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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 0-14713
[LOGO]
Interleaf, Inc.
(exact name of registrant as specified in its charter)
Massachusetts 04-2729042
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
62 Fourth Avenue, Waltham, MA 02154
(Address of principal executive offices) (Zip Code)
(617) 290-0710
(Registrant's telephone number, including area code)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the issuer's Common Stock, $.01 par
value, as of August 12, 1997 was 17,709,719.
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<PAGE>
Interleaf, Inc.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated balance sheets at June 30, 1997 and March 31, 1997 ............ 3
Consolidated statements of operations for the three months ended
June 30, 1997 and 1996 ..................................................... 4
Consolidated statements of cash flows for the three months ended
June 30, 1997 and 1996 ..................................................... 5
Notes to consolidated financial statements ................................. 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................................ 8
PART II - OTHER INFORMATION
Item 5 - Other Information ................................................. 11
Item 6 - Exhibits and Reports on Form 8-K .................................. 11
SIGNATURE .................................................................. 11
2
<PAGE>
Interleaf, Inc.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
June 30, 1997 March 31, 1997
In thousands, except for share and per share (unaudited)
amounts
ASSETS
Current Assets
Cash and cash equivalents $ 18,031 $ 17,349
Accounts receivable, net of reserve for doubtful
accounts of $1,377 at June 30, 1997 and $1,371
at March 31, 1997 7,922 11,359
Prepaid expenses and other current assets 1,532 1,504
--------- ---------
Total current assets 27,485 30,212
Property and equipment, net 4,423 4,963
Intangible assets 1,946 2,281
Other assets 444 444
--------- ---------
Total assets $ 34,298 $ 37,900
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 2,544 $ 1,774
Accrued expenses 11,845 14,455
Unearned revenue 13,819 15,102
Accrued restructuring 3,598 4,386
--------- ---------
Total current liabilities 31,806 35,717
Long-term restructuring 2,744 2,955
--------- ---------
Total liabilities 34,550 38,672
--------- ---------
Shareholders' Equity (Deficit)
Preferred stock, par value $.10 per share,
authorized 5,000,000 shares:
Series A Junior Participating, none issued and
outstanding Senior Series B Convertible, issued
and outstanding, 861,911 at June 30, 1997
and at March 31, 1997 86 86
Senior Series C Convertible, issued and
outstanding, 1,006,480 at June 30, 1997 and
1,006,220 at March 31, 1997 101 101
Common stock, par value $.01 per share, authorized
30,000,000 shares, issued and outstanding,
17,709,719 at June 30, 1997
and 17,459,219 at March 31, 1997 177 175
Additional paid-in capital 85,747 85,513
Retained earnings (deficit) (86,122) (86,508)
Cumulative translation adjustment (241) (139)
--------- ---------
Total shareholders' equity (deficit) (252) (772)
--------- ---------
Total liabilities and shareholders' equity (deficit) $ 34,298 $ 37,900
========= =========
See notes to consolidated financial statements
3
<PAGE>
Interleaf, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended June 30
1997 1996
In thousands, except for per share amounts (unaudited)
Revenues:
Products $ 2,742 $ 7,046
Maintenance 6,650 7,472
Services 3,434 4,536
-------- --------
Total Revenues 12,826 19,054
-------- --------
Costs of revenues:
Products 730 1,626
Maintenance 946 1,308
Services 2,839 4,200
-------- --------
Total costs of revenues 4,515 7,134
-------- --------
Gross Margin 8,311 11,920
-------- --------
Operating Expenses:
Selling, general and administrative 5,557 11,357
Research and development 2,451 4,270
-------- --------
Total operating expenses 8,008 15,627
-------- --------
Income (loss) from operations 303 (3,707)
Other income (expense) 83 (93)
-------- --------
386 (3,800)
Income (loss) before income taxes
Provision for income taxes -- --
-------- --------
Net income (loss) $ 386 $ (3,800)
======== ========
Earnings (loss) per share:
Primary $ 0.02 $ (0.22)
======== ========
Fully Diluted $ 0.02 N/A
======== ========
Shares used in computing primary
earnings per share 22,974 16,998
======== ========
Shares used in computing fully diluted
earnings per share 23,134 N/A
======== ========
See notes to consolidated financial statements
4
<PAGE>
Interleaf, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June 30
1997 1996
In thousands (unaudited)
Cash Flows from Operating Activities
Net income (loss) $ 386 $ (3,800)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization expense 997 2,009
Changes in assets and liabilities, net
of effect of acquisition:
Decrease in accounts receivable, net 3,437 4,491
Decrease in other assets (28) 76
Decrease in accounts payable and accrued expenses (1,840) (911)
Decrease in unearned revenue (1,283) (2,312)
Decrease in other liabilities (999) (354)
Other, net - 62
-------- --------
Net cash provided by (used in) operating
activities 670 (739)
-------- --------
Cash Flows from Investing Activities
Capital expenditures (122) (1,201)
Capitalized software development costs - (605)
-------- --------
Net cash used in investing activities (122) (1,806)
-------- --------
Cash Flows from Financing Activities
Net proceeds from issuance of common stock 236 1,237
Repayment of long-term debt and capital leases - (2)
-------- -------
Net cash provided by (used in) financing
activities 236 1,235
-------- --------
(102) (62)
-------- --------
Effect of exchange-rate changes on cash
Net increase (decrease) in cash and cash
equivalents 682 (1,372)
17,349 12,725
-------- --------
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period $ 18,031 $ 11,353
======== ========
See notes to consolidated financial statements
5
<PAGE>
Interleaf, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of Interleaf,
Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. Interleaf, Inc. and its
subsidiaries are collectively referred to as the "Company." Certain fiscal
1997 amounts have been reclassified to conform to the fiscal 1998 method of
presentation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all financial
information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
these financial statements include all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the results
of operations for the interim periods reported and of the financial
condition of the Company as of the date of the interim balance sheet. The
results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year.
These financial statements should be read in conjunction with the Company's
audited consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1997.
2. Net Income (Loss) Per Share
Per share amounts are calculated using the weighted average number of common
shares and common share equivalents outstanding during periods of net
income. Common share equivalents are attributable to stock options, common
stock warrants and convertible preferred stock. Per share amounts are
calculated using only the weighted average number of common shares
outstanding during periods of net loss. Fully diluted earnings per share is
not materially different from reported primary earnings per share.
On June 20, 1997, the Board of Directors authorized the repricing of
approximately 1,626,000 stock options at $1.25 per share. The original grant
prices ranged from $2.00 to $8.25 per share.
3. Credit Agreement
The Company has a revolving line of credit of up to $10 million from a major
commercial lender. The credit agreement also provides for the issuance of
letters of credit of up to $2 million. Borrowings from the line of credit
bear interest at the higher of 9% or prime rate plus 2% and are secured by
substantially all tangible and intangible domestic assets of the Company.
Outstanding letters of credit bear interest at 2%. The agreement contains
certain financial covenants relating to the Company's current ratio,
tangible net worth, and working capital, as well as restrictions on certain
additional indebtedness, acquisitions, capital expenditures, and dividend
payments. At June 30, 1997, there were no loans outstanding under this line
of credit. Borrowings under the credit agreement are based on the level of
eligible North American accounts receivable, modified by cash collections
during the previous 90 days. As of June 30, 1997, approximately $0.7 million
of standby letters of credit were outstanding to secure the leasing of
computer equipment, and the amount available for additional borrowings is
approximately $0.7 million. The current credit agreement expired on August
1, 1997 and approval of a new credit agreement was granted by the lender on
August 11, 1997. The lender and the Company expect to execute a final
agreement shortly.
6
<PAGE>
4. Restructuring
During the first quarter ended June 30, 1997, the Company paid approximately
$1.0 million, net of sublease receipts, related to the fiscal 1997 and 1995
restructurings. During the first quarter ended June 30, 1996, the Company
paid approximately $0.4 million, net of sublease receipts, related to the
fiscal 1995 restructuring. Expenditures for facility closures, primarily
lease payments, are expected to continue through December 2001.
5. Contingencies
Interleaf's German subsidiary, Interleaf GmbH, has been notified that it is
liable for certain German withholding taxes related to payments remitted to
the United States from Germany in 1990. The Company is appealing this
assessment, however, approximately $1.1 million of the cash and cash
equivalents balance at June 30, 1997 has been restricted for potential
payment of the German withholding taxes. The Company believes the final
outcome will not have a material adverse effect on the financial position or
results of operations of the Company.
7
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Interleaf, Inc.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Overview
The Company recorded net income of $0.4 million, on revenues of $12.8 million,
for its first quarter ended June 30, 1997. This compares with a net loss of $3.8
million on revenues of $19.1 million for the same period a year ago. Much of the
decline in revenue is due to a decrease in product revenue (61% reduction)
caused by the ongoing maturation of the market for complex authoring products
which is a main product line at the Company. An effort to focus on developing
and supporting integrated document publishing ("IDP") applications for the
extended enterprise has been initiated. The improvement in net income for the
first quarter ended June 30, 1997 compared to the same period a year ago was due
to the impact of significantly reducing the cost structure of the Company during
the second and third quarters of fiscal 1997. During these two quarters in
fiscal 1997, employment was reduced and facilities were closed or downsized.
Revenues
Total product revenue decreased by $4.3 million or 61% for the first quarter
ended June 30, 1997 compared to the same period a year ago. Revenue declined in
all geographic regions. The continuing trend in the reduction in product license
revenue is due to several factors. The first is the decline in licensing of the
Company's UNIX-based high-end authoring products which is primarily attributable
to the increasing popularity of Windows-based publishing software, for which the
Company did not have any offerings until January of 1996. A second factor is the
saturation of UNIX-based high-end authoring software in the aerospace/defense
industry, where the Company had historically derived most of its authoring
product license revenue.
The Company is refocusing its business strategy on providing integrated document
publishing applications targeted toward specific vertical markets. While the
Company has built well-accepted integrated document publishing based solutions
for individual customers, it has not yet demonstrated the ability to develop,
market and sell IDP applications. There is no assurance that the Company will be
successful in implementing its strategy and, therefore, the Company is unable to
predict if or when product revenues will stabilize or grow. Additionally, since
the Company's services and maintenance revenue is largely dependent on new
product licenses, these revenue components have also experienced downward
pressure. This trend will continue unless product revenue stabilizes.
Maintenance revenue declined by $0.8 million or 11% for the first quarter ended
June 30, 1997 compared to the same period a year ago. Revenue declined in all
geographic areas. Future maintenance revenue is dependent on the Company's
ability to maintain its existing customer base and to increase maintenance
contract volume related to the new IDP application sales. This will be necessary
to offset the general downward pricing pressure on maintenance in the software
industry and customers perceived value of maintenance services.
Services revenue, consisting of consulting and customer training revenue,
declined by $1.1 million or 24% for the first quarter ended June 30, 1997
compared to the same period a year ago. Revenue declined in all geographic
areas. Future services revenue is dependent on the Company's ability to maintain
its existing customer base and to increase consulting and training contracts.
8
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Interleaf, Inc.
During fiscal 1998, the Company plans to develop several integrated document
publishing application offerings which solve specific business problems in
several industries. Growth in revenues during fiscal 1998 will be largely
dependent on improving sales force productivity, the effectiveness of the
Company's increased investment in marketing and lead generation programs,
customer acceptance of the new and enhanced software products planned to be
released in fiscal 1998 and the next year, and the Company's success in
leveraging software products with services to provide IDP solutions to its
customers. If the Company is unable to grow or stabilize its revenues in fiscal
1998, further expense reductions will be necessary in order to sustain
operations.
Costs of Revenues
Cost of product revenues includes amortization of capitalized software
development costs; product media, documentation materials, packaging and
shipping costs; and royalties paid for licensed technology. Cost of product
revenues decreased by $0.9 million or 55% for the first quarter ended June 30,
1997 versus the first quarter ended June 30, 1996. Included in the cost of
product revenues were amortization of capitalized software of $0.3 million for
the quarter ended June 30, 1997 and $0.9 million for the quarter ended June 30,
1996. The cost of maintenance revenue declined by $0.4 million or 28% for the
quarter ended June 30, 1997 versus the quarter ended June 30, 1996. The cost of
service revenue declined by $1.4 million or 32% for the quarter ended June 30,
1997 versus the quarter ended June 30, 1996. The decline in the costs of
revenues was impacted by the year to year lower revenue and the reduced expenses
due to the fiscal 1997 restructurings.
Operating Expenses
Selling, general and administrative ("SG&A") expenses decreased $5.8 million or
51% for the quarter ended June 30, 1997 versus the quarter ended June 30, 1996.
The decline was primarily due to significant personnel and facilities expense
reductions related to the Company's fiscal 1997 restructurings. During the
quarter, the Company reduced certain accrued liabilities based on an updated
assessment of accrual requirements and actual expenditures for certain operating
expenses, resulting in an increase to net income of $0.4 million.
Research and development ("R&D") expenses consist primarily of personnel
expenses to support product development offset by capitalized software
development costs. R&D expenses decreased by $1.8 million or 43% for the quarter
ended June 30, 1997 versus the quarter ended June 30, 1996.
No tax provision was required due to the losses sustained during the previous
periods.
Liquidity and Capital Resources
The Company had approximately $18.0 million of cash and cash equivalents at June
30, 1997, an increase of approximately $0.7 million from March 31, 1997. The
increase was primarily attributable to the cash flow from operations.
Interleaf's German subsidiary, Interleaf GmbH, has been notified that it is
liable for German withholding taxes related to payments remitted to the United
States from Germany in 1990. The Company is appealing this assessment. At June
30, 1997 and March 31, 1997, the Company had approximately $1.1 million of cash
restricted for potential payment of German withholding taxes.
During the quarter ended June 30, 1997, the Company paid approximately $1.0
million, net of sublease receipts, related to the fiscal 1997 and 1995
restructurings, versus $0.4 million for the quarter ended June 30, 1996, related
to the fiscal 1995 restructuring. Cash payments related to these restructurings,
the majority of which are related to operating lease payments, net of subleases,
are anticipated to continue until December 2001. All significant vacant space
under lease has been subleased, or is the subject of a letter of understanding.
9
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Interleaf, Inc.
In May 1995, the Company obtained a revolving line of credit from a major
commercial lender. Borrowings from the line of credit are secured by
substantially all domestic assets of the Company. At June 30, 1997 and 1996,
there were no loans outstanding under this line of credit. However, a letter of
credit for $0.7 million is issued and outstanding and, accordingly, the amount
available for borrowings was approximately $0.7 million (see Note 3 to the
Consolidated Financial Statements regarding borrowing limits and restrictive
covenants associated with the credit agreement). This agreement expired on
August 1, 1997 and approval of a new credit agreement was granted by the lender
on August 11, 1997. The lender and the Company expect to execute a final
agreement shortly.
While the Company showed a small profit in the first quarter of fiscal 1998,
during fiscal year 1997, the Company experienced a substantial decline in
revenues and a substantial loss from operations which led to a $10.9 million
restructuring charge. These factors resulted in a shareholders' deficit at March
31, 1997. Due to the downward trend in the Company's revenues, the Company is
unable to predict future revenues and, if and when, it will achieve a
sustainable profitable level of operations. In response to these matters, the
Company developed detailed plans relating to its fiscal 1998 operations which,
if realized, will restore the Company to profitable operations. Although no
assurances can be given that such plans will be achieved, management is
committed to taking all appropriate and necessary actions to effect timely cost
reductions in the event that anticipated revenue levels are not achieved. In the
event such actions are not successful in achieving breakeven or profitable
operations, additional financing may be needed. Under such circumstances, no
assurance can be given that such financing could be obtained or that it could be
obtained at commercially reasonable terms or without incurring substantial
dilution to existing shareholders. The financial statements do not include any
adjustments to reflect the possible effects of these uncertainties.
The Company believes its current cash balances and cash generated from
operations will be sufficient to meet the Company's liquidity needs for fiscal
1998 and the foreseeable future. The Company can only fund its long-term growth
through increasing revenues, combined with tightly managed cost controls.
The Company was notified by the NASDAQ that it no longer meets the technical
listing requirements of the NASDAQ's National Market since its net tangible
assets were below $4 million at March 31, 1997, and was requested by NASDAQ to
respond to this notice. The Company has responded to NASDAQ's inquiry and
requested a temporary waiver from this requirement.
Risk Factors
From time to time, information provided by the Company or statements made by its
employees may contain forward-looking information. The Company's actual future
results may differ materially from those projections or suggestions made in such
forward-looking information as a result of various potential risks and
uncertainties including, but not limited to, the factors discussed below.
The Company's future operating results are dependent on its ability to develop
and market integrated document publishing software products and services that
meet the changing needs of organizations with complex document publishing
requirements. There are numerous risks associated with this process, including
rapid technological change in the information technology industry and the
requirement to bring to market IDP applications that solve complicated business
needs in a timely manner. In addition, the existing document publishing,
electronic distribution, and document management markets are highly competitive.
Many of these competitors are larger and better funded than the Company. The
Company competes for sales of its software products on both an individual
product basis and integrated with services in large IDP solution sales.
Sales cycles associated with IDP solution sales are long because organizations
frequently require the Company to solve complex business problems that typically
involve reengineering of their business processes. In addition, a high
percentage of the Company's product license revenues are generally realized in
the last month of a fiscal quarter and can be difficult to predict until the end
of a fiscal quarter. Accordingly, given the Company's relatively fixed cost
structure, a shortfall or increase in product license revenue can have a
significant impact on the Company's operating results and liquidity.
10
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Interleaf, Inc.
The Company markets its software products and services worldwide. Global and/or
regional economic factors, currency exchange rate fluctuations, and potential
changes in laws and regulations affecting the Company's business could impact
the Company's financial condition or future operating results.
The market price of the Company's common stock may be volatile at times in
response to fluctuations in the Company's quarterly operating results, changes
in analysts' earnings estimates, market conditions in the computer software
industry, as well as general economic conditions and other factors external to
the Company.
PART II - OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits listed in the accompanying Exhibit Index are filed as
part of this Quarterly Report on Form 10-Q.
(b) No reports were filed on Form 8-K by the Company during the quarter
ended June 30, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERLEAF, INC.
August 13, 1997
/s/ Robert R. Langer
------------------------------------
Robert R. Langer
Vice President of Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting
Officer)
11
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Interleaf, Inc.
EXHIBIT INDEX
Exhibit Method of
Number Description Filing
------ ----------- ------
3(a) Restated Articles of Organization of the Company, as [xvi]
amended
3(b) By-Laws of the Company, as amended [v]
4(a) Specimen Certificate for Shares of the Company's [xiv]
Common Stock
4(b) Rights Agreement, dated July 15, 1988, between the [xv]
Company and the First National Bank of Boston
10(a) Company's 1983 Stock Option Plan, as amended [v]
10(a1) 1994 Employee Stock Option Plan, as amended [xiii]
10(a2) 1993 Incentive Stock Option Plan, as amended [viii]
10(b) Company's 1989 Director Stock Option Plan [i]
10(b2) Company's 1987 Employee Stock Purchase Plan, as [xiii]
amended
10(c) Company's 1989 Officer and Employee Severance [i]
Benefit Plans
10(cc) Company's 1993 Director Stock Option Plan [v]
10(d) Agreements between PruTech Research and Development [ii]
Partnership III and the Company, dated October 21, 1988.
10(e) Exclusive Marketing and Licensing Agreement, between [i]
Interleaf South America, Ltd. and the Company, and
related Option Agreement, dated
March 31, 1989.
10(f) Distribution and License Agreement between Interleaf [i]
Italia, S.r.l. and the Company, and related Joint
Venture Agreement, dated October 31, 1988.
10(g) Preferred Stock Purchase Agreements, for the [ii]
issuance of 2,142,857 shares
of the Company's Senior Series B Convertible
Preferred Stock, dated
September 29, 1989.
10(h) Notification to Preferred Shareholder of increase in [iii]
conversion ratio, dated May 18, 1992.
10(i) Lease of Prospect Place, Waltham, MA, between [iv]
Prospect Place Limited
Partnership and Interleaf, Inc., and related
Agreements, dated March 30, 1990.
10(j) Employment and severance agreement between the [vii]
Company and Edward Koepfler, the Company's President,
dated October 3, 1994.
10(k) Loan and Security Agreement between the Company and [ix]
Foothill Capital Corporation, dated May 2, 1995.
10(l) Employment and severance agreement between the [ix]
Company and G. Gordon M. Large, the Company's
Executive Vice President and Chief Financial
Officer, dated June 5, 1995.
10(m) Net Lease, dated August 14, 1995, between Principal [x]
Mutual Insurance Company and the Company.
10(n) Sublease, dated September 15, 1995, between [x]
Parametric Technology Corporation and the Company.
10(o) Employment and severance agreement between the [xi]
Company and Mark Cieplik, the Company's Vice President,
Americas, dated March 17, 1995.
10(p) Agreement between PruTech Research and Development [xii]
Partnership III and the Company, dated November 14,
1995.
10(q) Series C Preferred Stock Agreement between [xiii]
Interleaf, Inc. and Lindner Investments, dated
October 14, 1996.
12
<PAGE>
Exhibit Method of
Number Description Filing
------ ----------- ------
10(r) Letter Agreement between the Company and Robert M.
Stoddard, as the Company's then Vice President of [xvi]
Finance and Administration, and Chief Financial
Officer, dated November 11, 1996.
10(s) Letter Agreement between the Company and Rory J.
Cowan, the Company's President and Chief Executive [xvi]
Officer, dated November 15, 1996, concerning his
employment and compensation with the Company.
10(t) Letter Agreement between the Company and Mark H.
Cieplik, the Company's Vice President of Sales, [xvi]
dated November 15, 1996, concerning his employment
and compensation with the Company.
10(u) Letter Agreement between the Company and Michael L.
Shanker, the Company's Vice President of [xvi]
Professional Services, dated November 15, 1996,
concerning his employment and compensation with the
Company.
10(v) Letter Agreement between the Company and Stephen J.
Hill, the Company's Vice President of Europe, dated [xvi]
November 15, 1996, concerning his employment and
compensation with the Company.
10(w) Resignation Agreement and Release and Employment
Agreement between Ed Koepfler, the Company's former [xvi]
President and Chief Executive Officer, and the
Company, dated November 15, 1996, concerning his
employment and severance with the Company.
10(w1) Resignation Agreement and Release and Employment
Agreement between G. Gordon M. Large, the Company's
former Executive Vice President of Finance and [xvi]
Administration and Chief Financial Officer, and the
Company, dated November 12, 1996, concerning his
employment and severance with the Company.
10(x) Resignation Agreement and Release and Employment
Agreement between Stan Douglas, the Company's former [xvi]
Vice President of Engineering Operations, and the
Company, dated November 15, 1996, concerning his
employment and severance with the Company.
10(y) Terms of Engagement between the Company and Robert
R. Langer, Vice President of Finance and [xvi]
Administration and Chief Financial Officer, dated
December 30, 1996, concerning his employment with
the Company.
10(z) Offer Letter and Acceptance between Jaime W.
Ellertson, the Company's President and Chief [xvi]
Executive Officer, and the Company, dated
January 9, 1997.
10(z1) Offer Letter and Acceptance between Michael L. Included
Torto, the Company's Vice President, Marketing, and
the Company, dated March 28, 1997.
10(z2) Offer Letter and Acceptance between Robert A. Included
Fisher, the Company's Vice President, Customer
Support, and the Company, dated April 17, 1997.
10(z3) Offer Letter and Acceptance between Christopher Included
McKee, the Company's Vice President, Europe,
Middle East, Africa, and the Company, dated
May 13, 1997.
10(z4) Offer Letter and Acceptance between Gary R. Included
Phillips, the Company's Vice President, North
American Sales, and the Company, dated May 22, 1997.
10(z5) Resignation Agreement between Mark H. Cieplik, the Included
Company's former Vice President, Americas, and the
Company, dated May 29, 1997, concerning his
employment and severance with the Company.
13
<PAGE>
Exhibit Method of
Number Description Filing
------ ----------- ------
10(z6) Resignation Agreement between Stephen J. Hill, the Included
Company's former Vice President, Europe, and the
Company, dated June 5, 1997, concerning his
employment and severance with the Company.
11 Computation of Earnings Per Share Included
27 Financial Data Schedule Included
- ------------------------
[i] Incorporated herein by reference is the applicable Exhibit to Company's
Annual Report on Form 10-K for the year ended March 31, 1989, File Number
0-14713.
[ii] Incorporated herein by reference is the applicable Exhibit to Company's
Annual Report on Form 10-K for the year ended March 31, 1990, File Number
0-14713.
[iii] Incorporated herein by reference is the applicable Exhibit to Company's
Annual Report on Form 10-K for the year ended March 31, 1992, File Number
0-14713.
[iv] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 8-K filed April 13, 1990, File Number 0-14713.
[v] Incorporated herein by reference is the applicable Exhibit to Company's
Annual Report on Form 10-K for the year ended March 31, 1994, File Number
0-14713.
[vi] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended September 30, 1994, File Number
0-14713.
[vii] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended December 31, 1994, File Number
0-14713.
[viii] Incorporated herein by reference is the applicable Exhibit to Company's
Annual Report on Form 10-K for the year ended March 31, 1995, File Number
0-14713.
[ix] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended June 30, 1995, File Number 0-14713.
[x] Incorporated herein by reference is the applicable Exhibit to Company's
Registration Statement on Form S-2, File Number 33-63785.
[xi] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended September 30, 1995, File Number
0-14713.
[xii] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended December 31, 1995, File Number
0-14713.
[xiii] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended September 30, 1996, File Number
0-14713.
[xiv] Incorporated herein by reference is the applicable Exhibit to Company's
Registration Statement on Form S-1, File Number 33-5743.
[xv] Incorporated herein by reference is Exhibit 1 to Company's Registration
Statement on Form 8-A, filed July 27, 1988.
[xvi] Incorporated herein by reference is the applicable Exhibit to Company's
Report on Form 10-Q for the quarter ended December 31, 1996, File Number
0-14713.
14
Exhibit 10(z1)
March 28, 1997
Mr. Michael Torto
32 Boston Road
Westford, MA 01886
Dear Mike:
I am delighted to offer you the position of Vice President of Marketing for
Interleaf, Inc. Our company is at a very important juncture. Tremendous
opportunities for success are within our sights, but there is work to be done.
Your credentials and energy are very impressive. I am sure that you will have a
positive influence on our results.
The Vice President of Marketing position is one of the most important officer
level positions in our company. You will be responsible for all aspects of
marketing strategy, planning, programming and organizational development. As a
direct report to the Chief Executive Officer, you will also be asked to
participate in developing our long-term strategy and operating plans. The base
salary for the Vice President of Marketing position is $165,000. In addition to
the base salary, we have developed an incentive compensation program that is
designed to reward you for meeting quarterly performance goals. The incentive
compensation program will provide you with a bonus of $100,000 upon achievement
of mutually agreed to revenue and profit targets and an escalation bonus should
you exceed the target. The incentive bonuses will be distributed to you in
quarterly amounts of $25,000 for 100% revenue and profit attainment. For
under/over attainment, the bonus payment will be made utilizing the following
formula:
At 80% of goal for the quarter, you will be paid $15,000.
At 90% of goal for the quarter, you will be paid $20,000.
At 100% of goal for the quarter, you will be paid $25,000.
At 125% of goal for the quarter, you will receive $30,000.
At each 25% above 125% of goal for the quarter, you will
receive $10,000.
The total annual on target compensation for this position is $265,000. The
incentive compensation goals will be determined as part of the planning process
that is currently underway. I am excited to have you participate in this
planning process to insure that the goals that are developed reflect your input.
Please note that there is no limit to your incentive compensation. I fully
intend to reward you for achievement above and beyond the defined targets.
<PAGE>
I am also delighted to offer you 200,000 stock options. The price of the options
will be based upon the then current price on your start date. The options will
vest over a 4 year period with additional provision made for a 75% vesting of
all your shares in the event of a majority acquisition of Interleaf. As we
discussed, I am fully committed to having you achieve your long-term
compensation goals. If we can demonstrate results that create even moderate
market demand for the Interleaf stock, you could realize your goal of $1,000,000
in personal worth within the four year period.
Your compensation will also include a complete executive benefits program.
Details regarding this program are appended to the offer.
I am very much looking forward to your joining our team. I know that you will do
an outstanding job in this critical role. Your expected start date is April 14,
1997. It is critical that you join us for the AIIM conference. Please indicate
your acceptance and agreement with the terms of this employment offer by signing
below. Again, we look forward to your joining the team.
Sincerely,
/s/ Robert Langer
- -----------------
Robert Langer
Chief Financial Officer
Accepted:
/s/ Michael Torto 3/29/97
- ----------------------------------
Michael Torto Date:
Exhibit 10 (z2)
April 17, 1997
Mr. Randy Fisher
12 Colonial Drive
Westford, MA 01886
Dear Randy,
It is with pleasure that I offer you the opportunity to re-join Interleaf as
Vice President, Worldwide Customer Support. In this position you will be
responsible for all customer support activities worldwide, as well as our
training and education services. You will participate on the Executive
Management team and report directly to the Vice President of Development. I am
enthusiastic about your return and I know I speak for the rest of the Interleaf
team in welcoming you back to the company.
The following outlines the terms of our offer.
Compensation
Base salary of $140,000 per year with a bonus potential of $30,000 per year
based on the company's achievement of a mutually agreed profit plan.
Three-fourths of the bonus is based on achievement of the annual goal. The other
one-fourth is divided into four bonus payments and paid each quarter based on
your department's attainment of planned quarterly goals.
Equity Participation
In addition to your base salary, the company would provide you a non-statutory
option agreement for the purchase of 100,000 shares of Interleaf common stock,
pending Board of Directors approval. The price will be set at the fair market
value of Interleaf common stock on the day you start your employment with
Interleaf. This option will vest over a four year period.
Of course, there is no guarantee that our stock price will increase, however,
should we get the stock price back to a $11 per share level, that would give you
a $650,000 gain on your options (based on closing price as of April 17, 1997).
Benefits
Interleaf will provide life insurance in the amount of $300,000, as well as
health, dental, short and long-term disability benefits.
Should your employment end for any reason, other than cause, Interleaf will
guarantee your base pay and benefits for a period of 6 months.
Randy, I am really looking forward to your participation on the Interleaf team.
I believe that while there are challenges ahead, Interleaf offers outstanding
opportunities. Assuming these terms and conditions are acceptable to you, please
sign in the appropriate place below and return this letter to me no later than
April 25, 1997.
Sincerely,
/s/ Jaime W. Ellertson
- ----------------------
Jaime W. Ellertson
President and Chief Executive Officer
Accepted:
/s/ Robert Fisher April 17, 1997
- -------------------------------------------
Robert Fisher Date
Exhibit 10(z3)
May 13, 1997
Mr. Christopher McKee
3 Queen Anne's Grove
London W4 1HW
United Kingdom
Dear Chris,
I am delighted to offer you the position of Vice President of Europe, Middle
East and Africa for Interleaf, Inc. Our company is at a very important juncture.
Tremendous opportunities for success are within our sights, but there is work to
be done. Your credentials and energy are very impressive. I am sure that you
will have a positive influence on our results.
The Position
The Vice President of Europe, Middle East and Africa position is one of the most
important officer level positions in our company. You will be responsible for
all aspects of our organization in Europe, Middle East and Africa. As a direct
report to the Chief Executive Officer, you will also be asked to participate in
developing our long-term strategy and operating plans.
Compensation Package
The base salary for the Vice President of Europe, Middle East and Africa
position is (pounds)95,000 (Pounds Sterling) with a quarterly non-recoverable
draw of (pounds)5,000 (Pounds Sterling) against your annual incentive
compensation pool of (pounds)110,000 (Pounds Sterling).
Your incentive compensation program is designed to reward you for meeting
quarterly performance goals. The incentive compensation program will provide you
with a bonus pool of (pounds)110,000 upon achievement of mutually agreed to
revenue and profit targets, and an escalation bonus should you exceed the
target. The incentive bonus will be distributed to you in quarterly amounts of
(pounds)25,000 for 100% revenue and profit attainment; for under/over attainment
the bonus payment will be made utilizing the following formula:
At 80% of goal for the quarter, you will be paid (pounds)15,000
At 90% of goal for the quarter, you will be paid (pounds)18,750
At 95% of goal for the quarter, you will be paid (pounds)22,500
At 100% of goal for the quarter you will be paid (pounds)25,000
At 125% of goal for the quarter, you will receive (pounds)31,250
At each 15% above 125% of goal for the quarter, you will receive
(pounds)10,000 additional bonus.
<PAGE>
Mr. Christopher McKee
May 13, 1997
Page Two
In addition, for reaching 100% of your targeted annual revenue and profit as
Vice President of Europe, Middle East and Africa, you will receive an additional
(pounds)10,000 bonus amount. The total annual on target earnings (OTE) for this
position is 200,000 (Pounds Sterling). The incentive compensation goals will be
determined as part of the planning process to insure that the goals that are
developed reflect your input. Please note that there is no limit to your
incentive compensation. I fully intend to reward you for achievement above and
beyond the defined targets.
Equity Participation
I am also delighted to offer you 150,000 stock options. The price of the options
will be based upon the then current price on your start date. The options will
vest over a four-year period. As we discussed, I am fully committed to having
you achieve your long-term compensation goals.
In the unlikely circumstance that you are terminated without cause, the company
will provide you a notice period of six (6) months and require a similar period
should you wish to end your employment with the company.
Executive Benefits Package
Your compensation will also include participation in our standard executive
benefits program. In summary, our European executives receive the following
package:
o Car allowance of (pounds)1,500 per month.
o Free fuel (reimbursement of fuel consumed for business - taxable).
o Private medical insurance with BUPA.
o Pension of 3% of base salary.
o Reimbursement of cellular telephone for business use.
o Laptop computer for business use.
I am very much looking forward to your joining our team. I know that you will do
an outstanding job in this critical role. Your expected start date is May 26,
1997. Please indicate your acceptance and agreement with the terms of this
employment offer by signing below. Again, we look forward to your joining the
team.
Sincerely,
/s/ Jaime W. Ellertson
- ----------------------
Jaime W. Ellertson
President and Chief Executive Officer
Accepted:
/s/ Christopher McKee May 13, 1997
- ------------------------------------
Christopher McKee Date
Exhibit 10(z4)
May 22, 1997
Mr. Gary R. Phillips
5 Deer Pond Road
Sudbury, MA 01776
Dear Gary:
I am delighted to offer you the position of Vice President, North American Sales
for Interleaf, Inc. Our company is at a very important juncture. Tremendous
opportunities for success are within our sights, but there is work to be done.
Your credentials and energy are very impressive. I am sure that you will have a
positive influence on our results.
The Position
The Vice President, North American Sales position is one of the most important
officer level positions in our company. You will be responsible for all aspects
of our sales organization in North America. As a direct report to the Chief
Executive Officer, you will also be asked to participate in developing our
long-term strategy and operating plans and participate on the senior management
team.
Compensation Package
The base salary for the Vice President, North American Sales position is
$150,000 per annum and an annual incentive compensation pool with total on
target earnings of $250,000.
Your incentive compensation program is designed to reward you for meeting
quarterly and annual performance goals. The incentive compensation program will
provide you with a bonus pool of $100,000 upon achievement of mutually agreed to
revenue and profit targets, and an escalation bonus should you exceed the
target. The incentive bonus will be distributed to you in quarterly amounts of
$18,750 for 100% revenue and profit attainment; for under/over attainment, the
bonus payment will be made utilizing the following formula:
At 75% of goal for the quarter, you will be paid $9,000
At 80% of goal for the quarter, you will be paid $11,000
At 90% of goal for the quarter, you will be paid $13,000
At 95% of goal for the quarter, you will be paid $15,000
At 100% of goal for the quarter, you will be paid $18,500
At 125% of goal for the quarter, you will receive $20,000
At each 10% above 125% of goal for the quarter, you will
receive $10,000 additional bonus.
<PAGE>
Mr. Gary R. Phillips
May 22, 1997
Page Two
In addition, for reaching 100% of your targeted annual revenue and profit as
Vice President, North American Sales, you will receive an additional $25,000
bonus amount. The total annual on target earnings (OTE) for this position is
$250,000. The incentive compensation goals will be determined as part of the
planning process that is currently underway. I am excited to have you
participate in this planning process to insure that the goals that are developed
reflect your input. Please note that there is no limit to your incentive
compensation. I fully intend to reward you for achievement above and beyond the
defined targets.
Equity Participation
I am also delighted to offer you 150,000 stock options. The price of the options
will be based upon the then current price on your start date. The options will
vest over a four-year period. As we discussed, I am fully committed to having
you achieve your long-term compensation goals.
In the unlikely circumstance that you are terminated without cause, the company
will provide you a notice period of six (6) months and require a similar period
should you wish to end your employment with the company.
Benefits Package
Your compensation will also include participation in our standard corporate
benefits program, a summary of which is attached.
I am very much looking forward to your joining our team. I know that you will do
an outstanding job in this critical role. Your expected start date is June 9,
1997* Please indicate your acceptance and agreement with the terms of this
employment offer by signing below. Again, we look forward to your joining the
team.
Sincerely,
/s/ Jaime W. Ellertson
- ----------------------
Jaime W. Ellertson
President and Chief Executive Officer
Accepted:
/s/ Gary R. Phillips 5/22/97
- -----------------------------------------
Gary R. Phillips Date
* If available, will start prior to 9th.
Interleaf will provide you with a signing bonus of $25,000 upon your
accepting and start of employment under terms specified in
Attachment A.
Exhibit 10(z5)
May 29, 1997
Mr. Mark H. Cieplik
23366 N. Chesapeake Drive
Lake Barrington, IL 60010
RE: Resignation Agreement and Release
Dear Mark:
This letter contains the terms of your resignation and departure from Interleaf
to be effective June 4, 1997 ("Resignation Date") as Vice President, Americas.
From now to your Resignation Date, you shall perform your current functions of
managing all direct and indirect sales in North America and assist in the
transition of your functions at my direction. You shall also specifically
perform the following:
(a) complete all personnel reviews and review them with me or my
designee,
(b) you will assist and close a commitment with our partner, ISI, to
purchase $350K plus of software (with current payment terms),
(c) complete a detailed forecast for Q1 1998 and Q2 1998,
(d) complete all Business Plans and Budgets for the U.S. Sales
organization, gain approval, and brief sales people on such Plans
and Budgets, and
(e) work with Bill Gallagher to clear up any outstanding issues relating
to BTG Pre-Pay I and ensure payments are up-to-date.
You, of course, agree to abide by your non-compete and confidentiality
agreements.
Upon completion of the above listed responsibilities, as a bonus, you shall
receive a lump sum payment of $20,000, payable June 16, 1997 or upon completion
of the above (under the condition that all items be complete prior to June 28,
1997).
In the event you secure a position with another firm prior to June 15, 1997:
(1) you will notify Interleaf immediately,
(2) your resignation date will be adjusted appropriately,
(3) the $20,000 bonus will be paid on June 16, 1997 if you have
satisfactorily completed items (a) through (e) above.
From the Resignation Date, you have the option of continuing your present
coverage under the COBRA provision through Interleaf's group plan at your own
expense for up to 18 months, or until you have the option of obtaining coverage
through other employment, whichever comes first. You have sixty (60) days from
receipt of your last payment to elect this coverage, at Interleaf's then current
COBRA rates.
To exercise your continuation option, you must pay retroactively to your last
day of coverage. Subsequent payments require the monthly amount to be paid,
prior to the first day of the month for which coverage is to be purchased.
Failure to make a payment on time will result in automatic removal from the
Interleaf Insurance Plan.
You will be notified by EBPA of your option to continue coverage. EBPA will also
provide the necessary forms to complete in order to elect continued coverage.
Please keep in mind that the continuation option refers only to your health and
dental benefits.
<PAGE>
Exhibit 10(z5)
You will have three months from your Resignation Date within which to exercise
your vested stock options or forfeit all rights to them. Any options not vested
as of your Resignation Date, will be cancelled. (See below.)
Vested
Number Vesting Shares Shares
Grant Date Grant Price of Shares Period Exercised Available
4/27/95 $2.56 110,000 4 years -0- 55,000
Please notify the Human Resources Department, in writing, of any change of
address through 1997 and 1998. Your W-2 form and any further correspondence will
be sent to the most recent address on file.
Please review the following information, sign and return to me within 45 days.
Sincerely yours,
/s/ Jaime W. Ellertson
- ----------------------
Jaime W. Ellertson
President and Chief Executive Officer
- --------------------------------------------------------------------------------
Release
In consideration of receiving compensation and benefits hereunder, I hereby
forever release Interleaf, Inc., its directors, officers, and employees
("Interleaf") from any and all demands, claims and causes of actions which I
have or may have against Interleaf arising out of or in any way related to my
employment with Interleaf, including but not limited to, Federal, State or local
discrimination laws, regulations, executive orders or other requirements
including any actions related to age (including any claims related to ADEA),
sex, sexual orientation, race or handicap discrimination.
I agree that I have read the foregoing, have been given the opportunity to have
it reviewed by an attorney of my choice and agree to the conditions and
obligations as set forth. I understand that I have 7 days from the date of
execution to revoke this agreement.
/s/ Mark H. Cieplik Date: 5/29/97
- -------------------------------------
Mark H. Cieplik
Exhibit 10(z6)
5th June 1997
Mr. Stephen J. Hill
Byways
Woodlands Drive
Farnham
Surrey
GU10 9SJ
Dear Stephen:
WITHOUT PREJUDICE
We refer to our meeting on 16th May when it was mutually agreed that your
employment with us would terminate on Friday 6th June subject to the following
terms and conditions:
1. Both parties waive their rights to notice under the Contract of
Employment dated 27th June 1994.
2. a) We will pay you the agreed sum of $215,000 at an exchange rate of
(pounds)1.56/$. This sum is agreed as being $85,000 for compensation
of loss of office with us and with the Interleaf Group of companies.
The balance being $130,000 for payment in lieu of notice and all
contractual benefits/agreements with the exclusion of item 4 of this
agreement.
b) The said amount of $215,000 will be payable to you on Monday 9th
June in sterling by company cheque provided that you have signed
this agreement.
c) We will require you devote up to 5 working days as reasonably
requested during the next 30 day period (commencing on 9th June) to
assist Richard Barnett and Interleaf in an orderly management
transition.
d) We are currently investigating payment of the maximum allowance
tax free for "compensation of loss of office".
3. a) You may have the use of equipment as listed in sub paragraph c)
below ("the Equipment") until the 16th November 1997, or such date
as you commence.
b) On or before the Return Date you must return all the Equipment to
us at Persimmon House in the same condition as at the date hereof,
and in any event in good working order. Proof of return will only be
evidenced by a receipt to this effect signed by a director or by a
personnel officer.
<PAGE>
c) The Equipment loaned to you is as follows:
o Fax machine
o Compaq LTE 5100 lap top computer - serial number
J607HQU70389
o Mouse
o Toshiba TF461 Colour fax/printer/scanner
o 5 colour cartridges
o Printer cable
o Modem and network card
o BT response 300 combine telephone/answer phone
o Ericsson GSM mobile phone
o Mitsubishi MT7 mobile phone
d) Interleaf will not be responsible for the running costs of the
Equipment from the date hereof until returned to Interleaf in
accordance with paragraph 3(b) above. Running costs will include
repair and maintenance, cost of sending faxes or making telephone
calls and line rental hire cost and all other costs attributable to
the Equipment. Any invoices received relating to the running costs
of the Equipment are payable by you within 7 days of receipt.
4. We will pay a lump sum in respect of your pension, medical and life
insurance benefits for a period of six months in your June salary.
5. You will return to us your AT&T phone card, American Express card,
fuel card, company keys and swipe card immediately.
6. You must liaise with Richard Barnett on the following issues:
a) You will resign from all directorships or as an officer of
Interleaf UK Ltd, Interleaf GmbH, Interleaf France and all
directorships of Interleaf, Inc., and its subsidiaries immediately
by signing letters of resignation, waiving any rights you may have
to compensate for loss of office.
b) You will sign off the company accounts for the year ending March
31st, 1997.
c) You will sign any forms required for Interleaf's bank mandate and
any ancillary forms.
d) You will sign any forms or documents required by Interleaf in
relation to the above sub-paragraphs.
7. You will strictly comply with the post termination provisions of
your contract in particular condition 15 (ii) and (iii) and
condition 17, a copy of which can be provided.
8. In agreeing to the above terms, we Interleaf, agree with you, that
we have no claims against you whatsoever save in respect of this
Agreement.
<PAGE>
9. In agreeing to the above terms, I, Stephen J. Hill, agree to
formally compromise my right to claim unfair dismissal and to waive
all and any other claims or rights of action (whether statutory,
contractual or otherwise) which I may have or may in the future have
under UK law, any State or Federal law of the USA or the Treaty of
Rome against any company in the Interleaf Group of Companies or any
employee, agent, or officer of any such Company, whether relating to
my employment, its termination, my holding or loss of office in
otherwise.
The termination of your employment and the terms set out in this letter are
conditional on the following:
a) the receipt of your signed letter of resignation as a director of
the Companies referred to in 6 (a) above, in the form provided;
b) the receipt of a counter-signed copy of this letter which will
constitute open correspondence from the date on which the letter is
agreed by you.
Please confirm your acceptance of these terms by countersigning and returning
the enclosed copy of this letter in the space provided and arranging for your
solicitor to complete a certificate in the form attached hereto, after you have
obtained advice from him as to the terms and effect of this agreement and, in
particular, your liability to pursue rights before an industrial tribunal
arising our of your employment, directorship or their termination.
Yours sincerely,
/s/ Jaime Ellertson
- -------------------
Jaime Ellertson
CEO
<PAGE>
I, STEPHEN J. HILL, confirm the following:
a) Acceptance of the tems and conditions above and to formally compromise my
right to claim unfair dismissal and to waive all and any other claims of
action (wheter statutory, contractual or otherwise) which I have or may
have in the future under UK law, any State or Federal law of the USA, or
the Treaty of Rome against any Company in the Interleaf Group of Companies
or any employee, agent or officer of any such company whether relating to
my employment, its termination, my holding or loss of office or otherwise.
b) I have taken independent legal advice from _____________________ (name of
solicitor), a solicitor holding a current practitioners certificate of the
firm ____________________ and I have been advised that the said firm holds
a Professional Indemnity Insurance Policy in respect of the advice given to
me.
c) _____________________ (name of the solicitor) of ______________________
(name of firm) has explained all of my rights in relation to the potential
claims that I may have had in respect of my contract of employment and its
termination including rights of unfair dismissal and has explained to me
the consequences and effect of signing this letter--in that I am agreeing
not to pursue any claims before an Industrial Tribunal or any Court of Law.
STEPHEN HILL having received a certificate from _______________________ (name of
solicitor) in the form attached confirms that the condition regulating
Compromise Agreements under Section 203 of the Employment Rights Act 1996 are
satisfied by this letter of Agreement.
/s/ Stephen J. Hill
- -------------------
Stephen J. Hill
June 9, 1997
- ------------
Date
Interleaf, Inc.
EXHIBIT 11-COMPUTATION OF EARNINGS PER SHARE
Three months ended
June 30
1997 1996
---- ----
In thousands, except for per share amounts (unaudited)
Primary
Weighted average shares outstanding of Common Stock 17,624 16,998
Dilutive Senior Series B and Senior
Series C Convertible Preferred Stock 5,178 -
Dilutive stock options 147 -
Dilutive stock purchase warrants - -
Dilutive stock purchase plan rights 25 -
------- -------
Total 22,974 16,998
======= =======
$ 386 $(3,800)
======= =======
Net income (loss)
Net income (loss) per share $ 0.02 $ (0.22)
======= =======
Fully Diluted
Weighted average shares outstanding of Common Stock 17,624 16,998
Dilutive Senior Series B and Senior Series C
Convertible Preferred Stock 5,178 -
Dilutive stock options 300 -
Dilutive stock purchase warrants - -
Dilutive stock purchase plan rights 32 -
------- -------
23,134 16,998
------- -------
Total
$ 386 $(3,800)
======= =======
Net income (loss)
Net income (loss) per share $ 0.02 $ (0.22)
======= =======
The dilutive effect of stock options, stock purchase warrants, and stock
purchase plan rights are calculated using the treasury stock method. Under this
method, these common stock equivalents are assumed to be exercised and proceeds
from the exercise are assumed to be used to repurchase common stock at the
average market price for primary income (loss) per share and the higher of the
end of the period or average market price for fully diluted income (loss) per
share. The dilutive effect of Convertible Preferred Stock is calculated using
the if-converted method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 16 and 17 of the Company's Form 10-K for the year ended March 31, 1997,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997
<CASH> 17,349 18,031
<SECURITIES> 0 0
<RECEIVABLES> 12,730 9,299
<ALLOWANCES> 1,371 2,877
<INVENTORY> 205 179
<CURRENT-ASSETS> 30,212 27,485
<PP&E> 45,829 45,926
<DEPRECIATION> 40,866 41,503
<TOTAL-ASSETS> 37,900 34,298
<CURRENT-LIABILITIES> 38,527 31,086
<BONDS> 0 0
0 0
187 187
<COMMON> 175 177
<OTHER-SE> (1,134) (616)
<TOTAL-LIABILITY-AND-EQUITY> 37,900 34,298
<SALES> 18,821 2,742
<TOTAL-REVENUES> 64,823 12,826
<CGS> 7,501 730
<TOTAL-COSTS> 28,104 4,515
<OTHER-EXPENSES> 54,624 <F1> 7,897
<LOSS-PROVISION> 304 0
<INTEREST-EXPENSE> 400 312
<INCOME-PRETAX> (29,550) <F1> 386
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (29,550) <F1> 386
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (29,550) <F1> 386
<EPS-PRIMARY> (0.17) 0.02
<EPS-DILUTED> (0.17) 0.02
<FN>
<F1>
</FN>
</TABLE>
