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PROSPECTUS
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-50566
[INTERWOVEN LOGO]
Interwoven, Inc.
1,110,117 Shares of Common Stock
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Interwoven's common stock trades on the Nasdaq National Market.
Last reported sale price on December 28, 2000: $75.125 per share.
Trading Symbol: IWOV
The Offering
Under this prospectus, the selling stockholders named on pages 11 through 15
may offer and sell shares of our common stock that they acquired upon our
acquisitions of Ajuba Solutions, Inc. and Metacode Technologies, Inc.
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Investing in our common stock involves a high degree of risk. Please
carefully consider the "Risk Factors" beginning on page 4 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is December 28, 2000
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TABLE OF CONTENTS
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Forward-Looking Statements............................................. 2
Prospectus Summary..................................................... 3
Risk Factors........................................................... 4
Use of Proceeds........................................................ 10
Dividend Policy........................................................ 10
Selling Stockholders................................................... 11
Plan of Distribution................................................... 15
Legal Matters.......................................................... 17
Experts................................................................ 17
Where You Can Find More Information.................................... 17
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FORWARD-LOOKING STATEMENTS
We make many statements in this prospectus under the captions "Prospectus
Summary," "Risk Factors" and elsewhere that are forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. These statements relate to our future plans,
objectives, expectations and intentions. We may identify these statements by
the use of the future tense, and words such as "believe," "expect,"
"anticipate," "intend" and "plan" and similar expressions. These forward-
looking statements include statements indicating that we believe, we expect or
we anticipate that events may occur or trends may continue, and similar
statements relating to future events or financial results. These forward-
looking statements involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those we discuss in "Risk Factors" and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without also considering the risks and uncertainties associated with these
statements and our business.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you
should consider before buying shares in this offering. You should read the
entire prospectus carefully. Unless the context otherwise requires, references
in this prospectus to "Interwoven," "we," "our" and "us" refer to Interwoven,
Inc., a Delaware corporation, and its predecessors and subsidiaries.
Interwoven
Interwoven is a provider of software products and services that help
businesses and other organizations manage the information that makes up the
content of their web sites. In the Internet industry this is often referred to
as "web content management." Our flagship software product, TeamSite, is
designed to help customers develop, maintain and extend large web sites that
are essential to their businesses. TeamSite incorporates widely accepted
Internet industry standards and is designed with an open architecture that
allows it to support a wide variety of web authoring tools and web application
servers. Using TeamSite, our customers can manage web content, control the
versions of their web sites, manage web site contribution and content approval
processes, and develop eBusiness applications. TeamSite allows large numbers of
contributors across an enterprise to add web content in a carefully-managed
process. In addition, our OpenDeploy product allows customers to automate the
distribution of web content across multiple web sites. By using our products,
businesses can accelerate their time-to-web, lower web operating costs,
establish a differentiated presence on the web and attract and retain
customers. Currently, we have licensed our software products to 503 customers
operating in a broad range of industries. Our customers include AltaVista,
AT&T/TCI, BellSouth, Best Buy, Cisco Systems, E*Trade, FedEx, Gap, General
Electric, the U.S. Department of Education, USWeb/CKS, Viacom/Nickelodeon and
Yahoo!/GeoCities.
Interwoven, Inc. was incorporated under the laws of California in March 1995,
and reincorporated under the laws of Delaware in October 1999. Our principal
executive offices are located at 1195 W. Fremont Avenue, Sunnyvale, California
94087. The primary telephone number for our principal executive office is (408)
774-2000.
The Offering
Former stockholders of Ajuba Solutions, Inc. and Metacode Technologies, Inc.
hold all 1,110,117 shares that may be offered under this prospectus. These
shares are being offered on a continuous basis under Rule 415 of the Securities
Act.
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Common stock that may be offered by the selling
stockholders....................................... 1,110,117 shares
Common stock to be outstanding after this offering.. 51,269,244 shares*
Use of proceeds..................................... We will receive no proceeds of this offering
</TABLE>
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* Based on the number of shares outstanding as of December 15, 2000.
Interwoven(R), TeamSite(R) and OpenDeploy(TM) are our trademarks. This
prospectus also contains trademarks of other companies and organizations.
Recent Developments
On December 13, 2000 we amended our Certificate of Incorporation to increase
the number of authorized shares of common stock from 100,000,000 to 500,000,000
shares.
Unless otherwise indicated, stock and stock-related information in this
prospectus does not reflect the impact of a two-for-one stock split approved by
our Board of Directors, pursuant to which holders of record of common stock on
December 13, 2000 will be entitled to receive a stock dividend, which is
expected to be distributed approximately December 29, 2000.
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RISK FACTORS
The risks described below are not the only ones facing our company.
Additional risks not presently known to us, or that we currently deem
immaterial, may also impair our business operations. Our business, financial
condition or results of operations could be seriously harmed by any of these
risks. The trading price of our common stock could decline due to any of these
risks.
Risks Related to Interwoven's Business
Our operating history is limited, so it will be difficult for you to evaluate
our business in making an investment decision.
We were incorporated in March 1995 and have a limited operating history. We
are still in the early stages of our development, which makes the evaluation of
our business operations and our prospects difficult. We shipped our first
product in May 1997. Since that time, we have derived substantially all of our
revenues from licensing our TeamSite product and related services. In
evaluating our common stock, you should consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets, particularly those companies whose businesses depend on the Internet.
These risks and difficulties, as they apply to us in particular, include:
. potential fluctuations in operating results and uncertain growth rates;
. limited market acceptance of our products;
. concentration of our revenues in a single product or family of products;
. our dependence on a small number of orders for most of our revenue;
. our need to expand our direct sales forces and indirect sales channels;
. our need to manage rapidly expanding operations; and
. our need to attract and train qualified personnel.
If we do not increase our license revenues significantly, we will fail to
achieve profitability.
We have incurred net losses in each quarter since our inception, and we
expect our net losses to increase. We incurred net losses of $2.9 million in
1997, $6.3 million in 1998, $15.7 million in 1999 and $12.2 million for the
nine months ended September 30, 2000. As of September 30, 2000, we had an
accumulated deficit of approximately $38.1 million. To compete effectively, we
plan to continue to invest aggressively to expand our sales and marketing,
research and development, and professional services organizations. As a result,
if we are to achieve profitability we will need to increase our revenues
significantly, particularly our license revenues. We cannot predict when we
will become profitable, if at all.
Our operating results fluctuate widely and are difficult to predict, so we may
fail to satisfy the expectations of investors or market analysts and our stock
price may decline.
Our quarterly operating results have fluctuated significantly in the past,
and we expect them to continue to fluctuate unpredictably in the future. It is
possible that in some future periods our results of operations may not meet or
exceed the expectations of public market analysts and investors. If this
occurs, the price of our common stock is likely to decline.
Acquisitions may harm our business by being more difficult than expected to
integrate, by diverting management's attention or by subjecting us to
unforeseen accounting problems.
As part of our business strategy, we have acquired and in the future may seek
to acquire or invest in additional businesses, products or technologies that we
feel could complement or expand our business. If we
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identify an appropriate acquisition opportunity, we might be unable to
negotiate the terms of that acquisition successfully, finance it, or integrate
it into our existing business and operations. We may also be unable to select,
manage or absorb current or future acquisitions successfully. Further,
negotiation of potential acquisitions, integration of acquired businesses,
diverts management time and other resources. We may have to use a substantial
portion of our available cash to consummate an acquisition. On the other hand,
if we use our securities for acquisitions, our stockholders could suffer
significant dilution. Further, we cannot assure you that any particular
acquisition, even if successfully completed, will ultimately benefit our
business. These difficulties could harm our business and operating results.
In connection with our acquisitions, we may be required to write off
software development costs or other assets, incur severance liabilities,
amortization expenses related to goodwill and other intangible assets, or
incur debt, any of which could harm on our business, financial condition, cash
flows and results of operations. The companies we acquire may not have audited
financial statements, detailed financial information, or adequate internal
controls. There can be no assurance that an audit subsequent to the completion
of an acquisition will not reveal matters of significance, including with
respect to revenues, expenses, contingent or other liabilities, and
intellectual property. Any such write off could harm our financial results.
We face significant competition, which could make it difficult to acquire and
retain customers and inhibit any future growth.
We expect the competition in the market in which we operate to persist and
intensify in the future. Competitive pressures may seriously harm our business
and results of operations if they inhibit our future growth, or require us to
hold down or reduce prices, or increase our operating costs. Our competitors
include:
. potential customers that utilize in-house development efforts; and
. developers of software that directly addresses the need for web content
management, such as Vignette, Eprise, Documentum and Rational.
We also face potential competition from companies--for example, Microsoft
and IBM--that may decide in the future to enter our market. Many of our
existing and potential competitors have longer operating histories, greater
name recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we do. Many of these companies can also
leverage extensive customer bases and adopt aggressive pricing policies to
gain market share. Potential competitors may bundle their products in a manner
that discourages users from purchasing our products. Barriers to entering the
web content management software market are relatively low.
Our lengthy sales cycle makes it particularly difficult for us to forecast
revenue, requires us to incur high costs of sales, and aggravates the
variability of quarterly fluctuations.
The time between our initial contact with a potential customer and the
ultimate sale, which we refer to as our sales cycle, typically ranges between
three and nine months depending largely on the customer. If we do not shorten
our sales cycle, it will be difficult for us to reduce sales and marketing
expenses. In addition, as a result of our lengthy sales cycle, we have only a
limited ability to forecast the timing and size of specific sales. This makes
it more difficult to predict quarterly financial performance, or to achieve
expected performance, and any delay in completing sales in a particular
quarter could harm our business and cause our operating results to vary
significantly.
We rely heavily on sales of one product, so if it does not achieve market
acceptance we are likely to experience larger losses.
Since 1997, we have generated substantially all of our revenues from
licenses of, and services related to, our TeamSite product. We believe that
revenues generated from TeamSite will continue to account for a large portion
of our revenues for the foreseeable future. A decline in the price of
TeamSite, or our inability to
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increase license sales of TeamSite, would harm our business and operating
results more seriously than it would if we had several different products and
services to sell. In addition, our future financial performance will depend
upon successfully developing and selling enhanced versions of TeamSite. If we
fail to deliver product enhancements or new products that customers want it
will be more difficult for us to succeed.
We depend on our direct sales force to sell our products, so future growth will
be constrained by our ability to hire and train new sales personnel.
We sell our products primarily through our direct sales force, and we expect
to continue to do so in the future. Our ability to sell more products is
limited by our ability to hire and train direct sales personnel, and we believe
that there is significant competition for direct sales personnel with the
advanced sales skills and technical knowledge that we need. Some of our
competitors may have greater resources to hire personnel with that skill and
knowledge. If we are not able to hire experienced and competent sales
personnel, our business will be harmed. Furthermore, because we depend on our
direct sales force, any turnover in our sales force can significantly harm our
operating results. Sales force turnover tends to slow sales efforts until
replacement personnel can be recruited and trained to become productive.
If we do not continue to develop and maintain our indirect sales channels, we
will be less likely to increase our revenues.
If we do not develop indirect sales channels, we may miss sales opportunities
that might be available through these other channels. For example, domestic and
international resellers may be able to reach new customers more quickly or more
effectively than our direct sales force. Although we are currently investing
and plan to continue to invest significant resources to develop and maintain
these indirect sales channels, we may not succeed in establishing a channel
that can market our products effectively and provide timely and cost-effective
customer support and services. In addition, we may not be able to manage
conflicts across our various sales channels, and our focus on increasing sales
through our indirect channel may divert management resources and attention from
direct sales.
We must attract and retain qualified personnel, which is particularly difficult
for us because we compete with other Internet-related software companies and
are located in the San Francisco Bay area, where competition for personnel is
extremely intense.
Our success depends on our ability to attract and retain qualified,
experienced employees. We compete for experienced engineering, sales and
consulting personnel with Internet professional services firms, software
vendors, consulting and professional services companies. It is also
particularly difficult to recruit and retain personnel in the San Francisco Bay
area, where we are located. Although we provide compensation packages that
include incentive stock options, cash incentives and other employee benefits,
the volatility and current market price of our common stock may make it
difficult for us to attract, assimilate and retain highly qualified employees
in the future. In addition, our customers generally purchase consulting and
implementation services. While we have recently established relationships with
some third-party service providers, we continue to be the primary provider of
these services. It is difficult and expensive to recruit, train and retain
qualified personnel to perform these services, and we may from time to time
have inadequate levels of staffing to perform these services. As a result, our
growth could be limited due to our lack of capacity to provide those services,
or we could experience deterioration in service levels or decreased customer
satisfaction, any of which would harm our business.
If we do not improve our operational systems on a timely basis, we will be more
likely to fail to manage our growth properly.
We have expanded our operations rapidly in recent years. We intend to
continue to expand our operational systems for the foreseeable future to pursue
existing and potential market opportunities. This growth places a significant
demand on management and operational resources. In order to manage our growth,
we need to
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implement and improve our operational systems, procedures and controls on a
timely basis. If we fail to implement and improve these systems in a timely
manner, our business will be seriously harmed.
Difficulties in introducing new products and upgrades in a timely manner will
make market acceptance of our products less likely.
The market for our products is characterized by rapid technological change,
frequent new product introductions and Internet-related technology
enhancements, uncertain product life cycles, changes in customer demands and
evolving industry standards. We expect to add new content management
functionality to our product offerings by internal development, and possibly by
acquisition. Content management technology is more complex than most software,
and new products or product enhancements can require long development and
testing periods. Any delays in developing and releasing new products could harm
our business. New products or upgrades may not be released according to
schedule or may contain defects when released. Either situation could result in
adverse publicity, loss of sales, delay in market acceptance of our products or
customer claims against us, any of which could harm our business. If we do not
develop, license or acquire new software products, or deliver enhancements to
existing products on a timely and cost-effective basis, our business will be
harmed.
Our products might not be compatible with all major platforms, which could
limit our revenues.
Our products currently operate on the Sun Solaris operating system and
Microsoft NT and Windows 2000 Platforms. In addition, our products are required
to interoperate with leading web content authoring tools and web application
servers. We must continually modify and enhance our products to keep pace with
changes in these applications and operating systems. If our products were to be
incompatible with a popular new operating system or Internet business
application, our business would be harmed. In addition, uncertainties related
to the timing and nature of new product announcements, introductions or
modifications by vendors of operating systems, browsers, back-office
applications and other Internet-related applications could also harm our
business.
We have no significant experience conducting operations internationally, which
may make it more difficult than we expect to expand overseas and may increase
the costs of doing so.
We derive substantially all of our revenues from sales to North American
customers. We are expanding our international operations and plan to do so for
the foreseeable future. There are many barriers to competing successfully in
the international arena, including:
. costs of customizing products for foreign countries;
. restrictions on the use of software encryption technology;
. dependence on local vendors;
. compliance with multiple, conflicting and changing governmental laws and
regulations;
. longer sales cycles; and
. import and export restrictions and tariffs.
As a result of these competitive barriers, we cannot assure you that we will
be able to market, sell and deliver our products and services in international
markets.
If we fail to establish and maintain strategic relationships, the market
acceptance of our products, and our profitability, may suffer.
To offer products and services to a larger customer base our direct sales
force depends on strategic partnerships and marketing alliances to obtain
customer leads, referrals and distribution. If we are unable to
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maintain our existing strategic relationships or fail to enter into additional
strategic relationships, our ability to increase our sales and reduce expenses
will be harmed. We would also lose anticipated customer introductions and co-
marketing benefits. Our success depends in part on the success of our strategic
partners and their ability to market our products and services successfully. In
addition, our strategic partners may not regard us as significant for their own
businesses. Therefore, they could reduce their commitment to us or terminate
their respective relationships with us, pursue other partnerships or
relationships, or attempt to develop or acquire products or services that
compete with our products and services. Even if we succeed in establishing
these relationships, they may not result in additional customers or revenues.
If our services revenues do not grow substantially, our total revenues are
unlikely to increase.
Our services revenues represent a significant component of our total
revenues: 21% of total revenues for 1998, 36% of total revenues for 1999 and
31% of total revenues for the nine months ended September 30, 2000. We
anticipate that services revenues will continue to represent a significant
percentage of total revenues in the future. To a large extent, the level of
services revenues depends upon our ability to license products which generate
follow-on services revenue. Additionally, services revenues growth depends on
ongoing renewals of maintenance and service contracts. Moreover, if third-party
organizations such as systems integrators become proficient in installing or
servicing our products, our services revenues could decline. Our ability to
increase services revenues will depend in large part on our ability to increase
the capacity of our professional services organization, including our ability
to recruit, train and retain a sufficient number of qualified personnel.
We might not be able to protect and enforce our intellectual property rights, a
loss of which could harm our business.
We depend upon our proprietary technology, and rely on a combination of
patent, copyright and trademark laws, trade secrets, confidentiality procedures
and contractual provisions to protect it. We currently do not have any issued
United States or foreign patents, but we have applied for U.S. patents. It is
possible that a patent will not be issued from our currently pending patent
applications or any future patent application we may file. We have also
restricted customer access to our source code and require all employees to
enter into confidentiality and invention assignment agreements. Despite our
efforts to protect our proprietary technology, unauthorized parties may attempt
to copy aspects of our products or to obtain and use information that we regard
as proprietary. In addition, the laws of some foreign countries do not protect
our proprietary rights as effectively as the laws of the United States, and we
expect that it will become more difficult to monitor use of our products as we
increase our international presence. In addition, third parties may claim that
our products infringe theirs.
Our failure to deliver defect-free software could result in greater losses and
harmful publicity.
Our software products are complex and have in the past and may in the future
contain defects or failures that may be detected at any point in the product's
life. We have discovered software defects in the past in some of our products
after their release. Although past defects have not had a material effect on
our results of operations, in the future we may experience delays or lost
revenue caused by new defects. Despite our testing, defects and errors may
still be found in new or existing products, and may result in delayed or lost
revenues, loss of market share, failure to achieve acceptance, reduced customer
satisfaction, diversion of development resources and damage to our reputation.
As has occurred in the past, new releases of products or product enhancements
may require us to provide additional services under our maintenance contracts
to ensure proper installation and implementation. Moreover, third parties may
develop and spread computer viruses that may damage the functionality of our
software products. Any damage to or interruption in the performance of our
software could also harm our business.
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Defects in our products may result in customer claims against us that could
cause unanticipated losses.
Because customers rely on our products for business critical processes,
defects or errors in our products or services might result in tort or warranty
claims. It is possible that the limitation of liability provisions in our
contracts will not be effective as a result of existing or future federal,
state or local laws or ordinances or unfavorable judicial decisions. We have
not experienced any product liability claims like this to date, but we could in
the future. Further, although we maintain errors and omissions insurance, this
insurance coverage may not be adequate to cover us. A successful product
liability claim could harm our business. Even defending a product liability
suit, regardless of its merits, could harm our business because it entails
substantial expense and diverts the time and attention of key management
personnel.
Because the market for our products is new, we do not know whether existing and
potential customers will purchase our products in sufficient quantity for us to
achieve profitability.
The market for web content management software in which we sell is new and
rapidly evolving. We expect that we will continue to need intensive marketing
and sales efforts to educate prospective clients about the uses and benefits of
our products and services. Various factors could inhibit the growth of the
market, and market acceptance of our products and services. In particular,
potential customers that have invested substantial resources in other methods
of conducting business over the Internet may be reluctant to adopt a new
approach that may replace, limit or compete with their existing systems. We
cannot be certain that a viable market for our products will emerge, or if it
does emerge, that it will be sustainable.
If widespread Internet adoption does not continue, or if the Internet cannot
accommodate continued growth, our business will be harmed because it depends on
growth in the use of the Internet.
Acceptance of our products depends upon continued adoption of the Internet
for commerce. As is typical in the case of an emerging industry characterized
by rapidly changing technology, evolving industry standards and frequent new
product and service introductions, demand for and acceptance of recently
introduced products and services are subject to a high level of uncertainty. To
the extent that businesses do not consider the Internet a viable commercial
medium, our customer base may not grow. In addition, critical issues concerning
the commercial use of the Internet remain unresolved and may affect the growth
of Internet use. The adoption of the Internet for commerce, communications and
access to content, particularly by those who have historically relied upon
alternative methods, generally requires understanding and accepting new ways of
conducting business and exchanging information. In particular, companies that
have already invested substantial resources in other means of conducting
commerce and exchanging information may be particularly reluctant or slow to
adopt a new, Internet-based strategy that may render their existing
infrastructure obsolete. If Internet use develops more slowly than expected,
our business may be seriously harmed.
To the extent that there is an increase in Internet use, an increase in
frequency of use or an increase in the required bandwidth of users, the
Internet infrastructure may not be able to support the demands placed upon it.
In addition, the Internet could lose its viability as a commercial medium due
to delays in development or adoption of new standards or protocols required to
handle increased levels of Internet activity. Changes in, or insufficient
availability of, telecommunications or similar services to support the Internet
also could result in slower response times and could adversely impact use of
the Internet generally. If use of the Internet does not continue to grow or
grows more slowly than expected, or if the Internet infrastructure, standards,
protocols or complementary products, services or facilities do not effectively
support any growth that may occur, our business would be seriously harmed.
There is substantial risk that future regulations could be enacted that either
directly restrict our business or indirectly impact our business by limiting
the growth of Internet commerce.
As Internet commerce evolves, we expect that federal, state or foreign
agencies will adopt new legislation or regulations covering issues such as user
privacy, pricing, content and quality of products and services. If
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enacted, these laws, rules or regulations could indirectly harm us to the
extent that they impact our customers and potential customers. We cannot
predict if or how any future legislation or regulations would impact our
business. Although many of these regulations may not apply to our business
directly, we expect that laws regulating or affecting commerce on the Internet
could indirectly harm our business.
We have various mechanisms in place to discourage takeover attempts, which
might tend to suppress our stock price.
Provisions of our certificate of incorporation and bylaws that may
discourage, delay or prevent a change in control include:
. we are authorized to issue "blank check" preferred stock, which could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;
. we provide for the election of only one-third of our directors at each
annual meeting of stockholders, which slows turnover on the board of
directors;
. we limit who may call special meetings of stockholders;
. we prohibit stockholder action by written consent, so all stockholder
actions must be taken at a meeting of our stockholders; and
. we require advance notice for nominations for election to the board of
directors or for proposing matters that can be acted upon by
stockholders at stockholder meetings.
In addition to the aforementioned provisions, our Third Amended and Restated
Certificate of Incorporation has been amended to increase the authorized
number of shares of common stock issuable by Interwoven from 100 million to
500 million shares. While it is not the purpose of this amendment to
discourage, delay or prevent takeover attempts, it is possible that it may
have that effect, alone or in combination with other provisions of our
certificate of incorporation or bylaws. For example, if there is an
unsolicited tender offer with respect to Interwoven's outstanding shares,
having more shares available for issuance might make that tender offer more
difficult if we were to issue additional shares to third parties.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
selling stockholders under this prospectus.
DIVIDEND POLICY
We have never paid any cash dividends on our capital stock. We anticipate
that we will continue to retain any earnings for use in the operation of our
business and we do not currently intend to pay dividends.
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SELLING STOCKHOLDERS
The following table sets forth information with respect to the selling
stockholders who received shares of our common stock in our acquisitions of
Ajuba Solutions, Inc. in October 2000 and Metacode Technologies, Inc. in
November 2000, and the shares that they may offer under this prospectus. Except
for the relationships described below, to our knowledge, the selling
stockholders have not had any other position, office or other material
relationship with us or any of our predecessors or affiliates.
The share information provided in the table below is based on information
provided to us by the selling stockholders on or about November 22, 2000. We
calculated beneficial ownership according to Rule 13d-3 under the Securities
Exchange Act. Each selling stockholder owns less than 1% of our outstanding
common stock, based on 51,269,244 shares of common stock outstanding as of
December 15, 2000. We may update, amend or supplement this prospectus from time
to time to update the disclosure in this section.
Subject to the terms of our merger agreement with Ajuba Solutions, Inc., we
will hold in escrow 20,633 shares that are beneficially owned by the selling
stockholders that are former shareholders of Ajuba Solutions, Inc. until
October 31, 2001, as collateral for indemnification obligations set forth in
that agreement. In addition, subject to the terms of our merger agreement with
Metacode Technologies, Inc., we will hold in escrow 154,588 shares that are
beneficially owned by the selling stockholders that are former shareholders of
Metacode Technologies, Inc. until November 1, 2001, as collateral for
indemnification obligations set forth in that agreement. Subject to limited
exceptions, the shares subject to escrow may not be sold or transferred without
our consent. These shares will be released to the former Ajuba Solutions, Inc.
and Metacode Technologies, Inc. stockholders on October 31, 2001 and November
1, 2001, respectively, less any shares returned to Interwoven to cover damages
incurred by Interwoven or subject to Interwoven claims for damages still
outstanding at that date.
The selling stockholders from time to time may offer and sell any or all of
their shares that are covered by this prospectus. Because the selling
stockholders are not obligated to sell their shares, and because the selling
stockholders may also acquire publicly traded shares of our common stock, we
cannot estimate how many shares of the selling stockholders will beneficially
own after this offering.
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Number of Total shares
shares owned before that may be
Name this offering offered
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Former Shareholders of Metacode Technologies,
Inc.:
The Schatz Revocable Trust................... 460,000 394,667
Searle Patients In Need Foundation........... 153,240 153,240
*Chris V. Rathe.............................. 87,849 75,372
*John W. Hellwig............................. 59,535 51,080
Paul Hawken.................................. 38,004 32,604
Oneida Tribe of Indians of Wisconsin......... 17,860 15,323
*Ray Picard.................................. 16,669 11,025
Paul Kim..................................... 16,372 14,047
Vladimir A. Serdiuk.......................... 14,883 12,769
Robert H. Roehl.............................. 11,907 10,216
Herbert and Elaine Kwok...................... 11,311 9,704
Daniel Ortega................................ 9,674 8,300
George Sollman............................... 8,879 7,618
Barry Richman................................ 7,739 6,640
Gray Cary Ware & Freidenrich LLP............. 7,332 6,291
Andrei S. Kolesnikov......................... 5,953 5,107
James Yung & Agnes Kwok...................... 5,358 4,597
*Paul O'Leary................................ 5,239 4,494
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Number of Total shares
shares owned before that may be
Name this offering offered
---- ------------------- ------------
<S> <C> <C>
The Bulitt Foundation........................ 5,209 4,469
Silicon Valley Bank.......................... 4,977 4,270
Allen Brown.................................. 4,316 3,702
Elaine Seiler Living Trust................... 4,107 3,524
Mark Freeland................................ 3,959 3,393
NeeUnee Consulting Partnership............... 3,869 3,319
Roy Grant.................................... 3,796 3,257
Richard E. Aubin............................. 3,720 3,192
Habib Sadeghi-Azar........................... 3,572 3,065
Ahmad and Mitra Ghaffarian................... 3,572 3,065
Catherine Cochran............................ 3,572 3,065
Michael Baldwin.............................. 3,572 3,065
Charles E. Bascom 1991 Trust................. 3,572 3,065
Robert P. Inches............................. 3,572 3,065
Cameron Truesdell............................ 3,119 2,676
Dale Larson.................................. 3,119 2,676
Catherine E. Roehl........................... 2,976 2,553
Fariborz Pourabbas........................... 2,619 2,247
Fraser Smith................................. 2,589 2,221
Cameron and Dondi Truesdell.................. 2,440 2,093
Felicia Kwok................................. 1,786 1,532
Kevin and Jacqueline Charbeneau.............. 1,786 1,532
Marie and George Chow........................ 1,786 1,532
Ali Sadeghi.................................. 1,786 1,532
Majid and Katayoun Harrirchi................. 1,786 1,532
Farshid Oshidari............................. 1,786 1,532
John and Mina Aryanpur....................... 1,786 1,532
Mehraban Keyani and Perimah Mehrrostami...... 1,786 1,532
Fereidoon Sohrabian.......................... 1,786 1,532
*Theresa Rossiter............................ 1,532 1,315
Kay Edholm................................... 1,483 1,272
William J. Wohler............................ 1,377 1,181
James Dow.................................... 1,333 1,144
John S. Majnarich & Wanda J. Majnarich
Revocable Trust............................. 1,333 1,144
Janet J. Rathe............................... 1,333 1,144
Mo Stevenson................................. 1,333 1,144
*Barbara Norgard............................. 1,289 1,106
John Steinhart............................... 1,190 1,021
Marc Baber................................... 1,116 957
Karsten Rasmussen............................ 1,116 957
Gene F. Straube Living Trust................. 983 843
Andrew Thompson.............................. 944 810
Mike Matthews................................ 944 810
Frederick and Shelia Hoar.................... 944 810
Marian McNamee............................... 893 766
Jim Selman................................... 893 766
Darryl Kwok.................................. 893 766
Irene Gockson................................ 893 766
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Number of Total shares
shares owned before that may be
Name this offering offered
---- ------------------- ------------
<S> <C> <C>
Ennio S. Stacchetti Revocable Trust U/A/D 8/7/98................ 893 766
Robert Eye...................................................... 893 766
Mark Ciotek..................................................... 755 648
William Lyon.................................................... 706 606
Farimah S. and Vahid Ghodsi..................................... 595 510
Seyed Abdoulhamid Ghodsi........................................ 595 510
Masoud F. Saedi................................................. 595 510
John Kao........................................................ 595 510
Gerard Mosseri Marlio........................................... 595 510
Shalini and Ramachandran Krishnaswamy........................... 595 510
Mansour Moussavian.............................................. 595 510
Muller Family Trust Dated 4/26/93............................... 595 510
Global Health Asia Limited...................................... 595 510
John Garn....................................................... 595 510
Henry Dakin..................................................... 595 510
Pacifico Land Corporation....................................... 595 510
Charles E. Bascom............................................... 535 459
Lulworth Partners............................................... 535 459
Battery Street Ventures......................................... 496 426
Tansy Young..................................................... 357 306
Leigh Culpepper................................................. 330 283
Patrice Winchester.............................................. 297 255
James G. Leathers, Jr. ......................................... 297 255
Stephen J. Atwater.............................................. 297 255
William D. Cone................................................. 297 255
John Aryanpur................................................... 297 255
The Karr Family 1982 Trust...................................... 297 255
Zahra Mahloudhji................................................ 284 244
James R. Voigt.................................................. 119 102
Elizabeth Karr.................................................. 99 85
Cynthia Karr.................................................... 99 85
<CAPTION>
Number of Total shares
shares owned before that may be
Name this offering offered
---- ------------------- ------------
<S> <C> <C>
Former Shareholders of Ajuba Solutions, Inc.:
Accel VI L.P.................................................... 54,355 48,916
*John K. Ousterhout............................................. 37,473 31,085
Lighthouse Capital Partners III, L.P. .......................... 24,879 22,390
Tom Thomas...................................................... 23,634 21,270
Gary F. Hromadko................................................ 12,792 11,512
Accel Internet Fund II L.P. .................................... 6,945 6,249
Sarah E. Daniels................................................ 5,712 5,141
Andreas V. Bechtolsheim......................................... 5,610 5,047
*Scott Stanton.................................................. 5,280 4,355
Accel Investors "98 L.P. ....................................... 4,607 4,146
*Brent Welch.................................................... 3,168 2,554
Chen Family Trust Dated January 15, 1993........................ 2,040 1,835
Ray Johnson..................................................... 1,980 1,782
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Number of Total shares
shares owned before that may be
Name this offering offered
---- ------------------- ------------
<S> <C> <C>
*Melissa Chawla................................ 1,320 1,064
John Kent Chin................................. 1,020 917
Susan Wong..................................... 1,020 917
Bryan Surles................................... 946 851
Accel Keiretsu VI, L.P. ....................... 868 781
*Lee Bernhard.................................. 845 649
Carole Hayworth................................ 825 742
Linda Giampa................................... 628 565
*Berry Kercheval............................... 594 363
*Kimberley Yates............................... 548 286
Scott Redman................................... 528 288
Foster Curry................................... 426 383
Suresh Sastry.................................. 396 356
*Joe Sammut.................................... 396 296
*Al Borr....................................... 347 233
*Jennifer Hom.................................. 330 179
*Jeff Hobbs.................................... 330 167
*Sven Delmas................................... 330 160
Hillsman & Palefsky McGuinn.................... 269 242
Paul Gardiner.................................. 264 237
*Mariam Tariq.................................. 264 137
*Peter Key..................................... 264 90
David A. Patterson............................. 255 229
R. Randolph Scott.............................. 255 229
Peter Halper................................... 248 222
Tom Von Karl................................... 248 222
*Michael Siebrass.............................. 248 147
Joseph M. Eyre................................. 234 210
*Thomas Lofgren................................ 198 178
John Doumani................................... 198 107
*Michael Thomas................................ 198 107
*Karin Brown................................... 198 103
*Sandeep Tamharkar............................. 198 88
*Robert Gunn................................... 185 68
Nicolette ter Rele............................. 172 154
Mel Connet..................................... 165 148
*Eric Melski................................... 158 82
*Shawn K. Kielty............................... 158 67
*Jennifer Trent................................ 158 67
Ken Jones...................................... 157 141
Linda Ford..................................... 139 124
JGK and Associates............................. 132 118
*Daniel Gerard Kuchler......................... 119 45
Ellen Olson.................................... 106 95
Allen L. Morgan................................ 102 91
Julie Franklin................................. 99 89
Steve Hamilton................................. 95 85
Katie Wiederholt............................... 86 77
Corinne A. Forti............................... 66 59
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Number of Total shares
shares owned before that may be
Name this offering offered
---- ------------------- ------------
<S> <C> <C>
Nina A. Gass................................... 40 35
Randy Williams................................. 36 32
Stacey Yates................................... 22 19
Perlin/Morales Partners Search................. 21 18
John Stump..................................... 7 5
--------- ---------
Total........................................ 1,268,904 1,110,117
========= =========
</TABLE>
--------
* This person is an employee or consultant of Interwoven.
PLAN OF DISTRIBUTION
The selling stockholders and their permitted transferees will be offering
and selling all shares offered and sold with this prospectus. We will not
receive any of the proceeds of the sales of these shares. Offers and sales of
shares made with this prospectus must comply with the terms of the merger
agreements we entered into with Ajuba Solutions, Inc. and Metacode
Technologies, Inc. However, selling stockholders may resell all or a portion
of their shares in open market transactions in reliance upon available
exemptions under the Securities Act, provided they meet the criteria and
conform to the requirements of one of these exemptions.
Who may sell and applicable restrictions. Shares may be offered and sold
directly by the selling stockholders and their permitted transferees from time
to time. The selling stockholders could transfer, devise or gift shares by
other means.
Alternatively, the selling stockholders from time to time may offer the
shares through brokers, dealers or agents that may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of the shares for whom they may act as agent. In
effecting sales, broker-dealers that are engaged by the selling stockholders
may arrange for other broker-dealers to participate. The selling stockholders
and any brokers, dealers or agents who participate in the distribution of the
securities may be deemed to be underwriters, and any profits on the sale of
the securities by them and any discounts, commissions or concessions received
by any brokers, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act. To the extent the selling
stockholders may be deemed to be underwriters, they may be subject to
statutory liabilities, including, but not limited to, Sections 11, 12 and 17
of the Securities Act and Rule 10b-5 under the Exchange Act.
In addition, some of the selling stockholders are venture capital funds,
corporations or trusts which may, in the future, distribute their shares to
their trust beneficiaries, respectively, which distributees may likewise
distribute further such shares. Those shares may be sold by those partners,
members, stockholders or trust beneficiaries, or by any of their respective
distributees, pursuant to this prospectus.
Prospectus delivery. Because selling stockholders may be deemed to be
underwriters within the meaning of Section 2(a)(11) of the Securities Act,
they will be subject to the prospectus delivery requirements of the Securities
Act. At any time a particular offer of the securities is made, a revised
prospectus or prospectus supplement, if required, will be distributed which
will set forth:
. the name of the selling stockholder and of any participating
underwriters, broker-dealers or agents;
. the aggregate amount and type of securities being offered;
. the price at which the securities were sold and other material terms of
the offering;
. any discounts, commissions, concessions and other items constituting
compensation from the selling; stockholders and any discounts,
commissions or concessions allowed or re-allowed or paid to dealers; and
15
<PAGE>
. that the participating broker-dealers did not conduct any investigation
to verify the information in this prospectus or incorporated in this
prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed with
the Securities and Exchange Commission to reflect the disclosure of additional
information with respect to the distribution of the securities.
Manner of sales. The selling stockholders will act independently of us in
making decisions with respect to the timing, manner and size of each sale.
Sales may be made over the Nasdaq National Market or the over-the-counter
market. The shares may be sold at then prevailing market prices, at prices
related to prevailing market prices or at negotiated prices. The selling
stockholders may also resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act, provided that
the shares meet the criteria and conform to the requirements of this rule. The
selling stockholders may decide not to sell any of the shares offered under
this prospectus, and they may transfer, devise or gift these shares by other
means.
The shares may be sold according to one or more of the following methods:
. a block trade in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by the broker or
dealer for its account as allowed under this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. an exchange distribution under the rules of the exchange;
. face-to-face transactions between sellers and purchasers without a
broker-dealer; and
. by writing options.
Some persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities, including
the entry of stabilizing bids or syndicate covering transactions or the
imposition of penalty bids. The selling stockholders and any other person
participating in a distribution will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder including Regulation
M. This regulation may limit the timing of purchases and sales of any of the
securities by the selling stockholders and any other person. The anti-
manipulation rules under the Exchange Act may apply to sales of securities in
the market and to the activities of the selling stockholders and their
affiliates. Furthermore, Regulation M of the Exchange Act may restrict the
ability of any person engaged in the distribution of the securities to engage
in market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
All of the foregoing may affect the marketability of the securities and the
ability of any person or entity to engage in market-making activities with
respect to the securities.
Hedging and other transactions with broker-dealers. In connection with
distributions of the securities, the selling stockholders may enter into
hedging transactions with broker-dealers. In connection with these
transactions, broker-dealers may engage in short sales of the registered
securities in the course of hedging the positions they assume with selling
stockholders. The selling stockholders may also sell securities short and
redeliver the securities to close out short positions. The selling
stockholders may also enter into option or other transactions with broker-
dealers which require the delivery to the broker-dealer of the registered
securities. The broker-dealer may then resell or transfer these securities
under this prospectus. A selling stockholder may also loan or pledge the
registered securities to a broker-dealer and the broker-dealer may sell the
securities so loaned or, upon a default, the broker-dealer may effect sales of
the pledged securities under this prospectus.
Expenses associated with registration. We have agreed to pay the expenses of
registering the shares under the Securities Act, including registration and
filing fees, printing and duplication expenses, administrative expenses and
legal and accounting fees. Each selling stockholder will pay its own brokerage
and legal fees, if any.
16
<PAGE>
Indemnification and contribution. In the merger agreements, we and the
selling stockholders have agreed to indemnify or provide contribution to each
other and specified other persons against some liabilities in connection with
the offering of the shares, including liabilities arising under the Securities
Act. The selling stockholders may also agree to indemnify any broker-dealer or
agent that participates in transactions involving sales of the shares against
some liabilities, including liabilities arising under the Securities Act.
Suspension of this offering. We may suspend the use of this prospectus if we
learn of any event that causes this prospectus to include an untrue statement
of a material fact or omit to state a material fact required to be stated in
the prospectus or necessary to make the statements in the prospectus not
misleading in the light of the circumstances then existing. If this type of
event occurs, a prospectus supplement or post-effective amendment, if
required, will be distributed to each selling stockholder.
LEGAL MATTERS
Fenwick & West LLP, Palo Alto, California, has provided us with an opinion
as to legal matters in connection with the shares of common stock that may be
offered with this prospectus.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
The following documents that we have filed with the Securities and Exchange
Commission are incorporated into this prospectus by reference:
. the registration statement on Form S-3 of which this prospectus is a
part, and the exhibits filed with this registration statement and
incorporated into the registration statement by reference
. our annual report on Form 10-K for the fiscal year ended December 31,
1999
. the registration of our common stock on Form 8-A filed on September 20,
1999
. all other reports filed under Section 13(a) or 15(d) of the Exchange Act
since December 31, 1999
. all other information that we file with the Commission under to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the termination of this offering
To the extent that any statement in this prospectus is inconsistent with any
statement that is incorporated by reference, the statement in this prospectus
shall control. The incorporated statement shall not be deemed, except as
modified or superseded, to constitute a part of this prospectus or the
registration statement.
Because we are subject to the informational requirements of the Exchange
Act, we file reports and other information with the Commission. Reports,
registration statements, proxy and information statements and other
information that we have filed can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain copies of this material
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at rates prescribed by the Commission. The public may
obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission also maintains a World
17
<PAGE>
Wide Web site that contains reports, proxy and information statements and other
information that is filed electronically with the Commission. This web site can
be accessed at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3 under
the Securities Act with respect to the Common Stock offered under this
prospectus. This prospectus does not contain all of the information in the
registration statement, parts of which we have omitted, as allowed under the
rules and regulations of the Commission. You should refer to the registration
statement for further information with respect to us and our Common Stock.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete and, in each instance, we refer you
to the copy of each contract or document filed as an exhibit to the
registration statement. Copies of the registration statement, including
exhibits, may be inspected without charge at the Commission's principal office
in Washington, D.C., and you may obtain copies from this office upon payment of
the fees prescribed by the Commission.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the
information that has been incorporated by reference into this prospectus
(except exhibits, unless they are specifically incorporated by reference into
this prospectus). You should direct any requests for copies to Interwoven,
Inc., 1195 W. Fremont Ave., Sunnyvale, California 94087, Attention: Stock
Administrator, telephone: (408) 774-2000.
18
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INTERWOVEN, INC.
1,110,117 Shares of
Common Stock
-------------------------
PROSPECTUS
December 28, 2000
-------------------------
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. The selling stockholders are offering to sell, and
seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
--------------------------------------------------------------------------------
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