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Pursuant to Rule 424(b)(2)
Registration No. 333-37248
PROSPECTUS SUPPLEMENT DATED AUGUST 4, 2000
TO PROSPECTUS DATED MAY 26, 2000
162,305 Shares
DATAWARE TECHNOLOGIES, INC.
Common Stock, $0.01 par value per share
Dataware Technologies, Inc. is offering, in a privately-negotiated
transaction, 162,305 shares of its common stock at a price of $2.83417 per
share. We are offering the shares directly to the purchaser pursuant to a
Purchase Agreement dated August 3, 2000.
No party is acting as an underwriter with respect to this offering.
Our common stock is traded on the Nasdaq National Market under the symbol
"DWTI." On August 2, 2000, the last sale price for our common stock as reported
by the Nasdaq was $3.375 per share.
We will receive gross proceeds of approximately $460,000 from the sale of
our common stock, and we expect to incur approximately $10,000 in offering
expenses. After deducting our estimated expenses, we will receive approximately
$450,000.
_________________________
Investing in our common stock involved significant risk. These risks are
described under the caption "Risk Factors" beginning on Page 4 of the
accompanying prospectus.
_________________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement and the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
_________________________
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TABLE OF CONTENTS
Page
----
Prospectus Supplement
Use of Proceeds................................................... S-3
Plan of Distribution.............................................. S-3
Prospectus
Dataware Technologies, Inc........................................ 3
Risk Factors...................................................... 4
Note Regarding Forward-Looking Statements......................... 8
Use of Proceeds................................................... 8
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.. 8
Description of Debt Securities.................................... 9
Description of Preferred Stock.................................... 17
Description of Dataware Common Stock.............................. 19
Description of Warrants........................................... 20
Plan of Distribution.............................................. 22
Legal Matters..................................................... 23
Experts........................................................... 23
Where You Can Find More Information............................... 24
-------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with information that is different.
You should not assume that the information in this prospectus supplement, the
accompanying prospectus or any document incorporated by reference is accurate as
of any date other than the date of the applicable document.
________________________
S-2
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USE OF PROCEEDS
We estimate the net proceeds from the sale of 162,305 shares of our common
stock in this offering would be approximately $460,000, and we expect to incur
approximately $10,000 in offering expenses. We will use the net proceeds for
working capital and general corporate purposes.
PLAN OF DISTRIBUTION
We are selling the shares of common stock offered under this prospectus
supplement directly to an investor in a privately-negotiated transaction in
which no party is acting as an underwriter. Our employees will not receive any
compensation based upon their participation in this offering and, pursuant to
Rule 3a4-1 of the Exchange Act, will not be deemed to be brokers as defined in
the Exchange Act.
At the closing, we will effect the sale through the book entry facilities
of The Depository Trust Company against payment of the aggregate purchase price
for the shares purchased.
We determined the per share price through negotiations with the purchaser.
The price represents approximately a 7% discount from the average closing bid
prices as reported by the Nasdaq during a trading period ending prior to the
date of this prospectus supplement.
S-3
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PROSPECTUS
$25,000,000
DATAWARE TECHNOLOGIES, INC.
Debt Securities, Preferred Stock, Common Stock and Warrants
We may offer to the public from time to time in one or more series or
issuances:
o debt securities consisting of debentures, notes or other evidences of
indebtedness;
o shares of our preferred stock;
o shares of our common stock; or
o warrants to purchase common stock, preferred stock or debt securities.
Our common stock trades on the Nasdaq National Market under the symbol
"DWTI." The shares of common stock sold by means of a prospectus supplement to
this prospectus may be listed on the Nasdaq National Market.
This prospectus provides you with a general description of the securities
that we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information" beginning on page 24 of this
prospectus before you make your investment decision.
See Risk Factors beginning on page 4 for a discussion of certain factors
that you should consider before investing in these securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus or any accompanying prospectus supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
This prospectus may not be used to sell securities unless it is accompanied
by a prospectus supplement.
________________________
The date of this prospectus is May 26, 2000
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TABLE OF CONTENTS
Page
DATAWARE TECHNOLOGIES, INC........................................ 3
RISK FACTORS...................................................... 4
NOTE ON FORWARD-LOOKING STATEMENTS................................ 8
USE OF PROCEEDS................................................... 8
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS.. 8
DESCRIPTION OF DEBT SECURITIES.................................... 9
DESCRIPTION OF PREFERRED STOCK.................................... 17
DESCRIPTION OF DATAWARE COMMON STOCK.............................. 19
DESCRIPTION OF WARRANTS........................................... 20
PLAN OF DISTRIBUTION.............................................. 22
LEGAL MATTERS..................................................... 23
EXPERTS 23
WHERE YOU CAN FIND MORE INFORMATION............................... 24
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DATAWARE TECHNOLOGIES, INC.
During 1999, we began to reposition and restructure the company as an e-
Business solutions provider and began making strategic and organizational
changes toward that goal. We were previously focused on providing software for
enterprise information access, or "knowledge management," and professional
electronic publishing applications, as well as multimedia services for CD-ROM
and web-based publishing. We are now a full service e-Business provider,
working with our clients to create solutions that efficiently translate their
businesses to a web-oriented model by incorporating the client's information
with our technology and methodology to deliver solutions built around the web,
such as portals, e-commerce sites and web-based training. We also continue to
develop interactive multimedia, intelligent information retrieval, distributed
media and knowledge management solutions.
We were founded as a Delaware corporation in 1988. You can find additional
information about us in our filings with the SEC. See "Where You Can Find More
Information" on page 24.
Our principal offices are located at One Canal Park, Cambridge,
Massachusetts 02141, and our main telephone number is (617) 621-0820.
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RISK FACTORS
If you purchase securities offered by this prospectus, you will take on
financial risk. In deciding whether to invest, you should carefully consider the
following risk factors, the information contained in this prospectus and the
other information to which we have referred you. It is especially important to
keep these risk factors in mind when you read forward-looking statements
appearing in this prospectus.
WE MAY HAVE DIFFICULTY TRANSITIONING TO AN E-BUSINESS SOLUTIONS MODEL, WHICH
COULD AFFECT OUR ABILITY TO MEET OUR LONG-TERM GOALS.
During 1999, we began to transition our business and our corporate
organization to an e-Business solutions model. This model involves an extensive
personnel reorganization, as well as new sales and marketing strategies. We
have made substantial progress in our efforts to position the company as a full
service provider in the e-Business market by expanding our e-Business solutions
customer base and adding new executives experienced in this area to the
management team. However, we may not be able to successfully implement the e-
Business solutions model. Some of the risks associated with our revised
approach include:
o we may not effectively complete the necessary reorganization of our
personnel;
o we may not be able to develop appropriate new distribution channels
capable of delivering these offerings economically and on time; and
o we are phasing out our older product lines and may not be able to
replace those revenues with revenues from newer offerings.
WE EXPECT TO INCUR FUTURE OPERATING LOSSES AND MAY NEVER BECOME PROFITABLE.
In recent years we have had significant operating losses, and we expect
losses to continue at least for the next few quarters, and possibly longer.
During the last three fiscal years, we have incurred cumulative losses of
approximately $10.9 million, and in the first quarter of 2000, we incurred a
loss of approximately $9.6 million. We expect our operating expenses and capital
expenditures to continue to increase as we complete our transition to an e-
Business solutions provider. We cannot be certain that we will become profitable
after we implement the e-Business solutions model. There are a number of
important factors that could adversely affect our profitability, resulting in
higher than anticipated costs and/or lower than anticipated revenues including:
o the impact of significant fixed costs while sales cycles lengthen as we
move from selling software products to providing solutions;
o inherent risks and costs of providing a unique solution for each
customer, including uncertainty of customer acceptance;
o increased employment costs and turnover stemming from the high level of
competition for qualified personnel in the e-commerce and software
industries; and
o reliance on third parties for supply of certain product components.
If our revenue does not increase as expected or operating expenditures exceed
our projections, our business, prospects, financial condition and results of
operations could be adversely affected.
EVEN IF WE RAISE ADDITIONAL CAPITAL, WE MAY NOT BE ABLE TO EXPAND OR WE MAY HAVE
TO CUT BACK OUR OPERATIONS.
We anticipate that our liquid assets, anticipated cash from operations and
borrowings, and the proceeds of this offering will be sufficient to provide for
our growth during 2000. However, if we cannot increase revenues or we suffer
additional liquidity problems, we may be required to cut back operations to
extend our resources. In general, factors such as the following may cause
liquidity problems in the future:
o unanticipated changes in business conditions or delays in market
acceptance of new solutions;
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o expansion of operations or research and development activities;
o development of new distribution channels;
o competitive and technological developments; and
o future acquisitions of businesses and/or product rights.
OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER, MAKING FUTURE OPERATING
RESULTS DIFFICULT TO PREDICT.
We have experienced, and may continue to experience, significant quarterly
fluctuations in our operating results. Our shift in business emphasis to an e-
Business solutions model has resulted in less predictable sales cycles. Also, a
disproportionately large percentage of quarterly sales have historically
occurred in the closing weeks of each quarter, making any prediction of
quarterly results before the end of a quarter potentially unreliable. In any
quarter, there may be a material variation between forecasted quarterly results
and actual results. Given these variations, we cannot assure you that we will
be consistently profitable during any particular period. A shortfall in
revenues during any quarter could cause our earnings for that quarter to fall
below expectations, which could adversely impact the market price of our stock.
IF WE ARE UNABLE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES IN THE MARKET FOR
OUR PRODUCTS AND SERVICES, WE MAY MISS MARKET OPPORTUNITIES, WHICH COULD REDUCE
SALES.
The market for e-Business solutions in general, and information management
and distribution products and services in particular, continues to change
rapidly. We must keep up with changing technology and customer demands,
including technologies and features introduced by our competitors, or we will
not be successful.
As with any new product, our most innovative offerings may be subject to
delays in development, "debugging," production, or customization, and will
require periods of adjustment to ensure that they are meeting customer
requirements. These may cause us to miss market opportunities and future sales.
WE FACE INTENSE COMPETITION. IF WE CANNOT DEVELOP NEW, IMPROVED OR MORE COST
EFFECTIVE PRODUCTS AND SOLUTIONS AS QUICKLY AS OUR COMPETITORS, WE WILL LOSE
SALES.
The markets in which we do business are intensely competitive. Increased
competition may result in price reductions, reduced gross margins, lost
business, and loss of market share, any of which could have a material adverse
effect on our business, operating results and financial condition.
Our competition varies by:
o geography (North America, Europe, Asia);
o type of customer (commercial, corporate, government agency); and
o market segment (financial services, high technology, etc).
Our competitors include traditional information retrieval competitors, such
as Verity, Inc., Fulcrum Technologies, Inc., and Excalibur Technologies
Corporation, as well as very significant companies in various areas of the e-
Business solutions market, such as Sapient Corporation, Proxicom, Inc., and
Cambridge Technology Partners, Inc. It is likely that new competitors will enter
these markets as they continue to grow. Furthermore, as the markets grow, a
number of companies could attempt to increase their presence in our markets by
acquiring or forming strategic alliances with our competitors or by introducing
products or services specifically designed for these markets. Compared to us,
many of our current and future competitors have longer operating histories and
significantly greater financial, technical, sales, marketing and other
resources.
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WE ARE DEPENDENT ON KEY PERSONNEL, WHOSE LOSS COULD DELAY OUR DEVELOPMENT
INITIATIVES OR ABILITY TO MARKET TO CUSTOMERS.
Our success depends on our ability to attract, motivate and retain highly
skilled technical, management, sales and marketing personnel. Competition for
personnel in the e-commerce software and services industry is intense, and we
are always at risk of losing key personnel to our competitors. We are still
experiencing the impact of higher than average voluntary and involuntary
employee turnover, with attendant costs, as the transition to an e-Business
solution provider is completed. In addition, we may not be able to attract and
retain additional highly skilled employees, which could impair our ability to
adequately manage and complete existing projects or develop and introduce
competitive new solutions.
SINCE A LARGE PORTION OF OUR REVENUES ARE GENERATED OUTSIDE THE UNITED STATES,
CHANGES IN INTERNATIONAL MARKETS COULD AFFECT OUR OVERALL SALES.
We generate a significant portion of our revenues from international sales.
Currently, we have direct sales organizations in the United Kingdom, Denmark and
Singapore and have distribution agreements covering other European countries,
the Pacific Rim, and South America. Our performance could be adversely affected
by changes in the world economies. As a result of doing business abroad, a
significant percentage of our revenues and expenses are denominated in foreign
currencies that fluctuate in value, relative to the U.S. dollar. Although we
may enter into foreign exchange forward contracts and foreign exchange option
contracts to offset a portion of the foreign exchange fluctuations,
unanticipated events may have a material impact on our results. Risks of doing
business abroad include:
o unanticipated changes in regulatory requirements, tariffs and other
barriers;
o potential changes in tax and other laws;
o greater difficulty in protecting intellectual property rights;
o difficulties in managing foreign operations; and
o general economic and political conditions.
These or other factors may have a material adverse effect on our
international sales, our ability to collect international receivables, or the
value of our assets denominated in foreign currencies, any of which would hurt
our operating results.
MARKET FACTORS THAT AFFECT CERTAIN CLASSES OF CUSTOMERS MAY HURT OUR RESULTS.
Our revenues depend on our maintaining relationships with certain classes
of customers, including:
o government agencies in the United States, Canada, Germany and the United
Kingdom;
o corporate and commercial publishers;
o financial printers and issuers of securities; and
o financial services and health care organizations.
Factors that affect any of these customer groups may have a substantial
adverse effect on our earnings. For example, political pressures may cause
governmental customers to reduce spending on our services. A reduction in the
amount of business from any customer class could have a material adverse effect
on our earnings and may cause actual results to vary materially from quarter to
quarter.
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WE MAY NOT BE ABLE TO OBTAIN OR ENFORCE PROTECTION FOR OUR INTELLECTUAL
PROPERTY, WHICH COULD LIMIT OUR ABILITY TO PREVENT COMPETITORS FROM USING OUR
TECHNOLOGY.
Our success depends in large part on the integration of our proprietary
technology into e-Business solutions. We rely primarily on a combination of
copyright, trademark and trade secret laws, license agreements, employee and
third party non-disclosure agreements and other methods to protect our
technology from infringement. Various factors create risks in this area. For
example, existing copyright laws -- even in the United States -- afford only
limited protection, and it may be difficult to protect proprietary rights in
certain international markets where the laws do not offer the same intellectual
property protection as U.S. law. Third parties may claim we are infringing their
rights. If these claims are made, they may result in costly litigation or
require us to license intellectual property rights of others, which may not be
possible on reasonable terms or at all. Any such claims, with or without merit,
can be time consuming and expensive to defend, which can adversely affect our
financial condition.
YEAR 2000 PROBLEMS COULD CAUSE INTERRUPTION OR FAILURE OF OUR INTERNAL COMPUTER
SYSTEMS AND THOSE OF OUR SUPPLIERS, WHICH MAY BE EXPENSIVE TO FIX.
To date, no material problems related to the Year 2000 issue have surfaced.
It is possible, however, that such problems exist but either have not yet
manifested themselves or have not yet been detected. We cannot, of course,
predict the nature or materiality of the impact on our operations or operating
results of Year 2000 disruption by parties over whom we have no control. These
Year 2000 problems may be expensive to fix and could have a material adverse
effect on our operating results.
OUR COMMON STOCK MAY HAVE A VOLATILE TRADING PRICE AND LOW TRADING VOLUME.
The market price of our common stock has been highly volatile and the
market for our common stock has experienced significant price and volume
fluctuations. In the last twelve months our common stock has traded as low as
$1.56 and as high as $18.50. This volatility has often been unrelated to our
operating performance, so our stock price could decline even if our e-Business
solutions strategy is successful. These fluctuations have adversely affected and
may in the future adversely affect the market price of our common stock.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BYLAWS AND UNDER DELAWARE LAW COULD
PREVENT OR DELAY A CHANGE IN CONTROL OF OUR COMPANY.
Provisions of our certificate of incorporation, bylaws, and shareholder
rights plan may discourage, delay, or prevent a takeover that shareholders may
consider favorable. These provisions may also prevent changes in our
management. Some of our anti-takeover provisions include:
o Our ability to authorize the issuance of undesignated preferred stock;
o A classified board of directors with staggered, three-year terms;
o Limiting the persons who may call special meetings of shareholders;
o Prohibiting shareholder action by written consent; and
o Establishing advance notice requirements for nominations for election to
the board of directors and for proposing matters that can be acted on by
shareholders at shareholder meetings.
Some provisions of Delaware law may also discourage, delay, or prevent
someone from acquiring or merging with us. See "Description of Dataware Common
Stock--Anti-Takeover Provisions" beginning on page 19.
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NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements about our:
o projected financial performance;
o market opportunities;
o solutions development;
o commercialization of new solutions; and
o future operations.
These statements can be identified by the use of words such as "may,"
"will," "expect," "anticipate," "estimate," "continue" or other similar words
and may also appear in our SEC filings incorporated by reference and in other
public announcements. These statements are necessarily based on management's
knowledge at the time and are subject to known and unknown risks and
uncertainties and other factors that could cause our actual results to differ
materially from those contemplated by the statements. Although we believe that
the assumptions and expectations reflected in these forward-looking statements
are reasonable at the time they are made, you should not view them as guarantees
of future performance. You should, therefore, consider these forward-looking
statements in light of all the information included or referred to in this
prospectus, including the risk factors described on pages 4 to 7. These are
important factors that could cause future results to differ materially from
those projected in the forward-looking statements.
USE OF PROCEEDS
Except as may otherwise be provided in the applicable prospectus
supplement, we intend to use the net proceeds from the sale of the securities
offered by this prospectus for general corporate purposes, which may include the
expansion of our selling and marketing organization, repayment, refinancing,
redemption or repurchase of existing indebtedness or capital stock, working
capital, capital expenditures, acquisitions of new technologies and businesses
and investments. Additional information on the use of net proceeds from the sale
of securities offered by this prospectus may be set forth in the prospectus
supplement relating to the specific offering.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to combined fixed
charges and preferred stock dividends on a historical basis for the periods
indicated. For purposes of this calculation, "earnings" consist of income
(loss) before income taxes and fixed charges. "Fixed charges" consist of
interest, amortization of debt issuance costs, preferred stock dividends and the
component of rental expense believed by management to be representative of the
interest factor on those amounts.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED
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1995 1996 1997 1998 1999 MARCH 31, 2000
---- ----- ----- ----- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (a)...... 8.2x (c) (c) (c) (c)(e) (c)
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends (b).............. 8.2x (d) (d) (d) (d)(e) (d)
</TABLE>
(a) The ratio of earnings to fixed charges is computed by dividing net income
(loss) before income taxes and extraordinary credits and fixed charges
(excluding interest capitalized during the period), by fixed charges.
(b) The ratio of earnings to fixed charges and preferred stock dividends is
computed by dividing net income (loss) before income taxes and
extraordinary credits and fixed charges (excluding interest capitalized
during the period), by fixed charges and preferred stock dividend
requirements. In April 1997, we issued shares of our Series B Convertible
Preferred Stock, all of which were converted into common stock in 1997. The
preferred stock dividend requirements represent the pretax earnings which
would have been required to cover the dividend requirements on our Series B
Convertible Preferred Stock.
(c) Due to our losses in these periods, additional earnings of $19.31 million,
$6.39 million, $0.10 million, $5.08 million and $9.66 million would have
been needed for the years ending 1996, 1997, 1998, 1999 and the three
months ending March 31, 2000, respectively, to cover fixed charges for
these periods.
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(d) Due to our losses in these periods, additional earnings of $19.31 million,
$6.45 million, $0.10 million, $5.08 million and $9.66 million would have
been needed for the years ending 1996, 1997, 1998, 1999 and the three
months ending March 31, 2000, respectively, to cover fixed charges for
these periods.
(e) Included in earnings for 1999 was a non-recurring gain of $5.0 million
before income taxes relating to the sale of a portion of our investment in
Northern Light Technology LLC, as disclosed in Note M of our consolidated
financial statements appearing in our annual report on Form 10-K. If this
sale had not occurred, the total additional earnings needed to achieve a
1:1 coverage ratio of earnings to fixed charges and earnings to fixed
charges and preferred stock dividends would have been $10.17 million.
DESCRIPTION OF DEBT SECURITIES
We will issue the debt securities (the "Debt Securities") offered by this
prospectus and any accompanying prospectus supplement under an indenture (the
"Indenture") to be entered into between us and the trustee identified in the
applicable prospectus supplement (the "Trustee"). The terms of the Debt
Securities will include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as in effect on the
date of the Indenture. We have filed a copy of the proposed form of Indenture
as an exhibit to the registration statement in which this prospectus is
included. Each Indenture will be subject to and governed by the terms of the
Trust Indenture Act of 1939.
We may offer under this prospectus up to an aggregate principal amount of
$25,000,000 in Debt Securities. If Debt Securities are issued at a discount, or
in a foreign currency, foreign currency units or composite currency, the
principal amount may be sold for an initial public offering price of up to
$25,000,000. Unless otherwise specified in the applicable prospectus
supplement, the Debt Securities will represent direct, unsecured obligations of
Dataware and will rank equally with all of our other unsecured indebtedness.
The following statements relating to the Debt Securities and the form of
Indenture are summaries and do not purport to be complete, and are subject in
their entirety to the detailed provisions of the applicable Indenture.
GENERAL
We may issue the Debt Securities in one or more series with the same or
various maturities, at par, at a premium, or at a discount. We will describe
the particular terms of each series of Debt Securities in a prospectus
supplement relating to that series, which we will file with the SEC. To review
the terms of a series of Debt Securities, you must refer to both the prospectus
supplement for the particular series and to the description of Debt Securities
in this prospectus.
The prospectus supplement will set forth the following terms of the Debt
Securities in respect of which this prospectus is delivered:
o the title of the series;
o the aggregate principal amount;
o the issue price or prices, expressed as a percentage of the aggregate
principal amount of the Debt Securities;
o any limit on the aggregate principal amount;
o the date or dates on which principal is payable;
o the interest rate or rates (which may be fixed or variable) or, if
applicable, the method used to determine such rate or rates;
o the date or dates from which interest, if any, will be payable and any
regular record date for the interest payable;
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o the place or places where principal and, if applicable, premium and
interest, is payable;
o the terms and conditions upon which we may, or the holders may require
us to, redeem or repurchase the Debt Securities;
o the denominations in which such Debt Securities may be issuable, if
other than denominations of $1,000 or any integral multiple of that
number;
o whether the Debt Securities are to be issuable in the form of
certificated Debt Securities (as described below) or global Debt
Securities (as described below);
o the portion of principal amount that will be payable upon declaration of
acceleration of the maturity date if other than the principal amount of
the Debt Securities;
o the currency of denomination;
o the designation of the currency, currencies or currency units in which
payment of principal and, if applicable, premium and interest, will be
made;
o if payments of principal and, if applicable, premium or interest, on the
Debt Securities are to be made in one or more currencies or currency
units other than the currency of denomination, the manner in which the
exchange rate with respect to such payments will be determined;
o if amounts of principal and, if applicable, premium and interest may be
determined by reference to an index based on a currency or currencies or
by reference to a commodity, commodity index, stock exchange index or
financial index, then the manner in which such amounts will be
determined;
o the provisions, if any, relating to any collateral provided for such
Debt Securities;
o any addition to or change in the covenants and/or the acceleration
provisions described in this prospectus or in the Indenture;
o any Events of Default, if not otherwise described in this prospectus
under "Events of Default";
o the terms and conditions for conversion into or exchange for shares of
common stock or preferred stock;
o any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents;
o the terms and conditions, if any, upon which the Debt Securities shall
be subordinated in right of payment to other indebtedness of Dataware;
o if applicable, whether the Debt Securities will be defeasible; and
o any other terms, which may modify or delete any provision of the
Indenture insofar as it applies to the series.
We may issue discount Debt Securities ("Discount Securities") that provide
for an amount less than the stated principal amount to be due and payable upon
acceleration of the maturity of such Debt Securities in accordance to the terms
of the Indenture. We may also issue Debt Securities in bearer form, with or
without coupons. If we issue Discount Securities or Debt Securities in bearer
form, we will describe U.S. federal income tax considerations and other special
considerations which apply to these Debt Securities in the applicable prospectus
supplement.
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We may issue Debt Securities denominated in or payable in a foreign
currency or currencies or a foreign currency unit or units. If we do, we will
describe the restrictions, elections, general tax considerations, specific terms
and other information relating to the Debt Securities and the foreign currency
or currencies or foreign currency unit or units in the applicable prospectus
supplement.
EXCHANGE AND/OR CONVERSION RIGHTS
We may issue Debt Securities that can be exchanged for or converted into
shares of our common stock or preferred stock. If we do, we will describe the
term of exchange or conversion in the prospectus supplement relating to these
Debt Securities.
TRANSFER AND EXCHANGE
We may issue Debt Securities that will be represented by either:
o "book-entry securities," which means that there will be one or more
global securities registered in the name of The Depository Trust
Company, as Depository (the "Depository"), or a nominee of the
Depository; or
o "certificated securities," which means that they will be represented by
a certificate issued in definitive registered form.
We will specify in the prospectus supplement applicable to a particular
offering whether the Debt Securities offered will be book-entry or certificated
securities. Except as set forth under "-- Global Debt Securities and Book Entry
System" below, book-entry Debt Securities will not be issuable in certificated
form.
CERTIFICATED DEBT SECURITIES
If you hold certificated Debt Securities, you may transfer or exchange the
debt securities at the Trustee's office or at the paying agency in accordance
with the terms of the Indenture. You will not be charged a service charge for
any transfer or exchange of certificated Debt Securities, but may be required to
pay an amount sufficient to cover any tax or other governmental charge payable
in connection with such transfer or exchange.
You may effect the transfer of certificated Debt Securities and of the
right to receive the principal of, premium, and/or interest, if any, on the
certificated Debt Securities only by surrendering the certificate representing
the certificated Debt Securities and having us or the Trustee issue a new
certificate to the new holder.
GLOBAL DEBT SECURITIES AND BOOK ENTRY SYSTEM
The Depository has indicated that it would follow the procedures described
below to book-entry Debt Securities.
Beneficial interests in book-entry Debt Securities may be owned only by
participants that have accounts with the Depository for the related global Debt
Security or persons that hold interests through participants. Upon the issuance
of a global Debt Security, the Depository will credit, on its book-entry
registration and transfer system, each participants' account with the principal
amount of the book-entry Debt Securities represented by such global Debt
Security that is beneficially owned by the participant. The accounts to be
credited will be designated by any dealers, underwriters or agents participating
in the distribution of such book-entry Debt Securities. Ownership of book-entry
Debt Securities will be shown on, and the transfer of such ownership interests
will be effected only through, records maintained by the Depository for the
related global Debt Security (with respect to interests of participants) and on
the records of participants (with respect to interests of persons holding
through participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. These laws may impair your ability to own, transfer or pledge beneficial
interests in book-entry Debt Securities.
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So long as the Depository for a global Debt Security, or its nominee, is
the registered owner of a global Debt Security, the Depository or its nominee
will be considered the sole owner or holder of the book-entry Debt Securities
represented by the global Debt Security for all purposes under the Indenture.
Except as described below, beneficial owners of book-entry Debt Securities will
not be entitled to have such securities registered in their names, will not
receive or be entitled to receive physical delivery of a certificate in
definitive form representing the securities and will not be considered the
owners or holders of the securities under the Indenture. Accordingly, each
person who beneficially owns book-entry Debt Securities and desires to exercise
its rights as a holder under the Indenture, must rely on the procedures of the
Depository for the related global Debt Security. If a person is not a
participant, they must rely on the procedures of the participant through which
they own their interest, to exercise the rights.
We understand, however, that under existing industry practice, the
Depository will authorize the persons on whose behalf it holds a global Debt
Security to exercise certain rights of holders of Debt Securities. Dataware,
the Trustee, and any of their agents, will treat as the holder of a Debt
Security the persons specified in a written statement of the Depository with
respect to the global Debt Security for purposes of obtaining any consents or
directions required to be given by holders of the Debt Securities under the
Indenture.
Payments of principal and, if applicable, premium and interest, on book-
entry Debt Securities will be made to the Depository or its nominee, as the case
may be, as the registered holder of the related global Debt Security. Dataware
and the Trustee, and any of their agents will not have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such global Debt Security or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
We expect that the Depository, upon receipt of any payment of principal of,
premium, if any, or interest, if any, on a global Debt Security, will
immediately credit participants' accounts with payments in amounts proportionate
to the amounts of book-entry Debt Securities held by each participant as shown
on the records of the Depository. We also expect that payments by participants
to owners of beneficial interests in book-entry Debt Securities held through the
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name." These payments will be
the responsibility of the participants.
If the Depository is at any time unwilling or unable to continue as
Depository or ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, we will appoint a successor Depository. If we do not
appoint a successor Depository registered as a clearing agency under the
Securities Exchange Act of 1934 within 90 days, we will issue certificated Debt
Securities in exchange for each global Debt Security. In addition, we may at
any time and in our sole discretion determine not to have the book-entry Debt
Securities of any series represented by one or more global Debt Securities. If
this happens, we will issue certificated Debt Securities in exchange for the
global Debt Securities of the effected series. Global Debt Securities will also
be exchangeable by the holders for certificated Debt Securities if an Event of
Default (see "Events of Default" below) with respect to the book-entry Debt
Securities represented by the global Debt Securities has occurred and is
continuing. Any certificated Debt Securities issued in exchange for a global
Debt Security will be registered in such name or names as the Depository shall
instruct the Trustee. We expect that such instructions will be based upon
directions received by the Depository from participants.
We obtained the information in this section concerning the Depository and
the Depository's book-entry system from sources we believe to be reliable, but
we do not take any responsibility for the accuracy of this information.
NO PROTECTION IN THE EVENT OF CHANGE OF CONTROL
The form of Indenture does not have any covenants or other provisions
providing for a put or increased interest or otherwise that would afford holders
of Debt Securities additional protection in the event of a recapitalization
transaction, a change of control of Dataware or a highly leveraged transaction.
If we offer any covenants or provisions of this type with respect to any Debt
Securities in the future, we will describe them in the applicable prospectus
supplement.
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COVENANTS
Unless otherwise indicated in this prospectus or a prospectus supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict our business or operations, the pledging of our assets or the
incurrence by us of indebtedness. We will describe in the applicable prospectus
supplement any material covenants in respect of a series of Debt Securities.
With respect to any series of senior subordinated Debt Securities, we will
agree not to issue debt that is, expressly by its terms, subordinated in right
of payment to any other debt of Dataware and that is not ranked on a parity
with, or subordinate and junior in right of payment to, the senior subordinated
Debt Securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The form of Indenture provides that we will not consolidate with or merge
into any other person or convey, transfer, sell or lease our properties and
assets substantially as an entirety to any person, unless:
o the person formed by the consolidation or into or with which we are
merged or the person to which our properties and assets are conveyed,
transferred, sold or leased, is a corporation organized and existing
under the laws of the U.S., any state or the District of Columbia or a
corporation or comparable legal entity organized under the laws of a
foreign jurisdiction and, if we are not the surviving person, the
surviving person has expressly assumed all of our obligations, including
the payment of the principal of and, premium, if any, and interest on
the Debt Securities and the performance of the other covenants under the
Indenture; and
o immediately after giving effect to the transaction, no event of default,
and no event that, after notice or lapse of time or both, would become
an Event of Default, has occurred and is continuing under the Indenture.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, the
following events will be Events of Default under the applicable Indenture with
respect to Debt Securities of any series:
o we fail to pay any principal of, or premium, if any, when it becomes
due;
o we fail to pay any interest within 30 days after it becomes due;
o we fail to observe or perform any other covenant in the Debt Securities
or the Indenture for 60 days after written notice specifying the failure
from the Trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding Debt Securities of that series;
o we are in default under one or more agreements, instruments, mortgages,
bonds, debentures or other evidences of indebtedness under which we or
any significant subsidiaries then has more than $25 million in
outstanding indebtedness, individually or in the aggregate, and either
(a) the indebtedness is already due and payable in full or (b) the
default or defaults have resulted in the acceleration of the maturity of
such indebtedness;
o any final judgment or judgments that can no longer be appealed for the
payment of more than $25 million in money (not covered by insurance) is
rendered against us or any of our significant subsidiaries and has not
been discharged for any period of 60 consecutive days during which a
stay of enforcement is not in effect; and
o certain events occur involving bankruptcy, insolvency or reorganization
of Dataware or any of our significant subsidiaries.
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The Trustee may withhold notice to the holders of the Debt Securities of
any series of any default, except in payment of principal or premium, if any, or
interest on the Debt Securities of a series, if the Trustee considers it to be
in the best interest of the holders of the Debt Securities of that series to do
so.
If an Event of Default (other than an Event of Default resulting from
certain events of bankruptcy, insolvency or reorganization) occurs, and is
continuing, then the Trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding Debt Securities of any series may accelerate
the maturity of the Debt Securities. If this happens, the entire principal
amount, plus the premium, if any, of all the outstanding Debt Securities of the
affected series plus accrued interest to the date of acceleration will be
immediately due and payable. At any time after the acceleration, but before a
judgment or decree based on such acceleration is obtained by the Trustee, the
holders of a majority in aggregate principal amount of outstanding Debt
Securities of such series may rescind and annul such acceleration if:
o all Events of Default (other than nonpayment of accelerated principal,
premium or interest) have been cured or waived;
o all overdue interest and overdue principal has been paid; and
o the rescission would not conflict with any judgment or decree.
In addition, if the acceleration occurs at any time when Dataware has
outstanding indebtedness that is senior to the Debt Securities, the payment of
the principal amount of outstanding Debt Securities may be subordinated in right
of payment to the prior payment of any amounts due under the senior
indebtedness, in which case the holders of Debt Securities will be entitled to
payment under the terms prescribed in the instruments evidencing the senior
indebtedness and the applicable Indenture.
If an Event of Default resulting from certain events of bankruptcy,
insolvency or reorganization occurs, the principal, premium and interest amount
with respect to all of the Debt Securities of any series will be due and payable
immediately without any declaration or other act on the part of the Trustee or
the holders of the Debt Securities of that series.
The holders of a majority in principal amount of the outstanding Debt
Securities of a series will have the right to waive any existing default or
compliance with any provision of the applicable Indenture or the Debt Securities
of that series and to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, subject to certain
limitations specified in the Indenture.
No holder of any Debt Security of a series will have any right to institute
any proceeding with respect to the Indenture or for any remedy under the
Indenture, unless:
o the holder gives to the Trustee written notice of a continuing Event of
Default;
o the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of the affected series make a written
request and offer reasonable indemnity to the Trustee to institute a
proceeding as trustee;
o the Trustee fails to institute a proceeding within 60 days of such
request; and
o the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of the affected series do not give the
Trustee a direction inconsistent with such request during such 60-day
period.
However, these limitations do not apply to a suit instituted for payment on
Debt Securities of any series on or after the due dates expressed in the Debt
Securities.
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MODIFICATION AND WAIVER
From time to time, we and the Trustee under any Indenture may, without the
consent of holders of the Debt Securities of one or more series, amend the
Indenture or the Debt Securities of one or more series, or supplement the
Indenture, for certain specified purposes, including:
o to provide that the surviving entity following a change of control of
Dataware permitted under the Indenture will assume all of our
obligations under the Indenture and Debt Securities;
o to provide for uncertificated Debt Securities in addition to
certificated Debt Securities;
o to comply with any requirements of the SEC under the Trust Indenture Act
of 1939;
o to cure any ambiguity, defect or inconsistency, or make any other change
that does not materially and adversely affect the rights of any holder;
o to issue and establish the form and terms and conditions; and
o to appoint a successor Trustee under the Indenture with respect to one
or more series.
From time to time we and the trustee may, with the consent of holders of at
least a majority in principal amount of the outstanding Debt Securities, amend
or supplement the Indenture or the Debt Securities, or waive compliance in a
particular instance by us with any provision of the Indenture or the Debt
Securities. However, we may not, without the consent of each holder affected by
such action, modify or supplement the Indenture or the Debt Securities or waive
compliance with any provision of the Indenture or the Debt Securities in order
to:
o reduce the amount of Debt Securities whose holders must consent to an
amendment, supplement, or waiver to the Indenture or such Debt Security;
o reduce the rate of or change the time for payment of interest;
o reduce the principal of or premium on or change the stated maturity;
o make any Debt Security payable in money other than that stated in the
Debt Security;
o change the amount or time of any payment required or reduce the premium
payable upon any redemption, or change the time before which no such
redemption may be made;
o waive a default on the payment of the principal of, interest on, or
redemption payment; or
o take any other action otherwise prohibited by the Indenture to be taken
without the consent of each holder affected by the action.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
The form of Indenture permits us, at any time, to elect to discharge our
obligations with respect to one or more series of Debt Securities by following
certain procedures described in the Indenture. These procedures will allow us
either:
o to defease and be discharged from any and all of our obligations with
respect to any Debt Securities except for the following obligations
(which discharge is referred to as "legal defeasance"):
(1) to register the transfer or exchange of such Debt Securities;
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(2) to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities;
(3) to compensate and indemnify the Trustee; or
(4) to maintain an office or agency in respect of the Debt Securities and
to hold monies for payment in trust; or
o to be released from our obligations with respect to the Debt Securities
under certain covenants contained in the Indenture, as well as any
additional covenants which may be contained in the applicable
supplemental indenture (which release is referred to as "covenant
defeasance").
In order to exercise either defeasance option, we must deposit with the
Trustee or other qualifying trustee, in trust for that purpose:
o money;
o U.S. Government Obligations (as described below) or Foreign Government
Obligations (as described below) which through the scheduled payment of
principal and interest in accordance with their terms will provide
money; or
o a combination of money and/or U.S. Government Obligations and/or Foreign
Government Obligations sufficient in the written opinion of a
nationally-recognized firm of independent accountants to provide money;
which in each case specified above, provides a sufficient amount to pay the
principal of, premium, if any, and interest, if any, on the Debt Securities of a
series, on the scheduled due dates or on a selected date of redemption in
accordance with the terms of the Indenture.
In addition, defeasance may be effected only if, among other things:
o in the case of either legal or covenant defeasance, we deliver to the
Trustee an opinion of counsel, as specified in the Indenture, stating
that as a result of the defeasance neither the trust nor the Trustee
will be required to register as an investment company under the
Investment Company Act of 1940;
o in the case of legal defeasance, we deliver to the Trustee an opinion of
counsel stating that we have received from, or there has been published
by, the Internal Revenue Service a ruling to the effect that, or there
has been a change in any applicable federal income tax law with the
effect that (and the opinion shall confirm that), the holders of
outstanding Debt Securities will not recognize income, gain or loss for
U.S. federal income tax purposes solely as a result of such legal
defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner, including as a result of prepayment, and at
the same times as would have been the case if legal defeasance had not
occurred;
o in the case of covenant defeasance, we deliver to the Trustee an opinion
of counsel to the effect that the holders of the outstanding Debt
Securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if covenant
defeasance had not occurred; and
o certain other conditions described in the Indenture are satisfied.
If we fail to comply with our remaining obligations under the applicable
Indenture and applicable supplemental indenture after a covenant defeasance of
the Indenture and applicable supplemental indenture, and the Debt Securities are
declared due and payable because of the occurrence of any undefeased Event of
Default, the amount of money and/or U.S. Government Obligations and/or Foreign
Government Obligations on deposit with the
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Trustee could be insufficient to pay amounts due under the Debt Securities of
the affected series at the time of acceleration. We will, however, remain liable
in respect of these payments.
The term "U.S. Government Obligations" as used in the above discussion
means securities that are direct obligations of or non-callable obligations
guaranteed by the United States of America for the payment of which obligation
or guarantee the full faith and credit of the United States of America is
pledged.
The term "Foreign Government Obligations" as used in the above discussion
means, with respect to Debt Securities of any series that are denominated in a
currency other than U.S. dollars (1) direct obligations of the government that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged or (2) obligations of a person controlled
or supervised by or acting as an agent or instrumentality of such government the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by that government, which in either case under clauses (1) or (2),
are not callable or redeemable at the option of the issuer.
REGARDING THE TRUSTEE
We will identify the Trustee with respect to any series of Debt Securities
in the prospectus supplement relating to the applicable Debt Securities. You
should note that if the Trustee becomes a creditor of the Company, the Indenture
and the Trust Indenture Act of 1939 limit the rights of the Trustee to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim, as security or otherwise. The Trustee and its
affiliates may engage in, and will be permitted to continue to engage in, other
transactions with us and our affiliates. If, however, the Trustee, acquires any
"conflicting interest" within the meaning of the Trust Indenture Act of 1939, it
must eliminate such conflict or resign.
Unless otherwise provided in the applicable Indenture, the holders of a
majority in principal amount of the then outstanding Debt Securities of any
series may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee. If an Event of Default occurs
and is continuing, the Trustee, in the exercise of its rights and powers, must
use the degree of care and skill of a prudent person in the conduct of his or
her own affairs. Subject to that provision, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the Debt Securities, unless they have offered
to the Trustee reasonable indemnity or security.
DESCRIPTION OF PREFERRED STOCK
We currently have authorized 8,000,000 shares of undesignated preferred
stock, none of which were issued and outstanding as of the date of this
prospectus. 300,000 of such shares have been designated "Series A Junior
Participating Preferred Stock," none of which are issued and outstanding, and
3,000 of such shares were designated and issued as "Series B Convertible
Preferred Stock" and subsequently converted and cancelled. Under Delaware law
and our charter, our board of directors may, without further action of the
shareholders, issue shares of the undesignated preferred stock from time to time
in one or more series. Subject to limitations prescribed by Delaware law and our
charter and by-laws, the board of directors may fix the number of shares
constituting each series of preferred stock and the rights and preferences of
such series. These may include provisions concerning voting rights, redemption
(including sinking fund provisions), dividends, liquidation preferences,
conversion rights, and any other subjects or matters as may be fixed by
resolution of the board or an authorized committee of the board.
If we offer a specific series of preferred stock under this prospectus, we
will describe the terms of the preferred stock in the prospectus supplement for
such offering and will file a copy of the certificate establishing the terms of
the preferred stock with the SEC. This description will include:
o the title of the series;
o the number of shares offered, the liquidation preference per share and
the purchase price;
o the dividend rate(s), period(s) and/or payment date(s), or method(s) of
calculation for such dividends;
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o whether dividends will be cumulative or non-cumulative and, if
cumulative, the date from which dividends will accumulate;
o the procedures for any auction and remarketing, if any;
o the provisions for a sinking fund, if any;
o the provisions for redemption, if applicable;
o any listing of the preferred stock on any securities exchange or market;
o whether the preferred stock will be convertible into our common stock,
and, if applicable, the conversion price (or how it will be calculated)
and conversion period;
o whether the preferred stock will be exchangeable into Debt Securities,
and, if applicable, the exchange price (or how it will be calculated)
and exchange period;
o voting rights, if any, of the preferred stock;
o whether interests in the preferred stock will be represented by
depositary shares;
o a discussion of any material and/or special U.S. federal income tax
considerations applicable to the preferred stock;
o the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the company;
o any limitations on issuance of any class or series of preferred stock
ranking senior to or on a parity with the series of preferred stock as
to dividend rights and rights upon liquidation, dissolution or winding
up of Dataware; and
o any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
The preferred stock offered by this prospectus will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or
similar rights.
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of Dataware, rank as follows:
o senior to our common stock, and to all equity securities issued by
Dataware the terms of which specifically provide that they rank junior
to the preferred stock with respect to those rights;
o on a parity with all equity securities issued by us that do not rank
senior or junior to the preferred stock with respect to those rights;
and
o junior to all equity securities issued by us the terms of which do not
specifically provide that they rank on a parity with or junior to the
preferred stock with respect to these rights (including any entity with
which we may be merged or consolidated or to which all or substantially
all of our assets may be transferred or which transfers all or
substantially all of our assets).
As used for these purposes, the term "equity securities" does not include
convertible debt securities.
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DESCRIPTION OF DATAWARE COMMON STOCK
AUTHORIZED COMMON STOCK
We are authorized to issue 30,000,000 shares of common stock. On May 12,
2000, there were 10,531,927 shares of our common stock issued and outstanding.
VOTING RIGHTS
Each share of our common stock entitles the holder to one vote on matters
to be voted upon by the shareholders. There are no cumulative voting rights.
DIVIDENDS; LIQUIDATION RIGHTS
Subject to the preferential rights of the holders of any class of preferred
stock then outstanding, holders of our common stock are entitled to receive
ratable dividends as may be declared by the board out of funds legally available
for such purpose. However, we have never paid cash dividends on our common
stock. Currently, we intend to retain our earnings to finance future growth.
Accordingly, we do not expect to pay any cash dividends on our common stock in
the near future.
Upon a liquidation, dissolution of winding up of Dataware, the holders of
common stock share ratably in our corporate assets available for distribution,
subject to the preferential rights of the holders of any then outstanding
preferred stock.
OTHER PROVISIONS
The common stock has no preemptive, subscription, redemption or conversion
rights.
The common stock offered by this prospectus will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or
similar rights.
"ANTI-TAKEOVER" PROVISIONS
Contractual Measures
Our charter and by-laws contain provisions that could discourage potential
takeover attempts and prevent shareholders from changing our management. For
example, our charter and by-laws divide our board of directors into three
classes as nearly equal in size as possible with staggered three-year terms.
Under our by-laws, any vacancy on the board of directors may only be filled by
vote of a majority of the directors then in office or by the vote of the
shareholders. These provisions are likely to increase the time required for the
shareholders to change the composition of the board of directors. Our charter
and by-laws also provide that any action required or permitted to be taken by
our shareholders at an annual meeting or special meeting of shareholders may
only be taken if it is properly brought before such meeting and may not be taken
by written consent in lieu of a meeting. Our charter and by-laws provide that
special meetings of the shareholders may only be called by our board of
directors, the chairman of the board or president. The by-laws further provide
that in order to nominate anyone as a director or for any matter to be
considered properly brought before an annual meeting, a shareholder must comply
with certain requirements regarding advance notice. These provisions could have
the effect of delaying until the next annual shareholders' meeting actions that
are favored by the holders of a majority of our outstanding voting securities.
In addition, we have a shareholder rights plan. Under the plan, each
outstanding share of our common stock carries with it a right, currently
unexercisable, that if triggered permits the holder to purchase large amounts of
our or any successor entity's securities at a discount and/or trade those
purchase rights separately from the common stock. The rights are triggered when
a person acquires, or makes a tender or exchange offer to acquire, 15% of our
common stock's voting power. The plan, however, prohibits the 15% acquiror, or
its affiliates, from exercising these purchase rights. As a result, the
acquirer's interest in us would be substantially diluted.
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The rights are described completely in a rights agreement between us and
American Stock Transfer & Trust Company as rights agent. The rights agreement
and two amendments to the agreement are contained in exhibits to our Forms 8-K
filed with the SEC on July 18, 1996 and April 17, 1997, and our Form 10-K filed
on March 13, 2000, and are incorporated in this document by reference.
DELAWARE ANTI-TAKEOVER STATUTE
We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. In general, this statute prohibits a publicly-held Delaware
corporation from engaging in a business combination with an interested
shareholder for a period of three years after the date of the transaction in
which the person became an interested shareholder, unless the business
combination is approved in a prescribed manner. A business combination includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested shareholder. Subject to certain exceptions, an interested
shareholder is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock.
Limitation of Liability
As permitted by the Delaware General Corporation Law, our charter
eliminates the directors' personal liability for monetary damages to us and our
shareholders for breach of fiduciary duty as a director, unless they:
o breach their duty of loyalty to us and our shareholders;
o act in bad faith;
o knowingly or intentionally violate the law;
o engage in self-dealing; or
o authorize unlawful dividends or repurchases of stock.
Transfer Agent and Registrar
American Stock Transfer & Trust Company is the registrar and transfer agent
for our common stock. Its telephone number is (212) 936-5100.
DESCRIPTION OF WARRANTS
GENERAL
We may issue warrants to purchase Debt Securities (the "Debt Warrants"),
preferred stock (the "Preferred Stock Warrants") or common stock (the "Common
Stock Warrants" and, collectively with the Debt Warrants and the Preferred Stock
Warrants, the "Warrants"). Warrants may be issued independently or together
with any other securities offered by this prospectus and may be attached to or
separate from the other securities. If Warrants are issued, they will be issued
under warrant agreements to be entered into between us and a bank or trust
company, as warrant agent (the "Warrant Agent"), all of which will be described
in the prospectus supplement relating to the Warrants being offered.
DEBT WARRANTS
We will describe the terms of the Debt Warrants offered in the applicable
prospectus supplement, the Warrant Agreement relating to the Debt Warrants and
the Debt Warrant certificates representing the Debt Warrants, including the
following:
o the title;
o the aggregate number offered;
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o their issue price or prices;
o the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise, and the procedures and conditions
relating to exercise;
o the designation and terms of any related Debt Securities and the number
of such Debt Warrants issued with each Debt Security;
o the date, if any, on and after which the Debt Warrants and the related
Debt Securities will be separately transferable;
o the principal amount of Debt Securities purchasable upon exercise, and
the price at which such principal amount of Debt Securities may be
purchased upon exercise;
o the commencement and expiration dates of the right to exercise;
o the maximum or minimum number which may be exercised at any time;
o a discussion of the material U.S. federal income tax considerations
applicable to exercise; and
o any other terms, procedures and limitations relating to exercise.
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable prospectus supplement. Before exercising their Debt Warrants,
holders will not have any of the rights of holders of the securities purchasable
upon such exercise and will not be entitled to payments of principal of, or
premium, if any, or interest, if any, on the securities purchasable upon such
exercise.
OTHER WARRANTS
The applicable prospectus supplement will describe the following terms of
Preferred Stock Warrants or Common Stock Warrants offered under this
prospectus:
o the title;
o the securities issuable upon exercise;
o the issue price or prices;
o the number of such Warrants issued with each share of preferred stock or
common stock;
o any provisions for adjustment of (1) the number or amount of shares of
preferred stock or common stock receivable upon exercise of the Warrants
or (2) the exercise price;
o if applicable, the date on and after which the Warrants and the related
preferred stock or common stock will be separately transferable;
o if applicable, a discussion of the material U.S. federal income tax
considerations applicable to the exercise of the Warrants;
o any other terms, including terms, procedures and limitations relating to
exchange and exercise;
o the commencement and expiration dates of the right to exercise; and
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o the maximum or minimum number which may be exercised at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash or in
consideration of canceling a portion of the Warrant such principal amount of
Debt Securities or shares of preferred stock or common stock at the applicable
exercise price set forth in, or determined as described in, the applicable
prospectus supplement. Warrants may be exercised at any time up to the close of
business on the expiration date set forth in the applicable prospectus
supplement. After the close of business on the expiration date, unexercised
Warrants will become void.
Warrants may be exercised by delivering to the corporation trust office of
the Warrant Agent or any other officer indicated in the applicable prospectus
supplement (a) the Warrant certificate properly completed and duly executed and
(b) payment of the amount due upon exercise or notice of cancellation of a
portion of the Warrant. As soon as practicable following the exercise, we will
forward the Debt Securities or shares of preferred stock or common stock
purchasable upon the exercise. If less than all of the Warrants represented by
a Warrant certificate are exercised, a new Warrant certificate will be issued
for the remaining Warrants.
PLAN OF DISTRIBUTION
We may sell the securities being offered by us in this prospectus:
o directly to purchasers;
o through agents;
o through dealers;
o through underwriters; or
o through a combination of any of these methods of sale.
We and our agents and underwriters may sell the securities being offered by
us in this prospectus from time to time in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
We may solicit directly offers to purchase securities. We may also
designate agents from time to time to solicit offers to purchase securities. Any
agent that we designate, who may be deemed to be an "underwriter" as that term
is defined in the Securities Act of 1933, may then resell such securities to the
public at varying prices to be determined by such agent at the time of resale.
If we use underwriters to sell securities, we will enter into an
underwriting agreement with the underwriters at the time of the sale to them.
The names of the underwriters will be set forth in the prospectus supplement
that will be used by them together with this prospectus to make resales of the
securities to the public. In connection with the sale of the securities offered,
the underwriters may be deemed to have received compensation from us in the form
of underwriting discounts or commissions. Underwriters may also receive
commissions from purchasers of the securities.
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Underwriters may also use dealers to sell securities. If this happens, the
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
Any underwriting compensation paid by us to underwriters in connection with
the offering of the securities offered in this prospectus, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable prospectus supplement.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with us, to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, or to contribution with respect to payments that they may be required to
make in respect of such liabilities. Underwriters and agents may engage in
transactions with, or perform services for, us in the ordinary course of
business.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers, or other persons to solicit offers by certain
institutions to purchase the securities offered by us under this prospectus
pursuant to contracts providing for payment and delivery on a future date or
dates. The obligations of any purchaser under these contracts will be subject
only to those conditions described in the applicable prospectus supplement, and
the prospectus supplement will set forth the price to be paid for securities
pursuant to those contracts and the commissions payable for solicitation of the
contracts.
Any underwriter may engage in over-allotment, stabilizing and syndicate
short covering transactions and penalty bids in accordance with Regulation M of
the Securities Exchange Act of 1934. Over-allotment involves sales in excess of
the offering size, which creates a short position. Stabilizing transactions
involve bids to purchase the underlying security so long as the stabilizing bids
do not exceed a specified maximum. Syndicate short covering transactions involve
purchases of securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
underwriters to reclaim selling concessions from dealers when the securities
originally sold by such dealers are purchased in covering transactions to cover
syndicate short positions. These transactions may cause the price of the
securities sold in an offering to be higher than it would otherwise be. These
transactions, if commenced, may be discontinued by the underwriters at any time.
Each series of securities offered under this prospectus will be a new issue
with no established trading market, other than our common stock, which is listed
on the Nasdaq National Market. Any shares of our common stock sold pursuant to
a prospectus supplement will be listed on the Nasdaq National Market or on the
exchange on which the common stock offered is then listed, subject to official
notice of issuance. Any underwriters to whom we sell securities for public
offering and sale may make a market in the securities that they purchase, but
the underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We may elect to list any of the securities we
may offer from time to time for trading on an exchange or on the Nasdaq National
Market, but we are not obligated to do so.
The anticipated date of delivery of the securities offered hereby will be
set forth in the applicable prospectus supplement relating to each offering.
LEGAL MATTERS
Our counsel, Palmer & Dodge LLP, Boston, Massachusetts, will give us an
opinion on the legality and validity of the securities offered by this
prospectus and any accompanying prospectus supplement. Matthew C. Dallett, a
partner of Palmer & Dodge LLP, is the Assistant Secretary of Dataware.
EXPERTS
The financial statements incorporated in this Registration Statement on
Form S-3 by reference to the Annual Report of Dataware Technologies, Inc. on
Form 10-K for the year ended December 31, 1999 have been so incorporated in
reliance on the report (which contains an explanatory paragraph relating to our
ability to continue as
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a going concern as described in Note A to the consolidated financial statements)
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information that we file with the SEC at the SEC's public reference rooms at the
following locations:
<TABLE>
<CAPTION>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, 7 World Trade Center Citicorp Center
N.W. Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These SEC filings are also available to the public from
commercial document retrieval services and at the Internet world wide web site
maintained by the SEC at "http://www.sec.gov." Reports, proxy statements and
other information concerning Dataware may also be inspected at the offices of
The Nasdaq Stock Market, which is located at 1735 K Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information in this prospectus by referring to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede the information in this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 before
the sale of all the shares covered by this prospectus:
o Annual Report on Form 10-K for the year ended December 31, 1999, as
filed with the SEC on March 13, 2000;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, as
filed with the SEC on May 12, 2000; and
o The description of the common stock contained in our Registration
Statement on Form 8-A, declared effective by the SEC on July 19, 1993,
including any amendment or reports filed to update the description.
You may request a copy of these filings, at no cost, by writing or
telephoning Susan Weiner, Controller at our principal executive offices, which
are located at One Canal Park, Cambridge, Massachusetts 02141; Telephone: (617)
621-0820, or by sending an e-mail to: [email protected]. Additional information
about Dataware is available in our Internet website at http://www.dataware.com.
The information on our website is not incorporated by reference into this
prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated May 26, 2000. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date.
Neither the delivery of this prospectus nor the sale of securities creates any
implication to the contrary.
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