As Filed with the Securities and Exchange Commission on February 26, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
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REGISTRATION STATEMENT
UNDER
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THE SECURITIES ACT OF 1933
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Intelligroup, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
New Jersey 11-2880025
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
499 Thornall Street
Edison, New Jersey 08837
(732) 590-1600
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(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
STEPHEN A. CARNS
President and Chief Executive Officer
Intelligroup, Inc.
499 Thornall Street
Edison, New Jersey 08837
(732) 590-1600
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copy to:
DAVID J. SORIN, ESQ.
DAVID S. MATLIN, ESQ.
Buchanan Ingersoll Professional Corporation
College Centre
500 College Road East
Princeton, New Jersey 08540
(609) 987-6800
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed
Amount Maximum Proposed Maximum Amount Of
Title of Shares To Be Aggregate Price Aggregate Offering Registration
To Be Registered Registered Per Share(1) Price Fee
- ---------------------------- ------------------ ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value......... 980,532 $15.47 $15,168,830 $4,216.94
Total
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<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Such price is based upon the average of the high
and low price per share of the Registrant's Common Stock as reported on
the Nasdaq National Market on February 22, 1999.
</FN>
</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>
The information in this prospectus is not complete and may be changed. The
Selling Shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
<PAGE>
PROSPECTUS (Not Complete)
Issued: February 26, 1999
980,532 Shares
INTELLIGROUP, INC.
499 Thornall Street
Edison, New Jersey 08837
(732) 590-1600
Common Stock
David Anthony Stott, Alexander Graham Wilson, Bandele Attah, Paul Grant,
Michael J. Hirst, Richard M. Lucy, Christopher J.J. Smith and Robert Wilson, the
Selling Shareholders, may offer and sell, from time to time, an aggregate of
980,532 Shares of the Common Stock of Intelligroup, Inc. See "Selling
Shareholders" for information relating to the number of shares offered hereby by
each individual Selling Shareholder. The Selling Shareholders may sell all or a
portion of their Shares through public or private transactions, at prevailing
market prices, or at privately negotiated prices. The Company will not receive
any part of the proceeds from sales of these Shares.
Our Common Stock is listed on the Nasdaq National Market under the symbol
"ITIG". The last reported sale price of the Common Stock on February 25, 1999 on
the Nasdaq National Market was $15.75 per share.
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INVESTING IN THE SHARES OF COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
----------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
February , 1999
<PAGE>
INTELLIGROUP, INC.
TABLE OF CONTENTS
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Page
----
About Intelligroup ................................................... 3
Additional Information ............................................... 4
Risk Factors ......................................................... 5
Use of Proceeds....................................................... 16
Selling Shareholders.................................................. 16
Plan of Distribution.................................................. 17
Legal Matters......................................................... 18
Experts............................................................... 18
Indemnification of Directors and Officers............................. 18
Securities and Exchange Commission Position on Indemnification
for Securities Act Liabilities...................................... 20
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<PAGE>
ABOUT INTELLIGROUP
The Company provides a wide range of information technology services,
including enterprise-wide business process solutions, internet applications
services, applications outsourcing and maintenance, management consulting, web
site design and customization, IT training solutions, systems integration and
custom software development based on leading technologies. 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 Company's
customers are Fortune 1000 and other large and mid-sized companies, as well as
other information technology consulting firms.
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 principal executive offices are located at 499 Thornall
Street, Edison, New Jersey 08837 and its telephone number is (732) 590-1600.
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<PAGE>
ADDITIONAL INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission ("SEC"). You
may read and copy any document the Company files at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. The
Company's SEC filings are also available to the public from the SEC's web site
at http://www.sec.gov. For additional information, please visit the Company's
website at http://www.intelligroup.com.
The SEC allows the Company to "incorporate by reference" the information
the Company files with the SEC, which means that the Company can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and later information that the Company files with the SEC will
automatically update and supersede this information.
The Company incorporates by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until the Selling Shareholders sells all the
Shares.
1. Annual Report on Form 10-K for the year ended December 31, 1998;
2. Current Reports on Form 8-K dated and filed with the SEC on January 20,
1999 and February 24, 1999;
3. The description of the Company's Common Stock, $.01 par value, which is
contained in the Company's Registration Statement on Form 8-A filed
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended, in the form declared effective by the SEC on September 26, 1996,
including any subsequent amendments or reports filed for the purpose of
updating such description.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the information
incorporated herein by reference. Exhibits to any of such documents, however,
will not be provided unless such exhibits are specifically incorporated by
reference into such documents. The requests should be made to:
Gerard E. Dorsey, Chief Financial Officer
Intelligroup, Inc.
499 Thornall Street
Edison, New Jersey 08837
(732) 590-1600
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. The Company has authorized no one to provide you with different
information. Neither the Company nor the Selling Shareholders are making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
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date other than the date on the front of the document.
RISK FACTORS
SOME INFORMATION IN THIS PROSPECTUS MAY CONTAIN "FORWARD-LOOKING
STATEMENTS". SUCH STATEMENTS CAN BE IDENTIFIED BY THE USE OF WORDS SUCH AS
"BELIEVE," "ANTICIPATE" AND "EXPECT." THESE STATEMENTS DISCUSS FUTURE
EXPECTATIONS, CONTAIN PROJECTIONS OR STATE OTHER "FORWARD-LOOKING" INFORMATION.
THE FACTORS DISCUSSED BELOW COULD CAUSE ACTUAL RESULTS AND DEVELOPMENTS TO BE
MATERIALLY DIFFERENT FROM THOSE EXPRESSED IN OR IMPLIED BY SUCH STATEMENTS. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, YOU SHOULD
CONSIDER THE FOLLOWING FACTORS CAREFULLY BEFORE DECIDING TO PURCHASE SHARES OF
OUR COMMON STOCK.
SUBSTANTIAL VARIABILITY OF QUARTERLY OPERATING RESULTS
In the past, the Company's operating results have varied substantially from
quarter to quarter. The Company's operating results also may vary in the future.
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. The Company's quarterly operating
results are influenced by:
[ ] 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;
[ ] the hiring of additional staff;
[ ] changes in the Company's billing and employee utilization rates; and
[ ] timing and integration of acquired businesses.
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. This decrease is 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.
MANAGEMENT OF GROWTH
The Company's growth has placed significant demands on its management,
administrative and operational resources. The Company's revenue increased from
$24.6 million in 1995 to $80.2 million in 1997 and $134.1 million in 1998
(exclusive of certain revenues relating to the
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<PAGE>
Company's acquisition of the Azimuth Companies). From January 1, 1995 through
December 31, 1998, the Company's total number of employees and independent
contractors increased from 113 to 1,260 persons. To manage its growth
effectively, the Company must continue to develop and improve its operational,
financial and other internal systems, as well as its business development
capabilities. The Company must also continue to attract, train, retain, motivate
and manage its employees.
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;
[ ] maintain project quality, particularly if the size and scope of the
Company's projects increase; and
[ ] integrate the service offerings, operations and employees of acquired
businesses.
The inability of the Company to manage its growth and projects effectively
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.
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. The management letter
described significant deficiencies and material weaknesses in the Company's
internal control structure. Arthur Andersen LLP noted that, during 1995, the
Company's internal control structure had two material weaknesses:
[ ] the Company did not reconcile its supporting records to the general
ledger or perform meaningful account analysis; and
[ ] the Company did not maintain, summarize or reconcile any books or
records for its foreign operations.
The Company first hired a Chief Financial Officer in January 1996. In March
1996 it implemented an accounting system capable of generating information and
reports necessary to appropriately manage the Company. In February 1998, the
Company's Chief Financial Officer resigned and on April 29, 1998, the Company
appointed a new Chief Financial Officer. On April 29, 1998, Stephen A. Carns was
appointed President and Chief Executive Officer of the Company. The Company
continues to develop and implement a system of internal controls and otherwise
develop an appropriate administrative infrastructure. Following the audit for
the year ended December 31, 1996, Arthur Andersen LLP issued a management letter
which, although it did set forth significant deficiencies, did not specify any
material weaknesses in the Company's
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<PAGE>
internal control structure. In addition, Arthur Andersen LLP informed the
Company that no material weaknesses in the Company's internal control structure
were noted during the audit of the Company's consolidated financial statements
for the year ended December 31, 1997. The failure to continue to develop and
maintain an effective internal control structure could have a material adverse
effect on the Company's business.
DEPENDENCE ON SAP, ORACLE AND PEOPLESOFT
During the years ended December 31, 1997 and 1998, approximately 58% and
59%, respectively, of the Company's revenue (restated to reflect the Company's
acquisitions) was derived from projects in which the Company implemented
software developed by SAP. SAP is a major international German-based software
company and a leading vendor of client/server application software for business
applications. 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
[ ] status as a SAP National Logo Partner.
The Company executed its SAP National Logo Partner Agreement in April 1997
and previously had been a SAP National Implementation Partner since 1995. In
July 1997, the Company achieved Accelerated SAP Partner Status with SAP by
meeting certain performance criteria established by SAP. Such status is awarded
by SAP on an annual basis pursuant to contract. The Company's current contract
expires on December 31, 1999 and is automatically renewed for successive
one-year periods, unless terminated by either party.
During each of the years ended December 31, 1997 and 1998, approximately
12% of the Company's total restated revenue was derived from projects in which
the Company implemented software developed by Oracle. Oracle is a leading vendor
of client/server application software for business applications. The Company's
current contract with Oracle expires on July 26, 1999 and is automatically
renewed for a successive one-year period, unless terminated by either party. The
Company expanded its relationship with Oracle by entering into an agreement,
effective October 26, 1998. The agreement is expected to help the Company meet
the demands of mid-size to large companies using Oracle. The agreement is
terminable by either party upon 30 days notice.
Additionally, the Company has increased its PeopleSoft implementation
projects. During 1998, the Company consummated acquisitions of companies whose
practices consist primarily of PeopleSoft implementation projects which will add
to its current PeopleSoft practice. During the years ended December 31, 1997 and
1998, approximately 8% and 9%, respectively, of the Company's restated revenue
was derived from projects in which the Company implemented software developed by
PeopleSoft. The company's current contract with PeopleSoft expires on July 15,
1999. In addition, the Company acquired Empower Solutions, Inc., a PeopleSoft
implementation company, in February 1999.
The Company has no reason to believe that its contracts with SAP, Oracle
and PeopleSoft will not be renewed or that the scope of such contracts will be
modified or limited in a manner adverse to the Company. However, there can be no
assurance that such contracts will be renewed
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<PAGE>
on terms acceptable to the Company, if at all. In addition, there could be a
material adverse effect on the Company's business if:
[ ] SAP, Oracle or PeopleSoft are unable to maintain their respective
leadership positions within the business applications software market;
[ ] the Company's relationship with SAP, Oracle or PeopleSoft
deteriorates; or
[ ] SAP, Oracle or PeopleSoft elects to compete directly with the Company.
SUBSTANTIAL RELIANCE ON KEY CUSTOMERS AND INFORMATION TECHNOLOGY PARTNERS
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, 1997 and 1998, the Company's ten
largest customers accounted for in the aggregate approximately 46% and 34% of
its restated revenue. In 1996 and 1997, PricewaterhouseCoopers LLP accounted for
more than 10% of restated revenue. During 1998, no single customer accounted for
more than 10% of restated revenue. For the years ended December 31, 1997 and
1998, approximately 32% and 25% of the Company's restated 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. There
can be no assurance that such information technology consulting firms will
continue to use the Company in the future and at current levels of retention, if
at all. In addition, the amount of work performed for specific customers is
likely to vary from year to year. The loss of any large customer or project
could have a material adverse effect on the Company's business.
Most of the Company's contracts can be canceled by the customer on short
notice and without significant penalty, with the exception of fixed price
contracts. The cancellation or significant reduction in the scope of a large
contract could have a material adverse effect on the Company's business.
The Company provides services to its customers primarily on a time and
materials basis. Recently, however, the Company has bid on certain fixed price
projects. For the year ended December 31, 1998, fixed price contracts
represented 7% of the total restated revenues of the Company. The Company
believes that, as it pursues its strategy of making turnkey project management a
larger portion of its business, it will likely be required to offer more fixed
price projects. The Company has had limited prior experience in pricing and
performing under fixed price arrangements. There can be no assurance that the
Company will be able to complete such projects within the fixed price and
required timeframes. The failure to perform within such fixed price contracts
could have a material adverse effect on the Company's business.
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 could result in a material adverse change to the customer's
operations. Such failure could give rise to claims for damages against the
Company or cause damage to the Company's reputation. Such claims could adversely
affect the Company's business. In some of its agreements, the Company has agreed
to indemnify the customer for damages arising from services provided to, or on
behalf of, such customer.
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Such indemnification could have a material adverse effect on the Company's
financial condition and results of operations. In some of its contracts, the
Company warrants that it will repair errors or defects in its deliverables
without additional charge to the customer. To date, the Company has not
experienced any material claims against such warranties. The Company has
insurance for damages and expenses incurred in connection with alleged negligent
acts, errors or omissions. There can be no assurance that such insurance will
continue to be available to the Company on acceptable terms.
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<PAGE>
ACQUISITION RISKS
A key element of the Company's strategy is growth by acquisition. From
May 1998 through the date of this Prospectus, the Company has completed four
significant acquisitions of businesses with services complementary to those
offered by the Company. For example, during 1998 and the first quarter of 1999
the Company consummated the following acquisitions:
<TABLE>
<CAPTION>
Companies Acquired Primary Location Services Date
------------------ ---------------- -------- ----
<S> <C> <C> <C>
CPI Consulting Limited and United Kingdom PeopleSoft May 1998
CPI Resources Limited Implementation
Azimuth Consulting Limited, Azimuth New Zealand IT Management November 1998
Holdings Limited, Braithwaite Richmond Consulting
Limited and Azimuth Corporation Limited
Network Publishing, Inc. Provo, Utah Web site design and January 1999
customized IT training
solutions
Empower Solutions, LLC and Plymouth, Michigan PeopleSoft February 1999
Empower, Inc. Implementation
</TABLE>
The Company expects to undertake additional acquisitions in the future,
although none are planned or being negotiated as of the date of this Prospectus.
Risks associated with acquisitions may include:
[ ] possible adverse effects on the Company's operating results;
[ ] diversion of management's attention;
[ ] risks associated with unanticipated liabilities or contingencies;
[ ] risks associated with financing;
[ ] integration of service offerings, operations and employees of acquired
businesses; and
[ ] management of growth issues.
HIGHLY COMPETITIVE INFORMATION TECHNOLOGY SERVICES INDUSTRY
The Company's business is highly competitive. 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. Additionally, the Company has faced, and expects to continue to face,
additional competition from new entrants into its markets.
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The Company believes that competitive factors in its markets include:
Principal Factors
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[ ] quality of service and deliverables;
[ ] speed of development and implementation;
[ ] price;
[ ] project management capability; and
[ ] technical and business expertise.
External Factors
----------------
[ ] 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 also believes that it competes based on its level of expertise
in SAP, Oracle, PeopleSoft and Baan products and a wide variety of other
technologies. There can be no assurance that the Company will be able to
continue to compete successfully with existing and new competitors.
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS
The Company's success depends 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. Even if these developments are
addressed, the Company may not be successful in the marketplace. In addition,
competitor's products or technologies may make the Company's services less
competitive or obsolete. The Company's failure to address these developments
could have a material adverse effect on its business.
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DEPENDENCE ON KEY PERSONNEL
The Company believes that its success now and in the future will depend
largely on the continued services of its key executive officers and leading
technical personnel. Each executive officer and leading technical professional
has entered into an employment agreement with the Company which contains
non-competition, non-disclosure and non-solicitation covenants. The departure of
one or more of such key personnel may have a material adverse effect on the
Company's business.
COMPETITIVE MARKET FOR TECHNICAL PERSONNEL
The Company believes that its 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. Such
qualified personnel are in great demand, there is significant competition for
such employees and it is likely that access to such personnel will remain
limited for the foreseeable future. There can be no assurance that the Company
will be successful in attracting a sufficient number of such personnel in the
future, or that it will be successful in retaining, training and motivating the
employees it is able to attract. The failure to do so could:
[ ] impair the Company's ability to adequately manage and complete its
existing projects;
[ ] impair the Company's ability to bid for or obtain new projects; and
[ ] adversely affect the Company's business.
RELIANCE ON INTELLECTUAL PROPERTY RIGHTS
The Company's future success is dependent, in part, upon its proprietary
implementation methodology and toolset, development tools and other intellectual
property rights. In order to protect its proprietary rights, the Company:
[ ] relies upon trade secrets, nondisclosure and other contractual
arrangements;
[ ] relies on copyright and trademark laws;
[ ] enters into confidentiality agreements with employees, consultants and
customers;
[ ] limits access to and distribution of its proprietary information; and
[ ] requires almost all employees and consultants to assign to the Company
their rights in intellectual property developed during their
employment or engagement by the Company.
There can be no assurance that the steps taken by the Company 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.
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The Company believes that its trademarks, service marks, services,
methodology and development tools do not infringe on the intellectual property
rights of others. There can be no assurance, however, 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.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company's international operations have been increased in recent years.
During 1997 and 1998, approximately 26% and 30% of the Company's restated
revenues were derived from international operations. The Company's recent
acquisitions of (i) CPI Consulting Limited and CPI Resources Limited (the "CPI
Companies") and (ii) Azimuth Consulting Limited, Azimuth Holdings Limited,
Braithwaite Richmond Limited and Azimuth Corporation Limited (the "Azimuth
Companies") have resulted and should continue to result in greater revenues
being derived internationally. To date, the Company has established or acquired
foreign operations in Australia, Denmark, India, Japan, New Zealand, the
Philippines, Singapore, Thailand and the United Kingdom. In order to expand
international sales, the Company may establish or acquire additional foreign
operations. Increasing foreign operations has required and likely will continue
to require significant management attention and financial resources and could
materially adversely affect the Company's business. Accordingly, in October
1998, the Company hired a Vice President of International Operations. In
addition, there can be no assurance that the Company will be able to increase
international market demand for its services. The risks 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;
[ ] 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.
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RISKS ASSOCIATED WITH OPERATIONS IN INDIA
The Company, through Intelligroup Asia Private Limited, is subject to the
risks associated with doing business in India. India's central and state
governments heavily regulate the Indian economy. In the recent past, the
government of India has provided significant tax incentives and relaxed certain
regulatory restrictions in order to encourage foreign investment in certain
sectors of the economy. Certain of these benefits that directly affect
Intelligroup Asia include:
[ ] tax holidays;
[ ] liberalized import and export duties; and
[ ] preferential rules on foreign investment and repatriation.
Changes in the business, political or regulatory climate of India could
have a material adverse effect on Intelligroup Asia's business. In addition,
India has experienced significant inflation, shortages of foreign exchange and
has been subject to civil unrest. Further, the United States and Japan have
recently imposed sanctions on India in response to certain nuclear testing
conducted by the Indian government. Changes in the following factors could have
a material adverse effect on the Company's business:
[ ] inflation;
[ ] interest rates;
[ ] taxation; or
[ ] other social, political, economic or diplomatic developments affecting
India in the future.
RISK OF INCREASED GOVERNMENT REGULATION OF IMMIGRATION
In the United States, the Company has relied and in the future expects to
continue to rely increasingly upon attracting and retaining personnel with
technical and project management skills from other countries. The Immigration
and Naturalization Service limits the number of new petitions it approves each
year. Accordingly, the Company may be unable to obtain visas necessary to bring
critical foreign employees to the United States. Any difficulty in hiring or
retaining foreign nationals in the United States could increase competition for
technical personnel and have a material adverse effect on the Company's
business.
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SHARES ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock in the public market following this offering,
or the perception that such sales could occur, may adversely affect the market
price of the Common Stock. As of February 16, 1999, the Company had an aggregate
of 15,402,843 shares of Common Stock issued and outstanding. Prior to the
effectiveness of this Registration Statement, the Company is obligated to issue
an aggregate of 155,208 shares, of which 77,604 shares are being registered
hereby, subject to its agreement with certain Selling Shareholders. See "Selling
Shareholders". Upon completion of this offering, an aggregate of 8,430,699
shares, including 1,343,471 shares issuable upon the exercise of stock options,
will be freely tradable by persons other than "affiliates" of the Company
without restriction. In addition, an aggregate of 6,484,524 shares held by the
founders of the Company may be sold pursuant to the provisions of Rule 144
(subject to volume limitations) under the Securities Act.
Shortly after this offering, the Company intends to register an additional
750,000 shares of Common Stock issuable upon stock options granted or to be
granted under its 1996 Stock Plan. Additionally, in connection with the
Company's acquisition of Empower Solutions, LLC and its affiliate Empower, Inc.,
the Company has agreed to register an aggregate of 1,831,091 shares of its
Common Stock. Of the 1,831,091 shares, up to 1,025,410 shares are to be
registered no later than the announcement of the Company's 1999 first quarter
financial results and the remainder of such shares are to be registered no later
than February 16, 2000. In addition, the Company may be required to register
additional shares of its Common Stock which may be issued in connection with a
net worth adjustment to be conducted subsequent to the date of this Prospectus.
CONTROL BY CERTAIN SHAREHOLDERS
Upon completion of this offering, the founders of the Company, Ashok
Pandey, Rajkumar Koneru and Nagarjun Valluripalli together will beneficially own
approximately 42% of the outstanding shares of Common Stock. As a result, these
shareholders, acting together, will be able to influence significant control of
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.
CERTAIN ANTI-TAKEOVER PROVISIONS; PREFERRED STOCK
Certain Provisions of the Certificate of Incorporation and the Shareholder
Protection Rights Agreement could make it more difficult for a third party to
acquire control of the Company, even if such change in control would be
beneficial to stockholders. The Certificate of Incorporation allows the Company
to issue preferred stock without shareholder approval. Such issuances could make
it more difficult for a third party to acquire the Company.
-15-
<PAGE>
POTENTIAL VOLATILITY OF STOCK PRICE
The market price of the shares of Common Stock has been and in the future
may be highly volatile. Some factors that may affect the market price include:
[ ] actual or anticipated fluctuations 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 and
IT services industry generally;
[ ] changes in recommendations or earnings estimates by securities
analysts; and
[ ] actual or anticipated quarterly fluctuations in financial results.
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.
ABSENCE OF DIVIDENDS
The Company has never paid, and does not anticipate paying any dividends on
its Common Stock in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered by the Selling Shareholders set forth in this Prospectus.
SELLING SHAREHOLDERS
The Shares to be offered under this Prospectus are owned by David Anthony
Stott, Alexander Graham Wilson, Bandele Attah, Paul Grant, Michael J. Hirst,
Richard M. Lucy, Christopher J.J. Smith and Robert Wilson. Messrs. Stott and A.
Wilson acquired their Shares in connection with the acquisition by the Company
of their equity interests in each of Azimuth Consulting Limited, Azimuth
Holdings Limited, Braithwaite Richmond Limited and Azimuth Corporation Limited,
pursuant to the terms of an Agreement of Purchase and Sale dated as of November
25, 1998, among the Company and Messrs. Stott and A. Wilson. Pursuant to the
terms of such agreement, the Company is required to file a registration
statement covering the Shares held by Messrs. Stott and A. Wilson with the SEC.
Messrs. Attah, Grant, Hirst, Lucy, Smith and R. Wilson acquired their Shares in
connection with the acquisition by the Company, through its wholly-owned
subsidiary, of their equity interests in CPI Consulting Limited, pursuant to the
terms of an Agreement of Purchase and Sale dated as of May 7, 1998, among the
Company, the Company's wholly-owned subsidiary and Messrs. Attah, Grant, Hirst,
Lucy, Smith and Wilson. Pursuant to the terms of such agreement, the Company is
required to file a registration statement covering the Shares held by Messrs.
Attah, Grant, Hirst, Lucy, Smith and R. Wilson with the SEC.
-16-
<PAGE>
The following table sets forth, as of February16, 1999, certain information with
respect to the Selling Shareholders.
<TABLE>
<CAPTION>
Number of
Beneficial Ownership of Shares Beneficial
Name of Selling Shareholders Prior Offered Ownership of Shares
Selling Shareholders to Offering(1) Hereby(2) After Offering(2)
- --------------------------------- --------------------------------- --------------- -------------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C>
David Anthony Stott 451,464(3) 2.9 451,464 -- --
Alexander Graham Wilson 451,464(3) 2.9 451,464 -- --
Bandele Attah 53,484(4) * 12,934 40,550 *
Paul Grant 53,484(4) * 12,934 40,550 *
Michael J. Hirst 53,484(4) * 12,934 40,550 *
Richard M. Lucy 53,484(4) * 12,934 40,550 *
Christopher J.J. Smith 53,484(4) * 12,934 40,550 *
Robert J. Wilson 53,484(4) * 12,934 40,550 *
</TABLE>
- ------------------
* Less than one percent
(1) Applicable percentage of ownership is based on 15,558,051 shares of Common
Stock issued and outstanding. Assumes the issuance of an aggregate of
155,208 shares by the Company to Messrs. Attah, Grant, Hirst, Lucy, Smith
and R. Wilson prior to the effectiveness of this offering.
(2) Assumes that all Shares are sold pursuant to this offering and that no
other shares of Common Stock are acquired or disposed of by the Selling
Shareholders prior to the termination of this offering. Because the Selling
Shareholders may sell all, some or none of their Shares or may acquire or
dispose of other shares of Common Stock, no reliable estimate can be made
of the aggregate number of Shares that will be sold pursuant to this
offering or the number or percentage of shares of Common Stock that each
Selling Shareholder will own upon completion of this offering.
(3) Includes, as to each such Selling Shareholder, 45,147 shares held in escrow
pending settlement of any claims relating to the acquisition of the Azimuth
Companies by the Company and expiration of the escrow agreement on November
25, 1999. Such Selling Shareholder does not hold any common stock
equivalents of the Company.
(4) Such number includes 25,868 shares to be issued by the Company to such
Selling Shareholder prior to the effectiveness of this Registration
Statement. Also includes 27,616 shares held by Messrs. Attah, Grant, Hirst,
Lucy, Smith and Wilson which were previously registered on a Registration
Statement on Form S-3 (Registration No. 333-56143) and filed with the
Securities and Exchange Commission on June 5, 1998. Does not include
options to purchase 3,000 shares of Common Stock granted to such holder
pursuant to the Company's 1996 Stock Plan. Such options become exercisable
to the extent of one-fourth of the options on the first anniversary of the
date of grant (April 27, 1998) with an additional one-fourth of the options
granted becoming exercisable on each of the second, third and fourth
anniversary of the date of grant.
All offering expenses are being paid by the Company except the fees and
expenses of any counsel and other advisors that the Selling Shareholders may
employ to represent them in connection with the offering and all brokerage or
underwriting discounts or commissions paid to broker-dealers in connection with
the sale of the Shares.
PLAN OF DISTRIBUTION
The Selling Shareholders have not advised the Company of any specific plan
for distribution of the Shares offered hereby, but it is anticipated that the
Shares will be sold from time to time by the Selling Shareholders or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made over-the-counter on the Nasdaq National Market at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated
-17-
<PAGE>
transactions. The Shares may be sold by one or more of the following: (i) a
block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (ii) purchases by a broker or dealer for its
account pursuant to this Prospectus; or (iii) ordinary brokerage transactions
and transactions in which the broker solicits purchases. In effecting sales,
brokers or dealers engaged by the Selling Shareholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from the Selling Shareholders in amounts to be negotiated
immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any commissions
received by them and any profit realized by them on the resale of Shares as
principals may be deemed underwriting compensation under the Securities Act. The
expenses of preparing this Prospectus and the related Registration Statement
with the Commission will be paid by the Company. Shares of Common Stock covered
by this Prospectus also may qualify to be sold pursuant to Rule 144 (subject to
the holding periods thereunder) under the Securities Act, rather than pursuant
to this Prospectus. The Selling Shareholders have been advised that they are
subject to the applicable provisions of the Exchange Act, including without
limitation, Rules 10b-5 and Regulation M thereunder.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be
passed upon for the Company by Buchanan Ingersoll Professional Corporation, 500
College Road East, Princeton, New Jersey.
EXPERTS
The consolidated financial statements 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 are included herein in reliance upon the authority of said firm as
experts in giving said reports.
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 or her serving
or having served in such capacities; or
[ ] each such person's acts taken in such capacity if such actions were
taken in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the
corporation.
With respect to any criminal proceeding, indemnity is permitted if such
person had no reasonable cause to believe his or her conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.
-18-
<PAGE>
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 for:
[ ] any breach of the director's or officer's duty of loyalty to the
corporation or its shareholders;
[ ] acts or omissions not in good faith or which involve a knowing
violation of law; or
[ ] any transaction from which the director or officer derived an improper
personal benefit.
The Company's 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 Company shall indemnify its directors and officers to the extent such
parties are involved in or made a party to any action, suit or proceeding
because he or she was a director or officer 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 or she reasonably believed to
be in the best interests of the Company; and
[ ] had no reasonable cause to believe his or her conduct was unlawful.
This provision of the By-laws is deemed to be a contract between the
Company 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. Any repeal or modification shall not offset any
action, suit or proceeding 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 capital stock of the Company is
required to adopt, amend or repeal such provision of the By-laws.
The Company has executed indemnification agreements with each of its
directors and executive officers. Such agreements require the Company 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 Company has liability insurance for the benefit of its directors and
officers. The insurance covers claims against such persons due to any breach of
duty, neglect, error, misstatement, misleading statement, omission or act done.
The insurance covers such claims, except as prohibited by law, or otherwise
excluded by such insurance policy.
-19-
<PAGE>
SECURITIES AND EXCHANGE COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
-20-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee........................... $ 4,216.94
Counsel fees and expenses*..................... 60,000.00
Accounting fees and expenses*.................. 20,000.00
Miscellaneous expenses*........................ 783.06
---------
Total*..................................... $ 85,000.00
=========
----------
* Estimated
All expenses of issuance and distribution listed above will be borne by the
Company. The costs of fees and expenses of legal counsel and other advisors, if
any, that the Selling Shareholders employ in connection withthe offering will be
borne by the Selling Shareholders.
ITEM 15. 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 or her serving
or having served in such capacities; or
[ ] each such person's acts taken in such capacity if such actions were
taken in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the
corporation.
With respect to any criminal proceeding, indemnity is permitted if such
person had no reasonable cause to believe his or her 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 for:
[ ] any breach of the director's or officer's duty of loyalty to the
corporation or its shareholders;
[ ] acts or omissions not in good faith or which involve a knowing
violation of law; or
II-1
<PAGE>
[ ] any transaction from which the director or officer derived an improper
personal benefit.
The Company's 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 Company shall indemnify its directors and officers to the extent such
parties are involved in or made a party to any action, suit or proceeding
because he or she was a director or officer 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 or she reasonably believed to
be in the best interests of the Company; and
[ ] had no reasonable cause to believe his or her conduct was unlawful.
This provision of the By-laws is deemed to be a contract between the
Company 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. Any repeal or modification shall not offset any
action, suit or proceeding 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 capital stock of the Company is
required to adopt, amend or repeal such provision of the By-laws.
The Company has executed indemnification agreements with each of its
directors and executive officers. Such agreements require the Company 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 Company has liability insurance for the benefit of its directors and
officers. The insurance covers claims against such persons due to any breach of
duty, neglect, error, misstatement, misleading statement, omission or act done.
The insurance covers such claims, except as prohibited by law, or otherwise
excluded by such insurance policy.
SECURITIES AND EXCHANGE COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
II-2
<PAGE>
ITEM 16. EXHIBITS.
Exhibit No. Description of Exhibit
----------- ----------------------
5 Opinion of Buchanan Ingersoll Professional Corporation as to
legality of the Shares of Common Stock.
23.1* Consent of Arthur Andersen LLP.
23.2 Consent of Buchanan Ingersoll Professional Corporation
(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).
- ------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
this Registration Statement or any material change to such information in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the
II-3
<PAGE>
foregoing provisions, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to 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 S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Edison, State of New Jersey, on the 26th day of
February, 1999.
INTELLIGROUP, INC.
By: /s/ Stephen A. Carns
---------------------------------
President and Chief Executive
Officer
II-5
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Stephen A. Carns and Gerard E. Dorsey,
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen A. Carns President, Chief Executive Officer February 26, 1999
- -------------------------- and Director(principal executive officer)
Stephen A. Carns
/s/ Ashok Pandey Co-Chairman of the Board and Director February 26, 1999
- --------------------------
Ashok Pandey
/s/ Rajkumar Koneru Co-Chairman of the Board and Director February 26, 1999
- --------------------------
Rajkumar Koneru
/s/ Nagarjun Valluripalli Co-Chairman of the Board, President of February 26, 1999
- -------------------------- International Operations and Director
Nagarjun Valluripalli
/s/ Gerard E. Dorsey Senior Vice President - Finance and Chief February 26, 1999
- -------------------------- Financial Officer (principal financial and
Gerard E. Dorsey accounting officer)
/s/ Klaus Besier Director February 26, 1999
- --------------------------
Klaus Besier
/s/ David Finley Director February 26, 1999
- --------------------------
David Finley
/s/ Kevin P. Mohan Director February 26, 1999
- --------------------------
Kevin P. Mohan
/s/ John E. Steuri Director February 26, 1999
- --------------------------
John E. Steuri
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
5 Opinion of Buchanan Ingersoll Professional Corporation as to
legality of the Shares of Common Stock.
23.1* Consent of Arthur Andersen LLP.
23.2 Consent of Buchanan Ingersoll Professional Corporation (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).
- --------------
* To be filed by amendment.
EXHIBIT 5
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
(Incorporated in Pennsylvania)
Attorneys
500 College Road East
Princeton, New Jersey 08540
February 26, 1999
Intelligroup, Inc.
499 Thornall Street
Edison, New Jersey 08837
Gentlemen:
We have acted as counsel to Intelligroup, Inc., a New Jersey corporation
(the "Company"), in connection with the filing by the Company of a registration
statement on Form S-3 (the "Registration Statement"), under the Securities Act
of 1933, as amended, relating to the registration of an aggregate of 980,532
shares (the "Shares") of the Company's common stock, $0.01 par value, all of
which are to be offered by a certain Selling Shareholders as set forth therein.
In connection with the Registration Statement, we have examined such
corporate records and documents, other documents, and such questions of law as
we have deemed necessary or appropriate for purposes of this opinion. On the
basis of such examination, it is our opinion that:
1. The issuance of the Shares was duly and validly authorized; and
2. The Shares are legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Registration Statement.
Very truly yours,
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
/s/David J. Sorin
------------------------------
By: David J. Sorin,
a member of the firm
