<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998
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)
<TABLE>
<S> <C>
CALIFORNIA 33-0209937
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
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:
From time to time 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 offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, no par value.... 106,315 $22.41 $2,382,519 $702.84
======================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(c) of the Securities Act of 1933
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 April 29, 1998.
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.
================================================================================
<PAGE> 2
PROSPECTUS
106,315 SHARES
DATAWORKS CORPORATION
COMMON STOCK
------------------------
This Prospectus relates to 106,315 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 certain
shareholders of the Company (the "Selling Shareholders") 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 Shareholders 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 Shareholders 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 Shareholders" and "Plan of
Distribution." No representation is made that any Shares will or will not be
offered for sale. The Shares are being offered for the accounts of the Selling
Shareholders. It is not possible at the present time to determine the price to
the public in any sale of the Shares by the Selling Shareholder and each Selling
Shareholder reserves the right to accept or reject, in whole or in part, any
proposed purchase of Shares. Accordingly, the public offering price and the
amount of any applicable underwriting discounts and commissions will be
determined at the time of such sale by each Selling Shareholder.
None of the proceeds from the sale of the Shares by the Selling
Shareholders 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 Shareholders. The Company has agreed to indemnify
the Selling Shareholders against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
See "Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq National Market
under the Symbol "DWRX." On April 29, 1998, the last sale price for the Common
Stock as reported by the Nasdaq National Market was $22.4375 per share.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------
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 MAY 1, 1998
<PAGE> 3
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. The Common Stock is listed on the
Nasdaq National Market and reports and other information concerning the Company
may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, the Company's Definitive Proxy Statement for its 1998 Annual Meeting
of Shareholders filed pursuant to Rule 14a-6 of the Exchange Act, the Company's
Current Report on Form 8-K dated February 4, 1998 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
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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 General Counsel 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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<PAGE> 5
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 in 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.
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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 most 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. 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; 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. 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, revenues for any quarter
are subject to significant variation, and the Company believes that
period-to-period comparisons of its 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 in the price of
the Company's Common Stock.
Lengthy Sales Cycle. The Company's sales figures for Avante, the Company's
principal product, generally reflect a relatively high amount of revenues per
order. The loss or delay of individual orders for this product, 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 Avante product is
difficult to predict because of the length of the sales cycle for this product,
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 are not offset by increased
revenues, the Company's operating results would be materially adversely
affected.
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
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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 sells its products and services in a highly fragmented market
and its competitors consist of a few large multi-national 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 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.
Introduction of Impresa for Backoffice System. The Company currently
anticipates commencing customer shipments of its Impresa for Backoffice system
in late 1998. Historically, however, the Company has not commenced shipment of
its Impresa for Backoffice product at the anticipated time and there can be no
assurance that the Company will commence such shipments in 1998, or at all.
Furthermore, the Company has limited experience in selling products to customers
in the upper tier of the mid-range manufacturing market
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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
Impresa for Backoffice 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 Impresa for Backoffice
system are timely commenced, there can be no assurance that the Company will be
successful in effectively marketing the Impresa for Backoffice system or that
the Impresa for Backoffice system will achieve market acceptance.
Integration of DataWorks and Interactive Operations. The Company acquired
Interactive Group, Inc. ("Interactive") in September 1997. The process of
rationalizing 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 integration
process will be successful or that the anticipated benefits of the business
combination will be fully realized. The dedication of management resources to
such integration may detract attention from the day-to-day 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.
Integrating the two companies has caused the Company to incur certain additional
expenses, and there can be no assurance 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 $15.6 million in the third quarter of 1997. There can
be no assurance that DataWorks will not incur additional charges in future
quarters to reflect costs associated with the acquisition.
Management of Growth. The Company's business has grown rapidly, both
internally and through acquisitions, with total revenues increasing to $147.0
million for the year ended December 31, 1997 from $116.9 million for the year
ended December 31, 1996. There can be no assurance that the Company will be able
to manage its recent growth 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, 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.
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 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.
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 Impresa for Backoffice
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 Impresa for Backoffice
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
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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.
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 Principal Products. Substantially all of the Company's
revenue is derived from the sale of manufacturing information systems and
related support services. Accordingly, any event that adversely affects fees
derived from sale of such systems, such as competition from other products,
significant flaws in the Company's software products or incompatibility with
third party hardware or software products, negative publicity or evaluation, or
obsolescence of the hardware platforms or software environments in which the
systems run, would have a material adverse effect on the Company's results of
operations. The Company's future financial performance will depend, in
substantial part, on the continued development and introduction of new and
enhanced versions of the Avante product and customer acceptance of such new and
enhanced products.
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 relational database management
systems 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 Ardent
Software, Inc. (formerly Unidata and VMark), Progress and 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"), DEC and Microsoft. The computer hardware and related
equipment sold as part of the Company's turnkey systems are manufactured by
Hewlett-Packard, IBM, DEC and others. There can be no assurance that all of
these entities 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 or
available on terms satisfactory 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 Currency Fluctuations. The Company derived
approximately 17% of its revenues from operations outside North America in 1997
and 1996. 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. The Company does not currently
engage 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
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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 on terms acceptable to
the Company or at all.
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.
Year 2000 Compliance. Significant uncertainty exists in the software
industry concerning the potential effects from the Year 2000 issue associated
with the date codes used in computer software and hardware systems. The Company
believes that all of its existing products are Year 2000 compliant and new
products are being designed to be Year 2000 compliant. Although products have
undergone the Company's normal quality testing procedures, there can be no
assurance that the Company's software products contain all necessary date code
changes. Any failure of the Company's products to perform, including system
malfunctions due to the onset of the calendar year 2000, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company is also currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance, including reviewing what
actions are required to make all software systems used internally Year 2000
compliant as well as actions needed to mitigate vulnerability to problems with
suppliers and other third parties' systems. The Company is assessing the extent
of the necessary modifications to its computer software, and management does not
anticipate that the Company will incur significant operating expenses or be
required to invest heavily in computer system improvements to be Year 2000
compliant. There can be no assurance that such measures will alleviate the Year
2000 problems which could have a material adverse effect upon the Company's
business, operating results and financial condition.
Influence of Existing Shareholders. As of April 24, 1998, the Company's
executive officers, directors and their affiliates beneficially owned
approximately 15% of the Company's outstanding shares of Common Stock. 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
9
<PAGE> 11
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.
10
<PAGE> 12
SELLING SHAREHOLDERS
The following table sets forth the name of each of the Selling
Shareholders, the number of shares of Common Stock owned beneficially by such
Selling Shareholders as of April 24, 1998 and the number of shares of Common
Stock which may be offered by each of them pursuant to this Prospectus. This
information is based upon information provided by each respective Selling
Shareholder. Because the Selling Shareholders may offer all, some or none of
their respective Shares, no definitive estimate as to the number of shares
thereof that will be held by the Selling Shareholders after such offering can be
provided.
Each Selling Shareholder represented in the agreement under which he, she
or it acquired the Shares that he, she or it was acquiring the Shares for
investment and not with a view to, or for resale in connection with, any
distribution thereof. The Company has agreed to register the Shares for resale.
Accordingly, the Company has filed with the Commission a Registration Statement
on Form S-3, of which this Prospectus forms a part, with respect to, among other
things, the resale of the Shares from time to time 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 prevailing market prices at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company 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 the earlier to occur of (i) the sale
pursuant thereto of all Shares offered hereby or (ii) April 22, 1999.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED AFTER
PRIOR TO OFFERING(1) NUMBER OF OFFERING(1)(3)
--------------------- SHARES --------------------
SELLING SHAREHOLDERS NUMBER PERCENT(2) BEING OFFERED NUMBER PERCENT
-------------------- ------- ----------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Michael Bayer............................... 146 * 146 0 --
Claire Berman............................... 2,338 * 2,338 0 --
James Cerra................................. 243 * 243 0 --
Eric Chapman................................ 146 * 146 0 --
Ralph W. Conway, as Trustee of the Alexandra
M. Conway Trust, U/A/D 12/92.............. 1,753 * 1,753 0 --
Ralph W. Conway, as Trustee of the Danielle
Caitlin Conway Trust, U/A/D 12/92......... 1,753 * 1,753 0 --
Edyth Conway................................ 7,017 * 7,017 0 --
Ralph W. Conway, as Trustee of the Evan D.
Conway Trust, U/A/D 12/92................. 1,753 * 1,753 0 --
Evan D. Conway, as Trustee of the Michenna
Caroline Conway Trust..................... 1,753 * 1,753 0 --
Ralph Conway................................ 1,218 * 1,218 0 --
Kathryn C. Dimiduk, as Trustee of the Ralph
W. Conway Trust, U/A/D 12/92.............. 1,753 * 1,753 0 --
Richard Conway.............................. 13,838 * 13,838 0 --
Evan D. Conway, as Trustee of the Tyler
Richard Conway Trust, U/A/D 10/26/93...... 1,753 * 1,753 0 --
Kathryn C. Dimiduk, as Trustee of the
Jeffrey T. Dimiduk Trust, U/A/D 12/92..... 1,753 * 1,753 0 --
Evan D. Conway, as Trustee of the Kathryn C.
Dimiduk Trust, U/A/D 12/92................ 1,753 * 1,753 0 --
Kathryn C. Dimiduk, as Trustee of the Sarah
E. Dimiduk Trust, U/A/D 12/92............. 1,753 * 1,753 0 --
Kathryn C. Dimiduk, as Trustee of the Thomas
G. Dimiduk Trust, U/A/D 12/92............. 1,753 * 1,753 0 --
Deborah Dixon, as Custodian for Geoffrey
Dixon, NYUTMA............................. 1,608 * 1,608 0 --
Deborah Dixon, as Custodian for Kaitlin
Dixon, NYUTMA............................. 1,608 * 1,608 0 --
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED AFTER
PRIOR TO OFFERING(1) NUMBER OF OFFERING(1)(3)
--------------------- SHARES --------------------
SELLING SHAREHOLDERS NUMBER PERCENT(2) BEING OFFERED NUMBER PERCENT
-------------------- ------- ----------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Dora Flash.................................. 1,032 * 1,032 0 --
Thomas Foulkes.............................. 1,032 * 1,032 0 --
Frank J. Garofalo........................... 4,254 * 4,254 0 --
Genevieve M. Hall........................... 74 * 74 0 --
Kenneth Hammer.............................. 1,032 * 1,032 0 --
Joan Hass................................... 2,580 * 2,580 0 --
Kevin Healey................................ 486 * 486 0 --
William David Maxwell, as Custodian for
Claire Maxwell, NYUTMA.................... 1,608 * 1,608 0 --
William David Maxwell, as Custodian for
Greggory Maxwell, NYUTMA.................. 1,608 * 1,608 0 --
William David Maxwell, as Custodian for Leah
Maxwell, NYUTMA........................... 1,608 * 1,608 0 --
William Maxwell............................. 18,857 * 18,857 0 --
John McClain................................ 243 * 243 0 --
Judith Miskell.............................. 1,032 * 1,032 0 --
Whitney Miskell............................. 1,032 * 1,032 0 --
Mark Nassi.................................. 146 * 146 0 --
Amy St. Clair Olt........................... 1,056 * 1,056 0 --
Catherine Olt Orphanos...................... 1,056 * 1,056 0 --
Elizabeth Allan Olt......................... 1,226 * 1,226 0 --
Marjorie Clark Olt Trust, U/A/D 3/6/95...... 1,226 * 1,226 0 --
T. Olt...................................... 2,404 * 2,404 0 --
Bruce Otto.................................. 1,032 * 1,032 0 --
Stephen Payne............................... 34 * 34 0 --
Gil N. Perry................................ 2,127 * 2,127 0 --
Gilbert Rankin.............................. 1,301 * 1,301 0 --
Donald Read................................. 1,201 * 1,201 0 --
Ann Rogers.................................. 516 * 516 0 --
John Rogers................................. 516 * 516 0 --
Andrew Mory Schultz......................... 2,064 * 2,064 0 --
Mary Mory Schultz........................... 243 * 243 0 --
Seymour Smidt............................... 1,548 * 1,548 0 --
Suzan Schultz Tapscott...................... 516 * 516 0 --
Douglas Thomas.............................. 146 * 146 0 --
Steven Worona............................... 1,218 * 1,218 0 --
David Brooke, as Administrator of the 625
Ridge Road E. Trust No. One............... 297 * 297 0 --
David Brooke, as Administrator of the 625
Ridge Road E. Trust No. Two............... 297 * 297 0 --
Cornell University.......................... 1,364 * 1,364 0 --
David L. Brooke Self Declaration Trust...... 105 * 105 0 --
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED AFTER
PRIOR TO OFFERING(1) NUMBER OF OFFERING(1)(3)
--------------------- SHARES --------------------
SELLING SHAREHOLDERS NUMBER PERCENT(2) BEING OFFERED NUMBER PERCENT
-------------------- ------- ----------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Genevieve M. Hall and C. Robert Hall, as
Trustees FBO Genevieve M. Trust, U/A/D
6/17/91................................... 958 * 958 0 --
Suzan Schultz Tapscott, as Custodian for
Amanda Schultz Tapscott................... 516 * 516 0 --
Suzan Schultz Tapscott, as Custodian for
Emma Schultz Tapscott..................... 516 * 516 0 --
Suzan Schultz Tapscott, as Custodian for
Mary Schultz Tapscott..................... 516 * 516 0 --
</TABLE>
- ---------------
* Less than 1%
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares shown as beneficially owned
by them, subject to community property laws where applicable.
(2) Applicable percentage of ownership is based on 14,218,159 shares of Common
Stock outstanding on April 24, 1998.
(3) Assumes the sale of all shares offered hereby, should each respective
Selling Shareholder elect to do so.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders 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. The Selling Shareholders 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 Shareholders 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 Shareholders will act independently of the
Company in making decisions with respect to the timing, manner and size of each
sale of the Shares.
The Selling Shareholders 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, and any discount, commission or concession
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.
All costs associated with the registration of the Shares being offered
hereunder will be paid by the Company. The Company has agreed to indemnify the
Selling Shareholders against certain liabilities, including liabilities under
the Securities Act.
There can be no assurance the Selling Shareholders will sell all or any of
the shares of Common Stock offered hereunder.
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").
13
<PAGE> 15
EXPERTS
The consolidated financial statements of DataWorks Corporation at December
31, 1997 and 1996 and for each of the three years in the period ended December
31, 1997, incorporated herein by reference and appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, 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 the year
ended December 31, 1995, is based in part on the report of Price Waterhouse LLP,
independent accountants. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
14
<PAGE> 16
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....................................... $ 703
Legal fees and expenses.................................... 3,000
Accounting fees and expenses............................... 3,000
Printing and Engraving..................................... 1,200
Transfer agent and registrar fees.......................... 2,500
-------
Total............................................ $10,403
=======
</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> 17
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> 18
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.
II-3
<PAGE> 19
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 30th day of
April, 1998.
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 April 30, 1998
- ----------------------------------------------------- Officer, Chairman of the Board
Stuart W. Clifton and Director
(Principal Executive Officer)
/s/ NORMAN R. FARQUHAR Executive Vice President, Chief April 30, 1998
- ----------------------------------------------------- Financial Officer and Director
Norman R. Farquhar (Principal Financial Officer)
/s/ RICK E. RUSSO Vice President, Finance and April 30, 1998
- ----------------------------------------------------- Secretary (Principal Accounting
Rick E. Russo Officer)
/s/ NATHAN W. BELL Director April 30, 1998
- -----------------------------------------------------
Nathan W. Bell
/s/ WILLIAM P. FOLEY II Director April 30, 1998
- -----------------------------------------------------
William P. Foley II
/s/ RONALD S. PARKER Director April 30, 1998
- -----------------------------------------------------
Ronald S. Parker
/s/ TONY N. DOMIT Director April 30, 1998
- -----------------------------------------------------
Tony N. Domit
</TABLE>
II-4
<PAGE> 20
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]
May 1, 1998
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 106,315 shares
of the Company's Common Stock to be sold by certain shareholders, as described
in the Registration Statement (the "Shares").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company's Articles of Incorporation and Bylaws, as
amended, 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 Shares are 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 to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of DataWorks
Corporation for the registration of shares of its common stock and to the
incorporation by reference therein of our report dated January 26, 1998 with
respect to the consolidated financial statements of DataWorks Corporation
included in its Annual Report (Form 10-K) for the year ended December 31, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
April 29, 1998
<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, 1997. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Minneapolis, Minnesota
April 29, 1998
