-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G3dNXk9UT9i3157H1gLphE8p9HmcsZ9F1uFXyHhu64QCKNZiB+r796x5mN0Vsx9O 4yj85E6NCzYLqGcLBO+1OA== 0000950172-95-000420.txt : 19951023 0000950172-95-000420.hdr.sgml : 19951023 ACCESSION NUMBER: 0000950172-95-000420 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19951020 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTKEY INTERNATIONAL INC CENTRAL INDEX KEY: 0000719612 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942562108 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-63073 FILM NUMBER: 95582853 BUSINESS ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6174941200 MAIL ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 FORMER COMPANY: FORMER CONFORMED NAME: WORDSTAR INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MICROPRO INTERNATIONAL CORP DATE OF NAME CHANGE: 19890618 S-3/A 1 FORM S-3 AMENDMENT NO. 1 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. EX-99 2 EXHIBIT 5.1 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 -----END PRIVACY-ENHANCED MESSAGE-----