Interleaf Inc/MA – ‘DEFR14A’ on 7/11/95

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Revised Definitive Proxy Solicitation Material   —   Schedule 14A
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 1: DEFR14A     Revised Definitive Proxy Solicitation Material        35    172K 

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SCHEDULE 14A INFORMATION    
Proxy Statement Pursuant to Section 14(a) of the Securities     
Exchange Act of 1934 (Amendment #1)         

Filed by the Registrant  /X/                                                    
Filed by a party other than the Registrant   / /                                

Check the appropriate box:                                                      

/ /  Preliminary proxy statement                                                
/X/  Definitive proxy statement                                                 
/ /  Definitive additional materials                                            
/ /  Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12              

----------------------- 
INTERLEAF, INC. 
(Name of Registrant as Specified in Its Charter)  

INTERLEAF, INC. 
(Name of Person(s) Filing Proxy Statement)  
------------------------

Payment of the filing fee (Check the appropriate box):                          

/X/  $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).    
/ /  $500 per each party to the controversy pursuant to Exchange Act            
Rule 14a-6(i)(3).                                                     
/ /  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

1. Title of each class of securities to which transaction applies:              
2. Aggregate number of securities to which transaction applies:                 
3. Per unit price or other underlying value of transaction computed pursuant    
to Exchange Act Rule 0-11:                                                
4. Proposed maximum aggregate value of transaction:                             

/ /  Check box if any part of the fee is offset as provided by Exchange Act     
  Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
 paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.           

1.  Amount previously paid:                                                     
2.  Form, schedule or registration statement no.:                               
3.  Filing party:                                                               
4.  Date filed:                                                                 

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  [INTERLEAF LOGO]

 INTERLEAF, INC.
PROSPECT PLACE
 9 HILLSIDE AVENUE
  WALTHAM, MASSACHUSETTS 02154
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
   TELEPHONE NO.: (617) 290-0710

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 17, 1995 

 The Annual Meeting of Shareholders (the "Annual Meeting") of Interleaf,
Inc. (the "Company") will be held at the Westin Hotel, 70 Third Avenue,         
Waltham, Massachusetts, on Thursday, August 17, 1995 at 8:30 a.m., local        
time, to consider and act upon the following matters:                           

1. To elect two (2) Class II directors to serve for the ensuing three years.    
2. To ratify and approve an amendment to the Company's 1993 Stock Option Plan   
  to increase the number of shares of the Company's Common Stock available for
issuance from 750,000 to 1,500,000, as described in the Proxy Statement.  
3. To ratify the selection of Ernst & Young LLP as the Company's independent    
auditors for the 1996 fiscal year.                                        
4. To transact such other business as may properly come before the              
meeting or any adjournment thereof.                                       

  Shareholders of record at the close of business on June 23, 1995 will be
entitled to vote at the Annual Meeting or any adjournment thereof. The stock    
transfer books of the Company will remain open.                                 

                   By Order of the Board of Directors,

     John K. Hyvnar, Clerk

Waltham, Massachusetts                                                          
July 1, 1995                                                                    

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE   
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN    
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF    
THE PROXY IS MAILED IN THE UNITED STATES.                                       

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 INTERLEAF, INC.
PROSPECT PLACE
 9 HILLSIDE AVENUE
      WALTHAM, MASSACHUSETTS 02154

  NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
   AUGUST 17, 1995

  INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation 
of proxies by the Board of Directors of Interleaf, Inc. (the "Company") for     
use at the Annual Meeting of Shareholders to be held on Thursday, August 17,    
1995 and at any adjournment of that meeting (the "Annual Meeting"). All proxies 
will be voted in accordance with the shareholders' instructions, and if no      
choice is specified, the proxies will be voted in favor of the matters set      
forth in the accompanying Notice of Annual Meeting. Any proxy may be revoked    
by a shareholder at any time before its exercise by delivery of written         
revocation, or a subsequently dated proxy to the Clerk of the Company, or by    
voting in person at the Annual Meeting.                                         

The Board of Directors has fixed June 23, 1995 as the record date for 
determining shareholders who are entitled to vote at the Annual Meeting. At     
the close of business on June 23, 1995 there were outstanding and entitled to   
vote 14,457,009 shares of common stock of the Company, $.01 par value per       
share ("Common Stock") and 1,728,573 shares of the Company's Senior Series B    
Convertible Preferred Stock, $.10 par value per share ("Preferred Stock"). At   
the Annual Meeting each share of the Common Stock is entitled to one vote;      
each share of the Preferred Stock is entitled to 1.34375 votes, and therefore   
the total number of votes eligible to be cast at the Annual Meeting is          
16,779,778.                                                                     

The Company's Annual Report for the fiscal year ended March 31,         
1995 is being mailed to the shareholders with the accompanying Notice of        
Annual Meeting and this Proxy Statement on or about July 1, 1995.               

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PRINCIPAL SHAREHOLDERS                                                          

  The following table sets forth certain information, as of June 15, 1995,
with respect to all of the beneficial ownership of the Company's voting shares  
by (i) each person known by the Company to own beneficially more than five      
percent (5%) of the outstanding shares of any voting class, (ii) each current   
director, (iii) each named executive listed under "Executive Compensation,"     
and (iv) all current directors and executive officers of the Company as a       
group:                                                                          

                                                        [Enlarge/Download Table]


                                                           CLASS OF STOCK                                                  

                                                 COMMON STOCK                       PREFERRED STOCK       % OF TOTAL VOTING
        DIRECTORS, OFFICERS AND           NO. OF SHARES     % OF CLASS      NO. OF SHARES     % OF CLASS     CAPITAL STOCK 
          5% SHAREHOLDERS              BENEFICIALLY OWNED  OUTSTANDING   BENEFICIALLY OWNED  OUTSTANDING     OUTSTANDING(1)

                                                                                                                           

Advent International Corporation                -  (2)          -           1,241,242(3)       71.81%         9.94%        
101 Federal Street                                                                                                         
Boston, MA 02110                                                                                                           

Compagnie Financiere du Scribe                  -  (4)          -             428,572          24.79%         3.43%        
73, Rue du Faubourg                                                                                                        
Saint Honore, Paris, France                                                                                                

Frederick B. Bamber                          33,491(5)          *                -               -             *           

David A. Boucher                            426,644(6)         2.93%             -               -            2.53%        

Andre Harari                                 10,000(7)          *             428,572(8)       24.79%         3.43%        

Clinton P. Harris                            16,000(9)          *                - (12)          -             *           

George D. Potter, Jr.                       116,662(10)         *                -               -             *           

Patrick J. Sansonetti                        31,900(11)         *                - (12)          -             *           

Ed Koepfler                                  25,000             *                -               -             *           

Richard P. Delio                            103,692(13)         *                -               -             *           

Frederick J. Egan                           129,000(14)         *                -               -             *           

Paul English                                 67,188(15)         *                -               -             *           

Bob Maher                                    10,833(16)         *                -               -             *           

Mark K. Ruport(17)                               -              -                -               -             -           

Peter Cittadini(18)                              -              -                -               -             -           

All current directors and executive                                                                                        
officers as a group (13 persons)            970,410(19)        6.53%          428,572(20)        24.79%     11.29%         
------------------------------                                                                                             
<FN>                                                                                                                       
 * Less than 1%.                                                                                                           
 - Indicates zero.                                                                                                         

 (1) Determined by using a conversion ratio of 1.34375 for the Preferred Stock.                                            
 (2) Does not include 16,000 shares of Common Stock listed as beneficially                                                 
     owned by Mr. Clinton P. Harris, and 31,900 shares of Common Stock listed                                              
     as beneficially owned by Mr. Patrick J. Sansonetti, both of whom serve as                                             
     Sr. Vice Presidents of Advent International Corporation.                                                              
 (3) Represents 1,241,242 shares of Senior Series B Convertible Preferred Stock                                            
     ("Preferred Stock") held by various limited partnerships of which Advent                                              
     International Corporation is either the general partner or a general                                                  
     partner in limited partnerships which are the general partners in such                                                
     various limited partnerships ("Advent"). The Company has relied on                                                    
     information contained in a Schedule 13D, filed on October 18, 1989 by                                                 
     Advent, in providing this information.                                                                                
 (4) Does not include 10,000 shares of Common Stock listed as beneficially                                                 
     owned by Mr. Andre Harari. Mr. Harari is the controlling shareholder,                                                 
     Chairman of the Board of Directors, and Chief Executive Officer of                                                    
     Compagnie Financiere du Scribe.                                                                                       
 (5) Includes 28,000 shares of Common Stock issuable upon exercise of certain                                              
     options, which options are currently exercisable or become exercisable                                                
     within a 60-day period after June 15, 1995.                                                                           
 (6) Includes 10,000 shares held by the spouse of Mr. Boucher, as to which                                                 
     Mr. Boucher disclaims all beneficial ownership. Also includes 94,800                                                  
     shares of Common Stock issuable upon exercise of certain options, which                                               
     options are all currently exercisable.                                                                                
 (7) Represents 10,000 shares of Common Stock issuable upon exercise of certain                                            
     options, all of which are currently exercisable.                                                                      
 (8) Represents 428,572 shares of Preferred Stock listed as beneficially owned                                             
     by Compagnie Financiere du Scribe, a French corporation of which                                                      
     Andre Harari, a director of the Company, is Chairman of the Board of                                                  
     Directors, Chief Executive Officer and controlling shareholder.                                                       

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 (9) Includes 10,000 shares of Common Stock issuable upon exercise of certain                                              
     options, which are currently exercisable, and 2,000 shares of Common Stock                                            
     held by trustees of trusts established for the benefit of Mr. Harris' wife                                            
     and children, as to all of which shares Mr. Harris disclaims beneficial                                               
     ownership.                                                                                                            
(10) Includes 10,000 shares of Common Stock issuable upon exercise of an option                                            
     granted, which options are currently exercisable.                                                                     
(11) Includes 28,000 shares of Common Stock issuable upon exercise of certain                                              
     options, which options are currently exercisable.                                                                     

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(12) Does not include 1,241,242 shares of Preferred Stock listed as                                                        
     beneficially owned by Advent International Corporation, a corporation                                                 
     in which he serves as Sr. Vice President.                                                                             
(13) Includes 97,500 shares of Common Stock issuable upon exercise of certain                                              
     options, which options are currently exercisable or become exercisable                                                
     within a 60-day period after June 15, 1995.                                                                           
(14) Includes 67,500 shares of Common Stock issuable upon exercise of certain                                              
     options, which options are currently exercisable or become exercisable                                                
     within a 60-day period after June 15, 1995.                                                                           
(15) Includes 62,250 shares of Common Stock issuable upon exercise of certain                                              
     options, which options are currently exercisable or become exercisable                                                
     within a 60-day period after June 15, 1995.                                                                           
(16) Represents 10,833 shares of Common Stock issuable upon exercise of                                                    
     certain options, which options are currently exercisable or become                                                    
     exercisable within a 60-day period after June 15, 1995.                                                               
(17) Mr. Ruport resigned from all positions with the Company, effective                                                    
     July 25, 1994.                                                                                                        
(18) Mr. Cittadini resigned from all positions with the Company, effective                                                 
     September 30, 1994.                                                                                                   
(19) Includes an aggregate of 418,883 shares issuable upon exercise of options                                             
     held by 6 directors and 6 executive officers, which options are currently                                             
     exercisable or become exercisable within the 60-day period after June 15,                                             
     1995.                                                                                                                 
(20) Represents 428,572 shares of Preferred Stock listed as beneficially owned                                             
     by Compagnie Financiere du Scribe, a French corporation of which                                                      
     Andre Harari, a director of the Company, is Chairman of the Board of                                                  
     Directors, Chief Executive Officer and controlling shareholder. Does not                                              
     include 1,241,242 shares of Preferred Stock listed as beneficially                                                    
     owned by Advent International Corporation, a corporation in which                                                     
     Patrick J. Sansonetti and Clinton P. Harris serve as Sr. Vice Presidents.                                             

VOTES REQUIRED                                                                  

A plurality of  votes cast by the holders of the Preferred and        
Common Stock is required for the election of directors. The affirmative vote  
of the holders of a majority of the shares of Common and Preferred Stock        
represented and entitled to vote at the Annual Meeting is required for the      
approval of the amendment to the Company's 1993 Incentive Stock Option Plan.    
The affirmative vote of the holders of a majority of the shares of Common and   
Preferred Stock represented and voting at the Annual Meeting is required for    
the ratification of the selection by the Board of Directors of Ernst & Young    
LLP as the Company's independent accountants for the current 1996 fiscal        
year.                                                                           

Shares of Common and Preferred Stock represented in person or by proxy
at the Annual Meeting (including shares which abstain from or do not vote       
with respect to one or more of the matters presented at the Annual Meeting)     
will be tabulated by the inspector of the election. The First National Bank     
of Boston (the "Bank of Boston") was appointed inspector for the Annual         
Meeting and will determine whether or not a quorum is present for a             
particular matter(s). The Bank of Boston will treat abstentions as shares       
that are present and entitled to vote for purposes of determining the number    
of shares that are present and entitled to vote with respect to any             
particular matter, but will not count abstentions as a vote in favor of such    
matter. Accordingly, an abstention from voting on a matter by a shareholder     
present in person or represented by proxy at the Annual Meeting with respect    
to any matter requiring a majority of the shares represented and entitled to    
vote has the same legal effect as a vote "against" the matter even though the   
shareholder or interested parties analyzing the results of the voting may       
interpret such vote differently. If a broker holding stock in  "street name"    
indicates on the proxy that it does not have discretionary authority as to      
certain shares to vote on a particular matter, those shares will not be         
considered as present and entitled to vote with respect to the matter.          

1. ELECTION OF DIRECTORS      

The Company has a classified Board of Directors presently consisting  
of two (2) Class I, two (2) Class II, and three (3) Class III directors.        
At each annual meeting of shareholders, a class of directors is elected for     
a full term of three years to succeed those directors whose terms are           
expiring. The Preferred Shareholders, as a separate class, elect the director   
designated herein as the Preferred  Class I Director.                           

At the Annual Meeting, two (2) Class II directors will be elected to  
hold office until the 1998 annual meeting of shareholders and until their       
respective successors are duly elected and qualified. All nominees have         
indicated their willingness to serve if elected; however, if an individual      
should be unable to serve, the proxies may be voted for a substitute nominee    
or nominees designated by management.                                           

 The persons named in the enclosed proxy will vote to elect as directors
the Class II nominees named below, unless authority to vote for any or all of   
the directors is withheld by marking the proxy to that effect.                  

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The following table sets forth the name and age of each nominee for   
election as a Class II director (each of whom is currently a director) and      
each of the Class I and Class III directors, the positions and offices held     
by him with the Company, his principal occupation and business experience       
during the past five years, the names of other publicly held companies of       
which he serves as a director, if any, and the year of the commencement of      
his term as a director of the Company.                                          

NOMINEES FOR THE TERMS EXPIRING IN 1998 
(CLASS II DIRECTORS)    

Andre Harari                                                                    
Age 52; Chairman of the Board of Directors and Chief Executive Officer of       
Compagnie Financiere du Scribe, a French venture capital firm, since            
January 1975. Director of the Company since 1991.                               

George D. Potter, Jr.                                                           
Age 58; President of Quality Systems International, Inc., a developer of        
quality assurance software, since October 1993 to present; Independent          
business consultant September 1991 to October 1993; Sr. Vice President of       
Sales and Marketing, Gescan International, Inc., a data retrieval software      
company from January 1990 to September 1991; Sr. Vice President of Sales        
Operations of the Company from April 1989 to December 1990; Vice President of   
Marketing of the Company, February 1983 to March 1989. Director of the          
Company since 1983.                                                             

DIRECTORS WHOSE TERMS EXPIRE IN 1996  
(CLASS III DIRECTORS)   

David A. Boucher                                                                
Age 44; General Partner of Applied Technology Partners, L.P., a venture         
capital limited partnership, since January 1993; Chairman of the Board of       
Directors of the Company since October 1989; Chief Executive Officer of the     
Company from October 1989 to July 1992; Chief Executive Officer and President   
from 1981 to October 1989. Director of the Company since 1981. Director of      
Viewlogic, Inc., and Wang Laboratories, Inc.                                    

Frederick B. Bamber                                                             
Age 52; General Partner of Applied Technology Partners, L.P., a venture capital 
limited partnership, since January 1982. Director of the Company since 1984.    

Ed Koepfler                                                                     
Age 46; President and Chief Executive Officer of the Company since November     
1994; from January 1992 to November 1994, Vice President for North American     
Operations of System Software Associates, Inc. ("SSA"), a developer of          
manufacturing software, and from 1989 to December 1991, Vice President of       
Operations of SSA. Director of the Company since November 1994.                 

DIRECTORS WHOSE TERMS EXPIRE IN 1997        
(CLASS I DIRECTORS)         

Patrick J. Sansonetti                                                           
Age 51; Sr. Vice President of Advent International Corporation, a venture       
capital company, since December 1987. Director of the Company since 1983.       
Director of Cognex Corp.                                                        

PREFERRED CLASS I DIRECTOR                                                      

Clinton P. Harris                                                               
Age 48; Sr. Vice President of Advent International Corporation, a venture       
capital company, since December 1984. Director of the Company since 1990.       

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BOARD AND COMMITTEE MEETINGS                                                    

The Company has a standing Audit Committee of the Board of Directors, 
which provides the opportunity for direct contact between the Company's         
independent auditors and the Board of Directors. The Audit Committee reviews    
the overall scope and specific plans of the annual audit by the Company's       
independent auditors and the adequacy of the Company's internal controls, and   
considers and recommends the selection of the Company's independent auditors.   
The Audit Committee met five (5) times during fiscal 1995. The current Audit    
Committee members are Messrs. Bamber (Chairman), Harris, and Potter.            

The Company also has a standing Compensation Committee of the Board of
Directors, which provides recommendations to the Board of Directors regarding   
compensation programs of the Company and administers the Company's 1983, 1993   
and 1994 Stock Option Plans and 1987 Employee Stock Purchase Plan. The          
Compensation Committee met six (6) times during fiscal 1995. The current        
members of the Compensation Committee are Messrs. Bamber, Harari, and Harris    
(Chairman).                                                                     

The Company has no nominating committee.                              

   The Board of Directors met six (6) times during fiscal 1995. Each current
director attended at least 75% of the aggregate number of the meetings of the   
Board of Directors and of all committees of the Board of Directors on which he  
served.                                                                         

There are no family relationships between or among any directors or   
officers of the Company. Under the terms of the Certificate of Vote             
Establishing the Preferred Stock, the holders of the Preferred Stock have the   
right, as a single class, to elect one director, herein designated the          
Preferred Class I Director. At the time of such establishment in September,     
1989, a current director of the Company, Patrick J. Sansonetti, was so          
designated. Daniel Harari and Clinton P. Harris were elected by the Board       
of Directors as directors of the Company pursuant to arrangements arising       
out of the Company's private placement of the Preferred Stock in                
September, 1989. In May, 1991, Daniel Harari resigned as a director of the      
Company. Subsequently, the Board of Directors elected Mr. Andre Harari a        
Class II director of the Company, succeeding to the position previously held    
Daniel Harari. Mr. Andre Harari is a current nominee for election as a          
Director.                                                                       

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

While Mr. David Boucher served as the Company's Chief Executive Officer,
the Company and Mr. Boucher entered into an agreement that in the event         
Mr. Boucher should resign from his employment with the Company, he would be     
available on an exclusive consulting basis to the Company for a period of       
18 months during which time his monthly compensation would equal that of his    
1992 compensation of $30,750 per month. Additionally, in such event, certain    
outstanding unvested stock options, approximately 30,000 shares, would          
continue to vest over said 18 month period. In July 1992, Mr. Boucher resigned  
as Chief Executive Officer and thereafter received compensation as a consultant 
until January 31, 1994, totalling $553,500. Mr. Boucher shall have until        
June 30, 1996 to exercise options covering 42,800 shares at per share exercise  
price of $3.13. Mr. Boucher is currently Chairman of the Company's Board of     
Directors, and since January 1993 a general partner in Applied Technology       
Partners, L.P. Mr. Frederick Bamber, a Company director, is also a general      
partner in Applied Technology Partners, L.P. In July 1994, upon the resignation 
of the Company's then President and Chief Executive Officer, Mark K. Ruport,    
and to assist the Company in its restructuring, Mr. Boucher was selected by     
the Company's Board of Directors to oversee the restructuring and the search    
for a new President and Chief Executive Officer, ultimately resulting in the    
appointment of Ed Koepfler, as the Company's President and Chief Executive      
Officer in November 1994. For his services, Mr. Boucher received cash           
compensation of approximately $37,000, and was granted an option of 50,000      
shares, at an exercise price of $2.75 per share, the Company's then current     
market price. In addition,  the exercise period for his existing options was    
extended an additional 18 months to June 30, 1996.                              

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EXECUTIVE COMPENSATION                                                          

  The following table sets forth the summary of compensation received by the
Chief Executive Officer and other Named Executive Officers along with their     
principal positions, for services rendered with respect to fiscal 1995, 1994,   
and 1993:                                                                       

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------------- 
                                                SUMMARY COMPENSATION TABLE                                            
--------------------------------------------------------------------------------------------------------------------- 
                                                       ANNUAL COMPENSATON                             LONG TERM       
                                                                                                    COMPENSATION      
--------------------------------------------------------------------------------------------------------------------- 
                                                                                                        AWARDS        
--------------------------------------------------------------------------------------------------------------------- 
    NAME AND                              YEAR        SALARY(1)($)    BONUS(2)($)               SECURITIES UNDERLYING 
PRINCIPAL POSITION*                                                                                   OPTIONS (#)     
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
Ed Koepfler,(3)                                                                                                       
President and Chief Executive Officer      1995         $120,000         $50,000                      350,000         
----------------------------------------------------------------------------------------------------------------------
                                           1994             -               -                            -            
----------------------------------------------------------------------------------------------------------------------
                                           1993             -               -                            -            
----------------------------------------------------------------------------------------------------------------------
Richard P. Delio,(4)                                                                                                  
Senior Vice President of Finance and                                                                                  
Administration and Chief Financial Officer 1995         $194,615         $70,000                      180,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994             -               -                            -            
-------------------------------------------------------------------------------------------------------------         
                                           1993             -               -                            -            
-------------------------------------------------------------------------------------------------------------         
Frederick J. Egan,                                                                                                    
Vice President, Asia/Pacific/Japan         1995         $163,462            -                          70,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994         $160,000         $160,000                        -            
-------------------------------------------------------------------------------------------------------------         
                                           1993         $129,731          $80,752                        -            
-------------------------------------------------------------------------------------------------------------         
Paul English,                                                                                                         
Sr. Vice President, Product Management     1995         $174,615          $25,000                     134,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994         $109,115          $25,000                      47,000(5)      
-------------------------------------------------------------------------------------------------------------         
                                           1993          $91,646          $17,000                      15,000(5)      
-------------------------------------------------------------------------------------------------------------         
Bob Maher,                                                                                                            
Vice President, Technology                 1995         $111,807          $25,000                      30,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994             -                -                           -            
-------------------------------------------------------------------------------------------------------------         
                                           1993             -                -                           -            
-------------------------------------------------------------------------------------------------------------         
Mark K. Ruport,(6)                                                                                                    
formerly President and                                                                                                
Chief Executive Officer                    1995         $346,152             -                         30,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994         $250,000          $49,810                      30,000         
-------------------------------------------------------------------------------------------------------------         
                                           1993         $250,000          $87,500                      25,000         
-------------------------------------------------------------------------------------------------------------         
Peter Cittadini,(7)                                                                                                   
formerly Sr. VP Worldwide Operations       1995         $227,811             -                         20,000         
-------------------------------------------------------------------------------------------------------------         
                                           1994         $150,000          $73,444                      20,000         
-------------------------------------------------------------------------------------------------------------         
                                           1993         $150,000         $293,303                        -            
-------------------------------------------------------------------------------------------------------------         
<FN>                                                                                                                  
 *  No restricted stock awards have ever been made by the Company to the Chief                                        
    Executive Officer and the other Named Executive Officers.                                                         
 -  Indicates zero.                                                                                                   
(1) Salary includes amounts deferred pursuant to the Interleaf, Inc. 401(k)                                           
    Savings Plan.                                                                                                     
(2) Amounts shown, except for those relating to Messrs. Cittadini and Egan, are                                       
    the awards made under the Company's corporate bonus program, which amounts                                        
    are earned and accrued during the fiscal years indicated and paid subsequent                                      
    to the end of each fiscal year. Amounts shown for Messrs. Cittadini and Egan                                      
    are comprised of sales commissions based on revenue and a cash bonus for                                          
    meeting his sales goal, or part thereof, with respect to each fiscal year.                                        
(3) Mr. Koepfler joined the Company and was elected President and Chief                                               
    Executive Officer in November 1994.                                                                               
(4) Mr. Delio resigned from all positions with the Company, effective                                                 
    June 6, 1995.                                                                                                     
(5) Mr. English's options were cancelled in fiscal 1995 and reissued in the                                           
    Company's 1995 repricing program.                                                                                 

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(6) Mr. Ruport resigned from all positions with the Company, effective                                                
    July 25, 1994.                                                                                                    
(7) Mr. Cittadini resigned from all positions with the Company, effective                                             
    September 30, 1994.                                                                                               

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The following table sets forth certain information with respect to the  
grant of incentive and non-qualified stock options for the Chief Executive      
Officer and its other Named Executive Officers in fiscal 1995:                  

                                                        [Enlarge/Download Table]


                                                   OPTION GRANTS TABLE                                                            

                                            OPTIONS GRANTED IN FISCAL YEAR 1995                                                   

                                      INDIVIDUAL GRANTS                                       POTENTIAL REALIZABLE VALUE AT       
                                                                                               ASSUMED ANNUAL RATES OF STOCK      
                                                                                             PRICE APPRECIATION FOR OPTION TERM(3)
    NAME       NUMBER OF SECURITIES    PERCENT OF TOTAL OPTIONS    EXERCISE OF   EXPIRATION         5% ($)     10% ($)            
                UNDERLYING OPTIONS     GRANTED TO EMPLOYEES IN     BASE PRICE       DATE                                          
                   GRANTED (#)(1)          FISCAL YEAR(2)          ($/SHARE)                                                      

                                                                                                                                  

Ed Koepfler         350,000                  15.09%                   $3.75      10/27/2004      $826,875   $2,086,875            

Richard P. Delio    180,000                   7.76%                   $2.75        4/1/2004      $311,850     $747,050            

Frederick J. Egan    70,000                   3.02%                   $2.75        8/2/2004      $121,275     $306,075            

Paul English          5,000                   0.22%                   $2.75        4/2/2002        $8,163      $21,863            
                     10,000                   0.43%                   $2.75        9/3/2002       $17,325      $43,725            
                      2,000                   0.09%                   $2.75        4/8/2002        $3,465       $8,745            
                      7,000                   0.30%                   $2.75        4/8/2003       $12,127      $30,608            
                     40,000                   1.72%                   $2.75       2/28/2004       $69,300     $174,900            
                     70,000                   3.02%                   $2.75        8/3/2004      $121,275     $306,075            

Bob Maher            30,000                   1.29%                   $2.75       4/14/2004       $51,975     $131,175            

Mark K. Ruport(4)    30,000                   1.29%                   $6.25                -            -            -            

Peter Cittadini(4)   20,000                    .86%                   $6.25                -            -            -            

<FN>                                                                                                                              

- Indicates zero.                                                                                                                 

(1) All options granted to the Named Executive Officers provided above are                                                        
    exercisable in two to four equal annual installments, commencing one                                                          
    year after the date of grant. The Company's 1983, 1993 and 1994 Stock                                                         
    Option Plans ("Stock Option Plans") provide that the exercise price of                                                        
    each option must be at least 100% of the fair market value of the                                                             
    Company's Common Stock on the date the option is granted. The exercise                                                        
    price may be paid in cash. Pursuant to the terms of the Plans, the                                                            
    options held by all employees, including the above-mentioned                                                                  
    executives, become exercisable in full upon a "change in control." See,                                                       
    "Severance and Change in Control."                                                                                            

(2) During the fiscal year ended March 31, 1995, the Company granted options                                                      
    under its Stock Option Plans to its employees to purchase a total of                                                          
    2,319,000 shares of Common Stock and cancelled options to purchase                                                            
    1,696,000 shares of Common Stock. These options include 1,043,000 shares                                                      
    that were cancelled and reissued under the Company's repricing program.                                                       

(3) The dollar amounts under these columns are the result of calculations                                                         
    at the 5% and 10% appreciation rates set by the Securities and Exchange                                                       
    Commission and, therefore, are not intended to forecast possible future                                                       
    appreciation, if any, in the price of the Common Stock.                                                                       

(4) Due to Named Executive's resignation in fiscal 1995, all options                                                              
    granted in fiscal 1995 have been forfeited.                                                                                   


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The following table sets forth certain information on option exercises in 
fiscal 1995 for the Company's Chief Executive Officer and its other Named       
Executive Officers during fiscal 1995 and the value of such executive           
officers' in-the-money unexercised options as of March 31, 1995:                

                                                        [Enlarge/Download Table]


                         AGGREGATED OPTION EXERCISES AND FISCAL 1995 YEAR-END OPTION VALUE                              

                         AGGREGATED OPTION EXERCISES IN 1995 AND FY-END OPTION VALUES                                   

   NAME          SHARES ACQUIRED      VALUE REALIZED ($)          NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED IN-THE
                 ON EXERCISE (#)                                OPTIONS AT FY1995-END (#)    MONEY OPTIONS AT FY1995-END
                                                                                                    ($)(1)              

                                                                     EXERCISABLE/                 EXERCISABLE/          
                                                                    UNEXERCISABLE                UNEXERCISABLE          
                                                                                                                        

Ed Koepfler            -                      -                        -/350,000                   -/$393,750           

Richard P. Delio(2)    -                      -                   25,000/155,000             $53,125/$329,375           

Frederick J. Egan      -                      -                   61,500/81,500             $108,269/$166,994           

Paul English           -                      -                   34,250/102,750             $70,881/$218,344           

Bob Maher              -                      -                        -/30,000                    -/$63,750            

Mark K. Ruport(3)      -                      -                        -/-                         -/-                  

Peter Cittadini(4)     -                      -                        -/-                         -/-                  

<FN>                                                                                                                    

- Indicates zero.                                                                                                       

(1) Market value of shares covered by in-the-money options on                                                           
    March 31, 1995, or $4.875 per share, less the option exercise price.                                                
    Options are in-the-money if the market value of the shares covered                                                  
    thereby is greater than the option exercise price.                                                                  

(2) Mr. Delio resigned from all positions with the Company, effective                                                   
    June 6, 1995.                                                                                                       

(3) Mr. Ruport resigned from all positions with the Company, effective                                                  
    July 25, 1994.                                                                                                      

(4) Mr. Cittadini resigned from all positions with the Company,                                                         
    effective September 30, 1994.                                                                                       


COMPENSATION COMMITTEE REPORT ON REPRICING                                      

 On August 3, 1994, the Compensation Committee met to determine the need
to reprice the Company's outstanding stock options for certain key              
employees and officers. Because of the $8.2 million loss for the quarter        
ended June 30, 1994, the Company's stock price dropped from a trading range     
of $6-$8 per share, to a trading range of $2-$3 per share. As a result, all     
options granted in the last five years to employees were significantly          
underwater. The Committee also reviewed the planned corporate                   
reorganization and restructuring that was expected to be announced by           
September 7, 1994. As part of this restructuring and reorganization, the        
Company was expected to incur a $7.1 million charge to earnings to cover        
expected lay-offs of approximately 150 employees and the consolidation of       
19 sales offices worldwide. As part of the reorganization, the Company also     
planned to revamp its senior management team, having previously accepted        
the resignation of Mark K. Ruport, the Company's President and Peter            
Cittadini, its Sr. Vice President for Worldwide Operations.                     

Given this environment, the Committee recognized the need to incent   
and retain certain key employees and officers. The Committee adopted a          
repricing program whereby outstanding options would be repriced at $2.75 per    
share, the closing market price on August 3, 1994, for certain employees        
and officers which it believed were important to the future success of the      
Company. Because of the critical need to retain these individuals, the          
vesting period was not restarted.                                               

None of the employees and officers, including former President,       
Mark K. Ruport and former Sr. Vice President for Worldwide Operations,          
Peter Cittadini, who departed or were scheduled to depart were eligible to      
have their options repriced. Of the Named Executive Officers, Richard P.        
Delio, Frederick J. Egan, and Paul English, who were selected by the Board      
of Directors to implement the Company's reorganization and restructuring,       
had their options repriced. The Company's current President, Ed Koepfler,       
joined the Company in November 1994 and did not participate in the              
repricing program.                                                              

COMPENSATION COMMITTEE:  ANDRE HARARI  FREDERICK B. BAMBER   CLINTON P. HARRIS  

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The following table sets forth certain information concerning all         
repricing of options held by an executive officer of the Company during the     
last ten completed fiscal years:                                                

                                                        [Enlarge/Download Table]

                                           TEN-YEAR OPTION REPRICINGS                                                   
                                                                                                            Length of   
                                                                                                         Original Option
                                              Number of                                                        Term     
                                             Securities                                                     Remaining at
                                             Underlying     Market Price of   Exercise Price      New         Date of   
                                              Options        Stock at Time     at Time of      Exercise     Repricing   
Name                                Date     Repriced (#)   of Repricing ($)  Repricing ($)    Price ($)     (Years)    

                                                                                                                        

NAMED EXECUTIVE OFFICERS AND CURRENT OFFICERS                                                                           

Richard P. Delio, Sr. VP           8/3/94    100,000          $2.75            $7.00          $2.75          9.7        
of Finance and Administration      8/3/94     15,000          $2.75            $6.75          $2.75          9.7        
and Chief Financial Officer                                                                                             

Paul English, Sr. VP of Product   11/2/90      1,500          $3.13            $6.63          $3.13          9.4        
Management                        11/2/90      1,000          $3.13            $8.38          $3.13          8.4        
                                   8/3/94      5,000          $2.75           $10.63          $2.75          7.7        
                                   8/3/94     10,000          $2.75            $9.88          $2.75          8.1        
                                   8/3/94      7,000          $2.75            $8.25          $2.75          8.7        
                                   8/3/94     40,000          $2.75            $7.00          $2.75          9.6        

Bob Maher, VP of Technology        8/3/94     25,000          $2.75            $7.25          $2.75          9.7        

Frederick J. Egan,               10/31/88      7,500          $7.38           $19.38          $7.38          9.4        
VP of Asia/Pacific/Japan          11/2/90     25,000          $3.13            $5.13          $3.13          9.8        
                                  11/2/90     25,000          $3.13            $8.13          $3.13          8.6        
                                  11/2/90     10,000          $3.13            $8.38          $3.13          8.4        
                                  11/2/90      7,500          $3.13            $7.38          $3.13          7.4        
                                  11/2/90      5,000          $3.13            $4.50          $3.13            5        
                                   8/3/94     10,000          $2.75            $6.75          $2.75          9.7        

Stephen J. Hill, VP of Europe      8/3/94      8,000          $2.75            $6.75          $2.75            9        
                                   8/3/94      2,000          $2.75            $6.75          $2.75          9.7        

John K. Hyvnar,                  10/31/88      2,000          $7.38           $16.13          $7.38          8.8        
General Counsel and Clerk        10/31/88      1,500          $7.38           $15.63          $7.38          9.6        
                                  11/2/90      1,500          $3.13            $7.38          $3.13          7.6        
                                  11/2/90     17,000          $3.13            $7.75          $3.13          8.8        
                                  11/2/90      2,000          $3.13            $7.38          $3.13          6.8        
                                  11/2/90      5,000          $3.13            $3.38          $3.13           10        
                                   8/3/94      8,000          $2.75            $8.25          $2.75          8.7        
                                   8/3/94      6,000          $2.75            $6.75          $2.75          9.7        

FORMER EXECUTIVE OFFICERS                                                                                               

William W. Barnes,               10/31/88      6,000          $7.38           $14.63          $7.38          8.5        
VP of Human Resources             11/2/90      5,000          $3.13            $7.75          $3.13          8.8        
                                  11/2/90      2,000          $3.13            $8.38          $3.13          8.4        
                                  11/2/90      6,000          $3.13            $7.38          $3.13          6.5        

Lawrence S. Bohn, Sr.             10/31/88     3,000          $7.38           $16.50          $7.38          8.7        
VP of Marketing and Business       11/2/90     5,000          $3.13            $6.63          $3.13          9.4        
Development                        11/2/90     2,000          $3.13            $8.38          $3.13          8.4        
                                   11/2/90    10,000          $3.13            $8.38          $3.13          8.1        
                                   11/2/90     3,000          $3.13            $7.38          $3.13          6.7        
                                    8/3/94    20,000          $2.75           $10.63          $2.75          7.7        
                                    8/3/94     7,000          $2.75            $4.50          $2.75          1.7        
                                    8/3/94    10,000          $2.75            $9.00          $2.75          8.8        
                                    8/3/94    10,000          $2.75            $6.75          $2.75          9.7        

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                                      TEN-YEAR OPTION REPRICINGS                                                    

                                                                                                        Length of   
                                                                                                     Original Option
                                          Number of                                                        Term     
                                         Securities                                                     Remaining at
                                         Underlying     Market Price of   Exercise Price      New         Date of   
                                          Options        Stock at Time     at Time of      Exercise     Repricing   
Name                            Date     Repriced (#)   of Repricing ($)  Repricing ($)    Price ($)     (Years)    

                                                                                                                    

David A. Boucher, President    3/20/89    40,000          $8.38           $14.63          $8.38          8.1        
and Chief Executive Officer    11/2/90    44,800          $3.13            $8.38          $3.13          6.5        

David J. Collard, Sr. VP of                                                                                         
Finance and Administration                                                                                          
and Chief Financial Officer    11/2/90    75,000          $3.13            $7.75          $3.13          8.8        

David L. Cross, Treasurer     10/31/88    10,000          $7.38           $10.13          $7.38          9.8        
                               11/2/90    10,000          $3.13            $7.38          $3.13          7.8        

Stephen J. Cummings, VP of     11/2/90     5,000          $3.13            $8.13          $3.13          8.6        
International Operations       11/2/90     5,000          $3.13            $8.38          $3.13          8.4        
                               11/2/90     2,400          $3.13            $8.13          $3.13          5.8        
                               11/2/90     1,500          $3.13            $4.50          $3.13          5.5        
                               11/2/90     1,500          $3.13            $4.50          $3.13          5.1        
                               11/2/90     3,000          $3.13            $4.00          $3.13          4.1        

M. David Downs,               10/31/88     2,000          $7.38           $16.13          $7.38          8.8        
VP of Manufacturing           10/31/88     5,000          $7.38           $10.13          $7.38          9.8        

Harry A. George,               3/20/89    30,000          $8.38           $14.63          $8.38          8.1        
VP of Finance                                                                                                       

Edward Mallen,                10/31/88     3,000          $7.38           $14.63          $7.38          8.5        
VP of U.S. Sales               11/2/90    20,000          $3.13            $7.38          $3.13            8        
                               11/2/90     3,000          $3.13            $7.38          $3.13          6.5        

Michael Mark, VP of Systems                                                                                         
Integration                    3/20/89     4,000          $8.38           $14.63          $8.38          8.1        

Stephen D. Pelletier,         10/31/88    30,000          $7.38           $12.38          $7.38          9.7        
VP of Engineering              11/2/90    30,000          $3.13            $6.63          $3.13          9.4        
                               11/2/90    30,000          $3.13            $7.38          $3.13          7.7        

George D. Potter, Jr.,                                                                                              
Sr. VP of Sales Operations     3/20/89    30,000          $8.38           $14.63          $8.38          8.1        

Mark K. Ruport, President                                                                                           
and Chief Executive Officer    11/2/90    75,000          $3.13            $5.38          $3.13          9.5        

Steven M. Schwartz,           10/31/88     6,000          $7.38           $14.63          $7.38          8.5        
VP of Marketing               10/31/88     6,000          $7.38           $10.13          $7.38          9.8        

Andrew J Van Abs,             10/31/88    10,000          $7.38           $13.50          $7.38          9.1        
VP of Engineering -            11/2/90     7,500          $3.13            $6.63          $3.13          9.4        
Peripherals Technology         11/2/90     5,000          $3.13            $7.75          $3.13          8.8        
                               11/2/90     5,000          $3.13            $7.38          $3.13            8        
                               11/2/90    10,000          $3.13            $7.38          $3.13          7.1        

George R. Vaughn, Controller  10/31/88     6,000          $7.38            $14.63         $7.38          8.5        

Robert K. Weiler, President                                                                                         
and Chief Operating Officer    11/2/90   125,000          $3.13             $6.75         $3.13          8.9        

Haviland Wright, Sr. VP and                                                                                         
Chief Scientist                 8/3/94    60,000          $2.75             $6.75         $2.75            9        
                                8/3/94     7,500          $2.75             $6.75         $2.75          9.7        


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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

The members of the Compensation Committee of the Company's Board of   
Directors during fiscal 1995 were Andre Harari, Clinton P. Harris and           
Frederick B. Bamber, none of whom is or has ever been an officer or             
employee of the Company or any of its subsidiaries. No member of the            
Compensation Committee is a party to any relationship required to be            
disclosed under Item 402 or Item 404 of Regulation S-K promulgated by the       
Securities and Exchange Commission. See "Certain Relationships and Related      
Transactions," above.                                                           

COMPENSATION COMMITTEE REPORT                                                   

The Company's executive compensation program is developed and approved
by the Compensation Committee. The Committee's philosophy is to reward          
executives based upon the achievement of corporate and individual               
performance goals as well as to provide long-term incentives for the            
achievement of future financial and strategic goals. Commencing in fiscal       
1995, the Company's then President and Chief Executive Officer, Mark K.         
Ruport, could earn up to 50% of his compensation based exclusively upon the     
achievement of corporate goals. Approximately 25% to 50% of the Company's       
other executive officers' total compensation opportunity was based upon the     
achievement of corporate and individual performance goals, except for           
executives whose salaries are highly leveraged based on profitability for a     
particular business unit. Of the Named Executive Officers, Peter Cittadini,     
the Company's then Sr. Vice President of Worldwide Operations, and              
Frederick Egan, Vice President, Asia/Pacific/Japan, had their compensation      
based on this latter criterion.                                                 

The Company's executive compensation program for fiscal 1995          
originally consisted of the following three elements: (1) base salary; (2)      
incentive compensation in the form of commissions and annual cash bonuses       
earned under the Company's corporate bonus program; and (3) long-term           
equity-based incentive compensation in the form of stock options granted        
pursuant to the Company's 1993 Stock Option Plan.                               

1.   BASE SALARY                                                                

Base salaries for the Company's executive officers, including the     
Company's then President, Mark K. Ruport, were determined by taking into        
account a combination of the following three factors: (a) salaries              
generally paid for similar positions in comparable software companies, (b)      
the particular skills of the executive, and (c) the past performance of the     
executive with the Company.                                                     

2.   INCENTIVE COMPENSATION                                                     

In April 1994, the Compensation Committee established Interleaf's     
corporate bonus program ("1995 Bonus Program"). Under the 1995 Bonus            
Program, each then executive, with the exception of Messrs. Cittadini and       
Ruport, could receive between 25% to 50% of his base salary if certain          
targeted (i) corporate revenue and (ii) corporate net income goals were         
achieved ("Goals") in fiscal 1995, along with certain individual                
performance goals established by Mr. Ruport, with the approval of the           
Compensation Committee. Under the 1995 Bonus Program, however, no bonuses       
were to be paid to Mr. Ruport, the Company's President and Chief Executive      
Officer, if the Company achieved less than 70% of these Goals; if the           
Company achieved 70% of its Goals, 12.5% of his base salary would be paid;      
and at 90% of Goals, 35% of his base salary would be paid. Finally, if 100%     
of Goals were achieved, Mr. Ruport would receive a bonus equal to 50% of        
his base salary. This formula has been in effect for the Company's last         
four fiscal years.                                                              

3.   LONG-TERM INCENTIVES                                                       

The Company awards options primarily to executives and key employees. 
Under the Company's 1993 Stock Option Plan, stock options are awarded an        
executive to incent the executive to focus on the Company's long-term           
success as measured by the Company's stock price. Since options for             
executives vest annually over a 4 to 5 year period, executives are              
encouraged to focus on the long-term success of the Company. In April 1994,     
Mr. Ruport, the Company's then President, was awarded an option grant           
covering 30,000 shares of the Company's Common Stock at an exercise price       
of $6.25 per share, the then fair market price of the Company's Common          
Stock.                                                                          

In the first quarter of fiscal 1995, ended June 30, 1994, the Company 
recorded a loss of approximately $8.2 million and the full Board of             
Directors determined that the Company's senior management organization          
needed to be reorganized. Upon mutual agreement, the Company's then             
President and Chief Executive Officer, Mark K. Ruport, resigned effective       
July 25, 1994. Mr. Ruport received one year of severance totalling $350,000     
payable over                                                                    

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26 equal installments. The Compensation Committee believed this to be fair      
and reasonable in light of Mr. Ruport's position, his term of five years        
with the Company, and his dedicated efforts. Mr. Ruport also forfeited all      
options, in which he was not vested as of his termination date, July 25,        
1994.                                                                           

In November 1994, the Company's Board of Directors elected Mr. Ed     
Koepfler as President and Chief Executive Officer. Pursuant to Mr.              
Koepfler's employment agreement with the Company, he received a base salary     
of $300,000, with a guaranteed bonus of $50,000 for fiscal 1995. The            
Compensation Committee based this salary on consultations with outside          
executive placement firms, and given Mr. Koepfler's past experience and         
performance as a senior executive in the software industry. In addition,        
Mr. Koepfler was awarded an option grant of 350,000 shares, vesting over        
four years, at an exercise price of $3.75 per share, the then current           
market price. This option was granted to significantly tie Mr. Koepfler's       
compensation to the long term success of the Company, and was within the        
range of options being offered by other software companies for newly            
recruited CEO's for companies similarly situated to Interleaf.                  

In fiscal 1995, the bonuses awarded to the current executive officers 
were awarded based on their contribution to the Company's restructuring         
program. With the exception of Paul English, the Company's Sr. Vice             
President of Product Management, none of these individuals served in their      
respective positions in fiscal 1994, the previous year.                         

Finally, for fiscal 1995, the Committee has reviewed the implications 
of Section 162(m) of the Internal Revenue Code and the proposed regulations     
thereunder. Section 162(m) disallows for federal tax purposes the               
deductibility of compensation to the Company's President or any Named           
Executive Officer to the extent compensation to the executive exceeds $1        
million in a year. The Compensation Committee believes that the Company's       
compensation for each executive in the foreseeable future would not exceed      
this limitation. Therefore, it has no present intention of formally             
qualifying any compensation paid to its executive officers for                  
deductibility under Section 162(m) of the Internal Revenue Code, but may        
consider doing so in the future when the proposed regulations become final      
if it appears that the limitations are likely to be exceeded.                   

COMPENSATION COMMITTEE:  ANDRE HARARI  FREDERICK B. BAMBER  CLINTON P. HARRIS   

STOCK PERFORMANCE GRAPH         

The following graph compares the Company's cumulative                 
shareholder return with that of a broad market index (NASDAQ Stock Market       
Index for U.S. and Foreign Companies) and a published industry index (NASDAQ    
Computer and Data Processing Services Stocks). Each of these indexes is         
calculated assuming that $100 was invested on March 31, 1990. The lines         
represent monthly index levels derived from the changes in the daily market     
capitalization, which are calculated based on daily closing stock prices,       
quarterly shares outstanding and quarterly dividend reinvestments. The broad    
market index and industry index are weighted on the basis of market             
capitalization.                                                                 

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[GRAPH]   

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                                                                [Download Table]


                                              FISCAL YEAR                       

                            3/30/90  3/28/91  3/31/92  3/31/93  3/31/94  3/31/95
                                                                                

Interleaf, Inc.              100      108.16   179.59   153.06   110.20   79.59 

NASDAQ Stock Market                                                             
(U.S. & Foreign)             100      113.56   145.12   166.55   179.63  198.36 

NASDAQ Computer and Data                                                        
Processing Services Stocks   100      134.19   198.61   221.56   227.02  308.83 


SEVERANCE PLAN AND CHANGE OF CONTROL                                            

Executive officers and all other officers of the Company are covered  
by the Company's Officer Severance Benefit Plan (the "Severance Plan").         
Adopted by the Board of Directors effective March 13, 1989, the Severance       
Plan provides that if any officer, vice president or more senior officer        
loses his employment with the Company, or has his responsibilities              
significantly diminished, during a one year period after a "change in           
control of the Company," such individual will be entitled to receive an         
amount equal to his then total annual compensation. For purposes of the         
Severance Plan, a "change in control" occurs if (a) an individual by            
himself or in affiliation with others shall acquire, directly or                
indirectly, 25% or more of the the combined voting power of Company's           
outstanding securities, or causes the replacement of a majority of the          
incumbent Board of Directors of the Company, (b) the Company is merged or       
reorganized into or with another entity, resulting in previous shareholders     
of the Company holding less than 80% of the combined voting power of the        
outstanding securities of the resulting entity, or (c) the Company is           
liquidated or substantially all of its assets are sold.                         

In addition, under the Company's 1983, 1993 and 1994 Stock Option     
Plans, all options held by all employees, including Named Executive             
Officers, become exercisable in full upon a "change in control."                

On April 13, 1994, Richard P. Delio was elected the Company's Sr. Vice
President of Finance and Administration and  Chief Financial Officer.           
Pursuant to Mr. Delio's employment agreement, in the event that Mr. Delio is    
terminated without cause or resigns due to a diminution of responsibility, he   
shall receive severance equal to his first year's salary, or approximately      
$300,000. In addition, all options granted to him shall continue vesting for    
an additional year. In June 1995, upon mutual agreement between the Company     
and Mr. Delio, Mr. Delio resigned from all positions with the Company, and      
will receive for a period of 12 months, severance equal to approximately        
$300,000. In July 1994, upon mutual agreement between the Company and Mr.       
Mark Ruport, the Company's then President and Chief Executive Officer, Mr.      
Ruport resigned from all positions with the Company, and received severance     
equal to one year of compensation, approximately $350,000. In September 1994,   
upon mutual agreement between the Company and Mr. Peter Cittadini, the          
Company's then Senior Vice President of Worldwide Operations, Mr. Cittadini     
resigned from the Company, and received severance equal to approximately        
$185,833.  In                                                                   

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November 1994, Mr. Ed Koepfler was elected the Company's President              
and Chief Executive Officer. Pursuant to Mr. Koepfler's employment              
agreement with the Company, in the event that Mr. Koepfler is terminated        
without cause, he shall receive severance equal to his annual base salary       
of $300,000.                                                                    

DIRECTORS' COMPENSATION                                                         

CASH COMPENSATION. Nonemployee directors of the Company receive       
$1,000 for each Board of Directors and Audit Committee meeting attended. In     
addition, each nonemployee director receives a retainer fee of $6,000 per       
year, payable in four equal quarterly payments. Board members are also          
reimbursed for reasonable out-of-pocket expenses.                               

COMPANY'S 1989 AND 1993 DIRECTOR STOCK OPTION PLANS. On March 20,     
1989, the Board of Directors of the Company adopted the 1989 Director Stock     
Option Plan (the "1989 Director Stock Option Plan"), which was ratified by      
the shareholders at the Special Meeting in Lieu of An Annual Meeting held       
in August 1989. To replace the 1989 Director Stock Option Plan, on              
September 8, 1993, the Board adopted the 1993 Director Stock Option Plan        
("1993 Director Stock Option Plan"), which was ratified at the Annual           
Meeting of Shareholders held in August 1994.                                    

Under the 1989 Director Stock Option Plan, each then nonemployee      
director of the Company was granted a non-statutory stock option to             
purchase 12,000 shares of Common Stock on March 20, 1989, the date the 1989     
Director Stock Option Plan was adopted by the Board of Directors at a per       
share exercise price of $8.38. Each such option is exercisable on a             
cumulative basis in equal annual installments over a three-year period          
beginning one year after the date of grant. At the end of the three year        
period, each such director receives an option grant of 3,000 shares on each     
succeeding March 20, at the then fair market value on such date in which he     
will be fully vested at such time.                                              

Only two of six (6) current nonemployee directors, Messrs. Sansonetti 
and Bamber, participate in the 1989 Director Stock Option Plan. Under the       
1989 Director Stock Option Plan, each holds an option to purchase 12,000        
shares at an exercise price of $8.38 per share, and an option to purchase       
3,000 shares at an exercise price of $8.75 per share.                           

Under the 1993 Director Stock Option Plan, each current nonemployee   
director of the Company was granted a non-statutory option to purchase          
5,000 shares of Common Stock on September 9, 1993 at an exercise price of       
$6.65 per share, the average last reported sale price per share during the      
period of September 9, 1993 through September 30, 1993, inclusive. Such         
options became exercisable in full on August 4, 1994. Each person who           
becomes a director of the Company and is not an employee of the Company         
will be granted, as of the first date of his or her election as a director,     
a non-statutory option to purchase 5,000 shares of Common Stock at the then     
fair market value of the Common Stock. Each such option will be exercisable     
one year after the date of grant. In addition, each nonemployee director        
will be automatically granted, on April 1 of each year, a non-statutory         
option to purchase 5,000 shares of Common Stock at the fair market value of     
the stock on April 1. Such option will be fully exercisable one year after      
the date of grant.                                                              

Under the 1993 Director Stock Option Plan, each current nonemployee   
director, with the exception of Mr. Boucher, has three options of 5,000         
shares each to purchase shares of the Company's Common Stock at exercise        
prices of $6.65, $7.13, and $4.87, respectively.                                

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2. RATIFICATION AND APPROVAL OF AMENDMENT TO                
THE COMPANY'S 1993 STOCK OPTION PLAN                

Under the Company's 1993 Stock Option Plan (the "1993 Stock Option    
Plan"), the Company is currently authorized to grant options to purchase up     
to an aggregate of 750,000 shares of Common Stock, of which 10,000 shares       
of Common Stock remain available for future grants as of June 1, 1995. Any      
options to purchase shares of Common Stock issued pursuant to the 1993          
Stock Option Plan which are cancelled shall be available for future grants      
under such plan.                                                                

To ensure that the Company may continue to attract and retain key     
employees, on April 27, 1995, the Board of Directors adopted, subject to        
the approval of the Company's shareholders at the Annual Meeting, an            
amendment to the 1993 Stock Option Plan increasing the total number of          
shares available for issuance under the 1993 Stock Option Plan from 750,000     
to 1,500,000 shares (subject to adjustment for any dividend, stock split or     
other relevant changes in the Company's capitalization).                        

The following is a summary of certain provisions of the 1993 Stock    
Option Plan.                                                                    

ELIGIBILITY                                                                     

All employees (including executive officers) of the Company are       
eligible to receive incentive stock options and non-statutory stock             
options. Consultants and advisors to the Company are only eligible to           
receive non-statutory stock options. As of June 15, 1995, approximately 650     
employees (including 5 executive officers) were eligible for selection to       
receive stock options under the 1993 Stock Option Plan.                         

ADMINISTRATION; OPTION TERMS                                                    

The 1993 Stock Option Plan is administered by the Compensation      
Committee of the Board of Directors, which designates the optionees, number     
of shares, exercise price, date of grant and other terms of each option.        
The exercise price may not be less than 100% of the fair market value of        
the Common Stock for both non-statutory and for incentive stock options.        
Under Section 422 of the Internal Revenue Code of 1986, as amended (the         
"Code"), no incentive stock option granted under the 1993 Stock Option Plan     
can, together with any other incentive stock option granted under any other     
plan of the Company, become exercisable for the first time in any one           
calendar year for shares of Common Stock with an aggregate fair market          
value (determined as of the date of grant) of more than $100,000 and no         
incentive stock option can have a term exceeding ten years. Payment of the      
option price may be made in cash, shares of Common Stock or a combination       
thereof.                                                                        

While the Company may grant options which are exercisable at different
times or within different periods, it is anticipated that options granted       
generally will be exercisable on a cumulative basis in three equal annual       
installments (generally four or five equal annual installments in the case      
of executive officers). Options are nontransferable other than by the laws      
of descent and distribution and are exercisable, during the optionee's          
lifetime, only by him or her. The Compensation Committee will determine the     
length of time an optionee may exercise his option following the                
termination of employment of the optionee (which may not exceed three           
months in the case of incentive stock options) or upon the optionee's death     
or disability (which may not exceed one year in the case of incentive stock     
options). In the event of a "Change of Control" of the Company, as defined      
in the 1993 Stock Option Plan, all outstanding options will immediately         
become exercisable in full.                                                     

The last reported sale price for the Common Stock as reported by      
NASDAQ on the National Market System on June 15, 1995 was $6.37 per share.      

CANCELLATION AND GRANT OF NEW OPTIONS                                           

The Compensation Committee, with the consent of the affected option   
holder, may at any time cancel any or all outstanding options under the         
1993 Stock Option Plan and grant in substitution therefor new options under     
the 1993 Stock Option Plan covering the same or different numbers of shares     
of Common Stock. Such new options shall have an exercise price of not less      
than 100% of the fair market value on the date of the new grant in the case     
of both non-statutory and incentive stock options. The Company anticipates      
that in most cases the option price in effect under any such new grant will     
be less than the option price which would have been payable under the           
cancelled options since the new grant is likely to arise in situations          
where the exercise price of existing options exceed the market price and        
new options are granted at lower prices to restore incentive to recipients      
of such options.                                                                

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AMENDMENT AND TERMINATION                                                       

The Board of Directors may at any time amend or terminate the 1993    
Stock Option Plan except that no amendment may be made without the approval     
of the Company's stockholders if such amendment would (i) materially            
increase the benefits accruing to participants under the 1993 Stock Option      
Plan, (ii) materially increase the number of shares which may be issued         
under the 1993 Stock Option Plan or (iii) materially modify the                 
requirements as to eligibility for participation under the 1993 Stock           
Option Plan.                                                                    

FEDERAL INCOME TAX CONSEQUENCES                                                 

The following is a summary of the federal income tax treatment of     
incentive stock options and non-statutory stock options.                        

NON-STATUTORY OPTIONS. No taxable income is recognized by the optionee
upon the grant of a non-statutory stock option. The optionee must recognize     
as ordinary income in the year in which the option is exercised the amount      
by which the fair market value of the purchased shares on the date of           
exercise exceeds the option price. The Company will be entitled to a            
business expense deduction equal to the amount of ordinary income               
recognized by the optionee. Any additional gain or loss recognized upon the     
subsequent disposition of the purchased shares will be a capital gain or        
loss, and will be a long-term gain or loss if the shares are held for more      
than one year from the date of exercise.                                        

INCENTIVE STOCK OPTIONS. No taxable income will be recognized by the  
optionee upon the grant or exercise of an incentive stock option and no         
corresponding business expense deduction will be available to the Company.      
Generally, if an optionee holds shares acquired upon the exercise of            
incentive stock options for at least two years from the grant of the option     
and for at least one year from the date of transfer of the purchased shares     
to him or her, any gain recognized by the optionee on a subsequent sale of      
the shares will be treated as long-term capital gain. The gain recognized       
upon the sale of the stock is the difference between the option price and       
the sale price of the stock. The net federal income tax effect on the           
holder of an incentive stock option is to defer, until the stock is sold,       
taxation of any increase in the stock's value from the time of grant to the     
time of exercise.                                                               

If the optionee disposes of the shares prior to the expiration of the 
statutory holding periods described above, he or she will recognize taxable     
income at ordinary income tax rates in an amount equal to the lesser of (i)     
the value of the shares on the date of exercise, less the option price, or      
(ii) the amount realized on the date of sale, less the option price and the     
Company will receive a corresponding business expense deduction. The amount     
by which the proceeds of sale exceed the fair market value of the shares on     
the date of exercise will be treated as long-term capital gain if the           
shares are held for more than one year prior to the sale and as short-term      
capital gain if the shares are held for a shorter period. In the case of a      
sale where a loss, if sustained, would have been recognized, the amount of      
the optionee's income, and the amount of the Company's corresponding            
expense deduction, will not exceed the difference between the sale price        
and the adjusted basis of the shares.                                           

For the purposes of the "alternative minimum tax" applicable to       
individuals, an incentive stock option is treated as if it were a               
non-statutory stock option. Thus, in the year of option exercise, an            
optionee must generally include in his or her alternative minimum taxable       
income the difference between the exercise price and the fair market value      
of the stock on the date of exercise, and in the year of sale any               
additional gain or loss is included in alternative minimum taxable income.      

INFORMATION ABOUT PARTICIPATION                                                 

Because the selection of optionees and the number of shares to be     
covered by options will be made from time to time in the future by the          
Compensation Committee of the Board of Directors, it is not possible to         
determine the benefits or amounts that will be received by executive            
officers named under the caption "Executive Compensation" above, all            
current executive officers as a group or all employees, including all           
current officers who are not executive officers, as a group. For                
information concerning recent grants to executive officers of stock options     
under the Company's 1993 Stock Option Plan, see the table captioned "Option     
Grants Table" above.                                                            

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RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

The Board of Directors believes that the proposed increase in the     
number of shares available for issuance in the 1993 Stock Option Plan is in     
the best interests of the Company and its shareholders, and accordingly         
recommends a vote FOR the proposal.                                             

3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS          

Subject to ratification by the shareholders, the Board of Directors,  
on the recommendation of the Audit Committee, has selected the firm of          
Ernst & Young LLP as the Company's independent auditors for the current         
fiscal year, ending March 31, 1996. Ernst & Young LLP has served as the         
Company's independent auditors since 1981.                                      

Although shareholder approval of the Board of Directors' selection of 
Ernst & Young LLP is not required by law, the Board of Directors believes       
it is advisable to give shareholders an opportunity to ratify this              
selection. If this proposal is not approved at the Annual Meeting, the          
Board of Directors will reconsider its selection of Ernst & Young LLP.          

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they      
desire to do so and will also be available to respond to appropriate            
questions from shareholders.                                                    

OTHER MATTERS           

Management does not know of any other matters which may come before   
the Annual Meeting. However, if any other matters are properly presented to     
the meeting, it is the intention of the persons named in the accompanying       
proxy to vote, or otherwise act, in accordance with their judgment on such      
matters.                                                                        

This solicitation has been made by the Company. All costs of          
solicitation of proxies will be borne by the Company. In addition to            
solicitations by mail, the Company's directors, officers and other              
employees, without additional remuneration, may solicit proxies by              
telephone, telegraph and personal interviews. Brokers, custodians and           
fiduciaries will be requested to forward proxy soliciting material to the       
owners of stock held in their names, and the Company will reimburse them        
for their out-of-pocket expenses in this connection.                            

DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS                                

Proposals of shareholders intended to be presented at the 1996 Annual 
Meeting of Shareholders must be received by the Company at its principal        
office in Waltham, Massachusetts, by no later than April 1, 1996 for            
inclusion in the proxy statement for that meeting.                              

                                 By Order of the Board of Directors,

                   John K. Hyvnar, Clerk

July 1, 1995                                                                    

THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE ANNUAL           
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,          
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE.     
YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING       
AND WILL BE APPRECIATED. SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR     
SHARES PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.                  

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M74031-004                                                                      

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APPENDIX

 INTERLEAF, INC.
1993 STOCK OPTION PLAN
 AMENDED BY THE BOARD OF DIRECTORS ON APRIL 27, 1995, SUBJECT TO SHAREHOLDER
 RATIFICATION AND APPROVAL AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 17, 1995

1.  PURPOSE.                                                                    

          The purpose of this plan (the "Plan") is to secure for Interleaf, Inc.
(the "Company") and its shareholders the benefits arising from capital stock    
ownership by employees, officers and directors of, and consultants or advisors  
to, the Company and its parent and subsidiary corporations who are expected to  
contribute to the Company's future growth and success. Except where the context 
otherwise requires, the term "Company" shall include the parent and all present 
and future subsidiaries of the Company as defined in Sections 425(e) and 425(f) 
of the Internal Revenue Code of 1986, as amended or replaced from time to time  
(the "Code").                                                                   

2.  TYPE OF OPTIONS AND ADMINISTRATION.                                         

 (a) TYPES OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee   
designated by the Board of Directors) and may be either incentive stock options 
("Incentive Stock Options") meeting the requirements of Section 422 of the Code 
or non-statutory options which are not intended to meet the requirements of     
Section 422 of the Code.                                                        

(b) ADMINISTRATION. The Plan will be administered by the Board of 
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion grant options to purchase shares of the Company's Common 
Stock ("Common Stock") and issue shares upon exercise of such options as        
provided in the Plan. The Board shall have authority, subject to the express    
provisions of the Plan, to construe the respective option agreements and the    
Plan, to prescribe, amend and rescind rules and regulations relating to the     
Plan, to determine the terms and provisions of the respective option agreements,
which need not be identical, and to make all other determinations in the        
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors may correct any defect or supply any        
omission or reconcile any inconsistency in the Plan or in any option agreement  
in the manner and to the extent it shall deem expedient to carry the Plan into  
effect and it shall be the sole and final judge of such expediency. No director 
shall be liable for any action or determination made in good faith. The Board of
Directors may, to the full extent permitted by or consistent with applicable    
laws or regulations (including, without limitation, applicable state law and    
Rule l6b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange 
Act"), or any successor rule ("Rule l6b-3"), delegate any or all of its powers  
under the Plan to a committee (the "Committee") appointed by the Board of       
Directors, and if the Committee is so appointed all references to the Board of  
Directors in the Plan shall mean and relate to such Committee.                  

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      (c) APPLICABILITY OF RULE l6b-3. Those provisions of the Plan which make
express reference to Rule l6b-3 shall apply to the Company only at such time as 
the Company's Common Stock is registered under the Exchange Act, and then only  
to such persons as are required to file reports under Section 16(a) of the      
Exchange Act (a "Reporting Person").                                            

3.  ELIGIBILITY.                                                                

      (a) GENERAL. Options shall be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the  
Company; provided, that Incentive Stock Options may be granted only to persons  
who are eligible to receive such options under Section 422 of the Code. A person
who has been granted an option may, if he or she is otherwise eligible, be      
granted an additional option or options if the Board of Directors shall so      
determine.                                                                      

   (b) GRANT OF OPTIONS TO REPORTING PERSONS. While the Company's Common
Stock is registered under the Exchange Act, the selection of a Reporting Person 
as a participant and decisions concerning the date of grant, exercise price and 
amount of shares covered by an option or options to be granted to such Reporting
Person shall be made either by the Board of Directors, if each member is a      
"disinterested person" (as hereinafter defined), or by a committee of two or    
more directors, each of whom is a "disinterested person." For purposes of this  
Plan, a person is a "disinterested person" only if such person qualifies as a   
"disinterested person" within the meaning of paragraph (c)(1)(2)(i) of Rule     
l6b-3 (or successor), as such term is interpreted from time to time.            

4.  STOCK SUBJECT TO PLAN.                                                      

       Subject to adjustment as provided in Section 15 below, the maximum number
of shares of Common Stock of the Company which may be issued and sold under the 
Plan is 1,500,000 shares. If an option granted under the Plan shall expire or   
terminate for any reason without having been exercised in full, the unpurchased 
shares subject to such option shall again be available for subsequent option    
grants under the Plan. If shares issued upon exercise of an option under the    
Plan are tendered to the Company in payment of the exercise price of an option  
granted under the Plan, such tendered shares shall again be available for       
subsequent option grants under the Plan; provided, that in no event shall (i)   
the total number of shares issued pursuant to the exercise of Incentive Stock   
Options under the Plan, on a cumulative basis, exceed the maximum number of     
shares authorized for issuance under the Plan exclusive of shares made available
for issuance pursuant to this sentence or (ii) the total number of shares issued
pursuant to the exercise of options by Reporting Persons, on a cumulative basis,
exceed the maximum number of shares authorized for issuance under the Plan      
exclusive of shares made available for issuance pursuant to this sentence.      

5.  FORMS OF OPTION AGREEMENTS.                                                 

    As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with  
the Plan as may be approved by the board of directors. Such option agreements   
may differ among recipients.                                                    

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6.  PURCHASE PRICE.                                                             

     (a) GENERAL. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the board of directors, PROVIDED,  
HOWEVER, that (i) in the case of an Incentive Stock Option, the exercise price  
shall not be less than 100% of the fair market value of such stock, as          
determined by the Board of Directors, at the time of grant of such option, or   
less than 110% of such fair market value in the case of options described in    
Section 11(b), and (ii) in the case of a non-statutory option granted at a time 
when the Company is subject to Rule l6b-3, the exercise price shall not be less 
than 100% of the fair market value of such stock, as determined by the Board of 
Directors, at the time of grant of such option.                                 

       (b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the     
order of the Company in an amount equal to the exercise price of such options,  
or, to the extent provided in the applicable option agreement, (i) by delivery  
to the Company of shares of Common Stock of the Company already owned by the    
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, (ii) by any other means which the Board of Directors   
determines are consistent with the purpose of the Plan and with applicable laws 
and regulations (including, without limitation, the provisions of Rule l6b-3 and
Regulation T promulgated by the Federal Reserve Board) or (iii) by any          
combination of such methods of payment. The fair market value of any shares of  
the Company's Common Stock or other non-cash consideration which may be         
delivered upon exercise of an option shall be determined in such manner as may  
be prescribed by the Board of Directors.                                        

7.  OPTION PERIOD.                                                              

      Each option and all rights thereunder shall expire on such date as shall
be set forth in the applicable option agreement, except that such date, in the  
case of an Incentive Stock Option, shall in no case be later than ten years     
after the date on which the option is granted.                                  

8.  EXERCISE OF OPTIONS.                                                        

       Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set    
forth in the agreement evidencing such option, subject to the provisions of the 
Plan.                                                                           

9.  NONTRANSFERABILITY OF OPTIONS.                                              

    Incentive Stock Options and options granted to Reporting Persons shall
not be assignable or transferable by the person to whom it is granted, either   
voluntarily or by operation of law, except by will or the laws of descent and   
distribution, and, during the life of the optionee, shall be exercisable only by
the optionee.                                                                   

10.  EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.                 

       The Board of Directors shall determine the period of time during which an
optionee may exercise an option following (i) the termination of the optionee's 
employment or other                                                             

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relationship with the Company or (ii) the death or disability of the optionee.  
Such periods shall be set forth in the agreement evidencing such option.        

11.  INCENTIVE STOCK OPTIONS.                                                   

     Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:      

    (a) EXPRESS DESIGNATION. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the     
option agreement covering such Incentive Stock Options.                         

       (b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the   
owner of stock possessing more than 10% of the total combined voting power of   
all classes of stock of the Company (after taking into account the attribution  
of stock ownership rules of Section 425(d) of the Code), then the following     
special provisions shall be applicable to the Incentive Stock Option granted to 
such individual:                                                                

                (i) The purchase price per share of the Common Stock
             subject to such Incentive Stock Option shall not be less than
             110% of the fair market value of one share of Common Stock at
the time of grant; and                          

                     (ii) The option exercise period shall not exceed five years
from the date of grant.                         

      (c) DOLLAR LIMITATION. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option    
plans of the Company) which are intended to constitute Incentive Stock Options  
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year   
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.                   

    (d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,  
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:                                                    

                     (i) an Incentive Stock Option may be exercised within the
               period of three months after the date the optionee ceases to be
               an employee of the Company (or within such lesser period as may
                be specified in the applicable option agreement), PROVIDED, that
                the agreement with respect to such option may designate a longer
            exercise period and that the exercise after such three-month
          period shall be treated as the exercise of a non-statutory
option under the Plan;                          

              (ii) if the optionee dies while in the employ of the
               Company, or within three months after the optionee ceases to be
such an employee,                               

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            the Incentive Stock Option may be exercised by the person to
         whom it is transferred by will or the laws of descent and
            distribution within the period of one year after the date of
              death (or within such lesser period as may be specified in the
applicable option agreement); and               

                  (iii) if the optionee becomes disabled (within the meaning
          of Section 22(e)(3) of the Code or any successor provision
                thereto) while in the employ of the Company, the Incentive Stock
               Option may be exercised within the period of one year after the
               date the optionee ceases to be such an employee because of such
               disability (or within such lesser period as may be specified in
the applicable option agreement).               

For all purposes of the Plan and any option granted hereunder, "employment"     
shall be defined in accordance with the provisions of Section 1.421-7(h) of the 
Income Tax Regulations (or any successor regulations). Notwithstanding the      
foregoing provisions, no Incentive Stock Option may be exercised after its      
expiration date.                                                                

12.  ADDITIONAL PROVISIONS.                                                     

       (a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its sole
discretion, include additional provisions in any option granted under the Plan, 
including without limitation restrictions on transfer, repurchase rights,       
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to   
transfer other property to optionees upon exercise of options, or such other    
provisions as shall be determined by the Board of Directors; provided that such 
additional provisions shall not be inconsistent with any other term or condition
of the Plan.                                                                    

       (b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular     
option or options granted under the Plan may be exercised or (ii) extend the    
dates during which all, or any particular option or options granted under the   
Plan may be exercised; provided, however, that no such extension shall be       
permitted if it would cause the Plan to fail to comply with Section 422 of the  
Code or with Rule l6b-3.                                                        

13.  GENERAL RESTRICTIONS.                                                      

   (a) INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an option is granted, as a condition of exercising such option, to give    
written assurances in substance and form satisfactory to the Company to the     
effect that such person is acquiring the Common Stock subject to the option for 
his or her own account for investment and not with any present intention of     
selling or otherwise distributing the same, and to such other effects as the    
Company deems necessary or appropriate in order to comply with federal and      
applicable state securities laws, or with covenants or representations made by  
the Company in connection with any public offering of its Common Stock.         

      (b) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that   
the listing, registration or                                                    

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qualification of the shares subject to such option upon any securities exchange 
or under any state or federal law, or the consent or approval of any            
governmental or regulatory body, or that the disclosure of non-public           
information or the satisfaction of any other condition is necessary as a        
condition of, or in connection with, the issuance or purchase of shares         
thereunder, such option may not be exercised, in whole or in part, unless such  
listing, registration, qualification, consent or approval, or satisfaction of   
such condition shall have been effected or obtained on conditions acceptable to 
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to       
satisfy such condition.                                                         

14.  RIGHTS AS A SHAREHOLDER.                                                   

The holder of an option shall have no rights as a shareholder with
respect to any shares covered by the option (including, without limitation, any 
rights to receive dividends or non-cash distributions with respect to such      
shares) until the date of issue of a stock certificate to him or her for such   
shares. No adjustment shall be made for dividends or other rights for which the 
record date is prior to the date such stock certificate is issued.              

15.  ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS AND RELATED TRANSACTIONS.      

   (a) GENERAL. If, through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,  
recapitalization, reclassification, stock dividend, stock split, reverse stock  
split, or other similar transaction, (i) the outstanding shares of Common Stock 
are increased or decreased or are exchanged for a different number or kind of   
shares or other securities of the Company, or (ii) additional shares or new or  
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an 
appropriate and proportionate adjustment may be made in (x) the maximum number  
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to then outstanding options under the     
Plan, and (z) the price for each share subject to any then outstanding options  
under the Plan, without changing the aggregate purchase price as to which such  
options remain exercisable, provided that no adjustment shall be made pursuant  
to this Section 15 if such adjustment would cause the Plan to fail to comply    
with Section 422 of the Code or with Rule l6b-3.                                

 (b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this
Section 15 will be made by the Board of Directors, whose determination as to    
what adjustments, if any, will be made and the extent thereof will be final,    
binding and conclusive. No fractional shares will be issued under the Plan on   
account of any such adjustments.                                                

16.  MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.                       

      (a) GENERAL. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of   
Common Stock are exchanged for securities, cash or other property of any other  
corporation or business entity or in the event of a liquidation of the Company, 
the Board of Directors of the Company, or the board of directors of any         
corporation assuming the obligations of the Company, may,                       

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in its discretion, take any one or more of the following actions, as to         
outstanding options: (i) provide that such options shall be assumed, or         
equivalent options shall be substituted, by the acquiring or succeeding         
corporation (or an affiliate thereof), provided that any such options           
substituted for Incentive Stock Options shall meet the requirements of Section  
425(a) of the Code, (ii) upon written notice to the optionees, provide that all 
unexercised options will terminate immediately prior to the consummation of such
transaction unless exercised by the optionee within a specified period following
the date of such notice, (iii) in the event of a merger under the terms of which
holders of the Common Stock of the Company will receive upon consummation       
thereof a cash payment for each share surrendered in the merger (the "Merger    
Price"), make or provide for a cash payment to the optionees equal to the       
difference between (A) the Merger Price times the number of shares of Common    
Stock subject to such outstanding options (to the extent then exercisable at    
prices not in excess of the Merger Price) and (B) the aggregate exercise price  
of all such outstanding options in exchange for the termination of such options,
and (iv) provide that all or any outstanding options shall become exercisable in
full immediately prior to such event.                                           

     (b) SUBSTITUTE OPTIONS. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become    
employees of the Company, or a subsidiary of the Company, as the result of a    
merger or consolidation of the employing corporation with the Company or a      
subsidiary of the Company, or as a result of the acquisition by the Company, or 
one of its subsidiaries, of property or stock of the employing corporation. The 
Company may direct that substitute options be granted on such terms and         
conditions as the Board of Directors considers appropriate in the circumstances.

17.  CHANGE IN CONTROL.                                                         

     Notwithstanding any other provision of the Plan and except as otherwise
provided in the relevant option agreement, in the event of a "Change in Control 
of the Company" (as defined below), the exercise dates of all options then      
outstanding shall be accelerated in full and any restrictions on exercising     
outstanding options issued pursuant to the Plan prior to any given date shall   
terminate. For purposes of the Plan, a "Change in Control of the Company" shall 
occur or be deemed to have occurred only if (i) any "person," as such term is   
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as     
amended (the "Exchange Act") (other than the Company, any trustee of other      
fiduciary holding securities under an employee benefit plan of the Company, or  
any corporation owned directly or indirectly by the stockholders of the Company 
in substantially the same proportion as their ownership of stock of the         
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under  
the Exchange Act), directly or indirectly, of securities of the Company         
representing 25% or more of the combined voting power of the Company's then     
outstanding securities; (ii) during any period of two consecutive years ending  
during the term of the Plan (not including any period prior to the adoption of  
the Plan), individuals who are the beginning of such period constitute the Board
of Directors of the Company, and any new director (other than a director        
designated by a person who has entered into an agreement with the Company to    
effect any transaction described in clause (i), (iii), or (iv) of this Section  

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17) whose election by the Board of Directors or nomination for election by the  
Company's shareholders was approved by a vote of at least two-thirds of the     
directors then still in office who were either directors at the beginning of the
period or whose election or whose nomination for election was previously so     
approved (collectively, the "Disinterested Directors"), cease for any reason to 
constitute a majority of the Board of Directors; (iii) the shareholders of the  
Company approve a merger or consolidation of the Company with any other         
corporation, other than (A) a merger or consolidation which would result in the 
voting securities of the Company outstanding immediately prior thereto          
continuing to represent (either by remaining outstanding or by being converted  
into voting securities of the surviving entity) more than 80% of the combined   
voting power of the voting securities of the Company or such surviving entity   
outstanding immediately after such merger or consolidation or (B) a merger or   
consolidation effected to implement a recapitalization of the company (or       
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 25% of the combined voting power of the Company's then outstanding         
securities; or (iv) the shareholders of the Company approve a plan of complete  
liquidation of the Company or an agreement for the sale or disposition by the   
Company of all or substantially all of the Company's assets.                    

18.  NO SPECIAL EMPLOYMENT RIGHTS.                                              

  Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by 
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the    
optionee.                                                                       

19.  OTHER EMPLOYEE BENEFITS.                                                   

      The amount of any compensation deemed to be received by an employee as a
result of the exercise of an option or the sale of shares received upon such    
exercise will not constitute compensation with respect to which any other       
employee benefits of such employee are determined, including, without           
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the    
Board of Directors.                                                             

20.  AMENDMENT OF THE PLAN.                                                     

       (a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required as to such modification or amendment    
under Section 422 of the Code or any successor provision with respect to        
Incentive Stock Options or under Rule l6b-3 or any successor provision with     
respect to options held by Reporting Persons, the Board of Directors may not    
effect such modification or amendment without such approval.                    

    (b) The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an      
option previously granted to him or her. With the consent of the optionee       
affected, the Board of Directors may amend outstanding option agreements in a   
manner not inconsistent with the Plan. The Board of                             

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Directors shall have the right to amend or modify (i) the terms and provisions  
of the Plan and of any outstanding Incentive Stock Options granted under the    
Plan to the extent necessary to qualify any or all such options for such        
favorable federal income tax treatment (including deferral of taxation upon     
exercise) as may be afforded incentive stock options under Section 422 of the   
Code and (ii) the terms and provisions of the Plan and of any outstanding option
to the extent necessary to ensure the qualification of the Plan under Rule l6b-3
or any successor rule.                                                          

21.  WITHHOLDING.                                                               

      (a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind     
required by law to be withheld with respect to any shares issued upon exercise  
of options under the Plan. Subject to the prior approval of the Company, which  
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to    
withhold shares of Common Stock otherwise issuable pursuant to the exercise of  
an option or (ii) by delivering to the Company shares of Common Stock already   
owned by the optionee. The shares so delivered or withheld shall have a fair    
market value equal to such withholding obligation. The fair market value of the 
shares used to satisfy such withholding obligation shall be determined by the   
Company as of the date that the amount of tax to be withheld is to be           
determined. An optionee who has made an election pursuant to this Section 21(a) 
may only satisfy his or her withholding obligation with shares of Common Stock  
which are not subject to any repurchase, forfeiture, unfulfilled vesting or     
other similar requirements.                                                     

      (b) Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective  
unless made in compliance with any applicable requirements of Rule l6b-3(e) or  
any successor rule under such Act.                                              

22.  CANCELLATION AND NEW GRANT OF OPTIONS, ETC.                                

    The Board of Directors shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, (i) the      
cancellation of any or all outstanding options under the Plan and the grant in  
substitution therefor of new options under the Plan covering the same or        
different numbers of shares of Common Stock and having an option exercise price 
per share which may be lower or higher than the exercise price per share of the 
cancelled options or (ii) the amendment of the terms of any and all outstanding 
options under the Plan to provide an option exercise price per share which is   
higher or lower than the then-current exercise price per share of such          
outstanding options; provided, that in the case of a Reporting Person, the      
exercise price of options substituted or amended in the manner described above  
shall not be less than 50% of the fair market value of the underlying stock at  
the time of such substitution or amendment.                                     

23.  EFFECTIVE DATE AND DURATION OF THE PLAN.                                   

     (a) EFFECTIVE DATE. The Plan shall become effective when adopted by the
Board of Directors, but no option granted under the Plan shall become           
exercisable unless and until                                                    

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the Plan shall have been approved by the Company's shareholders. If such        
shareholder approval is not obtained within twelve months after the date of the 
Board's adoption of the Plan, no options previously granted under the Plan shall
be deemed to be Incentive Stock Options and no Incentive Stock Options shall be 
granted thereafter. Amendments to the Plan not requiring shareholder approval   
shall become effective when adopted by the Board of Directors; amendments       
requiring shareholder approval (as provided in Section 20) shall become         
effective when adopted by the Board of Directors, but no Incentive Stock Option 
issued after the date of such amendment shall become exercisable (to the extent 
that such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular optionee) unless and until such amendment
shall have been approved by the Company's shareholders. If such shareholder     
approval is not obtained within twelve months of the Board's adoption of such   
amendment, any Incentive Stock Options granted on or after the date of such     
amendment shall terminate to the extent that such amendment to the Plan was     
required to enable the Company to grant such option to a particular optionee.   
Subject to this limitation, options may be granted under the Plan at any time   
after the effective date and before the date fixed for termination of the Plan. 

  (b) TERMINATION. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate, with respect to Incentive Stock Options, upon the     
earlier of (i) the close of business on the day next preceding the tenth        
anniversary of the date of its adoption by the Board of Directors, or (ii) the  
date on which all shares available for issuance under the Plan shall have been  
issued pursuant to the exercise or cancellation of options granted under the    
Plan. Unless sooner terminated in accordance with Section l6, the Plan shall    
terminate with respect to options which are not Incentive Stock Options on the  
date specified in (ii) above. If the date of termination is determined under (i)
above, then options outstanding on such date shall continue to have force and   
effect in accordance with the provisions of the instruments evidencing such     
options.                                                                        

24.  PROVISION FOR FOREIGN PARTICIPANTS.                                        

     The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside   
the United States to recognize differences in laws, rules, regulations or       
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.                                              

    Adopted by the Board of Directors on June 2, l993, and approved by the
Company's shareholders at Special Meeting in Lieu of an Annual Meeting on August
5, 1993. Amended by the Board of Directors on July 14, 1994.                    

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INTERLEAF, INC. 
     Proxy for the Annual Meeting of Shareholders to be held August 17, 1995
      THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

   The undersigned, revoking all prior proxies, hereby appoint(s) Ed Koepfler,
G. Gordon M. Large, and  John K. Hyvnar, and each of them, with full power of   
substitution, as proxies to represent and vote as designated herein, all shares 
of capital stock of Interleaf, Inc. (the "Company") which the undersigned       
would be entitled to vote if personally present at the Annual Meeting of        
Shareholders of the Company to be held at the Westin Hotel, 70 Third Avenue,    
Waltham, Massachusetts on Thursday, August 17, 1995 at 8:30 a.m., local time,   
and at any adjournment thereof.                                                 

The proxy when properly executed will be voted in the manner directed   
herein by the undersigned shareholder.  If no direction is given, this proxy    
will be voted for all proposals.  Attendance of the undersigned at the meeting  
or at any adjournment thereof will not be deemed to revoke this proxy unless    
the undersigned shall revoke this proxy in writing.                             

                         NEW ADDRESS:_______________________________________

                         ___________________________________________________

                         ___________________________________________________

                         ___________________________________________________

 (Front)
    CONTINUED AND TO BE SIGNED ON REVERSE SIDE

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1.  To elect the following two nominees as Class II                             
directors (except as marked below):                                     

Nominees: Andre Harari and George D. Potter, Jr.                        

/X/  FOR                  /X/ WITHHOLD                                  
nominees                 from nominees                        

For, except vote(s) withheld from the following                         
nominees:                                                               

/X/ ____________________________________________                        

2.  To ratify and approve an         FOR    AGAINST   ABSTAIN                   
amendment to the Company's                                              
1993 Stock Option Plan to        /X/      /X/       /X/                 
increase the number of shares                                           
available for issuance by                                               
750,000 shares.                                                         

------------------------------------------------------------------------------  

3.  To ratify the appointment of     FOR    AGAINST   ABSTAIN                   
Ernst & Young LLP as the                                                
Company's independent auditors   /X/       /X/      /X/                 
for the 1996 fiscal year.                                               

In their discretion, the proxies are authorized to vote upon such other         
matters as may properly come before the meeting or any adjournment thereof.     

CHECK HERE FOR                                CHECK HERE IF             
ADDRESS CHANGE    /X/                         YOU PLAN TO ATTEND  /X/   
                               THE MEETING

Signature _______________________________  Date _______________________         

Signature _______________________________  Date _______________________         

(Reverse)     

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEFR14A’ Filing		Date		First		Last			Other Filings
		6/30/96		8					10-Q
		4/1/96		22
		3/31/96		22					10-K405
		8/17/95		2		34			DEF 14A
Filed on:		7/11/95
		7/1/95		2		22
		6/23/95		2		3
		6/15/95		4		20
		6/6/95		9		12
		6/1/95		20
		4/27/95		20		24
		3/31/95		3		12			10-K405
		9/30/94		6		12
		9/7/94		12
		8/4/94		19
		8/3/94		12
		7/25/94		6		16
		7/14/94		33
		6/30/94		12		15
		4/13/94		18
		1/31/94		8
		9/30/93		19
		9/9/93		19
		9/8/93		19
		8/5/93		33
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