AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1995
REGISTRATION NO. 33-63073
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOFTKEY INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2562108
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
ONE ATHENAEUM STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 494-1200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
MICHAEL J. PERIK
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
SOFTKEY INTERNATIONAL INC.
ONE ATHENAEUM STREET
CAMBRIDGE, MASSACHUSETTS 02142
(617) 494-1200
(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:
AS SOON AS PRACTICABLE 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: ( )
CALCULATION OF REGISTRATION FEE
===============================================================================
Amount Proposed Proposed
Title of to be Maximum Maximum Amount of
Securities Registered Offering Aggregate Registration
to be Registered (1) Price Per Offering Fee (2)
Share (1)(2) Price (1)(2)
_______________________________________________________________________________
Common Stock, par
value $.01 per share 1,477,667 $42.41 $67,031,551.36 $23,114.33
===============================================================================
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended,
based on the average of the high and low prices per share of the
Registrant's Common Stock reported on the Nasdaq National Market on
September 27, 1995.
(2) A filing fee of $22,565.86 was previously paid in connection with
the previous filing of this Registration Statement relating to the
registration of an aggregate of 1,440,163 shares of the Registrant's
Common Stock at a Proposed Maximum Aggregate Offering Price of
$65,441,006.72. A filing fee of $548.47 is being paid herewith
relating to the registration of an additional 37,504 shares of the
Registrant's Common Stock hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
1,477,667 SHARES
LOGO]
COMMON STOCK
This Prospectus relates to 1,477,667 shares (the "Shares")
of Common Stock, par value $.01 per share (the "Common Stock"), of
SoftKey International Inc. ("SoftKey" or the "Company"). The
Shares may be offered by certain stockholders of the Company (the
"Selling Stockholders") from time to time in transactions on the
Nasdaq National Market, in negotiated transactions, at fixed prices
which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Shares for whom such broker-dealers
may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in
excess of customary commissions). The Selling Stockholders, and
any agents or broker-dealers that participate with the Selling
Stockholders in the distribution of the Shares, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions received by
them and any profit on their resale of the Shares may be deemed to
be underwriting commissions or discounts under the Securities Act.
See "The Selling Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the
Selling Stockholders will be received by the Company. The Company
has agreed to bear certain expenses (other than selling
commissions) in connection with the registration of the Shares.
The Common Stock of the Company is quoted on the Nasdaq
National Market under the symbol "SKEY." On October 18, 1995,
the per share closing price of the Common Stock as reported on the
Nasdaq National Market was $41 15/16.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October 20, 1995
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and
other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's Regional Offices at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material also can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549 at prescribed
rates. In addition, material filed by the Company can be inspected
at the offices of The Nasdaq Stock Market, Reports Section, 1735 K
Street N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration
Statement on Form S-3 (together with any amendments or supplements
thereto, the "Registration Statement") under the Securities Act
with respect to the securities to be offered and sold by means of
this Prospectus. This Prospectus omits certain of the information
contained in the Registration Statement and the exhibits and
schedules thereto in accordance with the rules and regulations of
the Commission. For further information regarding the Company and
the Shares offered hereby, reference is made to the Registration
Statement and the exhibits and schedules filed therewith, which may
be inspected without charge at the office of the Commission at 450
Fifth Street N.W., Washington, D.C. 20549 and copies of which may
be obtained from the Commission at prescribed rates. Statements
contained in this Prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and
in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such
reference.
DOCUMENTS INCORPORATED BY REFERENCE
The Annual Report on Form 10-K of the Company for the fiscal
year ended December 31, 1994, the Current Report on Form 8-K of the
Company dated February 10, 1995, the Company's Quarterly Report on
Form 10-Q for the quarterly period ended April 1, 1995, the Current
Report on Form 8-K of the Company dated June 12, 1995, the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended July 1, 1995, the Current Report on Form 8-K of the Company
dated August 3, 1995, as amended by a Current Report on Form 8-K/A
dated October 4, 1995, the Current Report on Form 8-K of the
Company dated September 6, 1995, the Current Report on Form 8-K of
the Company dated October 12, 1995 and the description of the
Common Stock contained in the Company's registration statement
filed pursuant to Section 12(g) of the Exchange Act, including any
amendment or reports filed for the purpose of updating such
description filed by the Company, all of which are on file with the
Commission, are incorporated in this Prospectus by reference and
made a part hereof.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of the Shares hereunder shall be deemed
to be incorporated herein by reference and shall be a part hereof
from the date of the filing of such documents. Any statements
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or replaced for
purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein
modifies or replaces such statement. Any such statement so
modified or replaced shall not be deemed, except as so modified or
replaced, to constitute a part of this Prospectus.
The Company will provide without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered,
upon written or oral request of such person, a copy of the
documents incorporated by reference herein, other than exhibits to
such documents not specifically incorporated by reference. Such
requests should be directed to SoftKey International Inc., One
Athenaeum Street, Cambridge, Massachusetts 02142, Attention:
Secretary (telephone: (617) 494-1200).
THE COMPANY
SoftKey is a leading developer and publisher of value-priced,
high-quality, consumer software for personal computers ("PCs"),
primarily produced on CD-ROM. The Company currently offers over
300 software titles in consumer-oriented categories, including
lifestyle, edutainment, productivity, entertainment and education.
The Company's products include titles such as: Calendar Creator,
Sports Illustrated Swimsuit Calendar, Time Almanac, BodyWorks 4.0,
The American Heritage Talking Dictionary, PC Paintbrush and Key 3D
Design Center.
The Company was created through a combination of three
corporations. On February 4, 1994, the Company (which was then
known as WordStar International Incorporated ("WordStar"))
completed a three-way business combination transaction with SoftKey
Software Products Inc. and Spinnaker Software Corporation
("Spinnaker"). Effective February 4, 1994, the Company changed its
name to SoftKey International Inc.
SoftKey's strategy is to develop, license and acquire a broad
range of quality software products with significant unit-volume
potential at the lowest possible cost and to continuously introduce
these new products through a wide variety of established and
emerging distribution channels worldwide, including retail
channels, direct mail and original equipment manufacturers
("OEMs"). Other key elements of this strategy include focusing on
high growth consumer software, broadly distributing to the consumer
market at various price points, building strong relationships with
retail channels, acquiring complementary products, technologies and
businesses and enhancing brand awareness and loyalty.
SoftKey develops and publishes products through internal
development and licensing agreements with outside developers. The
Company's internal product development efforts are designed to
result in efficient and timely product introductions by focusing on
"core code" development. Where possible, the Company specifies,
develops and manages (or purchases) one base of source code from
which many products are created. The Company supplements its
development efforts through product acquisitions and royalty-
bearing licenses.
On October 18, 1995, SoftKey announced the final terms of a
private offering of $350,000,000 principal amount 5 1/2% Senior
Convertible Notes due 2000 (the "Notes"). The Notes will be
convertible into Common Stock at a conversion price of $53
per share. The Notes will be redeemable by SoftKey on or
after November 2, 1998 at declining redemption prices. SoftKey
has granted to the initial purchasers a thirty-day option to
purchase an additional $52,500,000 principal amount of the Notes.
SoftKey intends to use all or a substantial portion of the net
proceeds of the private offering for acquisitions and strategic
alliances. There are currently no understandings, agreements, or
commitments with respect to any such transactions.
The Company recently acquired four privately held consumer
software companies. On July 21, 1995, the Company acquired all of
the aggregate share capital of tewi Verlag GmbH, a German limited
liability company ("tewi") and publisher and distributor of CD-ROM
software and computer-related books. In and in connection with the
acquisition, the Company issued an aggregate of 99,045 shares of
Common Stock to a former shareholder of tewi (the "tewi Selling
Stockholder") and may issue additional shares of Common Stock to
the tewi Selling Stockholder pursuant to an Earn-Out Agreement.
The Company also paid cash consideration of $1,454,600 to the tewi
Selling Stockholder and $11,564,070 to another former shareholder
of tewi.
On August 31, 1995, the Company acquired all of the issued and
outstanding capital stock of Future Vision Holding, Inc., a
multimedia software company ("Future Vision"). In connection
with the acquisition, the Company issued an aggregate of
1,088,047 shares of Common Stock to the owners of all the
outstanding capital stock of Future Vision (the "Future Vision
Owners"), one of which, K.H. Trustees Ltd. ("KHT") subsequently
transferred the shares of Common Stock it received in the
acquisition to another entity, D.A.J.A. Trust Company Ltd.,
("DAJA") (DAJA and the Future Vision Owners other than KHT are
referred to collectively in this Prospectus as the "Future Vision
Selling Stockholders"). See "The Selling Stockholders." In
addition, since the acquisition, the Company has issued 46,934
shares of Common Stock to certain creditors of Future Vision
(collectively, the "Debt Holder Selling Stockholders").
On August 31, 1995, the Company also acquired Ancier
Technologies, Inc., a software development company ("Ancier"). In
the acquisition, the Company issued an aggregate of 102,000 shares
of Common Stock to the owner of all the outstanding capital stock
of Ancier (the "Ancier Selling Stockholder").
On September 29, 1995, the Company acquired all of the
issued and outstanding capital stock of Electromap, Inc., a
software developer of electronic maps and atlases ("Emap"). In the
acquisition, the Company issued an aggregate of 37,506 shares of
Common Stock to the owners of all the outstanding capital stock of
Emap (collectively, the "Emap Selling Stockholders").
RISK FACTORS
Prospective purchasers of shares of Common Stock offered
hereby should carefully consider the following risk factors, in
addition to other information contained or incorporated by
reference in this Prospectus.
INTENSE COMPETITIVE ENVIRONMENT
The PC consumer software industry is intensely competitive and
is characterized by rapid changes in technology and customer
requirements. The changing nature of the consumer software
industry and rapidly changing demand for products make it difficult
to predict the future success of the Company in the business of
producing packaged software products for the retail market. The
Company competes for retail shelf space and general consumer
awareness with a number of companies that market software products.
The Company encounters competition from both established
companies, including the largest companies in the industry, and new
companies that may develop comparable products. A number of the
Company's competitors and potential competitors possess
significantly greater capital, marketing resources and brand
recognition than the Company. Rapid changes in technology, product
obsolescence and advances in computer software and hardware require
the Company to develop or acquire new products and to enhance its
existing products on a continuing and timely basis.
Many large companies with sophisticated product marketing and
technical abilities and financial resources that do not presently
compete with the Company may enter the PC software market. Such
companies could rapidly become significant additional competitors
of the Company. To the extent that competitors achieve either a
performance, price or distribution advantage, the Company could be
adversely affected.
Microsoft Corporation ("Microsoft") is the dominant supplier
of computer operating systems and frequently coordinates its
operating system marketing efforts with those for its applications
software. Competition in Microsoft's Windows application segment
from major software publishers is intensifying, and the
"competitive upgrade" price discounting among the major firms is
eroding the traditional pricing structures that had previously
existed in the software industry. Recently, Microsoft announced
that it was reducing the price of a number of its consumer software
titles from $69.95 to $49.95. Competitive pressures have resulted
in price reductions throughout the industry with the result that
industry wide operating margins are likely to be adversely
affected.
There is no assurance that the Company will have the resources
required to respond to market or technological changes or to
compete successfully in the future.
INTENSE COMPETITION FOR DISTRIBUTION CHANNELS
The Company competes with other companies for access to retail
shelf space and inclusion in OEM sales programs. Competition in
this aspect of the industry is intense, and the type and number of
channels is increasing to include non-traditional software
retailers such as book, music, video, magazine, toy, gift,
convenience, drug and grocery store chains.
The traditional channels of distribution in the software
industry have experienced increasing concentration during the past
several years, in particular with respect to PC chain stores and
software distributors. With the increasing concentration in the
traditional channels of distribution, the Company's customers have
increased strength in negotiating favorable terms of sale,
including price discounts and product return policies. In
addition, a number of the Company's competitors, such as Davidson &
Associates (through New Media Express) and GT Interactive Software,
have attempted, with some success, to enter into exclusive
software distribution arrangements with certain retail outlets.
Should the occurrence of these exclusive arrangements increase and
the Company not be able to offer a competing product line or
arrangement, the Company's operating results may be negatively
impacted. There can be no assurance that the Company will be able
to continue to have access to sufficient retail marketing
distribution channels or obtain adequate distribution for all of
its products in the future. Accordingly, such concentration may
have an adverse effect in the future on the profitability of the
Company's operations.
Regardless of the retail strategy chosen by the Company, the
retail channels of distribution available for products will be
subject to rapid changes as retailers and distributors enter and
exit the software market segments or alter their product inventory
preferences. In addition, other types of retail outlets and
methods of product distribution may become important in the future.
These new methods may also include delivery of software using
on-line services or the Internet. It is critical to the success of
the Company that as these changes occur it maintain access to those
channels of distribution offering software in its market segments.
ACQUISITIONS, BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES
The Company has historically expanded its business through,
among other strategies, acquisitions, business combinations and
strategic alliances. Moreover, the consumer software industry as a
whole has recently experienced consolidation. The Company believes
that its customers will in the future demand that the Company offer
increasing numbers of titles throughout the Company's existing
product categories and, in particular, the education and
entertainment categories. The Company believes that in many cases
the most efficient means to acquire such titles or the ability to
develop or license such titles is to enter into acquisitions,
business combinations or strategic alliances with consumer software
companies.
The Company continuously evaluates and considers other
businesses of varying sizes as potential strategic partners and
candidates for acquisition and has engaged in discussions with
certain businesses in pursuit of possible transactions. Certain of
these businesses may be substantially larger than businesses
acquired in the past by the Company. The Company is currently
evaluating and considering a number of potential transactions (both
negotiated and non-negotiated) and transaction prospects, but there
are currently no understandings, agreements or commitments with
respect to any acquisition, business combination or strategic
alliance. Moreover, there can be no assurance that the Company
will enter into any such transaction or, if the Company does
identify and consummate such a transaction, that the transaction
will enable the Company to achieve its goals.
Acquisitions or business combination transactions that would
result in expansion of the Company's business in the entertainment
and educational product areas may result in a higher degree of
product acceptance risk and longer development cycles for the
Company's products. In addition, companies that develop
entertainment software (for PC, Sega, Nintendo and 3DO platforms)
typically experience lower gross margins than the Company has
experienced from its current operations. Further, should purchase
accounting be used by the Company for future acquisitions or
business combination transactions, such accounting treatment may
result in large, one-time expense charges for in-process research
and development costs and short amortization periods for acquired
technology and other intangible assets acquired in the transaction.
Competition for suitable acquisitions, business combinations
and strategic alliances and the cost of these transactions have
recently been increasing. The future availability of desirable
prospects for these transactions in the computer software industry
is uncertain. In addition, assuming that the Company is able to
identify appropriate transaction prospects, the execution and
implementation of acquisitions, business combinations or strategic
alliances involves a significant time commitment from senior
management and can result in large restructuring costs. There can
be no assurance that suitable opportunities will be identified or
that transactions can be consummated or integrated successfully
into the Company's operations.
NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE
Software companies must continue to develop or acquire new
products or upgrade existing products on a timely basis to sustain
revenues and profitable operations. One factor contributing to the
short life span of PC software has been rapid technological change.
Software companies must continue to create or acquire innovative
new products reflecting technological changes in hardware and
software and translate current products into newly accepted
hardware and software formats, in order to gain and maintain a
viable market for their products. PC hardware, in particular, is
steadily advancing in power and function, expanding the market for
increasingly complex and flexible software products. This has also
resulted in longer periods necessary for research and development
of new products and a greater degree of unpredictability in the
time necessary to develop products. Furthermore, the rapid changes
in the market and the increasing number of new products available
to consumers have increased the degree of consumer acceptance risk
with respect to any specific title that the Company may publish.
It is expected that this trend will continue and may become more
pronounced in the future.
The Company has in the past focused primarily on the
productivity, lifestyle and edutainment product categories. These
product categories have a lower development cost and are not
considered as "hit" driven as the high-end, 16-bit and 32-bit
entertainment and games software category (including the Sega,
Nintendo and 3DO platforms) and the high-end, PC-based CD-ROM game
category. Additionally, the high-end entertainment and games
category requires higher development and marketing costs and a
higher cost of goods sold than the Company's traditional software
business, is dominated by a number of very large competitors and is
subject to rapid change in consumer preference. Should the Company
substantially increase its presence in the high-end entertainment
and games industry segment, it will experience these additional
risks and competitive pressures.
The Company's rights to license many of its software products
are non-exclusive and, generally, of limited duration, and there is
no assurance the Company will be able to continue to obtain new
products from developers or to maintain or expand its market share
in the event that a competitor offers the same or similar software
products. If the Company is unable to develop or acquire new
products in a timely manner as revenues decrease from products
reaching the end of their natural life cycle, the Company's results
of operations will be adversely affected.
SIGNIFICANT PRICE REDUCTIONS IN PERSONAL COMPUTER SOFTWARE
Recently, several major publishers of PC software have
significantly reduced the prices of their products with the goal of
gaining greater market share, to the extent that at least one
company (which is not a competitor of SoftKey) distributed its
product at no cost (except what it represented as shipping and
handling charges) in order to gain market share upon its entrance
into a new market. Most recently, Microsoft announced that it
was reducing the price of a number of its consumer software titles
from $69.95 to $49.95. The retail and wholesale prices of many of
the Company's products have declined, and the Company has
introduced new lines of lower-priced software products. There can
be no assurance that such price reductions or new product lines
will result in an increase in unit sales volume or that prices will
not continue to decline in the future. Such a decline would lead
to a decrease in the revenues from, and gross margin on, sales of
such products in the future and could result in lower cash flow or
operating margins.
RISK OF INTERNATIONAL OPERATIONS
The Company derived approximately 10% of its revenues in the
year ended December 31, 1994 from sales occurring outside North
America. Revenues from such international sales in 1995 have
increased slightly and should continue to increase as a result of
the Company's acquisition of tewi in July 1995. These revenues are
subject to the risks normally associated with international
operations, including currency conversion risks, limitations
(including taxes) on the repatriation of earnings, slower and more
difficult accounts receivable collection, greater difficulty and
expense in administering business abroad, complications in
complying with foreign laws and the necessity of obtaining
requisite export licenses, which on occasion may be delayed or
difficult to obtain. In addition, while U.S. copyright law,
international conventions and international treaties may provide
meaningful protection against unauthorized duplication of software,
the laws of foreign jurisdictions may not protect the Company's
proprietary rights to the same extent as the laws of the United
States. Software piracy has been, and can be expected to be, a
persistent problem for participants in the "shrinkwrap" software
industry, including the Company. These problems are particularly
acute in certain international markets such as South America, the
Middle East, the Pacific Rim and the Far East.
DEPENDENCE ON MAJOR SUPPLIER
All duplication, assembly and fulfillment, with certain
exceptions (including CD-ROMs and products reproduced by OEMs), for
all of the Company's U.S. products are provided by one supplier,
Stream International Inc. (formerly known as the Global Software
Services business unit of R.R. Donnelley & Sons Company)
("Stream"), at facilities in Crawfordsville, Indiana. Any
interruption in Stream's manufacturing, assembly and fulfillment
services could have a material adverse impact on the Company's
business. The Company's agreement with Stream expires in April
1997, and there can be no assurance that such agreement will be
renewed or that the terms of any renewal will be the same as those
currently in effect. Although the Company believes that suitable
alternative suppliers exist, there can be no assurance that any
termination or modification of the agreement with Stream would not
result in a short-term business interruption for the Company.
MANAGEMENT OF GROWTH
The Company is currently experiencing a period of rapid growth
that could place a strain on the Company's financial, management
and other resources in the future. The Company's ability to
continue to manage its growth effectively will require it to
continue to improve its operational, financial and management
information systems and to continue to attract, train, motivate,
manage and retain key employees. If the Company's management
becomes unable to manage growth effectively, the Company's
business, operating results and financial condition could be
adversely affected.
DEPENDENCE ON CONTINUED PERSONAL COMPUTER SALES
The success of the Company is dependent upon the continuing
use of PCs, and especially multimedia PCs, in the consumer market.
A general decrease in unit sales of PCs could adversely affect the
Company's future results of operations.
HISTORY OF OPERATING LOSSES
A variety of factors may cause period-to-period fluctuations
in the Company's operating results, including integration of
operations resulting from acquisitions of companies, products or
technologies, revenues and expenses related to the introduction of
new products or new versions of existing products, changes in
selling prices, delays in purchases in anticipation of upgrades to
existing products, currency fluctuations, dealer and distributor
order patterns, general economic trends or a slowdown of PC sales
and seasonality of customer buying patterns. Historical operating
results of the Company and its predecessors cannot be relied upon
as indicative of the future performance of the Company. On an
historical basis, the Company incurred net losses of $4,983,000 for
the year ended June 30, 1992, $57,250,000 for the year ended June
30, 1993 and $73,258,000 for the transition period from July 4,
1993 to January 1, 1994. The Company had net income of $21,145,000
for the year ended December 31, 1994 and $17,973,000 ($12,795,000
after restatement to give effect to the operating results of Future
Vision, the acquisition of which has been treated as a pooling-of-
interest for accounting purposes) for the six months ended June 30,
1995. There can be no assurance that the Company will continue to
be profitable in the future.
CAPITAL RESOURCES
The expansion of the Company's current business involves
significant financial risk and capital investment. There is no
assurance that capital will be available in the future to meet
the needs of the Company for additional investment.
VOLATILITY OF STOCK PRICE AND DEPTH OF TRADING MARKET
The Common Stock trades on the Nasdaq National Market. The
market price of the Common Stock, like the shares of many other
high technology companies, has been and may continue to be
volatile. Recently, the stock market in general and the shares of
PC software companies in particular have experienced significant
price fluctuations. These broad market and industry fluctuations
may adversely affect the market price of the Common Stock. Factors
such as quarterly fluctuations in results of operations, the
announcement of technological innovations, the introduction of new
products by the Company or its competitors and general conditions
in the computer hardware and software industries may have a
significant impact on the market price of the Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares by the Selling Stockholders.
THE SELLING STOCKHOLDERS
The Selling Stockholders beneficially own an aggregate of
1,477,667 shares of Common Stock, all of which are offered
hereby. The Shares offered hereby by the Selling Stockholders
represent approximately 5.91% of the outstanding Common Stock as
of September 15, 1995. The Emap Selling Stockholders and the
Company are parties to a Stock Purchase Agreement dated
September 29, 1995, pursuant to which the Emap Selling
Stockholders acquired 37,506 shares of Common Stock, all of which
are offered hereby. Certain shares acquired by the Emap Selling
Stockholders are subject to an Escrow Agreement dated September 29,
1995 (the "Emap Escrow Agreement"). The Future Vision Selling
Stockholders (except DAJA) and the Company are parties to a Stock
Purchase Agreement dated as of July 17, 1995, pursuant to which the
Future Vision Owners acquired an aggregate of 1,088,047 shares of
Common Stock, all of which are offered hereby (29,453 of which
shares are being offered by DAJA, which acquired such shares from
KHT). Certain shares of Common Stock acquired by the Future Vision
Selling Stockholders are subject to an Escrow Agreement dated
August 31, 1995 (the "Future Vision Escrow Agreement"). Each Debt
Holder Selling Stockholder and the Company are parties to stock-
for-debt letter agreements dated July 18, 1995, pursuant to which
the Debt Holder Selling Stockholders acquired an aggregate of
46,934 shares of Common Stock. The Ancier Selling Stockholder and
the Company are parties to a Merger Agreement dated as of August
31, 1995, pursuant to which the Ancier Selling Stockholder acquired
102,000 shares of Common Stock, all of which are offered hereby.
The tewi Selling Stockholder and the Company are parties to various
separate but related agreements, including without limitation a
Share Purchase Agreement and a Stock Restriction and Repurchase
Agreement, each dated July 21, 1995, pursuant to which the tewi
Selling Stockholder acquired an aggregate of 99,045 shares of
Common Stock, all of which are offered hereby. The remaining
Selling Stockholder, Diane M. Heppting (the "Aris Selling
Stockholder"), acquired, pursuant to a Stock Purchase Agreement
dated as of June 15, 1994, 231,411 shares of Common Stock in
connection with the Company's acquisition of Aris Multimedia
Entertainment, Inc. ("Aris") on such date; 104,135 of such shares
are being offered hereby.
The following table sets forth certain information regarding
the ownership by the Selling Stockholders of Common Stock at
September 15, 1995, and as adjusted for the sale of the Shares
offered hereby. At September 15, 1995, there were 25,013,515
shares of Common Stock issued and outstanding.
Beneficial Ownership Shares Being Beneficial Ownership
Prior to Offering(1) Offered Hereby After Offering(1)
____________________ ______________ ____________________
Shares Percent Shares Percent
NAMES OF EMAP
SELLING STOCKHOLDERS
Richard M. Smith(2) 12,502 * 12,502 0 0
Joan Y. Smith(3) 12,502 * 12,502 0 0
Gregory Mitchell(4) 12,502 * 12,502 0 0
NAMES OF FUTURE VISION
AND DEBT HOLDER
SELLING STOCKHOLDERS
Flextech Holdings
Limited(5) 504,847 2.02% 504,847 0 0
Harry Fox(6) . 302,824 1.12 302,824 0 0
Joseph Abrams(7) 23,023 * 23,023 0 0
Sol Rosenberg(8) 137,497 * 137,497 0 0
Mathew Barlow(9) 6,858 * 6,858 0 0
Samuel Zaemsky(10) 12,360 * 12,360 0 0
D.A.J.A. Trust
Company Ltd.(11) 29,453 * 29,453 0 0
Seth Altholz(12) 56,484 * 56,484 0 0
Shelly Abrahami(13) 37,661 * 37,661 0 0
Au Sai Chuen(14) 17,419 * 17,419 0 0
Barry Charles 6,555 * 6,555 0 0
NAME OF ANCIER
SELLING STOCKHOLDER
Leland J. Ancier(15) 102,000 * 102,000 0 0
NAME OF TEWI
SELLING STOCKHOLDER
Helmut Kunkel(16) 99,045 * 99,045 0 0
NAME OF ARIS
SELLING STOCKHOLDER
Diane M. Heppting(17) 104,135 * 104,135 0 0
_________
* Less than 1%.
(1) Unless otherwise noted, the nature of beneficial ownership
is sole voting and/or investment power, except to the extent
authority is shared by spouses under applicable law.
(2) Pursuant to the Emap Escrow Agreement, 715 of such
shares are currently held in escrow by The First National
Bank of Boston, as escrow agent (the "Escrow Agent"). Mr.
Smith is currently a consultant to the Company and was
formerly a director of Emap.
(3) Pursuant to the Emap Escrow Agreement, 715 of such shares
are currently held in escrow by the Escrow Agent. Ms. Smith
is currently an employee of Emap and was formerly a director
of Emap.
(4) Pursuant to the Emap Escrow Agreement, 715 of such shares
are currently held in escrow by the Escrow Agent. Mr.
Mitchell is currently an employee of the Company and was
formerly a director of Emap.
(5) Pursuant to the Future Vision Escrow Agreement, 67,511 of
such shares are currently held in escrow by the Escrow
Agent.
(6) Pursuant to the Future Vision Escrow Agreement, 38,960 of
such shares are currently held in escrow by the Escrow
Agent. Mr. Fox has entered into an employment agreement
with the Company, effective as of August 31, 1995, under
which he is employed by the Company until August 31, 1998,
unless earlier terminated in accordance with his employment
agreement. Until the Company's acquisition of Future
Vision, Mr. Fox was one of Future Vision's principals, a
director and its President. Mr. Fox was also an officer and
director of certain subsidiaries of Future Vision.
(7) Pursuant to the Future Vision Escrow Agreement, 3,078 of
such shares are currently held in escrow by the Escrow
Agent. Mr. Abrams was formerly a consultant to Future
Vision.
(8) Pursuant to the Future Vision Escrow Agreement, 16,852 of
such shares are currently held in escrow by the Escrow
Agent. Mr. Rosenberg is currently an employee of the
Company. He is also currently employed by Future Vision and
until the Company's acquisition of Future Vision, Mr.
Rosenberg was a director, officer and one of its
principals. Mr. Rosenberg was also an officer and director
of certain subsidiaries of Future Vision.
(9) Pursuant to the Future Vision Escrow Agreement, 917 of such
shares are currently held in escrow by the Escrow Agent.
(10) Pursuant to the Future Vision Escrow Agreement, 1,653 of
such shares are currently held in escrow by the Escrow
Agent. Mr. Zemsky was formerly the Chief Financial
Officer of Future Vision.
(11) DAJA is an Israeli limited liability company which
beneficially owns shares of Common Stock held in trust for
a senior employee and a former consultant of SuperStudio
Ltd. ("SuperStudio"), as well as shares of Common Stock
reserved for future issuance to employees of SuperStudio
(which may include Seth Altholz and Shelly Abrahami, the
founders of SuperStudio and each a Selling Stockholder) as
and when determined by Mr. Altholz and Ms. Abrahami on
behalf of SuperStudio. Pursuant to the Future Vision Escrow
Agreement, 3,938 of the 29,453 shares of Common Stock
beneficially owned by DAJA are currently held in escrow by
the Escrow Agent. DAJA will manage the proceeds from the
sale of the shares of Common Stock beneficially owned by it
subject to the same terms and conditions pursuant to which
DAJA currently serves as trustee with respect to such shares.
SuperStudio is a developer of multimedia products
incorporated and located in Israel and is an indirect,
wholly owned subsidiary of SoftKey. SuperStudio was
acquired by Future Vision from Mr. Altholz, Ms. Abrahami
and KHT in July 1995 (and thereafter assigned to FVH Asia
Pte. Ltd., a wholly owned subsidiary of Future Vision ("FVH
Asia")), prior to the acquisition of Future Vision by
SoftKey. Except for shares held in trust for the senior
employee and former consultant referred to above, Mr.
Altholz and Ms. Abrahami share the power to instruct DAJA on
behalf of SuperStudio with respect to the voting and
transfer of the shares of Common Stock held in trust. As to
those shares held in trust for the senior employee and
former consultant (including shares of Common Stock held
in escrow by the Escrow Agent), which the senior employee
and former consultant each presently have the right to hold
directly, SuperStudio has instructed DAJA that DAJA is to
act only upon the written instructions of the senior
employee or former consultant, as the case may be. The
senior employee referred to above was formerly an officer of
SuperStudio and is employed by SuperStudio pursuant to an
employment agreement dated as of March 6, 1995, which
terminates on March 6, 1998.
(12) Pursuant to the Future Vision Escrow Agreement, 7,553 of
such shares of Common Stock are currently held in escrow by
the Escrow Agent. The 56,484 shares of Common Stock
beneficially owned by Mr. Altholz do not include the shares
of Common Stock held in trust as described above which are
reserved for issuance to employees of SuperStudio as and
when determined by Mr. Altholz and Ms. Abrahami on behalf
of SuperStudio. Mr. Altholz is currently an officer and
director of SuperStudio. Mr. Altholz has entered into an
employment agreement with SuperStudio, effective as of March
6, 1995, under which he is employed by SuperStudio until
March 6, 1998. As of the date of this Prospectus, Mr.
Altholz is owed $300,000 by FVH Asia pursuant to a
promissory note guaranteed by Future Vision which was
received by Mr. Altholz in connection with Future Vision's
acquisition of SuperStudio.
(13) Pursuant to the Future Vision Escrow Agreement, 5,036 of
such shares of Common Stock are currently held in escrow
by the Escrow Agent. The 37,661 shares of Common Stock
beneficially owned by Ms. Abrahami do not include the shares
of Common Stock held in trust as described above which are
reserved for issuance to employees of SuperStudio as and
when determined by Mr. Altholz and Ms. Abrahami on behalf of
SuperStudio. Ms. Abrahami is an officer and was formerly a
director of SuperStudio. Ms. Abrahami has entered into an
employment agreement with SuperStudio, effective as of March
6, 1995, under which she is employed by SuperStudio until
March 6, 1998. As of the date of this Prospectus, Ms.
Abrahami is owed $200,000 by FVH Asia pursuant to a
promissory note guaranteed by Future Vision which was
received by Ms. Abrahami in connection with Future Vision's
acquisition of SuperStudio.
(14) Mr. Chen was formerly a director of Future Vision.
(15) Leland J. Ancier was the founder and sole stockholder of
Ancier, a company which had licensed a significant portion
of its assets to the Company, until Ancier was acquired by
the Company on August 31, 1995.
(16) Helmut Kunkel has entered into an employment agreement with
tewi, effective as of July 1, 1995, under which he is
employed in the capacity of General Manager of tewi until
July 31, 1998, unless earlier terminated in accordance with
his employment agreement.
(17) Until the Company's acquisition of Aris, Ms. Heppting was
one of Aris' principals. Thereafter, she was employed in
the capacity of a Publisher of the Company until May 31,
1995.
PLAN OF DISTRIBUTION
Shares of Common Stock registered for sale hereby may be
offered and sold by the Selling Stockholders from time to time in
transactions on the Nasdaq National Market, in negotiated
transactions, at fixed prices which may be changed, at market
prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. Without limiting
the foregoing, the Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Shares for whom such broker-dealers
may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in
excess of customary commissions). The Selling Stockholders, and
any agents or broker-dealers that participate in the distribution
of such Shares pursuant to this Prospectus, may be deemed
"underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on their resale of the
Shares may be deemed to be underwriting commissions or discounts
under the Securities Act.
Sales of Shares are, in general, expected to be made at the
market price prevailing at the time of each such sale; however,
prices in negotiated transactions may differ considerably. The
Selling Stockholders are acting independently of the Company in
making decisions with respect to the timing, manner and size of
each sale.
In order to comply with the securities laws of certain states,
if applicable, the Shares will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in
certain states the Shares may not be sold unless they have been
registered or qualified for sale in the applicable state or any
exemption from the registration or qualification process is
available and complied with. The Selling Stockholders have advised
the Company that they have made no arrangements with any brokerage
firm or otherwise regarding the sale of their Shares.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed
upon for the Company by Neal S. Winneg, General Counsel of the
Company. Mr. Winneg owns options to purchase an aggregate of
69,375 shares of Common Stock, which are or become exercisable in
periodic installments through June 1998.
EXPERTS
The consolidated financial statements and related schedule of
the Company as of and for the year ended December 31, 1994,
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, have been audited by Coopers & Lybrand
L.L.P., independent public accountants, as set forth in their
report therein dated March 3, 1995 and incorporated herein by
reference in reliance on such report, given on the authority of
that firm as experts in accounting and auditing. The consolidated
financial statements and related schedules of the Company as of
December 31, 1993 and June 30, 1993 and for the six month
transition period from July 4, 1993 to January 1, 1994 and for each
of the two years in the period ended June 30, 1993, included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994, have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their report therein dated
January 16, 1995 and incorporated herein by reference. In its
report, Arthur Andersen LLP states that with respect to the
consolidated financial statements and related schedules of WordStar
as of June 30, 1993 and for each of the two years in the period
ended June 30, 1993, Spinnaker as of June 30, 1993 and for the year
then ended and Spinnaker as of June 30, 1992 and for the year then
ended, its opinion is based on the reports of other independent
accountants, namely KPMG Peat Marwick LLP, Price Waterhouse LLP and
Deloitte & Touche LLP, respectively. The consolidated financial
statements and related schedules of the Company have been included
therein in reliance upon such reports given upon the authority of
those firms as experts in accounting and auditing. The report of
Price Waterhouse LLP on the consolidated financial statements of
Spinnaker as of June 30, 1993 and for the year then ended contains
an explanatory paragraph relating to Spinnaker's ability to
continue as a going concern as described in Note 12 of the
consolidated financial statements of Spinnaker (not included
herein). The report of Deloitte & Touche LLP on the consolidated
financial statements of Spinnaker for the year ended June 30, 1992
expresses an unqualified opinion and includes an explanatory
paragraph referring to an uncertainty in connection with an
arbitration proceeding referred to in Note 12 of the consolidated
financial statements of Spinnaker (not included herein).
______________________________________ _______________________________________
No dealer, salesman or
any other person has been 1,477,667 SHARES
authorized to give any
information or to make any [LOGO]
representation not contained
in this Prospectus, and, if COMMON STOCK
given or made, such
information or representation ____________________
must not be relied upon as
having been authorized by the PROSPECTUS
Company or any Selling ____________________
Stockholder. This Prospectus
does not constitute an offer October 20, 1995
to sell or a solicitation of
an offer to buy any of the
securities offered hereby in
any jurisdiction to any person
to whom it is unlawful to make
such offer in such
jurisdiction. Neither the
delivery of this Prospectus
nor any sale made hereunder
shall, under any
circumstances, create any
implication that the
information herein is correct
as of any time subsequent to
the date hereof or that there
has been no change in the
affairs of the Company since
such date.
____________
TABLE OF CONTENTS
Page
Available Information . 2
Documents Incorporated by
Reference . . . . . . . 2
The Company . . . . . . 3
Risk Factors . . . . . 4
Use of Proceeds . . . . . 7
The Selling Stockholders 8
Plan of Distribution . . 11
Legal Matters . . . . . . 11
Experts . . . . . . . . . 11
___________________________________
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the distribution of the
securities being registered (all of which (other than selling
commissions) will be borne by the Company and not the Selling
Stockholders), are estimated as follows:
Securities and Exchange Commission Registration Fee . . . . $ 23,114.33
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . 30,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . . 30,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 10,000.00
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 93,114.33
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102 of the Delaware General Corporation Law, as
amended, allows a corporation to eliminate the personal liability
of directors of a corporation to the corporation or to any of its
stockholders for monetary damage for a breach of his fiduciary duty
as a director, except in the case where the director breached his
duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the
payment of a dividend or approved a stock repurchase in violation
of Delaware corporate law or obtained an improper personal benefit.
Section 145 of the Delaware General Corporation Law, as
amended, provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation or is or was serving at its request in such
capacity in another corporation or business association against
expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 8 of the Company's Restated Certificate of
Incorporation, as amended, provides for elimination of directors'
personal liability and indemnification as follows:
"8. LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS
8.1 ELIMINATION OF CERTAIN LIABILITIES OF DIRECTORS. 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 directors' 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)
under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is
amended after approval by the stockholders of this Section to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so
amended. Any repeal or modification of this Section by the
stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at
the time of such repeal or modification.
8.2 INDEMNIFICATION AND INSURANCE
8.2.1 RIGHT TO INDEMNIFICATION. Each person who was
or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative, or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer, of the Corporation or is or was serving at the request of
the Corporation, as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust, or
other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless
by the Corporation to its fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability,
and loss (including attorneys' fees, judgments, fines, Employee
Retirement Income Security Act of 1974 excise taxes or penalties,
and amounts paid or to be paid in settlement) reasonably incurred
or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be
a director, officer, employee, or agent and shall inure to the
benefit of his or her heirs, executors, and administrators;
provided, however, that the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred defending any such
proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay
all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its
Board of Directors, provide indemnification to employees and agents
of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
8.2.2 NON-EXCLUSIVITY OF RIGHTS. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, provision of this
Restated Certificate, Bylaw, agreement, vote of stockholders, or
disinterested directors or otherwise.
8.2.3. INSURANCE. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee, or agent of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise
against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against
such expense, liability, or loss under the Delaware General
Corporation Law."
SoftKey has purchased directors' and officers' liability
insurance which would indemnify the directors and officers of
SoftKey against damages arising out of certain kinds of claims
which might be made against them based on their negligent acts or
omissions while acting in their capacity as such.
ITEM 16. EXHIBITS
Exhibit No. Description
2.1 Share Purchase Agreement dated July 21, 1995 by
and among the Company, Ziff-Davis Verlag GmbH
and Helmut Kunkel(1)
2.2 Earn-Out Agreement dated July 21, 1995 by and
between the Company and Kunkel(1)
2.3 Stock Purchase Agreement by and among the
Company, Flextech Holdings Pte Ltd, Harry Fox,
Joseph Abrams, Sol Rosenberg, Mathew Barlow,
Samuel Zemsky, K. H. Trustees Ltd., Seth
Altholz and Shelly Abrahami dated July 17, 1995(2)
5.1 Opinion of Neal S. Winneg, Esq., General
Counsel of the Company, regarding legality of
securities being registered
23.1 Written consent of Coopers & Lybrand L.L.P.(3)
23.2 Written consent of Arthur Andersen LLP(3)
23.3 Written consent of KPMG Peat Marwick LLP(3)
23.4 Written consent of Deloitte & Touche LLP(3)
23.5 Written consent of Price Waterhouse LLP(3)
23.6 Written consent of Neal S. Winneg, Esq.,
General Counsel of the Company (contained in
the opinion filed as Exhibit 5.1)
24.1 Power of Attorney (included on the signature
page of this Registration Statement)
_________________
1 Incorporated by reference to exhibits filed with the Company's
Current Report on Form 8-K dated July 21, 1995.
2 Incorporated by reference to exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarterly period ended July
1, 1995.
3 Filed with the Commission on September 29, 1995.
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; (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933; (ii) 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 dollar
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 change in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of the Registration Fee" table in the effective
registration statement; (iii) 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;
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such 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; and
(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.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
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.
Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
described in Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In
the event that a claim of 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 a 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 of 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.
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 Cambridge, the Commonwealth of Massachusetts on October
20, 1995.
SOFTKEY INTERNATIONAL INC.
By: /s/ R. Scott Murray
_________________________
R. Scott Murray
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below on October 20,
1995 by the following persons in the capacities indicated.
Signature Title Date
* Chairman of the October 20, 1995
_____________________ Board and
Michael J. Perik Chief Executive
Officer
(principal executive
officer)
* Chief Financial October 20, 1995
_____________________ Officer
R. Scott Murray (principal financial
and accounting
officer)
* President and October 20, 1995
___________________ Director
Kevin O'Leary
* Director October 20, 1995
___________________
Michael Bell
* Director October 20, 1995
___________________
Robert Rubinoff
* Director October 20, 1995
___________________
Scott M. Sperling
*By:/s/ Neal S. Winneg
Neal S. Winneg, as
attorney-in-fact for each
of the persons indicated
EXHIBIT INDEX
Exhibit No. Description
2.1 Share Purchase Agreement dated July 21, 1995 by
and among the Company, Ziff-Davis Verlag GmbH
and Helmut Kunkel(1)
2.2 Earn-Out Agreement dated July 21, 1995 by and
between the Company and Kunkel(1)
2.3 Stock Purchase Agreement by and among the
Company, Flextech Holdings Pte Ltd, Harry Fox,
Joseph Abrams, Sol Rosenberg, Mathew Barlow,
Samuel Zemsky, K. H. Trustees Ltd., Seth
Altholz and Shelly Abrahami dated July 17,1995(2)
5.1 Opinion of Neal S. Winneg, Esq., General
Counsel of the Company, regarding legality of
securities being registered
23.1 Written consent of Coopers & Lybrand L.L.P.(3)
23.2 Written consent of Arthur Andersen LLP(3)
23.3 Written consent of KPMG Peat Marwick LLP(3)
23.4 Written consent of Deloitte & Touche LLP(3)
23.5 Written consent of Price Waterhouse LLP(3)
23.6 Written consent of Neal S. Winneg, Esq.,
General Counsel of the Company (contained in
the opinion filed as Exhibit 5.1)
24.1 Power of Attorney (included on the signature
page of this Registration Statement)
_________________
1 Incorporated by reference to exhibits filed with the Company's
Current Report on Form 8-K dated July 21, 1995.
2 Incorporated by reference to exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarterly period ended July
1, 1995.
3 Filed with the Commission on September 29, 1995.
Exhibit 5.1
October 20, 1995
SoftKey International Inc.
One Athenaeum Street
Cambridge, Massachusetts 02142
Re: Public Offering of up to 1,477,667
Shares of the Common Stock of
SoftKey International Inc.
Ladies and Gentlemen:
I am Vice President and General Counsel of
SoftKey International Inc., a Delaware corporation (the
"Company"), and am issuing this opinion in connection
with the Registration Statement on Form S-3 being filed
by the Company with the Securities and Exchange
Commission (the "Commission") on the date hereof (the
"Registration Statement"). The Registration Statement
relates to the registration by the Company under the
Securities Act of 1933, as amended (the "1933 Act"), and
the sale by certain selling stockholders of the Company
of 1,477,667 shares (the "Shares") of common stock of the
Company, par value $.01 per share (the "Common Stock").
In this connection and as General Counsel for
the Company, I have examined and am familiar with
originals or copies, certified or otherwise identified to
my satisfaction, of the Registration Statement (together
with the form of final prospectus forming a part
thereof); the Restated Certificate of Incorporation of
the Company, as amended, and the Bylaws of the Company,
as amended, each as in effect on the date hereof; certain
resolutions adopted by the Board of Directors of the
Company relating to the preparation and filing of the
Registration Statement, the original issuance and sale of
the Shares and certain related matters; a form of
specimen certificate for the Common Stock; certain
agreements, certificates of public officials,
certificates of officers or representatives for the
Company or others; and such other documents, certificates
and records as I have deemed necessary or appropriate as
a basis for the opinions set forth herein. In such
examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to me as
originals, the conformity to original documents of all
documents submitted to me as certified, conformed or
photostatic copies and the authenticity of the originals
of such copies. As to any facts material to the opinions
expressed herein which I have not independently
established or verified, I have relied upon statements
and representations of officers and other representatives
of the Company and others.
I am admitted to the Bar of the Commonwealth of
Massachusetts and do not purport to be an expert on, or
express any opinion concerning, any law other than the
substantive law of the Commonwealth of Massachusetts.
Based upon and subject to the foregoing, I am
of the opinion that:
1. The Company has been duly organized and is
validly existing as a corporation in good standing with
the Secretary of State under the laws of the State of
Delaware.
2. Assuming the conformity of the certificates
representing the Shares to the form of the specimen
certificate for the Common Stock examined by me and the
due execution and delivery of such certificates, the
Shares have been duly authorized for issuance, were
validly issued and are fully paid and nonassessable.
I hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and to the
reference to me under the caption "Legal Matters" in the
prospectus filed as part of the Registration Statement.
In giving such consent, I do not thereby admit that I am
in the category of persons whose consent is required
under Section 7 of the 1933 Act or the rules and
regulations of the Commission promulgated thereunder.
This opinion is furnished by me, as counsel to
the Company, in connection with the filing of the
Registration Statement and, except as provided in the
immediately preceding paragraph, is not to be used,
circulated, quoted for any other purpose or otherwise
referred to or relied upon by any other person without my
express written permission.
Very truly yours,
Neal S. Winneg
General Counsel
