EXHIBIT 1.1
$250,000,000
ZD INC.
____% SENIOR SUBORDINATED NOTES DUE 2008
UNDERWRITING AGREEMENT
April 28, 1998
April 28, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
BNY Capital Markets, Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
ZD Inc., a Delaware corporation (the "COMPANY"), proposes to issue and sell
to the several Underwriters named in Schedule I hereto (the "UNDERWRITERS")
$250,000,000 principal amount of its ____% Senior Subordinated Notes due 2008
(the "SECURITIES") to be issued pursuant to the provisions of an Indenture dated
as of May __, 1998 (the "INDENTURE") between the Company and The Bank of New
York, as Trustee (the "TRUSTEE").
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Securities. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Securities is hereinafter referred to as the
"PROSPECTUS." If the Company has filed an abbreviated registration statement to
register additional ____% Senior Subordinated Notes due 2008 pursuant to Rule
462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "REGISTRATION STATEMENT" shall be deemed to
include such Rule 462 Registration Statement.
It is understood and agreed that as of the Closing Date (as defined below),
the Company will consummate a series of transactions pursuant to which (i) all
of the stock of ▇▇▇▇-▇▇▇▇▇ Inc. ("ZDI"), ZD COMDEX and Forums Inc. ("ZDCF") and
ZD Holdings (U.K.) Limited will be contributed to the Company by SOFTBANK
Holdings Inc., a wholly owned subsidiary of SOFTBANK Corp., in exchange for
74,200,000 shares of Common Stock, (ii) certain obligations owed to SOFTBANK
Corp. will be converted to equity, (iii) the Company will enter
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into a U.S.$1.35 billion Credit Agreement with The Bank of New York, Morgan
▇▇▇▇▇▇▇ Senior Funding and other lenders (the "CREDIT AGREEMENT") and borrow
$1.25 billion thereunder, (iv) the Company will issue and sell the Securities
pursuant to this Agreement and shall issue and sell 25,800,000 Shares of its
Common Stock (the "SHARES") pursuant to an underwriting agreement (the "EQUITY
UNDERWRITING AGREEMENT") of even date herewith and (v) the Company will apply
the proceeds of the sale of the Shares and the Securities, together with amounts
borrowed under the Credit Agreement, to purchase from MAC Inc. certain
operations and assets relating to certain publications and trade shows and to
repay certain Indebtedness owed to SOFTBANK Corp. and its affiliates (all such
transactions, as more fully described in the Prospectus, shall collectively be
referred to herein as the "REORGANIZATION"), which transactions shall be deemed
to take place simultaneously on the Closing Date. In connection with the
Reorganization, the Company will change its name to "▇▇▇▇-▇▇▇▇▇ Inc." and ZDI
will change its name to "ZD Inc."
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the Company's
knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to (A) statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein or (B) that part
of the Registration Statement that constitutes the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of 1939, as amended (the "TRUST
INDENTURE ACT"), of the Trustee.
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(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus.
(d) Each entity that will be a subsidiary of the Company after
giving effect to the Reorganization (each a "SUBSIDIARY") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries, taken
as a whole; all of the issued shares of capital stock of each Subsidiary of
the Company (including, but not limited to, ZDI, ZDCF and Holdings) have
been duly and validly authorized and issued, are fully paid and non-
assessable and, as of the Closing Date, will be owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity.
(g) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the terms
of this Agreement, will be entitled to the benefits of the Indenture and
will be valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity.
(h) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
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Indenture, the Securities and the consummation of the transactions
comprising the Reorganization will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or
any of its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any Subsidiary, and no consent, approval, authorization or order of, or
qualification with (any of the foregoing, a "CONSENT"), any governmental
body or agency is required for the performance by the Company of its
obligations under this Agreement, the Indenture, the Securities or the
consummation of the transactions comprising the Reorganization, except (i)
such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Securities and (ii) for
Consents the failure of which to have been obtained would not have a
material adverse effect on the Company and its Subsidiaries taken as a
whole.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole, from that
set forth in or contemplated by the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement).
(j) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company or
any of its Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(k) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
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(l) The Company is not and, after giving effect to the
Reorganization, will not be an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(m) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its Subsidiaries have not incurred any liability or obligation, direct or
contingent that is material to the Company and its Subsidiaries, taken as a
whole, nor entered into any transaction not in the ordinary course of
business that is material to the Company and its Subsidiaries, taken as a
whole and (ii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its consolidated
subsidiaries, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
(n) The Company and its Subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of
the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries; the Company does not hold title to any real
property that is material to the Company and its Subsidiaries, taken as a
whole; and any real property and buildings held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries, in each case except as
described in or contemplated by the Prospectus.
(o) The Company and its Subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, the
loss or failure to obtain of which would not have a material adverse effect
on the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole, and
neither the Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the
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subject of an unfavorable decision, ruling or finding, would result
in any material adverse change in the condition, financial or otherwise, or
in the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.
(p) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(q) No material labor dispute with the employees of the Company or
any of its Subsidiaries exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its Subsidiaries, taken as a
whole.
(r) As of the Closing Date, the Reorganization will have been
completed as described in the Prospectus.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Securities set forth in Schedule I
hereto opposite its name at _____% of their principal amount plus accrued
interest, if any, from ______, 1998 to the date of payment and delivery.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Securities are to be offered to the public initially at
____% of their principal amount (the "PUBLIC OFFERING PRICE") plus accrued
interest, if
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any, from _______, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
____% of their principal amount, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of ____% of their principal
amount, to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to the
Company in Federal or other funds immediately available in New York City at
10:00 a.m., New York City time, on May [4], 1998, or at such other time on the
same or such other date, not later than May [11], 1998, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred
to as the "CLOSING DATE."
Payment for the Securities shall be made against delivery to you on the
Closing Date for the respective accounts of the several Underwriters of the
Securities registered in such names and in such denominations as you shall
request in writing not less than one full business day prior to the Closing
Date, with any transfer taxes payable in connection with the transfer of the
Securities to the Underwriters duly paid.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Securities to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Securities are subject to the
condition that the Registration Statement shall have become effective not later
than 5:30 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
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the Company and its Subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in the
judgment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, is material and adverse and that makes
it, in the judgment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, impracticable to market the
Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5 above and to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company
has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before the Closing
Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus;
(ii) each of ZDI and ZDCF has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the State of Delaware, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture
Act of 1939; the Securities have been duly authorized, executed,
authenticated, issued and delivered; and the Indenture and the
Securities constitute valid and legally binding obligations
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of the Company enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(v) none of (A) the execution and delivery by the Company of,
and the performance by the Company of its obligations under, this
Agreement, the Indenture and the Securities, (B) the execution and
delivery by the Company of, and the performance by the Company of its
obligations under, the agreements entered into by the Company in
connection with the transactions comprising the Reorganization or (C)
the transfer of the shares of Common Stock of SOFTBANK Corp. or its
affiliates in exchange for the stock of ZDI and ZDCF, the purchase of
the MAC Assets and the repayment of approximately $1.589 billion of
obligations to SOFTBANK Corp., all in connection with the
Reorganization: (1) will violate the Company's certificate of
incorporation or by-laws, (2) to the best of such counsel's
knowledge, result in a default under or breach of any agreement or
other instrument binding upon the Company or any of its Subsidiaries
that is filed as an exhibit to the Registration Statement or (3)
violate any Federal law of the United States or law of the State of
New York applicable to the Company; provided, however, that for the
purposes of this paragraph, such counsel need express no opinion with
respect to Federal or state securities laws, other antifraud laws and
fraudulent transfer; provided, further, that insofar as performance
by the Company of its obligations under agreements entered into by
the Company in connection with the Reorganization and this Agreement
are concerned, such counsel need express no opinion as to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights.
(vi) All regulatory consents, authorizations, approvals and
filings required to be obtained or made by the Company under the
Federal laws of the United States and the General Corporation Law of
the State of Delaware for the issuance, sale and delivery of the
Securities by the Company to you have been obtained or made.
(vii) after due inquiry, such counsel does not know of any
litigation or governmental proceedings instituted or threatened
against the Company or any of its Subsidiaries that are required to
9
be disclosed in the Registration Statement or the Prospectus and are
not so disclosed or of any documents that are required to be
disclosed in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
summarized or filed as required;
(viii) the Company is not and, after giving effect to the
Reorganization, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(ix) the Registration Statement, as of the effective date of
the Registration Statement, and the Prospectus, as of the date of the
Prospectus, appeared on their face to be appropriately responsive in
all material respects to the requirements of the Act and the Trust
Indenture Act of 1939 and the applicable rules and regulations of the
Commission thereunder; nothing that came to such counsel's attention
in the course of their review has caused such counsel to believe that
the Registration Statement, as of its effective date, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of the
date of the Prospectus, contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. Such counsel may state that they do
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus except for those made under the captions "Description
of Notes" and "Underwriters" in the Prospectus, insofar as they
relate to provisions of documents therein described. Such counsel may
also state that they do not express any opinion or belief as to the
financial statements or other financial or statistical data contained
in the Registration Statement or the Prospectus or as to the
statement of the eligibility and qualification of the Trustee under
the Indenture under which the Securities are being issued.
(d) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5, (c)(iii)
5(c)(iv) 5(c)(v) and 5(c)(x) above.
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With respect to Section 5 (c)(x) above, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇ may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ described in Section 5(c) above
shall be rendered to the Underwriters at the request of the Company and
shall so state therein.
(e) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Price Waterhouse, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
of the Company, ZDI and ZDCF, and certain financial information contained
in the Registration Statement and the Prospectus (including pro forma and
other unaudited combined financial data); provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(f) You shall have received evidence satisfactory to you that the
contribution to the Company of the stock of ZDI, ZDCF and ZD Holdings
(U.K.) Ltd. by SOFTBANK Holdings Inc. shall have occurred, and that the
other transactions comprising the Reorganization shall have occurred or
will occur as of the Closing Date, including the concurrent closings of the
issuance and sale of the Shares contemplated by the Equity Underwriting
Agreement and the borrowings under the Credit Agreement.
6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c) below, as many copies of the Prospectus and any supplements
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and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before filing any amendment or supplement the Registration
Statement or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the reasonable opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor, in cooperation with the Underwriters, to qualify the
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request, provided that the Company
shall not be required to qualify to do business in any jurisdiction where
it is not now qualified or to take any action which would subject it to
general or unlimited service of process in any jurisdiction where it is not
now so subject or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise subject.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the twelve-
month period ending June 30, 1998 that satisfies the provisions
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of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase or otherwise acquire debt securities of the Company substantially
similar to the Securities (other than (i) the Securities and (ii)
commercial paper issued in the ordinary course of business), without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
(g) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Securities under the Securities Act and
all other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Securities to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any Blue Sky
or legal investment memorandum in connection with the offer and sale of the
Securities under state law and all expenses in connection with the
qualification of the Securities for offer and sale under state law as
provided in Section 6(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements
of counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Securities by the National Association
of Securities Dealers, Inc., (v) any fees charged by the rating agencies
for the rating of the Securities, (vi) the cost of printing certificates
representing the Securities, (vii) the costs and charges of any trustee,
transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
13
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any
advertising expenses connected with any offers they may make.
7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY")
14
shall promptly notify the person against whom such indemnity may be sought
(the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed in
writing to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated, in the case of parties indemnified pursuant to
Section 7(a), and by the Company, in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a)
or 7(b) is unavailable to an indemnified party or insufficient in respect
of any losses,
15
claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities or (ii)
if the allocation provided by clause 7(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover of the Prospectus, bear
to the aggregate Public Offering Price of the Securities. The relative
fault of the Company on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
principal amounts of Securities they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of
16
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The remedies provided for
in this Section 7 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law
or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Securities.
8. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
8(a)(i) through 8(a)(iv), such event, singly or together with any other such
event, makes it, in the judgment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Underwriters shall fail or
refuse to purchase Securities that it has or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Securities to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the principal
amount of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Securities which such defaulting
17
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the principal amount of Securities that
any Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such principal
amount of Securities without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Securities and the aggregate principal amount of Securities with respect to
which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
48 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
reasonable and documented out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
18
12. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
ZD Inc.
By:
------------------------------------------
Name:
Title:
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
BNY Capital Markets, Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Acting severally on behalf of themselves and the several Underwriters named in
Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
-------------------------------------------
Name:
Title:
19
SCHEDULE I
PRINCIPAL AMOUNT
OF
SECURITIES TO BE
UNDERWRITER PURCHASED
--------------------------------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
BNY Capital Markets, Inc...............
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation...........................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated..........................
---------------------
Total: ........................... $ 250,000,000
=====================
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