As filed with the Securities and Exchange Commission on March 8, 2000
Registration No. 333-30964
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ZIFF-DAVIS INC.
(Exact name of Registrant as specified in its charter)
NEW YORK
(State or other jurisdiction
of incorporation or organization)
13-3987754
(I.R.S. Employer
Identification No.)
28 EAST 28TH STREET
NEW YORK, NEW YORK 10016
(212) 503-3500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
J. MALCOLM MORRIS
GENERAL COUNSEL
ZIFF-DAVIS INC.
28 EAST 28TH STREET
NEW YORK, NEW YORK 10016
(212) 503-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times as may be determined by the selling shareholder after this
Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[_] ________________.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ________________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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PROSPECTUS
March 8, 2000
ZIFF-DAVIS INC.
186,046 SHARES OF ZDNET COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
This document relates to an offering by the selling shareholder of up
to 186,046 shares of ZDNet common stock.
The selling shareholder acquired the shares offered by this document in
connection with our acquisition of the selling shareholder's equity interest in
Ziff-Davis Richina Media LDC. Ziff-Davis will not receive any of the proceeds
from the sale of the shares offered by this document.
The selling shareholder has informed us that it proposes to offer the
shares offered by this document from time to time and in any of several
different ways. The selling shareholder may offer shares:
o through brokers in ordinary brokerage transactions,
o to underwriters or dealers in negotiated transactions or
o by a combination of these methods of sale.
The selling shareholder may offer its shares at various prices,
including:
o at fixed prices,
o at market prices at the time of sale,
o at prices related to prevailing market prices or
o at negotiated prices.
ZDNet common stock trades on the New York Stock Exchange under the
symbol "ZDZ." On March 7, 2000, the closing price reported on the New York
Stock Exchange was $30 3/16 per share.
INVESTMENT IN THE SHARES INVOLVES SIGNIFICANT RISKS. YOU SHOULD READ
THE INFORMATION UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 TO LEARN
ABOUT SOME FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN THE SHARES.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THE SECURITIES TO BE OFFERED UNDER THIS DOCUMENT OR DETERMINED IF THIS
DOCUMENT IS ADEQUATE OR ACCURATE. IT IS ILLEGAL FOR ANYONE TO TELL YOU
OTHERWISE.
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THE DATE OF THE PROSPECTUS IS MARCH 8, 2000
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TABLE OF CONTENTS
PAGE
----
Ziff-Davis Inc.................................................................3
Recent Developments............................................................3
Risk Factors...................................................................4
Where You Can Find More Information...........................................16
The Selling Shareholder.......................................................18
Plan of Distribution..........................................................19
Use of Proceeds...............................................................20
Cautionary Statement Regarding Forward-Looking Statements.....................20
Validity of Common Stock......................................................21
Experts.......................................................................21
ZIFF-DAVIS INC.
Ziff-Davis is a leading media and marketing company focused on computing
and Internet-related technologies. Through our ZDNet division, which we call
"ZDNet," we provide online content and other Internet related services. Through
our ZD division, which we call "ZD," we are or have been engaged in the print
publishing, trade shows and conferences, education and television businesses.
Ziff-Davis currently has two series of common stock, ZDNet common stock,
which we call "ZDNet stock," and ZD common stock, which we call "ZD stock." Each
of these series is what is commonly referred to as a "tracking stock." ZDNet
common stock is intended to track the performance of ZDNet and ZD common stock
is intended to track the performance of ZD. In addition to the businesses
referred to above, ZD owns a retained interest in ZDNet which is currently the
equivalent of 60 million shares of ZDNet stock.
The mailing address of our principal executive offices is 28 East 28th
Street, New York, New York 10016. Our telephone number is (212) 503-3500.
RECENT DEVELOPMENTS
We are in the process of selling our ZD businesses as part of a
comprehensive restructuring described in our proxy statement dated February 7,
2000 which we mailed to stockholders on such date (our "Proxy Statement"), and
we have already completed the sale of ZD Market Intelligence, ZD Education and
our equity interest in ZDTV. As part of the restructuring, we intend to
eliminate our tracking stock structure and make ZDNet a standalone independent
Internet company by merging Ziff-Davis with a newly formed subsidiary so that
all current holders of our ZD stock and ZDNet stock will hold their investments
through a single class of ordinary common stock. We will rename the surviving
company ZDNet Inc.
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RISK FACTORS
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You should carefully consider the risk factors described below, as well as the
other information included in this document, before buying shares of ZDNet
stock.
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RISK FACTORS RELATING TO THE RESTRUCTURING
THE SALES OF ZD PUBLISHING AND ZD EVENTS MAY NOT OCCUR AS CONTEMPLATED.
It is possible that the sale of one or more of ZD Publishing and ZD
Events will not occur as currently contemplated.
The ZD Publishing sales agreement is subject to a number of conditions,
including, among others:
o the absence of certain adverse changes,
o the accuracy of representations and warranties on the closing
date,
o the receipt of third party consents and
o the receipt of sufficient financing by the buyer.
Because these transactions are structured as asset sales, they will
require numerous third party consents, and we cannot assure you that we will be
able to obtain these consents on reasonable terms. The buyers will not be
obligated to purchase unless all the conditions to closing have been satisfied
and we cannot assure you that this will occur. If any of the conditions are not
satisfied, the sale may not proceed or we may be forced to renegotiate material
terms, including the price.
We are currently in discussions regarding a possible sale of ZD Events,
but we cannot assure you that a sale transaction will result and, if it does, we
cannot assure you that the sale price will meet Wall Street expectations. If we
are unable to reach agreement to sell ZD Events at an acceptable price, we
currently plan to recapitalize it and spin it off to holders of ZD stock.
However, we cannot assure you that we would be able to complete a
recapitalization and spin off. Moreover, if we are able to complete a
recapitalization and spin off of ZD Events, we cannot assure you that the value
of the special dividend (which would include most of the cash proceeds from the
recapitalization as well as the stock of ZD Events) would approximate the $5.00
per share of ZD stock that we currently envision.
If we do not complete one or more of the sales as planned, we will
still be free to complete the rest of the restructuring or otherwise revise it,
in our discretion.
THE EXCHANGE RATIO MAY BE MORE OR LESS THAN OUR EXAMPLE.
Each share of ZDNet stock will convert into a fixed number of shares of
our common stock in the merger. The exact exchange ratio will depend upon three
factors that are not yet known and as a result we are unable to tell you now
what it will be. These three factors are:
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o the value of the remaining ZD assets in excess of the cash set
aside to cover the ZD liabilities, as determined by our board of
directors,
o the market price of ZDNet stock on the date those assets are
transferred from ZD to ZDNet and
o the number of options to acquire ZD stock that are exercised
prior to the merger.
We have included an example of how we will calculate the exchange ratio
in our Proxy Statement which is based on certain assumptions with respect to
these three factors. This example, which results in an exchange ratio of about
1.77, is included for illustrative purposes only. The actual exchange ratio may
differ significantly from this example and may even fall outside the range set
forth in the stockholder's letter that appears on the front cover of our Proxy
Statement and incorporated herein by reference.
THE AMOUNT WE LEAVE BEHIND TO COVER ZD LIABILITIES MAY BE DIFFERENT FROM THE
AMOUNT ACTUALLY NEEDED.
We will determine the amount that we will leave behind to cover actual
or contingent ZD liabilities based on the advice of management and our financial
and legal advisors, as contemplated under "Proposal 1--The Restructuring of Ziff
Davis--Repayment of ZD Debt and Provision for Other ZD Liabilities" in our Proxy
Statement and incorporated herein by reference. Since contingent liabilities are
inherently uncertain, it is possible that the amount we leave behind will turn
out to be significantly more or less than the amount actually needed to cover
these liabilities. In that case, holders of ZDNet stock would end up with
significantly more or less value than they would otherwise have, and holders of
ZD stock would correspondingly end up with significantly less or more value than
they would otherwise have.
THE RESTRUCTURING INVOLVES TRANSACTIONS THAT MIGHT CREATE CONFLICTS OF INTEREST.
The restructuring involves transactions and issues that might create
conflicts or the appearance of conflicts between the interests of the holders of
ZD stock and the holders of ZDNet stock or between Softbank and other
stockholders. These transactions and issues include:
o the terms of the content license arrangements between ZDNet and
the buyer of our publishing business,
o the valuation of the assets being transferred from ZD to ZDNet,
o the valuation of any actual or potential ZD liabilities that will
be provided for and
o the possibility that Softbank may provide equity or debt
financing (or both) to the buyer in connection with a possible
sale of ZD Events.
In order to address these potential conflicts of interest, we created a special
committee of our board of directors to review these issues and make
recommendations to the full board. Our board of directors has followed the
recommendations of the special committee to date and expects to continue to do
so in the future.
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THE SALE OF ZD'S BUSINESSES MAY ADVERSELY AFFECT ZDNET'S FUTURE BUSINESS.
It is possible that the sale of ZD's businesses as part of the
restructuring may adversely affect ZDNet's future business in a number of ways,
including the following:
o ZDNet will no longer be able to leverage the ZD brand and
cross-market across all of ZD's platforms.
o ZDNet currently relies on content that it licenses from ZD
Publishing on an exclusive basis online. Under the agreement for
the sale of ZD Publishing, ZDNet will retain the rights to this
content online for only five years and those rights will remain
exclusive to ZDNet for only three years. After the three year
exclusivity period expires, the buyer of ZD Publishing will be
free to use the content to compete with ZDNet on the Internet,
and after four years the buyer will be free to license it to
other online competitors.
o The buyer of ZD Publishing is acquiring the "Ziff-Davis" brand
name and is receiving a license for the "ZD" brand name, in each
case, for use in print publishing and its future actions may
adversely affect the ZD brand.
o As a standalone company, ZDNet's costs of services may increase
significantly due to the loss of certain large volume discounts
or other special pricing arrangements it previously received as a
division of Ziff-Davis.
WE HAVE ONLY OPERATED AS A STANDALONE COMPANY SINCE MAY 1998, AND A SIGNIFICANT
PART OF OUR INFRASTRUCTURE MAY BE TRANSFERRED ALONG WITH THE BUSINESSES BEING
SOLD AS PART OF THE RESTRUCTURING.
We have only operated as a standalone company since May 1998. In
addition, a significant part of our infrastructure may be transferred along with
the businesses being sold as part of the restructuring. Our success will depend
on our continued ability to manage the company with the resources available to
us.
ZDNET MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING ON REASONABLE TERMS.
As mentioned in a number of the risk factors described below, ZDNet
will need access to additional financing in order to be successful. Because the
company will be considerably smaller and less diversified after the
restructuring, it may be difficult for it to obtain additional financing on
reasonable terms. If this is the case, ZDNet's future financial position and
results of operations may be adversely affected.
OTHER RISK FACTORS
ZDNET HAS AN EXTREMELY LIMITED OPERATING HISTORY AND A HISTORY OF NET LOSSES AND
THERE IS NO ASSURANCE ZDNET WILL REPORT NET INCOME IN THE FUTURE.
ZDNet, which will constitute the major business of the company after the
restructuring, has an extremely limited operating history and an investor must
consider the risks, expenses and difficulties frequently encountered by such
companies, particularly in the new and rapidly evolving market for Internet
products, content and services. We cannot assure you that ZDNet will be
successful in addressing such
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risks. Although ZDNet has experienced revenue growth in recent periods, we
cannot assure you that ZDNet's revenue will continue to grow or continue at its
current level.
ZDNet has incurred significant net losses in the past ($21.2 million in
1997, $7.9 million in 1998 and $0.1 million in the first nine months of 1999).
For more information regarding these net losses, see "ZDNet Summary Historical
and Pro Forma Combined Financial and Other Data" included in our Proxy Statement
and incorporated herein by reference. We cannot assure you that ZDNet will
report net income in the future.
WE CANNOT ACCURATELY PREDICT ZDNET'S FUTURE REVENUE.
As a result of the evolving nature of the Internet and ZDNet's limited
operating history, we cannot accurately forecast ZDNet's revenue. Current and
future expense levels are based principally on estimated future revenue and are
to a large extent fixed. Accordingly, ZDNet may be unable to adjust spending to
compensate for any unexpected revenue shortfall. If ZDNet's actual revenue is
less than its estimated revenue, this could have an immediate material adverse
effect on ZDNet's profits and liquidity.
ZDNET'S QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY AND ARE NOT
RELIABLE INDICATORS OF ITS FUTURE PERFORMANCE.
ZDNet's quarterly operating results may fluctuate significantly because of
a variety of factors, many of which are outside our control, including:
o overall usage levels of the Internet and of ZDNet's sites in
particular,
o demand for Internet advertising and the loss of advertisers,
o seasonal trends in Internet use and advertising,
o the amount and timing of ZDNet's capital expenditures,
o costs relating to the expansion of ZDNet's operations and the
introduction of new sites and services,
o price competition or pricing changes in Internet advertising and
o costs relating to technical difficulties or system downtime.
We believe Internet advertising typically slows in the first quarter of
the year. Historically, ZDNet has experienced lower advertising and lower
revenue in the first quarter of each year as compared to the fourth of the prior
year. Seasonality and cyclicality in the level of Internet advertising
expenditures generally could become more pronounced in the future as the
Internet becomes more accepted as an advertising vehicle. If a large number of
ZDNet's advertisers do not advertise in a given quarter or if advertising
revenue is deferred, ZDNet's revenue in that quarter could be substantially
reduced. This would have a material adverse effect on ZDNet's operating results
and could impair its business in future periods. Quarterly comparisons of
ZDNet's results of operations are not reliable and you should not rely on them
as an indication of ZDNet's future performance. For additional information about
the seasonality of ZDNet's revenue, see "ZDNet Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in our Proxy
Statement and incorporated herein by reference.
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ZDNET'S FUTURE REVENUE IS DEPENDENT ON THE GROWTH OF INTERNET USE AND THE
ACCEPTANCE OF THE INTERNET AS AN ADVERTISING AND COMMERCE MEDIUM.
ZDNet's future revenue will depend largely on the widespread acceptance
and use of the Internet as an information source and as an advertising and
commerce vehicle. Rapid growth in Internet use is a recent trend and market
acceptance of the Internet as an advertising and commercial medium is highly
uncertain.
The Internet may not be accepted as a viable advertising and commerce
medium for distribution of information and engaging in commerce for a number of
reasons, including:
o inadequate development of the network infrastructure,
o inadequate development of enabling technologies,
o insufficient commercial support for Internet advertising,
o concerns about privacy and security among users and
o lack of widely accepted standards for measuring the effectiveness of
advertising on the Internet.
ZDNET DEPENDS ON ADVERTISING AS A PRINCIPAL SOURCE OF ITS REVENUE.
ZDNet derived 86% of its revenue in 1998 and 92% of its revenue in the
first nine months of 1999 from the sale of advertising on its Internet sites and
we expect that advertising revenue will continue to be the principal source of
ZDNet's revenue in the foreseeable future. Most of ZDNet's advertising contracts
are either short-term arrangements and/or can be terminated by the advertiser at
any time with little notice. We cannot assure you that ZDNet will be able to
retain current advertisers or obtain new advertising contracts.
ZDNet's ability to generate advertising revenue will depend on several
factors, including:
o the continued development of the Internet as an advertising medium,
o the pricing of advertising on other Internet sites,
o the amount of traffic on ZDNet's network of sites,
o pricing pressure, delays and new product launches,
o ZDNet's ability to achieve, demonstrate and maintain attractive user
demographics and
o ZDNet's ability to develop and retain a skilled advertising sales
force.
ZDNET IS INCREASINGLY DEPENDENT ON, AND RECEIVES A SIGNIFICANT PERCENTAGE OF ITS
REVENUE FROM, A LIMITED NUMBER OF ADVERTISERS.
A relatively small number of advertisers contribute a significant
percentage of ZDNet's consolidated revenue. ZDNet's top 20 advertising customers
accounted for approximately 46.5% of its advertising revenue in 1998 and
approximately 42.1% of its advertising revenue in the first nine months of 1999.
These
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advertising clients, and its other advertising clients, may not continue to use
ZDNet's services to the same extent, or at all, in the future. A significant
reduction in advertising by one or more of ZDNet's largest advertisers would
have a material adverse effect on ZDNet's profits and liquidity.
ZDNET DEPENDS ON ARRANGEMENTS WITH THIRD PARTIES FOR INTERNET TRAFFIC TO ITS
SITES AND ZDNET'S FAILURE TO MAINTAIN THESE ARRANGEMENTS WITH THIRD PARTIES
COULD ADVERSELY AFFECT ITS BUSINESS.
ZDNet's ability to advertise on and maintain links from other Internet
sites is an important element to its success. Traffic originating from links
existing on other Internet sites (particularly search engines, directories and
other navigational tools managed by Internet service providers and Web browser
companies), is an important segment of the overall traffic on ZDNet's Internet
sites. ZDNet has special linking arrangements to generate additional traffic
with Yahoo!, AltaVista, Go.com, Lycos and iVillage which are either short-term
contracts and/or can be terminated with little notice. There is intense
competition for these types of linking arrangements. We cannot assure you that
these arrangements will be maintained or that advertising or links will continue
to be available on reasonable commercial terms or at all.
ZDNET DEPENDS ON LICENSED TECHNOLOGY FROM THIRD PARTIES AND ZDNET'S FAILURE TO
MAINTAIN THESE ARRANGEMENTS WITH THIRD PARTIES COULD ADVERSELY AFFECT ITS
BUSINESS.
ZDNet relies on certain technology licensed from third parties such as
Vignette's Storyserver, Thunderstone's Texis Search Engine and Netscape's Web
Server Software for use in operating and managing its Internet sites and
providing related services to users and advertisers. ZDNet's ability to generate
revenue from Internet commerce may also depend on data encryption and
authentication technologies that it may be required to license from third
parties. We cannot assure you that such technology licenses will be available at
all, that they will be available on reasonable commercial terms or that they
will operate as intended.
ZDNET'S COMPETITIVE POSITION DEPENDS ON ITS ABILITY TO ATTRACT AND RETAIN KEY
PERSONNEL.
ZDNet's failure to attract and retain qualified personnel could diminish
its competitive position. ZDNet's performance is substantially dependent on the
continued services and performance of its senior executive officers and other
key personnel. ZDNet does not have long-term employment agreements with any of
its key personnel and maintains no "key person" life insurance policies. ZDNet's
future success also depends on its ability to identify, attract, retain and
motivate highly skilled editorial, technical, managerial, sales, marketing and
customer service personnel. Competition for such persons is intense. We cannot
assure you that ZDNet will be able to attract or retain such personnel.
ZDNET MAY NOT BE ABLE TO ADEQUATELY RESPOND TO TECHNOLOGICAL CHANGE.
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. ZDNet will be required to continually improve the
performance, features and reliability of its network infrastructure and Internet
sites, particularly in response to competition and changing customer demands. We
cannot assure you that ZDNet will be successful in responding rapidly,
cost-effectively or adequately to such developments.
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ZDNET'S COMPETITION IS INTENSE AND IS EXPECTED TO INCREASE SIGNIFICANTLY.
We cannot assure you that ZDNet will be able to maintain its competitive
position. Competition among Internet content providers is intense and is
expected to increase significantly in the future. The market for Internet
content sites is rapidly evolving and barriers to entry are low, enabling
newcomers to launch competitive sites at relatively low cost. Moreover,
increased competition could result in price reductions, reduced margins or loss
of market share, any of which could have an effect on our future revenue and
profits.
We believe ZDNet competes most directly with Web sites specializing in
broad-based technology information. These include c/net, CMP, Internet.com and
IDG. ZDNet also generally competes for users and advertisers with:
o Internet portals and search sites that help users access information
rather than create original content and are not specifically focused
on technology related information, such as Excite, Infoseek, Lycos and
Yahoo!,
o general news sites, such as those provided by CNN and ABC,
o general purpose online service providers, such as America Online and
MSN,
o browser/software companies offering information services, such as
Microsoft and Netscape and
o large general-interest sites.
In addition, ZDNet competes with traditional media content businesses such
as newspapers, magazines, radio and television. In order to compete successfully
and attract users, advertisers and strategic partners, ZDNet must continue to
provide high quality, engaging content in a timely and cost-effective manner.
TO REMAIN COMPETITIVE, ZDNET MUST CONSTANTLY EXPAND AND DEVELOP NEW CONTENT
AREAS AND SERVICES. THIS IS INHERENTLY RISKY AND EXPENSIVE.
ZDNet's future success may depend in part on its ability to continue
expanding its Internet sites to include new subject matters and services. Costs
related to developing new content areas and services are expensed as they are
incurred while revenue related to these new content areas and services typically
builds over time. Accordingly, ZDNet's profitability from year to year may be
adversely affected by the number and timing of new launches. In addition, we
cannot assure you that any new areas or services will be developed in a timely
or cost-effective manner or that they will be successful.
ZD NET HAS LAUNCHED AN EXPENSIVE ADVERTISING CAMPAIGN THAT MAY OR MAY NOT BE
EFFECTIVE.
On December 25, 1999, ZDNet launched a 15-month, $25 million consumer
advertising campaign. This campaign is ZDNet's first major attempt at offline
consumer advertising. The campaign will initially run on network and cable TV,
in mainstream and technology-focused print publications and in key online and
outdoor positions. We cannot assure you that this campaign, or any other
advertising campaign we may launch in the future, will be effective. In
addition, to remain competitive, ZDNet may need to spend
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significantly more money on advertising in the future and such additional costs
could adversely affect ZDNet's profits.
WE CANNOT ASSURE YOU THAT ZDNET WILL CONTINUE TO DEVELOP THE ZDNET BRAND.
We cannot assure you that ZDNet will be able to continue to develop its
brand. ZDNet believes brand identity is important to attracting and expanding
its user base, Internet traffic and advertising and commerce relationships.
ZDNet believes the significance of brand recognition will intensify as the
number of Internet sites increases.
ANY CAPACITY CONSTRAINTS OR SYSTEM DISRUPTIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON ZDNET.
The performance and reliability of ZDNet's Internet sites and network
infrastructure are critical to its reputation and ability to attract and retain
users, advertisers, merchants and strategic partners. Any system error or
failure, or a sudden and significant increase in traffic, may result in the
unavailability of sites and significantly delay response times. Individual,
sustained or repeated occurrences could result in a loss of potential or
existing users, advertisers or strategic partners. In addition, because ZDNet's
advertising revenue is directly related to the number of advertisements it
delivers to users, system interruptions or delays would reduce the number of
impressions delivered and thereby reduce its revenue.
ZDNet's systems and operations are vulnerable to interruption or
malfunction due to certain events beyond its control, including natural
disasters, telecommunications failures and computer hacking. ZDNet also relies
on Web browsers and online service providers to provide Internet access to its
sites. We cannot assure you that ZDNet will be able to expand its network
infrastructure, either itself or through use of third-party hosting systems or
service providers, on a timely basis sufficient to meet demand. ZDNet presently
has only a limited amount of redundant facilities or systems, no formal disaster
recovery plan and no sufficient business interruption insurance to compensate
for losses that may occur. Any interruption to its systems or operations could
have a material adverse effect on ZDNet's business and its ability to retain
users, advertisers and strategic partners.
ZDNET'S NETWORKS MAY BE VULNERABLE TO SECURITY RISKS.
ZDNet's networks may be vulnerable to denial-of-service attacks,
unauthorized access, computer viruses and other security problems. A user who
circumvents security measures could misappropriate proprietary information or
cause interruptions or malfunctions in ZDNet's operations. ZDNet may be required
to expend significant resources to protect against the threat of such security
breaches or to alleviate problems caused by such breaches. Although ZDNet
intends to continue to implement industry-standard security measures, not all
securities which are implemented may be the latest state of the art and such
measures may be inadequate.
INCREASED GOVERNMENT REGULATION OF THE INTERNET COULD HAVE A MATERIAL ADVERSE
EFFECT ON ZDNET.
Increased government regulation, or the application of existing laws to
online activities, could inhibit Internet growth, expose ZDNet and other online
content providers to additional liabilities and increase the cost of doing
business. This could have a material adverse effect on ZDNet's profits and
liquidity. The increasing popularity and use of the Internet and other online
services may lead to the adoption of new laws
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and regulations in the U.S. or elsewhere covering issues affecting ZDNet's
business, such as online privacy, copyright and trademark, sales taxes and fair
business practices or which require qualification to do business as a foreign
corporation in certain jurisdictions. For instance, the European Union's privacy
regulations may limit the collection and use of certain user information.
ZDNET RELIES ON INTELLECTUAL PROPERTY RIGHTS WHICH MAY NOT BE ADEQUATELY
PROTECTED UNDER CURRENT LAWS.
To establish and protect its trademarks, service marks and other
proprietary rights in its products and services, ZDNet relies on a combination
of:
o copyright, unfair competition, trademark, service mark and trade
secret laws and
o confidentiality agreements with certain of its licensees and other
third parties and confidentiality agreements and policies covering its
employees.
We cannot assure you that these measures will be adequate, that ZDNet will
be able to secure registrations for all of its marks in the U.S. or
internationally or that third parties will not infringe upon or misappropriate
its proprietary rights. Any infringement or misappropriation, or litigation
relating to intellectual property rights, may divert management's attention and
ZDNet's funds to litigate such claims.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related business are
uncertain and evolving. In particular, new domain name registration and
ownership priority procedures have recently been adopted which may make it more
difficult for ZDNet to retain or obtain desirable domain names.
ZDNET MAY INCUR LIABILITY FOR ITS INTERNET CONTENT AND USER DATA.
As a content provider, ZDNet may face potential liability for intellectual
property infringement, defamation, indecency and other claims. In addition,
ZDNet may incur liability for unauthorized duplication or distribution of
third-party content or materials or for information collected from and about its
users. We cannot assure you that third parties or users will not bring claims
against ZDNet relating to proprietary rights or use of personal information.
Although ZDNet seeks to obtain indemnification from strategic partners for any
liability resulting from licensed content or linked sites, we cannot assure you
that such indemnities will always be obtainable or adequate. ZDNet's general
liability insurance may not cover or be adequate for potential claims of this
type.
ZDNET MAY NOT BE ABLE TO ADEQUATELY MANAGE ITS GROWTH.
ZDNet will need to effectively plan and manage its business to succeed in
the rapidly evolving Internet industry. ZDNet continues to increase the scope of
its operations and has grown its workforce substantially. As of December 31,
1998, ZDNet had a total of 316 employees and as of December 31, 1999, ZDNet had
a total of 438 employees, a growth of 52.8%. This growth has placed, and future
growth may place, a significant strain on ZDNet's resources. For example, we
expect that the variety of advertising products available on ZDNet sites will
expand, increasing demands on ZDNet's billing and collection systems and
requiring additional resources to properly determine pricing and discounting
structures. ZDNet expects that it will need to continue to improve its financial
and management controls and reporting systems and procedures, and will need to
continue to expand, train and manage its workforce.
12
<PAGE>
ZDNET'S ACQUISITION AND INVESTMENT STRATEGY EXPOSES IT TO RISKS.
ZDNet currently intends to continue acquisitions of and investments in new
or complementary businesses, products, services or technologies. However, we
cannot assure you that ZDNet will be able to identify suitable acquisition or
investment candidates. Even if ZDNet does identify suitable candidates, we
cannot assure you that ZDNet will be able to make such acquisitions or
investments on reasonable commercial terms or successfully assimilate personnel,
operations, products, services or technologies into its operations. This could
disrupt ZDNet's ongoing business, distract ZDNet's management and employees,
increase ZDNet's expenses, including amortization of goodwill, and materially
and adversely affect ZDNet's profits and liquidity.
ZDNET INTENDS TO EXPAND ITS INTERNATIONAL OPERATIONS AND MAY ENCOUNTER A NUMBER
OF PROBLEMS DOING SO. THERE ARE ALSO A NUMBER OF RISKS ASSOCIATED WITH
INTERNATIONAL OPERATIONS THAT COULD ADVERSELY AFFECT ZDNET'S BUSINESS.
EXPANSION OF INTERNATIONAL OPERATIONS. One component of ZDNet's growth
strategy is to further expand into international markets. ZDNet's international
operations are at an early stage of development and have an extremely limited
operating history. In addition, the markets in which ZDNet has undertaken
international expansion have technology and online industries that are less well
developed than in the U.S.
RISKS OF INTERNATIONAL OPERATIONS. There are certain risks inherent in
doing business in international markets, such as the following:
o uncertainty of product acceptance by different cultures,
o unforeseen changes in regulatory requirements,
o difficulties in staffing and managing multinational operations,
o state-imposed restrictions on the repatriation of funds,
o currency fluctuations,
o difficulties in finding appropriate foreign licensees or joint venture
partners and
o potentially adverse tax consequences.
There is a risk that such factors will have an adverse effect on ZDNet's
ability to successfully operate internationally and on its profits and
liquidity.
THE INCLUSION OF COMPUTER SHOPPER IN OUR CONSOLIDATED RESULTS MAY ADVERSELY
AFFECT OUR STOCK PRICE.
We plan to include our Computer Shopper business in the assets that we
will transfer to ZDNet in return for an increase in ZD's retained interest in
ZDNet. Although we expect that the value of Computer Shopper will be immaterial
in relation to the expected market capitalization of ZDNet Inc. after the
restructuring, we also expect Computer Shopper to be highly material to the
consolidated financial statements of ZDNet Inc. after the restructuring. Even
though we plan to break out our online business as a separate segment from our
Computer Shopper business for accounting purposes, it is possible that the
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<PAGE>
market will not value our stock as highly as it would in the absence of Computer
Shopper since, among other things, we expect that our consolidated revenues will
grow at a substantially lower rate (or may even decline) as a result of
including Computer Shopper in our consolidated results.
OUR HISTORICAL AND PRO FORMA FINANCIAL INFORMATION IS NOT PARTICULARLY RELEVANT
TO OUR ACTUAL RESULTS.
Our financial information included in our Proxy Statement and incorporated
herein by reference does not reflect what the actual results of operations,
financial position and cash flows would have been had Ziff-Davis existed and the
restructuring been completed prior to the periods in question. In addition, the
financial information is not necessarily indicative of our future results of
operations, financial position and cash flows.
WE ARE CONTROLLED BY OUR PRINCIPAL STOCKHOLDER. THIS CREATES POTENTIAL CONFLICTS
OF INTEREST.
SOFTBANK Corp. and its non-Ziff-Davis affiliates ("Softbank") currently
own 71,620,000 shares of ZD stock and will, after the restructuring, own a
majority of our outstanding shares of common stock. As a result, Softbank will
be able to elect all the members of the board of directors. Softbank could also
control those actions requiring the approval of the holders of a majority of the
voting stock, including amendments to our charter and any business combinations.
This concentration of ownership could prevent a change in control of ZDNet that
might otherwise be beneficial to stockholders.
We have entered into certain agreements with Softbank governing ongoing
relationships. These agreements include certain licensing and management
agreements relating to ZDNet. However, the agreements with Softbank do not
preclude investments by venture capital funds managed by Softbank which invest
in, among other things, computer and Internet-related companies. These funds may
be able to co-invest with or compete with ZDNet with respect to new investments.
In addition, Softbank may also develop new funds which may compete with ZDNet
for investment opportunities. These agreements also prohibit ZDNet from
competing with SOFTBANK Corp. in Japan without the prior approval of SOFTBANK
Corp.'s board of directors and give Softbank the continuing right to license all
of ZDNet's products and services in Japan. These arrangements and undertakings
might be less favorable than arrangements negotiated at arm's length between
unrelated parties.
WE HAVE SIGNIFICANT DEBT OBLIGATIONS AND MAY BE UNABLE TO OBTAIN ADDITIONAL
FINANCING OR BE REQUIRED TO DIVERT FUNDS TO PAY DOWN PRINCIPAL AND INTEREST ON
OUR DEBT.
At September 30, 1999:
o Ziff-Davis's total debt was approximately $1.265 billion.
o Ziff-Davis's total stockholders' equity was approximately $1.605
billion.
o Ziff-Davis's total debt was 78.8% of total capitalization.
Our indebtedness is substantial in relation to stockholders' equity. The
degree to which we are leveraged is important because:
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<PAGE>
o It may impair our ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate
purposes.
o It may reduce the funds available to us for our operations if a
substantial portion of our cash flow from operations is dedicated to
the payment of principal and interest on our indebtedness.
o It may impair our ability to incur additional debt because of
financial and other restrictive covenants, including those relating to
the incurrence of additional indebtedness, the creation of liens, the
payment of dividends and sales of assets.
o It may increase our vulnerability to adverse general economic
conditions, including increases in interest rates.
Our indebtedness requires us to use a substantial portion of our cash flow
to pay down principal and interest on our outstanding debt. This reduces the
funds available for capital expenditures and future business opportunities.
Our credit facility is secured, in part, by a first priority security
interest in the capital stock of certain of our subsidiaries and is guaranteed
by certain of our wholly owned domestic subsidiaries, including ZD Inc. and ZD
Events Inc.
WE ARE A DEFENDANT IN SEVERAL LAWSUITS, WHICH COULD MATERIALLY AND ADVERSELY
AFFECT OUR BUSINESS AND OPERATIONS.
In connection with the initial public offering of our common stock on
April 28, 1998, the repricing of certain stock options and a former joint
venture between Softbank and certain third parties, we have been named as a
defendant in several lawsuits. While we believe there are substantial defenses
to all of the claims, we cannot assure you that we will prevail. Defense costs
and/or settlement costs relating to these actions could be substantial, and the
defense of these actions may divert management's attention and resources. If the
plaintiffs prevail in these actions, any judgments awarded by the courts could
have a material adverse effect on our liquidity. For more information regarding
these lawsuits, see "ZDNet Description of Business--Legal Proceedings" included
in our Proxy Statement and incorporated herein by reference.
-----------
Our logo and certain of our Internet sites, publications, products and
services referenced in this document are our trademarks. Each trade name,
trademark or service mark of any other company appearing in this document is the
property of its owner.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
THE REGISTRATION STATEMENT
We have filed a registration statement with the SEC under the Securities
Act of 1933 that registers the shares of ZDNet common stock offered by this
document. We sometimes refer to these shares as the "ZDNet shares" or the "ZD
stock."
The registration statement that we filed with the SEC, including the
attached exhibits and schedules, contains additional relevant information about
Ziff-Davis and the ZDNet shares offered by this document. The SEC allows us to
omit some information included in the registration statement from this document.
You should read the entire registration statement in order to obtain this
additional information.
FILINGS WITH THE SEC
In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934 on a regular basis. You may
read and copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You can obtain more information on the
operation of the SEC's Public Reference Room in Washington, D.C. by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Ziff-Davis,
who file electronically with the SEC. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
Ziff-Davis at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
DOCUMENTS INCORPORATED BY REFERENCE
THE SEC ALLOWS US TO "INCORPORATE BY REFERENCE" INFORMATION INTO THIS
DOCUMENT. THIS MEANS THAT WE CAN DISCLOSE IMPORTANT INFORMATION TO YOU BY
REFERRING YOU TO ANOTHER DOCUMENT FILED SEPARATELY WITH THE SEC. This
information incorporated by reference is a part of this document, unless we
provide you with different information in this document.
16
<PAGE>
This document incorporates by reference the documents listed below that we
have previously filed with the SEC. They contain important information about
Ziff-Davis and its financial condition.
<TABLE>
<CAPTION>
ZIFF-DAVIS COMMISSION FILINGS (FILE NO. 1-14055) PERIOD COVERED OR DATE FILED
- ----------------------------------------------------- -----------------------------------------------------
<S> <C>
Our Annual Report on Form 10-K. Year ended December 31, 1998.
Quarterly Reports on Form 10-Q. Quarter ended March 31, 1999.
Quarter ended June 30, 1999.
Quarter ended September 30, 1999.
Current Reports on Form 8-K. Filed December 1, 1998, and February 19, April 4,
April 20, July 20, August 4, December 8, 1999.
The description of our ZDNet common stock Filed pursuant to Section 12 of the Exchange Act on
contained in our Registration STatement on Form S-1 March 31, 1999, including any amendments or
(File No. 333-69447) filed under the Securities Act reports filed for the purpose of updating such
of 1933 and incorporated in our Registration description.
Statement on Form 8-A.
The description of our ZDNet common stock Filed on August 4, 1999, containing the final
contained in our Current Report on Form 8-K. prospectus used in connection with the initial public
offering of the ZDNet stock (the "IPO Prospectus").
The description of our restructuring contained in our Filed pursuant to Section 14(a) of the Exchange Act
Proxy Statement on Schedule 14A. on February 9, 2000.
</TABLE>
Ziff-Davis also incorporates by reference additional documents that we may
file with the SEC between the date of this document and the date that the
offering of the ZDNet stock is terminated. These documents include periodic
reports, like Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, other
Current Reports on Form 8-K and proxy statements.
17
<PAGE>
You can obtain any of the documents incorporated by reference in this
document from us or from the SEC through the SEC's web site at the address
above. Documents incorporated by reference are available from us without charge,
excluding any exhibits to those documents unless we specifically incorporated by
reference the exhibit in this document. You can obtain these documents from us
by requesting them in writing or by telephone at the following address or
number:
Timothy C. O'Brien
Ziff-Davis Inc.
28 East 28th Street
New York, New York 10016
Telephone: (212) 503-3500
OTHER INFORMATION
We have not authorized anyone to give you any information about us or this
offering that is different from what we tell you in this document or in any of
the materials that we have incorporated into this document. If anyone gives you
any other information about us, you should not rely on it. If you are in a
jurisdiction where offers to sell, or solicitations of offers to buy, the ZD
shares offered by this document are unlawful, or if you are a person to whom it
is unlawful to direct these types of activities, then the offer presented in
this document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
THE SELLING SHAREHOLDER
The ZDNet shares offered by this document are being offered by the selling
shareholder named below. The selling shareholder acquired its common shares as a
result of our acquisition of the outstanding equity Ziff-Davis Richina Media LDC
on January 18, 2000 owned by Richina Media and Entertainment Limited (formerly
known as Richina Media Holdings Ltd.).
The selling shareholder is listed below, together with the number of ZDNet
shares it beneficially owns as of March 8, 2000 and the number of ZDNet
shares offered by this document. Because the selling shareholder may not sell
all, or any, of the ZDNet shares by means of this document, we do not know the
number it will own after this offering.
<TABLE>
<CAPTION>
ZDNET SHARES ZDNET SHARES
BENEFICIALLY OWNED ON OFFERED BY
SELLING SHAREHOLDER MARCH 8, 2000 THIS DOCUMENT
<S> <C> <C>
Richina Media and Entertainment Limited 186,046 186,046
New Hua Lian Building, West Block, Suite 8B,
775 Huai Hai Zhang Road, Shanghai 200020,
PRC
TOTAL......................................... 186,046 186,046
</TABLE>
18
<PAGE>
PLAN OF DISTRIBUTION
METHODS OF DISTRIBUTION BY SELLING SHAREHOLDER
The selling shareholder has informed us that it proposes to offer for sale
the ZDNet shares offered by this document from time to time and in several
different ways. For example, it may make sales:
o on the New York Stock Exchange,
o on another stock exchange or interdealer quotation system on which
ZDNet shares are quoted or listed at the time,
o through negotiated transactions or
o otherwise at prices related to prevailing market prices or at
negotiated prices.
From time to time, the selling shareholder may offer the shares offered by
this document through brokers, dealers or agents, who may receive compensation
in the form of concessions or commissions from the selling shareholder, agents
and/or the purchasers for whom they may act as agent.
PREPARATION OF AN ADDITIONAL PROSPECTUS
If necessary, we will prepare another document to describe the method of
sale in greater detail. As of the date of this document, we do not know of any
arrangements by the selling shareholder to sell its shares, nor do we know which
brokerage firms the selling shareholder may select to sell its shares. In
addition, the selling shareholder may sell its shares without the aid of a
registration statement if it follows SEC rules.
PARTIES THAT MAY BE DEEMED UNDERWRITERS
The selling shareholder and any brokers, dealers or agents that
participate in the distribution of the shares offered by this document may be
considered "underwriters." If the selling shareholder is considered an
underwriter, any profits on the sale of common shares by it and any associated
discounts or commissions may be considered underwriting compensation. In
addition, if the selling shareholder is considered an underwriter, the selling
shareholder may be subject to liability for misstatements and omissions in the
registration statement relating to this document.
REGULATION OF SALES BY SELLING SHAREHOLDER
The selling shareholder and any other person participating in a sale or
distribution of the shares offered by this document will be subject to
applicable provisions of the Securities Exchange Act of 1934, which is the
federal statute regulating sales of securities. Some SEC rules and regulations,
including some limitations on activities during securities offerings and
anti-fraud provisions, may limit when the selling shareholder, or any other
person, may sell or purchase the common shares.
In some jurisdictions, the securities laws require that the shares offered
by this document be offered or sold only through registered or licensed brokers
or dealers. In addition, in some jurisdictions the shares may
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<PAGE>
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available and is complied with.
EXPENSES
We will not receive any part of the proceeds from the sale of the ZDNet
shares offered by this document. We will bear all expenses we incur in
registering the shares with the SEC. The selling shareholder will pay its own
expenses, including brokerage commissions, personal legal and/or advisor fees or
similar expenses, in offering and selling its shares.
USE OF PROCEEDS
We will not receive any proceeds from the sales of the shares offered by
this document, but we will bear some of the expenses. See "Plan of Distribution
- - Expenses" above for a description of the payment of expenses.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains statements that anticipate or plan for the future.
These forward-looking statements include statements about our future business
plans and strategies, financial condition and results of operations, and other
statements that are not historical. These statements may be:
o made directly in this document or
o "incorporated by reference" to other documents Ziff-Davis files with
the SEC.
You can find many of these statements by looking for words like
"believes," "expects," "anticipates" and "estimates" and for similar
expressions. Because forward-looking statements involve assumptions and future
risks and uncertainties, there are factors that could cause the actual results
to differ materially from those expressed or implied. For example, the
statements appearing under "Risk Factors" herein and our December 31, 1998 Form
10-K, our March 31, 1999 Form 10-Q, our June 30, 1999 Form 10-Q and our
September 30, 1999 Form 10-Q describe circumstances that could not materially
affect the accuracy of forward-looking statements.
You should not unduly rely on these forward-looking statements, which are
correct only as of the date of this document or the date of any document
incorporated by reference.
If either Ziff-Davis or Richina Media and Entertainment Limited, or any
person acting on our behalf, makes any subsequent written or oral
forward-looking statements, these statements are qualified in total by the
cautionary statements contained or referred to in this section. Ziff-Davis
undertakes no obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
This document also includes statistical data regarding the publishing,
trade show and Internet industries. This data was obtained from industry
publications and reports which we believe to be reliable sources. We have not
independently verified such data nor sought the consent of any organizations to
refer to their reports in this document.
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<PAGE>
VALIDITY OF COMMON STOCK
The validity of the shares of ZDNet stock being offered by this document
has been passed upon for Ziff-Davis by Sullivan & Cromwell.
EXPERTS
The following financial statements have been so incorporated in this
document and registration statement in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting:
o the consolidated financial statements of Ziff-Davis Inc. as of
December 31, 1997 and 1998 and for the three years in the period ended
December 31, 1998 appearing in Ziff-Davis Inc.'s Annual Report on Form
10-K for the year ended December 31, 1998, Ziff-Davis Inc.'s Current
Report on Form 8-K dated April 2, 1999, and Ziff-Davis Inc.'s Current
Report on Form 8-K dated August 4, 1999;
o the combined financial statements of ZD (a division of Ziff-Davis
Inc.) as of December 31, 1997 and 1998 and for the three years in the
period ended December 31, 1998 appearing in Ziff-Davis Inc.'s Current
Report on Form 8-K dated April 2, 1999 and Ziff-Davis Inc.'s Current
Report on Form 8-K dated August 4, 1999;
o the combined financial statements of ZDNet (a division of Ziff-Davis
Inc.) as of December 31, 1997 and 1998 and for the three years in the
period ended December 31, 1998 appearing in Ziff-Davis Inc.'s, Current
Report on Form 8-K dated April 2, 1999 and Ziff-Davis Inc.'s Current
Report on Form 8-K dated August 4, 1999;
o the financial statements of ZDTV, LLC as of December 31, 1997 and 1998
and for the two years in the period ended December 31, 1998 appearing
in Ziff-Davis Inc.'s Current Report on Form 8-K/A dated April 20,
1999; and
o the consolidated financial statements of Ziff-Davis Inc. as of
December 31, 1997 and 1998, and for the years ended December 31, 1996,
1997 and 1998, appearing in Ziff-Davis Inc.'s Proxy Statement on
Schedule 14A dated February 7, 2000.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
Registration Statement Filing Fee...................$ 1,504.19
Legal Fees and Expenses............................. 15,000.00
Accounting Fees and Expenses........................ 5,500.00
Printing Costs...................................... 2,500.00
Miscellaneous Fees and Expenses..................... 5,000.00
-----------------
Total.......................................$ 29,504.19
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by a reason of such person
being or having been a director, officer, employee or agent of the Registrant or
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or other enterprise if the person acted in good
faith and in a manner the person reasonably believed was not opposed to the
corporation's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The statute provides that the indemnification is not exclusive of
other rights to which those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.4 of the Registrant's By-laws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law and permits the Registrant to
maintain insurance to protect against such expense, liability or loss, whether
or not the Delaware General Corporation Law provides indemnification. In
addition to the protection available under the Registrant's Amended and Restated
Certificate of Incorporation, By-laws and insurance policies, the Registrant has
entered into agreements with its outside directors to indemnify them to the
fullest extent permitted by law against losses arising from any claim against
them by reason of being or having been a director.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which
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<PAGE>
the director derived an improper personal benefit. The Registrant's Certificate
of Incorporation provides for such limitation of liability.
ITEM 16. EXHIBITS.
4.1 Specimen certificate representing Ziff-Davis Inc.'s ZDNet Stock,
par value $0.01 per share. (Incorporated by reference to
Ziff-Davis' Registration Statement on Form S-1) (File No.
333-69447)
5.1 Opinion of Sullivan & Cromwell.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Sullivan & Cromwell. (Included in Exhibit 5.1.)
24.1 Powers of Attorney.*
- --------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (as amended, and together with the rules and
regulations thereunder, the "Securities Act");
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
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<PAGE>
provided, however, that paragraphs (1)(a) and (1)(b) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 (as amended,
and together with the rules and regulations thereunder, the
"Securities Exchange Act") that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of the registration statement as of the time it was declared effective.
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
may, therefore, be unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on March 7, 2000.
Ziff-Davis Inc.
By: /s/ Timothy C. O'Brien
-------------------------------
Timothy C. O'Brien
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed by the following persons in the capacities
and on the date indicated.
SIGNATURE TITLE
--------- -----
*
- --------------------------------
Eric Hippeau Chairman, Chief Executive Officer, Director
(Principal Executive Officer)
*
- --------------------------------
Timothy C. O'Brien Chief Financial Officer, Director
*
- --------------------------------
Mark D. Moyer Controller
- --------------------------------
Masayoshi Son Director
- --------------------------------
Ronald D. Fisher Director
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*
- --------------------------------
Jason E. Chudnofsky Director
*
- --------------------------------
Jonathan D. Lazarus Director
*
- --------------------------------
Jerry Yang Director
*
- --------------------------------
Daniel L. Rosensweig Director
* /s/ J. Malcolm Morris
--------------------------------
J. Malcolm Morris, as Attorney-in-Fact
Dated: March 7, 2000
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ----------- --------
<S> <C> <C>
4.1 Specimen certificate representing Ziff-Davis Incorporated by reference to Ziff Davis'
Inc.'s ZDNet Stock, par value $0.01 per share. Registration Statement on Form S-1) (File
No. 333-69447).
5.1 Opinion of Sullivan & Cromwell. Filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP. Filed herewith.
23.2 Consent of Sullivan & Cromwell. Included in Exhibit 5.1.
24.1 Powers of Attorney. Previously filed.
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II-6
EXHIBIT (5.1)
March 2, 2000
[LETTERHEAD OF SULLIVAN & CROMWELL]
Ziff-Davis Inc.,
28 East 28th Street,
New York, New York 10016.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 186,046 shares (the "Securities") of ZDNet common stock, par value
$0.01 per share, of Ziff-Davis Inc., a Delaware corporation (the "Company"), we,
as your counsel, have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such
examination, we advise you that, in our opinion, the Securities have been
validly issued and are fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Delaware, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the certificates for the Securities
conform to the specimen thereof examined by us and have been duly countersigned
by a transfer agent of the Securities and duly registered by a registrar of the
Securities, and that the signatures on all documents examined by us are genuine,
assumptions which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Common Stock" in the Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
(EXHIBIT 23.1)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Ziff-Davis Inc.
of:
(I) our report dated February 22, 1999 appearing on page F16 of Ziff-Davis
Inc.'s Annual Report on Form 10-K, on page 20 of Ziff-Davis Inc.'s
Current Report on Form 8-K dated April 2, 1999 and on page F-79 of
Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Consolidated Financial Statements of Ziff-Davis Inc.
for the year ended December 31, 1998;
(II) our report dated February 22, 1999 appearing on page 94 of Ziff-Davis
Inc.'s Current Report on Form 8-K dated April 2, 1999 and on page F-33
of Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Combined Financial Statements of ZD (a division of
Ziff-Davis Inc.) for the year ended December 31, 1998;
(III) our report dated February 22, 1999 appearing on page 168 of Ziff-Davis
Inc.'s Current Report on Form 8-K dated April 2, 1999 and on page F-5
of Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Combined Financial Statements of ZDNet (a division of
Ziff-Davis Inc.) for the year ended December 31, 1998;
(IV) our report dated February 22, 1999 appearing on page F2 of Ziff-Davis
Inc.'s Current Report on Form 8-K/A dated April 20, 1999 relating to
the Financial Statements of ZDTV, LLC for the year ended December 31,
1998.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
March 8, 2000
