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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DATAWORKS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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CALIFORNIA 33-0209937
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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5910 PACIFIC CENTER BOULEVARD, SUITE 300
SAN DIEGO, CALIFORNIA 92121
(619) 546-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STUART W. CLIFTON
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATAWORKS CORPORATION
5910 PACIFIC CENTER BOULEVARD, SUITE 300
SAN DIEGO, CALIFORNIA 92121
(619) 546-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
FREDERICK T. MUTO, ESQ.
THOMAS A. COLL, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
(619) 550-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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 offerin. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. N
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
Common Stock no par value............ 417,185 $16.9375 $7,066,071 $2,142
=====================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing
the amount of the registration fee based on the average of the high and low
prices of the Registrant's Common Stock as reported on the Nasdaq National
Market on September 16, 1997.
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 THAT 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.
================================================================================
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PROSPECTUS
417,185 SHARES
DATAWORKS CORPORATION
COMMON STOCK
------------------------
This Prospectus relates to 417,185 shares (the "Shares") of Common Stock,
no par value per share (the "Common Stock"), of DataWorks Corporation
("DataWorks" or the "Company"). The Shares may be offered by a certain
shareholder of the Company (the "Selling Shareholder") from time to time in
transactions on the Nasdaq National Market, in privately negotiated transactions
or a combination of such methods of sale, at fixed prices that may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholder 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 Shareholder or the purchasers of the
Shares for whom such broker-dealers may act as agent or to whom they sell as
principal or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). See "Selling Shareholder" and "Plan of
Distribution."
THE SELLING SHAREHOLDER HAS INDICATED THAT AS OF THE DATE OF THIS
PROSPECTUS, HE HAS NO PRESENT INTENTION TO SELL ANY SHARES. THIS PROSPECTUS HAS
BEEN PREPARED BY THE COMPANY AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN ACCORDANCE WITH ARRANGEMENTS MADE AT THE TIME THE SHARES WERE
ORIGINALLY SOLD BY THE COMPANY TO THE SELLING SHAREHOLDER.
None of the proceeds from the sale of the Shares by the Selling Shareholder
will be received by the Company. The Company has agreed to bear certain expenses
in connection with the registration and sale of the Shares being offered by the
Selling Shareholder. The Company has agreed to indemnify the Selling Shareholder
against certain liabilities, including certain liabilities under the Securities
Act of 1933, as amended. See "Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq National Market
under the Symbol "DWRX." On September 17, 1997, the last sale price for the
Common Stock as reported by the Nasdaq National Market was $16.875 per share.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
------------------------
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 ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER [ ], 1997
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
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 may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: Chicago Regional Office, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information regarding the Company. The address for such site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits and schedules thereto, which may be
inspected without charge at, and copies thereof may be obtained at prescribed
rates from, the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1997, the Company's Proxy Statement for the 1997 Annual
Meeting of Shareholders filed pursuant to Rule 14a-6 of the Exchange Act, the
Company's Prospectus/Joint Proxy Statement dated August 22, 1997, the Company's
Registration Statement on Form S-4 (No. 333-33451) filed on August 12, 1997 (as
amended), the Company's Current Report on Form 8-K dated July 31, 1997, and the
description of the common stock contained in the Company's Registration
Statement on Form 8-A filed on September 20, 1995, each as filed by the Company
with the Commission, are hereby incorporated by reference in this Prospectus
except as superseded or modified herein. All documents filed with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of the offering shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded 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 supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Prospectus. The Company will provide without charge to each
person, including any beneficial owner, to whom this Prospectus is delivered,
upon written or oral request of such person, a copy of any and all of the
documents that have been or may be incorporated by reference herein (other than
exhibits to such documents which are not specifically incorporated by reference
into such documents). Such requests should be directed to the Chief Financial
Officer at the Company's principal executive offices at 5910 Pacific Center
Boulevard, Suite 300, San Diego, California 92121, (619) 546-9600.
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THE COMPANY
Except for the historical information contained or incorporated by
reference herein, this Prospectus (and the information incorporated herein by
reference) contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here or incorporated by reference. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in the following section, as well as those discussed elsewhere in this
Prospectus and any other documents incorporated herein by reference.
DataWorks Corporation ("DataWorks" or the "Company") develops, markets,
implements and supports open systems, client/server-based Enterprise Resource
Planning ("ERP") software for mid-range discrete manufacturing companies with
annual revenues between $3 million and $1 billion. The Company's products and
services facilitate enterprise-wide management of resources and information and
allow mid-range manufacturers to reduce order fulfillment cycle times, improve
operating efficiencies and measure critical company performance against defined
plan objectives. DataWorks' products enable its customers to manage
make-to-stock and make-to-order production methods, as well as multiple hybrid
or "mixed mode" production methods, within a single manufacturing site or across
multiple sites. The Company's products also help customers adapt to growth,
changing levels of operations, and business process re-engineering, which is
becoming commonplace among manufacturing concerns.
The Company was incorporated in California in 1986. The Company's executive
offices are located at 5910 Pacific Center Boulevard, Suite 300, San Diego,
California 92121, and its telephone number is (619) 546-9600.
RECENT AND PENDING ACQUISITIONS
In September 1996, the Company acquired DCD in a stock-for-stock
transaction accounted for as a pooling-of-interests. Accordingly, the financial
results of DCD have been consolidated with the financial results of the Company
included in this Prospectus. In connection with the acquisition, the
shareholders of DCD received approximately 1.8 million shares of the Common
Stock of the Company, which constituted approximately 22.6% of the outstanding
Common Stock immediately after the acquisition.
DCD designs, develops, markets and supports software for use by lower tier
mid-range manufacturers in the make-to-order manufacturing industry. The
principal products acquired by DataWorks in the transaction were Vista and
Vantage. The Company believes that this acquisition allows it to achieve several
important strategic objectives, including both the addition of complementary
products to better serve various markets and a significant expansion of the
Company's customer and revenue base.
On July 31, 1997, the Company, DataWorks Acquisition Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company created in order to
engage in a merger transaction ("Merger Sub"), and Interactive Group, Inc., a
Delaware corporation ("Interactive"), entered into an Agreement and Plan of
Merger and Reorganization dated as of such date (the "Interactive Merger
Agreement"). The Interactive Merger Agreement provides for the merger of Merger
Sub with and into Interactive (the "Interactive Merger"), upon satisfaction of
certain closing conditions including, without limitation, the approval of the
Company's shareholders at a Special Meeting of Shareholders scheduled for
September 29, 1997. The Interactive Merger will be a stock-for-stock transaction
accounted for as a pooling of interests. Pursuant to the Interactive Merger
Agreement, the stockholders of Interactive will, upon consummation of the
Interactive Merger, receive approximately 3,700,000 shares of Common Stock of
the Company, which would constitute approximately 27% of the outstanding Common
Stock immediately thereafter; and option and warrant holders of Interactive will
receive rights to acquire an aggregate of approximately 536,000 shares of Common
Stock of the Company. The Company expects that the Interactive Merger will be
consummated promptly following such Special Meeting, but there can be no
assurance that the Interactive Merger will occur.
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Interactive develops, markets, implements and supports integrated business
information systems that enable discrete manufacturers to manage their
enterprise-wide information requirements. Interactive's primary software
product, INFOFLO, supports make-to-order and make-to-stock manufacturers in
their business re-engineering efforts by providing customer-oriented
capabilities that allow manufacturers to reduce order fulfillment cycle times,
improve operating efficiencies and measure critical company performance against
defined plan objectives. There can be no assurance that the Interactive Merger
will benefit the Company in the long term, or that it will occur at all. The
Interactive Merger and the business and other relevant information with respect
to Interactive are described in the Company's Prospectus/Joint Proxy Statement
dated August 22, 1997, and the Company's Registration Statement on Form S-4 (No.
333-33451) filed on August 12, 1997 (as amended), both of which are incorporated
herein by reference.
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RISK FACTORS
An investment in the shares being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus and in
any other documents incorporated herein by reference in evaluating an investment
in the shares of Common Stock offered hereby.
Fluctuations in Quarterly Operating Results. The Company has experienced
significant fluctuations in its revenues and operating results from quarter to
quarter and anticipates that it will continue to experience such quarterly
fluctuations. The Company's revenues and operating results have generally been
higher in the fourth quarter than in any preceding quarter of the year. The
Company believes that fourth quarter revenues are positively impacted by
year-end capital purchases by some large corporate customers, as well as by the
Company's sales compensation plans. Seasonal factors, which the Company believes
are common in the computer software industry, are likely to increase as the
Company focuses on larger corporate accounts. As a result of these seasonal
factors, first quarter revenues in any year are typically lower than revenues in
the immediately preceding fourth quarter. In addition, the Company's revenues
occur predominantly in the third month of each quarter and tend to be
concentrated in the latter half of that third month. Further, the Company
believes it is possible that customers or prospective customers aware of the
pending Interactive Merger may defer purchasing decisions until the closing of
the Interactive Merger or thereafter. Accordingly, the Company's quarterly
results of operations are difficult to predict, and delays in product delivery
or in closings of sales near the end of a quarter could cause quarterly revenues
and, to a greater degree, net income to fall substantially short of anticipated
levels. Factors that may contribute to such fluctuations in addition to seasonal
factors include: the number of new orders and product shipments; the size and
timing of individual orders; the timing of shipment of hardware or database
software by third party vendors necessary in order for the Company to recognize
revenues; the timing of introduction of products or product enhancements by the
Company, the Company's competitors or other providers of hardware, software and
components for the Company's market; lengthy sales cycles; competition and
pricing in the software industry; market acceptance of new products; reduction
in demand for existing products and shortening of product life cycles as a
result of new product introductions by competitors; product quality problems;
customer order deferrals in anticipation of new products; changes in customer
budgets; changes in Company strategy; changes in Company operating expenses;
personnel changes; fluctuations in foreign currency exchange rates; changes in
the mix of products sold; conditions or events in the manufacturing industry;
and general economic conditions.
The Company's sales figures for DataFlo and ManFact II, the Company's
principal products, generally reflect a relatively high amount of revenues per
order. The loss or delay of individual orders for these products, therefore,
could have a more significant impact on the revenues and quarterly results of
the Company than on those of companies with higher sales volumes and lower
revenues per order. The Company's software products generally are shipped as
orders are received, and revenues are recognized upon delivery of the products,
provided no significant vendor obligations exist and collection of the related
receivable is deemed probable. As a result, software license revenues in any
quarter are substantially dependent on orders booked and shipped in that
quarter. The timing of license revenues derived from sales of the Company's
DataFlo and ManFact II products is difficult to predict because of the length of
the sales cycle for these products, which is typically three to nine months from
the initial contact. Because the Company's operating expenses are based on
anticipated revenue trends and because a high percentage of the Company's
expenses are relatively fixed, a delay in the recognition of revenue from a
limited number of license transactions could cause significant variations in
operating results from quarter to quarter and could result in losses. To the
extent such expenses precede, or are not subsequently followed by, increased
revenues, the Company's operating results would be materially adversely
affected. In addition, the achievement of anticipated revenues is substantially
dependent on the ability of the Company to attract, on a timely basis, and
retain skilled personnel, especially sales, service and implementation
personnel. As a result of these factors, and because of the pending Interactive
Merger, the Company's revenues for any quarter are subject to significant
variation and difficult to predict; and period-to-period comparisons of the
Company's results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Fluctuations in operating
results may also result in volatility
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in the price of the Company's Common Stock. See "-- Ability to Recruit Sales,
Service and Implementation Personnel," "-- Dependence on Key Employees" and
"-- Possible Volatility of Stock Price."
Integration of Operations. The Company acquired DCD in September 1996, and
the pending Interactive Merger is expected to close at the end of September
1997, provided conditions described in the Interactive Merger Agreement are
satisfied and subject to certain other contingencies. The process of
rationalizing product lines, management services, administrative organizations,
facilities, management information systems and other aspects of operations,
while managing a larger and geographically expanded entity, presents a
significant challenge to the management of DataWorks. There can be no assurance
that the Company's current integration plans, including integration of the
Company's and Interactive's businesses if the Interactive Merger occurs, will be
successful or that the anticipated benefits of business combinations will be
fully realized. The dedication of management resources to such integration may
detract attention from the day-today business of the Company. The difficulties
of integration may be increased by the necessity of coordinating geographically
separated organizations, integrating personnel with disparate business
backgrounds and combining different corporate cultures. Integration has caused
the Company to incur certain additional expenses, and there can be no assurance,
particularly if the Interactive Merger occurs, that there will not continue to
be substantial costs associated with the integration process, that such
activities will not result in a decrease in revenues or that there will not be
other material adverse effects of these integration efforts. Such effects could
materially reduce the earnings of the Company. The Company incurred acquisition
and related costs totaling $3.7 million in the third quarter of 1996 in
connection with the acquisition of DCD, and the Company's preliminary estimate
is that it will incur a $14 million charge in the third quarter of fiscal 1997
to reflect the combination of the Company and Interactive, including transaction
and integration costs, if the Interactive Merger occurs. There can be no
assurance that DataWorks will not incur additional charges in the third quarter
or subsequent quarters to reflect costs associated with its acquisitions. See
"-- Management of Growth."
Competition. The business information systems industry is intensely
competitive, rapidly changing and significantly affected by new product
offerings and other market activities. A number of companies offer products
similar to the Company's products, which are directed at the market for ERP
systems. Many of the Company's existing competitors, as well as a number of
potential competitors, have more established and larger marketing and sales
organizations, significantly greater financial and technical resources and a
larger installed base of customers than the Company. In addition, potential
customers that have a large installed base of legacy systems may resist
committing the time and resources necessary to convert to an open systems-based
client/server software product. The Company has no proprietary barriers to entry
which would limit competitors from developing similar products or selling
competing products in the Company's markets. Accordingly, there can be no
assurance that such competitors will not offer or develop products that are
superior to the Company's products or that achieve greater market acceptance. In
addition, suppliers of relational database management systems ("RDBMS") or
companies that develop management information software applications for large
multinational manufacturers are beginning to market to the upper tier of the
mid-range market targeted by the Company or otherwise develop applications that
compete effectively in the Company's markets. Furthermore, the Company intends
to focus its marketing and product development efforts increasingly toward the
upper end of its target market, which could result in increased competition. As
a result, competition (including price competition) is likely to increase
substantially, which may result in price reductions and loss of market share. In
addition, potential customers may increasingly demand that ERP systems
incorporate certain popular RDBMS software not currently integrated into certain
of DataWorks' product offerings that are offered by its competitors. As the
client/server computing market expands, a large number of companies, some with
significantly greater resources than the Company, may enter the market or
increase their market share by acquiring or entering into alliances with
competitors of the Company. There can be no assurance that the Company will be
able to compete successfully against its competitors or that the competitive
pressures faced by the Company will not adversely affect its financial
performance.
The Company has a large number of competitors that vary in size, primary
computer platforms and overall product scope. Within its market, the primary
competition comes from independent software vendors in four distinct groups
including (i) large multinational system developers in the upper tier of the
Company's
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mid-range market, including Baan Company, Oracle Corporation ("Oracle") and qad,
Inc., (ii) companies offering high levels of functionality on the AS/400
platform such as System Software Associates, Inc. and J.D. Edwards Company,
(iii) traditional mid-range market sector firms such as ROI Systems and Symix
Systems, Inc., and (iv) lower priced PC network-based offerings from companies
such as Fourth Shift Corporation, Lilly Software Associates and Macola Software,
Inc. There is also a large number of regional manufacturing software suppliers
that leverage as competitive advantages their concentrated local support,
reputation and, typically, lower price.
The Company's principal market is highly fragmented and consists of a few
large multinational suppliers and a much larger number of small regional
competitors. The Company believes that its industry will experience
consolidation as business information systems become more complex and as more
manufacturers adopt sophisticated business information systems, forcing smaller
companies in the industry, such as the Company and Interactive, to specialize or
merge with their competitors. In order to compete effectively in the broad
markets which the Company presently targets, the Company will need to continue
to grow and attain sufficient size to ensure that it can develop new products on
a timely basis in response to evolving technology and new customer demands and
can sell such products to a variety of manufacturing industries worldwide. No
assurance can be given that the Company will be able to grow sufficiently to
enable it to compete effectively. The Company anticipates that a significant
source of future competition may be from larger manufacturing software companies
that may tailor their products for the mid-range market. Only a few of the
larger and better capitalized software systems companies currently compete in
the Company's targeted market. There can be no assurance that such companies
will not develop products that are superior to the Company's products or that
achieve greater market acceptance.
Ability to Recruit Sales, Service and Implementation Personnel. The ability
to achieve anticipated revenues is substantially dependent on the ability of the
Company to attract on a timely basis and retain skilled personnel, especially
sales, service and implementation personnel. In addition, the Company believes
that its future success will depend in large part on its ability to attract and
retain highly skilled technical, managerial, marketing and professional services
personnel to ensure the quality of products and services provided to its
customers. Competition for such personnel, in particular for product
development, sales and implementation personnel, is intense, and the Company
competes in the market for such personnel against numerous companies, including
larger, more established companies with significantly greater financial
resources than the Company. There can be no assurance that the Company will be
successful in attracting and retaining skilled personnel. The Company's
inability to attract and retain qualified employees could have a material
adverse effect on the Company's business and operations. See "-- Dependence on
Key Employees" and "-- Rapid Technological Change and New Products."
Introduction of ECS System. The Company currently anticipates commencing
beta shipments of the initial phase of its ECS system in late 1997. However,
there can be no assurance that the Company will commence such shipments in 1997,
or at all. Furthermore, the Company has limited experience in selling products
to customers in the upper tier of the mid-range manufacturing market and
anticipates that selling products to such customers will result in a longer
sales cycle and will require a different strategy than that employed by the
Company in selling products to customers in the mid-tier market. For example, as
part of its upper tier marketing strategy, the Company is exploring potential
relationships with third party integrators to facilitate implementation of the
ECS system. There can be no assurance that any such relationships will be formed
or, if formed, will prove beneficial to the Company. Accordingly, even if
customer shipments of the ECS system are timely commenced, there can be no
assurance that the Company will be successful in effectively marketing the ECS
system or that the ECS system will achieve market acceptance. See "-- Rapid
Technological Change and New Products."
Management of Growth. The Company's business has grown rapidly, both
internally and through acquisitions. The Company's business will grow
dramatically as a result of the Interactive Merger, if it occurs. There can be
no assurance that the Company will be able to manage its recent growth or growth
attributable to the Interactive Merger, and assimilate its new employees and
products successfully. To manage its growth effectively, the Company will be
required to expand, train and manage its employee base, enhance its operating
and financial systems, and effectively expand its product line. If the Company
continues to grow,
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there can be no assurance that the management skills and systems currently in
place will be adequate or that the Company will be able to manage any additional
growth effectively. See "-- Integration of Operations."
Dependence on Key Employees. The Company's continued success depends to a
significant extent upon its ability to retain certain key employees, including
Stuart W. Clifton, Norman R. Farquhar and Robert W. Brandel; and if the
Interactive Merger occurs it will be similarly important to retain Robert C.
Vernon and Mark Hellinger. The loss of certain key employees or the Company's
inability to attract and retain other qualified employees could have a material
adverse effect on the Company's business and operations. See "-- Ability to
Recruit Sales, Service and Implementation Personnel" and "-- Rapid Technological
Change and New Products."
Rapid Technological Change and New Products. The market for the Company's
software products is characterized by rapid technological advances, evolving
industry standards, changes in end-user requirements and frequent new product
introductions and enhancements. The introduction of products embodying new
technologies, such as the planned introduction of the initial phase of the ECS
system, and the emergence of new industry standards, could render the Company's
existing products and products currently under development obsolete and
unmarketable. Accordingly, the Company's future success will depend upon its
ability to enhance its current products and develop and introduce new products
that keep pace with technological developments, satisfy varying end-user
requirements and achieve market acceptance. Any failure by the Company to
anticipate or respond adequately to technological developments or end-user
requirements, or any significant delays in product development or introduction,
could damage the Company's competitive position and have an adverse effect on
revenues. There can be no assurance that the Company will be successful in
developing and marketing new products, including the ECS system, or product
enhancements on a timely basis or that the Company will not experience
significant delays in the future, which could have a material adverse effect on
the Company's business and operations. In addition, there can be no assurance
that new products or product enhancements developed by the Company will achieve
market acceptance. The Company may need to increase the size of its product
development staff in the near term to meet these challenges. There can be no
assurance that the Company will be successful in hiring and training an adequate
number of qualified product development personnel to meet its needs. See
"-- Introduction of ECS System," "-- Dependence on Key Employees."
Software programs as complex as those offered by the Company may contain
undetected errors or "bugs" when first introduced or as new versions are
released that, despite testing by the Company, are discovered only after a
product has been installed and used by customers. There can be no assurance that
errors will not be found in future releases of the Company's software, or that
any such errors will not impair the market acceptance of these products and
adversely affect operating results. Problems encountered by customers installing
and implementing new releases or with the performance of the Company's products
could have a material adverse effect on the Company's business and operations.
Dependence on Manufacturing Industry. The Company's business depends
substantially upon the capital expenditures of mid-range discrete manufacturers,
which in part depend upon the demand for such manufacturers' products. A
recession or other adverse events affecting the manufacturing industry in the
United States or other markets served by the Company could affect such demand,
forcing manufacturers in the Company's target markets to curtail or postpone
capital expenditures on business information systems. Any such change in the
amount or timing of capital expenditures in its target markets could have a
material adverse effect on the Company's business and operations.
Dependence on Third Party Software and Hardware. Most of the Company's
products incorporate and use software products and computer hardware and
equipment developed by other entities. The RDBMS currently used in the Company's
products are those which the Company believes are best suited for the particular
applications required by the mid-range discrete manufacturers. These RDBMS have
been developed by UniData, Inc. (previously Millsoft, Inc.) ("UniData"), VMark
Software, Inc. ("VMark"), Progress Software Corporation and Microsoft
Corporation ("Microsoft"). The operating systems on which the Company's products
can function (UNIX, SCO-UNIX, UnixWare, VMS and Microsoft NT) have been
developed or are owned by Novell Corporation ("Novell"), Digital Equipment
Corporation ("DEC") and
9
<PAGE> 11
Microsoft. The computer hardware and related equipment sold as part of the
Company's turnkey systems are manufactured by Hewlett-Packard Company
("Hewlett-Packard"), International Business Machines Corporation ("IBM"), DEC
and others. Further, Interactive's products incorporate and use software
products and computer hardware and equipment developed by other entities, which
will increase the Company's dependence on third-party vendors if the Interactive
Merger occurs. There can be no assurance that all of the entities with which the
Company does or will do business will remain in business, that such entities
will continue to support these product lines, that their product lines will
remain viable or that these products will otherwise continue to be available to
the Company. If any of these entities ceases to do business or abandons or fails
to enhance a particular product line, the Company may need to seek other
suppliers. This could have a material adverse effect on the Company's business
and operations. In addition, there can be no assurance that the Company's
current suppliers will not significantly alter their pricing in a manner adverse
to the Company.
International Operations and Risk of International Sales. The Company
derived approximately 4% of its total revenues from operations outside North
America in 1996. Interactive derived approximately 32% of its total revenues in
1996 from such sources and the Company will likely increase its emphasis on
international sales if the Interactive Merger occurs. The international business
is subject to various risks common to international activities, including
exposure to currency fluctuations, political and economic instability, the
greater difficulty of administering business abroad and the need to comply with
a wide variety of foreign import and United States export laws and regulatory
requirements. Neither DataWorks nor Interactive currently engages in foreign
currency hedging transactions.
Intellectual Property and Proprietary Rights. The Company relies on a
combination of copyright, trademark and trade secret laws, employee and
third-party nondisclosure agreements and other industry standard methods for
protecting ownership of its proprietary software. There can be no assurance,
however, that, in spite of these precautions, an unauthorized third party will
not copy or reverse-engineer certain portions of the Company's products or
obtain and use information that the Company regards as proprietary. The Company
provides the source code for its application software under licenses to its
customers to enable them to customize the software to meet particular
requirements. Although the Company's source code license contains
confidentiality and nondisclosure provisions, there can be no assurance that
such customers will take adequate precautions to protect the Company's source
code or other confidential information. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. There can be no assurance that the mechanisms
used by the Company to protect its software will be adequate or that the
Company's competitors will not independently develop software products that are
substantially equivalent or superior to the Company's software products.
The Company has and may from time to time receive notices from third
parties claiming that the Company's products infringe upon third party
proprietary rights. The Company expects that, as the number of software products
in the industry increases and the functionality of these products further
overlaps, software products will increasingly be subject to such claims. Any
such claim, with or without merit, could result in costly litigation and require
the Company to enter into royalty or licensing arrangements. Such royalty or
license arrangements, if required, may not be available, if at all, on terms
acceptable to the Company.
Product Liability. Because the Company markets and sells its software
products on a turnkey basis, which includes rendering professional consulting
services, the Company incurs significant risks of professional and other
liability. No assurance can be given that the limitations of liability set forth
in the Company's license agreements or other contracts would be enforceable or
would otherwise protect the Company from liability for damages to a customer
resulting from a defect in one of the Company's products or arising as a result
of professional services rendered by the Company. Such a claim, if successful
and of sufficient magnitude, could have a material adverse effect on the
Company's business and operations.
Influence of Existing Shareholders. As of August 20, 1997, the Company's
executive officers, directors and their affiliates beneficially owned
approximately 23% of the Company's outstanding shares of Common Stock. Upon
consummation of the Interactive Merger, if it occurs, the Company's executive
officers, directors and their affiliates will beneficially own approximately 25%
of the Company's outstanding shares of Common Stock. (If the Selling Shareholder
sells his shares that are the subject of this Prospectus, these percentages
10
<PAGE> 12
will be changed.) As a result, these shareholders, if acting together, would be
able to influence matters requiring approval by the shareholders of the Company,
including the election of a majority of the directors. The voting power of these
shareholders under certain circumstances could have the effect of delaying or
preventing a change in control of the Company. The Company has entered into
agreements with its executive officers and directors indemnifying them against
losses they may incur in legal proceedings arising from their service to the
Company.
Possible Volatility of Stock Price. The market price of the Company's
Common Stock has fluctuated since its initial public offering in October 1995.
The price of the Company's stock may be subject to significant fluctuations in
the future in response to variations in quarterly operating results of the
Company, announcements of new products by the Company or by its competitors, and
general trends in the software industry, as well as fluctuations in the stock
market that are unrelated to the operating performance of particular companies.
Also, the Company's revenues or operating results in future quarters may be
below the expectations of public market securities analysts and investors, which
could cause the price of the Company's stock to decline, perhaps substantially.
Such stock price and market fluctuations could adversely affect the Company.
Effect of Certain Charter Provisions. The Company's Board of Directors has
the authority to issue up to 5,000,000 shares of Preferred Stock and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the shareholders. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plan to
issue any shares of Preferred Stock.
Additional Shares to be Issued by the Company; Shares Eligible for Future
Sale. Upon the closing of the Interactive Merger, an aggregate of approximately
3,700,000 shares of the Company's Common Stock (the "Merger Consideration") will
be issued in the Interactive Merger, and the Company will assume all outstanding
Interactive options and warrants which will be converted into options and
warrants to acquire approximately 536,000 additional shares of the Company's
Common Stock. In general, the shares will be eligible for sale in the public
market following the Interactive Merger, subject to certain volume and other
resale limitations for affiliates of Interactive and the Company, pursuant to
Rules 144 and/or 145 under the Securities Act and to agreements not to sell to
the extent required to cause the Interactive Merger to be accounted for as a
pooling of interests. The sale of a significant number of the foregoing shares
may cause substantial fluctuations in the market price of the Company's Common
Stock. Upon completion of the Interactive Merger, the Company will have
outstanding an aggregate of approximately 13.9 million shares of Common Stock,
assuming no exercise of outstanding options or warrants, based upon the number
of shares outstanding as of August 20, 1997. Assuming 3,700,000 shares of Common
Stock are issued as a result of the Interactive Merger, the Company's current
shareholders' ownership of the Company will be reduced to 73%. In addition,
promptly following the consummation of the Interactive Merger, the Company
expects to file on Form S-8 a post-effective amendment registering a total of
approximately 431,000 shares of Common Stock. Shares registered on such Form S-8
will, subject to vesting restrictions and to Rule 144 and/or Rule 145 volume
limitations applicable to affiliates, be available for sale in the open market.
SELLING SHAREHOLDER
The following table sets forth the name of the Selling Shareholder, the
number of shares of Common Stock owned beneficially by such Selling Shareholder
as of September 17, 1997 and the number of which may be offered pursuant to this
Prospectus. This information is based upon information provided by the Selling
Shareholder. Because the Selling Shareholder may offer all, some or none of his
Common Stock, no definitive estimate as to the number of shares thereof that
will be held by the Selling Shareholder after such offering can be provided.
11
<PAGE> 13
THE SELLING SHAREHOLDER HAS INDICATED THAT AS OF THE DATE OF THIS
PROSPECTUS, HE HAS NO PRESENT INTENTION TO SELL ANY SHARES. THIS PROSPECTUS HAS
BEEN PREPARED BY THE COMPANY AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN ACCORDANCE WITH ARRANGEMENTS MADE AT THE TIME THE SHARES WERE
ORIGINALLY SOLD BY THE COMPANY TO THE SELLING SHAREHOLDER.
The Selling Shareholder represented in the agreement under which he
acquired the shares that he was acquiring the Shares for investment and with no
present intention of distributing the Shares. The Selling Shareholder has also
entered into an agreement with Interactive, temporarily restricting his ability
to transfer the Shares under certain circumstances (the "Interactive Merger
Affiliate Agreement"). In recognition of the fact that the Selling Shareholder
may wish to be legally permitted to sell the Shares when he deems appropriate
and subject to the Interactive Merger Affiliate Agreement, the Company has filed
with the Commission a Registration Statement on Form S-3, which this Prospectus
forms a part, with respect to, among other things, the resale of the Shares from
time to time at prevailing prices in the over-the-counter market or in
privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until all Shares offered hereby have
been sold pursuant thereto or until such Shares are no longer, by reason of Rule
144 under the Securities Act or any other rule of similar effect, required to be
registered for the sale thereof by the Selling Shareholder.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
SHARES BENEFICIALLY OWNED
OWNED AFTER
PRIOR TO OFFERING(1) NUMBER OF OFFERING(1)(3)
---------------------- SHARES ------------------
SELLING SHAREHOLDER NUMBER PERCENT(2) BEING OFFERED NUMBER PERCENT
- ---------------------------------------- ------- ---------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert W. Brandel(4).................... 417,185 4.1% 417,185 0 --
</TABLE>
- ---------------
(1) Unless otherwise indicated below, the person named in the table has sole
voting and investment power with respect to all shares beneficially owned by
him, subject to community property laws where applicable.
(2) Applicable percentage of ownership is based on 10,183,696 shares of Common
Stock outstanding on August 20, 1997.
(3) Assumes the sale of all shares offered hereby, should the Selling
Shareholder elect to do so. The Selling Shareholder has indicated that as of
the date of this Prospectus, he has no present intention to sell any Shares.
(4) Mr. Brandel is the Company's Executive Vice President and Chief Operating
Officer, and has been employed by the Company since September 1996.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholder may sell Shares
from time to time in transactions on the Nasdaq National Market, in
privately-negotiated transactions or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices; all in compliance with the terms and provisions of the Interactive
Merger Affiliate Agreement. The Selling Shareholder 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 Shareholder or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commission).
THE SELLING SHAREHOLDER HAS INDICATED THAT AS OF THE DATE OF THIS
PROSPECTUS, HE HAS NO PRESENT INTENTION TO SELL ANY SHARES. THIS PROSPECTUS HAS
BEEN PREPARED BY THE COMPANY AND FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN ACCORDANCE WITH ARRANGEMENTS MADE AT THE TIME THE SHARES WERE
ORIGINALLY SOLD BY THE COMPANY TO THE SELLING SHAREHOLDER.
The Selling Shareholder and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act of 1933, as amended (the
12
<PAGE> 14
"Securities Act"), and any commissions received by them and profit on any resale
of the Shares as principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward LLP, San Diego, California
("Cooley Godward").
EXPERTS
The consolidated financial statements of DataWorks Corporation at December
31, 1996 and 1995 and for each of the three years in the period ended December
31, 1996, incorporated by reference herein and appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference, which, as to each of the
two years in the period ended December 31, 1995, is based in part on the report
of Price Waterhouse LLP, independent accountants. The financial statements
referred to above have been so incorporated in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
13
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the registration fee.
<TABLE>
<S> <C>
SEC registration fee.............................. $2,142.00
Legal fees and expenses........................... 3,000.00
Accounting fees and expenses...................... 3,000.00
Printing and Engraving............................ 1,200.00
---------
Total................................... $9,342.00
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Amended and Restated Articles of Incorporation include
provisions to eliminate the personal liability of its directors to the fullest
extent permitted by Section 204(a)(10) under the General Corporation Law of
California (the "California Law"). In addition, the Registrant's Bylaws include
provisions that require the Registrant to indemnify its directors and executive
officers to the fullest extent permitted by Section 317 of the California Law,
including circumstances in which indemnification is otherwise discretionary. The
Bylaws also provide the Registrant with the authority to indemnify its other
officers, employees and other agents as set forth in the California Law.
Pursuant to Section 317 of the California Law, a corporation generally has the
power to indemnify its present and former directors, officers, employees and
agents against expenses incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
such positions so long as they acted in good faith and in a manner they
reasonably believed to be in the best interests of a corporation, and with
respect to any criminal action, so long as they had no reasonable cause to
believe their conduct was unlawful. The Registrant believes that these
provisions are necessary to attract and retain qualified persons as directors
and officers. These provisions do not eliminate liability for breach of the
director's duty of loyalty to the Registrant or its shareholders, for acts or
omissions involving intentional misconduct or knowing and culpable violations of
law, for acts or omissions that the director believes to be contrary to the best
interests of the Company or its shareholders or that involve the absence of good
faith on the part of the director, for any transaction from which the director
derived an improper personal benefit, for acts or omissions involving a reckless
disregard for the director's duty to the Company or its shareholders when the
director was aware or should have been aware of a risk of serious injury to the
Company or its shareholders, for acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of the director's duty to
the Company or its shareholders, for improper distributions to shareholders and
loans to directors and officers, or for acts or omissions by the director as an
officer.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its affiliated enterprises, provided 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 Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or Director.
II-1
<PAGE> 16
The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ --------------------------------------------------------------------------
<C> <S>
3.1 Registrant's Amended and Restated Certificate of Incorporation.(1)
3.2 Registrant's Amended and Restated Bylaws.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ---------------
(1) Filed as an exhibit to Registrant's Registration Statement on Form SB-2 (No.
33-97022 LA) or amendments thereto and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
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 provisions described in Item 15 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
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 Act and will
be governed by the final adjudication of such issue.
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;
(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 clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
these clauses is contained in periodic reports filed 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, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
II-2
<PAGE> 17
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 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.
The undersigned Registrant undertakes that:
(1) for purposes of determining any liability under the Securities Act
of 1933, any information omitted from the form of prospectus filed as part
of the registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective; and
(2) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 18
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 San Diego, State of California, on the 18th day of
September, 1997.
DATAWORKS CORPORATION
By: /s/ STUART W. CLIFTON
------------------------------------
Stuart W. Clifton
Chief Executive Officer, President
and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stuart W. Clifton and Norman R. Farquhar,
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for the undersigned and in his name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to the Registration Statement and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
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
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<S> <C> <C>
/s/ STUART W. CLIFTON President, Chief Executive September 18, 1997
- --------------------------------------------- Officer, Chairman of the
Stuart W. Clifton Board and Director
(Principal Executive
Officer)
/s/ NORMAN R. FARQUHAR Executive Vice President, September 18, 1997
- --------------------------------------------- Chief Financial Officer and
Norman R. Farquhar Director (Principal
Financial Officer)
/s/ RICK E. RUSSO Vice President, Finance and
- --------------------------------------------- Secretary (Principal
Rick E. Russo Accounting Officer)
/s/ NATHAN W. BELL Director September 18, 1997
- ---------------------------------------------
Nathan W. Bell
/s/ WILLIAM P. FOLEY II Director September 18, 1997
- ---------------------------------------------
William P. Foley II
/s/ RONALD S. PARKER Director September 18, 1997
- ---------------------------------------------
Ronald S. Parker
/s/ TONY N. DOMIT Director September 18, 1997
- ---------------------------------------------
Tony N. Domit
/s/ ROY THIELE-SARDINA Director September 18, 1997
- ---------------------------------------------
Roy Thiele-Sardina
</TABLE>
II-4
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ --------------------------------------------------------------------------------
<C> <S>
3.1 Registrant's Amended and Restated Certificate of Incorporation.(1)
3.2 Registrant's Amended and Restated Bylaws.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ---------------
(1) Filed as an exhibit to Registrant's Registration Statement on Form SB-2 (No.
33-97022 LA) or amendments thereto and incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
September 19, 1997
DataWorks Corporation
5910 Pacific Center Blvd.
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by DataWorks Corporation (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") covering the offering of 417,185 shares
of the Company's Common Stock to be sold by a certain shareholder, as described
in the Registration Statement (the "Common Stock").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company's Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws and the originals or copies
certified to our satisfaction, of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Common Stock, when sold in accordance with the Registration Statement,
will be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
/s/ THOMAS A. COLL
Thomas A. Coll, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" and to the
incorporation by reference of our report dated January 31, 1997 with respect to
the consolidated financial statements of DataWorks Corporation included in the
Annual Report (Form 10-K) for the year ended December 31, 1996, in the Joint
Proxy/Prospectus of DataWorks Corporation that is made a part of the
Registration Statement (Form S-3) for the registration of shares of its common
stock.
ERNST & YOUNG LLP
San Diego, California
September 19, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of DataWorks
Corporation of our report dated April 5, 1996, relating to the financial
statements of DCD Corporation, appearing on page F-3 of the DataWorks
Corporation Annual Report on Form 10-K for the year ended December 31, 1996. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Minneapolis, Minnesota
September 18, 1997
