Exhibit 10(z7)

                           Via Facsimile: 617-923-5120

                                                                 October 3, 1997

Mr. Craig Newfield
64 Hawthorn Avenue
Needham, Massachusetts  02192

Dear Craig,

I am delighted to offer you the position of Vice President and General Counsel
for Interleaf, Inc. Our company is at a very important juncture. Tremendous
opportunities for success are within our sights but there is work to be done.
Your credentials and energy are very impressive. I am sure that you will have a
positive influence on our results.

The Position

The General Counsel position is one of the most important officer level
positions in our company. You will be responsible for all of our legal matters
(both internal and external coordination) as well as their impact on both
operational and strategic activities. As a direct report to the Chief Executive
Officer, you will also be asked to participate in developing our long-term
strategy and operating plans and participate on the senior management team.

Compensation Package

The base salary for the General Counsel position is $110,000 per annum and an
annual incentive compensation pool of $40,000 with total on target earnings of
$150,000.

Your incentive compensation program is designed to reward you for both
individual contributions as well as the performance of the team in meeting
quarterly and annual performance goals. The incentive compensation program will
provide you with a total quarterly bonus pool of $30,000 upon achievement of
mutually agreed to revenue and profit targets, and an escalation bonus should
you exceed the target. The incentive bonus will be distributed to you in
quarterly amounts of $7,500 for 100% revenue and profit attainment; for
under/over attainment the bonus payment will be made utilizing the following
formula:

        At 70% of goal for the quarter, you will be paid $4,500 
        At 80% of goal for the quarter, you will be paid $5,250 
        At 85% of goal for the quarter, you will be paid $6,000 
        At 90% of goal for the quarter, you will be paid $6,750 
        At 95-100% of goal for the quarter, you will be paid $7,500 
        At each 10% above 100% of goal for the quarter, you will receive
          $10,000 additional bonus.

In addition, for reaching 100% of our targeted annual revenue and profit as
General Counsel, you will receive an additional $10,000 bonus amount. The total
annual on target earnings (OTE) for this position is $150,000. The incentive
compensation goals for the first half of FY1998 are similar for the entire
Senior Management Team. We will be reviewing our goals for the second half of
FY1998 this month and look forward to your participating in this planning
process to
<PAGE>

Mr. Craig Newfield
October 3, 1997
Page Two

insure that the goals that are developed reflect your input. Please note that
there is no limit to your incentive compensation. I fully intend to reward you
for achievement above and beyond the defined targets.

Equity Participation

I am also delighted to offer you 125,000 stock options. The price of the options
will be based upon the then current price on your start date. The options will
vest over a four-year period. As we discussed, I am fully committed to having
you achieve your long-term compensation goals.

As we discussed, 50,000 of these stock options are cancelable if you do not
reach or exceed 80% of your incentive goals for the second half of FY1998.

                        % Achieved               Cancelable
                        ----------               ----------
        12,500          80% of Plan YTD           6 mos. after start
        12,500          90% of Plan YTD           6 mos. after start
        12,500          80% of Plan YTD          12 mos. after start
        12,500          90% of Plan YTD          12 mos. after start
        ------
        50,000

Benefits Package

Your compensation will also include participation in our standard corporate
benefits program, a summary of which is attached.

Please note that this letter does not constitute an employment agreement. In the
unlikely circumstance that you are terminated without cause, the company will
provide you a notice period of six (6) months and require a similar period
should you wish to end your employment with the company.

I am very much looking forward to your joining our team. I know that you will do
an outstanding job in this critical role. Your expected start date is October
13, 1997. Please indicate your acceptance and agreement with the terms of this
employment offer by signing below. Again, we look forward to your joining the
team.

Sincerely,


Jaime W. Ellertson
President and Chief Executive Officer

Accepted:


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