<PAGE> 1
As filed with the Securities and Exchange Commission on December 23, 1996
Registration No. 333-16879
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTELLICORP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2756073
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
1975 EL CAMINO REAL WEST, MOUNTAIN VIEW, CALIFORNIA 94040-2216
(415)965-5500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
KENNETH H. HAAS
1975 EL CAMINO REAL WEST
MOUNTAIN VIEW, CALIFORNIA 94040-2216
(415)965-5500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH COPIES OF ALL ORDERS, NOTICES AND COMMUNICATIONS TO:
RICHARD A. PEERS
HELLER, EHRMAN, WHITE & MCAULIFFE
525 UNIVERSITY AVENUE
PALO ALTO, CALIFORNIA 94301-1908
(415) 324-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS
SOON AS PRACTICABLE 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 being 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 addition 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 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 number of the earlier 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> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Amount to be aggregate price aggregate Amount of
Title of securities to be registered registered per security offering price registration fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001 3,972,318 $1.75 (1) $6,951,557 (1) $2,107(2)
</TABLE>
(1) Estimated solely for the purpose of computing the amount of
registration fee pursuant to Rule 457(c) under the Securities Act of
1993, as amended, based on the average of the high and low prices
reported of the Registrant's Common Stock on the Nasdaq Stock Market
on December 19, 1996.
(2) Of this amount, $2,044 was previously paid.
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PROSPECTUS
3,972,318 SHARES OF COMMON STOCK OFFERED BY THE SELLING SHAREHOLDERS
INTELLICORP, INC.
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All of the 3,972,318 shares (the "Shares") of common stock, $.001 par
value, (the "Common Stock") of IntelliCorp, Inc. (the "Company" or
"IntelliCorp") covered by this prospectus (the "Prospectus") are being offered
by the holders of the Shares (collectively, the "Selling Shareholders") named in
this Prospectus. See "Selling Shareholders". The Company will not receive any of
the proceeds from the sale of Shares by the Selling Shareholders; however, the
Company will receive up to $2,520,000 on the issuance of Shares to certain
Selling Shareholders upon exercise of 720,000 warrants to purchase Company
Common Stock at $3.50 per share (the "Warrants").
Some or all of the Shares covered by this Prospectus may be offered for
sale from time to time by the Selling Shareholders at such prices and on such
terms as may then be obtainable, in negotiated transactions, or otherwise. This
Prospectus may be used by the Selling Shareholders or by any broker-dealer who
may participate in sales of the securities covered hereby. The Selling
Shareholders will pay all commissions, transfer taxes, and other expenses
associated with the sales of securities by them. The Company has paid the
expenses of the preparation of this Prospectus. The Company has agreed to
indemnify the Selling Shareholders against certain liabilities, including
liabilities arising under the Securities Act.
The Shares are quoted on the Nasdaq Stock Market under the symbol
"INAI". On December 19, 1996, the closing price as reported on the Nasdaq Stock
Market was $1 5/8 per share.
IntelliCorp has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered by this
Prospectus. As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to IntelliCorp and the securities offered hereby, reference is made to
the Registration Statement and the exhibits thereto, which may be examined
without charge at the public reference facilities maintained by the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
of which may be obtained from the Commission upon payment of the prescribed
fees.
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THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK.
(SEE "RISK FACTORS" COMMENCING ON PAGE 3.)
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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.
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THE DATE OF THE PROSPECTUS IS DECEMBER 24, 1996
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No person is authorized to give any information or to make any
representations or projections of future performance other than those contained
or incorporated by reference in this Prospectus and, if given or made, such
information, projections or representations must not be relied upon as having
been authorized. This Prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell or solicitation of an
offer to buy to any person in any jurisdiction where such offer would be
unlawful. The delivery of this Prospectus or sale hereunder at any time does not
imply that the information herein is correct as of any time subsequent to the
date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected at the public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street, N. W., Washington, D.C. 20549. Copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Commission at such address. Such reports, proxy statements and other information
can also be inspected at the Commission's regional offices at 7 World Trade
Center, Suite 1300, New York, New York 10048 and at 500 West Madison, Chicago,
Illinois 60661, and at the offices of the Nasdaq Stock Market at 1735 K Street,
N.W., Washington, D.C. 20006-1500. The Commission maintains a Web Site that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission, and the address of such site is http://www/sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(i) the Company's annual report on Form 10-KSB for the fiscal year
ended June 30, 1996, and quarterly report on Form 10-QSB for the fiscal quarter
ended September 30, 1996, each filed pursuant to Section 13(a) or 15(d) of the
Exchange Act;
(ii) all other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since the end of the fiscal year covered by the
annual report referred to in (i) above; and
(iii) the description of the Company's securities contained in its Form
8-A Registration Statements filed pursuant to Section 12 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of securities hereunder shall be deemed to be
incorporated herein by reference and shall be a part hereof from the date of the
filing of such documents. Any statements contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
replaced for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or replaces such
statement. Any such statement so modified or replaced shall not be deemed,
except as so modified or replaced, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any document incorporated by reference in this
Prospectus, other than exhibits to such documents not specifically incorporated
by reference. Such requests should be directed to IntelliCorp, Inc., 1975 El
Camino Real West, Mountain View, California 94040, Attention: Kenneth A. Czaja,
Chief Financial Officer, Telephone: (415) 965-5500.
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RISK FACTORS
An investment in the securities being offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the Shares.
NEED FOR ACCEPTANCE OF MODELING TECHNOLOGY AND COMPANY PRODUCTS
The market for the Company's products is new and evolving, and its
growth depends upon broader market acceptance of modeling technology, including
object-oriented technology. Modeling technologies represent fundamental shifts
in analysis, design and programming methodologies. They require substantial
investment in the retraining of programmers and business analysts, which can be
expensive and can reduce the productivity of programmers and analysts during the
training period. As a result, there can be no assurance that organizations will
choose to make the investment required to use modeling techniques in planning
their operations and for the enhancement of their businesses or their clients'
businesses.
Even if modeling technology gains broader market acceptance, there can
be no assurance that PowerModel and LiveModel, the Company's principal products
at this time, will be accepted for implementation of object-oriented and
modeling technology. PowerModel and LiveModel are both relatively new products
with limited market acceptance. In the case of the product market for LiveModel:
SAP R/3 Edition, it is unclear if this product's modeling approach will be
accepted as a solution to customers' SAP implementation problems, or if the
product will be used by customers who have previously installed SAP's R/3
software. In addition, even if PowerModel and LiveModel gain broader market
acceptance, a number of other vendors offer competing products. There are also a
number of other approaches to business and application modeling, including the
use of traditional CASE tools. See "Competition" below.
The Company has refocused its efforts on the SAP market and, in June
1996, LiveModel: SAP R/3 Edition was commercially released to address the need
for a modeling tool to assist companies who are implementing SAP's R/3 system.
As a result of refocusing a substantial portion of the Company's business on the
SAP market, increased acceptance of the Company's software products will depend
on continued market acceptance of SAP's R/3 system. In addition, sales of the
Company's SAP R/3 based products will depend on the acceptance and use by
consulting firms and others who assist their customers to implement the complex
R/3 system. There can be no assurance that the Company will be successful in
achieving and sustaining partnerships with third party packaged system vendors
or with strategic consulting firms. SAP has formed strategic alliances with
other companies to develop R/3 modeling/implementation software packages and SAP
itself offers products that include a subset of the capabilities of
IntelliCorp's products. While the Company believes that LiveModel: SAP R/3
Edition offers advantages over competing products in this market, there can be
no assurance that the Company will be successful in refocusing its business in
the SAP R/3 market or that the Company's products will successfully compete with
others in this market.
The Company's fiscal 1997 sales forecast anticipates a significant
portion of revenues to be derived from sales of and consulting services related
to LiveModel: SAP R/3 Edition. Factors which could impact the level of revenues
generated from LiveModel: SAP R/3 Edition include, but are not limited to, the
timing and level of market acceptance of the new product, the timing of market
introduction of competing products, the success of providing consulting services
and the success of sales efforts with strategic partners. There can be no
assurance, however, that the actual sales will not differ materially from the
sales forecast in the near term.
The Company has focused its PowerModel business on the concurrent
engineering market for manufacturing and design. However, there can be no
assurance that customers will accept the Company's product solutions once the
solutions are completed, that the Company will have the necessary expertise for
this market, or that the Company will obtain the right business partnerships.
RAPID TECHNOLOGICAL CHANGE; PRODUCT DEVELOPMENT
The market for the Company's products is characterized by ongoing
technological developments, evolving industry standards, rapid changes in
customer requirements and increasing customer demands. As a result, the
Company's success depends upon its ability to continue to enhance its existing
products, develop and introduce in a timely manner new products that take
advantage of technological advances, and respond to new customer requirements
and demands. To the extent one or more of the Company's competitors introduce
products that fully address customer requirements, the Company's business could
be adversely affected. There can be no assurance that the Company will be
successful in developing and marketing enhancements to its existing products or
new
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products incorporating new technology on a timely basis, or that its new
products will adequately address the changing needs of the marketplace. If the
Company is unable to develop and introduce new products, or enhancements to
existing products, in a timely manner in response to changing market conditions
or customer requirements or demands, the Company's business and results of
operations will be materially and adversely affected. Versions of LiveModel and
PowerModel are currently available for use on the UNIX operating system. UNIX
enjoys relatively limited market acceptance at present and there can be no
assurance that market acceptance for UNIX will expand or will not decrease.
Additionally, sales of existing products on UNIX have declined substantially and
there can be no assurance that future sales of these products will not continue
to decline.
With the introduction of LiveModel: SAP R/3 Edition, the Company has
shift its emphasis from UNIX systems to Windows and other Microsoft operating
systems. There can be no assurance that this shift from UNIX to Windows will be
successful or that the Company will achieve significant success of its
Windows-based products.
In addition, the Company and SAP AG have a joint development agreement
under which the utility of the IntelliCorp technology within the content of the
SAP R/3 system is being explored. There is no assurance that SAP or IntelliCorp
will continue to find the mutual development of interfacing products to be in
their mutual best interests or that SAP will not terminate the partnership or
change their products or strategies in a way that is adverse to IntelliCorp.
Even though IntelliCorp may wish to further its relationship with SAP and its
development of products, there can be no assurance that the Company will be
successful in doing so. Termination of its arrangement with SAP could have a
material adverse effect on the Company's financial results. In addition, the
Company relies on licenses from third parties, such as POET and SAP, for some of
its technology and product functionality.
Although the Company has a number of ongoing development projects,
there can be no assurance that the development of these products will be
completed successfully or on time, that the projects will include the features
required to achieve market acceptance, or that enhancements to the product will
keep pace with broadening market requirements. From time to time the Company or
its competitors may announce new products, capabilities or technologies that
have the potential to replace or shorten the life cycles of the Company's
existing products. There can be no assurance that announcements by the Company
or its competitors of currently planned or other new products will not cause
customers to defer purchasing existing Company products. The Company has in the
past experienced delays in software development and there can be no assurance
that the Company will not experience further delays in connection with its
current product development or future development activities. Delays or
difficulties associated with new product introductions or product enhancements
could have a material adverse effect on the Company's results of operations.
Software products as complex as those offered by the Company may contain
undetected errors when first introduced or as new versions are released. There
can be no assurance that errors will not be found in new products after
commencement of commercial shipments, resulting in loss of or delay in market
acceptance. The Company maintains no insurance for this risk.
COMPETITION
The Company believes that its ability to compete depends on factors
both within and outside its control, including the timing and success of new
products developed by the Company and its competitors, product performance and
price, distribution and customer support. There can be no assurance that the
Company will be able to compete successfully with respect to these factors.
The market for IntelliCorp's software products is intensely competitive
and is characterized by rapid change and frequent introduction of new products.
The important competitive factors in the industry are generation of and
integration with standard runtime environments, access to standard databases,
ability to support the client/server paradigm, support for popular
methodologies, product sophistication, features, reliability, price/performance
characteristics, ease of understanding and operating the software, integration
with conventional computing environments and the internet, availability of the
product on a variety of hardware platforms. There can be no assurance that the
Company will be successful in the face of increasing competition from new
products and enhancements introduced by existing competitors and by new
companies entering the market.
The market for application development tools and languages for
client/server computing environments is intensely competitive and the Company
expects competition to continue to increase. The Company's competitors include a
broad range of companies that develop and market tools and languages for
software application development, including (i) providers of modeling and/or
diagramming tools, some of which operate, or may in the future, operate in
conjunction with SAP's R/3 System and who, for marketing purposes, have formed
or may, in the future, form strategic partnerships with providers of
commercially popular software systems, such as SAP; (ii) providers of
object-oriented languages and tools such as C++ and C and Smalltalk; (iii)
providers of object-based development tools; (iv) providers of 4GL-based
development tools; and (v) providers of CASE tools. Vendors marketing competing
object-oriented languages and/or tools, include Brightware; Gensyn; Neuron Data;
NeXT; ParcPlace; and Platinum Technologies.
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Providers of 4GL application development tools include Borland; Informix;
Oracle; and Sybase. Providers of CASE tools include Cayenne; IDE; Rational;
Intersolv; Oracle; Texas Instruments; and Seer Technologies. Other companies
offering SAP R/3 modeling and implementation tools include: IDS Prof. Scheer,
Visio, Texas Instruments, Logic Works, and Micrographix. In addition, SAP offers
the Business Engineering Workbench with a subset of the capabilities of the
IntelliCorp products.
Many of the Company's current and prospective competitors have
significantly greater financial, technical, manufacturing and sales and
marketing resources than the Company. These companies as well as other hardware
and database software vendors can be expected to develop and market additional
competitive products in the future. In addition, a variety of established
companies are also building object-oriented products as extensions to their
existing product lines.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon a limited number of key management,
technical and sales personnel, the loss of whom would adversely affect the
Company's business. In addition, in the future, the Company may need to augment
or replace existing key management, technical, or sales personnel in order to
maintain or increase its business. Because of the complexity and breadth of the
Company's product line in certain technical areas, the Company may have only a
single employee with appropriate expertise. The loss of any such employee can
have the effect of slowing down or halting development with respect to a product
until the Company is able to locate and hire another technical person with the
requisite expertise. In addition, certain management, technical and support
personnel are relatively new to the Company, and the Company's success in the
future will depend in part on successful assimilation of new personnel. The
Company's future success will depend in part upon its ability to attract and
retain highly qualified personnel. The Company competes for such personnel with
other companies, academic institutions, government entities and other
organizations. The ability to recruit, on a timely basis, appropriate personnel
to staff the various development efforts will be a key factor in the success of
those projects. If the Company cannot recruit the appropriate personnel and must
hire outside consultants to perform this work, the contract margins may be
adversely affected. There can be no assurance that the Company will be
successful in hiring or retaining qualified personnel. It is particularly
difficult to hire personnel with SAP expertise. Loss of key personnel or
inability to hire and retain qualified personnel could have a material adverse
effect on the Company's business and results of operations. Recently, and from
time to time in the past, the Company has experienced significant turnover in
its sales force. There can be no assurance that the Company will be able to
reduce this periodic turnover in its sales force and, as a result, the Company
may lose sales opportunities, market share or customers.
Customers in the modeling technology market require tools that can
operate on many different hardware platforms and with many different operating
systems, tools, databases, systems and devices. Because of the broad range of
features and functions required of the Company's products, their development,
maintenance and use is extremely complex and requires the Company to have
technical personnel with a breadth of expertise. Highly qualified and
specialized personnel for sales, customer training, customer support and on-site
consulting are required. These personnel requirements are very difficult for the
Company to manage and maintain because of its limited financial resources. There
can be no assurance that the Company will have the necessary personnel to
develop and commercialize its products successfully, or to port these products
to the necessary hardware platforms and operating systems.
DEPENDENCE ON LOWER MARGIN SERVICE REVENUES
A significant amount of the Company's revenues has been derived from
contract and other services. The operating margins from revenues for such
services are substantially lower than the operating margins from revenues for
the Company's software products. This disparity is principally due to the low
cost of materials, royalties, and other costs of the Company's software
products, as compared to the relatively high personnel costs (including the
higher cost of using outside consultants) incurred in providing consulting
services. In addition, as the proportion of contract and other service revenues
increases, the overall margins will decrease accordingly. As a result of the
Company's reliance on contract and other revenues, the Company's overall
operating margins may be lower than those for software companies that do not
derive such a significant percentage of revenues from contract and other
services. In addition, the Company's operating margins have in the past and may
in the future vary significantly as a result of changes in the proportion of
revenues attributable to products and services.
LACK OF PROFITABILITY; POTENTIAL FUTURE LOSSES
Over the last five years, the Company has experienced aggregate
consolidated net losses of over $25,000,000, including a net loss of $4,499,000
for the year ended June 30, 1996 and a net loss of $981,000 for the quarter
ended September 30, 1996. In
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addition, the Company may incur a loss in fiscal 1997 and may also have losses
in future years. There can be no assurance that the Company will eventually
attain profitability or, if it attains profitability, that it will be able to
maintain profitability.
Working capital at September 30, 1996, was $1,865,000 as compared to
$2,850,000 at June 30, 1996. Management's financial plans for fiscal year
1997 anticipate sufficient revenues so as not to require additional capital
resources. However, the Company may, from time to time, need to raise additional
capital through debt or equity financing and there can be no assurance that such
financing will be available to the Company. If revenues for fiscal year 1997 do
not meet management's expectations, and additional financings are not available,
management has the ability and intent to reduce certain expenditures to lower
the Company's cost base, if required. As a result of these factors, the Company
believes its cash and cash equivalents at September 30, 1996 and expected cash
generated from operations will be sufficient to fund operations during fiscal
1997.
To allow its Common Stock to remain listed for trading on the Nasdaq
Stock Market, the Company is required to maintain a minimum capital and surplus.
In the past, the Company's capital and surplus have fallen below the Nasdaq
minimum. This failure to maintain the minimum capital and surplus required the
Company to exchange debt for preferred stock. Additional losses could adversely
affect the Company's ability to maintain the required minimum capital and
surplus in the future. Should the Company's Common Stock be delisted from the
Nasdaq Stock Market, the trading market for the Common Stock may be adversely
affected.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's quarterly revenues and operating results have in the
past, and may in the future, vary significantly due to such factors as the
timing of new product introductions, changes in pricing policies by the Company
and its competitors, market acceptance of new products, and enhanced versions of
existing products, the information systems department budgets of its customers,
and the length of sales cycles. Although a significant portion of the Company's
revenues in each quarter result from orders received in that quarter, the
majority of the Company's expense levels are fixed, based on expectations of
future revenues. In addition, a substantial amount of the Company's quarterly
revenues have typically been recorded in the third month of the fiscal quarter
with a concentration of such revenues in the last half of the month. The timing
of the closing of large license agreements increases the risk of quarter to
quarter fluctuations. As a result, if revenues are not realized as expected, the
Company's operating results will be materially adversely affected. Accordingly,
it is likely that the Company would experience disproportionate declines in its
operating results if revenues were to decline. In addition, it is possible that
in some future quarter the Company's operating results will be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock would likely be adversely affected.
CONCENTRATED PRODUCT LINE
The Company currently derives substantially all of its revenue from
LiveModel and PowerModel and related products and services and expects this
concentration to continue for the foreseeable future. As a result, any factor
adversely affecting the demand for, or pricing of, LiveModel and PowerModel and
related products and services would have a material adverse effect on the
Company's business and results of operations. The Company's future financial
performance will depend significantly on the successful development and customer
acceptance of new and enhanced versions of its products.
CUSTOMER CONCENTRATION
In the quarter ended September 30, 1996, revenues from the sale of
products and services to one commercial customer and one related party accounted
for 14% and 14%, respectively, of total revenue. The level of revenues received
from these customers may not continue in future periods. In addition, certain
customers may account for a significant portion of net revenues in a particular
quarter, which may lead to significant variations in quarterly results.
NEED FOR CHANNEL PARTNERS
In order for the Company to reach higher levels of revenue and
sustainable growth, the Company may require channel partners for the sale,
distribution and co-marketing of its products. Such partners may include SAP,
consulting firms, systems integrators, traditional software distributors or
hardware or software companies with established distribution channels. The
Company has an arrangement with Hewlett-Packard and an agreement with Deloitte &
Touche Consulting Group/ICS and Origin to promote or to utilize the Company's
LiveModel: SAP R/3 Edition. These channel partners are instrumental in gaining
acceptance of IntelliCorp's modeling tools both for their consulting methodology
as well as by their customers for continuing operating requirements.
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The Company anticipates that a significant portion of fiscal year 1997 revenues
will be generated through these arrangements and other similar arrangements or
agreements with consulting firms and hardware companies. There can be no
assurance that the Company will be able to achieve significant sales through its
Hewlett-Packard, Deloitte & Touche and Origin relationships or that the Company
will be successful in establishing additional channel partner arrangements or
that, if such relationships are established, they will prove to be commercially
successful. In addition, there can be no assurance that the Company's partners
will not utilize their relative size or financial strength to the disadvantage
of the Company.
MANAGING A CHANGING BUSINESS
Since its inception, the Company has experienced changes in its
operations which have placed significant demands on the Company's
administrative, operational and financial resources. The Company's future
performance will depend in part on its ability to manage change, both in its
domestic and international operations, and to adapt its operational and
financial control systems as necessary to respond to changes in its business.
The failure of the Company's management to effectively respond to and manage
changing business conditions could have a material adverse effect on the
Company's business and results of operations.
INTERNATIONAL OPERATIONS
Approximately 39% of the Company's net revenues for the quarter ended
September 30, 1996 and 31% of the Company's net revenues for the fiscal year
ended June 30, 1996 were attributable to international sales. Substantially all
international revenues to date have been derived from license revenues. The
Company currently offers local language versions of its products. Although it
does intend to offer additional localized product releases in the future, there
can be no assurance that such releases will be successfully developed or, if
developed, that they will achieve market acceptance. The Company faces certain
risks as a result of international sales. First, staff levels have been reduced
significantly as a result of the Company's restructuring in the last fiscal
year. Second, the results of the Company could be affected adversely by
short-term fluctuations in currency exchange rates. Additionally, the Company's
international operations may be affected by changes in demand resulting from
long-term changes in interest and currency exchange rates. The Company is also
subject to other risks associated with international operations, including
tariff regulations and requirements for export licenses, particularly with
respect to the export of certain technologies, which may on occasion be delayed
or difficult to obtain, unexpected changes in regulatory requirements, longer
accounts receivable payment cycles, difficulties in managing international
operations, potentially adverse tax consequences, economic and political
instability, restrictions on repatriation of earnings, and the burdens of
complying with a wide variety of foreign laws. In addition, the laws of certain
countries do not protect the Company's products and intellectual property rights
to the same extent as do the laws of the United States. There can be no
assurance that such factors will not have an adverse effect on the Company's
future international sales and, consequently, on the Company's business and
results of operations. With the exception of limited patent protection in
Canada, the Company has no patents protecting its products in foreign markets.
PROPRIETARY INFORMATION
IntelliCorp regards its software as proprietary and attempts to protect
it by relying upon copyrights, trade secret and patent laws and contractual
nondisclosure safeguards as well as restrictions on transferability that are
incorporated into its software license agreements. IntelliCorp licenses its
software products (in object or binary form) to customers rather than
transferring title. In spite of these precautions, it may be possible for
competitors or users to copy aspects of IntelliCorp's products or to obtain
information which the Company regards as trade secrets without authorization, or
to develop similar technology independently. In addition, effective copyright
and trade secret protection may be unavailable or limited in certain foreign
countries. IntelliCorp has licensed a number of products, including PowerModel,
in source form (or human-readable form) to certain customers and third parties,
both in the United States and internationally, for a variety of purposes,
including porting to other platforms and globalization. This practice increases
the possibility of misappropriation or other misuse of the Company's products.
IntelliCorp has not required end-users of Kappa-PC (a PowerModel product) and
LiveModel: SAP R/3 Edition to sign license agreements. Instead, the license
agreement for Kappa-PC and LiveModel: SAP R/3 Edition is included in the product
packaging, and the packaging explains that by opening the seal the user is
agreeing to the terms of the license agreement. It is uncertain whether
"Shrink-wrap" license agreements of this type are legally enforceable.
IntelliCorp's first three patents, relating primarily to
knowledge-based technology, were issued between June 1987 and May 1990.
IntelliCorp's fourth patent with respect to certain technologies integrated in
its PowerModel product was issued in May 1994. The Company filed an additional
patent application in June 1994 relating to its LiveModel product. However,
there can be no assurance that any further patents will be issued with respect
to the Company's products, and existing patent and copyright laws afford
-7-
<PAGE> 10
only limited practical protection to IntelliCorp. Although the Company believes
that its products and technology do not infringe on any existing proprietary
rights of others, there exist several patents with claims that might extend to
IntelliCorp's products, which, together with the growing use of patents to
protect software, has increased the risk that third parties may assert
infringement claims against IntelliCorp in the future. Any such claims, with or
without merit, could result in costly litigation or might require the Company to
enter into royalty or licensing agreements. Such royalty or license agreements,
if required, may not be available on terms acceptable to the Company or at all.
The Company does not have insurance to cover the risk of infringement claims.
In view of the rapid rate of technological change in the areas in which
it does business and the uncertainty of the scope of the protection afforded by
copyright and patent laws, IntelliCorp does not believe that copyrights or
patents will be of major competitive advantage to it. Rather, IntelliCorp
believes that it must rely primarily on the technical competence and creative
ability of its personnel to improve and update its software products and create
additional products in order to be successful.
PUBLIC TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
As of November 30, 1996, there were 12,408,750 shares of Common Stock
outstanding. The trading price of the Company's Common Stock is subject to wide
fluctuations in response to variations in the actual or anticipated quarterly
operating results of the Company, announcements of new products or technological
innovations by the Company or its competitors, and general conditions in the
industry. In addition, stock markets for securities of high technology companies
have experienced extreme price and volume trading volatility in recent years.
This volatility may have a substantial effect on the market prices of securities
of many high-technology companies for reasons unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock.
In 1996, the Company had a convertible debt offering (the "Notes") and
issued convertible preferred stock (the "Preferred Shares") and the Warrants.
The interest due on the Notes and dividends on Preferred Shares may be and are
expected to be payable in shares of Common Stock in lieu of cash for two years.
The Notes and Preferred Shares are convertible into Common Stock at the election
of the holders. The Company is registering for resale the shares of Common Stock
issuable with respect to the Notes, Preferred Shares and the Warrants, as well
as the Common Stock expected to be issued in payment of interest and dividends
with respect to the Notes and Preferred Shares. If all the shares reserved for
these purposes were issued, it would significantly increase the number of shares
outstanding. Sales or issuance of substantial amounts of the Company's Common
Stock by the holders of the Notes, Preferred Shares and Warrants or others in
the future could adversely affect the market price of the Company's Common
Stock. Substantially all of the outstanding shares of the Company's Common Stock
are eligible for sale in the public market. In addition, the holders of stock
options could exercise their options and sell the vested shares in the public
market.
-8-
<PAGE> 11
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders. The Company will receive up to $2,520,000
upon the exercise of the Warrants. No assurance can be given that any Warrants
will be exercised. The Company expects that any net proceeds from the exercise
of the Warrants will be used for working capital and general corporate purposes,
including product development and marketing.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, with a par value of
$.001, and 2,000,000 shares of Preferred Stock, with a par value of $.001.
COMMON STOCK
As of November 30, 1996, there were 12,408,750 shares of Common Stock
outstanding. The shares were held of record by approximately 607 shareholders.
As of November 30, 1996, an additional 3,398,787 shares of Common Stock were
issuable upon exercise of outstanding options and warrants, 1,032,258 shares of
Common Stock were issuable upon conversion of the outstanding Notes and
1,161,290 shares of Common Stock were issuable upon the conversion of
outstanding Preferred Shares. In addition, up to 270,000 shares of Common Stock
may be issuable by the Company in lieu of cash dividends on the Preferred
Shares, and up to 296,462 shares of Common Stock may be issuable in lieu of
interest payments on the Notes. The holders of Common Stock are entitled to one
vote for each share held of record on all matters submitted to a vote of
shareholders, including the election of Directors. The holders of the Common
Stock are entitled to any dividends that may be declared by the Board of
Directors out of funds legally available therefor subject to the prior rights,
if any, of holders of Preferred Stock. In the event of liquidation or
dissolution of the Company, holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preferences, if any, of any outstanding shares of Preferred Stock.
Holders of Common Stock have no preemptive rights and have no right to
convert their Common Stock into any other securities. All of the outstanding
shares of Common Stock are fully paid and nonassessable.
PREFERRED STOCK
As of November 30, 1996, there were 580,645 Preferred Shares
outstanding. The Preferred Shares were held of record by five stockholders. Each
Preferred Share is convertible at the option of the holder into two shares of
Company Common Stock, subject to adjustments for dilutive events, and carries
10% cumulative dividends which, at the Company's election, may be paid in cash
or Common Stock. The Preferred Shares have no voting rights unless dividend
payments are more than two years in arrears, at which time the Preferred Shares
shall have the right to vote with the Common Stockholders as one class, with the
number of votes equal to the number of shares of Common Stock into which the
Preferred Shares are convertible. The Preferred Shares have the right to receive
a preference in the event of any liquidation or winding up of the Company.
The Board of Directors may issue additional shares of Preferred Stock
from time to time in one or more series with such designations, voting powers,
if any, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations and restrictions thereof, as are
determined by resolution of the Board of Directors of the Company. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the shareholders and
could adversely affect the rights and powers, including voting rights, of the
holders of Common Stock. In certain circumstances, the issuance of Preferred
Stock could depress the market price of the Common Stock.
-9-
<PAGE> 12
SELLING SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by the Selling Shareholders as of
November 30, 1996 and as adjusted to reflect the sale by Selling Shareholders of
shares offered by this Prospectus.
<TABLE>
<CAPTION>
Common Stock Common Stock
Beneficially Owned Beneficially Owned
Prior to Offering (1) After Offering (1)
--------------------- ------------------
Common Stock
Holder Number Percent to be Sold Number Percent
------ ------ ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Atalanta Selective Fund #6 L.P. ........ 910,591 (2) 6.8% 910,591 (2) 0 --
Arthur W. Berry ........................ 101,177 (3) * 101,177 (3) 0 --
Philip Glickman ........................ 132,788 (4) 1.1% 101,177 (4) 31,611 *
Ricky Solomon .......................... 188,087 (5) 1.5% 151,765 (5) 36,322 *
Norman Wechsler ........................ 3,277,728 (6) 22.4% 2,707,608 (6) 570,120 3.9%
------------ ------------- -------
TOTAL: 4,610,371 3,972,318 638,053
</TABLE>
- -----------------------
* Less than 1%
(1) Applicable percentage of ownership is based on 12,408,750 shares of
Common Stock outstanding as of November 30, 1996 and, for each Selling
Shareholder, assumes conversion of outstanding Preferred Shares and
Notes and exercise of outstanding Warrants held by such shareholder,
and the issuance to such shareholder of the Shares which may be
issued as payment of interest and dividends on such Note and
Preferred Shares.
(2) Consists of 290,322 shares issuable on conversion of a Note, 290,322
shares issuable on conversion of Preferred Shares, 180,000 shares
issuable on exercise of a Warrant and up to 149,947 shares which may be
issued in payment of interest and dividends on the Note and Preferred
Shares.
(3) Consists of 32,258 shares issuable on conversion of a Note, 32,258
shares issuable on conversion of Preferred Shares, 20,000 shares
issuable on exercise of a Warrant and up to 16,661 shares which may be
issued in payment of interest and dividends on the Note and Preferred
Shares.
(4) Includes 32,258 shares issuable on conversion of a Note, 32,258 shares
issuable on conversion of Preferred Shares, 20,000 shares issuable on
exercise of a Warrant and up to 16,661 shares which may be issued in
payment of interest and dividends on the Note and Preferred Shares.
Also includes 1,611 shares held by a partnership of which Mr. Glickman
is a partner.
(5) Includes 48,387 shares issuable on conversion of a Note, 48,387 shares
issuable on conversion of Preferred Shares, 30,000 shares issuable on
exercise of a Warrant and up to 24,991 shares which may be issued in
payment of interest and dividends on the Note and Preferred Shares.
Also includes 322 shares held by a partnership of which Mr. Solomon is
a partner.
(6) Includes 629,032 shares issuable on conversion of a Note, 758,064
shares issuable on conversion of Preferred Shares, 470,000 shares
issuable on exercise of a Warrant and up to 358,204 shares which may be
issued in payment of interest and dividends on the Note and Preferred
Shares. Also includes 492,308 shares of Common Stock which Mr.
Wechsler has agreed to purchase from the Company, and 27,607 shares
held by a partnership of which Mr. Wechsler is a partner. Mr. Wechsler
has been a director of the Company since September 3, 1996. He is a
member of the Audit Committee and the Compensation and Stock Option
Committee.
-10-
<PAGE> 13
PLAN OF DISTRIBUTION
Of the 3,972,318 Shares offered by this Prospectus, 1,161,290 of the
Shares are issuable upon the conversion of 580,645 outstanding Preferred Shares,
1,032,258 of the Shares are issuable upon the conversion of the Notes, up to
270,000 of the Shares may be issued as dividends on the Preferred Shares, up to
296,462 of the Shares may be issued as interest on the Notes, 720,000 of the
Shares are issuable upon the exercise of the Warrants, and 492,308 of the
Shares are being sold to a Selling Shareholder in a privately placed equity
financing.
Some of the Common Stock covered by this Prospectus may be offered by
the Selling Shareholders through broker-dealers who will receive ordinary
brokers' commissions in connection with such sales. The securities may be sold
in privately negotiated transactions or otherwise, and participating
broker-dealers may act as agents or principals, or both, in connection with such
sales. The Company has not entered into any agreements, arrangements or
understandings for the sale of securities covered by this Prospectus. The
Selling Shareholders and any other persons who participate in the resale of the
securities, may be deemed to be underwriters as defined in the Securities Act.
Any commissions paid or any discounts or concessions allowed by such person, and
any profits received on resale of securities, may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders in
connection with the registration of the Common Stock.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Heller, Ehrman, White & McAuliffe, Palo Alto, California, counsel
to the Company in connection with the offering.
EXPERTS
The consolidated financial statements of IntelliCorp, Inc. appearing in
IntelliCorp, Inc.'s Annual Report (Form 10-KSB) for the year ended June 30,
1996, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-11-
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee.
<TABLE>
<S> <C>
Securities and Exchange Commission $ 2,107
Registration Fee...............................
Legal fees and expenses.......................... $10,000
Accounting fees and expenses..................... $ 5,000
Miscellaneous ................................... $ 2,956
------
TOTAL: ................................ $20,063
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The registrant has the power to indemnify its officers and directors
against liability for certain acts pursuant to Section 145 of the General
Corporation Law of the State of Delaware. Section A of Article Ninth of the
registrant's Certificate of Incorporation provides:
1. Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees, judgments, fines, Employee Retirement Income Security Act of 1974 excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
2. Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
II-1
<PAGE> 15
3. Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ITEM 16. EXHIBITS
Exhibit Description
------- -----------
5 Opinion of Heller, Ehrman, White & McAuliffe
23.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part of
Exhibit 5)
23.2 Consent of Ernst & Young LLP, Independent Auditors
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;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement,
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registrations 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 liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed 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.
II-2
<PAGE> 16
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 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 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 Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 17
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 City of Mountain View, State of California, on this 20th day
of December, 1996.
INTELLICORP, INC.
By: /s/ Kenneth H. Haas
-------------------------------------
Kenneth H. Haas
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Kenneth H. Haas Director and President December 20, 1996
- -----------------------------------
Kenneth H. Haas
/s/ Ken Czaja Vice President and Chief Financial Officer December 20, 1996
- -----------------------------------
Ken Czaja
/s/ Daniel R. Menudier Chief Accounting Officer and Controller December 20, 1996
- -----------------------------------
Daniel R. Menudier
Director
- -----------------------------------
Katharine C. Branscomb
* Director December 20, 1996
- -----------------------------------
Joseph A. Graziano
* Director December 20, 1996
- -----------------------------------
Norman J. Wechsler
* By: /s/ Kenneth H. Haas
- -----------------------------------
Kenneth H. Haas
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 18
INTELLICORP, INC.
Index to Exhibits
<TABLE>
<CAPTION>
Sequentially Numbered
Exhibit Description Pages
-------- ------------------------------------------------------------ -----------------------
<S> <C> <C>
5 Opinion of Heller, Ehrman, White & McAuliffe
23.1 Consent of Heller, Ehrman, White & McAuliffe (filed as part
of Exhibit 5)
23.2 Consent of Ernst & Young LLP, Independent Auditors _____
</TABLE>
- -------------------
II-5
<PAGE> 1
EXHIBIT 5
December 23, 1996
INTELLICORP, INC.
1975 El Camino Real West
Mountain View, California 94040-2216
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to IntelliCorp, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-3 to
be filed with the Securities and Exchange Commission (the "Commission") on
December 23, 1996 (the "Registration Statement") for the purpose of registering
under the Securities Act of 1933, as amended, an aggregate of 3,972,318 shares
of its Common Stock, $.001 par value (the "Shares"), all of which are to be
sold by certain of the Company's stockholders. Of the Shares to be registered,
1,431,290 shares are issuable upon the conversion of outstanding Preferred
Stock and as dividends on such Preferred Stock (the "Preferred Shares"),
1,328,720 shares are issuable upon conversion of convertible notes (the
"Notes") and as interest on such Notes (the "Note Shares"), 720,000 shares are
issuable upon exercise of warrants (the "Warrants") to purchase shares of the
Company's Common Stock (the Warrant Shares"), and 492,308 shares are to be
issued in a privately placed equity financing (the "Private Placement Shares").
I.
In connection with this opinion, we have assumed the authenticity of
all records, documents and instruments submitted to us as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all records, documents and instruments submitted
to us as copies. In rendering our opinion, we have examined the following
records, documents, instruments and certificates:
(a) The Restated Certificate of Incorporation, as
amended, of the Company certified by the Secretary of
State of the State of Delaware as of December 20,
1996, and certified to us by an officer of the
<PAGE> 2
INTELLICORP, INC.
December 23, 1996
Page 2
Company as being complete and in full force and
effect as of the date of this opinion;
(b) The Bylaws of the Company certified to us by an
officer of the Company as being complete and in full
force and effect as of the date of this opinion;
(c) The Seven Year Senior Convertible Note Purchase
Agreement dated April 19, 1996;
(d) The Certificates representing shares of Preferred
Stock;
(e) The Warrants;
(f) A Letter Agreement (the "Letter Agreement") regarding
the Private Placement Shares dated December 23, 1996;
(g) A Certificate of an Officer of the Company: (i)
attaching records certified to us as constituting all
records of proceedings and actions of the Board of
Directors of the Company and any committees of the
Board of Directors relating to the Shares; and (ii)
certifying as to certain factual matters;
(h) The Registration Statement; and
(i) A written statement from ChaseMellon Shareholder
Services, the Company's transfer agent, as to the
number of shares of the Company's Common Stock that
were outstanding on December 19, 1996.
This opinion is limited to the federal laws of the United States of
America and the General Corporation Law of the State of Delaware and the laws
of the State of California, and we disclaim any opinion as to the laws of any
other jurisdiction. We further disclaim any opinion as to any statute, rule,
regulation, ordinance, order or other promulgation of any other jurisdiction or
any regional or local governmental body or as to any related judicial or
administrative decision.
II.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that: (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and sold; (ii) the full amount of
consideration stated in the Letter
<PAGE> 3
INTELLICORP, INC.
December 23, 1996
Page 3
Agreement pursuant to which the Private Placement Shares are issued is paid for
each Private Placement Share and that such consideration in respect of each
Private Placement Share includes payment of cash or other lawful consideration
at least equal to the par value thereof;(iii) the full consideration stated in
the Warrant pursuant to which the Warrant Shares are to be issued is paid for
each Warrant Share and that such consideration in respect of each Warrant Share
includes payment of cash or other lawful consideration at least equal to the
par value thereof; (iv) appropriate certificates evidencing the Shares are
executed and delivered by the Company; and (v) all applicable securities laws
are complied with, it is our opinion that the Shares, when issued, will be
legally issued, fully paid and nonassessable.
III.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose, or relied upon by any other person, firm,
corporation or other entity for any purpose, without our prior consent. We
disclaim any obligation to advise you of any change of law that occurs, or any
facts of which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
HELLER EHRMAN WHITE & MCAULIFFE
<PAGE> 1
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Amendment No. 1 to Registration Statement (Form S-3 No. 333-16879) and
related Prospectus of IntelliCorp, Inc. for the registration of 3,972,318
shares of its common stock and to the incorporation by reference therein of our
report dated August 2, 1996, with respect to the consolidated financial
statements of IntelliCorp, Inc. included in its Annual Report (Form 10-KSB) for
the year ended June 30, 1996, filed with the Securities and Exchange Commission.
Palo Alto, California
December 23, 1996
