SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 9, 1998
INTERLEAF, INC.
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(Exact name of registrant as specified in its charter)
Massachusetts 0-14713 2729042
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
62 Fourth Avenue
Waltham, Massachusetts 02451
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 290-0710
Item 5. Acquisition or Disposition of Assets
On September 9, 1998, Interleaf, Inc. (the "Company") entered into Stock
Purchase Agreements effective as of August 31, 1998 (collectively the
"Purchase Agreements") with each of Dona D. Ray, Davis K. Marksbury, Jr., and
Donald J. Kloiber (the "Sellers"), the three owners of all of the capital
stock of PDR Automated Systems & Publications, Inc., a Kentucky corporation
("PDR"). PDR is a company engaged in the business of providing technical
documentation services.
Pursuant to the terms of the Purchase Agreements, the Company acquired all of
the capital stock of PDR as of August 31, 1998 for (i) approximately $2.7
million in cash plus six month warrants to purchase 250,000 shares of Company
common stock at an exercise price of $2.85 issued at closing, and (ii) an
installment payment of $1.5 million on March 31, 1999 (subject to adjustment)
and a second installment payment to bring the total to $3.0 million (also
subject to adjustment) on September 30, 1999 (collectively, the "Installment
Payments"). In addition, the Company agreed to pay the Sellers an aggregate
of $75,000 in cash, payable 50% at the closing and 50% in February 1999, and
to pay to them any amounts PDR receives with respect to certain accounts
receivable.
The first Installment Payment is subject to decrease (but not below $500,000
in the aggregate) or increase (but not beyond $2.5 million in the aggregate)
by differing percentages of the amount, if any, by which the revenues of PDR
during the six-month period followed the closing derived from certain
customer accounts exceed or are less than $1.5 million. The second
Installment Payment is subject to similar adjustment (with a zero floor and
no ceiling) based upon the amount by which such revenues for the full
12-month period following closing exceed or are less than $3 million.
Each Installment Payment is payable in the form of Company common stock
having a market value (defined by reference to a trailing ten day average
trading price) on the date of delivery equal to the dollar amount due on the
Installment Payment, except that the Company has the option of paying in cash
rather than stock if the market value of its common stock is less than $2.85
per share or if, despite its reasonable efforts, the shares to be delivered
have not been registered under the Securities Act of 1933, as amended, for
resale by the Sellers. The Company further agreed that to the extent that it
makes an Installment Payment in the form of its common stock and the Sellers
resell that stock in the public markets in the manner provided in the Stock
Purchase Agreements and those sales result in the Sellers receiving less than
90% of the dollar amount of the Installment Payment, the Company will make an
additional cash payment to the Sellers to bring the amount received up to 90%
and repurchase any remaining unsold shares.
In connection with the execution of the Stock Purchase Agreements, the
Company also entered into a one year employment agreement with Dona Ray and
one year consulting agreements with the other two stockholders of PDR, each
of which includes a noncompetition provision. The aggregate amount payable
under these three agreements is $225,000.
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The assets of PDR acquired as a result of the stock purchases are
primarily its contractual and business relationships, certain computer
software programs, office leases and office furnishings and equipment.
The acquisition was financed out of the Company's working capital.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
The financial statements of PDR required by Regulation S-X to be filed with
the Commission will be filed by an amendment to this Form 8-K or within 60
days hereafter.
(c) Exhibits.
10.1 Stock Purchase Agreement by and among Interleaf, Inc., PDR
Automated Systems and Publications, Inc. and Dona D. Ray, with variable
information for otherwise identical agreements with Messrs. Marksbury and
Kloiber.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Interleaf, Inc.
Date: September 24, 1998 By: /s/ Peter W. Rice
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Peter W. Rice
EXHIBIT INDEX
Exhibit Description At
No. Page
4.1 Form of Stock Purchase Warrant issued to each of Ms. Ray 4
and Messrs. Marksbury and Kloiber.
10.1 Stock Purchase Agreement by and among Interleaf, Inc., PDR 9
Automated Systems and Publications, Inc. and Dona D. Ray,
with variable information for otherwise identical
agreements with Messrs. Marksbury and Kloiber.
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