As filed with the Securities and Exchange Commission on February 12, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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QUERYOBJECT SYSTEMS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3087939
(State or other jurisdiction of (I.R.S. Employer
incorporation or Organization) Identification No.)
60 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553
(Address, including zip code, of Registrant's principal executive offices)
QUERYOBJECT SYSTEMS CORPORATION
AMENDED AND RESTATED
1991 STOCK OPTION PLAN
AND OPTIONS TO CONSULTANTS
(Full title of the Plans)
DANIEL M. PESS
QUERYOBJECT SYSTEMS CORPORATION
60 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553
(516) 228-8500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
DAVID J. ADLER, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG &WOLOSKY LLP
505 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 753-7200
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CALCULATION OF REGISTRATION FEE
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Amount Proposed maximum Proposed maximum Amount of
Title of each class of to be offering price aggregate offering registration
Securities to be registered registered per share price fee
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<S> <C> <C> <C> <C> <C>
Common Stock, par value $.001 per share 5,806,000(1)(2) $0.97(3) $5,631,820 $1,565.64
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Common Stock, par value $.001 per share 175,000(1) $8.56(3) $1,498,000 $416.44
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Total $1,982.11
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(1) Pursuant to Rule 416, the registration statement also covers such
indeterminate additional shares of Common Stock as may become issuable
as a result of any future anti-dilution adjustment in accordance with
the terms of the Amended and Restated 1991 Stock Option Plan (the "1991
Plan") and the consultant options.
(2) The number of shares available for the grant of options under the 1991
Plan has been increased from 1,950,000 to 5,806,000, subject to
stockholder approval.
(3) Includes an aggregate of 4,386,037 shares with respect to which options
were granted under the 1991 Plan at an average exercise price of $.97
per share. An additional 1,419,963 shares of Common Stock may be
offered under the 1991 Plan. Pursuant to Rule 457(g) and (h), the
offering price for the shares which may be issued under the 1991 Plan
is estimated solely for the purpose of determining the registration fee
and is based on the closing price of the Company's Common Stock $.97 as
reported by the Nasdaq Stock Market ("Nasdaq") on February 10, 1999.
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EXPLANATORY NOTES
QueryObject Systems Corporation (the "Company") has prepared this
Registration Statement in accordance with the requirements of Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), to register shares of
common stock, $.001 par value per share (the "Common Stock"), of the Company,
issuable pursuant to the 1991 Plan.
This Form S-8 includes a Reoffer Prospectus prepared in accordance with
Part I of Form S-3 under the Securities Act. The Reoffer Prospectus may be
utilized for reofferings and resales of up to 5,918,500 shares of Common Stock
acquired pursuant to the Plan by selling stockholders who may be deemed an
"affiliate" (as such term is defined in Rule 405 under the Securities Act) of
the Company.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The Company will provide documents containing the information
specified in Part 1 of Form S-8 to employees as specified by Rule 428(b)(1)
under the Securities Act. Pursuant to the instructions to Form S-8, the Company
is not required to file these documents either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424
under the Securities Act.
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PROSPECTUS
5,918,500 SHARES
QUERYOBJECT SYSTEMS CORPORATION
This prospectus relates to the reoffer and resale by certain selling
stockholders of shares of our common stock that may be issued by us to the
selling stockholders upon the exercise of stock options granted under our 1991
Stock Option Plan or under consulting agreements. We previously registered the
offer and sale of the shares to the selling stockholders. This Prospectus also
relates to certain underlying options that have not as of this date been
granted. If and when such options are granted to persons required to use the
prospectus to reoffer and resell the shares underlying such options, we will
distribute a prospectus supplement. The shares are being reoffered and resold
for the account of the selling stockholders and we will not receive any of the
proceeds from the resale of the shares.
The selling stockholders have advised us that the resale of their
shares may be effected from time to time in one or more transactions on the
Nasdaq Stock Market or the Boston Stock Exchange, in negotiated transactions or
otherwise, at market prices prevailing at the time of the sale or at prices
otherwise negotiated. See "Plan of Distribution." We will bear all expenses in
connection with the preparation of this prospectus.
Our common stock is listed on the Nasdaq SmallCap Market under the
symbol "QUOB" and on the Boston Stock Exchange under the symbol "QOB." The last
reported sale price on the Nasdaq SmallCap Market for our common stock on
February 10, 1999 was $.97 per share.
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THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING AT PAGE 4.
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Neither the Securities and Exchange Commission nor any State securities
commission has determined whether this prospectus is truthful or complete. They
have not made, nor will they make, any determination as to whether anyone should
buy these securities. Any representation to the contrary is a criminal offense.
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The date of this Prospectus is February 12, 1999.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document we file at the SEC's public reference room
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain further information on the operation of the public reference room by
calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also request copies of such documents, upon payment of a duplicating fee, by
writing to the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Our common
stock is listed on the Nasdaq SmallCap Market and the Boston Stock Exchange and
such reports and other information may also be inspected at the offices of
Nasdaq at 1735 "K" Street, N.W., Washington, D.C. 20006-1500 and the Boston
Stock Exchange at One Boston Place, Boston, Massachusetts 02108.
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WHERE YOU CAN FIND MORE INFORMATION 2
INCORPORATION BY REFERENCE 3
ABOUT THIS PROSPECTUS 3
RISK FACTORS 4
THE COMPANY 10
USE OF PROCEEDS 10
SELLING STOCKHOLDERS 11
PLAN OF DISTRIBUTION 12
LEGAL MATTERS 13
ADDITIONAL INFORMATION 13
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INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
considered to be a part of this prospectus and information that we file later
with the SEC will automatically update and replace this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"):
(1) Our Annual Report on Form 10-KSB for the year ended
December 31, 1997;
(2) Our Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, 1998, June 30, 1998 and
September 30, 1998; and
(3) Our Application for Registration of our common stock on
Form 8-A dated November 7, 1997.
You may request a copy of these filings (excluding the exhibits to such
filings which we have not specifically incorporated by reference in such
filings) at no cost, by writing or telephoning us at the following address:
QueryObject Systems Corporation
60 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: Chief Financial Officer
(516) 228-8500
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information provided or incorporated by
reference in this prospectus or any related supplement. We have not authorized
anyone else to provide you with different information. The Selling Stockholders
will not make an offer of these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any other date than the date on the front of those
documents.
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RISK FACTORS
The purchase of our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this Prospectus before deciding to invest in our common stock.
NEGATIVE WORKING CAPITAL; UNCERTAINTY REGARDING RECEIPT OF FUNDS FROM PRIVATE
PLACEMENTS; NEED FOR ADDITIONAL FUNDING
At September 30, 1998, we had negative working capital of $1,743,864.
We have had a limited operating history as a software product company, have not
made significant sales of our products and our revenues are difficult to
predict.
We sold securities in private placements in October and November 1998
so that we could continue operations. In the private placements, we received
conditional commitments to purchase $4,500,000 of units consisting of
convertible preferred stock and warrants to purchase common stock, of which
payment for all of the units had been made as of February 1999. We received net
proceeds of $4,121,000 from such private placements. However, given our
continued operating losses, we will need additional financing to continue
operations. Our current projections indicate that if our forecasts are achieved,
we will have enough cash to continue operations until June 1999. As of the date
of this Prospectus, we have no commitments, agreements or understandings
regarding additional financing and we may be unable to obtain additional
financing.
ACCUMULATED DEFICIT; HISTORICAL AND PROJECTED FUTURE OPERATING LOSSES; GOING
CONCERN QUALIFICATION IN INDEPENDENT ACCOUNTANTS' REPORT
At September 30, 1998, our accumulated deficit was $31,971,100. For the
fiscal years ended December 31, 1996 and 1997, and for the nine months ended
September 30, 1998, we incurred net losses of $4,917,953, $10,563,484 and
$6,104,114, respectively. We have incurred a net loss in each year of our
existence, and have financed our operations primarily through sales of equity
and debt securities. Our expense levels are high and our revenues are difficult
to predict. The independent accountants' report on our financial statements for
the year ended December 31, 1997 states that our recurring losses from
operations and negative cash flow from operating activities raise substantial
doubt about our ability to continue as a going concern. We expect that the
independent accountants' report on our financial statements for the year ended
December 31, 1998 will contain the same qualification.
We expect to incur net losses for the foreseeable future. We may never
achieve or sustain significant revenues or profitability on a quarterly or
annual basis in the future. Our future operating results will depend on many
factors, including:
O product demand
0 product and price competition in our industry
O our success in expanding our direct sales force and
establishing indirect channel partners
O our ability to develop and market products and control
costs
O the percentage of our revenues that is derived from
indirect channel partners
LIMITED OPERATING HISTORY; LACK OF SUBSTANTIAL REVENUE
We have a limited operating history as a software product
company and have made only limited sales of our products. Our total revenues for
the year ended December 31, 1997 and for the nine months ended September 30,
1998 were $1,012,159 and $398,590, respectively. Prior to 1997, our revenues
were derived primarily from contract data analysis services, which we no longer
provide.
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DEPENDENCE UPON NEW PRODUCTS; UNCERTAIN MARKET ACCEPTANCE
Substantially all of our revenues for the foreseeable future are
expected to be derived from sales of QueryObject System. Between January 1, 1995
and September 30, 1998, we had software product revenue from only 12 QueryObject
System installations (including those sold pursuant to reseller agreements for
their own internal use), one of which (sold in 1995) was a pre-production beta
version. We only recently commenced an integrated marketing effort for our
products. Our future financial performance will depend upon the successful
introduction and customer acceptance of QueryObject System and the development
of new and enhanced versions of the product. If we fail to achieve broad market
acceptance of QueryObject System, it would materially adversely affect our
business, operating results and financial condition.
POSSIBLE NASDAQ DELISTING; POTENTIALLY LIMITED TRADING MARKET
Our common stock is listed on the Nasdaq SmallCap Market and the Boston
Stock Exchange. To remain eligible for listing on the Nasdaq SmallCap Market we
must comply with the following:
O our common stock must have a minimum bid price of $1.00;
O we must have minimum tangible net assets of $2,000,000 or a
market capitalization of $35,000,000 or net income of $500,000
in two of the three prior years; and
O we must have a public float of at least 500,000 shares with a
market value of at least $1,000,000; at least 300 stockholders
must hold our common stock; and at least two market makers must
make a market in it.
Nasdaq has notified us that our common stock will be delisted. We have
requested a hearing to appeal the delisting. The hearing will be held on
February 19, 1999. Our common stock will continue to be listed on Nasdaq at
least until the date of the hearing. We are unable to predict the outcome of the
hearing, but based on our review of the delisting notice, we believe that,
absent additional financing, our common stock will be delisted and that our
common stock may be delisted even if we obtain additional financing.
The Nasdaq notification is based in part on reservations that Nasdaq
has about our ability to regain and sustain compliance with its net tangible
asset requirements. As of September 30, 1998, we had a deficiency of $1,456,798
in net tangible assets. Subsequent to September 30, 1998, we received net
proceeds of $4,121,000 from the October and November 1998 private placements.
Due to actual and anticipated losses subsequent to September 30, 1998, however,
we do not expect to be able to maintain for any sustained period at least
$2,000,000 in net tangible assets. We would be required to enter into a
transaction or transactions to raise additional equity capital to maintain at
least $2,000,000 in net tangible assets. Such additional financing may be
unavailable to us on acceptable terms or at all.
Nasdaq has also advised us that the October and November 1998 private
placements did not receive the requisite approval of the Company's stockholders.
While our stockholders approved a proposal in August 1998 whereby we could issue
an unlimited amount of common stock (and securities exercisable for such common
stock) in a private placement, the purchasers in the October and November 1998
private placements required that we issue preferred stock, which issuance was
not approved by our stockholders. Nasdaq also believes that the issuance of the
common stock underlying the preferred stock was not specifically approved by our
stockholders. Moreover, Nasdaq believes that our stockholders lacked sufficient
information to determine the effect that the October and November 1998 private
placements could have on their voting rights and investment in the Company.
Accordingly, our common stock could be delisted from Nasdaq even if we are able
to satisfy the net tangible asset requirement.
If our common stock is delisted from Nasdaq, trading, if any, therein
would thereafter be conducted on the OTC Bulletin Board and the Boston Stock
Exchange. The Boston Stock Exchange will delist our common stock if we have less
than $500,000 in net tangible assets. We will not be able to maintain at least
$500,000 in net tangible assets without additional financing or revenues. If our
common stock is delisted from Nasdaq and the Boston Stock Exchange, the common
stock could be considered a penny stock. SEC regulations generally define a
penny stock to be an equity security that is not listed on Nasdaq or a national
securities exchange and that has a market price of less than $5.00 per share,
subject to certain exceptions. The regulations of the SEC would require
broker-dealers to deliver to a purchaser of common stock a disclosure schedule
explaining the penny stock market and the risks associated with it. Various
sales practice requirements are also imposed on broker-dealers who sell penny
stocks to
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persons other than established customers and accredited investors (generally
institutions). In addition, broker-dealers must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. If the common stock is traded on the OTC Bulletin Board and becomes
subject to the regulations applicable to penny stocks, investors may find it
more difficult to obtain timely and accurate quotes and execute trades in the
common stock.
USE OF INDIRECT CHANNEL PARTNERS TO INCREASE SALES
As part of our sales and marketing efforts we are seeking to develop
strategic relationships with indirect channel partners, such as original
equipment manufacturers and value-added resellers, to increase the number of our
customers. We currently are investing, and intend to continue to invest,
significant resources to develop indirect channel partners. Our results of
operations will be adversely affected if we are unable to attract indirect
channel partners to market our products effectively and provide timely and cost
effective customer support and service. If we successfully sell products through
these sales channels, the lower unit prices we expect to receive for such sales
will result in our gross margins being lower than if we had sold those products
through our direct sales force.
NEED TO ENHANCE EXISTING PRODUCTS, DEVELOP NEW PRODUCTS AND ADAPT TO RAPID
TECHNOLOGICAL CHANGE
The market for our software is characterized by rapid technological
change, frequent new product introductions and evolving industry standards. The
introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and unmarketable. We
cannot easily estimate the life cycles of our products. Our future success will
depend upon our ability to:
O enhance existing products
O develop and introduce new products that keep pace with
technological developments and emerging industry standards
O address the increasingly sophisticated needs of customers
We may be unable to accomplish these tasks. Any delays in the commencement of
commercial shipments of new products and enhancements could cause potential
customers to delay their decision to purchase our products or to choose to not
purchase our products, which would result in delays in or loss of product
revenues. In such event, our business, operating results and financial condition
would be materially adversely affected.
DEPENDENCE ON SIGNIFICANT CUSTOMERS
For the fiscal year ended December 31, 1997, one customer accounted for
65%, and for the nine months ended September 30, 1998, one customer accounted
for 55%, of our total revenues. We are unsure if we will realize significant
future revenues from either of these customers. We also expect that for the
foreseeable future a relatively small number of customers and value added
resellers will account for a significant percentage of our revenues. The loss of
any such customer would have a material adverse effect on our operating results
and financial condition.
COMPETITION
The market for our products is intensely competitive and subject to
rapid technological change. Our competitors include Hyperion Solutions Corp.,
HNC Software Inc., Red Brick Systems, Inc., Informix Corp., Oracle Corp., IBM,
and Cognos Inc. Because there are relatively low barriers to entry into the
software market, we expect additional competition from other established and
emerging companies if the business intelligence data delivery software market
continues to develop. Our competitors have:
O longer operating histories
O significantly greater financial, technical and marketing
resources
O greater name recognition
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O a larger installed base of customers and products
O well-established relationships with our current and potential
customers
O extensive knowledge of the relational database industry
Our competitors may also be able to offer an integrated hardware and/or software
product that could be more attractive to potential customers. Our competitors
may respond more quickly to new or emerging technologies and changes in customer
requirements, or devote greater resources to the development, promotion and sale
of their products. We also expect that software industry consolidations may
create more formidable competitors, resulting in price reductions that would
reduce gross margins and erode any market share we may attain, any of which
could materially adversely affect our business, operating results and financial
condition.
DEPENDENCE UPON KEY PERSONNEL; NEED TO INCREASE SALES, MARKETING, DEVELOPMENT
AND TECHNICAL PERSONNEL
Our future performance depends in significant part upon the continued
service of key technical, sales and senior management personnel. The loss of the
services of one or more of our key employees, in particular, Robert Thompson,
our President and Chief Executive Officer or Daniel M. Pess, our Chief Operating
Officer and Chief Financial Officer, could have a material adverse effect on our
business, operating results and financial condition. We have an employment
agreement with Mr. Thompson that expires in October, 1999, and an employment
agreement with Mr. Pess that expires in May, 1999. We are unsure if we will be
able to agree with either of Messrs. Thompson or Pess on the terms of extensions
to their employment agreements prior to the expiration of these agreements.
Our future success also depends on our continuing ability to attract,
train and retain highly qualified technical, sales, marketing, development and
managerial personnel. Competition for such personnel is intense, and we may be
unable to retain key technical, sales, development and managerial employees or
attract, assimilate or retain other highly qualified technical, sales,
development and managerial personnel in the future. If we are unable to hire
such personnel on a timely basis, our business, operating results and financial
condition could be materially adversely affected.
LACK OF PROPRIETARY TECHNOLOGY PROTECTION; RISKS OF INFRINGEMENT
We rely primarily on a combination of trade secrets, confidentiality
agreements and contractual provisions to protect our proprietary technology. We
license rather than sell our software and require licensees to enter into
license agreements that impose certain restrictions on their ability to utilize
the software. In addition, we seek to avoid disclosure of our trade secrets,
including but not limited to requiring those persons with access to our
proprietary information to execute confidentiality agreements and restricting
access to our source code. These steps afford only limited protection. We have
no patents or patent applications pending. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or obtain and use information that we regard as proprietary. Policing
unauthorized use of our products may be difficult and costly, and software
piracy may become a persistent problem. In addition, the laws of some foreign
countries do not protect our proprietary rights to as great an extent as do the
laws of the United States. We are unable to predict whether our means of
protecting our proprietary rights will be adequate or whether competitors will
independently develop the same technology.
From time to time, third parties may assert patent, copyright and other
intellectual property claims against us. If we are unable to license protected
technology that may be used in our products, we could be prohibited from
manufacturing and marketing such products. We also could incur substantial costs
to redesign our products, to defend any legal action taken against us or to pay
damages to any infringed party. Litigation, which could result in substantial
cost to and diversion of our resources, may be necessary to enforce our other
intellectual property rights or to defend ourselves against claimed infringement
of the rights of others.
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POTENTIAL FLUCTUATIONS IN PERIODIC RESULTS
Our revenues may vary significantly from period to period due to the
discretionary nature of business intelligence data delivery software purchases,
and will be difficult to predict. Sales prices of our products range from
$50,000 to over $275,000. As a result, the timing of the receipt and shipment of
a single order can significantly impact our revenues and results of operations
for a particular period. We anticipate that product revenues in any quarter will
be substantially dependent on orders booked and shipped in that quarter, and we
are unable to predict revenues for any future quarter with any significant
degree of certainty.
RISK OF PRODUCT DEFECTS; PRODUCT LIABILITY
Any new products we develop would be subject to significant technical
risks. Our software products are complex and may contain undetected errors or
failures when we first introduce them or when we release new versions of them.
Although we have not experienced material adverse effects resulting from any
errors to date, our products could contain errors. If our products contain
errors, we could experience a loss of or delay in market acceptance. While we
have not experienced product liability claims to date, our product licensing and
support may entail the risk of such claims. A significant product defect or a
successful product liability claim brought against us could have a material
adverse effect on our business, operating results and financial condition.
INTERNATIONAL OPERATIONS
We intend to expand our international operations and to enter
additional international markets, which will require significant management
attention and financial resources and could adversely affect our business,
operating results of financial condition. To expand international sales
successfully, we must establish additional foreign operations, hire additional
personnel and recruit additional international resellers and distributors. If we
are unable to do so in a timely manner, our growth, if any, in international
sales will be limited, and our business, operating results and financial
condition could be materially adversely affected. We anticipate that our
international sales, if any, will be denominated in U.S. dollars. An increase in
the value of the U.S. dollar relative to foreign currencies could make our
products more expensive and, therefore, potentially less competitive in those
markets. Additional risks inherent in our future international business
activities generally include:
O unexpected changes in regulatory requirements
O tariffs and other trade barriers
O costs of localizing products for foreign countries
O longer accounts receivable payment cycles
POSSIBLE VOLATILITY OF SECURITIES PRICES
The market price of our common stock has in the past been, and may in
the future continue to be, volatile. For instance, between January 1, 1998 and
February 3, 1999, the closing price of our common stock has ranged between $.50
and $5.50. A variety of events may cause the market price of our common stock to
fluctuate significantly, including:
O quarter to quarter variations in operating results
O adverse news announcements
O the introduction of new products
O market conditions in the industry
In addition, the stock market in recent years has experienced
significant price and volume fluctuations which have particularly affected the
market prices of equity securities of many companies that service the software
industry and which often have been unrelated to the operating performance of
such companies. These market fluctuations may adversely affect the price of our
common stock.
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ISSUANCE OF PREFERRED STOCK; ANTI-TAKEOVER PROVISIONS
Our Board of Directors has the authority, without further action by the
stockholders, to issue 9,000 shares of preferred stock on such terms and with
such rights, preferences and designations, including, without limitation
restricting dividends on our common stock, dilution of the voting power of our
common stock and impairing the liquidation rights of the holders of our common
stock, as the Board may determine without any vote of the stockholders. Issuance
of such preferred stock, depending upon the rights, preferences and designations
thereof may have the effect of delaying, deterring or preventing a change in our
control. In addition, certain "anti-takeover" provisions of the Delaware General
Corporation Law, among other things, may restrict the ability of our
stockholders to authorize a merger, business combination or change of control.
NO DIVIDENDS.
We have never paid cash dividends on our common stock. We expect to
incur net losses for the foreseeable future.
OUTSTANDING OPTIONS, WARRANTS AND CONVERTIBLE PREFERRED STOCK
We have outstanding options to purchase an aggregate of 5,001,037
shares of our common stock at a weighted average exercise price of $1.63 per
share (including options to purchase 2,614,492 shares at an exercise price of
$.94 per share which are subject to the approval of our stockholders of a
proposal to an increase the number of shares reserved for issuance under our
stock option plan) and outstanding warrants to purchase an aggregate of
3,494,757 shares of common stock at a weighted average exercise price of $4.09
per share. As a result of the October and November 1998 private placements, we
also have outstanding shares of convertible preferred stock that are convertible
into an aggregate of 9,900,000 shares of common stock and outstanding warrants
to purchase an aggregate of 6,187,500 shares of common stock at a conversion
price of $.50 per share. The exercise of all of outstanding warrants and options
and/or the conversion of the outstanding convertible preferred stock would
dilute the then-existing stockholders' percentage ownership of the common stock,
and any sales in the public market of the common stock issuable upon such
exercise and conversion could adversely affect prevailing market prices for the
common stock. Moreover, the terms upon which we would be able to obtain
additional equity capital could be adversely affected because the holders of
such securities can be expected to exercise or convert them at a time when we
would, in all likelihood, be able to obtain any needed capital on terms more
favorable to than those provided by such securities.
FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS
Certain forward-looking statements, including statements regarding our
expected financial position, business and financing plans are contained in this
prospectus or are incorporated in documents annexed as exhibits to this
prospectus. These forward-looking statements reflect our views with respect to
future events and financial performance. The words, "believe," "expect," "plans"
and "anticipate" and similar expressions identify forward-looking statements.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from such expectations are disclosed in this prospectus. All
subsequent written and oral forward-looking statements attributable to us are
expressly qualified in their entirety by the cautionary statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of their dates. We undertake no obligations to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
YEAR 2000 COMPLIANCE
We have commenced an assessment of the readiness of our internal
business information systems for handling the Year 2000 and the Year 2000
compliance of our products. We believe that we will need to modify or replace
portions of our internal business information systems to ensure Year 2000
compliance and we expect that we will successfully address Year 2000 issues
relating to our internal business information systems by the end of fiscal 1999.
We believe that our current products are Year 2000 compliant. However,
it is possible that current or future customers will assert claims against us
with respect to Year 2000 issues and, in the event such claims are asserted and
adjudicated in favor of these customers, our liability could be material. We are
taking steps to identify affected customers and assist them in assessing risks
that may be associated with our products. We may incur
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increasing costs regarding customer service related to these actions over the
next few years. As our customer service programs are currently ongoing, we are
unsure of the scope of any resulting Year 2000 issues and potential liability
resulting from such issues. We do not know the potential impact on our business,
operating results and financial condition with respect to these matters.
We have had discussions with our significant vendors, service providers
and large customers to evaluate Year 2000 issues, if any, relating to the
interaction of their systems with our internal systems. We have not yet received
written compliance information from these third parties and we cannot currently
determine when we will receive all of this information. Thus, despite the
initiation of these discussions, we lack the information necessary to estimate
the potential impact of Year 2000 compliance issues relating to these third
parties and their interaction with us and are unsure of when we will receive
such information.
While we have not incurred any material expenditures in connection with
identifying or evaluating Year 2000 compliance issues, there can be no assurance
that our Year 2000 compliance costs will continue at this level. Most of our
expenses have related to the opportunity cost of time spent by our employees
evaluating our internal business information systems, our products and the
interaction of our internal business information systems with the internal
systems of third parties. Although we are unaware of any material operational
issues or costs associated with preparing our internal business information
systems and products for the Year 2000, we are unsure that we will avoid serious
unanticipated negative consequences and/or material costs caused by undetected
errors or defects in our technology. Such unanticipated negative consequences
and/or material costs, if incurred, could have a material adverse effect on our
business, operating results or financial condition.
Because we are unaware of any material Year 2000 compliance issues, we
lack a Year 2000-specific contingency plan. If Year 2000 compliance issues are
discovered, we will evaluate the need for one or more contingency plans relating
to such issues. If we are unable to develop and implement appropriate
contingency plans, as needed, in a timely manner, we may experience delays in,
or increased costs associated with, implementation of changes to address any
such issues, which could have a material adverse effect on our business,
operating results or financial condition.
THE COMPANY
We develop and market business intelligence software that helps
business managers to efficiently use data to make strategic decisions. Many
businesses generate, gather and store large amounts of data. This data contains
information that, if extracted effectively and efficiently, can be used to
enhance decision making. While companies have invested heavily in capturing
data, they have only recently begun to focus significant resources on the
management and analysis of that data. We developed our products in response to
businesses' desire to analyze their data.
In the third quarter of 1996, we shifted our focus from using the
software we developed for providing contract data analysis services to selling
the software itself. We have not yet made significant sales of our software
product.
In September 1998, we implemented a plan to reduce our monthly
operating costs, which included the termination of approximately 20% of our
employees.
Our principal executive offices are located at 60 Charles Lindbergh
Boulevard, Uniondale, New York 11553. Our telephone number is (516) 228-8500.
USE OF PROCEEDS
The shares of common stock offered hereby are being registered for the
account of the selling stockholders identified in this prospectus. See "Selling
Stockholders." All net proceeds from the sale of the common stock will go to the
stockholders who offer and sell their shares. We will not receive any part of
the proceeds from such sales of common stock. We will, however, receive the
exercise price of the options at the time of their exercise. If all of the
options are exercised, we will realize proceeds in the amount of $5,752,456.
Such proceeds will be contributed to working capital and will be used for
general corporate purposes.
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<PAGE>
SELLING STOCKHOLDERS
This Prospectus relates to the reoffer and resale of shares issued or
that may be issued to the selling stockholders under our 1991 Stock Option Plan.
The following table sets forth (i) the number of shares of common stock
beneficially owned by each selling stockholder at January 31, 1998, (ii) the
number of shares to be offered for resale by each selling stockholder (i.e., the
total number of shares underlying options held by each selling stockholder
irrespective of whether such options are presently exercisable or exercisable
within sixty days of January 31, 1999), and (iii) the number and percentage of
shares of our common stock to be held by each selling stockholder after
completion of the offering.
<TABLE>
<CAPTION>
Number of Percentage
shares of of Class to
Common be Owned
Number of Stock After After
Number of shares of Shares to be Completion Completion
Common Stock Owned Offered for of the of the
Name at January 31, 1991(1) Resale Offering(2) Offering
---- ---------------------- ------ ----------- --------
<S> <C> <C> <C> <C>
Alan Kaufman(3) 325,000 300,000 325,000 5.8%
Amy Newmark(4) 361,000 300,000 361,000 6.4%
Rino Bergonzi(5) 10,000 30,000 0 0
Andre Szykier(6) 213,750 125,000 213,750 4.1%
Irwin Jacobs(7) 10,000 30,000 0 0
Robert Thompson(8) 23,414 400,000 0 0
Daniel Pess(9) 40,886 400,000 0 0
Barry Rubenstein(10) 5,822,156 206,250 5,615,906 55.4%
</TABLE>
- ----------------
* Less than one percent
(1) A person is deemed to be the beneficial owner of voting securities that
can be acquired by such person within 60 days after the date hereof
upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants or convertible securities that are held by such
person (but not those held by any other person) and that are currently
exercisable (i.e., that are exercisable within 60 days from the date
hereof) have been exercised. Unless otherwise noted, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares beneficially owned by them.
(2) Consists of shares issuable upon the exercise of options both currently
and not currently exercisable.
(3) Consists of (i) 200,000 shares common stock that are issuable upon the
conversion of Series A Preferred Stock and (ii) 125,000 shares of
common stock that are issuable upon the exercise of Series A Warrants.
Mr. Kaufman has been the Company's Chairman of the Board since October
1997 and was President and Chief Executive Officer from October 1997 to
December 1998.
(4) Consists of (i) 26,000 shares of common stock that are owned directly
by Ms. Newmark, (ii) 200,000 shares common stock that are issuable upon
the conversion of Series A Preferred Stock and (iii) 125,000 shares of
common stock that are issuable upon the exercise of Series A Warrants.
Ms. Newmark has been a Director of the Company since May 1998.
(5) Consists of 10,000 shares of Common Stock issuable upon exercise of
options. Mr. Bergonzi has been a director of the of the Company since
August 1997.
(6) Includes 312 shares of Common Stock owned by Remy Szykier, Mr.
Syzkier's daughter. Mr. Szykier, a co-founder of the Company, has
served as its Vice President and Chief Technology Officer since the
inception of the Company in February 1989.
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<PAGE>
(7) Mr. Jacobs has been a director since May 1998.
(8) Mr. Thompson joined the Company in September 1997 as Vice President of
Marketing and was named President and Chief Executive Officer in
December 1998.
(9) Consists of 40,886 shares of Common Stock issuable upon exercise of
options. Mr. Pess joined the Company in July 1994 as Vice President of
Finance and Administration and was promoted to Senior Vice President of
Finance and Administration in October 1997. Since December 1996, Mr.
Pess has also served as Chief Financial Officer of the Company and
since August 1997 Mr. Pess has served as Secretary of the Company. Mr.
Pess was also named Chief Operating Officer of the Company in December
1998.
(10) Based upon information contained in a report on Schedule 13D (the
"Wheatley 13D") filed jointly by Barry Rubenstein, Wheatley Foreign
Partners, L.P. ("Wheatley Foreign"), Wheatley Partners, L.P.
("Wheatley"), Seneca Ventures, Woodland Venture Fund, Woodland
Partners, Rev-Wood Merchant Partners and certain other entities with
the SEC. Includes (i) 56,250 shares of common stock issuable upon
exercise of options, (ii) 50,000 shares of common stock issuable upon
exercise of Series A Warrants and (iii) 80,000 shares of common stock
issuable upon conversion of shares of Series A Preferred Stock held by
Mr. Rubenstein. Also includes (a) 3,125 shares of common stock issuable
upon exercise of warrants held by Woodland Partners, (b)(i) 38,125
shares of common stock issuable upon exercise of warrants, (ii) 40,000
shares of common stock issuable upon conversion of shares of Series A
Preferred Stock and (iii) 16,000 shares of common stock issuable upon
conversion of shares of Series B Preferred Stock, all of which is held
by Woodland Fund, (c)(i) 38,125 shares of common stock issuable upon
exercise of warrants, (ii) 40,000 shares of common stock issuable upon
conversion of shares of Series A Preferred Stock and (iii) 16,000
shares of common stock issuable upon conversion of shares of Series B
Preferred Stock, all of which is held by Seneca, (d)(i) 557,879 shares
of common stock issuable upon exercise of warrants and (ii) 883,200
shares of common stock issuable upon conversion of shares of Series A
Preferred Stock, all of which is held by Wheatley, (e)(i) 48,371 shares
of common stock issuable upon exercise of warrants and (ii) 76,800
shares of common stock issuable upon conversion of shares of Series A
Preferred Stock, all of which is held by Wheatley Foreign, and (f)
200,000 shares of common stock issuable upon exercise of options held
by Rev-Wood Merchant Partners. Mr. Rubenstein disclaims beneficial
ownership of the securities held by Woodland Partners, Woodland Fund,
Seneca, Wheatley, Wheatley Foreign and Rev-Wood Merchant Partners,
except to the extent of his respective equity interest therein.
PLAN OF DISTRIBUTION
This offering is self-underwritten; neither we nor the selling
stockholders have employed an underwriter for the sale of common stock by the
selling stockholders. We will bear all expenses in connection with the
preparation of this Prospectus. The selling stockholders will bear all expenses
associated with the sale of the common stock.
The selling stockholders may offer their shares of common stock
directly or through pledgees, donees, transferees or other successors in
interest in one or more of the following transactions:
o On any stock exchange on which the shares of common stock may be
listed at the time of sale
o In negotiated transactions
o In the over-the-counter market
o In a combination of any of the above transactions
The selling stockholders may offer their shares of common stock at any
of the following prices:
o Fixed prices which may be changed
o Market prices prevailing at the time of sale
o Prices related to such prevailing market prices
o At negotiated prices
The selling stockholders may effect such transactions by selling shares
to or through broker-dealers, and all such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from the
selling stockholders and/or the purchasers of shares of common stock for whom
such broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
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<PAGE>
Any broker-dealer acquiring common stock from the selling stockholders
may sell the shares either directly, in its normal market-making activities,
through or to other brokers on a principal or agency basis or to its customers.
Any such sales may be at prices then prevailing on Nasdaq or at prices related
to such prevailing market prices or at negotiated prices to its customers or a
combination of such methods. The selling stockholders and any broker-dealers
that act in connection with the sale of the common stock hereunder might be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act; any commissions received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts and commissions
under the Securities Act. Any such commissions, as well as other expenses
incurred by the selling stockholders and applicable transfer taxes, are payable
by the selling stockholders.
The selling stockholders reserve the right to accept, and together with
any agent of the selling stockholder, to reject in whole or in part any proposed
purchase of the shares of common stock. The selling stockholders will pay any
sales commissions or other seller's compensation applicable to such
transactions.
We have not registered or qualified offers and sales of shares of the
common stock under the laws of any country, other than the United States. To
comply with certain states' securities laws, if applicable, the selling
stockholders will offer and sell their shares of common stock in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the selling stockholders may not offer or sell
shares of common stock unless we have registered or qualified such shares for
sale in such states or we have complied with an available exemption from
registration or qualification.
The selling shareholders have represented to us that any purchase or
sale of shares of common stock by them will comply with Regulation M promulgated
under the Securities Exchange Act of 1934, as amended. In general, Rule 102
under Regulation M prohibits any person connected with a distribution of our
common stock (a "Distribution") from directly or indirectly bidding for, or
purchasing for any account in which he or she has a beneficial interest, any of
our common stock or any right to purchase our common stock, for a period of one
business day before and after completion of his or her participation in the
distribution (we refer to that time period as the "Distribution Period").
During the Distribution Period, Rule 104 under Regulation M prohibits
the selling shareholders and any other persons engaged in the Distribution from
engaging in any stabilizing bid or purchasing our common stock except for the
purpose of preventing or retarding a decline in the open market price of our
common stock. No such person may effect any stabilizing transaction to
facilitate any offering at the market. Inasmuch as the selling shareholders will
be reoffering and reselling our common stock at the market, Rule 104 prohibits
them from effecting any stabilizing transaction in contravention of Rule 104
with respect to our common stock.
There can be no assurance that the selling shareholders will sell any
or all of the shares offered by them hereunder or otherwise.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the shares of
common stock offered hereby have been passed upon for the Company by Olshan
Grundman Frome Rosenzweig & Wolosky LLP, 505 Park Avenue, New York, New York
10022. Steven Wolosky, a member of such firm, beneficially owns 65,000 shares of
our common stock.
ADDITIONAL INFORMATION
We have filed with the Commission a Registration Statement on
Form S-8 under the Securities Act with respect to the Shares offered hereby. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement. Statements contained in
this Prospectus as to the contents of
-13-
<PAGE>
any contract or other document are not necessarily complete, and in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
-14-
<PAGE>
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by QueryObject Systems Corporation (the
"Company") with the Securities and Exchange Commission (the "Commission") are
incorporated herein by reference and made a part hereof:
(a) The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1997, June 30, 1998 and September 30, 1998;
and
(c) The description of the Company's securities contained in the
Company's Registration Statement on Form 8-A filed on November 7,
1997.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which de-registers all
securities remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of the filing of such reports and
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Steven Wolosky, a member of Olshan Grundman Frome Rosenzweig & Wolosky
LLP, 505 Park Avenue, New York, New York 10022, beneficially owns 65,000 shares
of the Company's common stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law ("DGCL"), the
Company's Certificate of Incorporation, as amended, limits the personal
liability of a director or officer to the Company for monetary damages for
breach of fiduciary duty of care as a director. Liability is not eliminated for
(i) any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payment of
dividends or stock purchase or redemptions pursuant to Section 174 of the DGCL,
or (iv) any transaction from which the director derived an improper personal
benefit.
The Company has also entered into indemnification agreements with each
of its directors and executive officers. The indemnification agreements provide
that the directors and executive officers will be indemnified to the fullest
extent permitted by applicable law against all expenses (including attorneys'
fees), judgments, fines and amounts reasonably paid or incurred by them for
settlement in any threatened, pending or completed action, suit or proceeding,
including any derivative action, on account of their services as a director or
officer of the Company or of any subsidiary of the Company or of any other
company or enterprise in which they are serving at the request of the Company.
No indemnification will be provided under the indemnification agreements,
however, to any director or executive officer in certain limited circumstances,
including on account of knowingly fraudulent, deliberately dishonest or willful
<PAGE>
misconduct. To the extent the provisions of the indemnification agreements
exceed the indemnification permitted by applicable law, such provision may be
unenforceable or may be limited to the extent they are found by a court of
competent jurisdiction to be contrary to pubic policy.
DELAWARE LAW
The Company is subject to Section 203 of the DGCL, which prevents an
"interested stockholder" (defined in Section 203, generally, as a person owning
15% or more of a corporation's outstanding voting stock) from engaging in a
"business combination" with a publicly-held Delaware corporation for three years
following the date such person became an interested stockholder, unless: (i)
before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (subject to certain exceptions), or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of 66% of the
outstanding voting stock of the corporation not owned by the interested
stockholder. A "business combination" includes mergers, stock or asset sales and
other transactions resulting in a financial benefit to the interested
stockholder.
The provisions of Section 203 of the DGCL could have the effect of
delaying, deferring or preventing a change in the control of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS
EXHIBIT INDEX
*4(a) - The 1991 Plan
*5 - Opinion of Olshan Grundman Frome Rosenzweig & Wolosky, LLP.
*23(a) - Consent of PricewaterhouseCoopers LLP, independent
auditors.
23(b) - Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP
(included in its opinion filed as Exhibit 5).
24 - Powers of Attorney (included on signature page to this
Registration Statement).
- -----------------
* Filed herewith.
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purposes 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; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that
remain unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange
II-3
<PAGE>
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 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 a controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
D. The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, a copy of the registrant's latest
annual report to stockholders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on February 11,
1999.
QUERYOBJECT SYSTEMS CORPORATION
By: /S/ ROBERT THOMPSON
-----------------------
Robert Thompson
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Robert Thompson and Daniel M.
Pess his true and lawful attorneys-in-fact and agent, with full power of
substitution and resubstitution, for and in his or her name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his or her substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/S/ ALAN W. KAUFMAN Chairman of the Board February 11, 1999
- -----------------------------
Alan W. Kaufman
/S/ ROBERT THOMPSON President and Chief February 11, 999
- ----------------------------- Executive Officer(Principal
Robert Thompson Executive Officer)
/S/ DANIEL M. PESS Executive Vice President, February 11, 1999
- ----------------------------- Chief Operating Officer and
Daniel M. Pess Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
/S/ ANDRE SZYKIER Director February 11, 1999
- -----------------------------
Andre Szykier
/S/ RINO BERGONZI Director February 11, 1999
- -----------------------------
Rino Bergonzi
/S/ IRWIN JACOBS Director February 11, 1999
- -----------------------------
Irwin Jacobs
/S/ AMY L. NEWMARK Director February 11, 1999
- -----------------------------
Amy L. Newmark
II-5
<PAGE>
AMENDED AND RESTATED 1991 STOCK OPTION PLAN. Pursuant to the requirements of the
Securities Act of 1933, the trustees (or other persons who administer the 1991
Plan) have duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York on February 11, 1999.
/s/ Rino Bergonzi
-----------------------------------------
Rino Bergonzi
Member of Stock Option Committee
/s/ Amy L. Newmark
-----------------------------------------
Amy L. Newmark
Member of the Stock Option Committee
EXHIBIT 4(a)
CROSSZ SOFTWARE CORPORATION
AMENDED AND RESTATED
1991 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1991 Stock Option Plan (the "Plan") is intended as an
incentive, to retain in the employ of and as consultants and advisors to CROSSZ
SOFTWARE CORPORATION, (the "Company") and any Subsidiary of the Company, within
the meaning of Section 425(f) of the United States Internal Revenue Code of
1986, as amended (the "Code"), persons of training, experience and ability, to
attract new employees, directors, advisors and consultants whose services are
considered valuable, to encourage the sense of proprietorship and to stimulate
the active interest of such persons in the development and financial success of
the Company and its Subsidiaries.
It is further intended that certain options granted pursuant
to the Plan shall constitute incentive stock options within the meaning of
Section 422 of the Code (the "Incentive Stock Options") while certain other
options granted pursuant to the Plan shall be nonqualified stock options (the
"Nonstatutory Stock Options"). Incentive Stock Options and Nonstatutory Stock
Options are hereinafter referred to collectively as "Options."
The Company intends that the Plan meet the requirements of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted consistent with the
Company's intent as stated in this Section 1.
-1-
<PAGE>
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall
appoint and maintain as administrator of the Plan a Committee (the "Committee")
consisting of two or more Non-Employee Directors (as such term is defined in
Rule 16b-3), which shall serve at the pleasure of the Board. The Committee,
subject to Sections 3 and 5 hereof, shall have full power and authority to
designate recipients of Options, to determine the terms and conditions of
respective Option agreements (which need not be identical) and to interpret the
provisions and supervise the administration of the Plan. The Committee shall
have the authority, without limitation, to designate which Options granted under
the Plan shall be Incentive Stock Options and which shall be Nonstatutory Stock
Options. To the extent any Option does not qualify as an Incentive Stock Option,
it shall constitute a separate Nonstatutory Stock Option.
Subject to the provisions of the Plan, the Committee shall
have the authority, in its discretion: (1) to grant Incentive Stock Options,
Nonstatutory Stock Options or Stock Purchase Rights; (2) to determine, upon
review of relevant information and in accordance with Section 5 of the Plan, the
fair market value of the Common Stock; (3) to determine the exercise price per
share of Options or Stock Purchase Rights, to be granted, which exercise price
shall be determined in accordance with Section 5 of the Plan; (4) to determine
the Employees or Consultants to whom, and the time or times at which, Options or
Stock Purchase Rights shall be granted and the number of shares to be
represented by each Option or Stock Purchase Right; (5) to interpret the Plan;
(6) to prescribe, amend and rescind rules and regulations relating to the Plan;
(7) to determine the terms and provisions of each Option and Stock Purchase
Right granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option or Stock Purchase Right; (8) to accelerate
or defer (with the consent of the Optionee) the exercise date of any Option,
consistent with the provisions of Section 5 of the Plan; (9) to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an Option or Stock Purchase Right previously granted by the Board;
and (10) to make all other determinations deemed necessary or advisable for the
administration of the Plan.
All decisions, determinations and interpretations of the
Committee shall be final and binding on all Optionees, Purchasers and any other
holders of any Options or Stock Purchase Rights granted under the Plan.
-2-
<PAGE>
In the event that for any reason the Committee is unable to
act or if the Committee at the time of any grant, award or other acquisition
under the Plan of Options or Stock does not consist of two or more Non-Employee
Directors, then any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as
recipients of Options (the "Optionees") shall include employees, officers and
directors of, and consultants and advisors to, the Company or any Subsidiary;
provided that Incentive Stock Options may only be granted to employees of the
Company and the Subsidiaries. In selecting Optionees, and in determining the
number of shares to be covered by each Option granted to Optionees, the
Committee may consider the office or position held by the Optionee or the
Optionee's relationship to the Company, the Optionee's degree of responsibility
for and contribution to the growth and success of the Company or any Subsidiary,
the Optionee's length of service, age, promotions, potential and any other
factors that the Committee may consider relevant. An Optionee who has been
granted an Option hereunder may be granted an additional Option or Options, if
the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total
of 1,950,000 shares of the Company's Common Stock (the "Stock") shall be subject
to the Plan. The shares of Stock subject to the Plan shall consist of unissued
shares or previously issued shares held by any Subsidiary of the Company, and
such amount of shares of Stock shall be and is hereby reserved for such purpose.
Any of such shares of Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be cancelled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore subject to such Option may be subject to future Options under the
Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the
following conditions and shall contain such additional terms and
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conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(a) OPTION PRICE. The purchase price of each share of
Stock purchasable under an Option shall be determined by the Committee at the
time of grant, but shall not be less than 100% of the Fair Market Value (as
defined below) of such share of Stock on the last trading day prior to the date
the Option is granted in the case of an Incentive Stock Option and not less than
85% of the Fair Market Value of such share of Stock on the last trading day
prior to the date the Option is granted in the case of a Nonstatutory Stock
Option; PROVIDED, HOWEVER, that with respect to an Optionee who, at the time an
Incentive Stock Option is granted, owns (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or of any Subsidiary, the purchase price per share of Stock
shall be at least 110% of the Fair Market Value per share of Stock on the last
trading day prior to the date of grant. The exercise price for each Option shall
be subject to adjustment as provided in Section 7 below. Fair Market Value means
the closing price of publicly traded shares of Stock on the NASDAQ Small-Cap
market, or, if not so listed or regularly quoted, the mean between the closing
bid and asked prices of publicly traded shares of Stock in the over-the-counter
market, or, if such bid and asked prices shall not be available, as reported by
any nationally recognized quotation service selected by the Company, or as
determined by the Committee in a manner consistent with the provisions of the
Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event
shall the purchase price of a share of Stock be less than the minimum price
permitted under rules and policies of the NASDAQ Small-Cap market, so long as
the Common Shares are listed on any such exchange.
(b) OPTION TERM. The term of each Incentive Stock
Option shall be five (5) years from the date of grant thereof or such other term
as may be provided in the Stock Option Agreement. The term of each Option that
is not an Incentive Stock Option shall be five (5) years from the date or grant
thereof or such other term as may be provided in the Stock Option Agreement.
However, in the case of an Option granted to an Employee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary
if the Option is an Incentive Stock Option, the term of the Option shall be five
(5) years from the date of grant thereof or such shorter time as may be provided
in the Stock Option Agreement.
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(c) EXERCISABILITY. Subject to Section 5(j) hereof,
Options shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant.
(d) METHOD OF EXERCISE. Options to the extent then
exercisable may be exercised in whole or in part at any time during the option
period, by giving written notice to the Company specifying the number of shares
of Stock to be purchased, accompanied by payment in full of the purchase price,
in cash, by check or such other instrument as may be acceptable to the
Committee. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of Stock owned by
the Optionee (based on the Fair Market Value of the Stock on the trading day
before the Option is exercised). An Optionee shall have the right to dividends
and other rights of a stockholder with respect to shares of Stock purchased upon
exercise of an Option after (i) the Optionee has given written notice of
exercise and has paid in full for such shares and (ii) becomes a stockholder of
record with respect thereto.
(e) NON-TRANSFERABILITY OF OPTIONS. Options are
not transferable and may be exercised solely by the Optionee during his lifetime
or after his death by the person or persons entitled thereto under his will or
the laws of descent and distribution. Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or similar process,
any Option contrary to the provisions hereof shall be void and ineffective and
shall give no right to the purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined
by the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary terminates by reason of death, the Option may
thereafter be exercised, to the extent then exercisable (or on such accelerated
basis as the Committee shall determine at or after grant), by the legal
representative of the estate or by the legatee of the Optionee under the will of
the Optionee, for a period of one year after the date of such death or until the
expiration of the stated term of such Option as provided under the Plan,
whichever period is shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless
otherwise determined by the Committee at grant, if any Optionee's employment
with or service to the Company or any Subsidiary terminates by reason of total
and permanent disability, any Option held by such Optionee may thereafter be
exercised, to the extent it
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was exercisable at the time of termination due to Disability (or on such
accelerated basis as the Committee shall determine at or after grant), but may
not be exercised after 30 days after the date of such termination of employment
or service or the expiration of the stated term of such Option, whichever period
is shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Unless
otherwise determined by the Committee at grant, if any Optionee's employment
with or service to the Company or any Subsidiary terminates by reason of Normal
or Early Retirement (as such terms are defined below), any Option held by such
Optionee may thereafter be exercised to the extent it was exercisable at the
time of such Retirement (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after 30 days after the
date of such termination of employment or service or the expiration of the
stated term of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such 30 day period, any unexercised Option
held by such Optionee shall thereafter be exercisable, to the extent to which it
was exercisable at the time of death, for a period of one year after the date of
such death or for the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h), Normal Retirement shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65. Early Retirement
shall mean retirement from active employment with the Company or any Subsidiary
pursuant to the early retirement provisions of the applicable Company or
Subsidiary pension plan or if no such pension plan, age 55.
(i) OTHER TERMINATION. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with or service to the
Company or any Subsidiary terminates for any reason other than death, Disability
or Normal or Early Retirement, the Option shall thereupon terminate, except that
the portion of any Option that was exercisable on the date of such termination
of employment may be exercised for the lesser of 30 days after the date of
termination or the balance of such Option's term if the Optionee's employment or
service with the Company or any Subsidiary is terminated by the Company or such
Subsidiary without cause (the
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determination as to whether termination was for cause to be made by the
Committee). The transfer of an Optionee from the employ of the Company to a
Subsidiary, or vice versa, or from one Subsidiary to another, shall not be
deemed to constitute a termination of employment for purposes of the Plan.
(j) LIMIT ON VALUE OF INCENTIVE STOCK OPTION. The
aggregate Fair Market Value, determined as of the date the Incentive Stock
Option is granted, of Stock for which Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year under the Plan
(and/or any other stock option plans of the Company or any Subsidiary) shall not
exceed $100,000.
(k) TRANSFER OF INCENTIVE STOCK OPTION SHARES. The
stock option agreement evidencing any Incentive Stock Options granted under this
Plan shall provide that if the Optionee makes a disposition, within the meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of any
share or shares of Stock issued to him upon exercise of an Incentive Stock
Option granted under the Plan within the two-year period commencing on the day
after the date of the grant of such Incentive Stock Option or within a one-year
period commencing on the day after the date of transfer of the share or shares
to him pursuant to the exercise of such Incentive Stock Option, he shall, within
10 days after such disposition, notify the Company thereof and immediately
deliver to the Company any amount of United States federal income tax
withholding required by law.
(l) LIMITATION ON OPTIONS HELD BY ONE PERSON. The
aggregate number of shares of Stock subject to options held by any one person
shall not exceed that number of shares as equals 5% of the outstanding shares of
the Company.
6. TERM OF PLAN.
The Plan shall become effective upon the earlier to occur of
its adoption by the Board of Directors or its approval by vote or the holders of
a majority of the outstanding shares or the Company entitled to vote on the
adoption of the Plan. It shall continue in effect for a term or ten (10) years
unless sooner terminated under Section 14 of the Plan.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding Option
and Stock Purchase Right, and the number of
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<PAGE>
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, or repurchase of Shares from a Purchaser upon
termination of employment, as well as the Price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock of the Company or
the payment of a stock dividend with respect to the Common Stock or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities off the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not-otherwise be exercisable. In the event
of a Proposed sale of all or substantially all of the assets or the Company, or
the merger of the Company with or into another corporation, the Option shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Board makes an Option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the Optionee that the Option shall be
fully exercisable for a period of thirty (30) days from the date of such notice,
and the Option will terminate upon the expiration of such period.
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<PAGE>
Capital Change of the Company.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or the Company has determined that such registration is
unnecessary, each person exercising an Option under the Plan may be required by
the Company to give a representation in writing that he is acquiring the shares
for his own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
9. TAXES.
The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any Options
granted under the Plan with respect to the withholding of any United States or
Canadian taxes or any other tax matters.
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date specified in Section
6.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except
that no amendment shall be made that would impair the rights of any Optionee
under any Option theretofore granted without his consent, and except that no
amendment shall be made which, without the approval of the shareholders of the
Company would:
(a) materially increase the number of shares that may
be issued under the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the
Optionees under the Plan;
(c) materially modify the requirements as to
eligibility for participation in the Plan;
(d) decrease the exercise price of an Incentive Stock
Option to less than 100% of the Fair Market Value per share of Stock on
the last trading day prior to the date of grant thereof; or
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<PAGE>
(e) extend the term of any Option beyond that
provided for in Section 5(b).
The Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Optionee without his consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and
the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges
(including the NASDAQ Small-Cap Market, so long as the Common Stock is listed on
any such exchange) as may be required.
13. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of
Stock delivered under the Plan shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, or
other securities commission having jurisdiction, any applicable Federal,
provincial or state securities law, any stock exchange upon which the Stock is
then listed and the Committee may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan
shall not confer upon any Optionee of the Company or any Subsidiary, any right
to continued employment or, in the case of an Optionee who is a director,
continued service as a director, with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its employees, the service of
any of its directors or the retention of any of its consultants or advisors at
any time.
(c) LIMITATION OF LIABILITY. No member of the Board
or the Committee, or any officer or employee of the Company acting on behalf of
the Board or the Committee, shall be personally
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liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination or interpretation.
(d) REGISTRATION OF STOCK. Notwithstanding any
other provision in the Plan, no Option may be exercised unless and until the
Stock to be issued upon the exercise thereof has been registered under the
Securities Act and applicable state securities laws, or are, in the opinion of
counsel to the Company, exempt from such registration in the United States or
exempt from the prospectus and registration requirements under applicable
provincial legislation. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Stock to be
issued upon the exercise of an Option granted hereunder, or to comply with an
appropriate exemption from registration under such laws or the laws of any
province in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option however, the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions to the Company's transfer agents.
14. DEFINITIONS. As used above, the following definitions shall apply:
"BOARD" shall mean the Board of Directors of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMON STOCK" shall mean the Common stock of the
Company.
"COMPANY" shall mean CrossZ Software Corporation, a
Delaware corporation.
"COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 2 of the Plan, if one is appointed.
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"CONSULTANT" shall mean any person who is engaged by the
Company or any subsidiary to render consulting services and is compensated for
such consulting services, and any director of the Company whether compensated
for such services or not; provided that if and in the event the Company
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term
Consultant shall thereafter not include directors who are to be compensated for
their services or are paid only a director's fee by the Company.
"CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean
the absence of any interruption or termination of service as an Employee or
Consultant, as applicable. Continuous Status as an Employee or Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
"EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
"INCENTIVE STOCK OPTION" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
"NONSTATUTORY STOCK OPTION" shall mean an Option not intended
to qualify as an Incentive Stock Option.
"OPTION" shall mean a stock option granted pursuant to
the Plan.
"OPTIONED STOCK" shall mean the Common Stock subject to
an Option.
"OPTIONEE" shall mean an Employee or Consultant who
receives an Option.
"PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
"PLAN" shall mean this 1991 Incentive Stock Plan.
"PURCHASER" shall mean an Employee or Consultant who
exercises a Stock Purchase Right.
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"SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
"STOCK PURCHASE RIGHT" shall mean a right to purchase Common
Stock pursuant to the Plan or the right to receive a bonus of Common Stock for
past services.
"SUBSIDIARY" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
CROSSZ SOFTWARE CORPORATION
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OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 Park Avenue
New York, NY 10022
212 753 7200
February 12, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: QueryObject Systems Corporation
REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Gentlemen:
Reference is made to the Registration Statement on Form S-8
dated February 12, 1999 (the "Registration Statement"), filed with the
Securities and Exchange Commission by QueryObject Systems Corporation, a
Delaware corporation (the "Company"). The Registration Statement relates to an
aggregate of 5,981,000 shares (the "Shares") of common stock, par value $.001
per share (the "Common Stock"). The Shares will be issued and sold by the
Company in accordance with the Company's 1991 Stock Option Plan, as amended (the
"Plan") and the exercise of Stock Options held by Consultants.
We advise you that we have examined originals or copies
certified or otherwise identified to our satisfaction of the Certificate of
Incorporation and By-laws of the Company, minutes of meetings of the Board of
Directors and stockholders of the Company, the Plan, the option agreement
relating to the Consultant Stock Option, a Prospectus relating to the resale of
Common Stock underlying options held by affiliates of the Company (the
"Prospectus"), and such other documents, instruments and certificates of
officers and representatives of the Company and public officials, and we have
made such examination of the law, as we have deemed appropriate as the basis for
the opinion hereinafter expressed. In making such examination, we have assumed
the genuineness of all signatures, the authenticity of all
<PAGE>
Securities and Exchange Commission
February 12, 1999
Page 2
documents submitted to us as originals, and the conformity to original documents
of documents submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the
Shares, when issued and paid for in accordance with the terms and conditions set
forth in the Plan, and the option agreement for the Consultants, will be duly
and validly issued, fully paid and non-assessable.
We consent to the reference to this firm under the caption
"Legal Opinion" in the Prospectus. We advise you that Steven Wolosky, a member
of this firm, beneficially owns 65,000 shares of our Common Stock.
Very truly yours,
/s/ OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 19, 1998, which appears on
page F-2 of the QueryObject Systems Corporation's Annual Report on Form 10-KSB
for the year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
February 12, 1998
