<PAGE>
As filed with the Securities and Exchange Commission on March 18, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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INTERLEAF, INC.
(Exact name of Registrant as Specified in its Charter)
Massachusetts 04-2729042
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
62 Fourth Avenue
Waltham, Massachusetts 02451
(781) 290-0710
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------------------------
Craig Newfield, Esq.
Interleaf, Inc.
62 Fourth Avenue
Waltham, Massachusetts 02451
(781) 290-0710
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------------------------
Copies to:
David Murphree, Esq.
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
Tel: (617) 856-8200
Fax: (617) 856-8201
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement. If the only
securities being registered on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box./ /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under Securities Act of 1933,
please check the following box./X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering./ /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
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<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------ --------------------- ---------------------- --------------------------- --------------------
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AMOUNT PROPOSED PROPOSED
TITLE OF SHARES TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- ------------------------------------ --------------------- ---------------------- --------------------------- --------------------
- ------------------------------------ --------------------- ---------------------- --------------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 432,388 $3 3/4 $1,621,455 $451
- ------------------------------------ --------------------- ---------------------- --------------------------- --------------------
- ------------------------------------ --------------------- ---------------------- --------------------------- --------------------
</TABLE>
(1) Estimated solely for purposes of calculating the Registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Based upon
the average of the high and low price of the Common Stock as reported
on the Nasdaq National Market on March 12, 1999.
------------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
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Preliminary prospectus dated March 18, 1999, Subject to Completion
INTERLEAF, INC.
432,388 Shares of Common Stock
This prospectus relates to the resale of up to 432,388 shares of the common
stock of Interleaf. These shares are already outstanding and may be offered for
sale from time to time for the accounts of the selling stockholders listed on
page 6 of this prospectus.
The common stock presently is traded on the Nasdaq National Market under the
symbol "LEAF". On March 12, 1999, the last reported sale price of the common
stock on the Nasdaq National Market was $3 9/16 per share.
An investment in the common stock offered under this prospectus involves a high
degree of risk. See "Risk Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is March 18, 1999.
The information contained in this prospectus is not complete and may be changed.
The securities may not be sold until the related registration statement filed
with the Securities and Exchange Commission or any applicable state securities
commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
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<PAGE>
This prospectus is part of a registration statement that we
filed with the SEC. You should rely only on the information or
representations provided in this prospectus. We have
authorized no one to provide you with different information.
We are not making an offer in any jurisdiction where the
offering is not permitted.
TABLE OF CONTENTS PAGE
Summary................................................ 2
Risk Factors........................................... 3
Use of Proceeds........................................ 5
Selling Stockholders................................... 5
Plan of Distribution................................... 6
Where You Can Find More Information.................... 8
Legal Matters.......................................... 8
Experts................................................ 8
INTERLEAF, INC.
432,388 shares of common stock
PROSPECTUS
March 18, 1999
INTERLEAF, INC.
432,388 Shares of common stock
PROSPECTUS
March 18, 1999
<PAGE>
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SUMMARY
About Interleaf
Interleaf and its subsidiaries develop and market software products used in the
creation, publication, management and distribution of information and documents
in electronic and paper form. Interleaf's software products enable customers to
compose, edit, view, print, control, manage and distribute information and
documents on a cost-effective and efficient basis.
Interleaf's core product line includes:
- - electronic publishing;
- - document management systems;
- - intranet publishing; and
- - content management software.
Interleaf provides technical support and maintenance to its customers utilizing
its software products. In addition, it provides consulting, custom application
and implementation services to its customers.
Interleaf's principal executive offices are located at 62 Fourth Avenue,
Waltham, Massachusetts 02451, and its telephone number is (781) 290-0710.
Summary of the Offering
Securities Offered: 432,388 shares of common stock.
Plan of Distribution: The shares of common stock covered by this prospectus
may be offered from time to time by the selling
stockholders. See "Plan of Distribution."
Trading: The common stock presently is traded on the Nasdaq
National Market under the symbol "LEAF."
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<PAGE>
RISK FACTORS
The common stock offered under this prospectus involves a high degree of risk.
You should carefully consider the following risk factors in addition to the
other information in this prospectus before deciding to purchase the common
stock.
IF INTERLEAF DOES NOT SUCCESSFULLY DEVELOP NEW PRODUCTS AND MARKETS, THEN
REVENUES MAY CONTINUE TO DECLINE.
Interleaf's revenues have declined over the last several years as a result of
both the maturation and saturation of the market for electronic publishing
software which historically was the focus of its business and the increased
popularity of low cost versions of Windows-based authoring software. Unless
Interleaf successfully develops new products and exploits new markets, revenues
can be expected to continue to decline.
INTERLEAF IS DEPENDENT ON THE SUCCESS OF ITS NEW ENTERPRISE CONTENT MANAGEMENT
PRODUCTS AND SERVICES.
Interleaf's strategy for future growth depends upon the successful development,
introduction and customer acceptance of new and improved products and services
such as its enterprise content management products and services. Enterprise
content management refers to processes and technology which enable a business
enterprise to create and package information content (such as text, graphics,
documents and hyperlinks) from throughout an organization and its business
partners as part of a dynamic, integrated web-based solution. There is a risk
that the market for enterprise content management products and services may not
grow, that Interleaf may not be successful in developing enterprise content
management software, or that the marketplace may not accept Interleaf's
software. Interleaf's new products are based on the "XML" language (extensible
Markup Language). There are risks that this new technology will change, and as a
result the new products when released will not meet market and customer
requirements.
INTERLEAF'S QUARTERLY OPERATING RESULTS MAY FLUCTUATE.
Interleaf believes that period-to-period comparisons of its results of
operations are not necessarily meaningful and that investors should not rely on
them as indications of future performance because of the following factors:
- - Interleaf typically ships a substantial amount of its products in the final
weeks, or even the final days, of each quarter;
- - The length of Interleaf's sales cycle makes it difficult to predict when
Interleaf will receive license revenue; and
- - Any shortfall or delay in the recognition of revenue from even a limited
number of license transactions could cause significant variations in
Interleaf's operating results from quarter to quarter because Interleaf's
expenses are relatively fixed.
These factors also increase the risk that Interleaf's results in some quarters
will be below the expectations of stock analysts or investors. Such an "earnings
surprise" frequently will result in a drop in the market price of a company's
stock.
THERE IS INTENSE COMPETITION IN INTERLEAF'S TECHNICAL DOCUMENTATION AND
ENTERPRISE CONTENT MANAGEMENT MARKETS.
The market for Interleaf's existing technical documentation products is very
competitive, subject to rapid change and significantly affected by activities of
other industry participants. Several competitors in that market have greater
market penetration, greater name recognition, a larger installed base of
customers and significantly greater financial, technical and marketing resources
than Interleaf. While Interleaf does not yet know who its principal competitors
in the emerging and highly fragmented enterprise content management market will
be, it is likely that the enterprise content management market will develop
characteristics similar to those described above.
INTERLEAF IS DEPENDENT ON ITS STRATEGIC RELATIONSHIPS WITH MICROSTAR SOFTWARE
LTD. AND MICROSOFT, INC.
Interleaf is dependent on the performance of Microstar Software Ltd. in the
development of Interleaf's new enterprise content management products, and if
Microstar were sold to a competitor, went out of business or otherwise ceased to
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<PAGE>
provide contract services to Interleaf, it could have a material adverse effect
on Interleaf's business. Interleaf also needs to maintain a good working
relationship with Microsoft, Inc., since many of Interleaf's products are
designed to be accessed using Microsoft software such as Microsoft Word, Office,
SQL Server and NT.
INTERLEAF'S INTELLECTUAL PROPERTY HAS LIMITED PROTECTION; OTHERS COULD
MISAPPROPRIATE INTERLEAF'S INTELLECTUAL PROPERTY AND INTERLEAF MAY NOT BE ABLE
TO ENFORCE ITS RIGHTS; INTERLEAF'S INTELLECTUAL PROPERTY COULD INFRINGE ON
RIGHTS OF OTHERS.
Interleaf's success is heavily dependent upon the protection of its proprietary
technology through a combination of copyrights, trademarks, patents, trade
secrets and technical measures. There is the risk that Interleaf's attempts to
protect its rights will not be adequate and that competitors may independently
develop similar technology. Interleaf seeks to protect its software,
documentation and other written materials primarily under trade secret and
copyright laws, which afford only limited protection. The laws of some foreign
countries do not provide the same level of protection to Interleaf's proprietary
rights as do the laws of the United States. Policing unauthorized use of
Interleaf's products is difficult. While Interleaf cannot determine the extent
to which piracy of its software products exists, some software piracy can be
expected.
Interleaf is not aware that any of its products infringe the proprietary rights
of third parties. However, in the future, third parties may claim that
Interleaf's current or future products infringe on their proprietary rights.
Claims of this type could be very time-consuming, result in costly litigation,
cause product shipment delays or require Interleaf to enter into costly royalty
or licensing agreements.
INTERLEAF'S IN PROCESS RESEARCH AND DEVELOPMENT WRITE-OFFS COULD BE REDUCED.
In connection with the acquisitions of PDR Automated Systems and Publications,
Inc. and Softquad, Inc. during the current fiscal year, Interleaf wrote off
approximately $990,000 for in-process research and development. The SEC has
recently increased the scrutiny of certain accounting practices, including the
extent of write-offs of in-process research and development in connection with
acquisitions. While Interleaf did obtain evaluations of outside accounting firms
with respect to the amount of its write-offs, there is a risk that a portion of
those write-offs may be reduced, which would result in a corresponding increase
in the amount of goodwill associated with those acquisitions. Any additional
goodwill would have to be amortized over future years.
INTERLEAF'S FOREIGN SALES AND FINANCIAL RESULTS MAY FLUCTUATE BECAUSE OF
CURRENCY EXCHANGE RATE FLUCTUATIONS.
Interleaf generates sales primarily in U.S. dollars, British pounds, and Euros
and incurs expenses principally in the same currencies. Fluctuations in the
value of the U.S. dollar and foreign currencies have caused, and are likely to
continue to cause, amounts translated into U.S. dollars to fluctuate in
comparison with previous periods. Interleaf generally has not attempted to limit
its foreign currency exposure through foreign currency exchange rate hedging
transactions. Exchange rate fluctuations or other risks associated with
international operations may have a material adverse affect on Interleaf's
business, financial condition and results of operations. Interleaf's worldwide
business operations also may be affected by changes in demand resulting from
these currency exchange rate fluctuations, as well as by governmental controls
and other risks associated with international sales (such as changes in various
regulatory requirements, political and economic changes and disruptions,
export/import controls, tariff regulations, difficulties in staffing and
managing foreign sales and support operations, greater difficulties in trade
accounts receivable collection, and possibly adverse tax consequences).
YEAR 2000 PROBLEMS COULD AFFECT INTERLEAF'S BUSINESS.
Some computers, software, and other equipment include programming code in which
calendar year data is abbreviated to only two digits. As a result of this design
decision, some of the systems do not properly recognize a year that begins with
"20" instead of "19". These problems are widely expected to increase in
frequency and severity as the year 2000 approaches, and are commonly referred to
as the "Millennium Bug" or "Year 2000 problem". Interleaf has made significant
efforts to address its Year 2000 issues, as described in its most recent
quarterly report on Form 10-Q filed with the SEC. At this time, there are no
identifiable significant risks associated with its Year 2000 readiness, although
there is a risk that unanticipated problems may arise. Any costs, which are not
expected to be material, that are associated with compliance efforts are being
funded out of cash flow from operations.
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<PAGE>
TWO RECENT ACQUISITIONS HAVE RISKS.
As part of its business strategy to acquire and develop new products and
services, Interleaf acquired PDR and certain assets of Softquad, during the last
year. The risks related to the PDR and Softquad acquisitions include, among
others, the difficulty of assimilating the operations, information systems and
personnel of the acquired businesses; difficulties in assimilating the acquired
products into Interleaf's current sales force and sales channels; the risk that
customers of the acquired businesses will react unfavorably to the acquisition
and as a result Interleaf will not reap the benefits that it had expected; and
difficulties in retaining and integrating employees of the acquired businesses.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus and in the documents
incorporated by reference are forward-looking. The following and similar
expressions identify forward-looking statements:
- - expects;
- - anticipates; and
- - estimates.
Forward-looking statements include, but are not limited to, statements related
to:
- - Interleaf's plans, objectives, expectations and intentions;
- - the timing of, availability and functionality of products under
development or recently introduced; and
- - general economic conditions.
Actual results may differ materially from those suggested by the forward-looking
statements for various reasons, including those discussed under "Risk Factors."
These forward-looking statements speak only as of the date of this prospectus,
or in the case of forward-looking statements in documents incorporated by
reference, as of the dates of those documents.
USE OF PROCEEDS
Interleaf will not receive any proceeds from the sale by the selling
stockholders listed below of the shares of common stock offered under this
prospectus.
SELLING STOCKHOLDERS
The shares of common stock covered by this prospectus are being offered by those
selling stockholders listed below. As of the effective date of this registration
statement, Interleaf has issued 432,388 shares of the common stock to the
selling stockholders in connection with the transaction described below.
On August 31, 1998, Interleaf purchased all of the outstanding shares of PDR
pursuant to stock purchase agreements with each selling stockholder. The
purchase price of the PDR shares under these agreements was payable in
installments on August 31, 1998, February 28, 1999, March 31, 1999 and September
30, 1999. The installments payable in March and September of 1999 may be paid in
shares of the common stock having a then current market value substantially
equal to the cash amount of the installment. Immediately prior to the
effectiveness of the registration statement of which this prospectus is a part,
Interleaf issued all 432,388 shares to the selling stockholders as payment of
the March 1999 installment.
In connection with the PDR acquisition, each selling stockholder entered into an
agreement with Interleaf to assist in effecting a professional and smooth
transition of the business operations of PDR to Interleaf. In particular, Dona
D. Ray entered into an employment agreement with a term of one year and Davis L.
Marksbury and Daniel J Kloiber entered into consulting agreements with terms of
three months.
Prior to the PDR acquisition, the selling stockholders held the following
offices at PDR: Ms. Ray held the offices of President and Chief Financial
Officer, Mr. Marksbury held the office of Chairman of the Board and Mr. Kloiber
held the offices of Vice President and Secretary.
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<PAGE>
Other than as just described, none of the selling stockholders has held any
position or office or had any other material relationship with Interleaf during
the past three years.
The following table sets forth:
- - the number of shares of common stock beneficially owned by each of the
selling stockholders as of March 31, 1999 (including any shares which
that selling stockholder has the right to acquire within 60 days after
March 31, 1999 by the exercise of options) after taking into account
the shares of common stock issued as payment of the March 31, 1999
purchase price installment for the PDR shares;
- - the maximum number of shares of common stock that may be offered by the
selling stockholder under this prospectus;
- - the number of shares of common stock that will be beneficially owned by
each selling stockholder assuming all of the shares that may be offered
under this prospectus are sold; and
- - the percentage of common stock owned after the offering if all of the
shares that may be offered under this prospectus are sold.
The information with regard to each selling stockholder provided in the table
and footnotes below is based upon information provided to Interleaf by that
selling stockholder.
<TABLE>
<CAPTION>
Number of Shares Maximum Number Number of Shares Percentage of
Beneficially Owned as of of Shares Being Beneficially Owned Class Owned
Name of Beneficial Owner March 31, 1999 Offered after Offering after Offering
- ---------------------------- ------------------------ --------------- ------------------ --------------
<S> <C> <C> <C> <C>
Dona D. Ray 143,354 143,354 -- 0%
Davis L. Marksbury 201,885 201,885 -- 0%
Daniel J. Kloiber 87,149 87,149 -- 0%
</TABLE>
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares of common stock from time to
time in transactions (which may include block transactions) on any exchange or
market on which the common stock is listed or quoted, in public or private
transactions, through a combination of such methods of sale, or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices, or at negotiated prices.
The selling stockholders may sell the common stock by selling:
- - directly to purchasers;
- - through broker-dealers acting as agents for them;
- - to broker-dealers who may purchase common stock as principals and then
sell the common stock from time to time in transactions which may
include block transactions on any exchange or market on which
securities are listed or quoted, as applicable;
- - in negotiated transactions; or
- - through a combination of the foregoing methods of sale, or otherwise.
However, in the stock purchase agreements pursuant to which they are
receiving the stock being offered hereby, the selling stockholders have
agreed to certain limitations on the manner of their sale of the stock,
including volume limitations and selling through a single broker, which are
intended by Interleaf to reduce the risk of their sales into the market
having a negative effect on the market price of Interleaf's common stock.
Broker-dealers engaged by selling stockholders may arrange for other
broker-dealers to participate in the sales. Broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of the common stock. The
broker-dealers may act as agents for the selling stockholders or they may sell
to them as principals, or both. Particular broker-dealers may receive, as
compensation, commissions in excess of customary commissions.
Except as provided herein, Interleaf has agreed to pay all expenses incident to
the offer and sale of the common stock offered by the selling stockholders under
this prospectus. Interleaf estimates such expenses to be approximately
$16,451.00. The selling stockholders will pay all selling commissions,
brokerage fees and related expenses.
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<PAGE>
To comply with the securities laws of certain jurisdictions, if applicable, the
common stock offered under this prospectus will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of the common stock may be limited in
its ability to engage in market activities with respect to the common stock. In
addition, each selling stockholder will be subject to applicable provisions of
the Securities and Exchange Act and the rules and regulations under the
Securities and Exchange Act, which may limit the timing of purchases and sales
of any of the common stock by the selling stockholders.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
on the SEC's Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
1. Annual Report on Form 10-K for the fiscal year ended March 31, 1998;
2. Quarterly Report on Form 10-Q and the amendments thereto for the
fiscal quarters ended June 30, 1998, September 30, 1998 and December 31, 1998;
3. Current Reports on Form 8-K dated July 17, 1998, September 24, 1998
(as amended on November 12, 1998) and November 27, 1998; and
4. The description of Interleaf's common stock contained in the
registration statement on Form 8-A filed on June 11, 1986, including all
amendments or reports filed for the purpose of updating such description.
You may request a copy of these filings at no cost, by writing or
telephoning our general counsel at the following address:
Interleaf, Inc.
62 Fourth Avenue
Waltham, Massachusetts 02451
(781) 290-0710
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been passed upon
for Interleaf by Craig Newfield, Esq., General Counsel of Interleaf.
EXPERTS
The consolidated financial statements of Interleaf, Inc. appearing in
Interleaf, Inc.'s Annual Report (Form 10-K) for the year ended March 31,
1998, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The financial statements of PDR Automated Systems and Publications, Inc.
appearing in Interleaf's Current Report on Form 8-K as filed with the SEC on
September 24, 1998 and the amendment thereto filed on November 12, 1998, have
been audited by Dulworth, Breeding & Karns, LLP, independent public accountants,
as indicated in their report with respect thereto, and are incorporated by
reference herein in reliance upon the authority of Dulworth, Breeding & Karns,
LLP as experts in accounting and auditing.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses payable by the
registrant in connection with the sale and distribution of the securities
registered hereby. All amounts are estimated except the SEC and Nasdaq filing
fee. Costs of issuance and distribution will be borne by the registrant as
follows:
<TABLE>
<S> <C>
SEC Registration Fee $451.00
Accounting Fees and Expenses $ 5,000.00
Legal Fees and Expenses $ 10,000.00
Miscellaneous $ 1,000.00
-------------
Total $ 16,451.00
</TABLE>
*Estimated.
Item 15. Indemnification of Directors and Officers
(a) Section 67 of the Massachusetts Business Corporation Law permits
indemnification of present and former directors and officers to the extent
specified in or authorized by (i) the articles of organization, (ii) a by-law
adopted by the stockholders, (iii) a vote adopted by the holders of a majority
of the shares of stock entitled to vote, or (iv) in the case of officers who are
not directors, by the Board of Directors, except that no indemnification shall
be provided for any person with respect to any matter as to which he shall have
been adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his action was in the best interests of the corporation.
Section 67 also provides that the absence of any express provision for
indemnification shall not limit any right of indemnification existing
independently of such Section.
(b) Article V of Interleaf's By-laws provides that Interleaf shall, to the
extent legally permissible, indemnify each former or present director or officer
against all liabilities and expenses imposed upon or incurred by any such person
in connection with, or arising out of, the defense or disposition of any action,
suit or other proceeding, civil or criminal, in which he may be threatened or
involved, by reason of his having been a director or officer; provided that
Interleaf shall provide no indemnification with respect to any matter as to
which any such person shall be finally adjudicated in such action, suit or
proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of Interleaf. If any such action is disposed
of, on the merits or otherwise, without the disposition being adverse to the
director or officer and without an adjudication that such person did not act in
good faith in the reasonable belief that his action was in the best interests of
Interleaf, the director or officer is entitled to indemnification as a matter of
right. In all other cases, indemnification shall be made as of right unless
after investigation (a) by the Board of Directors by a majority vote of a quorum
of disinterested directors, or (b) by written opinion of independent legal
counsel (who may be regular counsel of Interleaf), or (c) the holders of a
majority of outstanding stock entitled to vote (exclusive of stock owned by any
interested directors or officers), it shall be determined by clear and
convincing evidence that such person did not act in good faith and in a manner
reasonably believed to be in or not opposed to the best interest of Interleaf.
Indemnification may include advancement of expenses of defending an action upon
receipt of an undertaking by the person indemnified to repay such advances if it
is ultimately determined that such person is not entitled to indemnification
under Article V. Article V also provides that the right of indemnification
provided therein is not exclusive of and does not affect any other rights to
which any director or officer may be entitled under any agreement, statute, vote
of stockholders or otherwise. The Company's obligation to indemnify under
Article V shall be offset to the extent of any other source of indemnification
or any otherwise applicable insurance coverage.
(c) The Company has entered into an Agreement to Defend and Indemnify with each
of its officers and directors. Pursuant to these agreements, Interleaf has
agreed, to the extent legally permissible, to indemnify such person against all
losses (including, without limitation, judgments, fines and penalties) and
expenses
II-1
<PAGE>
(including, without limitation, amounts paid in settlement and counsel fees and
disbursements) incurred by such person in connection with or as a result of any
claim, action, suit or other proceeding, civil or criminal, or appeal related
thereto, in which he may be involved by reason of his having been a director or
officer or by reason of any action taken or not taken in his capacity as
director or officer; provided that no indemnification shall be provided with
respect to any matter as to which such person shall not have acted in good faith
in the reasonable belief that his action was in the best interests of Interleaf.
If any such claim, action, suit or proceeding is disposed of, on the merits or
otherwise, without the disposition being adverse to such person, without a plea
of guilty or NOLO CONTENDRE and without an adjudication that such person did not
act in good faith in the reasonable belief that his action was in the best
interests of Interleaf, the director or officer is entitled to indemnification
as a matter of right. In all other cases, indemnification shall be made upon a
determination that such person's conduct was in good faith and in the reasonable
belief that his action was in the best interests of Interleaf by (a) a quorum of
disinterested directors, or (b) independent legal counsel (who may be regular
counsel of Interleaf), or (c) the holders of a majority of outstanding stock
entitled to vote (exclusive of stock owned by an interested directors or
officer). Expenses may be advanced by Interleaf prior to any final disposition
of any such action upon receipt of an undertaking by the person indemnified to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification under the Agreement. Such Agreements provide that
the right of indemnification provided therein is in addition to any rights to
which any person concerned may be entitled by other agreements or as a matter of
law, and shall inure to the benefit of the heirs, executors and administrators
of the indemnified person. The rights of indemnification provided in such
Agreements are in addition to any rights under any insurance policy in effect,
provide that to the extent any claim is covered by any such insurance policy,
Interleaf will provide coverage after the full coverage of the insurance policy
is exhausted or otherwise unavailable.
(d) Article 6D of Interleaf's Articles of Organization provides that, to the
fullest extent permitted by Chapter 156B of the Massachusetts General Laws, a
director of Interleaf shall not be personally liable to Interleaf or its
stockholders for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability. Section 13(b)(1
1/2) of Chapter 156B of the Massachusetts General Laws permits a corporation to
include in its articles of organization a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary as a director, except for (i) any
breach of the director's duty of loyalty to the corporation and its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (ii) improper
issuances of stock or unauthorized distributions to stockholders, or (iv) any
transaction in which the director derived an improper personal benefit.
II-2
<PAGE>
Item 16. Exhibits
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Restated Articles of Organization of Interleaf, as amended (Filed as
the applicable exhibit to Interleaf's Report on Form 10-Q for the
fiscal quarter ended September 30, 1997)*
3.2 By-Laws of Interleaf, as amended (Filed as the applicable exhibit to
Interleaf's Annual Report on Form 10-K for the fiscal year ended March
31, 1994)*
4.1 Specimen Certificate for shares of Interleaf's common stock (Filed as
the applicable exhibit to Interleaf's registration statement on Form
S-1, File No. 33-5743)*
4.2 Stock Purchase Agreement, by and among Interleaf, PDR and Donna D. Ray,
with variable information for otherwise identical agreements with
Messrs. Marksbury and Kloiber (Filed as Exhibit 10.1 to Interleaf's
Current Report on Form 8-K, dated September 24, 1998)*
5.1 Legal Opinion of Craig Newfield, Esq.**
23.1 Consent of Ernst & Young LLP **
23.2 Consent of Dulworth, Breeding & Karns, LLP **
23.3 Consent of Craig Newfield, Esq. (contained in Exhibit 5.1)**
24 Power of Attorney (contained on Signature Page of this Registration
Statement)**
- ---------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to
the Securities Act of 1933, reference is made to the documents
previously filed with the Commission, which are incorporated by
reference herein.
** Filed herewith.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and persons
controlling the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(i) Not applicable.
(j) Not applicable.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Waltham, Commonwealth of Massachusetts, on March 18,
1999.
INTERLEAF, INC.
By: /s/ JAIME W. ELLERTSON
----------------------
Jaime W. Ellertson, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jaime W. Ellertson, Peter Rice and Craig
Newfield, and each of them (with full power to each of them to act alone), his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, and, in
connection with any registration of additional securities pursuant to Rule
462(b) under the Securities Act of 1933, to sign any abbreviated registration
statement and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, in each case, with
the Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or either of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jaime W. Ellertson President and Chief
Executive Officer, and Director (Principal Executive Officer) March 18, 1999
- ------------------------------------
Jaime W. Ellertson
/s/ Peter J. Rice Vice President of Finance and March 18, 1999
- ------------------------------------ Administration, Chief Financial Officer
Peter J. Rice and Treasurer (Principal Financial and
Accounting Officer)
/s/ Frederick B. Bamber
- ------------------------------------ Director March 18, 1999
Frederick B. Bamber
/s/ David A. Boucher
- ------------------------------------ Director March 18, 1999
David A. Boucher
/s/ Rory J. Cowan Chairman of the Board of Directors March 18, 1999
- ------------------------------------
Rory J. Cowan
/s/ Marcia J. Hooper
- ------------------------------------ Director March 18, 1999
Marcia J. Hooper
/s/ John A. Lopiano
- ------------------------------------ Director March 18, 1999
John. A. Lopiano
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
3.1 Restated Articles of Organization of Interleaf, as amended (Filed as
the applicable exhibit to Interleaf's Report on Form 10-Q for the
fiscal quarter ended September 30, 1997)*
3.2 By-Laws of Interleaf, as amended (Filed as the applicable exhibit to
Interleaf's Annual Report on Form 10-K for the fiscal year ended March
31, 1994)*
4.1 Specimen Certificate for shares of Interleaf's common stock (Filed as
the applicable exhibit to Interleaf's registration statement on Form
S-1, File No. 33-5743)*
4.2 Stock Purchase Agreement, by and among Interleaf, PDR and Donna D. Ray,
with variable information for otherwise identical agreements with
Messrs. Marksbury and Kloiber (Filed as Exhibit 10.1 to Interleaf's
Current Report on Form 8-K dated September 24, 1998)*
5.1 Legal Opinion of Craig Newfield, Esq.**
23.1 Consent of Ernst & Young LLP **
23.2 Consent of Dulworth, Breeding & Karns, LLP **
23.3 Consent of Craig Newfield, Esq. (contained in Exhibit 5.1)**
24 Power of Attorney (contained on Signature Page of this Registration
Statement)**
</TABLE>
- -----------------
* Not filed herewith. In accordance with Rule 411 promulgated pursuant to
the Securities Act of 1933, as amended, reference is made to the
documents previously filed with the Commission, which are incorporated
by reference herein.
** Filed herewith.
<PAGE>
EXHIBIT 5.1
March 18, 1999
Interleaf, Inc.
62 Fourth Avenue
Waltham, MA 02451
Gentlemen:
I have assisted in the preparation of a Registration Statement on Form S-3 to be
filed with the Securities and Exchange Commission (the "Registration
Statement"), relating to 432,388 shares of Common Stock, $.01 par value per
share (the "Shares"), of Interleaf, Inc., a Massachusetts corporation (the
"Company"), pursuant to the several Stock Purchase Agreements between the
Company and each of the former shareholders of PDR Automated Systems and
Publications, Inc. dated as of August 31, 1998 (collectively, the "Agreement").
I have examined (i) the Restated Articles of Organization and By-laws of the
Company and all amendments thereto, (ii) the Agreement, and (iii) such records
of meetings of the directors and stockholders of the company, documents and
other instruments as in my judgment are necessary or appropriate to enable me to
render the opinion expressed below.
In my examination of the foregoing documents, I have assumed the genuineness of
all signatures and the authenticity of all documents submitted to me as
originals, the conformity to original documents of all documents submitted to me
as certified or photostatic copies, and the authenticity of the originals of
such latter documents.
Based upon the foregoing, I am of the opinion that the Shares have been duly
authorized for issuance and, when issued pursuant to the terms of the Agreement,
will be legally issued, fully paid and nonassessable.
I hereby consent to the use of my name in the Registration Statement and consent
to the filing of this opinion with the Securities and exchange Commission as an
exhibit to the Registration Statement.
Very truly yours,
Craig Newfield,
General Counsel
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of Interleaf, Inc.
for the registration of 432,388 shares of its common stock and to the
incorporation by reference of our report dated May 13, 1998 with respect to
the consolidated financial statements and schedule of Interleaf, Inc.
included in its Annual Report (Form 10-K) for the year ended March 31, 1998,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
/s/ Ernst & Young LLP
Boston, Massachusetts
March 12, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
March 12, 1999
The Board of Directors
PDR Automated Systems and Publications, Inc.
800 Corporate Drive, Suite 200
Lexington, KY 40503
To the Board of Directors:
We agree to the inclusion by reference in the Form S-3 of Interleaf, Inc.,
dated on or before March 19, 1999, of our independent auditors' report and
independent accountants' compilation report, dated September 17, 1998, on our
audit of the financial statements of PDR Automated Systems and Publications,
Inc., as of June 30, 1998, and December 31, 1997, and for the six months
ended June 30, 1998, and for the year ended December 31, 1997, and our
compilation of the financial statements for the six months ended June 30,
1997.
Yours truly,
Dulworth, Breeding & Karns, LLP
