<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DATAWORKS CORPORATION
(NAME OF ISSUER)
Common Stock, no par value
(TITLE OF CLASS OF SECURITIES)
237924 10 5
(CUSIP NUMBER)
MARK HELLINGER
INTERACTIVE GROUP, INC.
5095 MURPHY CANYON ROAD
SAN DIEGO, CALIFORNIA 92123
(619) 560-8525
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
JULY 31, 1997
(DATE OF EVENT WHICH REQUIRES FILING
OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
(Page 1 of 8 Pages)
<PAGE> 2
- --------------------------------------------------------------------------------
CUSIP NO. 237924 10 5 13D Page 2 of 8 Pages
- --------------------------------------------------------------------------------
- -------------------- ----------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
INTERACTIVE GROUP, INC.
95-2925769
- -------------------- ----------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------- ----------------------------------------------------------
3 SEC USE ONLY
- -------------------- ----------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
NOT APPLICABLE
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------- ----------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
- -------------------- ----------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF
SHARES -0-
BENEFICIALLY
OWNED BY
REPORTING
PERSON
WITH
----------------- ---------------------------------------
8 SHARED VOTING POWER
1,943,441
----------------- ---------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
----------------- ---------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------- ----------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,943,441
- -------------------- ----------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES [ ]
- -------------------- ----------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
19.2%
- -------------------- ----------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------- ----------------------------------------------------------
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<PAGE> 3
ITEM 1. SECURITY AND ISSUER
(a) Title of Security:
DataWorks Corporation Common Stock, no par value per share.
(b) Name of Issuer:
DataWorks Corporation, a California corporation ("DataWorks").
(c) Address of Issuer's Principal Executive Office:
The principal executive office of DataWorks is located at 5910
Pacific Center Boulevard, Suite 300, San Diego, California
92121.
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is filed by Interactive Group, Inc., a Delaware
corporation ("Interactive"). Interactive is principally in business to develop,
market, implement and support integrated business information systems that
enable discrete manufacturers to manage their enterprise-wide information
requirements.
(b) The address of the principal business offices of Interactive is
5095 Murphy Canyon Road, San Diego, California 92123.
(c) Set forth in Schedule I to this Schedule 13D is the name and
present principal occupation or employment of each of Interactive's executive
officers and directors and the name, principal business and address of any
corporation or other organization in which employment is conducted.
(d) During the last five years, there have been no criminal proceedings
against Interactive or, to the best knowledge of Interactive, any of the other
persons with respect to whom information is given in response to this Item 2.
(e) During the last five years, neither Interactive nor, to the best
knowledge of Interactive, any of the other persons with respect to whom
information is given in response to this Item 2, has been a party to any civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) To the best knowledge of Interactive, all of the directors and
executive officers of Interactive named in Schedule I to this Schedule 13D are
citizens of the United States.
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<PAGE> 4
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
To facilitate the consummation of the Merger (as defined in Item 4
below), certain stockholders of DataWorks have entered into "Voting Agreements"
with Interactive as described in Item 4. These Voting Agreements do not
contemplate a purchase of DataWorks Common Stock by Interactive.
ITEM 4. PURPOSE OF THE TRANSACTION
(a) - (b) Pursuant to that certain Agreement and Plan of Merger and
Reorganization dated as of July 31, 1997 (the "Reorganization Agreement"), among
Interactive, DataWorks Acquisition Sub, Inc., a wholly owned Delaware subsidiary
of DataWorks ("Merger Sub"), and DataWorks, and subject to the conditions set
forth therein (including any required regulatory approval and the approval of
stockholders of Interactive and shareholders of DataWorks), Merger Sub will be
merged with and into Interactive (the "Merger") and Interactive will become a
wholly owned subsidiary of DataWorks. Each share of Interactive Common Stock,
$.001 par value per share, shall be converted into the right to receive 0.8054
of a share of DataWorks Common Stock. In addition, DataWorks will assume each
unexpired and unexercised option and warrant to purchase Interactive Common
Stock, and such options and warrants shall be converted into options and
warrants with respect to DataWorks Common Stock on the terms set forth in
Section 5.5 of the Reorganization Agreement.
The consummation of the Merger is subject to the satisfaction or waiver
of closing conditions for the benefit of Interactive and closing conditions for
the benefit of DataWorks, as set forth in Sections 7 and 6, respectively, of the
Reorganization Agreement.
If the Merger is not consummated and the Reorganization Agreement is
terminated by Interactive pursuant to Section 8.1(h) therein, or by DataWorks or
Interactive pursuant to Section 8.1(f) or Section 8.1(i) therein, Interactive
shall pay to DataWorks a nonrefundable fee in the amount of $1,500,000. If the
Merger is not consummated and the Reorganization Agreement is terminated by
DataWorks pursuant to Section 8.1(h) therein, or by DataWorks or Interactive
pursuant to Section 8.1(g) therein, DataWorks shall pay to Interactive a
nonrefundable fee in the amount of $1,500,000.
The foregoing summary of the Merger is qualified in its entirety by
reference to the copy of the Reorganization Agreement included as Exhibit 99.1
to this Schedule 13D and incorporated herein in its entirety by reference.
Each of Nathan W. Bell, Stuart W. Clifton, Tony N. Domit, William P.
Foley, II, Norman Farquhar, Ronald S. Parker, Roy Thiele-Sardina, Fidelity
National Title Insurance Company, Fidelity National Title Insurance Company of
Pennsylvania, Parker, Mulcahy & Associates and Pacific Mezzanine Fund
(individually, a "Voting Agreement Shareholder" and, collectively, the "Voting
Agreement Shareholders") has entered into a Voting Agreement dated as of July
31, 1997 (individually, a "Voting Agreement" and, collectively, the "Voting
Agreements") with Interactive. The number of shares of DataWorks Common Stock
beneficially owned by each of the Voting Agreement Shareholders is set forth on
Schedule II to this Schedule 13D. Pursuant to Section 2.1 of the Voting
Agreements, the Voting Agreement Shareholders have agreed to vote or direct the
vote of all the shares of DataWorks Common Stock over which such person has
voting power or control (the "DataWorks Subject Shares"): (i) in favor of (1)
the Reorganization Agreement and the approval of the Merger; and (2) each of the
other actions contemplated by the Reorganization Agreement and any action
required in furtherance thereof or of the Voting Agreement; and (ii) against any
action or agreement that would result in a breach of any representation,
warranty, covenant or obligation of DataWorks in the Reorganization Agreement.
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Pursuant to Sections 1.2 and 1.3 of the Voting Agreements, the Voting
Agreement Shareholders have also agreed not to, directly or indirectly, (i)
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of or transfer (or announce any offer, sale, offer
of sale, contract of sale or grant of any option to purchase or other
disposition or transfer of) any shares of the DataWorks Subject Shares to any
person; (ii) create or permit to exist any encumbrance with respect to any of
the DataWorks Subject Shares; (iii) reduce such Voting Agreement Shareholders'
beneficial ownership of, interest in or risk relating to any of the DataWorks
Subject Shares; (iv) commit or agree to do any of the foregoing; or (v) deposit
any of the DataWorks Subject Shares into a voting trust or grant a proxy (except
as provided in Section 2.2 of the Voting Agreements) or enter into a voting
agreement with respect to any of the DataWorks Subject Shares.
Pursuant to Section 2.2 of the Voting Agreements, the Voting Agreement
Shareholders also executed and delivered to Interactive irrevocable proxies
voting the DataWorks Subject Shares in favor of the Reorganization Agreement and
Merger and each of the other actions contemplated by the Reorganization
Agreement and against any action or agreement that would result in a breach of
any representation, warranty, covenant or obligation of DataWorks in the
Reorganization Agreement.
The foregoing summary of the Voting Agreements is qualified in its
entirety by reference to the form of Voting Agreement included as Exhibit 99.2
to this Schedule 13D and incorporated herein in its entirety by reference.
(c) Not applicable.
(d) There will be no change in the current DataWorks Board and officers
of DataWorks as a result of the Merger, except that Robert C. Vernon, the
current Chairman of the Board and Chief Executive Officer of Interactive, will
become President, International Operations and a director of DataWorks, and Mark
Hellinger, the current President and Chief Operating Officer -- North American
Operations and a director of Interactive, will become President, MidTier
Division of DataWorks. In addition, Robert W. Brandel, currently an Executive
Vice President and the Chief Operating Officer of DataWorks, will become
President, Lower-Tier Division of DataWorks.
(e) Based upon the capitalization of Interactive as of the close of
business on August 20, 1997, an aggregate of approximately 3,700,000 shares of
DataWorks Common Stock will be issued to Interactive stockholders in the Merger
and DataWorks will assume options and warrants to acquire up to approximately
536,000 additional shares of Interactive Common Stock.
(f) Upon consummation of the Merger, Interactive will become a wholly
owned subsidiary of DataWorks.
(g) Upon approval of the DataWorks shareholders, the bylaws of
DataWorks shall be amended to increase the size of the DataWorks board of
directors to provide for the election of Robert C. Vernon thereto, following
consummation of the Merger.
(h) Not applicable.
(i) Not applicable.
(j) Other than as described above, Interactive has no plan or proposal
which relates to, or may result in, any of the matters listed in Items 4(a) -
(i) of this Schedule 13D (although Interactive reserves the right to develop
such plans).
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<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (b) As a result of the Voting Agreements, Interactive has shared
power to vote an aggregate of 1,943,441 shares of DataWorks Common Stock for the
limited purposes described in Item 4 above. Such shares constitute approximately
19.2% of the issued and outstanding shares of DataWorks Common Stock as of July
31, 1997.
To Interactive's knowledge, no shares of DataWorks Common Stock are
beneficially owned by any of the persons named in Schedule I, except for such
beneficial ownership, if any, arising solely from the Voting Agreements.
Set forth in Schedule III to this Schedule 13D is the name and present
principal occupation or employment of each person with whom Interactive shares
the power to vote or to direct the vote of DataWorks Common Stock.
During the past five years, to Interactive's knowledge, no person named
in Schedule III to this Schedule 13D, has been convicted in a criminal
proceeding.
During the past five years, to Interactive's knowledge, no person named
in Schedule III to this Schedule 13D was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting or mandating activity subject to federal or
state securities laws or finding any violation with respect to such laws.
To Interactive's knowledge, all persons named in Schedule III to this
Schedule 13D are citizens of the United States.
(c) Neither Interactive nor, to Interactive's knowledge, any person
named in Schedule I, has effected any transaction in DataWorks Common Stock
during the past 60 days, except as disclosed herein.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
In connection with the Reorganization Agreement, certain possible
affiliates of Interactive (including Robert C. Vernon, Mark Hellinger, Randolph
S. Naylor, Lyndol Cook, John W. Darracq and Craig Gallagher) and certain
possible affiliates of DataWorks (including Nathan W. Bell, Pacific Mezzanine
Fund, Stuart W. Clifton, Tony N. Domit, William P. Foley, II, Fidelity National
Title Insurance Company, Fidelity National Title Insurance Company of
Pennsylvania, Norman R. Farquhar, Ronald S. Parker, Parker Mulcahy & Associates,
Roy Thiele-Sardina, Robert W. Brandel and Rick E. Russo) (each an "Affiliate")
will enter into an Affiliate Agreement with DataWorks and Interactive,
respectively, dated as of July 31, 1997 (collectively, the "Affiliate
Agreements"). Pursuant to Section 2(d) thereof, each Affiliate has agreed that,
during the period from the date 30 days prior to the date of consummation of the
Merger through the date on which financial results covering at least 30 days of
post-Merger "combined operations" of DataWorks and Interactive have been
published by DataWorks (within the meaning of the applicable "pooling of
interests" accounting requirements), such Affiliate shall not dispose of the
Affiliate's shares of DataWorks Common Stock.
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<PAGE> 7
Other than as described in the foregoing paragraph and in Item 4 above,
to Interactive's knowledge there are no contracts, arrangements, understandings
or relationships (legal or otherwise) among the persons named in Item 2 and
between such persons and any person with respect to any securities of DataWorks,
including but not limited to transfer or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NO. Description
----------- -----------
99.1 Agreement and Plan of Merger and Reorganization dated as
of July 31, 1997, by and among DataWorks Corporation, a
California corporation, DataWorks Acquisition Sub, a
Delaware corporation, and Interactive Group, Inc., a
Delaware corporation.*
99.2 Form of Voting Agreement dated as of July 31, 1997, by
and between Interactive Group, Inc., a Delaware
corporation, and each of Nathan W. Bell, Stuart W.
Clifton, Tony N. Domit, William P. Foley, II, Norman
Farquhar, Ronald S. Parker, Roy Thiele-Sardina, Fidelity
National Title Insurance Company, Fidelity National
Title Insurance Company of Pennsylvania, Parker, Mulcahy
& Associates and Pacific Mezzanine Fund.*
* Incorporated by reference to Interactive Group, Inc.'s Current Report
on Form 8-K dated July 31, 1997.
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<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 20, 1997 INTERACTIVE GROUP, INC.
By: /s/ Mark Hellinger
-----------------------------------
Mark Hellinger
President and Chief Operating Officer
-8-
<PAGE> 9
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF INTERACTIVE
NAME Principal Occupation or Employment
- ---- ----------------------------------
Robert C. Vernon Chairman of the Board, Chief Executive Officer and
Director
Mark Hellinger President, Chief Operating Officer and Director
Randolph S. Naylor Director
Lyndal L. Cook Director
All individuals named in the above table are employed at, or retained as
directors by, Interactive Group, Inc., 5095 Murphy Canyon Road, San Diego,
California 92123.
<PAGE> 10
SCHEDULE II
<TABLE>
<CAPTION>
Percentage of
Number of Shares of Outstanding Shares of
VOTING AGREEMENT DataWorks Common Stock DataWorks Common
SHAREHOLDER Beneficially Owned Stock as of July 31, 1997
---------------- ---------------------- ---------------------
<S> <C> <C>
Nathan W. Bell 389,805(1)(A) 3.85%(B)
Stuart W. Clifton 1,085,215(2) 10.70%
Tony N. Domit 4,443(3) 0.04%
William P. Foley, II 285,832(4)(A) 2.82%(B)
Norman R. Farquhar 92,103(5) 0.90%
Ronald S. Parker 81,600(6)(A) 0.81%(B)
Roy Thiele-Sardina 4,443(7) 0.04%
Pacific Mezzanine Fund 378,555(8)(A) 3.74%(B)
Fidelity National Title 90,000 (A) 0.89%(B)
Insurance Company
Fidelity National Title 170,000 (A) 1.68%(B)
Insurance Company of
Pennsylvania1
Parker, Mulcahy & 44,105(9)(A) 0.44%(B)
Associates
TOTAL TOTAL
SHARES:1,943,441 PERCENTAGE:19.2%
</TABLE>
(1) Includes 69 shares issuable upon exercise of a warrant held by Mr.
Bell, 3,458 shares issuable upon exercise of a warrant held by Pacific
Mezzanine Fund ("PMF") and 375,097 shares held by PMF. Mr. Bell is a
general partner of Pacific Private Capital ("PPC"), which is the
general partner of PMF. He disclaims beneficial ownership of securities
held by PMF, except to the extent of his pro rata interest therein.
Includes 2,777 shares subject to options exercisable within 60 days of
July 31, 1997.
(2) Includes 19,166 shares subject to options exercisable within 60 days of
July 31, 1997.
(3) Includes 4,443 shares subject to options exercisable within 60 days of
July 31, 1997.
(4) Includes 170,000 shares held of record by Fidelity National Title
Insurance Company of Pennsylvania (now known as Fidelity National Title
Insurance Company of New York) ("Fidelity Pennsylvania") and 90,000
shares held by Fidelity National Title Insurance Company ("Fidelity").
Mr. Foley is an executive officer and director of Fidelity National
Financial, Inc., which is affiliated with both Fidelity Pennsylvania
and Fidelity. Mr. Foley disclaims beneficial ownership of all such
shares held by Fidelity Pennsylvania and Fidelity. Includes 3,332
shares subject to options exercisable within 60 days of July 31, 1997.
(5) Includes 92,103 shares subject to options exercisable within 60 days of
July 31, 1997.
- -------------------
1 Fidelity National Title Insurance Company of Pennsylvania was merged with and
into Fidelity National Title Insurance Company of New York. However, shares of
DataWorks that were held by Fidelity National Title Insurance Company of
Pennsylvania were still held in the record name of Fidelity National Title
Insurance Company of Pennsylvania as of July 31, 1997.
<PAGE> 11
(6) Includes 19,356 shares held by Parker, Mulcahy & Associates ("PMA"), of
which Mr. Parker is Chairman of the Board and a majority shareholder,
16,552 shares held by DataWorks Partners IV, L.P., of which PMA is a
general partner and warrants held by PMA to purchase up to 8,197 shares
of DataWorks Common Stock. Includes 2,777 shares subject to options
exercisable within 60 days of July 31, 1997.
(7) Includes 4,443 shares subject to options exercisable within 60 days of
July 31, 1997.
(8) Includes 3,458 shares issuable upon exercise of a warrant held by PMF.
(9) Includes 16,552 shares held by DataWorks Partners IV, L.P., of which
PMA is a general partner, and 8,197 shares issuable upon exercise of a
warrant held by PMA.
(A) Shares which are beneficially owned by two or more persons or entities
have only been counted once for purposes of calculating the total
shares.
(B) The percentage of outstanding shares of DataWorks represented by shares
which are beneficially owned by two or more persons or entities have
only been counted once for purposes of calculating the total
percentage.
<PAGE> 12
SCHEDULE III
NAME Principal Occupation or Employment
- ---- ----------------------------------
Stuart W. Clifton Chairman of the Board, President and Chief Executive
Officer
Norman R. Farquhar Executive Vice President, Chief Financial Officer and
Director
Robert W. Brandel Executive Vice President and Chief Operating Officer
Rick E. Russo Vice President, Finance and Secretary
Tony N. Domit Director
Roy Thiele-Sardina Director
Nathan W. Bell Director
William Foley Director
Ronald S. Parker Director
All individuals named in the above table are employed at, or retained as
directors by, DataWorks Corporation, 5910 Pacific Center Boulevard, Suite 300,
San Diego, California 92121.
<PAGE> 13
EXHIBIT INDEX
EXHIBIT NO. Description
----------- -----------
99.1 Agreement and Plan of Merger and Reorganization dated as
of July 31, 1997, by and among DataWorks Corporation, a
California corporation, DataWorks Acquisition Sub, a
Delaware corporation, and Interactive Group, Inc., a
Delaware corporation.*
99.2 Form of Voting Agreement dated as of July 31, 1997, by
and between Interactive Group, Inc., a Delaware
corporation, and each of Nathan W. Bell, Stuart W.
Clifton, Tony N. Domit, William P. Foley, II, Norman
Farquhar, Ronald S. Parker, Roy Thiele-Sardina, Fidelity
National Title Insurance Company, Fidelity National
Title Insurance Company of Pennsylvania, Parker, Mulcahy
& Associates and Pacific Mezzanine Fund.*
* Incorporated by reference to Interactive Group, Inc.'s Current Report
on Form 8-K dated July 31, 1997.
