<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 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
-------------------------------------
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. / /
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED PROPOSED
TITLE OF EACH CLASS OF TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE (1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,040,333 $8.50 $7,899,058 $2,458
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</TABLE>
(1) Estimated solely for purposes of calculating the Registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended. Based on the
average of the high and low price of the Common Stock as reported on the
Nasdaq National Market on August 19, 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, AS AMENDED, OR UNTIL 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>
PRELIMINARY PROSPECTUS DATED AUGUST 20, 1999, SUBJECT TO COMPLETION
The information contained in this prospectus is not complete and 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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INTERLEAF, INC.
1,040,333 SHARES OF COMMON STOCK
This prospectus relates to the resale of 1,040,333 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 5 of this prospectus.
The common stock presently is traded on the Nasdaq National Market
under the symbol "LEAF". On August 19, 1999, the last reported sale
price of the common stock on the Nasdaq National Market was $8.313 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 AUGUST __, 1999.
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<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 also provides technical support and maintenance, consulting, custom
application development, 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: 1,040,333 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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-2-
<PAGE>
RISK FACTORS
The following risk factors should be carefully considered in
evaluating Interleaf and its business.
INTERLEAF IS DEPENDENT ON THE SUCCESS OF ITS NEW E-CONTENT 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 content management products (called
BladeRunner-TM-) and related services. 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 content
management products and services may not grow, that Interleaf may not be
successful in developing 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 will not meet
market and customer requirements. There is also a risk that XML will be
supplanted as the de facto standard in the content management market, and
that BladeRunner will become obsolete or that Interleaf will be forced to
migrate the product to a new technology.
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 software 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.
INTERLEAF FACES INTENSE COMPETITION IN BOTH THE TECHNICAL DOCUMENTATION
AND CONTENT MANAGEMENT MARKETS FROM COMPETITORS WITH GREATER RESOURCES.
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 has identified its primary existing competitors in the
content management market, this market is still developing and subject to rapid
change. As a result, new competitors may emerge very
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quickly, or very large companies such as Microsoft Corporation may decide to
enter the market, presenting significant competitive challenges and causing
confusion and turmoil in the market.
INTERLEAF NEEDS TO MAINTAIN A GOOD WORKING RELATIONSHIP WITH MICROSOFT, AND TO
DEVELOP NEW RELATIONSHIPS WITH OTHER COMPANIES.
Interleaf also needs to maintain a good working relationship with
Microsoft Corporation, since many of Interleaf's products are designed to be
accessed using Microsoft software such as Microsoft Word, Office, SQL Server
and NT. Interleaf believes that market penetration and acceptance of its new
content management products will depend significantly on developing
relationships with companies that will promote, market, re-sell and integrate
BladeRunner, including relationships with third party resellers, system
integrators and other companies. Interleaf cannot guaranty that it will be able
to develop and maintain these relationships.
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 or 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 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).
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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 Annual
Report on Form 10-K for the fiscal year ended March 31, 1999. At this time, we
have not identified any 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.
RECENT ACQUISITIONS HAVE RISKS.
As part of its business strategy to acquire and develop new products
and services, Interleaf acquired PDR Automated Systems and Publications, Inc.
and the remaining outstanding capital of Interleaf Italia Srl and certain assets
of Softquad and Texcel International AB during the last year. The risks related
to these 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 and
future products, 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
- 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.
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<PAGE>
SELLING STOCKHOLDERS
The shares of common stock covered by this prospectus are being offered by those
selling stockholders listed below. Of the 1,040,333 shares offered hereby,
100,000 shares are issuable upon the exercise of certain Stock Purchase Warrants
issued to Tower Hill Capital Group dated February 17, 1999 and April 12, 1999,
respectively (the "Warrants"), and 940,333 shares were issued in the private
placement described below.
Interleaf entered into an agreement effective August 13, 1999 with certain
existing stockholders, new investors and the CEO of Interleaf under which each
of them agreed to purchase and Interleaf agreed to sell a total of 940,333
shares of common stock at a purchase price of $7.50 per share. On September __,
1999, Interleaf and the selling stockholders consummated the closing of the
purchase and sale of 940,333 shares of common stock pursuant to such agreements.
Interleaf issued all 940,333 shares to the selling stockholders on the date of
the closing.
As partial payment for investment banking services, Interleaf issued Stock
Purchase Warrants to Tower Hill Capital Group dated February 17, 1999 and April
12, 1999, respectively, entitling it to purchase a total of 100,000 shares of
common stock. Under the terms of those warrants, the Company is obligated to
register the shares issuable upon exercise of those warrants for re-sale under
this registration statement.
Other than Mr. Jaime W. Ellertson, President and Chief Executive Officer of
Interleaf, who purchased 13,333 shares in the September, 1999 private placement,
and Tower Hill Capital Group, 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 August 13, 1999 (including any shares which
that selling stockholder has the right to acquire within 60 days after
August 13, 1999 by the exercise of options) after taking into account
the sale of shares of common stock in the private placement;
- 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.
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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. Straus Capital Management, S Squared Technology Corp. and
PAW Capital Partners, each of whom is an investment advisor, have informed
Interleaf that the shares listed opposite its name are owned by three, 20 and
two accounts, respectively, with respect to which it has discretionary
authority.
<TABLE>
<CAPTION>
Number of
Maximum Shares
Number of Shares Number of Beneficially Percentage of
Beneficially Owned as Shares Being Owned after Class Owned
Name of Beneficial Owner of August 13, 1999 Offered Offering after Offering
- ----------------------------- --------------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Jaime W. Ellertson 219,518 13,333 206,185 1.7%
Warburg, Pincus Trust - Small 400,000 400,000 0 *
Company Growth Portfolio
Maple Row Partners, L.P. 100,000 100,000 0 *
Straus Capital Management 100,000 100,000 0 *
Libra Fund, L.P. 65,700 50,000 15,700 *
Edward O. Thorp 50,000 50,000 0 *
Rainbow Trading Corp. 50,000 50,000 0 *
S Squared Technology Corp. 1,045,181 133,333 911,848 7.4%
PAW Capital Partners 357,000 42,000 315,000 2.6%
Tower Hill Capital Group LLC 221,479 100,000 121,479 1.0%
</TABLE>
- -----------
* Less than one percent.
PLAN OF DISTRIBUTION
We are registering all of the shares on behalf of the selling
stockholders. "Selling stockholders," as used in this prospectus, includes
donees, pledgees, transferees or other successors in interest selling shares
received from a named selling stockholder after the date of this prospectus.
The selling stockholders may sell their shares from time to time. The
selling stockholders will act independently of Interleaf in making decisions
with respect to the timing, manner and size of each sale. The sales may be made
on one or more markets at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
selling stockholders may sell their shares by one or more of, or a combination
of, the following methods:
- purchases by a broker-dealer as principal and the resale by such
broker or dealer for its account pursuant to this prospectus,
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers,
- block trades in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction,
- an over-the-counter distribution in accordance with the rules of the
NASDAQ National Market,
- in privately negotiated transactions,
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- in put or call option transactions or short sales related to the
shares, and
- for shares that qualify for resale under Rule 144 of the Securities
Act, under that rule rather than this prospectus.
Selling stockholders may make sales directly to purchasers or through
broker-dealers. If making sales through broker-dealers, those broker-dealers may
in turn arrange for other broker-dealers to participate. Broker-dealers will
receive commissions or discounts from the selling stockholders in amounts to be
negotiated immediately prior to the sale. In offering the shares covered by this
prospectus, the selling stockholders and any broker-dealers who execute sales
for the selling stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with those sales. Any profits
realized by the selling stockholders and the compensation of any broker-dealer
may be deemed to be underwriting discounts and commissions.
In addition, if any selling stockholder is an affiliate of a
broker-dealer, and sells its shares prior to one year after acquiring those
shares then, in the view of the SEC staff, that selling stockholder is an
underwriter and may only sell stock under this prospectus if Interleaf is
eligible to use Form S-3 for a sale of stock by it. As of the date hereof,
Interleaf is eligible to use Form S-3 for a sale of stock by it.
In connection with sales of the shares, the selling stockholders may
enter into hedging transactions with financial institutions, including
broker-dealers. In connection with those transactions, those financial
institutions may engage in short sales of the common stock in the course of
hedging the positions they assume with selling stockholders. The selling
stockholders may also sell the common stock short and redeliver the shares to
close out their short positions. The selling stockholders may also enter into
option or other transactions with financial institutions which require the
delivery to those financial institutions of shares offered by this prospectus.
The financial institution may then resell those shares pursuant to this
prospectus (as supplemented or amended to reflect such transaction). The selling
stockholders may also pledge shares to a financial institution, and, upon a
default, the financial institution may make sales of the pledged shares pursuant
to this prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders may agree to indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities, including liabilities arising under the
Securities Act.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. If Interleaf is
notified by a selling stockholder that any material arrangement has been entered
into with a broker-dealer for the sale of shares through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, a supplement to this prospectus will be filed, if required
under the Securities Act, disclosing (i) the name of each selling stockholder
and of the participating broker-dealers(s), (ii) the number of shares involved,
(iii) the price at which the shares were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-dealers(s), where applicable,
(v) that the broker-dealer(s) did not conduct any investigation to verity the
information set out or incorporated by reference in this prospectus and (vi)
other facts material to the transaction. In addition, upon Interleaf being
notified by a selling stockholder that a donee or pledgee intends to sell more
than 500 shares, a supplement to this prospectus will be filed.
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In order to comply with the securities law of certain states, shares
sold in those states must be sold only through registered or licensed brokers or
dealers. In addition, in certain states the shares may not be sold unless they
have been registered or qualified for sale in that state or unless the seller
complies with an exemption.
We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Securities Exchange Act may apply to sales of shares in
the market and to the activities of the selling stockholders and their
affiliates.
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 $34,958. The selling stockholders will pay all selling
commissions, brokerage fees and related expenses.
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,
1999;
2. Quarterly Report on Form 10-Q and the amendments thereto for the
fiscal quarter ended June 30, 1999;
3. Current Report on Form 8-K filed on August 17, 1999; 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
9
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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 financial statements as of and for the year ended March 31, 1999
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended March 31, 1999, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Interleaf, Inc. as of and for the
two years ended March 31, 1998 appearing in Interleaf Inc.'s Annual Report
(Form 10-K) for the year ended March 31, 1999, 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.
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This prospectus is part of a registration INTERLEAF, INC.
statement that we filed with the SEC.
You should rely only on the information
or representations provided in this 1,040,333 SHARES OF COMMON STOCK
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.
PROSPECTUS
SEPTEMBER __, 1999
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Summary................................ 2
Risk Factors........................... 3
Forward Looking Statements............. 5
Use of Proceeds........................ 5
Selling Stockholders................... 6
Plan of Distribution................... 7
Where You Can Find More Information.... 9
Legal Matters.......................... 10
Experts................................ 10
</TABLE>
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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:
SEC Registration Fee $ 2,458
Nasdaq Listing Fee $ 17,500
Accounting Fees and Expenses $ 2,500 *
Legal Fees and Expenses $ 7,500 *
Miscellaneous $ 5,000 *
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Total $ 34,958
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*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.
II-1
<PAGE>
(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 (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.
ITEM 16. EXHIBITS
The exhibits listed in the accompanying Exhibit Index are filed as part of this
Registration Statement on Form S-3.
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;
(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;
II-2
<PAGE>
(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 Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act,
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, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling persons
of 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 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 and will be governed by the
final adjudication of such issue.
(i) Not applicable.
(j) Not applicable.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 August 17,
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, 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, 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 August 17, 1999
- -------------------------------------------- Director (Principal Executive Officer)
Jaime W. Ellertson
/s/ PETER J. RICE Vice President of Finance and August 17, 1999
- --------------------------------------------
Peter J. Rice Administration, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer)
/s/ FREDERICK B. BAMBER Director August 17, 1999
- --------------------------------------------
Frederick B. Bamber
/s/ DAVID A. BOUCHER Director August 17, 1999
- --------------------------------------------
David A. Boucher
/s/ RORY J. COWAN Chairman of the Board of Directors August 17, 1999
- --------------------------------------------
Rory J. Cowan
/s/ MARCIA J. HOOPER Director August 17, 1999
- --------------------------------------------
Marcia J. Hooper
/s/ JOHN A. LOPIANO Director August 17, 1999
- --------------------------------------------
John. A. Lopiano
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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 Exhibit 4.01 to Interleaf's Annual
Report on Form 10-K for the fiscal year ended March 13, 1999 )*
4.2 Form of Common Stock Purchase Agreement (Filed as Exhibit 10 to Interleaf's Current Report on Form 8-K dated
August 17, 1999)*
4.3 Form of Stock Purchase Warrant issued to Tower Hill Capital Group
5.1 Legal Opinion of Craig Newfield, Esq.**
23.1 Consent of PricewaterhouseCoopers LLP **
23.2 Consent of Ernst & Young 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.
II-5
<PAGE>
EXHIBIT 4.3
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (II) AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
Date of No. of
Issue: [____], 1999 STOCK PURCHASE WARRANT Shares: [____]
Subscribe for and Purchase Common Stock of
INTERLEAF, INC.
THIS CERTIFIES that, for value received, TOWER HILL CAPITAL GROUP (together
with any subsequent transferees of all or any portion of this Warrant, the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, to subscribe for and purchase from Interleaf, Inc. a Massachusetts
corporation (hereinafter called the "Company"), up to [____] fully paid and
non-assessable shares of the Company's common stock, $.01 par value per share
(the "Shares"), at the price of $ 4.80 per share (the "Warrant Purchase Price"),
subject to adjustment as provided in Section 5.
1. PURCHASE RIGHTS. The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, at any time and from time to time
commencing on the date hereof and ending at 5:00 p.m. (EST) on [____].
2. EXERCISE OF WARRANT; NET ISSUE EXERCISE.
2.1 EXERCISE OF WARRANT. Subject to Section 1 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by certified check or wire
transfer of immediately available funds, of an amount equal to the then
applicable Warrant Purchase Price per share multiplied by the number of Shares
then being purchased. Subject to Section 2.2, upon exercise, the Holder shall be
entitled to receive, within five (5) business days thereafter (or as soon
thereafter as practicable), a certificate or certificates, issued in the
Holder's name, for the number of Shares so purchased. The Shares so purchased
shall be deemed to be issued as of the close of business on the date on which
this Warrant shall have been exercised.
2.2. NET ISSUE EXERCISE.
(a) At either party's option, this Warrant may be exercised on a "net
issue" basis, as follows. The Holder shall tender this Warrant together with its
notice of Exercise but without payment of the exercise price, and receive Shares
equal to the value of this Warrant (or the portion thereof being cancelled) upon
surrender of this Warrant at the principal office of the Company together with
its Notice of Exercise, in which event the Company shall issue to the Holder a
number of Shares computed using the following formula:
X = Y(A - B)
-----
A
Where X = the number of Shares to be issued to the Holder;
Y = the number of Shares purchasable under this Warrant;
A = the fair market value of one Share; and
B = the Warrant Purchase Price (as adjusted to the date of such
calculations).
<PAGE>
Once either party exercises its option to cause this Warrant to be
exercised on a net issue basis as provided above, the other party shall not be
able to force exercise for cash under Section 2.1.
(b) For purposes of this Section, fair market value of a Share shall mean
the volume-weighted average of the last sale price reported on the Nasdaq
National Market for the Common Stock for the 20 trading days preceding the day
the Warrant is surrendered for exercise.
3. SHARES TO BE ISSUED; RESERVATION AND REGISTRATION OF SHARES. The Company
covenants that the Shares that may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon issuance, be fully paid and
non-assessable, and free from all liens and charges with respect to the issue
thereof. During the period within which the purchase rights represented by the
Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the right represented by this Warrant.
In the event that, at any time during the term of this Warrant, the Company
files with the Securities and Exchange Commission a registration statement under
which the Company seeks to register securities of the Company under the
Securities Act of 1933 (the "'33 Act") for re-sale by the holder of such
securities, and not for the Company's own account (a "Registration Statement"),
and provided that the Shares would be eligible to be included in such
Registration Statement, then the Company agrees to use reasonable efforts to
include the Shares in such Registration Statement and to effectively register
the Shares under the '33 Act for re-sale by the Holder. The Company shall
provide the Holder with 30 days notice of its intention to file a Registration
Statement, and the Holder shall have ten business days from such notice to
notify the Company that the Holder wishes to have the Shares included therein.
The Holder shall cooperate with the Company in the registration process, and the
Company shall bear such reasonable incremental expenses of including the Shares
in such Registration Statement, not to exceed $5,000. The Holder shall have no
right to participate in, and this provision shall not apply to, any registration
statement filed by the Company in connection with a merger, acquisition,
divestiture, reorganization, rights offering, exchange offering, stock option or
other benefit plan. Once such a Registration Statement is filed, the Company
shall have sole and exclusive control over the prosecution of such Registration
Statement, and nothing contained herein will restrict, prevent or delay the
Company from amending, abandoning or delaying such a Registration Statement as
the Company sees fit in the Company's sole discretion.
4. NO FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined under Section 2.
5. ADJUSTMENT FOR MERGER, CONSOLIDATION OR SALE OF ASSETS. In the event
that at any time or from time to time after the Date of Issue the Company shall
merge or consolidate with or into another entity, or shall sell all or
substantially all of its assets, the Board of Directors of the Company shall
provide such that the Holder hereof thereafter shall have the right to receive
the kind and amount of securities, property or cash that the Holder hereof would
have received had he exercised this Warrant immediately prior thereto (less the
amount of the exercise price).
If the Company at any time or from time to time while this Warrant is
outstanding shall declare or pay, without consideration, any dividend on the
Shares payable in Shares, or shall effect a subdivision of the outstanding
Shares into a greater number of Shares (by stock split, reclassification or
otherwise than by payment of a dividend in Shares or in any right to acquire
Shares), or if the outstanding Shares shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of Shares, then the
-2-
<PAGE>
number of Shares issuable upon the exercise of this Warrant and the Warrant
Purchase Price shall be appropriately adjusted to such number of Shares and such
price as would have been held and paid by the Holder is this Warrant had been
issued immediately prior to the date of such dividend, subdivision, combination
or reclassification.
6. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the Shares so purchased. Upon valid
exercise of this Warrant and payment for the Shares so purchased in accordance
with the terms of the Warrant, the Holder or the Holder's designee, as the case
may be, shall be deemed a shareholder of the Company.
7. SALE OR TRANSFER OF THE WARRANT; LEGEND. The Warrant and the Shares
shall not be sold or transferred unless either (i) they first shall have been
registered under the Securities Act of 1933 as amended, or a similar Federal
statute, and the rules and regulations of the Securities and Exchange Commission
issued thereunder, as they each may, from time to time, be in effect (the
"Act"), or (ii) the Company first shall have been furnished with an opinion of
legal counsel satisfactory to the Company to the effect that such sale or
transfer is exempt from the registration requirements of the Act, which opinion
may include the conclusion that the holding period of this Warrant may be tacked
to the holding period for the Shares for purposes of satisfying the requirements
of Rule 144 under the Act upon a net issue exercise hereunder. Each certificate
representing any Warrant shall bear the legend set out on page 1 hereof. Each
certificate representing any Shares shall bear a legend substantially in the
following form, as appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
Such Warrant and Shares may be subject to additional restrictions on transfer
imposed under applicable state and federal securities law.
8. MODIFICATIONS AND WAIVERS. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
9. NOTICES. Any notice, request or other document required or permitted to
be given or delivered to the Holder or the Company shall be delivered, or shall
be sent by certified or registered mail, postage prepaid, to the Holder at its
address shown on the books of the Company or to the Company at the address
indicated therefor on the signature page of this Warrant, or, if different, at
the principal office of the Company. Any such notice shall be deemed to have
been given (a) on the business day actually received if given by hand, (b) on
the business day immediately subsequent to mailing, if sent by U.S. express mail
service or private overnight mail service, or (c) three (3) business days
following the mailing thereof, if mailed by certified or registered mail,
postage prepaid, return receipt requested.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the
-3-
<PAGE>
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
11. REPRESENTATIONS AND WARRANTIES OF HOLDER. By accepting this Warrant,
the Holder represents and warrants that he, she or it is acquiring this Warrant
and the Shares for his, her or its own account, for investment and not with a
view to, or for sale in connection with, any distribution thereof or any part
thereof. Holder represents and warrants that he, she or it is (a) experienced in
the evaluation of businesses similar to the Company, (b) is able to fend for
himself, herself or itself in the transactions contemplated by this Warrant, (c)
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Company, (d)
has the ability to bear the economic risks of an investment in the Company, (e)
has been furnished with or has had access to such information as is specified in
subparagraph (b)(2) of Rule 502 promulgated under the Act and (f) has been
afforded the opportunity to ask questions of and to receive answers from the
Company and to obtain any additional information necessary to make an informed
investment decision with respect to an investment in the Company.
12. SUCCESSORS AND ASSIGNS. Subject to the rules and regulations of the
National Association of Securities Dealers, Inc., this Warrant may be assigned,
in whole or in part, to any affiliate of the Holder, or any officer, director,
equity holder or employee of the Holder or any affiliate of the Holder. This
Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets, and all of the obligations of the Company relating to the Shares
issuable upon exercise of this Warrant shall survive the exercise and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the Holder.
13. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Interleaf, Inc. and the Holder have caused this Warrant
to be executed under seal by its officer thereunto duly authorized.
INTERLEAF, INC.
AGREED:
TOWER HILL CAPITAL GROUP
By: ___________________________
Peter Rice, CFO
By: _____________________________
Date: _________________________
Name: ___________________________
Attest: Title: __________________________
Date: ___________________________
_______________________________
Craig Newfield, Clerk
-4-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Interleaf, Inc.
62 Fourth Avenue
Waltham, MA 02451 (USA)
Attn: General Counsel
Re: EXERCISE OF STOCK PURCHASE WARRANT
1. The undersigned Tower Hill Capital Group (the "Holder") hereby elects to
purchase _______ shares of Common Stock of Interleaf, Inc., pursuant and subject
to the terms and conditions of the attached Warrant, as follows (check one):
/ / The Warrant is being exercised in cash, pursuant to Section 2.1, and
the Holder tenders herewith payment of the purchase price of such
shares in full; or
/ / The Warrant is being exercised on a net exercise basis pursuant to
Section 2.2.
2. Please issue a certificate or certificates representing said Shares in
the name of TOWER HILL CAPITAL GROUP and deliver such certificate(s) to the
address indicated below.
3. The Holder represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
The Holder further represents that such shares shall not be sold or transferred
unless either (1) they first shall have been registered under the Securities Act
of 1933, as amended, or (ii) the Company first shall have been furnished with an
opinion of legal counsel reasonably satisfactory to the Company to the effect
that such sale or transfer is exempt from the registration requirement.
4. In the event of partial exercise, please re-issue an appropriate Warrant
exercisable into the remaining shares, in the name of the Holder and deliver
such Warrant to the address indicated below.
TOWER HILL CAPITAL GROUP
____________________________________ ______________________________________
(Signature) (Date)
____________________________________ ______________________________________
(Type or Print Name) (Address for delivery of Shares)
____________________________________ ______________________________________
(Title) (Address for delivery of Shares)
-5-
<PAGE>
EXHIBIT 5.1 & 23.3
August 17, 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 1,040,333 shares of Common Stock, $.01 par value per
share (the "Shares"), of Interleaf, Inc., a Massachusetts corporation (the
"Company"), pursuant to certain Stock Purchase Agreements between the Company
and certain purchasers in a private placement (collectively, the
"Agreements").
I have examined (i) the Restated Articles of Organization and By-laws of the
Company and all amendments thereto, (ii) the Agreements, 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,
/s/ Craig Newfield
Craig Newfield,
General Counsel
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated May 6, 1999 relating to the financial
statements and financial statement schedule, which appears in Interleaf, Inc.'s
Annual Report on Form 10-K for the year ended March 31, 1999. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
August 16, 1999
<PAGE>
EXHIBIT 23.2
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 1,040,333 shares of its common stock and to the
incorporation by reference therein of our report dated May 13, 1998 with
respect to the consolidated financial statements and schedule of Interleaf,
Inc. as of and for the two years ended March 31, 1998 included in its Annual
Report (Form 10-K) for the year ended March 31, 1999, filed with the
Securities and Exchange Commission.
Ernst & Young LLP
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
August 16, 1999
