-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JtU75USubpAaayQbvhx+6V/T4VJPsNJmqvReuybDvZ5KA4noZoyYjGoZVGLg6CHO JGejoVSqKB2YzmIry7cPvA== 0001095811-01-500713.txt : 20010329 0001095811-01-500713.hdr.sgml : 20010329 ACCESSION NUMBER: 0001095811-01-500713 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20010328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLICORP INC CENTRAL INDEX KEY: 0000730169 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942756073 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-57770 FILM NUMBER: 1582264 BUSINESS ADDRESS: STREET 1: 1975 EL CAMINO REAL WEST STREET 2: SUITE 101 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94040-2216 BUSINESS PHONE: 4159655500 MAIL ADDRESS: STREET 1: 1975 EL CAMINO REAL WEST STREET 2: SUITE 101 CITY: MOUNTAIN VIEW STATE: CA ZIP: 94040-2216 FORMER COMPANY: FORMER CONFORMED NAME: INTELLIGENETICS INC DATE OF NAME CHANGE: 19840802 S-3 1 f70915ors-3.txt FORM S-3 1 As filed with the Securities and Exchange Commission on March 28, 2001 Registration No. 333-_____ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 INTELLICORP, INC. (Exact name of Registrant as specified in its charter) DELAWARE 94-2756073 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number)
1975 EL CAMINO REAL WEST, SUITE 201, MOUNTAIN VIEW, CALIFORNIA 94040-2216, (650) 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, SUITE 201 MOUNTAIN VIEW, CALIFORNIA 94040-2216 (650) 965-5500 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------- Copies to: RICHARD A. PEERS MARINA REMENNIK HELLER EHRMAN WHITE & MCAULIFFE, LLP 275 MIDDLEFIELD ROAD MENLO PARK, CALIFORNIA 94025-3506 TELEPHONE: (650) 324-7000 FACSIMILE: (650) 324-0638 ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. 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 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 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. [ ] CALCULATION OF REGISTRATION FEE
====================================== =================== ========================= ====================== ==================== PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING REGISTRATION FEE BE REGISTERED REGISTERED SECURITY PRICE - -------------------------------------- ------------------- ------------------------- ---------------------- -------------------- Common Stock, par value $.001 9,079,881 $1.0625(1) $9,647,373.50 $2,412 ====================================== =================== ========================= ====================== ====================
(1) Estimated solely for the purpose of computing the amount of registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices reported of the Registrant's Common Stock on the Nasdaq SmallCap Market on March 26, 2001. 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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 2 The information in this Prospectus is not complete and may be changed. We are not allowed to 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 is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated March 28, 2001 INTELLICORP, INC. 7,383,904 SHARES OF COMMON STOCK 1,695,977 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS ------------- These shares may be offered and sold from time to time by the security holders of the company identified in this Prospectus. See "Selling Stockholders". Of the shares offered by this prospectus, 4,337,778 of the shares are issuable upon conversion of the Series C Preferred Stock of the Company and 1,084,445 of the shares are issuable upon exercise of warrants to purchase common stock at an exercise price of $2.00 per share issued pursuant to the Series C Preferred Stock Purchase Agreement dated March 8, 2001. In June 2000, an aggregate of 1,446,126 shares were acquired pursuant to the Agreement for the Purchase and Sale of Common Stock, dated March 30, 1999, as amended, between the Company and Wechsler & Co., Inc. (the "Letter Agreement"). Pursuant to the Letter Agreement, the Company issued two warrants to Wechsler & Co., Inc., one to purchase 149,032 shares of common stock at an exercise price of $1.84525 per share and another to purchase 212,500 shares of common stock at an exercise price of $2.20 per share. In addition, 1,000,000 shares were acquired pursuant to the Common Stock Purchase Agreement dated September 29, 2000 and 250,000 shares are issuable upon exercise of warrants to purchase common stock at an exercise price of $2.00 per share issued in connection with that financing. Moreover, 600,000 shares were acquired pursuant to the Common Stock Purchase Agreements dated December 28, 2000. The selling stockholders will receive all of the proceeds from the sale of the shares and will pay all underwriting discounts and selling commissions, if any, applicable to the sale of the shares. We will pay the expenses of registration of the sale of the shares. We could receive proceeds from the exercise of the warrants. On March 21, 2001, we had 21,706,007 shares of common stock issued and outstanding. Our Common Stock trades on the Nasdaq SmallCap Market under the symbol "INAI". On March 21, 2001, the closing price for the Common Stock on the Nasdaq SmallCap Market was $1.00 per share. ------------ Beginning on page 5, we have listed "RISK FACTORS" which you should consider. You should read the entire prospectus carefully before you make your investment decision. ------------ The Securities and Exchange Commission and state regulatory authorities have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ------------ The date of this Prospectus is March __, 2001 2 3 You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The selling security holder is offering to sell, and seeking offers to buy, shares of IntelliCorp, Inc. common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the shares. In this prospectus, the "company", the "Registrant", "IntelliCorp, Inc.", "we", "us" and "our" refer to IntelliCorp, Inc. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (the "SEC"). You may read and copy any document we file at the SEC's public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on the public reference room. The SEC maintains an internet site at http://www.sec.gov where certain information regarding issuers (including IntelliCorp, Inc.) may be found. This prospectus is part of a registration statement that we filed with the SEC (Registration No. ______). The registration statement contains more information than this prospectus regarding IntelliCorp, Inc. and its common stock, including certain exhibits. You can get a copy of the registration statement from the SEC at the address listed above or from its internet site. DOCUMENTS INCORPORATED BY REFERENCE The SEC allows us to "incorporate" into this prospectus information we file with the SEC in other documents. This means that we can disclose important information to you by referring to other documents that contain that information. The information may include documents filed after the date of this prospectus which update and supersede the information you read in this prospectus. We incorporate by reference the documents listed below, except to the extent information in those documents is different from the information contained in this prospectus, and all future documents filed with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until we terminate the offering of these shares.
SEC Filing File No. 0-13022 Period/Filing Date ---------------- ------------------ Annual Report on Form 10-KSB Year ended June 30, 2000 Quarterly Reports on Form 10-QSB Quarters ended September 30, 2000 and December 31, 2000 Registration Statement on Form 8-A describing Filed on October 7, 1983 the common stock
You may request a copy of these documents, at no cost, by writing to: IntelliCorp, Inc. 1975 El Camino Real West, Suite 201, Mountain View, California 94040-2216 Attention: Jerome F. Klajbor, Chief Financial Officer Telephone: (650) 965-5500 3 4 FORWARD-LOOKING INFORMATION Statements made in this prospectus or in the documents incorporated by reference herein that are not statements of historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A number of risks and uncertainties, including those discussed under the caption "Risk Factors" below and the documents incorporated by reference herein could affect such forward-looking statements and could cause actual results to differ materially from the statements made. ABOUT THE COMPANY We develop, market and support a comprehensive suite of eBusiness and Customer Relationship Management (CRM) consulting solutions for the SAP community. These consulting solutions, which consist of people, processes and technology, enable companies to accelerate the drive towards eBusiness by enabling companies to integrate front-office applications with back-office Enterprise Resource Planning (ERP) systems. Transitioning from primarily a product focus, beginning in fiscal 2001, we are now focused on helping traditional Fortune 1000 companies rapidly enter the eBusiness world. Our consulting solutions provide SAP customers with an eBusiness strategy that maximizes their ERP investment and minimizes integration and data management issues associated with implementing best-of-breed software. 4 5 RISK FACTORS You should consider carefully the following risk factors, along with the other information contained or incorporated by reference in this prospectus, in deciding whether to invest in our securities. These factors, among others, may cause actual results, events or performance to differ materially from those expressed in any forward-looking statements we make in this prospectus. RISKS RELATING TO MARKET ACCEPTANCE Our sales forecast for fiscal 2001 anticipates a predominant portion of revenues will come from CMS consulting services. An existing backlog helps to insure continued growth in this area. Factors which could impact the level of revenues include, but are not limited to: o the continued sales, o overall customer satisfaction on our CRM services, and o a sustained knowledgeable workforce. Future growth will depend heavily on CRM sales and retention and recruitment of qualified employees. The market for our solutions and products is evolving, and our growth in the area of business process management, in particular, depends upon broader market acceptance of business process management and modeling technology. Business process management represents a fundamental shift in the implementation and management of customers' SAP R/3 systems, that, from time to time, may or may not be compatible with implementation methodologies promoted by SAP. One such example of this risk was SAP's shift in the fall of 1998 from the Business Engineer technology (which relied more heavily on modeling technology) to their ASAP(TM) methodology. It took a significant amount of time to effectively integrate our products with the ASAP methodology and to re-position our solutions and their value appropriately in the marketplace. As a result, organizations may choose not to make the investment required to use our business process management tools and solutions for their ERP lifecycle needs. In addition, even if these products 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. See "Risks Relating to Competition" below. The market for enterprise application integration tools is well established and is fought over by a number of successful companies. One of LiveInterface's key differentiating characteristics is that it is written in ABAP, an SAP proprietary language, and resides "inside" the R/3 system. The leading competitors typically endorse an ERP-independent approach to application integration, relying on a hub-and-spoke architecture for application communication. Our approach may not be accepted over that provided by other vendors. In addition, sales of our 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. We may not 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 products as well as applications integration products and SAP itself offers products that include a subset of the capabilities of our products. While we believe that our products offer advantages over competing products in this market, we may not be successful in refocusing our business in the SAP R/3 market. Also, our products may not be able to successfully compete with others in this market. These events could materially and adversely affect our business. RISKS RELATING TO RAPID TECHNOLOGICAL CHANGE The market for our solutions is characterized by: o ongoing technological developments, o evolving industry standards, and o rapid changes in customer requirements and increasing customer demands. As a result, our success depends upon our ability to continue to: o enhance our existing solutions, o develop and introduce in a timely manner new products that take advantage of technological advances, and o respond to new customer requirements and demands. 5 6 We may not be successful in developing and marketing enhancements to our existing solutions or new solutions incorporating new technology on a timely basis. Also, our new solutions may not adequately address the changing needs of the marketplace. If we are unable to develop and introduce new solutions, or enhance existing solutions, in a timely manner in response to changing market conditions or customer requirements or demands, our business and results of operations will be materially and adversely affected. LiveInterface is written in the SAP ABAP programming language. SAP may discontinue or dramatically change the specifications of this language. The market for expert Windows and ABAP programmers is highly competitive. In addition, customer requirements and technology for the applications integration market is evolving very rapidly. New, follow-on technology and products will be necessary to remain competitive. We also rely on licenses from third parties, such as POET, SAP, and ProUBIS for some of our technology and product functionality. These licensed technologies may not be maintained and/or enhanced by their owners such that they can continue to provide the necessary functionality for our products. RISKS RELATING TO PRODUCT DEVELOPMENT Although we have a number of ongoing development projects, the following risks still exist: o development may not be completed successfully or on time, o projects may not include the features required to achieve market acceptance, and o enhancements to the product may not keep pace with broadening market requirements. From time to time our competitors or we may announce new products, capabilities or technologies that have the potential to replace or shorten the life cycles of our existing products. Such announcements of currently planned or other new products may cause customers to defer purchasing our existing products. In the past we experienced delays in software development, and we may experience further delays in connection with our 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 our results of operations. Software products as complex as those offered by us may contain undetected errors when first introduced or as new versions are released. Such errors may be found in new products after commencement of commercial shipments, resulting in loss of or delay in market acceptance. We have no insurance for this risk. We may consider, from time to time, purchasing technology from third parties. However, we may not be able to purchase new technology. Further, if we do acquire new technology, it may also have an adverse impact on our business. RISKS RELATING ON DEPENDENCE UPON SAP We have entered into custom development projects with SAP. The revenues from these development agreements have been one-time in nature. We may not be able to replace these revenues with other customer revenues, if and when these custom projects for SAP cease. In addition, SAP may not continue their relationship with us. Termination of the SAP arrangement could adversely affect our financial results. RISKS RELATING TO COMPETITION We believe that our ability to compete depends on factors both within and outside our control, including: o the timing and success of our newly developed solutions and products, o the timing and success of newly developed products by our competitors, o product performance and price, and o distribution and customer support. We may not be able to compete successfully with respect to these factors. The greatest competitive threat to our solution offerings is posed by the large consulting firms, which include, Accenture Consulting, Cap Gemini/Ernst and Young, IBM Global Services, KPMG and PricewaterhouseCoopers. Other eIntegrators such as Scient and Viant also pose a competitive threat to our solution offerings. Although these companies represent the major eCRM and eBusiness Integration players, we have extensive experience and knowledge of what it takes to implement and integrate highly optimized back-office ERP with eBusiness and CRM front-office systems. Unlike our competition, we have created and marketed business modeling and interface development tools for SAP R/3, as well as co- 6 7 developed a number of SAP's CRM offerings including the Internet Pricing and Configurator (IPC), our unique intellectual property. The market for our software products has been intensely competitive and characterized by rapid change and frequent introduction of new products. The important competitive factors in the industry are the following: o acceptance of our products by the SAP implementation partners, o continued close relationship with SAP, o product sophistication, features and reliability, o product price and performance characteristics, o ease of understanding and operating the software, and o integration with conventional computing environments and the internet. We may not be successful in the face of increasing competition from new products and enhancements introduced by existing competitors and by new companies entering the market. Our advantage continues to be our close relationship with the SAP development organization, and continued growth of this relationship is necessary to insure our success in the SAP R/3 market. This relationship is always at risk based upon our ability to perform the development work desired by SAP and the alternatives available to SAP. We are at risk for encroachment into the value provided by LiveModel: SAP R/3 Edition by SAP's continued improvement to the ASAP Implementation Toolkit. As new facilities are added to this freely provided component of the SAP R/3 implementation toolset, the value of LiveModel may be jeopardized. We must continue to enhance LiveModel and/or introduce new products of software assets to retain and grow our revenues. Recently, we introduced NetProcesses, which is a web-enabled version of LiveModel and LiveCapture. SAP also provides an environment that fosters competition to LiveModel through a published API to the models in their repository. Existing competitors such as IDS Scheer and Micrografx already have access to these APIs, and other modeling tool companies may be interested in entering this market by using API's and their existing or planned products to offer valuable business process modeling capabilities to their customers. A major competitor in the SAP business-modeling marketplace is IDS Scheer with the ARIS product line, which offers broad BPR capabilities. Other competitors are expected to enter this process management marketplace. In addition, SAP offers the ASAP Implementation Toolkit with a subset of the capabilities of our products. The primary competitors to our LiveInterface product today are Mercator, Neon (formerly TSI), IBI and ETI. However, there are numerous other competitors that include data transformation and middleware vendors who have invested in technologies to access data within SAP R/3. Our strategy is to partner with these vendors and to develop follow-on product offerings that result in a more complete solution for the customer. TestDirector's primary competitors are Autotester Inc. and SAP. Both companies have test automation tools and test management tools for use in R/3. Both have a close focus on SAP implementations. In additional, SAP's Computer Aided Testing Tool (CATT) is delivered free with the R/3 Developers Workbench. We intend to compete with these tools in several ways: o emphasize integration with LiveModel as a key differentiator which supports process-based testing, o emphasize the ability of TestDirector to address all of a customer's enterprise systems, not just SAP, and o introduce NetProcesses, which is a web-enabled version of LiveModel and LiveCapture. The PowerModel business continues to decline primarily due to the declining market for internal application development. In addition, the focus for new application development is on Windows and Java applications. Since neither of these application delivery platforms is the primary development environment for PowerModel, PowerModel is susceptible to competition from many sources. The major market has been the existing customer base where the values of PowerModel facilities are appreciated, and the applications built with PowerModel continue to need support. Many of our current and prospective competitors have significantly greater financial, technical, manufacturing and sales and marketing 7 8 resources. 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. These events could have a material adverse effect on us. RISKS RELATING TO DEPENDENCE ON KEY PERSONNEL We are dependent upon a limited number of key management, technical and sales personnel, the loss of whom would be adverse to our business. In addition, in the future, we may need to augment or replace existing key management, technical, or sales personnel in order to maintain or increase our business. Because of the complexity and breadth of our product line in certain technical areas, we 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 we are 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 our success in the future will depend in part on successful assimilation of new personnel. Our future success will depend in part upon our ability to attract and retain highly qualified personnel. We compete 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 consulting/solutions and development efforts will be a key factor in the success of those projects. If we cannot recruit the appropriate personnel and must hire outside consultants to perform this work, our margins may be reduced. We may not be successful in hiring or retaining qualified personnel. It is particularly difficult to hire personnel with SAP and configure to order expertise. Loss of key personnel or inability to hire and retain qualified personnel could have a material adverse effect on our business and results of operations. From time to time, we have experienced significant turnover in our sales force. We may not be able to reduce this periodic turnover in our sales force and, as a result, we may lose sales opportunities, market share or customers. These events could have a material adverse effect on our business. RISKS RELATING TO DEPENDENCE ON LOWER MARGIN SERVICE REVENUES A significant amount of our revenues has been derived from consulting and other services. The operating margins from revenues for such services are substantially lower than the operating margins from revenues for our software products. This disparity principally results from the low cost of materials, royalties and other costs of our software products, as compared with the relatively high personnel costs (including the higher cost of using outside consultants) incurred in providing consulting services. In addition, as the proportion of consulting and other service revenues increases, the overall margins will decrease accordingly. As a result of our reliance on consulting and other revenues, our overall operating margins may be lower than those for software companies that do not derive such a significant percentage of revenues from consulting and other services. In addition, our 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. These events could have a material adverse effect on the company. RISKS RELATING TO PAST AND POTENTIAL FUTURE LOSSES Over the five years ended June 30, 2000, we have experienced aggregate consolidated net losses of over $20.4 million, including net losses of $7.1 million for the year ended June 30, 2000. We had a net loss of $2.1 million for the six months ending December 31, 2000. We may also have losses in future years. We may not be able to attain and maintain profitability. As of June 30, 2000, we had an accumulated deficit of $62.7 million, a cash and cash equivalent balance of $2.2 million, and a working capital balance of $1.3 million. As of December 31, 2000, we had an accumulated deficit of $65.1 million, a cash and cash equivalent balance of $2.4 million, and a working capital balance of $1.1 million. In addition, we had a net loss of $2.1 million for the six months ending December 31, 2000. Management expects to incur additional losses through at least part of fiscal 2001 and recognizes the need to utilize all or some of our available financing resources as of June 30, 2000 to fund our cash requirements in fiscal 2001. Available financing resources as of June 30, 2000 consist of a bank credit facility, which amounts to the lesser of $3.0 million, or 80% of eligible 8 9 accounts receivable. At December 31, 2000, the amount of the bank credit facility available was $1.8 million. In addition, in March 2001, we raised $4.88 million in a private financing. At this time, management's plans for fiscal 2001 anticipate that revenues together with available financing alternatives will be sufficient to fund our cash requirements through at least October 31, 2001. However, if anticipated revenues for fiscal 2001 do not meet management's expectations, management has the ability to reduce certain planned expenditures to lower the Company's operating costs. To allow our Common Stock to remain listed for trading on the Nasdaq SmallCap Market, we are required to maintain a minimum capital and surplus of $2,000,000 as well as a closing bid price of at least $1.00 per share. In the past, our capital and surplus as well as our stock price have fallen temporarily below the Nasdaq minimum. Recently, our common stock has been trading below $1.00 per share. In January 2001, we were notified by Nasdaq that we failed to meet the minimum bid requirement, one of the maintenance criteria for trading on the Nasdaq SmallCap Market. Subsequently, the minimum bid of our common stock exceeded the $1.00 requirement for trading on Nasdaq, and on February 21, we were notified that we were in compliance with Nasdaq's maintenance criteria. Significant additional losses could adversely affect our ability to maintain the required minimum capital and surplus in the future and potentially impact our stock price. Should our Common Stock be delisted from the Nasdaq SmallCap Market, the trading market for the Common Stock may be adversely affected. RISKS RELATING TO POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS Our quarterly revenues and operating results have in the past, and may in the future, vary significantly due to such factors as: o the information systems department budgets of our customers for both implementation and integration of CRM related applications as well as EAI/BPM tools and solutions; o the timing of new product introductions, o changes in our pricing policies and those of our competitors, o market acceptance of new products, and enhanced versions of existing products, and o the length of sales cycles. Although a significant portion of our revenues in each quarter result from orders received in that quarter, the majority of our expense levels are fixed, based on expectations of future revenues. In addition, a substantial amount of our 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, our operating results will be materially adversely affected. Accordingly, it is likely that we would experience disproportionate declines in our operating results if revenues were to decline. In addition, it is possible that in some future quarter our operating results will be below the expectations of public market analysts and investors. In such event, the price of our Common Stock would likely be adversely affected. RISKS RELATING TO CONCENTRATED PRODUCT LINE We currently derive substantially all of our revenue from LiveModel: SAP R/3 Edition and LiveInterface and related products and services and expects this concentration to continue for the foreseeable future. We anticipate that the newly released web enabled version of LiveModel and LiveCapture, referred to as NetProcesses, may be seen as an alternative to LiveModel. As a result, any factor adversely affecting the demand for, or pricing of, LiveModel and LiveInterface, or NetProcesses, and related products and services would have a material adverse effect on our business and results of operations. Our future financial performance will depend significantly on the successful development and customer acceptance of new and enhanced versions of our products, such as NetProcesses. RISKS RELATING TO CUSTOMER CONCENTRATION For the first six months of 2001 and in fiscal 2000, revenues from the sale of products and services to one related party accounted for 16% and 15%, respectively, of total revenues. The level of revenues received from this customer 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. RISKS RELATING TO NEED FOR CHANNEL PARTNERS In order to reach higher levels of revenue and sustainable growth, we may need channel 9 10 partners for the sale, distribution and co-marketing of our products. Such partners may include: o SAP, o consulting firms, o systems integrators, and o traditional software distributors or hardware or software companies with established distribution channels. We have an agreement with some global SAP Implementation Partners to promote or to utilize our LiveModel: SAP R/3 Edition, as well as our LiveInterface product. These channel partners are instrumental in gaining acceptance of our modeling tools both for their consulting methodology as well as by their customers for continuing operating requirements. We anticipate that a portion of fiscal year 2001 revenues will be generated through these arrangements and other similar arrangements or agreements with consulting firms and hardware companies. We may not be able to achieve significant sales through our global implementation partner relationships. Also, we may not be successful in establishing additional channel partner arrangements, and even if such relationships are established, they may not prove to be commercially successful. In addition, our partners may utilize their relative size or financial strength to our disadvantage. These events could have a material adverse effect on us. RISKS RELATING TO MANAGING A CHANGING BUSINESS Since inception, we have experienced changes in our operations, which have placed significant demands on our administrative, operational and financial resources. Our future performance will depend in part on our ability to manage change, both in our domestic and international operations, and to adapt our operational and financial control systems as necessary to respond to changes in our business. The failure of our management to effectively respond to and manage changing business conditions could have a material adverse effect on our business and results of operations. INTERNATIONAL OPERATIONS RISKS Approximately 29% of our net revenues for the first six months of fiscal year 2001, 37% of our net revenues for the fiscal year ended June 30, 2000 and 33% of our net revenues for the fiscal year ended June 30, 1999 were attributable to international sales. Most international revenues to date have been derived from license revenues. We currently offer selected local language versions of our products. Although we intend to offer additional localized product releases in the future, such releases may not be successfully developed or, if developed, they may not achieve market acceptance. We face certain risks as a result of international sales. Our results could be affected adversely by short-term fluctuations in currency exchange rates. Additionally, our international operations may be affected by changes in demand resulting from long-term changes in interest and currency exchange rates. We are also subject to other risks associated with international operations, including: o 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, o unexpected changes in regulatory requirements, o longer accounts receivable payment cycles, o difficulties in managing international operations, o potentially adverse tax consequences, o economic and political instability, o restrictions on repatriation of earnings, o the burdens of complying with a wide variety of foreign laws, and o patterns of customers' staff vacations, especially in Europe, that may reduce our earnings in the first quarter. In addition, the laws of certain countries do not protect our products and intellectual property rights to the same extent, as do the laws of the United States. Such factors may have an adverse effect on our future international sales and, consequently, on our business and results of operations. With the exception of limited patent protection in Canada, we have no patents protecting our products in foreign markets. RISKS RELATING TO PROPRIETARY INFORMATION We regard our software as proprietary and attempt to protect it by relying upon copyrights, trade secret and patent laws and contractual nondisclosure safeguards as well as restrictions on transferability 10 11 that are incorporated into its software license agreements. We license our software products to customers rather than transferring title. In spite of these precautions, it may be possible for competitors or users to copy aspects of our products or to obtain information that we regard 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. We license LiveInterface in a machine-independent form for users to install into their SAP R/3 systems. This practice increases the possibility of misappropriation or other misuse of our products. We have not required end-users of Kappa-PC (a PowerModel product) and LiveModel: SAP R/3 Edition (and derivative editions), LiveAnalyst and LiveInterface to sign license agreements. Instead, the license agreements for these products are included in the product packaging, which explains that by opening the seal, the user agrees to the terms of the license agreement. It is uncertain whether "shrink-wrap" license agreements of this type are legally enforceable. Our first three patents, relating primarily to knowledge-based technology, were issued between June 1987 and May 1990. Our fourth patent with respect to certain technologies integrated in our PowerModel product was issued in May 1994. However, further patents may not be issued with respect to our products, and existing patent and copyright laws afford us only limited practical protection. Although we believe that our products and technology do not infringe on any existing proprietary rights of others, there exist several patents with claims that might extend to our products, which, together with the growing use of patents to protect software, has increased the risk that third parties may assert infringement claims against us in the future. Any such claims, with or without merit, could result in costly litigation or might require us to enter into royalty or licensing agreements. Such royalty or license agreements, if required, may not be available on terms acceptable to us or at all. We do not have insurance to cover the risk of infringement claims. In view of the rapid rate of technological change in the areas in which we do business and the uncertainty of the scope of the protection afforded by copyright and patent laws, we do not believe that copyrights or patents will be of major competitive advantage to us. Rather, we believe that we must rely primarily on the technical competence and creative ability of our personnel to improve and update our software products and create additional products in order to be successful. RISKS RELATING TO STOCK PRICE The trading price of our Common Stock is subject to wide fluctuations in response to: o variations in our actual or anticipated quarterly operating results, o announcements of our new products or technological innovations or those of our competitors, and o general conditions in the industry. In addition, our stock and the securities of high technology companies generally 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 our Common Stock. Sales or issuance of substantial amounts of our Common Stock by the holders of our preferred stock or warrants or others in the future could adversely affect the market price of the our Common Stock. In March 1997, we had a preferred stock offering for shares of Series B Preferred Stock (the "Series B Preferred Stock"). The Series B Preferred Stock may, at our option, be exchanged for convertible promissory notes of the Company issued with the same terms as the Series B Preferred Stock (the Notes). The Series B Preferred Stock or the Notes, if issued, are convertible into Common Stock at the election of the holders. We have registered for resale the shares of Common Stock issuable with respect to the Series B Preferred Stock. In March 2001, we sold shares of Series C Preferred Stock and warrants to purchase Common Stock. The shares of Series C Preferred Stock are convertible into Common Stock at the election of the holders. We are registering for resale the shares of Common Stock issuable upon conversion of the series C Preferred Stock and exercise of the warrants. If all the shares reserved for these purposed were issued, it would significantly increase the number of shares outstanding. Sales or issuance of substantial amounts of our Common Stock by the holders of the 11 12 Series B Preferred Stock, Series C Preferred Stock, warrants or others in the future could adversely affect the market price of our Common Stock. Almost all of the outstanding shares of our 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. 12 13 USE OF PROCEEDS We will not receive any of the proceeds from the sale of the Shares by the Selling Stockholders. We could receive up to $3,411,391 upon the exercise of the warrants. However, we do not know if any warrants will be exercised. We expect 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. 13 14 SELLING STOCKHOLDERS The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock by the Selling Stockholders as of March 21, 2001 and as adjusted to reflect the sale by Selling Stockholders of shares offered by this Prospectus.
Common Stock Common Stock Beneficially Owned Beneficially Owned Prior to Offering After Offering ----------------------- -------------------- Common Stock Holder Number Percent to be Sold Number Percent ------ ------ ------- ------------ ------ ------- Anvil Investment Associates, L.P. (1).. 977,778 4.31% 977,778 0 0 Ashford Capital Partners, L.P. (2) .... 1,111,111 4.87% 1,111,111 0 0 Banner Partners Minaret (3) ........... 750,000 3.34% 750,000 0 0 Berry, Art (4) ........................ 485,482 2.22% 125,000 360,482 1.65% Gibbons, Fred M. (5) .................. 50,000 * 50,000 0 0 Greene, Alan K. (6) ................... 31,250 * 31,250 0 0 Micro Cap Partners, L.P. (7) .......... 1,584,445 6.80% 1,584,445 0 0 Micro-Mousse Partners, L.P. (8) ....... 193,334 * 193,334 0 0 Morgenstern, Victor. (9) .............. 250,000 1.14% 250,000 0 0 Palo Alto Crossover Fund, L.P. (10) ... 609,555 2.74% 555,555 54,000 * Sulier, Gregory (11) .................. 31,250 * 31,250 0 0 UBTI Free, L.P. (12) .................. 162,222 * 162,222 0 0 Wechsler & Co., Inc. (13) ............. 7,456,921 31.95% 2,658,626 4,798,295 20.94% William H. Draper, III Revocable Trust (14) ............................ 37,778 * 37,778 0 0 ---------- ----- --------- --------- ----- Total ................................. 13,731,126 56.95% 8,518,349 5,212,777 22.72%
14 15 - ------------------------------- * Less than 1%. (1) Includes 195,556 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00 per share, and 782,222 shares of common stock issuable upon conversion of 880 shares of Series C preferred stock, representing 18.03% of the outstanding Series C preferred stock. (2) Includes 222,222 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 888,889 shares of common stock issuable upon conversion of 1,000 shares of Series C preferred stock, representing 20.49% of the outstanding Series C preferred stock. (3) Includes 150,000 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 600,000 shares of common stock issuable upon conversion of 675 shares of Series C preferred stock, representing 13.83% of the outstanding Series C preferred stock. (4) Includes 45,000 shares of common stock issuable upon exercise of warrants with a weighted exercise price of $2.67, 40,000 shares of common stock issuable upon exercise of options, and 33,736 shares of common stock issuable upon conversion of Series A preferred stock. (5) Includes 10,000 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 40,000 shares of common stock issuable upon conversion of 45 shares of Series C preferred stock, representing less than 1% of the outstanding Series C preferred stock. (6) Includes 6,250 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00. (7) Includes 316,889 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 1,267,556 shares of common stock issuable upon conversion of 1,426 shares of Series C preferred stock, representing 29.22% of the outstanding Series C preferred stock. (8) Includes 38,667 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 154,667 shares of common stock issuable upon conversion of 174 shares of Series C preferred stock, representing 3.57% of the outstanding Series C preferred stock. (9) Includes 50,000 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00. (10) Includes 111,111 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 444,444 shares of common stock issuable upon conversion of 500 shares of Series C preferred stock, representing 10.25% of the outstanding Series C preferred stock. (11) Includes 6,250 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00. (12) Includes 32,444 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 129,778 shares of common stock issuable upon conversion of 146 shares of Series C preferred stock, representing 2.99% of the outstanding Series C preferred stock. (13) Includes 994,032 shares of common stock issuable upon exercise of warrants with a weighted exercise price of $2.7288, 45,000 shares issuable upon exercise of stock options, and 792,794 shares of common stock issuable upon conversion of the Series A preferred stock. (14) Includes 7,556 shares of common stock issuable upon exercise of a warrant with an exercise price of $2.00, and 30,222 shares of common stock issuable upon conversion of 34 shares of Series C preferred stock, representing less than 1% of the outstanding Series C preferred stock. 15 16 DESCRIPTION OF CAPITAL STOCK As of the date of this prospectus, the authorized capital stock of the Company consists of 50,000,000 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 March 8, 2001, there were 21,706,007 shares of Common Stock outstanding. The shares were held of record by approximately 441 stockholders. As of March 8, 2001, approximately 7,908,070 shares of Common Stock were reserved for issuance upon the conversion of outstanding shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (together, the "Preferred Stock"). In addition, up to 351,360 shares of Common Stock may be issuable by the Company in lieu of cash dividends on the Preferred Stock. The holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, 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 March 8, 2001, there were 430,133 shares of Series A Preferred Stock, 5,420 shares of Series B Preferred Stock and 4,880 shares of Series C Preferred Stock outstanding. The Preferred Stock was held of record by 17 stockholders. Each share of Series A Preferred Stock is convertible at the option of the holder into two shares of our Common Stock, subject to adjustments for dilutive events, and carries 10% cumulative dividends. Each share of Series B Preferred Stock is convertible at the option of the holder into 500 shares of our Common Stock, subject to adjustment for dilutive events, and carries 8% cumulative dividends. The Series B Preferred Stock may be exchanged, at the option of the Company for convertible promissory notes of the Company (the "Notes"). Each share of Series C Preferred Stock is convertible at the option of the holder into approximately 889 shares of our Common Stock, subject to adjustment for dilutive events and changes in our stock price, and carries 8% cumulative dividends which, at the Company's election, may be paid in cash or Common Stock for dividends payable through February 1, 2002. Except as noted below, the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock have no voting rights unless dividend payments are more than two years in arrears, at which time the outstanding shares of Preferred Stock 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 outstanding shares of Preferred Stock are convertible. The holders of Series C Preferred Stock have a right to elect one director to the Board of Directors. The outstanding shares of Preferred Stock 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 stockholders 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. 16 17 WARRANTS As of March 21, 2001, we had outstanding warrants to purchase 1,936,945 shares of Common Stock, at a weighted average exercise price of $2.5343 per share. Such warrants expire on various dates, the latest of which is June 26, 2006. In connection with the Series C Preferred Stock financing, we granted 1,084,445 warrants, which are exercisable for $2.00 per share of common stock at any time prior to March 8, 2006. PLAN OF DISTRIBUTION All or a portion of the Shares of Common Stock offered hereby by the Selling Stockholders may be delivered and/or sold in transactions from time to time on the over-the-counter market at prices prevailing at the time, at prices related to such prevailing prices or at negotiated prices and/or may also be used to cover any short positions previously established. The Selling Stockholders may effect such transactions by selling to or through one or more broker-dealers, and such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Stockholders. The Selling Stockholders and any broker-dealers that participate in the distribution may under certain circumstances be deemed to be "underwriters" within the meaning of the Securities Act, and any commissions received by such broker-dealers and any profits realized on the resale of Shares by them may be deemed to be underwriting discounts and commissions under the Securities Act. The Selling Stockholders may agree to indemnify such broker-dealers against certain liabilities, including liabilities under the Securities Act. In addition, the Company has agreed to indemnify the Selling Stockholders with respect to the Shares offered hereby against certain liabilities, including, without limitation, certain liabilities under the Securities Act. Any broker-dealer participating in such transactions as agent may receive commissions from the Selling Stockholders (and, if they act as agent for the purchaser of such Shares, from such purchaser). Broker-dealers may agree with the Selling Stockholders to sell a specified number of Shares at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as agent for the Selling Stockholders, to purchase as principal any unsold Shares at the price required to fulfill the broker-dealer commitment to the Selling Stockholders. Broker-dealers who acquire Shares as principal may thereafter resell such Shares from time to time in transactions (which may involve crosses and block transactions and which may involve sales to and through other broker-dealers, including transactions of the nature described above) in the over-the-counter market, in negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such Shares commissions computed as described above. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale of shares may not simultaneously engage in market making activities with respect to the common stock of the company for a period of two business days prior to the commencement of such distribution. In addition and without limiting the foregoing, the selling security holders will be subject to applicable provisions of the Exchange Act, and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of shares of the company's common stock by the selling security holders. Each Selling Stockholder will pay all commissions, transfer taxes and other expenses associated with the sale of securities by such Selling Stockholder. The Shares offered hereby are being registered pursuant to contractual obligations of the Company, and the Company has paid the expenses of the preparation of this Prospectus. The Company has not made any underwriting arrangements with respect to the sale of Shares offered hereby. 17 18 LEGAL MATTERS The validity of the shares offered hereby will be passed upon for the Company by Heller Ehrman White & McAuliffe, LLP, Menlo Park, California, counsel to the Company in connection with the offering. EXPERTS Ernst & Young LLP, independent auditors, have audited our consolidated financial statements included in our Annual Report on form 10-KSB for the year ended June 30, 2000, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. 18 19 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. Securities and Exchange Commission Registration Fee.................................... $ 2,412 Legal fees and expenses................................ $40,000 Accounting fees and expenses........................... $15,000 Nasdaq Listing Fee..................................... $17,500 Miscellaneous ......................................... $ 88 TOTAL: ....................................... $75,000
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 II-1 20 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. 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 ------- ----------- 3.1 Certificate of Designation, Preferences and Rights of the Series C Preferred Stock 5 Opinion of Heller Ehrman White & McAuliffe, LLP 10.1 Series C Preferred Stock Purchase Agreement dated March 8, 2001 10.2 Form of Warrant to purchase common stock dated March 8, 2001 10.3 Common Stock Purchase Agreement dated September 29, 2000 10.4 Form of Warrant to purchase common stock dated September 29, 2000 10.5 Common Stock Purchase Agreement dated December 28, 2000 10.6 The Agreement for the Purchase and Sale of Common Stock dated March 30, 1999, as amended 10.7 Warrant to purchase common stock dated June 19, 2000 10.8 Warrant to purchase common stock dated June 30, 2000 23.1 Consent of Heller Ehrman White & McAuliffe, LLP (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, II-2 21 (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 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. 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 22 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 28th day of March, 2001. INTELLICORP, INC. By: /s/ Kenneth H. Haas ----------------------------- Kenneth H. Haas Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kenneth H. Haas and Jerome F. Klajbor, or either of them, as her or his attorney in fact, to sign any amendments to this Registration Statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may 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. /s/ Kenneth H. Haas Director and Chief Executive Officer March 28, 2001 - ---------------------------------------------- (Principal Executive Officer) Kenneth H. Haas /s/ Jerome F. Klajbor Chief Financial Officer and Secretary March 28, 2001 - ---------------------------------------------- (Principal Financial and Accounting Officer) Jerome F. Klajbor /s/ Katharine C. Branscomb Director March 28, 2001 - ---------------------------------------------- Katharine C. Branscomb /s/ Norman J. Wechsler Director March 28, 2001 - ---------------------------------------------- Norman J. Wechsler /s/ Arthur W. Berry Director March 28, 2001 - ---------------------------------------------- Arthur W. Berry /s/ Robert A. Lauridsen Director March 28, 2001 - ---------------------------------------------- Robert A. Lauridsen /s/ Elmer F. Fisher Director March 28, 2001 - ---------------------------------------------- Elmer F. Fisher
II-4 23 INTELLICORP, INC. Index to Exhibits
Exhibit Description ------- ----------- 3.1 Certificate of Designation, Preferences and Rights of the Series C Preferred Stock 5 Opinion of Heller Ehrman White & McAuliffe, LLP 10.1 Series C Preferred Stock Purchase Agreement dated March 8, 2001 10.2 Form of Warrant to purchase common stock dated March 8, 2001 10.3 Common Stock Purchase Agreement dated September 29, 2000 10.4 Form of Warrant to purchase common stock dated September 29, 2000 10.5 Common Stock Purchase Agreement dated December 28, 2000 10.6 The Agreement for the Purchase and Sale of Common Stock dated March 30, 1999, as amended 10.7 Warrant to purchase common stock dated June 19, 2000 10.8 Warrant to purchase common stock dated June 30, 2000 23.1 Consent of Heller Ehrman White & McAuliffe, LLP (filed as part of Exhibit 5) 23.2 Consent of Ernst & Young LLP, Independent Auditors
II-5 EX-3.1 2 f70915orex3-1.txt EXHIBIT 3.1 1 EXHIBIT 3.1 CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C PREFERRED STOCK OF INTELLICORP, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware INTELLICORP, INC., a corporation (the "Corporation") organized and existing under the General Corporation Law of the State of Delaware (the "DGCL"), in accordance with the provisions of Section 103 thereof, HEREBY CERTIFIES: That, pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, the Board of Directors, on March 5, 2001, adopted the following resolution creating a series of 5,000 shares of Preferred Stock designated as Series C Preferred Stock. RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Certificate of Incorporation and Section 151 of the DGCL, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: 1. Designation and Amount. The shares of such series shall be designated as "Series C Preferred Stock, par value $.001 per share" (the "Series C Preferred Stock"), and the number of shares constituting such series shall be 5,000. 2. Dividend Rights. 2.1. Priority. The holders of the Series C Preferred Stock shall be entitled to receive, in preference and priority to payment of any dividends on any other outstanding shares of the Corporation other than the Series A Preferred Stock and Series B Preferred Stock, when and as declared by the Board of Directors out of any funds legally available therefor, dividends on each outstanding share of Series C Preferred Stock, payable on July 15, 2001 for the period commencing March 1, 2001 and ending June 30, 2001 and quarterly thereafter on each November 1, February 1, May 1 and August 1 thereafter. Such dividends on the Series C Preferred Stock shall be at a rate of 2 8% per annum ($80.00 per share annually, as pro rated for each dividend payment period, including the initial dividend payment period), unless a dividend is paid at a higher rate (determined on an as-if-converted to Common Stock basis) on any outstanding shares of the Corporation other than the Series A Preferred Stock, in which event the dividends on Series C Preferred Stock shall be paid at such higher rate (determined on an as-if-converted to Common Stock basis). The right to such dividends on the Series C Preferred Stock shall be cumulative. Except for dividends paid on the Series A Preferred Stock and the Series B Preferred Stock, no dividends shall be paid on any other outstanding shares of the Corporation while any dividend on shares of Series C Preferred Stock are not paid for the current period and for any prior period, and dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the date of issuance of such shares. Accumulated but unpaid dividends shall not bear interest. Dividends paid on shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares of Series C Preferred Stock at the time outstanding. The Board of Directors may fix a record date for the determination of holders of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Dividends, if paid, or if declared and set apart for payment, must be paid on, or declared and set apart for payment on, all outstanding shares of Series C Preferred Stock contemporaneously. If any dividend is not paid on a dividend payment date, the holders of the Series C Preferred Stock shall be entitled, at their election, to have the dividend, when paid, paid in cash or in Common Stock of the Corporation, valued at 90% of the average closing bid price of the Corporation's Common Stock on the Nasdaq Stock Market for any 20 consecutive trading days preceding the dividend payment date through the date the dividend is paid. 2.2. Payment. Dividends shall be paid by forwarding a check, postage prepaid, to the address of each holder (or, in the case of joint holders, to the address of any such holder) of Series C Preferred Stock as shown on the books of the Corporation, or to such other address as such holder specifies for such purpose by written notice to the Corporation. The forwarding of such check shall satisfy all obligations of the Corporation with respect to such dividends, unless such check is not paid. For all dividend payments through February 1, 2002, the Corporation, at its option, may elect to pay the dividends in Common Stock of the Corporation, valued at 90% of the average closing bid price of the Corporation's Common Stock on the Nasdaq Stock Market for the 20 trading days preceding the dividend payment date so long as such Common Stock is, on the dividend payment date, registered with the United States Securities and Exchange Commission (the "Commission") for resale by the holder and properly listed on NASDAQ. If the Corporation elects to pay the first dividend payment in Common Stock, it shall notify the holders of Series C Preferred Stock on or before July 15, 2001. 2 3 3. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or not, the holders of Series C Preferred Stock shall be entitled to receive, on a pari passu basis with the rights of the holders of the Series A Preferred Stock and the Series B Preferred Stock and before any amount shall be paid to holders of Common Stock, an amount per share equal to $1,000.00 (as adjusted for stock splits, combinations or similar events and hereafter referred to as "Original Issue Price") plus all accumulated and unpaid dividends, if any (the "Liquidation Amount"). If, upon the occurrence of a liquidation, dissolution or winding up, the assets and surplus funds distributed among the holders of Series C Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amount, then subject to any prior payment to the holders of the Common Stock, such assets and surplus funds of the Corporation as are legally available for distribution shall be distributed ratably among the holders of Preferred Stock. If, upon the occurrence of a liquidation, dissolution or winding up, after the payment to the holders of Preferred Stock of the preferential amount, assets or surplus funds remain in the Corporation, the holders of Common Stock shall be entitled to receive ratably all such remaining assets and surplus funds. 4. Redemption. At any time on 30 days written notice given after March 8, 2004, at its option, the Corporation will have the right to redeem the Series C Preferred Stock by paying in cash the Liquidation Amount. The Series C Preferred Stock may also be redeemed under the circumstances described in Section 6, "Change in Control" and Section 7.4 "Adjustments to Conversion Price" below. 5. Voting Rights. (a) Except as specifically provided below, the Series C Preferred Stock shall have no voting rights. If the Corporation does not declare and pay eight quarterly dividend payments, then the holders of Series C Preferred Stock shall have the right to vote with the holders of Common Stock as one class on all matters submitted to the shareholders for a vote as follows: (i) the holders of Series C Preferred Stock shall have one vote for each full share of Common Stock into which their respective shares of Series C Preferred Stock are convertible on the record date for the vote; and (ii) the holders of Common Stock shall have one vote per share of Common Stock. (b) Notwithstanding the provisions of paragraph (a), at each annual or special meeting called for the purpose of electing directors or by an action by written consent, the holders of Series C Preferred, voting as a single class, shall be entitled to elect one member of the Board of Directors, and the remaining directors shall be elected by the holders of Common Stock voting together as a single class. The provisions of this Section 3(b) shall expire and be of no further force or effect upon conversion or redemption of 75% of the outstanding shares of Series C Preferred pursuant to the provisions of Sections 4 and 7 hereof. In the case of any vacancy in the office of a 3 4 director elected by the holders of Series C Preferred, a successor shall be elected to hold office for the unexpired term of such director by the affirmative vote of a majority of the holders of Series C Preferred given at a special meeting of such shareholders duly called or by an action by written consent for that purpose. Any director who shall have been elected by the holders of Series C Preferred may be removed during the aforesaid term of office, either for or without cause, by, and only by, the affirmative vote of the holders of a majority of the shares of the Series C Preferred, given at a special meeting of such shareholders duly called or by an action by written consent for that purpose, and any such vacancy thereby created, may be filled by the vote of the holders of a majority of the shares of the Series C Preferred represented at such meeting or by an action by written consent. 6. Change in Control. If, prior to conversion or redemption in full of the Series C Preferred Stock, the Corporation shall consolidate with or merge with another corporation or engage in a similar transaction and the stockholders of this Corporation immediately prior to such merger or consolidation own and control less than 50% of the outstanding securities of the surviving corporation, or the Corporation shall sell all or substantially all of its assets for a consideration (apart from the assumption of obligations) consisting principally of securities or there occurs a purchase of 50% or more of the Common Stock of the Corporation by a person or group of related persons pursuant to a tender offer or otherwise (any such event, a "change in control"), the Corporation shall take such steps in connection with such change in control, as may be necessary to assure that the Series C Preferred Stock (or new preferred stock issued by the succeeding company with exactly the same terms as the Series C Preferred Stock) shall remain in effect and that the provisions of the Series C Preferred Stock shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or property thereafter issuable upon the conversion of the Series C Preferred Stock. In addition, in the event of a change in control, the Conversion Price (as defined in Section 7) shall become the lower of the Conversion Price in effect immediately prior to such change in control (as adjusted pursuant to the provisions of Section 7.3) or the price per share paid in the transaction resulting in the change in control. 7. Conversion to Common Stock. The Series C Preferred Stock shall be convertible into Common Stock of the Corporation as follows: 7.1. Right to Convert; Initial Conversion Price; Automatic Conversion. 7.1.1 Each holder of the Series C Preferred Stock will have the right at its option, at any time and from time to time, prior to redemption in full of the Series C Preferred Stock, to convert any or all of such Series C Preferred Stock (including any accumulated and unpaid dividends, whether or not declared) into fully-paid and non-assessable shares of the Corporation's Common Stock $.001 par value per share, at the conversion price as hereafter provided. 4 5 7.1.2 If the amount of consideration payable to the holders of Common Stock per share paid in the change in control event is (i) at least two times the Original Conversion Price and (ii) is payable in the form of cash or freely marketable securities, then the Series C Preferred Stock shall automatically be converted into shares of Common Stock at the then effective applicable Conversion Price. 7.2. Mechanics of Conversion. 7.2.1 To convert Series C Preferred Stock, in whole or in part as provided herein at the holder's election, a holder of Series C Preferred Stock shall give written notice to the Corporation (by means of first class U.S. mail or by facsimile addressed to the attention of the President) of his intention to convert, stating the number of shares of Series C Preferred Stock and the amount of any accumulated and unpaid dividends that is to be converted and the name and address of each person in whose name a share or shares of Common Stock issuable upon such conversion is to be registered, such conversion to be effective on receipt of the notice of conversion. 7.2.2 As promptly as practical after the giving of notice to convert as herein provided, but in no event more than three business days, and the surrender of the certificates representing the shares of Series C Preferred Stock converted, the Corporation shall: (i) pay the holder (to the extent not converted as provided above) the amount of accrued and unpaid dividends on Series C Preferred Stock to the date on which such conversion is made, either in cash or by means of shares of Common Stock as set forth above; and (ii) deliver or cause to be delivered at its office or agency maintained for that purpose to or upon written order of the holder of the Series C Preferred Stock certificates representing the number of fully paid and nonassessable shares of Common Stock of the Corporation into which the Series C Preferred Stock is converted and, in the event of partial conversion, certificates representing the unconverted shares of Series C Preferred Stock, dated as of the date the Series C Preferred Stock is converted in part, and in all other respects identical to the Series C Preferred Stock converted. 7.2.3 The total number of shares of Common Stock into which a share of Series C Preferred Stock may be converted initially will be determined by dividing the Original Issue Price of $1,000.00 by the conversion price. The conversion price shall initially be $1.125 and shall be adjusted as provided in Paragraph 7.4 hereof, and as provided below (hereinafter called the "Original Conversion Price"). In the case of accumulated and unpaid dividends, the total number of shares of Common Stock into which such accumulated and unpaid dividends may be converted shall be determined by dividing the dollar amount of the accumulated and unpaid dividends to be converted by the value of the Common Stock determined in accordance with Paragraph 2.1 above, with, for this purpose, the date of conversion being the "date the dividend is paid" referred to in the final sentence of Paragraph 2.1. 5 6 7.3. Reserved Shares. 7.3.1 The Corporation covenants and agrees that it has reserved and shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of issuing such shares upon the conversion of the Series C Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all Series C Preferred Stock outstanding. The Corporation covenants and agrees that the shares of its Common Stock delivered: (i) upon conversion of the Series C Preferred Stock; (ii) in payment of dividends; and (iii) on conversion of any accumulated and unpaid dividends shall, at the time of delivery of the certificates for such shares of Common Stock, be validly issued and outstanding and fully paid and nonassessable shares of Common Stock. The Corporation further covenants and agrees that it will pay when due and payable any and all Federal and state original issue taxes which may be payable in respect of the issue of the Series C Preferred Stock or any shares of Common Stock upon the conversion of Series C Preferred Stock. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the transfer and delivery of Series C Preferred Stock, all such tax being payable by the holder of such Series C Preferred Stock at the time of surrender. 7.3.2 Each person in whose name any certificate for shares of Common Stock is issuable upon the conversion of Series C Preferred Stock or any accumulated and unpaid dividends shall for all purposes be deemed to have become the holder of record of the Common Stock represented thereby on the date upon which notice of conversion was given in accordance with Paragraph 7.2, notwithstanding that the date of such notice is a date upon which the stock transfer books of the Corporation are then closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the holder of the Series C Preferred Stock. 7.4. Adjustments to Conversion Price. 7.4.1 In case the Corporation shall, at any time or from time to time after the date of issuance of the Series C Preferred Stock, issue any additional shares of Common Stock (or any security convertible into shares of Common Stock or any rights or options to purchase shares of Common Stock) for a consideration per share less than the Original Conversion Price in effect immediately prior to the issuance of such additional shares or without consideration, then, and thereafter successively upon each such issuance, the Original Conversion Price in effect immediately prior to the issuance of such additional shares shall forthwith be reduced to a price determined by dividing: (a) An amount equal to the sum of: (i) the number of shares of Common Stock outstanding immediately prior to such issuance multiplied by 6 7 the then existing Conversion Price; plus (ii) the consideration, if any, received by the Corporation upon such issuance, by (b) The total number of shares of Common Stock outstanding immediately after the issuance of such additional shares. 7.4.2 The Corporation shall not be required to make any adjustment of the Original Conversion Price in accordance with Section 7.4.1 if the amount of such adjustment shall be less than $.01, but in such case, any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment of the Original Conversion Price which, together with all adjustments thereof so carried forward, shall amount to not less than $.01. 7.4.3 For the purpose of adjustments under Section 7.4.1, the following provisions shall also be applicable: (a) In the case of the issuance of additional shares of Common Stock for cash, the consideration received by the Corporation therefor shall be deemed to be the cash proceeds received for such shares without deducting any commissions or other expenses paid or incurred by the Corporation for any underwriting of, or otherwise in connection with, the issuance of such shares. (b) In case of the issuance (otherwise than upon conversion of Series C Preferred Stock) of additional shares of Common Stock for a consideration other than cash or a consideration a part of which shall be other than cash, the amount of the consideration shall be determined in good faith by the Board of Directors of the Corporation. (c) In the case of the issuance by the Corporation after the date of issuance of the Series C Preferred Stock, of any security that is convertible into shares of Common Stock or any rights or options to purchase shares of Common Stock: (i) the Corporation shall be deemed to have issued the maximum number of shares of Common Stock deliverable upon the exercise of such rights or options or upon conversion of such securities; and (ii) the consideration therefor shall be deemed to be the sum of (x) the consideration received by the Corporation for such convertible securities or for such other rights or options as the case may be, without deducting therefrom any expenses or commissions incurred or paid by the Corporation for any underwriting or issuance of such convertible security or right or option, plus (y) the consideration or adjustment payment to be received by the Corporation in connection with such conversion, plus (z) the minimum price at which shares of Common Stock are to be delivered upon the exercise of such rights or options, or, if no minimum price is specified and such shares are to be delivered at the option price related to the market value of the subject shares, an option price bearing the same relation to the market value of the subject 7 8 shares at the time such rights or options were granted; provided, that as to such options such further adjustment as shall be necessary on the basis of the actual option price at the time of exercise shall be made at such time if the actual option price is less than the aforesaid assumed option price. (d) For the purpose hereof, any additional shares of Common Stock issued as a stock dividend shall be deemed to have been issued for no consideration. (e) The number of shares of Common Stock at any time outstanding shall include: (i) all outstanding common stock of the Corporation; and (ii) the aggregate number of shares deliverable in respect of the convertible securities, rights and options referred to in this Section 7.4; provided, that to the extent that any such options, warrants or conversion privileges are not exercised, such shares shall be deemed to be outstanding only until the expiration dates of the rights, options or conversion privilege or the prior cancellation thereof. Notwithstanding the foregoing, there shall not be taken into account, for the purpose of any computation made pursuant to Section 7.4, whether for the determination of the number of shares of Common Stock issued or outstanding on or prior to any date, or otherwise: (i) any options, warrants or rights to purchase shares of Common Stock of the Corporation in existence on the date of issuance of the Series C Preferred Stock; (ii) options to purchase up to 5,283,805 shares of Common Stock approved by the Board of Directors; (iii) any options granted to directors of the Corporation pursuant to the automatic grants of the Nonemployee Director Plan, as currently in effect, where the exercise price has been discounted to reflect forgiven director fees; or (iv) any shares of Common Stock issued upon the exercise of any such options, warrants or conversion rights. 7.4.4 If at any time or from time to time the Corporation shall by subdivision, consolidation or reclassification of shares, or otherwise, change as a whole, the outstanding shares of Common Stock into a different number or class of shares, the shares issuable: (i) upon conversion of the Series C Preferred Stock; (ii) in payment of dividends; and (iii) on conversion of any accumulated and unpaid dividends, and the Original Conversion Price per share, shall be proportionately and correspondingly adjusted. 7.4.5 In case the Corporation shall declare a dividend upon the Common Stock payable otherwise than out of earnings or earned surplus and otherwise than in Common Stock, the Original Conversion Price in effect immediately prior to the declaration of such dividend shall be reduced by an amount equal, in the case of a dividend in cash, to the amount thereof payable per share of the Common Stock, or in the case of any other dividend, to the fair value thereof per share of the Common Stock as determined, in good faith, by the Board of Directors of the Corporation. For the purposes of the foregoing, a dividend other than in cash shall be considered payable out of earnings 8 9 or earned surplus only to the extent that such earnings or earned surplus are charged an amount equal to the fair value of such dividend as determined in good faith by the Board of Directors of the Corporation. Such reductions shall take effect as of the date as of which the holders of Common Stock of record are entitled to such dividend. 7.4.6 Irrespective of any adjustments or changes in the Conversion Price or the number of shares of Common Stock actually issuable: (i) on conversion of the Series C Preferred Stock; (ii) in payment of dividends; and (iii) on conversion of any accumulated and unpaid dividends, the Series C Preferred Stock shall continue to express the Conversion Price per share and the number of shares issuable thereunder as expressed in Series C Preferred Stock when initially issued. 7.4.7 The Corporation shall promptly give notice to the holders of Series C Preferred Stock of any change in the Original Conversion Price of the Series C Preferred Stock and any change in the number of shares of Common Stock issuable in payment of dividends and on conversion of any accumulated and unpaid dividends, and the method of calculation thereof, but in no event more than 10 days following the event triggering such change. The Corporation shall give the holder of Series C Preferred Stock at least 10 days advance notice of any cash dividends, rights offerings and other transactions directly for the benefit of holders of Common Stock of the Corporation. 7.4.8 If the average closing bid price per share of the Corporation's Common Stock for the five (5) trading days immediately preceding the six month anniversary of the sale of the first share of Series C Preferred (the "Reset Date") is less than the Original Conversion Price, then, the Original Conversion Price shall be reduced to the Reset Price, subject to stockholder approval as required under NASD Rule 4350(i)(1)(D). For purposes of this Section 7.4.8, the "Reset Price" shall be defined as the higher of (a) $0.84 or (b) the average closing bid price per share of the Common Stock for the five (5) trading days immediately preceding the six month anniversary of the sale of the first share of Series C Preferred, not to exceed $1.125. Notwithstanding the above, the Corporation shall not be obligated to reduce the Original Conversion Price to the Reset Price if it will result in the issuance of an aggregate number of shares of Series C Preferred, calculated on an as converted basis, which exceeds 19.9% of the number of shares of Common Stock issued and outstanding on the Reset Date without obtaining stockholder approval of such excess issuance. If stockholder approval is necessary to effect the adjustment of the Original Conversion Price and such approval is not obtained within the earlier of 75 days of the Reset Date or the Company's 2001 annual stockholders meeting, the holders of outstanding shares of the Series C Preferred may request (the "Redemption Request") that the Corporation redeem that number of Series C Preferred (the "Redemption Shares") as will allow adjustment of the Initial Conversion Price to the Reset Price for the remaining Series C Preferred without obtaining stockholder approval. Upon receiving 9 10 the Redemption Request, the Corporation shall redeem the Redemption Shares by paying in cash the Liquidation Amount for such shares and immediately upon such redemption the Initial Conversion Price shall be adjusted to the Reset Price. The redemption of shares of Series C Preferred shall be pro rata among the holders of the Series C Preferred. For purposes of this Section 7.4.8, the closing bid price shall mean the closing bid price of the Common Stock on the principal United States securities exchange or trading market on which the Common Stock is listed or traded as reported by Bloomberg Financial Markets, or a comparable financial reporting service of national reputation selected by the Corporation. IN WITNESS WHEREOF, IntelliCorp, Inc. has caused this Certificate to be signed by Kenneth H. Haas, its Chief Executive Officer, on this 7th day of March, 2001. IntelliCorp, Inc. By: /s/ Kenneth H. Haas ------------------------------------------- Kenneth H. Haas, Chief Executive Officer 10 EX-5 3 f70915orex5.txt EXHIBIT 5 1 Exhibit 5 [Heller Ehrman White & McAuliffe LLP letterhead] March 28, 2001 IntelliCorp, Inc. 1975 El Camino Real West Mountain View, CA 94040 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 (the "Registration Statement") which the Company proposes to file with the Securities and Exchange Commission on March 28, 2001 for the purpose of registering under the Securities Act of 1933, as amended, 9,079,881 shares of its Common Stock, par value $0.001 (the "Shares"). 4,337,778 of the Shares (the "Conversion Shares") are issuable upon conversion of the Series C Preferred Stock of the Company, and 1,084,445 of the Shares (the "March Warrant Shares") are issuable upon exercise of warrants (the "March Warrants") to purchase common stock issued pursuant to the Series C Preferred Stock Purchase Agreement dated March 8, 2001 (the "Preferred Purchase Agreement"). 1,000,000 of the Shares were issued pursuant to the Common Stock Purchase Agreement dated September 29, 2000 (the "September Purchase Agreement"), and 250,000 of the Shares (the "September Warrant Shares") are issuable upon exercise of warrants (the "September Warrants") to purchase common stock issued pursuant to the September Purchase Agreement. 600,000 of the Shares were issued pursuant to the Common Stock Purchase Agreements dated December 28, 2000 (the "December Purchase Agreement"). In addition, an aggregate of 1,446,126 Shares were issued pursuant to the Agreement for the Purchase and Sale of Common Stock dated March 30,1999, as amended, (the "Letter Agreement") and 361,532 of the Shares (the "Letter Warrant Shares") are issuable upon the exercise of warrants (the "Letter Warrants"). The Preferred Purchase Agreement, the September Purchase Agreement, December Purchase Agreement and the the Letter Agreement are collectively referred to as the "Purchase Agreements". The March Warrant Shares, September Warrant Shares and the Letter Warrant Shares are collectively referred to as the "Warrant Shares". The 2 March Warrants, September Warrants and the Letter Warrants are collectively referred to as the "Warrants". 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 and instruments: (a) The Restated Certificate of Incorporation of the Company, as amended, certified by the Delaware Secretary of State as of March 22, 2001, and certified to us by an Officer of the Company as being complete and in full force as of the date of this opinion; (b) The Certificate of Designation, Preferences and Rights of the Series C Preferred Stock of the Company, certified by the Delaware Secretary of State as of March 22, 2001, and 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 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; (d) 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, including any committee thereof, and stockholders of the Company relating to the Shares, the Purchase Agreements, the Warrants, and the Registration Statement, and (ii) certifying as to certain factual matters; (e) The Registration Statement; (f) The Purchase Agreements; (g) The Warrants; and (h) A letter from ChaseMellon Investor Services, the Company's transfer agent, dated as of March 22, 2001, as to the number of shares of the Company's Common Stock that were outstanding on March 21, 2001. This opinion is limited to the federal law of the United States of America and the General Corporation Law of the State of Delaware, and we disclaim any opinion as to the laws of any other jurisdiction. We further disclaim any opinion as to any other statute, rule, regulation, ordinance, order or other promulgation of any other jurisdiction or any 2 3 regional or local governmental body or as to any related judicial or administrative opinion. 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 issued, (ii) the full consideration stated in the Purchase Agreements or Warrants, respectively, for each Share is received and that such consideration in respect of each Share includes payment of cash or other lawful consideration at least equal to the par value thereof, (iii) the Shares are issued in accordance with the terms of the Purchase Agreements or the Warrants, respectively, the resolutions authorizing their issuance and the Registration Statement, (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 when issued by the Company in the manner provided in the Purchase Agreements, the Warrants, and the Registration Statement, the Shares will be legally issued, fully paid and nonassessable. 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 written 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, /s/ Heller Ehramn White & McAuliffe LLP 3 EX-10.1 4 f70915orex10-1.txt EXHIBIT 10.1 1 EXHIBIT 10.1 INTELLICORP, INC. SERIES C PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT ("Purchase Agreement") is made and entered into this 8th day of March, 2001 by and between INTELLICORP, INC., a Delaware corporation (the "Company"), and the Purchasers listed in Schedule 1.1 attached hereto (the "Purchasers" and individually, a "Purchaser"). R E C I T A L S: A. The Board of Directors of the Company has adopted the Certificate Designation, Preferences and Rights of the Series C Preferred Stock (the "Certificate of Designation") in the form attached hereto as Exhibit 1 which establishes the rights, preferences and privileges of the Company's $0.001 par value Series C Preferred Stock (the "Series C Preferred Stock"). B. The Company desires to issue and the Purchasers desire to acquire up to 4,880 shares of Series C Preferred Stock and warrants to purchase 1,084,445 shares of Common Stock (the "Warrants") subject to the terms and conditions set forth in this Purchase Agreement. A G R E E M E N T: NOW, THEREFORE, IT IS AGREED as follows: 1. Issue of Preferred Stock and Warrants. 1.1 Subject to the terms and conditions hereof, the Company has authorized the issue of: (a) Up to 4,880 shares of Series C Preferred Stock of the Company for delivery to the Purchasers in the amounts set forth in Schedule 1.1 attached hereto against payment to the Company by each Purchaser of the amount set forth in Schedule 1.1 by wire transfer in same day or next day funds. (b) Up to 4,337,777 shares of Common Stock (which number may be adjusted as provided in the Certificate of Designation) upon conversion of the Shares in accordance with the terms of the Certificate of Designation, shares of Common Stock which may be issued as dividends on the Shares through February 1, 2002 (the "Dividend Shares") and 1,084,445 shares of Common Stock issuable upon exercise of the Warrants as described below. 2 1.2 Subject to the terms and conditions of this Purchase Agreement, the Company shall issue and sell to the Purchasers and the Purchasers shall purchase from the Company a total of 4,880 shares of Series C Preferred Stock (the "Shares") and warrants to acquire 1,084,445 shares of Common Stock, for an aggregate purchase price of $4,880,000. The Shares shall be convertible into shares of the Company's Common Stock (the "Conversion Shares") as provided in the Certificate of Designation. Each Purchaser shall receive that number of Warrants equal to 25% of the number of shares of Common Stock being purchased by such Purchaser, on an as converted basis, under this Purchase Agreement. The exercise price of each Warrant shall be $2.00 per share. The number of Shares and Warrants to be purchased by each Purchaser is set forth opposite the name of each Purchaser on Schedule 1.1. The shares of Common Stock issuable upon exercise of the Warrants are referred to herein as the "Warrant Shares", and the Shares, the Conversion Shares, the Warrants, the Dividend Shares and the Warrant Shares are referred to collectively as the Securities. 1.3 The closing of the purchase and sale of Shares and the Warrants shall take place at the offices of Heller Ehrman White and McAuliffe, 275 Middlefield Road, Menlo Park, California, at 10:00 a.m., on March 8, 2001, or on such other date and at such other time as the parties shall mutually agree (the "Closing Date"). 1.4 If the number of shares Common Stock issuable on conversion of the Shares is increased by virtue of the provisions of Section 7.4.8 of the Certificate of Designation (the "Increased Shares"), the Company shall promptly issue to each Purchaser an additional Warrant to purchase 25% of the number of the Increased Shares applicable to the Shares held by such Purchaser. If Shares are redeemed pursuant to the Certificate of Designation, there will not be any adjustments to the number of Warrants issued to the Purchasers. 2. Representations and Warranties of the Company. The Company represents and warrants that: 2.1 It is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware, and duly qualified to do business and in good standing as a foreign corporation in the State of California, with full power and authority, corporate and otherwise, to enter into and perform this Agreement, and to make, execute and deliver the various instruments and documents provided for herein. 2.2 The execution, delivery and performance by the Company of this Purchase Agreement, and the making, execution and delivery by the Company of the instruments contemplated hereby, have been duly authorized by all necessary corporate action and will not violate any provision of law, court order or decree, or of its Certificate of Incorporation or Bylaws, or result in the breach of or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any agreement or instrument, to which it is a party, or by which 3 it or its property may be bound or affected. This Agreement is a valid and binding obligation of the Company, enforceable in accordance with its terms. 2.3 The Shares, the Dividend Shares, the Conversion Shares and the Warrant Shares have been duly authorized and at all times prior to the conversion of the Shares or the exercise of the Warrants will have been duly reserved for issuance and, when issued, will be validly issued, fully paid and nonassessable and free and clear of all pledges, liens, encumbrances and restrictions other than any liens or encumbrances created by or imposed on the holder thereof through no action of the Company. Assuming the truth and accuracy of the representations made by the Purchasers, the offer, sale and issuance of the Securities are exempt from the registration requirements of the Securities Act and applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf has taken or will take any action hereafter that would cause the loss of such exemption. 2.4 The authorized capital of the Company is 50,000,000 shares of Common Stock, $.001 par value per share and 2,000,000 shares of preferred stock, $.001 par value, of which 21,701,000 shares of Common Stock, 411,290 shares of Series A Preferred Stock and 5,000 shares of Series B Preferred Stock are issued and outstanding, respectively. There are no shares of preferred stock reserved for issuance, except as set forth herein. There are no shares of Common Stock reserved for issuance on exercise of options and warrants or conversion of convertible securities, except as set forth on Schedule 2.4 hereto. 2.5 There are no law suits or proceedings pending, or, to the Company's knowledge, threatened against or affecting the Company and there are no proceedings before any governmental commission, bureau or other administrative agency pending, or, to the Company's knowledge, threatened against the Company. 2.6 Any and all licenses and approvals required by the Company for the conduct of its business have been obtained from the federal, state or local authorities concerned, all of which are in good standing, except where the failure to receive such licenses or approvals would not, individually or in the aggregate, have a material adverse effect on the financial condition, operations, business, assets or properties of the Company. 2.7 The minute books of the Company have been properly kept and reflect all transactions entered into by the Company which require submission to or action by the stockholders or directors of the Company. 2.8 No governmental permit, consent, approval or authorization (other than as required by any applicable state securities law) is required in connection with (i) the execution and delivery of this Purchase Agreement by the Company or (ii) the offer, sale, issuance and delivery of the Securities contemplated hereby by the Company; 4 provided that, all representations made to the Company by the Purchasers in this Purchase Agreement are assumed for purposes of this representation and warranty to be accurate and complete. 2.9 Included in the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000 are the consolidated balance sheets of the Company at June 30, 2000 and June 30, 1999, and the consolidated statements of operations, cash flows and stockholders equity for the year ended June 30, 2000 with the report thereon of Ernst & Young LLP, independent auditors. 2.10 None of the Company's reports and filings with the Securities and Exchange Commission ("SEC") when filed contained a misstatement of a material fact or omitted to state a material fact necessary to make the statements contained therein, in the light of the circumstances in which they were made or omitted, not misleading. 2.11 The Company's Common Stock is traded on Nasdaq SmallCap Market, and within 20 days of this Agreement the Conversion Shares, Warrant Shares and the Dividend Shares shall be listed for trading with Nasdaq. 2.12 Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of the Securities being offered hereby under the Securities Act or cause this offering of Securities to be integrated with any prior offering of securities of the Company for purposes of the Securities Act or any applicable stockholder approval provisions. 2.13 The Company is currently eligible to register the resale of its Common Stock on a registration statement on Form S-3 under the Securities Act. There exist no facts or circumstances (including without limitation any required approvals or waivers of any circumstances that may delay or prevent the obtaining of accountant's consents) that would prohibit or delay the preparation and filing of a registration statement on Form S-3 with respect to the Securities, or delay the effectiveness of such registration statement. 2.14 Changes. Except as otherwise disclosed herein or the reports listed in paragraph 2.10 hereof, between December 31, 2000 and the date of this Agreement there has not been: (a) any change in the assets, liabilities, financial condition, prospects or operations of the Company from that reflected in the Quarterly Report, except changes in the ordinary course of business which have not been, either in any individual case or in the aggregate, materially adverse; 5 (b) any material change in the contingent obligations of the Company, whether by way of guaranty, endorsement, indemnity, warranty or otherwise; (c) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties or business of the Company; (d) except for the dividend payment on outstanding preferred stock of the Company, any declaration or payment of any dividend or other distribution of the assets of the Company; (e) any labor organization activity; or (f) to the best of the Company's knowledge, any other event or condition of any character which has materially and adversely affected the Company's assets, liabilities, financial condition, prospects or operations. 2.15 Intellectual Property. To the Company's knowledge, the Company has not violated and is not currently in violation of any copyright, trademark or other intellectual property rights of any third persons, except to the extent that such violation does not materially and adversely affect the Company or its operations. 2.16 Investment Company. The Company represents and warrants that it is not an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). In addition, the Company agrees that it shall not become an "investment company" or a company "controlled" by an "investment company", within the meaning of the 1940 Act. In the event that the Company breaches the foregoing, the Company shall forthwith notify the Purchasers and shall take immediate corrective action to remedy such breach. 6 3. Representations of Purchaser. This Purchase Agreement is made with each Purchaser by the Company in reliance upon such Purchaser's representations to the Company, which by such Purchaser's acceptance hereof, such Purchaser confirms, that (a) Purchaser is acquiring the Shares for its own account and not for the beneficial interest of any other person, and not with a view to the distribution thereof, and that Purchaser will not distribute, sell or otherwise dispose of the Shares, or the Warrants, or any of the shares of Common Stock of the Company issuable upon conversion of the Shares or the Warrants, except as permitted under the Securities Act of 1933, as amended (the "Act"), the General Rules and Regulations thereunder, and all applicable State "Blue Sky" laws; (b) Purchaser's financial circumstances are such as to permit Purchaser to make this investment without having a present intention or need to liquidate its investment; (c) Purchaser severally confirms further that it has been advised that none of the Shares, the Warrants, or the Common Stock issuable upon the conversion thereof have been registered under the Act, and that, accordingly, such Shares, shares of Common Stock and the Warrants will be what is commonly known as "restricted securities," and are not freely transferrable by Purchaser except pursuant to an exemption from registration under the Act, such as Rule 144, the substance of which has been explained to Purchaser or upon registration of the Common Stock under the Act; (d) Purchaser is an "accredited investor" as that term is defined in SEC Regulation D, (e) Purchaser is knowledgeable about the software industry and the Company's products and has had the opportunity to discuss with Company management the Company and its products, prospects, results of operation and financial condition and to have access to any and all information regarding the Company that Purchaser deems necessary to its decision to purchase the Shares, and (f) that the following legends shall be placed on the Certificates evidencing the Shares (and, on the Warrants, Conversion Shares and the Warrant Shares): "THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO SECTION 4(2) OF SAID ACT AND NOT WITH A VIEW TO OR IN CONNECTION WITH THE DISTRIBUTION THEREOF. NEITHER THESE SECURITIES NOR THE SECURITIES ISSUED UPON CONVERSION HEREOF MAY BE OFFERED FOR SALE OR SOLD OR OTHERWISE DISPOSED OF EXCEPT UPON COMPLIANCE WITH SAID ACT." 4. Registration. 4.1 Within 20 days following the execution of this Agreement the Company shall prepare and file with the Commission a registration statement on Form S- 7 3 sufficient to permit the public offering and sale by the Purchasers of the Conversion Shares and the Warrant Shares through the facilities of all appropriate securities exchanges and the over-the-counter market, and will use its best efforts through its officers, directors, auditors and counsel to cause such registration statement to become effective within 90 days following the execution of this Agreement (or 120 days following the execution of this Agreement in the event of a written review of such registration statement by the Commission). Any registration statement which becomes effective pursuant to the provisions of this paragraph, shall be kept effective by the Company for so long as any Purchaser owns any of the Shares or Warrants, or any Conversion Shares or Warrant Shares. (a) Terms of Registrations. The foregoing rights and duties shall be subject to the following terms and conditions: (i) The Company shall bear all of the costs of any registration statement, including all "blue sky" fees and expenses. (ii) The Company will use its best efforts to cause such registration statement to become effective under the Act. (iii) Other than for 1,850,00 shares of Common Stock which shall be registered with the Securities, the Company shall not register or file a registration statement registering any shares of its securities (other than as provided herein or in connection with employee stock option plans) until the registration statement covering the Conversion Shares, and Warrant Shares has been declared effective and remains effective for a period of at least 60 consecutive trading days. (b) Warrants. If the registration is not declared effective with such 90 day (or 120 day if the registration is reviewed in writing by the Commission) period, as described above, additional Warrants shall be issued at the rate of 15% of the number of Warrants issued to the Purchaser for each month (or partial month) thereafter that the registration statement is not declared effective. If after the registration is declared effective the holders are not able to sell the Common Stock pursuant to the registration statement, the Company shall grant additional Warrants to holders of the Shares at the rate of 15% of the number of Warrants initially granted for each month (or partial month) thereafter that the holder is not able to sell under the registration statement, provided however, the Company shall be able to declare a black-out period of no more than 10 days per calendar year without having to issue additional Warrants; provided however, in no event shall the Company declare or allow to exist a blackout period in excess of 60 days. 4.2 In connection with any registration pursuant to Section 5.1, the Company will (i) use its best efforts to permit a lawful distribution by Purchasers in the manner specified by Purchasers; (ii) use its best efforts to qualify or otherwise "blue sky" 8 the proposed offering by Purchasers in such states as the Purchasers shall reasonably request; provided, however, that nothing herein contained shall require the Company to qualify as a foreign corporation in a jurisdiction in which it is not presently qualified or to become licensed as a securities broker or dealer in any jurisdiction; (iii) provide Purchasers with a reasonable number of registration statements and prospectuses (including amendments and revisions) requested by Purchasers; and (iv) use its best efforts to have such prospectuses meet the requirements of Section 10(a) of the Securities Act of 1933, as amended. 4.3 The Company's obligations under this Section 4 are conditioned upon its being furnished by each Purchaser with descriptions of such Purchaser's Common Stock to be covered in the requested registration statement, the proposed method of distribution, and such other relevant information as may be required. 4.4 In connection with any registration statement pursuant to this Section 4, Purchasers shall indemnify and hold harmless the Company and each person (if any) who controls the Company within the meaning of Section 15 of the Act from and against all losses, claims, damages and liabilities to which the Company or any of them may be subject, actually or allegedly caused by any untrue statement of a material fact contained in any such registration statement or related prospectus or actually caused by an omission to state therein a material fact actually required to be stated therein or necessary to make the statements therein not misleading, which statement or omission shall have been made in reliance upon and in conformity with written information furnished to the Company by Purchasers or the Purchaser's agent specifically for use in connection with such registration statement; provided however, that the Purchasers' liability under this Purchase Agreement shall be limited to the net proceeds received from the sale of the Shares. Reciprocally, the Company hereby agrees to indemnify and hold harmless Purchasers, any broker or other person who may be deemed an underwriter for a Purchaser and each person (if any) who controls a Purchaser or Purchaser's underwriter within the meaning of Section 14 of the Act, from and against all losses, claims, damages and liabilities to which such parties or any of them may be subject, actually or allegedly caused by any untrue or allegedly untrue statement of a material fact contained in any such registration statement or related prospectus or actually or allegedly caused by any omission to state therein a material fact actually or allegedly required to be stated therein or necessary to make the statements therein not misleading, except insofar as such statement or omission shall have been made in reliance upon and in conformity with written information furnished to the Company by or on behalf of a Purchaser specifically for use in connection with such registration statement. (a) Subject to subsection (b) below, the foregoing indemnity shall include reimbursements for any reasonable legal or other expenses incurred by the indemnified party or any director, officer or controlling person, as defined above, in connection with investigating or defending any such loss. 9 (b) Promptly after receipt by an indemnified party under this Section 4.4 of notice of commencement of any action, the indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 4.4, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability to any indemnified party except to the extent that the failure to so notify such party adversely affected the indemnifying party. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the latter will be entitled to participate therein, and to the extent desired, jointly, with any other indemnifying party similarly notified, assume the defense and control the settlement thereof, with counsel satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party as to its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 4.4 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable cost of investigation. (c) The Company and Purchasers each have the right to make a reasonable investigation of the information contained in any registration statement covered by this Section 4 to confirm its accuracy, subject, however, to the obligation of the party making such investigation to keep in confidence any information derived until such time as the information is filed with the SEC. 4.5 To the extent transfers of any of the Securities are permitted pursuant to Section 3(a) hereof, Purchaser may transfer, assign or otherwise transfer of its rights under this Section 4, as a whole or in part, but no such action by Purchaser shall increase or otherwise affect the nature or extent of the Company's obligations provided in this Section. 4.6 If any holder of Series C Preferred is granted Board of Directors observer rights and exercises such rights, such holder shall comply with the Company's policy regarding trading window periods. 4.7 With a view to making available to Purchasers the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Purchasers to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times from and after the date of this Agreement so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and 10 (c) furnish to each Purchaser, so long as such Purchaser owns any Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested in availing such Purchaser of any rule or regulation of the SEC which permits the selling of any the Conversion Shares, Dividend Shares and Warrant Shares without registration or pursuant to such form. 4.8 Further Obligations of the Company. In connection with the registration obligations of the Company pursuant to this Agreement, the Company shall, as expeditiously as reasonably possible: (a) furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Conversion Shares, Dividend Shares and Warrant Shares owned by them; and (b) provide a transfer agent and registrar for all Conversion Shares, Dividend Shares and Warrant Shares registered pursuant hereunder and a CUSIP number for all such shares, in each case not later than the effective date of such registration. 5. Board Representation. In accordance with the Certificate of Determination, the Purchasers, voting as a single class, shall be entitled to elect one member of the Board of Directors of the Corporation. Following the election of such nominee as a director, such person shall receive no more or less compensation than is paid to other non-officer directors of the Company for attendance at meetings of the Board of Directors of the Company and shall be entitled to receive reimbursement for all reasonable costs incurred in attending such meetings including, but not limited to, food, lodging and transportation. The Company agrees to indemnify and hold such director harmless, to the maximum extent permitted by the Corporation's Restated Certificate of Incorporation or state law, against any and all claims, actions, awards and judgments arising out of his service as a director and, in the event the Company maintains a liability insurance policy affording coverage for the acts of its officers and directors, to include such director as an insured under such policy. The rights and benefits of such indemnification and the benefits of such insurance shall, to the extent possible, extend to the Purchaser insofar as it may be or may be alleged to be responsible for such director. 11 6. Covenants of the Company. The Company agrees that, while any Shares or Warrants issued hereunder remain outstanding in the name of the Purchaser, it will do the following: 6.1 The Company will not sell, lease or convey all or substantially all of its assets or shares of capital stock without the written consent of Purchaser. 6.2 Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, shall, directly or indirectly, make any offers or sales of any security or solicit any offers to buy any security under circumstances that would require registration of the Securities being offered hereby under the Securities Act or cause this offering of Securities to be integrated with any prior or future offering of securities of the Company for purposes of the Securities Act or any applicable stockholder approval provisions. 6.3 So long as the Purchasers beneficially own any Securities, the Company shall timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination. The Company's obligation in this Section 6.3 will terminate in the event of a merger or consolidation, wherein the Company is not the surviving or successor entity. 7. Expenses. Upon the Closing, the Company shall pay the Purchasers the reasonable fees and expenses, including reasonable attorney fees for PaloAlto Investors, in the amount not to exceed $20,000. 8. Notices. Any notice or demand required or desired to be given to or served upon the Company or Purchaser in connection herewith shall be in writing and deemed to have been sufficiently given or served for all purposes when delivered in person or when deposited in the United States mails, certified or registered, postage prepaid, if to the Company, addressed or delivered as follows: If to the Company: IntelliCorp, Inc. 1975 El Camino Real West Mountain View, CA 94040-2216 Attention: President If to Purchaser: at the address set forth on Schedule 1.1 attached hereto, or, if any other address shall at any time be designated by the Company or by Purchaser in writing in conformance with the provisions hereof, to such other address. 12 9. Legal Opinion. The Purchaser shall have received an opinion of counsel to the Company, dated as of the Closing Date, in substantially the form of Exhibit 9 attached hereto. 10. Parties in Interest. All the terms and provisions of this Purchase Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 11. Governing Law. This Purchase Agreement shall be construed in accordance with and governed by the laws of the State of California. 12. Section and other Headings. Section and other headings herein are for reference purposes only, and shall not be used in any way to govern, limit, modify, construe or otherwise affect this Agreement. 13. Counterparts. This Purchase Agreement may be executed with Purchasers in one or more counterparts, each of which shall be deemed an original, but all of which together shall be deemed but one and the same instrument. 14. Amendment. This Purchase Agreement may be amended by written agreement of the Company and the holders of the 75% of the then outstanding Shares with respect to the matters referred to herein. Any such amendment, waiver or consent shall be binding upon the parties hereto. 15. Expense of Enforcement. If any action, proceeding or litigation is commenced to enforce any provision of this Purchase Agreement, then the prevailing party shall be entitled to be reimbursed by the unsuccessful party for all costs incurred in connection with such action, proceeding or litigation, including a reasonable allowance for attorneys' fees and costs, which amount shall be added to and become part of the final decision in such matter. IN WITNESS WHEREOF, this Agreement has been executed and delivered on the date first above written by the duly authorized representative of the Company. COMPANY: INTELLICORP, INC. By: ----------------------------------------- Kenneth H. Haas Chief Executive Officer Address: 1975 El Camino Real West Mountain View, CA 94040-2216 13 PURCHASERS: BANNER PARTNERS MINARET By: -------------------------------------------- Will Edwards, Registered Investment Advisor WILLIAM H. DRAPER, III REVOCABLE TRUST By: -------------------------------------------- Will Edwards, Registered Investment Advisor FRED M. GIBBONS By: -------------------------------------------- Will Edwards, Registered Investment Advisor MICRO CAP PARTNERS, L.P. By: Palo Alto Investors LLC, General Partner By: Palo Alto Investors, Inc., Manager By: -------------------------------------------- Will Edwards, President 14 MICRO-MOUSSE PARTNERS, L.P. By: Palo Alto Investors LLC, General Partner By: Palo Alto Investors, Inc., Manager By: -------------------------------------------- Will Edwards, President UBTI FREE, L.P. By: Palo Alto Investors LLC, General Partner By: Palo Alto Investors, Inc., Manager By: -------------------------------------------- Will Edwards, President PALO ALTO CROSSOVER FUND, L.P. By: Palo Alto Investors LLC, General Partner By: Palo Alto Investors, Inc., Manager By: -------------------------------------------- Will Edwards, President ASHFORD CAPITAL MANAGEMENT, INC. with discretion f/b/o Ashford Capital Partners, L.P. By: -------------------------------------------- Theodore H. Ashford for Ashcap Corp. General Partner 15 ASHFORD CAPITAL MANAGEMENT, INC. with discretion f/b/o Anvil Investment Associates, L.P. By: ---------------------------------------- Theodore H. Ashford for Anvil Management Co., LLC General Partner 16 EXHIBIT 1 CERTIFICATE OF DESIGNATION 17 SCHEDULE 1.1 SCHEDULE OF PURCHASERS
- --------------------------------------------------------------------------------------------- NAME NUMBER OF NUMBER OF SHARES WARRANT SHARES PURCHASE PRICE - --------------------------------------------------------------------------------------------- Banner Partners Minaret 675 150,000 $675,000 - --------------------------------------------------------------------------------------------- William H. Draper, III Revocable Trust 34 7,556 $34,000 - --------------------------------------------------------------------------------------------- Fred M. Gibbons 45 10,000 $45,000 - --------------------------------------------------------------------------------------------- Micro Cap Partners, L.P. 1,426 316,889 $1,426,000 - --------------------------------------------------------------------------------------------- Micro-Mousse Partners, L.P. 174 38,667 $174,000 - --------------------------------------------------------------------------------------------- UBTI Free, L.P. 146 32,444 $146,000 - --------------------------------------------------------------------------------------------- Palo Alto Crossover Fund, L.P. 500 111,111 $500,000 - --------------------------------------------------------------------------------------------- Anvil Investment Associates, L.P. 880 195,556 $880,000 - --------------------------------------------------------------------------------------------- Ashford Capital Partners, L.P. 1,000 222,222 $1,000,000 - --------------------------------------------------------------------------------------------- TOTAL 4,880 1,084,445 $4,880,000.00 - ---------------------------------------------------------------------------------------------
18 SCHEDULE 2.4 Common Stock 21,701,000 Series A Preferred(1) 411,290 Series B Preferred(2) 5,000 Employee Options(3) 4,039,338 Warrants 1,409,418 (1) Convertible into 860,265 shares of Common Stock. (2) Convertible into 2,710,027 shares of Common Stock. (3) 5,283,805 shares are available for issuance under existing employee stock option plan. EX-10.2 5 f70915orex10-2.txt EXHIBIT 10.2 1 Exhibit 10.2 THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE TRANSFERRED, UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE. WARRANT VOID AFTER 5:00 P.M., California Time, on March 8, 2006 WARRANT TO PURCHASE COMMON STOCK OF INTELLICORP, INC. This is to certify that subject to the terms and conditions hereof, FOR VALUE RECEIVED, ___________ (the "Initial Holder") or registered assigns (collectively referred to as the "Holder") is entitled to purchase, at an exercise price per share of $2.00 (the "Exercise Price"), _________ shares (the "Warrant Shares") of the Common Stock (the "Common Stock") of IntelliCorp, Inc., a Delaware corporation (the "Company"), at any time during the period from March 8, 2001 (the "Commencement Date") to 5:00 P.M., California Time, on March 8, 2006, at which time this Warrant will expire and become void. The following terms shall apply to this Warrant: 1. Exercise of Warrant, Reservation of Shares. 1.1. Subject to the terms and conditions hereof, this Warrant may be exercised in whole or in part at any time and from time to time on or after the Commencement Date, and before 5:00 P.M., California Time, on March 8, 2006, or if such day is a day on which federal or state chartered bank institutions located in the State of California are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Purchase Form duly executed and accompanied by payment, in cash or certified or official bank check payable to the order of the Company, of the Exercise Price for the number of Warrant Shares specified in such form. If this Warrant should be exercised in part only, the Company will, upon presentation of this Warrant upon such exercise, execute and deliver a new warrant, dated the date hereof, evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder upon the same terms and conditions as herein set forth. Upon and as of such receipt of this Warrant and the Purchase Form by the Company at its office, in proper form for exercise and accompanied by payment as herein provided, the Holder shall be deemed to be the holder 2 of record of the Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall promptly take such reasonable steps as it deems necessary in order to issue the Warrant Shares to be delivered following exercise of this Warrant, but in any event within three business days from the date the Warrant is exercised. 1.2. Net Issue Exercise of Warrant. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, Holder may elect to receive shares of Common Stock equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Purchase Form in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y(A-B) ------ A Where X = the number of shares of Common Stock to be issued to Holder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) A = the fair market value of one share of the Company's Common Stock (at the date of such calculation) B = Exercise Price (as adjusted to the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be the closing bid price of the Common Stock on the principal United States securities exchange or trading market on which the Common Stock is listed or traded as reported by Bloomberg Financial Markets, or a comparable financial reporting service of national reputation selected by the Corporation for the five (5) trading days prior to the date of determination of fair market value. 1.3. The Company covenants that at all times after the Commencement Date and until expiration of this Warrant, it shall reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares as shall be required for issuance and delivery upon exercise of this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of the Company's Common Stock upon the exercise of the purchase rights under this Warrant. The Company further covenants and agrees (i) that it will not, by -2- 3 amendment of its Certificate of Incorporation or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act, avoid or seek to avoid the observation or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, (ii) promptly to take such action as may be required of the Company to permit the Holder to exercise this Warrant and the Company duly and effectively to issue shares of its Common Stock or other securities as provided herein upon the exercise hereof and (iii) promptly to take all action required or provided in Section 4 hereof. 2. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fractional shares called for upon exercise hereof, the Company will pay to the Holder an amount in cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. 3. Transfer in Compliance with the Securities Act of 1933; Exchange, Assignment or Loss of Warrant. 3.1. This Warrant may not be sold, assigned or transferred, except as provided herein, and in accordance with and subject to the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (said Act and such Rules and Regulations being hereinafter collectively referred to as the "Act"). Any purported transfer or assignment made other than in accordance with this Section 3 shall be null and void and of no force and effect. 3.2. Each certificate for Warrant Shares or for any other security issued or issuable upon exercise of this Warrant shall contain a legend as follows, unless, in the opinion of counsel reasonably satisfactory to the Company, such legend is not required: THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE TRANSFERRED, UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE. 3.3. Subject to the provisions of Sections 3.1 through 3.2, this Warrant is exchangeable, without expense, at the option of the Holder, for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of Warrant Shares purchasable on the same terms and conditions, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued, and may be divided or combined with other warrants which carry the same rights, upon presentation at the principal office -3- 4 of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued. 3.4. Any assignment permitted under this Warrant will be made by surrender of this Warrant to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Assignment Form duly executed and accompanied by funds sufficient to pay any transfer tax. In such event the Company will, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment, and this Warrant will promptly be canceled. 3.5. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, or destroyed Warrant shall thereupon become void. 4. Adjustment of Number of Warrant Shares and Exercise Price. 4.1. The number of Warrant Shares for which this Warrant may be exercised shall be subject to adjustment as follows: (a) In the event there is a subdivision or combination of the outstanding shares of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced in the same proportion as the increase or decrease in the outstanding shares of Common Stock. (b) If the Company declares a dividend on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of Warrant Shares shall be increased, as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares of Common Stock as a result of such dividend. 4.2. Change of Control Event. (a) In case of any consolidation of the Company with, or merger of the Company into, any other corporation (other than a consolidation or merger in which the Company is the continuing corporation and in which no change occurs in its outstanding Common Stock), or in case of any sale or transfer of all or substantially all of the assets of the Company, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company, except where the Company is the surviving entity and no change occurs in its outstanding Common Stock), the corporation formed by such -4- 5 consolidation or the corporation resulting from or surviving such merger or the corporation which shall have acquired such assets or securities of the Company, as the case may be, shall execute and deliver to the Holder simultaneously therewith a new Warrant, satisfactory in form and substance to the Holder, together with such other documents as the Holder may reasonably request, entitling the Holder thereof to receive upon exercise of such Warrant the kind and amount of shares of stock and other securities and property receivable upon such consolidation, merger, sale, transfer, or exchange of securities, or upon the dissolution following such sale or other transfer, by a holder of the number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such consolidation, merger, sale, transfer, or exchange. Such new Warrant shall contain the same basic other terms and conditions as this Warrant and shall provide for adjustments which, for events subsequent to the effective date of such written instrument, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The above provisions of this Section 4(a) shall similarly apply to successive consolidations, mergers, exchanges, sales or other transfers covered hereby. (b) If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant immediately prior to such subdivision, combination, reclassification or other change. If shares of the Company's Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the purchase price under this Warrant shall be proportionately reduced in the case of a subdivision of shares or proportionately increased in the case of a combination of shares, in both cases by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event. 4.3. If the Company shall, at any time prior to the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise the Holder shall have the right to receive, in lieu of the shares of Common Stock that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such shares of Common Stock had the Holder been the holder of record of such shares of Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price -5- 6 provided for by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.4. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price shall be adjusted by multiplying the applicable Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such adjustment and the denominator of which shall be the number of shares of Common Stock purchasable immediately after such adjustment. 4.5. Upon any adjustment of the Exercise Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price resulting from such adjustment, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.6. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder thereof for any issuance tax in respect thereof; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder. 5. Rights of Holder. Except as otherwise provided in Section 1.1 above, this Warrant does not entitle the Holder to any rights of a shareholder of the Company either at law or in equity, and the rights of any such Holder are limited to those expressed in this Warrant and are not enforceable against the Company, except to the extent set forth herein. 6. Warrant Transfer Agent. Any reference in this Warrant to the warrant transfer agent will apply if, and only if, the Company will have advised the Holder that such an agent has been designated as an agency for the transfer or exercise of this Warrant. -6- 7 7. Expense of Enforcement. If any action, proceeding or litigation is commenced to enforce any provision of this Warrant, then the prevailing party shall be entitled to be reimbursed by the unsuccessful party for all costs incurred in connection with such action, proceeding or litigation, including a reasonable allowance for attorneys' fees and costs, which amount shall be added to and become part of the final decision in such matter. 8. Governing Law. This Warrant shall be construed in accordance with the laws of the State of California. 9. Registration Rights. The Company is required to register the Warrant Shares as provided in that certain Series C Preferred Stock Purchase Agreement (the "Purchase Agreement") between the Company and the parties thereto, and Sections 4 and 6 of the Purchase Agreement are incorporated by reference into this Warrant. 10. Notices. Any notice required hereunder shall be by writing and shall be given by personal delivery, or United States mail, certified or registered with return receipt requested, postage prepaid and shall be deemed to be effective five (5) business days after mailing or on the date of delivery if delivered personally, at the following addresses, or such other addresses as one party may from time to time give the other in writing: To the Company: INTELLICORP, INC. 1975 El Camino Real Mountain View, CA 94040 Attention: CFO To Holder: At the address set forth below. IN WITNESS WHEREOF, the Company has executed this Warrant as of the 8th day of March, 2001. INTELLICORP, INC. By: --------------------------- Initial Holder: Name: Address: -7- 8 PURCHASE FORM Dated: ________________ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________ shares of Common Stock and hereby makes payment of $__________ in payment of the actual Exercise Price thereof. __ [Please check if this option is selected] Instead of paying cash for exercise of the Warrant as provided above, the undersigned, the holder of the attached Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, shares of Common Stock of the Company and herewith elects to pay for such shares by reducing the number of shares issuable thereunder in accordance with Section 1.2 thereof. The undersigned hereby authorizes the Company to make the required calculation under Section 1.2 of the Warrant. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ------------------------------------------------------ (Please typewrite or print in block letters) Address: ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ Signature: ---------------------- 9 ASSIGNMENT FORM FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers unto Name: ------------------------------------------------------ (Please typewrite or print in block letters) Address:________________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________ shares of Stock and does hereby irrevocably constitute and appoint ____________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Signature: ------------------------- Dated: ----------------------- EX-10.3 6 f70915orex10-3.txt EXHIBIT 10.3 1 EXHIBIT 10.3 [INTELLICORP LOGO] INTELLICORP, INC. COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as of September 29, 2000, by and between IntelliCorp, Inc., a Delaware corporation (the "COMPANY"), and investors listed on the attached Exhibit A who become signatories to this Agreement (the "PURCHASERS"). THE PARTIES AGREE AS FOLLOWS: 1. ISSUANCE OF SHARES; PURCHASE PRICE. The Purchasers hereby purchase and the Company hereby sells an aggregate of 1,000,000 shares of the Company common stock (the "SHARES") at a purchase price of $1.00 per share payable in cash. In addition, in consideration for the investment by the Purchasers, the Company shall issue each Purchaser a five-year Warrant to purchase 25% of that number of Shares that are being purchased by such Purchaser under this Agreement at an exercise price of $2.00 per share. The number of Shares and Warrants to be purchased by each Purchaser is set forth opposite the name of each Purchaser on Exhibit A. The shares of common stock issuable upon exercise of the Warrant are referred to herein as the "WARRANT SHARES". 2. RIGHT OF PARTICIPATION. In the event the Company shall propose to sell and issue additional shares of the Company's common stock in a private equity financing with gross profits to the Company of at least $5,000,000 closing on or prior to June 30, 2001 (the "FINANCING"), each Purchaser shall have the right to participate in the first Financing by purchasing such aggregate number of shares with a purchase value equal to the purchase price of the Shares purchased by the Purchaser under this Agreement. 3. REGISTRATION RIGHT. The Shares shall be subject to registration rights which will require the Company to file with the SEC a registration Statement on Form S-3 (or equivalent) covering the resale of the Shares and the Warrant Shares. 4. PURCHASER'S REPRESENTATIONS. Each Purchaser is acquiring the Shares and the Warrant Shares for the Purchaser's own account, and not directly or indirectly for the account of any other person. The Purchaser is acquiring the Shares and the Warrant Shares for investment and not with a view to distribution or resale thereof except in compliance with the Act and any applicable state law regulating securities, and the certificates for any Shares will bear restrictive legends to that effect. 2 5. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and to be performed entirely within the State of California by residents of the State of California. 6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties pertaining to the Shares and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. IN WITNESS WHEREOF, the parties hereto have executed the Common Stock Purchase Agreement as of the date first above written. INTELLICORP, INC. A Delaware corporation By: ------------------------------------ Jerome F. Klajbor Title: Chief Financial Officer ---------------------------------- By: ------------------------------------ Wechsler & Co. Inc. Address: 105 South Bedford Rd., Suite 310 -------------------------------- Mount Kisco, NY 10549 -------------------------------- By: ------------------------------------ Victor Morgenstern Address: -------------------------------- -------------------------------- -------------------------------- By: ------------------------------------ Art Berry 2 3 Address: -------------------------------- -------------------------------- -------------------------------- By: ------------------------------------ Alan K. Greene Address: -------------------------------- -------------------------------- -------------------------------- By: ------------------------------------ Gregory Sulier Address: -------------------------------- -------------------------------- -------------------------------- 3 4 EXHIBIT A
NAME OF INVESTOR SHARES WARRANTS - ---------------- -------- -------- Wechsler & Co. Inc. 650,000 162,500 $650K Victor Morgenstern 200,000 50,000 $200K Art Berry 100,000 25,000 $100K Alan Greene 25,000 6,250 $ 25K Gregory Sulier 25,000 6,250 $ 25K
4 EX-10.4 7 f70915orex10-4.txt EXHIBIT 10.4 1 EXHIBIT 10.4 THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE TRANSFERRED, UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE. WARRANT VOID AFTER 5:00 P.M., California Time, on September 29, 2005 WARRANT TO PURCHASE COMMON STOCK OF INTELLICORP, INC. This is to certify that subject to the terms and conditions hereof, FOR VALUE RECEIVED, _____________ (the "Initial Holder") or registered assigns (collectively referred to as the "Holder") is entitled to purchase, at an exercise price per share of $2.00 (the "Exercise Price"), _______ shares (the "Warrant Shares") of the Common Stock (the "Common Stock") of IntelliCorp, Inc., a Delaware corporation (the "Company"), at any time during the period from September 29, 2000 (the "Commencement Date") to 5:00 P.M., California Time, on September 29, 2005, at which time this Warrant will expire and become void. The following terms shall apply to this Warrant: 1. Exercise of Warrant, Reservation of Shares. 1.1. Subject to the terms and conditions hereof, this Warrant may be exercised in whole or in part at any time and from time to time on or after the Commencement Date, and before 5:00 P.M., California Time, on September 29, 2005, or if such day is a day on which federal or state chartered bank institutions located in the State of California are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Purchase Form duly executed and accompanied by payment, in cash or certified or official bank check payable to the order of the Company, of the Exercise Price for the number of Warrant Shares specified in such form. If this Warrant should be exercised in part only, the Company will, upon presentation of this Warrant upon such exercise, execute and deliver a new warrant, dated the date hereof, evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder upon the same terms and conditions as herein set forth. Upon and as of such receipt of this Warrant and the Purchase Form by the Company at its office, in proper form for exercise and accompanied by payment as herein provided, the Holder shall be deemed to be the 2 holder of record of the Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall promptly take such reasonable steps as it deems necessary in order to issue the Warrant Shares to be delivered following exercise of this Warrant. 1.2. Net Issue Exercise of Warrant. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, Holder may elect to receive shares of Common Stock equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Purchase Form in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B) ------ A Where X = the number of shares of Common Stock to be issued to Holder Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation) A = the fair market value of one share of the Company's Common Stock (at the date of such calculation) B = Exercise Price (as adjusted to the date of such calculation) For purposes of the above calculation, the fair market value of one share of Common Stock shall be the average of the closing bid and asked prices of the Common Stock quoted in the over-the-counter market summary or the last reported sale price of the Common Stock or the closing price quoted on the NASDAQ Stock Market or on any exchange on which the Common Stock is listed, whichever is applicable, as published in The Wall Street Journal for the five (5) trading days prior to the date of determination of fair market value. 1.3. The Company shall at all times after the Commencement Date and until expiration of this Warrant reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares as shall be required for issuance and delivery upon exercise of this Warrant. 2. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fractional shares called for upon exercise hereof, the Company will pay to the Holder an amount in -2- 3 cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. 3. Transfer in Compliance with the Securities Act of 1933; Exchange, Assignment or Loss of Warrant. 3.1. This Warrant may not be assigned or transferred, except as provided herein, and in accordance with and subject to the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (said Act and such Rules and Regulations being hereinafter collectively referred to as the "Act"). Any purported transfer or assignment made other than in accordance with this Section 3 shall be null and void and of no force and effect. 3.2. This Warrant or the Warrant Shares may not be sold or otherwise disposed of except as follows: (a) To a person who, in the opinion of counsel reasonably satisfactory to the Company, is a person to whom this Warrant or the Warrant Shares may be legally transferred without registration and without the delivery of a current prospectus under the Act, as well as applicable state securities laws with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 3.2 with respect to any resale or other disposition of such securities unless, in the opinion of counsel to the Company, such agreement is not required; or (b) Upon delivery of a prospectus or offering circular then meeting the requirements of the Act as well as applicable state securities laws relating to such securities and the offering thereof for such sale or disposition. 3.3. Each certificate for Warrant Shares or for any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in Section 3.1, unless, in the opinion of counsel reasonably satisfactory to the Company, such legend is not required. 3.4. Each holder of the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Act, any applicable state securities law or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) directly arise out of or are based upon the disposition by such holder of the Warrant, Warrant Shares or other such securities in violation of the above representation. -3- 4 3.5. Subject to the provisions of Sections 3.1 through 3.4, this Warrant is exchangeable, without expense, at the option of the Holder, for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of Warrant Shares purchasable on the same terms and conditions, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued, and may be divided or combined with other warrants which carry the same rights, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued. 3.6. Any assignment permitted under this Warrant will be made by surrender of this Warrant to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Assignment Form duly executed and accompanied by funds sufficient to pay any transfer tax. In such event the Company will, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment, and this Warrant will promptly be canceled. 3.7. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, or destroyed Warrant shall thereupon become void. 4. Adjustment of Number of Warrant Shares and Exercise Price. 4.1. The number of Warrant Shares for which this Warrant may be exercised shall be subject to adjustment as follows: (a) In the event there is a subdivision or combination of the outstanding shares of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced in the same proportion as the increase or decrease in the outstanding shares of Common Stock. (b) If the Company declares a dividend on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of Warrant Shares shall be increased, as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares of Common Stock as a result of such dividend. -4- 5 4.2. In the event at any time prior to the expiration of this Warrant of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value, or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or any consolidation or merger of the Company with another entity, or sale, lease or transfer of all or substantially all of the property or assets of the Company, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise, the Holder shall have the right to receive the same kind and number of shares of capital stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.3. If the Company shall, at any time prior to the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise the Holder shall have the right to receive, in lieu of the shares of Common Stock that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such shares of Common Stock had the Holder been the holder of record of such shares of Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided for by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.4. The Company may retain a firm of independent public accountants of recognized standing (who may be any such firm regularly employed by the Company) to make any computation required under this Section 4, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section. -5- 6 4.5. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price shall be adjusted by multiplying the applicable Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such adjustment and the denominator of which shall be the number of shares of Common Stock purchasable immediately after such adjustment. 4.6. Upon any adjustment of the Exercise Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price resulting from such adjustment, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.7. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder thereof for any issuance tax in respect thereof; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder. 5. Rights of Holder. Except as otherwise provided in Section 1.1 above, this Warrant does not entitle the Holder to any rights of a shareholder of the Company either at law or in equity, and the rights of any such Holder are limited to those expressed in this Warrant and are not enforceable against the Company, except to the extent set forth herein. 6. Warrant Transfer Agent. Any reference in this Warrant to the warrant transfer agent will apply if, and only if, the Company will have advised the Holder that such an agent has been designated as an agency for the transfer or exercise of this Warrant. 7. Governing Law. This Warrant shall be construed in accordance with the laws of the State of California. 8. Notices. Any notice required hereunder shall be by writing and shall be given by personal delivery, or United States mail, certified or registered with return receipt requested, postage prepaid and shall be deemed to be effective five (5) business days after mailing or on the date of delivery if delivered personally, at the following addresses, or such other addresses as one party may from time to time give the other in writing: -6- 7 To the Company: INTELLICORP, INC. 1975 El Camino Real Mountain View, CA 94040 Attention: CFO To Holder: At the address set forth below. IN WITNESS WHEREOF, the Company has executed this Warrant as of the 29th day of September, 2000. INTELLICORP, INC. By: ------------------------- Initial Holder: Address: -7- 8 PURCHASE FORM Dated: ________________ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________ shares of Common Stock and hereby makes payment of $__________ in payment of the actual Exercise Price thereof. __ [Please check if this option is selected] Instead of paying cash for exercise of the Warrant as provided above, the undersigned, the holder of the attached Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, shares of Common Stock of the Company and herewith elects to pay for such shares by reducing the number of shares issuable thereunder in accordance with Section 1.2 thereof. The undersigned hereby authorizes the Company to make the required calculation under Section 1.2 of the Warrant. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ---------------------------------------------------------- (Please typewrite or print in block letters) Address: ---------------------------------------------------------- ---------------------------------------------------------- ---------------------------------------------------------- Signature: -------------------- 9 ASSIGNMENT FORM FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers unto Name: -------------------------------------------------------------- (Please typewrite or print in block letters) Address:____________________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________ shares of Stock and does hereby irrevocably constitute and appoint ____________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Signature: ---------------------- Dated: ------------------- EX-10.5 8 f70915orex10-5.txt EXHIBIT 10.5 1 EXHIBIT 10.5 [INTELLICORP LOGO] INTELLICORP, INC. COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as of December 28, 2000, by and between IntelliCorp, Inc., a Delaware corporation (the "COMPANY"), and Norman J. Wechsler, who becomes a signatory to this Agreement (the "PURCHASER"). THE PARTIES AGREE AS FOLLOWS: 1. ISSUANCE OF SHARES; PURCHASE PRICE: The Purchaser hereby purchases and the Company hereby sells an aggregate of 400,000 shares of the Company common stock (the "SHARES") at a purchase price of $.50 per share payable in cash. 2. REGISTRATION RIGHT: The Shares shall be subject to piggy-back registration rights if the Company files with the SEC a registration Statement on Form S-3 (or equivalent) covering the resale of any Shares. 3. PURCHASER'S REPRESENTATIONS: Purchaser is acquiring the Shares for the Purchaser's own account, and not directly or indirectly for the account of any other person. The Purchaser is acquiring the Shares for investment and not with a view to distribution or resale thereof except in compliance with the Act and any applicable state law regulating securities, and the certificates for any Shares will bear restrictive legends to that effect. 4. GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and to be performed entirely within the State of California by residents of the State of California. 5. ENTIRE AGREEMENT: This Agreement constitutes the entire agreement of the parties pertaining to the Shares and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. 2 IN WITNESS WHEREOF, the parties hereto have executed the Common Stock Purchase Agreement as of the date first above Written. INTELLICORP, INC. A Delaware corporation By: /s/ JEROME F. KLAJBOR ----------------------------------- Jerome F. Klajbor Title: Chief Financial Officer By: /s/ NORMAN J. WECHSLER ----------------------------------- Norman J. Wechsler Address: 105 South Bedford Rd., Suite 310 Mount Kisco, NY 10549 ----------------------------- 3 EXHIBIT 10.5 Part II [INTELLICORP LOGO] INTELLICORP, INC. COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as of December 28, 2000, by and between IntelliCorp Inc., a Delaware corporation (the "COMPANY"), and Norman J. Wechsler, who becomes a signatory to this Agreement (the "PURCHASER"). THE PARTIES AGREE AS FOLLOWS: 1. ISSUANCE OF SHARES; PURCHASE PRICE: The Purchaser hereby purchases and the Company hereby sells an aggregate of 200,000 shares of the Company common stock (the "SHARES") at a purchase price of $.50 per share payable in cash. 2. REGISTRATION RIGHT: The Shares shall be subject to piggy-back registration rights if the Company files with the SEC a registration Statement on Form S-3 (or equivalent) covering the resale of any Shares. 3. PURCHASER'S REPRESENTATIONS: Purchaser is acquiring the Shares for the Purchaser's own account, and not directly or indirectly for the account of any other person. The Purchaser is acquiring the Shares for investment and not with a view to distribution or resale thereof except in compliance with the Act and any applicable state law regulating securities, and the certificates for any Shares will bear restrictive legends to that effect. 4. GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and to be performed entirely within the State of California by residents of the State of California. 5. ENTIRE AGREEMENT; This Agreement constitutes the entire agreement of the parties pertaining to the Shares and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. 4 IN WITNESS WHEREOF, the parties hereto have executed the Common Stock Purchase Agreement as of the date first above Written. INTELLICORP, INC. A Delaware corporation By: /s/ JEROME F. KLAJBOR ----------------------------------- Jerome F. Klajbor Title: Chief Financial Officer By: /s/ NORMAN J. WECHSLER ----------------------------------- Norman J. Wechsler Address: 105 South Bedford Rd., Suite 310 Mount Kisco, NY 10549 ----------------------------- EX-10.6 9 f70915orex10-6.txt EXHIBIT 10.6 1 [INTELLICORP LOGO] 1975 EL CAMINO REAL WEST MOUNTAIN VIEW, CA 94040-2216 Exhibit 10.6 March 30, 1999 Wechsler & Co., Inc. 105 South Bedford Road, suite 310 Mount Kisco, N.Y. 10549 Attn: Mr. Norman J. Wechsler Re: PURCHASE AND SALE OF COMMON STOCK Dear Mr. Wechsler: This letter documents our agreement regarding the purchase and sale of shares of Common Stock of IntelliCorp, Inc. (the "Company"). When signed by you it will constitute a binding agreement between us for the period of one year from March 30, 1999 until March 30, 2000 (the "Demand Period"). The Company shall have the right to sell to you (and to require you to purchase) shares of Company Common Stock, on the terms set forth below, which right shall terminate on expiration of the Demand Period. This will confirm that the Company is entitled to sell, and you will purchase, during the Demand Period, up to a total of $1,000,000 ("Investment Maximum") in value of Common Stock of the Company in one or more separate transactions ("Investment"). This agreement, in conjunction with like agreements separately executed effective March 30, 1999 with Delaware State Employees' Retirement Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc., and Declaration of Trust for Defined Benefit Plans of ICI American Holdings Inc., represent an aggregate maximum financing of $3,000,000 (collectively called the "Financing"). For your convenience, when the Company decides to exercise its right under this agreement, the Company will first attempt to arrive at a mutually agreeable ratio of Investment between you and the other parties in this financing. If no agreement can be 2 Purchase and Sale of Common Stock March 30, 1999 Page 2 reached between you, the Company has the right to demand an Investment mix based on the proportional share of each party's Investment Maximum compared to the aggregate combined maximum of $3,000,000 in this Financing. When the Company determines that it wishes to sell shares, it will provide you written notice ("notice date") of its election to exercise its right under this agreement; the notice shall specify the dollar amount of the shares to be sold by the Company and purchased by you and the purchase date, which shall be not more than ten (10) business days after such notice. The purchase price for any shares purchased by you hereunder shall be equal to $1.50 per share or 10% above market price (where market price is as defined below), whichever is greater, up to a maximum price of $3.00 per share. However, if during the term of this agreement, the Company sells and issues additional shares of common stock (excluding issuances on exercise of employee or director stock options or issuance of shares under this agreement or like agreements with the parties to this Financing) at a price per share less than the purchase price per share under this agreement, the purchase price for such shares sold to you shall be adjusted in the same manner as the conversion price is adjusted in the Company's Convertible Note dated April 19, 1996 (Section 3), and following any such adjustment, additional common stock shares will be issued to you by the Company to reflect this adjustment of the purchase price. Market price is defined as the average closing price over the five (5) trading days ending the day prior to the notice date. On the purchase date (or as soon thereafter as practically possible), you will deliver cash in immediately available funds in the amount of the purchase price of such shares. Within five (5) days after the receipt of funds, the Company will deliver to you a certificate representing the number of shares being purchased by you. This letter will also confirm your investment intent with respect to the purchase and sale of the shares thereunder. You agree and acknowledge that you are purchasing the shares for your own account, not with a view to resell them, and that the certificates for any shares will bear restrictive legends to that effect. Such shares shall also be subject to registration rights in your favor which will require the Company to file with the SEC an S-3 Registration Statement (or equivalent) covering your resale of such shares within 3 3 Purchase and Sale of Common Stock March 30, 1999 Page 3 months after the end of the demand period, or within 3 months of the last transaction purchase date, if earlier. If the foregoing accurately describes our agreement regarding the purchase and sale of the Shares, please so indicate by signing and returning this letter to me. Sincerely, INTELLICORP, INC. By: -------------------------------- Kenneth A. Czaja Chief Financial Officer THE FOREGOING IS HEREBY AGREED TO AND ACCEPTED: WECHSLER & CO., INC.. By: -------------------------- Norman J. Wechsler 4 EXHIBIT 10.6 Part II [INTELLICORP LETTERHEAD] May 1, 2000 Wechsler & Co., Inc. 105 South Bedford Road, suite 310 Mount Kisco, N.Y. 10549 Attn: Mr. Norman J. Wechsler Re: PURCHASE AND SALE OF COMMON STOCK Dear Mr. Wechsler: This letter documents our agreement to amend and extend the Agreement for the Purchase and Sale of Common Stock dated March 30, 1999, regarding the purchase and sale of shares of Common Stock of IntelliCorp, Inc. (the "Company"). When signed by you it will constitute a binding agreement between us for the period starting March 31, 2000, and ending the earlier of December 31, 2000 or the receipt by the Company of at least $5,000,000 of equity funding above and beyond what is obtained under this agreement (the "Demand Period"). The Company shall have the right to sell to you (and to require you to purchase) shares of Company Common Stock, on the terms set forth below, which right shall terminate on expiration of the Demand Period. This will confirm that the Company is entitled to sell, and you will purchase, during the Demand Period, up to a total of $2,500,000 ("Investment Maximum") in value of Common Stock of the Company in one or more separate transactions ("Investment"). When the Company determines that it wishes to sell shares, it will provide you written notice ("notice date") of its election to exercise its right under this agreement; the notice shall specify the dollar amount of the shares to be sold by the Company and purchased by you and the purchase date, which shall be not more than ten (10) business days after such notice. The purchase price for any shares purchased by you hereunder shall be equal to 110% of market price (where market price is defined below), with a minimum price of $1.00 per share and a maximum price of $2.00 per share. However, if during the term of this agreement, the Company sells and issues additional shares of common stock (excluding issuances on exercise of employee or director stock options or issuance of shares under this agreement or like agreements with the parties to this Financing) at a price per share less than the purchase price per share under this 5 Purchase and Sale of Common Stock May 1, 2000 Page 2 agreement, the purchase price for such shares sold to you shall be adjusted in the same manner as the conversion price is adjusted in the Company's Convertible Note dated April 19, 1996 (Section 3), and following any such adjustment, additional common stock shares will be issued to you by the Company to reflect this adjustment of the purchase price. Market price is defined as the average closing price over the five (5) trading days ending the day prior to the notice date. On the purchase date (or as soon thereafter as practically possible), you will deliver cash in immediately available funds in the amount of the purchase price of such shares. Within five (5) days after the receipt of funds, the Company will deliver to you a certificate representing the number of shares being purchased by you. As common stock is purchased by you under this agreement, you will also receive from the Company a five year warrant to purchase additional common stock of the Company where the number of shares covered by the warrant is equal to 25% of the number of shares purchased by you in a transaction under this agreement. The exercise price of the warrant will be 110% of the purchase price for the shares purchased. Finally, this letter will confirm your investment intent with respect to the purchase and sale of the shares thereunder. You agree and acknowledge that you are purchasing the shares for your own account, not with a view to resell them, and that the certificates for any shares will bear restrictive legends to that effect. Such shares as well as the shares underlying the warrants shall also be subject to demand registration rights in your favor which, if such demand is exercised by you, will cause the Company to use its best efforts to file with the SEC as soon as possible an S-3 Registration Statement (or equivalent) covering your resale of such shares. If the foregoing accurately describes our agreement regarding the purchase and sale of the Shares, please so indicate by signing and returning this letter to me. Sincerely, INTELLICORP, INC. By: /s/ KENNETH A. CZAJA --------------------------------- Kenneth A. Czaja Chief Financial Officer THE FOREGOING IS HEREBY AGREED TO AND ACCEPTED: WECHSLER & CO., INC. 6 Purchase and Sale of Common Stock May 1, 2000 Page 3 By: /s/ NORMAN J. WECHSLER ------------------------------- Norman J. Wechsler 7 EXHIBIT 10.6 Part III [INTELLICORP LETTERHEAD] June 28, 2000 Wechsler & Co., Inc. 105 South Bedford Road, suite 310 Mount Kisco, N.Y. 10549 Attn: Mr. Norman J. Wechsler Re: PURCHASE AND SALE OF COMMON STOCK Dear Mr. Wechsler: This letter documents our agreement to amend the Agreement for the Purchase and Sale of Common Stock dated May 1, 1999, ("Agreement"), regarding the purchase and sale of shares of Common Stock of IntelliCorp. Inc. (the "Company"). When signed by you it will constitute a binding agreement between us to increase the maximum amount that the Company is entitled to sell, and you to purchase, during the Demand Period (as defined in the Agreement) by $300,000, from $2,500,000 to $2,800,000. All the other terms and conditions of the Agreement remain unchanged and apply to this additional amount. If the foregoing accurately describes our agreement to amend the May 1 Agreement, please so indicate by signing and returning this letter to me. Sincerely, INTELLICORP, INC. By: /S/ JEROME KLAJBOR ----------------------------------------- Jerome Klajbor, Chief Financial Officer THE FOREGOING IS HEREBY AGREED TO AND ACCEPTED: WECHSLER & CO., INC. By: /s/ NORMAN J. WECHSLER ------------------------------- Norman J. Wechsler EX-10.7 10 f70915orex10-7.txt EXHIBIT 10.7 1 Exhibit 10.7 THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE TRANSFERRED, UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE. WARRANT VOID AFTER 5:00 P.M., California Time, on June 19, 2005 WARRANT TO PURCHASE COMMON STOCK OF INTELLICORP, INC. This is to certify that subject to the terms and conditions hereof, FOR VALUE RECEIVED, Wechsler & Co., Inc. (the "Initial Holder") or registered assigns (collectively referred to as the "Holder") is entitled to purchase, at an exercise price per share of $1.84525 (the "Exercise Price"), 149,032 shares (the "Warrant Shares") of the Common Stock (the "Common Stock") of IntelliCorp, Inc., a Delaware corporation (the "Company"), at any time during the period from June 19, 2000 (the "Commencement Date") to 5:00 P.M., California Time, on June 19, 2005, at which time this Warrant will expire and become void. The following terms shall apply to this Warrant: 1. Exercise of Warrant, Reservation of Shares. 1.1. Subject to the terms and conditions hereof, this Warrant may be exercised in whole or in part at any time and from time to time on or after the Commencement Date, and before 5:00 P.M., California Time, on June 19, 2005, or if such day is a day on which federal or state chartered bank institutions located in the State of California are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Purchase Form duly executed and accompanied by payment, in cash or certified or official bank check payable to the order of the Company, of the Exercise Price for the number of Warrant Shares specified in such form. If this Warrant should be exercised in part only, the Company will, upon presentation of this Warrant upon such exercise, execute and deliver a new warrant, dated the date hereof, evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder upon the same terms and conditions as herein set forth. Upon and as of such receipt of this Warrant and the Purchase Form by the Company at its office, in proper form for exercise and accompanied by payment as herein provided, the Holder shall be deemed to be the holder 2 of record of the Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall promptly take such reasonable steps as it deems necessary in order to issue the Warrant Shares to be delivered following exercise of this Warrant. 1.2. The Company shall at all times after the Commencement Date and until expiration of this Warrant reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares as shall be required for issuance and delivery upon exercise of this Warrant. 2. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fractional shares called for upon exercise hereof, the Company will pay to the Holder an amount in cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. 3. Transfer in Compliance with the Securities Act of 1933; Exchange, Assignment or Loss of Warrant. 3.1. This Warrant may not be assigned or transferred, except as provided herein, and in accordance with and subject to the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (said Act and such Rules and Regulations being hereinafter collectively referred to as the "Act"). Any purported transfer or assignment made other than in accordance with this Section 3 shall be null and void and of no force and effect. 3.2. This Warrant or the Warrant Shares may not be sold or otherwise disposed of except as follows: (a) To a person who, in the opinion of counsel reasonably satisfactory to the Company, is a person to whom this Warrant or the Warrant Shares may be legally transferred without registration and without the delivery of a current prospectus under the Act, as well as applicable state securities laws with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 3.2 with respect to any resale or other disposition of such securities unless, in the opinion of counsel to the Company, such agreement is not required; or (b) Upon delivery of a prospectus or offering circular then meeting the requirements of the Act as well as applicable state securities laws relating to such securities and the offering thereof for such sale or disposition. 3.3. Each certificate for Warrant Shares or for any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face, in form and -2- 3 substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in Section 3.1, unless, in the opinion of counsel reasonably satisfactory to the Company, such legend is not required. 3.4. Each holder of the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Act, any applicable state securities law or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) directly arise out of or are based upon the disposition by such holder of the Warrant, Warrant Shares or other such securities in violation of the above representation. 3.5. Subject to the provisions of Sections 3.1 through 3.4, this Warrant is exchangeable, without expense, at the option of the Holder, for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of Warrant Shares purchasable on the same terms and conditions, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued, and may be divided or combined with other warrants which carry the same rights, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued. 3.6. Any assignment permitted under this Warrant will be made by surrender of this Warrant to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Assignment Form duly executed and accompanied by funds sufficient to pay any transfer tax. In such event the Company will, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment, and this Warrant will promptly be canceled. 3.7. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, or destroyed Warrant shall thereupon become void. 4. Adjustment of Number of Warrant Shares and Exercise Price. -3- 4 4.1. The number of Warrant Shares for which this Warrant may be exercised shall be subject to adjustment as follows: (a) In the event there is a subdivision or combination of the outstanding shares of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced in the same proportion as the increase or decrease in the outstanding shares of Common Stock. (b) If the Company declares a dividend on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of Warrant Shares shall be increased, as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares of Common Stock as a result of such dividend. 4.2. In the event at any time prior to the expiration of this Warrant of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value, or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or any consolidation or merger of the Company with another entity, or sale, lease or transfer of all or substantially all of the property or assets of the Company, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise, the Holder shall have the right to receive the same kind and number of shares of capital stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.3. If the Company shall, at any time prior to the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise the Holder shall have the right to receive, in lieu of the shares of Common Stock that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such shares of Common Stock had the Holder been the holder of record of such shares of Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, -4- 5 liquidation or winding up results in any cash distribution in excess of the Exercise Price provided for by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.4. The Company may retain a firm of independent public accountants of recognized standing (who may be any such firm regularly employed by the Company) to make any computation required under this Section 4, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section. 4.5. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price shall be adjusted by multiplying the applicable Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such adjustment and the denominator of which shall be the number of shares of Common Stock purchasable immediately after such adjustment. 4.6. Upon any adjustment of the Exercise Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price resulting from such adjustment, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.7. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder thereof for any issuance tax in respect thereof; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder. 5. Rights of Holder. Except as otherwise provided in Section 1.1 above, this Warrant does not entitle the Holder to any rights of a shareholder of the Company either at law or in equity, and the rights of any such Holder are limited to those expressed in this Warrant and are not enforceable against the Company, except to the extent set forth herein. 6. Warrant Transfer Agent. Any reference in this Warrant to the warrant transfer agent will apply if, and only if, the Company will have advised the Holder that -5- 6 such an agent has been designated as an agency for the transfer or exercise of this Warrant. 7. Governing Law. This Warrant shall be construed in accordance with the laws of the State of California. 8. Notices. Any notice required hereunder shall be by writing and shall be given by personal delivery, or United States mail, certified or registered with return receipt requested, postage prepaid and shall be deemed to be effective five (5) business days after mailing or on the date of delivery if delivered personally, at the following addresses, or such other addresses as one party may from time to time give the other in writing: To the Company: INTELLICORP, INC. 1975 El Camino Real Mountain View, CA 94040 Attention: President To Holder: At the address set forth below. IN WITNESS WHEREOF, the Company has executed this Warrant as of the 19th day of June, 2000. INTELLICORP, INC. By: ------------------------------ Initial Holder: Name: Wechsler & Co., Inc. Address: 105 South Bedford Road, Suite 310 Mount Kisco, N.Y. 10549 ATTENTION: Norman J. Wechsler -6- 7 PURCHASE FORM Dated: ------------------ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________ shares of Common Stock and hereby makes payment of $__________ in payment of the actual Exercise Price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: --------------------------------------------------- (Please typewrite or print in block letters) Address: --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- Signature: ---------------------- 8 ASSIGNMENT FORM FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers unto Name: ----------------------------------------------------------------- (Please typewrite or print in block letters) Address:___________________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________ shares of Stock and does hereby irrevocably constitute and appoint ____________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Signature: ----------------------- Dated: ----------------------------- EX-10.8 11 f70915orex10-8.txt EXHIBIT 10.8 1 EXHIBIT 10. 8 THESE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE TRANSFERRED, UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL TO THE ISSUER, AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE. WARRANT VOID AFTER 5:00 P.M., California Time, on June 30, 2005 WARRANT TO PURCHASE COMMON STOCK OF INTELLICORP, INC. This is to certify that subject to the terms and conditions hereof, FOR VALUE RECEIVED, Wechsler & Co., Inc. (the "Initial Holder") or registered assigns (collectively referred to as the "Holder") is entitled to purchase, at an exercise price per share of $2.20 (the "Exercise Price"), 212,500 shares (the "Warrant Shares") of the Common Stock (the "Common Stock") of IntelliCorp, Inc., a Delaware corporation (the "Company"), at any time during the period from June 30, 2000 (the "Commencement Date") to 5:00 P.M., California Time, on June 30, 2005, at which time this Warrant will expire and become void. The following terms shall apply to this Warrant: 1. Exercise of Warrant, Reservation of Shares. 1.1. Subject to the terms and conditions hereof, this Warrant may be exercised in whole or in part at any time and from time to time on or after the Commencement Date, and before 5:00 P.M., California Time, on June 30, 2005, or if such day is a day on which federal or state chartered bank institutions located in the State of California are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Purchase Form duly executed and accompanied by payment, in cash or certified or official bank check payable to the order of the Company, of the Exercise Price for the number of Warrant Shares specified in such form. If this Warrant should be exercised in part only, the Company will, upon presentation of this Warrant upon such exercise, execute and deliver a new warrant, dated the date hereof, evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder upon the same terms and conditions as herein set forth. Upon and as of such receipt of this Warrant and the Purchase Form by the Company at its office, in proper form for exercise and accompanied by payment as herein provided, the Holder shall be deemed to be the holder 2 of record of the Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing the Warrant Shares shall not then be actually delivered to the Holder. The Company shall promptly take such reasonable steps as it deems necessary in order to issue the Warrant Shares to be delivered following exercise of this Warrant. 1.2. The Company shall at all times after the Commencement Date and until expiration of this Warrant reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares as shall be required for issuance and delivery upon exercise of this Warrant. 2. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fractional shares called for upon exercise hereof, the Company will pay to the Holder an amount in cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. 3. Transfer in Compliance with the Securities Act of 1933; Exchange, Assignment or Loss of Warrant. 3.1. This Warrant may not be assigned or transferred, except as provided herein, and in accordance with and subject to the provisions of the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder (said Act and such Rules and Regulations being hereinafter collectively referred to as the "Act"). Any purported transfer or assignment made other than in accordance with this Section 3 shall be null and void and of no force and effect. 3.2. This Warrant or the Warrant Shares may not be sold or otherwise disposed of except as follows: (a) To a person who, in the opinion of counsel reasonably satisfactory to the Company, is a person to whom this Warrant or the Warrant Shares may be legally transferred without registration and without the delivery of a current prospectus under the Act, as well as applicable state securities laws with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 3.2 with respect to any resale or other disposition of such securities unless, in the opinion of counsel to the Company, such agreement is not required; or (b) Upon delivery of a prospectus or offering circular then meeting the requirements of the Act as well as applicable state securities laws relating to such securities and the offering thereof for such sale or disposition. 3.3. Each certificate for Warrant Shares or for any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face, in form and -2- 3 substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in Section 3.1, unless, in the opinion of counsel reasonably satisfactory to the Company, such legend is not required. 3.4. Each holder of the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Act, any applicable state securities law or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) directly arise out of or are based upon the disposition by such holder of the Warrant, Warrant Shares or other such securities in violation of the above representation. 3.5. Subject to the provisions of Sections 3.1 through 3.4, this Warrant is exchangeable, without expense, at the option of the Holder, for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of Warrant Shares purchasable on the same terms and conditions, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued, and may be divided or combined with other warrants which carry the same rights, upon presentation at the principal office of the Company or at the office of its warrant transfer agent, if any, together with a written notice signed by the Holder specifying the names and denominations in which new warrants are to be issued. 3.6. Any assignment permitted under this Warrant will be made by surrender of this Warrant to the Company at its principal office or at the office of its warrant transfer agent, if any, with the attached Assignment Form duly executed and accompanied by funds sufficient to pay any transfer tax. In such event the Company will, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment, and this Warrant will promptly be canceled. 3.7. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, or destroyed Warrant shall thereupon become void. 4. Adjustment of Number of Warrant Shares and Exercise Price. -3- 4 4.1. The number of Warrant Shares for which this Warrant may be exercised shall be subject to adjustment as follows: (a) In the event there is a subdivision or combination of the outstanding shares of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced in the same proportion as the increase or decrease in the outstanding shares of Common Stock. (b) If the Company declares a dividend on Common Stock payable in Common Stock or securities convertible into Common Stock, the number of Warrant Shares shall be increased, as of the record date for determining which holders of Common Stock shall be entitled to receive such dividend, in proportion to the increase in the number of outstanding shares of Common Stock as a result of such dividend. 4.2. In the event at any time prior to the expiration of this Warrant of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value, or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or any consolidation or merger of the Company with another entity, or sale, lease or transfer of all or substantially all of the property or assets of the Company, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise, the Holder shall have the right to receive the same kind and number of shares of capital stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.3. If the Company shall, at any time prior to the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right, but not the obligation, to exercise this Warrant. Upon such exercise the Holder shall have the right to receive, in lieu of the shares of Common Stock that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such shares of Common Stock had the Holder been the holder of record of such shares of Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, -4- 5 liquidation or winding up results in any cash distribution in excess of the Exercise Price provided for by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 4.4. The Company may retain a firm of independent public accountants of recognized standing (who may be any such firm regularly employed by the Company) to make any computation required under this Section 4, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section. 4.5. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price shall be adjusted by multiplying the applicable Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such adjustment and the denominator of which shall be the number of shares of Common Stock purchasable immediately after such adjustment. 4.6. Upon any adjustment of the Exercise Price, then and in each such case the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price resulting from such adjustment, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.7. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder thereof for any issuance tax in respect thereof; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Holder. 5. Rights of Holder. Except as otherwise provided in Section 1.1 above, this Warrant does not entitle the Holder to any rights of a shareholder of the Company either at law or in equity, and the rights of any such Holder are limited to those expressed in this Warrant and are not enforceable against the Company, except to the extent set forth herein. 6. Warrant Transfer Agent. Any reference in this Warrant to the warrant transfer agent will apply if, and only if, the Company will have advised the Holder that -5- 6 such an agent has been designated as an agency for the transfer or exercise of this Warrant. 7. Governing Law. This Warrant shall be construed in accordance with the laws of the State of California. 8. Notices. Any notice required hereunder shall be by writing and shall be given by personal delivery, or United States mail, certified or registered with return receipt requested, postage prepaid and shall be deemed to be effective five (5) business days after mailing or on the date of delivery if delivered personally, at the following addresses, or such other addresses as one party may from time to time give the other in writing: To the Company: INTELLICORP, INC. 1975 El Camino Real Mountain View, CA 94040 Attention: President To Holder: At the address set forth below. IN WITNESS WHEREOF, the Company has executed this Warrant as of the 30th day of June, 2000. INTELLICORP, INC. By: --------------------------- Initial Holder: Name: Wechsler & Co., Inc. Address: 105 South Bedford Road, Suite 310 Mount Kisco, N.Y. 10549 ATTENTION: Norman J. Wechsler -6- 7 PURCHASE FORM Dated: ----------------- The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________ shares of Common Stock and hereby makes payment of $__________ in payment of the actual Exercise Price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ---------------------------------------------------------- (Please typewrite or print in block letters) Address: ---------------------------------------------------------- ---------------------------------------------------------- ---------------------------------------------------------- Signature: ------------------------ 8 ASSIGNMENT FORM FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers unto Name: -------------------------------------------------------------------- (Please typewrite or print in block letters) Address:___________________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________ shares of Stock and does hereby irrevocably constitute and appoint ____________________, attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Signature: ------------------- Dated: ------------------------- EX-23.2 12 f70915orex23-2.txt EXHIBIT 23.2 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 Registration Statement (Form S-3) and related Prospectus of IntelliCorp, Inc. for the registration of 9,079,881 shares of its common stock and to the incorporation by reference therein of our report dated July 28, 2000, with respect to the consolidated financial statements of IntelliCorp, Inc. included in its Annual Report (Form 10-KSB) for the year ended June 30, 2000, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP Palo Alto, California March 28, 2001 II-7 -----END PRIVACY-ENHANCED MESSAGE-----