<PAGE> 1
As filed with the Securities and Exchange Commission on November 20, 1997
Registration No. 333-________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
N2K INC.
(Exact name of registrant as specified in its charter)
DELAWARE N2K INC. 06-1455771
55 BROAD STREET
(State or other 26TH FLOOR (I.R.S. Employer
jurisdiction of NEW YORK, NY 10004 Identification No.)
incorporation or
organization) (Address of Principal
Executive Offices)(Zipcode)
1987 Employee Incentive Stock Option Plan
1996 Stock Option Plan
(Full Title of the Plans)
Jonathan V. Diamond
Vice Chairman
N2K Inc.
55 Broad Street, 26th Floor
New York, New York 10004
(Name and address of agent for service)
Telephone number, including area code, of agent for service: 212-378-5555
Copies of all communications, including all
communications sent to the agent for service,
should be sent to:
Frank E. Morgan II, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(212) 259-8000
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CALCULATION OF REGISTRATION FEE
- ---------------------------- -------------------- -------------------- --------------------- ------------------
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE PRICE(2)
- -------------------------- -------------------- -------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par 180,490 Shares(1) $20.25 (6) $ 3,654,9922.50 $ 1,107.55
value per share
Common Stock, $.001 par 1,794,901 Shares(3) $8.89 (4) $ 15,956,669.00 $ 4,835.35
value per share
Common Stock, $.001 par 105,241 Shares(5) $20.25(6) $ 2,131,130.20 $ 645.80
value per share
----------------- --------------- ----------
Total 2,080,632 Shares $ 21,742,721.70 $ 6,588.70(7)
- ---------------------------- -------------------- ---------------------- ----------------------- --------------------
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(1) Represents the maximum number of currently outstanding shares being
registered.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(h) under the Securities Act of 1933,
as amended.
(3) Represents the maximum number of shares being registered that may be
purchased upon exercise of stock options currently outstanding under
the Registrant's 1987 Employee Incentive Stock Option Plan and 1996
Stock Option Plan.
(4) Based on the weighted average exercise price of currently outstanding
options.
(5) Represents the maximum number of shares being registered that may be
purchased upon exercise of stock options that may be granted in the
future under the Registrant's 1996 Stock Option Plan.
(6) Based on the average of the high and low prices of Registrant's Common
Stock on the NASDAQ National Market ("NASDAQ") on November 19, 1997.
(7) Total filing fee being paid.
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EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 under the Securities Act of 1933, as amended (the "1933
Act") to register shares of common stock, $.001 par value per share ("Common
Stock") of N2K Inc., issuable pursuant to Registrant's 1987 Employee Incentive
Stock Option Plan (the "1987 Option Plan") and the 1996 Stock Option Plan (the
"1996 Option Plan" and, together with the 1987 Option Plan, the "Plans").
Under cover of this Form S-8 is a reoffer prospectus prepared in
accordance with Part I of Form S-3 under the 1933 Act (the "Reoffer
Prospectus"). The Reoffer Prospectus may be utilized for reofferings and resales
of up to 186,467 shares of Common Stock acquired by selling stockholders through
participation in the Plans.
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
Not required pursuant to the instructions of Form S-8.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required pursuant to the instructions of Form S-8.
<PAGE> 4
REOFFER PROSPECTUS
N2K Inc.
55 Broad Street
26th Floor
New York, New York 10004
(212) 378-5555
180,490 SHARES OF COMMON STOCK
________________________________________________
The shares of Common Stock, $.001 par value per share (the "Common
Stock"), of N2K Inc. ("N2K" or the "Company") offered hereby (the "Shares") will
be sold from time to time by certain employees, officers and directors of the
Company (collectively, the "Selling Stockholders"). The Selling Stockholders
have acquired Shares upon the exercise of options ("Options") granted under the
Company's 1987 Employee Incentive Stock Option Plan (the "1987 Option Plan") and
the 1996 Stock Option Plan (the "1996 Option Plan," and, together with the 1987
Option Plan, the "Plans"). The sales may occur in transactions in the national
over-the-counter market or in negotiated transactions or otherwise at prices
prevailing at the time of the sale. The Company will not receive any of the
proceeds from such sales but it will receive the exercise price upon exercise of
the Options. The expenses incurred in registering the Shares will be paid by the
Company.
The Shares are "restricted securities" under the Securities Act of 1933
(the "1933 Act") prior to their sale hereunder. This Reoffer Prospectus has been
prepared for the purpose of registering the Shares under the 1933 Act to allow
for future sales by the Selling Stockholders to the public without restriction.
To the knowledge of the Company, the Selling Stockholders have made no
arrangement with any brokerage firm for the sale of the Shares. The Selling
Stockholders may be deemed to be "underwriters" within the meaning of the 1933
Act. Any commissions received by a broker or dealer in connection with resales
of the Shares may be deemed to be underwriting commissions or discounts under
the 1933 Act.
The Common Stock of the Company is traded in the over-the-counter
market and quoted on the Nasdaq National Market under the symbol "NTKI". The bid
and asked prices for the Common Stock on November 19, 1997, as reported on the
Nasdaq National Market were $20.00 and $20.50 per share, respectively.
THE COMMON STOCK OFFERED HEREBY IS HIGHLY SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________________________________
The date of this Prospectus is November 20, 1997
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is November 20, 1997
<PAGE> 6
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TABLE OF CONTENTS
<S> <C>
Available Information......................................... I-2
The Company................................................... I-3
Risk Factors.................................................. I-4
Use of Proceeds............................................... I-13
Selling Stockholders.......................................... I-13
Plan of Distribution.......................................... I-13
Legal Matters................................................. I-14
Incorporation of Documents by
Reference................................................. I-14
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at Seven World Trade Center, 13th Floor, New York,
New York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a Web site, located at
http://www.sec.gov, that contains reports, proxy and information statements and
other information regarding issuers, including the Company, that file
electronically. The Common Stock of the Company is traded in the
over-the-counter market and quoted on the Nasdaq National Market. Reports, proxy
and information statements and such other information concerning the Company can
be inspected at such offices.
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THE COMPANY
N2K is one of the leading on-line music entertainment companies using
the Internet as a global platform for promoting, marketing and selling music and
related merchandise. The Company's strategy is to build loyal user communities
around genre-specific websites that provide music content and enable consumers
to purchase compact discs ("CDs"), cassettes and related merchandise.
The Company's music retail website is Music Boulevard
(WWW.MUSICBLVD.COM), around which the Company organizes is genre-specific music
websites, Rocktropolis (WWW.ROCKTROPOLIS.COM), Jazz Central Station
(WWW.JAZZCENTRALSTATION.COM) and Classical Insites (WWW.CLASSICALINSITES.COM).
In addition to these genre websites, the Company also operates websites for such
artists as David Bowie, The Rolling Stones and Leonard Bernstein. All product
purchases are coordinated through Music Boulevard, which acts as the Company's
on-line retail store. The Company believes that by providing a wealth of
information in a highly personalized, interactive context, it creates an
entertaining environment that attracts traffic to its websites, fosters brand
awareness and encourages purchases of music and related merchandise.
The Company's executive offices are located at 55 Broad Street, New
York, New York 10004, its telephone number is 212-378-5555 and its Internet
address is WWW.N2K.COM.
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RISK FACTORS
An investment in the Shares involves a high degree of risk. Prospective
investors should consider carefully the following risk factors, in addition to
the other information set forth in this Prospectus, before purchasing any of the
Shares.
HISTORICAL AND ANTICIPATED LOSSES; UNCERTAINTY OF FUTURE RESULTS
The Company has incurred significant losses and expects to continue to
incur significant losses on a quarterly and annual basis for the foreseeable
future. Since its inception, the Company has incurred costs to develop and
enhance its technology, to create, introduce and enhance its websites, to
establish marketing and distribution relationships and to build an
administrative organization. The Company currently intends to increase
substantially its operating expenses as a result of the Company's strategic
alliances, to fund increased sales and marketing, to enhance existing websites
and to implement strategic relationships important to the success of the
Company. To the extent that such expenses precede or are not subsequently
followed by increased revenues, the Company's business, results of operations
and financial condition will be materially adversely affected. There can be no
assurance that the Company will be able to generate sufficient revenues from the
sale of music recordings, related merchandise, advertising and sponsorships to
achieve or maintain profitability on a quarterly or annual basis in the future.
The Company expects negative cash flow from operations to continue for the
foreseeable future as it continues to develop and market its business.
NEW BUSINESS CHALLENGES
Although the Company was founded in 1984 and has been conducting an
on-line information services business for more than ten years, it began
development of its central website, Music Boulevard, in 1994. To date, the
Company has only a limited operating history in its music entertainment business
upon which an evaluation of N2K and its prospects can be based. The Company's
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in new, unproven and rapidly evolving
markets. To address these risks, the Company must, among other things, expand
its customer base, respond to competitive developments, continue to attract,
retain and motivate qualified employees and continue to upgrade its
technologies. There can be no assurance that the Company will be successful in
addressing such risks. If the Company is not successful in developing and
expanding its music entertainment business, sales of advertising on its websites
and development of related business opportunities, the Company's ability to
achieve profitability will be materially adversely affected.
COMPETITION
The market for Internet content providers is highly competitive and
rapidly changing. Since the Internet's commercialization in the early 1990's,
the number of websites on the Internet competing for consumers' attention and
spending has proliferated. With no substantial barriers to entry, the Company
expects that competition will continue to intensify. With respect to competition
for consumers' attention, in addition to intense competition from Internet
content providers, the Company also faces competition from traditional media
such as radio, television and print. With respect to recorded music sales, the
Company competes with numerous Internet retailers, including traditional music
retail chains, record labels and independents with websites on the Internet. In
addition, the Company competes with traditional retail stores, including chains
and megastores, mass merchandisers, consumer electronics stores and music clubs.
The Company
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believes that the primary competitive factors in providing music
entertainment products and services via the Internet are name recognition,
variety of value-added services, ease of use, price, quality of service,
availability of customer support, reliability, technical expertise and
experience. The Company's success will depend heavily upon its ability to
provide high quality, entertaining content, along with cutting-edge technology
and value-added Internet services. Other factors that will affect the Company's
success include the Company's continued ability to attract experienced
marketing, sales and management talent. The Company's failure to compete
successfully in the music entertainment business would have a material adverse
effect on the Company's business, results of operations and financial condition.
In addition, the competition for advertising revenues, both on Internet websites
and in more traditional media, is intense. To the extent the Company is not able
to attract significant sources of revenues from paid advertisements and
sponsorships on its websites, the Company's business, results of operations and
financial condition will be materially adversely affected.
Many of the Company's current and potential competitors in the Internet
and music entertainment businesses have longer operating histories,
significantly greater financial, technical and marketing resources, greater name
recognition and larger existing customer bases than the Company. These
competitors may be able to respond more quickly to new or emerging technologies
and changes in customer requirements and to devote greater resources to the
development, promotion and sale of their products or services than the Company.
There can be no assurance that the Company will be able to compete successfully.
DEPENDENCE UPON STRATEGIC ALLIANCES
The Company relies on certain strategic alliances to attract users to
its websites to purchase recorded music and related merchandise, as well as to
attract paid advertising to its websites. The Company's ability to generate
revenues from Internet commerce may depend on the increased traffic, purchases,
advertising and sponsorships that the Company expects to generate through such
strategic alliances. There can be no assurance that the Company's infrastructure
will be sufficient to handle the expected increased traffic from such alliances.
There can also be no assurance that these relationships will be maintained
beyond their initial terms or that additional third-party alliances will be
available to the Company on acceptable commercial terms or at all. The inability
to enter into new, and to maintain any one or more of its existing, strategic
alliances could have a material adverse effect on the Company's business,
results of operations and financial condition.
DEPENDENCE ON KEY SUPPLIERS AND DISTRIBUTORS
The Company has no fulfillment operation or facility of its own and,
accordingly, is dependent upon maintaining its existing relationship with Valley
Record Distributors ("Valley") or establishing a new fulfillment relationship
with one of the few other fulfillment operations. There can be no assurance that
the Company will maintain its relationship with Valley, or that it will be able
to find an alternative, comparable supplier capable of providing fulfillment
services on terms satisfactory to the Company should its relationship with
Valley terminate. An unanticipated termination of the Company's relationship
with Valley, particularly during the fourth quarter of the calendar year in
which a high percentage of recorded music sales are made, could materially
adversely affect the Company's results of operations for the quarter in which
such termination occurred even if the Company was able to establish a
relationship with an alternative fulfillment house. To date, Valley has
satisfied the Company's requirements on a timely basis. However, to the extent
that Valley does not have sufficient capacity and is unable to satisfy on a
timely basis increasing requirements of the Company, such capacity constraint
would
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have a material adverse effect on the Company's business, results of operations
and financial condition.
The Company does not have a distribution operation of its own to act as
exclusive distribution agent in the United States for the N2K Encoded Music
label and, accordingly, is dependent upon maintaining its existing relationship
with RED Distribution, Inc., a subsidiary of Sony Music Entertainment, Inc.
("Sony's RED Distribution") or establishing a new distribution relationship with
a comparable distributor. There can be no assurance that the Company will
maintain its relationship with Sony's RED Distribution. The termination of such
relationship would, absent establishing a substitute relationship with another
distributor, have a material adverse effect on the Company's business, results
of operations and financial condition.
INTERNET-RELATED RISKS
Dependence on the Internet; Uncertain Acceptance of the Internet as a
Medium for Commerce
Use of the Internet by consumers is at an early stage of development,
and market acceptance of the Internet as a medium for commerce is subject to a
high level of uncertainty. The Company's future success will depend on its
ability to significantly increase revenues, which will require the development
and widespread acceptance of the Internet as a medium for commerce. There can be
no assurance that the Internet will be a successful retailing channel. The
Internet may not prove to be a viable commercial marketplace because of
inadequate development of the necessary infrastructure, such as reliable network
backbones, or complementary services, such as high speed modems and security
procedures for financial transactions. The viability of the Internet may prove
uncertain due to delays in the development and adoption of new standards and
protocols (for example, the next generation Internet Protocol) to handle
increased levels of Internet activity or due to increased government regulation.
If use of the Internet does not continue to grow, or if the necessary Internet
infrastructure or complementary services are not developed to effectively
support growth that may occur, the Company's business, results of operations and
financial condition could be materially adversely affected.
Uncertain Acceptance of the Company's Internet Content
The Company's future success will be significantly dependent upon its
ability to create, license and deliver entertaining and compelling Internet
music-related content in order to attract users to its websites to purchase
recorded music and related merchandise and to attract advertisers to its
websites. The Company launched its first music website, Music Boulevard, in
August 1995 and has limited experience in the on-line music entertainment
business. There can be no assurance that the Company's content will be
attractive to a sufficient number of users to generate significant revenues.
There can also be no assurance that the Company will be able to anticipate,
monitor and successfully respond to rapidly changing consumer tastes and
preferences so as to continually attract a sufficient number of users to its
websites. If the Company is unable to develop Internet content that allows it to
attract, retain and expand a loyal user base, its business, results of
operations and financial condition will be materially adversely affected.
Uncertain Acceptance of the Internet as a Medium for Advertising
In order for the Company to generate advertising revenues, advertisers
and advertising agencies must direct a portion of their budgets to the Internet
and, specifically, to the Company's Internet websites. To date, sales of
Internet advertising represent only a small percentage of total
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advertising sales. The Company has begun to sell advertising on its websites but
has not recognized material advertising revenues to date. There can be no
assurance that advertisers and advertising agencies will accept the Internet as
a medium. If Internet advertising is not widely accepted by, or if the Company
is not successful in generating significant advertising revenues from,
advertisers and advertising agencies, the Company's business, results of
operations and financial condition could be materially adversely affected.
Security Risks
Despite the implementation of network security measures by the Company,
its infrastructure is potentially vulnerable to computer break-ins and similar
disruptive problems caused by its customers or others. Consumer concern over
Internet security has been, and could continue to be, a barrier to commercial
activities requiring consumers to send their credit card information over the
Internet. Computer viruses, break-ins or other security problems could lead to
misappropriation of proprietary information and interruptions, delays or
cessation in service to the Company's customers. Moreover, until more
comprehensive security technologies are developed, the security and privacy
concerns of existing and potential customers may inhibit the growth of the
Internet as a merchandising medium.
Government Regulation and Legal Uncertainties
The Company is subject, both directly and indirectly, to various laws
and governmental regulations relating to its business. The Company believes it
is currently in compliance with such laws and that they do not have a material
impact on its operations. Moreover, there are currently few laws or regulations
directly applicable to access to or commerce on the Internet. However, due to
the increasing popularity and use of the Internet, it is possible that a number
of laws and regulations may be adopted with respect to the Internet. Such laws
and regulations may cover issues such as user privacy, pricing and
characteristics and quality of products and services. The enactment of any such
laws or regulations in the future may slow the growth of the Internet, which
could in turn decrease the demand for the Company's services and increase the
Company's cost of doing business or otherwise have an adverse effect on the
Company's business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, libel and personal privacy is uncertain and could expose the Company
to substantial liability for which the Company might not be indemnified by
content providers. The Company believes that its use of material on its websites
is protected under current provisions of copyright law. However, legal rights to
certain aspects of Internet content and commerce are not clearly settled. There
can be no assurance that the Company will be able to continue to maintain rights
to information, including downloadable music samples and artist, record and
other information. The failure to be able to offer such information would have a
material adverse effect on the Company's business, results of operations and
financial condition.
Liability for Information Retrieved from the Internet
Due to the fact that material may be downloaded from websites and may
be subsequently distributed to others, there is a potential that claims will be
made against the Company for defamation, negligence, copyright or trademark
infringement or other theories based on the nature and content of such material.
Such claims have been brought, and sometimes successfully pressed, against
on-line services in the past. In addition, the Company could be exposed to
liability with respect to the material that may be accessible through the
Company's branded products and websites. For example, claims could be made
against the Company if material deemed inappropriate for viewing by children
could be accessed through the Company's websites.
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Although the Company carries general liability insurance, the Company's
insurance may not cover potential claims of this type or may not be adequate to
cover all costs incurred in defense of potential claims or to indemnify the
Company for all liability that may be imposed. Any costs or imposition of
liability that is not covered by insurance or in excess of insurance coverage
could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company is currently not aware of any
such claims.
MANAGEMENT OF GROWTH
The Company has recently experienced a period of rapid and significant
growth, including a substantial increase in the number of its employees. Such
growth has placed, and may continue to place, significant demands on the
Company's management, operations and systems. To the extent that the Company
continues to grow internally, through strategic alliances or through
acquisitions, the Company will be faced with risks, including risks associated
with the assimilation of new operations, websites and personnel, the diversion
of resources from the Company's existing business and the inability of
management to integrate any acquired businesses. The Company's ability to
compete effectively will depend, in part, upon its ability to overcome these
risks and to revise, improve and effectively use its operational, management,
marketing and financial systems, both domestically and on an international
basis, as necessitated by changes in the Company's business. There can be no
assurance that the Company will be able to effectively manage such growth and
changes. Any failure of the Company to effectively manage its growth and to
respond to changes in its business would have a material adverse effect on the
Company's business, results of operations and financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent on the continued
contributions of its senior management team, and technical and marketing
personnel. In particular, the Company's business is highly dependent upon the
services and music industry expertise of Larry Rosen, Dave Grusin, Jon Diamond
and Phil Ramone. The Company does not maintain "key man" life insurance for any
of its employees. The Company does have employment agreements with Messrs.
Rosen, Diamond and Grusin and certain other members of senior management.
However, such employment agreements do not assure the services of such
employees. Despite employment agreements and non-competition arrangements with
certain members of management, the Company's employees may voluntarily terminate
their employment with the Company at any time. The Company's success also
depends on its ability to attract and retain additional qualified employees.
Competition for qualified personnel is intense and there are a limited number of
persons with knowledge of and experience in the Internet and music entertainment
industries. There can be no assurance that the Company will be able to attract
and retain key personnel. The loss of one or more key employees could have a
material adverse effect on the Company.
RISKS INHERENT IN THE RECORD LABEL INDUSTRY
The record label industry, like other creative industries, involves a
substantial degree of risk. Each recording is an individual artistic work, and
its commercial success is primarily determined by consumer taste, which is
unpredictable and constantly changing. Accordingly, there can be no assurance as
to the financial success of any particular release, the timing of any such
success or the popularity of any particular artist, or the Company's ability to
attract and sign artists to the N2K Encoded Music label. Furthermore, the
Company believes that it is standard practice for record companies to pay
substantial advances to artists. The Company may incur significant expenses in
connection with paying its artists such advances, which could materially
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adversely affect the Company's results of operations. In circumstances when the
Company does not pay such advances, it will be competing for artistic talent at
a disadvantage to other record labels that do pay such advances. There can be no
assurance that the Company will be able to generate sufficient revenues from
successful releases to cover the costs of unsuccessful releases. The record
label industry is dominated by a small number of large record companies that
have significantly greater experience and financial, marketing and distribution
resources than the Company. There can be no assurance of the Company's ability
to compete effectively in that market. The failure of the Company to grow N2K
Encoded Music would have a material adverse effect on the Company's growth,
financial condition and results of operations.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company expects to experience significant fluctuations in future
quarterly operating results that may be caused by a variety of factors, many of
which are outside the Company's control. Factors that may affect the Company's
quarterly operating results include, without limitation, (i) the Company's
ability to retain existing customers, attract new customers at a steady rate and
maintain customer satisfaction, (ii) the announcement or introduction of new or
enhanced websites, products and strategic alliances by the Company and its
competitors, (iii) the mix of products sold by the Company, (iv) seasonality of
the recorded music industry, (v) seasonality of advertising sales, (vi) Company
promotions and sales programs, (vii) price competition or higher recorded music
prices in the industry, (viii) the level of use of the Internet and increasing
consumer acceptance of the Internet for the purchase of consumer products such
as those offered by the Company, (ix) the Company's ability to upgrade and
develop its systems and infrastructure in a timely and effective manner, (x) the
level of traffic on the Company's websites, (xi) technical difficulties, system
downtime or Internet brownouts, (xii) the amount and timing of operating costs
and capital expenditures relating to expansion of the Company's business,
operations and infrastructure and the implementation of marketing programs, key
agreements and strategic alliances, (xiii) the number of recorded music releases
introduced during the period, (xiv) the level of merchandise returns experienced
by the Company and (xv) general economic conditions and economic conditions
specific to the Internet, on-line commerce and the recorded music industry.
While the Company has a limited operating history in the music entertainment
business, it anticipates that revenues will eventually track traditional music
purchase and advertising sales patterns. As a result, the Company believes that
period-to-period comparisons of its results of operations are not and will not
necessarily be meaningful and should not be relied upon as an indication of
future performance. Due to all of the foregoing factors, it is possible that in
some future quarter or quarters the Company's operating results will be below
the expectations of securities analysts and investors. In such event, the price
of the Common Stock would likely be materially adversely affected.
RISK OF SYSTEM FAILURE OR INADEQUACY
The Company's operations are dependent on its ability to maintain its
computer and telecommunications equipment in effective working order and to
protect its systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events. In addition, the growth of the
Company's customer base may strain or exceed the capacity of its computer and
telecommunications systems and lead to degradations in performance or systems
failure. From time to time, the Company has experienced capacity constraints and
failure of its information systems which have resulted in decreased levels of
service delivery or interruptions in service to its customers. While the Company
continually reviews and seeks to upgrade its technical infrastructure and
provides for certain system redundancies and backup power to limit the
likelihood of systems overload or failure, any damage, failure or delay that
causes
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interruptions in the Company's operations could have a material adverse
effect on the Company's business, results of operations and financial condition.
In addition, substantially all of the Company's computer and telecommunications
operations, including its processing operations, are located at its facility in
Wayne, Pennsylvania. In the event of a catastrophic loss at the Wayne,
Pennsylvania facility resulting in the destruction of the Company's computer and
telecommunications operations, the Company would experience a significant
interruption of its business. Although the Company maintains insurance, such
insurance may not be adequate to compensate the Company for all property damage
and business interruption losses that may occur.
RISKS OF TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS
The Company's success will depend upon its ability to develop and
provide new services that meet customers' changing requirements. The music
entertainment industry has been characterized by significant technological
changes, such as the introduction of CDs which have had a significant impact on
the industry and industry participants, and further technological changes are
expected to occur. The Internet is characterized by rapidly changing technology,
evolving industry standards, changes in customer needs and frequent new service
and product introductions. The Company's future success will depend, in part, on
its ability to effectively use leading technologies, to continue to develop its
technological expertise, to enhance its current services, to develop new
services that meet changing customer needs and to influence and respond to
emerging industry standards and other technological changes on a timely and
cost-effective basis.
RISKS ASSOCIATED WITH GLOBAL EXPANSION
An important component of the Company's growth strategy is its planned
expansion into global markets. The Company has established a wholly-owned
subsidiary in Japan. There can be no assurance that the Company will be able to
successfully market, sell and distribute its products in global markets due to
legal, contractual and practical considerations. The Company does not currently
have any overseas fulfillment or distribution facility or arrangement and there
can be no assurance that the Company will be able to expand its global presence.
In addition, there are certain risks inherent in doing business on a global
level, such as unexpected changes in regulatory requirements, export
restrictions, tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, difficulties in protecting intellectual property
rights, longer payment cycles, problems in collecting accounts receivable,
political instability, fluctuations in currency exchange rates and potentially
adverse tax consequences, which could adversely impact the success of the
Company's global operations. There can be no assurance that one or more of such
factors will not have a material adverse effect on the Company's future global
operations, and consequently, on the Company's business, results of operations
and financial condition.
POSSIBLE NEED FOR ADDITIONAL FUNDS
The Company may well require additional funds to sustain and expand its
sales and marketing and research and development activities and its strategic
alliances, particularly if a well-financed competitor emerges or if there is a
shift in the type of Internet services that are developed and ultimately receive
customer acceptance. Adequate funds for these and other purposes on terms
acceptable to the Company, whether through additional equity financing, debt
financing or other sources, may not be available when needed or may result in
significant dilution to existing stockholders. The inability to obtain
sufficient funds from operations and external
I-13
<PAGE> 15
sources would have a material adverse effect on the Company's business, results
of operations and financial condition.
CONTROL BY MANAGEMENT
The Company's executive officers and directors and their respective
affiliates, if voting together, may, as a practical matter, have sufficient
voting power to elect the Board of Directors, exercise significant control over
the business, policies and affairs of the Company and, in general, determine the
outcome of any corporate transaction or other matters submitted to the
stockholders for approval, such as any amendment to the certificate of
incorporation of the Company (the "Certificate of Incorporation"), any merger,
consolidation, sale of all or substantially all of the Company's assets or
"going private" transactions and prevent or cause a change in control of the
Company, all of which may adversely affect the market price of the Common Stock.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Delaware General Corporation Law (the
"Delaware GCL") may delay, discourage or prevent a change in control of the
Company. Such provisions may discourage bids for the Common Stock at a premium
over the market price of the Common Stock and may adversely affect the market
price and the voting and other rights of the holders of Common Stock. In
addition, the Board of Directors has the authority without action by the
Company's stockholders to fix the rights, privileges and preferences of, and to
issue shares of, the preferred stock, which may have the effect of delaying,
deterring or preventing a change in control of the Company.
The trading price of the Common Stock could be subject to fluctuations
in response to quarterly variations in results of operations, announcements of
technological innovations or new services or products by the Company or its
competitors, changes in financial estimates by securities analysts and other
events or factors. The stock market has experienced significant price and volume
fluctuations that have particularly affected the market prices of equity
securities of many high technology companies, particularly Internet-related
companies, and that often have been unrelated to the operating performance of
such companies. These broad market fluctuations may adversely effect the market
price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS.
On October 31, 1997, there were 11,706,680 shares of Common Stock
outstanding. Of such shares, 3,895,166 shares were tradable without restriction
by persons other than "affiliates" of the Company. On April 16, 1998, an
additional 3,990,866 shares of Common Stock will be eligible for immediate
resale under the 1993 Act. In addition, the Company has granted certain holders
registration rights as to 5,022,978 shares of Common Stock and intends to
register an aggregate of 3,900,142 shares of Common Stock pursuant to certain
employee stock option and purchase plans. As a result of these factors, a large
number of shares of Common Stock could be sold in the public market and could
have an adverse effect on the market price for the Common Stock. No prediction
can be made as to the effect, if any, that future sales of shares of Common
Stock, or the availability of shares for future sale, will have on the market
price of the Common Stock prevailing from time to time. Sales of substantial
amounts of Common Stock, or the perception that such sales could occur, could
adversely affect the prevailing market price of the Common Stock.
I-14
<PAGE> 16
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Common Stock could be subject to fluctuations
in response to quarterly variations in results of operations, announcements of
technological innovations or new services or products by the Company or its
competitors, changes in financial estimates by securities analysts and other
events or factors. Recent history relating to the market prices of other newly
public companies indicates that the market price of the Common Stock may be
highly volatile. In addition, the stock market has experienced significant price
and volume fluctuations that have particularly affected the market prices of
equity securities of many high technology companies, particularly
Internet-related companies, and that often have been unrelated to the operating
performance of such companies. These broad market fluctuations may adversely
effect the market price of the Common Stock.
ABSENCE OF DIVIDENDS
The Company has never declared or paid any dividends on the Common
Stock and does not anticipate paying any cash dividends on the Common Stock in
the foreseeable future.
I-15
<PAGE> 17
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. However, the Company expects to use the proceeds from the exercise of
the Options for working capital and other general corporate purposes.
SELLING STOCKHOLDERS
The Shares to which this Reoffer Prospectus relates are being
registered for reoffers and resales by the Selling Stockholders who have
acquired such Shares pursuant to the exercise of Options. The Selling
Stockholders named below may resell all, a portion or none of such Shares from
time to time.
The table below sets forth with respect to each Selling Stockholder,
based upon information available to the Company as of November 19, 1997, the
number of Shares beneficially owned before and after the sale of the Shares, the
number of Shares to be sold, and the percent of the outstanding Shares owned
before and after the sale of the Shares offered hereby.
<TABLE>
<CAPTION>
- ---------------------- ------------- --------------- --------------- --------------- -----------------------
SELLING STOCKHOLDER NUMBER OF % OF NUMBER OF NUMBER OF % OF SHARES
SHARES OWNED SHARES OWNED SHARES TO BE SHARES OWNED OWNED
BEFORE SALE BEFORE SALE SOLD AFTER SALE AFTER SALE
- ---------------------- ------------- --------------- --------------- --------------- -----------------------
<S> <C> <C> <C> <C> <C>
SUSAN HAIDAR 27 * 25 2 *
TERRENCE A. QUAIN 25 * 25 0 *
LISA FRAIMOW 125 * 62 63 *
LESLIE AVAKIAN 1,200 * 1,000 200 *
GAIL MCELROY 437 * 437 0 *
DENISE FRANKS 100 * 100 0 *
SUE KANE 281 * 281 0 *
TROY HUNTER 250 * 250 0 *
CHUCK MURKO 1,125 * 1,125 0 *
MARK KOTTMEYER 187 * 187 0 *
JIM COANE 100,000 * 100,000 0 *
BRUCE JOHNSON 34,275 * 33,750 525 *
ROGER WILCOX 29,737 * 27,375 2,362 *
SETH HORWITZ 17,356 * 14,531 2,825 *
RICH HARRIS 843 * 843 0 *
CLAIRE DIPARDO 187 * 187 0 *
EMILY S. SKOLNIK 125 * 125 0 *
THOMAS MEYER 187 * 187 0 *
- ----------------------- -------------- ---------------- --------------- ---------------- -------------------------
</TABLE>
*Less than 1%
PLAN OF DISTRIBUTION
The Shares may be sold or transferred for value by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest to the Selling Stockholders, in one or more transactions on NASDAQ, in
a negotiated transaction or in a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices otherwise negotiated. The Selling Stockholders may
effect such transactions
I-16
<PAGE> 18
by selling the Shares to or through brokers-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agent (which compensation may be less
than or in excess of customary commissions). The Selling Stockholders and any
broker-dealers that participate in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of Section 2(11) of the 1933 Act, and
any commissions received by them and any profit on the resale of the Shares sold
by them may be deemed to be underwriting discounts and commissions under the
1933 Act. All selling and other expenses incurred by individual Selling
Stockholders will be borne by such Selling Stockholders.
In addition to any such number of Shares sold hereunder, a Selling
Stockholder may, at the same time, sell any shares of Common Stock, including
the Shares, owned by him or her in compliance with all of the requirements of
Rule 144 under the 1933 Act, regardless of whether such shares are covered by
this Reoffer Prospectus.
There is no assurance that any of the Selling Stockholders will sell
all or any portion of the Shares offered hereby.
The Company will pay all expenses in connection with this offering.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York 10019.
INCORPORATION OF DOCUMENTS BY REFERENCE
Registrant's prospectus, filed pursuant to Rule 424(b), dated October
17, 1997, is incorporated herein by reference. In addition, all documents filed
or subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the 1934 Act, prior to the termination of this Offering, are deemed
incorporated by reference into this prospectus.
I-17
<PAGE> 19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Registrant's prospectus, filed pursuant to Rule 424(b), dated October
17, 1997, is incorporated herein by reference. In addition, all documents filed
or subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the 1934 Act, prior to the termination of this Offering, are deemed
incorporated by reference into this prospectus.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that a director of
the Company shall not be personally liable to it or its stockholders for
monetary damages to the fullest extent permitted by the Delaware General
Corporation Law ("GCL"). Section 102(b)(7) of the Delaware GCL currently
provides that a director's liability for breach of fiduciary duty to a
corporation may be eliminated except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware GCL, for
unlawful dividends or unlawful stock repurchases or redemptions, and (iv) for
any transaction from which the director derives an improper personal benefit.
The Delaware GCL does afford persons who serve on the board of directors of a
Delaware corporation protection against awards of monetary damages for
negligence in the performance of their duties as directors. The Delaware GCL
does not affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care. Any amendment to
these provisions of the Delaware GCL will automatically be incorporated by
reference into the Company's Certificate of Incorporation, without any vote on
the part of its stockholders, unless otherwise required.
Pursuant to the provisions of Section 145 of the Delaware GCL, every
Delaware corporation has the power to indemnify any person who was 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 such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding. The
power to indemnify applies only if such person acted in good faith and in a
manner such person 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 that his or her conduct was
unlawful.
II-1
<PAGE> 20
The power to indemnify applies to actions brought by or in the right of
the corporation as well, but only to the extent of defense or settlement
expenses and not to any satisfaction of a judgment or settlement of the claim
itself, and with the further limitation that in such actions no indemnification
shall be made in the event of any adjudication of negligence or misconduct
unless the court, in its discretion, believes that in light of all the
circumstances indemnification should apply. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-laws, agreement, vote of stockholders or otherwise.
Indemnification Agreements. The Company and each of its directors has
entered into indemnification agreements. The indemnification agreements provide
that the Company will indemnify the directors against certain liabilities
(including settlements) and expenses actually and reasonably incurred by them in
connection with any threatened, pending or completed legal action, proceeding or
investigation (other than actions brought by or in the right of the Company) to
which any of them was, is or is threatened to be made a party by reason of his
or her status as a director, officer or agent of the Company or his or her
serving at the request of the Company in any other capacity for or on behalf of
the Company, provided that (i) such director acted in good faith and in a manner
at least not opposed to the best interests of the Company, (ii) with respect to
any criminal proceedings, such director had no reasonable cause to believe his
or her conduct was unlawful, (iii) such director is not finally adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
Company, unless the court views in light of the circumstances that the director
is nevertheless entitled to indemnification, and (iv) the indemnification does
not relate to any liability arising under Section 16(b) of the 1934 Act or the
rules or regulations promulgated thereunder. With respect to any action brought
by or in the right of the Company, directors may also be indemnified, to the
extent not prohibited by applicable laws or as determined by a court of
competent jurisdiction, against reasonable costs and expenses incurred by them
in connection with such action if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the 1933 Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Any restricted securities to be offered or resold pursuant to this
Registration Statement are exempt under Section 4(2) of the 1933 Act, as a
non-public offering of securities.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
4.1 Form of Certificate of Incorporation of the Registrant, as amended.
4.2 Form of Bylaws of the Registrant, as amended.
4.3 1987 Employee Incentive Stock Option Plan of the Company.
4.4 Amended and Restated 1996 Stock Option Plan of the Company.
5 Opinion of Dewey Ballantine LLP.
23 Consent of Dewey Ballantine LLP (contained in Exhibit 5).
24 Power of attorney (included on signature page).
</TABLE>
II-2
<PAGE> 21
ITEM 9. UNDERTAKINGS
(a) 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 1993;
(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; and
(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; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference 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.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to be believe it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on November 20, 1997.
N2K INC.
By: /s/ Lawrence L. Rosen
---------------------------------
Lawrence L. Rosen
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below under the heading "Signatures" constitutes and appoints Jonathan V.
Diamond and Bruce Johnson his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this Registration Statement, including post-effective amendments,
and to file the same with all exhibits thereto, and all documents in connection
therewith, including, without limitation, any registration statement for the
same offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933, with the Securities and Exchange Commission,
granting unto attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Lawrence L. Rosen Chairman of the Board, Chief Executive Officer and
--------------------------------
Lawrence L. Rosen Director (Principal Executive Officer)
/s/ Jonathan V. Diamond Vice Chairman and Director
--------------------------------
Jonathan V. Diamond
/s/ Robert David Grusin Vice Chairman and Director
--------------------------------
Robert David Grusin
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
/s/ James E. Coane President, Chief Operating Officer and Director
--------------------------------
James E. Coane
/s/ Bruce Johnson Vice President, Secretary, Chief Financing Officer
--------------------------------
Bruce Johnson (Principal Accounting Officer and Principal
Financial Officer) and Director
/s/ Robert C. Harris, Jr. Director
--------------------------------
Robert C. Harris, Jr.
/s/ Susanne Harrison Director
--------------------------------
Susanne Harrison
</TABLE>
<PAGE> 24
INDEX TO EXHIBITS
The following documents are filed as part of this Registration Statement.
<TABLE>
<CAPTION>
Exhibit Location
<S> <C> <C>
4.1 Form of Certificate of Incorporation of the Incorporated by reference from Exhibit 3.1 to the
Registrant, as amended. Registrant's Registration Statement on Form S-1,
Registration Statement No. 333-33105, filed with
the Securities and Exchange Commission
("Commission") on August 7, 1997.
4.2 Form of Bylaws of the Registrant, as Incorporated by reference from Exhibit 3.2 to the
amended. Registrant's Registration Statement on Form S-1,
Registration Statement No. 333-33105, filed with
the Commission on August 7, 1997.
4.3 1987 Employee Incentive Stock Option Plan Incorporated by reference from Exhibit 4.2 to the
of the Company. Registrant's Registration Statement on Form S-1,
Registration Statement No. 333-33105, filed with
the Commission on August 7, 1997.
4.4 Amended and Restated 1996 Stock Option Plan Incorporated by reference from Exhibit 4.3 to the
of the Company. Registrant's Registration Statement on Form S-1,
Registration Statement No. 333-33105, filed with
the Commission on August 7, 1997.
5 Opinion of Dewey Ballantine LLP, re: Attached.
legality, including consent.
23 Consent of Dewey Ballantine LLP Contained in Exhibit 5.
24 Power of Attorney Included on signature page.
</TABLE>
<PAGE> 1
Dewey Ballantine LLP Letterhead
1301 Avenue of the Americas
New York, NY 10019
November 20, 1997
N2K Inc.
55 Broad Street
26th Floor
New York, New York 10004
Gentlemen:
On or about November 20, 1997, N2K Inc. (the "Company") will file with
the Securities and Exchange Commission on Form S-8 its Registration Statement
("Registration Statement") relating to 2,080,632 shares of Common Stock that
have been or may be issued or transferred by the Company upon the exercise of
stock options that have been granted to employees of the Company and its
subsidiaries under the 1987 Employee Incentive Stock Option Plan and have or may
be granted under the 1996 Stock Option Plan (the "Plans").
With respect to the Company and shares of its Common Stock, we are of
the opinion that:
A. The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware.
B. The 2,080,632 shares of Common Stock referred to above:
(i) are duly authorized; and
(ii)will be validly issued and outstanding, fully
paid and nonassessable upon issuance or transfer pursuant to the due
exercise of stock options in accordance with the terms and subject to
the conditions of the Plans and the payment of the option price stated
in such options.
In arriving at the foregoing opinion, we have examined corporate
records, plans, agreements and other documents of the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Dewey Ballantine LLP
DEWEY BALLANTINE LLP
