SOFTWORKS INC, S-1/A, 1999-06-03

SOFTWORKS INC
S-1/A, 1999-06-03
PREPACKAGED SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999

REGISTRATION NO. 333-77565
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

SOFTWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7372 52-1092916
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

5845 RICHMOND HIGHWAY, SUITE 400
ALEXANDRIA, VIRGINIA 22303
(703) 317-2424
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JUDY G. CARTER
CHIEF EXECUTIVE OFFICER
SOFTWORKS, INC.
5845 RICHMOND HIGHWAY, SUITE 400
ALEXANDRIA, VIRGINIA 22303
(703) 317-2424
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
DAVID H. LIEBERMAN, ESQ. IRA A. GREENSTEIN, ESQ.
BLAU, KRAMER, WACTLAR & LIEBERMAN, P.C. MORRISON & FOERSTER LLP
100 JERICHO QUADRANGLE, SUITE 225 1290 AVENUE OF THE AMERICAS
JERICHO, NEW YORK 11753 NEW YORK, NEW YORK 10104
TELEPHONE: (516) 822-4820 TELEPHONE: (212) 468-8000
FACSIMILE: (516) 822-4824 FACSIMILE: (212) 468-7900
</TABLE>

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: as soon
as practicable after this Registration Statement becomes effective.
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, please check the following box. [ ]
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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION DATED MAY 13, 1999

3,500,000 SHARES

[SOFTWORKS LOGO]
SOFTWORKS

COMMON STOCK

We are selling 1,000,000 shares of common stock and the selling
stockholders are selling 2,500,000 shares of common stock. We will not receive
any of the proceeds from the sale of the shares being sold by the selling
stockholders. Our common stock is traded on The Nasdaq National Market under the
symbol SWRX.

The underwriters have an option to purchase a maximum of 525,000 additional
shares to cover over-allotments of shares.

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 4.

<TABLE>
<CAPTION>
PER
SHARE TOTAL
------ --------
<S> <C> <C>
Public offering price....................................... $ $

Underwriting discounts...................................... $ $

Proceeds, before expenses, to SOFTWORKS, Inc................ $ $

Proceeds to selling stockholders............................ $ $
</TABLE>

Delivery of the shares of common stock will be made on or about
, 1999, against payment in immediately available funds.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

SOUNDVIEW TECHNOLOGY GROUP
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN
RAUSCHER INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.

PROSPECTUS DATED , 1999.
<PAGE> 3

[ARTWORK]
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 4
Special Note Regarding Forward-Looking
Statements.......................... 8
Use of Proceeds....................... 8
Dividend Policy....................... 8
Price Range of Common Stock........... 9
Capitalization........................ 9
Selected Consolidated Financial
Data................................ 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 11
Business.............................. 23
Management............................ 31
</TABLE>

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Certain Transactions.................. 36
Principal and Selling Stockholders.... 38
Description of Capital Stock.......... 40
Shares Eligible For Future Sale....... 42
Underwriting.......................... 43
Legal Matters......................... 44
Experts............................... 44
Available Information................. 44
Index to Consolidated Financial
Statements.......................... F-1
Report of Independent Public
Accountants......................... F-2
Notes to Consolidated Financial
Statements.......................... F-7
</TABLE>

------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.

SOFTWORKS and Catalog Solution are our registered trademarks. This
prospectus also includes other registered and unregistered trademarks and
service marks which belong to us and other companies. All trademarks and service
marks which appear in this prospectus that do not relate to our products and
services are the property of their respective holders.

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<PAGE> 5

PROSPECTUS SUMMARY

This summary is not complete and may not contain all of the information
that you should consider before you invest in our common stock. To understand
this offering fully, you should read the entire prospectus carefully, including
the risk factors and financial statements. Unless we indicate otherwise, the
information in this prospectus assumes no exercise of the underwriters'
over-allotment option or any other options or warrants.

SOFTWORKS, INC.

MARKET TRENDS

Our products serve primarily the storage resource management market, which
GartnerGroup, an information technology research and consulting firm, estimates
will grow at a compound annual rate of approximately 44% through 2002. The
overall complexity of information technology infrastructures has increased
because mainframes, UNIX and NT platforms must co-exist to satisfy a variety of
business application requirements across multiple platforms. In addition to the
increasing complexity of the multi-platform information technology environment,
the need to store increasing amounts of data, caused in part by the expanding
use of the Internet, is driving the need for software solutions such as ours
that provide platform-independent, enterprise-wide storage and performance
management.

OUR PRODUCTS

Our products integrate a proprietary combination of core technologies and a
unique design strategy and development methodology which enable our software
products to provide immediate performance improvements and cost savings. We call
this combination "SOFTWORKS SavanTechnology" or "SST." We believe that SST
differs from conventional monitoring and reporting systems management by
providing proactive alerts, programmed responses and automated corrective
actions. Products employing SST are designed to address the weaknesses and
exploit the strengths of operating systems, such as OS/390, UNIX or NT, and
access methods found in multiple processing environments.

OUR STRATEGY

We are capitalizing on our established market position in the mainframe
environment in order to become a leading provider of storage management and
performance management products for multi-platform environments. We also plan to
offer additional systems management products and services for both the mainframe
and multi-platform environments. Our strategy is to:

- capitalize on increased demand for storage;

- enhance and expand our current product offerings;

- expand domestic and international sales channels;

- sell additional products to our customers; and

- pursue strategic partnerships, alliances and acquisitions.

Before 1998, our products addressed only the storage and performance
management requirements of mainframe operating systems. In 1998, we extended our
product family by introducing UNIX and NT-based storage management products. In
1999, we plan to introduce additional storage management products for Oracle,
EMC Symmetrix, IBM RAMAC, and StorageTek Tape Silo. We have granted over
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<PAGE> 6

6,400 licenses for use of our products at over 2,000 installations worldwide,
including installations at 87% of the Fortune 100 and 60% of the Fortune 500
companies. In addition to selling additional products to our existing customers,
during 1998 we added 50 new customers. Our customers operate in a variety of
industries, such as financial services, healthcare, manufacturing and
telecommunications, and include Citicorp, GTE Data Services, NationsBank,
PaineWebber, Prudential Service Company, Sprint, State Farm Mutual Auto
Insurance and Wal-Mart. We sell our products through a global direct sales force
and a network of international distributors and resellers.

ABOUT US

We incorporated in Maryland in July 1977 and reincorporated in Delaware in
May 1998. Our principal offices are located at 5845 Richmond Highway,
Alexandria, Virginia 22303 and our telephone number is (703) 317-2424.

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us................... 1,000,000 shares

Common stock offered by the selling 2,500,000 shares
stockholders...............................

Total common stock offered................... 3,500,000 shares

Common stock to be outstanding after the 17,132,984 shares
offering...................................

Use of proceeds.............................. For working capital and general corporate
purposes.

Nasdaq National Market symbol................ SWRX
</TABLE>

2
<PAGE> 7

SUMMARY FINANCIAL INFORMATION

We present the following consolidated financial data for the fiscal years
ended December 31, 1996, 1997 and 1998 from our audited financial statements.
The consolidated financial data for the three months ended March 31, 1998 and
1999 is derived from our unaudited financial statements. Investors should read
"Management's Discussion and Analysis of Operations," beginning on page 12 to
obtain a more complete picture, as well as our consolidated financial statements
and related notes beginning on page F-1. Other financial information appears
elsewhere in this prospectus. All numbers are in thousands, with the exception
of per share amounts. The "As Adjusted" column reflects our sale of 1,000,000
shares of common stock at an assumed offering price of $14.00 per share, after
deducting the underwriting discount and our offering expenses.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.......................... $16,525 $26,770 $43,749 $ 6,596 $10,258
Gross margin........................... 15,381 25,135 39,499 5,632 9,493
Net income (loss)...................... 792 786 2,957 (767) 93
======= ======= ======= ======= =======
Basic and diluted net income (loss) per
share............................... $ 0.06 $ 0.06 $ 0.20 $ (0.05) $ 0.01
======= ======= ======= ======= =======
Basic weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 15,973
======= ======= ======= ======= =======
Diluted weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 16,380
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1999
----------------------
ACTUAL AS ADJUSTED
------- -----------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 6,759 $18,989
Working capital........................................... 13,508 25,738
Total assets.............................................. 54,492 66,722
Long term debt, net of current portion.................... 2,401 2,401
Total stockholders' equity................................ 18,781 31,011
</TABLE>

3
<PAGE> 8

RISK FACTORS

You should carefully consider the following risks, as well as the other
information in this prospectus, before deciding to invest in our common stock.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY ON A QUARTERLY BASIS.

In the past, our operating results have fluctuated significantly from
quarter to quarter, and we expect this trend to continue. Our operating results
may also fluctuate on an annual basis. Factors which affect our operating
results include:

- the size and timing of customer orders;

- the timing of renewals or the failure of existing customers to renew
their maintenance agreements with us when their current agreements
expire;

- changes in our sales cycle;

- the timing of new product announcements and introductions of new products
by us and our competitors;

- our ability to develop, introduce and market new products and product
enhancements;

- market acceptance of our products;

- deferrals of customer orders in anticipation of new products or product
enhancements or service offerings;

- changes in contract terms (including terms affecting the timing of
recognition of license and maintenance revenue) and the rate at which
such changes are made;

- our ability to control costs, including the hiring of new employees;

- changes in our management team; and

- fluctuating economic conditions.

Many of these factors are beyond our control. In the past we have
recognized a substantial portion of our revenues in the last month of the
quarter. If this trend continues, any failure or delay to fill orders by the end
of a particular quarter will have an adverse effect on our results of
operations.

OUR RECENT GROWTH HAS CAUSED A STRAIN ON OUR MANAGEMENT AND OTHER RESOURCES.

In recent periods, we have grown rapidly. The speed of this growth has
placed a significant strain on our resources, and we expect this trend to
continue. To accommodate this growth, we have implemented a variety of new or
upgraded operational and financial systems, procedures, and controls, and we
have improved our accounting and other internal management systems. In 1998, the
number of our employees increased by 43 and in the first quarter of 1999 it
increased by 24. We added 43 employees in 1998 and added 24 employees in the
first quarter of 1999. This adds to management responsibilities. We also plan to
increase our sales, marketing and software development personnel. This may
require substantial management effort and may not be successful. If we fail to
improve our operational, financial and management information systems, or to
hire, train, motivate or manage our employees, our business, financial condition
and results of operations could suffer.

OUR PLANNED EXPANSION OF INTERNATIONAL OPERATIONS MAY ADVERSELY AFFECT OUR
FINANCIAL RESULTS.

In order to further increase sales, we will continue to expand our
marketing, direct and third party sales and support channels outside the United
States, particularly in Europe and the Asia-Pacific region. We have limited
experience in marketing our products outside the United States, and we may not
be able

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to increase sales in Europe or elsewhere. International business activities
could be limited or disrupted by any of the following:

- the imposition of governmental controls;

- restrictions on the export of technology;

- currency exchange fluctuations;

- political instability;

- trade restrictions;

- changes in tariffs;

- variations in the protection of intellectual property rights; and

- additional expenses and risks associated with conducting operations in
geographically diverse locations, and in dealing with customers who speak
different languages and have diverse cultural approaches to the conduct
of business.

In addition, as we expand our international operations, we must recruit,
train and manage qualified personnel, including sales agents. Our failure to
attract and retain qualified personnel could have a material adverse effect on
our business, operating results or financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 12 and "Business -- Sales, Distribution and Marketing" on page 27.

CHANGES IN TECHNOLOGY MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS.

The markets for our products change rapidly because of technological
innovation, changes in customer requirements, declining prices, and evolving
industry standards, among other factors. New products and new technology often
render existing information services or technology infrastructure obsolete,
excessively costly, or otherwise unmarketable. As a result, our success depends
on our ability to timely innovate and integrate new technologies into our
current products and to develop new products. We cannot guarantee that we will
successfully integrate new technologies into our products or develop new
products in a timely manner.

Advances in technology also require us to commit substantial resources to
acquiring and applying new technologies for use in our operations. We must
continually commit resources to train our personnel to use these new
technologies and maintain the compatibility of existing software systems with
these new technologies. We cannot be sure that we will be able to continue to
commit the resources necessary to refresh our technology infrastructure at the
rate demanded by our markets.

In addition, corporate computing environments have increasingly
transitioned from the use of mainframe systems to open, complex networks of
diverse systems. Prior to 1998, our products addressed only the storage and
performance management requirements of mainframe operating systems. In 1998, we
introduced UNIX and NT-based storage and performance products for open systems.
We cannot be sure that the products we develop will achieve market acceptance.

CONFLICTS MAY EXIST IN OUR RELATIONSHIP WITH COMPUTER CONCEPTS CORPORATION.

After the sale of the common stock in this offering, Computer Concepts will
beneficially own 42.1% of our outstanding common stock. As the holder of a large
block of stock, Computer Concepts may have the ability to control or influence
certain fundamental matters affecting us. Under certain circumstances, Computer
Concepts' financial condition may influence our decisions, since they own a
large block of our stock. Our ongoing relationship with Computer Concepts may
result in conflicts of interest, even though they are not engaged in competing
businesses.

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WE DEPEND ON CERTAIN KEY PERSONNEL.

Our future success depends in part on our ability to retain qualified
management, technical, sales and support personnel for our operations.
Competition for these personnel is intense. Specifically, the success of our
business is dependent in substantial part upon the abilities of James A.
Cannavino, our Chairman of the Board, Judy G. Carter, our President and Chief
Executive Officer and Claude R. Kinsey, III, our Vice President and Chief
Technology Officer. Although we have an employment agreement with each of these
officers, we cannot be sure that they will stay on as employees or continue to
provide services to us. The loss of services of any of these officers could
likely have a material adverse effect on us. We maintain key person life
insurance in the amount of $5 million for both Mr. Cannavino and Ms. Carter, for
which we receive the proceeds.

OUR STOCK PRICE MAY BE VOLATILE.

The stock market in general, and the market for shares of technology
companies in particular, have experienced extreme price fluctuations, often
unrelated to the operating performance of the affected companies. Many
technology companies, including us, have experienced dramatic volatility in the
market prices of their common stock. If our future operating results are below
the expectations of stock market analysts and investors, our stock price may
decline. We cannot be certain that the market price of our common stock will
remain stable in the future. Our stock price may undergo fluctuations that are
material, adverse and unrelated to our performance.

OUR SUCCESS DEPENDS UPON PROTECTING OUR INTELLECTUAL PROPERTY.

Our success depends upon our confidential and proprietary software
technology and other intellectual property rights. We do not currently have any
patents or pending patent applications, and we rely principally on a combination
of:

- trade secret, copyright and trademark laws;

- nondisclosure, use restriction and other contractual restrictions and
agreements; and

- certain technical measures to ensure the protection of our technology.

Trade secret, copyright and trademark laws provide limited protection.
These laws, in combination with the steps we take to protect our proprietary
rights, may not adequately prevent misappropriation of those rights. Also, such
protections do not preclude our competitors from independently developing
products similar or superior to our products and technologies. In addition,
effective protection of copyrights, trade secrets, trademarks, and other
proprietary rights may be unavailable or limited in certain foreign countries in
which we do business. In furtherance of the development of our services or
products, we may need to acquire licenses for intellectual property to avoid
infringement of a third party's product. Such a license may not be available on
commercially reasonable terms, if at all. Our failure or inability to protect
our proprietary technology or to obtain appropriate licenses could have a
material adverse effect on our business, operating results or financial
condition.

OUR DEPENDENCE ON PROPRIETARY TECHNOLOGY CREATES THE POTENTIAL FOR RISK OF
ERRORS OR FAILURES IN OUR SOFTWARE PRODUCTS.

Our products are very complicated and may contain errors, failures or bugs.
In particular, the wide variety of standard and non-standard computer
configurations and the occurrence of errors, failures and bugs in third party
platforms and applications make pre-release testing for programming or
compatibility errors very difficult, time-consuming and expensive. Furthermore,
no amount of testing can guarantee that products which we ship commercially will
not contain errors, failures or bugs. Errors, failures or bugs in our products
could result in adverse publicity, product returns, loss of or delay in market
acceptance of our products or claims by the customer or others against us.
Alleviating those problems, if they occur, could require us to make significant
expenditures of capital and resources and could cause interruptions, delays

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or cessation of service to our customers. Errors, failures or bugs in our
products could have a material adverse effect on our business, operating results
or financial condition.

POSSIBLE ACQUISITIONS MAY DISRUPT OUR BUSINESS.

In the normal course of our business, we evaluate potential acquisitions of
businesses, products and technologies that could complement or expand our
business. In connection with any acquisition we do not know whether:

- we will be able to successfully negotiate the terms of the acquisition;

- we will be able to successfully finance the acquisition;

- we will be able to successfully integrate an acquired business, product,
or technology into our existing business or products in order to fully
benefit from an acquisition; or

- we will be able to retain key personnel previously associated with the
acquired businesses.

Negotiating potential acquisitions and integrating acquired businesses
could divert management's time and resources. We may use proceeds from the
offering to consummate a potential acquisition. In addition, completing future
mergers or acquisitions may require us to issue a significant number of shares
of common stock or incur significant additional indebtedness, which could dilute
our earnings or the book value per share of our common stock.

YEAR 2000 ISSUES MAY ADVERSELY AFFECT OUR BUSINESS.

The Year 2000 issue is the result of computer programs using two digits
rather than four digits to define the applicable year. Any software or hardware
using date-sensitive programs or embedded chips may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. Year 2000 issues may also affect
our customers' purchasing plans since they may need to expend significant
resources to correct their existing systems. As a result, our customers may have
reduced funds available to purchase our products.

We cannot ascertain with complete certainty that all Year 2000 problems
affecting our software products have been identified or corrected due to the
complexity of these products and the normal interface with a wide range of third
party vendor products and computer systems which are not under our control. If
any of our products malfunction due to the onset of Year 2000, customers could
bring claims against us, which could have a material adverse effect on our
business, results of operations or financial condition. Moreover, our customers
could choose to convert to other Year 2000-compliant products in order to avoid
such malfunctions, which could have a material adverse effect on our business,
results of operations or financial condition.

Further, we believe that certain companies have purchased additional
storage capacity in order to address their Year 2000 problems, which has
required them to also purchase storage management products such as ours.
Accordingly, once these companies have satisfactorily addressed their Year 2000
problems, they may not be required to purchase additional storage capacity or
storage management products.

Our failure to timely address Year 2000 problems in our internal systems
would result in disruptions of operations which would adversely impact our
business operations.

We are currently developing contingency plans, but have not yet determined
the extent of our exposure with respect to the Year 2000 issue. We cannot be
certain that our contingency plans, if implemented, will be adequate to minimize
disruptions to our business.

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OUR CHARTER PROVISIONS AND STATUTORY LAW MAY INHIBIT CHANGES IN CONTROL OF OUR
COMPANY.

Our certificate of incorporation and bylaws contain provisions which may
discourage takeover attempts and hinder a merger, tender offer or proxy contest
targeting us, including transactions in which stockholders might receive a
premium for their shares. This may limit your ability as a stockholder to
approve a transaction that you may think is in your best interest.

These provisions could reduce the price that certain investors might be
willing to pay in the future for shares of common stock or preferred stock.
Moreover, although our ability to issue preferred stock may provide flexibility
in connection with possible acquisitions and other corporate purposes, such
issuance may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, a majority of our voting stock.

Furthermore, we may in the future adopt other measures that may delay,
defer or prevent a change in control of SOFTWORKS. We may adopt some of these
measures without any further vote or action by stockholders.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements and information
relating to SOFTWORKS. We generally identify forward-looking statements in this
prospectus using words like "believes," "intends," "expects," "may," "will,"
"should," "plan," "projected," "contemplates," "anticipates," or similar
statements. These statements are based on our beliefs as well as assumptions we
made using information currently available to us. Because these statements
reflect our current views concerning future events, these statements involve
risks, uncertainties and assumptions. Our actual future results may differ
significantly from the results we discuss in these forward-looking statements.

USE OF PROCEEDS

We expect to receive approximately $12,230,000 of the net proceeds from the
sale of the 1,000,000 shares of common stock offered with this prospectus (after
deducting underwriting discounts and estimated offering expenses). We will not
receive any proceeds from the sale of shares by the selling stockholders.

We intend to use the net proceeds of this offering primarily for additional
working capital and general corporate purposes, including hiring of additional
personnel and international expansion. In addition, we may make one or more
acquisitions of complementary technologies, products or businesses which broaden
or enhance our current product offerings.

Management will retain broad discretion in the allocation of the net
proceeds from this offering. Pending the uses described above, the net proceeds
will be invested in interest-bearing, investment-grade securities, U.S.
Government securities, money market investments and short-term, interest-bearing
deposits in major banks. See "Risk Factors -- Possible acquisitions may disrupt
our business."

We expect the net proceeds we receive from this offering to be adequate to
fund our working capital needs for at least the next twelve months. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock and
currently do not intend to pay cash dividends in the foreseeable future. We
intend to retain earnings, if any, to finance the development and expansion of
our business. In addition, we are a party to a voting trust agreement which
limits the payment of dividends. See "Certain Transactions -- Voting Trust
Agreement." Payment of future dividends on our common stock will be subject to
the discretion of our board of directors and will be contingent upon future
earnings, our financial condition, capital requirements, general business
conditions and other factors. Therefore, dividends on our common stock may never
be paid.
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PRICE RANGE OF COMMON STOCK

Our common stock has traded on The Nasdaq National Market under the symbol
"SWRX" since our initial public offering on August 4, 1998. Prior to that date,
there was no public market for our common stock. The following table sets forth,
for the periods indicated, the high and low sale prices per share of our common
stock, as reported by The Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year 1998
Third Quarter 1998 (from August 4, 1998).................. $ 7.13 $ 3.13
Fourth Quarter 1998....................................... $ 7.63 $ 3.38
Fiscal Year 1999
First Quarter 1999........................................ $14.88 $ 5.38
Second Quarter 1999 (June 1, 1999)........................ $16.88 $ 9.50
</TABLE>

On June 1, 1999 the reported last sale price of our common stock on The
Nasdaq National Market was $11.00 per share. As of June 1, 1999 there were
approximately 37 stockholders of record of our common stock.

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999: (1)
on an actual basis, and (2) as adjusted to reflect our sale of the 1,000,000
shares of common stock offered by this prospectus at an assumed price of $14.00
per share. You should note that the information in this table is unaudited.

<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, net of current portion...................... $ 2,401 $ 2,401
Preferred stock, $0.001 par value, 2,000,000 shares
authorized; none issued or outstanding.................... -- --
Common stock, $0.001 par value, 150,000,000 shares
authorized; 15,973,000 shares issued and outstanding
(actual); 16,973,000 shares issued and outstanding (as
adjusted)................................................. 16 17
Additional paid-in capital.................................. 15,201 27,430
Retained earnings........................................... 3,628 3,628
Accumulated other comprehensive loss........................ (64) (64)
------- -------
Total stockholders' equity........................ $18,781 $31,011
------- -------
Total capitalization.............................. $21,182 $33,412
======= =======
</TABLE>

9
<PAGE> 14

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for the four fiscal
years ended December 31, 1995, 1996, 1997 and 1998 are derived from our audited
financial statements. The data for the fiscal year ended December 31, 1994 are
derived from our unaudited consolidated financial statements. The financial
information as of March 31, 1999 and for the three months ended March 31, 1998
and 1999 has been derived from our unaudited financial information, which in
management's opinion, includes all normal recurring adjustments necessary for a
fair presentation of that financial information. This data should be read in
conjunction with our consolidated financial statements, related notes, and other
financial information included elsewhere in this prospectus. See "Index to
Consolidated Financial Statements" on page F-1. All numbers are in thousands,
except per share amounts.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
----------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Software licenses............................ $ 4,438 $ 5,718 $ 8,611 $16,633 $31,725 $ 3,736 $ 6,730
Services..................................... 5,011 5,908 7,914 10,137 12,024 2,860 3,528
------- ------- ------- ------- ------- ------- -------
Total revenue......................... 9,449 11,626 16,525 26,770 43,749 6,596 10,258
Cost of revenue (exclusive of amortization and
depreciation shown separately below except
for amortization of software development
costs):
Software licenses............................ 223 432 424 580 1,843 439 216
Services..................................... 360 660 720 1,055 2,407 525 549
------- ------- ------- ------- ------- ------- -------
Total cost of revenue................. 583 1,092 1,144 1,635 4,250 964 765
------- ------- ------- ------- ------- ------- -------
Gross margin................................... 8,866 10,534 15,381 25,135 39,499 5,632 9,493
Operating expenses:
Sales and marketing.......................... 2,898 4,262 6,161 12,463 19,666 3,395 5,012
General and administrative................... 1,970 1,619 2,217 2,791 4,575 1,102 1,072
Amortization and depreciation................ 861 2,088 1,596 1,972 2,169 490 710
Research and development..................... 2,395 3,935 3,911 6,093 7,800 1,618 2,500
Impairment on goodwill....................... -- 1,320 -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total operating expenses.............. 8,124 13,224 13,885 23,319 34,210 6,605 9,294
------- ------- ------- ------- ------- ------- -------
Operating income (loss)........................ 742 (2,690) 1,496 1,816 5,289 (973) 199
Other expenses................................. -- -- -- -- 252 -- 46
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations before income
taxes........................................ 742 (2,690) 1,496 1,816 5,037 (973) 153
Provision for (benefit from) income tax........ 260 (979) 704 1,030 2,080 (206) 60
------- ------- ------- ------- ------- ------- -------
Net income (loss)..................... $ 482 $(1,711) $ 792 $ 786 $ 2,957 $ (767) $ 93
======= ======= ======= ======= ======= ======= =======
Basic and diluted net income (loss) per
share........................................ $ 0.03 $ (0.12) $ 0.06 $ 0.06 $ 0.20 $ (0.05) $ 0.01
======= ======= ======= ======= ======= ======= =======
Basic weighted average shares outstanding...... 14,083 14,083 14,083 14,083 14,860 14,083 15,973
======= ======= ======= ======= ======= ======= =======
Diluted weighted average shares outstanding.... 14,083 14,083 14,083 14,083 14,860 14,083 16,380
======= ======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
----------- ------- ------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 246 $ 167 $ 1,735 $ 360 $ 6,003 $ 6,759
Working capital.................................... (2,098) (3,516) (824) (775) 11,879 13,508
Total assets....................................... 12,633 12,766 22,543 35,683 58,352 54,492
Long-term debt, net of current portion............. 135 465 351 1,294 1,401 2,401
Total stockholders' equity......................... 6,214 4,563 5,355 6,087 18,685 18,781
</TABLE>

10
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We develop, market, license and support storage and performance management
software products. Our products are designed to optimize system and application
performance and the management of multi-platform storage resources in order to
maximize the value of purchased hardware and software. Our products address
these issues for organizations that employ enterprise-scale servers, OS/390,
UNIX, and Microsoft(R) Windows NT(R) computing environments. We have over 6,400
licenses of our products in use at over 2,000 installations worldwide. Our
products are installed at 87% of the Fortune 100 and 60% of the Fortune 500
companies. During 1998, we sold additional products to our existing customers
and added 50 new customers.

Our revenue consists of revenue from licensing our software products,
revenue from the maintenance and support of our software products and
professional services relating to information technology ("IT") consulting.
Generally, we are required by our license agreement to provide maintenance and
enhancements during a stated maintenance period. "Maintenance" includes
diagnosis and correction of errors in the current version of the product and
telephone consultation to discuss general support questions. "Enhancements"
include upgrades to the products as they become available and new releases of
products, except for those which are sold as charged options to our general
customer base. Substantially all of our license agreements are perpetual.
Maintenance agreements are typically for a term of one year and renew
automatically upon the payment by the customer of an annual maintenance fee.

We recognize revenue from software licenses in accordance with the American
Institute of Certified Public Accountants Statement of Position 97-2, "Software
Revenue Recognition," Statement of Position 98-4, "Deferral of the Effective
Date of a Provision of SOP 97-2" and Statement of Position 98-9, "Modification
of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions." Revenue from the sale of perpetual and term software licenses is
recognized, net of provisions for returns, at the time of delivery and
acceptance of software products by the customer. We provide creditworthy
customers with the option to pay for license fees in one lump sum or in equal
annual installments over extended periods of time, generally one to five years.
Through 1998, we did not consider sales contracts with amounts due for periods
greater than one year from delivery fixed and determinable, and accordingly,
recognized such amounts as revenue when they became due. Beginning January 1,
1999, for contracts with payment terms of three years or less, we will recognize
the entire amount of the license revenue at the time of delivery and acceptance
by the customer. This change is being made since we have established a history
which demonstrates that we do not provide any concessions to customers with whom
we have these extended payment arrangements. For contracts with amounts due for
periods greater than three years, we do not consider such sales fixed and
determinable, and accordingly, recognize such amounts as revenue when they
become due. Maintenance revenue that is bundled with an initial license fee is
deferred and recognized ratably over the maintenance period. Amounts deferred
for maintenance are based on the fair value of equivalent maintenance services
sold separately. Revenue from professional services is recognized as the
services are performed. Deferred license revenue resulting from extended payment
agreements beyond one year is included in installment receivables and deferred
installment revenue. Related sales commissions are also deferred and recognized
over the period of the installment payment plan.

Maintenance and support services revenue represents the ratable recognition
of fees to enroll licensed products in our software maintenance and support
program. Enrollment entitles the customer to product enhancements, technical
support services, and ongoing compatibility with third party operating systems.
Maintenance revenue also includes the ratable recognition of the bundled fees
included in any extended term payment agreement. Once a product license is
acquired and paid for, maintenance fees are generally incurred annually and
equal 15% to 20% of the current list price of the product at the time of
renewal, less any applicable discounts. In 1998, approximately 24% of our
revenue was generated from maintenance service agreements. Additional revenue is
generated when product licenses are transferred to different or larger central
processing units ("CPUs").

11
<PAGE> 16

Historically, we have not experienced any significant bad debts associated
with these long-term installment arrangements which we introduced in 1996. We
introduced extended payment terms to all of our customers in an effort to
increase sales of our products, achieve a stream of revenue, remain competitive,
raise total contract value and establish long-term customer relationships. No
single customer accounted for greater than 5% of our total revenue in 1998.

During 1998, approximately 59% of our license revenue was derived from
storage management products and approximately 32% of our license revenue was
derived from performance management products. Our cost of license revenue
consists primarily of royalties paid to in-house and third party software
developers and amortization of capitalized software costs. Beginning in 1997,
and continuing for four years, we are obligated to pay a minimum annual royalty
associated with certain Year 2000 and other products.

We derive significant recurring revenue from maintenance service
agreements. Maintenance fee revenue was $10.5 million, $10.0 million and $7.9
million, or 23.9%, 37.2% and 47.9% of total revenue in 1998, 1997 and 1996,
respectively.

We market and sell our products and services through a direct sales force
in the United States and directly and through distributors in South America,
Europe and Asia. International revenue transactions are denominated in U.S.
dollars and local currencies. Revenue generated by our international
distributors is translated into U.S. dollars at the time the transaction occurs.
We have not sustained material foreign currency exchange losses and presently do
not attempt to hedge our exposure to fluctuations in international currency
exchange rates. Our international revenue contributed approximately 20.1% to our
total revenue during 1998, 17.7% to our total revenue during 1997, and 29.5% to
our total revenue during 1996. Should our revenue from international sales
increase as intended, and should such sales be denominated in international
currencies, we intend to adopt an adequate hedging strategy to guard against
international currency fluctuations.

Historically, we have experienced fluctuations in quarterly sales with
greater revenues and net earnings in the latter half of the calendar year. As a
result, our operating results have fluctuated in the past and in the future are
expected to fluctuate significantly from quarter to quarter and may fluctuate on
an annual basis as a result of a number of factors. Revenue in any quarter is
dependent to a significant degree on orders booked and renewals of agreements
for maintenance in that quarter and is not predictable with any degree of
certainty. Since our expense levels are based in part on management's
expectations regarding future revenue, if revenue is below expectations in any
quarter, the adverse effect may be magnified by our inability to adjust spending
in a timely manner to compensate for any revenue shortfall.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain
consolidated statement of operations data expressed in thousands of dollars
(except for per share data).

12
<PAGE> 17

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cost of revenue (exclusive of
amortization and depreciation shown
separately below except for
amortization of software development
costs):
Software licenses................... 424 580 1,843 439 216
Services............................ 720 1,055 2,407 525 549
------- ------- ------- ------- -------
Total cost of revenue....... 1,144 1,635 4,250 964 765
------- ------- ------- ------- -------
Gross margin.......................... 15,381 25,135 39,499 5,632 9,493
Operating expenses:
Sales and marketing................. 6,161 12,463 19,666 3,395 5,012
General and administrative.......... 2,217 2,791 4,575 1,102 1,072
Amortization and depreciation....... 1,596 1,972 2,169 490 710
Research and development............ 3,911 6,093 7,800 1,618 2,500
------- ------- ------- ------- -------
Total operating expenses.... 13,885 23,319 34,210 6,605 9,294
------- ------- ------- ------- -------
Operating income (loss)............... 1,496 1,816 5,289 (973) 199
Other expenses........................ -- -- 252 -- 46
------- ------- ------- ------- -------
Income (loss) from operations before
income taxes........................ 1,496 1,816 5,037 (973) 153
Provision for (benefit from) income
taxes............................... 704 1,030 2,080 (206) 60
------- ------- ------- ------- -------
Net income (loss)..................... $ 792 $ 786 $ 2,957 $ (767) $ 93
======= ======= ======= ======= =======
Basic and diluted net income (loss)
per share........................... $ 0.06 $ 0.06 $ 0.20 $ (0.05) $ 0.01
======= ======= ======= ======= =======
Basic weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 15,973
======= ======= ======= ======= =======
Diluted weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 16,380
======= ======= ======= ======= =======
</TABLE>

The following table sets forth for the periods indicated certain
consolidated statement of operations data expressed as a percentage of total
revenue.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- --------------------------
1996 1997 1998 1998 1999
----- ----- ----- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Software licenses......................... 52.1% 62.1% 72.5% 56.6% 65.6%
Services.................................. 47.9 37.9 27.5 43.4 34.4
----- ----- ----- ----- -----
Total revenue..................... 100.0 100.0 100.0 100.0 100.0
Cost of revenue (exclusive of amortization
and depreciation shown separately below
except for amortization of software
development costs):
Software licenses......................... 2.6 2.2 4.2 6.7 2.1
Services.................................. 4.3 3.9 5.5 7.9 5.4
----- ----- ----- ----- -----
Total cost of revenue............. 6.9 6.1 9.7 14.6 7.5
----- ----- ----- ----- -----
Gross margin................................ 93.1 93.9 90.3 85.4 92.5
</TABLE>

13
<PAGE> 18

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- --------------------------
1996 1997 1998 1998 1999
----- ----- ----- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating expenses:
Sales and marketing....................... 37.3 46.6 44.9 51.5 48.9
General and administrative................ 13.4 10.4 10.5 16.7 10.4
Amortization and depreciation............. 9.6 7.4 5.0 7.4 6.9
Research and development.................. 23.7 22.7 17.8 24.5 24.4
----- ----- ----- ----- -----
Total operating expenses.......... 84.0 87.1 78.2 100.1 90.6
----- ----- ----- ----- -----
Operating income (loss)..................... 9.1 6.8 12.1 (14.7) 1.9
Other expenses.............................. -- -- 0.6 -- 0.4
----- ----- ----- ----- -----
Income (loss) from operations before income
taxes..................................... 9.1 6.8 11.5 (14.7) 1.5
Provision for (benefit from) income taxes... 4.3 3.9 4.7 (3.1) 0.6
----- ----- ----- ----- -----
Net income (loss)........................... 4.8% 2.9% 6.8% (11.6)% 0.9%
===== ===== ===== ===== =====
</TABLE>

Three Months Ended March 31, 1999 and 1998

Revenue. Total revenue increased 55.5% to $10.3 million for the three
months ended March 31, 1999 from $6.6 million for the same period in the prior
year. License revenue increased 80.1% to $6.7 million for the three months ended
March 31, 1999 from $3.7 million for the three months ended March 31, 1998. The
increase was primarily due to the increased sales of our products resulting from
continued expansion of our worldwide sales force, the conversion from CPU-based
pricing to millions of instructions processed per second ("MIPS")-based pricing
and the introduction of Resource Availability into the storage management
segment. During the three months ended March 31, 1999, MIPS-based licenses
accounted for 80% of new sales. Sales in the storage management segment
accounted for 60.2% and 57.6% of total license revenue for the three months
ended March 31, 1999 and 1998, respectively. License revenue from the
performance management segment accounted for 24.9% and 32.6% of total license
revenue for the three months ended March 31, 1999 and 1998, respectively.
License revenue from the Year 2000 segment accounted for 0.9% of total license
revenue for the three months ended March 31, 1999 and 9.3% for the same period
in 1998. International revenue increased as a percentage of total revenue to
31.4% from 19.8% for the three months ended March 31, 1999 and 1998,
respectively. In terms of absolute dollars, international revenues increased
146.9% to $3.2 million for the three months ended March 31, 1999 from $1.3
million for the same period in the prior year. This increase is primarily
attributable to the opening of our sales office in Germany.

Services revenue, comprised of maintenance revenue and to a lesser extent,
revenue from professional services, increased 23.4% to $3.5 million for the
three months ended March 31, 1999 from $2.9 million for the same period in the
prior year. This increase is attributable to overall growth in license revenue
and renewals of maintenance contracts by the installed customer base.

Cost of Revenue. Cost of software license revenue includes royalties paid
to company developers and to a third party under a licensing agreement,
amortization of capitalized software development costs and costs of shipping and
fulfillment. Cost of software license revenue decreased 50.8% to $216,000, or
2.1% of total revenue for the three months ended March 31, 1999 from $439,000,
or 6.7% for the same period in 1998. This decrease was primarily attributable to
the termination of certain royalty agreements. Cost of services revenue is
comprised of costs of maintenance and to a lesser extent, costs of professional
services. Cost of services revenue increased 4.6% to $549,000, or 5.4% of total
revenue for the three months ended March 31, 1999 from $525,000, or 7.9% of
total revenue for the same period in the prior year. This increase is primarily
attributable to the staffing of maintenance personnel to support the growth of
the international customer base.

14
<PAGE> 19

Sales and Marketing Expense. Sales and marketing expenses include salaries
and related costs, commissions, travel, facilities, communications costs and
promotional expenses for our direct sales organization and marketing staff.
Sales and marketing expenses increased 47.6% to $5.0 million for the three
months ended March 31, 1999 from $3.4 million for the three months ended March
31, 1998. This increase was attributable primarily to increased commission
expenses resulting from increased sales, and increased personnel costs resulting
from growth in our sales organization. Sales and marketing expenses decreased as
a percentage of revenue to 48.9% for the three months ended March 31, 1999 from
51.5% for the same period in the prior year.

General and Administrative Expense. General and administrative expenses
include administrative salaries and related benefits, recruiting and relocation
expenses, as well as legal, accounting and other professional fees. General and
administrative expenses were $1.1 million for the three months ending March 31,
1999 and 1998. General and administrative expenses decreased as a percentage of
revenue to 10.4% for the three months ending March 31, 1999 from 16.7% for the
same period in the prior year.

Amortization and Depreciation Expense. Amortization and depreciation
expenses increased 44.9% to $710,000 for the three months ended March 31, 1999
from $490,000 for the three months ended March 31, 1998, due to our purchase of
new hardware for our data center and the upgrade of our communications
infrastructure.

Research and Development Expense. Research and development expenses
include salaries and related costs for software developers, quality assurance
and documentation personnel involved in our research and development efforts, as
well as support for the research and development effort including our data
center operations. Research and development expenses increased 54.5% to $2.5
million or 24.4% of revenue for the three months ended March 31, 1999 from $1.6
million or 24.5% of revenue for the same period in the prior year. The increase
is primarily attributable to an increase in personnel necessary to support our
research and development efforts.

Provision for Income Taxes. The provision for income taxes increased to
$60,000 for the three months ended March 31, 1999 from a benefit of $206,000 for
the three months ended March 31, 1998, representing 39.2% and 21.2% of income
(loss) before taxes, respectively.

Years Ended December 31, 1998 and 1997

Revenue. Total revenue increased 63.4% to $43.7 million in 1998 from $26.8
million in 1997. License revenue increased 90.7% to $31.7 million in 1998 from
$16.6 million in 1997. The increase was primarily due to the increased sales of
our products resulting from continued expansion of our worldwide sales force,
the conversion from CPU-based pricing to MIPS-based pricing and the introduction
of Resource Availability into the storage management segment. During 1998,
MIPS-based licenses accounted for 74% of new sales. Sales in the storage
management segment accounted for 59% of total license revenue in 1998 and 1997.
License revenue from the performance management segment accounted for 32% of
total license revenue in 1998 and 1997. License revenue from the Year 2000
segment accounted for 5.3% of total license revenue in 1998 and 3.5% in 1997.
International revenue increased as a percentage of total revenue to 20.1% in
1998 from 17.7% for the period ending December 31, 1997. In terms of absolute
dollars, international revenues increased 85.9% to $8.8 million in 1998 from
$4.7 million in 1997. This increase is attributable to our continuing
international expansion.

Services revenue, comprised of maintenance revenue and, to a lesser extent,
revenue from professional services, increased 18.6% to $12.0 million in 1998
from $10.1 million in 1997. This increase is attributable to overall growth in
license revenue, renewals of maintenance contracts by the installed customer
base and customer acceptance of the SKILLPACKS and Extended SKILLPACKS services.

15
<PAGE> 20

attributable to the royalties paid as a result of a third party licensing
agreement that commenced in July 1997, as well as an increase in royalty
payments to company developers resulting from increased software license
revenue. Costs of services revenue is comprised of costs of maintenance and to a
lesser extent, costs of professional services. Cost of services revenue
increased 128.2% to $2.4 million, or 5.5% of total revenue in 1998 from $1.1
million, or 3.9% of total revenue in 1997. This increase is primarily
attributable to the staffing of maintenance personnel to support the growth of
the international customer base and to a lesser extent, the commencement of
professional services operations in the third quarter of 1997.

Sales and Marketing Expense. Sales and marketing expenses include salaries
and related costs, commissions, travel, facilities, communications costs and
promotional expenses for our direct sales organization and marketing staff.
Sales and marketing expenses increased 57.8% to $19.7 million in 1998 from $12.5
million in 1997. This increase was attributable primarily to increased
commission expenses resulting from increased sales, and increased personnel
costs resulting from growth in our sales organization. In addition, the opening
of international sales offices in Germany, Australia and Spain and one domestic
sales office contributed to an increase in certain fixed costs over 1997. Sales
and marketing expenses decreased to 44.9% of revenue in 1998 from 46.6% in 1997.

Amortization and Depreciation. Amortization and depreciation expenses
increased 10.0% to $2.2 million in 1998 from $2.0 million in 1997, primarily due
to the purchase of new hardware for our data center and the upgrade of our
communications infrastructure.

General and Administrative Expense. General and administrative expenses
include administrative salaries and related benefits, management fees,
recruiting and relocation expenses, as well as legal, accounting and other
professional fees. General and administrative expenses increased 63.9% to $4.6
million in 1998 from $2.8 million in 1997. The increase in general and
administrative expenses was principally due to an increase in finance and
administrative personnel necessary to support our growth and the costs
associated with operating as a public company.

Research and Development Expense. Research and development expenses
include salaries and related costs for software developers, quality assurance
and documentation personnel involved in our research and development efforts as
well as support for the research and development effort including our data
center operations. Research and development increased 28.0% to $7.8 million or
17.8% of 1998 revenue from $6.1 million or 22.7% of 1997 revenue. The increase
is primarily attributable to an increase in personnel necessary to support our
research and development efforts.

Provision for Income Taxes. The provision for income taxes increased to
$2.1 million in 1998 from $1.0 million in 1997. For the period ending December
31, 1997, we reported our financial results on a consolidated basis with
Computer Concepts and did not file separate tax returns. On a stand-alone basis,
if we had filed a separate Federal tax return, our effective rate for 1997 would
have been 56.7%. For 1998 the effective tax rate was 41.3%. The decrease in
effective rates is due to the reduction in previously non-deductible operating
losses incurred by our international subsidiary corporations. A valuation
reserve has been established for the deferred tax asset generated from the
remaining international net operating losses as it is uncertain when, and if,
these losses will be utilized against future international income.

Years Ended December 31, 1997 and 1996

Total Revenue. Total revenue increased 62.0% to $26.8 million in 1997 from
$16.5 million in 1996. License revenue increased 93.2% to $16.6 million in 1997
from $8.6 million in 1996. The increase was primarily due to an increase in the
number of licenses of our products in the performance management segment and
storage management segment, the conversion from CPU-based pricing to MIPS-based
pricing, the availability of extended payment terms to customers for a full
fiscal year, as well as the introduction of our Year 2000 products. New products
in the Year 2000 segment introduced during 1997 accounted for approximately 3.5%
of software license revenue. During 1997, we entered into approximately 107
MIPS-based licenses which accounted for $6.2 million in revenue. Sales in the
storage management segment accounted for approximately 59% of license revenue in
1997, compared to approximately 60% of
16
<PAGE> 21

license revenue in 1996. Sales in the performance management segment accounted
for approximately 32% of license revenue in 1997, compared to approximately 36%
of license revenue in 1996. Services revenue is comprised of maintenance revenue
and to a lesser extent, revenue from professional services. Services revenue
increased 28.1% to $10.1 million in 1997 from $7.9 million in 1996. This
increase is attributable to overall growth in license revenue and renewals of
maintenance contracts by the installed customer base and to a lesser extent, the
commencement of professional services operations in the third quarter of 1997.
International revenue decreased as a percentage of total revenue to 17.7% for
the period ending December 31, 1997 from 29.5% for the period ending December
31, 1996. In terms of absolute dollars, international revenue decreased slightly
to $4.7 million for the period ending December 31, 1997 from $4.9 million for
the period ending December 31, 1996.

Cost of Revenue. Cost of software license revenue increased 36.8% to
$580,000, or 2.2% of total revenue, in 1997, from $424,000, or 2.6% of total
revenue, in 1996. Cost of services revenue is comprised of costs of maintenance
and to a lesser extent, costs of professional services. Cost of services
increased 46.5% to $1.1 million in 1997 from $720,000 in 1996. As a percentage
of services revenue, cost of services increased to 10.4% in 1997 from 9.1% in
1996. This increase is primarily attributable to the staffing of maintenance
personnel to support international sales in lieu of reliance upon distributors
and to a lesser extent, the commencement of professional services operations in
the third quarter of 1997.

Sales and Marketing Expense. Sales and marketing expense increased 102.3%
to $12.5 million in 1997 from $6.2 million in 1996. The increase was primarily
attributable to the expansion of the direct sales force both domestically and
internationally. Sales and marketing expense was 46.6% of total revenue in 1997
and 37.3% of total revenue in 1996.

General and Administrative Expense. General and administrative expense
increased 25.9% to $2.8 million in 1997 from $2.2 million in 1996. As a
percentage of total revenue, general and administrative expense declined to
10.4% in 1997 from 13.4% in 1996. General and administrative expenses grew in
absolute dollars as we added personnel to all administrative areas, but declined
as a percentage of total revenue principally due to economies of scale
associated with increased revenue.

Research and Development Expense. Research and development expense
increased 55.8% to $6.1 million in 1997 from $3.9 million in 1996. The increase
was primarily attributable to our accelerated development of our multi-platform
and Year 2000 products.

Provision for Income Taxes. The provision for income taxes increased 46.3%
to $1.0 million in 1997 from $704,000 in 1996. During these years, we were
reported on a consolidated basis for Federal income tax purpose with Computer
Concepts and did not file a separate Federal tax return. On a stand-alone basis,
if we had filed a separate Federal tax return, our effective rates for 1997 and
1996 would have been 56.7% and 47.1%, respectively. These rates differ from the
Federal statutory income tax rate primarily because of the non-deductibility of
operating losses incurred by the international subsidiary corporations. A
valuation reserve has been established for the deferred tax asset generated from
international net operating losses as it is uncertain when, and if, these losses
will be utilized against future international income.

17
<PAGE> 22

QUARTERLY RESULTS OF OPERATIONS

The following tables present certain unaudited quarterly statements of
operations data for each of our last eight quarters, including the period ended
March 31, 1999, as well as the percentage of our total revenue represented by
each item. The information has been derived from our financial statements. The
unaudited quarterly financial statements have been prepared on substantially the
same basis as the audited financial statements contained herein. In the opinion
of management, the unaudited quarterly financial statements include all
adjustments, consisting only of normal recurring adjustments, that we consider
to be necessary to present fairly this information when read in conjunction with
our financial statements and notes thereto appearing elsewhere in this
prospectus. The results of the operations for any quarter are not necessarily
indicative of the results to be expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1998 1998 1998 1998 1999
-------- --------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses............... $3,809 $4,281 $6,248 $3,736 $6,026 $8,172 $13,791 $ 6,730
Services........................ 2,458 2,623 2,685 2,860 3,028 3,075 3,061 3,528
------ ------ ------ ------ ------ ------ ------- -------
Total revenue............ 6,267 6,904 8,933 6,596 9,054 11,247 16,852 10,258
Cost of revenue (exclusive of
amortization and depreciation
shown separately below except
for amortization of software
development costs):
Software licenses............... 114 161 204 439 194 426 784 216
Services........................ 210 278 387 525 526 604 752 549
------ ------ ------ ------ ------ ------ ------- -------
Total cost of revenue.... 324 439 591 964 720 1,030 1,536 765
------ ------ ------ ------ ------ ------ ------- -------
Gross margin...................... 5,943 6,465 8,342 5,632 8,334 10,217 15,316 9,493
Operating expenses:
Sales and marketing............. 3,300 3,247 3,611 3,395 4,516 5,181 6,574 5,012
General and administrative...... 594 586 727 1,102 1,254 1,087 1,132 1,072
Amortization and depreciation... 445 500 591 490 525 616 538 710
Research and development........ 1,540 1,798 1,499 1,618 1,703 2,165 2,314 2,500
------ ------ ------ ------ ------ ------ ------- -------
Total operating
expenses............... 5,879 6,131 6,428 6,605 7,998 9,049 10,558 9,294
------ ------ ------ ------ ------ ------ ------- -------
Operating income (loss)........... 64 334 1,914 (973) 336 1,168 4,758 199
Other (expense) income............ -- -- -- -- (169) (84) 1 (46)
------ ------ ------ ------ ------ ------ ------- -------
Income (loss) from operations
before income taxes............. 64 334 1,914 (973) 167 1,084 4,759 153
Provision for (benefit from)
income taxes.................... 84 207 902 (206) 180 547 1,559 60
------ ------ ------ ------ ------ ------ ------- -------
Net (loss) income................. $ (20) $ 127 $1,012 $ (767) $ (13) $ 537 $ 3,200 $ 93
====== ====== ====== ====== ====== ====== ======= =======
</TABLE>

18
<PAGE> 23

QUARTERLY RESULTS OF OPERATIONS AS A PERCENTAGE OF TOTAL REVENUE:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1998 1998 1998 1998 1999
-------- --------- -------- -------- -------- --------- -------- --------
(AS A PERCENTAGE OF TOTAL REVENUE)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Software licenses..................... 60.8% 62.0% 69.9% 56.6% 66.6% 72.7% 81.8% 65.6%
Services.............................. 39.2 38.0 30.1 43.4 33.4 27.3 18.2 34.4
----- ----- ----- ----- ----- ----- ----- -----
Total revenue.................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenue (exclusive
of amortization and depreciation shown
separately below except for
amortization of capitalized software
development costs):
Software licenses..................... 1.8 2.3 2.3 6.7 2.1 3.8 4.7 2.1
Services.............................. 3.4 4.1 4.3 7.9 5.8 5.4 4.5 5.4
----- ----- ----- ----- ----- ----- ----- -----
Total cost of revenue.......... 5.2 6.4 6.6 14.6 8.0 9.2 9.2 7.5
----- ----- ----- ----- ----- ----- ----- -----
Gross margin............................ 94.8 93.6 93.4 85.4 92.0 90.8 90.8 92.5
Operating expenses:
Sales and marketing................... 52.7 47.0 40.4 51.5 49.9 46.1 39.0 48.9
General and administrative............ 9.5 8.5 8.1 16.7 13.9 9.6 6.7 10.4
Amortization and depreciation......... 7.1 7.3 6.6 7.4 5.8 5.5 3.2 6.9
Research and development.............. 24.5 26.0 16.8 24.5 18.7 19.3 13.7 24.4
----- ----- ----- ----- ----- ----- ----- -----
Total operating expenses....... 93.8 88.8 72.0 100.1 88.3 80.5 62.6 90.6
----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss)................. 1.0 4.8 21.4 (14.7) 3.7 10.3 28.2 1.9
Other expenses.......................... 0.0 0.0 0.0 0.0 1.9 0.7 0.0 0.4
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from operations before
income taxes.......................... 1.0 4.8 21.4 (14.7) 1.8 9.6 28.2 1.5
Provision for (benefit from) income
taxes................................. 1.3 3.0 10.1 (3.1) 2.0 4.8 9.2 0.6
----- ----- ----- ----- ----- ----- ----- -----
Net (loss) income....................... (0.3)% 1.8% 11.3% (11.6)% (0.2)% 4.8% 19.0% 0.9%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

Demand for our products has been generally higher during the fourth
quarter, primarily due to the capital spending trends of our customers, which
has resulted in higher license revenue in that period and lower license revenue
in the first quarter. We anticipate that our business will continue to be
subject to such seasonal variations.

Our operating results for any quarter are not necessarily indicative of
results that will be obtained for any future period. Due to the relatively fixed
nature of certain of our costs, including personnel and facilities costs, a
decline in revenue, failure to achieve expected revenue in any fiscal quarter or
unanticipated variations in billing and utilization rates of service personnel
would result in lower profitability in that quarter. Our quarterly results may
fluctuate as a result of a variety of factors, many of which are beyond our
control, including the timing and levels of software purchases by customers, the
timing, size and state of new product development projects, new product
introductions by us or our competitors, levels of market acceptance for our
products, or the hiring of additional personnel. In addition, historically we
have recognized a large portion of our revenue from sales in the last month of a
quarter so the magnitude of quarterly fluctuations may not become evident until
late in, or at the end of, a particular quarter. Due to the above, we believe
that past operating results and period-on-period comparisons should not be
relied upon as an indication of future performance.

19
<PAGE> 24

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations through cash generated from operations and
proceeds from our recent initial public offering. We had cash and cash
equivalents of $6.8 million at March 31, 1999 and $6.0 million at December 31,
1998.

We have not sustained material foreign currency exchange losses and
presently do not attempt to hedge our exposure to fluctuations in foreign
currency exchange rates. Should our revenue from international sales increase,
and should such sales be denominated in foreign currencies, we intend to adopt
an adequate hedging strategy to guard against foreign currency fluctuations.

For the three months ended March 31, 1999 and 1998, net cash provided by
operating activities was $75,000 and $1.7 million, respectively. This decrease
is primarily as a result of changes in operating assets and liabilities,
primarily due to an increase in our income tax liability as a result of our
being taxed as an independent entity.

For the twelve months ended December 31, 1998 and December 31, 1997, net
cash provided by operating activities was $1.3 million and $213,000,
respectively. This increase is primarily a result of an increase in net income
adjusted for significant non-cash expenses, such as depreciation and
amortization.

Our investing activities primarily include expenditures for fixed assets in
support of our product development activities and infrastructure, software
development and technology purchases and, for the twelve months ended December
31, 1998 and 1997, additional contingent consideration paid to two former
stockholders in connection with our acquisition by Computer Concepts. Net cash
used in investing activities decreased 43.1% to $452,000 for the three months
ended March 31, 1999 from $795,000 for the same period in the prior year. The
decrease was primarily a result of costs incurred in the three month period
ended March 31, 1998 for software development and technology purchases and
additional contingent consideration paid to two former stockholders in
connection with our acquisition by Computer Concepts, offset by increased
purchases of property and equipment during the three month period ended March
31, 1999. Net cash used in investing activities increased 29.6% from $2.6
million in 1997 to $3.3 million in 1998. The increase was primarily a result of
an increase in purchases related to fixed assets in support of our product
development infrastructure.

For the three months ended March 31, 1999 and 1998, net cash provided by
(used in) financing activities was $1.1 million and ($405,000), respectively.
The increase in cash provided by financing activities was primarily a result of
borrowings under a line of credit agreement.

For the twelve months ended December 31, 1998 and December 31, 1997, net
cash provided by financing activities was $7.7 million and $1.0 million,
respectively. The increase in cash provided by financing activities was
primarily a result of cash generated from our initial public offering offset by
repayments made to Computer Concepts to repay for federal income taxes and
borrowings.

Our principal commitments as of March 31, 1999 consisted primarily of (1)
leases on our corporate headquarters facilities, various sales offices and
operating equipment, (2) employment agreements, (3) a software licensing and
distribution agreement and (4) long-term debt under a line of credit.

We believe that our current cash and cash equivalent balances, cash flow
from operations, and the proceeds of this offering, will be sufficient to meet
our working capital and capital expenditure needs for at least the next 12
months. However, we cannot assure you that we will have sufficient capital to
finance potential acquisitions or other growth-oriented activities, which could
require us to incur additional debt or obtain other financing.

YEAR 2000 ISSUES

Background. Some computers, software, and other equipment include
programming code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct results if "00" is interpreted to mean 1900, rather

20
<PAGE> 25

than 2000. These problems are widely expected to increase in frequency and
severity as the year 2000 approaches, and are commonly referred to as the
"Millennium Bug" or "Year 2000 problem."

Assessment. The Year 2000 problem could affect computers, software, and
other equipment which we use, operate, or maintain. Accordingly, we are
reviewing our internal computer programs and systems to ensure that the programs
and systems will be Year 2000 compliant. We presently believe that our computer
systems will be Year 2000 compliant in a timely manner. However, while the
estimated cost of these efforts is not expected to be material to our overall
financial position, or any year's results of operations, there can be no
assurance to this effect.

We have obtained certification of our processes to assess Year 2000
problems from the Information Technology Association of America (ITAA). Because
our business involves software development, we have not sought further
verification or validation by independent third parties of our corrections of
Year 2000 problems. However, our Year 2000 project team is reviewing our project
plans and monitoring progress against those plans.

Software Sold to Consumers. We believe that we have substantially
identified and resolved all potential Year 2000 problems with the software
products we develop and market. However, we also believe that it is not possible
to determine with complete certainty that all Year 2000 problems affecting our
software products have been identified or corrected due to the complexity of
these products and the fact that these products interact with other third party
vendor products and operate on computer systems which are not under our control.

Internal Information Technology Infrastructure. We believe that we have
identified substantially all of the major computers, software applications, and
related equipment used in connection with our internal operations that must be
modified, upgraded, or replaced to minimize the possibility of a material
disruption to our business. We have commenced the process of modifying,
upgrading, and replacing major systems that have been identified as adversely
affected, and expect to complete this process before the end of June 1999.

Systems Other than Information Technology Systems. In addition to
computers and related systems, the operation of office and facilities equipment,
such as fax machines, photocopiers, telephone switches, security systems,
elevators, and other common devices may be affected by the Year 2000 problem. We
are currently assessing the potential effect of, and costs of remediating, the
Year 2000 problem on our office and facilities equipment and expect to complete
such assessment by June, 1999. We estimate that the total cost of completing any
required modifications, upgrades, or replacements of these internal systems will
not have a material adverse effect on our business or results of operations.
This estimate is being monitored and will be revised as additional information
becomes available.

Suppliers. We have initiated communications, including surveys, with third
party suppliers of the major computers, software, and other equipment which we
use, operate, or maintain to identify and, to the extent possible, to resolve
issues involving the Year 2000 problem. However, we have limited or no control
over responses to our inquiries and the actions of these third party suppliers.
Thus, while we do not anticipate any significant Year 2000 problems with these
systems, we cannot assure you that these suppliers will resolve any or all of
their Year 2000 problems with these systems before the occurrence of a material
disruption to our business or that of our customers. Any failure of these third
parties to resolve Year 2000 problems with their systems in a timely manner
could have a material adverse effect on our business, financial condition, and
results of operation.

Most Likely Consequences of Year 2000 Problems. We expect to identify and
resolve all Year 2000 problems that could materially adversely affect our
business operations. However, we do not believe that it is possible to determine
with complete certainty that all Year 2000 problems which affect us have been
identified or corrected. The number of devices that could be affected and the
interactions among these devices are simply too numerous. In addition, one
cannot accurately predict how many Year 2000 problem-related failures will occur
or the severity, duration, or financial consequences of these perhaps inevitable
failures. In addition, we are unable to determine with any degree of certainty
the changes in

21
<PAGE> 26

buying habits of our current and potential customers due to their concerns over
Year 2000 issues. As a result, we expect that we could likely experience a
significant number of operational inconveniences and inefficiencies for us and
our customers that may divert management's time and attention and our financial
and human resources from our ordinary business activities. In addition, we may
experience a lesser number of serious system failures that may require
significant efforts by us or our customers to prevent or alleviate material
business disruptions.

Contingency Plans. We are currently developing contingency plans to be
implemented as part of our efforts to identify and correct Year 2000 problems
affecting our internal systems. We expect to complete our contingency plans by
the end of June 1999. Depending on the systems affected, these plans could
include accelerated replacement of affected equipment or software, short to
medium-term use of backup equipment and software, increased work hours for our
personnel or use of contract personnel to correct on an accelerated schedule any
Year 2000 problems that arise or to provide manual workarounds for information
systems, and similar approaches. If we are required to implement any of these
contingency plans, it could have a material adverse effect on our financial
condition and results of operations.

Disclaimer. The discussion of our efforts, and management's expectations,
relating to Year 2000 compliance are forward-looking statements. Our ability to
achieve Year 2000 compliance and the level of incremental costs associated with
such compliance, could be adversely affected by, among other things, the
availability and cost of programming and testing resources, vendors' ability to
modify proprietary software, and unanticipated problems identified in our
ongoing compliance review.

22
<PAGE> 27

BUSINESS

OVERVIEW

Prior to 1998, our products addressed only the storage and performance
management requirements of mainframe operating systems. In 1998, we extended our
product family by introducing UNIX and NT-based storage products. In 1999, we
plan to introduce additional storage management products for Oracle, EMC
Symmetrix, IBM RAMAC, and StorageTek Tape Silo. We have granted over 6,400
licenses for use of our products at over 2,000 installations worldwide. Our
products are installed at 87% of the Fortune 100 and 60% of the Fortune 500
companies. In addition to selling additional products to our existing customers,
during 1998 we added 50 new customers. Our customers operate in a variety of
industries, such as financial services, healthcare, manufacturing and
telecommunications, and include Citicorp, GTE Data Services, NationsBank,
PaineWebber, Prudential Service Company, Sprint, State Farm Mutual Auto
Insurance and Wal-Mart. We sell our products through a global direct sales force
and a network of international distributors and resellers.

INDUSTRY BACKGROUND

The worldwide IT infrastructure is growing rapidly and becoming
increasingly complex. Corporate computing environments have transitioned from
the use of closed, proprietary systems to open, complex networks of diverse
systems. Although mainframe environments remain the preferred platform for high-
volume, transaction-oriented applications, as well as applications that require
the storage and rapid retrieval of large amounts of data, there has also been
widespread adoption of distributed platforms such as UNIX and NT. As a result,
mainframes, UNIX and NT platforms now co-exist to satisfy a variety of business
application requirements across an organization, and this increases the overall
complexity of the IT infrastructure.

The increased number of NT and UNIX application servers also makes it more
complicated for organizations to effectively manage their IT assets due to the
disparate nature of decentralized, multi-platform systems. Additionally, the
need to store increasing amounts of data, caused in part by the expanding use of
the Internet for communications (e-mail) and business (e-commerce, e-marketing
and customer service) applications, is driving the need for software solutions
that address enterprise-wide storage and performance management requirements.

According to GartnerGroup, net new license revenue for the network and
systems management and storage management markets in 1997 totaled approximately
$8.2 billion. GartnerGroup also estimates that the storage management market is
expected to grow at a compound annual rate of approximately 20% through the year
2002. We primarily operate in the storage resource management market, a subset
of the storage management market. GartnerGroup expects that revenues of the
storage resource management market will grow at a 44% compound annual growth
rate, from $201 million in 1997 to $1.2 billion in 2002.

23
<PAGE> 28

As a result of the increased complexity of the IT infrastructure, many
corporations can no longer guarantee compliance with their "best practices."
"Best practices" are a set of standard practices and policies which started in
mainframe environments and are designed to ensure the data integrity and
availability required by mission-critical computing systems. Corporate IT
organizations need solutions that enable them to extend these "best practices"
across their multi-platform computing environments.

Software vendors have responded to the need for UNIX and NT systems
management by developing tools tailored to address the unique storage and
performance management requirements of each platform. These tools are designed
to monitor and provide reports on system performance. Systems management
personnel with platform-specific expertise are needed to interpret these reports
and identify and correct problems. The result has been a significant increase in
the number of technical personnel required to effectively manage enterprise
systems, and such personnel are in increasingly short supply.

Many IT organizations are now demanding next generation tools that move
beyond simple monitoring and reporting. They are seeking solutions that
incorporate platform-specific intelligence and enable automatic management of
storage and performance across heterogeneous environments. Comprehensive storage
and performance management solutions should include proactive alerts, programmed
responses and automated corrective actions which result in effective management
of the increasing volume and complexity of computing environments with fewer
specialized technicians. These solutions should also provide an effective
vehicle for instituting "best practices" across the enterprise.

THE SOFTWORKS SOLUTION

We provide automated storage and performance management solutions to help
organizations more efficiently and effectively manage their IT infrastructures.
Our products possess the following key features:

- Integrated Storage Management. We believe that many organizations want
an integrated suite of products to address their multi-platform storage
management needs. Our solutions provide a single point of control and
management of storage in OS/390, UNIX and NT computing environments. In
addition to providing conventional storage management functions, our
solutions are designed to enhance and ensure data and system
availability.

- Automated Storage and Performance Management. In contrast to
conventional storage and performance management solutions which merely
provide reporting and monitoring capabilities, our products provide
automated proactive alerts, programmed responses and corrective actions,
which enable IT personnel to focus more of their time on complex
mission-critical systems management tasks. "Proactive alerts" detect
system events and abnormalities and alert the user to potential system,
application or data availability issues. Our products probe system
resources to determine if key storage and performance indicators fall
within acceptable ranges. If an "out of reasonable range" condition is
detected, our products offer three alternative, but not mutually
exclusive, responses. Our products can:

-- notify the management console or appropriate network or system
monitoring software;

-- automatically correct the condition using "pre-programmed responses"
which enable the user to program the product to respond appropriately
to a particular condition; or

-- guide the user through "automated corrective actions" which present
the user with one or more alternative responses to the condition and
guide the user through the corrective action.

- Intelligent Agent Technology. Our software incorporates intelligent
agent technology to perform analysis and management tasks across
multi-platform environments. This technology permits systems information
to be shared across platforms, as well as with a central point of
control. This technology also reduces the need for platform-specific
expertise and enhances our customers' ability to effectively manage their
systems.

- Application of "Best Practices" to a Multi-Platform Environment. Our
solutions are designed to enable the centralized control of disparate
applications and platforms, thereby facilitating the
24
<PAGE> 29

implementation of an organization's "best practices" across multi-platform
environments and allowing them to tailor responses to specific requirements. Our
solutions operate efficiently in multi-platform environments by using embedded
intelligent agents which recognize and respond to the particular
requirements of each specific operating system.

Our solutions are designed to reduce an organization's overall cost to
manage its IT infrastructure through a combination of advanced products and
technology with comprehensive service and support. Our SST technology is
specifically designed to enable our customers to minimize the amount of
intervention by IT personnel and to facilitate system availability 24 hours per
day, seven days per week. Our solutions often reduce hardware expenditures by
permitting organizations to defer purchases of CPU and storage upgrades.
Organizations using our automated products can achieve a higher level of system
performance, respond more easily to the rapid introduction of new technologies
and require fewer specialized technicians to manage the increasing size and
complexity of their computing environments.

STRATEGY

Our objective is to become a leading provider of storage management
products, performance management products, and related systems management
software products and services on both mainframe and multi-platform
environments. The primary elements of our strategy to achieve this objective
include the following:

Capitalize on Increased Demand for Storage. There is an increasing
demand for data storage, in part due to the need to store the large amounts
of data transmitted over the Internet. In response to this demand, we
expect to focus a majority of our marketing activities on the storage
management market and intend to continue to enhance and extend our
enterprise-wide storage management products. As part of this expansion, we
plan to develop storage management agents for specific vendor hardware,
such as EMC, StorageTek and IBM, and specific vendor software such as
VERITAS and Legato. We then intend to initiate joint marketing activities
with those specific vendors.

Enhance and Extend Current Product Offerings. We intend to use our
technical expertise to expand our core product functionality, as well as
add products to our existing product line. These products will enhance
customers' ability to derive superior performance in mission-critical
systems and applications, facilitate the management of enterprise storage
devices and data and help ensure system and data availability. We are
currently developing the next generation of SST to permit further
integration and web-enablement of our products, as well as to allow
integration and deployment of third party systems management tools.

Expand Domestic and International Sales Channels. We intend to
continue to focus on expanding our sales efforts. As of March 31, 1999, we
have increased our direct sales force to 145 from 11 in January 1996.
During 1998, we opened new direct sales offices in Germany, Australia, and
Spain and, during the first quarter of 1999, we opened offices in Japan and
Singapore. We are continuing to expand our domestic and international
distribution channels by adding sales agents and opening additional direct
sales offices.

Sell Additional Products to Our Customers. We have over 1,850
customers who use our products in over 2,000 installations worldwide. On
average our customers use three of our products, and we believe there is a
significant opportunity to sell additional SOFTWORKS products to them.

Pursue Strategic Partnerships, Alliances and Acquisitions. In
addition to our internal development efforts, we intend to acquire new
products and technologies or the distribution rights to third party
products that address complementary systems management market segments. We
also intend to pursue relationships through which third parties could
distribute some of our products. As evidence of this strategy, during 1998,
we initiated strategic partnerships with EMC and VERITAS, as well as with
IBM for its SystemPac distribution program. These supplement our existing
partnerships with HP, Sun, IBM, and Tivoli.

25
<PAGE> 30

PRODUCTS AND SERVICES

Using our proprietary SST development methodologies and core technologies,
we have developed offerings primarily grouped into two market segments: storage
management products and performance management products.

Products

The following table describes the functionality of our principal products:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
INITIAL
RELEASE
PRODUCT DATE DESCRIPTION
<S> <C> <C> <C>
STORAGE PRODUCTS ENTERPRISE-WIDE TOOLS DESIGNED TO FACILITATE STORAGE
MANAGEMENT AND SYSTEM AND DATA AVAILABILITY

Catalog Solution 1986 - Provides comprehensive OS/390 catalog maintenance,
diagnostics, reporting, backup, repair and recovery
- Reduces disaster recovery time
- Improves the integrity and availability of the catalog
environment and mission-critical data resources distributed
across multiple operating system platforms
- -----------------------------------------------------------------------------------------------------------
CenterStage 1995 - Provides centralized control and monitoring of storage
and data resources distributed across multiple operating
A suite of independent and system platforms
integratable products for - Reduces the cost, complexity and skill requirements for
OS/390-MVS, AIX, HP-UX, capacity planning, disaster recovery, and storage resource
Solaris, DB2 and management
OpenEdition - Reports storage subsystem information and provides an
assessment of storage problems. Provides
customer-controlled automation to correct designated
storage problems and minimize the need for storage
administrators to develop platform-specific solutions
- -----------------------------------------------------------------------------------------------------------
Resource Availability 1998 - Integrates storage management functionality while adding
24x7 proactive catalog monitoring, event-based alerts for
catalog events, and automated corrective actions.
PERFORMANCE PRODUCTS CREATE SUPERIOR PERFORMANCE FOR MISSION-CRITICAL SYSTEMS
AND APPLICATIONS

Performance Essential I/O 1984 - Designed to optimize and improve system and processing
Plus for VSAM performance
I/O Plus for xSAM 1993 - Reduces the requirement for manual tuning efforts
HiperLoad for VSAM 1992 - May defer or eliminate costly processor upgrades while
helping to ensure that service level requirements are met
TeraSAM 1995 - Provides transparent file segmentation to overcome VSAM's
4GB file size restriction
- Splits large VSAM files into separate physical data sets
that can be managed and processed more efficiently
- Enables parallel backup, restore and reorganization of
segments to reduce batch processing time
VSAM Assist 1978 - Provides VSAM backup, recovery, and migration
capabilities to simplify and improve VSAM file and data
maintenance
- Reduces batch processing time while safeguarding data
VSAM Quick Index 1981 - Reduces batch processing time and processor utilization
by building alternate indices quickly
- Improves data availability by providing faster access to
data
- -----------------------------------------------------------------------------------------------------------
</TABLE>

In addition, we also have Year 2000 products including HotDate 2000,
products which facilitate Year 2000 assessment, remediation and testing on
OS/390 and MVS platforms and HotDate 2000/MP, products which perform Year 2000
assessment and remediation for C and COBOL on UNIX (HP-UX, Solaris, AIX) and
assessment for Powerbuilder on NT.

26
<PAGE> 31

We provide our customers with both product maintenance and enhancement
releases under their existing maintenance agreements. Enhancement releases
typically occur once a year and are developed primarily to respond to market
demand and to ensure that the product is competitive in the market. Maintenance
releases occur at a minimum of one maintenance release per product per year. We
typically introduce annual upgrades to our existing products.

Our Product SKILLPACKS are strategic IT services offerings that provide our
customers with expertise and assistance in installing and implementing our
software products. Product SKILLPACKS are intended to expedite the
implementation of our products, accelerate the customer's staff productivity and
expose the customer to the full capabilities of our products. Extended
SKILLPACKS provide implementation of third party products, assistance with
product conversions, training in specific areas related to systems management
and address short-term, critical project requirements. SKILLPACKS prices are
dependent upon the complexity of each customer's environment, the expertise
level of each customer's staff, and each customer's goal and time frame.

CUSTOMER SERVICE AND TECHNICAL SUPPORT

We maintain an experienced staff of customer service personnel to provide
technical support to our customers. Each member of our customer service staff is
certified through an ongoing in-house training and testing program to provide
support for each individual product. Our customer service staff provides product
support via telephone and e-mail 24 hours per day, seven days per week. We
generally provide software and documentation updates, including maintenance
releases, operating system upgrades and major functional upgrades, as part of
our customer support services.

CUSTOMERS

As of March 31, 1999, our products were licensed for use by approximately
1,850 customers at over 2,000 installations, including 87% of the Fortune 100
companies and 60% of the Fortune 500. Our target customers are large
organizations with complex computing environments that rely on mainframe, UNIX
and NT-based systems.

SALES, DISTRIBUTION AND MARKETING

We market our products and services through our worldwide distribution
channels which include direct sales personnel, agents, and distributors. We have
approximately 145 sales and sales support employees who promote the licensing of
our products and services. In the United States, we operate 10 sales offices.
Internationally, we have sales offices in Australia, Brazil, Canada, France,
Germany, Japan, Singapore, Spain and the United Kingdom. Our U.K. office also
covers the Scandinavian and Benelux countries. Our international distributors
currently are located in Argentina, Chile, Israel, Italy, Mexico, Peru, South
Africa, Thailand, Turkey, Uruguay and Venezuela. All offices are responsible for
specific geographic territories that may extend beyond the state, province, or
country in which the office is located.

Our direct sales force consists of account managers and sales engineers
who, in addition to the sale of our products, are responsible for technical
demonstrations, product installation and product implementation. A separate
Federal Accounts group specifically targets United States government customers,
including end-users and system integrators. In addition, we have established a
web-based interface to allow the purchase and download of our UNIX-based
products.

We maintain vendor relationships with leading organizations such as IBM,
EMC, Hewlett-Packard, Sun, Oracle, Tivoli, StorageTek and VERITAS. These
relationships provide us access to pre-release versions of software to help
ensure that our products utilize the latest technology and continue to be
competitive with new operating systems and database releases. These
relationships also provide us with insight for strategic planning and product
direction.

We maintain marketing programs to support the sales and distribution of our
products and services, and communicate corporate direction. Our marketing
department is responsible for collateral development,

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<PAGE> 32

lead generation and brand awareness of SOFTWORKS and its products. Marketing
programs include public relations, seminars, industry conferences and trade
shows, advertising and direct mail. Our marketing organization also contributes
to both the product direction and strategic planning processes by providing
market research and conducting surveys and focus groups.

INTELLECTUAL PROPERTY AND LICENSING

We consider certain features of our software, our internal operations and
development process, and our SST methodology and technology to be proprietary.
We rely on a combination of trade secret, copyright and trademark laws,
contractual provisions and certain technology and security measures to protect
our proprietary intellectual property. We do not currently have any patents or
pending patent applications. Notwithstanding our efforts to protect our
proprietary rights, existing trade secret, copyright, and trademark laws afford
only limited protection. In addition, effective protection of copyrights, trade
secrets, trademarks and other proprietary rights may be unavailable or limited
in certain international countries. We believe that, because of the rapid rate
of technological change in the computer software industry, factors such as the
knowledge, ability and experience of our employees, product and service offering
development, and quality of customer support services are more important than
any available trade secret or copyright protection.

License fees are generated from the initial licensing of a product and the
subsequent licenses purchased under our CPU-based licensing program or our
MIPS-based licensing program. Included in license revenues are capacity-based
license upgrade fees which are charged when a customer acquires the right to run
an already licensed product on additional processing capacity measured in MIPS
for all CPUs for which our products are licensed. These license upgrade fees
include fees associated with a customer's purchase of the right to operate a
product with currently installed additional processing capacity and/or with
anticipated future processing capacity. We do not sell or transfer title of our
products to our customers, but rather a perpetual right to use the product is
granted to customers pursuant to a licensing agreement. Under the CPU option,
the license fee is based principally upon the number and size of the central
processing units. Under the MIPS option, which we are now emphasizing, the
license fee is based upon the amount of the customer's computing power as
measured in MIPS. In 1998, 74% of our new licenses were priced on a MIPS basis.
Our client-server products are licensed to end users on a per-server or length
of service basis.

We generate revenue through perpetual product licenses and maintenance
service agreements that are renewed annually on the anniversary of the original
purchase date. In 1998, approximately 24% of our revenue was generated from
maintenance service agreements. Additional revenue is generated when product
licenses are transferred to different or larger CPUs. No single customer
accounted for greater than 5% of our total revenue in 1998. Sales of storage
management products accounted for 59% of total license revenue in 1998 while
license revenue from performance management products accounted for 32% of total
license revenue.

We generally offer our customers extended payment terms of one to five
years. In the case of extended payment term agreements, a customer is typically
required to make equal annual fixed payments. The first year of maintenance is
bundled with standard licensing agreements. In the case of extended payment term
agreements, maintenance is bundled for the length of the payment term. After the
initial term, in both instances, the customer may purchase maintenance annually.
Revenue, with respect to payment terms of three years or less, is recognized
upon contract acceptance and delivery of product. Revenue, with respect to
extended payment terms of greater than three years is deferred and recognized as
payments become due.

Historically, we have experienced fluctuations in quarterly sales with
greater revenue and net earnings in the latter half of the calendar year. As a
result, our operating results have fluctuated and are expected to fluctuate
significantly from quarter to quarter and may fluctuate on an annual basis as a
result of a number of factors. Revenue in any quarter is dependent to a
significant degree on orders booked and

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<PAGE> 33

renewals of agreements for maintenance in that quarter, as well as the buying
habits of our customers, and is not predictable with any degree of certainty.

Currently, we license, on a perpetual basis, certain technology from third
parties which is incorporated in some of our products. In the future, we may
license additional technology from third parties for incorporation in some of
our products on a perpetual or term basis.

RESEARCH AND DEVELOPMENT

The computer software industry is characterized by rapid technological
change which requires ongoing development and maintenance of software products.
It is customary for modifications to be made to a software product as experience
with its use grows or changes in manufacturers' hardware and software so
require.

We use a design strategy and development methodology, SST, that facilitates
product development, adherence to market requirements, quality testing
practices, product consistency and ease of integration, and long-term
supportability and maintainability. This methodology has evolved to address the
changing requirements of product-for-market development that have come about as
a result of client-server technology advances. We are currently expanding the
scope of our CenterStage suite of products to address Oracle, NT and third party
hardware devices and to enhance and extend the SST knowledge base.

We believe that our research and development staff, many with extensive
experience in our industry, represents a significant competitive advantage. As
of March 31, 1999, our research and development group consisted of 66 employees.
We seek to recruit highly qualified employees, and our ability to attract and
retain such employees will be a principal factor in our success in maintaining a
leading technological position. For the year ended December 31, 1998, our
research and development expenses were $7.8 million, for the year ended December
31, 1997, they were $6.1 million, for the year ended December 31, 1996, they
were $3.9 million and for the three months ended March 31, 1999, they were $2.5
million. We believe that significant investments in research and development are
required in order for us to remain competitive.

COMPETITION

The market in which we operate is highly competitive, rapidly evolving and
subject to continuous technological change. Our products have traditionally
addressed niches within the performance and storage management segments. In
conjunction with our SST strategy, we group our existing products into bundles
to compete more effectively and better address our customers' strategic issues.
This approach enables us to market our products to systems and applications
personnel, as well as to a higher level of management within our customer and
prospect base.

Although we believe that we maintain a competitive advantage by bundling
our software products to minimize point product competition and by offering
products which we believe are unavailable from our competitors, we cannot assure
you that we can maintain or enhance our competitive position against current and
future competitors. Our competitive position may be affected by factors such as
the emergence of new products, fundamental changes in computing technology and
data storage and manipulation platforms and applications, and aggressive pricing
and marketing strategies by our competitors.

In the storage management market, our primary competitors are Sterling
Software, Inc. and BMC Software, Inc. In the performance management market, our
primary competitors are BMC Software, Inc. and Computer Associates
International, Inc. In the Year 2000 market, our primary competitors are
Compuware, Inc. and Viasoft Inc. We believe that our products compete
effectively on the basis of quality, functionality, technical support and
service, and embedded intelligence and proactive automation.

EMPLOYEES

As of March 31, 1999, we employed 264 full-time employees, including 151 in
marketing, sales and support services, 66 in research and development, 20 in
customer support and maintenance, and 27 in
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<PAGE> 34

finance and administration. We employ 201 people in the United States and 63 in
other countries. Our future success will depend in large part upon our continued
ability to attract and retain highly skilled and qualified personnel in a highly
competitive environment. We believe our relationships with our employees are
good.

PROPERTIES

Our executive offices, customer support and marketing operations are
currently located in facilities occupying approximately 31,000 sq. ft. in
Alexandria, Virginia pursuant to a lease expiring in September 2001. The annual
rent and maintenance for the facility is approximately $505,000. The lease
provides for a renewal option for five years at the then current market rate of
rent. We also lease an aggregate of approximately 20,000 sq. ft. at an aggregate
annual rental of approximately $404,000 in 10 locations throughout the United
States which are used for sales activities. We also maintain international sales
offices in Australia, Brazil, Canada, France, Germany, Japan, Singapore, Spain
and the United Kingdom.

LEGAL PROCEEDINGS

We are not a party to any litigation that we believe could have a material
adverse effect on our business, financial condition or results of operations.

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<PAGE> 35

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers, and their ages, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
James A. Cannavino(1)(2)............. 54 Chairman of the Board of Directors
Judy G. Carter....................... 46 President, Chief Executive Officer and Director
C.R. Kinsey, III..................... 53 Vice President, Secretary and Chief Technology Officer
Robert C. McLaughlin................. 53 Treasurer and Chief Financial Officer
Robert Devine(1)(2).................. 59 Director
Charles Feld(1)(2)................... 56 Director
</TABLE>

- ---------------
(1) Member, audit committee.

(2) Member, compensation committee.

DIRECTORS AND EXECUTIVE OFFICERS

James A. Cannavino has been our Chairman of the Board since April 1998. Mr.
Cannavino is President and Chief Executive Officer of CyberSafe, Inc., a
corporation specializing in network security. He was the President and Chief
Executive Officer of Perot Systems Corporation through July 1997, and before
that was a Senior Vice President at IBM, responsible for strategy and
development. He also served on the IBM Corporate Executive Committee and
Worldwide Management Council, and on the board of IBM's integrated services and
solutions company. Mr. Cannavino currently is a consultant to Computer Concepts
and serves on the boards of the National Center for Missing and Exploited
Children, 7th Level, Inc. and Marist College.

Judy G. Carter has been our President and Chief Executive Officer and a
director since October 1993. Prior thereto, Ms. Carter was our Chief Operating
Officer from 1991. Ms. Carter started with us as a system software developer and
progressed to a number of supervisory and managerial roles, leading to her
appointment as Vice President of technical services in 1990. Ms. Carter is a
director of Fairfax Opportunities Unlimited, a non-profit organization.

C.R. Kinsey, III, one of our co-founders, has been our Vice President since
May 1998 and has been Secretary and Chief Technology Officer since 1977. From
1977 until May 1998, Mr. Kinsey was also our Treasurer. In addition, Mr. Kinsey
is a primary technical advisor to our technology division for new product
research and development, product enhancements and service and support.

Robert C. McLaughlin has been our Treasurer and Chief Financial Officer
since March 1998. Prior thereto, Mr. McLaughlin was a Department Director with
global responsibilities at Perot Systems Corporation in Dallas, Texas from
November 1996 through December 1997. Mr. McLaughlin also served as Senior Vice
President for a real estate investment venture in West Palm Beach, Florida from
1993 to 1996, as a Vice President of First Union National Bank of Florida, N.A.
in Fort Lauderdale from 1991 to 1993 and as a Vice President of Southeast Bank,
N.A. in Miami from 1987 to 1991.

Robert Devine has been a director since May 1998. Mr. Devine has been a
director and the Chief Executive Officer of Chemtainer Industries, Inc. for more
than twenty years. Chemtainer Industries manufactures and distributes a diverse
array of commercial and consumer products nationally and internationally with
eleven plants located in nine states throughout the United States. Mr. Devine is
also a director of Rototron Corp. and Tracey International, and has been a
director and Vice President of the non-profit New York City Mental Health
Association for more than ten years.

Charles Feld has been a director since July 1998. Mr. Feld has been
President of the Feld Group, Inc., a provider of temporary chief information
officer consulting services, for more than the past five years. Since December
1997, Mr. Feld has also served as operating Chief Information Officer of Delta
Air Lines,

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<PAGE> 36

an international airline. Prior thereto, from June 1992 until August 1997, Mr.
Feld served as operating Chief Information Officer for Burlington Northern Santa
Fe Corp.

EXECUTIVE COMPENSATION

The following table sets forth the annual and long-term compensation with
respect to our Chief Executive Officer and our other most highly compensated
executive officer other than the Chief Executive Officer ("named executive
officers") whose total annual salary and bonus equaled or exceeded $100,000 for
services rendered for the fiscal year ended December 31, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL ALL OTHER
COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2)
- --------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Judy G. Carter..................... 1997 $155,000(3) $165,000(4) -- $ 1,000
President and 1998 $170,833 -- -- --
Chief Executive Officer
C.R. Kinsey, III................... 1997 $155,000(3) $165,000(4) -- $189,000
Vice President, Secretary and 1998 $170,833 -- -- $114,611
Chief Technology Officer
</TABLE>

- ---------------
(1) No Other Annual Compensation is shown because the amounts of perquisites and
other non-cash benefits provided by us do not exceed the lesser of $50,000
or 10% of the total annual base salary and bonus disclosed in this table for
the respective officer.

(2) All Other Compensation includes royalties paid in respect of software
products developed by such officers.

(3) Includes $5,000 deferred from 1996.

(4) Includes $77,500 deferred from 1996.

STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth details regarding the options granted during
our last fiscal year to Judy G. Carter and C.R. Kinsey, III, the persons listed
in the Summary Compensation Table.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
-------------------------------------------- --------------------------------
PERCENT OF EXERCISE
TOTAL OPTIONS PRICE OR
OPTIONS GRANTED TO BASE PRICE EXPIRATION
NAME GRANTED (#) EMPLOYEES(1) PER SHARE DATE 5% 10%
- ---- --------------- ------------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Judy G. Carter(3)........ 150,000 Type I 6-30-01 $126,758 $ 296,720
200,000 Type II 12-31-02 288,146 671,595
-------- -------- ----------
350,000 9.7% $7.00 414,904 968,315
C.R. Kinsey, III(3)...... 200,000 Type I 6-30-01 169,011 395,626
250,000 Type II 12-31-02 360,183 839,494
-------- -------- ----------
450,000 12.4% $7.00 $529,194 $1,235,120
</TABLE>

- ---------------
(1) We granted options for 3,613,850 shares to employees during our fiscal year
ended December 31, 1998.

(2) Potential realizable value assumes that our stock price increases from the
date the options were granted until the end of the option term at the annual
rate specified. Annual compounding results in total appreciation of 15.2%
(at 5% per year) for the Type I options with a term of 2.9 years and total

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<PAGE> 37

appreciation (at 5% per year) of 24.0% for the Type II options with a term
of 4.4 years; and 31.8% total appreciation (at 10% per year) for Type I
options with a term of 2.9 years and total appreciation (at 10% per year) of
52.1% for the Type II Options with a term of 4.4 years. If the price of our
common stock increased at such rates from the price at the end of our 1998
fiscal year ($7.06 per share) over the next three years, our stock price
with 5% appreciation would be $8.17 per share and with 10% appreciation
would be $9.40 per share. These assumed rates of appreciation are specified
in the Commission's rules and are not our estimate or projection of our
future stock price growth.

(3) We granted options for 125,000 shares to Judy G. Carter and 40,000 shares to
C.R. Kinsey III in February 1999 and 50,000 shares to Judy G. Carter in May
1999, which amounts are not included in this table.

EMPLOYMENT AGREEMENTS

We have entered into an agreement with Mr. James A. Cannavino pursuant to
which he has agreed to serve as Chairman of our board of directors. As
compensation for his services, Mr. Cannavino was granted options to purchase
1,200,000 shares of common stock, 600,000 of which are Type I options and
600,000 of which are Type II options. "Type I" options vested one-half on the
earlier of (i) the closing date of our initial public offering (August 7, 1998),
or (ii) December 31, 1998 and one-half on December 31, 1998. "Type II" options
vest on December 31, 2002, subject to earlier vesting based upon the company
reaching certain defined levels of net income. The agreement with Mr. Cannavino
further provides for the issuance of a $500,000 full recourse loan to him for
relocation or other purposes upon the effective date of our initial public
offering. The money was lent to Mr. Cannavino and the loan is due on December 1,
2000. Mr. Cannavino also receives a monthly salary of $2,000 and is reimbursed
for certain expenses.

We have entered into employment agreements with each of Judy G. Carter,
C.R. Kinsey, III and Robert C. McLaughlin, which started on the effective date
of our initial public offering. The employment agreements with Ms. Carter and
Mr. Kinsey terminate December 31, 2002 and the employment agreement for Mr.
McLaughlin is for a three year term. The agreements automatically renew for
additional one year periods unless we or the employee notifies the other party
at least ninety days prior to the en d of any renewal term that we or they
desire to terminate such agreement. Pursuant to the agreements, Ms. Carter, Mr.
Kinsey, Mr. McLaughlin, receive annual compensation of $200,000, $200,000, and
$120,000, respectively and an incentive bonus based on meeting or exceeding
annual or quarterly net income targets to be established by the board of
directors. The incentive payments to Ms. Carter and Mr. Kinsey were up to
$150,000 for 1998 and are up to $200,000 for each of the years 1999 through
2002. Each employment agreement also provides for certain payments following
death or disability and further provides, in the event of a change in control of
SOFTWORKS, as defined therein, the right, at the employee's election, to
terminate the agreement and receive a lump sum payment of approximately three
times his or her annual salary.

401(k) SAVINGS PLAN

We sponsor a retirement plan (the "401(k) Savings Plan") intended to be
qualified under section 401(k) of the Internal Revenue Code of 1986, as amended.
All employees over age 21 are eligible to participate in the 401(k) Savings
Plan. Employees may contribute to the 401(k) Savings Plan on a tax deferred
basis up to 20% of their total annual salary, but in no event more than the
maximum permitted by the Code ($10,000 in calendar 1998). After an employee has
been with us for two years we match 25% of all employee contributions up to
$2,500 per year per employee, and all company contributions are fully vested.
For the fiscal year ended December 31, 1998, 161 employees participated in the
401(k) Savings Plan. For the fiscal year ended December 31, 1998, our
contribution on behalf of 76 eligible participants was an aggregate
approximately $78,000 to the 401(k) Savings Plan, of which an aggregate $4,700
was a contribution for Judy G. Carter and C.R. Kinsey, III.

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<PAGE> 38

1998 LONG TERM INCENTIVE PLAN

In May 1998, we adopted the SOFTWORKS, Inc. 1998 Long Term Incentive Plan
(the "1998 Incentive Plan") in order to motivate our qualified employees, to
help us attract employees and to align the interests of those employees with our
stockholders' interests.

The 1998 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal Revenue Code of 1986, as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to our and our affiliates' officers, key employees,
consultants and independent contractors.

The 1998 Incentive Plan, which is administered by the Long Term Incentive
Plan Administrative Committee of our board of directors, authorizes the issuance
of a maximum of 3,727,000 shares of common stock, which may be either newly
issued shares, treasury shares, reacquired shares, shares purchased in the open
market or any combination thereof. If any award under the 1998 Incentive Plan
terminates, expires unexercised, or is cancelled, the shares of common stock
that would otherwise have been issuable pursuant thereto will be available for
issuance pursuant to the grant of new awards. We have outstanding options to
purchase 3,727,000 shares of common stock under the 1998 Incentive Plan. Of the
3,727,000 options, James A. Cannavino has been granted 600,000 Type I options
and 600,000 Type II options, Judy Carter has been granted 150,000 Type I options
and 200,000 Type II options, C.R. Kinsey has been granted 200,000 Type I options
and 250,000 Type II options and Robert McLaughlin has been granted 20,000 Type I
options and 80,000 Type II options. Mr. Cannavino has exercised 200,000 Type I
options.

1999 STOCK OPTION PLAN

In January 1999 we adopted the 1999 Stock Option Plan (the "1999 Plan") in
order to motivate our employees, and to help us attract employees and to align
the interests of those employees with our stockholders' interests.

The 1999 Plan provides for the grant of non-qualified stock options to our
officers, key employees, consultants and independent contractors.

The 1999 Plan, which will be administered by our board of directors or a
committee of our board, authorizes the issuance of a maximum of 1,250,000 shares
of common stock, which may be either newly issued shares, treasury shares,
reacquired shares, shares purchased in the open market or any combination
thereof. If any award under the 1999 Plan terminates, expires unexercised, or is
cancelled, the shares of the common stock that would otherwise have been
issuable pursuant thereto will be available for issuance pursuant to the grant
of new awards. We have outstanding options to purchase 1,250,000 shares of
common stock under the 1999 Plan. Of the 1,250,000 options, Judy Carter has been
granted 175,000 options, C.R. Kinsey has been granted 40,000 options and Robert
McLaughlin has been granted 15,000 options.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During our last fiscal year, our Compensation Committee consisted of James
A. Cannavino, Charles Feld and Robert Devine. Neither Mr. Feld nor Mr. Devine is
our employee.

PERSONAL LIABILITY AND INDEMNIFICATION OF DIRECTORS

Our Certificate of Incorporation and By-laws contain provisions which
reduce the potential personal liability of our directors for certain monetary
damages and provide for indemnity of directors and other persons. We do not know
of any pending or threatened litigation against us or our directors that would
result in any liability for which any of our directors would seek
indemnification or similar protection.

These indemnification provisions are intended to increase the protection
provided directors and, thus, increase our ability to attract and retain
qualified persons to serve as directors. We believe that the

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<PAGE> 39

substantial increase in the number of lawsuits being threatened or filed against
corporations and their directors has resulted in a growing reluctance on the
part of capable persons to serve as members of boards of directors of companies,
particularly of companies which intend to become public companies. We also
believe that the increased risk of personal liability without adequate insurance
or other indemnity protection for our directors could result in their less
effective management. Consequently, we have agreed to indemnify our directors
and officers and have obtained directors and officers liability insurance.

The provisions which affect personal liability do not void a director's
fiduciary duty to us and our stockholders; instead, they eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for the following:

- failing to act in good faith;

- engaging in intentional misconduct or knowingly violating a law;

- authorizing the illegal payment of a dividend or repurchase of stock;

- obtaining an improper personal benefit;

- breaching a director's duty of loyalty (which is generally described as
the duty not to engage in any transaction which involves a conflict
between our interests and those of the director); or

- violating the federal securities laws.

The provisions also limit or indemnify against liability resulting from
grossly negligent decisions including grossly negligent business decisions
relating to attempts to change in our control.

Basically, the provisions regarding indemnification provide that we will
indemnify our directors against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with any action, suit or proceeding arising out of the director's
status as a director of the company, including actions brought by us or on our
behalf (shareholder derivative actions). The provisions do not require that a
director show good faith. The provisions also do not provide indemnification for
liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profit violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance.

These provisions reduce the potential rights of action which might
otherwise be available to you and other stockholders by limiting the liability
of officers and directors to the maximum extent allowable under Delaware law and
by providing indemnification against most damages and settlement amounts paid by
a director in connection with any stockholders derivative action. However, the
provisions do not limit the right of a stockholder to enjoin a director from
taking actions in breach of his fiduciary duty, or cause us to rescind actions
already taken, although as a practical matter courts may be unwilling to grant
such equitable remedies in circumstances in which such actions have already been
taken.

We have entered into Indemnification Agreements with certain of our
officers and directors. The Indemnification Agreements provide for reimbursement
for all direct and indirect costs of any type or nature whatsoever (including
attorneys' fees and related disbursements) actually and reasonably incurred in
connection with either the investigation, defense or appeal of certain legal
proceedings, including amounts paid in settlement by or on behalf of an
indemnitee thereunder.

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<PAGE> 40

CERTAIN TRANSACTIONS

In prior fiscal years, Computer Concepts provided certain corporate and
administrative services to us, including executive management and professional
services (accounting, auditing and legal). These services were performed for
$500,000 in each of 1997 and 1996. Prior to 1996, we effectively operated
independently of Computer Concepts and were responsible for our own expenses. As
a result, prior to 1996, Computer Concepts performed no material services nor
incurred any material expenses on our behalf. We and Computer Concepts also
jointly participated in certain employee benefit plans (defined contribution and
employee health) and we were allocated our applicable share of these costs.
Additionally, in prior fiscal years, certain of our employees received part of
their compensation in the form of Computer Concepts common stock or options. In
1998, there were no net administrative fees paid to Computer Concepts.

Mr. Cannavino, our Chairman of the Board, remains a consultant to Computer
Concepts and received from Computer Concepts prior to our initial public
offering 100,000 shares of our common stock. The 100,000 shares of common stock
were transferred in consideration for services rendered to Computer Concepts. It
is not anticipated that Mr. Cannavino will receive significant additional
compensation from Computer Concepts for future consulting services.

The employment agreement between us and Mr. Cannavino provides for the
issuance of a $500,000 full recourse loan to him for relocation or other
purposes upon the effective date of our initial public offering. The money was
lent to Mr. Cannavino and the loan is due on December 1, 2000.

We pay, on behalf of Computer Concepts, the salaries of two of their
employees located in the United Kingdom. These two salaries total approximately
$160,000 per year. Computer Concepts reimburses us quarterly for the amount of
those salaries plus a portion of our overhead.

VOTING TRUST AGREEMENT

In connection with our initial public offering, we, Computer Concepts,
James Cannavino, Daniel DelGiorno, Jr. and Robert Devine, each of whom were then
members of our board of directors, entered into a Voting Trust Agreement. On
April 22, 1999, Mr. DelGiorno resigned as a director and Trustee and was
replaced as a Trustee by Charles Feld, one of our other directors. Pursuant to
the Voting Trust Agreement, as amended, Computer Concepts has deposited the
shares of our common stock which it owns in a voting trust, together with
certain shares of common stock that may be acquired by our affiliates. The
Voting Trust Agreement provides, among other things, that the Trustees, who are
currently Messrs. Cannavino, Devine and Feld, will have the right to vote the
deposited shares in connection with certain specified major transactions (the
"Approval Actions") and that Computer Concepts and its affiliates will have the
right to vote for the election of directors and on other actions other than
Approval Actions, except that if an "independent" Trustee (as defined below)
ceases to be a director for any reason or is required to resign as a director of
we for failure to remain independent, the remaining independent Trustee(s) will
have the right to vote for a successor independent director, which Trustee(s)
will take direction from the holders of a majority of the shares of common stock
not held by Computer Concepts and its affiliates. The Voting Trust Agreement
requires that each Trustee must be a director, that two of the three Trustees
must be "independent" and that a Trustee required to be independent who ceases
to be so will resign as Trustee and as our director. The Voting Trust Agreement
does not prevent the pledge of any of the deposited shares. As used in the
Voting Trust Agreement, the term "independent" means any of our directors who
does not derive in excess of $60,000 of compensation from Computer Concepts or
its affiliates (other than us) in any fiscal year (other than Mr. Cannavino's
receipt of 100,000 shares of our common stock referred to above).

Pursuant to the Voting Trust Agreement, we agree that the following
Approval Actions will not be taken without the approval of the Trustees:

- the sale, lease, encumbrance, assignment, transfer or conveyance of all
or substantially all (i.e., 51% or more) of our assets or capital stock
to an acquiring party, or our merger or consolidation into or with
another corporation, if Computer Concepts or one of its affiliates is a
party to such transaction;

36
<PAGE> 41

- any filing by us or a subsidiary for relief as a debtor under any
bankruptcy or similar law, any application by us or a subsidiary for the
appointment of a receiver, trustee, custodian or similar fiduciary for a
substantial portion of the consolidated assets of us and our
subsidiaries, or the consent by us or a subsidiary to any petition or
application seeking similar relief which is filed against us or the
subsidiary, or our voluntary liquidation, dissolution or winding up;

- the declaration or payment of any dividends on any of our capital stock;

- the incurrence of any liens upon any of our property or properties which,
individually or in the aggregate, are material to our operations;

- the acquisition of any equity security, or any right to acquire any
equity security, of any other corporation, other than our formation of
one or more wholly-owned subsidiaries (or subsidiaries in which a de
minimis number of shares are held by a third party in order to comply
with local law), if such other corporation is Computer Concepts or one of
its affiliates;

- the acquisition of assets outside the ordinary course of business from
Computer Concepts or one of its affiliates;

- any transaction or proposed transaction between us and any "person," as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than a Trustee, us,
any trustee or other fiduciary holding securities under an employee
benefit plan of ours, or any corporation owned directly or indirectly by
our stockholders in substantially the same proportion as their ownership
of our stock), pursuant to which such person becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities representing 50% or more of the combined voting
power of our then outstanding securities;

- any transaction or proposed transaction between us and an affiliate or
any transaction or proposed transaction between us and Computer Concepts
for an aggregate consideration in excess of $1 million unless a fairness
opinion is obtained from SoundView Technology Group, Inc. or any other
independent investment banking institution of national standing which we
appoint; or

- any other transaction which requires stockholder approval under Delaware
law to the extent that any of the parties to the Voting Trust Agreement
have been advised in writing by counsel that the transaction presents an
actual conflict of interest between Computer Concepts and its affiliates
and the other holders of common stock.

The Voting Trust Agreement will remain in effect until the earliest of: (i)
Computer Concepts and its affiliates collectively ceasing to own 25% or more of
our common stock, (ii) the acquisition by a person other than Computer Concepts
and its affiliates of a greater percentage of our common stock than that then
owned by Computer Concepts and its affiliates or (iii) 10 years from the date of
the Voting Trust Agreement.

37
<PAGE> 42

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock
as of June 1, 1999 of (1) each person we know to beneficially own 5% or more of
our outstanding common stock, (2) each of our executive officers, directors and
director nominees, and (3) all of our executive officers and directors as a
group. Except as otherwise indicated, all shares of common stock are
beneficially owned, and investment and voting power is held, by the persons
named as owners. Percentage ownership for all officers and directors as a group
includes options currently exercisable or exercisable within 60 days to purchase
1,106,999 shares of common stock before and after the offering.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED PERCENTAGE OWNERSHIP
-------------------------- ------------------------
BEFORE AFTER BEFORE AFTER
NAME OF BENEFICIAL OWNER OFFERING OFFERING(1) OFFERING OFFERING(1)
- ------------------------ ---------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Computer Concepts Corp.(2)...................... 8,017,700 7,160,767 49.7% 41.8%
Spinneret Financial Systems, Inc.(3)............ 1,000,000 333,333 6.2% 2.0%
Tech Connect Consulting Inc. ................... 141,600 0 * 0
Joseph Dekama................................... 12,000 0 * 0
Bo-Tel, Inc. ................................... 244,000 144,000 1.5% *
Dan Kinsey...................................... 136,000 36,000 * *
Joseph Markus................................... 605,300(4) 352,500 3.7% 2.0%
Linda Neely..................................... 25,000 0 * 0
Dynasoft Inc. .................................. 25,000 10,000 * *
Anthony Coppola................................. 30,000 0 * 0
Dan DelGiorno Sr. .............................. 328,000 128,000 2.0% *
Global Access Technology, Inc. ................. 133,000 33,000 * *
James A. Cannavino.............................. 707,469(5) 707,469 4.3% 4.0%
Judy G. Carter.................................. 208,334(6) 208,334 1.3% 1.2%
C.R. Kinsey, III................................ 281,666(7) 281,666 1.7% 1.6%
Robert C. McLaughlin............................ 48,333(8) 48,333 * *
Robert Devine................................... 42,000(9) 42,000 * *
Charles Feld.................................... 42,000(9) 42,000 * *
All officers and directors as a group (6
persons)...................................... 1,329,802 1,329,802 7.7% 7.3%
</TABLE>

- ---------------
* Less than one percent (1%) unless otherwise indicated.

(1) Assumes no exercise of the underwriters' over-allotment option.

(2) The address is 80 Orville Drive, Bohemia, New York 11716. Includes an
aggregate 280,000 shares subject to options granted to third parties which
are currently exercisable or exercisable within 60 days.

(3) The address is 578 Post Road East, Westport, Connecticut 06880.

(4) Includes 17,300 shares and 34,000 options currently exercisable or
exercisable within 60 days owned by Mr. Markus' wife, 15,000 shares and
200,000 options currently exercisable or exercisable within 60 days owned by
S/J & Associates, Inc. of which Mr. Markus is the principal stockholder and
options currently exercisable or exercisable within 60 days to purchase
131,235 shares of common stock.

(5) Includes options currently exercisable or exercisable within 60 days to
purchase 500,000 shares of common stock. Does not include options not yet
exercisable nor exercisable within 60 days to purchase 400,000 shares of
common stock.

38
<PAGE> 43

(6) Represents options currently exercisable or exercisable within 60 days to
purchase 208,334 shares of common stock. Does not include options not yet
exercisable nor exercisable within 60 days to purchase 316,666 shares of
common stock.

(7) Represents options currently exercisable or exercisable within 60 days to
purchase 281,666 shares of common stock. Does not include options not yet
exercisable nor exercisable within 60 days to purchase 208,334 shares of
common stock.

(8) Represents options currently exercisable or exercisable within 60 days to
purchase 48,333 shares of common stock. Does not include options not yet
exercisable nor exercisable within 60 days to purchase 66,667 shares of
common stock.

(9) Represents options currently exercisable or exercisable within 60 days to
purchase 42,000 shares of common stock. Does not include options not yet
exercisable within 60 days to purchase 42,000 shares of common stock.

39
<PAGE> 44

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 150,000,000 shares of common
stock, $.001 par value per share and 2,000,000 shares of preferred stock, $.001
par value per share. At the 1999 annual meeting of our stockholders, presently
scheduled for June 1999, we intend to propose to amend our certificate of
incorporation to decrease our authorized common stock to 50,000,000 shares of
common stock.

COMMON STOCK

General. We have 150,000,000 authorized shares of common stock, 16,132,984
of which were issued and outstanding prior to the closing of this offering. All
shares of common stock currently outstanding are validly issued, fully paid and
non-assessable. All shares which are the subject of this prospectus, when issued
and paid for pursuant to this offering, will be validly issued, fully paid and
non-assessable.

Voting Rights. Each share of common stock entitles its holder to one vote,
either in person or by proxy, at meetings of stockholders. Our board of
directors consists of three classes each of which serves for a term of three
years. At each annual meeting of the stockholders, the directors in only one
class will be elected. The holders are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than fifty percent (50%) of the
issued and outstanding shares of common stock can elect all of our directors.
See "Principal and Selling Stockholders."

Dividend Policy. All shares of common stock are entitled to participate
ratably in dividends when and as declared by our board of directors out of the
funds legally available therefor. Any such dividends may be paid in cash,
property or additional shares of common stock. We have not paid any cash
dividends since our inception and presently expect that any earnings will be
used to develop our business and that no dividends on the shares of common stock
will be declared in the foreseeable future. Payment of future dividends will be
subject to the discretion of our board of directors and will depend upon, among
other things, future earnings, our operating and financial condition, our
capital requirements and general business conditions. Therefore dividends on our
common stock may not be paid in the future. In addition, pursuant to the Voting
Trust Agreement, we may not declare or pay dividends on our common stock without
the prior approval of the Trustees. See "Certain Transactions -- Voting Trust
Agreement" and "Dividend Policy."

Miscellaneous Rights and Provisions. Holders of common stock have no
preemptive or other subscription rights, conversion rights, redemption or
sinking fund provisions. In the event of our liquidation or dissolution, whether
voluntary or involuntary, each share of common stock is entitled to share
ratably in any assets available for distribution to our holders of the equity
after satisfaction of all liabilities, subject to the rights of holders of our
preferred stock.

PREFERRED STOCK

Our certificate of incorporation authorizes the issuance of up to 2,000,000
shares of preferred stock. Currently there are no shares of preferred stock
issued or outstanding.

The issuance of preferred stock by our board of directors could adversely
affect the rights of common stockholders by, among other things, establishing
preferential dividends, liquidation rights or voting power. The issuance of
preferred stock could be used to discourage or prevent another entity or person
from acquiring control of us through the acquisition of shares of common stock.

CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS

Our certificate of incorporation contains certain provisions which may be
deemed to be "anti-takeover" in nature because they may deter, discourage or
make it more difficult for another entity or

40
<PAGE> 45

person to assume control of us. In addition to the ability to issue preferred
stock, these provisions are as follows:

A vote of 66 2/3% of the stockholders is required by our certificate
of incorporation to approve certain transactions including mergers and
sales or transfers of all or substantially all of our assets.

Our by-laws provide for a classified board of directors and divides
the members of our board of directors into three classes: Class I (which
consists of Robert Devine) will serve until our 1999 Annual Meeting of
Stockholders. Class II (which consists of James A. Cannavino and Judy G.
Carter) will serve until our 2000 Annual Meeting of Stockholders. Class III
(which consists of Charles Feld) will serve until our 2001 Annual Meeting
of Stockholders. After their initial staggered terms, the term of each
class will run for three years and expire at successive annual meetings of
stockholders. Accordingly, we expect that it would take a minimum of two
annual meetings of stockholders to change a majority of our board of
directors. Further, directors may only be removed for cause prior to the
expiration of their term of office.

DELAWARE GENERAL CORPORATION LAW

The Delaware General Corporation Law further contains certain anti-takeover
provisions. Section 203 of the Delaware General Corporation Law provides, with
certain exceptions, that a Delaware corporation may not engage in any of a broad
range of business combinations with a person who owns 15% or more of the
corporation's outstanding voting stock (an "interested stockholder") for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder, (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation (excluding shares owned by persons
who are both officers and directors of the corporation and shares held by
certain employee stock ownership plans), or (iii) the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting, excluding shares owned by the interested stockholder.

TRANSFER AGENT, REGISTRAR AND WARRANT AGENT

The transfer agent and registrar for the common stock is Manhattan Transfer
Registrar Co., Lake Ronkonkoma, New York.

41
<PAGE> 46

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 17,132,984 shares of common
stock outstanding. Of these shares, the 3,500,000 shares of common stock sold in
this offering (4,025,000 shares if the underwriters' over-allotment option is
exercised in full) will be freely tradable without restriction or further
registration under the Securities Act, except for any shares purchased by our
"affiliate" (in general, a person who has a control relationship with us), which
will be subject to the limitations of Rule 144 adopted under the Securities Act.
All of the remaining shares are deemed to be "restricted securities," as that
term is defined under Rule 144.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including our affiliate (or
persons whose shares are aggregated), who has owned restricted shares of common
stock beneficially for at least one year is entitled to sell, within any three-
month period, a number of shares that does not exceed the greater of 1% of the
total number of outstanding shares of the same class or the average weekly
trading volume of the common stock on all exchanges and/or reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the date on which notice of the sale is filed with
the Securities and Exchange Commission. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about us. A person who has not been an affiliate of
ours for at least the three months immediately preceding the sale and who has
beneficially owned shares of common stock for at least two years is entitled to
sell such shares under Rule 144 without regard to any of the limitations
described above.

7,217,700 of the shares of restricted stock outstanding upon completion of
this offering (6,917,700 shares if the underwriters' over-allotment option is
exercised in full) have been held for more than one year. Computer Concepts,
which owns all of these shares, has agreed that for a period of 180 days after
the effective date of this prospectus, without the prior written consent of
SoundView Technology Group, Inc., it will not, with certain limited exceptions,
sell or otherwise dispose of any shares of common stock beneficially owned by
it. In addition, Computer Concepts has "piggy-back" registration rights for
2,500,000 of such shares for a one-year period from the effective date of this
prospectus. Following expiration of the lock-up period (or earlier consent of
SoundView Technology Group, Inc.), these shares will be eligible for sale
subject to the restrictions of Rule 144. We have registered the 4,977,000 shares
reserved for issuance under our stock option plans. The sale of a substantial
number of these shares in the public market could adversely affect prevailing
market prices following the offering.

42
<PAGE> 47

UNDERWRITING

Upon the terms and subject to the conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the underwriters named below, for whom
SoundView Technology Group, Inc., Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated, and Raymond James & Associates, Inc. are acting as
representatives (the "Representatives"), have severally agreed to purchase from
us and the selling stockholders an aggregate of 3,500,000 shares of common
stock. The number of shares of common stock that each underwriter has agreed to
purchase is set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------
<S> <C>
SoundView Technology Group, Inc.............................
Dain Rauscher Wessels.......................................
Raymond James & Associates, Inc.............................
---------
Total............................................. 3,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
underwriters to purchase shares of common stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of common stock are purchased by the underwriters pursuant to the
Underwriting Agreement, all such shares of common stock (other than the shares
of common stock covered by the over-allotment option described below) must be so
purchased.

We and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, and
to contribute to payments that the underwriters may be required to make in
respect thereof.

The underwriters propose to offer the shares of common stock directly to
the public at the public offering price set forth on the cover page of this
prospectus and to certain dealers (who may include the underwriters) at such
price less a concession not to exceed $ per share. The underwriters may
allow, and such dealers may reallow, a concession not to exceed $ per share
to any other underwriter and certain other dealers. The Representatives have
advised us that the underwriters do not intend to confirm any shares to any
accounts over which they exercise discretionary control.

We and certain of the selling stockholders have granted to the underwriters
an option, exercisable for 30 days from the date of this prospectus, to purchase
up to an aggregate of 525,000 additional shares of common stock at the initial
public offering price less underwriting discounts and commissions. Such option
may be exercised solely for the purpose of covering over-allotments, if any, in
connection with the offering of the shares offered hereby. To the extent that
the underwriters exercise such option, each of the underwriters will be
committed, subject to certain conditions, to purchase a number of additional
shares proportionate to such underwriter's initial commitment as indicated in
the preceding table.

The offering of the shares offered hereby is made for delivery when, as and
if accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject an order for the purchase of shares in whole or in
part.

All of our directors and executive officers and Computer Concepts have
agreed that, for a period of 180 days after the date of this prospectus, without
the prior written consent of SoundView Technology Group, Inc., they will not,
with certain limited exceptions, directly or indirectly, offer, sell, contract
to sell, grant any option to purchase or otherwise dispose of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock or, in any manner, transfer all or a portion of the economic
consequences associated with the ownership of the common stock, other than the
shares of common stock offered hereby.

In connection with this offering, the underwriters and other persons
participating in this offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the common stock.

43
<PAGE> 48

Specifically, the underwriters may over-allot in connection with this offering,
creating a short position in common stock for their own account. To cover a
short position or to stabilize the price of the common stock, the underwriters
may bid for, and purchase, shares of common stock in the open market. The
underwriters may also impose a penalty bid whereby they may reclaim selling
concessions allowed to an underwriter or a dealer for distributing common stock
in this offering, if the underwriters repurchase previously distributed common
stock in transactions to cover their short position, in stabilization
transactions or otherwise. Finally, the underwriters may bid for, and purchase,
shares of common stock in market making transactions. These activities may
stabilize or maintain the market price of the common stock above market levels
that may otherwise prevail. The underwriters are not required to engage in these
activities and may stop any of these activities at any time without notice.

In connection with this offering, certain underwriters and other selling
group members or their affiliates may engage in passive market making
transactions in the common stock on the Nasdaq National Market in accordance
with Rule 103 of Regulation M under the Securities Exchange Act of 1934, as
amended. Rule 103 permits passive market making during the period when
Regulation M would otherwise prohibit market making activity by the participants
in this offering. Passive market making consists of displaying bids on the
Nasdaq National Market limited by the bid prices of independent market makers
and making purchases limited by such prices and effected in response to order
flow. Rule 103 limits the net purchases by a passive market maker on each day to
a specified percentage of the passive market maker's average daily trading
volume in the common stock during a specified period. The passive market maker
must stop its passive market making transactions for the rest of that day when
such limit is reached.

LEGAL MATTERS

The validity of the issuance of the common stock offered hereby will be
passed upon for us by the law firm of Blau, Kramer, Wactlar & Lieberman, P.C.,
Jericho, New York. Members of Blau, Kramer, Wactlar & Lieberman, P.C. own an
aggregate of 20,000 shares of our common stock. Certain matters will be passed
upon for the underwriters by Morrison & Foerster LLP, New York, New York.

EXPERTS

Our audited financial statements as of December 31, 1997 and 1998 and for
each of the three years in the period ended December 31, 1998, included in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

AVAILABLE INFORMATION

We have filed with the Commission a registration statement on Form S-1,
pursuant to the Securities Act, with respect to the common stock. This
prospectus does not contain all of the information set forth in the registration
statement, and its exhibits thereto. For further information with respect to us
and the common stock, reference is made to the registration statement and our
exhibits, which may be obtained at the locations described below.

We are subject to the informational requirements of the Securities Exchange
Act of 1934 and, therefore, we file reports, proxy statements, information
statements and other information with the Commission. You may inspect and copy
this information (at prescribed rates) at the Commission's public reference
facilities at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the regional offices of the Commission located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, IL 60661 and Seven World Trade Center,
Suite 1300, New York, NY 10048. Please call the Commission at 1-800-SEC-0330 for
more information on its public reference rooms. The Commission also maintains an
Internet Website at http://www.sec.gov that contains reports, proxy statements
and information statements and other information regarding issuers that file
electronically with the Commission. In addition, this information may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.

44
<PAGE> 49

SOFTWORKS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets As of December 31, 1997 and 1998
and As of March 31, 1999 (unaudited)...................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1997 and 1998 and For the Three Months
Ended March 31, 1998 (unaudited) and March 31, 1999
(unaudited)............................................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1997 and 1998 and For the
Three Months Ended March 31, 1999 (unaudited)............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1997 and 1998 and For the Three Months
Ended March 31, 1998 (unaudited) and March 31, 1999
(unaudited)............................................... F-6
Notes to the Consolidated Financial Statements as of
December 31, 1997 and 1998 and As of March 31, 1999
(unaudited)............................................... F-7
</TABLE>

F-1
<PAGE> 50

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To SOFTWORKS, Inc.:

We have audited the accompanying consolidated balance sheets of SOFTWORKS,
Inc., a Delaware corporation, and subsidiaries (the "Company") as of December
31, 1997 and 1998, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SOFTWORKS, Inc., and
subsidiaries as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Washington D.C.
February 9, 1999

F-2
<PAGE> 51

SOFTWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------- -----------
1997 1998 1999
----------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................... $ 360 $ 6,003 $ 6,759
Accounts receivable, net of allowance for doubtful accounts
of $206, $289 and $244 in 1997, 1998 and 1999,
respectively.............................................. 10,652 14,316 7,743
Installment receivables..................................... 6,148 16,406 18,440
Prepaid expenses and other current assets................... 984 1,349 2,379
Deferred tax assets......................................... 138 306 --
------- ------- -------
Total current assets.............................. 18,282 38,380 35,321
------- ------- -------
Installment receivables, noncurrent......................... 6,480 7,908 7,759
Property and equipment, net................................. 1,523 2,498 2,698
Software development costs, net............................. 3,357 3,039 2,732
Goodwill, net of accumulated amortization of $2,477, $3,346
and $3,568 in 1997, 1998 and 1999, respectively........... 4,611 4,143 3,921
Other assets................................................ 734 1,900 1,561
Deferred tax assets, noncurrent............................. 696 484 500
------- ------- -------
Total assets...................................... $35,683 $58,352 $54,492
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses....................... $ 4,689 $ 6,136 $ 4,349
Current portion of long-term debt........................... 1,083 1,930 2,060
Deferred maintenance revenue................................ 6,225 9,064 7,973
Deferred installment revenue................................ 5,506 7,314 7,317
Income taxes payable........................................ -- 2,057 114
Due to Principal Shareholder................................ 1,554 -- --
------- ------- -------
Total current liabilities......................... 19,057 26,501 21,813
Deferred maintenance revenue, noncurrent.................... 740 3,882 4,585
Deferred installment revenue, noncurrent.................... 7,122 7,883 6,912
Long-term debt, noncurrent.................................. 1,294 1,401 2,401
Payable to Principal Shareholder for federal income taxes... 1,383 -- --
------- ------- -------
Total liabilities................................. 29,596 39,667 35,711
------- ------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; 2,000,000 shares
authorized; none issued or outstanding.................... -- -- --
Common stock, $.001 par value; 150,000,000 authorized;
14,083,000, 15,973,000 and 15,973,000 shares issued and
outstanding in 1997, 1998 and 1999, respectively.......... 14 16 16
Additional paid-in capital.................................. 5,549 15,201 15,201
Retained earnings........................................... 578 3,535 3,628
Accumulated other comprehensive loss........................ (54) (67) (64)
------- ------- -------
Total stockholders' equity........................ 6,087 18,685 18,781
------- ------- -------
Total liabilities and stockholders' equity........ $35,683 $58,352 $54,492
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 52

SOFTWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Software licenses................... $ 8,611 $16,633 $31,725 $ 3,736 $ 6,730
Services............................ 7,914 10,137 12,024 2,860 3,528
------- ------- ------- ------- -------
Total revenue............... 16,525 26,770 43,749 6,596 10,258
------- ------- ------- ------- -------
Cost of revenue (exclusive of
amortization and depreciation shown
separately below except for
amortization of software development
costs):
Software licenses................... 424 580 1,843 439 216
Services............................ 720 1,055 2,407 525 549
------- ------- ------- ------- -------
Total cost of revenue....... 1,144 1,635 4,250 964 765
------- ------- ------- ------- -------
Gross margin.......................... 15,381 25,135 39,499 5,632 9,493
OPERATING EXPENSES:
Sales and marketing................. 6,161 12,463 19,666 3,395 5,012
General and administrative.......... 2,217 2,791 4,575 1,102 1,072
Amortization and depreciation....... 1,596 1,972 2,169 490 710
Research and development............ 3,911 6,093 7,800 1,618 2,500
------- ------- ------- ------- -------
Total operating expenses.... 13,885 23,319 34,210 6,605 9,294
------- ------- ------- ------- -------
Operating income (loss)............... 1,496 1,816 5,289 (973) 199
Other expenses........................ -- -- 252 -- 46
------- ------- ------- ------- -------
Income (loss) from operations before
income taxes........................ 1,496 1,816 5,037 (973) 153
Provision for (benefit from) income
taxes............................... 704 1,030 2,080 (206) 60
------- ------- ------- ------- -------
Net income (loss)..................... $ 792 $ 786 $ 2,957 $ (767) $ 93
======= ======= ======= ======= =======
Basic and diluted net income (loss)
per share........................... $ 0.06 $ 0.06 $ 0.20 $ (0.05) $ 0.01
======= ======= ======= ======= =======
Basic weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 15,973
======= ======= ======= ======= =======
Diluted weighted average shares
outstanding......................... 14,083 14,083 14,860 14,083 16,380
======= ======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 53

SOFTWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL RETAINED OTHER TOTAL
------------------- PAID-IN EARNINGS COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
SHARES AMOUNT CAPITAL (DEFICIT) (LOSS) INCOME EQUITY INCOME (LOSS)
---------- ------ ---------- --------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1995........... 14,083,000 $14 $ 5,489 $ 711 $ -- $ 6,214
Contribution to Capital.......... -- -- 60 -- -- 60
Net loss and comprehensive
loss.......................... -- -- -- (1,711) -- (1,711) $(1,711)
---------- --- ------- ------- ---- ------- -------
BALANCE, December 31, 1995......... 14,083,000 14 5,549 (1,000) -- 4,563
Net income and comprehensive
income........................ -- -- -- 792 -- 792 $ 792
---------- --- ------- ------- ---- ------- -------
BALANCE, December 31, 1996......... 14,083,000 14 5,549 (208) -- 5,355
Foreign currency translation
adjustment.................... -- -- -- -- (54) (54) $ (54)
Net income....................... -- -- -- 786 -- 786 786
---------- --- ------- ------- ---- ------- -------
Total comprehensive income.... $ 732
=======
BALANCE, December 31, 1997......... 14,083,000 14 5,549 578 (54) 6,087
Foreign currency translation
adjustment.................... -- -- -- -- (13) (13) $ (13)
Issuance of common stock to
consultant in connection with
initial public offering....... 190,000 -- -- -- -- --
Issuance of common stock pursuant
to the initial public
offering, net of offering
costs......................... 1,700,000 2 9,652 -- -- 9,654
Net income....................... -- -- -- 2,957 -- 2,957 2,957
---------- --- ------- ------- ---- ------- -------
Total comprehensive income.... $ 2,944
=======
BALANCE, December 31, 1998......... 15,973,000 16 15,201 3,535 (67) 18,685
Foreign currency translation
adjustment (unaudited)........ -- -- -- -- 3 3 $ 3
Net income (unaudited)........... -- -- -- 93 -- 93 93
---------- --- ------- ------- ---- ------- -------
Total comprehensive income
(unaudited)................. $ 96
=======
BALANCE, March 31, 1999
(unaudited)...................... 15,973,000 $16 $15,201 $ 3,628 $(64) $18,781
========== === ======= ======= ==== =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 54

SOFTWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------- -------------------------
1996 1997 1998 1998 1999
------- ------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $ 792 $ 786 $ 2,957 $ (767) $ 93
Adjustments to reconcile net income (loss) to net
cash provided by operating activities --
Amortization and depreciation
Property and equipment......................... 505 697 774 180 252
Software development costs..................... 543 689 1,480 170 307
Goodwill....................................... 659 749 869 207 222
Provision for doubtful accounts.................. 50 75 317 55 (45)
Loss on disposal of property and equipment....... 2 -- -- -- --
Deferred tax provision (benefit)................. 569 (33) 44 (231) 290
Changes in operating assets and liabilities --
Accounts receivable and installment
receivables.................................... (8,598) (11,002) (15,667) 1,480 4,733
Prepaid expenses and other current assets........ (314) (561) (365) (360) (1,030)
Other assets..................................... (306) (377) (1,166) 48 339
Accounts payable and accrued expenses............ 761 2,515 1,447 (936) (1,787)
Income taxes payable............................. -- -- 2,057 -- (1,943)
Deferred revenue................................. 8,071 6,675 8,550 1,895 (1,356)
------- ------- -------- -------- -------
Net cash provided by operating activities... 2,734 213 1,297 1,741 75
------- ------- -------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................ (445) (990) (1,749) (138) (452)
Software development and technology purchases...... (359) (1,044) (1,162) (388) --
Additional consideration for SOFTWORKS, Inc.
acquisition...................................... (478) (522) (401) (269) --
------- ------- -------- -------- -------
Net cash used in investing activities....... (1,282) (2,556) (3,312) (795) (452)
------- ------- -------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from (payments to) Principal
Shareholder...................................... 145 407 (1,554) (336) --
Change in amount payable to Principal Shareholder
for federal income taxes......................... -- 858 (1,383) -- --
Repayments of long-term debt....................... (190) (253) -- (69) (891)
Proceeds from long-term debt....................... 161 -- 954 -- 2,021
Net proceeds from initial public offering.......... -- -- 9,654 -- --
------- ------- -------- -------- -------
Net cash provided by (used in) financing
activities................................ 116 1,012 7,671 (405) 1,130
------- ------- -------- -------- -------
Effect of exchange rate changes on cash and cash
equivalents........................................ -- (44) (13) 8 3
------- ------- -------- -------- -------
Net increase (decrease) in cash and cash
equivalents........................................ 1,568 (1,375) 5,643 549 756
Cash and cash equivalents, beginning of period....... 167 1,735 360 360 6,003
------- ------- -------- -------- -------
Cash and cash equivalents, end of period............. $ 1,735 $ 360 $ 6,003 $ 909 $ 6,759
======= ======= ======== ======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid...................................... $ 46 $ 44 $ 24 $ 10 $ 292
------- ------- -------- -------- -------
Income taxes paid.................................. $ 40 $ (96) $ 14 $ 14 $ 1,713
======= ======= ======== ======== =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Assumption of long-term debt from capitalized
software technology.............................. $ -- $ 2,160 $ -- $ -- $ --
======= ======= ======== ======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 55

SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS:

The Company

SOFTWORKS, Inc. ("SOFTWORKS" or the "Company") designs, develops, markets,
and supports systems management software products for enterprise computing
environments primarily in the United States. SOFTWORKS wholly owns subsidiaries
in the United Kingdom, France, Brazil, Australia, Italy, Germany, and Spain
which operate primarily as sales offices. SOFTWORKS was incorporated in 1977
under the state laws of Maryland and reincorporated in 1998 under the state laws
of Delaware. In 1993, SOFTWORKS was acquired by Computer Concepts Corp. (the
"Principal Shareholder").

Increase in Authorized Shares and Stock Split

SOFTWORKS has restated its articles of incorporation to increase the number
of authorized shares to 2,000,000 of preferred shares and 150,000,000 of common
shares. Additionally, on May 28, 1998, the board of directors of SOFTWORKS
effected a 5,000-for-1 stock split. Further, on June 29, 1998, the board of
directors of SOFTWORKS declared and issued a stock dividend of 583,000 shares of
common stock to its sole stockholder, the Principal Shareholder. The effects of
the stock split, and stock dividend have been given retroactive application in
the consolidated financial statements for all periods presented.

Public Offering

On August 4, 1998, the Company completed an initial public offering ("IPO")
of 4,200,000 shares of the Company's common stock, par value $.001. 1,700,000 of
these shares were sold by the Company, resulting in net proceeds to the Company
of approximately $9.7 million, while the remaining 2,500,000 shares sold were
owned by the Principal Shareholder and another stockholder. In conjunction with
the IPO, the Company also issued 190,000 shares of common stock to a consultant.

Voting Trust Agreement

In conjunction with the IPO, shares owned by the Principal Shareholder were
deposited in a voting trust. The voting power of the shares deposited in the
trust is held by three trustees who are members of the board of directors of
SOFTWORKS. One trustee was the Chief Executive Officer of the Principal
Shareholder, who resigned as trustee and director of the Company on April 22,
1999. The three trustees now serving are directors of the Company who do not
have a significant financial interest in the Principal Shareholder. This
agreement remains in effect until the earliest of: (i) Computer Concepts and its
affiliates collectively ceasing to own 25% or more of the common stock, (ii) the
acquisition by a person other than Computer Concepts and its affiliates of a
greater percentage of the common stock than that then owned by Computer Concepts
and its affiliates or (iii) 10 years from the date of the Voting Trust
Agreement.

Principles of Consolidation

The consolidated financial statements include the accounts of SOFTWORKS and
its wholly-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

Risks and Other Factors

As a company that develops, markets, licenses and supports a family of
enterprise systems management software products for storage management and
performance management, SOFTWORKS faces certain risks. These include dependence
on proprietary technology, rapid technological change, errors or failures in its
products, dependence on key personnel, challenges in recruiting personnel and a
highly competitive marketplace.

F-7
<PAGE> 56
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1998, the Principal Shareholder owned more than 50% of
the outstanding shares of the Company. The Principal Shareholder received a
going concern opinion with respect to its audited financial statements for the
year ended December 31, 1997. A going concern opinion was not rendered for 1998.
Under certain circumstances, the Principal Shareholder's financial condition may
influence its decisions as the controlling stockholder of the Company. The
voting trust agreement noted above gives the majority of trustees control over
significant corporate actions, including certain dispositions or encumbrances of
assets and the payment of dividends.

2. SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

The unaudited consolidated balance sheet as of March 31, 1999, and the
unaudited consolidated statements of operations and cash flows for the three
months ended March 31, 1998 and 1999, have been prepared by the Company and in
the opinion of management include all adjustments, consisting only of normal
recurring accruals, which management considers necessary for fair presentation
of the financial statements for such periods. The Company's results of
operations for the three months ended March 31, 1999, are not necessarily
indicative of results that may be expected for any other future interim periods
or for the year ending December 31, 1999. Demand for the Company's products has
historically been higher during the fourth quarter, primarily due to the capital
spending trends of its customers, which has resulted in higher software license
revenue in that period and lower software license revenue in the first quarter.

Revenue Recognition

Revenue from the sale of perpetual and term software licenses is
recognized, net of provisions for returns, at the time of delivery and
acceptance of software products by the customer, when collectibility is
probable. The Company provides customers with the option to pay for license fees
in one lump sum or in installments over extended periods of time, generally one
to five years. Through 1998, the Company did not consider sales contracts with
amounts due for periods greater than one year from delivery fixed and
determinable, and accordingly, recognized such amounts as revenue when they
became due. Beginning January 1, 1999, for contracts with payment terms of three
years or less, the Company will recognize the entire amount of the license
revenue at the time of delivery and acceptance by the customer. This change is
being made since the Company has established a history which demonstrates that
concessions are not provided to customers with whom we have these extended
payment arrangements. For contracts with amounts due for periods greater than
three years, we do not consider such sales fixed and determinable, and
accordingly, recognize such amounts as revenue when they become due. Maintenance
revenue that is bundled with an initial license fee is deferred and recognized
ratably over the maintenance period. Amounts deferred for maintenance are based
on the fair value of equivalent maintenance services sold separately. Revenue
from professional services is recognized as the services are performed.
Maintenance and professional service revenue are classified as services revenue
on the accompanying statement of operations.

The American Institute of Certified Public Accountants (AICPA) issued
Statement of Position 97-2 "Software Revenue Recognition" ("SOP 97-2"), which
superceded Statement of Position 91-1 "Software Revenue Recognition." SOP 97-2
provides additional guidance with respect to multiple element arrangements;
returns, exchanges, and platform transfer rights; resellers; services; funded
software development arrangements; and contract accounting. The Company
implemented SOP 97-2 for the year ended December 31, 1997. In March 1998,
Statement of Position 98-4 ("SOP 98-4"), "Deferral of the Effective Date of a
Provision of SOP 97-2", amended a portion of SOP 97-2. Subsequent to the
issuance of SOP 98-4 the AICPA issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, With Respect to Certain Transactions". SOP 97-2,
the amendment contained in SOP 98-4 and the modification contained in SOP 98-9
were adopted by the Company but did not have a material effect on the Company's
software revenue recognition policy.
F-8
<PAGE> 57
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cash Equivalents

The Company considers all highly liquid instruments with an original
maturity of three months or less at the time of purchase to be cash equivalents.

Installment Receivables

The Company offers customers extended payment terms to purchase software.
The extended payment plans consist generally of plans with payment terms of one
to five years. The Company records an installment receivable for the payments
not yet billed by the Company. When the payment is billed by the Company, the
payment is classified as accounts receivable.

The Company imputes interest on the extended payment plans and recognizes
interest income as the related deferred license revenue is recognized.

Property and Equipment

Property and equipment are stated at cost and depreciated on a
straight-line basis over the estimated useful lives of the related assets.
Leasehold improvements are amortized over the shorter of the useful life of the
asset or the lease term. Capitalized lease assets are amortized over the shorter
of the lease term or the service life of the related assets.

Software Development Costs

Costs associated with the development of software products are generally
capitalized once technological feasibility is established. Purchased software
technologies are recorded at cost and software technologies acquired in purchase
business transactions are recorded at their estimated fair value. Software costs
associated with technology development and purchased software technologies are
amortized using the greater of the ratio of current revenue to total projected
revenue for a product or the straight line method over a useful life of 2 to 5
years. Amortization of software costs begins when products become available for
general customer release. Costs incurred prior to the establishment of
technological feasibility are expensed as incurred and reflected as research and
development costs in the accompanying consolidated statements of operations.

Goodwill

In connection with its acquisition by the Principal Shareholder in 1993
under which there was a change in 100 percent of the Company's equity interests,
the excess of the acquisition cost of the Company over the then fair value of
its tangible and intangible net assets (or goodwill) has been recorded on the
books of the Company, using "push-down" accounting. The goodwill is being
amortized over a ten year period.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including goodwill resulting
from business acquisitions, capitalized software development costs, and property
and equipment, for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. To
determine recoverability of its long-lived assets, the Company evaluates the
probability that future undiscounted net cash flows, without interest charges,
will be less than the carrying amount of the assets. The Company has determined
that as of December 31, 1998, there has been no impairment in the carrying value
of long-lived assets.

F-9
<PAGE> 58
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes

The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires the determination of deferred tax assets and liabilities
based on the differences between the financial statement and income tax bases of
assets and liabilities, using enacted tax rates. SFAS No. 109 requires that the
net deferred tax asset is to be adjusted by a valuation allowance, if, based on
the weight of available evidence, it is more likely than not that some portion
or all of the net deferred tax asset will not be realized.

Basic and Diluted Net Income (Loss) Per Share

In March 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997 and has been implemented for all periods presented. SFAS No. 128 requires
dual presentation of basic and diluted earnings per share. Basic earnings per
share includes no dilution and is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share includes the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. As of December 31, 1998 and March 31,
1999 (unaudited), the total stock options outstanding were 3,604,225 and
4,672,500, respectively. Due to the anti-dilutive nature of the options for all
audited periods presented, there is no effect on the calculation of weighted
average shares for diluted earnings per share. As a result, the audited basic
and diluted earnings per share amounts are identical. For the unaudited three
months ended March 31, 1998 the outstanding options would have been
anti-dilutive in nature; however, for the three months ended March 31, 1999, the
effect of the treasury stock method resulted in the inclusion of 407,000 shares
in the diluted earnings per share calculation.

Basic and diluted net earnings per share is also computed pursuant to SEC
Staff Accounting Bulletin No. 98 ("SAB 98"). SAB 98 requires that all equity
instruments issued at nominal prices, prior to the effective date of an initial
public offering, be included in the calculation of basic and diluted net income
per share as if they were outstanding for all periods presented. To date the
Company has not had any issuances or grants at nominal prices.

Foreign Currency

The functional currency for all of the Company's international subsidiaries
is the subsidiary's local currency. Assets and liabilities of international
subsidiaries are translated into U.S. dollars at period-end exchange rates and
revenue and expense accounts and cash flows are translated at average exchange
rates during the period. Gains and losses resulting from translation are
recorded as accumulated other comprehensive income in stockholders' equity.
Transaction gains and losses are recognized in the consolidated statements of
operations as incurred. The Company does not engage in any hedging activities .
As a result, there is no guarantee that fluctuations in exchange rates might not
have a material adverse effect on the Company's financial results.

Included in cash and cash equivalents at December 31, 1997, December 31,
1998 and March 31, 1999 (unaudited) is approximately $278,000, $464,000 and
$1,000,000, respectively of cash denominated in various foreign currencies.

New Accounting Pronouncements

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in the

F-10
<PAGE> 59
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

financial statements. The adoption of SFAS No. 130 did not have a material
impact on the Company's results of operations, financial position, or cash
flows.

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. The adoption
of SFAS No. 131 has had no significant impact on the Company's results of
operations, financial position or cash flows.

In March 1998, the AICPA issued Statement of Position 98-1 "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use", ("SOP
98-1"). SOP 98-1 requires the Company to capitalize internal computer software
costs once certain capitalization criteria is met. SOP 98-1 is effective January
1, 1999, and is applied to all projects in progress upon the initial application
of SOP 98-1. The adoption of SOP 98-1 did not have a material impact on the
Company's results of operations, financial position, or cash flows.

During 1998, the Company adopted AICPA Statement of Position 98-5,
"Reporting on the Cost of Start-Up Activities." The adoption of this statement
requires the expensing of preopening costs as incurred. The adoption of SOP 98-5
did not have a material impact on the Company's results of operations, financial
position, or cashflows.

Concentrations and Fair Value of Financial Instruments

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash equivalents and trade
accounts receivables. At December 31, 1998, the Company's cash investments are
held at various financial institutions, which limits the amount of credit
exposure to any one financial institution. Concentrations of credit risk with
respect to trade accounts receivables are limited due to the large number of
customers comprising the Company's revenue base and their dispersion across
different industries and geographic areas. The Company performs ongoing credit
evaluations of its customers' financial condition but requires no collateral
from its customers. Unless otherwise disclosed, the fair value of financial
instruments approximates their recorded values.

Use of Estimates

In preparing consolidated financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassifications

Certain 1997 and 1996 amounts have been reclassified to conform to the 1998
presentation.

3. INSTALLMENT RECEIVABLES AND DEFERRED INSTALLMENT REVENUE:

Perpetual license agreements may be executed under installment payment
plans with payment terms of one to five years. The initial payment due is
classified as accounts receivable and the remaining payments are classified as
installment receivables. Revenue for payment terms beyond one year, which is not
considered fixed and determinable, is classified as deferred installment
revenues and recognized when the payments become due.
F-11
<PAGE> 60
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Maintenance revenue that is bundled with the initial license fee is
deferred, classified as deferred installment revenue and recognized ratably over
the maintenance period. The maintenance revenue due within twelve months is
classified as accounts receivable and the amount due beyond twelve months is
classified as installment receivables.

The following identifies the payment schedules for the noncurrent
installment receivables at December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
PAYMENT
SCHEDULE
--------
<S> <C>
Due in 2000................................................. $5,249
Due in 2001................................................. 1,852
Due in 2002................................................. 756
Due in 2003................................................. 51
------
$7,908
======
</TABLE>

Deferred installment revenue which relates to the installment receivables is
scheduled to be earned as follows (in thousands):

<TABLE>
<CAPTION>
SOFTWARE SOFTWARE
LICENSES MAINTENANCE TOTAL
-------- ----------- ------
<S> <C> <C> <C>
Earned in 1999....................................... $5,656 $1,658 $7,314
------ ------ ------
Earned in 2000....................................... 3,988 1,237 5,225
Earned in 2001....................................... 1,428 424 1,852
Earned in 2002....................................... 534 222 756
Earned in 2003....................................... 38 12 50
------ ------ ------
$5,988 $1,895 $7,883
====== ====== ======
</TABLE>

The Company imputes interest on extended payment contracts for which recognition
of license revenue has been deferred based on a borrowing rate of 6.1% (LIBOR
plus one percent). Interest income is recognized when the related deferred
license revenue is recognized. Extended payment contracts for which license
revenue has been recognized at the time of delivery and acceptance, have been
discounted based on a borrowing rate of 6.1% (LIBOR plus one percent). The
discount is recognized as interest income on an effective yield basis. Interest
income included in software license revenue is $0 in 1996, $136,000 in 1997,
$433,000 in 1998, and $111,000 for the three months ended March 31, 1999
(unaudited).

4. PREPAID EXPENSES AND OTHER ASSETS:

Included in prepaid expenses and other current assets are prepaid
commissions of $511,000, $839,000 and $671,000 at December 31, 1997, December
31, 1998, and March 31, 1999 (unaudited), respectively. Also included in other
assets are noncurrent prepaid commissions of $538,000, $878,000 and $544,000 at
December 31, 1997, December 31, 1998 and March 31, 1999 (unaudited),
respectively.

F-12
<PAGE> 61
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL LIFE ------------------ MARCH 31,
IN YEARS 1997 1998 1999
----------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Computer equipment and software.......... 3 to 5 $ 2,565 $ 4,214 $ 4,652
Furniture and fixtures................... 5 to 7 204 250 263
Leasehold improvements................... 7 500 554 554
------- ------- -------
3,269 5,018 5,469
Less: Accumulated depreciation........... (1,746) (2,520) (2,771)
------- ------- -------
Property and equipment, net............ $ 1,523 $ 2,498 $ 2,698
======= ======= =======
</TABLE>

6. SOFTWARE DEVELOPMENT COSTS:

Software development costs consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1997 1998 1999
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Capitalized software development costs................ $1,242 $2,298 $2,298
Purchased and acquired software technologies for
resale.............................................. 4,228 4,334 4,334
------ ------ ------
5,470 6,632 6,632
Less: Accumulated amortization........................ (2,113) (3,593) (3,900)
------ ------ ------
Capitalized software development costs, net......... $3,357 $3,039 $2,732
====== ====== ======
</TABLE>

In July 1997, the Company acquired from Cognizant Technology Solutions
Corporation ("CTS") the rights to certain technology (the "Technology") that
complement certain Year 2000 product solutions and the development of the
Company's application resource management tools. Pursuant to the software
distribution agreement, in exchange for the Technology rights, the Company is
required to pay CTS a royalty on sales of the Technology at defined rates
subject to minimum annual royalties as follows: $100,000 in 1997, $900,000 in
1998, $1,400,000 in 1999 and $400,000 in 2000. An asset equal to the present
value of the minimum annual royalties of $2,160,000 has been recorded as
purchased and acquired software technologies for resale and is being amortized
using the straight-line method over the five year term of the agreement. The
payment obligation is recorded as debt.

7. ACQUISITION BY THE PRINCIPAL SHAREHOLDER:

In September 1993, the Company was acquired by the Principal Shareholder
and the acquisition was accounted for using the purchase method of accounting.
Accordingly, assets and liabilities were recorded at their fair values as of the
effective date of the acquisition, and the operations of the Company have been
included in the Principal Shareholder's consolidated statements of operations
since that date. The purchase price approximated $5,700,000 (payable in cash and
restricted common stock of the Principal Shareholder) and originally resulted in
$5,484,000 of goodwill related to the excess of cost over the fair value of net
assets acquired. The acquisition agreement also required the Company to make
additional contingent purchase consideration payments to two of the Company's
former stockholders based upon certain product revenue for the four-year period
ending September 1998, up to a maximum of $1,000,000 each, for an aggregate
maximum of $2,000,000. As of December 31, 1998, the Company had paid the maximum
of $2,000,000 to the non-employee former stockholders, which has been treated as
additional

F-13
<PAGE> 62
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

consideration in connection with the acquisition and, accordingly, added to the
goodwill related to the acquisition.

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1997 1998 1999
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Trade accounts payable................................ $1,834 $1,069 $1,654
Accrued payroll and benefits.......................... 579 1,046 857
Commissions payable................................... 1,368 2,463 567
Royalties payable..................................... 75 538 117
Other accrued expenses................................ 833 1,020 1,154
------ ------ ------
$4,689 $6,136 $4,349
====== ====== ======
</TABLE>

9. STOCK OPTIONS AND STOCK-BASED COMPENSATION:

Principal Shareholder Common Stock and Options

Prior to the IPO, certain Company employees received part of their
compensation in the form of the Principal Shareholder's common stock or options.
Included in the Company's consolidated statements of operations are noncash
compensation charges related to the fair value of the Principal Shareholder's
common stock issued and noncash compensation charges related to the intrinsic
value of stock options granted pursuant to APB Opinion No. 25, "Accounting for
Stock Issued to Employees". Charges for both stock and options totaled $187,000
and $18,000 for the years ended December 31, 1996 and 1997, respectively. During
1998, no such stock or options were issued. Accordingly, there were no related
charges. In addition, during 1998, certain outstanding options under the
existing plan were repriced; however, there were no related charges to the
Company associated with this repricing.

Stock Option Plan

In May 1998, the Company adopted the SOFTWORKS, Inc. 1998 Long-Term
Incentive Plan (the "1998 Incentive Plan") which authorizes the issuance of a
maximum of 3,727,000 shares of common stock. The 1998 Incentive Plan provides
for grants of options to officers, key employees, consultants and independent
contractors of the Company and its affiliates. The 1998 Incentive Plan provides
for the granting of incentive stock options, non-qualified stock options,
performance grants and other types of awards. This plan is administered by the
Long-Term Incentive Plan Administrative Committee of the board of directors,
which has sole discretion and authority, consistent with the provisions of the
1998 Incentive Plan, to determine which eligible participants will receive
options, the time when options will be granted and the terms of options granted.
In January 1999, the Company adopted the 1999 Stock Option Plan which authorizes
the issuance of up to 1,250,000 shares of common stock to officers, key
employees, consultants and independent contractors.

F-14
<PAGE> 63
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Prior to the implementation of the 1998 Incentive Plan, the Company did not
have a stock option plan in place. The following is a summary of the option
activity of the 1998 Incentive Plan and the 1999 Stock Option Plan:

<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
OPTIONS EXERCISE PRICE
--------- --------------
<S> <C> <C>
Balance, December 31, 1997.................................. -- $ --
Stock options granted....................................... 3,613,850 7.00
Stock options exercised..................................... -- --
Stock options canceled...................................... (9,625) 7.00
--------- -----
Balance, December 31, 1998.................................. 3,604,225 7.00
Stock options granted (unaudited)........................... 1,121,250 7.00
Stock options exercised (unaudited)......................... -- --
Stock options canceled (unaudited).......................... (52,975) 7.00
--------- -----
Balance, March 31, 1999..................................... 4,672,500 $7.00
========= =====
</TABLE>

As of December 31, 1998, options to purchase 1,599,660 shares of common
stock were exercisable with a weighted-average exercise price of $7.00. The
weighted-average remaining contractual life of options outstanding at December
31, 1998, was 3.3 years. The weighted average fair value of options issued in
1998 was $3.77.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 defines a "fair value based method" of accounting
for stock-based compensation. Under the fair value based method, compensation
cost is measured at the grant date based on the fair value of the award and is
recognized over the service period. Prior to the issuance of SFAS No. 123,
stock-based compensation was accounted for under the "intrinsic value method" as
defined by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for
Stock Issued to Employees." Under the intrinsic value method, compensation is
the excess, if any, of the market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock.

SFAS No. 123 allows an entity to continue to use the intrinsic value
method. However, entities electing the accounting in APB Opinion No. 25 must
make pro forma disclosures as if the fair value based method of accounting had
been applied. The Company applies APB Opinion No. 25 and the related
interpretations in accounting for its stock-based compensation.

Had compensation expense been determined based on the fair value of the
options at the grant dates consistent with the method of accounting under SFAS
No. 123, the Company's net income and net income per share would have been
decreased to the pro forma amounts indicated below (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997 1998
----- ----- ------
<S> <C> <C> <C>
Net income (loss) attributable to common stockholders:
As reported.............................................. $ 792 $ 786 $2,957
Pro forma................................................ 672 598 (287)
Basic and diluted income (loss) per share:
As reported.............................................. $0.06 $0.06 $ 0.20
Pro forma................................................ 0.05 0.04 (0.02)
</TABLE>

F-15
<PAGE> 64
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions used for
grants during the years ended December 31, 1996, 1997 and 1998: no dividend
yield, expected volatility from 72% to 130%, risk-free interest rates from 5.4%
to 6.3% and an expected terms ranging from 1.1 to 4.4 years.

10. TRANSACTIONS WITH THE PRINCIPAL SHAREHOLDER:

Prior to the initial public offering, the Principal Shareholder provided
certain corporate and administrative services to the Company, including
executive management and professional services (accounting, auditing, and
legal). These services were performed for $500,000 in the years ended December
31, 1996 and 1997. These costs were allocated to the Company based on a
proportional cost allocation method. During 1998, there were no net charges for
administrative services. The Company and its Principal Shareholder also jointly
participated in certain employee benefit plans (defined contribution and
employee health), and the Company was allocated a portion of these costs on an
incremental basis. As of December 31, 1998 the Company's foreign subsidiary,
SOFTWORKS International, Ltd. employed 2 individuals that performed services
primarily on behalf of the Principal Shareholder. These amounts, and other
associated costs are reimbursed to the Company periodically. As of December 31,
1998, the amount owed to the Company by the Principal Shareholder was
approximately $188,000, which has subsequently been repaid.

Management believes that the intercompany charges and cost allocations were
reasonable and approximate the expenses that the Company would have incurred had
it been operating as a stand-alone entity. Since its public offering, the
Company has performed the corporate and administrative functions directly, using
its own resources or purchased services, and will continue to be responsible for
the costs and expenses associated with the management of a public corporation.
As of December 31, 1998, other than as set forth above, the Company had no
amounts due from or owed to the Principal Shareholder.

11. INCOME TAXES:

The following table summarizes components of income (loss) before income
taxes and the provision for both current and deferred income taxes.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Income (loss) before provision for income taxes:
United States............................................. $1,471 $2,579 $4,857
Foreign................................................... 25 (763) 180
------ ------ ------
Total............................................. $1,496 $1,816 $5,037
====== ====== ======
Provision for income taxes:
Current --
United States.......................................... $ -- $ 858 $1,769
Foreign................................................ 135 55 30
State and other........................................ -- 150 237
------ ------ ------
135 1,063 2,036
------ ------ ------
Deferred --
United States.......................................... 505 (27) 40
Foreign................................................ (16) -- --
State and other........................................ 80 (6) 4
------ ------ ------
569 (33) 44
------ ------ ------
Total............................................. $ 704 $1,030 $2,080
====== ====== ======
</TABLE>

F-16
<PAGE> 65
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the significant differences between the U.S.
Federal statutory tax rate and the Company's effective tax rate for financial
statement purposes:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
U.S. Federal statutory tax rate............................. 34.0% 34.0% 34.0%
State and local taxes, net of U.S. federal tax effect....... 6.8 3.5 4.7
Non-U.S. taxes.............................................. 5.9 2.0 1.0
Foreign operating (loss) income............................. (0.6) 14.3 (0.4)
Other....................................................... 1.0 2.9 2.0
---- ---- ----
Effective tax rate.......................................... 47.1% 56.7% 41.3%
==== ==== ====
</TABLE>

The tax effects of temporary differences and carryforwards that give rise
to significant portions of deferred tax assets are summarized as follows:

<TABLE>
<CAPTION>
1997 1998
----- -----
<S> <C> <C>
Current:
Accruals and reserves..................................... $ 138 $ 306
----- -----
138 306
----- -----
Long-Term:
Fixed and intangible assets............................... 347 115
Capitalized software...................................... 349 369
Net operating loss carryforwards -- foreign............... 229 200
Valuation allowance on foreign net operating loss
carryforwards.......................................... (229) (200)
----- -----
696 484
----- -----
Net deferred tax assets..................................... $ 834 $ 790
===== =====
</TABLE>

In 1997, the Company utilized federal net operating losses generated in
1995 and 1996, aggregating $1,000,000. Included in the deferred tax assets as of
December 31, 1997 and 1998, is net operating loss of $763,000 and income of
$180,000 from international subsidiaries, resulting in a deferred tax benefit of
$229,000 and $200,000, respectively. Most of the net operating loss
carryforwards have no expiration date. The Company has provided for full
valuation allowances of these international net operating losses.

12. COMMITMENTS AND CONTINGENCIES:

Royalty Commitments

The Company has entered into royalty agreements with several employees of
the Company. These agreements call for royalties ranging from 1% to 7% of
various product revenue. These agreements range in term from three to five years
and contain no provisions for minimum royalties. One agreement is with an
officer of the Company and has resulted in royalty expense of $98,000, $188,000
and $115,000 for the years ended December 31, 1996, 1997 and 1998, respectively.
The agreement with this officer was terminated in conjunction with the signing
of an employment agreement in 1998.

F-17
<PAGE> 66
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Employment Agreements

The Company has entered into employment agreements with several key
employees of the Company. These agreements call for an annual aggregate base
compensation commitment of $800,000 through 2001.

Leases

The Company leases certain computer equipment under long-term
non-cancelable leases which are classified as capital leases and are included as
part of property and equipment. Operating leases are primarily for office space
and equipment.

At December 31, 1998, the future minimum lease payments under operating and
capital leases are summarized as follows (in thousands):

<TABLE>
<CAPTION>
OPERATING CAPITAL
YEAR ENDING DECEMBER 31, LEASES LEASES TOTAL
- ------------------------ --------- ------- ------
<S> <C> <C> <C>
1999.................................................... $1,080 $269 $1,349
2000.................................................... 1,013 269 1,282
2001.................................................... 747 268 1,015
2002.................................................... 153 -- 153
2003.................................................... 101 -- 101
------ ---- ------
Total......................................... 3,094 806 3,900
Amounts representing interest........................... -- (59) (59)
------ ---- ------
Net........................................... $3,094 $747 $3,841
====== ==== ======
</TABLE>

Rent expense approximated $522,000, $896,000 and $1,097,000 for the years
ended December 31, 1996, 1997 and 1998, respectively.

Employee 401(k) Savings Plan

The Company provides pension benefits to eligible employees through a
401(k) plan sponsored jointly by the Company and the Principal Shareholder. The
Company's allocable share of employer matching contributions to this 401(k) plan
approximated $36,000, $52,000 and $77,000 for the years ended December 31, 1996,
1997 and 1998, respectively.

Long Term Debt

The Company's long term debt commitments consist of future amounts due for
certain technology purchases (Note 6) and an obligation under a capital lease.

13. SEGMENT REPORTING:

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that public business enterprises report
information about operating segments in the annual financial statements and
requires selected information about operating segments in interim financial
reports. SFAS No. 131 also establishes standards for related disclosures about
products and services, geographic areas and major customers.

The Company is primarily engaged in a single line of business. The Company
aggregates and reports revenues from products which have similar economic
characteristics in their nature, production, and distribution process. The
Company's geographic locations vary between full operating offices and sales

F-18
<PAGE> 67
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

offices. The Company has identified the reportable operating segments as North
America and International. These operating segments are representative of the
Company's management approach to its evaluation of the operations. The
accounting policies of the reportable operating segments are the same as those
described in the summary of significant accounting policies. The International
segment includes an aggregation of certain operations consisting primarily of
sales operations through the Company's international subsidiaries in the United
Kingdom, France, Brazil, Australia, Spain, Germany, and Italy, and sales
generated through international distributors primarily in Europe and Asia. The
following information is presented in accordance with SFAS No. 131 for all
periods presented (in thousands):

<TABLE>
<CAPTION>
1996
-------------------------------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 YEAR
----------- ----------- ----------- ----------- -------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
North America................... $ 2,236 $ 2,051 $ 3,188 $ 4,168 $11,643
International................... 956 1,363 900 1,663 4,882
------- ------- ------- ------- -------
Total................... $ 3,192 $ 3,414 $ 4,088 $ 5,831 $16,525
======= ======= ======= ======= =======
Operating Income (Loss)
North America................... $ (267) $ (155) $ 441 $ 571 $ 590
International................... 110 337 80 379 906
------- ------- ------- ------- -------
Total................... $ (157) $ 182 $ 521 $ 950 $ 1,496
======= ======= ======= ======= =======
Identifiable Assets
North America................... $11,649 $12,753 $15,241 $21,272 $21,272
International................... 435 770 851 1,271 1,271
------- ------- ------- ------- -------
Total................... $12,084 $13,523 $16,092 $22,543 $22,543
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
1997
-------------------------------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 YEAR
----------- ----------- ----------- ----------- -------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
North America................... $ 3,647 $ 5,161 $ 5,709 $ 7,521 $22,038
International................... 1,019 1,106 1,195 1,412 4,732
------- ------- ------- ------- -------
Total................... $ 4,666 $ 6,267 $ 6,904 $ 8,933 $26,770
======= ======= ======= ======= =======
Operating Income (Loss)
North America................... $ (263) $ 215 $ 503 $ 1,901 $ 2,356
International................... (233) (151) (169) 13 (540)
------- ------- ------- ------- -------
Total................... $ (496) $ 64 $ 334 $ 1,914 $ 1,816
======= ======= ======= ======= =======
Identifiable Assets
North America................... $21,240 $23,881 $26,878 $33,015 $33,015
International................... 1,152 1,307 1,820 2,668 2,668
------- ------- ------- ------- -------
Total................... $22,392 $25,188 $28,698 $35,683 $35,683
======= ======= ======= ======= =======
</TABLE>

F-19
<PAGE> 68
SOFTWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1998
------------------------------------------------------------------- 1999
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 YEAR MAR. 31
----------- ----------- ----------- ----------- ------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenue
North America........ $ 5,290 $ 7,022 $ 8,827 $13,812 $34,951 $ 7,033
International........ 1,306 2,032 2,420 3,040 8,798 3,225
------- ------- ------- ------- ------- -------
Total........ $ 6,596 $ 9,054 $11,247 $16,852 $43,749 $10,258
======= ======= ======= ======= ======= =======
Operating Income (Loss)
North America........ $ (384) $ 464 $ 1,395 $ 4,588 $ 6,063 $(1,000)
International........ (589) (128) (227) 170 (774) 1,199
------- ------- ------- ------- ------- -------
Total........ $ (973) $ 336 $ 1,168 $ 4,758 $ 5,289 $ 199
======= ======= ======= ======= ======= =======
Identifiable Assets
North America........ $31,897 $32,457 $39,478 $48,827 $48,827 $43,033
International........ 3,465 4,235 6,517 9,525 9,525 11,459
------- ------- ------- ------- ------- -------
Total........ $35,362 $36,692 $45,995 $58,352 $58,352 $54,492
======= ======= ======= ======= ======= =======
</TABLE>

Revenue from unaffiliated customers is based on the location of the
customer. Operating income (loss) consists of the related income (loss) of the
Company's subsidiaries based upon the location of their respective operations.
Identifiable assets are those assets used in the Company's operations in those
operating segments. No single customer represents greater than five percent of
revenues.

14. INTERIM FINANCIAL DATA -- UNAUDITED:

The following table of quarterly financial data has been prepared from the
financial records of the Company, without audit, and reflects all adjustments
that are, in the opinion of management, necessary for a fair presentation of the
results of operations for the interim periods presented:

<TABLE>
<CAPTION>
1997 QUARTER ENDED
-----------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenue......................................... $4,666 $6,267 $6,904 $8,933
Gross margin.................................... 4,385 5,943 6,465 8,342
(Loss) income from operations................... (496) 64 334 1,914
Net (loss) income............................... (333) (20) 127 1,012
Basic and diluted (loss) income per share....... (0.02) (0.00) 0.01 0.07
</TABLE>

<TABLE>
<CAPTION>
1998 QUARTER ENDED
-----------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenue....................................... $6,596 $9,054 $11,247 $16,852
Gross margin.................................. 5,632 8,334 10,217 15,316
(Loss) income from operations................. (973) 336 1,168 4,758
Net (loss) income............................. (767) (13) 537 3,200
Basic and diluted (loss) income per share..... (0.05) (0.00) 0.04 0.20
</TABLE>

The sum of the per share amounts may not equal the annual amounts because of the
changes in the weighted-average number of shares outstanding during the year.

F-20
<PAGE> 69

[SOFTWORKS LOGO]
SOFTWORKS
<PAGE> 70

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses of the distribution, all of which shall be borne by
Softworks, are as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 15,106
NASD Filing Fee............................................. 5,934
NASDAQ Application.......................................... 17,500
Transfer Agent Fees......................................... 1,000
Accounting Fees and Expenses................................ 150,000
Legal Fees and Expenses..................................... 195,000
Printing and Engraving...................................... 100,000
Miscellaneous............................................... 15,460
--------
Total............................................. $500,000
--------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Softworks, a Delaware corporation, is empowered by Section 145 of the
Delaware General Corporation Law (the "Delaware Act"), subject to the procedures
and limitations stated therein, to indemnify certain parties. Section 145 of the
Delaware Act provides in part that a corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful. Similar indemnity is authorized for such persons against
expenses (including attorneys' fees) actually and reasonably incurred in defense
or settlement of any threatened, pending or completed action or suit by or in
the right of the corporation, if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of competent jurisdiction
otherwise provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct. Where an officer or a director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually or reasonably incurred. Section 145 provides further that
indemnification pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any law, agreement, vote
of stockholders or disinterested directors or otherwise.

Softworks Certificate of Incorporation and By-laws contain provisions that
limit the potential personal liability of directors for certain monetary damages
and provide for indemnity of directors and other persons. Softworks also
maintains officers and directors liability insurance. The policy coverage is $10
million, which includes reimbursement for costs and fees, with a maximum
deductible for officers and directors of $200,000 for each securities-related
claim, and $75,000 for each non-securities related claim.
II-1
<PAGE> 71

Softworks is unaware of any pending or threatened litigation against Softworks
or its directors that would result in any liability for which such director
would seek indemnification or similar protection.

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to Softworks and its stockholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction that involves a conflict between the interests of Softworks and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions, including grossly negligent business decisions relating to
attempts to change control of Softworks.

The provisions regarding indemnification provide, in essence, that
Softworks will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of Softworks, including actions brought by or on
behalf of Softworks (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance.

These provisions diminish the potential rights of action that might
otherwise be available to shareholders by limiting the liability of officers and
directors to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of Softworks in connection with any stockholders derivative action. However, the
provisions do not have the effect of limiting the right of a stockholder to
enjoin a director from taking actions in breach of the director's fiduciary
duty, or to cause Softworks to rescind actions already taken, although as a
practical matter courts may be unwilling to grant such equitable remedies in
circumstances in which such actions have already been taken.

Softworks has entered into indemnification agreements with certain of its
officers. The indemnification agreements provide for reimbursement for all
direct and indirect costs of any type or nature whatsoever (including attorneys'
fees and related disbursements) actually and reasonably incurred in connection
with either the investigation, defense or appeal of a legal proceeding,
including amounts paid in settlement by or on behalf of an indemnitee
thereunder.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

None.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of Softworks*
3.2 By-laws of Softworks*
4.1 Specimen Common Stock Certificate*
5.1 Opinion and Consent of Blau, Kramer, Wactlar & Lieberman,
P.C. regarding the legality of the securities being
registered
</TABLE>

II-2
<PAGE> 72

<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
9. Form of Voting Trust Agreement*
10.1 Lease Agreement dated June 14, 1994 between Softworks and
WHT Real Estate Limited Partnership*
10.2 First Amendment to Lease Agreement*
10.3 Second Amendment to Lease Agreement*
10.4 1998 Long-Term Incentive Plan, as amended**
10.5 Consulting Agreement between Softworks and James Cannavino*
10.6 Employment Agreement between Softworks and C. R. Kinsey,
III*
10.7 Employment Agreement between Softworks and Judy G. Carter,
as amended*
10.8 Employment Agreement between Softworks and Robert
McLaughlin*
10.9 Form of Indemnification Agreement between Softworks and its
officers and directors*
10.10 Distribution Agreement dated July 8, 1997 between Softworks
and Cognizant Technology Solutions Corporation*
10.11 1999 Stock Option Plan**
21. The following lists Softworks significant subsidiaries, all
of which are wholly-owned by Softworks. The names of certain
subsidiaries which do not, when considered in the aggregate,
constitute a significant subsidiary have been omitted.
</TABLE>

<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
<S> <C>
SOFTWORKS International, Limited United Kingdom
SOFTWORKS SavanTechnology International,
S.A. Spain
SOFTWORKS International, LTD, Pty. Australia
SOFTWORKS SavanTechnology do Brazil Ltda Brazil
SOFTWORKS, S.A. France
SOFTWORKS Deutschland GmbH Germany
SOFTWORKS Italia S.r.l. Italy
SOFTWORKS Services Corp. Texas
SOFTWORKS FSC, Inc. U.S. Virgin Islands
</TABLE>

<TABLE>
<C> <S>
23.1 Consent of Arthur Andersen LLP
Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included
23.2 in Exhibit 5)
24. Power of Attorney (included in signature page)
</TABLE>

- ---------------
* Incorporated by reference to Exhibits to Registration Statement No. 333-53939

** Incorporated by reference to Exhibits to Registration Statement No. 333-77747

Financial Statement Schedules

Not applicable.

II-3
<PAGE> 73

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

For purposes of determining any liability under the Securities Act of 1933
(the "Act"), the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) and (4) and
Rule 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

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.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the issuer
pursuant to the foregoing provisions, or otherwise, the issuer has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the issuer of expenses
incurred or paid by a director, officer or controlling person of the issuer 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 issuer 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 Securities Act and will be governed by the final
adjudication of such issue.

II-4
<PAGE> 74

SIGNATURE

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Alexandria, Virginia
on the 2nd day of June, 1999.

SOFTWORKS, Inc.

By: /s/ JUDY G. CARTER
------------------------------------
Judy G. Carter
President
(Chief Executive Officer)

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on June 2, 1999, by the following
persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

By: * Chairman of the Board of Directors
-------------------------------------------------
James A. Cannavino

By: /s/ JUDY G. CARTER President, Chief Executive Officer and a
------------------------------------------------- Director
Judy G. Carter

By: * Vice President and Secretary
-------------------------------------------------
C.R. Kinsey, III

By: * Treasurer and Chief Financial Officer
-------------------------------------------------
Robert C. McLaughlin

By: * Director
-------------------------------------------------
Robert Devine

By: * Director
-------------------------------------------------
Charles Feld

*By: /s/ JUDY G. CARTER
------------------------------------------------
Judy G. Carter, Attorney-in-fact
</TABLE>

II-5
<PAGE> 75

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- -------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of Softworks*
3.2 By-laws of Softworks*
4.1 Specimen Common Stock Certificate*
5.1 Opinion and Consent of Blau, Kramer, Wactlar & Lieberman,
P.C. regarding the legality of the securities being
registered
9. Form of Voting Trust Agreement*
10.1 Lease Agreement dated June 14, 1994 between Softworks and
WHT Real Estate Limited Partnership*
10.2 First Amendment to Lease Agreement*
10.3 Second Amendment to Lease Agreement*
10.4 1998 Long-Term Incentive Plan, as amended**
10.5 Consulting Agreement between Softworks and James Cannavino*
10.6 Employment Agreement between Softworks and C. R. Kinsey,
III*
10.7 Employment Agreement between Softworks and Judy G. Carter,
as amended*
10.8 Employment Agreement between Softworks and Robert
McLaughlin*
10.9 Form of Indemnification Agreement between Softworks and its
officers and directors*
10.10 Distribution Agreement dated July 8, 1997 between Softworks
and Cognizant Technology Solutions Corporation*
10.11 1999 Stock Option Plan**
21. The following lists Softworks significant subsidiaries, all
of which are wholly-owned by Softworks. The names of certain
subsidiaries which do not, when considered in the aggregate,
constitute a significant subsidiary have been omitted.
</TABLE>

<PAGE> 76

<TABLE>
<C> <S>
23.1 Consent of Arthur Andersen LLP
Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included
23.2 in Exhibit 5)
24. Power of Attorney (included in signature page)
</TABLE>

- ---------------

* Incorporated by reference to Exhibits to Registration Statement No. 333-53939

** Incorporated by reference to Exhibits to Registration Statement No. 333-77747

<PAGE> 1
EXHIBIT 1.1

3,500,000 SHARES

SOFTWORKS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT

June __, 1999

SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of the several Underwriters
c/o SoundView Technology Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902

Ladies and Gentlemen:

1. DESCRIPTION OF SHARES.

SOFTWORKS, Inc., a Delaware corporation (the "Company"), and the
selling stockholders named in Schedule B attached hereto (the "Selling
Stockholders") propose to sell, upon the terms and subject to the conditions of
this Agreement, to the several underwriters named in Schedule A attached hereto
(collectively, the "Underwriters," or each an "Underwriter"), an aggregate of
3,500,000 shares (the "Firm Shares") of the Company's common stock, par value
$.001 per share ("Common Stock"). The Company and certain Selling Stockholders
also propose to sell to the Underwriters, upon the terms and subject to the
conditions of this Agreement, as set forth in Section 5, up to an aggregate of
an additional 525,000 shares of Common Stock (the "Option Shares," and,
collectively with the Firm Shares, the "Shares").

2. REGISTRATION STATEMENT AND PROSPECTUS.

A registration statement (File No. 333-77565) on Form S-1 relating to
the Shares, including a Preliminary Prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission.

The term "Preliminary Prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at
<PAGE> 2
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

any time as part of the registration statement. Copies of such registration
statement and amendments and of each related Preliminary Prospectus have been
delivered to the representatives of the several Underwriters hereunder
(collectively, the "Representatives"). The term "Registration Statement" means
the registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A or Rule 434 of the Rules and
Regulations. If the Company files a registration statement to register a portion
of the Shares and relies on Rule 462(b) of the Rules and Regulations for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the "Registration
Statement" shall be deemed to include the Rule 462 Registration Statement, as
amended from time to time. The term "Prospectus" means the prospectus as first
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
or, if no such filing is required, the form of final prospectus included in the
Registration Statement at the Effective Date.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to, and agrees with, the several
Underwriters that:

(a) Securities Act Compliance. The Registration Statement conforms in
all material respects with the requirements of the Securities Act and has been
filed with the Commission under the Securities Act. The Commission has not
issued or, to the Company's knowledge, threatened to issue any order preventing
or suspending the use of any Preliminary Prospectus, and, at its date of issue,
each Preliminary Prospectus conformed in all material respects with the
requirements of the Securities Act and did not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and, when the Registration Statement
becomes effective and at all times subsequent thereto up to and including the
Closing Dates (as hereinafter defined), the Registration Statement and the
Prospectus and any amendments or supplements thereto contained and will contain
all material statements and information required to be included therein by the
Securities Act and conformed and will conform in all material respects to the
requirements of the Securities Act, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing representations,
warranties and agreements shall not apply to information contained in or omitted
from any Preliminary Prospectus or the Registration Statement or the Prospectus
or any such amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. There is no contract,
agreement, lease, franchise or document required

2
<PAGE> 3
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

to be described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described therein or filed
therewith as required, and all descriptions of any such contracts, agreements,
leases, franchises or documents contained in the Registration Statement are
accurate and complete descriptions of such documents in all material respects.

(b) Organization, Good Standing and Qualification. The Company and each
of its subsidiaries has been duly organized and is validly existing and in good
standing as a corporation under the laws of its jurisdiction of incorporation,
with power and authority (corporate and other) to own or lease its properties
and to conduct its business as described in the Prospectus. The Company and each
of its subsidiaries is in possession of and operating in compliance with all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business, all of which
are valid and in full force and effect, and is duly qualified to do business and
in good standing as a foreign corporation in all other jurisdictions where its
ownership or leasing of properties or the conduct of its business requires such
qualification. The Company and each of its subsidiaries has obtained all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public regulatory or
governmental agencies and bodies to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, except where the failure to obtain any of the
foregoing would not have a material adverse effect on the condition (financial
or otherwise), properties, business, management, prospects, net worth or results
of operations of the Company and its subsidiaries taken as a whole ("Material
Adverse Effect"), and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and the
Prospectus.

(c) Subsidiaries. Except as set forth in Exhibit 21 to the Registration
Statement, the Company does not have any subsidiaries and does not own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity.

(d) No Changes. Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and except as
set forth or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations nor entered into any
transactions not in the ordinary course of business, and there has not been any
Material Adverse Effect, or any material adverse change in the capital stock,
short-term or long-term debt of the Company and its subsidiaries taken as a
whole.

(e) Valid Issuance of the Shares. The Shares to be issued and sold by
the Company to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully

3
<PAGE> 4
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

paid and nonassessable and free of any preemptive or similar rights and will
conform in all material respects to the description thereof in the Prospectus.

(f) Authorization. The Company has the full corporate power and
authority to enter into this Agreement and to perform its obligations hereunder
(including to issue, sell and deliver the Shares), and this Agreement has been
duly and validly authorized, executed and delivered by the Company and is a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditor's
rights generally, (ii) as the enforceability of any indemnification provision
may be limited under federal or state securities laws or (iii) as the remedy of
specific forms of equitable relief may be subject to equitable defenses and the
discretion of the court before which any proceeding may be brought
(collectively, the "Enforceability Exceptions").

(g) Compliance with other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach of any of the terms or provisions of,
constitute a default under or result in the creation of any lien under any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties is or may be bound, the Certificate of Incorporation, By-laws or
other organizational documents of the Company or of any of its subsidiaries, or
any law, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties.

(h) Legal Compliance. The Company and each of its subsidiaries, in all
material respects, is in compliance with and conducts its business in conformity
with all applicable federal, state, local and foreign laws, rules and
regulations of any court or governmental agency or body, and, to the knowledge
of the Company, except as set forth in the Registration Statement and the
Prospectus, no prospective change in any of such federal or state laws, rules or
regulations has been adopted which, when made effective, would have a Material
Adverse Effect.

(i) Governmental Consents. No consent, approval, authorization or order
of any court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, except such as
may be required by the National Association of Securities Dealers, Inc. (the
"NASD") or under federal or state securities laws in connection with the
purchase and distribution of the Shares by the Underwriters.

(j) Financial Statements. The financial statements, together with the
related notes and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly

4
<PAGE> 5
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

present, on the basis stated in the Registration Statement, the financial
condition and the results of operations of the Company and its subsidiaries at
the respective dates or for the respective periods therein specified. Such
statements and related notes and schedules have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, except
as may be set forth in the Prospectus. The selected financial and statistical
data set forth in the Prospectus under the caption "Selected Financial Data"
fairly present, on the basis stated in the Registration Statement, the
information set forth therein. The Company has provided the Representatives with
all financial statements from its inception to the date hereof that are
available to the officers of the Company.

(k) Independent Auditors. Arthur Andersen LLP, who have expressed their
opinions on the audited financial statements and related schedules included in
the Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the Rules and Regulations.

(l) Capitalization. The Company's authorized and outstanding capital
stock is on the date hereof, and will be on the Closing Dates, as set forth
under the heading "Capitalization" in the Prospectus (except that such
disclosure need not reflect the issuance of the Option Shares) and conforms in
all material respects to the description thereof set forth under the heading
"Description of Capital Stock" in the Prospectus. The outstanding shares of
Common Stock (including the Shares) (i) conform in all material
respects to the description thereof in the Prospectus, (ii) have been duly
authorized and validly issued and are fully paid and nonassessable, (iii) have
been issued in compliance with all federal and state securities laws, and (iv)
were not issued in violation of or subject to any preemptive rights or similar
rights to subscribe for or purchase securities. Except as disclosed in the
Prospectus and the financial statements of the Company and related notes thereto
included in the Prospectus, the Company does not have outstanding any options or
warrants to purchase, or any preemptive rights or other rights to subscribe for
or to purchase any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations, except for options
granted subsequent to the date of information provided in the Prospectus
pursuant to the Company's 1998 Long Term Incentive Plan and 1999 Stock Option
Plan (collectively, the "Stock Option Plans"), as disclosed in the Prospectus.
The description of the Stock Option Plans and the options or other rights
granted or exercised thereunder, as set forth in the Prospectus, accurately and
fairly presents the information required to be disclosed with respect to such
Stock Option Plans, options and rights.

(m) Litigation. Except as set forth in the Prospectus, there is no
legal or governmental action, suit, proceeding or investigation pending to which
the Company or any of its subsidiaries or affiliates is a party or to which any
property of the Company or any subsidiary or affiliate is subject, which, if
determined adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the

5
<PAGE> 6
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

transactions contemplated by this Agreement, (ii) suspend the effectiveness of
the Registration Statement, (iii) prevent or suspend the use of the Preliminary
Prospectus in any jurisdiction, or (iv) have a Material Adverse Effect, and, to
the best of the Company's knowledge, no such action, suit, proceeding or
investigation is threatened or contemplated against the Company or any
subsidiary or affiliate by governmental authorities or others. Neither the
Company nor any of its subsidiaries is a party to or subject to the provisions
of any material injunction, judgment, decree or order of any court, regulatory
body or other governmental agency or body.

(n) Tax Returns and Payments. The Company has filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns, except where the failure to file would not have a Material Adverse
Effect, and has paid all taxes shown as due thereon or with respect to any of
its properties, and there is no tax deficiency that has been, or, to the
knowledge of the Company, is likely to be asserted against the Company, any of
its subsidiaries or any of their respective properties or assets that would have
a Material Adverse Effect. All distributions to the stockholders of the Company
prior to the date hereof have been made in compliance with applicable law and
have not exceeded the amounts to which such stockholders were legally entitled.

(o) Registration Rights. No person or entity has the right to require
registration of shares of Common Stock or other securities of the Company as a
result of the filing or effectiveness of the Registration Statement and, in any
event, except as set forth in the Prospectus, no person or entity has the right
to require registration of shares of Common Stock or other securities of the
Company.

(p) Price Stabilization and Manipulation. Neither the Company nor any
of its officers, directors, subsidiaries or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or resulted
in, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.

(q) Patents and Trademarks. The Company owns or otherwise possesses or
has the right to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights either (i) described in the Prospectus as
being owned by it or (ii) necessary for the conduct of its business as so
described, as now conducted or as proposed to be conducted. The Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company with respect to the foregoing. The Company's business as
now conducted does not infringe or conflict with in any material respect any
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
U.S. patents or other intellectual property or franchise rights or, to the
Company's knowledge, foreign patents of any person. No claim has been made
against the Company alleging the infringement by the Company of any patent,
trademark, service mark,

6
<PAGE> 7
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

trade name, copyright, trade secret, license in or other intellectual property
right or franchise right of any person, except as described in the Prospectus or
with respect to claims which, singly or in the aggregate, will not have a
Material Adverse Effect.

(r) Material Contracts. The Company or a subsidiary of the Company, as
the case may be, has performed all material obligations required to be performed
by it under all contracts required by Item 601(b)(10) of Regulation S-K under
the Securities Act to be filed as exhibits to the Registration Statement, and
neither the Company nor, to the knowledge of the Company, any other party to
such contract is in default under or in breach of any such obligations, except
with respect to any defaults or breaches which, singly or in the aggregate, will
not result in a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any notice of such default or breach.

(s) Voting Trust Agreement. The Voting Trust Agreement, dated as of
August 5, 1998, as amended (the "Voting Trust Agreement"), by and among the
Company, Computer Concepts Corp. ("Computer Concepts") and each of James
Cannavino, Charles Feld and Robert Devine (collectively, the "Trustees"), has
been duly and validly authorized, executed and delivered by the Company and each
of the Trustees and is a valid and binding agreement of the Company and each of
the Trustees, enforceable against the Company and each of the Trustees in
accordance with its terms, subject to the Enforceability Exceptions.

(t) Labor Agreements and Actions. Neither the Company nor any of its
subsidiaries is involved in any labor dispute and, to the Company's knowledge,
no such dispute is threatened. The Company is not aware that (i) any executive,
key employee or significant group of employees of the Company or of any of its
subsidiaries plans to terminate employment with the Company or any of its
subsidiaries, or (ii) any such executive or key employee is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreement that would be violated by the present or proposed business activities
of the Company or of any of its subsidiaries. Neither the Company nor any of its
subsidiaries has or expects to have any liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company or any of its subsidiaries makes or ever has made a contribution and
in which any employee of the Company or of any of its subsidiaries is or has
ever been a participant, except where such liability would not have a Material
Adverse Effect. With respect to such plans, the Company and each of its
subsidiaries are in compliance in all material respects with all applicable
provisions of ERISA, except with respect to any non-compliance with such
provisions which, singly or in the aggregate, will not have a Material Adverse
Effect.

(u) Lock-Up Agreements. Except as disclosed in the Prospectus, the
Company has obtained the written agreement, in substantially the form attached
hereto as Schedule C, from

7
<PAGE> 8
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

each of its officers and directors and Computer Concepts.

(v) Title to Property and Assets. The Company or a subsidiary of the
Company has and, as of the Closing Dates, will have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned or proposed to be owned by it which is material to the business
of the Company and its subsidiaries taken as a whole, in each case free and
clear of all liens, encumbrances and defects except such as are described in the
Prospectus or such as would not have a Material Adverse Effect. Any real
property and buildings held under lease by the Company or any subsidiary of the
Company or proposed to be held after giving effect to the transactions described
in the Prospectus are, or will be as of the Closing Dates, held by it under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect, in each case except as described in or contemplated
by the Prospectus.

(w) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the business in which it is engaged or
proposes to engage after giving effect to the transactions described in the
Prospectus, and the Company has no reason to believe that it will not be able to
renew any such existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect, except as
described in or contemplated by the Prospectus.

(x) Brokers. Except as may be set forth in the Prospectus, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or similar fee or commission as a result of any of the
transactions contemplated by this Agreement.

(y) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

8
<PAGE> 9
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

(z) Distribution of Offering Materials. The Company has not distributed
and will not distribute prior to the later of (i) the First Closing Date or the
Option Closing Date, as the case may be, and (ii) the completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectus, the
Prospectus, the Registration Statement and other materials, if any, permitted by
the Securities Act and the use of which has been approved in advance in writing
by the Representatives.

(aa) Payment or Receipt of Funds. Except as set forth in the
Prospectus, neither the Company nor, to the Company's knowledge, any employee or
agent of the Company has made any payment of funds of the Company or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.

(bb) Investment Company. The Company is not an "investment company" or
an entity "controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.

(cc) Environmental Laws. The Company and each of its subsidiaries is in
compliance with the terms and conditions of all applicable federal, state, local
and foreign laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), except where the failure to be in
compliance would not have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries has received notice from any governmental authority of any
claim under any Environmental Laws that could result in a Material Adverse
Effect. No property that is owned, leased or occupied by the Company or by any
of its subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (420 U.S.C. (S) 9601 et seq.), or otherwise designated as a contaminated
site under applicable state or local laws.

(dd) Permits. The Company and each of its subsidiaries have such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its property and
to conduct its business. The Company and each of its subsidiaries have fulfilled
and performed all of its material obligations with respect to such permits and
no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit, except events the
existence of which would not have a Material Adverse Effect, and, except as
described in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company and its subsidiaries taken as a whole.

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

(ee) Employment Matters. To the Company's knowledge, neither the
Company nor any of its subsidiaries has violated any federal or state law
relating to discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of ERISA or
the rules and regulations promulgated thereunder, which in each case might have
a Material Adverse Effect.

(ff) Certificates. Each certificate signed by any officer of the
Company and delivered to the Underwriters or counsel for the Underwriters
pursuant to this Agreement or in connection with the offering contemplated
hereby shall be deemed to be a representation and warranty of the Company to the
Underwriters as to the matters covered thereby.

4. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.

1. Each Selling Stockholder, severally and not jointly, represents and warrants
to, and agrees with, the several Underwriters that:

(a) Valid and Marketable Title. Such Selling Stockholder now has, and
on the Closing Dates will have, valid and marketable title to the Shares to be
sold by such Selling Stockholder, free and clear of any lien, claim, security
interest or other encumbrance, including, without limitation, any restriction on
transfer, and has full right, power and authority to enter into this Agreement,
the Power of Attorney and the Custody Agreement (each as hereinafter defined),
and each of the several Underwriters will acquire valid and marketable title to
all of the Shares being sold to the Underwriters by such Selling Stockholder,
free and clear of any liens, encumbrances, equities claims, restrictions on
transfer or other defects whatsoever.

(b) Authority. Such Selling Stockholder now has, and on the Closing
Dates will have, upon delivery of and payment for each of the Shares hereunder,
full right, power and authority, and shall have obtained any approval required
by law, to sell, transfer, assign and deliver the Shares being sold by such
Selling Stockholder hereunder.

(c) Power of Attorney. Such Selling Stockholder has duly executed and
delivered a power of attorney, in substantially the form heretofore delivered to
the Representatives (the "Power of Attorney"), each appointing an
attorney-in-fact (the "Attorneys-in-Fact") with authority to execute and deliver
this Agreement on behalf of such Selling Stockholder, to authorize the delivery
of the Shares to be sold by such Selling Stockholder hereunder and otherwise to
act on behalf of such Selling Stockholder in connection with the transactions
contemplated by this Agreement.

(d) Custody Agreement. Such Selling Stockholder has duly executed and
delivered a custody agreement, in substantially the form heretofore delivered to
the Representatives (the

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

"Custody Agreement"), with George Aronson and Dan Kinsey, or either of them, as
custodian (the "Custodian"), pursuant to which certificates in negotiable form
for the Shares to be sold by such Selling Stockholder hereunder have been placed
in custody for delivery under this Agreement.

(e) Binding Obligations. Such Selling Stockholder has, by execution and
delivery of each of this Agreement, the Power of Attorney, the Custody Agreement
and, if applicable, the Lock-Up Agreement, created valid and binding obligations
of such Selling Stockholder, enforceable against such Selling Stockholder in
accordance with their respective terms, subject to the Enforceability
Exceptions.

(f) Compliance with other Instruments. The performance of this
Agreement, the Custody Agreement and the Power of Attorney, and the consummation
of the transactions contemplated hereby and thereby, will not result in a breach
or violation in any material respect by such Selling Stockholder of any of the
terms or provisions of, or constitute a default by such Selling Stockholder
under, (i) any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other material agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder or any of its properties is bound, (ii) any judgment of any court or
governmental agency or body applicable to such Selling Stockholder or any of its
properties, or any statute, decree, order, Rule or regulation of any court or
governmental agency or body applicable to such Selling Stockholder or any of its
properties, or (iii) any provisions of the charter, bylaws or other
organizational documents of such Selling Stockholder.

(g) No Revocation. Each Selling Stockholder agrees that (i) the Shares
represented by the certificates held in custody under the Custody Agreement are
for the benefit of and coupled with and subject to the interests of the
Underwriters and the Company hereunder, (ii) the arrangement for such custody
and the appointment of the Attorneys-in-Fact are irrevocable, (iii) the
obligations of such Selling Stockholder hereunder shall not be terminated by
operation of law, whether by the liquidation or dissolution of such Selling
Stockholder or any other event, and (iv) if such Selling Stockholder should die
or become incapacitated or is liquidated or dissolved or any other event occurs,
before the delivery of the Shares hereunder, certificates for the Shares to be
sold by such Selling Stockholder shall be delivered on behalf of such Selling
Stockholder in accordance with the terms and conditions of this Agreement and
the Custody Agreement, and action taken by the Attorneys-in-Fact or any of them
under the Power of Attorney shall be as valid as if such liquidation or
dissolution or other event had not occurred, whether or not the Custodian, the
Attorneys-in-Fact or any of them shall have notice of such liquidation or
dissolution or other event.

(h) No Stabilization or Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action designed to, or
which might reasonably be

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares
pursuant to the distribution contemplated by this Agreement, and, other than as
permitted by the Securities Act, the Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection with
the offering and sale of the Shares.

(i) Governmental Consents. The execution, delivery and performance of
this Agreement by such Selling Stockholder, compliance by such Selling
Stockholder with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may be required under federal
or state securities laws or by the NASD).

(j) Beneficial Ownership. The information set forth under the heading
"Principal and Selling Stockholders" in the Prospectus which specifically
relates to such Selling Stockholder does not, and will not on the Closing Dates,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of circumstances under which they were made, not misleading, and such
Selling Stockholder has agreed to immediately notify the Company if, at any time
during the period when a Prospectus is required by law to be delivered in
connection with sales of Common Stock by an Underwriter or a dealer, there is
any change in such information.

(k) Organization and Good Standing. Such Selling Stockholder, if other
than a natural person, has been duly organized and is validly existing and in
good standing under the laws of the jurisdiction of its organization as the type
of entity it purports to be.

(l) No Preemptive or Other Rights. Such Selling Stockholder does not
have, or has waived prior to the date hereof, any preemptive right, co-sale
right or right of first refusal or other similar right to purchase any of the
Shares that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement. Such Selling
Stockholder does not have, or has waived prior to the date hereof, any
registration right or other similar right to participate in the offering made by
the Prospectus, other than such rights of participation as have been satisfied
by the participation of such Selling Stockholder in the transactions to which
this Agreement relates in accordance with the terms of this Agreement. Such
Selling Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company, other
than those described in the Registration Statement and the Prospectus.

2. Computer Concepts hereby makes to the several Underwriters the
representations and warranties of the Company set forth in Section 3 hereof. In
addition, Computer Concepts

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

represents and warrants to, and agrees with the several Underwriters that, the
Voting Trust Agreement has been duly authorized, executed and delivered by
Computer Concepts and is a valid and binding agreement of Computer Concepts,
enforceable against Computer Concepts in accordance with its terms, subject to
the Enforceability Exceptions.

5. PURCHASE AND SALE OF THE SHARES.

The Company and the Selling Stockholders agree, severally and not
jointly, to sell to the Underwriters the Firm Shares, with the number of shares
to be sold by the Company and each Selling Stockholder being the number of
Shares set opposite his, her or its name in Schedule B attached hereto, and on
the basis of the representations, warranties, covenants and agreements herein
contained, but upon the terms and subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase the Firm Shares
from the Company and the Selling Stockholders, with the number of shares of Firm
Shares to be purchased by each Underwriter being set opposite its name in
Schedule A attached hereto, subject to adjustment in accordance with Section 14
hereof. The number of Shares to be purchased by each Underwriter from each
Selling Stockholder hereunder shall bear the same proportion to the total number
of Shares to be purchased by such Underwriter hereunder as the number of Shares
being sold by each Selling Stockholder bears to the total number of Shares being
sold by all of the Selling Stockholders, subject to adjustment by the
Representatives to eliminate fractions.

(a) Purchase Price. The purchase price per Share to be paid by the
Underwriters to the Company and the Selling Stockholders will be $_ per share
(the "Purchase Price").

(b) Closing. The Company and the Selling Stockholders will deliver the
Firm Shares to the Representatives for the respective accounts of the several
Underwriters in the form of definitive certificates, issued in such names and in
such denominations as the Representatives may direct by notice in writing to the
Company and the Selling Stockholders given at or prior to 10:00 a.m., New York
time, on the second full business day preceding the First Closing Date (as
defined below) or, if no such direction is received, in the names of the
respective Underwriters or in such other names as SoundView may designate
(solely for the purpose of administrative convenience) and in such denominations
as SoundView may determine, against payment of the aggregate Purchase Price
therefor in Federal or other immediately available funds, by certified or
official bank check or checks payable to the order of the Company and the
Custodian or by wire transfer to accounts designated by the Company and the
Custodian, all at the offices of Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York, New York 10104. Such delivery and closing shall occur at
10:00 a.m., New York time, on the fourth business day after the date of this
Agreement (the "First Closing Date"). The First Closing Date and the location of
delivery of, and the form of payment for, the Firm Shares may be varied by
agreement between the Company and SoundView. The First Closing Date may be
postponed pursuant to the provisions of Section 14.

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

(c) Certificates for the Shares. The Company and the Selling
Stockholders shall make the certificates for the Firm Shares available to the
Representatives for examination on behalf of the Underwriters not later than
12:00 p.m., New York time, on the business day preceding the First Closing Date
at such location within New York, New York as may be designated by the
Representatives. If the Representatives so elect, delivery of the Firm Shares
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.

(d) Payment on behalf of Underwriters. It is understood that the
Representatives, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to the Company or
the Selling Stockholders on behalf of any Underwriter or Underwriters for the
Shares to be purchased by such Underwriter or Underwriters. Any such payment by
the Representatives shall not relieve such Underwriter or Underwriters from any
of its or their other obligations hereunder.

(e) Public Offering. The several Underwriters agree to make a public
offering of the Firm Shares at the public offering price of $____ per share as
soon after the effectiveness of the Registration Statement as, in their
judgment, is advisable. The Representatives shall promptly advise the Company
and the Selling Stockholders of the making of the public offering. After the
public offering, the several Underwriters may, in their discretion, vary the
public offering price.

(f) Over-Allotment Option.

(i) Option Shares. For the purpose of covering any
over-allotments in connection with the distribution and sale of the
Firm Shares as contemplated by the Prospectus, the Company and certain
of the Selling Stockholders hereby grant to the Underwriters an option
(the "Option") to purchase up to 525,000 Option Shares. The price per
share to be paid for the Option Shares shall be the Purchase Price. The
Option may be exercised as to all or any part of the Option Shares at
any time, and from time to time, not more than thirty (30) days
subsequent to the effective date of this Agreement. No Option Shares
shall be sold and delivered unless the Firm Shares previously have
been, or simultaneously are, sold and delivered. The right to purchase
the Option Shares or any portion thereof may be surrendered and
terminated at any time upon notice by the Underwriters to the Company
and the Selling Stockholders.

(ii) Exercise of Option. The Option may be exercised by the
Underwriters by SoundView's giving written notice to the Company and
Stockholders setting forth the number of shares of the Option Shares to
be purchased by them and the date and time for delivery of and payment
for the Option Shares (the "Option Closing Date," and, collectively
with the First Closing Date, the "Closing Dates"). The Option Closing
Date

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

shall not be earlier than the First Closing Date and shall in no event
be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. Option Shares shall be purchased
for the account of each Underwriter in the same proportion as the
number of Firm Shares set forth opposite such Underwriter's name on
Schedule A attached hereto bears to the total number of Firm Shares
(subject to adjustment by the Underwriters to eliminate odd lots). Upon
exercise of the Option by the Underwriters, the Selling Stockholders
agree to sell to the Underwriters the number of Option Shares set forth
in the written notice of exercise and the Underwriters agree, severally
and not jointly and upon the terms and subject to the conditions herein
set forth, to purchase the number of such shares determined as
aforesaid.

(iii) Option Closing. The Selling Stockholders will deliver
the Option Shares to the Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company and The
Selling Stockholders given at or prior to 10:00 a.m., New York time, on
the second full business day preceding the Option Closing Date or, if
no such direction is received, in the names of the respective
Underwriters or in such other names as SoundView may designate (solely
for the purpose of administrative convenience) and in such
denominations as SoundView may determine, against payment of the
aggregate Purchase Price therefor in Federal or other immediately
available funds, by certified or official bank check or checks payable
to the order of the Custodian or by wire transfer to accounts
designated by the Custodian, all at the offices of Morrison & Foerster
LLP, 1290 Avenue of the Americas, New York, New York 10104. The Selling
Stockholders shall make the certificates for the Option Shares
available to the Underwriters for examination not later than 12:00
p.m., New York time, on the business day preceding the Option Closing
Date, at such location within New York, New York as may be designated
by the Representatives. If the Representatives so elect, delivery of
the Option Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the
Representatives. The Option Closing Date and the location of delivery
of, and the form of payment for, the Option Shares may be varied by
agreement between the Company and SoundView. The Option Closing Date
may be postponed pursuant to the provisions of Section 14.

6. COVENANTS AND AGREEMENTS OF THE COMPANY.

The Company covenants and agrees with the several Underwriters that:

(a) Effectiveness of Registration Statement. The Company will
(i) if the Company and the Representatives have determined not to
proceed pursuant to Rule 430A, use its best efforts to cause the
Registration Statement to become effective, (ii) if the Company and the
Representatives have determined to proceed pursuant to Rule 430A, use
its best efforts to

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

comply with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and Rule 424, (iii) if the Company and
the Representatives have determined to deliver Prospectuses pursuant to
Rule 434, to use its best efforts to comply with all the applicable
provisions thereof, and (iv) use its best efforts to cause any
abbreviated registration statement pursuant to Rule 462(b) of the Rules
and Regulations as may be required subsequent to the date the
Registration Statement is declared effective to become effective as
promptly as possible. The Company will advise the Representatives
promptly as to the time at which the Registration Statement becomes
effective, will advise the Representatives promptly of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for
that purpose, and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible the lifting
thereof, if issued. The Company will advise the Representatives
promptly of the receipt of any comments of the Commission or any
request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for additional information
and will not at any time file any amendment to the Registration
Statement or supplement to the Prospectus which shall not previously
have been submitted to the Representatives a reasonable time prior to
the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the
Securities Act and the Rules and Regulations.

(b) Amendments and Reports. The Company will prepare and file
with the Commission, promptly upon the request of the Representatives,
any amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may be necessary
to enable the several Underwriters to continue the distribution of the
Shares and will use its best efforts to cause the same to become
effective as promptly as possible. The Company will promptly file all
reports and any definitive proxy or information statements required to
be filed with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares.

(c) Prospectus. If, at any time after the effective date of
the Registration Statement when a prospectus relating to the Shares is
required to be delivered under the Securities Act, any event relating
to or affecting the Company occurs as a result of which the Prospectus
or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary at
any time to amend the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representatives thereof and will
prepare an amended or supplemented prospectus which will correct such
statement or omission.

(d) Copies of Registration Statement and Prospectus. The
Company will deliver to the Representatives, at or before the Closing
Dates, manually signed copies of the Registration

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE , 1999

Statement, and each amendment thereto, including all financial
statements and exhibits thereto, and will deliver to the
Representatives such number of copies of the Registration Statement,
including such financial statements but without exhibits, and all
amendments thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the
Representatives, from time to time until the effective date of the
Registration Statement, as many copies of the Preliminary Prospectus as
the Representatives may reasonably request. The Company will deliver or
mail to or upon the order of the Representatives on the date of the
public offering, and thereafter from time to time during the period
when delivery of a prospectus relating to the Shares is required under
the Securities Act, as many copies of the Prospectus, in final form or
as thereafter amended or supplemented as the Representatives may
reasonably request.

(e) Section 11(a) Earnings Statement. The Company will make
generally available to its Stockholders as soon as practicable, but not
later than fifteen (15) months after the effective date of the
Registration Statement, an earnings statement which will be in
reasonable detail (but which need not be audited) and which will comply
with Section 11(a) of the Securities Act, covering a period of at least
twelve (12) months beginning after the "effective date" (as defined in
Rule 158 under the Securities Act) of the Registration Statement.

(f) Blue Sky Qualification. The Company will cooperate with
the Representatives to enable the Shares to be registered or qualified
for offering and sale by the Underwriters and by dealers under the
securities laws of such jurisdictions as the Representatives may
reasonably request.

(g) Reports to Stockholders. So long as the Company shall be
subject to the reporting requirements of the Exchange Act, the Company
will furnish to its Stockholders annual reports containing financial
statements certified by independent public accountants and will furnish
or make available to its Stockholders quarterly summary financial
information in reasonable detail, which may be unaudited.

(h) Nasdaq National Market. The Company will use its best
efforts to maintain the listing of the Common Stock on the Nasdaq
National Market for a period of five (5) years after the effective date
of the Registration Statement.

(i) Use of Proceeds. The Company will apply the net proceeds
from the sale of the Shares substantially in conformity with the
description set forth under the heading "Use of Proceeds" in the
Prospectus.

(j) SEC Correspondence. The Company will supply the
Representatives with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the
registration of the Shares under the Securities Act.

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

(k) Financial Statements. Prior to the Closing Dates the Company will
furnish to the Representatives, as soon as they have been prepared, copies of
any unaudited interim financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.

(l) Press Releases. Prior to the Closing Dates and during the period when
a prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company will issue no press release or other communications
directly or indirectly and hold no press conference with respect to the Company
or its financial condition, results of operation, business, prospects, assets or
liabilities, or the offering of the Shares, without the prior consent of the
Representatives, which consent shall not be unreasonably withheld.

(m) Reports to Representatives. During the period of three (3) years from
the date hereof, the Company will furnish to the Representatives, and, upon
request of the Representatives, to each of the Underwriters (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, Stockholder's equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
accountants, (ii) as soon as practicable after the filing thereof, copies of
each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Report on Form 8-K or other report filed by the Company with the Commission,
Nasdaq or any securities exchange, (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of its Common
Stock, and (iv) such other information concerning the Company as the
Representatives may reasonably request from time to time.

7. PAYMENT OF EXPENSES.

(a) Expenses of the Company. The Company will pay, either directly or by
reimbursement, all costs, fees and expenses incurred in connection with expenses
incident to the performance of the obligations of the Company and of the Selling
Stockholders under this Agreement, including, but not limited to, (i) all
expenses and taxes incident to the issuance and delivery of the Shares to the
Representatives, (ii) all expenses incident to the registration of the Shares
under the Securities Act, (iii) all costs of preparing stock certificates,
including printing and engraving costs, (iv) all fees and expenses of the
registrar and transfer agent of the Shares, (v) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares to
the Underwriters, (vi) all fees and expenses of the Company's counsel and the
Company's independent accountants, (vii) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement, each Preliminary Prospectus and the Prospectus,
including all exhibits and financial statements, and all amendments and
supplements provided for herein, the Powers of Attorney, the Custody Agreement,
the Underwriters' Questionnaire, the Blue Sky memoranda and this Agreement,

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SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

(viii) all filing fees and attorneys' fees and expenses incurred by the Company
or the Underwriters in connection with exemptions from qualifying or registering
(or obtaining qualification or registration of) all or any part of the Shares
for offer and sale and determination of its eligibility for investment under the
Blue Sky or other securities laws of such jurisdictions as the Representatives
may designate, and (ix) all filing fees paid or incurred in connection with
filings made with the NASD.

(b) Expenses of the Selling Stockholders. Each Selling Stockholder will
pay, either directly or by reimbursement, all fees and expenses incident to the
performance of such Selling Stockholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including, but not limited
to, any fees and expenses of counsel for such Selling Stockholder, such Selling
Stockholder's pro rata share of fees and expenses of the Attorneys-in-Fact and
the Custodian and all expenses and taxes incident to the sale and delivery of
the Shares to be sold by such Selling Stockholder to the Underwriters hereunder.

8. INDEMNIFICATION AND CONTRIBUTION.

(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls such
Underwriter within the meaning of the Securities Act and the respective
officers, directors, partners, employees, representatives and agents of each of
such Underwriter and controlling person (collectively, the "Underwriter
Indemnified Parties" and, each, an "Underwriter Indemnified Party") against any
losses, claims, damages, liabilities or expenses (including the reasonable cost
of investigating and defending against any claims therefor and fees of counsel
incurred in connection therewith), joint or several, which may be based upon the
Securities Act, the Exchange Act, or any other federal, state, local or foreign
statute or regulation, or at common law, on the ground or alleged ground that
any Preliminary Prospectus, the Registration Statement or the Prospectus (or any
Preliminary Prospectus, the Registration Statement or the Prospectus as from
time to time amended or supplemented) includes or allegedly includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof. The Company
will be entitled to participate at its own expense in the defense or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if the Company elects to assume the defense, such defense shall be
conducted by counsel chosen by it. In the event the Company elects to assume the
defense of any such suit and retain such counsel, any Underwriter Indemnified
Parties, defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) the Company shall
have specifically authorized the retaining of such counsel, or (ii) the parties
to such suit include any such Underwriter Indemnified

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Parties, and the Company and such Underwriter Indemnified Parties have been
advised by counsel to the Underwriters that one or more legal defenses may be
available to it or them which may not be available to the Company, in which case
the Company shall not be entitled to assume the defense of such suit,
notwithstanding its obligation to bear the fees and expenses of such counsel.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.

(b) Indemnification by the Selling Stockholders. Each Selling Stockholder
agrees to indemnify and hold harmless each Underwriter Indemnified Party against
any losses, claims, damages, liabilities or expenses (including, unless such
Selling Stockholder elects to assume the defense, the reasonable cost of
investigating and defending against any claims therefor and fees of counsel
incurred in connection therewith), which may be based upon the Securities Act,
the Exchange Act, or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
such documents, as from time to time amended and supplemented) includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
written information furnished to the Company by any Underwriter, directly or
through the Representatives, specifically for use in the preparation thereof;
provided, however, that the indemnification obligation arising under this
Section 8(b) shall apply only to the extent that such loss, claim, damage,
liability or expense is caused by or related to an untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to such Selling Stockholder furnished in writing to
the Company by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendments or supplements thereto. Such Selling Stockholder shall be entitled to
participate at his own expense in the defense, or, if he so elects, to assume
the defense of any suit brought to enforce any such liability, but, if such
Selling Stockholder elects to assume the defense, such defense shall be
conducted by counsel chosen by him. In the event that any Selling Stockholder
elects to assume the defense of any such suit and retain such counsel, the
Underwriter Indemnified Parties, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) such Selling Stockholder shall have specifically authorized the retaining of
such counsel, or (ii) the parties to such suit include such Underwriter
Indemnified Parties and such Selling Stockholder and such Underwriter
Indemnified Parties have been advised by counsel to the Underwriters that one or
more legal defenses may be available to them which may not be available to such
Selling Stockholder, in which case such Selling Stockholder shall not be
entitled to assume the defense of such suit notwithstanding its obligation to
bear the fees and expenses of such counsel. Subject to Section 8(e) below, this
indemnity agreement is not exclusive and will be in addition

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DAIN RAUSCHER WESSELS
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to any liability which such Selling Stockholder might otherwise have and shall
not limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party. The Company and the Selling
Stockholders may agree, as among themselves and without limiting the rights of
the Underwriters under this Agreement, as to their respective amounts of such
liability for which they each shall be responsible.

(c) Indemnification by Underwriters. Each Underwriter severally agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act (collectively, the
"Company Indemnified Parties") and each Selling Stockholder and each person, if
any, who controls a Selling Stockholder within the meaning of the Securities Act
(collectively, the "Stockholder Indemnified Parties") against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
Underwriters elect to assume the defense, the reasonable cost of investigating
and defending against any claims therefor and fees of counsel incurred in
connection therewith), joint or several, which arise out of or are based in
whole or in part upon the Securities Act, the Exchange Act or any other federal,
state, local or foreign statute or regulation, or at common law, on the ground
or alleged ground that any Preliminary Prospectus, the Registration Statement or
the Prospectus (or any such document, as from time to time amended and
supplemented) includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, but only insofar as any such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company by such Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof, and the parties acknowledge and
agree that the only information furnished by the Underwriters to the Company for
inclusion in any Preliminary Prospectus, the Registration Statement or the
Prospectus, as from time to time amended or supplemented, is the information
under the caption "Underwriting" in the Prospectus that does not describe this
Agreement; provided, however, that in no case is such Underwriter to be liable
with respect to any claims made against any Company Indemnified Party or
Stockholder Indemnified Party against whom the action is brought unless such
Company Indemnified Party or Stockholder Indemnified Party shall have notified
such Underwriter in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Company Indemnified Party or Stockholder Indemnified Party,
but failure to notify such Underwriter of such claim shall not relieve it from
any liability which it may have to any Company Indemnified Party or Stockholder
Indemnified Party otherwise than on account of its indemnity agreement contained
in this paragraph. Such Underwriter shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit and
retain such counsel, the Company Indemnified Parties

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or Stockholder Indemnified Parties and any other Underwriter or Underwriters or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, respectively.
The Underwriter against whom indemnity may be sought shall not be liable to
indemnify any person for any settlement of any such claim effected without such
Underwriter's consent. This indemnity agreement is not exclusive and will be in
addition to any liability which such Underwriter might otherwise have and shall
not limit any rights or remedies which may otherwise be available at law or in
equity to any Company Indemnified Party or Stockholder Indemnified Party.

(d) Contribution. If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand, and the Underwriters on the other hand, from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholders on the
one hand, and the Underwriters on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand, and the Underwriters on the other
hand, shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, defending, settling or compromising any such claim.
Notwithstanding the provisions of this subsection (d),

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DAIN RAUSCHER WESSELS
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no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations and not joint. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

(e) Limitation of Liability. Notwithstanding any provision herein to the
contrary, (i) the indemnity agreements contained in Section 8(a) and Section
8(b) with respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage, liability or expense purchased
the Shares which are the subject thereof if, at or prior to the written
confirmation of the sale of such Shares, a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
(excluding the documents incorporated therein by reference), the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), and such failure to send or deliver a copy of the Prospectus (or
the Prospectus as amended or supplemented) was not the result of the Company's
non-compliance with the provisions of Section 6(d), (ii) the liability for
indemnification under Section 8(b) of each Selling Stockholder shall not exceed
the Purchase Price of the Shares sold by such Selling Stockholder to the
Underwriters, and (iii) such liability shall be further limited for each Selling
Stockholder such that such Selling Stockholder's liability, in proportion to the
aggregate liability of all Selling Stockholders as a group, shall not exceed the
proportion that the number of Shares sold by such Selling Stockholder bears to
the aggregate number of Shares sold by all Selling Stockholders hereunder;
provided, however, that the limitation on liability set forth in the foregoing
clause (iii) shall not apply with respect to any particular Selling Stockholder
if such liability is attributable to such Selling Stockholder, as set forth in
the first sentence of Section 8(b); and, provided, further, that nothing in the
foregoing clause (iii) shall require the Underwriters to seek indemnification
from any other Selling Stockholder(s) as a condition of their being entitled to
indemnification from any particular Selling Stockholder. Notwithstanding
anything to the contrary in this Agreement, the Underwriters and their control
persons shall not seek indemnification pursuant to this Section 8 unless they
shall have first reasonably determined that the Company is unable or not
required to fully satisfy the obligations of the Selling Stockholders pursuant
to such Sections.

9. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC.

Unless this Agreement is terminated in accordance with Section 12 hereof,
the respective indemnities, covenants, agreements, representations, warranties
and other statements of the

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Company, the Selling Stockholders and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Selling Stockholders, the Company or any of its
officers or directors or any controlling person, and shall survive delivery of
and payment for the Shares.

10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.

The respective obligations of the several Underwriters hereunder shall be
subject to the material accuracy, at and (except as otherwise stated herein) as
of the date hereof and at and as of the Closing Dates, of the representations
and warranties made herein by the Company and the Selling Stockholders, to
compliance at and as of the Closing Dates by the Company and the Selling
Stockholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to the Closing Dates, and to the
following additional conditions:

(a) Effective Registration Statement. The Registration Statement shall
have become effective and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or the Representatives, shall be
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Representatives. Any filings of the Prospectus, or any
supplement thereto, required pursuant to Rule 424(b) or Rule 434 of the Rules
and Regulations, shall have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and Regulations, as the case
may be.

(b) Changes. The Representatives shall have been reasonably satisfied that
there shall not have occurred any change prior to the Closing Dates in the
condition (financial or otherwise), properties, business, prospects, net worth
or results of operations of the Company and its subsidiaries taken as a whole,
or any material adverse change in the capital stock, short-term or long-term
debt of the Company and its subsidiaries taken as a whole, such that (i) the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the reasonable opinion
of the Representatives, is material, or omits to state a fact which, in the
reasonable opinion of the Representatives, is required to be stated therein or
is necessary to make the statements therein not misleading, or (ii) it is
impracticable in the reasonable judgment of the Representatives to proceed with
the public offering or to purchase the Shares as contemplated hereby.

(c) Litigation. The Representatives shall be satisfied that no legal or
governmental action, suit, proceeding or investigation affecting the Company or
any of its subsidiaries which may have a Material Adverse Effect or may affect
the Company's or the Selling Stockholders'

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DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

ability to perform their respective obligations under this Agreement shall have
been instituted or threatened, and there shall have occurred no material adverse
development in any existing such action, suit, proceeding or investigation.

(d) Comfort Letter. Prior to the execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP, independent
certified public accountants, a letter, dated the date hereof, in form and
substance reasonably satisfactory to the Underwriters.

(e) Bring-Down. The Representatives shall have received from Arthur
Andersen L.L.P., independent certified public accountants, letters, dated the
Closing Dates, to the effect that such accountants reaffirm, as of the Closing
Dates, and as though made on the Closing Dates, the statements made in the
letter furnished by such accountants pursuant to Section 10(d); provided,
however, that the letter delivered on the First Closing Date shall use a
"cut-off date" not earlier than the date hereof, and the letter delivered on the
Option Closing Date shall use a "cut-off date" not more than five (5) business
days prior to such Option Closing Date.

(f) Legal Opinion of Counsel for the Company. The Representatives shall
have received from Blau, Kramer, Wactlar & Lieberman, P.C., counsel for the
Company and Computer Concepts, an opinion, dated the Closing Dates, which
opinion shall be rendered to the Underwriters at the request of the Company and
the Selling Stockholders (and shall so state therein) to the effect that:

(i) the Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority required to carry on its business and to own, lease and
operate its property as described in the Prospectus;

(ii) the Company and each of its subsidiaries is duly qualified and
is in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect;

(iii) all of the outstanding shares of Common Stock (including the
Shares to be sold by the Selling Stockholders) have been duly authorized
and validly issued and are fully paid, non-assessable and not subject to
any preemptive or similar rights, except as disclosed in the Prospectus;

(iv) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will have been
validly issued and will be fully

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DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
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paid and non-assessable, and the issuance of such shares is not subject to
any preemptive or similar rights;

(v) this Agreement has been duly and validly authorized, executed
and delivered by the Company and by the Selling Stockholders and is a
valid and binding agreement of the Company and the Selling Stockholders,
enforceable against the Company and the Selling Stockholders in accordance
with its terms, subject to the Enforceability Exceptions;

(vi) the authorized capital stock of the Company, including the
Common Stock, conforms in all material respects to the description thereof
contained in the Prospectus;

(vii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending
its effectiveness has been issued and no proceedings for that purpose are,
to the knowledge of such counsel, pending before or contemplated by the
Commission;

(viii) the Company is not in violation of its Certificate of
Incorporation or By-laws and, to such counsel's knowledge, the Company is
not in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material
to the conduct of the business of the Company, to which the Company is a
party or by which it or its property is bound;

(ix) the execution, delivery and performance of this Agreement by
the Company and the Selling Stockholders, compliance by the Company and
the Selling Stockholders with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or order of any court or governmental
agency or body (except such as may be required by the the NASD or under
federal or state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters) and will not conflict with
or constitute a breach of any of the terms or provisions of, or a default
under, the Certificate of Incorporation, By-laws or other organizational
documents of the Company or of any of its subsidiaries, or any agreement,
indenture or other instrument known to such counsel to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound, or, to such
counsel's knowledge, violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or its
property;

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DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
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(x) to such counsel's knowledge, there is no legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of its property is subject which
is required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other document
which is required to be described in the Registration Statement or the
Prospectus or is required to be filed as an exhibit to the Registration
Statement which is not described or filed as required;

(xi) the Company is not an "investment company" or a company
"controlled" by an "investment company," as defined in the Investment
Company Act of 1940, as amended;

(xii) to such counsel's knowledge, except otherwise set forth in the
Registration Statement, no holder of any security of the Company has any
right to require registration of shares of Common Stock or any other
security of the Company;

(xiii) to such counsel's knowledge, except as otherwise set forth in
the Registration Statement or such as are not material to the business,
prospects, financial condition or results of operation of the Company and
its subsidiaries taken as a whole, the Company and each of its
subsidiaries has good and marketable title, free and clear of all liens,
claims, encumbrances and restrictions except liens for taxes not yet due
and payable, to all property and assets described in the Registration
Statement as being owned by it;

(xiv) to such counsel's knowledge, all leases to which the Company
and each of its subsidiaries is a party are valid and binding and no
default has occurred or is continuing thereunder, with the exception of
those leases the violation of which would not, in the aggregate, have a
Material Adverse Effect;

(xv) (A) the Registration Statement (including any Registration
Statement filed under Rule 462(b) under the Securities Act, if any) and
the Prospectus and any supplement or amendment thereto (except for
financial statements, schedules and reports thereon, and other financial
and statistical data included therein, as to which no opinion need be
expressed) comply as to form in all material respects with the Securities
Act, and (B) although counsel has not undertaken to investigate or verify
independently and is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Prospectus or any amendment or supplement
thereto, nothing has come to the attention of such counsel which has
caused it to believe that (except for financial statements, schedules and
reports thereon, and other financial and statistical data included therein
as aforesaid) the Registration Statement and the prospectus included
therein at the time the Registration

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DAIN RAUSCHER WESSELS
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Statement became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable (except for
financial statements, schedules and reports thereon, and other financial
and statistical data included therein as aforesaid) contains any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

(xvi) the Custody Agreement has been duly and validly authorized,
executed and delivered by Computer Concepts and is a valid and binding
agreement of Computer Concepts, enforceable against Computer Concepts in
accordance with its terms, subject to the Enforceability Exceptions;

(xvii) The Selling Stockholders have full legal right, power and
authority, and any approval required by law (other than any approval
imposed by the applicable state securities and Blue Sky laws) to sell,
assign, transfer and deliver the Shares to be sold by them in the manner
provided in this Agreement and the Custody Agreement;

(xviii) Each Selling Stockholder has good and valid title to the
certificates for the Shares to be sold by such Selling Stockholder and,
upon delivery thereof, pursuant hereto and payment therefor, good and
valid title will pass to the Underwriters, severally, free of all
restrictions on transfer, liens, encumbrances, security interests and
claims whatsoever;

(xix) the Power of Attorney signed by Computer Concepts appointing
George Aronson and Dan Kinsey, or either of them, as attorney-in-fact to
the extent set forth therein with regard to the transactions contemplated
hereby has been duly and validly authorized, executed and delivered by or
on behalf of Computer Concepts and is a valid and binding instrument of
Computer Concepts, enforceable against Computer Concepts in accordance
with its terms, subject to the Enforceability Exceptions; and

Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the States of New York or
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company, the Selling
Stockholders or officers of the Selling Stockholders (when such Selling
Stockholder is not a natural person), and of government officials, in which case
their opinion is to state that they are so relying, without any independent
investigation or inquiry, and that they have no knowledge of any material
misstatement or inaccuracy in any such opinion, representation or certificate.
Copies of any opinion, representation or certificate so relied upon shall be
delivered to the Representatives and to counsel for the Underwriters.

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(g) Legal Opinion of Counsel for the Underwriters. The Representatives
shall have received from Morrison & Foerster, LLP, counsel for the Underwriters,
their opinion or opinions, dated the Closing Dates, with respect to the validity
of the Shares, the Registration Statement and the Prospectus and such other
related matters as they may reasonably request, and the Company and the Selling
Stockholders shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters.

(h) Officers' Certificate. The Representatives shall have received a
certificate, dated the Closing Dates, of the Chief Executive Officer of the
Company and the Chief Financial Officer of the Company to the effect that:

(i) No stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the knowledge of the signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act;

(ii) Neither any Preliminary Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, as of the time when the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such
certificate, included any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;

(iii) The representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as of the
Closing Dates, and the Company has substantially complied with all of the
agreements and substantially performed or satisfied all of the conditions
on its part to be performed or satisfied at or prior to the Closing Dates;
and

(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as disclosed in
or contemplated by the Prospectus, (A) there has not been any material
adverse change or a development involving a material adverse change in the
condition (financial or otherwise), properties, business, management,
prospects, net worth or results of operations of the Company, (B) the
business and operations conducted by the Company have not sustained a loss
by strike, fire, flood, accident or other calamity (whether or not
insured) of such a character as to interfere materially with the conduct
of the business and operations of the Company, (C) no legal or
governmental action, suit, proceeding or investigation is pending or
threatened against the Company which is material to the Company, whether
or not arising from transactions in the ordinary course of business, or
which may materially and adversely affect the transactions contemplated by
this Agreement,

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DAIN RAUSCHER WESSELS
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(D) since such dates and except as so disclosed, the Company has not
incurred any material liability or obligation, direct, contingent or
indirect, made any change in its capital stock (except pursuant to its
Stock Option Plan), made any material change in its short-term or funded
debt or repurchased or otherwise acquired any of the Company's capital
stock, (E) the Company has not declared or paid any dividend, or made any
other distribution, upon its outstanding capital stock payable to
Stockholders of record on a date prior to the Closing Dates, and (F) the
Company has not entered into any material transactions not in the ordinary
course of business.

(i) Certificate of Selling Stockholders. The Representatives shall have
received a certificate or certificates, dated the Closing Dates, of the
Attorneys-in-Fact on behalf of each of the Selling Stockholders to the effect
that as of the Closing Dates its representations and warranties in this
Agreement are true and correct as if made on and as of the Closing Dates, and
that it has performed all its obligations and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Dates.

(j) Opinion of Intellectual Property Counsel. The Representatives shall
have received from Marzouk & Parry, special intellectual property counsel for
the Company, an opinion, dated the Closing Dates, with respect to certain
intellectual property law matters. Such opinion shall be in form and substance
reasonably satisfactory to the Underwriters.

(k) Additional Certificates. The Company and each of the Selling
Stockholders shall have furnished to the Representatives such additional
certificates as the Representatives may have reasonably requested as to the
accuracy, at and as of the Closing Dates, of the representations and warranties
made herein by them and as to compliance at and as of the Closing Dates by them
with their covenants and agreements herein contained and other provisions hereof
to be satisfied at or prior to the Closing Dates, and as to satisfaction of the
other conditions to the obligations of the Underwriters hereunder.

(l) Satisfaction. All opinions, certificates, letters and other documents
will be in compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company will
furnish to the Representatives such number of original and conformed copies of
such opinions, certificates, letters and other documents as the Representatives
shall reasonably request. If any of the conditions hereinabove provided for in
this Section 10 shall not have been satisfied when and as required by this
Agreement, this Agreement may be terminated by the Representatives by notifying
the Company of such termination in writing or by telegram at or prior to the
Closing Dates, but SoundView shall be entitled to waive any of such conditions.

30
<PAGE> 31
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

11. EFFECTIVE DATE.

This Agreement shall become effective upon execution and delivery by all
the parties hereto and the written or oral release of notification of the
effectiveness of the Registration Statement by the Commission.

12. TERMINATION.

The Representatives shall have the right to terminate this Agreement by
giving notice to the Company as hereinafter specified at any time at or prior to
the First Closing Date or the Option Closing Date, as the case may be, (a) if
the Company or any Selling Stockholder shall have failed, refused or been unable
to perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled is
not fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or Prospectus,
which, in the sole reasonable judgment of the Representatives, is material and
adverse, or (b) if additional material governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange, Nasdaq or the American Stock
Exchange or in the over-the-counter market by the NASD, or trading in securities
generally shall have been suspended on any such exchange or in the
over-the-counter market by the NASD, or if a banking moratorium shall have been
declared by federal or New York authorities, or (c) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (d) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in the
reasonable judgment of the Representatives makes it inadvisable or impracticable
to proceed with the offering, sale and delivery of the Shares, or (e) if there
shall have been an outbreak or escalation of hostilities or of any other
insurrection or armed conflict or the declaration by the United States of a
national emergency which, in the reasonable opinion of the Representatives,
makes it impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus. In the event of termination pursuant
to this Section 12 the Company shall remain obligated to pay costs and expenses
pursuant to Section 7, Section 8 and Section 13 hereof. If the Company shall
elect to prevent this Agreement from becoming effective as provided in Section
11, the Company shall promptly notify the Representatives by telephone,
facsimile or telegraph, in each case confirmed by letter. If the Representatives
elect to prevent this Agreement from becoming effective as provided in Section
11 or to terminate this Agreement as provided in this Section 12, the
Representatives shall promptly notify the Company by telephone, facsimile or
telegraph, in each case confirmed by letter.

31
<PAGE> 32
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

13. REIMBURSEMENT OF UNDERWRITERS.

Notwithstanding any other provisions hereof, if this Agreement shall not
become effective by reason of any election of the Company pursuant to Section 11
or shall be terminated by the Representatives under Section 10 or Section 12(a),
the Company will bear and pay the expenses specified in Section 7 hereof and, in
addition to its obligations pursuant to Section 8 hereof, the Company will
reimburse the reasonable out-of-pocket expenses of the several Underwriters
(including reasonable fees and disbursements of counsel for the Underwriters)
incurred in connection with this Agreement and the proposed purchase of the
Shares, and promptly upon demand the Company will pay such amounts to the
Representatives.

14. SUBSTITUTION OF UNDERWRITERS.

If any Underwriter or Underwriters shall default in its or their
obligations to purchase shares of Shares hereunder and the aggregate number of
shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of shares
with respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and arrangements satisfactory
to the Representatives and the Company for the purchase of such shares by other
persons are not made within forty-eight (48) hours after such default, this
Agreement shall terminate. If the remaining Underwriters or substituted
Underwriters are required hereby or agree to take up all or part of the shares
of Shares of a defaulting Underwriter or Underwriters as provided in this
Section 14, (a) the Company and the Selling Stockholders shall have the right to
postpone the Closing Dates for a period of not more than seven (7) full business
days in order that the Company and the Selling Stockholders may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (b) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Any action taken under this Section 14 shall not
relieve any defaulting Underwriter of its liability to the Company, the Selling
Stockholders or the other Underwriters for damages occasioned by its default
hereunder. Any termination of this Agreement pursuant to this Section 14 shall
be without liability on the part of any non-defaulting Underwriter, the Selling
Stockholders or the Company, except for expenses to be paid or reimbursed
pursuant to Section 7 and except for the provisions of Section 8.

32
<PAGE> 33
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

15. NOTICES.

All communications hereunder shall be in writing and, (a) if sent to the
Underwriters, shall be mailed, delivered, transmitted by facsimile or
telegraphed and confirmed to the Representatives, c/o SoundView, 22 Gatehouse
Road, Stamford, Connecticut 06902 (facsimile: (203) 462-7257), except that
notices given to an Underwriter pursuant to Section 8 hereof shall be sent to
such Underwriter at the address furnished by the Representatives, or (b) if sent
to the Company, shall be mailed, delivered, transmitted by facsimile or
telegraphed and confirmed to the Company, 5845 Richmond Highway, Suite 400,
Alexandria, Virginia 22303, Attn: President (facsimile: (703) 341-2424), with a
copy to Blau, Kramer, Wactlar & Lieberman, P.C., 100 Jericho Quadrangle, Suite
225, Jericho, New York 11753, Attn: David H. Lieberman (facsimile (516)
822-4824) or (c) if sent to the Computer Concepts, shall be mailed, delivered,
transmitted by facsimile or telegraphed and confirmed to the Selling
Stockholders, c/o the Attorneys-in-Fact, c/o SOFTWORKS, Inc., 5845 Richmond
Highway, Suite 400, Alexandria, Virginia 22303, Attn: President (facsimile:
(703) 341-2424), with a copy to Blau, Kramer, Wactlar & Lieberman, P.C. , 100
Jericho Quadrangle, Suite 225, Jericho, New York 11753, Attn: David H.
Lieberman (facsimile (516) 822-4824).

16. SUCCESSORS.

This Agreement shall inure to the benefit of and be binding upon the
several Underwriters, the Company and the Selling Stockholders and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person other
than the persons mentioned in the preceding sentence any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person, except that the representations, warranties,
covenants, agreements and indemnities of the Company and the Selling
Stockholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the indemnities of the several Underwriters shall also be for the
benefit of each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or any Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.

17. APPLICABLE LAW.

This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of laws.

33
<PAGE> 34
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

18. AUTHORITY OF REPRESENTATIVES.

In connection with this Agreement, the Representatives will act for and on
behalf of the several Underwriters, and any action taken under this Agreement by
the Representatives will be binding on all the Underwriters, and any action
taken under this Agreement by any of the Attorneys-in-Fact will be binding on
all of the Selling Stockholders.

19. PARTIAL UNENFORCEABILITY.

The invalidity or unenforceability of any section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.

20. ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.

21. GENERAL.

In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and the
Representatives.

22. COUNTERPARTS.

This Agreement may be signed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.

23. ATTORNEY-IN-FACT.

Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Stockholders represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.

34
<PAGE> 35
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.

Very truly yours,

SOFTWORKS, INC.

By: __________________________________
Name:
Title:

35
<PAGE> 36
SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES
JUNE __, 1999

SELLING STOCKHOLDERS NAMED IN SCHEDULE B

By: __________________________________
Name:
As Attorney-in-Fact of ______________

Agreed to and accepted as of
the date first set forth above:

SOUNDVIEW TECHNOLOGY GROUP, INC.
DAIN RAUSCHER WESSELS
RAYMOND JAMES & ASSOCIATES, INC.

By: SoundView Technology Group, Inc.

By: __________________________________
Name:
Title:

36
<PAGE> 37
SCHEDULE A

<TABLE>
<CAPTION>
Number of Firm Number of Option
Shares to be Shares to be
Name Purchased Purchased
---- ---------- ----------
<S> <C> <C>
SoundView Technology Group, Inc.
----------
Dain Rauscher Wessels
----------
Raymond James & Associates, Inc.
----------

---------- ----------
TOTAL 3,500,000 525,000
========== ==========
</TABLE>
<PAGE> 38
SCHEDULE B

<TABLE>
<CAPTION>
Number of Firm Number of Option
Shares to be Shares to be
Name Sold Sold
---- --------- ---------
<S> <C> <C>
SOFTWORKS, Inc. 1,000,000 100,000

Computer Concepts Corp. 856,933 300,000
========= =========

Spinneret Financial Systems, Inc. 666,667
========= =========

Tech Connect Consulting Inc. 141,600
========= =========

Joseph Dekama 12,000
========= =========

Bo-Tel, Inc. 100,000
========= =========

Dan Kinsey 100,000
========= =========

Joseph Markus 252,800 125,000
========= =========

Linda Neeley 25,000
========= =========

Dynasoft Inc. 15,000
========= =========

Anthony Coppola 30,000
========= =========

Dan DelGiorno, Sr 200,000
========= =========

Global Access Technology, Inc 100,000
========= =========

TOTAL 3,500,000 525,000
========= =========
</TABLE>

<PAGE> 39
SCHEDULE C

LOCK-UP AGREEMENT

SoundView Technology Group, Inc.
Dain Rauscher Wessels
Raymond James & Associates, Inc.
c/o SoundView Technology Group, Inc.
22 Gatehouse Road
Stamford, Connecticut 06902

Ladies and Gentlemen:

The undersigned is a director, officer and/or securityholder of SOFTWORKS,
Inc. (the "Company") and wishes to facilitate the proposed public offering (the
"Offering") of the Company's common stock ("Common Stock") pursuant to a
registration statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission (the "SEC").

The undersigned recognizes and agrees that the Offering will benefit the
undersigned as a director, officer or securityholder of the Company. In
consideration of the foregoing, and in order to induce the several underwriters
to act as such in connection with the Offering, the undersigned hereby
irrevocably agrees not to, directly or indirectly, offer, sell, contract to
sell, transfer the economic risk of ownership in, make any short sale, pledge,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended, grant any option to sell,
transfer or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exchangeable or exercisable for or any rights to purchase or
acquire Common Stock, or publicly announce the undersigned's intention to do any
of the foregoing, without the prior written consent of SoundView Technology
Group, Inc., for a period commencing on the date hereof and terminating one
hundred eighty (180) days after the effective date of the Registration Statement
(the "Lock-Up Period"); provided, however, that shares of Common Stock purchased
by the undersigned in the public market after the Offering, and any shares of
Common Stock issuable upon exercise of employee stock options issued in
accordance with the terms of the Company's 1998 Long Term Incentive Plan and
1999 Stock Option Plan, as disclosed in the Registration Statement shall not be
subject to this agreement.

Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock either during his or her lifetime
or on death by will or intestacy to his or her immediate family or to a trust if
the beneficiaries of such trust are exclusively the undersigned and/or a member
or members of his or her immediate family; provided, however, that prior to any
such transfer each transferee shall execute an agreement, satisfactory to
SoundView Technology Group, Inc., pursuant to which each transferee shall agree
to receive and hold such
<PAGE> 40
SoundView Technology Group, Inc.
_____ __, 1999
Page Two

shares of Common Stock, or securities convertible into or exchangeable or
exercisable for Common Stock, subject to the provisions hereof, and there shall
be no further transfer except in accordance with the provisions hereof. In
addition, if the undersigned is a partnership, the partnership may transfer any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock to a partner of such partnership, to a retired
partner of such partnership, or to the estate of any such partner or retired
partner, and any such partner who is an individual may transfer such shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock by gift, will or intestacy to a member or members of his or her
immediate family; provided, however, that prior to any such transfer each
transferee shall execute an agreement, satisfactory to SoundView Technology
Group, Inc., pursuant to which each transferee shall agree to receive and hold
such shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, subject to the provisions hereof, and there shall
be no further transfer except in accordance with the provisions hereof. For
purposes of this paragraph, "immediate family" shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor.

In addition, the undersigned agrees that, except for the 2,500,000 shares
of Common Stock for which Computer Concepts has "piggy-back" registration
rights, without the prior written consent of SoundView Technology Group, Inc.,
the undersigned will not, during the Lock-Up Period, make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.

The undersigned confirms that he or she understands that the underwriters
of the Offering and the Company will rely upon the representations set forth in
this agreement in proceeding with the Offering. The undersigned further confirms
that this agreement is irrevocable and shall be binding upon the undersigned's
heirs, legal representatives, successors and assigns so long as the closing of
the Offering occurs on or prior to ________ __, 1999. The undersigned agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of Common Stock or other securities of the Company
held by the undersigned except in compliance with this agreement.

Dated: ___________, __ 1999.
Name of Securityholder

By:____________________________________
Name:
Title:

<PAGE> 1
Exhibit 5.1

June 2, 1999

Securities and Exchange Commission
450 Fifth Avenue
Washington, D.C. 20549

Re: Softworks, Inc.
Registration Statement on Form S-1
----------------------------------

Gentlemen:

Reference is made to the filing by Softworks, Inc. (the "Company") of a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Act of 1933, as amended, covering the registration of 4,025,000 shares of
Common Stock of the Company, par value $.001 per share (the "Common Stock").

As counsel for the Company, we have examined its corporate records,
including its Certificate of Incorporation, By-Laws, its corporate minutes, the
form of its Common Stock certificate and such other documents as we have deemed
necessary or relevant under the circumstances.

Based upon our examination, we are of the opinion that:

1. The Company is duly organized and validly existing under the laws of
the State of Delaware.

2. The shares of Common Stock subject to the Registration Statement have
been duly authorized and, when issued will be legally issued, fully paid and
non-assessable.

3. The 2,925,000 previously issued shares of Common Stock covered by the
Registration Statement to be sold by the Selling Stockholders have been legally
issued, fully paid and are non-assessable.

We hereby consent to be named in the Registration Statement and in the
prospectus which constitutes a part thereof as counsel to the Company, and we
hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.

Very truly yours,

/s/ Blau, Kramer, Wactlar & Lieberman, P.C.

BLAU, KRAMER, WACTLAR
& LIEBERMAN, P.C.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.

/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Arthur Andersen LLP

Washington, D.C.

June 1, 1999