<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
INTERACTIVE GROUP, INC.
(NAME OF ISSUER)
COMMON STOCK, $.001 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
237924 10 5
(CUSIP NUMBER)
NORMAN R. FARQUHAR
DATAWORKS CORPORATION
5910 PACIFIC CENTER BOULEVARD, SUITE 300
SAN DIEGO, CALIFORNIA 92121
(619) 546-9600
(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 9 Pages)
<PAGE> 2
- --------------------------------------------------------------------------------
CUSIP NO. 237924 10 5 13D Page 2 of 9 Pages
- --------------------------------------------------------------------------------
- -------------------- ----------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
DATAWORKS CORPORATION
33-0209937
- -------------------- ----------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |_|
- -------------------- ----------------------------------------------------------
3 SEC USE ONLY
- -------------------- ----------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
SC
- -------------------- ----------------------------------------------------------
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 CALIFORNIA
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF
SHARES -0-
BENEFICIALLY
OWNED BY
REPORTING
PERSON
WITH
----------------- ---------------------------------------
8 SHARED VOTING POWER
1,744,896
----------------- ---------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
----------------- ---------------------------------------
10 SHARED DISPOSITIVE POWER
344,531
- -------------------- ----------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,774,896
- -------------------- ----------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES |_|
- -------------------- ----------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
38.6%
- -------------------- ----------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------- ----------------------------------------------------------
2.
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
(a) Title of Security:
Interactive Group, Inc. Common Stock, $.001 par value per share (the
"Common Stock")
(b) Name of Issuer:
Interactive Group, Inc., a Delaware corporation ("Interactive").
(c) Address of Issuer's Principal Executive Office:
The principal executive office of Interactive is located at 5095
Murphy Canyon Road, California, 92123.
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is filed by DataWorks Corporation, a California
corporation ("DataWorks"). DataWorks is principally in business to develop,
market, implement and support open systems, client/server-based Enterprise
Resource Planning software for mid-sized discrete manufacturing companies.
(b) The address of the principal business offices of DataWorks is 5910
Pacific Center Boulevard, Suite 300, San Diego, California.
(c) Set forth in Schedule I to this Schedule 13D is the name and present
principal occupation or employment of each of DataWorks' 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 DataWorks or, to the best knowledge of DataWorks, 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 DataWorks nor, to the best
knowledge of DataWorks, 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 DataWorks, all of the directors and executive
officers of DataWorks named in Schedule I to this Schedule 13D are citizens of
the United States.
3.
<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 Interactive have entered into Voting Agreements and
Interactive has entered into an Option Agreement with DataWorks as described in
Item 4.
ITEM 4. PURPOSE OF THE TRANSACTION
(A) - (B) Pursuant to the 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 shall be
converted into the right to receive 0.8054 of a share of DataWorks' Common
Stock, $.001 par value per share ("DataWorks' Common Stock"). In addition,
DataWorks will assume each unexpired and unxercised 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 DataWorks and closing conditions for the
benefit of Interactive, as set forth in Sections 6 and 7 of the Reorganization
Agreement.
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. 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.
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 Robert C. Vernon, Mark Hellinger and Randolph S. Naylor
(individually, a "Voting Agreement Stockholder" and, collectively, the "Voting
Agreement Stockholders") has entered into a Voting Agreement dated as of July
31, 1997 (individually, a "Voting Agreement" and, collectively, the "Voting
Agreements") with DataWorks. The number of shares of Interactive Common Stock
beneficially owned by each of the Voting Agreement Stockholders is set forth on
Schedule II to this Schedule 13D. Pursuant to Section 2.1 of the Voting
Agreements, the Voting Agreement Stockholders have agreed to vote or direct the
vote of all the shares of Interactive Common Stock over which such person has
voting power or control (the "Interactive Subject Shares"): (i) in favor of (1)
the Reorganization Agreement and the approval of the
4.
<PAGE> 5
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 Interactive in
the Reorganization Agreement.
Pursuant to Sections 1.2 and 1.3 of the Voting Agreements, the Voting
Agreement Stockholders 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 Interactive Subject Shares to any
person other than DataWorks or DataWorks' designee; (ii) create or permit to
exist any encumbrance with respect to any of the Interactive Subject Shares;
(iii) reduce such Voting Shareholder's beneficial ownership of, interest in or
risk relating to any of the Interactive Subject Shares; (iv) commit or agree to
do any of the foregoing; or (v) deposit any of the Interactive 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
Interactive Subject Shares.
Pursuant to Section 2.2 of the Voting Agreements, the Voting Agreement
Stockholders also executed and delivered to DataWorks irrevocable proxies voting
the Interactive 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.
DataWorks and Interactive have also entered into an option agreement (the
"Option Agreement") by which Interactive granted to DataWorks (i) an
unregistered, irrevocable option (the "Stock Option") to purchase up to 344,531
shares of Interactive Common Stock of Interactive (the "Option Shares"), at a
price of $7.50 per share, subject to adjustment for stock dividends, stock
splits, mergers (other than the Merger), recapitalizations, combinations,
exchange of shares or the like and (ii) a put option in the event the Stock
Option is exercisable and a letter of intent or definitive agreement with
respect to a more favorable offer for Interactive.
DataWorks may exercise the Stock Option with respect to any of the Option
Shares in whole or in part following the occurrence of a Purchase Event and
prior to the Termination Date. A "Purchase Event" shall be deemed to have
occurred upon a termination of the Merger Agreement pursuant to which
Interactive is required to pay DataWorks a fee of $1,500,000 under Section
8.3(d) of the Reorganization Agreement (any such event, a "Termination"). The
"Termination Date" shall be 120 days after a Termination.
The Option Agreement further provides that prior to the Termination Date,
if the market value of Interactive Common Stock exceeds the exercise price of
the Stock Option, then
5.
<PAGE> 6
DataWorks may exercise the Stock Option without a cash payment, and receive
shares of Interactive Common Stock with a value equal to the aggregate amount by
which the market value exceeds the exercise price. Finally, the Option Agreement
grants DataWorks registration rights with respect to the Option Shares for two
years after purchase.
The foregoing summary of the Option Agreement is qualified in its entirety
by reference to the form of Option Agreement included as Exhibit 99.3 to this
Schedule 13D and incorporated herein in its entirety by reference.
(c) Not applicable.
(d) Upon consummation of the Merger, Interactive will become a wholly owned
subsidiary of DataWorks. The directors and officers of the subsidiary will be
the respective individuals who are serving as directors and officers of Merger
Sub immediately prior to the Effective Date.
(e) None, other than a change in the number of outstanding shares of
Interactive Common Stock as contemplated by the Reorganization Agreement.
(f) Upon consummation of the Merger, Interactive will become a wholly owned
subsidiary of DataWorks.
(g) Upon consummation of the Merger, the Certificate of Incorporation of
Interactive will be amended and restated in a form satisfactory to DataWorks.
(h) Upon consummation of the Merger, Interactive Common Stock will cease to
be quoted on any quotation system or exchange.
(i) Upon consummation of the Merger, the Interactive Common Stock will
become eligible for termination of registration pursuant to Section 12(g)(4) of
the Exchange Act.
(j) Other than as described above, DataWorks 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 DataWorks reserves the right to develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(A) - (B) As a result of the Voting Agreements, DataWorks has shared
power to vote an aggregate of 1,774,896 shares of Interactive Common Stock for
the limited purposes described in Item 4 above. Such shares constitute
approximately 38.6% of the issued and outstanding shares of Interactive Common
Stock as of July 31, 1997.
DataWorks has the right to acquire up to 344,531 shares of Interactive
Common Stock pursuant to the Option Agreement under the circumstances specified
therein. If so acquired, such shares would constitute approximately 7.5% of the
issued and outstanding shares of the Interactive Common Stock as of July 31,
1997.
6.
<PAGE> 7
To DataWorks' knowledge, no shares of Interactive 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 DataWorks shares the
power to vote or to direct the vote or to dispose or direct the disposition of
Interactive Common Stock.
During the past five years, to DataWorks' knowledge, no person named in
Schedule III to this Schedule 13D, has been convicted in a criminal proceeding.
During the past five years, to DataWorks' 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 DataWorks' knowledge, all persons named in Schedule III to this Schedule
13D are citizens of the United States.
(C) Neither DataWorks, nor, to DataWorks' knowledge, any person named in
Schedule I, has effected any transaction in Interactive 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, affiliates of Interactive,
Robert C. Vernon, Mark Hellinger, Randolph S. Naylor, Lyndol Cook, Ronald H.
Jones, John W. Darracq and Craig Gallagher and affiliates of DataWorks, Nathan
W. Bell, Pacific Mezanine 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") entered 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.
7.
<PAGE> 8
Other than as described in the foregoing paragraph and in Item 4 above, to
DataWorks' 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 Interactive,
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 DataWorks Corporation, a California corporation, and
each of Robert C. Vernon, Mark Hellinger and Randolph S.
Naylor.*
99.3 Option Agreement dated as of July 31, 1997, by and between
DataWorks Corporation, a California corporation, and
Interactive Group, Inc., a Delaware corporation.*
* Incorporated by reference to Interactive Group, Inc.'s Current Report on
Form 8-K dated July 31, 1997.
8.
<PAGE> 9
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.
Date: August 11, 1997 DATAWORKS CORPORATION
By: /s/ Norman R. Farquhar
-----------------------------------
Norman R. Farquhar
Executive Vice President, Chief Financial
Officer and Director
9.
<PAGE> 10
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF DATAWORKS
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 DataWorks Corporation,
5910 Pacific Center Boulevard, Suite 300, San Diego, California.
1.
<PAGE> 11
SCHEDULE II
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OF OUTSTANDING SHARES OF
VOTING AGREEMENT INTERACTIVE COMMON STOCK INTERACTIVE COMMON
STOCKHOLDER BENEFICIALLY OWNED STOCK AS OF JULY 31, 1997
- ---------------- ------------------------ -------------------------
<S> <C> <C>
Robert C. Vernon 1,053,422 22.92%
Mark Hellinger 334,774 7.28%
Randolph S. Naylor 386,700 8.41%
</TABLE>
2.
<PAGE> 12
SCHEDULE III
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ----------------------------------
Robert C. Vernon Chairman of the Board, Chief Executive Officer and
Secretary
Mark Hellinger President and Chief Operating Officer - North American
Operations and Director
Randolph S. Naylor Senior Vice President and Director
All individuals named in the above table are employed at Interactive Group,
Inc., 5095 Murphy Canyon Road, San Diego, California 92123.
3.
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
<S> <C> <C>
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 DataWorks Corporation, a California corporation, and each
of Robert C. Vernon, Mark Hellinger and Randolph S. Naylor.*
99.3 Option Agreement dated as of July 31, 1997, by and between
DataWorks Corporation, a California corporation, and Interactive
Group, Inc., a Delaware corporation.*
</TABLE>
* Incorporated by reference to Interactive Group, Inc.'s Current Report on
Form 8-K dated July 31, 1997.
4.
