INTELLIGROUP INC
SB-2/A, 1996-11-26
COMPUTER INTEGRATED SYSTEMS DESIGN
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<PAGE>   1
 
   
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1996
    
 
   
                                                      REGISTRATION NO. 333-16561
    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
   
                                AMENDMENT NO. 1
    
                                       TO
 
                                   FORM SB-2
 
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
 
                            ------------------------
 
                               INTELLIGROUP, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
 
<TABLE>
<S>                                        <C>                                        <C>
                NEW JERSEY                                    7373                                    11-2880025
         (STATE OF INCORPORATION)                 (PRIMARY STANDARD INDUSTRIAL                     (I.R.S. EMPLOYER
                                                   CLASSIFICATION CODE NUMBER)                    IDENTIFICATION NO.)
</TABLE>
 
                              517 ROUTE ONE SOUTH
                            ISELIN, NEW JERSEY 08830
                                 (908) 750-1600
                         (ADDRESS AND TELEPHONE NUMBER
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                                  ASHOK PANDEY
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                               INTELLIGROUP, INC.
                              517 ROUTE ONE SOUTH
                            ISELIN, NEW JERSEY 08830
                                 (908) 750-1600
                      (NAME, ADDRESS, AND TELEPHONE NUMBER
                             OF AGENT FOR SERVICE)
 
                            ------------------------
 
                                   COPIES TO:
 
<TABLE>
<S>                                                <C>
               DAVID J. SORIN, ESQ.                               WILLIAM N. DYE, ESQ.
 
                BUCHANAN INGERSOLL                              WILLKIE FARR & GALLAGHER
                  COLLEGE CENTRE                                   ONE CITICORP CENTER
               500 COLLEGE ROAD EAST                              153 EAST 53RD STREET
            PRINCETON, NEW JERSEY 08540                         NEW YORK, NEW YORK 10022
                  (609) 987-6800                                     (212) 821-8000
</TABLE>
 
                            ------------------------
 
   
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
    
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
PROSPECTUS (SUBJECT TO COMPLETION)
   
Dated November 26, 1996
    
   
                                1,350,000 Shares
    
 
                           [INTELLIGROUP, INC. LOGO]

                               INTELLIGROUP, INC.

                                  Common Stock
                         ------------------------------
 
   
     Of the 1,350,000 shares of Common Stock offered hereby, 900,000 shares are
being issued and sold by Intelligroup, Inc. ("Intelligroup" or the "Company")
and 450,000 shares are being sold by certain selling shareholders of the Company
(the "Selling Shareholders"). See "Principal and Selling Shareholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Shareholders.
    
 
   
     Upon completion of this offering, the Selling Shareholders, constituting
certain of the Company's current officers, directors and affiliated entities,
will together beneficially own approximately 64% of the Company's outstanding
Common Stock. See "Risk Factors" and "Principal and Selling Shareholders."
    
 
   
     The Common Stock is quoted on the Nasdaq National Market under the symbol
"ITIG." On November 25, 1996, the last reported sales price of the Common Stock
on the Nasdaq National Market was $14.50 per share. See "Price Range of Common
Stock."
    
                         ------------------------------
 
                 THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
                 SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF.
                         ------------------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
       EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
            COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
              PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
======================================================================================================
                                                     Underwriting                       Proceeds to
                                      Price to       Discounts and     Proceeds to        Selling
                                       Public       Commissions(1)     Company(2)      Shareholders
- ------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>               <C>              <C>
Per Share......................        $               $                $                $
Total(3).......................        $               $                $                $
======================================================================================================
</TABLE>
 
(1) The Company and the Selling Shareholders have agreed to indemnify the
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses, estimated to be $300,000, payable by the Company.
   
(3) The Selling Shareholders have granted the Underwriters an option,
    exercisable within 30 days of the date hereof, to purchase up to an
    aggregate of 202,500 additional shares at the Price to Public less the
    Underwriting Discounts and Commissions to cover over-allotments, if any. If
    all such additional shares are purchased, the total Price to Public,
    Underwriting Discounts and Commissions, Proceeds to Company and Proceeds to
    Selling Shareholders will be $     , $     , $     and $     , respectively.
    See "Underwriting."
    
                         ------------------------------
 
     The Common Stock is offered by the several Underwriters named herein when,
as and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected that
delivery of certificates for such shares will be made at the offices of Cowen &
Company, New York, New York on or about      , 1996.
                         ------------------------------
 
COWEN & COMPANY                                            MONTGOMERY SECURITIES
 
     , 1996
<PAGE>   3
 
                                    PICTURE
 
The picture consists of two three-dimensional columns which form an inverted "V"
shape and which join together at the top with the Company's logo. Each column
includes statements which summarize the Company's services (column 1:
enterprise-wide business process solutions, including strategic planning,
business process redesign, technology implementation, on-site and offshore
software development, change management and training and support; column 2:
system integration and custom software development, including system
integration, system analysis, system design, on-site and offshore software
development, implementation and training and support). The columns are joined by
three lines which include statements which summarize services of the Company
applicable to the services included on each column (value-oriented
implementation, Advanced Development Center and logo of the Company's
proprietary implementation methodology, "4 SIGHT").
 
     The Company intends to furnish its shareholders with annual reports
containing financial statements certified by its independent public accountants
and quarterly reports containing unaudited financial information for the first
three quarters of each year.
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
     IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the consolidated
financial statements, including the notes thereto, appearing elsewhere in this
Prospectus, including information under "Risk Factors." Except as otherwise
noted herein, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option and reflects a 81,351.1111-for-1 stock split
of the Common Stock effected July 12, 1996. See "Capitalization," "Description
of Capital Stock" and "Underwriting."
 
                                  THE COMPANY
 
     Intelligroup provides a wide range of information technology services,
including enterprise-wide business process solutions, systems integration and
custom software development based on leading technologies. The Company has grown
rapidly since 1994 when it made a strategic decision to diversify its customer
base by expanding the scope of its integration and development services and to
utilize SAP software as a primary tool to implement enterprise-wide business
process solutions. In 1995, the Company became a SAP National Implementation
Partner and also began to utilize Oracle products to diversify its service
offerings. The Company's custom software development services are enhanced by
its exclusive access to qualified and experienced programmers at its affiliated
Advanced Development Center located in India and connected to the Company's
headquarters in the United States and to certain customer sites by dedicated,
high speed satellite links. The Company provides its services directly to
end-user organizations or as a member of consulting teams assembled by other
information technology consulting firms. The number of customers billed by the
Company has grown substantially from three customers in 1993 to 75 customers for
the year ended December 31, 1995 and to 90 customers for the nine months ended
September 30, 1996. The Company's customers are Fortune 1000 and other large and
mid-sized companies, as well as other information technology consulting firms,
and include AT&T, American Cyanamid, Bristol-Myers Squibb, Citibank, Ernst &
Young LLP, IBM, ICS Deloitte & Touche LLP and Price Waterhouse LLP.
 
     Many large and mid-sized businesses face a rapidly changing business
environment, intense global competition and accelerating technological change.
To remain competitive, businesses are implementing and utilizing advanced
information technology solutions that enable them to redesign their business
processes in such areas as product development, service delivery, manufacturing,
sales and human resources. Concurrently, businesses are migrating from legacy
systems running proprietary software to open systems and client/server systems.
Such client/server systems, when developed and implemented appropriately, enable
the creation and utilization of more functional and flexible applications which
are critical to the competitive needs of businesses. Organizations often acquire
packaged enterprise-wide business software applications for client/ server
systems, including those offered by leading vendors, such as SAP, Oracle,
PeopleSoft or Baan, and implement or customize these applications to match their
needs. Organizations also may develop customized software applications designed
for their specific business needs. Since organizations often lack sufficient
technical resources necessary to design, develop and implement emerging
information technology solutions on a timely basis, many businesses increasingly
engage experienced outside specialists to develop and implement solutions, in
shorter timeframes and at lower costs, while reducing implementation risks. As a
result, demand for information technology services has grown significantly.
According to industry sources, the global demand for SAP-related consulting
services alone was estimated to be $3.0 billion in 1995.
 
     Intelligroup provides information technology services to develop and
implement cost-effective client/ server business solutions on a timely basis by
combining its expertise in a wide range of technologies and business processes
with its proprietary implementation methodology and development tools. The
Company's consultants have expertise with SAP and Oracle products and with a
wide variety of leading computing technologies. The Company recently has
developed a proprietary implementation methodology, "4 SIGHT", which is designed
to minimize the time required to develop and implement SAP and Oracle solutions
for its customers. "4 SIGHT" is designed to be technology independent and
modular so that it may be utilized by the Company's consultants and project
managers in other packaged applications development or software customization
projects.
 
                                        3
<PAGE>   5
 
     The Company's objective is to be a leading provider of a wide range of
information technology services. The Company's strategy to achieve this
objective is to: (i) accelerate a shift from implementation assignments to
turnkey project management engagements; (ii) maintain and expand long-term
customer relationships; (iii) leverage and expand strategic relationships,
including existing relationships with SAP and Oracle; (iv) maintain
technological leadership and enhance its proprietary implementation methodology
and development tools; (v) continue to attract and retain skilled, motivated
technical employees; and (vi) expand its global sales and marketing efforts.
 
     The Company was incorporated in New Jersey in October 1987 under the name
Intellicorp, Inc. The Company's name was changed to Intelligroup, Inc. in July
1992. The Company's executive offices are located at 517 Route One South,
Iselin, New Jersey 08830, and its telephone number is (908) 750-1600.
 
     "Intelligroup," "4 SIGHT," "4 SIGHT plus" and the Company's logo are
service marks and OPMS and OIM are trademarks of the Company. All other trade
names, trademarks or service marks appearing in this Prospectus are the property
of their respective owners and are not the property of the Company.
 
                                  RISK FACTORS
 
     THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 6 HEREOF.
 
                                  THE OFFERING
 
   
<TABLE>
<S>                                            <C>
Common Stock offered by the Company..........  900,000 shares
Common Stock offered by the
  Selling Shareholders.......................  450,000 shares
Common Stock to be outstanding
  after the offering.........................  11,635,600 shares(1)
Use of proceeds..............................  For general corporate purposes, including
                                               working capital and possible acquisitions.
Nasdaq National Market Symbol................  ITIG
</TABLE>
    
 
- ---------------
(1) Excludes 500,000 shares of Common Stock issuable upon the exercise of stock
    options outstanding as of the date of this Prospectus at an exercise price
    of $8.00 per share, none of which are currently exercisable, see
    "Management -- 1996 Stock Plan," and 40,000 shares of Common Stock issuable
    upon the exercise of stock options outstanding as of the date of this
    Prospectus at an exercise price of $10.00 per share, none of which are
    currently exercisable, see "Management -- 1996 Non-Employee Director Stock
    Option Plan."
 
                                        4
<PAGE>   6
 
                             SUMMARY FINANCIAL DATA
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                    NINE MONTHS ENDED
                                              YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,
                                  -----------------------------------------------   -----------------
                                   1991      1992      1993      1994      1995      1995      1996
                                  -------   -------   -------   -------   -------   -------   -------
<S>                               <C>       <C>       <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
  Revenue.......................  $   166   $   481   $   933   $ 6,800   $24,589   $16,745   $33,471
  Gross profit..................       78       129       305       958     4,568     2,643     9,499
  Operating income (loss).......       --         1         6       (28)      116       (73)    2,603
  Income (loss) before
     extraordinary charge.......       --         1         6      (437)   (1,059)   (1,054)      929
  Extraordinary charge(1).......       --        --        --        --        --        --    (1,034)
  Net income (loss).............       --         1         6      (437)   (1,059)   (1,054)     (105)
  Income (loss) per share before
     extraordinary charge.......       --        --        --     (0.03)    (0.08)    (0.08)     0.09
  Net income (loss) per share...  $    --   $    --   $    --   $ (0.03)  $ (0.08)  $ (0.08)  $ (0.01)
  Shares used in per share
     calculation(2).............   13,737    13,737    13,737    13,737    13,737    13,737    10,825
</TABLE>
 
   
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30, 1996
                                                                ---------------------------------------
                                                 DECEMBER 31,                              PRO FORMA
                                                     1995       ACTUAL    PRO FORMA(4)   AS ADJUSTED(5)
                                                 ------------   -------   ------------   --------------
<S>                                              <C>            <C>       <C>            <C>
BALANCE SHEET DATA:
  Cash and cash equivalents....................    $     71     $   169     $  6,602        $ 18,602
  Subscriptions receivable(6)..................          --      19,065           --              --
  Working capital (deficit)....................      (1,597)     15,447       15,447          27,447
  Total assets.................................       6,784      33,330       20,698          32,698
  Short-term debt, including subordinated
     debentures(3)(7)..........................       3,489      11,463           18              18
  Capital lease obligations, less current
     portion...................................          81          65           65              65
  Shareholders' equity (deficit)...............      (1,366)     16,307       16,307          28,307
</TABLE>
    
 
- ---------------
(1) The extraordinary charge of $1,034,000 relates to the early extinguishment
    of the Company's subordinated debentures, net of an income tax benefit of
    $410,000. See Note 3 below.
 
(2) In April 1996 4,881,066 shares were repurchased by the Company from its
    current shareholders, Messrs. Pandey, Koneru and Valluripalli, and such
    shares were cancelled by the Company. See "Capitalization."
 
(3) Includes the April 1996 issuance of five-year 9% subordinated debentures in
    the aggregate principal amount of $6.0 million and warrants to purchase
    1,364,000 shares of Common Stock upon the payment of nominal consideration
    (less than $0.25 in the aggregate), and the application of the proceeds
    therefrom to purchase certain of the shares of Common Stock of the Company's
    current shareholders and to repay debt. See "Capitalization." In October
    1996, following the consummation of the Company's initial public offering of
    Common Stock, the Company prepaid all amounts outstanding under its five-
    year 9% subordinated debentures, including accrued interest.
 
(4) Gives effect to the collection of the subscriptions receivable (see Note 6
    below) and utilization of a portion of the net proceeds from the Company's
    initial public offering consummated on October 2, 1996 to prepay the
    subordinated debentures and repay other debt.
 
(5) Adjusted to reflect the estimated net proceeds from the sale of 900,000
    shares of Common Stock offered by the Company hereby and the application
    thereof as described in "Use of Proceeds."
 
(6) The Company's subscriptions receivable at September 30, 1996 were collected
    on October 2, 1996, upon consummation of the Company's initial public
    offering of Common Stock.
 
(7) Upon consummation of the Company's initial public offering of Common Stock
    in October 1996, the Company repaid all of its short-term debt except for
    the current portion of its capital lease obligations.
 
                                        5
<PAGE>   7
 
                                  RISK FACTORS
 
     In addition to the other information in this Prospectus, prospective
investors should consider carefully the following risk factors in evaluating an
investment in the Company before purchasing any shares of the Common Stock
offered hereby. This Prospectus contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in such forward-looking statements. Factors that may cause
such a difference are those discussed below.
 
SUBSTANTIAL VARIABILITY OF QUARTERLY OPERATING RESULTS
 
     The Company's historical operating results have varied substantially from
quarter to quarter, and the Company expects that they will continue to do so.
Due to the relatively fixed nature of certain of the Company's costs, including
personnel and facilities costs, a decline in revenue in any fiscal quarter would
result in lower profitability in that quarter. A variety of factors, many of
which are not within the Company's control, influence the Company's quarterly
operating results, including seasonal patterns of hardware and software capital
spending by customers, information technology outsourcing trends, the timing,
size and stage of projects, new service introductions by the Company or its
competitors, levels of market acceptance for the Company's services or the
hiring of additional staff. Operating results also may be impacted by changes in
the Company's billing and employee utilization rates. The Company believes,
therefore, that past operating results and period-to-period comparisons should
not be relied upon as an indication of future performance. Demand for the
Company's services generally is lower in the fourth quarter due to reduced
activity during the holiday season and fewer working days for those customers
which curtail operations during such period. The Company anticipates that its
business will continue to be subject to such seasonal variations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Selected Quarterly Results of Operations."
 
MANAGEMENT OF GROWTH
 
     The Company's growth has placed significant demands on its management,
administrative and operational resources. The Company's revenue increased 262%
in 1995, from $6.8 million in 1994 to $24.6 million in 1995. From January 1,
1995 through September 30, 1996, the Company's staff increased 184% from 113 to
321 full-time employees. The Company's ability to manage its growth effectively
will require the Company to continue developing and improving its operational,
financial and other internal systems, as well as its business development
capabilities, and to attract, train, retain, motivate and manage its employees.
In addition, the Company's future success will depend in large part on its
ability to continue to maintain high rates of employee utilization at profitable
billing rates and maintain project quality, particularly if the size and scope
of the Company's projects increase. In addition, other than the Company's Chief
Financial Officer, none of the Company's senior management previously has
managed a business of the Company's scale or scope or has any experience
managing a public company. If the Company is unable to manage its growth and
projects effectively, such inability could have a material adverse effect on the
quality of the Company's services and products, its ability to retain key
personnel and its ability to report financial results in an accurate and timely
manner which could have a material adverse effect on the Company's business,
financial condition and results of operations.
 
WEAKNESSES IN INTERNAL CONTROLS
 
     Following the audit of the Company's consolidated financial statements for
the year ended December 31, 1995, the Company received a management letter from
its independent public accountants, Arthur Andersen LLP, which set forth
significant deficiencies and material weaknesses in the Company's internal
control structure. The Company's independent public accountants noted that,
during 1995, the Company's internal control structure had two material
weaknesses: (i) the Company did not reconcile its supporting records to the
general ledger or perform meaningful account analysis; and (ii) the Company did
not maintain, summarize or reconcile any books or records for its foreign
operations. The Company's independent public accountants have not conducted any
further reviews of the Company's internal control structure. The Company first
hired a Chief Financial Officer in January 1996, only recently implemented an
accounting system capable of
 
                                        6
<PAGE>   8
 
generating information and reports necessary to appropriately manage the
Company, and currently is developing and implementing a system of internal
controls and otherwise developing an appropriate administrative infrastructure.
The failure to develop and maintain an effective internal control structure
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Legal
Proceedings" and " -- Employees."
 
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE
FINANCIAL RESULTS
 
     The Company's strategic decision in 1994 to diversify its customer base and
to utilize SAP software as a primary tool to implement enterprise-wide business
process solutions resulted in significant growth and a major change of the
Company's business. As a result, the Company has a limited operating history
within its current line of business. Despite the fact that the Company has
recognized substantially increased revenue during the years ended December 31,
1994 and 1995, respectively, the Company incurred net losses of $437,000 and
$1.1 million for such periods. Furthermore, the Company was profitable in only
six of the last eleven quarters. Although the Company had net income of $929,000
(before the extraordinary charge of $1,034,000, net of an income tax benefit of
$410,000, incurred in the third quarter of 1996) for the nine months ended
September 30, 1996, there can be no assurance that the Company will continue to
achieve profitable levels of operations in the future, thus management could not
determine that it was more likely than not that a future tax benefit would be
realized. The Company has offset its deferred tax asset of $475,000 at September
30, 1996 with a valuation allowance. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations."
 
DEPENDENCE ON SAP
 
     During the years ended December 31, 1994 and 1995 and the first nine months
of 1996, 33%, 69% and 75% of the Company's total revenue was derived from
projects in which the Company implemented software developed by SAP, a major
international German-based software company and the leading vendor of
client/server application software for business applications. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company's future success in its SAP-related consulting services depends largely
on its continued relationship with SAP America, SAP's United States affiliate,
and on its continued status as a SAP National Implementation Partner, which was
first obtained in 1995. Such status is awarded by SAP on an annual basis
pursuant to contract. The Company's 1996 contract expires on December 31, 1996.
While the Company has no reason to believe that its contract with SAP will not
be renewed or that the scope of such contract will be modified or limited in a
manner adverse to the Company, there can be no assurance that such contract will
be renewed on terms acceptable to the Company, if at all. In addition, in the
event that SAP is unable to maintain its leadership position within the business
applications software market, if the Company's relationship with SAP
deteriorates, or if SAP elects to compete directly with the Company, the
Company's business, financial condition and results of operations could be
materially adversely affected. See "Business."
 
SUBSTANTIAL RELIANCE ON KEY CUSTOMERS AND LARGE PROJECTS
 
     The Company has derived and believes that it will continue to derive a
significant portion of its revenue from a limited number of customers and
projects. For the years ended December 31, 1994 and 1995 and for the nine months
ended September 30, 1996, the Company's ten largest customers accounted for in
the aggregate approximately 61%, 56% and 64% of its revenue, respectively.
During 1994, AT&T accounted for more than 10% of revenue, while in 1995, Ernst &
Young LLP and Price Waterhouse LLP each accounted for more than 10% of revenue.
During the first nine months of 1996, Ernst & Young LLP, Price Waterhouse LLP
and Bristol-Myers Squibb each accounted for more than 10% of revenue. For the
years ended December 31, 1994 and 1995 and for the nine months ended September
30, 1996, 64%, 50% and 45%, respectively, of the Company's revenue was generated
by serving as a member of consulting teams assembled by other information
technology consulting firms, which also may be competitors of the Company. Such
firms included Andersen Consulting, Ernst & Young LLP, ICS Deloitte & Touche
LLP, KPMG Peat Marwick LLP, Price Waterhouse LLP and other information
technology consulting firms. See "Management's Discussion and
 
                                        7
<PAGE>   9
 
Analysis of Financial Condition and Results of Operations" and
"Business -- Customers." There can be no assurance that such information
technology consulting firms will continue to engage the Company in the future,
if at all, and all of such customer relationships are terminable at will. In
addition, the volume of work performed for specific customers is likely to vary
from year to year, and a major customer in one year or quarter may not continue
to use the Company's services. The loss of any large customer or project could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Customers."
 
     Most of the Company's project-based contracts are terminable by the
customer with limited advance notice, typically not more than 30 days, and
without significant penalty, generally limited to fees earned and expenses
incurred by the Company through the date of termination. The cancellation or
significant reduction in the scope of a large project could have a material
adverse effect on the Company's business, financial condition, and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Customers."
 
     Many of the Company's engagements involve projects that are critical to the
operations of its customers' businesses and provide benefits that may be
difficult to quantify. The Company's failure or inability to meet a customer's
expectations in the performance of its services could result in a material
adverse change to the customer's operations giving rise to claims for damages
against the Company or causing damage to the Company's reputation, adversely
affecting its business, financial condition and results of operations. In
addition, certain of the Company's agreements with its customers require the
Company to indemnify the customer for damages arising from services provided to,
or on behalf of, such customer. Such indemnification, if required, could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business -- Customers."
 
HIGHLY COMPETITIVE INFORMATION TECHNOLOGY SERVICES INDUSTRY
 
     The markets for the Company's services are highly competitive. The Company
believes that its principal competitors include the internal information systems
groups of its prospective customers, as well as technology consulting and
systems integration firms, including the "Big Six" accounting firms, the ISSC
division of IBM, Cambridge Technology Partners, SHL Systemhouse (a subsidiary of
MCI), and Computer Sciences Corporation, and with the consulting divisions of
software applications vendors, some of which also are customers of the Company.
The consulting divisions of five of the "Big Six" accounting firms also are
customers of the Company and comprised 6%, 34% and 34% of the Company's revenue
for the years ended December 31, 1994 and 1995, and for the nine months ended
September 30, 1996, respectively. Many of the Company's competitors have longer
operating histories, possess greater industry and name recognition and have
significantly greater financial, technical and marketing resources than the
Company. In addition, there are relatively low barriers to entry into the
Company's markets and the Company has faced, and expects to continue to face,
additional competition from new entrants into its markets.
 
     The Company believes that the principal competitive factors in its markets
include quality of service and deliverables, speed of development and
implementation, price, project management capability and technical and business
expertise. The Company believes that it addresses these principal competitive
factors with competitive pricing, by utilizing experienced project managers and
consultants, through the use of its proprietary implementation methodology
designed to minimize time required to develop and implement SAP and Oracle
solutions and its ability to provide other services, including systems
integration and custom software development, including access to the Advanced
Development Center. See "Business -- The Intelligroup Solution." The Company
believes that its ability to compete also depends in part on a number of
competitive factors outside its control, including the ability of its
competitors to hire, retain and motivate project managers and other senior
technical staff, the development by others of services that are competitive with
the Company's services and the extent of its competitors' responsiveness to
customer needs. There can be no assurance that the Company will be able to
compete successfully with its competitors. See "Business -- Competition."
 
                                        8
<PAGE>   10
 
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS
 
     The Company's success will depend in part on its ability to develop
solutions that keep pace with continuing changes in information technology,
evolving industry standards and changing customer objectives and preferences.
There can be no assurance that the Company will be successful in adequately
addressing these developments on a timely basis or that, if these developments
are addressed, the Company will be successful in the marketplace. In addition,
there can be no assurance that products or technologies developed by others will
not render the Company's services non-competitive or obsolete. The Company's
failure to address these developments could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Strategy."
 
DEPENDENCE ON KEY PERSONNEL
 
     The success of the Company for the foreseeable future will depend largely
on the continued services of its key executive officers and leading technical
personnel. Each executive officer and key employee has entered into an
employment agreement with the Company which contains non-competition,
non-disclosure and non-solicitation covenants that extends for a period of two
years following termination of employment. See "Management -- Employment
Agreements, Indemnification Agreements and Non-Competition, Non-Disclosure and
Non-Solicitation Agreements." Each of the leading technical personnel has
entered into an agreement with the Company which contains non-competition,
non-disclosure and non-solicitation provisions. See "Business -- Employees." The
Company maintains, and is the beneficiary of, life insurance policies on the
lives of Ashok Pandey, Rajkumar Koneru and Nagarjun Valluripalli. The face
amount of each such policy is $1.0 million. See "Management -- Key Man
Insurance." The Company does not maintain key man life insurance on any of its
other executive officers or employees. There can be no assurance that the
departure of one or more of such key personnel would not have a material adverse
effect on the Company's financial condition and results of operations.
 
COMPETITIVE MARKET FOR TECHNICAL PERSONNEL
 
     The Company's business is labor intensive and, therefore, the Company's
success will depend in large part upon its ability to attract, retain, train and
motivate highly-skilled employees, particularly project managers and other
senior technical personnel. There is significant competition for employees with
the skills required to perform the services the Company offers. Qualified
project managers and senior technical staff, including in particular, personnel
with development experience, are in great demand and are likely to remain a
limited resource for the foreseeable future. There can be no assurance that the
Company will be successful in attracting a sufficient number of highly skilled
employees in the future, or that it will be successful in retaining, training
and motivating the employees it is able to attract, and any inability to do so
could impair the Company's ability to adequately manage and complete its
existing projects and to bid for or obtain new projects. If the Company's
employees are unable to achieve expected performance levels, the Company's
business, financial condition and results of operations could be adversely
affected. See "Business -- Employees."
 
UNCERTAINTIES RESULTING FROM PENDING LITIGATION MATTERS AND ADMINISTRATIVE
PROCEEDINGS
 
     The Company is involved in disputes with third parties, including certain
former employees and other information technology consulting firms. Such
disputes have resulted in litigation with such parties and, although the Company
is a plaintiff in one of such matters, the Company is subject to claims and
counterclaims for damages and has incurred, and likely will continue to incur,
legal expenses in connection with such matters. There can be no assurance that
such litigation will result in favorable outcomes for the Company. The Company
also is aware of certain pending and potential administrative and regulatory
immigration and tax law matters which may result in significant costs to the
Company, as well as fines and penalties. These matters also may result in
diversion of management time and effort from the operations of the business.
There can be no assurance that damages, fines and penalties, if any, and related
legal expenses and management diversion from operations will not have a material
adverse effect on the Company's business, reputation, financial condition or
results of operations. See "Management's Discussion and Analysis of Results
 
                                        9
<PAGE>   11
 
of Operations and Financial Condition -- Liquidity and Capital Resources" and
"Business -- Legal Proceedings."
 
RELIANCE ON INTELLECTUAL PROPERTY RIGHTS
 
     The Company relies upon a combination of trade secrets, nondisclosure and
other contractual arrangements, and copyright and trademark laws to protect its
proprietary rights. The Company's future success is dependent, in part, upon its
proprietary implementation methodology, "4 SIGHT", development tools and other
intellectual property rights. The Company enters into confidentiality agreements
with its employees, generally requires that its consultants and customers enter
into such agreements, and limits access to and distribution of its proprietary
information. There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of its proprietary
information or that the Company will be able to detect unauthorized use of and
take appropriate steps to enforce its intellectual property rights. See
"Business -- Intellectual Property Rights" and " -- Legal Proceedings."
 
     Although the Company believes that its services, methodology and
development tools do not infringe on the intellectual property rights of others,
there can be no assurance that such a claim will not be asserted against the
Company in the future, or that if asserted, any such claim will be successfully
defended. See "Business -- Intellectual Property Rights."
 
INTERNATIONAL OPERATIONS
 
     While international operations accounted for an insignificant portion of
the Company's total revenue in each of 1994 and 1995, the Company anticipates
that in the future a larger percentage of its revenue may be derived from
international operations. To date, the Company has established foreign
operations in New Zealand, South Africa and the United Kingdom. In order to
expand sales on an international basis, the Company may establish additional
foreign operations. In addition, the Company has established operations in India
by forming an affiliation with Intelligroup Asia Private Limited ("Intelligroup
Asia"), an entity which currently is majority owned by Messrs. Koneru and
Valluripalli, two of the Company's principal shareholders. Mr. Pandey has the
right, subject to necessary Indian government approvals, to acquire the
remaining outstanding shares of Intelligroup Asia. The Company and Messrs.
Pandey, Koneru and Valluripalli have entered into an agreement pursuant to which
the Company will acquire, subject to necessary Indian government approvals, all
of the outstanding capital stock of Intelligroup Asia for nominal consideration.
See "Certain Transactions." Increasing foreign operations likely will require
significant management attention and financial resources and could materially
adversely affect the Company's business, financial condition or results of
operations. In addition, there can be no assurance that the Company will be able
to increase international market demand for its services. The risks inherent in
the Company's international business activities include unexpected changes in
regulatory environments, foreign currency fluctuations, tariffs and other trade
barriers, longer accounts receivable payment cycles, difficulties in managing
international operations and potential foreign tax consequences, including
restrictions on the repatriation of earnings, and the burdens of complying with
a wide variety of foreign laws and regulations. There can be no assurance that
such factors will not have a material adverse effect on the Company's future
international sales, if any, and, consequently, on the Company's business,
financial condition or results of operations. See "Business -- Sales and
Marketing."
 
SHARES ELIGIBLE FOR FUTURE SALE
 
   
     Future sales of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. Upon completion of
this offering, an aggregate of 4,196,250 shares, consisting of the 1,350,000
shares offered hereby and the 2,846,250 shares offered and sold pursuant to the
Company's initial public offering of its Common Stock consummated in October
1996, will be freely tradeable by persons other than "affiliates" of the Company
without restriction. The remaining 7,439,350 shares held by certain current
shareholders of the Company are subject to "lock-up" agreements under which the
holders of such shares have agreed not to sell or otherwise dispose of any
shares of Common Stock without the prior written consent of the representative
of the Underwriters until March 23, 1997. Of such shares of Common Stock,
6,231,662 shares will be eligible for resale after the expiration of the lock-up
period, subject to the
    
 
                                       10
<PAGE>   12
 
   
provisions of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). The remaining 1,207,688 shares of Common Stock will become
eligible for sale over a period of less than two years and could be sold earlier
if the holders thereof exercise any available registration rights. See
"Description of Capital Stock -- Registration Rights." Of the shares of Common
Stock issuable upon the exercise of outstanding options, in January 1997,
166,667 shares will become eligible for immediate resale in the public market,
subject to compliance with Rules 144 and 701 under the Securities Act. Sales of
substantial amounts of the Common Stock in the public market, whether by
purchasers in the offering or other shareholders of the Company, or the
perception that such sales could occur, may adversely affect the market price of
the Common Stock. See "Shares Eligible for Future Sale."
    
 
CONTROL BY MANAGEMENT AND EXISTING SHAREHOLDERS
 
   
     Upon completion of this offering, certain of the Company's current officers
(Messrs. Pandey, Koneru and Valluripalli), directors and affiliated entities
together will beneficially own approximately 64% of the outstanding shares of
Common Stock (approximately 62% if the Underwriters' over-allotment option is
exercised in full). As a result, these shareholders, acting together, will be
able to control matters requiring approval by the shareholders of the Company,
including the election of directors. Such a concentration of ownership may have
the effect of delaying or preventing a change in control of the Company,
including transactions in which shareholders might otherwise receive a premium
for their shares over then current market prices. See "Principal and Selling
Shareholders."
    
 
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND NEW JERSEY LAW
 
     The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") authorizes the Board of Directors to issue,
without shareholder approval, 5,000,000 shares of Preferred Stock with voting,
conversion and other rights and preferences that could adversely affect the
voting power or other rights of the holders of Common Stock. The issuance of
Preferred Stock or of rights to purchase Preferred Stock could be used to
discourage an unsolicited acquisition proposal. In addition, the possible
issuance of Preferred Stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of the Company's Common Stock
or limit the price that investors might be willing to pay in the future for
shares of the Company's Common Stock. The Certificate of Incorporation also
provides that: (i) the affirmative vote of the holders of at least 80% of the
voting power of all outstanding shares of the capital stock of the Company shall
be required to adopt, amend or repeal any provision of the By-laws of the
Company; (ii) shareholders of the Company may not take any action by written
consent; (iii) special meetings of shareholders may be called only by the
President, the Chairman of the Board or a majority of the Board of Directors and
business transacted at any such special meeting shall be limited to matters
relating to the purposes set forth in the notice of such special meeting; (iv)
the Board of Directors, when evaluating an offer related to a tender or exchange
offer or other business combination, is authorized to give due consideration to
any relevant factors, including the social, legal and economic effects upon
employees, suppliers, customers, creditors, the community in which the Company
conducts its business, and the economy of the state, region and nation; and (v)
the affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company shall be required to
amend the above provisions or the limitation on director liability. The
foregoing provisions of the Certificate of Incorporation could have the effect
of delaying, deterring or preventing a change in control of the Company. In
addition, certain "anti-takeover" provisions of the New Jersey Business
Corporation Act, among other things, restrict the ability of certain
shareholders to effect a merger or business combination or obtain control of the
Company. These provisions may have the effect of delaying or preventing a change
of control of the Company without action by the shareholders and, therefore,
could adversely affect the price of the Company's Common Stock. In the event of
a merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets in which the successor
corporation does not assume outstanding options or issue equivalent options, the
Board of Directors of the Company is required to provide accelerated vesting of
outstanding options. See "Description of Capital Stock -- Preferred Stock,"
"-- Anti-takeover Provisions" and "-- Limitation of Director Liability."
 
                                       11
<PAGE>   13
 
POTENTIAL VOLATILITY OF STOCK PRICE
 
     The market price of the shares of Common Stock may be highly volatile.
Factors such as fluctuation in the Company's operating results, announcements of
technological innovations or new commercial products or services by the Company
or its competitors, market conditions in the computer software and hardware
industries generally and quarterly fluctuations in financial results may have a
significant effect on the market price of the Common Stock. Furthermore, the
stock market historically has experienced volatility which has particularly
affected the market prices of securities of many technology companies and which
sometimes has been unrelated to the operating performances of such companies.
See "Price Range of Common Stock" and "Underwriting."
 
ACQUISITION RISK
 
   
     The Company may acquire other businesses with services complementary to
those offered by the Company. The Company intends to evaluate potential
acquisitions in the ordinary course of business and aggressively pursue
attractive businesses. The success of such acquisitions, if any, depends not
only upon the Company's ability to acquire complementary businesses on a
cost-effective basis, but also upon its ability to integrate acquired operations
into its organization effectively, to retain and motivate key personnel, and to
retain customers of acquired firms. Although the Company reviews and considers
possible acquisitions on an on-going basis, no specific acquisitions are being
negotiated or planned as of the date of this Prospectus. There can be no
assurance that the Company will be able to acquire or integrate such businesses
successfully. Furthermore, there can be no assurance that financing for any such
transactions will be available on satisfactory terms, or that the Company will
be able to accomplish its objectives as a result of any such transaction or
transactions. See "Use of Proceeds."
    
 
UNALLOCATED NET PROCEEDS
 
     The anticipated net proceeds of this offering have not been designated for
specific uses. Therefore, the Board of Directors of the Company will have broad
discretion with respect to the use of the net proceeds of this offering. See
"Use of Proceeds."
 
ABSENCE OF DIVIDENDS
 
     The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. See "Dividend Policy."
 
                                       12
<PAGE>   14
 
                                USE OF PROCEEDS
 
   
     The net proceeds to the Company from the sale of the 900,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$12.0 million, after deducting the Underwriters' discounts and commissions and
estimated offering expenses payable by the Company, at an assumed offering price
of $14.50 per share (the last reported sales price of the Common Stock on the
Nasdaq National Market on November 25, 1996). The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Shareholders.
See "Principal and Selling Shareholders."
    
 
     The Company intends to use the net proceeds from this offering for general
corporate purposes, including working capital and possible acquisitions of
businesses or services complementary to the Company's business. Although the
Company reviews and considers possible acquisitions on an on-going basis, no
specific acquisitions are being negotiated or planned as of the date of this
Prospectus. Pending such uses, the net proceeds to the Company from this
offering will be invested in short-term, investment-grade, interest-bearing
instruments.
 
                                DIVIDEND POLICY
 
     The Company has never declared or paid any dividends on its capital stock.
The Company intends to retain any earnings to fund future growth and the
operation of its business and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.
 
                          PRICE RANGE OF COMMON STOCK
 
     The Common Stock has been quoted on the Nasdaq National Market under the
symbol "ITIG" since September 27, 1996 when the Company conducted its initial
public offering. The following table sets forth, for the periods indicated, the
high and low sale prices per share of Common Stock as reported by the Nasdaq
National Market. The prices shown represent quotations among securities dealers,
do not include retail markups, markdowns or commissions and may not represent
actual transactions.
 
   
<TABLE>
<CAPTION>
                                                                                 HIGH       LOW
                                                                               -------    -------
<S>                                                                            <C>        <C>
September 1996 (from September 27, 1996).....................................  $13 7/8    $12 5/8
October 1996.................................................................   17 5/8     13 3/8
November 1996 (through November 25, 1996)....................................   19 3/4     13 1/4
</TABLE>
    
 
   
     On November 25, 1996, the last sales price of the Common Stock as reported
by the Nasdaq National Market was $14.50 per share. The number of shareholders
of record on October 31, 1996 was 89.
    
 
                                       13
<PAGE>   15
 
                                 CAPITALIZATION
 
   
     The following table sets forth the capitalization of the Company: (i) as of
September 30, 1996; (ii) on a pro forma basis after giving effect to the
collection of the Company's subscriptions receivable and utilization of a
portion of the net proceeds from the Company's initial public offering
consummated on October 2, 1996 to prepay the subordinated debentures and repay
other debt; and (iii) on a pro forma as-adjusted basis to give effect to the
issuance and sale by the Company of 900,000 shares of Common Stock offered
hereby, at an assumed offering price of $14.50 per share (the last reported
sales price of the Common Stock on the Nasdaq National Market on November 25,
1996), after deducting the underwriting discounts and commissions and estimated
offering expenses payable by the Company and the application of the estimated
net proceeds therefrom by the Company.
    
 
   
<TABLE>
<CAPTION>
                                                                       AS OF SEPTEMBER 30, 1996
                                                                 -------------------------------------
                                                                                            PRO FORMA
                                                                 ACTUAL      PRO FORMA     AS ADJUSTED
                                                                 -------     ---------     -----------
                                                                            (IN THOUSANDS)
<S>                                                              <C>         <C>           <C>
Short-term debt, including subordinated debentures(1)(2).......  $11,463      $    18        $    18
                                                                 =======      =======        =======
Capital lease obligations, less current portion(1).............  $    65      $    65        $    65
                                                                 -------      -------        -------
Shareholders' equity:
  Preferred Stock, $0.01 par value, 5,000,000 shares
     authorized;
     none issued...............................................       --           --             --
  Common Stock, $0.01 par value, 25,000,000 shares authorized,
     10,735,600 shares actual (11,635,600 as adjusted) issued
     and outstanding(3)(4).....................................      107          107            116
  Additional paid-in capital...................................   19,244       19,244         31,235
  Accumulated deficit(4).......................................   (3,044)      (3,044)        (3,044)
                                                                 -------      -------        -------
     Total shareholders' equity................................   16,307       16,307         28,307
                                                                 -------      -------        -------
          Total capitalization.................................  $16,372      $16,372        $28,372
                                                                 =======      =======        =======
</TABLE>
    
 
- ---------------
(1) For information concerning the Company's debt see Notes 3 and 4 of Notes to
    Consolidated Financial Statements. Short-term debt includes $6,000,000 of
    subordinated debentures (see Note 2 below).
(2) Proceeds from the issuance of $6.0 million of 9% debentures were allocated
    between the debentures and warrants based on their deemed fair market value.
    The debentures were issued with detachable warrants to purchase a maximum of
    20.8% of the Common Stock of the Company at a nominal exercise price (less
    than $0.25 in the aggregate), decreasing to not less than 11.0% based upon
    the initial public offering price. Using an assumed interest rate of 15%,
    which the Company believes reflected a fair market interest rate for the
    debentures if the detachable warrants were not included, the fair market
    value of the warrants and the resulting discount on the debentures was
    approximately $1.4 million. In October 1996, following the consummation of
    the Company's initial public offering of Common Stock which became effective
    September 26, 1996, the Company prepaid all amounts outstanding under the
    debentures, including accrued interest. As a result, the prepayment of the
    debentures resulted in an extraordinary charge of $1,034,000, net of an
    income tax benefit of $410,000, which amount was recorded as of September
    30, 1996. Other than such extraordinary charge, no additional charges to
    earnings relating to the warrants will occur. The actual number of shares
    underlying the warrants was 1,364,000 shares of Common Stock. The warrants
    were exercised upon the effectiveness of the Company's initial public
    offering of Common Stock on September 26, 1996.
(3) Excludes 500,000 shares of Common Stock issuable upon the exercise of stock
    options outstanding as of the date of this Prospectus at an exercise price
    of $8.00 per share, none of which are currently exercisable, see
    "Management -- 1996 Stock Plan," and 40,000 shares of Common Stock issuable
    upon the exercise of stock options outstanding as of the date of this
    Prospectus at an exercise price of $10.00 per share, none of which are
    currently exercisable, see "Management -- 1996 Non-Employee Director Stock
    Option Plan."
(4) Reflects the repurchase and cancellation by the Company of 4,881,066 shares
    from the Company's current shareholders, Messrs. Pandey, Koneru and
    Valluripalli, for an aggregate of $1.5 million. Such shares were repurchased
    to allow Messrs. Pandey, Koneru and Valluripalli to diversify their
    portfolios and achieve a degree of liquidity.
 
                                       14
<PAGE>   16
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The selected consolidated financial data set forth below as of December 31,
1995 and for the two years then ended are derived from and are qualified by
reference to the audited consolidated financial statements and the related notes
thereto included elsewhere in this Prospectus. The selected consolidated
financial data as of December 31, 1991, 1992, 1993, 1994 and September 30, 1996,
and for the three years ended December 31, 1993 and for the nine months ended
September 30, 1995 and 1996 have been derived from the unaudited consolidated
financial statements of the Company. The unaudited financial data include all
adjustments consisting only of normal, recurring adjustments that the Company
considers necessary for fair presentation of the financial position and results
of operations for these periods. The results of operations for the nine months
ended September 30, 1996 are not necessarily indicative of the results for any
future period or for the full year ending December 31, 1996. The following
should be read in conjunction with the consolidated financial statements and
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" appearing elsewhere in this Prospectus:
 
<TABLE>
<CAPTION>
                                                                                                        NINE MONTHS ENDED
                                                                   YEAR ENDED DECEMBER 31,                SEPTEMBER 30,
                                                         -------------------------------------------    ------------------
                                                          1991     1992     1993     1994     1995       1995       1996
                                                         ------   ------   ------   ------   -------    -------    -------
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                      <C>      <C>      <C>      <C>      <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Revenue..............................................  $  166   $  481   $  933   $6,800   $24,589    $16,745    $33,471
  Cost of sales........................................      88      352      628    5,842    20,021     14,102     23,972
                                                           ----     ----     ----   ------   -------    -------     ------
    Gross profit.......................................      78      129      305      958     4,568      2,643      9,499
  Selling, general and administrative
    expenses...........................................      78      128      299      986     4,452      2,716      6,896
                                                           ----     ----     ----   ------   -------    -------     ------
    Operating income (loss)............................      --        1        6      (28)      116        (73)     2,603
  Factor charges/Interest expense......................      --       --       --      409     1,175        981      1,264
                                                           ----     ----     ----   ------   -------    -------     ------
  Income (loss) before provision for
    income taxes and extraordinary
      charge...........................................      --        1        6     (437)   (1,059)    (1,054)     1,339
  Provision for income taxes...........................      --       --       --       --        --         --        410
                                                           ----     ----     ----   ------   -------    -------     ------
  Income (loss) before extraordinary charge............      --        1        6     (437)   (1,059)    (1,054)       929
  Extraordinary charge, net of income tax benefit of
    $410...............................................      --       --       --       --        --         --     (1,034)
                                                           ----     ----     ----   ------   -------    -------     ------
  Net income (loss)....................................  $   --   $    1   $    6   $ (437)  $(1,059)   $(1,054)   $  (105)
                                                           ====     ====     ====   ======   =======    =======     ======
  Earnings (loss) per share:
    Income (loss) before extraordinary charge..........  $   --   $   --   $   --   $(0.03)  $ (0.08)   $ (0.08)   $  0.09
    Extraordinary charge, net of income tax benefit....      --       --       --       --        --         --      (0.10)
                                                           ----     ----     ----   ------   -------    -------     ------
  Net income (loss) per share..........................  $   --   $   --   $   --   $(0.03)  $ (0.08)   $ (0.08)   $ (0.01)
                                                           ====     ====     ====   ======   =======    =======     ======
  Shares used in per share calculation.................  13,737   13,737   13,737   13,737    13,737     13,737     10,825
                                                           ====     ====     ====   ======   =======    =======     ======
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                                            AS OF
                                                                   AS OF DECEMBER 31,                 SEPTEMBER 30, 1996
                                                          -------------------------------------     ----------------------
                                                          1991   1992   1993    1994     1995       ACTUAL    PRO FORMA(1)
                                                          ----   ----   ----   ------   -------     -------   ------------
                                                                                   (IN THOUSANDS)
<S>                                                       <C>    <C>    <C>    <C>      <C>         <C>       <C>
BALANCE SHEET DATA:
  Cash and cash equivalents.............................   $6    $ 3    $ 34   $  209   $    71     $   169     $  6,602
  Subscriptions receivable..............................   --     --      --       --        --      19,065           --
  Working capital (deficit).............................    4     (2 )   146     (426)   (1,597)     15,447       15,447
  Total assets..........................................    9     14     257    2,313     6,784      33,330       20,698
  Short-term debt, including subordinated debentures....   --     --       5    1,032     3,489      11,463           18
  Capital lease obligations, less current portion.......    7      5      52       --        81          65           65
  Shareholders' equity (deficit)........................    1      3     130     (307)   (1,366)     16,307       16,307
</TABLE>
 
- ---------------
 
(1) Gives effect to the collection of the subscriptions receivable and
    utilization of a portion of the net proceeds from the Company's initial
    public offering consummated on October 2, 1996 to prepay the subordinated
    debentures and repay other debt.
 
                                       15
<PAGE>   17
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company was formed in 1987 to provide systems integration and custom
software development. In March 1994, the Company acquired Oxford Systems Inc.
("Oxford") in a pooling-of-interests transaction, in exchange for an aggregate
two-thirds equity interest in the Company. The Company currently provides a wide
range of information technology services, including enterprise-wide business
process solutions, systems integration and custom software development based on
leading technologies. The Company has grown rapidly since 1994 when it made a
strategic decision to diversify its customer base by expanding the scope of its
integration and development services and to utilize SAP software as a primary
tool to implement enterprise-wide business process solutions. In 1995, the
Company became a SAP National Implementation Partner and also began to utilize
Oracle products to diversify its service offerings. To achieve SAP National
Implementation Partner status, the Company was required to demonstrate: (1)
customer satisfaction with the Company's SAP-related services; (2) its
capabilities and expertise with SAP software; and (3) that its employee base
included an appropriate number of SAP-experienced consultants. SAP National
Implementation Partner status is awarded by SAP on an annual basis pursuant to
contract. The Company's current contract expires on December 31, 1996. Contract
renewal is within SAP's discretion and is expected to be based on, among other
things, the following subjective criteria set forth in the Company's contract:
(1) customer satisfaction with the Company's performance and ability to deliver
services in a timely and cost-effective manner; (2) quality of the Company's
personnel performing SAP-related services; (3) the number and scope, without
assigning any dollar amounts in the contract, of SAP R/3 projects; (4) the
thoroughness of the Company's training programs for its employees; (5)
achievement of mutually agreed upon goals; and (6) level of effective
communication between the Company and SAP. The Agreement contains no minimum
revenue requirements or cost sharing arrangements and does not provide for
commissions or royalties to either party.
 
     The Company generates revenue from professional services rendered to
customers and revenue is recognized as services are performed. The Company's
services range from providing customers with a single consultant to
multi-personnel full-scale projects. The Company provides these services to its
customers primarily on a time and materials basis and pursuant to written
contracts which can be terminated with limited advance notice, typically not
more than 30 days, and without significant penalty, generally limited to fees
earned and expenses incurred by the Company through the date of termination. The
Company provides its services directly to end-user organizations or as a member
of a consulting team assembled by another information technology consulting firm
to Fortune 1000 and other large and mid-sized companies. The Company generally
bills its customers semi-monthly for the services provided by its consultants at
contracted rates. Where contractual provisions permit, customers also are billed
for reimbursement of expenses incurred by the Company on the customers' behalf.
 
     The Company has derived and believes that it will continue to derive a
significant portion of its revenue from a limited number of customers and
projects. For the years ended December 31, 1994 and 1995 and for the nine months
ended September 30, 1996, the Company's ten largest customers accounted for
approximately 61%, 56% and 64% of its revenue, respectively. During 1994, AT&T
accounted for more than 10% of revenue. In 1995, Ernst & Young LLP and Price
Waterhouse LLP each accounted for more than 10% of revenue. During the first
nine months of 1996, Ernst & Young LLP, Price Waterhouse LLP and Bristol-Myers
Squibb each accounted for more than 10% of revenue. For the years ended December
31, 1994 and 1995 and for the nine months ended September 30, 1996, 64%, 50% and
45%, respectively, of the Company's revenue was generated by serving as a member
of consulting teams assembled by other information technology consulting firms.
There can be no assurance that such information technology consulting firms will
continue to engage the Company in the future at current levels of retention, if
at all. During the years ended December 31, 1994 and 1995 and the nine months
ended September 30, 1996, 33%, 69% and 75%, respectively, of the Company's total
revenue was derived from projects in which the Company implemented software
developed by SAP.
 
     The Company's most significant cost is project personnel expenses, which
consist of consultant salaries, benefits and payroll-related expenses. Thus, the
Company's financial performance is based primarily upon
 
                                       16
<PAGE>   18
 
billing margin (billable hourly rate less the cost to the Company of a
consultant on an hourly basis) and personnel utilization rates (billable hours
divided by paid hours). The Company believes that turnkey project management
assignments typically carry higher margins. The Company intends to accelerate a
shift to such higher-margin turnkey management assignments and more complex
projects by leveraging its reputation, existing capabilities, proprietary
implementation methodology, development tools and offshore development
capabilities with expanded sales and marketing efforts and new service offerings
to develop turnkey project sales opportunities with existing customers and to
expand its market to new customers. The Company's inability to accelerate a
shift to higher-margin turnkey management assignments and more complex projects
may adversely impact the Company's future growth. Although the Company expects
that it will utilize its proprietary implementation methodology in an increasing
number of projects, there can be no assurance that the Company will be engaged
to do so.
 
     Since late 1994, the Company has made substantial investments in its
infrastructure in order to support its rapid growth. For example, in 1994, the
Company established and funded an affiliated operation in India, the Advanced
Development Center, and established a sales office in California. In addition,
from 1994 to date, the Company has incurred significant expenses to develop
proprietary development tools and "4 SIGHT", its proprietary accelerated
implementation methodology. Commencing in 1995, the Company has been increasing
its sales force and its marketing, finance, accounting and administrative staff.
The Company employed 41 such personnel as of September 30, 1996, as compared to
eight such personnel as of January 1, 1995.
 
RESULTS OF OPERATIONS
 
     The following table sets forth for the periods indicated certain financial
data as a percentage of revenue:
 
<TABLE>
<CAPTION>
                                                                     PERCENTAGE OF REVENUE
                                                              -----------------------------------
                                                                                    NINE MONTHS
                                                                YEAR ENDED        ENDED SEPTEMBER
                                                               DECEMBER 31,             30,
                                                              ---------------     ---------------
                                                              1994      1995      1995      1996
                                                              -----     -----     -----     -----
<S>                                                           <C>       <C>       <C>       <C>
Revenue.....................................................  100.0%    100.0%    100.0%    100.0%
Cost of sales...............................................   85.9      81.4      84.2      71.6
                                                              -----     -----     -----     -----
  Gross profit..............................................   14.1      18.6      15.8      28.4
Selling, general and administrative expenses................   14.5      18.1      16.2      20.6
                                                              -----     -----     -----     -----
  Operating income (loss)...................................   (0.4)      0.5      (0.4)      7.8
Factor fees/Interest expense................................    6.0       4.8       5.9       3.8
                                                              -----     -----     -----     -----
Income (loss) before provision for income taxes and
  extraordinary charge......................................   (6.4)     (4.3)     (6.3)      4.0
Provision for income taxes..................................     --        --        --       1.2
                                                              -----     -----     -----     -----
Income (loss) before extraordinary charge...................   (6.4)     (4.3)     (6.3)      2.8
Extraordinary charge, net of income tax benefit.............     --        --        --      (3.1)
                                                              -----     -----     -----     -----
Net loss....................................................   (6.4)%    (4.3)%    (6.3)%    (0.3)%
                                                              =====     =====     =====     =====
</TABLE>
 
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30,
1995
 
     Revenue.  Revenue increased by 99.9%, or $16.8 million, from $16.7 million
in the first nine months of 1995 to $33.5 million in the first nine months of
1996. This increase was attributable primarily to increased demand for the
Company's SAP-related consulting services and, to a lesser extent, to increased
demand for the Company's systems integration and custom software development
services.
 
     Gross profit.  The Company's cost of sales includes primarily the cost of
salaries to consultants and related employee benefits and payroll taxes. The
Company's cost of sales increased by 70.0%, or $9.9 million, from $14.1 million
in the first nine months of 1995 to $24.0 million in the first nine months of
1996. The increase was due to increased personnel costs resulting from the
hiring of additional consultants to support the significant increase in demand
for the Company's services. The Company's gross profit increased by 259.4% or
$6.9 million, from $2.6 million in the first nine months of 1995 to $9.5 million
in the first nine months of 1996. Gross profit margin increased from 15.8% of
revenue in the first nine months of 1995 to 28.4% of revenue in the first nine
months of 1996. The increase in such gross profit margin was attributable
primarily to the fact
 
                                       17
<PAGE>   19
 
that revenue increased at a faster rate than cost of sales which resulted from a
combination of improved billing margins and greater consultant utilization.
 
     Selling, general and administrative expenses.  Selling, general and
administrative expenses consist primarily of administrative salaries, sales
person compensation, travel and entertainment, the costs associated with the
Advanced Development Center and related development costs and professional fees.
Selling, general and administrative expenses increased by 153.9%, or $4.2
million, from $2.7 million in the first nine months of 1995 to $6.9 million in
the first nine months of 1996, and increased as a percentage of revenue from
16.2% to 20.6%, respectively. The increases in such expenses were due primarily
to the expansion of the Company's sales and marketing force in 1995 and 1996,
the additional accounting and financial personnel added in the first nine months
of 1996, and increased travel and entertainment expenses due to the growth of
the business and the employee base.
 
     Factor fees/Interest expense.  Factor fees are the charges incurred by the
Company to finance its accounts receivable. The rapid increase in the Company's
business and revenue resulted in increased working capital requirements and the
Company utilized its increasing accounts receivable base as a source of security
to obtain financing because the Company was unable to obtain more traditional
financing. See "-- Liquidity and Capital Resources." The Company also incurred
interest expense for bank borrowings and capital lease transactions and,
beginning in April 1996, for the subordinated debentures. Such expenses
increased by 28.8%, or $283,000, from $981,000 in the first nine months of 1995
to $1.3 million in the first nine months of 1996, but decreased as a percentage
of revenue from 5.9% to 3.8%, respectively. The Company changed factors in
October 1995, resulting in lower factor rates. The effect of the decrease in
factor rates in conjunction with a partial replacement of the factor debt with a
portion of the proceeds from the issuance of subordinated debentures was offset
by an increase in the volume of accounts receivable financed. The Company
utilized a portion of the net proceeds from its initial public offering of
Common Stock consummated on October 2, 1996 to repay all amounts outstanding and
due to the factor. The Company terminated such factor agreement effective
October 10, 1996.
 
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
 
     Revenue.  Revenue increased by 261.6%, or $17.8 million, from $6.8 million
in 1994 to $24.6 million in 1995. This increase was attributable primarily to
increased demand for the Company's SAP-related consulting services and, to a
lesser extent, to increased demand for the Company's systems integration and
custom software development services.
 
     Gross profit.  The Company's cost of sales increased by 242.7%, or $14.2
million, from $5.8 million in 1994 to $20.0 million in 1995. The increase was
due to increased personnel costs resulting from the hiring of additional
consultants to support the Company's significant increase in demand for the
Company's services. The Company's gross profit increased by 376.8%, or $3.6
million, from $958,000 in 1994 to $4.6 million in 1995. Gross profit margin
increased from 14.1% of revenue in 1994 to 18.6% of revenue in 1995. The
increase in such gross profit margin was attributable primarily to the fact that
revenue increased at a faster rate than cost of sales which resulted from a
combination of improved billing margins and greater consultant utilization.
 
     Selling, general and administrative expenses.  Selling, general and
administrative expenses increased by 351.5%, or $3.5 million, from $986,000 in
1994 to $4.5 million in 1995, and increased as a percentage of revenue from
14.5% to 18.1% of revenue, respectively. The increases in such expenses in
absolute dollars and as percentage of revenue were due primarily to the
expansion of the Company's sales and marketing activities to support the
Company's growth. In 1995, selling, general and administrative expenses included
operations in India and California which were established in late 1994.
 
     Factor fees/Interest expense.  Factors fees and interest expense increased
by 187.3%, or $766,000, from $409,000 in 1994 to $1.2 million in 1995 as a
result of increased volume of accounts receivable financed resulting from
revenue increases. The Company did not establish a collections department until
the first quarter of 1996. Slow accounts receivable turnover in 1995 contributed
to increased factor fees. Factor fees and interest expense decreased as a
percentage of revenue from 6.0% to 4.8% of revenue in 1994 and 1995,
respectively, as a result of increased revenue.
 
                                       18
<PAGE>   20
 
SELECTED QUARTERLY RESULTS OF OPERATIONS
 
     The following table presents certain condensed unaudited quarterly
financial information for each of the eleven quarters through September 30,
1996. This information is derived from unaudited consolidated financial
statements of the Company that include, in the opinion of the Company, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of results of operations for such periods, when read in
conjunction with the audited Consolidated Financial Statements of the Company
and notes thereto appearing elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                         QUARTER ENDED
                              ---------------------------------------------------------------------------------------------------
                             MAR. 31  JUNE 30  SEPT. 30  DEC. 31  MAR. 31  JUNE 30  SEPT. 30  DEC. 31  MAR. 31  JUNE 30  SEPT. 30
                               1994     1994     1994     1994     1995      1995     1995     1995     1996     1996      1996
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
                                                             (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                           <C>      <C>      <C>      <C>      <C>       <C>      <C>      <C>      <C>      <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenue...................... $  644   $1,082   $2,481   $2,593   $ 3,850   $5,623   $7,272   $7,844   $8,710   $10,916   $13,845
Cost of sales................    437      707    1,704    2,994     3,857    4,454    5,791    5,919    6,423     7,723     9,825
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
  Gross profit...............    207      375      777     (401)       (7)   1,169    1,481    1,925    2,287     3,193     4,020
Selling, general and
  administrative expenses....     30      218      372      366       721      816    1,179    1,736    1,644     2,421     2,831
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
  Operating income (loss)....    177      157      405     (767)     (728)     353      302      189      643       772     1,189
Factor fees/Interest
  expense....................     28       67      149      165       320      317      344      194      315       387       562
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
Income (loss) before
  provision for income taxes
  and extraordinary charge...    149       90      256     (932)   (1,048)      36      (42)      (5)     328       385       627
Provision for income taxes...     --       --       --       --        --       --       --       --      101       117       193
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
Income (loss) before
  extraordinary charge.......    149       90      256     (932)   (1,048)      36      (42)      (5)     227       268       434
Extraordinary charge, net of
  income tax benefit.........     --       --       --       --        --       --       --       --       --        --    (1,034)
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
Net income (loss)............ $  149   $   90   $  256   $ (932)  $(1,048)  $   36   $  (42)  $   (5)  $  227   $   268   $  (600)
                              ======   ======   ======   ======   =======   ======   ======   ======   ======   =======   =======
Earnings (loss) per share:
  Income (loss) before
    extraordinary charge..... $ 0.01   $ 0.01   $ 0.02   $(0.07)  $ (0.08)  $ 0.00   $ 0.00   $ 0.00   $ 0.02   $  0.02   $  0.05
  Extraordinary charge, net
    of income tax benefit....     --       --       --       --        --       --       --       --       --        --     (0.12)
                              ------   ------   ------   ------   -------   ------   ------   ------   ------   -------   -------
  Net income (loss) per
    share.................... $ 0.01   $ 0.01   $ 0.02   $(0.07)  $ (0.08)  $ 0.00   $ 0.00   $ 0.00   $ 0.02   $  0.02   $ (0.07)
                              ======   ======   ======   ======   =======   ======   ======   ======   ======   =======   =======
Shares used in per share
  calculation................ 13,737   13,737   13,737   13,737    13,737   13,737   13,737   13,737   13,737    11,913     8,877
                              ======   ======   ======   ======   =======   ======   ======   ======   ======   =======   =======
</TABLE>
 
     The Company's historical operating results have varied substantially from
quarter to quarter, and the Company expects that they will continue to do so.
Due to the relatively fixed nature of certain of the Company's costs, including
personnel and facilities costs, a decline in revenue in any fiscal quarter would
result in lower profitability in that quarter. A variety of factors, many of
which are not within the Company's control, influence the Company's quarterly
operating results, including seasonal patterns of hardware and software capital
spending by customers, information technology outsourcing trends, the timing,
size and stage of projects, new service introductions by the Company or its
competitors, levels of market acceptance for the Company's services or the
hiring of additional staff. Operating results also may be impacted by the timing
of billings and changes in the Company's billing and utilization rates. The
Company believes, therefore, that past operating results and period-to-period
comparisons should not be relied upon as an indication of future performance.
Demand for the Company's services generally is lower in the fourth quarter due
to reduced activity during the holiday season and fewer working days for those
customers which curtail operations during such period. The Company anticipates
that its business will continue to be subject to such seasonal variations.
 
BACKLOG
 
     The Company generally enters into written contracts with its customers at
the time it commences work on a project. These written contracts contain varying
terms and conditions and the Company does not generally believe it is
appropriate to characterize such written contracts as creating backlog. In
addition, because these written contracts often provide that the arrangement can
be terminated with limited advance notice and without significant penalty, the
Company does not believe that projects in process at any one time are a reliable
indicator or measure of expected future revenue. In the event that a customer
terminates a
 
                                       19
<PAGE>   21
 
project, the customer remains obligated to pay the Company for services
performed by it through the date of termination.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     On October 2, 1996, the Company consummated an initial public offering of
2,846,250 shares of its Common Stock (which includes 371,250 additional shares
to cover over-allotments) at a price of $10.00 per share, of which 2,050,000
shares were issued and sold by the Company and 796,250 shares, including the
additional shares to cover over-allotments, were sold by the Selling
Shareholders. The net proceeds to the Company from such initial public offering,
after underwriting discounts and commissions and other expenses of such
offering, were approximately $17.9 million. The Company did not receive any
proceeds from the sale of shares sold by the Selling Shareholders.
 
     Since its inception, the Company has funded its operations primarily from
factoring of accounts receivable and equipment leases. Cash used in operating
activities was $715,000 and $2.3 million in 1994 and 1995, respectively, and
resulted primarily from the growth in accounts receivable and unbilled services.
During the nine months ended September 30, 1996, cash used in operating
activities was $4.7 million which resulted primarily from increases in accounts
receivable and unbilled services.
 
     The Company's working capital deficit was $1.6 million at December 31,
1995. The Company had working capital of $15.4 million at September 30, 1996.
 
     The Company's subscriptions receivable of approximately $19.1 million at
September 30, 1996 were collected on October 2, 1996. In accordance with
investment guidelines approved by the Company's Board of Directors, cash
balances in excess of those required to prepay the subordinated debentures,
including accrued interest, repay its factor debt obligation and fund operations
have been invested in short-term U.S. Treasury securities and commercial paper
with a credit rating no lower than A1/P1.
 
     The Company invested $89,000, $142,000 and $524,000 in capital equipment
and furniture in 1994, 1995 and the first nine months of 1996, respectively.
Although there are no other material commitments for capital expenditures
currently outstanding, the Company intends further capital expenditures for
computer equipment in 1996 approximating $400,000. See "Use of Proceeds."
 
     The Company's factoring agreement with Access Capital, Inc. (the "Factor")
required that the Company offer all of its trade accounts receivable to the
Factor for financing; however, the Factor was under no obligation to accept any
or all of such receivables. Due to a combination of factors, including the rapid
growth of the Company, the lack of available tangible security to utilize as
collateral and the absence of historical operating profits prior to 1996, the
Company was unable to obtain more traditional financing. On October 10, 1996,
the Company repaid approximately $4.4 million, consisting of all amounts
outstanding under the agreement with the Factor and terminated the Factor
agreement. The Company is seeking more traditional financing, such as a bank
line of credit. No assurance can be made that such financing will be available
on terms acceptable to the Company, if at all.
 
     In October 1995 and May 1996, the Company deposited $100,000 and $200,000
of cash, respectively, in an escrow account pursuant to an agreement with its
former factor subject to the disposition of certain unresolved differences
between the Company and such factor relating to the factor fees and amounts due
between the parties. These differences were resolved by the parties in June
1996, and approximately $197,000 was returned to the Company and the remaining
balance was released to such former factor.
 
     In March 1996, in anticipation of the debenture financing described below,
the Company obtained a $750,000 line of credit, payable on demand, from a bank.
The line of credit carried interest at the federal funds rate plus 1%.
Borrowings under the line totalled $200,000 at March 31, 1996 and $300,000 in
April 1996, when the Company repaid all amounts outstanding under such line in
connection with the debenture financing described below. The line of credit has
been terminated in accordance with the terms of such debenture financing.
 
     In April 1996, the Company issued and sold five-year 9% subordinated
debentures in the aggregate principal amount of $6.0 million to Summit Ventures
IV, L.P. and Summit Investors III, L.P. The subordinated debentures were issued
to raise funds for working capital and general corporate purposes, to repurchase
from current shareholders, Messrs. Pandey, Koneru and Valluripalli, an aggregate
of 4,881,066 shares of Common Stock for an aggregate of $1.5 million, to repay
approximately $300,000 outstanding under
 
                                       20
<PAGE>   22
 
the $750,000 credit facility described above and to satisfy approximately
$358,000 of cash overdrafts. Upon receipt of the net proceeds from the Company's
initial public offering in October 1996, the Company prepaid approximately $6.3
million, representing all amounts outstanding under such debentures, including
interest. See "Certain Transactions." As a result of such prepayment, the
Company incurred an extraordinary, non-cash charge of $1,034,000, net of an
income tax benefit of $410,000.
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid federal and state payroll-related taxes for certain
employees. As a result of the Company's voluntary disclosure to the Internal
Revenue Service of certain unpaid tax liabilities, on June 5, 1996, the Company
received an audit assessment from the Internal Revenue Service for unpaid 1994
and 1995 federal income tax withholding, FICA and FUTA taxes in the aggregate
amount of $814,000, of which approximately $800,000 was paid in August 1996. No
interest or penalties were assessed. Reserves, aggregating $1.0 million,
including the amount of the Internal Revenue Service audit assessment, were
recorded at December 31, 1995. No assurance may be given, however, that
interest, penalties or additional state or federal taxes will not be assessed in
the future. The Company's principal shareholders, Messrs. Pandey, Koneru and
Valluripalli, have agreed to indemnify the Company for any and all losses which
the Company may sustain, in excess of the $1.0 million reserve, net of any tax
benefits realized by the Company, arising from or relating to federal or state
tax, interest or penalty payment obligations resulting from the above subject
matter. See "Certain Transactions." The Company believes that its failure to
record and pay 1994 and 1995 federal and state payroll-related taxes for certain
employees resulted from a combination of factors, including lack of internal
controls, lack of financial expertise and oversight, and the Company's reliance
on outside professional advice. The Company hired a Chief Financial Officer in
January 1996 who has implemented accounting and financial controls to ensure the
Company's compliance with payroll tax regulations.
 
     The Company believes that the net proceeds of this offering, together with
available funds, anticipated future credit arrangements and the cash flow
expected to be generated from operations, will be adequate to satisfy its
current and planned operations for at least the next 24 months. The Company is
seeking a bank line of credit. No assurance can be made that such financing will
be available on terms acceptable to the Company, if at all.
 
RECENT PRONOUNCEMENTS ON ACCOUNTING FOR STOCK-BASED COMPENSATION
 
     In October 1995, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 123, "Accounting for Stock-Based Compensation,"
which requires companies to measure employee stock compensation plans based on
the fair value method using an option pricing model or to continue to apply
Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees,"
and provide pro forma footnote disclosures under the fair value method. The
Company continues to apply Accounting Principles Board No. 25 and will provide
pro forma footnote disclosure.
 
                                       21
<PAGE>   23
 
                                    BUSINESS
 
GENERAL
 
     Intelligroup provides a wide range of information technology services,
including enterprise-wide business process solutions, systems integration and
custom software development based on leading technologies. The Company has grown
rapidly since 1994 when it made a strategic decision to diversify its customer
base by expanding the scope of its integration and development services, and to
utilize SAP software as a primary tool to implement enterprise-wide business
process solutions. In 1995, the Company became a SAP National Implementation
Partner and also began to utilize Oracle products to diversify its service
offerings. The Company's custom software development services are enhanced by
its exclusive access to qualified and experienced programmers at its affiliated
Advanced Development Center located in India and connected to the Company's
headquarters in the United States and to certain customer sites by dedicated,
high speed satellite links. The Company provides its services directly to
end-user organizations or as a member of consulting teams assembled by other
information technology consulting firms. The number of customers billed by the
Company has grown substantially from three customers in 1993 to 75 customers in
1995 and to 90 customers for the nine months ended September 30, 1996. The
Company's customers are Fortune 1000 and other large and mid-sized companies, as
well as other information technology consulting firms, and include AT&T,
American Cyanamid, Bristol-Myers Squibb, Citibank, Ernst & Young LLP, IBM, ICS
Deloitte & Touche LLP and Price Waterhouse LLP.
 
INDUSTRY BACKGROUND
 
     Many large and mid-sized businesses face a rapidly changing business
environment, intense global competition and accelerating technological change.
To remain competitive, such businesses continually seek to improve the quality
of products and services, lower costs, reduce cycle times and increase value to
customers. Businesses are implementing and utilizing advanced information
technology solutions that enable them to redesign their business processes in
such areas as product development, service delivery, manufacturing, sales and
human resources. The ability of an organization to integrate and deploy
redesigned business processes and related information technologies timely and
cost effectively is critical in the changing business environment.
 
     Concurrently, businesses are migrating from legacy systems running
proprietary software to open systems and client/server architectures based on
personal computers, LANs/WANs, shared databases and packaged software
applications. Such client/server systems, when developed and implemented
appropriately, enable the creation and utilization of more functional and
flexible applications which are critical to the competitive needs of businesses.
Organizations often acquire packaged enterprise-wide business software
applications for client/server systems, including those offered by leading
vendors, such as SAP, Oracle, PeopleSoft or Baan, and implement or customize
these applications to match their needs. Organizations also may develop
customized software applications designed for their specific business needs.
 
     Despite the advantages of client/server systems, the complex task of
developing and implementing enterprise-wide, mission-critical, client/server
solutions presents significant challenges for most organizations and often is a
time consuming and costly undertaking. Implementing client/server solutions
typically requires significant allocation of organizational resources.
Information technology managers must integrate and manage open systems and
distributed computing environments consisting of multiple computing platforms,
operating systems, databases and networking protocols, and implement packaged
enterprise software applications to support business objectives. Companies also
must continually keep pace with new technological developments which can render
internal information technology skills outmoded. Professionals with the
requisite technology skills often are in short supply and many organizations are
reluctant to expand their internal information systems department for particular
projects. At the same time, external economic factors encourage organizations to
focus on their core competencies and trim workforces in the information
technology management area. Accordingly, organizations often lack sufficient
technical resources necessary to design, develop and implement emerging
information technology solutions on a timely basis.
 
                                       22
<PAGE>   24
 
     To support their information technology needs, many businesses increasingly
engage experienced outside specialists to develop and implement solutions, in
shorter timeframes and at lower costs, while reducing implementation risks. As a
result, demand for information technology services has grown significantly.
According to industry sources, the global demand for SAP-related consulting
services alone was estimated to be $3.0 billion in 1995.
 
THE INTELLIGROUP SOLUTION
 
     Intelligroup provides information technology services to develop and
implement cost-effective client/server business solutions on a timely basis by
combining its expertise in a wide range of technologies and business processes
with its proprietary implementation methodology and development tools. The
Company believes it offers the following advantages:
 
     Expertise in a Wide Range of Technologies:  The Company's consultants have
expertise with SAP and Oracle products and with a wide variety of leading
computing technologies, including client/server architectures, object-oriented
technologies, CASE, distributed database management systems, micro-to-mainframe
connectivity, LAN/WAN and telecommunications technologies. Since many of the
Company's customers have invested in a variety of technologies, including legacy
systems, the Company also develops solutions for these environments.
 
     Accelerated Implementation Methodology:  The Company recently has developed
a proprietary implementation methodology, "4 SIGHT", which is designed to
minimize the time required to develop and implement SAP and Oracle solutions for
its customers. "4 SIGHT" is designed to be technology independent and modular so
that it may be utilized by the Company's consultants and project managers in
other packaged applications development or software customization projects. The
Company only recently began marketing its new implementation capability, which
currently is being utilized in two projects, each of which involves
implementation of a SAP solution for a Fortune 500 company in which the Company
has been retained directly by the end-user organization. See "-- Customers."
 
     Value-Oriented Implementation:  The Company provides experienced project
managers and consultants to its customers. The Company believes that its
personnel are effective because of their industry experience. Currently, a
majority of its consultants have over three years information technology
consulting experience and approximately 25% of its consultants have over five
years of such experience. In addition, the Company has the ability to develop
and implement business solutions through its affiliated offshore Advanced
Development Center in India which gives the Company access to qualified and
experienced programmers at a reduced labor cost.
 
     Customer-Driven Approach:  The Company's project managers and consultants
maintain on-going communication and close interaction with customers to ensure
that they are involved in all facets of a project and that the solutions
designed and implemented by the Company meet the customer's needs. The Company's
goal is to provide training to its customers during a project to achieve high
levels of self-sufficiency among its customers' end users and internal
information technology personnel. The Company believes that its ability to
deliver the requisite knowledge base to its customers is critical to fostering
long-term relationships with, and generating referrals from, existing customers.
 
STRATEGY
 
     The Company's objective is to be a leading provider of a wide range of
information technology services, including enterprise-wide business process
solutions, systems integration and custom software development based on leading
technologies. The Company's strategy includes the following key elements:
 
     Accelerate Shift to Turnkey Project Management:  The Company provides its
services directly to its customers or as a member of consulting teams in which
other information technology consulting firms serve as project managers. To
date, the Company has been retained primarily to implement project
specifications designed by other members of the project team. The Company
believes that turnkey project management assignments typically carry higher
margins. The Company intends to accelerate a shift to such higher-margin
 
                                       23
<PAGE>   25
 
turnkey project management assignments and to more complex projects. The Company
seeks to accomplish such shift by leveraging its reputation, existing
capabilities, proprietary implementation methodology, development tools, and
offshore development capabilities with expanded sales and marketing efforts and
new service offerings to develop turnkey project sales opportunities with
existing customers and to expand its market to new customers. The Company's
inability to accelerate a shift to higher-margin turnkey project management
assignments and more complex projects may adversely impact the Company's future
growth. The Company is unable to determine the period of time it may take to
accomplish such shift and no assurance may be given that such shift will occur.
Turnkey project management assignments require the Company to allocate resources
to employ qualified project managers and consultants and direct sales personnel.
In addition, such assignments carry long sales cycles, typically ranging from
one to six months. See "-- Sales and Marketing."
 
     Maintain and Expand Long-Term Customer Relationships:  The Company
recognizes the importance of offering superior services to its customers, which
it believes is essential to building long-term customer relationships. The
Company believes that satisfying customer expectations within established
budgets and estimated timeframes is critical to gaining repeat business and
generating new business from referrals. As information technology continues to
evolve, the Company believes that service providers with established customer
relationships and the ability to maintain a high level of expertise in new
technologies will be market leaders.
 
     Leverage and Expand Strategic Relationships:  The Company currently
maintains strategic relationships with SAP and Oracle, which are leading
enterprise software applications developers. The Company believes that its
designation as a SAP National Implementation Partner and its status as an Oracle
services provider results in direct referrals and in enhanced industry
recognition. The Company also believes that such relationships enable the
Company to broaden its customer base, maintain technological leadership and
increase its competitiveness. The Company intends to continue to cultivate its
relationships with SAP and Oracle to expand its sales opportunities. The Company
also seeks to continue to form alliances with other developers and vendors of
information technologies. In addition, the Company seeks to form strategic
alliances with other business partners, such as management consulting firms, to
pursue joint business opportunities.
 
     Maintain Technological Leadership and Enhance Methodology and Development
Tools:  The Company intends to continue to enhance its proprietary
implementation methodology and development tools as new information technology
challenges and technologies emerge. The Company also intends to leverage "4
SIGHT" by porting it to other leading software applications in addition to SAP.
For example, "4 SIGHT" recently has been adapted for Oracle implementations. The
Company continually evaluates new and emerging software applications and
technologies and intends to incorporate such technologies into the Company's
service offerings.
 
     Attract and Retain Skilled, Motivated Technical Employees:  The Company
believes that its future success depends upon its ability to continue to
attract, retain and train skilled, motivated technical employees. To this end,
the Company focuses on maintaining its merit-driven employment environment and
incentive systems, including the implementation of its stock incentive plan, to
continue to motivate and reward its employees and to align their goals with
those of the Company. The Company believes that it will continue to benefit from
the recruitment efforts of its existing employee base to attract additional
qualified consultants and programmers in a highly competitive employment
environment.
 
     Expand Global Sales and Marketing Efforts:  The Company intends to expand
its sales and marketing efforts by hiring additional experienced sales
personnel, leveraging existing customers to gain referrals, offering new
services to new and existing customers, and utilizing its relationships with
industry leading information technology providers. In addition, the Company
intends to expand by establishing additional sales offices in the United States
and abroad in areas in which the Company has a base of customers or perceives
significant market opportunities. The Company believes that a strong domestic
and international presence will enhance its competitiveness by providing
additional sales presence at the local level. To date, the Company has
established operations or affiliated operations in New Jersey, California,
India, New Zealand, South Africa and the United Kingdom.
 
                                       24
<PAGE>   26
 
INTELLIGROUP SERVICES
 
     Intelligroup provides a wide range of information technology services,
including (i) enterprise-wide business process solutions utilizing SAP R/3 and
Oracle products, which are leading software applications; and (ii) systems
integration and custom software development solutions in a wide variety of
computing environments utilizing leading technologies, including client/server
architectures, object-oriented technologies, CASE, distributed database
management systems, LAN/WAN and telecommunications technologies. The Company's
services range from providing customers with a single consultant to
multi-personnel full-scale projects. The Company provides these services to its
customers primarily on a time and materials basis and pursuant to agreements
which are terminable upon relatively short notice. The Company's custom software
development services are enhanced by its exclusive access to qualified and
experienced programmers at the Advanced Development Center located in India and
connected to the Company's headquarters in the United States and to certain
customer sites by dedicated, high speed satellite links.
 
  ENTERPRISE-WIDE BUSINESS PROCESS SOLUTIONS
 
     The Company designs, develops, integrates and implements sophisticated
business process solutions utilizing SAP R/3 and Oracle products and
incorporating best business practices and methods. The Company builds business
solutions for its customers by focusing on each customer's business objectives
and by providing business process re-engineering, information systems strategic
planning, technology implementation, comprehensive training and organizational
change management services. The Company believes that its expertise in a wide
variety of technologies, coupled with its ability to provide comprehensive
business process solutions and timely and cost-effective implementation of new
business systems, enables its customers to achieve substantial improvements in
efficiency and effectiveness in their businesses and fosters long-term customer
relationships.
 
      On-line Project Management System ("OPMS"):  The Company utilizes its OPMS
to monitor enterprise-wide business process solutions development projects. The
Company designed OPMS as a SAP subsystem developed in R/3 and installable on
customers' SAP systems. OPMS provides real-time information relating to: the
current stage of development of each program; the number of man-hours spent at
each stage of development; total man-hours spent on development during any
interval of time; programs developed by each programmer; analysis of time spent
on the development project; and technical information, including source code,
documentation and tables used in the system. The Company believes that OPMS also
shortens the turn-around time for program development as it streamlines the
information flow between the Company's offices and customer sites.
 
                                       25
<PAGE>   27
 
      Accelerated Implementation Methodology:  As a result of its experience in
implementing SAP software, the Company has developed a proprietary methodology,
"4 SIGHT", for implementing enterprise business software applications. "4
SIGHT", used by the Company to date solely in projects implementing SAP R/3, is
designed to be portable to other packaged software applications, including those
offered by Oracle, PeopleSoft and Baan, and to be adaptable to the scope of a
particular project. "4 SIGHT" recently has been adapted for Oracle
implementations. The following chart outlines the framework of the Company's
methodology:
- --------------------------------------------------------------------------------
 
                                   "4 SIGHT"
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                      <C>                              <C>                                  
            PHASE                 DESCRIPTION                      SELECTED ACTIVITIES
- ----------------------   -----------------------------    -----------------------------------------
       Requirements      Develop a detailed project       - Project goals definition
       Analysis          plan.                            - Project scoping and planning
                                                          - Process identification
                                                          - Cost/benefit analysis
                                                          - Data requirement analysis
                                                          - Detailed implementation plan
                                                              development
- ---------------------------------------------------------------------------------------------------
       Prototyping       Convert the customer's           - Business process prototyping
                         business requirements to a       - Report prototyping
                         basic systems solution.          - Design data conversion
                                                              implementation and enhancements
                                                          - Transaction testing
- ---------------------------------------------------------------------------------------------------
       Development       Implement end user input to      - Software customization
                         customize the solution,          - New reports and layouts development
                         integrate with other systems     - Data interfaces completion
                         and prepare for the "go-live"    - Data conversion
                         point.                           - Technical implementation
                                                          - System testing
                                                          - Training preparation
- ---------------------------------------------------------------------------------------------------
       Implementation    Determine the most               - Data conversion
                         appropriate implementation       - Acceptance testing
                         approach, including "big         - Maintenance handover
                         bang," functionally phased       - Benefits tracking
                         and location phased              - Implementation review
                         approaches.
</TABLE>
 
- --------------------------------------------------------------------------------
 
     The Company believes that the use of "4 SIGHT" throughout an implementation
project may enable its customers to realize significant savings in time and
resources.
 
  SYSTEMS INTEGRATION AND CUSTOM SOFTWARE DEVELOPMENT
 
     The Company provides a broad range of systems integration and customized
application solutions to customers in a wide variety of industries. The Company
is engaged by customers to undertake feasibility studies, systems engineering,
custom software development and tailoring, migration strategies, systems design,
development, testing, integration, implementation, training and support in a
wide variety of computing environments. The Company, in providing such services,
utilizes leading technologies, including client/server architectures,
object-oriented technologies, CASE, distributed database management systems,
LAN/WAN and telecommunications technologies.
 
  ADVANCED DEVELOPMENT CENTER
 
     The Company provides cost-effective, timely custom software development and
tailoring in the United States, at customer sites and through its affiliated
Advanced Development Center ("ADC") located in Hyderabad, India. The ADC is
connected to the Company's headquarters in the United States and to certain
 
                                       26
<PAGE>   28
 
customer sites by dedicated, high speed satellite links. The ADC is owned by
Intelligroup Asia, a corporation organized pursuant to the laws of India and
majority owned by Messrs. Koneru and Valluripalli, two of the principal
shareholders of the Company. The ADC is operated for the sole and exclusive use
and benefit of the Company. See "Certain Transactions." The ADC is staffed with
qualified and experienced programmers, including those with SAP configuration
expertise and SAP's ABAP/4 programming capability. The Company utilizes the
programmers at the ADC, in conjunction with its consultants in the United States
who are on site at customer locations, to provide its customers with savings in
development and implementation costs and time to project completion. All
development projects undertaken by the ADC are monitored by the Company's OPMS.
OPMS also minimizes the turn-around time for program development as it
streamlines the information flow between customer sites and the ADC. The Company
intends to utilize the ADC to provide similar development services to customers
that utilize software applications other than SAP software.
 
SALES AND MARKETING
 
     The Company historically has generated new sales leads from referrals from
existing customers, and from introductions to potential customers by SAP or
Oracle, which often need to recommend qualified systems integrators to implement
their software products. In addition, the Company has been introduced to
customers by certain of its competitors, such as "Big Six" accounting firms,
which at times require the Company's expertise and ability to deliver qualified
personnel for complex projects. To date, the Company has been able to grow its
customer base without allocating significant resources to its sales and
marketing effort. The Company believes, however, that in order to continue its
growth, it must dedicate an increased level of resources to more focused sales
and marketing efforts. The Company will continue to market to potential
customers with demonstrated needs for the Company's expertise in core
information technologies and solutions such as SAP. To implement this plan, the
Company intends to expand its dedicated sales and marketing force by hiring
several individuals with experience in the industry sectors in which the Company
has prior experience.
 
     Among its sales and marketing efforts, the Company's sales force has
presented the Company's expertise at SAPPHIRE, the annual SAP America conference
for SAP service providers and end-users, and uses direct marketing techniques.
The Company intends to increase its participation in industry-recognized
programs and trade shows. Most importantly, however, the Company believes that
satisfying customer expectations within budgets and time schedules is critical
to gaining repeat business and obtaining new business from referrals. The
Company believes that it has consistently met customer expectations with respect
to budgets and time schedules.
 
     As of September 30, 1996, the Company's sales and marketing group consisted
of 12 employees in the United States and one in the United Kingdom. The Company
markets and delivers its services to customers on an international basis through
its network of offices. The Company's headquarters in New Jersey and its branch
office in San Jose, California serve the United States market. Intelligroup Asia
serves as the Company's sales agent in Asia and the Middle East. In addition,
the Company also has established operations in New Zealand and currently has
information technology consultants on-site at a customer location. The Company
intends to add sales and marketing capabilities in New Zealand. In February
1996, the Company established a sales office in South Africa. The Company also
established operations in the United Kingdom in June 1996. The Company also
intends to increase its local presence in the United States by opening
additional sales offices and by expanding its sales and marketing staff in New
Jersey and California.
 
     The Company's services require a substantial financial commitment by
customers and, therefore, typically involve a long sales cycle. Once a lead is
generated, the Company endeavors to understand quickly the potential customer's
business needs and objectives in order to develop the appropriate solution and
bid accordingly. The Company's project managers are involved throughout the
sales cycle to ensure mutual understanding of customer goals, including time to
completion, and technological requirements. Sales cycles for complex business
solutions projects typically range from one to six months from the time the
Company initially meets with a prospective customer until the customer decides
whether to authorize commencement of an engagement.
 
                                       27
<PAGE>   29
 
CUSTOMERS
 
     The Company provides its services directly to Fortune 1000 and other large
and mid-sized companies, many of which have information-intensive, multinational
operations, or as a member of a consulting team assembled by other information
technology consultants, such as "Big Six" accounting firms. The number of
customers billed by the Company has grown substantially from three customers in
1993 to 75 customers for the year ended December 31, 1995. For the nine months
ended September 30, 1996, the Company billed 90 customers.
 
     Since January 1, 1994, the Company has served customers in a broad range of
industries. The following list includes representative customers which have
engaged the Company to perform services for which the Company has generated a
minimum of $250,000 in revenue from January 1, 1994 through September 30, 1996.
 
                                 IT CONSULTING
                         ------------------------------
                              Andersen Consulting
                               Ernst & Young LLP
                           ICS Deloitte & Touche LLP
                             KPMG Peat Marwick LLP
                              Price Waterhouse LLP
 
                                BASIC INDUSTRIES
                         ------------------------------
                               American Cyanamid
                              Bristol-Myers Squibb
                                 Coors Brewing
                                Hoechst Celanese
                                Hoffman LaRoche
                                National Starch
                                  Schlumberger
                           Wisconsin Electric & Power
 
                                  TECHNOLOGIES
                             ---------------------
                                      AT&T
                                 Analog Devices
                               Brother Industries
                                     GTech
                                      IBM
                               Informix Software
                               Landmark Graphics
                                    Merisel
                                      NCR
                                     Oracle
                                  SAP America
 
                                   FINANCIAL
                             ---------------------
                                    Citibank
                                  PaineWebber
 
     The Company's ten largest customers accounted for, in the aggregate,
approximately 61%, 56% and 64% of its revenue in 1994, 1995 and the nine months
ended September 30, 1996, respectively. During 1994, AT&T accounted for more
than 10% of revenue, while in 1995, Ernst & Young LLP and Price Waterhouse LLP
each accounted for more than 10% of revenue. During the first nine months of
1996, Ernst & Young LLP, Price Waterhouse LLP and Bristol-Myers Squibb each
accounted for more than 10% of revenue. Currently, the Company is engaged in
four projects for Ernst & Young LLP and nine projects for Price Waterhouse LLP.
In 1994, 1995 and the nine months ended September 30, 1996, 64%, 50% and 45%,
respectively, of the Company's revenue was generated by serving as a member of
consulting teams assembled by leading information technology consulting firms
retained by organizations to manage projects to provide enterprise-wide business
process solutions.
 
     Although the Company has contracts with many of its large customers to
provide its services, in general, such contracts are terminable upon relatively
short notice, typically not more than 30 days. There can be no assurance that
the Company's customers will continue to enter into contracts with the Company
or that existing contracts will not be terminated.
 
     While each customer project is different, the following case studies
illustrate some of the types of business needs addressed by the Company and the
range of information technology solutions the Company has provided to its
customers.
 
  ENTERPRISE-WIDE IMPLEMENTATION OF SAP'S R/3 SOFTWARE:
 
     MERISEL:  Merisel, a leading national master distributor of micro-computer
products, engaged the Company to provide assistance in implementation of its SAP
business system in the United States and Canada.
 
                                       28
<PAGE>   30
 
          Problem:  Merisel, in its migration from a legacy system to a
     UNIX-based SAP system, required substantial development of customized
     reports in SAP to meet organizational requirements in the areas of sales
     and distribution, finance, costing, and profitability and logistics. This
     project required experienced SAP consultants, including analysts and ABAP/4
     programmers. Merisel initially believed that it required approximately 500
     reports to be developed in a six-month period.
 
          Solution:  SAP recommended to Merisel that it engage the Company to
     provide assistance in its SAP implementation project. The Company was able
     rapidly to form a team of experienced ABAP/4 programmers and analysts. The
     Company's on-site analyst team performed requirements analysis to identify
     reports needed in each functional area. The Company's analysts ensured that
     the user requirements were accurately transformed into a practical
     technical design and its programming staff at the ADC provided timely and
     cost-effective software development. The Company utilized its OPMS to
     manage effectively the development effort by providing the appropriate
     communications system, document and software management system, and
     progress tracking and management system. The Company's analysts also
     provided end-user training and documentation.
 
          Result:  The Company achieved the project goals on time and within
     Merisel's budget, while reducing the number of reports required by
     approximately 65%.
 
     GATX CAPITAL:  GATX, a diversified financial services company, has selected
the Company to manage its current SAP R/3 implementation project which includes
project management, business process re-engineering, SAP configuration and
prototyping, on-site and off-shore development, training, data conversion and
implementation. The GATX project is one of the first major implementations of
the new SAP R/3 Treasury Management module.
 
          Problem:  GATX required an implementation partner with SAP-experienced
     personnel for its migration from a heterogeneous collection of software
     applications and computing platforms to a new integrated and flexible
     system utilizing SAP R/3. The project goal is to provide the functionality
     required to administer the financial and physical asset management needs of
     the GATX organization, which includes over 200 subsidiaries or affiliates
     worldwide.
 
          Solution:  The Company is managing the SAP implementation utilizing 
     "4 SIGHT" in implementing new business processes which incorporate 
     accounting and administration, treasury and cash management, invoicing, 
     bookings, dispositions, projections, depreciation, asset tracking and 
     portfolio and profitability analysis.
 
          Result:  The GATX SAP R/3 implementation project, which commenced in
     January 1996, is proceeding as projected.
 
  INTEGRATION OF INFORMATION TECHNOLOGIES:
 
     AT&T:  AT&T retained the Company to develop a creative software application
to provide instructional training exercises for certain of AT&T's customer
service representatives.
 
          Problem:  AT&T wanted to improve the efficiency and effectiveness of
     its training of entry level representatives by using advanced information
     technologies to enable on-line, on-the-job training.
 
          Solution:  The Company designed and developed training software using
     Sun SparcStations connected via a LAN and utilizing state-of-the-art audio
     and visual effects. The Company developed the software using Open Windows,
     C, Xt, and Xlib in a networked environment and integrated all of these
     technologies with the job functions of AT&T's proprietary customer service
     applications system.
 
          Result:  The development of this software permitted AT&T to
     administer, monitor and manage the performance of its trainees at reduced
     costs. The Company achieved the project goals on time and within AT&T's
     budget.
 
     Many of the Company's engagements involve projects that are critical to the
operations of its customers' businesses and provide benefits that may be
difficult to quantify. The Company's failure or inability to meet a
 
                                       29
<PAGE>   31
 
customer's expectations in the performance of its services could result in a
material adverse change to the customer's operations giving rise to claims for
damages against the Company or causing damage to the Company's reputation,
adversely affecting its business, financial condition and results of operations.
In addition, certain of the Company's agreements with its customers require the
Company to indemnify the customer for damages arising from services provided to,
or on behalf of, such customer. Under certain of the Company's customer
contracts, the Company warrants that it will repair errors or defects in its
deliverables without additional charge to the customer. The Company has not
experienced, to date, any material claims against such warranties. The Company
is seeking to purchase and maintain errors and omissions insurance to insure the
Company for damages and expenses incurred in connection with alleged negligent
acts, errors or omissions. There can be no assurance that such insurance will be
available to the Company on acceptable terms, if at all.
 
COMPETITION
 
     The markets for the Company's services are highly competitive. The Company
believes that its principal competitors include the internal information systems
groups of its prospective customers, as well as consulting and software
integration firms, including the "Big Six" accounting firms, the ISSC division
of IBM, Cambridge Technology Partners, SHL Systemhouse (a subsidiary of MCI),
and Computer Sciences Corporation, and with software applications vendors, some
of which are also customers of the Company. Many of the Company's competitors
have longer operating histories, possess greater industry and name recognition
and have significantly greater financial, technical and marketing resources than
the Company. In addition, there are relatively low barriers to entry into the
Company's markets and the Company has faced, and expects to continue to face,
additional competition from new entrants into its markets.
 
     The Company believes that the principal competitive factors in its markets
include quality of service and deliverables, speed of development and
implementation, price, project management capability and technical and business
expertise. The Company believes that its ability to compete also depends in part
on a number of competitive factors outside its control, including the ability of
its competitors to hire, retain and motivate project managers and other senior
technical staff, the development by others of services that are competitive with
the Company's services and the extent of its competitors' responsiveness to
customer needs.
 
     The Company believes that it competes based on its expertise in SAP and
Oracle products and a wide variety of technologies. There can be no assurance
that the Company will be able to continue to compete successfully with existing
and new competitors. See "Risk Factors -- Highly Competitive Information
Technology Services Industry."
 
EMPLOYEES
 
     As of September 30, 1996, the Company employed 321 full-time employees, of
whom 280 were engaged as consultants, 13 were engaged in sales and marketing,
and 28 were engaged in finance, administration, and management. Of the total
number of employees, 303 were based in the United States, 11 were based in New
Zealand, 4 were based in South Africa and 3 were based in the United Kingdom. In
addition, the Company engaged 28 independent contractors to perform information
technology services and has exclusive access to all of the employees of
Intelligroup Asia, which consisted of 65 software developers and 4
administrative personnel at September 30, 1996.
 
     None of the Company's employees is covered by a collective bargaining
agreement. Substantially all of the Company's employees have executed a
non-competition, non-disclosure and non-solicitation assignment. In addition,
the Company requires that all new employees execute such agreement as a
condition of employment by the Company. The Company believes that it has been
successful in attracting and retaining skilled and experienced personnel. There
is increasing competition for experienced sales and marketing personnel and
technical professionals. The Company's future success will depend in part on its
ability to continue to attract, retain, train and motivate highly qualified
personnel. See "Risk Factors -- Competitive Market for Technical Personnel." The
Company considers relations with its employees to be good.
 
                                       30
<PAGE>   32
 
INTELLECTUAL PROPERTY RIGHTS
 
     The Company's success is dependent, in part, upon its proprietary
accelerated implementation methodology, development tools and other intellectual
property rights. The Company relies upon a combination of trade secret,
nondisclosure and other contractual arrangements, and copyright and trademark
laws, to protect its proprietary rights. The Company generally enters into
confidentiality agreements with its employees, consultants and customers, and
limits access to and distribution of its proprietary information. The Company
also requires that substantially all of its employees and consultants assign to
the Company their rights in intellectual property developed while employed or
engaged by the Company. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of its
proprietary information or that the Company will be able to detect unauthorized
use of and take appropriate steps to enforce its intellectual property rights.
See "Risk Factors -- Reliance on Intellectual Property Rights."
 
FACILITIES
 
     The Company owns no real property and currently leases all of its office
space. The Company subleases its headquarters in Iselin, New Jersey, totaling
approximately 13,200 square feet. The sublease expires in November 1999. The
Company believes that such headquarters has sufficient space for its current and
anticipated near-term needs. The Company uses such facility for certain
technical and support personnel, sales and marketing, administrative, finance
and management personnel. The Company also leases or subleases offices for its
operations in San Jose, California and Pretoria, South Africa.
 
LEGAL PROCEEDINGS
 
     The Company currently is being investigated by the Immigration and
Naturalization Service (the "INS") concerning possible violations of the
Immigration Reform and Control Act of 1990. Specifically, the INS is
investigating whether the Company improperly employed certain foreign national
individuals prior to their obtaining appropriate work authorization and failed
to complete properly employment eligibility verification forms for all
employees. The Company has and will continue to cooperate fully with the INS. A
notice of intent to fine has not been served upon the Company, and, therefore,
the potential for fines is not known at this time. Upon review of the fines
generally assessed in similar matters, the Company believes, however, that
fines, if any, will not exceed $150,000. The Company anticipates that the INS
investigation may continue for six months or more. There can be no assurance,
however, as to the ultimate amount of fines which may be assessed or the length
of time it may take to conclude the INS investigation. The Company employs many
foreign national individuals and has implemented procedures and controls which
it believes will ensure full compliance with the Immigration Reform and Control
Act of 1990 and related regulations. Toward this end, the Company now employs
in-house counsel to oversee this function.
 
     On February 16, 1996, the Company, as plaintiff, filed a complaint in the
Superior Court of New Jersey, Chancery Division, Middlesex County, against a
former consultant to the Company, seven former employees of the Company and
Pegasus Systems, Inc. ("Pegasus"), a corporation which currently employs such
individuals (collectively, the "Defendants"). The complaint, which seeks damages
and injunctive relief against the Defendants, alleges, among other things,
misappropriation of proprietary information, unfair competition, tortious
interference, breach of employment agreements, breach of a consulting agreement
between the Company and Pegasus, and breach of duty of loyalty, good faith and
fair dealing. Upon the filing of its complaint, the Company obtained a temporary
restraining order and in May 1996 obtained a preliminary injunction prohibiting
the Defendants from using or disclosing the Company's proprietary information,
prohibiting the Defendants from contacting or soliciting certain of the
Company's customers and prohibiting the Defendants from recruiting or attempting
to recruit the Company's employees, agents or contractors. The preliminary
injunction remains in effect and the Company intends to pursue vigorously
enforcement of the injunction against the Defendants. The Defendants have filed
an answer and counterclaim. Pegasus has asserted a breach of contract
counterclaim against the Company alleging that the Company owes it $129,000 for
consulting services. Pegasus and two of the individual Defendants also asserted
claims against the Company and two of its officers for tortious interference and
defamation. In addition, one of the individual Defendants has asserted that the
Company owes him $70,000 in commissions. In addition to monetary
 
                                       31
<PAGE>   33
 
damages the Defendants seek injunctive relief. The Defendants unsuccessfully
sought a temporary restraining order against the Company. The Company denies the
allegations made and intends to defend vigorously the counterclaims. The Company
does not believe that the outcome of these claims and counterclaims will have a
material effect upon the Company's business, financial condition or results of
operations.
 
     In a related matter, on August 21, 1996, the Company was named as defendant
in a complaint filed in the Delaware Chancery Court, New Castle County, by
plaintiff, Systems America, Inc. ("Systems America"), a computer and technology
consulting firm. Systems America alleges that it subcontracted Pegasus
consultants to perform SAP consulting services for two companies which are also
customers of the Company, and alleges that the Company has interfered with
Systems America's customer relationships, and as a result thereof, Systems
America has sustained damages. The complaint, which seeks unspecified monetary
damages, treble damages, attorney fees and injunctive relief against the
Company, alleges deceptive trade practices, defamation and tortious interference
with prospective business or contractual relations by the Company. In September
1996, the case was removed to Federal District Court in Delaware. This action is
in an early stage, and accordingly, the Company cannot currently assess the
ultimate outcome. However, the Company denies the allegations made and intends
to defend the claim vigorously. The Company has filed a motion to dismiss the
Systems America complaint. On November 16, 1996, Systems America and the Company
reached an agreement in principle to settle Systems America's claims against the
Company for an immaterial cash payment by the Company to Systems America.
 
     Oxford Systems Inc., a New Jersey corporation and a wholly-owned subsidiary
of the Company ("Oxford"), is named as a defendant in a civil complaint that was
filed on June 8, 1995 by Design Strategy Corp. ("Design Strategy"), in New York
State Supreme Court in the County of New York. Design Strategy alleges that
another named defendant, Citibank, N.A. ("Citibank"), contracted with Design
Strategy for database administration services. Design Strategy claims that
Citibank and Oxford conspired to deprive it of commissions, tortiously
interfered with contract, engaged in unfair competition, damaged its reputation
and misappropriated services. Design Strategy recently settled its claims
against Citibank. The Company denies the allegations made and intends to
continue to defend vigorously such action. The Company does not believe that the
outcome of the action will have a material effect upon the Company's business,
financial condition or results of operations.
 
     There is no other material litigation pending to which the Company is a
party or to which any of its property is subject.
 
                                       32
<PAGE>   34
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEE
 
     The executive officers, directors and key employee of the Company are as
follows:
 
<TABLE>
<CAPTION>
                      NAME                         AGE                     POSITION
- -------------------------------------------------  ----    ----------------------------------------
<S>                                                <C>     <C>
Ashok Pandey(1)(2)...............................  38      Chairman of the Board, President, Chief
                                                           Executive Officer and Director
Rajkumar Koneru..................................  26      Vice President -- Business Solutions and
                                                           Director
Nagarjun Valluripalli............................  28      Vice President -- Advanced Technology
                                                           and Director
Robert M. Olanoff................................  40      Chief Financial Officer, Treasurer and
                                                           Secretary
Paul W. Coombs...................................  40      Director of Business Solutions
Kevin P. Mohan(1)(2)(3)..........................  32      Director
Thomas S. Roberts(1)(2)(3).......................  33      Director
</TABLE>
 
- ---------------
(1) Member of Compensation Committee.
 
(2) Member of Audit Committee.
 
(3) Member of Option Committee.
 
     The Company intends to identify and elect two additional independent,
unaffiliated directors, each of whom is expected to serve on the Audit
Committee.
 
     All executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified. All
directors hold office until the next annual meeting of shareholders and until
their successors shall have been duly elected and qualified. There are no family
relationships among any of the executive officers, directors and key employee of
the Company.
 
     Ashok Pandey founded the Company and has served as a director, Chairman of
the Board, President, and Chief Executive Officer of the Company since its
inception in 1987. Prior to founding the Company, Mr. Pandey was a consultant to
AT&T and Bell Laboratories. He has more than twelve years of experience in
developing systems and application software.
 
     Rajkumar Koneru joined the Company in April 1996 and currently serves as
Vice President -- Business Solutions and as a director. In May 1993, Messrs.
Koneru and Valluripalli co-founded Oxford Systems Inc., a systems integration
company ("Oxford"). In March 1994, they sold all of the issued and outstanding
capital stock of Oxford to the Company. See "Certain Transactions." From June
1992 through December 1992, Mr. Koneru was a consultant with Super Solutions
Corporation and, from March 1993 until March 1996 he was a consultant for the
Boston Group, each an information technology consulting firm. Following
consummation of the Company's transaction with Oxford, Mr. Koneru continued to
be employed by the Boston Group, which subcontracted Mr. Koneru's services to
the Company.
 
     Nagarjun Valluripalli joined the Company in March 1994 and currently serves
as Vice President -- Advanced Technology and as a director. In May 1993, Messrs.
Koneru and Valluripalli co-founded Oxford, at which Mr. Valluripalli was
responsible for business development. In March 1994, Messrs. Koneru and
Valluripalli sold all of the issued and outstanding capital stock of Oxford to
the Company. See "Certain Transactions." Prior to founding Oxford, from 1990,
Mr. Valluripalli was marketing manager for VJ Infosystems, a software training
and services company.
 
     Robert M. Olanoff joined the Company in January 1996 and currently serves
as its Chief Financial Officer, Treasurer and Secretary. Prior to joining the
Company, from 1993 through 1995, Mr. Olanoff was Chief Financial Officer and
Vice President of InfoMed Holdings, Inc. From 1990 to 1993, he was Controller of
Execu-Flow Systems, Inc. Each company is a turnkey software provider to the
healthcare industry. Mr. Olanoff is a certified public accountant.
 
                                       33
<PAGE>   35
 
     Paul W. Coombs joined the Company in July 1994 and currently serves as
Director of Business Solutions. From November 1993 through December 1994, he was
a Director of CBC Limited, a computer consulting company, of which he was a
principal shareholder. From July 1986 through November 1993, he was an
Associate -- Strategic Planning with Touche Ross & Co.
 
     Kevin P. Mohan has been a director of the Company since April 1996. Mr.
Mohan currently serves as a Vice President of various venture capital funds
(including Summit Ventures IV, L.P. and Summit Investors III, L.P., shareholders
of the Company) affiliated with Summit Partners, a venture capital firm, at
which he has been employed since 1994. Prior to joining Summit Partners, Mr.
Mohan served as an engagement manager at McKinsey & Company, Inc. Mr. Mohan is
also a director of several privately held companies.
 
     Thomas S. Roberts has been a director of the Company since April 1996. Mr.
Roberts currently serves as a General Partner of various venture capital funds
(including Summit Ventures IV, L.P. and Summit Investors III, L.P., shareholders
of the Company) affiliated with Summit Partners, a venture capital firm, at
which he has been employed since 1989. Mr. Roberts is also a director of AMX
Corporation, Catalyst International, Inc., PowerCerv Corporation, and several
privately held companies.
 
     The Board of Directors has a Compensation Committee, which approves
salaries and certain incentive compensation for management and key employees of
the Company; an Audit Committee, which reviews the results and scope of the
audit and other services provided by the Company's independent public
accountants; and an Option Committee, which administers the Company's 1996 Stock
Plan.
 
DIRECTORS' COMPENSATION
 
     Currently, directors do not receive cash compensation for services on the
Board of Directors. The Company provides reimbursement to directors for
reasonable and necessary expenses incurred in connection with attendance at
meetings of the Board of Directors.
 
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
 
     On June 3, 1996 the Board of Directors approved and shareholders adopted
the Company's Non-Employee Director Plan which became effective on July 12,
1996. The Non-Employee Director Plan provides for the grant of options to
purchase a maximum of 140,000 shares of Common Stock of the Company to non-
employee directors of the Company. The Non-Employee Director Plan is
administered by the Board of Directors. Effective September 26, 1996, Messrs.
Roberts and Mohan each was granted options to purchase 20,000 shares of Common
Stock, at an exercise price of $10.00 per share, under such plan.
 
     Each person who was a director of the Company on the effective date of the
Company's initial public offering or becomes a director of the Company
thereafter, and who is not also an employee or officer of the Company, was or
shall be granted, on the date of such initial public offering or the date on
which he or she becomes a director, whichever is later, an option to purchase
20,000 shares of Common Stock, at an exercise price per share equal to the then
fair market value of the shares. No subsequent grants are permitted to such
individuals under the Non-Employee Director Plan. All options become exercisable
in five equal annual installments commencing one year after the date of grant
provided that the optionee then remains a director at the time of vesting of the
installments. The right to exercise annual installments of options will be
reduced proportionately based on the optionee's actual attendance at directors'
meetings if the optionee fails to attend at least 80% of the directors' meetings
held in any calendar year. The term of each option will be for a period of ten
years from the date of grant, unless sooner terminated in accordance with the
Non-Employee Director Plan. Options may not be transferred except by will or by
the laws of descent and distribution or pursuant to a domestic relations order
and are exercisable to the extent vested at any time prior to the scheduled
expiration date of the option. The Non-Employee Director Plan terminates on the
earlier of May 31, 2006 or at such time as all shares of Common Stock currently
or hereafter reserved for issuance shall have been issued.
 
                                       34
<PAGE>   36
 
EXECUTIVE COMPENSATION
 
     The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to the Company's Chief
Executive Officer and to the only other executive officer of the Company whose
aggregate cash compensation exceeded $100,000 (collectively, the "Named
Executives") during the year ended December 31, 1995.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                             ANNUAL COMPENSATION
                                                          --------------------------
                                                                        OTHER ANNUAL      ALL OTHER
                                                                        COMPENSATION     COMPENSATION
        NAME AND PRINCIPAL POSITION(1)           YEAR     SALARY($)        (2)($)           (3)($)
- -----------------------------------------------  ----     ---------     ------------     ------------
<S>                                              <C>      <C>           <C>              <C>
Ashok Pandey...................................  1995      145,150         18,367           12,190
     President and Chief
     Executive Officer
Nagarjun Valluripalli..........................  1995      147,968         19,727            3,858
     Vice President -- Advanced Technology
</TABLE>
 
- ---------------
(1) Mr. Koneru joined the Company in April 1996 and currently serves as Vice
    President -- Business Solutions and as a director. Immediately prior to
    becoming an employee of the Company, Mr. Koneru was a consultant with the
    Boston Group, which subcontracted Mr. Koneru's services to the Company from
    March 1994 to April 1996.
 
(2) Represents car allowance and payment by the Company of certain non-recurring
    personal expenses.
 
(3) Represents the value of insurance premiums paid by the Company with respect
    to whole life insurance for the benefit of such Named Executive.
 
1996 STOCK PLAN
 
     The 1996 Stock Plan was adopted by the Board of Directors and approved by
the shareholders of the Company on June 3, 1996 and became effective on July 12,
1996. A total of 1,450,000 shares are reserved for issuance upon the exercise of
options and/or stock purchase rights granted under the 1996 Stock Plan, 500,000
of which have been granted. Those eligible to receive stock option grants or
stock purchase rights under the 1996 Stock Plan include employees, non-employee
directors and consultants. The 1996 Stock Plan is administered by the Option
Committee of the Board of Directors of the Company, which is comprised solely of
outside directors.
 
     Subject to the provisions of the 1996 Stock Plan, the administrator of the
1996 Stock Plan has the discretion to determine the optionees and/or grantees,
the type of options to be granted (incentive stock options ("ISOs") or
nonqualified stock options ("NQSOs")), the vesting provisions, the terms of the
grants and such other related provisions as are consistent with the 1996 Stock
Plan. The exercise price of an ISO may not be less than the fair market value
per share of the Common Stock on the date of grant or, in the case of an
optionee who beneficially owns 10% or more of the outstanding capital stock of
the Company, not less than 110% of the fair market value per share on the date
of grant. The exercise price of a NQSO may not be less than 85% of the fair
market value per share of the Common Stock on the date of grant or, in the case
of an optionee who beneficially owns 10% or more of the outstanding capital
stock of the Company, not less than 110% of the fair market value per share on
the date of grant. The purchase price of shares issued pursuant to stock
purchase rights may not be less than 50% of the fair market value of such shares
as of the offer date of such rights.
 
     The options terminate not more than ten years from the date of grant,
subject to earlier termination on the optionee's death, disability or
termination of employment with the Company, but provide that the term of any
options granted to a holder of more than 10% of the outstanding shares of
capital stock may be no longer than five years. Options are not assignable or
otherwise transferable except by will or the laws of descent and
 
                                       35
<PAGE>   37
 
distribution. In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all of the
Company's assets in which the successor corporation does not assume outstanding
options or issue equivalent options, the Board of Directors of the Company is
required to provide accelerated vesting of outstanding options. The 1996 Stock
Plan terminates on June 5, 2006.
 
     In June 1996, the Option Committee granted ISOs effective July 1996, to
acquire an aggregate of 220,000 shares to the following officer and key
employee: Robert M. Olanoff, 88,000 shares; and Paul Coombs, 132,000 shares. All
of these options have an exercise price of $8.00 per share. One-third of the
shares subject to these options shall become exercisable on each of the
sixth-month, eighteenth-month and thirtieth-month anniversary of the date of
grant.
 
EMPLOYMENT AGREEMENTS, INDEMNIFICATION AGREEMENTS AND NON-COMPETITION,
NON-DISCLOSURE AND NON-SOLICITATION AGREEMENTS
 
     Each of the executive officers and key employee of the Company entered into
a two-year employment agreement with the Company commencing June 1, 1996. Under
the terms of their respective agreements, Messrs. Pandey, Koneru, Valluripalli,
Olanoff and Coombs are entitled to annual base salary of $200,000, $200,000,
$200,000, $100,000 and $200,000, respectively, and bonuses, the amounts and
payments of which are within the discretion of the Compensation Committee of the
Board of Directors. In addition, the Company and Mr. Olanoff entered into a
Change in Control Severance Pay Agreement, dated June 1, 1996, pursuant to which
the Company has agreed, subject to certain restrictions, to pay Mr. Olanoff the
equivalent of six months salary in the event that Mr. Olanoff is terminated
without cause if there is a change in control of the Company.
 
     The above described agreements require each individual to maintain the
confidentiality of Company information. In addition, each of such persons has
agreed that during the term of his respective agreement and thereafter for a
period of two years, such person will not compete with the Company in any state
or territory of the United States, or any other country, where the Company does
business by engaging in any capacity in any business which is competitive with
the business of the Company. The employment agreements also provide that for a
period of two years following the termination of employment, each such
individual shall not solicit the Company's customers or employees.
 
     In addition to the foregoing employment contracts, the Company has executed
indemnification agreements with each of its executive officers and directors
pursuant to which the Company has agreed to indemnify such party to the full
extent permitted by law, subject to certain exceptions, if such party becomes
subject to an action because such party is a director, officer, employee, agent
or fiduciary of the Company.
 
     Substantially all of the Company's employees have agreed not to compete
with the Company, not to disclose Company information and not to solicit Company
employees.
 
KEY MAN INSURANCE
 
     Messrs. Pandey, Koneru and Valluripalli are key employees of the Company
and the contribution of each of them to the Company has been and will be a
significant factor in the Company's future success. The loss of any of them
could adversely affect the Company's business and results of operations. The
Company maintains, and is the beneficiary of, a life insurance policy on the
life of each of Messrs. Pandey, Koneru and Valluripalli. The face amount of each
such policy is $1.0 million.
 
                              CERTAIN TRANSACTIONS
 
     In March 1994, the Company acquired all of the issued and outstanding
shares of Oxford Systems Inc., a New Jersey corporation ("Oxford"), from Messrs.
Koneru and Valluripalli, the co-founders of Oxford, in exchange for an aggregate
of a two-thirds equity interest in the Company.
 
     Messrs. Koneru and Valluripalli are the majority shareholders of
Intelligroup Asia and Mr. Pandey has the right, subject to necessary Indian
government approvals, to acquire the remaining outstanding shares of
Intelligroup Asia. Intelligroup Asia operates the Advanced Development Center in
Hyderabad, India for the
 
                                       36
<PAGE>   38
 
sole and exclusive use and benefit of the Company and all contracts and
commercial arrangements of Intelligroup Asia are subject to prior approval by
the Company. The Company and Messrs. Pandey, Koneru and Valluripalli have
entered into an agreement pursuant to which the Company will, subject to
necessary Indian government approvals, acquire the shares of Intelligroup Asia
for nominal consideration when such shares may be transferred in accordance with
the laws of India.
 
     In March 1996, Summit Ventures IV, L.P., guaranteed a $750,000 line of
credit obtained by the Company from a bank. All borrowings under such line of
credit were repaid by the Company in April 1996, upon consummation of the
financing described below.
 
     In April 1996, the Company issued and sold five-year 9% subordinated
debentures in the aggregate principal amount of $6.0 million to Summit Ventures
IV, L.P. and Summit Investors III, L.P. In connection therewith, the Company
also issued warrants to purchase, for nominal consideration (less than $0.25 in
the aggregate), up to a maximum of 1,922,845 shares of Common Stock of the
Company. The number of shares underlying the warrants was subject to downward
adjustment based upon the initial public offering price. At the initial public
offering price of $10.00 per share, there were 1,364,000 shares of Common Stock
underlying the warrants. See "Capitalization" and "Principal and Selling
Shareholders." The warrants were exercised upon effectiveness of the Company's
initial public offering on September 26, 1996. Summit Ventures IV, L.P. and
Summit Investors III, L.P. have certain registration rights. See "Description of
Capital Stock -- Registration Rights." In addition, each of Messrs. Pandey,
Koneru and Valluripalli have granted Summit Ventures IV, L.P. and Summit
Investors III, L.P. certain rights of co-sale in the event that such individuals
propose to sell their shares of Common Stock. In October 1996, the Company
prepaid in full the amounts outstanding under the subordinated debentures,
including accrued interest, with a portion of the net proceeds from its initial
public offering. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
 
     Following the issuance and sale of the subordinated debentures and in
connection therewith, the Company repurchased from Messrs. Pandey, Koneru and
Valluripalli an aggregate of 4,881,066 shares of Common Stock for an aggregate
cash payment of $1.5 million, or $500,000 to each such shareholder, at a price
per share equal to $0.31. The repurchased shares were canceled upon consummation
of such transaction. The debenture transaction was consummated, in part, to
allow Messrs. Pandey, Koneru and Valluripulli to diversify their portfolios and
achieve a degree of liquidity.
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid federal and state payroll-related taxes for certain
employees. As a result of the Company's voluntary disclosure to the Internal
Revenue Service of certain unpaid tax liabilities, on June 5, 1996, the Company
received an audit assessment from the Internal Revenue Service for unpaid 1994
and 1995 federal income tax withholding, FICA and FUTA taxes in the aggregate
amount of $814,000, of which approximately $800,000 has been paid as of the date
of this Prospectus. No interest or penalties were assessed. Reserves,
aggregating $1.0 million, including the amount of the Internal Revenue Service
audit assessment, were recorded at December 31, 1995. No assurance may be given,
however, that interest, penalties or additional state or federal taxes will not
be assessed in the future. The Company's principal shareholders, Messrs. Pandey,
Koneru and Valluripalli, have agreed to indemnify the Company for any and all
losses which the Company may sustain, in excess of the $1.0 million reserve, net
of any tax benefits realized by the Company, arising from or relating to federal
or state tax, interest or penalty payment obligations resulting from the above
subject matter. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
 
     The Board of Directors of the Company has adopted a policy requiring that
any future transactions between the Company and its officers, directors,
principal shareholders and their affiliates be on terms no less favorable to the
Company than could be obtained from unrelated third parties. In addition, New
Jersey law requires that any such transactions be approved by a majority of the
disinterested members of the Company's Board of Directors.
 
                                       37
<PAGE>   39
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 31, 1996, and as adjusted
to reflect the sale of the shares of Common Stock offered hereby, by (i) each
person who is known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors and
Named Executives, (iii) the Selling Shareholders, and (iv) all current directors
and executive officers of the Company as a group.
 
   
<TABLE>
<CAPTION>
                                       NUMBER OF SHARES OF                        NUMBER OF SHARES OF
                                           COMMON STOCK                               COMMON STOCK
                                        BENEFICIALLY OWNED        NUMBER OF        BENEFICIALLY OWNED
            DIRECTORS,                 PRIOR TO OFFERING(1)        SHARES          AFTER OFFERING(1)
       NAMED EXECUTIVES AND          ------------------------       BEING       ------------------------
          5% SHAREHOLDERS             NUMBER       PERCENT(2)      OFFERED       NUMBER       PERCENT(2)
- -----------------------------------  ---------     ----------     ---------     ---------     ----------
<S>                                  <C>           <C>            <C>           <C>           <C>
Ashok Pandey(3)....................  2,202,221         20.5%       125,000      2,077,221        17.8%
Rajkumar Koneru(3).................  2,202,220         20.5        125,000      2,077,220        17.8
Nagarjun Valluripalli(3)...........  2,202,221         20.5        125,000      2,077,221        17.8
Summit Ventures IV, L.P. and Summit
  Investors III, L.P.(4)...........  1,282,688         11.9         75,000      1,207,688        10.5
Kevin P. Mohan(5)..................  1,282,688         11.9         75,000      1,207,688        10.5
Thomas S. Roberts(6)...............  1,282,688         11.9         75,000      1,207,688        10.5
All directors and executive
  officers as a group (6
  persons)(7)......................  7,889,350         73.4%       450,000      7,439,350        63.9%
</TABLE>
    
 
- ---------------
(1) Except as set forth in the footnotes to this table and subject to applicable
    community property law, the persons named in the table have sole voting and
    investment power with respect to all shares.
 
(2) Applicable percentage of ownership is based on 10,735,600 shares of Common
    Stock outstanding on October 31, 1996 and 11,635,600 shares of Common Stock
    outstanding after the completion of this offering.
 
(3) The address for each of Messrs. Pandey, Koneru and Valluripalli is c/o
    Intelligroup, Inc., 517 Route One South, Iselin, NJ 08830.
 
(4) Includes, prior to this offering, 1,218,554 shares and 64,134 shares of
    Common Stock owned by Summit Ventures IV, L.P. and Summit Investors III,
    L.P., respectively. See "Capitalization." The address of both entities is
    600 Atlantic Avenue, Suite 2800, Boston, MA 02210.
 
(5) Kevin P. Mohan is a Vice President of Summit Partners and, as such, has the
    power to vote or direct the vote of and to dispose of or direct the
    disposition of the shares owned by Summit Ventures IV, L.P. and Summit
    Investors III, L.P. See Note 4. Mr. Mohan expressly disclaims beneficial
    ownership of such shares, except as to his proportionate interest in Summit
    Ventures IV, L.P. and Summit Investors III, L.P.
 
(6) Thomas S. Roberts is a General Partner of Summit Partners and, as such, has
    the power to vote or direct the vote of and to dispose of or direct the
    disposition of the shares owned by Summit Ventures IV, L.P. and Summit
    Investors III, L.P. See Note 4. Mr. Roberts expressly disclaims beneficial
    ownership of such shares, except as to his proportionate interest in Summit
    Ventures IV, L.P. and Summit Investors III, L.P.
 
(7) See Notes 3, 5 and 6.
 
                                       38
<PAGE>   40
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.01 par value per share, and, upon the effective date of this
offering, 5,000,000 shares of undesignated Preferred Stock, $.01 par value per
share (the "Preferred Stock").
 
     The following statements are brief summaries of certain provisions with
respect to the Company's capital stock contained in its Amended and Restated
Certificate of Incorporation, a copy of which has been filed as an exhibit to
the Registration Statement. The following summary is qualified in its entirety
by reference thereto.
 
COMMON STOCK
 
     Holders of shares of Common Stock are entitled to one vote for each share
held of record on matters to be voted on by the shareholders of the Company.
Holders of shares of Common Stock will be entitled to receive dividends, subject
to the senior rights of preferred shareholders, if any, when, as and if declared
by the Board of Directors (see "Dividend Policy") and to share ratably in the
assets of the Company legally available for distribution to its shareholders in
the event of the liquidation, dissolution or winding-up of the Company. Holders
of Common Stock have no preemptive, subscription, redemption or conversion
rights. All of the issued and outstanding shares of Common Stock are, and all
shares of Common Stock to be sold in this offering will be, duly authorized,
validly issued, fully paid and nonassessable.
 
     At October 31, 1996, there were 10,735,600 shares issued and outstanding
and held of record by 89 shareholders.
 
PREFERRED STOCK
 
     The Company's Board of Directors may without further action by the
Company's shareholders, from time to time, direct the issuance of shares of
Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. The holders of Preferred
Stock would normally be entitled to receive a preference payment in the event of
any liquidation, dissolution or winding-up of the Company before any payment is
made to the holders of the Common Stock. The Company does not presently intend
to issue any series of Preferred Stock.
 
     The overall effect of the ability of the Company's Board of Directors to
issue Preferred Stock may be to render more difficult the accomplishment of
mergers or other takeover or change-in-control attempts. To the extent that this
ability has this effect, removal of the Company's incumbent Board of Directors
and management may be rendered more difficult. Further, this may have an adverse
impact on the ability of shareholders of the Company to participate in a tender
or exchange offer for the Common Stock and in so doing diminish the market value
of such stock. See "Risk Factors -- Control by Management and Existing
Shareholders" and "-- Anti-takeover Effect of Certain Charter and By-law
Provisions and New Jersey Law."
 
REGISTRATION RIGHTS
 
     In April 1996, in connection with the sale of subordinated debentures and
warrants by the Company, the Company and Summit Ventures IV, L.P. and Summit
Investors III, L.P. executed a Registration Rights Agreement (the "Rights
Agreement") pursuant to which the Company granted certain registration rights to
such entities. Pursuant to the Rights Agreement, at any time beginning six
months after October 2, 1996, Summit Ventures IV, L.P. and Summit Investors III,
L.P. and their assignees have the right, subject to certain restrictions set
forth in the Rights Agreement, to require that the Company register, under the
Securities Act, the Registrable Securities, as defined in the Rights Agreement
(the "Registrable Securities"), requested by such holders at the Company's
expense (on no more than two occasions).
 
     Under the Rights Agreement, the Company is obligated to use its best
efforts to qualify for registration of securities on Form S-3 under the
Securities Act. After the Company has qualified for the use of Form S-3, the
holders of Registrable Securities have the right to an unlimited number of
registrations on such form. The Company is not, however, required to effect the
registration on a Form S-3 more than once in any six-month period, or if the
aggregate market value of such securities to be registered is less than $1.0
million.
 
                                       39
<PAGE>   41
 
     Also pursuant to the Rights Agreement, if, at any time following this
offering, subject to the lock-up agreements previously entered into by the
holders of the Registrable Securities, the Company proposes to register any of
its Common Stock under the Securities Act for sale to the public, the holders of
the Registrable Securities have unlimited piggyback registration rights at the
Company's expense, subject to certain restrictions set forth in the Rights
Agreement. In addition, the Company has agreed to indemnify the holders of such
registration rights and each underwriter in any such offering against certain
liabilities, including liabilities under the Securities Act.
 
LIMITATION OF DIRECTOR LIABILITY
 
     The Amended and Restated Certificate of Incorporation of the Company limits
the liability of directors and officers of the Company to the Company or its
shareholders to the fullest extent permitted by New Jersey law. Specifically,
directors and officers of the Company will not be personally liable for money
damages for breach of a duty as a director or an officer, except for liability
(i) for any breach of the director's or officer's duty of loyalty to the Company
or its shareholders, (ii) for acts or omissions not in good faith or which
involve a knowing violation of law, (iii) as to directors only, under section
14A:6-12(1) of the New Jersey Business Corporation Act, which relates to
unlawful declarations of dividends or other distributions of assets to
shareholders or the unlawful purchase of shares of the corporation, or (iv) for
any transaction from which the director or officer derived an improper personal
benefit.
 
ANTI-TAKEOVER PROVISIONS
 
     The Company is governed by the provisions of Section 14A:10A-1 et seq., the
New Jersey Shareholders Protection Act (the "New Jersey Act"), of the New Jersey
Business Corporation Act, an anti-takeover law. In general, the statute
prohibits a publicly-held New Jersey corporation from engaging in a "business
combination" with an "interested shareholder" for a period of five years after
the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 10% or more of the corporation's voting stock.
After the five-year waiting period has elapsed, a business combination between a
corporation and an interested shareholder will be prohibited unless the business
combination is approved by the holders of at least two-thirds of the voting
stock not beneficially owned by the interested shareholder, or unless the
business combination satisfies the New Jersey Act. The New Jersey Act's fair
price provision is intended to provide that all shareholders (other than the
interested shareholders) receive a fair price for their shares.
 
     In addition, the Company is authorized to issue up to 5,000,000 shares of
Preferred Stock, with rights, preferences and other designations, including
voting rights, to be determined by the Board of Directors. Furthermore, the
Amended and Restated Certificate of Incorporation also provides that: (i) the
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company shall be required to
adopt, amend or repeal any provision of the By-laws of the Company; (ii)
shareholders of the Company may not take any action by written consent; (iii)
special meetings shareholders may be called only by the President, the Chairman
of the Board or a majority of the Board of Directors and business transacted at
any such special meeting shall be limited to matters relating to the purposes
set forth in the notice of such special meeting; (iv) the Board of Directors,
when evaluating an offer related to a tender or exchange offer or other business
combination, is authorized to give due consideration to any relevant factors,
including the social, legal and economic effects upon employees, suppliers,
customers, creditors, the community in which the Company conducts its business,
and the economy of the state, region and nation; and (v) the affirmative vote of
the holders of at least 80% of the voting power of all outstanding shares of the
capital stock of the Company shall be required to amend the above provisions or
the limitation on director liability. The New Jersey statute, the undesignated
authorized Preferred Stock and the foregoing provisions of the Amended and
Restated Certificate of Incorporation may discourage certain types of
transactions involving an actual or potential change in control of the Company
and could have the effect of delaying, deterring or preventing a change in
control of the Company. In addition, in the event of a merger or consolidation
of the Company with or into another corporation or the sale of all or
substantially all of the
 
                                       40
<PAGE>   42
 
Company's assets in which the successor corporation does not assume outstanding
options or issue equivalent options, the Board of Directors of the Company is
required to provide accelerated vesting of outstanding options.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
   
     Upon completion of this offering, the Company will have outstanding
11,635,600 shares of Common Stock. See "Capitalization." Of these shares, an
aggregate of 4,196,250 shares, consisting of the 1,350,000 shares sold in this
offering and the 2,846,250 shares offered and sold pursuant to the Company's
initial public offering of Common Stock consummated in October 1996, will be
freely transferable by persons other than "affiliates" of the Company without
restriction or further registration under the Securities Act. The remaining
7,439,350 shares of Common Stock are "restricted securities" (the "Restricted
Shares") within the meaning of Rule 144 under the Securities Act and may not be
sold in the absence of registration under the Securities Act unless an exemption
from registration is available, including an exemption afforded by Rule 144.
    
 
   
     The Selling Shareholders previously entered into "lock-up" agreements with
the Representatives of the Underwriters, providing that, subject to certain
exceptions, they will not offer, sell or otherwise dispose of any shares of
Common Stock until March 23, 1997 without the prior written consent of Cowen &
Company, acting as a Representative of the Underwriters. Following the
expiration of the "lock-up" period, 6,231,662 of the Restricted Shares will be
eligible for resale in the public market pursuant to Rule 144, subject to
certain limitations described below. The remaining 1,207,688 shares of Common
Stock will become eligible for sale over a period of less than two years and
could be sold earlier if the holders thereof exercise any available registration
rights. Such shareholders have the right in certain circumstances to require the
Company to register under the Securities Act such shares of Common Stock for
resale to the public. See "Description of Capital Stock -- Registration Rights."
    
 
     Rule 144, as currently in effect, provides that an affiliate of the Company
or a person (or persons whose sales are aggregated) who has beneficially owned
Restricted Shares for at least two years but less than three years is entitled
to sell, commencing 90 days after the date of this Prospectus, within any
three-month period, a number of shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (116,356 shares
immediately after this offering) or the average weekly trading volume in the
Common Stock during the four calendar weeks preceding such sale. Sales under
Rule 144 also are subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not an "affiliate" of the Company at any time
during the three months preceding a sale, and who has beneficially owned
Restricted Shares for at least three years, is entitled to sell such shares
under Rule 144 without regard to the limitations described above.
 
     The Securities and Exchange Commission has proposed certain amendments to
Rule 144 that would reduce by one year the holding period required for shares
subject to Rule 144 to become eligible for resale in the public market. The
proposal, if adopted, would substantially increase the number of shares of
Common Stock eligible for immediate resale following the expiration of the
lock-up agreements, with a potential adverse effect on the market price. No
assurance can be given concerning whether or when such proposal will be adopted
by the Securities and Exchange Commission.
 
     As of the date of this Prospectus, there were outstanding options to
purchase an aggregate of 540,000 shares of Common Stock. Giving effect to
vesting provisions limiting the exercisability of all of the outstanding
options, 166,667 additional shares of Common Stock will be eligible, commencing
January 1997, for immediate resale in compliance with Rules 144 and 701 under
the Securities Act (relating to the sale of shares issuable under certain
compensatory stock plans).
 
     The Common Stock has been quoted on the Nasdaq National Market since
September 27, 1996. Nevertheless, sales of a substantial amount of the Common
Stock in the public market, or the perception that such sales could occur, could
adversely affect the market price of the shares of Common Stock and could impair
the Company's future ability to raise capital through an offering of its equity
securities. See "Risk Factors -- Shares Eligible for Future Sale."
 
                                       41
<PAGE>   43
 
                                  UNDERWRITING
 
     Subject to the terms and conditions of an underwriting agreement dated as
of the date hereof (the "Underwriting Agreement"), the Company and the Selling
Shareholders have agreed to sell to each of the Underwriters named below, and
each of the Underwriters, for whom Cowen & Company and Montgomery Securities are
acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company and the Selling Shareholders the respective number of
shares of Common Stock set forth opposite the name of such Underwriter below:
 
   
<TABLE>
<CAPTION>
                                    NAME                                   NUMBER OF SHARES
    ---------------------------------------------------------------------  ----------------
    <S>                                                                    <C>
    Cowen & Company......................................................
    Montgomery Securities................................................
 
                                                                               ---------
              Total......................................................      1,350,000
                                                                               =========
</TABLE>
    
 
     The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock offered
hereby (other than those covered by the over-allotment option described below),
if any of such shares are purchased.
 
     The Underwriters propose to offer the shares of Common Stock, in part,
directly to the public at the public offering price set forth on the cover page
of this Prospectus and, in part, to certain dealers at such price less a
concession not in excess of $   per share. The Underwriters may allow, and such
dealers may re-allow, a concession not in excess of $   per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the Representatives.
 
   
     The Selling Shareholders have granted the Underwriters an option,
exercisable for up to 30 days after the date of this Prospectus to purchase up
to an aggregate of 202,500 additional shares of Common Stock to cover
over-allotments, if any. If the Underwriters exercise their over-allotment
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them as shown in the foregoing table bears to the
1,350,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the 1,350,000 shares of Common Stock offered hereby.
    
 
     The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, as amended, and to contribute to payments that the
Underwriters may be required to make in respect thereof.
 
     The Company and all Selling Shareholders have agreed not to offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
any right to acquire Common Stock until March 23, 1997 without the prior written
consent (which consent may be given without notice to the Company's shareholders
or other public announcement) of Cowen & Company. Cowen & Company has advised
the Company that it has no present intention of releasing any of the Company's
shareholders from such lock-up agreements until the expiration of such lock-up
period. See "Shares Eligible for Future Sale."
 
     The Representatives have advised the Company and the Selling Shareholders
that the Underwriters do not intend to confirm sales in excess of 5% of the
shares offered hereby to any accounts over which they exercise discretionary
authority.
 
                                       42
<PAGE>   44
 
     In connection with this offering, certain Underwriters and selling group
members (if any) or the respective affiliates who are qualified registered
market makers on the Nasdaq National Market, may engage in passive market making
transactions in the Common Stock of the Company on the Nasdaq National Market in
accordance with Rule 10b-6A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), during the two business day period before
commencement of offers or sales of the Common Stock. Passive market making
transactions must comply with applicable volume and price limits and be
identified as such. In general, a passive market maker may display its bid at a
price not in excess of the highest independent bid for such security; if all
independent bids are lowered below the passive market maker's bid, however, such
bid must then be lowered when certain purchase limits are exceeded.
 
     The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "ITIG."
 
                                 LEGAL MATTERS
 
     The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Buchanan Ingersoll, Princeton, New Jersey.
Certain legal matters will be passed upon for the Underwriters by Willkie Farr &
Gallagher, New York, New York.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in giving said report.
 
     On December 15, 1995, the Company retained Arthur Andersen LLP to act as
its independent public accountants and informed the prior auditors, Amper,
Politziner & Mattia, the Company's independent accountants since January 1995,
of its decision. In connection with its audit of the consolidated financial
statements for the year ended December 31, 1994, there were no disagreements
with the prior auditors on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures. The prior
auditors' report on the Company's consolidated financial statements for the year
ended December 31, 1994 contained no adverse opinion or disclaimer of opinion
and was not modified or qualified as to uncertainty, audit scope, or accounting
principles. The decision to change accountants was approved by the Board of the
Directors of the Company. The Company has provided the prior auditors with a
copy of the disclosure contained in this section of the Prospectus and the prior
auditors have furnished the Company with a letter addressed to the Securities
and Exchange Commission (the "Commission") stating its agreement with the above
statements. Prior to retaining Arthur Andersen LLP, the Company had not
consulted with Arthur Andersen LLP regarding accounting principles.
 
                                       43
<PAGE>   45
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement on Form
SB-2 (the "Registration Statement") under the Securities Act, with respect to
the shares of Common Stock offered hereby. This Prospectus, which forms a part
of the Registration Statement, does not contain all the information set forth in
the Registration Statement and the exhibits and schedules filed therewith. For
further information with respect to the Company and the shares of Common Stock
offered hereby, reference is made to the Registration Statement and to such
exhibits and schedules filed therewith. Statements contained herein as to the
content of any contract or other document are not necessarily complete and, in
each instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, and each such statement shall
be deemed qualified in its entirety by such reference. The Registration
Statement and any amendments thereto, including exhibits filed or incorporated
by reference as a part thereof, are available for inspection and copying at the
Commission's offices as described in the following paragraph.
 
     The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, is required to file reports, proxy statements
and other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of filed reports, proxy statements and
other information can be obtained from the Public Reference Section of the
Commission, Washington D.C. 20549, upon payment of prescribed rates or in
certain cases by accessing the Commission's World Wide Web site at
http://www.sec.gov. The Common Stock of the Company is traded on the Nasdaq
National Market under the symbol "ITIG," and such reports, proxy statements and
other information concerning the Company also can be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington D.C. 20006.
 
                                       44
<PAGE>   46
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
Report of Independent Public Accountants..............................................   F-2
Financial Statements:
  Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996
     (unaudited)......................................................................   F-3
  Consolidated Statements of Operations for the Years Ended December 31, 1994 and 1995
     and for the Nine Months Ended September 30, 1995 (unaudited) and 1996
     (unaudited)......................................................................   F-4
  Consolidated Statements of Shareholders' Equity (Deficit) for the Years Ended
     December 31, 1994 and 1995 and for the Nine Months Ended September 30, 1996
     (unaudited)......................................................................   F-5
  Consolidated Statements of Cash Flows for the Years Ended December 31, 1994 and 1995
     and for the Nine Months Ended September 30, 1995 (unaudited) and 1996
     (unaudited)......................................................................   F-6
  Notes to Consolidated Financial Statements..........................................   F-7
</TABLE>
 
                                       F-1
<PAGE>   47
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Intelligroup, Inc.:
 
     We have audited the accompanying consolidated balance sheet of
Intelligroup, Inc. and subsidiary as of December 31, 1995, and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the years ended December 31, 1994 and 1995 (as revised, see Note 1).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Intelligroup, Inc. and subsidiary as of December 31, 1995, and the results of
their operations and their cash flows for the years ended December 31, 1994 and
1995 in conformity with generally accepted accounting principles.
 
                                          ARTHUR ANDERSEN LLP
 
Princeton, New Jersey
May 31, 1996 (except with respect to Note 8,
  as to which the date is July 12, 1996)
 
                                       F-2
<PAGE>   48
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 1995 AND SEPTEMBER 30, 1996
 
<TABLE>
<CAPTION>
                                                                    
                                                                    DECEMBER 31,     SEPTEMBER 30,
                                                                        1995             1996
                                                                    ------------     -------------
                                                                                      (UNAUDITED)
<S>                                                                 <C>              <C>
ASSETS
Current Assets:
  Cash and cash equivalents.......................................  $     71,000      $    169,000
  Restricted cash held in escrow..................................       100,000                --
  Accounts receivable, less allowance for doubtful accounts of
     $531,000 at December 31, 1995 and $566,000 at September 30,
     1996.........................................................     4,729,000         9,561,000
  Unbilled services...............................................     1,569,000         3,459,000
  Subscriptions receivable........................................            --        19,065,000
  Other current assets............................................         3,000           151,000
                                                                     -----------       -----------
          Total current assets....................................     6,472,000        32,405,000
Property and equipment, less accumulated depreciation of $99,000
  at December 31, 1995 and $189,000 at September 30, 1996.........       282,000           716,000
Other assets......................................................        30,000           209,000
                                                                     -----------       -----------
                                                                    $  6,784,000      $ 33,330,000
                                                                     ===========       ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Cash overdraft..................................................  $     83,000      $  1,086,000
  Line of credit..................................................        45,000            40,000
  Loans from factors..............................................     3,343,000         4,319,000
  Subordinated debentures.........................................            --         6,000,000
  Current portion of obligations under capital leases.............        18,000            18,000
  Accounts payable................................................     1,480,000         1,871,000
  Accrued payroll and related taxes...............................     2,568,000         1,874,000
  Accrued expenses and other liabilities..........................       532,000         1,750,000
                                                                     -----------       -----------
          Total current liabilities...............................     8,069,000        16,958,000
                                                                     -----------       -----------
Obligations under capital leases, less current portion............        81,000            65,000
                                                                     -----------       -----------
Commitments and Contingencies
Shareholders' equity (deficit):
  Preferred stock.................................................            --                --
  Common stock, $0.01 par value, 25,000,000 shares authorized,
     12,202,666 and 10,735,600 shares issued and outstanding at
     December 31, 1995 and September 30, 1996 (including 2,050,000
     shares subscribed), respectively.............................       122,000           107,000
  Additional paid-in capital......................................            --        19,244,000
  Accumulated deficit.............................................    (1,488,000)       (3,044,000)
                                                                     -----------       -----------
          Total shareholders' equity (deficit)....................    (1,366,000)       16,307,000
                                                                     -----------       -----------
                                                                    $  6,784,000      $ 33,330,000
                                                                     ===========       ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                 are an integral part of these balance sheets.
 
                                       F-3
<PAGE>   49
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                                             NINE MONTHS ENDED
                                            YEARS ENDED DECEMBER 31,           SEPTEMBER 30,
                                           --------------------------    --------------------------
                                              1994           1995           1995           1996
                                           -----------    -----------    -----------    -----------
                                                                         (UNAUDITED)
<S>                                        <C>            <C>            <C>            <C>
Revenue..................................  $ 6,800,000    $24,589,000    $16,745,000    $33,471,000
Cost of sales............................    5,842,000     20,021,000     14,102,000     23,972,000
                                           -----------    -----------    -----------    -----------
     Gross profit........................      958,000      4,568,000      2,643,000      9,499,000
Selling, general and administrative
  expenses...............................      986,000      4,452,000      2,716,000      6,896,000
                                           -----------    -----------    -----------    -----------
     Operating income (loss).............      (28,000)       116,000        (73,000)     2,603,000
                                           -----------    -----------    -----------    -----------
Other expenses:
  Interest expense.......................        3,000          4,000          3,000        310,000
  Factor charges.........................      406,000      1,171,000        978,000        954,000
                                           -----------    -----------    -----------    -----------
                                               409,000      1,175,000        981,000      1,264,000
                                           -----------    -----------    -----------    -----------
Income (loss) before provision for income
  taxes and extraordinary charge.........     (437,000)    (1,059,000)    (1,054,000)     1,339,000
Provision for income taxes...............           --             --             --        410,000
                                           -----------    -----------    -----------    -----------
Income (loss) before extraordinary
  charge.................................     (437,000)    (1,059,000)    (1,054,000)       929,000
Extraordinary charge-loss on early
  extinguishment of debt, net of income
  tax benefit of $410,000................           --             --             --     (1,034,000)
                                           -----------    -----------    -----------    -----------
Net loss.................................  $  (437,000)   $(1,059,000)   $(1,054,000)   $  (105,000)
                                           ===========    ===========    ===========    ===========
Earnings (loss) per share:
  Income (loss) before extraordinary
     charge..............................  $     (0.03)   $     (0.08)   $     (0.08)   $      0.09
  Extraordinary charge, net of income tax
     benefit.............................         0.00           0.00           0.00          (0.10)
                                           -----------    -----------    -----------    -----------
  Net loss per share.....................  $     (0.03)   $     (0.08)   $     (0.08)   $     (0.01)
                                           ===========    ===========    ===========    ===========
Shares used in per share calculation.....   13,737,000     13,737,000     13,737,000     10,825,000
                                           ===========    ===========    ===========    ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-4
<PAGE>   50
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
 
<TABLE>
<CAPTION>
                                                                            RETAINED        TOTAL
                                         COMMON STOCK        ADDITIONAL     EARNINGS     SHAREHOLDERS'
                                     ---------------------     PAID-IN     (ACCUMULATED    EQUITY
                                       SHARES      AMOUNT      CAPITAL      DEFICIT)      (DEFICIT)
                                     ----------   --------   -----------   -----------   -----------
<S>                                  <C>          <C>        <C>           <C>           <C>
Balance at December 31, 1993.......  12,202,666   $122,000   $        --   $     8,000   $   130,000
  Net loss.........................          --         --            --      (437,000)     (437,000)
                                     ----------   --------   -----------    ----------    ----------
Balance at December 31, 1994.......  12,202,666    122,000            --      (429,000)     (307,000)
  Net loss.........................          --         --            --    (1,059,000)   (1,059,000)
                                     ----------   --------   -----------    ----------    ----------
Balance at December 31, 1995.......  12,202,666    122,000            --    (1,488,000)   (1,366,000)
  Net loss (unaudited).............          --         --            --      (105,000)     (105,000)
  Repurchase of common stock.......  (4,881,066)   (49,000)           --    (1,451,000)   (1,500,000)
  Issuance of common stock, net of
     related costs.................   2,050,000     20,000    17,858,000            --    17,878,000
  Exercise of warrants.............   1,364,000     14,000     1,386,000            --     1,400,000
                                     ----------   --------   -----------    ----------    ----------
Balance at September 30, 1996
  (unaudited)......................  10,735,600   $107,000   $19,244,000   $(3,044,000)  $16,307,000
                                     ==========   ========   ===========    ==========    ==========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-5
<PAGE>   51
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                              YEARS ENDED DECEMBER 31,          SEPTEMBER 30,
                                              -------------------------   -------------------------
                                                 1994          1995          1995          1996
                                              -----------   -----------   -----------   -----------
                                                                          (UNAUDITED)
<S>                                           <C>           <C>           <C>           <C>
Cash flows from operating activities:
  Net loss..................................  $  (437,000)  $(1,059,000)  $(1,054,000)  $  (105,000)
  Adjustments to reconcile net loss to net
     cash used in operating activities:
     Depreciation and amortization..........       34,000        51,000        38,000       160,000
     Provision for doubtful accounts........      208,000       411,000        47,000       515,000
     Extraordinary charge...................           --            --            --     1,444,000
  Changes in assets and liabilities:
     Restricted cash deposited in escrow....           --      (100,000)           --       100,000
     Accounts receivable....................   (2,009,000)   (3,339,000)   (1,574,000)   (5,347,000)
     Unbilled services......................       (1,000)   (1,386,000)   (1,151,000)   (1,890,000)
     Other current assets...................           --        27,000       (33,000)     (148,000)
     Other assets...........................      (23,000)      (30,000)           --      (179,000)
     Cash overdraft.........................           --        83,000            --     1,003,000
     Accounts payable.......................           --     1,480,000            --       391,000
     Accrued payroll and related taxes......    1,466,000     1,035,000     1,331,000      (694,000)
     Accrued expenses and other
       liabilities..........................       47,000       478,000       415,000        29,000
                                              -----------   -----------   -----------   -----------
          Net cash used in operating
            activities......................     (715,000)   (2,349,000)   (1,981,000)   (4,721,000)
                                              -----------   -----------   -----------   -----------
Cash flows from investing activities:
  Purchase of property and equipment........      (89,000)     (142,000)      (25,000)     (524,000)
                                              -----------   -----------   -----------   -----------
Cash flows from financing activities:
  Proceeds from subordinated debentures
     and warrants, net of issuance costs....           --            --            --     5,888,000
  Repurchase of common stock................           --            --            --    (1,500,000)
  Loans from factors, net...................      994,000     2,349,000     1,848,000       976,000
  Proceeds from (repayments of) lines of
     credit, net............................       38,000         6,000        15,000        (5,000)
  Principal payments of long-term debt......      (53,000)           --            --            --
  Principal payments under capital leases...           --        (2,000)           --       (16,000)
                                              -----------   -----------   -----------   -----------
          Net cash provided by
            financing activities............      979,000     2,353,000     1,863,000     5,343,000
                                              -----------   -----------   -----------   -----------
          Net increase (decrease) in cash
            and cash equivalents............      175,000      (138,000)     (143,000)       98,000
Cash and cash equivalents at beginning
  of period.................................       34,000       209,000       209,000        71,000
                                              -----------   -----------   -----------   -----------
Cash and cash equivalents at end
  of period.................................  $   209,000   $    71,000   $    66,000   $   169,000
                                              ===========   ===========   ===========   ===========
Supplemental disclosures of cash flow
  information:
  Cash paid for interest....................  $     2,000   $     4,000   $     3,000   $    15,000
                                              ===========   ===========   ===========   ===========
Noncash transactions:
  Subscriptions receivable..................  $        --   $        --   $        --   $19,065,000
                                              ===========   ===========   ===========   ===========
  Capital lease obligations.................  $        --   $   102,000   $   102,000   $        --
                                              ===========   ===========   ===========   ===========
</TABLE>
 
          The accompanying notes to consolidated financial statements
                   are an integral part of these statements.
 
                                       F-6
<PAGE>   52
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     (FINANCIAL INFORMATION WITH RESPECT TO SEPTEMBER 30, 1996 AND FOR THE
          NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Organization
 
     Intelligroup, Inc. and its subsidiaries (the "Company") provide a wide
range of information technology services, including enterprise-wide business
process solutions, systems integration and custom software development based on
leading technologies. The Company markets its services to a wide variety of
industries primarily in the United States. The majority of the Company's
business is with large established companies, including consulting firms,
serving numerous industries.
 
   
     The Company has completed an initial public offering of its common stock
(see Note 8) and is proposing the issuance and sale of an additional 1,350,000
shares of its common stock, including 450,000 shares by certain selling
shareholders of the Company. Existing and prospective investors should consider,
among other things, the risks and difficulties encountered by any new business,
including competition from existing companies offering the same or similar
services, rapid technological change, dependence on SAP, substantial reliance on
key customers and large projects, management of growth and minimal previous
record of operations or earnings. See "Risk Factors" included elsewhere in this
Prospectus for a discussion of these and other factors.
    
 
  Restatement
 
     Subsequent to December 31, 1995, the Company determined that it had
unrecorded and unpaid Federal and state payroll related taxes for certain
employees. Accordingly, the Company has restated its 1994 and 1995 financial
statements resulting in a $320,000 and $680,000 increase in cost of sales in
1994 and 1995, respectively, with corresponding increases to accrued payroll and
related taxes. As a result of the Company's voluntary disclosure to the Internal
Revenue Service ("IRS") on June 5, 1996, the IRS issued an audit assessment to
the Company for $814,000 which has been included in the above accrual. The
Company's principal shareholders have agreed to indemnify the Company for any
and all losses which the Company may sustain in excess of the amounts accrued as
of December 31, 1995 arising from or relating to Federal or state tax, interest
or penalty payment obligations, net of any tax benefits realized by the Company,
resulting from the subject matter discussed above.
 
  Principles of Consolidation and Use of Estimates
 
     Effective March 31, 1994, Intelligroup, Inc. entered into an agreement with
the shareholders of Oxford Systems Inc., whereby Intelligroup, Inc. acquired all
the outstanding shares of stock of Oxford Systems Inc. in exchange for a
two-thirds interest in Intelligroup, Inc. This transaction has been accounted
for as a pooling of interests, and accordingly, the accompanying financial
statements for 1994 include the accounts of Intelligroup, Inc. and its
wholly-owned subsidiary, Oxford Systems Inc. for all periods prior to the
transaction.
 
     The accompanying financial statements for 1995 and 1996 include the
accounts of Intelligroup, Inc. and its wholly-owned subsidiary, Oxford Systems
Inc. In addition, the September 30, 1996 financial statements include the newly
established wholly-owned subsidiaries, Intelligroup New Zealand Limited and
Intelligroup Europe Limited. All significant intercompany balances and
transactions have been eliminated.
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the recorded amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
                                       F-7
<PAGE>   53
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Interim Financial Information
 
     The consolidated financial statements and accompanying financial
information as of September 30, 1996 and for the nine months ended September 30,
1995 and 1996 are unaudited and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) which the Company
considers necessary for a fair presentation of the financial position of the
Company at such dates and the operating results and cash flows for those
periods. Results for interim periods are not necessarily indicative of results
for the entire year.
 
  Cash and Cash Equivalents
 
     Cash and cash equivalents consist of investments in highly liquid
short-term instruments, with original maturities of three months or less.
 
  Property and Equipment
 
     Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets (five years). Costs of maintenance and repairs are
charged to expense as incurred.
 
  Revenue Recognition
 
     The Company generates revenue from professional services rendered. Revenue
is recognized as services are performed with the corresponding cost of providing
those services reflected as cost of sales. Substantially all customers are
billed on a per diem basis whereby actual time is charged directly to the
customer. Billings to customers for out-of-pocket expenses are recorded as a
reduction of expenses incurred. Unbilled services represent services provided in
excess of amounts billed.
 
  Allowance for Doubtful Accounts
 
     The Company provides an allowance for doubtful accounts arising from
services, which is based upon a review of outstanding receivables as well as
historical collection information. In determining the amount of the allowance,
management is required to make certain estimates and assumptions regarding the
timing and amount of collection. Actual results could differ from those
estimates and assumptions. The provision for doubtful accounts totaled $208,000,
$411,000 and $515,000 in 1994, 1995 and the nine months ended September 30,
1996, respectively. Credit is granted to substantially all customers on an
unsecured basis.
 
  Recoverability of Long-Lived Assets
 
     The Company reviews the recoverability of its long-lived assets on a
periodic basis in order to identify business conditions which may indicate a
possible impairment. The assessment for potential impairment is based primarily
on the Company's ability to recover the unamortized balance of its long-lived
assets from expected future cash flows from its operations on an undiscounted
basis.
 
  Stock-Based Compensation
 
     In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation," which requires companies to
measure employee stock compensation plans based on the fair value method using
an option pricing model or to continue to apply APB No. 25, "Accounting for
Stock Issued to Employees," and provide pro forma footnote disclosures under the
fair value method. The Company continues to apply APB No. 25 and will provide
the pro forma footnote disclosures.
 
                                       F-8
<PAGE>   54
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Concentrations
 
     For the years ended December 31, 1994 and 1995 and the nine months ended
September 30, 1996, approximately 33%, 69% and 75% of revenue, respectively, was
derived from projects in which Company personnel implemented software developed
by SAP. The Company's future success in its SAP-related consulting services
depends largely on its continued relationship with SAP and on its continued
status as a SAP National Implementation Partner, which was first obtained in
1995. The Company's agreement with SAP (the "Agreement") is awarded on an annual
basis pursuant to contract. The Company's current contract expires on December
31, 1996. The Agreement contains no minimum revenue requirements or cost sharing
arrangements and does not provide for commissions or royalties to either party.
 
     A substantial portion of the Company's revenue is derived from projects in
which an information technology consulting firm other than the Company has been
retained by the end-user organization to manage the overall project. For the
years ended December 31, 1994 and 1995 and for the nine months ended September
30, 1996, 64%, 50% and 45%, respectively, of the Company's revenue was generated
by serving as a member of consulting teams assembled by other information
technology consulting firms.
 
     One customer accounted for approximately 13% of revenue for the nine months
ended September 30, 1996. Accounts receivable due from this customer was
$2,049,000 as of September 30, 1996. Another customer accounted for
approximately 10% and 19% of revenue for the year ended December 31, 1995 and
the nine months ended September 30, 1996, respectively. Accounts receivable due
from this customer was $611,000 and $1,589,000 as of December 31, 1995 and
September 30, 1996, respectively. Another customer accounted for approximately
12% and 11% of revenue for the year ended December 31, 1995 and the nine months
ended September 30, 1996, respectively. Accounts receivable due from this
customer was $1,400,000 and $987,000 as of December 31, 1995 and September 30,
1996, respectively. Another customer accounted for approximately 15% of revenue
for the year ended December 31, 1994.
 
  Foreign Operations
 
     Revenues from foreign operations were not significant in 1994 and 1995 and
for the nine months ended September 30, 1996. Translation effects were not
material.
 
  Income Taxes
 
     The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes," which utilizes the liability method and results in the determination of
deferred taxes based on the estimated future tax effects of differences between
the financial statement and tax basis of assets and liabilities, using enacted
tax rates currently in effect. The principal differences arise from the
reporting of income and expenses under the accrual method for financial
statement purposes versus the cash basis method for income tax purposes.
 
  Net Income (Loss) Per Share
 
     Net income (loss) per share is computed using the weighted average number
of common and dilutive common equivalent shares outstanding during the period
after giving retroactive effect to the stock split (see Note 8). Pursuant to the
requirements of the Securities and Exchange Commission, stock options and
warrants issued by the Company during the twelve months immediately preceding
its initial public offering (see Note 8) have been included in computing net
income (loss) per share as if they were outstanding for all periods using the
treasury stock method.
 
                                       F-9
<PAGE>   55
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Financial Instruments
 
     Financial instruments that potentially subject the Company to credit risk
consist principally of trade receivables and unbilled services. The fair value
of accounts receivable and unbilled services approximates carrying value.
 
(2) PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following as of December 31, 1995 and
September 30, 1996:
 
<TABLE>
<CAPTION>
                                                                              
                                                                              
                                                             DECEMBER 31,     SEPTEMBER 30,
                                                                 1995             1996
                                                             ------------     -------------
                                                                               (UNAUDITED)
        <S>                                                  <C>              <C>
        Vehicles...........................................    $ 26,000         $  26,000
        Furniture..........................................      98,000            98,000
        Equipment..........................................     257,000           781,000
                                                               --------         ---------
                                                                381,000           905,000
        Less- Accumulated depreciation.....................     (99,000)         (189,000)
                                                               --------         ---------
                                                               $282,000         $ 716,000
                                                               ========         =========
</TABLE>
 
     Included in the above is $102,000 of equipment held under capital leases.
Depreciation expense was $34,000 and $51,000 in 1994 and 1995, respectively, and
$38,000 and $90,000 for the nine months ended September 30, 1995 and 1996,
respectively.
 
(3) LINES OF CREDIT AND SUBORDINATED DEBENTURES
 
     The Company had available, under an agreement with a bank, a $50,000 line
of credit bearing interest at the bank's prime lending rate plus 2% (10.5% as of
December 31, 1995), which was collateralized by all Company assets and
personally guaranteed by one of the Company's shareholders. The line of credit
expired May 26, 1996 and was repaid in November 1996. The outstanding balance
was $45,000 as of December 31, 1995 and $40,000 as of September 30, 1996.
 
     In March 1996, in anticipation of the financing discussed below, the
Company obtained a $750,000 line of credit, payable on demand, from a bank. The
line of credit bears interest at the Federal funds rate plus 1%. Aggregate
borrowings in the amount of $300,000 were repaid and the line was terminated by
the Company in accordance with the financing described below.
 
     In April 1996, the Company issued $6,000,000 of five-year, 9% subordinated
debentures. All principal and interest is due at maturity (April 2001) or at
prepayment. The debentures were issued with detachable warrants to purchase
common stock of the Company (see Note 7). Proceeds from the debentures were
allocated between the debentures and the warrants based on estimated fair value
which resulted in a discount on the debentures (based on a 15% interest rate)
and a value assigned to the warrants of $1,400,000. A portion of the net
proceeds of the Company's initial public offering (see Note 8) was used to
prepay the subordinated debentures which resulted in an extraordinary charge of
$1,034,000, net of an income tax benefit of $410,000.
 
     Subsequent to the issuance of the subordinated debentures, the Company
purchased and retired 4,881,066 shares of its common stock for $1,500,000 from
its shareholders.
 
(4) LOANS PAYABLE TO FACTORS
 
     On October 20, 1995, the Company entered into a new factoring agreement
with a financing institution (the "factor") under which the Company must offer
all its trade accounts receivable to the factor for financing; however, the
factor is not obligated to accept them. The agreement has a term of one year
with
 
                                      F-10
<PAGE>   56
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
automatic one-year renewals unless the Company or factor give notice of
cancellation. The factor charges an administrative fee of 0.75% on each invoice
plus an additional 0.75% for each 15-day increment the invoice remains unpaid,
to a maximum of 120 days, or 6.5%. If the amount of a factored receivable is not
paid by reason of the financial inability of the customer, the Company is not
liable to reimburse the factor. If, however, the factor, through legal action or
otherwise, settles, compromises or assigns the claim for any receivable, the
amount of any reduction resulting from such settlement, compromise or assignment
will reduce the balance due to the Company. The Company used approximately $4.4
million of the net proceeds from the Company's initial public offering to repay
loans from the factor (see Note 8). The factor agreement was terminated in
October 1996.
 
     The Company had factoring agreements with a former financing institution
("former factor") under which it could sell qualified trade accounts receivable,
with recourse provisions. The agreements, which were terminated in October 1995
required the Company to repurchase or replace any receivable remaining
uncollected for more than 120 days. At December 31, 1995, the Company had
unresolved differences with this former factor regarding the determination of
former factor fees and amounts due between the two parties. As of December 31,
1995, the Company had placed $100,000 in escrow which was subsequently increased
to $300,000 in May 1996, subject to the disposition of this matter. In June
1996, the parties agreed to settle the dispute for $103,000, which had
previously been accrued. Such amount was paid out of the escrow fund with the
remainder of the escrow fund remitted to the Company.
 
(5) INCOME TAXES
 
     For the years ended December 31, 1994 and 1995 and the nine months ended
September 30, 1995, no income tax benefit was provided as management could not
determine that it was more likely than not that such benefit would be realized.
For the nine months ended September 30, 1996, the effective rate was less than
the statutory rate due to the reversal of a portion of the valuation allowance.
 
     The Company's deferred tax asset was $668,000 and $475,000 as of December
31, 1995 and September 30, 1996, respectively, and relates primarily to the
Company's allowance for doubtful accounts ($234,000 and $335,000, respectively)
and certain accrued liabilities ($434,000 and $146,000, respectively). Other
temporary differences are not significant. The deferred tax asset as of December
31, 1995 and September 30, 1996 has been offset by a valuation allowance.
 
(6) COMMITMENTS AND CONTINGENCIES
 
  Employment Agreements
 
     Commencing June 1, 1996, the Company entered into two year employment
agreements with five employees with aggregate annual compensation of $900,000.
 
                                      F-11
<PAGE>   57
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Leases
 
     The Company leases office space and office equipment under capital and/or
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1995. Future minimum aggregate annual
lease payments are as follows:
 
<TABLE>
<CAPTION>
                   FOR THE YEARS ENDING DECEMBER 31                  CAPITAL      OPERATING
    ---------------------------------------------------------------  --------     ---------
    <S>                                                              <C>          <C>
    1996...........................................................  $ 37,000      $77,000
    1997...........................................................    37,000       15,000
    1998...........................................................    37,000        5,000
    1999...........................................................    20,000
    2000...........................................................    20,000
                                                                     --------
                                                                      151,000
    Less-Interest..................................................   (52,000)
                                                                     --------
                                                                       99,000
    Less-Current portion...........................................   (18,000)
                                                                     --------
                                                                     $ 81,000
                                                                     ========
</TABLE>
 
     Rent expense for the years ended December 31, 1994 and 1995 was $24,000 and
$74,000, respectively, and $110,000 for the nine months ended September 30,
1996.
 
     Commencing June 1, 1996, the Company entered into a lease for office space
at an annual rent of $220,000, plus common costs. The lease term is through
November 1999.
 
  Legal
 
     The Company currently is being investigated by the Immigration and
Naturalization Service concerning possible violations of the Immigration Reform
and Control Act of 1990. Although a notice of intent to fine has not been served
upon the Company and therefore the potential for fines is not known, the Company
believes that fines, if any, would not exceed $150,000. Management believes that
reserves recorded related to this matter are adequate. There can be no
assurance, however, as to the ultimate amount of the fines, which may be
assessed or the length of time it may take to conclude the investigation.
 
     On February 16, 1996, the Company, as plaintiff, filed a complaint in the
Superior Court of New Jersey, Chancery Division, Middlesex County, against a
former consultant to the Company, seven former employees of the Company and
Pegasus Systems, Inc. ("Pegasus"), a corporation which currently employs such
individuals (collectively, the "Defendants"). Upon the filing of its complaint,
the Company obtained a temporary restraining order and in May 1996 obtained a
preliminary injunction prohibiting the Defendants from using or disclosing the
Company's proprietary information, prohibiting the Defendants from contacting or
soliciting certain of the Company's customers and prohibiting the Defendants
from recruiting or attempting to recruit the Company's employees, agents or
contractors. In a related matter, on August 21, 1996, the Company was named as
defendant in a complaint filed by plaintiff, Systems America, Inc. ("Systems
America"), a computer and technology consulting firm. Systems America alleges
that it subcontracted Pegasus consultants to perform SAP consulting services for
two companies which are also customers of the Company, and alleges that the
Company has interfered with Systems America's customer relationships, and as a
result thereof, Systems America has sustained damages. The complaint, which
seeks unspecified monetary damages, treble damages, attorney fees and injunctive
relief against the Company, alleges deceptive trade practices, defamation and
tortious interference with prospective business or contractual relations by the
Company. This action is in a very early stage, and accordingly, the Company
cannot currently assess the ultimate outcome. However, the Company denies the
allegations made and intends to defend the claim vigorously. On November 16,
1996, Systems America and the Company reached an agreement in principle to
 
                                      F-12
<PAGE>   58
 
                      INTELLIGROUP, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
settle Systems America's claims against the Company for an immaterial cash
payment by the Company to Systems America.
 
     The Company is engaged in certain other legal and administrative
proceedings. Management believes the outcome of these proceedings will not have
a material adverse effect on the Company's financial position or results of
operations.
 
(7) STOCK OPTION PLANS AND WARRANTS
 
     The Company's 1996 Stock Plan (the "Plan") permits the granting of options
to employees, nonemployee directors and consultants. The Plan is administered by
the Option Committee of the Board of Directors, which generally has the
authority to select individuals who are to receive options and to specify the
terms and conditions of each option so granted, including the number of shares
covered by the option, the type of option (incentive stock option or
nonqualified stock option), the exercise price (which in all cases must be at
least 100% of the fair market value of the common stock on the date of grant),
vesting provisions, and the overall option term. Options to purchase a total of
1,450,000 shares of common stock were reserved for future grants of options
under the Plan. In June 1996, effective July 1996, the Company granted options
to purchase an aggregate of 500,000 shares of its common stock to certain key
employees at an exercise price of $8.00 per share. One-third of these options
vest six months from date of grant with the remaining options vesting over the
following two years.
 
     The 1996 Non-Employee Director Stock Option Plan provides for the granting
of options to purchase a maximum of 140,000 shares of common stock of the
Company to non-employee directors. An option to purchase 20,000 shares of common
stock, at an exercise price equal to the then fair value of the shares, will be
granted to non-employee directors. All options will vest in five equal
installments, commencing one year after grant and have a ten-year term. Options
to purchase 40,000 shares of the Company's common stock were granted at an
exercise price of $10.00 per share in September 1996.
 
     The subordinated debenture holders (see Note 3) received warrants for the
purchase of 20.8% of the fully diluted common stock of the Company, as defined,
at a nominal exercise price (less than $0.25 in the aggregate). If the Company
becomes a public company prior to April 10, 1997, the potential fully diluted
common stock ownership of the warrant holders reduces on a straight-line formula
from the 20.8% to 11%, depending on the premoney valuation of the public
offering, as defined. On September 26, 1996, the effective date of Company's
initial public offering (see Note 8), the warrants were exercised which resulted
in the issuance of 1,364,000 shares of the Company's common stock.
 
(8) INITIAL PUBLIC OFFERING, STOCK SPLIT AND PREFERRED STOCK AUTHORIZATION
 
     The Company's initial public offering for the sale of 2,050,000 shares of
its common stock became effective on September 26, 1996 and the net proceeds of
approximately $19,065,000 (before deducting expenses of the offering paid by the
Company) were received on October 2, 1996. Such amount has been recorded as
subscriptions receivable as of September 30, 1996. A portion of the net proceeds
was used to prepay subordinated debentures and repay other debt. (See Notes 3
and 4).
 
     In June 1996, the Board of Directors authorized management of the Company
to file a registration statement with the Securities and Exchange Commission
permitting the Company to sell common stock to the public. In July 1996, the
Company's Board of Directors recommended and shareholders approved an amendment
to the Company's Certificate of Incorporation to effect an 81,351.1111-for-1
stock split. All common shares and per share amounts in the accompanying
financial statements have been adjusted retroactively to give effect to the
stock split.
 
     In addition, the Company's Board of Directors authorized a change in the
Company's authorized capitalization to 25,000,000 shares of common stock, $0.01
par value per share, and 5,000,000 shares of undesignated preferred stock, $0.01
par value per share.
 
                                      F-13
<PAGE>   59
 
- ------------------------------------------------------------
- ------------------------------------------------------------
 
  NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS, ANY OF THE UNDERWRITERS OR BY ANY OTHER PERSON. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, ANY
SECURITIES OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY, TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
 
                         ------------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                         Page
                                         ----
<S>                                      <C>
Prospectus Summary.....................    3
Risk Factors...........................    6
Use of Proceeds........................   13
Dividend Policy........................   13
Price Range of Common Stock............   13
Capitalization.........................   14
Selected Consolidated Financial Data...   15
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...........................   16
Business...............................   22
Management.............................   33
Certain Transactions...................   36
Principal and Selling Shareholders.....   38
Description of Capital Stock...........   39
Shares Eligible for Future Sale........   41
Underwriting...........................   42
Legal Matters..........................   43
Experts................................   43
Additional Information.................   44
Index to Consolidated Financial
  Statements...........................  F-1
</TABLE>
 
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
   
                                1,350,000 Shares
    
 
                                      LOGO
 
                                  Common Stock
                         ------------------------------
                                   PROSPECTUS
                         ------------------------------
                                COWEN & COMPANY
                             MONTGOMERY SECURITIES
                                               , 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE>   60
 
                                    PART II
 
ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     Section 14A:3-5 of the New Jersey Business Corporation Act permits each New
Jersey business corporation to indemnify its directors, officers, employees and
agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his capacity as a director,
officer, employee or agent of the corporation if such actions were taken in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.
 
     Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve a knowing violation of law, (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation, or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.
 
     The registrant's Amended and Restated Certificate of Incorporation limits
the liability of its directors and officers as authorized by Section 14A:2-7(3).
The affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company is required to amend such
provisions.
 
     Article 11 of the registrant's Amended and Restated By-laws specifies that
the registrant shall indemnify its directors, officers, employees and agents to
the extent such parties are a party to any action because he was a director,
officer, employee or agent of the Company. The Company has agreed to indemnify
such parties for their actual and reasonable expenses if such party acted in
good faith and in a manner he reasonably believed to be in the best interests of
the Company and such party had no reasonable cause to believe his conduct was
unlawful. This provision of the By-laws is deemed to be a contract between the
registrant and each director and officer who serves in such capacity at any time
while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of the capital stock of the Company is required to adopt,
amend or repeal such provision of the By-laws.
 
     The registrant has executed indemnification agreements with each of its
officers and directors pursuant to which the registrant has agreed to indemnify
such parties to the full extent permitted by law, subject to certain exceptions,
if such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of the Company.
 
     The registrant has liability insurance for the benefit of its directors and
officers which will provide coverage for losses of directors and officers for
liabilities arising out of claims against such persons acting as directors or
officers of the registrant (or any subsidiary thereof) due to any breach of
duty, neglect, error, misstatement, misleading statement, omission or act done
by such directors and officers, except as prohibited by law.
 
     At present, there is no pending litigation or proceeding involving a
director or officer of the registrant as to which indemnification is being
sought nor is the registrant aware of any threatened litigation that may result
in claims for indemnification by any director or officer.
 
                                      II-1
<PAGE>   61
 
     Reference is made to Section 6 of the Underwriting Agreement, the proposed
form of which is filed as Exhibit One, in which the Underwriters agree to
indemnify the directors and officers of the registrant and certain other
persons, against civil liabilities, including certain liabilities under the
Securities Act.
 
ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     The following table sets forth an itemized estimate of fees and expenses
payable by the registrant in connection with the offering described in this
registration statement, other than underwriting discounts and commissions:
 
<TABLE>
    <S>                                                                       <C>
    SEC registration fee....................................................  $ 12,153.41
    NASD filing fee.........................................................     4,510.00
    Nasdaq National Market additional listing fee...........................    18,000.00
    Counsel fees and expenses...............................................    80,000.00
    Accounting fees and expenses............................................    50,000.00
    Blue sky fees and expenses..............................................     5,000.00
    Printing expenses.......................................................   100,000.00
    Transfer agent and registrar fees.......................................     5,000.00
    Miscellaneous...........................................................    25,336.59
                                                                               ----------
              Total.........................................................  $300,000.00
                                                                               ==========
</TABLE>
 
- ---------------
 
     All of the above expenses will be paid by the registrant.
 
ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     The following information relates to all securities of the registrant sold
by the registrant within the past three years which were not registered under
the Securities Act:
 
          1. On March 31, 1994, the registrant issued an aggregate of 8,135,111
     shares of Common Stock (on a post-stock split recapitalization basis) to
     Messrs. Koneru and Valluripalli in exchange for all of the issued and
     outstanding shares of Oxford Systems Inc.
 
          2. On April 19, 1996, the registrant issued to two venture capital
     funds 9.0% subordinated debentures with warrants to purchase up to 20.8% of
     the Common Stock of the Company for an aggregate purchase price of
     $6,000,000.
 
     No underwriter was employed by the registrant in connection with the
issuance and sale of the securities described above. The registrant claims that
the issuance and sale of all of the foregoing securities were exempt from
registration under Section 4(2) of the Securities Act as transactions not
involving any public offering. Appropriate legends were affixed to the stock
certificates issued in such transactions. All recipients had adequate access to
information about the registrant.
 
     There were no other securities sold by the registrant within the past three
years.
 
                                      II-2
<PAGE>   62
 
ITEM 27.  EXHIBITS AND FINANCIAL STATEMENTS.
 
     (a) Exhibits
    
<TABLE>
<CAPTION>
EXHIBIT NO.                                 DESCRIPTION OF EXHIBIT
- -----------   ----------------------------------------------------------------------------------
<S>           <C>
 1            Form of Underwriting Agreement.
 3.1*         Amended and Restated Certificate of Incorporation.
 3.2*         Amended and Restated Bylaws.
 4.1*         Debenture and Warrant Purchase Agreement dated April 10, 1996 by and between the
              Company, Messrs. Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and
              Summit Investors III, L.P.
 4.2*         Warrant Agreement dated April 10, 1996 by and between the Company and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.3*         Registration Rights Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.4*         Redemption Agreement dated April 10, 1996 by and between the Company and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.5*         Shareholders Agreement dated April 10, 1996 by and between the Company, Messrs.
              Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and Summit Investors
              III, L.P.
 5            Opinion of Buchanan Ingersoll as to validity of Common Stock.
10.1*         1996 Stock Plan of the Company.
10.2*         1996 Non-Employee Director Stock Option Plan.
10.3*         Employment Agreement dated June 1, 1996 between the Company and Ashok Pandey.
10.4*         Employment Agreement dated June 1, 1996 between the Company and Rajkumar Koneru.
10.5*         Employment Agreement dated June 1, 1996 between the Company and Nagarjun
              Valluripalli.
10.6*         Employment Agreement dated June 1, 1996 between the Company and Robert M. Olanoff,
              together with Change in Control Severance Pay Agreement dated June 1, 1996 between
              the Company and Robert M. Olanoff.
10.7*         Employment Agreement dated June 1, 1996 between the Company and Paul Coombs.
10.8*         Form of Indemnification Agreement entered into by the Company and each of its
              directors and officers.
10.9*         Sublease Agreement between Micrognosis, Inc., as sublessor, the Company, as
              sublessee, with master lease.
10.10*        Employee's Invention Assignment and Confidentiality Agreement.
10.11*        R/3 National Implementation Partner Agreement between SAP America, Inc. and the
              Company dated January 13, 1995.
10.12*        Services Provider Agreement by and between Oracle Corporation and the Company
              dated July 26, 1994.
10.13*        Amended and Restated Agreement by Messrs. Pandey, Koneru and Valluripalli dated
              July 16, 1996 to indemnify the Company for certain losses.
10.14*        Factoring Agreement by and between Access Capital, Inc. and the Company dated as
              of October 20, 1995, with exhibits. See Exhibit 10.17.
10.15*        Agreement of Waiver and Consent dated as of June 4, 1996 by and among the Company,
              certain current shareholders of the Company, and Summit Ventures IV, L.P. and
              Summit Investors III, L.P., with Amendment No. 1 thereto. See Exhibit 10.18.
10.16*        Agreement by and between the Company and Intelligroup Asia Private Limited
              ("Intelligroup Asia") relating to operational control of Intelligroup Asia, with
              related agreements.
10.17+        Letter agreements by and between each of the Company and Oxford Systems Inc., and
              Access Capital, Inc. dated October 10, 1996.
</TABLE>
    
 
                                      II-3
<PAGE>   63
 
   
<TABLE>
<CAPTION>
EXHIBIT NO.                                 DESCRIPTION OF EXHIBIT
- -----------   ----------------------------------------------------------------------------------
<S>           <C>
10.18         Amended and Restated Agreement of Waiver and Consent dated November 26, 1996 by
              and among the Company, certain shareholders of the Company, Summit Ventures IV,
              L.P. and Summit Investors III, L.P.
11+           Statement re: Computation of per share earnings.
16*           Letter re: Change of Certifying Accountant.
21*           Subsidiaries of the Registrant.
23.1          Consent of Arthur Andersen LLP.
23.2          Consent of Buchanan Ingersoll (contained in the opinion filed as Exhibit 5 to the
              Registration Statement).
24+           Powers of Attorney of certain officers and directors of the Company (contained on
              the signature page of this Registration Statement).
27.1+         Financial Data Schedule for the year ended December 31, 1995.
27.2+         Financial Data Schedule for the nine months ended September 30, 1996.
</TABLE>
    
 
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form SB-2
  (Registration Statement No. 333-5981) declared effective on September 26,
  1996.
 
   
+ Previously filed as an Exhibit to this Registration Statement on November 21,
  1996.
    
 
     (b) Financial Statement Schedules
 
     All financial statement schedules are omitted because the information is
not required, or is otherwise included in the consolidated financial statements
or the notes thereto.
 
ITEM 28.  UNDERTAKINGS.
 
     The undersigned registrant hereby undertakes that:
 
          (1) Insofar as indemnification for liabilities arising under the
     Securities Act of 1933 (the "Securities Act") may be permitted to
     directors, officers, and controlling persons of the registrant pursuant to
     the provisions described in Item 24, or otherwise, the registrant has been
     advised that in the opinion of the Securities and Exchange Commission such
     indemnification is against public policy as expressed in the Securities Act
     and is, therefore, unenforceable. In the event that a claim for
     indemnification against such liabilities (other than the payment by the
     registrant of expenses incurred or paid by a director, officer or
     controlling person of the registrant in the successful defense of any
     action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of appropriate
     jurisdiction the question whether such indemnification by it is against
     public policy as expressed in the Securities Act and will be governed by
     the final adjudication of such issue.
 
          (2) For purpose of determining any liability under the Securities Act,
     the information omitted from the form of prospectus filed as part of this
     registration statement in reliance upon Rule 430A and contained in a form
     of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
     497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.
 
          (3) For the purpose of determining any liability under the Securities
     Act each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
          (4) At the closing specified in the Underwriting Agreement, registrant
     shall provide the Underwriters certificates in such denominations and
     registered in such names as required by the Underwriters to permit prompt
     delivery to each purchaser.
 
                                      II-4
<PAGE>   64
 
   
                                   SIGNATURES
    
 
   
     In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned, in
the Township of Iselin, State of New Jersey, on November 26, 1996.
    
 
   
                                          Intelligroup, Inc.
    
 
   
                                          By: /s/  ASHOK PANDEY
    
 
                                            ------------------------------------
   
                                            Ashok Pandey, President and
    
   
                                            Chief Executive Officer
    
 
   
     In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates stated.
    
 
   
<TABLE>
<CAPTION>
              SIGNATURE                               TITLE                        DATE
- -------------------------------------    -------------------------------    ------------------
<S>                                      <C>                                <C>
/s/  ASHOK PANDEY                        President, Chief Executive         November 26, 1996
- -------------------------------------    Officer and Director
Ashok Pandey
*                                        Vice President -- Business         November 26, 1996
- -------------------------------------    Solutions and Director
Rajkumar Koneru
*                                        Vice President -- Advanced         November 26, 1996
- -------------------------------------    Technology and Director
Nagarjun Valluripalli
/s/  ROBERT M. OLANOFF                   Chief Financial Officer,           November 26, 1996
- -------------------------------------    Treasurer and Secretary
Robert M. Olanoff
*                                        Director                           November 26, 1996
- -------------------------------------
Kevin P. Mohan
*                                        Director                           November 26, 1996
- -------------------------------------
Thomas S. Roberts
</TABLE>
    
 
- ---------------
 
   
*By his signature set forth below the undersigned, pursuant to duly authorized
  powers of attorney filed with the Securities and Exchange Commission, has
  signed this Amendment to the Registration Statement on behalf of the persons
  indicated.
    
 
   
By: /s/  ROBERT M. OLANOFF
    
 
    --------------------------------------------------------
   
    Robert M. Olanoff (Attorney-in-fact)
    
 
                                      II-5
<PAGE>   65
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                                        SEQUENTIALLY
                                                                                         NUMBERED
EXHIBIT NO.                            DESCRIPTION OF EXHIBIT                              PAGE
- -----------   ------------------------------------------------------------------------  ----------
<S>           <C>                                                                       <C>
 1            Form of Underwriting Agreement.
 3.1*         Amended and Restated Certificate of Incorporation.
 3.2*         Amended and Restated Bylaws.
 4.1*         Debenture and Warrant Purchase Agreement dated April 10, 1996 by and
              between the Company, Messrs. Pandey, Koneru and Valluripalli and Summit
              Ventures IV, L.P. and Summit Investors III, L.P.
 4.2*         Warrant Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.3*         Registration Rights Agreement dated April 10, 1996 by and between the
              Company and Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.4*         Redemption Agreement dated April 10, 1996 by and between the Company and
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
 4.5*         Shareholders Agreement dated April 10, 1996 by and between the Company,
              Messrs. Pandey, Koneru and Valluripalli and Summit Ventures IV, L.P. and
              Summit Investors III, L.P.
 5            Opinion of Buchanan Ingersoll as to validity of Common Stock.
10.1*         1996 Stock Plan of the Company.
10.2*         1996 Non-Employee Director Stock Option Plan.
10.3*         Employment Agreement dated June 1, 1996 between the Company and Ashok
              Pandey.
10.4*         Employment Agreement dated June 1, 1996 between the Company and Rajkumar
              Koneru.
10.5*         Employment Agreement dated June 1, 1996 between the Company and Nagarjun
              Valluripalli.
10.6*         Employment Agreement dated June 1, 1996 between the Company and Robert
              M. Olanoff, together with Change in Control Severance Pay Agreement
              dated June 1, 1996 between the Company and Robert M. Olanoff.
10.7*         Employment Agreement dated June 1, 1996 between the Company and Paul
              Coombs.
10.8*         Form of Indemnification Agreement entered into by the Company and each
              of its directors and officers.
10.9*         Sublease Agreement between Micrognosis, Inc., as sublessor, the Company,
              as sublessee, with master lease.
10.10*        Employee's Invention Assignment and Confidentiality Agreement.
10.11*        R/3 National Implementation Partner Agreement between SAP America, Inc.
              and the Company dated January 13, 1995.
10.12*        Services Provider Agreement by and between Oracle Corporation and the
              Company dated July 26, 1994.
10.13*        Amended and Restated Agreement by Messrs. Pandey, Koneru and
              Valluripalli dated July 16, 1996 to indemnify the Company for certain
              losses.
10.14*        Factoring Agreement by and between Access Capital, Inc. and the Company
              dated as of October 20, 1995, with exhibits. See Exhibit 10.17.
</TABLE>
<PAGE>   66
 
   
<TABLE>
<CAPTION>
                                                                                        SEQUENTIALLY
                                                                                         NUMBERED
EXHIBIT NO.                            DESCRIPTION OF EXHIBIT                              PAGE
- -----------   ------------------------------------------------------------------------  ----------
<S>           <C>                                                                       <C>
10.15*        Agreement of Waiver and Consent dated as of June 4, 1996 by and among
              the Company, certain shareholders of the Company, and Summit Ventures
              IV, L.P. and Summit Investors III, L.P., with Amendment No. 1 thereto.
              See Exhibit 10.18.
10.16*        Agreement by and between the Company and Intelligroup Asia Private
              Limited ("Intelligroup Asia") relating to operational control of
              Intelligroup Asia, with related agreements.
10.17+        Letter agreements by and between each of the Company and Oxford Systems
              Inc., and Access Capital, Inc. dated October 10, 1996.
10.18         Amended and Restated Agreement of Waiver and Consent dated November 26,
              1996 by and among the Company, certain shareholders of the Company,
              Summit Ventures IV, L.P. and Summit Investors III, L.P.
11+           Statement re: Computation of per share earnings.
16*           Letter re: Change of Certifying Accountant.
21*           Subsidiaries of the Registrant.
23.1          Consent of Arthur Andersen LLP.
23.2          Consent of Buchanan Ingersoll (contained in the opinion filed as Exhibit
              5 to the Registration Statement).
24+           Powers of Attorney of certain officers and directors of the Company
              (contained on the signature page of this Registration Statement).
27.1+         Financial Data Schedule for the year ended December 31, 1995.
27.2+         Financial Data Schedule for the nine months ended September 30, 1996.
</TABLE>
    
 
- ---------------
* Incorporated by reference to the Company's Registration Statement on Form SB-2
  (Registration Statement No. 333-5981) declared effective on September 26,
  1996.
 
   
+ Previously filed as an Exhibit to this Registration Statement on November 21,
  1996.
    

<PAGE>   1
                                                                      Exhibit 1

                                1,350,000 Shares

                               INTELLIGROUP, INC.

                                  Common Stock

                             UNDERWRITING AGREEMENT

                                                               December __, 1996

COWEN & COMPANY
MONTGOMERY SECURITIES
  As Representatives of the several Underwriters

c/o Cowen & Company
   Financial Square
   New York, New York 10005

Dear Sirs:

         1. Introductory. Intelligroup, Inc., a New Jersey corporation (the
"Company"), and the selling shareholders named in Schedule B hereto (the
"Selling Shareholders") propose to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters," or, each, an "Underwriter"), an aggregate of 1,350,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of the Company. The
aggregate of 1,350,000 shares so proposed to be sold is hereinafter referred to
as the "Firm Stock." The Company and the Selling Shareholders listed in Schedule
B hereto also propose to sell to the Underwriters, upon the terms and conditions
set forth in Section 3 hereof, up to an additional 202,500 shares of Common
Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "Stock." Cowen & Company ("Cowen")
and Montgomery Securities ("Montgomery") are acting as representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives." The Underwriters consent to the sale of Common Stock
hereunder by the Company and the Selling Stockholders for purposes of the
lock-up undertakings made by the Company and the Selling Stockholders in
connection with the initial public offering of Common Stock.

         2. (a) Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the several Underwriters
that:

                  (i) The Company has complied with the conditions and meets the
         requirements for use of Form SB-2, and a registration statement on Form
         SB-2 (File No. 333-____) in the form in which it became or becomes
         effective and also in such form as it may be when any post-effective
         amendment thereto shall become effective with respect to the Stock,
         including any preeffective
<PAGE>   2
         prospectuses included as part of the registration statement as
         originally filed or as part of any amendment or supplement thereto, or
         filed pursuant to Rule 424 under the Securities Act of 1933, as amended
         (the "Securities Act"), and the rules and regulations (the "Rules and
         Regulations") of the Securities and Exchange Commission (the
         "Commission") thereunder, copies of which have heretofore been
         delivered to you, has been carefully prepared by the Company in
         conformity with the requirements of the Securities Act and has been
         filed with the Commission under the Securities Act; one or more
         amendments to such registration statement, including in each case an
         amended preeffective prospectus, copies of which amendments have
         heretofore been delivered to you, have been so prepared and filed. If
         it is contemplated, at the time this Agreement is executed, that a
         post-effective amendment to the registration statement will be filed
         and must be declared effective before the offering of the Stock may
         commence, the term "Registration Statement" as used in this Agreement
         means the registration statement as amended by said post-effective
         amendment. The term "Registration Statement" as used in this Agreement
         shall also include any registration statement relating to the Stock
         that is filed and declared effective pursuant to Rule 462(b) under the
         Securities Act. The term "Prospectus" as used in this Agreement means
         the prospectus in the form included in the Registration Statement, or,
         (A) if the prospectus included in the Registration Statement omits
         information in reliance on Rule 430A under the Securities Act and such
         information is included in a prospectus filed with the Commission
         pursuant to Rule 424(b) under the Securities Act, the term "Prospectus"
         as used in this Agreement means the prospectus in the form included in
         the Registration Statement as supplemented by the addition of the Rule
         430A information contained in the prospectus filed with the Commission
         pursuant to Rule 424(b) and (B) if prospectuses that meet the
         requirements of Section 10(a) of the Securities Act are delivered
         pursuant to Rule 434 under the Securities Act, then (i) the term
         "Prospectus" as used in this Agreement means the "prospectus subject to
         completion" (as such term is defined in Rule 434(g) under the
         Securities Act) as supplemented by (a) the addition of Rule 430A
         information or other information contained in the form of prospectus
         delivered pursuant to Rule 434(b)(2) under the Securities Act or (b)
         the information contained in the term sheets described in Rule
         434(b)(3) under the Securities Act, and (ii) the date of such
         prospectuses shall be deemed to be the date of the term sheets. The
         term "Preeffective Prospectus" as used in this Agreement means the
         prospectus subject to completion in the form included in the
         Registration Statement at the time of the initial filing of the

                                      -2-
<PAGE>   3
         Registration Statement with the Commission, and as such prospectus
         shall have been amended from time to time prior to the date of the
         Prospectus.

                  (ii) The Commission has not issued or threatened to issue any
         order preventing or suspending the use of any Preeffective Prospectus,
         and, at its date of issue, each Preeffective Prospectus conformed in
         all material respects with the requirements of the Securities Act and
         did not include any untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein, in light of the circumstances under which
         they were made, not misleading; and, when the Registration Statement
         becomes effective and at all times subsequent thereto up to and
         including each Closing Date, the Registration Statement and the
         Prospectus and any amendments or supplements thereto contained and will
         contain all material statements and information required to be included
         therein by the Securities Act and conformed and will conform in all
         material respects to the requirements of the Securities Act and neither
         the Registration Statement nor the Prospectus, nor any amendment or
         supplement thereto, included or will include any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading; provided,
         however, that the foregoing representations, warranties and agreements
         shall not apply to information contained in or omitted from any
         Preeffective Prospectus or the Registration Statement or the Prospectus
         or any such amendment or supplement thereto in reliance upon, and in
         conformity with, written information furnished to the Company by or on
         behalf of any Underwriter, directly or through you, or by any Selling
         Shareholder, specifically for use in the preparation thereof; there is
         no franchise, lease, contract, agreement or document required to be
         described in the Registration Statement or Prospectus or to be filed as
         an exhibit to the Registration Statement which is not described or
         filed therein as required; and all descriptions of any such franchises,
         leases, contracts, agreements or documents contained in the
         Registration Statement are accurate and complete descriptions of such
         documents in all material respects.

                  (iii) Subsequent to the respective dates as of which
         information is given in the Registration Statement and Prospectus, and
         except as set forth or contemplated in the Prospectus, neither the
         Company nor any of its subsidiaries has incurred any liabilities or
         obligations, direct or contingent, nor entered into any


                                      -3-
<PAGE>   4
         transactions not in the ordinary course of business, and there has not
         been any material adverse change in the condition (financial or
         otherwise), properties, business, management, prospects, net worth or
         results of operations of the Company and its subsidiaries, considered
         as a whole, or any change in the capital stock or short-term or
         long-term debt of the Company and its subsidiaries considered as a
         whole. The Company and its subsidiaries have no material contingent
         obligations which are not disclosed in the Company's financial
         statements which are included in the Registration Statement, as it may
         be amended or supplemented.

                  (iv) The financial statements, together with the related notes
         and schedules, set forth in the Prospectus and elsewhere in the
         Registration Statement fairly present, on the basis stated in the
         Registration Statement, the financial position and the results of
         operations and changes in financial position of the Company and its
         consolidated subsidiaries at the respective dates or for the respective
         periods therein specified. Such statements and related notes and
         schedules have been prepared in accordance with generally accepted
         accounting principles in the United States applied on a consistent
         basis except as may be set forth in the Prospectus. The selected
         financial and statistical data set forth in the Prospectus under the
         caption "Selected Consolidated Financial Data" fairly present, on the
         basis stated in the Registration Statement, the information set forth
         therein.

                  (v) Arthur Andersen LLP, who have expressed their opinions on
         the audited financial statements included in the Registration Statement
         and the Prospectus, are independent public accountants as required by
         the Securities Act and the Rules and Regulations.

                  (vi) The Company and each of its subsidiaries have been duly
         organized and are validly existing and in good standing as corporations
         under the laws of their respective jurisdictions of organization, with
         power and authority (corporate and other) to own or lease their
         properties and to conduct their businesses as described in the
         Registration Statement and the Prospectus; the Company and its
         subsidiaries are in possession of and operating in compliance with all
         franchises, grants, authorizations, licenses, permits, easements,
         consents, certificates and orders required for the conduct of their
         businesses, all of which are valid and in full force and effect; and
         the Company and each of such subsidiaries are duly qualified to do
         business and in good standing as foreign corporations in all other
         jurisdictions where their ownership or leasing of


                                      -4-
<PAGE>   5
         properties or the conduct of their businesses requires such
         qualification, except for those jurisdictions in which the failure to
         so qualify has not had and will not have a material adverse effect on
         the condition (financial or otherwise), properties, business,
         management, prospects, net worth or results of operations of the
         Company and its subsidiaries considered as a whole. The Company and
         each of its subsidiaries has all requisite power and authority, and all
         necessary consents, approvals, authorizations, orders, registrations,
         qualifications, licenses and permits of and from all public regulatory
         or governmental agencies and bodies to own, lease and operate its
         properties and conduct its business as now being conducted and as
         described in the Registration Statement and the Prospectus, and no such
         consent, approval, authorization, order, registration, qualification,
         license or permit contains a materially burdensome restriction not
         adequately disclosed in the Registration Statement and the Prospectus.
         The Company owns all of the issued and outstanding capital stock of
         Oxford Systems, Inc. and Intelligroup New Zealand Ltd. and neither the
         Company nor any of its subsidiaries owns or controls, directly or
         indirectly, any other corporations, associations or other entities.

                  (vii) The Company's authorized and outstanding capital stock
         is on the date hereof, and will be on the Closing Dates as set forth
         under the heading "Capitalization" in the Prospectus; the information
         set forth under the caption "Capitalization" in the Prospectus (after
         giving effect to the transactions therein described) is true and
         correct; the outstanding shares of Common Stock (including the
         outstanding shares of Stock) of the Company conform to the description
         thereof in the Registration Statement and the Prospectus and have been
         duly authorized and validly issued and are fully paid and nonassessable
         and have been issued in compliance with all federal and state
         securities laws and were not issued in violation of or subject to any
         preemptive rights or similar rights to subscribe for or purchase
         securities. Except as disclosed in and or contemplated by the
         Registration Statement and the Prospectus and the financial statements
         of the Company and related notes and schedules thereto included in the
         Registration Statement and the Prospectus, the Company does not have
         outstanding any options or warrants to purchase, or any preemptive
         rights or other rights to subscribe for or to purchase any securities
         or obligations convertible into, or any contracts or commitments to
         issue or sell, shares of its capital stock or any such options, rights,
         convertible securities or obligations. The description of the Company's
         stock option and other stock plans or


                                      -5-
<PAGE>   6
         arrangements, and the options or other rights granted or exercised
         thereunder, as set forth in the Registration Statement and the
         Prospectus, accurately and fairly presents the information required to
         be shown with respect to such plans, arrangements, options and rights.
         All outstanding shares of capital stock of each subsidiary have been
         duly authorized and validly issued, and are fully paid and
         nonassessable and are owned directly by the Company or by another
         wholly owned subsidiary of the Company free and clear of any liens,
         charges, encumbrances, equities or claims.

                  (viii) The Stock to be issued and sold by the Company to the
         Underwriters hereunder has been duly and validly authorized and, when
         issued and delivered against payment therefor as provided herein, will
         be duly and validly issued, fully paid and nonassessable and free of
         any preemptive or similar rights and will conform to the description
         thereof in the Registration Statement and the Prospectus.

                  (ix) Except as set forth in the Registration Statement and the
         Prospectus, there are no legal or governmental proceedings pending to
         which the Company or any of its subsidiaries or affiliates is a party
         or of which any property of the Company or any subsidiary or affiliate
         is subject, which, if determined adversely to the Company or any such
         subsidiary or affiliate, might individually or in the aggregate (A)
         prevent or adversely affect the transactions contemplated by this
         Agreement, (B) suspend the effectiveness of the Registration Statement,
         (C) prevent or suspend the use of the Preeffective Prospectus in any
         jurisdiction or (D) result in a material adverse change in the
         condition (financial or otherwise), properties, business, management,
         prospects, net worth or results of operations of the Company and its
         subsidiaries considered as a whole; and to the best of the Company's
         knowledge no such proceedings are threatened or contemplated against
         the Company or any subsidiary or affiliate by governmental authorities
         or others. The Company is not a party nor subject to the provisions of
         any material injunction, judgment, decree or order of any court,
         regulatory body or other governmental agency or body ("Governmental
         Authority"). All of the Company's litigation required to be disclosed
         pursuant to the Rules and Regulations has been disclosed and the
         description of the Company's litigation under the heading "Business --
         Legal Proceedings" in the Prospectus is true and correct and complies
         with the Rules and Regulations.


                                      -6-
<PAGE>   7
                  (x) The execution, delivery and performance of this Agreement
         and the consummation of the transactions herein contemplated will not
         result in a breach or violation of any of the terms or provisions of or
         constitute a default (or an event which with notice or lapse of time,
         or both, would constitute a default) under any indenture, mortgage,
         deed of trust, note agreement or other agreement or instrument to which
         the Company or any of its subsidiaries is a party or by which it or any
         of its properties is or may be bound, the Amended and Restated
         Certificate of Incorporation, Amended and Restated By-laws or other
         organizational documents of the Company or any of its subsidiaries, or
         any law, order, rule or regulation of any court or governmental agency
         or body having jurisdiction over the Company or any of its subsidiaries
         or any of their properties or will result in the creation of a lien.

                  (xi) No consent, approval, authorization or order of any court
         or governmental agency or body is required or necessary in connection
         with the execution and delivery by the Company or for the consummation
         by the Company of the transactions contemplated by this Agreement,
         except such as may be required by the National Association of
         Securities Dealers, Inc. (the "NASD") or under the Securities Act or
         the securities or "Blue Sky" laws of any jurisdiction in connection
         with the purchase and distribution of the Stock by the Underwriters.

                  (xii) The Company has the full corporate power and authority
         to enter into this Agreement to perform its obligations hereunder
         (including to issue, sell and deliver the Stock) and this Agreement has
         been duly and validly authorized, executed and delivered by the Company
         and is a valid and binding obligation of the Company, enforceable
         against the Company in accordance with its terms, except to the extent
         that rights to indemnity and contribution hereunder may be limited by
         federal or state securities laws or the public policy underlying such
         laws.

                  (xiii) Except as disclosed in the Registration Statement and
         the Prospectus with respect to unrecorded and unpaid federal and state
         payroll-related taxes and with respect to possible past violations of
         the Immigration Reform and Control Act of 1990, the Company and its
         subsidiaries are in all material respects in compliance with, and
         conduct their businesses in conformity with, all applicable federal,
         state, local and foreign laws, rules and regulations or any court or
         governmental agency or body; to the knowledge of the Company, otherwise
         than as set forth in the Registration Statement and the Prospectus, no


                                      -7-
<PAGE>   8
         prospective change in any of such federal, state, local or foreign
         laws, rules or regulations has been adopted which, when made effective,
         would have a material adverse effect on the operations of the Company
         and its subsidiaries. To the best knowledge of the Company, any
         violations by the Company of the Immigration Reform and Control Act of
         1990 or any similar laws, rules or regulations would not be found to be
         a "pattern and practice" by the Immigration and Naturalization Service.
         In the ordinary course of business, employees of the Company conduct
         periodic reviews of the effect of Environmental Laws (as defined below)
         on the business operations and properties of the Company and its
         subsidiaries, in the ordinary course of which they seek to identify and
         evaluate associated costs and liabilities. Except as disclosed in the
         Registration Statement and the Prospectus, the Company and its
         subsidiaries are in compliance with all applicable existing federal,
         state, local and foreign laws, rules and regulations relating to the
         protection of human health or the environment or imposing liability or
         requiring standards of conduct concerning any Hazardous Materials
         ("Environmental Laws"), except for such instances of noncompliance
         which, either singly or in the aggregate, would not have a material
         adverse effect. The term "Hazardous Material" means (A) any "hazardous
         substance" as defined by the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as amended, (B) any "hazardous
         waste" as defined by the Resource Conservation and Recovery Act, as
         amended, (C) any petroleum or petroleum product, (D) any
         polychlorinated biphenyl and (E) any pollutant or contaminant or
         hazardous, dangerous or toxic chemical, material, waste or substance
         regulated under or within the meaning of any other Environmental Law.

                  (xiv) Except as disclosed in the Registration Statement and
         the Prospectus with respect to unrecorded and unpaid federal and state
         payroll-related taxes, the Company and its subsidiaries have filed all
         necessary federal, state, local and foreign income, payroll, franchise
         and other tax returns and have paid all taxes shown as due thereon or
         with respect to any of their properties; and there is no tax deficiency
         that has been, or to the knowledge of the Company is likely to be,
         asserted against the Company or any of its subsidiaries or any of their
         respective properties or assets that would adversely affect the
         financial position, business or results of operations of the Company
         and its subsidiaries. All tax liabilities have been adequately provided
         for in the consolidated financial statements of the Company.


                                      -8-
<PAGE>   9
                  (xv) No person or entity has the right to require registration
         of shares of Common Stock or other securities of the Company because of
         the filing or effectiveness of the Registration Statement or otherwise,
         except for Summit Investors III, L.P. and Summit Ventures IV, L.P.
         which have the right to require the registration of their shares of
         Firm Stock and Optional Stock pursuant to the registration rights
         agreement described in the Prospectus.

                  (xvi) Neither the Company nor any of its officers, directors
         or affiliates has taken or will take, directly or indirectly, any
         action designed or intended to stabilize or manipulate the price of any
         security of the Company, or which caused or resulted in, or which might
         in the future reasonably be expected to cause or result in,
         stabilization or manipulation of the price of any security of the
         Company.

                  (xvii) The Company has provided you with all financial
         statements of the Company and its subsidiaries since December 31, 1993
         to the date hereof that are available to the officers of the Company,
         including financial statements for the quarters ended March 31, 1996,
         June 30, 1996 and September 30, 1996.

                  (xviii) The Company and its subsidiaries own or possess all
         patents, trademarks, trademark registrations, service marks, service
         mark registrations, tradenames, copyrights, licenses, inventions, trade
         secrets and rights described in the Prospectus as being owned by them
         or any of them or necessary for the conduct of their respective
         businesses, and the Company is not aware of any claim to the contrary
         or any challenge by any other person to the rights of the Company and
         its subsidiaries with respect to the foregoing. The Company's business
         as now conducted and as proposed to be conducted does not and will not
         infringe or conflict with in any material respect patents, trademarks,
         service marks, trade names, copyrights, trade secrets, licenses or
         other intellectual property or franchise right of any person. Except as
         described in the Prospectus, no claim has been made against the Company
         alleging the infringement by the Company of any patent, trademark,
         service mark, tradename, copyright, trade secret, license in or other
         intellectual property right or franchise right of any person.

                  (xix) The Company and its subsidiaries have performed all
         material obligations required to be performed by them under all
         contracts required by Item 601(b)(10) of Regulation S-B under the
         Securities Act to be filed as exhibits to the Registration Statement,
         and


                                      -9-
<PAGE>   10
         neither the Company nor any of its subsidiaries nor any other party to
         such contract is in default under or in breach of any such obligations.
         Neither the Company nor any of its subsidiaries has received any notice
         of such default or breach.

                  (xx) The Company is not involved in any labor dispute nor is
         any such dispute threatened. The Company is not aware that (A) any
         executive, key employee or significant group of employees of the
         Company or any subsidiary plans to terminate employment with the
         Company or any such subsidiary or (B) any such executive or key
         employee is subject to any noncompete, nondisclosure, confidentiality,
         employment, consulting or similar agreement that would be violated by
         the present or proposed business activities of the Company and its
         subsidiaries. Neither the Company nor any subsidiary has or expects to
         have any liability for any prohibited transaction or funding deficiency
         or any complete or partial withdrawal liability with respect to any
         pension, profit sharing or other plan which is subject to the Employee
         Retirement Income Security Act of 1974, as amended ("ERISA"), to which
         the Company or any subsidiary makes or ever has made a contribution and
         in which any employee of the Company or any subsidiary is or has ever
         been a participant. With respect to such plans, the Company and each
         subsidiary are in compliance in all material respects with all
         applicable provisions of ERISA.

                  (xxi) [Intentionally left blank]

                  (xxii) The Company and its subsidiaries have, and the Company
         and its subsidiaries as of the Closing Dates will have, good and
         marketable title in fee simple to all real property and good and
         marketable title to all personal property owned or proposed to be owned
         by them which is material to the business of the Company or of its
         subsidiaries, in each case free and clear of all liens, encumbrances
         and defects except such as are described in the Prospectus or such as
         would not have a material adverse effect on the Company and its
         subsidiaries considered as a whole; and any real property and buildings
         held under lease by the Company and its subsidiaries or proposed to be
         held after giving effect to the transactions described in the
         Registration Statement and the Prospectus are, or will be as of each
         Closing Date, held by them under valid, subsisting and enforceable
         leases with such exceptions as would not have a material adverse effect
         on the Company and its subsidiaries considered as a whole, in each case
         except as described in or contemplated by the Registration Statement
         and the Prospectus.


                                      -10-
<PAGE>   11
                  (xxiii) The Company and its subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are customary in the businesses in which
         they are engaged or propose to engage after giving effect to the
         transactions described in the Registration Statement and the Prospectus
         (except as described in the Registration Statement and the Prospectus
         with respect to errors and omissions insurance); and neither the
         Company nor any of its subsidiaries has any reason to believe that it
         will not be able to renew its existing insurance coverage as and when
         such coverage expires or to obtain similar coverage from similar
         insurers as may be necessary to continue its business at a cost that
         would not materially and adversely affect the condition, financial or
         otherwise, or the earnings, business or operations of the Company and
         its subsidiaries considered as a whole, except as described in or
         contemplated by the Prospectus.

                  (xxiv) Other than as contemplated by this Agreement, there is
         no broker, finder or other party that is entitled to receive from the
         Company any brokerage or finder's fee or other fee or commission as a
         result of any of the transactions contemplated by this Agreement.

                  (xxv) The Company confirms as of the date hereof that it is in
         compliance with all provisions of Section 1 of Laws of Florida, Chapter
         92-198, An Act Relating to Disclosure of doing Business with Cuba, and
         the Company further agrees that if it commences engaging in business
         with the government of Cuba or with any person or affiliate located in
         Cuba after the date the Registration Statement becomes or has become
         effective with the Commission or with the Florida Department of Banking
         and Finance (the "Department"), whichever date is later, the Company
         will provide the Department notice of such business in a form
         acceptable to the Department.

                  (xxvi) The Company and each of its subsidiaries maintain a
         system of internal accounting controls sufficient to provide reasonable
         assurances that (A) transactions are executed in accordance with
         management's general or specific authorization; (B) transactions are
         recorded as necessary to permit preparation of financial statements in
         conformity with generally accepted accounting principles in the United
         States and to maintain accountability for assets; (C) access to assets
         is permitted only in accordance with management's general or specific
         authorization; and (D) the recorded accountability for assets is
         compared with existing assets at reasonable intervals and


                                      -11-
<PAGE>   12
         appropriate action is taken with respect to any differences.

                  (xxvii) Neither the Company nor any of its subsidiaries nor
         any director, employee or agent of the Company or any of its
         subsidiaries has made any payment of funds of the Company or any of its
         subsidiaries or received or retained any funds in violation of any law,
         rule or regulation, which payment, receipt or retention of funds is of
         a character required to be disclosed in the Registration Statement and
         the Prospectus.

                  (xxviii) Neither the Company nor any of its subsidiaries is,
         or will become, as a result of the consummation of the transactions
         contemplated by this Agreement, and application of the net proceeds
         therefrom as described in the Prospectus, an "investment company" or an
         entity "controlled" by an "investment company" as such terms are
         defined in the Investment Company Act of 1940, as amended.

                  (xxix) Neither the Company nor any of its subsidiaries is or
         intends to become (a) a controlled foreign corporation, as such term is
         defined in the Internal Revenue Code of 1986, as amended (the "Code"),
         (b) a passive foreign investment company within the meaning of Section
         1296(a) of the Code or (c) a foreign personal holding corporation, as
         such term is defined in the Code.

                  (xxx) Each certificate signed by any officer of the Company
         and delivered to the Underwriters or counsel for the Underwriters shall
         be deemed to be a representation and warranty by the Company as to the
         matters covered thereby.

                  (xxxi) The Common Stock has been approved for quotation and
         trading on the Nasdaq National Market.

                  (xxxii) The Company has paid $793,000 of the $814,000 Internal
         Revenue Service assessment described in the Prospectus, has reserved an
         additional $21,000 for the assessed but unbilled Internal Revenue
         Service assessment and has reserved an additional $186,000 for any
         additional state tax assessments.

         For purposes of the foregoing representations and warranties which are
conditioned by reference to the knowledge of the Company, the Company shall be
charged with the knowledge of each Selling Shareholder.

                  (b) Representations, Warranties and Agreements of the Selling
Shareholders. Each Selling Shareholder severally and not


                                      -12-
<PAGE>   13
jointly represents and warrants to, and agrees with, the several Underwriters
that such Selling Shareholder:

                  (i) Now has, and on each Closing Date will have, valid and
         marketable title to the Stock to be sold by such Selling Shareholder,
         free and clear of any lien, claim, security interest or other
         encumbrance, including, without limitation, any restriction on
         transfer, and has full right, power and authority to enter into this
         Agreement, the Power of Attorney and the Custody Agreement (each as
         hereinafter defined), and, to the extent such Selling Shareholder is a
         corporation or a partnership, has been duly organized and is validly
         existing and in good standing as a corporation or partnership, as
         applicable, under the laws of its jurisdiction of organization.

                  (ii) Now has, and on each Closing Date will have, upon
         delivery of and payment for each share of Stock hereunder, full right,
         power, authority and any approval required by law to sell, transfer,
         assign and deliver the Stock being sold by such Selling Shareholder
         hereunder, and each of the several Underwriters will acquire valid and
         marketable title to all of the Stock being sold to the Underwriters by
         such Selling Shareholder, free and clear of any liens, encumbrances,
         equities claims, restrictions on transfer or other defects whatsoever.

                  (iii) For a period of 180 days after the date of this
         Agreement, without the consent of Cowen, such Selling Shareholder will
         not offer to sell, sell, contract to sell or otherwise dispose of any
         capital stock or securities convertible into or exchangeable for
         capital stock, including, without limitation, capital stock which may
         be deemed to be beneficially owned by such Selling Shareholder in
         accordance with the Rules and Regulations, except for the Stock being
         sold hereunder or as set forth in the agreement under Section 8(l)
         herein.

                  (iv) Has duly executed and delivered a power of attorney, in
         substantially the form heretofore delivered to the Representatives (the
         "Power of Attorney"), appointing David J. Sorin, or his duly appointed
         substitute as attorney-in-fact (the "Attorneys-in-fact") with authority
         to execute and deliver this Agreement on behalf of such Selling
         Shareholder, to authorize the delivery of the shares of Stock to be
         sold by such Selling Shareholder hereunder and otherwise to act on
         behalf of such Selling Shareholder in connection with the transactions
         contemplated by this Agreement.


                                      -13-
<PAGE>   14
                  (v) Has duly executed and delivered a custody agreement, in
         substantially the form heretofore delivered to the Representatives (the
         "Custody Agreement"), with Buchanan Ingersoll as custodian (the
         "Custodian"), pursuant to which certificates in negotiable form for the
         shares of Stock to be sold by such Selling Shareholder hereunder have
         been placed in custody for delivery under this Agreement.

                  (vi) Has, by execution and delivery of each of this Agreement,
         the Power of Attorney and the Custody Agreement, created valid and
         binding obligations of such Selling Shareholder, enforceable against
         such Selling Shareholder in accordance with its terms, except to the
         extent that rights to indemnity hereunder may be limited by federal or
         state securities laws or the public policy underlying such laws.

                  (vii) The performance of this Agreement, the Custody Agreement
         and the Power of Attorney, and the consummation of the transactions
         contemplated hereby and thereby will not result in a breach or
         violation by such Selling Shareholder of any of the terms or provisions
         of, or constitute a default by such Selling Shareholder under, any
         indenture, mortgage, deed of trust, trust (constructive or other), loan
         agreement, lease, franchise, license or other agreement or instrument
         to which such Selling Shareholder is a party or by which such Selling
         Shareholder or any of its properties is bound, or any judgment of any
         court or governmental agency or body applicable to such Selling
         Shareholder or any of its properties, or to such Selling Shareholder's
         knowledge, any statute, decree, order, rule or regulation of any court
         or governmental agency or body applicable to such Selling Shareholder
         or any of its properties.

                  (viii) Neither such Selling Shareholder nor any of its
         affiliates has taken or will take, directly or indirectly, any action
         designed or intended to stabilize or manipulate the price of any
         security of the Company, or which caused or resulted in, or which might
         in the future reasonably be expected to cause or result in,
         stabilization or manipulation of the price of any security of the
         Company.

                  (ix) Has no reason to believe that the representations and
         warranties of the Company contained in this Section 2 are not true and
         correct, is familiar with the Registration Statement and has no
         knowledge of any material fact, condition or information not disclosed
         in the Registration Statement which has adversely affected or may
         adversely affect the business of the Company or any of its
         subsidiaries; and the sale


                                      -14-
<PAGE>   15
         of the Shares by such Selling Shareholder pursuant hereto is not
         prompted by any materially adverse information concerning the Company
         or any of its subsidiaries which is not set forth in the Registration
         Statement. The information pertaining to the Selling Shareholder under
         the caption "Selling Shareholder" in the Prospectus is complete and
         accurate in all material respects.

         Each Selling Shareholder agrees that the shares of Stock represented by
the certificates held in custody under the Custody Agreement are for the benefit
of and coupled with and subject to the interests of the Underwriters, the other
Selling Shareholders and the Company hereunder, and that the arrangement for
such custody and the appointment of the Attorneys-in-fact are irrevocable; that
the obligations of such Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity, liquidation or
distribution of such Selling Shareholder, or any other event, that if such
Selling Shareholder should die or become incapacitated or is liquidated or
dissolved or any other event occurs, before the delivery of the Stock hereunder,
certificates for the Stock to be sold by such Selling Shareholder shall be
delivered on behalf of such Selling Shareholder in accordance with the terms and
conditions of this Agreement and the Custody Agreement, and action taken by the
Attorneys-in-fact or any of them under the Power of Attorney shall be as valid
as if such death, incapacity, liquidation or dissolution or other event had not
occurred, whether or not the Custodian, the Attorneys-in-fact or any of them
shall have notice of such death, incapacity, liquidation or dissolution or other
event.

         (c) Additional Representations, Warranties and Agreements of the
Principal Shareholders. Each of Ashok Pandey, Rajkumar Koneru and Nagarjun
Valluripalli (individually, a "Principal Shareholder") represents and warrants
to, and agrees with, the several Underwriters that:

                  (i) Such Principal Shareholder has duly executed and delivered
         the Indemnification Agreement, dated July 16, 1996 (the
         "Indemnification Agreement"), among the Company and the Selling
         Shareholders; the Escrow Agreement, dated as of the date hereof (the
         "Escrow Agreement") among each of the Principal Shareholders, as
         indemnitors, the Company and Summit Bank, as escrow agent; and the
         Pledge Agreement, dated as of the date hereof (the "Pledge Agreement"),
         made by the Principal Shareholders, as pledgors, to the Company, as
         pledgee. The Indemnification Agreement, the Escrow Agreement and the
         Pledge Agreement are each in full force and effect and the parties
         thereto are in full compliance with all their obligations under such
         agreements.


                                      -15-
<PAGE>   16
                  (ii) Such Principal Shareholder has, by execution and delivery
         of the Indemnification Agreement, the Escrow Agreement and the Pledge
         Agreement, created valid and binding obligations of such Principal
         Shareholder, enforceable against such Principal Shareholder in
         accordance with the respective terms of such agreements.

                  (iii) The execution, delivery and performance by such
         Principal Shareholder of the Indemnification Agreement, the Escrow
         Agreement and the Pledge Agreement, and the compliance by such
         Principal Shareholder with his obligations thereunder, did not and will
         not conflict with, or result in a breach or violation of any of the
         terms or provisions of, or constitute a default (or an event with
         notice or lapse of time, or both, would constitute a default) by such
         Principal Shareholder under any indenture, mortgage, deed of trust,
         trust (constructive or other), loan agreement, lease, franchise,
         license or other agreement or instrument to which such Principal
         Shareholder is a party or by which such Principal Shareholder or any of
         his properties is bound, or any judgment of any court or governmental
         agency or body applicable to such Principal Shareholder or any of his
         properties, or to such Principal Shareholder's knowledge, any statute,
         decree, order, rule or regulation of any court or governmental agency
         or body applicable to such Principal Shareholder or any of his
         properties.

                  (iv) On October 2, 1996, the first closing date of the
         Company's initial public offering of Common Stock (the "IPO Closing
         Date"), the Principal Shareholders pledged an aggregate of 191,667
         shares of Common Stock to the Company (with Summit Bank serving as
         escrow agent for the benefit of the Company). The security interest
         created by the Pledge Agreement in the shares of Common Stock pledged
         by each Principal Shareholder pursuant to the Pledge Agreement (the
         "Pledged Shares") constitutes a valid, perfected first priority lien on
         the Pledged Shares, enforceable by the Company as such against all
         creditors of such Principal Shareholder and any persons purporting to
         purchase any of the Pledged Shares from such Principal Shareholder.

                  (v) On the IPO Closing Date, the Principal Shareholders
         delivered a total of $450,000 (the "Escrowed Cash") to Summit Bank, as
         escrow agent under the Escrow Agreement (the "Escrow Agreement"). The
         security interest created by the Escrow Agreement in the Escrowed Cash
         constitutes a valid, perfected first priority lien on the Escrowed
         Cash, enforceable by the Company as such against all creditors of such
         Principal Shareholder.


                                      -16-
<PAGE>   17
         (c) Additional Representations, Warranties and Agreements of the
Company and the Principal Shareholders Regarding Intelligroup Asia Private Ltd.

         Each of the Company and each Principal Shareholder represents and
warrants to, and agrees with, the several Underwriters that:

                  (i) Subsequent to the respective dates as of which information
         is given in the Registration Statement and Prospectus, and except as
         set forth or contemplated in the Prospectus, Intelligroup Asia Private
         Ltd. ("Intelligroup Asia") has not incurred any liabilities or
         obligations, direct or contingent, nor entered into any transactions
         not in the ordinary course of business, and there has not been any
         material adverse change in the condition (financial or otherwise),
         properties, business, management, prospects, net worth or results of
         operations of Intelligroup Asia, or any change in the capital stock or
         short-term or long-term debt of Intelligroup Asia. Intelligroup Asia
         has no material contingent obligations which are not disclosed in the
         Registration Statement, as it may be amended or supplemented.

                  (ii) Intelligroup Asia has been duly organized and is validly
         existing and in good standing as a corporation under the laws of India,
         with power and authority (corporate and other) to own or lease its
         properties and to conduct its business as described in the Registration
         Statement and the Prospectus; Intelligroup Asia is in possession of and
         operating in compliance with all franchises, grants, authorizations,
         licenses, permits, easements, consents, certificates and orders
         required for the conduct of its businesses, all of which are valid and
         in full force and effect; and Intelligroup Asia is duly qualified to do
         business and in good standing as foreign corporations in all other
         jurisdictions where its ownership or leasing of properties or the
         conduct of its business requires such qualification, except for those
         jurisdictions in which the failure to so qualify has not had and will
         not have a material adverse effect on the condition (financial or
         otherwise), properties, business, management, prospects, net worth or
         results of operations of Intelligroup Asia. Intelligroup Asia has all
         requisite power and authority, and all necessary consents, approvals,
         authorizations, orders, registrations, qualifications, licenses and
         permits of and from all public regulatory or governmental agencies and
         bodies to own, lease and operate its properties and conduct its
         business as now being conducted and as described in the Registration
         Statement and the Prospectus, and no such consent, approval,
         authorization, order, registration,


                                      -17-
<PAGE>   18
         qualification, license or permit contains a materially burdensome
         restriction not adequately disclosed in the Registration Statement and
         the Prospectus.

                  (iii) The 200 shares of capital stock of Intelligroup Asia
         ("Asia Shares") owned by Rajkumar Koneru, the 200 Asia Shares owned by
         Nagarjun Valluripalli, the 100 Asia Shares owned by K. Rama Sastry and
         the 100 Asia Shares owned by D. Sriram represent all of the issued and
         outstanding capital stock of Intelligroup Asia and all such capital
         stock has been duly authorized and validly issued, is fully paid and
         non-assessable is owned, as described in the Registration Statement and
         Prospectus, by Mr. Koneru, Mr. Valluripalli, Mr. Sastry and Mr. Sriram,
         free and clear of any security interest, mortgage, pledge, lien,
         encumbrance, claim, charge or equity, and no options, warrants or other
         rights to purchase, agreements or other obligations to issue or other
         rights to convert any obligations into shares of capital or ownership
         interest in Intelligroup Asia exist or are outstanding.

                  (iv) Except as set forth in the Registration Statement and the
         Prospectus, there are no legal or governmental proceedings pending to
         which Intelligroup Asia is a party or of which any property of
         Intelligroup Asia is subject, which, if determined adversely to
         Intelligroup Asia, might individually or in the aggregate (A) prevent
         or adversely affect the transactions contemplated by this Agreement,
         (B) prevent or adversely affect the transactions contemplated by the
         Agreement, dated April 4, 1996, between Rajkumar Koneru, as Sole
         Proprietor of Ms. Intelligroup Asia, as assignor, and Intelligroup
         Asia, as assignee, (the "Take-over Agreement"); the Agreement, dated as
         of June 15, 1996, by and between the Company and Intelligroup Asia (the
         "Support Agreement,"); the Agreement, dated June 7, 1996, between
         Rajkumar Koneru, as transferor, and the Company, as transferee (the
         "First Transfer Agreement"); the Agreement, dated June 9, 1996, between
         Nagarjun Valluripalli, as transferor, and the Company, as transferee
         (the "Second Transfer Agreement"); the Agreement, dated June 9, 1996,
         between Ashok Pandey, as transferor, and the Company, as transferee
         (the "Third Transfer Agreement"); the Agreement, dated June 10, 1996,
         between D. Sriram, as transferor, and Ashok Pandey, as transferee (the
         "Fourth Transfer Agreement"); and the Agreement, dated June 10, 1996,
         between Shri Rama Sastry, as transferor, and Ashok Pandey, as
         transferee (the "Fifth Transfer Agreement," and the above-referenced
         Agreements, collectively, the "Transfer Agreements," and, together with
         the Take-Over Agreement and the Support Agreement, the "Intelligroup
         Asia Documents"), (C) suspend the effectiveness of the


                                      -18-
<PAGE>   19
         Registration Statement, (D) prevent or suspend the use of the
         Preeffective Prospectus in any jurisdiction or (E) result in a material
         adverse change in the condition (financial or otherwise), properties,
         business, management, prospects, net worth or results of operations of
         Intelligroup Asia; and to the best of the Company's knowledge, no such
         proceedings are threatened or contemplated against Intelligroup Asia by
         governmental authorities or others. Intelligroup Asia is not a party
         to, nor subject to the provisions of, any material injunction,
         judgment, decree or order of any court, regulatory body or other
         governmental agency or body. All of Intelligroup Asia's litigation
         required to be disclosed pursuant to the Rules and Regulations has been
         disclosed.

                  (v) The execution, delivery and performance of the
         Intelligroup Asia Documents by each party thereto and the consummation
         of the transactions therein contemplated did not and will not result in
         a breach or violation of any of the terms or provisions of or
         constitute a default (or an event which with notice or lapse of time,
         or both, would constitute a default) under any indenture, mortgage,
         deed of trust, note agreement or other agreement or instrument by which
         such party or any of its properties is or may be bound, any
         organizational documents of such party, or any law, order, rule or
         regulation of any court or governmental agency or body having
         jurisdiction over such party or any of its properties or will result in
         the creation of a lien. Each of the Intelligroup Asia Documents is in
         full force and effect and the parties thereto are in full compliance
         with all their obligations under such agreements

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required or necessary in connection
         with the execution and delivery by each party to the Intelligroup Asia
         Documents of, or for the consummation by each party to the Intelligroup
         Asia Documents, of the transactions contemplated by, the Intelligroup
         Asia Documents, except for the approval of the Reserve Bank for (A)
         each transfer of Asia Shares contemplated by the Fourth and Fifth
         Transfer Agreements, in respect of which the necessary application has
         been made and (B) each transfer of Asia Shares contemplated by the
         First, Second and Third Transfer Agreements, in respect of which
         application is proposed to be made to the Reserve Bank upon receipt of
         the approvals pursuant to sub clause (A) above. Intelligroup Asia and
         the Principal Shareholders have no reason to believe that each of the
         aforesaid approvals will not be granted.


                                      -19-
<PAGE>   20
                  (vii) Each party to the Intelligroup Asia Documents has the
         full corporate or other power and authority to enter into the
         Intelligroup Asia Documents and to perform its obligations thereunder
         and the Intelligroup Asia Documents have been duly and validly
         authorized, executed and delivered by such party and are valid and
         binding obligations of such party, enforceable against such party in
         accordance with their terms.

                  (viii) Intelligroup Asia is in all material respects in
         compliance with, and conducts its business in conformity with, all
         applicable federal, state, local and foreign laws, rules and
         regulations or any court or governmental agency or body; to the
         knowledge of the Company, otherwise than as set forth in the
         Registration Statement and the Prospectus, no prospective change in any
         of such federal, state, local or foreign laws, rules or regulations has
         been adopted which, when made effective, would have a material adverse
         effect on the operations of Intelligroup Asia. In the ordinary course
         of business, employees of Intelligroup Asia conduct periodic reviews of
         the effect of Environmental Laws on the business operations and
         properties of Intelligroup Asia, in the ordinary course of which they
         seek to identify and evaluate associated costs and liabilities.

                  (ix) Intelligroup Asia has filed all necessary local and
         foreign income, payroll, franchise and other tax returns and has paid
         all taxes shown as due thereon or with respect to any of its
         properties; and there is no tax deficiency that has been, or to the
         knowledge of the Company or the Principal Shareholders is likely to be,
         asserted against Intelligroup Asia or any of its properties or assets
         that would adversely affect the financial position, business or results
         of operations of Intelligroup Asia. All tax liabilities of Intelligroup
         Asia have been adequately provided for in the consolidated financial
         statements of the Company.

                  (x) Intelligroup Asia owns or possesses all patents,
         trademarks, trademark registrations, service marks, service mark
         registrations, tradenames, copyrights, licenses, inventions, trade
         secrets and rights described in the Prospectus as being owned by it or
         necessary for the conduct of its business, and Intelligroup Asia is not
         aware of any claim to the contrary or any challenge by any other person
         to the rights of Intelligroup Asia with respect to the foregoing.
         Intelligroup Asia's business as now conducted and as proposed to be
         conducted does not and will not infringe or conflict, in any material
         respect, with patents, trademarks, service marks, trade names,
         copyrights, trade secrets, licenses or other intellectual property or
         franchise right of any person.


                                      -20-
<PAGE>   21
         No claim has been made against Intelligroup Asia alleging the
         infringement by Intelligroup Asia of any patent, trademark, service
         mark, tradename, copyright, trade secret, license in or other
         intellectual property right or franchise right of any person.

                  (xi) Intelligroup Asia is not involved in any labor dispute
         nor is any such dispute threatened. Intelligroup Asia is not aware that
         (A) any executive, key employee or significant group of employees of
         Intelligroup Asia plans to terminate employment with it or (B) any such
         executive or key employee is subject to any noncompete, nondisclosure,
         confidentiality, employment, consulting or similar agreement that would
         be violated by the present or proposed business activities of
         Intelligroup Asia. Intelligroup Asia neither has nor expects to have
         any liability for any prohibited transaction or funding deficiency or
         any complete or partial withdrawal liability with respect to any
         pension, profit sharing or other plan, to which Intelligroup Asia makes
         or ever has made a contribution and in which any employee of the
         Intelligroup Asia is or has ever been a participant.

                  (xii) Intelligroup Asia has, and Intelligroup Asia as of each
         Closing Date will have, good and marketable title in fee simple to all
         real property and good and marketable title to all personal property
         owned or proposed to be owned by it which is material to the business
         of Intelligroup Asia, in each case free and clear of all liens,
         encumbrances and defects except such as are described in the Prospectus
         or such as would not have a material adverse effect on Intelligroup
         Asia; and any real property and buildings held under lease by
         Intelligroup Asia or proposed to be held after giving effect to the
         transactions described in the Registration Statement and the Prospectus
         are, or will be as of each Closing Date, held by it under valid,
         subsisting and enforceable leases with such exceptions as would not
         have a material adverse effect on Intelligroup Asia, in each case
         except as described in or contemplated by the Registration Statement
         and the Prospectus.

                  (xiii) Intelligroup Asia is insured by insurers of recognized
         financial responsibility against such losses and risks and in such
         amounts as are customary in the business in which it is engaged or
         proposes to engage after giving effect to the transactions described in
         the Registration Statement and the Prospectus (except with respect to
         errors and omissions insurance); and Intelligroup Asia does not have
         any reason to believe that it will not be able to renew its existing
         insurance coverage as and when such coverage expires or to obtain
         similar coverage from


                                      -21-
<PAGE>   22
         similar insurers as may be necessary to continue its business at a cost
         that would not materially and adversely affect the condition, financial
         or otherwise, or the earnings, business or operations of Intelligroup
         Asia.

                  (xiv) Intelligroup Asia maintains a system of internal
         accounting controls sufficient to provide reasonable assurances that
         (A) transactions are executed in accordance with management's general
         or specific authorization; (B) transactions are recorded as necessary
         to permit preparation of financial statements in conformity with
         generally accepted accounting principles in the United States and to
         maintain accountability for assets; (C) access to assets is permitted
         only in accordance with management's general or specific authorization;
         and (D) the recorded accountability for assets is compared with
         existing assets at reasonable intervals and appropriate action is taken
         with respect to any differences.

                  (xv) Neither Intelligroup Asia nor any of its directors,
         employees or agents has made any payment of funds of Intelligroup Asia
         or received or retained any funds in violation of any law, rule or
         regulation, which payment, receipt or retention of funds is of a
         character required to be disclosed in the Registration Statement and
         the Prospectus.

         3. Purchase by, and Sale and Delivery to, Underwriters--Closing Dates.
The Company and the Selling Shareholders agree, severally and not jointly, to
sell to the Underwriters the Firm Stock, with the number of shares to be sold by
the Company and each Selling Shareholder being the number of Shares set opposite
his, her or its name in Schedule B; and on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase the Firm Stock from the Company and the Selling
Shareholders, the number of shares of Firm Stock to be purchased by each
Underwriter being set opposite its name in Schedule A, subject to adjustment in
accordance with Section 12 hereof. The number of shares of Stock to be purchased
by each Underwriter from each Selling Shareholder hereunder shall bear the same
proportion to the total number of shares of Stock to be purchased by such
Underwriter hereunder as the number of shares of stock being sold by each
Selling Shareholder bears to the total number of shares of Stock being sold by
all Selling Shareholders, subject to adjustment by the Representatives to
eliminate fractions.

         The purchase price per share to be paid by the Underwriters to the
Company and the Selling Shareholders net of underwriting commissions will be
$_____ per share (the "Purchase Price").


                                      -22-
<PAGE>   23
         The Company and the Selling Shareholders will deliver the Firm Stock to
the Representatives for the respective accounts of the several Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company and the Selling Shareholders given at or prior to 12:00 Noon, New York
Time, on the second full business day preceding the First Closing Date (as
defined below) or, if no such direction is received, in the names of the
respective Underwriters or in such other names as Cowen may designate (solely
for the purpose of administrative convenience) and in such denominations as
Cowen may determine), against payment of the aggregate Purchase Price therefor
by wire transfer, certified or official bank check or checks in Clearing House
funds (next day funds), payable to the order of the Company and each Selling
Shareholder as more fully set forth in Schedule D, all at the offices of Willkie
Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York
10022 (except with respect to the delivery by the Selling Shareholders of Firm
Stock, which will take place in Jersey City, New Jersey). The time and date of
the delivery and closing shall be at 10:00 a.m., New York Time, on December __,
1996, in accordance with Rule 15c6-1 of the Exchange Act. The time and date of
such payment and delivery are herein referred to as the "First Closing Date."
The First Closing Date and the location of delivery of, and the form of payment
for, the Firm Stock may be varied by agreement among the Company, the Selling
Shareholders and Cowen. The First Closing Date may be postponed pursuant to the
provisions of Section 12.

         The Company and the Selling Shareholders shall make the certificates
for the Stock available to the Representatives for examination on behalf of the
Underwriters not later than 10:00 a.m., New York Time, on the business day
preceding the First Closing Date at the offices of Cowen & Company, Financial
Square, New York, New York 10005.

         It is understood that Cowen or Montgomery, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company or to the Selling Shareholders on behalf of any
Underwriter or Underwriters, for the Stock to be purchased by such Underwriter
or Underwriters. Any such payment by Cowen or Montgomery shall not relieve such
Underwriter or Underwriters from any of its or their other obligations
hereunder.

         The several Underwriters agree to make an initial public offering of
the Firm Stock at the initial public offering price as soon after the
effectiveness of the Registration Statement as in their judgment is advisable.
The Representatives shall promptly advise the Company and the Selling
Shareholders of the making of the initial public offering.

         For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, each
Selling Shareholder hereby


                                      -23-
<PAGE>   24
grants to the Underwriters an option to purchase, severally and not jointly, up
to the aggregate number of shares of Optional Stock set forth opposite each such
Selling Shareholder's name on Schedule B hereto, for an aggregate of up to
202,500 shares. The price per share to be paid for the Optional Stock shall be
the Purchase Price. The option granted hereby may be exercised as to all or any
part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the effective date of this Agreement. No Optional
Stock shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by the Underwriters to the Company and the Selling Shareholders.

         The option granted hereby may be exercised by the Underwriters by
giving written notice from Cowen to the Selling Shareholders setting forth the
number of shares of the Optional Stock to be purchased by them and the date and
time for delivery of and payment for the Optional Stock. Each date and time for
delivery of and payment for the Optional Stock (which may be the First Closing
Date, but not earlier) is herein called the "Option Closing Date" and shall in
no event be earlier than two (2) business days nor later than ten (10) business
days after written notice is given. (The Option Closing Date and the First
Closing Date are herein called the "Closing Dates" and each a "Closing Date.")
All purchases of Optional Stock from the Selling Shareholders shall be made on a
pro rata basis. Optional Stock shall be purchased for the account of each
Underwriter in the same proportion as the number of shares of Firm Stock set
forth opposite such Underwriter's name in Schedule B hereto bears to the total
number of shares of Firm Stock (subject to adjustment by the Underwriters to
eliminate odd lots). Upon exercise of the option by the Underwriters, each
Selling Shareholder agrees to sell to the Underwriters the number of shares of
Optional Stock set forth in the written notice of exercise and the Underwriters
agree, severally and not jointly and subject to the terms and conditions herein
set forth, to purchase the number of such shares determined as aforesaid.

         The Selling Shareholders will deliver the Optional Stock to the
Representatives in Jersey City, New Jersey (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Selling Shareholders
given at or prior to 12:00 Noon, New York Time, on the second full business day
preceding the Option Closing Date or, if no such direction is received, in the
names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate Purchase
Price therefor by wire transfer, or certified or official bank checks, in
Clearing House funds (next day funds), payable to the order of each Selling
Shareholder all at the offices of Willkie Farr & Gallagher, One Citicorp Center,
153 East 53rd Street, New York, New York 10022.


                                      -24-
<PAGE>   25
The Selling Shareholders shall make the certificates for the Optional Stock
available to the Underwriters for examination not later than 10:00 a.m., New
York Time, on the business day preceding the Option Closing Date at the offices
of Cowen & Company, Financial Square, New York, New York 10005. The Option
Closing Date and the location of delivery of, and the form of payment for, the
Option Stock may be varied by agreement between and among the Company, the
Selling Shareholders and Cowen. The Option Closing Date may be postponed
pursuant to the provisions of Section 12.

         4. Covenants and Agreements of the Company and the Selling
Shareholders.

         (a) The Company covenants and agrees with the several Underwriters
that:

                  (i) The Company will (A) if the Company and the
         Representatives have determined not to proceed pursuant to Rule 430A,
         use its best efforts to cause the Registration Statement to become
         effective, (B) if the Company and the Representatives have determined
         to proceed pursuant to Rule 430A, use its best efforts to comply with
         the provisions of and make all requisite filings with the Commission
         pursuant to Rule 430A and Rule 424 of the Rules and Regulations and (C)
         if the Company and the Representatives have determined to deliver
         Prospectuses pursuant to Rule 434 of the Rules and Regulations, to use
         its best efforts to comply with all the applicable provisions thereof.
         The Company will advise the Representatives promptly as to the time at
         which the Registration Statement becomes effective, will advise the
         Representatives promptly of the issuance by the Commission of any stop
         order suspending the effectiveness of the Registration Statement or of
         the institution of any proceedings for that purpose, and will use its
         best efforts to prevent the issuance of any such stop order and to
         obtain as soon as possible the lifting thereof, if issued. The Company
         will advise the Representatives promptly of the receipt of any comments
         of the Commission or any request by the Commission for any amendment of
         or supplement to the Registration Statement or the Prospectus or for
         additional information and will not at any time file any amendment to
         the Registration Statement or supplement to the Prospectus which shall
         not previously have been submitted to the Representatives a reasonable
         time prior to the proposed filing thereof or to which the
         Representatives shall reasonably object in writing or which is not in
         compliance with the Securities Act and the Rules and Regulations.

                  (ii) The Company will prepare and file with the Commission,
         promptly upon the request of the Representatives, any amendments or
         supplements to the


                                      -25-
<PAGE>   26
         Registration Statement or the Prospectus which in the opinion of the
         Representatives may be necessary to enable the several Underwriters to
         continue the distribution of the Stock and will use its best efforts to
         cause the same to become effective as promptly as possible.

                  (iii) If at any time after the effective date of the
         Registration Statement when a prospectus relating to the Stock is
         required to be delivered under the Securities Act any event relating to
         or affecting the Company or any of its subsidiaries occurs as a result
         of which the Prospectus or any other prospectus as then in effect would
         include an untrue statement of a material fact, or omit to state any
         material fact necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading, or if it is
         necessary at any time to amend the Prospectus to comply with the
         Securities Act, the Company will promptly notify the Representatives
         thereof and will prepare an amended or supplemented prospectus which
         will correct such statement or omission; and in case any Underwriter is
         required to deliver a prospectus relating to the Stock nine (9) months
         or more after the effective date of the Registration Statement, the
         Company upon the request of the Representatives and at the expense of
         such Underwriter will prepare promptly such prospectus or prospectuses
         as may be necessary to permit compliance with the requirements of
         Section 10(a)(3) of the Securities Act.

                  (iv) The Company will deliver to the Representatives, at or
         before the Closing Date, signed copies of the Registration Statement,
         as originally filed with the Commission, and all amendments thereto
         including all financial statements and exhibits thereto, and will
         deliver to the Representatives such number of copies of the
         Registration Statement, including such financial statements but without
         exhibits, and all amendments thereto, as the Representatives may
         reasonably request. The Company will deliver or mail to or upon the
         order of the Representatives, from time to time until the effective
         date of the Registration Statement, as many copies of the Preeffective
         Prospectus as the Representatives may reasonably request. The Company
         will deliver or mail to or upon the order of the Representatives on the
         date of the initial public offering, and thereafter from time to time
         during the period when delivery of a prospectus relating to the Stock
         is required under the Securities Act, as many copies of the Prospectus,
         in final form or as thereafter amended or supplemented as the
         Representatives may reasonably request; provided, however, that the
         expense of the preparation and delivery of any prospectus


                                      -26-
<PAGE>   27

                  required for use nine (9) months or more after the effective
                  date of the Registration Statement shall be borne by the
                  Underwriters required to deliver such prospectus.

                                    (v) The Company will make generally
                  available to its shareholders as soon as practicable, but not
                  later than fifteen (15) months after the effective date of the
                  Registration Statement, an earnings statement which will be in
                  reasonable detail (but which need not be audited) and which
                  will comply with Section 11(a) of the Securities Act, covering
                  a period of at least twelve (12) months beginning after the
                  "effective date" (as defined in Rule 158 under the Securities
                  Act) of the Registration Statement.

                                    (vi) The Company will cooperate with the
                  Representatives to enable the Stock to be registered or
                  qualified for offering and sale by the Underwriters and by
                  dealers under the securities laws of such jurisdictions as the
                  Representatives may designate and at the request of the
                  Representatives will make such applications and furnish such
                  consents to service of process or other documents as may be
                  required of it as the issuer of the Stock for that purpose;
                  provided, however, that the Company shall not be required to
                  qualify to do business or to file a general consent (other
                  than that arising out of the offering or sale of the Stock) to
                  service of process in any such jurisdiction where it is not
                  now so subject. The Company will, from time to time, prepare
                  and file such statements and reports as are or may be required
                  of it as the issuer of the Stock to continue such
                  qualifications in effect for so long a period as the
                  Representatives may reasonably request for the distribution of
                  the Stock. The Company will advise the Representatives
                  promptly after the Company becomes aware of the suspension of
                  the qualifications or registration of (or any such exception
                  relating to) the Common Stock of the Company for offering,
                  sale or trading in any jurisdiction or of any initiation or
                  threat of any proceeding for any such purpose, and in the
                  event of the issuance of any orders suspending such
                  qualifications, registration or exception, the Company will,
                  with the cooperation of the Representatives use its best
                  efforts to obtain the withdrawal thereof.

                                    (vii) The Company will furnish to its
                  shareholders annual reports containing financial statements
                  certified by independent public accountants and with quarterly
                  summary financial information in reasonable detail which may
                  be unaudited. During the period of five (5) years from the
                  date hereof, the Company will deliver to the Representatives
                  and, upon 


                                      -27-
<PAGE>   28
                  request, to each of the other Underwriters, as soon as they
                  are available, copies of each annual report of the Company and
                  each other report furnished by the Company to its shareholders
                  and will deliver to the Representatives, (A) as soon as they
                  are available, copies of any other reports (financial or
                  other) which the Company shall publish or otherwise make
                  available to any of its shareholders as such, (B) as soon as
                  they are available, copies of any reports and financial
                  statements furnished to or filed with the Commission or any
                  national securities exchange and (C) from time to time such
                  other information concerning the Company as you may reasonably
                  request. So long as the Company has active subsidiaries, such
                  financial statements will be on a consolidated basis to the
                  extent the accounts of the Company and its subsidiaries are
                  consolidated in reports furnished to its shareholders
                  generally. Separate financial statements shall be furnished
                  for all subsidiaries whose accounts are not consolidated but
                  which at the time are significant subsidiaries as defined in
                  the Rules and Regulations.

                                    (viii) The Company will file with the NASD
                  all documents and notices required by the NASD of companies
                  that have securities designated on the Nasdaq National Market
                  and will use its best efforts to list, subject to official
                  notice of effectiveness, on the Nasdaq National Market, the
                  Stock to be issued and sold by the Company.

                                    (ix) The Company will maintain a transfer
                  agent and registrar for its Common Stock.

                                    (x) Prior to filing its quarterly statements
                  on Form 10-Q or 10-QSB, as the case may be, the Company will
                  have its independent auditors perform a limited quarterly
                  review of its quarterly numbers, provided, however, that such
                  review for two full years commencing the quarter immediately
                  following consummation of the Offering shall be in accordance
                  with standards and procedures as set forth in the Statement on
                  Auditing Standards No. 71.

                                    (xi) The Company will not offer, sell,
                  assign, transfer, encumber, contract to sell, grant an option
                  to purchase or otherwise dispose of, other than by operation
                  of law, gifts, pledges or dispositions by estate
                  representatives, any shares of Common Stock or securities
                  convertible into or exercisable or exchangeable for Common
                  Stock (including, without limitation, Common Stock of the
                  Company which may be deemed to be beneficially owned by the
                  undersigned in accordance with the Rules and Regulations)
                  before March 23, 1997, other than the Company's sale of Common
                  Stock


                                      -28-
<PAGE>   29
                  hereunder and the Company's issuance of Common Stock upon the
                  exercise of warrants and stock options which are presently
                  outstanding and described in the Prospectus.

                                    (xii) The Company will apply the net
                  proceeds from the sale of the Stock as set forth in the
                  description under "Use of Proceeds" in the Prospectus, which
                  description complies in all respects with the requirements of
                  Item 504 of Regulation S-B.

                                    (xiii) The Company will supply you with
                  copies of all correspondence to and from, and all documents
                  issued to and by, the Commission in connection with the
                  registration of the Stock under the Securities Act.

                                    (xiv) Prior to each Closing Date the Company
                  will furnish to you, as soon as they have been prepared,
                  copies of any unaudited interim consolidated financial
                  statements of the Company and its subsidiaries, as applicable,
                  for any periods subsequent to the periods covered by the
                  financial statements appearing in the Registration Statement
                  and the Prospectus.

                                    (xv) Prior to each Closing Date the Company
                  will issue no press release or other communications directly
                  or indirectly and hold no press conference with respect to the
                  Company or any of its subsidiaries, the financial condition,
                  results of operation, business, prospects, assets or
                  liabilities of any of them, or the offering of the Stock,
                  without your prior written consent. For a period of twelve
                  (12) months following the later Closing Date, the Company will
                  use its best efforts to provide to you copies of each press
                  release or other public communications with respect to the
                  financial condition, results of operations, business,
                  prospects, assets or liabilities of the Company concurrently
                  with, or as soon as may reasonably be practicable after the
                  issuance thereof.

                                    (xvi) During the period of five (5) years
                  hereafter, the Company will furnish to the Representatives,
                  and upon request of the Representatives, to each of the
                  Underwriters: (A) as soon as practicable after the end of each
                  fiscal year, copies of the Annual Report of the Company
                  containing the balance sheet of the Company as of the close of
                  such fiscal year and statements of income, stockholder's
                  equity and cash flows for the year then ended and the opinion
                  thereon of the Company's independent public accountants; (B)
                  as soon as practicable after the filing thereof, copies of
                  each proxy statement, Annual Report on Form 10-K or Form
                  10-KSB, as the case may be,


                                      -29-
<PAGE>   30
                  Quarterly Report on Form 10-Q or Form 10-QSB, as the case 
                  may be,Report on Form 8-K or other report filed by the 
                  Company with the Commission, or the NASD or any securities 
                  exchange; and (C) as soon as available, copies of any report 
                  or communication of the Company mailed generally to holders of
                  its Common Stock. The Company will deliver to the
                  Representatives similar reports with respect to significant
                  subsidiaries, as that term is defined in the Rules and
                  Regulations, which are not consolidated in the Company's
                  financial statements.

                                    (xvii) The Company will not take, directly
                  or indirectly, any action designed to cause or result in, or
                  that has constituted or might reasonably be expected to
                  constitute, the stabilization or manipulation of the price of
                  any securities of the Company.

                  (b) Each Selling Shareholder, severally and not jointly,
covenants and agrees with the several Underwriters that:

                                    (i) No offering, sale, short sale or other
                  disposition of any shares of Common Stock or other capital
                  stock of the Company or other securities convertible,
                  exchangeable or exercisable for shares of Common Stock or
                  derivative of shares of Common Stock owned by such Selling
                  Shareholder or request by such Selling Shareholder for the
                  registration for the offer or sale of any of the foregoing (or
                  as to which such Selling Shareholder has the right to direct
                  the disposition) will be made for a period of 180 days after
                  the date of this Agreement, directly or indirectly, by such
                  Selling Shareholder otherwise than hereunder, as set forth in
                  Section 8(l) herein or with the prior written consent of
                  Cowen.

                                    (ii) In order to document the Underwriters'
                  compliance with the reporting and withholding provisions of
                  the Tax Equity and Fiscal Responsibility Act of 1982 and the
                  Interest and Dividend Tax Compliance Act of 1983 with respect
                  to the transactions herein contemplated, each Selling
                  Shareholder agrees to the extent required by applicable law or
                  regulation to deliver to you prior to or at the First Closing
                  Date a properly completed and executed United States Treasury
                  Department Form W-9 (or other applicable form or statement
                  specified by Treasury Department regulations in lieu thereof).

                                    (iii) Such Selling Shareholder will not
                  take, directly or indirectly, any action designed to cause or
                  result in, or that has constituted or might reasonably be
                  expected to constitute, the stabilization or manipulation of
                  the price of any securities of the Company.


                                      -30-
<PAGE>   31
                  5. Payment of Expenses. (a) The Company will pay (directly or
by reimbursement) all costs, fees and expenses incurred in connection with
expenses incident to the performance of the obligations of the Company and of
the Selling Shareholders under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to (i) all expenses
and taxes incident to the issuance and delivery of the Stock to the
Representatives; (ii) all expenses incident to the registration of the Stock
under the Securities Act; (iii) the costs of preparing stock certificates
(including printing and engraving costs); (iv) all fees and expenses of the
registrar and transfer agent of the Stock; (v) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Stock to the
Underwriters; (vi) fees and expenses of the Company's counsel and the Company's
independent accountants; (vii) all costs and expenses incurred in connection
with the preparation, printing, filing, shipping and distribution of the
Registration Statement, each Preeffective Prospectus and the Prospectus
(including all exhibits and financial statements) and all amendments and
supplements provided for herein, the Selling Shareholders' Powers of Attorney
and Custody Agreement, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected Dealers' Agreement,
the Underwriters' Questionnaire and the Blue Sky memoranda and this Agreement;
(viii) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with exemptions from the qualifying or
registering (or obtaining qualification or registration of) all or any part of
the Stock for offer and sale and determination of its eligibility for investment
under the Blue Sky or other securities laws of such jurisdictions as the
Representatives may designate; (ix) all fees and expenses paid or incurred in
connection with filings made with the NASD; and (x) all other costs and expenses
incident to the performance of their obligations hereunder which are not
otherwise specifically provided for in this Section.

                  (b) Except as otherwise agreed with the Company with respect
to the Summit Selling Shareholders (as defined herein), each Selling Shareholder
will pay (directly or by reimbursement) all fees and expenses incident to the
performance of such Selling Shareholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including but not limited to
any fees and expenses of counsel for such Selling Shareholder, such Selling
Shareholder's pro rata share of fees and expenses of the Attorneys-in-fact and
the Custodian and all expenses and taxes incident to the sale and delivery of
the Stock to be sold by such Selling Shareholder to the Underwriters hereunder.

                  (c) In addition to their other obligations under Section 6(a)
hereof, the Company and each Principal Shareholder, jointly and severally, agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon (i) any
statement or omission or any alleged statement or omission or (ii) any breach or


                                      -31-
<PAGE>   32
inaccuracy in their representations and warranties, that they will reimburse
each Underwriter on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
and each Principal Shareholder's obligation to reimburse each Underwriter for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company and each Principal Shareholder, as the
case may be, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Citibank, N.A., New York, New
York (the "Prime Rate"). Any such interim reimbursement payments which are not
made to an Underwriter in a timely manner as provided below shall bear interest
at the Prime Rate from the due date for such reimbursement. This expense
reimbursement agreement will be in addition to any other liability which the
Company or any Principal Shareholder may otherwise have. The request for
reimbursement will be sent to the Company with a copy to each Principal
Shareholder. In the event that the Company fails to make such reimbursement
payment within thirty (30) days of the reimbursement request, the
Representatives shall notify the Principal Shareholders of their obligation to
make such reimbursement payments within fifteen (15) days; provided, however,
that each Principal Shareholder shall be required to advance at such time only
its pro rata portion of the reimbursement payment. To the extent that any
Principal Shareholder fails to pay its pro rata portion in timely response to
the Underwriters' request, the other Principal Shareholders shall be jointly and
severally liable for such reimbursement payment and each shall render such
payment to the Representatives within fifteen (15) days of written demand
therefor by the Representatives.

                  (d) In addition to its other obligations under Section 6(b)
hereof, each Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in Section 6(b) hereof which relates to information
furnished to the Company pursuant to Section 6(c) hereof, it will reimburse the
Company (and, to the extent applicable, each officer, director or controlling
person of the Company or any Selling Shareholder) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director or controlling person of the
Company or any Selling Shareholder) for such expenses and the possibility that
such 


                                      -32-
<PAGE>   33
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director or controlling person of the Company or any Selling
Shareholder) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Company within thirty
(30) days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.

                  (e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraph (c)
and/or (d) of this Section 5, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant
to the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the event
the party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Such an arbitration would be limited to the
operation of the interim reimbursement provisions contained in paragraph (c)
and/or (d) of this Section 5 and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses which is created by the
provisions of Section 6.

                  6. Indemnification and Contribution. (a) Each of the Company
and each Principal Shareholder, who comprise three of the Selling Shareholders,
jointly and severally, agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the meaning of the
Securities Act and the respective officers, directors, partners, employees,
representatives and agents of each of such Underwriter (collectively, the
"Underwriter Indemnified Parties" and, each, an "Underwriter Indemnified
Party"), against any losses, claims, damages, liabilities or expenses (including
the reasonable cost of investigating and defending against any claims therefor
and counsel fees incurred in connection therewith), joint or several, which
arise out of or are based in whole or in part upon the Securities Act, the
Exchange Act or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any
Preeffective Prospectus, the Registration Statement or the Prospectus (or any
Preeffective Prospectus, the Registration Statement or the Prospectus as from
time to time amended or supplemented) includes or allegedly includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements 


                                      -33-
<PAGE>   34
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use in the
preparation thereof. Each of the Company and each Principal Shareholder will be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce any such liability, but if
the Company or any such Principal Shareholder elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event the Company or
any such Principal Shareholder elects to assume the defense of any such suit and
retain such counsel, any Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company or such Principal
Shareholder shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include any such Underwriter Indemnified Parties,
and the Company or such Principal Shareholder and such Underwriter Indemnified
Parties at law or in equity have been advised by counsel to the Underwriters and
have reasonably concluded based on such advice that one or more legal defenses
may be available to it or them which may not be available to the Company or such
Principal Shareholder, in which case the Company or such Selling Shareholder
shall not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel. This indemnity
agreement is not exclusive and will be in addition to any liability which each
of the Company and each Principal Shareholder might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.

                  (b) Each of Summit Investors III, L.P. and Summit Ventures IV,
L.P. (the "Summit Selling Shareholders"), who comprise two of the Selling
Shareholders, severally and not jointly, agrees to indemnify and hold harmless
each Underwriter Indemnified Party against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and counsel fees incurred in connection
therewith), joint or several, which arise out of or are based in whole or in
part upon the Securities Act, the Exchange Act or any other federal, state,
local or foreign statute or regulation, or at common law, on the ground or
alleged ground that any Preeffective Prospectus, the Registration Statement or
the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus as from time to time amended or supplemented) includes or
allegedly includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading in each case only to the extent that the untrue statement or
alleged untrue statement or the omission or the alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Summit Selling Shareholder


                                      -34-
<PAGE>   35
specifically for inclusion therein; provided, that, with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
Preeffective Prospectus, the indemnity agreement contained in this subsection
(b) shall not inure to the benefit of any Underwriter Indemnified Party from
whom the person asserting any such losses, claims, damages or liabilities
purchased the shares of Stock concerned to the extent that any such loss, claim,
damage or liability of such Underwriter Indemnified Party results from the fact
that a copy of the Prospectus was not sent or given to such person at or prior
to the written confirmation of the sale of such shares of Stock to such person
as required by the Securities Act and if the untrue statement or omission
concerned has been corrected in the Prospectus, unless such failure resulted
from non-compliance by the Company with Section 4(a)(ii). Such Summit Selling
Shareholder will be entitled to participate at its own expense in the defense
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but if such Summit Selling Shareholder elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the event
such Summit Selling Shareholder elects to assume the defense of any such suit
and retain such counsel, any Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Summit Selling Shareholder shall
have specifically authorized the retaining of such counsel or (ii) the parties
to such suit include any such Underwriter Indemnified Parties, and such Summit
Selling Shareholder and such Underwriter Indemnified Parties at law or in equity
have been advised by counsel to the Underwriters and have reasonably concluded
based on such advice that one or more legal defenses may be available to it or
them which may not be available to such Summit Selling Shareholder, in which
case such Summit Selling Shareholder shall not be entitled to assume the defense
of such suit notwithstanding its obligation to bear the fees and expenses of
such counsel. The liability of a Summit Selling Shareholder under this Agreement
shall not exceed the net proceeds (before deducting offering expenses) received
by such Summit Selling Shareholder from the sale of Stock in the Offering. This
indemnity agreement is not exclusive and will be in addition to any liability
which each Summit Selling Shareholder might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in equity to
each Underwriter Indemnified Party.

                  (c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively, the "Company
Indemnified Parties") and each Selling Shareholder and each person, if any, who
controls a Selling Shareholder within the meaning of the Securities Act
(collectively, the "Shareholder Indemnified Parties"), against any losses,
claims, damages, liabilities or expenses (including, unless the Underwriter or
Underwriters elect to assume the defense, the


                                      -35-
<PAGE>   36
reasonable cost of investigating and defending against any claims therefor and
counsel fees incurred in connection therewith), joint or several, which arise
out of or are based in whole or in part upon the Securities Act, the Exchange
Act or any other federal, state, local or foreign statute or regulation, or at
common law, on the ground or alleged ground that any Preeffective Prospectus,
the Registration Statement or the Prospectus (or any Preeffective Prospectus,
the Registration Statement or the Prospectus, as from time to time amended and
supplemented) includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, but only insofar as any such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company through the Representatives by or on behalf of any Underwriter,
specifically for use in the preparation thereof; provided, however, that in no
case is such Underwriter to be liable with respect to any claims made against
any Company Indemnified Party or Shareholder Indemnified Party against whom the
action is brought unless such Company Indemnified Party or Shareholder
Indemnified Party shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
Indemnified Party or Shareholder Indemnified Party, but failure to notify such
Underwriter of such claim shall not relieve it from any liability which it may
have to any Company Indemnified Party or Shareholder Indemnified Party otherwise
than on account of its indemnity agreement contained in this paragraph. Such
Underwriter shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Underwriter elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event that any
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company Indemnified Parties or Shareholder Indemnified Parties and
any other Underwriter or Underwriters or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, respectively. The Underwriter against whom
indemnity may be sought shall not be liable to indemnify any person for any
settlement of any such claim effected without such Underwriter's consent. This
indemnity agreement is not exclusive and will be in addition to any liability
which such Underwriter might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to any Company
Indemnified Party or Shareholder Indemnified Party.

                  (d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified


                                      -36-
<PAGE>   37
party as a result of such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other from the offering of the Stock. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Shareholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, defending, settling or
compromising any such claim. Notwithstanding the provisions of this subsection
(d), (x) no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the shares of the Stock
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and (y) no Summit Selling Shareholder shall be required to
contribute any amount in excess of the net proceeds (before deducting offering
expenses) received by such Summit Selling Shareholder from the sale of Stock in
the Offering. The Underwriters' obligations to contribute are several in
proportion to their respective underwriting obligations and not joint. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall 

                                      -37-
<PAGE>   38
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

                  7. Survival of Indemnities, Representations, Warranties, etc.
The respective indemnities, covenants, agreements, representations, warranties
and other statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Shareholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock.

                  8. Conditions of Underwriters' Obligations. The respective
obligations of the several Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof, at
and as of each Closing Date, of the representations and warranties made herein
by the Company and the Selling Shareholders, to compliance at and as of each
Closing Date by the Company and the Selling Shareholders with their covenants
and agreements herein contained and other provisions hereof to be satisfied at
or prior to the Closing Dates, and to the following additional conditions:

                           (a) The Registration Statement shall have become
         effective and no stop order suspending the effectiveness thereof shall
         have been issued and no proceedings for that purpose shall have been
         initiated or, to the knowledge of the Company or the Representatives,
         shall be threatened by the Commission, and any request for additional
         information on the part of the Commission (to be included in the
         Registration Statement or the Prospectus or otherwise) shall have been
         complied with to the reasonable satisfaction of the Representatives.
         Any filings of the Prospectus, or any supplement thereto, required
         pursuant to Rule 424(b) or Rule 434 of the Rules and Regulations, shall
         have been made in the manner and within the time period required by
         Rule 424(b) and Rule 434 of the Rules and Regulations, as the case may
         be.

                           (b) The Representatives shall have been satisfied
         that there shall not have occurred any change, on a consolidated basis,
         prior to each Closing Date in the condition (financial or otherwise),
         properties, business, management, prospects, net worth or results of
         operations of the Company and its subsidiaries considered as a whole,
         or any change in the capital stock, short-term or long-term debt of the
         Company and its subsidiaries considered as a whole, such that (i) the
         Registration Statement or the Prospectus, or any amendment or
         supplement thereto, contains an untrue statement of fact which, in the
         opinion of the Representatives, is material, or omits to state a fact
         which, in the opinion of the Representatives, is required to be stated
         therein or is necessary to make the statements therein not misleading,
         or 


                                      -38-
<PAGE>   39
         (ii) it is unpracticable in the reasonable judgment of the
         Representatives to proceed with the public offering or purchase the
         Stock as contemplated hereby.

                           (c) The Representatives shall be satisfied that no
         legal or governmental action, suit or proceeding affecting the Company
         which is material and adverse to the Company or which affects or may
         affect the Company's or the Selling Shareholders' ability to perform
         their respective obligations under this Agreement shall have been
         instituted or threatened and there shall have occurred no material
         adverse development in any such existing action, suit or proceeding.

                           (d) At the time of execution of this Agreement, the
         Representatives shall have received from Arthur Andersen LLP,
         independent certified public accountants, a letter, dated the date
         hereof, in form and substance satisfactory to the Underwriters.

                           (e) The Representatives shall have received from
         Arthur Andersen LLP, independent certified public accountants, a
         letter, dated each Closing Date, to the effect that such accountants
         reaffirm, as of each Closing Date, and as though made on each Closing
         Date, the statements made in the letter furnished by such accountants
         pursuant to paragraph (d) of this Section 8.

                           (f) The Representatives shall have received from
         Buchanan Ingersoll, counsel for the Company and the Selling
         Shareholders, an opinion, dated each Closing Date, addressed to the
         Underwriters to the effect that:

                           (i) The Company has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the State of New Jersey.

                           (ii) The Company has corporate power and authority to
                  own, lease and operate its properties and to conduct its
                  business as described in the Registration Statement and to
                  enter into and perform its obligations under the Underwriting
                  Agreement.

                           (iii) To the best of such counsel's knowledge, the
                  Company is duly qualified as a foreign corporation to transact
                  business and is in good standing in each jurisdiction in which
                  such qualification is required and in which the failure to so
                  qualify would, individually or in the aggregate, have a
                  material adverse effect on the condition (financial or
                  otherwise), properties, business, management, prospects, net
                  worth or results of the Company.

                           (iv) Each subsidiary of the Company (excluding
                  Intelligroup Europe Limited and Intelligroup New


                                      -39-
<PAGE>   40
         Zealand Limited, as to which no opinion is being rendered) has been
         duly incorporated and is validly existing as a corporation in good
         standing under the laws of the jurisdiction of its incorporation, has
         corporate power and authority to own, lease and operate its properties
         and to conduct its business as described in the Registration Statement
         and, to the best of such counsel's knowledge, is duly qualified as a
         foreign corporation to transact business and is in good standing in
         each jurisdiction in which such qualification is required and in which
         the failure to so qualify would, individually or in the aggregate, have
         a material adverse effect on the condition (financial or otherwise),
         properties, business, management, prospects, net worth or results of
         the Company and its subsidiaries taken as a whole; and all of the
         issued and outstanding capital stock of each such subsidiary has been
         duly authorized and validly issued, is fully paid and non-assessable
         and, to the best of such counsel's knowledge, is owned by the Company
         free and clear of any security interest, mortgage, pledge, lien,
         encumbrance, claim or equity, and no options, warrants or other rights
         to purchase, agreements or other obligations to issue or other rights
         to convert any obligations into shares of capital or ownership interest
         in any such subsidiary are outstanding.

                  (v) The authorized, issued and outstanding capital stock of
         the Company is as set forth in the Prospectus under "Capitalization";
         and all of the outstanding shares of the Company's capital stock,
         including the shares of Stock to be sold by the Company and the Selling
         Shareholders pursuant to the Underwriting Agreement, have been duly
         authorized and validly issued and are fully paid and non-assessable.

                  (vi) The issuance and sale of the Stock by the Company and the
         sale of the Stock by the Selling Shareholders are not subject to
         preemptive rights arising by operation of law or, to the best of such
         counsel's knowledge, otherwise.

                  (vii) The Underwriting Agreement has been duly authorized,
         executed and delivered by the Company and each Selling Shareholder.

                  (viii) The Power of Attorney and Custody Agreement has been
         duly authorized, executed and delivered by or on behalf of each Selling
         Shareholder.

                  (ix) Each Attorney-in-Fact has been duly authorized by each
         Selling Shareholder to deliver the Stock to be so sold by such Selling
         Shareholder on 

                                      -40-
<PAGE>   41
         behalf of such Selling Shareholder in accordance with the terms of this
         Agreement.

                  (x) Immediately prior to the applicable Closing Date, to the
         best knowledge of such counsel after due inquiry of corporate books and
         records, review of certificates representing the Shares to be sold by
         each Selling Shareholder and review of all representations and
         warranties by and certificates from such Selling Shareholder, each
         Selling Shareholder had good and valid title to the Stock to be sold by
         such Selling Shareholder hereunder on such date, free and clear of all
         liens, encumbrances, equities and claims.

                  (xi) Each Selling Shareholder has full legal right, power and
         authority, and has obtained any approval required by law (other than as
         required by State securities and Blue Sky laws as to which such counsel
         need express no opinion), to sell, assign, transfer and deliver the
         Stock to be sold by such Selling Shareholder.

                  (xii) The Underwriters (assuming that they are bona fide
         purchasers within the meaning of the Uniform Commercial Code) have
         acquired good and marketable title to the shares of Stock being sold by
         the Selling Shareholders on each Closing Date, free and clear of all
         liens, encumbrances, equities and claims.

                  (xiii) Except as described in the Prospectus, to such
         counsel's knowledge, there are no outstanding securities of the Company
         convertible or exchangeable into or evidencing the right to purchase or
         subscribe for any shares of capital stock of the Company and there are
         no outstanding or authorized options, warrants or rights of any
         character obligating the Company to issue any shares of its capital
         stock or any securities convertible or exchangeable into or evidencing
         the right to purchase or subscribe for any shares of such stock; and
         except as described in the Prospectus, to such counsel's knowledge, no
         holder of any securities of the Company or any other person has the
         right, contractual or otherwise, which has not been satisfied or
         effectively waived, to cause the Company to sell or otherwise issue to
         them, or to permit them to underwrite the sale of, any of the shares of
         Stock or the right to have any shares of Stock or other securities of
         the Company included in the Registration Statement or the right, as a
         result of the filing of the Registration Statement, to require
         registration under the Securities Act of any shares of Stock or other
         securities of the Company.


                                      -41-
<PAGE>   42
                           (xiv) The Registration Statement is effective under
                  the Securities Act and, to the best of such counsel's
                  knowledge, no stop order proceedings with respect thereto have
                  been instituted or are pending or threatened under the
                  Securities Act and all filings required by Rule 424(b) of the
                  Rules and Regulations have been timely made.

                           (xv) At the time the Registration Statement became
                  effective and on each Closing Date, the Registration
                  Statement, the Preeffective Prospectus, the Prospectus and
                  each amendment or supplement thereto (other than the financial
                  statements and supporting schedules including therein, as to
                  which no opinion need be rendered) complied as to form in all
                  material respects with the requirements of the Securities Act
                  and the Rules and Regulations.

                           (xvi) The shares of Stock conform to the description
                  thereof contained in the Prospectus, and the form of
                  certificate used to evidence the shares of Stock is in due and
                  proper form and complies with all applicable statutory
                  requirements.

                           (xvii) Such counsel does not know of any contracts or
                  documents required to be filed as exhibits to the Registration
                  Statement or described in the Registration Statement or the
                  Prospectus which are not so filed or described as required,
                  and such contracts and documents as are summarized in the
                  Registration Statement or the Prospectus are fairly summarized
                  in all material respects.

                           (xviii) There is no litigation or governmental or
                  other action, suit, proceeding or investigation before any
                  court or before or by any public, regulatory or governmental
                  agency or body including, but not limited to, investigations
                  and proceedings against the Company with respect to INS
                  issues, known to such counsel to be pending or threatened
                  against, or involving the properties or business of, the
                  Company or any of its subsidiaries which is of a character
                  required to be disclosed in the Registration Statement and the
                  Prospectus which has not been properly disclosed therein.

                           (xix) No authorization, approval, consent or order of
                  any court or governmental authority or agency is required in
                  connection with the sale of the Stock to the Underwriters,
                  except such as may be required under the Securities Act or the
                  Rules and Regulations or State securities law; to the best of
                  such counsel's knowledge, the execution, delivery and
                  performance of the Underwriting Agreement and the consummation
                  of the 


                                      -42-
<PAGE>   43
                  transactions contemplated herein and compliance by the Company
                  with its obligations hereunder will not conflict with or
                  constitute a breach of, or default (or an event which with
                  notice or lapse of time, or both, would constitute a default)
                  under, or result in the creation or imposition of any lien,
                  charge or encumbrance upon any property or assets of the
                  Company or any of its subsidiaries pursuant to, any indenture,
                  mortgage, deed of trust, note agreement, or other agreement or
                  instrument to which the Company or any of its subsidiaries is
                  a party or by which it or any of them may be bound, or to
                  which any of the properties or assets of the Company or any of
                  its subsidiaries is subject, nor will such action result in
                  any violation of the provisions of the Certificate of
                  Incorporation or By-laws of the Company, or any applicable
                  law, administrative regulation or any order, rule or
                  regulation known to such counsel of any court, regulatory
                  body, administrative agency or other governmental body having
                  jurisdiction over the Company or any of its subsidiaries.

                           (xx) The statements under the captions "Description
                  of Capital Stock," insofar as they purport to constitute a
                  summary of the terms of the share capital, "Certain
                  Transactions," and "Shares Eligible for Future Sale," in the
                  Prospectus, insofar as they constitute a summary of relevant
                  matters of law, the Company's Certificate of Incorporation or
                  documents referred to therein, and "Principal and Selling
                  Shareholders" are in all material respects accurate summaries
                  and fairly and correctly present the information called for
                  with respect to such documents and matters; the descriptions
                  of certain provisions of the Company's stock option plans
                  contained under the caption "Management" are materially
                  accurate; and the statements made with respect to Rule 144
                  under the Act set forth in "Shares Eligible for Future Sale"
                  are fair and correct statements about the provisions described
                  without purporting to summarize or describe all material
                  aspects of those rules and regulations.

                           (xxi) The Company has options to purchase shares of
                  the Company's capital stock as set forth in the Prospectus;
                  and all of such granted options have been duly and validly
                  authorized by the Company and conform to the descriptions
                  thereof contained in the Prospectus.

                           (xxii) To the best of such counsel's knowledge, and
                  except as disclosed in the Registration Statement and
                  Prospectus, nothing has come to such counsel's attention which
                  indicates that the Company is not conducting its business in
                  compliance with all laws, 


                                      -43-
<PAGE>   44
                  rules and regulations of the United States of America and of
                  the State of New Jersey except for such violations that would
                  not, individually or in the aggregate, have a material adverse
                  effect on the Company's condition (financial or otherwise),
                  properties, business, management, prospects, net worth or
                  results.

                           (xxiii) The Company is not, and will not become, as a
                  result of the consummation of the transactions contemplated by
                  the Underwriting Agreement, and application of the net
                  proceeds therefrom as described in the Prospectus, required to
                  register as an investment company under the Investment Company
                  Act.

                           (xxiv) The Company is not and will not become, as a
                  result of the consummation of the transactions contemplated by
                  the Underwriting Agreement, and the application of the net
                  proceeds therefrom as described in the Prospectus, (a) a
                  controlled foreign corporation, as such term is defined in the
                  Code, (b) a passive foreign investment company within the
                  meaning of Section 1296(a) of the Code or (c) a foreign
                  personal holding corporation, as such term is defined in the
                  Code.

                           (xxv) The shares of Stock to be sold under the
                  Underwriting Agreement to the Underwriters are duly authorized
                  for quotation and trading on the Nasdaq National Market,
                  subject to official notice of effectiveness.

                           (xxvi) To the best of such counsel's knowledge, the
                  Company is not subject to any current claim and has not
                  received any notice of infringement or other violation of any
                  copyright, copyright application, trade secret, trademark,
                  service mark, trademark registration or other proprietary
                  information or materials (collectively, "Intellectual
                  Property") of others; to the best of such counsel's knowledge
                  and except as set forth in the Prospectus, (A) there are no
                  legal or governmental proceedings pending relating to
                  Intellectual Property owned or used by the Company or any of
                  its subsidiaries, other than review of pending copyright
                  applications and trademark or service mark registrations, and
                  (B) no such proceedings, including without limitation
                  interference proceedings, are currently threatened or
                  contemplated by governmental authorities or others; such
                  counsel has no knowledge of any facts which would preclude the
                  Company from having clear title to the Company's Intellectual
                  Property. Except as otherwise described in the Prospectus,
                  such counsel has no knowledge of any facts that the Company
                  lacks any rights or licenses to use all Intellectual


                                      -44-
<PAGE>   45
                  Property materially necessary to the conduct of its business
                  as now being or proposed to be conducted by the Company as
                  described in the Prospectus. To such counsel's knowledge, the
                  Company has not received any notice of conflict with rights or
                  claims of others with respect to any Intellectual Property
                  owned or currently being used by, or intended to be used by
                  it, except as described in the Prospectus.

                           (xxvii) The Indemnification Agreement, the Escrow
                  Agreement and the Pledge Agreement have been duly executed and
                  delivered by each of the Principal Shareholders and each
                  constitutes the legal, valid and binding obligation of such
                  Principal Shareholder, enforceable against such Principal
                  Shareholder in accordance with its terms and, in the case of
                  the Indemnification Agreement, except as such enforceability
                  may be limited by applicable bankruptcy, insolvency,
                  reorganization, moratorium or other laws of general
                  application relating to or affecting the enforcement of
                  creditors' rights and the application of equitable principles
                  relating to the availability of remedies.

                           (xxviii) To the best of such counsel's knowledge, the
                  execution, delivery and performance of the Indemnification
                  Agreement, the Escrow Agreement and the Pledge Agreement and
                  the compliance by the Principal Shareholders with their
                  obligations thereunder will not conflict with, or constitute a
                  breach of, or default (or an event which with notice or lapse
                  of time, or both, would constitute a default) by any Principal
                  Shareholder under any indenture, mortgage, deed of trust,
                  trust (constructive or other), loan agreement, lease,
                  franchise, license or other agreement or instrument to which
                  any Principal Shareholder or any of his properties is bound,
                  or any judgment of any court or governmental agency or body
                  applicable to such Principal Shareholder or any of his
                  properties, or to any statute, decree, order, rule or
                  regulation of any court or governmental agency or body
                  applicable to such Principal Shareholder or any of his
                  properties.

                           (xxix) The provisions of the Escrow Agreement and the
                  Pledge Agreement are effective to create in favor of the
                  Escrow Agent for the benefit of the Company a valid and
                  enforceable security interest in the cash and Pledged Shares
                  described therein. Upon the delivery to the Escrow Agent of
                  certificates evidencing (a) such Pledged Shares and duly
                  executed transfer instruments with respect thereto and (b) the
                  cash provided for in the Escrow Agreement, the Pledge
                  Agreement and the Escrow Agreement, respectively, created in
                  favor of the Escrow Agent for the benefit of

                                      -45-
<PAGE>   46
                  the Company a perfected security interest in such Pledged
                  Shares and cash which rank prior to any security interest
                  which may be created under the Uniform Commercial Code of the
                  State of New Jersey. In rendering the foregoing opinion, such
                  counsel may assume that the Escrow Agent acted in good faith
                  and without notice or knowledge of any adverse claim to any of
                  such Pledged Shares.

                           (xxx) No stamp or other issuance or transfer taxes or
                  duties are payable in the State of New Jersey or in the State
                  of New York in connection with (a) the sale and delivery by
                  the Selling Shareholders of the Stock owned by them to the
                  Underwriters in the manner contemplated under this Agreement
                  or (b) the consummation of any other transaction contemplated
                  by this Agreement in connection with the issuance and sale of
                  the Stock by the Selling Shareholders.

                           In rendering such opinion, Buchanan Ingersoll may
         rely (A) as to all matters governed other than by United States federal
         laws and the laws of the State of New York and the State of New Jersey
         and on local counsel in the relevant jurisdictions reasonably
         satisfactory to the Representatives and counsel to the Underwriters,
         provided that in each case Buchanan Ingersoll shall state that they
         believe that they and the Underwriters are justified in relying on such
         other counsel; and (B) as to matters of fact, to the extent they deem
         proper, on the representations and warranties of the Company set forth
         in this Agreement and on certificates of responsible officers of the
         Company or its subsidiaries and certificates or other written
         statements of officers of departments of various jurisdictions having
         custody of documents respecting the corporate existence or good
         standing of the Company or of its subsidiaries; provided that copies of
         any such statements or certificates shall be delivered to counsel to
         the Underwriters. In addition to the matters set forth above, such
         opinion shall also include a statement to the effect that nothing has
         come to the attention of such counsel which leads them to believe that
         the Registration Statement, as of the time it became effective under
         the Securities Act (but after giving effect to any modifications
         incorporated therein pursuant to Rule 430A under the Securities Act),
         contained an untrue statement of a material fact or omitted to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading, or that the Prospectus or any
         amendment or supplement thereto, on the date it was filed pursuant to
         Rule 424(b), and the Registration Statement and the Prospectus, or any
         amendment or supplement thereto, as of each Closing Date, contain an
         untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein, in the


                                      -46-
<PAGE>   47
         light of the circumstances under which they were made, not
         misleading (except that such counsel need express no view as
         to financial statements, schedules and other financial
         information included therein). With respect to such statement,
         Buchanan Ingersoll may state that their belief is based upon
         the procedures set forth therein, but is without independent
         check and verification.
      
                 (g) The Representatives shall have received from
         Mulla & Mulla & Craigie Blunt & Caroe, local Indian counsel for the
         Company and the Selling Shareholders, an opinion, dated each Closing
         Date, addressed to the Underwriters to the effect that:

                           (i) Intelligroup Asia has been duly incorporated as a
                  private company under the provisions of the Companies Act,
                  1956 which is the law governing, inter alia, limited liability
                  companies in India. Intelligroup Asia is validly existing as a
                  private company in good standing under the laws of India.

                           (ii) Intelligroup Asia has corporate power and
                  authority to own, lease and operate its properties, and to
                  conduct its business as described in the Registration
                  Statement and to enter into and perform its obligations under
                  the Take-over Agreement and the Support Agreement.

                           (iii) Intelligroup Asia is entitled to the benefit of
                  all instruments (including, but not limited to, contracts,
                  leases, lease deeds, bonds, agreements, permissions, and
                  approval certificates) acquired by Ms. Intelligroup Asia,
                  prior to and subsequent to the execution of the Take-Over
                  Agreement, free and clear of any security interest, mortgage,
                  pledge, lien, encumbrance, claim, charge or equity.

                           (iv) Intelligroup Asia has not borrowed any amount
                  from any bank, financial institution or other creditor. So far
                  as Ms. Intelligroup Asia is concerned, its indebtedness is as
                  reflected in its balance sheet for the year ended March 31,
                  1996, which is annexed to the Take-Over Agreement.

                           (v) Rajkumar Koneru is a non-resident Indian under
                  the exchange control laws of India and all necessary filings
                  have been made with governmental authorities of India
                  including, but not limited to, the Reserve Bank, for Mr.
                  Koneru to freely invest by way of capital contribution in
                  Intelligroup Asia.

                           (vi) To the best of such counsel's knowledge,
                  Intelligroup Asia is duly qualified as a company incorporated
                  under the Companies Act, 1956 to transact

                                      -47-
<PAGE>   48
                  business and is in good standing in Indian jurisdiction in
                  which such qualification is required and in which the failure
                  to so qualify would, individually or in the aggregate, have a
                  material adverse effect on the condition (financial or
                  otherwise), properties, business, management, prospects, net
                  worth or results of Intelligroup Asia or the Company; the 200
                  Asia Shares owned by Rajkumar Koneru, the 200 Asia Shares
                  owned by Nagarjun Valluripalli, the 100 Asia Shares owned by
                  K. Rama Sastry and the 100 Asia Shares owned by D. Sriram
                  represent all of the issued and outstanding capital stock of
                  Intelligroup Asia and all such capital stock has been duly
                  authorized and validly issued, is fully paid and
                  non-assessable and, to the best of such counsel's knowledge,
                  is owned, as described in the Registration Statement and
                  Prospectus, by Mr. Koneru, Mr. Valluripalli, Mr. Sastry and
                  Mr. Sriram, free and clear of any security interest, mortgage,
                  pledge, lien, encumbrance, claim, charge or equity, and no
                  options, warrants or other rights to purchase, agreements or
                  other obligations to issue or other rights to convert any
                  obligations into shares of capital or ownership interest in
                  Intelligroup Asia are outstanding, save and except the
                  transactions contemplated by the Fifth and Fourth Transfer
                  Agreements, respectively.

                           (vii) Each of the Intelligroup Asia Documents has
                  been duly executed and delivered by the parties thereto
                  subject to the requisite permissions/approvals of the Reserve
                  Bank of India and constitutes the legal, valid and binding
                  obligations of the parties thereto, enforceable against them
                  in accordance with its terms.

                           (viii) To the best of such counsel's knowledge, the
                  execution, delivery and performance of the Intelligroup Asia
                  Documents and the compliance by each party thereto with its
                  obligations thereunder will not conflict with, or constitute a
                  breach of, or default (or an event which with notice or lapse
                  of time, or both, would constitute a default) under any (1)
                  indenture, mortgage, deed of trust, trust (constructive or
                  other), loan agreement, lease, franchise, license or other
                  agreement or instrument to which any party to the Intelligroup
                  Asia Documents or any of his properties is bound, (2) any
                  judgment of any court or governmental agency or body
                  applicable to it or any of its properties, or (3) any statute,
                  decree, order, rule or regulation of any court or governmental
                  agency or body applicable to it or any of its properties.

                           (ix) Each of K. Rama Sastry and D. Sriram has full
                  legal right, power and authority, and has applied for 


                                      -48-
<PAGE>   49
                  any and all approvals required by law, to sell, assign,
                  transfer and deliver 100 Asia Shares each (the "Transfer
                  Shares") to Ashok Pandey pursuant to Fifth and Fourth Transfer
                  Agreements, respectively. Each such Agreement requires
                  approval only of the Reserve Bank to complete the transfer of
                  the Transfer Shares from Mr. Sastry and Mr. Sriram to Mr.
                  Pandey, for which all necessary applications have been made,
                  and such counsel has no reason to believe that approvals for
                  the Transfer Shares from Mr. Sastry and Mr. Sriram to Mr.
                  Pandey will not be granted.

                           (x) Each Principal Shareholder has full legal right,
                  power and authority, and has obtained any and all approvals
                  required by law, to sell, assign, transfer and deliver all 600
                  issued and outstanding Asia Shares to the Company pursuant to
                  the First, Second and Third Transfer Agreements, respectively.
                  Each such Agreement requires approval only of the Reserve Bank
                  to complete the transfer of all issued and outstanding Asia
                  Shares from Mr. Koneru, Mr. Valluripalli and Mr. Pandey to the
                  Company, all necessary applications are proposed to be made
                  immediately subsequent to obtaining the approvals of the
                  Reserve Bank pursuant to Section 8(g)(ix) above, and such
                  counsel has no reason to believe that approval by the Reserve
                  Bank for transfer of all the issued and outstanding Asia
                  Shares from Mr. Koneru, Mr. Valluripalli and Mr. Pandey to the
                  Company will not be granted.

                           (xi) To the best of such counsel's knowledge, there
                  are no outstanding securities of Intelligroup Asia convertible
                  or exchangeable into or evidencing the right to purchase or
                  subscribe for any shares of capital stock of Intelligroup Asia
                  and there are no outstanding or authorized options, warrants
                  or rights of any character obligating Intelligroup Asia to
                  issue any shares of its capital stock or any securities
                  convertible or exchangeable into or evidencing the right to
                  purchase or subscribe for any shares of such stock; and, to
                  the best of such counsel's knowledge, no holder of any
                  securities of Intelligroup Asia or any other person has the
                  right, contractual or otherwise, which has not been satisfied
                  or effectively waived, to cause Intelligroup Asia to sell or
                  otherwise issue to them, or to permit them to underwrite the
                  sale of, any of the shares of Stock of Intelligroup Asia or
                  the right to have any shares of Stock of Intelligroup Asia or
                  other securities of Intelligroup Asia or the right, as a
                  result of the filing of the Registration Statement, to require
                  registration under the Securities Act of any shares of Stock
                  of Intelligroup Asia or other securities of Intelligroup Asia.


                                      -49-
<PAGE>   50
                           (xii) The form of certificate used to evidence the
                  shares of Stock of Intelligroup Asia is in due and proper form
                  and complies with all applicable statutory requirements. Under
                  the Indian law, this is governed by the Companies Act, 1956,
                  read with the Companies (Issue of Share Certificates) Rules,
                  1960.

                           (xiii) All contracts and documents with respect to
                  Intelligroup Asia summarized in the Registration Statement or
                  the Prospectus are fairly summarized in all material respects.

                           (xiv) Such counsel is not aware of any litigation or
                  governmental or other action, suit, proceeding or
                  investigation before any court or before or by any public,
                  regulatory or governmental agency or body including, but not
                  limited to, investigations and proceedings against
                  Intelligroup Asia known to such counsel to be pending or
                  threatened against, or involving the properties or business
                  of, the Company or Intelligroup Asia.

                           (xv) Except for the approvals of the Reserve Bank of
                  India with respect to the Transfer Agreements and the Support
                  Agreement, no authorization, approval, consent or order of any
                  court or governmental authority or agency is required in
                  connection with the execution of the Intelligroup Asia
                  Documents; to the best of such counsel's knowledge, the
                  execution, delivery and performance of the Intelligroup Asia
                  Documents and the consummation of the transactions
                  contemplated therein and compliance by each of the parties
                  thereto will not conflict with or constitute a breach of, or
                  default (or an event which with notice or lapse of time, or
                  both, would constitute a default) under, or result in the
                  creation or imposition of any lien, charge or encumbrance upon
                  any property or assets of Intelligroup Asia or the Company or
                  any of its subsidiaries pursuant to, any indenture, mortgage,
                  deed of trust, note agreement, or other agreement or
                  instrument to which Intelligroup Asia or the Company or any of
                  its subsidiaries is a party or by which it or any of them may
                  be bound, or to which any of the properties or assets of
                  Intelligroup Asia or the Company or any of its subsidiaries is
                  subject, nor will such action result in any violation of the
                  provisions of the Memorandum and Articles of Association of
                  Intelligroup Asia or the Certificate of Incorporation of the
                  Company, or any applicable law, administrative regulation or
                  any order, rule or regulation known to such counsel of any
                  court, regulatory body, administrative agency or other
                  governmental body having jurisdiction over Intelligroup Asia
                  or the Company or any of its subsidiaries.


                                      -50-
<PAGE>   51
                           (xvi) The statements in the Prospectus under the
                  captions "International Operations" and "Certain Transactions"
                  insofar as they purport to constitute a summary of the terms
                  of the ownership of Intelligroup Asia are in all material
                  respects accurate summaries and fairly and correctly present
                  the information called for with respect to such documents and
                  matters.

                           (xvii) Nothing has come to such counsel's attention
                  which indicates that Intelligroup Asia is not conducting its
                  business in compliance with all laws, rules and regulations of
                  India except for such violations that would not, individually
                  or in the aggregate, have a material adverse effect on
                  Intelligroup Asia's condition (financial or otherwise),
                  properties, business, management, prospects, net worth or
                  results.

                           (xviii) Intelligroup Asia is not subject to any
                  current claim and has not received any notice of infringement
                  or other violation of any Intellectual Property of others; to
                  the best of such counsel's knowledge, (A) there are no legal
                  or governmental proceedings pending relating to Intellectual
                  Property owned or used by Intelligroup Asia and (B) no such
                  proceedings, including without limitation interference
                  proceedings, are currently threatened or contemplated by
                  governmental authorities or others; such counsel has no
                  knowledge of any facts which would preclude Intelligroup Asia
                  from having clear title to Intelligroup Asia's Intellectual
                  Property. Such counsel has no knowledge of any facts that
                  Intelligroup Asia lacks any rights or licenses to use all
                  Intellectual Property materially necessary to the conduct of
                  its business as now being or proposed to be conducted by
                  Intelligroup Asia as described in the Prospectus. To such
                  counsel's knowledge, Intelligroup Asia has not received any
                  notice of conflict with rights or claims of others with
                  respect to any Intellectual Property owned or currently being
                  used by, or intended to be used by it, except as described in
                  the Prospectus.

                           In rendering such opinion, Mulla & Mulla & Craigie
         Blunt & Caroe may rely as to matters of fact, to the extent they deem
         proper, on certificates of responsible officers of the Intelligroup
         Asia or its subsidiaries and certificates or other written statements
         of officers of departments of various jurisdictions having custody of
         documents respecting the corporate existence or good standing of
         Intelligroup Asia or of its subsidiaries; provided that copies of any
         such statements or certificates shall be delivered to counsel to the
         Underwriters. In addition to the matters set forth above, such opinion
         shall also include a statement to 


                                      -51-
<PAGE>   52
         the effect that nothing has come to the attention of such counsel which
         leads them to believe that the Registration Statement, as of the time
         it became effective under the Securities Act (but after giving effect
         to any modifications incorporated therein pursuant to Rule 430A under
         the Securities Act), contained, in relation to Intelligroup Asia, an
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, or that the Prospectus or any amendment or
         supplement thereto, on the date it was filed pursuant to Rule 424(b),
         and the Registration Statement and the Prospectus, or any amendment or
         supplement thereto, as of the Closing Date, contain, in relation to
         Intelligroup Asia, an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading (except that such counsel need
         express no view as to financial statements, schedules and other
         financial information included therein). With respect to such
         statement, Mulla & Mulla & Craigie Blunt & Caroe may state that their
         belief is based upon the procedures set forth therein, but is without
         independent check and verification.

                           (h) The Representatives shall have received from
         Fragomen, Del Rey & Bernsen, P.C. ("Fragomen"), special immigration
         counsel for the Company and the Selling Shareholders, an opinion, dated
         each Closing Date, addressed to the Underwriters to the effect that:

                                    (i) The statements under the caption "Legal
                  Proceedings," insofar as they relate to INS matters, are in
                  all material respects accurate summaries and fairly and
                  correctly present the investigations of the Company by the
                  Immigration and Naturalization Service or any other
                  Governmental Authority concerning violations of the INS
                  Regulations.

                                    (ii) There is no litigation or governmental
                  or other action, suit, proceeding or investigation before any
                  court or before or by any public, regulatory or governmental
                  agency or body with respect to matters arising under the INS
                  Regulations known to such counsel to be pending or threatened
                  against, or involving the properties or business of, the
                  Company or any of its subsidiaries which is of a character
                  required to be disclosed in the Registration Statement and the
                  Prospectus which has not been properly disclosed therein.

                           In addition to the matters set forth above, such
         opinion shall also include a statement to the effect that nothing has
         come to the attention of such counsel which


                                      -52-
<PAGE>   53
         leads them to believe that, with respect to all INS related issues, the
         Registration Statement, as of the time it became effective under the
         Securities Act (but after giving effect to any modifications
         incorporated therein pursuant to Rule 430A under the Securities Act),
         contained an untrue statement of a material fact or omitted to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading, or that the Prospectus or any
         amendment or supplement thereto, on the date it was filed pursuant to
         Rule 424(b), and the Registration Statement and the Prospectus, or any
         amendment or supplement thereto, as of each Closing Date, with respect
         to such INS-related issues, contain an untrue statement of a material
         fact or omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading. With respect
         to such statement, Fragomen may state that their belief is based upon
         the procedures set forth therein, but is without independent check and
         verification.

                           (i) The Representatives shall have received from
         Willkie Farr & Gallagher counsel for the Underwriters, their opinion or
         opinions dated each Closing Date with respect to the incorporation of
         the Company, the validity of the Stock, the Registration Statement and
         the Prospectus and such other related matters as it may reasonably
         request, and the Company and the Selling Shareholders shall have
         furnished to such counsel such documents as they may request for the
         purpose of enabling them to pass upon such matters.

                           (j) The Representatives shall have received a
         certificate, dated each Closing Date, of the chief executive officer or
         the President and the chief financial or accounting officer of the
         Company to the effect that:

                                            (i) No stop order suspending the
                           effectiveness of the Registration Statement has been
                           issued, and, to the best of the knowledge of the
                           signers, no proceedings for that purpose have been
                           instituted or are pending or contemplated under the
                           Securities Act;

                                            (ii) Neither any Preeffective
                           Prospectus, as of its date, nor the Registration
                           Statement nor the Prospectus, nor any amendment or
                           supplement thereto, as of the time when the
                           Registration Statement became effective and at all
                           times subsequent thereto up to the delivery of such
                           certificate, included any untrue statement of a
                           material fact or omitted to state any material fact
                           required to be stated therein or necessary to make
                           the statements therein, in light of the


                                      -53-
<PAGE>   54
                           circumstances under which they were made, not
                           misleading;

                                            (iii) Subsequent to the respective
                           dates as of which information is given in the
                           Registration Statement and the Prospectus, and except
                           as set forth or contemplated in the Prospectus,
                           neither the Company nor any of its subsidiaries has
                           incurred any material liabilities or obligations,
                           direct or contingent, nor entered into any material
                           transactions not in the ordinary course of business
                           and there has not been any material adverse change in
                           the condition (financial or otherwise), properties,
                           business, management, prospects, net worth or results
                           of operations of the Company and its subsidiaries
                           considered as a whole, or any change in the capital
                           stock, short-term or long-term debt of the Company
                           and its subsidiaries considered as a whole;

                                            (iv) The representations and
                           warranties of the Company in this Agreement are true
                           and correct at and as of each Closing Date, and the
                           Company has complied with all the agreements and
                           performed or satisfied all the conditions on its part
                           to be performed or satisfied at or prior to each
                           Closing Date; and

                                            (v) Since the respective dates as of
                           which information is given in the Registration
                           Statement and the Prospectus, and except as disclosed
                           in or contemplated by the Prospectus, (i) there has
                           not been any material adverse change or a development
                           involving a material adverse change in the condition
                           (financial or otherwise), properties, business,
                           management, prospects, net worth or results of
                           operations of the Company and its subsidiaries
                           considered as a whole; (ii) the business and
                           operations conducted by the Company and its
                           subsidiaries have not sustained a loss by strike,
                           fire, flood, accident or other calamity (whether or
                           not insured) of such a character as to interfere
                           materially with the conduct of the business and
                           operations of the Company and its subsidiaries
                           considered as a whole; (iii) no legal or governmental
                           action, suit or proceeding is pending or threatened
                           against the Company which is material to the Company,
                           whether or not arising from transactions in the
                           ordinary course of business, or which may materially
                           and adversely affect the transactions contemplated by
                           this Agreement; (iv) since such dates and except as
                           so disclosed, the Company has not incurred any
                           material liability or obligation, direct, 


                                      -54-
<PAGE>   55
                           contingent or indirect, made any change in its
                           capital stock (except pursuant to its stock plans),
                           made any material change in its short-term or funded
                           debt or repurchased or otherwise acquired any of the
                           Company's capital stock; and (v) the Company has not
                           declared or paid any dividend, or made any other
                           distribution, upon its outstanding capital stock
                           payable to stockholders of record on a date prior to
                           each Closing Date.

                           (k) The Representatives shall have received a
         certificate or certificates, dated each Closing Date, of each Selling
         Shareholder to the effect that as of the Closing Date its
         representations and warranties in this Agreement are true and correct
         as if made on and as of each Closing Date, and that it has performed
         all its obligations and satisfied all the conditions on its part to be
         performed or satisfied at or prior to the Closing Date.

                           (l) The Company and each Selling Shareholder shall
         have furnished to the Representatives such additional certificates as
         the Representatives may have reasonably requested as to the accuracy,
         at and as of the Closing Dates, of the representations and warranties
         made herein by them and as to compliance at and as of each Closing Date
         by them with their covenants and agreements herein contained and other
         provisions hereof to be satisfied at or prior to the Closing Dates, and
         as to satisfaction of the other conditions to the obligations of the
         Underwriters hereunder.

                           (m)  [Intentionally left blank]

                           (n) The Indemnification Agreement, the Escrow
         Agreement and the Pledge Agreement Shall have been duly executed and
         delivered by the parties thereto, shall be in full force and effect and
         no default shall exist thereunder; and each of the Principal
         Shareholders shall have delivered to the Escrow Agent the cash, Pledged
         Shares and other documents and instruments required to be delivered
         thereunder.

                           All opinions, certificates, letters and other
         documents will be in compliance with the provisions hereunder only if
         they are satisfactory in form and substance to the Representatives. The
         Company will furnish to the Representatives conformed copies of such
         opinions, certificates, letters and other documents as the
         Representatives shall reasonably request. If any of the conditions
         hereinabove provided for in this Section shall not have been satisfied
         when and as required by this Agreement, this Agreement may be
         terminated by the Representatives by notifying the Company of such
         termination in writing or by telegram at or prior to each Closing Date,
         but Cowen shall be entitled to waive any of such conditions.


                                      -55-
<PAGE>   56
                  9. Effective Date. This Agreement shall become effective
immediately as to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to
all other provisions, at 11:00 a.m. New York City time on the first full
business day following the effectiveness of the Registration Statement or at
such earlier time after the Registration Statement becomes effective as the
Representatives may determine on and by notice to the Company or by release of
any of the Stock for sale to the public. For the purposes of this Section 9, the
Stock shall be deemed to have been so released upon the release for publication
of any newspaper advertisement relating to the Stock or upon the release by you
of telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.

                  10. Termination. This Agreement (except for the provisions of
Section 5) may be terminated by the Company at any time before it becomes
effective in accordance with Section 9 by notice to the Representatives and may
be terminated by the Representatives at any time before it becomes effective in
accordance with Section 9 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to any
other party, other than as provided in Sections 5, 6 and 11 and other than as
provided in Section 12 as to the liability of defaulting Underwriters.

                  This Agreement may be terminated after it becomes effective by
the Representatives by notice to the Company (i) if at or prior to the First
Closing Date or the Option Closing Date (only for such portion) trading in
securities on any of the Nasdaq National Market shall have been suspended or
minimum or maximum prices shall have been established on any such exchange or
market, or a banking moratorium shall have been declared by New York or United
States authorities; (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market; (iii) if at or
prior to the First Closing Date or the Option Closing Date (only for such
portion) there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power or of any other insurrection or
armed conflict involving the United States or (B) any change in financial
markets or any calamity or crisis which, in the judgment of the Representatives,
makes it impractical or inadvisable to offer or sell the Firm Stock or Optional
Stock, as applicable on the terms contemplated by the Prospectus; (iv) if there
shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or any of
its subsidiaries or the transactions contemplated by this Agreement, which, in
the judgment of the Representatives, makes it impracticable or inadvisable to
offer or deliver the Firm Stock or the Optional Stock, as applicable on the
terms contemplated by the Prospectus; (v) if there shall be any litigation or
proceeding, pending or threatened, which, in the judgment of the
Representatives, makes it impracticable or 


                                      -56-
<PAGE>   57
inadvisable to offer or deliver the Firm Stock or Optional Stock, as applicable,
on the terms contemplated by the Prospectus; or (vi) if there shall have
occurred any of the events specified in the immediately preceding clauses (i) -
(v) together with any other such event that makes it, in the judgment of the
Representatives, impractical or inadvisable to offer or deliver the Firm Stock
or Optional Stock, as applicable on the terms contemplated by the Prospectus.

                  11. Reimbursement of Underwriters. Notwithstanding any other
provisions hereof, if this Agreement shall not become effective by reason of any
election of the Company or the Selling Shareholders pursuant to the first
paragraph of Section 10 or shall be terminated by the Representatives under
Section 8 or Section 10, the Company will bear and pay the expenses specified in
Section 5 hereof and, in addition to its their obligations pursuant to Section 6
hereof, the Company will reimburse the reasonable out-of-pocket expenses of the
several Underwriters (including reasonable fees and disbursements of counsel for
the Underwriters) incurred in connection with this Agreement and the proposed
purchase of the Stock, and promptly upon demand the Company will pay such
amounts to you as Representatives.

                  12. Substitution of Underwriters. If any Underwriter or
Underwriters shall default in its or their obligations to purchase shares of
Stock hereunder and the aggregate number of shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed ten
percent (10%) of the total number of shares underwritten, the other Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
shall so default and the aggregate number of shares with respect to which such
default or defaults occur is more than ten percent (10%) of the total number of
shares underwritten and arrangements satisfactory to the Representatives and the
Company for the purchase of such shares by other persons are not made within
forty-eight (48) hours after such default, this Agreement shall terminate.

                  If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 12, (i) the
Company and the Selling Shareholders shall have the right to postpone any
Closing Date for a period of not more than five (5) full business days in order
that the Company and the Selling Shareholders may effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting 


                                      -57-
<PAGE>   58
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of its liability to the Company, the Selling
Shareholders or the other Underwriters for damages occasioned by its default
hereunder. Any termination of this Agreement pursuant to this Section 12 shall
be without liability on the part of any non-defaulting Underwriter, the Selling
Shareholders or the Company, except for expenses to be paid or reimbursed
pursuant to Section 5 and except for the provisions of Section 6.

                  13. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you, as their Representatives c/o Cowen & Company at Financial
Square, New York, New York 10005, with a copy to Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022, Attention:
William N. Dye, except that notices given to an Underwriter pursuant to Section 
6 hereof shall be sent to such Underwriter at the address furnished by the
Representatives or, if sent to the Company or the Selling Shareholders, shall be
mailed, delivered or telegraphed and confirmed c/o Intelligroup, Inc. at 517
Route One South, Iselin, New Jersey 08330, with a copy to Buchanan Ingersoll,
College Centre, 500 College Road East, Princeton, New Jersey 08540, Attention:
David J. Sorin.

                  14. Successors. This Agreement shall inure to the benefit of
and be binding upon the several Underwriters, the Company and the Selling
Shareholders and their respective successors and legal representatives. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company and the Selling Shareholders contained in this Agreement shall also be
for the benefit of the person or persons, if any, who control any Underwriter or
Underwriters within the meaning of Section 15 of the Securities Act or Section 
20 of the Exchange Act, and the indemnities of the several Underwriters shall
also be for the benefit of each director of the Company, each of its officers
who has signed the Registration Statement and the person or persons, if any, who
control the Company or any Selling Shareholders within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act.

                  15. Applicable Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to its conflict-of-law principles. Each of the
parties hereto consents to the jurisdiction of and venue in federal and state
courts located


                                      -58-
<PAGE>   59
in the Borough of Manhattan, City and State of New York, over any suit, action
or proceeding with respect to this Agreement.

                  16. Authority of the Representatives. In connection with this
Agreement, you will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by Cowen, as Representative, will be binding
on all the Underwriters; and any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Shareholders.

                  17. Partial Unenforceability. The invalidity or
unenforceability of any Section , paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section , paragraph or
provision hereof. If any Section , paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

                  18. General. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.

                  In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Shareholders and
the Representatives.

                  19. Counterparts. This Agreement may be signed in two (2) or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.

                  Any person executing and delivering this Agreement as
Attorney-in-fact for the Selling Shareholders represents by so doing that he has
been duly appointed as Attorney-in-fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action.


                                      -59-
<PAGE>   60
                  If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement between us.

                                                 Very truly yours,

                                                 INTELLIGROUP, INC.

                                                 By:____________________________
                                                    Name:Ashok  Pandey 
                                                    Title:  President
                                                                     

                                                 SELLING SHAREHOLDERS LISTED
                                                 IN SCHEDULE B

                                                 By: Attorney-in-fact

                                                     By:________________________
                                                         Attorney-in-fact
                                                         Acting on behalf of the
                                                         Selling Shareholders  
                                                         listed in Schedule  B.
                                                         
                                                        

Accepted and delivered in 
New York, New York as of
 the date first above written.

COWEN & COMPANY
MONTGOMERY SECURITIES
         Acting on their own behalf
         and as Representatives of several
         Underwriters referred to in the
         foregoing Agreement.

By:  Cowen & Company

By:  Cowen Incorporated,
          its general partner

By:______________________________
   Title:


                                      -60-
<PAGE>   61
                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                                                                       Number of
                                                                                                       shares of  
                                                                          Number of shares of           Optional
                                                                           Firm Stock to Be              Stock   
Name                                                                           Purchased              to Be Purchased  
- ----                                                                           ---------              ---------------          
<S>                                                                           <C>                    <C>

Cowen & Company...............................................
Montgomery Securities.........................................




















Total.........................................................                 1,350,000              202,500
                                                                               =========              =======
</TABLE>
<PAGE>   62
                                   SCHEDULE B

<TABLE>
<CAPTION>
                                                                         Number of 
                                                                          Optional
                                             Number of Firm Shares          Shares
                                                 to Be Sold              to Be Sold
                                                 ----------              -----------
<S>                                              <C>                       <C>
Intelligroup, Inc...............................   900,000                    --
                                                                        
Selling Shareholders                                                    
                                                                        
Ashok Pandey....................................   125,000                  56,250
Rajkumar Koneru.................................   125,000                  56,250
Nagarjun Valluripalli...........................   125,000                  56,250
Summit Investors III, L.P.......................     3,750                   1,687
Summit Ventures IV, L.P.........................    71,250                  32,063
                                                 ---------                 -------                 
Total........................................... 1,350,000                 202,500
                                                 =========                 =======
</TABLE>


<PAGE>   1
 
                                                                       EXHIBIT 5
 
                               BUCHANAN INGERSOLL
                                   ATTORNEYS
                             500 COLLEGE ROAD EAST
                              PRINCETON, NJ 08540
 
DAVID J. SORIN
609-987-6801
 
   
                                                               November 26, 1996
    
 
Intelligroup, Inc.
517 Route One South
Iselin, New Jersey 08830
 
Gentlemen:
 
   
     In connection with the Registration Statement on Form SB-2, as amended (the
"Registration Statement"), filed on November 21, 1996 and amended on the date
hereof by Intelligroup, Inc., a New Jersey corporation (the "Company"), under
the Securities Act of 1933, as amended, relating to the public offering of an
aggregate of up to 1,552,500 shares of the Company's Common Stock, par value of
$.01 per share, of which (a) 900,000 shares will be purchased by the
underwriters from the Company; (b) 450,000 shares will be purchased by the
underwriters from certain existing shareholders of the Company (the "Selling
Shareholders"); and (c) up to an aggregate of 202,500 shares may be purchased by
the underwriters from the Selling Shareholders, if the underwriters exercise the
option granted to them by the Selling Shareholders to cover over-allotments
(collectively, the "Shares"), we as counsel for the Company, have examined such
corporate records, other documents, and questions of law as we have considered
necessary or appropriate for the purposes of this opinion.
    
 
     Upon the basis of such examination, we advise you that in our opinion:
 
          (i) the Shares to be issued and sold by the Company have been duly and
     validly authorized and, when sold in the manner contemplated by the
     underwriting agreement (the "Underwriting Agreement") filed as an exhibit
     to the Registration Statement and upon receipt by the Company of payment
     therefor as provided in the Underwriting Agreement, will be legally issued,
     fully paid and non-assessable; and
 
          (ii) the Shares to be sold by the Selling Shareholders are duly and
     validly authorized, legally issued, fully paid and non-assessable.
 
     We consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to this firm under the caption "Legal Matters" in
the Prospectus contained therein.
 
                                          Very truly yours,
 
                                          /s/ BUCHANAN INGERSOLL

<PAGE>   1
                                                                   EXHIBIT 10.18

                             AMENDED AND RESTATED
                        AGREEMENT OF WAIVER AND CONSENT

         This Amended and Restated Agreement of Waiver and Consent (the
"Agreement") is made as of November 26, 1996, by and among Intelligroup, Inc.,
a New Jersey corporation (the "Company" or "Intelligroup"), Ashok Pandey,
Rajkumar Koneru and Nagarjun Valluripalli (collectively, the "Shareholders"),
and Summit Ventures IV, L.P. and Summit Investors III, L.P. (collectively,
"Summit").
         
         WHEREAS, Intelligroup, the Shareholders and Summit are parties to (i)
that certain Registration Rights Agreement, and (ii) that certain Shareholders'
Agreement, each dated as of April 10, 1996 (together, the "Agreements"); and

         WHEREAS, the Board of Directors of Intelligroup has approved a
proposed secondary underwritten public offering of the Common Stock of
Intelligroup (the "Secondary Offering"), in which the Company proposes to issue
and sell shares of Common Stock and the Shareholders and Summit propose to sell
shares of Common Stock; and

         WHEREAS, as a condition precedent to the consummation of the Secondary
Offering, certain waivers and amendments are necessary to the Agreements;

         NOW, THEREFORE, in consideration of the mutual promises herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:

1.       WAIVER OF CERTAIN REGISTRATION RIGHTS.

         Effective upon the date hereof, Summit hereby agrees to waive any and
all registration rights as to the Secondary Offering, except as to be provided
in the underwriting agreement between the Company, the Shareholders, Summit and
the representatives of the underwriters to be executed in conjunction with the
Secondary Offering.  It is further understood that Summit shall be entitled to
sell an aggregate of 75,000 shares of Common Stock in the Secondary Offering
and an aggregate of 33,750 shares of Common Stock (representing Summit's
pro-rata allocation of the underwriters' over-allotment option), in the event
the underwriters' over-allotment option is exercised in full. Notwithstanding
anything to the contrary, the Company will pay the Registration Expenses (as
defined in the Registration Rights Agreement referenced above) related to the
Secondary Offering, including, without limitation, the reasonable fees and
expenses of Summit's special counsel Hutchins, Wheeler & Dittmar, A
Professional Corporation.

2.       WAIVER OF CERTAIN CO-SALE RIGHTS.

         Effective upon the date hereof, Summit hereby agrees to waive any and
all co-sale rights as to the Secondary Offering, which they may have pursuant
to Section 4 of the Shareholder's Agreement referenced above.
<PAGE>   2
3.       TERMINATION UPON CANCELLATION OF SECONDARY OFFERING; REVERSION.

         In the event (i) the Company does not consummate the Secondary 
Offering by January 31, 1997, (ii) the Secondary Offering is not consummated
within ten days of its effectiveness or (iii) upon earlier notice to the Company
from the representatives of the underwriters of the Secondary Offering that the
Secondary Offering has been terminated, this Agreement shall be terminated and
deemed to be of no further force and effect.

4.       COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.

5.       BINDING EFFECT; SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of any of the parties.

6.       NOTICE.

         All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered
by hand and receipt made therefor by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with
postage prepaid to the addresses shown below, on the third business day after
the date postmarked.

         If to the Company or to the Shareholders:
         Intelligroup, Inc.
         517 Route One South
         Iselin, New Jersey, 08830

         Copy to:

         Buchanan Ingersoll
         500 College Road East
         Princeton, New Jersey  08540





                                      -2-
<PAGE>   3

         If to Summit:
         Summit Partners
         600 Atlantic Avenue
         Boston, MA   02210-2227

         Copy to:

         Hutchins, Wheeler & Dittmar, A Professional Corporation
         100 Federal Street
         Boston, MA  02110
         Attn:  James Westra, Esq.
        
7.       SEVERABILITY.

         The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law.  Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.

8.       AMENDMENT.

         No amendment, modification, termination or cancellation of this
Agreement shall be effective unless it is in writing signed by all of the
parties hereto.  No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

9.       INTEGRATION AND ENTIRE AGREEMENT.

         Except as provided in this Amended and Restated Agreement of Waiver
and Consent, the Agreements and documents and agreements contemplated thereby
and all of their respective terms and provisions, as amended by (i) that
certain Agreement of Waiver and Consent dated June 4, 1996 and (ii) that
certain Amendment No. 1 to Agreement of Waiver and Consent dated July 12, 1996,
remain in full force and effect.  This Amended and Restated Agreement of Waiver
and Consent supersedes the Agreement of Waiver and Consent dated November 20,
1996 in its entirety. 

                                 **************





                                      -3-
<PAGE>   4


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement 
as of the date first above written.


                                 INTELLIGROUP, INC.
                                 
                                 
                                 By: /s/ Ashok Pandey
                                    -------------------------------------
                                    Ashok Pandey
                                    President and Chief Executive Officer
                                 
                                 SUMMIT VENTURES IV, L.P.
                                 
                                 By: Summit Partners IV, L.P.
                                     Its General Partner
                                 
                                 By: Stamps, Woodsum & Co. IV,
                                     Its General Partner
                                 
                                 By:  /s/ Thomas S. Roberts                    
                                     -----------------------------------
                                      Its General Partner
                                 
                                 
                                 SUMMIT INVESTORS III, L.P.
                                 
                                 By:  /s/ Thomas S. Roberts              
                                     -----------------------------------
                                    Authorized Signatory
                                 
                                 INDIVIDUALS
                                 
                                 
                                  /s/ Ashok Pandey
                                 -----------------------------------------
                                 Ashok Pandey
                                 
                                  /s/ Rajkumar Koneru
                                 -----------------------------------------
                                 Rajkumar Koneru
                                 
                                  /s/ Nagarjun Valluripalli
                                 -----------------------------------------
                                 Nagarjun Valluripalli





                                      -4-

<PAGE>   1
 
                                                                    EXHIBIT 23.1
 
                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Intelligroup, Inc.:
 
     As independent public accountants, we hereby consent to the use of our
report and all references to our firm included in or made part of this
registration statement.
 
                                          ARTHUR ANDERSEN LLP
 
Princeton, New Jersey
   
November 26, 1996
    


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