UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Interface Systems, Inc.
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(Name of Issuer)
Common Stock, no par value
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(Title of Class and Securities)
458667102
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(CUSIP Number)
Bernard J. Cassidy, Esq.
General Counsel and Secretary
Tumbleweed Communications Corp.
700 Saginaw Drive
Redwood City, CA 94063
(650) 216-2000
with a copy to:
Gregory C. Smith, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 220
Palo Alto, CA 94301
(650) 470-4500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 28, 2000
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(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section
240.13d-7 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).
SCHEDULE 13D
CUSIP No. 458667102
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Tumbleweed Communications Corp.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
WC, 00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
NUMBER OF 1,255,004 (1)
SHARES -------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0 (1)
EACH -------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 1,255,004 (1)
WITH -------------------------------------
10. SHARED DISPOSITIVE POWER
0 (1)
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,255,004 (1)
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
Approximately 21%(2)
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14. TYPE OF REPORTING PERSON
CO
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(1) The shares of common stock of the Issuer covered by this report are
purchasable by the Reporting Person upon exercise of an option
granted to the Reporting Person on June 28, 2000, and upon
conversion of a note sold to the Reporting Person on June 28, 2000.
These items are described in Items 3, 4 and 5 of this report.
(2) After giving effect to the exercise of the option and conversion of the
notes as described herein.
ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this statement
relates is the common stock, no par value per share (the "Interface Common
Stock"), of Interface Systems, Inc., a Michigan corporation ("Interface" or
the "Company"). The principal executive offices of Interface are located at
5855 Interface Drive, Ann Arbor, MI, 48103.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) and (f)
This Schedule 13D is being filed by Tumbleweed
Communications Corp., a Delaware corporation ("Tumbleweed" or the
"Registrant"). The principal business of Tumbleweed is secure electronic
communications. The principal executive offices of Tumbleweed are located
at 700 Saginaw Drive, Redwood City, California, 94063. Certain information
concerning the executive officers and directors of Tumbleweed is set forth
in Schedule A hereto and is incorporated herein by this reference.
(d) and (e)
Neither Tumbleweed nor, to the knowledge of Tumbleweed as of
the date hereof, any of its executive officers or directors has during the
past five years (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
that resulted 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.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Registrant acquired an option (the "Option") to purchase
939,215 shares of Interface Common Stock pursuant to a Stock Option
Agreement, dated June 28, 2000, between Interface and the Registrant (the
"Option Agreement"). Pursuant to the Option, the Registrant has the right,
upon the occurrence of certain events specified in Section 2 of the Option
Agreement, to purchase 19.9% of the Interface Common Stock (or such greater
number of shares of Interface Common Stock equal to 19.9% of the then
outstanding shares of Interface Common Stock) for $13.33 per share, subject
to certain customary anti-dilution adjustments. Notwithstanding any other
provisions of the Option Agreement, the Total Profit (as defined in the
Option Agreement) that the Registrant may realize from the Option and
pursuant to the termination fee under the Merger Agreement may not exceed
the aggregate amount of fees and expenses payable to the Registrant under
the provisions of Section 7.2(b) of the Merger Agreement (as defined
below). Upon the occurrence of certain events specified in the Option
Agreement, the Registrant may require Interface to repurchase the Option.
In addition, the Option Agreement grants certain registration rights to the
Registrant with respect to any shares of Interface Common Stock acquired
pursuant to the Option. The Option Agreement is attached to this Schedule
13D as Exhibit 2.1(B) and is incorporated herein by reference. The
foregoing description of terms of the Option Agreement is qualified in its
entirety by reference to the full text of the Option Agreement.
It is anticipated that, should the Option become exercisable and
should the Registrant determine to exercise the Option, the Registrant
would obtain the funds therefor from working capital or by borrowing from
parties whose identity is not yet known.
In connection with the Merger (as defined below), the Registrant
also agreed to purchase an aggregate of $3,000,000 of Convertible
Subordinated Promissory Notes(the "Notes") of Interface, pursuant to a
Convertible Subordinated Note Purchase Agreement, by and between the
Registrant and Interface, dated as of June 28, 2000 (the "Note Purchase
Agreement"). At the Registrant's option, or upon the occurrance of other
events contained within the Notes' terms, the Notes are convertible into
Interface Common Stock. The initial conversion price is $9.50 per share
subject to adjustment upon the occurrence of certain events, including but
not limited to stock splits, reverse stock splits and dividends paid on
Interface Common Stock. The Note Purchase Agreement and the Note are
attached to this Form 13D as Exhibit 2.1(C) and are incorporated by
reference herein. The foregoing description of the terms of the Note
Purchase Agreement and the Note is qualified in its entirety by reference
to the full text of the Note Purchase Agreement, which includes a Form of
Note.
ITEM 4. PURPOSE OF TRANSACTION
(a) - (g)
On June 28, 2000, Tumbleweed, Interface, and Maize
Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Tumbleweed ("Sub"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") providing for the merger of Sub with and into Interface
such that Interface would become a wholly owned subsidiary of Tumbleweed
(the "Merger"). Upon consummation of the Merger, Interface would become the
surviving corporation (the "Surviving Corporation"), and shall continue to
be governed by the laws of the State of Michigan and the separate corporate
existence of the Company, with all its rights, privileges, immunities,
powers and franchises, shall continue unaffected by the Merger. At the
effective time of the Merger, each outstanding share of Interface Common
Stock will be converted into the right to receive 0.264 of a share of
common stock, par value $0.001 per share of Tumbleweed ("Tumbleweed Common
Stock") (except that cash will be paid in lieu of fractional shares). If
the Merger is consummated in accordance with the terms and conditions of
the Merger Agreement, or upon the occurrence of certain other events as set
forth in the Option Agreement, the Option will terminate.
(h) - (j)
Upon consummation of the Merger as contemplated by the Merger
Agreement, the Interface Common Stock will be delisted from the Nasdaq
Stock Market National Market System, and the Interface Common Stock will
become eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended.
The preceding summary of certain terms of the Merger Agreement is
qualified in its entirety by reference to the full text of such document, a
copy of which is filed as Exhibit 2.1 to this Schedule 13D, and which is
incorporated herein by this reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b)
The number of shares of Interface Common Stock covered by
the Option is equal to 939,215, subject to certain adjustments for
anti-dilution as set forth in the Option Agreement, which constitutes 19.9%
of the issued and outstanding shares of Interface Common Stock on June 28,
2000.
The number of shares of Interface Common Stock covered by
the Notes is equal to 315,789, subject to certain adjustments as set forth
in the Note Purchase Agreement, which constitutes 6.3% of the issued and
outstanding shares of Interface Common Stock on June 28, 2000, without
giving effect to the exercise of the Option.
Prior to the exercise of the Option, Tumbleweed (i) is not
entitled to any rights as a stockholder of Interface as to the shares
covered by the Option, and (ii) disclaims any beneficial ownership of the
shares of Interface Common Stock which are purchasable by Tumbleweed upon
exercise of the Option because the Option is exercisable only in the
limited circumstances set forth in the Option Agreement, none of which has
occurred as of the date hereof. If either the Option were exercised,
Tumbleweed would have the sole right to vote or to dispose of the shares of
Interface Common Stock issued as a result of such exercise, subject to the
terms of the Option Agreement. Prior to the conversion of the Notes,
Tumbleweed is not entitled to any rights as a stockholder of Interface as
to the shares issuable upon conversion of the Notes. If the Notes were
converted, Tumbleweed would have the sole right to vote or to dispose of
the shares of Interface Common Stock issued as a result of such conversion,
subject to the terms of the Notes and the Note Purchase Agreement.
(c) Other than as set forth in this Item 5, to the knowledge
of Tumbleweed as of the date hereof, (i) neither Tumbleweed nor any
subsidiary or affiliate of Tumbleweed nor any of Tumbleweed's executive
officers or directors, beneficially owns any shares of Interface Common
Stock, and (ii) there have been no transactions in the shares of Interface
Common Stock effected during the past 60 days by Tumbleweed, nor to the
knowledge of Tumbleweed as of the date hereof, by any subsidiary or
affiliate of Tumbleweed or any of Tumbleweed's executive officers or
directors.
(d) No other person is known by Tumbleweed to have the right
to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the Interface Common Stock obtainable by
Tumbleweed upon exercise of the Option.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER.
Certain stockholders of Interface collectively holding 83,081
shares of Interface Common Stock (representing approximately 1.76% of the
currently outstanding Interface Common Stock) have entered into voting
agreements, substantially in the form attached to this Schedule 13D as
Exhibit C (the "Voting Agreement"), with Tumbleweed, pursuant to which such
stockholders have agreed, among other things, to vote such shares of
Interface Common Stock to approve the Merger Agreement and the transactions
associated with it at the related special meeting of Interface
stockholders. The foregoing description of terms of the Voting Agreement is
qualified in its entirety by reference to the full text of the Voting
Agreement, which is incorporated herein by this reference.
The responses to Items 3, 4, 5 of this Schedule 13D and the
Exhibits to this Schedule 13D are incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
2.1 Agreement and Plan of Merger, dated as of June 28, 2000, by and
among the Registrant, Keyhole Acquisition Corp. and Interface
Communications Corporation, together with exhibits thereto.
(A) Form of Voting Agreement, by and among Registrant, Sub and
certain stockholders of Interface.
(B) Form of Stock Option Agreement, by and between Registrant
and Interface.
(C) Form of Convertible Subordinated Note Purchase Agreement, by
and between Interface and the Registrant.
SIGNATURE
After reasonable inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Tumbleweed Communications Corp.
Date: June 28, 2000 By: /s BERNARD J. CASSIDY
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Name: Bernard J. Cassidy
Title: Vice President,
General Counsel and Secretary
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF TUMBLEWEED COMMUNICATIONS CORP.
The following table sets forth the name, business address and
present principal occupation or employment of each director and executive
officer of Tumbleweed. Unless otherwise indicated, each such person is a
United States citizen, and the business address of each such person is 700
Saginaw Drive, Redwood City, CA 94063.
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
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Jeffrey C. Smith Chairman, President and Chief Executive Officer
Donald N. Taylor Vice President-International Sales
Donald R. Gammon Vice President-North American Sales
Jean-Christophe D. Bandini Chief Technical Officer
Shomit A. Ghose Senior Vice President-Operations
Kerry S. Champion Senior Vice President-Product Development
Joseph C. Consul Vice President-Finance and Chief
Financial Officer
Shinji Eura President-Tumbleweed Communications, K.K.
Robert A. Krauss Vice President-Business Development
Mark R. Pastore Vice President-Corporate Development
Michael J. Earhart Vice President-Corporate Marketing
Bernard J. Cassidy Vice President, General Counsel and
Secretary
Timothy C. Draper Director
Eric J. Hautemont Director
David F. Marquardt Director
Standish H. O'Grady Director
Pehong Chen Director
Kenneth R. Klein Director
