waiver of the employee's right to a civil
court action or a jury trial concerning matters covered by this
agreement.

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