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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION STATEMENT NO. 333-41133
PROSPECTUS SUPPLEMENT NO. 2
(To Prospectus Dated December 4, 1997)
5,592,000 Shares
INTERLEAF, INC.
Common Stock
This Prospectus Supplement supplements information contained in that
certain Prospectus dated December 4, 1997, as supplemented on August 3, 1998
(the "Prospectus") of Interleaf, Inc. (the "Company"), relating to the shares of
Common Stock issuable upon conversion of the Series 6% Convertible Preferred
Stock, $.01 par value per share by the Selling Shareholders. This Prospectus
Supplement is not complete without, and may not be delivered or utilized except
in connection with, the Prospectus, including any amendments or supplements
thereto. Capitalized terms used herein but not defined have the meanings
assigned to such terms in the Prospectus.
On November 3, 1998, the Company entered into an agreement with the
holders of 5,487 (or 79%) of the 6,987 shares then outstanding of the 6%
Convertible Preferred Stock under which those persons agreed to convert all of
their shares of 6% Convertible Preferred Stock in exchange for an aggregate
total of $2,194,800 in cash and 3,525,811 shares of the Company's Common Stock.
The transaction was completed on November 18, 1998.
Under the terms of the agreement, each of the participating holders
redeemed 40% of its shares of 6% Convertible Preferred Stock for $1,000 per
share in cash (equal to the amount of the liquidation preference) plus $150.00
per share in the form of additional Common Stock valued at $1.00 per share. In
addition, each participating holder converted 60% of its shares of 6%
Convertible Preferred Stock into Common Stock, together with accrued dividends
to the date of conversion, based upon a conversion price of $1.10 per share. The
shares of Common Stock received upon such conversion will be sold pursuant to
this Prospectus. The shares received upon redemption of the other 40% of the 6%
Convertible Preferred Stock are not being sold pursuant to this Prospectus.
One remaining holder of the 6% Convertible Preferred Stock, SIL
Nominees, Ltd., elected not to participate in the restructuring transaction and
will continue to hold its shares of 6% Convertible Preferred Stock in accordance
with their original terms.
Prospectus Supplement dated November ___, 1998
