As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
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
(State or other jurisdiction of
incorporation or organization)
94-3087939
(IRS Employer
Identification Number)
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60 Charles Lindbergh Boulevard
Uniondale, New York 11553
(516) 228-8500 (Telephone)
(516) 228-8584 (Telecopier)
(Address, Including Zip Code, and Telephone Number of
Registrant's Principal Executive Offices)
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Daniel M. Pess
QueryObject Systems Corporation
60 Charles Lindbergh Boulevard
Uniondale, New York 11553
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(Name, Address, Including Zip Code, and Telephone Number
of Agent for Service)
Copy to:
David J. Adler, Esq.
Kenneth A. Schlesinger, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
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<PAGE>
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
to be Offering Price Aggregate Registration
Title of Shares to be Registered Registered (1) Per Share Offering Price Fee(4)
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<S> <C> <C> <C> <C>
Common Stock issuable upon the 5,217,399 $.875(2) $4,565,224.13 $1,269.13
conversion of outstanding shares
of Series C Convertible Preferred
Stock (the "Series C Stock")
issued in a private placement
consummated in June and July
1999 (the "1999 Private
Placement")
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Common Stock issuable upon the 4,500,000 $.8625(3) $3,881,250.00 $1,078.99(3)
exercise of Warrants issued in the
1999 Private Placement (the
"1999 Warrants")
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Common Stock issuable to GKN 344,928 $.8625(3) $ 297,500.40 $ 82.71(3)
Securities Corp. ("GKN") upon
the exercise of an option (the
"GKN Option") granted to GKN
in connection with the 1999
Private Placement
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Common Stock issuable to 95,073 $.8625(3) $ 82,000.46 $ 22.80(3)
Seaboard Securities, Inc.
("Seaboard") upon the exercise of
an option (the "Seaboard Option")
granted to Seaboard in connection
with the Series C Private
Placement
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TOTAL 10,157,400 $8,825,947.99 $2,453.63
====================================================================================================================================
</TABLE>
(1) In the event of a stock split, stock dividend or similar transaction
involving the Common Stock, the shares registered hereby shall
automatically be increased pursuant to Rule 416 of the Securities Act of
1933, as amended (the "Securities Act"), to cover the additional shares of
Common Stock required to prevent dilution. Pursuant to Rule 416, the number
of shares to be registered hereunder is subject to adjustment and could be
greater or less than such estimated amount depending upon factors that
cannot be predicted by the Company at this time, including, among others,
stock splits, stock dividends and similar transactions, the effect of
anti-dilution provisions contained in the 1999 Warrants and by reason of
changes in the exercise price of the 1999 Warrants in accordance with the
terms thereof.
(2) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
price of the Company's Common Stock, $.001 par value (the "Common Stock"),
on the OTC Bulletin Board on September 28, 1999.
(3) The exercise price of each of the 1999 Warrants, the GKN Option and the
Seaboard Option is $0.8625. Pursuant to Rule 457(g), the registration fee
for the common stock underlying such securities is calculated on the basis
of the exercise price thereof.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a) may determine.
The prospectus contained within this Registration Statement also relates to
Common Stock issuable (i) upon the conversion of outstanding shares of Series A
Convertible Preferred Stock and Series B Preferred Stock of the Company issued
in private placements in 1998, (ii) upon the exercise of warrants and options
issued in or in connection with such private placements, and (iii) upon the
exercise of certain other warrants and options. Such shares of Common Stock were
registered previously under cover of a Form S-3 Registration Statement
(Registration No. 333-69101). The filing fees for such securities were
previously paid.
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<PAGE>
PROSPECTUS
25,850,572 SHARES OF COMMON STOCK
QUERYOBJECT SYSTEMS CORPORATION
The selling stockholders listed on pages 15 to 22 of this prospectus are
offering and selling up to 25,850,572 shares of common stock issuable upon
exercise of warrants and options and the conversion of preferred stock. All
proceeds from the sale of the common stock under this prospectus will go to the
selling stockholders. We will not receive any proceeds from the sale of such
common stock. We will, however, receive the exercise price of the warrants and
options at the time their holders may exercise them.
Our common stock is listed under the symbol "QOB" on the Boston Stock
Exchange and under the symbol "QUOB" on the OTC Bulletin Board. The last
reported sale price on the OTC Bulletin Board for our common stock on September
28, 1999 was $.875 per share.
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This investment involves a high degree of risk. See "Risk Factors" on
pages 5 through 13 of this Prospectus.
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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 [ ], 1999
<PAGE>
TABLE OF CONTENTS
THE COMPANY...................................................................4
RISK FACTORS..................................................................5
WE HAVE NEGATIVE WORKING CAPITAL AND ALTHOUGH WE RECENTLY RECEIVED
ADDITIONAL FINANCING, WE MAY NEED FURTHER FINANCING TO CONTINUE OUR OPERATIONS.
WE HAVE HAD A HISTORY OF OPERATING LOSSES AND PROJECT FUTURE LOSSES;
THEREFORE WE HAVE DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
WE HAVE HAD A LIMITED OPERATING HISTORY AS A SOFTWARE PRODUCT COMPANY AND
LACK ANY SUBSTANTIAL REVENUE.
OUR REVENUES WILL DEPEND ON SALES OF QUERYOBJECT SYSTEM AND WE ARE
UNCERTAIN WHETHER THERE WILL BE BROAD MARKET ACCEPTANCE OF THIS PRODUCT.
OUR COMMON STOCK WAS DELISTED FROM THE NASDAQ SMALLCAP MARKET AND THERE MAY
BE A LIMITED TRADING MARKET FOR OUR STOCK.
WE ARE SEEKING TO DEVELOP STRATEGIC RELATIONSHIPS WITH INDIRECT CHANNEL
PARTNERS TO INCREASE SALES, BUT WE MAY BE UNABLE TO ATTRACT EFFECTIVE PARTNERS
AND WE WILL HAVE LOWER GROSS MARGINS FOR SALES THROUGH INDIRECT CHANNEL
PARTNERS.
THE MARKET FOR OUR PRODUCT REQUIRES US TO ADAPT TO RAPID TECHNOLOGICAL
CHANGE AND WE MAY NOT HAVE THE ABILITY TO DO SO.
WE ARE DEPENDENT ON A FEW SIGNIFICANT CUSTOMERS AND THE LOSS OF A SINGLE
CUSTOMER COULD ADVERSELY EFFECT OUR BUSINESS.
THE MARKET FOR OUR PRODUCTS IS VERY COMPETITIVE AND OUR COMPETITION MAY
MORE EFFECTIVELY DEVELOP AND MARKET BUSINESS INTELLIGENCE SOFTWARE.
WE ARE DEPENDENT ON A FEW KEY PERSONNEL AND WE NEED TO ATTRACT AND RETAIN
HIGHLY QUALIFIED TECHNICAL, SALES, MARKETING, DEVELOPMENT AND MANAGEMENT
PERSONNEL.
WE LACK PROPRIETARY TECHNOLOGY PROTECTION OF OUR PRODUCTS AND MAY RISK
INFRINGEMENT UPON TECHNOLOGY DEVELOPED BY OTHERS.
OUR REVENUES MAY FLUCTUATE AND ARE DIFFICULT TO PREDICT BECAUSE OF THE
DISCRETIONARY NATURE OF SOFTWARE PURCHASES BY CUSTOMERS.
OUR PRODUCT MAY CONTAIN ERRORS AND WE MAY BE SUBJECT TO PRODUCT LIABILITY.
WE INTEND TO EXPAND OUR INTERNATIONAL SALES, BUT THERE ARE SUBSTANTIAL
RISKS INVOLVED, INCLUDING EFFECTIVELY ESTABLISHING ADDITIONAL FOREIGN OPERATIONS
AND FOREIGN REGULATORY CONCERNS.
THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE.
WE HAVE A SIGNIFICANT AMOUNT OF AUTHORIZED BUT UNISSUED PREFERRED STOCK,
WHICH MAY AFFECT THE LIKELIHOOD OF A CHANGE OF CONTROL IN OUR COMPANY.
WE HAVE A SUBSTANTIAL AMOUNT OF OUTSTANDING OPTIONS, WARRANTS AND
CONVERTIBLE PREFERRED STOCK. THESE SECURITIES COULD ADVERSELY AFFECT THE TERMS
UPON WHICH WE OBTAIN ADDITIONAL EQUITY CAPITAL AND THE EXERCISE OR CONVERSION OF
ALL THESE SECURITIES WOULD DILUTE THE MARKET PRICE OF OUR COMMON STOCK.
WE CAN GIVE NO ASSURANCES THAT OUR FORWARD LOOKING STATEMENTS WILL BE
CORRECT.
WE MAY HAVE YEAR 2000 COMPLIANCE ISSUES, PROBLEMS OR LIABILITY.
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USE OF PROCEEDS..............................................................14
ADDITIONAL INFORMATION.......................................................14
WHERE YOU CAN FIND MORE INFORMATION..........................................14
SELLING STOCKHOLDERS.........................................................15
PLAN OF DISTRIBUTION.........................................................27
LEGAL MATTERS................................................................28
EXPERTS......................................................................28
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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
decisionmaking. 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. Because of limited sales, in September 1998, we implemented a
plan to reduce our monthly operating costs, which included the termination of
approximately 20% of our employees. Through August 1999, we have continued to
realize limited sales of our software.
Our principal executive offices are located at 60 Charles Lindbergh
Boulevard, Uniondale, New York 11553. Our telephone number is (516) 228-8500.
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<PAGE>
RISK FACTORS
An investment in the shares offered by this prospectus involves a high
degree of risk. You should carefully consider the following risk factors, as
well as information contained and incorporated by reference in this prospectus
before deciding to invest in our common stock.
WE HAVE NEGATIVE WORKING CAPITAL AND ALTHOUGH WE RECENTLY RECEIVED
ADDITIONAL FINANCING, WE MAY NEED FURTHER FINANCING TO CONTINUE OUR OPERATIONS.
At June 30, 1999, we had negative working capital of $697,596. Subsequent
to June 30, 1999, we received net proceeds of $3,302,570 from the sale of 35
units, each unit consisting of (i) 100 shares of newly-created series c
convertible preferred stock and (ii) a common stock purchase warrant. Each share
of series c convertible preferred stock is convertible into approximately 1,159
shares of our common stock and each warrant entitles its holder to purchase
100,000 shares of our common stock at an exercise price of $.8625 per share.
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. Given our continued operating losses, we may need additional financing
to continue operations. Our current projections indicate that if our forecasts
are achieved, we may have enough cash to continue operations until May 2000;
however, we are unable to predict as to how long we will be able to continue our
operations. As of the date of this Prospectus, we have no commitments,
agreements or understandings regarding additional financings and we may be
unable to obtain additional financing on satisfactory terms or at all.
WE HAVE HAD A HISTORY OF OPERATING LOSSES AND PROJECT FUTURE LOSSES;
THEREFORE WE HAVE DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
At June 30, 1999, our accumulated deficit was $38,665,314. For the six
months ended June 30, 1999 and the fiscal years ended December 31, 1998 and
1997, we incurred net losses of $3,252,857, $7,294,032 and $10,563,484,
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, 1998 states that our recurring losses from operations,
our deficiencies in working capital and stockholders equity, and negative cash
flow from operating activities raise substantial doubt about our ability to
continue as a going concern.
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
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<PAGE>
o 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
WE HAVE HAD A LIMITED OPERATING HISTORY AS A SOFTWARE PRODUCT COMPANY AND
LACK ANY 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, 1998 and for the six months ended June 30, 1999 were $928,505 and
$606,294, respectively. Prior to 1997, our revenues were derived primarily from
contract data analysis services, which we no longer provide.
OUR REVENUES WILL DEPEND ON SALES OF QUERYOBJECT SYSTEM AND WE ARE
UNCERTAIN WHETHER THERE WILL BE BROAD MARKET ACCEPTANCE OF THIS PRODUCT.
Substantially all of our revenues for the foreseeable future are expected
to be derived from sales of QueryObject System. Between January 1, 1995 and June
30, 1999, we had software product revenue from only 21 QueryObject System
installations, including those sold pursuant to reseller agreements for the
resellers' own use. 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 have a material adverse
effect on our business, operating results and financial condition.
OUR COMMON STOCK WAS DELISTED FROM THE NASDAQ SMALLCAP MARKET AND THERE MAY
BE A LIMITED TRADING MARKET FOR OUR STOCK.
Effective with the close of business on May 6, 1999, our common stock was
delisted from the Nasdaq SmallCap Market because of our inability to comply with
certain maintenance standards required for continued listing on the Nasdaq
SmallCap Market, including the net tangible asset requirement. We fell out of
compliance primarily as a result of continued losses during 1998.
Now that our common stock has been delisted from the Nasdaq SmallCap
Market, trading in our common stock is conducted on the OTC Bulletin Board and
the Boston Stock Exchange. The Boston Stock Exchange has notified us that while
we currently meet its continuing listing requirements, the exchange will monitor
whether continued operating losses will jeopardize our ability to comply with
its requirement that we have at least $500,000 in net tangible assets.
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<PAGE>
If our common stock is delisted from the Boston Stock Exchange, our common
stock could be considered a penny stock. Securities and Exchange Commission
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 Securities and Exchange Commission would require broker-dealers to deliver
to a purchaser of our 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 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 our common stock is traded only 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 our common stock.
WE ARE SEEKING TO DEVELOP STRATEGIC RELATIONSHIPS WITH INDIRECT CHANNEL
PARTNERS TO INCREASE SALES, BUT WE MAY BE UNABLE TO ATTRACT EFFECTIVE PARTNERS
AND WE WILL HAVE LOWER GROSS MARGINS FOR SALES THROUGH INDIRECT CHANNEL
PARTNERS.
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.
THE MARKET FOR OUR PRODUCT REQUIRES US TO ADAPT TO RAPID TECHNOLOGICAL
CHANGE AND WE MAY NOT HAVE THE ABILITY TO DO SO.
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
are unable to 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
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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.
WE ARE DEPENDENT ON A FEW SIGNIFICANT CUSTOMERS AND THE LOSS OF A SINGLE
CUSTOMER COULD ADVERSELY EFFECT OUR BUSINESS.
For the six months ended June 30, 1999, four customers accounted for 94%,
and for the fiscal year ended December 31, 1998, four customers accounted for
80%, of our total revenues. We are unsure if we will realize significant future
revenues from any 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.
THE MARKET FOR OUR PRODUCTS IS VERY COMPETITIVE AND OUR COMPETITION MAY
MORE EFFECTIVELY DEVELOP AND MARKET BUSINESS INTELLIGENCE SOFTWARE.
The market for our products is intensely competitive and subject to rapid
technological change. Our current and prospective competitors offer a variety of
data mining and multidimensional data mart software solutions and generally fall
within five categories: (i) vendors of relational database products sold for
analytical (data warehouse and data mart) purposes; (ii) vendors of
multidimensional database and analysis software; (iii) vendors of
OLAP/relational database software; (iv) vendors of query excelleration products:
and (v) vendors of vertical software applications for budgeting and financial
consultation. Our competitors have:
o longer operating histories
o significantly greater financial, technical and marketing resources
o greater name recognition
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
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<PAGE>
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.
WE ARE DEPENDENT ON A FEW KEY PERSONNEL AND WE NEED TO ATTRACT AND RETAIN
HIGHLY QUALIFIED TECHNICAL, SALES, MARKETING, DEVELOPMENT AND MANAGEMENT
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 and 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 expired in May 1999. We are currently negotiating
the terms of new employment agreements with Messrs.
Thompson and Pess.
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.
WE LACK PROPRIETARY TECHNOLOGY PROTECTION OF OUR PRODUCTS AND MAY RISK
INFRINGEMENT UPON TECHNOLOGY DEVELOPED BY OTHERS.
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,
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<PAGE>
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.
OUR REVENUES MAY FLUCTUATE AND ARE DIFFICULT TO PREDICT BECAUSE OF THE
DISCRETIONARY NATURE OF SOFTWARE PURCHASES BY CUSTOMERS.
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.
OUR PRODUCTS MAY CONTAIN ERRORS AND WE MAY BE SUBJECT TO 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.
WE INTEND TO EXPAND OUR INTERNATIONAL SALES, BUT THERE ARE SUBSTANTIAL
RISKS INVOLVED, INCLUDING EFFECTIVELY ESTABLISHING ADDITIONAL FOREIGN OPERATIONS
AND FOREIGN REGULATORY CONCERNS.
Our international sales for the six months ended June 30, 1999 and for the
fiscal year ended in 1998, were approximately 56% and 17% of our total revenue,
respectively. 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 or 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
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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
THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE.
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
September 15, 1999, the closing price of our common stock has ranged between
$.47 and $5.50. The volatility of the market price of our common stock may
further increase now that our common stock has been delisted from the Nasdaq
SmallCap Market. 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 that have particularly affected the market prices
of equity securities of many companies that service the software industry and
that often have been unrelated to the operating performance of such companies.
These market fluctuations may adversely affect the price of our common stock.
WE HAVE ISSUED A SIGNIFICANT AMOUNT OF AUTHORIZED BUT UNISSUED PREFERRED
STOCK, WHICH MAY AFFECT THE LIKELIHOOD OF A CHANGE OF CONTROL IN OUR COMPANY.
As of September 15, 1999, our Board of Directors has the authority, without
further action by the stockholders, to issue 2,269,375 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 control. In addition, certain
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"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.
WE HAVE A SUBSTANTIAL AMOUNT OF OUTSTANDING OPTIONS, WARRANTS AND
CONVERTIBLE PREFERRED STOCK. THESE SECURITIES COULD ADVERSELY AFFECT THE TERMS
UPON WHICH WE OBTAIN ADDITIONAL EQUITY CAPITAL AND THE EXERCISE OR CONVERSION OF
ALL THESE SECURITIES WOULD DILUTE THE MARKET PRICE OF OUR COMMON STOCK.
As of September 15, 1999, we have outstanding options to purchase an
aggregate of 5,333,037 shares of common stock at a weighted average exercise
price of $1.51 per share and outstanding warrants to purchase an aggregate of
10,933,220 shares of common stock at a weighted average exercise price of $1.32
per share. As a result of private placements in 1998 and 1999, we also have
outstanding shares of preferred stock that are convertible into an aggregate of
14,514,799 shares of common stock. The exercise of all outstanding warrants and
options and/or the conversion of the outstanding preferred stock would dilute
the then-current stockholders' percentage ownership of our common stock, and any
sales in the public market of our common stock issuable upon such exercise and
conversion could adversely affect prevailing market prices for our 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 than
those provided by such securities.
WE CAN GIVE NO ASSURANCES THAT OUR FORWARD LOOKING STATEMENTS WILL BE
CORRECT.
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. We caution
readers 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.
WE MAY HAVE YEAR 2000 COMPLIANCE ISSUES, PROBLEMS, OR LIABILITY.
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
-12-
<PAGE>
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 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.
-13-
<PAGE>
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 warrants and options at the time of exercise. If all of
the warrants and options are exercised, we will realize proceeds in the amount
of $22,508,090. Such proceeds will be contributed to working capital and will be
used for general corporate purposes.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act, with respect to the resale of common stock. This prospectus,
which constitutes a part of that registration statement, does not contain all
the information contained in that registration statement and its exhibits. For
further information with respect to us and our common stock, you should consult
the registration statement and its exhibits. Statements contained in this
prospectus concerning the provisions of any documents are necessarily summaries
of those documents, and each statement is qualified in its entirety by reference
to the copy of the document filed with the SEC. The registration statement and
any of its amendments, including exhibits filed as a part of the registration
statement or an amendment to the registration statement, are available for
inspection and copying through the entities listed below. See "Where You Can
Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at "http://www.sec.gov."
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 incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
(1) Our Annual Report on Form 10-KSB for the year ended
December 31, 1998, as amended;
(2) Our Quarterly Reports on Form 10-QSB for the
quarterly periods ended March 31, 1999 and June 30,
1999;and
-14-
<PAGE>
(3) Our Application for Registration of our common stock
on Form 8-A dated November 7, 1997.
You may request a copy of the filings, at no cost, by writing or
telephoning the following address:
QueryObject Systems Corporation
60 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: Chief Financial Officer
(516) 228-8500
When you are deciding whether to purchase the shares being offered by
this prospectus, you should rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making any offer of
the 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
date other than the date on the front of those documents.
SELLING STOCKHOLDERS
The name of each selling stockholder, maximum number of shares of
common stock to be sold and total number of shares of common stock that each
selling stockholder owns that are set forth in the following table have been
provided by the selling stockholders as of September 15, 1999. The selling
stockholders may sell all or part of their shares of common stock registered
hereunder.
<TABLE>
<CAPTION>
Maximum
Percent Number Shares
Shares Beneficially of Shares Beneficially Percent
Beneficially Owned to be Owned after Beneficially
Owned Prior to Prior to this Offered this Owned after
this Offering Offering (1) for Resale Offering this Offering
<S> <C> <C> <C> <C> <C>
Robert M. Adams 18,750 (2) * 18,750 0 --
American Friends of 37,500 (2) * 37,500 0 --
Hebron Yeshiva
Stuart Berman 36,564 (3) * 26,350 10,214 *
Richard Manners 34,980 (3) * 23,850 11,130 *
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
James W. & Carol S. 107,971 (4) 1.5% 107,971 0 --
Archer
George W. Aucott 6,250 (2) * 6,250 0 --
Brenda Beacher 53,986 (4) * 53,986 0 --
B & B Trading 107,971 (4) 1.5% 107,971 0 --
Retirement Plan
J.M.R. Barker 11,419 (2) * 11,419 0 --
Foundation
Barker, Lee & Co. 21,309 (2) * 21,309 0 --
Ronald N. Beck 25,000 (2) * 25,000 0 --
Sonia B. Blanch 6,250 (2) * 6,250 0 --
J. Jeffrey Brausch 3,125 (2) * 3,125 0 --
Coleman Smith Bost 53,986 (4) * 53,986 0 --
Charles H. Brusco 107,971 (4) 1.5% 107,971 0 --
Charles R. Buckridge 25,000 (2) * 25,000 0 --
Revocable Trust
Edwin M. Busch, Jr. 107,971 (4) 1.5% 107,971 0 --
Herbert C. Clough 467 (2) * 467 0 --
Aaron Cywiak 6,250 (2) * 6,250 0 --
D. Stake Mill Inc. 6,250 (2) * 6,250 0 --
Phillip S. and Elayne 1,818 (2) * 1,818 0 --
Dauber, Trustees f/b/o
PSERD Trust
Jerry A. Dusa Trust 1,818 (2) * 1,818 0 --
Steven H. & Dara M. 6,250 (2) * 6,250 0 --
David
Penn W. Davidson 6,250 (2) * 6,250 0 --
Thomas R. Deakman 6,250 (2) * 6,250 0 --
Edwin K. Dimes 6,250 (2) * 6,250 0 --
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Albert W. Duffield 6,250 (2) * 6,250 0 --
Susan M. Erwin 215,942 (4) 2.9% 215,942 0 --
Andrew Feiner 46,875 (2) * 46,875 0 --
Warren B. Feldman 53,986 (4) * 53,986 0 --
Harry Friedman Living 6,250 (2) * 6,250 0 --
Trust
Gadraz, Inc. 46,875 (2) * 46,875 0 --
Richard E. Gerzof 107,971 (4) 1.5% 107,971 0 --
Richard Gillett 1,529 (2) * 1,529 0 --
Stuart W. Gold 9,375 (2) * 9,375 0 --
Bruce Greenberg 6,250 (2) * 6,250 0 --
Jeffrey N. Greenblatt 18,750 (2) * 18,750 0 --
Stuart Greenstein 6,250 (2) * 6,250 0 --
Richard L. Grossman 6,250 (2) * 6,250 0 --
Andrew Gyenes 6,250 (2) * 6,250 0 --
Richard Hantke 6,250 (2) * 6,250 0 --
Harsac, Inc. 25,000 (2) * 25,000 0 --
Donald V. Healy 53,986 (4) * 53,986 0 --
Sara D. Hauser 6,250 (2) * 6,250 0 --
John J. Healy 6,250 (2) * 6,250 0 --
Andrew and Mary Ann 909 (2) * 909 0 --
Heller
Steven W. Hemker 53,986 (4) * 53,986 0 --
Joseph & Sharon 53,986 (4) * 53,986 0 --
Imperiale
Terrence Hutton 6,250 (2) * 6,250 0 --
Alan Jablon 37,500 (2) * 37,500 0 --
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Ralph & Rosalie Joel 6,250 (2) * 6,250 0 --
Robert Katan 26,993 (4) * 26,993 0 --
Frank T. Juranich, Jr. 6,250 (2) * 6,250 0 --
Owen L. Kilgannon 25,000 (2) * 25,000 0 --
Charles Kleinberg 6,250 (2) * 6,250 0 --
Herb Kramer 53,986 (4) * 53,986 0 --
James Krantz 161,957 (4) 2.2% 161,957 0 --
Jonathan Krantz 107,971 (4) * 107,971 0 --
Winthrop Knowlton 16,395 (2)(32) * 16,395 0 --
Ronald N. Krinick 6,250 (2) * 6,250 0 --
Norman Kurtz 107,971 (4) 1.5% 107,971 0 --
Marc Lasry 125,000 (2) 1.7% 125,000 0 --
Scott Leach 6,250 (2) * 6,250 0 --
Dwight E. Lee 77,690 (2)(33) 1.1% 1,529 0 --
Lenny Corp. 12,500 (2) * 12,500 0 --
George Leodis 53,986 (4) * 53,986 0 --
Eli Levitin 53,986 (4) * 53,986 0 --
Kirk M. Loevner 9,393 (2) * 9,393 0 --
Theodore F. Luty, Jr. 107,971 (4) 1.5% 107,971 0 --
Brian H. Madden 26,993 (4) * 26,993 0 --
Paul Matusow 9,188 (2) * 9,188 0 --
Joseph F. McDonald 53,986 (4) * 53,986 0 --
Charles N. Martin 539,855 (4) * 539,855 0 --
John McMaster 6,250 (2) * 6,250 0 --
Ardith L. Mederrick 107,971 (4) 1.5% 107,971 0 --
Jonathan Medved 6,250 (2) * 6,250 0 --
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Michael Menkin 6,250 (2) * 6,250 0 --
William J. Motto 3,125 (2) * 3,125 0 --
Howard W. Muchnick 43,750 (2) * 43,750 0 --
William L. Musser 1,529 (2) * 1,529 0 --
Sheila Nagar 6,250 (2) * 6,250 0 --
Namakagon Associates, 31,199 (2)(33) * 31,199 0 --
L.P.
Narinder Arora 107,971 (4) 1.5% 107,971 0 --
Joseph Neuman 25,000 (2) * 25,000 0 --
Martin Orenstein 13,297 (4)(34) * 10,797 2,500 --
Ned F. Parson 25,000 (2) * 25,000 0 --
John G. Passarelli, M.D. 215,942 (4) 2.9% 215,942 0 --
James C. Percy 53,986 (4) * 53,986 0 --
Phoenix Leasing Inc. 2,337 (2) * 2,337 0 --
A.C. Providenti 18,750 (2) * 18,750 0 --
Malladi S. Reddy 18,750 (2) * 18,750 0 --
Lawrence Rothberg 6,250 (2) * 6,250 0 --
Steven R. Rothstein 12,500 (2) * 12,500 0 --
Eric C. Rudin 25,000 (2) * 25,000 0 --
Jerry L. Ruyan 7,250 (2) * 7,250 0 --
Wayne Saker 6,250 (2) * 6,250 0 --
Sargent Capital 18,750 (2) * 18,750 0 --
Ventures, LLC
George T. Schirripa 37,500 (2) * 37,500 0 --
Michael Schwartzbard 6,250 (2) * 6,250 0 --
Seminole Walls and 215,942 (4) 2.9% 215,942 0 --
Ceilings, Corp.
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Maurice Shamah 215,942 (4) 2.9% 215,942 0 --
Arthur A. Sharples 909 (2) * 909 0 --
David R. Signorile 107,971 (4) 1.5% 107,971 0 --
Richard D. Siegal 6,250 (2) * 6,250 0 --
Alan Silverman 107,971 (4) 1.5% 107,971 0 --
Fred Singer 215,942 (4) 2.9% 215,942 0 --
Arthur B. Steinberg & 12,500 (2) * 12,500 0 --
Co.
Lionel N. Sterling 16,364 (2) * 16,364 0 --
Jerry W. Stoker 12,500 (2) * 12,500 0 --
Sutton Hill Partnership 107,971 (4) 1.5% 107,971 0 --
Paul Treue 53,986 (4) 1.5% 53,986 0 --
Isaac K. A. Thompson, 53,986 (4) 1.5% 53,986 0 --
M.D., P.A.
Dr. Robert Trager and 53,986 (4) * 53,986 0 --
Barbara Goldman
Ramie A. Tritt 6,250 (2) * 6,250 0 --
Upland Associates, L.P. 12,234 (2)(33) * 12,234 0 --
US Data Capture, Inc. 6,250 (2) * 6,250 0 --
Jim Vandiver 107,971 (4) 1.5% 107,971 0 --
Richard Warren 107,971 (4) 1.5% 107,971 0 --
Raymond J. Woolston 53,986 (4) * 53,986 0 --
Jeffrey S. Wilks 6,250 (2) * 6,250 0 --
Donald C. Wright 6,250 (2) * 6,250 0 --
Z/Cross Partnership 3,125 (2) * 3,125 0 --
Zee Consulting West Inc. 50,000 (2) * 50,000 0 --
Defined Benefit Pension
Plan
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Sandra Zipper 12,500 (2) * 12,500 0 --
Frank C. and Jane M. 6,250 (2) * 6,250 0 --
Zozzorra
Barington Capital Group, 125,000 (5) 2.4% 125,000 0 --
L.P.
David M. Nussbaum 272,500 (6) 3.7% 272,500 0 --
Robert Gladstone 272,500 (6) 3.7% 272,500 0 --
Roger Gladstone 272,500 (6) 3.7% 272,500 0 --
Rev-Wood Merchant 350,000 (7) 4.7% 350,000 0 --
Partners
Stanley H. Blum 382,971 (8) 5.1% 382,971 0 --
Foxhound Fund, L.P. 893,534 (9) 11.2% 893,534 0 --
Kenneth D. Cole 515,942 (10) 6.8% 515,942 0 --
Dalewood Associates, 1,127,355 (10) 13.7% 1,127,355 0 --
L.P.
Kenneth Endelson 100,000 (11) 1.4% 100,000 0 --
Alan W. Kaufman 495,415 (12) 6.5% 325,000 170,415 2.3%
Michael F. Kremins 82,500 (13) 1.2% 82,500 0 --
Amy L. Newmark 396,267 (14) 5.3% 200,000 196,267 2.7%
Eli Oxenhorn 922,192 (15) 11.5% 890,942 31,250 *
PAW Partners 1,525,000 (9) 17.7% 1,525,000 0 --
Richard J. Rosenstock 162,500 (16) 3.1% 162,500 0 --
Barry Rubenstein 8,675,985 (17) 58.3% 8,675,985 0 --
Brookwood Partners, 107,971 (18) 1.5% 107,971 0 --
L.P.
Seneca Ventures 660,019 (19) 8.6% 660,019 0 --
Wheatley Foreign 5,746,564 (20) 47.1% 5,746,564 0 --
Partners
Wheatley Partners 5,746,564 (20) 47.1% 5,746,564 0 --
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Woodland Partners 377,548 (21) 5.2% 377,548 0 --
Woodland Venture Fund 781,484 (22) 10.0% 781,484 0 --
Irwin Lieber 6,075,006 (23) 48.4% 6,075,006 0 --
Barry Fingerhut 5,962,506 (24) 48.0% 5,962,506 0 --
Carl E. Siegel 267,971 (25) 3.6% 267,971 0 --
David Thalheim 714,855 (26) 9.2% 714,855 0 --
Craig Effron 100,000 (27) 1.4% 100,000 0 --
Lloyd Goldman 563,913 (28) 7.4% 563,913 0 --
Eleanor C. Groetch 50,000 (27) * 50,000 0 --
Hudson Capital 1,625,000 (29) 18.7% 1,625,000 0 --
Dr. Steven B. Landman 100,000 (27) 1.4% 100,000 0 --
Pension Trust
Roberta S. & Samuel M. 81,250 (29) 1.1% 81,250 0 --
Sorkin
Stourbridge Investments 31,251 (30) * 31,251 0 --
Ltd.
Richard Warren 132,500 (29) 1.8% 132,500 0 --
Steven Wolosky 25,000 (30) * 25,000 0 --
GKN Securities Corp. 344,928 (31) 4.6% 344,928 0 --
Seaboard Securities, Inc. 95,073 (31) 1.3% 95,073 0 --
</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.
-22-
<PAGE>
(2) Consists of shares of common stock that are issuable upon the exercise
of warrants issued in connection with a bridge financing consummated in
July 1997 or private placements consummated in 1995 and 1996.
(3) Includes 23,850 shares of common stock that are issuable upon the
exercise of warrants.
(4) Consists of (i) shares common stock that are issuable upon the
conversion of Series C Preferred Stock and (ii) shares of common stock
that are issuable upon the exercise of Series C Warrants.
(5) Includes 125,000 shares of common stock that are issuable upon the
exercise of a purchase option (the "Underwriters' Purchase Option")
issued in connection with the Company's initial public offering in
November 1997.
(6) Consists of (i) shares of common stock that are issuable upon the
conversion of Series A Preferred Stock and (ii) shares of common stock
that are issuable upon the exercise of warrants (the "Series A
Warrants"). Does not include securities held by GKN Securities Corp.,
of which Messrs. Robert Gladstone, Roger Gladstone and Nussbaum
disclaim beneficial ownership.
(7) Based upon information contained in a report on Schedule 13D filed by
Rev-Wood Merchant Partners with the SEC. Consists of shares of common
stock that are issuable upon the exercise of options.
(8) Consists of (i) shares of common stock that are issuable upon the
conversion of Series A Preferred Stock, (ii) shares of common stock
that are issuable upon the exercise of Series A Warrants, (iii) shares
of common stock that are issuable upon the conversion of Series C
Preferred Stock held by B&B Trading Retirement Plan, an entity of which
Mr. Blum is a trustee and (iv) shares of common stock that are issuable
upon the exercise of warrants (the "Series C Warrants") also held by
B&B Trading Retirement Plan. Mr. Blum disclaims beneficial ownership of
all securities owned by B&B Trading Retirement Plan.
(9) Consists of (i) shares of common stock that are issuable upon the
conversion of Series A Preferred stock (ii) shares of common stock that
are issuable upon the exercise of Series A Warrants, (iii) shares of
common that are issuable upon the conversion of Series C. Preferred
stock and (iv) shares of common stock that are issuable upon the
exercise of Series C Warrants.
(10) Consists of (i) shares of common stock that are issuable upon the
conversion of Series A Preferred Stock, (ii) shares of common stock
that are issuable upon the exercise of Series A Warrants, (iii) shares
of common stock that are issuable upon the conversion of Series C
Preferred Stock and (iv) shares of common stock that are issuable upon
the exercise of Series C Warrants.
(11) Consists of shares of common stock that are issuable upon the
conversion of Series A Preferred Stock.
(12) Consists of (i) 170,415 shares of common stock that are issuable upon
the exercise of options, (ii) 200,000 shares of 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. Mr. Kaufman has been the Company's
-23-
<PAGE>
Chairman of the Board since October 1997 and was President and Chief
Executive Officer of the Company from October 1997 to December 1998.
(13) Consists of 72,500 shares of common stock that are issuable upon the
conversion of Series A Preferred Stock.
(14) Includes (i) 161,667 shares of common stock that are issuable upon the
exercise of options and (ii) 200,000 shares of common stock that are
issuable upon the conversion of Series A Preferred Stock. Ms. Newmark
has been a Director of the Company since 1998.
(15) Based upon information contained in a report on Schedule 13D filed by
Eli Oxenhorn with the SEC. Includes (i) 31,250 shares of common stock
issuable upon the exercise of options held by Mr. Oxenhorn, (ii)
350,000 shares of common stock that are issuable upon the exercise of
options held by Rev-Wood Merchant Partners, an entity of which Mr.
Oxenhorn is a general partner, (iii) 200,000 shares of common stock
that are issuable upon the conversion of Series A Preferred Stock, (iv)
125,000 shares of common stock that are issuable upon the exercise of
Series A Warrants, (v) 115,942 shares of common stock that are issuable
upon the conversion of Series C Preferred Stock and (vi) 100,000 shares
of common stock that are issuable upon the exercise of Series C
Warrants.
(16) Consists of (i) shares of common stock that are issuable upon the
exercise of Series A Warrants, (ii) shares of common stock that are
issuable upon the conversion of Series C Preferred Stock held jointly
with David Thalheim and (iii) 250,000 shares of common stock that are
issuable upon the exercise of Series C Warrants held jointly with David
Thalheim.
(17) 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 ("Seneca"), Woodland Venture Fund
("Woodland Fund"), Woodland Partners, Rev-Wood Merchant Partners,
Brookwood Partners, L.P. ("Brookwood") and certain other entities with
the SEC and certain other information. Includes (i) 111,457 shares of
common stock issuable upon exercise of options, (ii) 225,000 shares of
common stock issuable upon exercise of warrants and (iii) 315,942
shares of common stock issuable upon conversion of shares of Series A
and Series C Preferred Stock held by Mr. Rubenstein. Also includes
(a)(i)103,125 shares of common stock issuable upon exercise of warrants
and (ii) 115,942 shares of common stock issuable upon conversion of
shares of Series C Preferred Stock held by Woodland Partners, (b)(i)
315,625 shares of common stock issuable upon exercise of warrants, and
(ii) 411,884 shares of common stock issuable upon conversion of shares
of Series A, Series B and Series C Preferred Stock held by Woodland
Venture Fund ("Woodland Fund"), (c)(i) 265,625 shares of common stock
issuable upon exercise of warrants, (ii) 353,913 shares of common stock
issuable upon conversion of shares of Series A, Series B and Series C
Preferred Stock, all of which are held by Seneca, (d)(i) 1,910,279
shares of common stock issuable upon exercise of warrants and (ii)
2,816,000 shares of common stock issuable upon conversion of shares of
Series A and Series C Preferred Stock, all of which are held by
Wheatley Partners, (e)(i) 165,971 shares of common stock issuable upon
exercise of warrants and (ii) 244,870 shares of common stock issuable
upon conversion of shares of Series A and Series C Preferred Stock, all
of which are held by Wheatley Foreign, (f) 350,000 shares of common
stock issuable upon exercise of options held by Rev-Wood Merchant
Partners ("Rev-Wood"), and (g)(i) 50,000 shares of common stock
issuable upon exercise of warrants and (ii) 57,971 shares of common
stock issuable upon conversion of shares of Series C Preferred Stock,
all of which are held by Brookwood. Mr. Rubenstein disclaims beneficial
ownership of the securities held by Woodland
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<PAGE>
Partners, Woodland Fund, Seneca, Wheatley, Wheatley Foreign, Rev-Wood,
and Brookwood, except to the extent of his respective equity interest
therein.
(18) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) shares of common stock that are issuable
upon the conversion of Series C Preferred Stock and (ii) shares of
common stock that are issuable upon the exercise of Series C Warrants.
(19) Based upon information contained in the Wheatley 13D and certain other
information. Includes (i) 265,625 shares of common stock issuable upon
exercise of warrants, and (ii) 353,913 shares of common stock issuable
upon conversion of shares of Series A, Series B & Series C Preferred
Stock, held by Seneca.
(20) Based upon information contained in the Wheatley 13D and certain other
information. Includes (a)(i) 1,910,279 shares of common stock issuable
upon exercise of warrants and (ii) 2,816,000 shares of common stock
issuable upon conversion of shares of Series A & Series C Preferred
Stock, all of which are held by Wheatley, and (b)(i) 165,971 shares of
common stock issuable upon exercise of warrants and (ii) 244,870 shares
of common stock issuable upon conversion of shares of Series A & Series
C Preferred Stock, all of which are held by Wheatley Foreign. Wheatley
Foreign disclaims beneficial ownership of the securities held by
Wheatley and Wheatley disclaims beneficial ownership of the securities
held by Wheatley Foreign.
(21) Based upon information contained in the Wheatley 13D and certain other
information. Includes (i)103,125 shares of common stock issuable upon
exercise of warrants, and (ii) 115,942 shares of common stock issuable
upon conversion of shares of Series C Preferred Stock held by Woodland
Partners.
(22) Based upon information contained in the Wheatley 13D and certain other
information. Includes (i) 315,625 shares of common stock issuable upon
exercise of warrants, and (ii) 411,884 shares of common stock issuable
upon conversion of shares of Series A, Series B & Series C Preferred
Stock, held by Woodland Fund.
(23) Based on information contained in the Wheatley 13D and certain other
information. Includes (i)112,500 shares of common stock issuable upon
exercise of options, (ii) 100,000 shares of common stock issuable upon
exercise of warrants and (iii) 115,942 shares of common stock issuable
upon conversion of shares of Series C Preferred Stock, all of which are
held by Mr. Lieber. Also includes (a)(i) 1,910,279 shares of common
stock issuable upon exercise of warrants and (ii) 2,816,000 shares of
common stock issuable upon conversion of shares of Series A & Series C
Preferred Stock, all of which are held by Wheatley, and (b)(i) 165,971
shares of common stock issuable upon exercise of warrants and (ii)
244,870 shares of common stock issuable upon conversion of shares of
Series A & Series C Preferred Stock, all of which are held by Wheatley
Foreign, of which Mr. Lieber disclaims beneficial ownership, except to
the extent of his respective equity interest therein.
(24) Based on information contained in the Wheatley 13D and certain other
information. Includes (i) 100,000 shares of common stock issuable upon
exercise of warrants, (ii) 115,942 shares of common stock issuable upon
conversion of shares of Series C Preferred Stock held by Mr. Fingerhut.
Also includes (a)(i) 1,910,279 shares of common stock issuable upon
exercise of warrants and (ii) 2,816,000 shares of common stock issuable
upon conversion of shares of Series A & Series C Preferred Stock, all
of which are held by Wheatley, and (b)(i) 165,971 shares of common
stock issuable upon exercise of warrants and (ii) 244,870 shares of
common stock issuable upon conversion of
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<PAGE>
shares of Series A & Series C Preferred Stock, all of which are held by
Wheatley Foreign. The Reporting Person disclaims beneficial ownership
of these securities except to the extent of his or its equity
respective ownership in Wheatley and/or Wheatley Foreign.
(25) Consists of shares of common stock that are issuable upon (i)
conversion of shares of Series A Preferred Stock, (ii) conversion of
shares of Series B Preferred Stock, (iii) exercise of Series B
Warrants, (iv) conversion of shares of Series C Preferred Stock and (v)
exercise of Series C Warrants.
(26) Consists of (i) shares of common stock that are issuable upon the
conversion of Series A Preferred Stock, (ii) shares of common stock
that are issuable upon the exercise of Series A Warrants, (iii) 289,855
shares of common stock that are issuable upon the conversion of Series
C Preferred Stock held jointly with Richard Rosenstock and (iii)
250,000 shares of common stock that are issuable upon the exercise of
Series C Warrants held jointly with Richard Rosenstock.
(27) Consists of shares of common stock that are issuable upon the
conversion of Series B Preferred Stock.
(28) Consists of (i) shares of common stock that are issuable upon the
conversion of Series B Preferred Stock, (ii) shares of common stock
that are issuable upon the exercise of Series B Warrants, (iii) shares
of common stock that are issuable upon the conversion of Series C
Preferred Stock and (vi) shares of common stock that are issuable upon
the exercise of Series C Warrants.
(29) Consists of (i) shares of common stock that are issuable upon the
conversion of shares of Series B Preferred Stock and (ii) shares of
common stock that are issuable upon the exercise of Series B Warrants.
(30) Consists of shares of common stock that are issuable upon the exercise
of Series B Warrants.
(31) Consists of shares of common stock that are issuable upon the exercise
of a purchase option (the "Series C Placement Agent Option") issued in
connection with the Company's Series C private placement.
(32) Includes shares issuable upon the exercise of warrants held by Winthrop
and Erica Knowlton TTEE and PaineWebber CFN FBO Winthrop Knowlton IRA.
Mr. Knowlton disclaims beneficial ownership of all securities owned by
such entities, except to the extent of his equity interest therein.
(33) Lee served as a Director of the Company from August 1996 to August
1997. Includes shares issuable upon the exercise of warrants held by
Barker, Lee & Co., J.M.R. Barker Foundation, Namakagon Associates, L.P.
and Upland Associates. Mr. Lee is a general partner of Barker, Lee &
Co., Namagkagon Associates, L.P., and Upland Associates and an officer
of J.M.R. Barker Foundation. Mr. Lee disclaims beneficial ownership of
all securities owned by such entities, except to the extent of his
equity interest therein.
(34) Consists of (i) shares common stock that are issuable upon the
conversion of Series C Preferred Stock, (ii) shares of common stock
that are issuable upon the exercise of Series C Warrants and (iii)
shares granted pursuant to the Company's 1991 Stock Option Plan.
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<PAGE>
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 their 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 that 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).
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 the OTC Bulletin Board 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
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<PAGE>
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
securities (a "Distribution") from directly or indirectly bidding for, or
purchasing for any account in which he or she has a beneficial interest, any of
such securities or any right to purchase such securities, 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 stockholders and any other persons engaged in the Distribution from
engaging in any stabilizing bid or purchasing of 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 stockholders 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 25,000 shares of
our common stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Annual Report on Form 10-KSB of QueryObject Systems
Corporation for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
-28-
<PAGE>
================================================================================
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this prospectus
and, if given or made, such other information and representations must not be
relied upon as having been authorized by us. This prospectus does not constitute
an offer or solicitation by anyone in any state in which such person is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. The delivery of this prospectus at any time does not imply that
the information herein is correct as of any time subsequent to the date hereof.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful.
25,850,572 SHARES
QUERYOBJECT SYSTEMS CORPORATION
COMMON STOCK
PROSPECTUS
[.............], 1999
================================================================================
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, all of which will be paid by the Registrant, are as
follows:
SEC Registration Fee............................. $ 2,453.63
Accounting Fees and Expenses..................... $ 10,000.00
Legal Fees and Expenses.......................... $ 20,000.00
Blue Sky Fees and Expenses....................... $ 10,000.00
Miscellaneous Expenses........................... $ 2,546.37
Total............................................ $ 45,000.00
============
Item 15. 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
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
II-1
<PAGE>
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 16. Exhibits.
Exhibit Index
4.5* Form of Warrant issued in connection with the private placements
consummated in October and November 1998 (Incorporated by reference
to Exhibit 99-D to the Company's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1998.)
4.6* Form of Warrant issued in connection with the private placement
consummated in July 1997 (Incorporated by reference to Exhibit 4.3
to the Company's Registration Statement on Form SB-2, No.
333-34667).
4.7* Form of Representative's Purchase Option granted to GKN Securities
Corp. (Incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form SB-2, No. 333-34667).
4.8* Form of Purchase Option granted to Southeast Research Partners in
connection with the private placements consummated in October and
November 1998 (Incorporated by reference to Exhibit 4.8 to the
Company's Form S-3, No. 333-69101).
4.9* Certificate of Designations, Preferences and Other Rights and
Qualifications of Series A Convertible Preferred Stock
(Incorporated by reference to Exhibit 99-A to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998).
4.10* Certificate of Correction to the Certificate of Designations,
Preferences and Other Rights and Qualifications of Series A
Convertible Preferred Stock (Incorporated by reference to Exhibit
99-B to the Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998).
4.11* Certificate of Designations, Preferences and Other Rights and
Qualifications of Series B Convertible Preferred Stock
(Incorporated by reference to Exhibit 99-C to the Company's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998).
4.12 Certificate of Designations, Preferences and Other Rights and
Qualifications of Series C Convertible Preferred Stock.
II-2
<PAGE>
4.13 Form of Warrant issued in connection with the private placement
consummated in June and July of 1999.
4.14 Form of Purchase Option granted to Seaboard Securities, Inc. in
connection with the private placement consummated in June and July
of 1999.
4.15** Form of Purchase Option granted to GKN Securities Corp. in
connection with the private placement consummated in June and July
of 1999.
5** Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP with
respect to the securities registered hereunder.
23(a) Consent of PricewaterhouseCoopers LLP.
23(c)** Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP (included
within Exhibit 5).
24(a) Powers of Attorney (included on the Signature page to the
Registration Statement).
____________________
* previously filed
** to be filed by amendment
Item 17. Undertakings
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 purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
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 the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against each such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and authorizes this Registration
Statement to be signed on its behalf by the undersigned, the City of New York,
State of New York, on the [ ]th day of September, 1999.
QUERYOBJECT SYSTEMS CORPORATION
(Registrant)
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 September 29, 1999
- ---------------------
Alan W. Kaufman
/s/ Robert Thompson President and Chief September 29, 1999
- --------------------- Executive Officer
Robert Thompson (Principal Executive Officer)
/s/ Daniel M. Pess Executive Vice President, September 29, 1999
- -------------------- Chief Operating Officer
Daniel M. Pess and Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/s/ Andre Szykier Director September 29, 1999
- --------------------
Andre Szykier
/s/ Rino Bergonzi Director September 29, 1999
- ---------------------
Rino Bergonzi
II-5
<PAGE>
/s/ Irwin Jacobs Director September 29, 1999
- ---------------------
Irwin Jacobs
/s/ Amy L. Newmark Director September 29, 1999
- ---------------------
Amy L. Newmark
II-6
<PAGE>
Exhibits
Exhibit Index
4.5* Form of Warrant issued in connection with the private
placements consummated in October and November 1998
(Incorporated by reference to Exhibit 99-D to the Company's
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998.)
4.6* Form of Warrant issued in connection with the private
placement consummated in July 1997 (Incorporated by reference
to Exhibit 4.3 to the Company's Registration Statement on Form
SB- 2, No. 333-34667).
4.7* Form of Representative's Purchase Option granted to GKN
Securities Corp. (Incorporated by reference to Exhibit 4.2 to
the Company's Registration Statement on Form SB-2, No. 333-
34667).
4.8* Form of Purchase Option granted to Southeast Research Partners
in connection with the private placements consummated in
October and November 1998 (Incorporated by reference to
Exhibit 4.8 to the Company's Amendment No. 1 to Form S-3 filed
February 2, 1999).
4.9* Certificate of Designations, Preferences and Other Rights and
Qualifications of Series A Convertible Preferred Stock
(Incorporated by reference to Exhibit 99-A to the Company's
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998)
4.10* Certificate of Correction to the Certificate of Designations,
Preferences and Other Rights and Qualifications of Series A
Convertible Preferred Stock (Incorporated by reference to
Exhibit 99-B to the Company's Quarterly Report on Form 10-QSB
for the quarter ended September 30, 1998)
4.11* Certificate of Designations, Preferences and Other Rights and
Qualifications of Series B Convertible Preferred Stock
(Incorporated by reference to Exhibit 99-C to the Company's
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998)
4.12 Certificate of Designations, Preferences and Other Rights and
Qualifications of Series C Convertible Preferred Stock.
4.13 Form of Warrant issued in connection with the private
placement consummated in June and July of 1999.
4.14 Form of Purchase Option granted to Seaboard Securities, Inc.
in connection with the private placement consummated in June
and July of 1999.
4.15** Form of Purchase Option granted to GKN Securities Corp. in
connection with the private placement consummated in June and
July of 1999.
5** Opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP with
respect to the securities registered hereunder.
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<PAGE>
23(a) Consent of PricewaterhouseCoopers LLP.
23(c)** Consent of Olshan Grundman Frome Rosenzweig & Wolosky LLP
(included within Exhibit 5).
24(a) Powers of Attorney (included on the Signature page to the
Registration Statement).
_______________________
* Previously filed
** To be filed by amendment
II-8
QUERYOBJECT SYSTEMS CORPORATION
CERTIFICATE OF DESIGNATION, PREFERENCES
AND OTHER RIGHTS AND QUALIFICATIONS OF
SERIES C CONVERTIBLE PREFERRED STOCK
QUERYOBJECT SYSTEMS CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That, pursuant to authority conferred upon the Board of
Directors of the Corporation (the "Board") by the Amended and Restated
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware (the "DGCL"), there hereby is created,
out of the 4,000,000 shares of Preferred Stock of the Corporation authorized in
Article FOURTH of the Certificate of Incorporation (the "Preferred Stock"), a
series of the Preferred Stock consisting of 4,500 shares, $.001 par value per
share, designated "Series C Convertible Preferred Stock," and to that end the
Board has adopted a resolution providing for the designation, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations and restrictions, of the Series C Convertible Preferred Stock, which
resolution is as follows:
RESOLVED, that the Certificate of Designation, Preferences and
Other Rights and Qualifications of Series C Convertible Preferred
Stock, dated June 28, 1999 (the "Certificate of Designation") be and is
hereby authorized and approved, which Certificate of Designation shall
be filed with the Delaware Secretary of State in the following form:
1. Designations and Amount and Rank. 4,500 shares of
the Preferred Stock of the Corporation, par value $.001 per share, shall
constitute a series of Preferred Stock designated as "Series C Convertible
Preferred Stock" (the "Series C Preferred Stock"). Except for Series A
Convertible Preferred Stock (the "Series A Preferred Stock") and Series B
Convertible Preferred Stock (the "Series B Preferred Stock") which shall rank
senior to the Series C Preferred Stock with respect to rights on liquidation,
dissolution or winding up of the Corporation and with respect to
<PAGE>
rights to dividends and distributions, the Series C Preferred Stock shall rank
senior to all classes and series of capital stock of the Corporation now or
hereafter authorized, issued or outstanding, including without limitation, the
Common Stock, par value $.001 per share (the "Common Stock"), of the Corporation
(collectively, the "Junior Securities"). In addition, except for Series A
Preferred Stock and Series B Preferred Stock, the Corporation shall not issue
any class or series of any class of capital stock that ranks pari passu with or
senior to the Series C Preferred Stock with respect to rights on liquidation,
dissolution or winding up of the Corporation.
2. Dividends. The holders of Series C Preferred Stock
shall not be entitled to any stated amount of dividends, cash or otherwise nor
shall they be entitled to payment of dividends unless dividends are paid on any
other securities of the Company that are equal or junior to the Series C
Preferred Stock. No dividends shall be payable on shares of Series C Preferred
Stock so long as any shares of Series A Preferred Stock or Series B Preferred
Stock are outstanding. Subject to the foregoing conditions, no dividends shall
be payable on any Junior Securities unless equivalent dividends, on an as
converted basis, are declared and paid concurrently on the Series C Preferred
Stock.
3. Rights on Liquidation, Dissolution or Winding Up,
Etc.
(a) In the event of any voluntary or involuntary
liquidation, dissolution, Change of Control (as hereinafter defined) or winding
up of the Corporation (each, a "Liquidation"), the assets of the Corporation
available for distribution to its stockholders, whether from capital, surplus or
earnings, shall be distributed in the following order of priority:
(i) The holders of Series A Preferred Stock and
Series B Preferred Stock shall be entitled to receive, prior
and in preference to any distribution to the holders of Common
Stock, any other series or class of Preferred Stock or any
other class of the Corporation's capital stock, whether now
existing or hereafter created, an amount equal to the sum of
(A) the greater of (1) the amount they would have received had
they converted all of their shares of Series A Preferred Stock
and Series B Preferred Stock into shares of Common Stock
immediately prior to such Liquidation and (2) the Investment
Value (as hereinafter defined) of such shares of Series A
Preferred Stock and Series B Preferred Stock and (B) an amount
equal to all declared but unpaid dividends on such
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shares of Series A Preferred Stock or Series B Preferred Stock
as of the date of such Liquidation. Investment Value shall
mean the aggregate purchase price paid by purchasers for the
units of the Corporation's securities that included Series A
Preferred Stock or Series B Preferred Stock, as the case may
be, upon original issuance of such securities.
(ii) After distribution of the amounts set forth in Section 3(a)(i)
hereof, the holders of Series C Preferred Stock shall be entitled to receive,
prior and in preference to any distribution to the holders of Junior Securities
an amount equal to the sum of (A) the greater of (1) the amount they would have
received had they converted all of the shares of Series C Preferred Stock held
by them as of the date of such Liquidation into shares of Common Stock
immediately prior to such Liquidation and (2) $1,000 multiplied by the number of
such shares of Series C Preferred Stock and (B) an amount equal to all declared
but unpaid dividends on such shares of Series C Preferred Stock.
(iii) After distribution of the amounts set forth in
Section 3(a)(i) and 3(a)(ii) hereof, the remaining assets of
the Corporation available for distribution, if any, shall be
distributed to the holders of issued and outstanding Junior
Securities.
(b) A "Change of Control" means (i) the direct or indirect
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Corporation to any person or entity or group of persons or
entities acting in concert as a partnership or other group or (ii) the merger or
consolidation of the Corporation with or into another corporation or
corporations with the effect that the then existing stockholders of the
Corporation hold less than 50% of the combined voting power of the then
outstanding securities of the surviving corporation of such merger or the
corporation resulting from such consolidation ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors.
4. Voting Rights.
Each holder of a share of Series C Preferred Stock shall be
entitled to cast such number of votes in respect of such share on a proposal
submitted for a vote of stockholders as shall equal the number of votes entitled
to be cast by a holder of the shares of Common Stock into which such share would
be convertible pursuant to Section 5 hereof as of the record date for
determining
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stockholders entitled to vote on such proposal. Such holder shall be entitled to
vote on all matters on which holders of Common Stock would be entitled to vote,
voting together as a single class with such holders of Common Stock (except as
hereinafter provided) in the same manner and with the same effect as such
holders of Common Stock, subject to Article Eighth of the Certificate of
Incorporation. The holders of shares of Series C Preferred Stock shall also vote
as a separate class on all matters on which the DGCL specifically requires the
holders of shares of the Series C Preferred Stock to vote as a separate class.
5. Conversion of Series C Preferred Stock.
(a) The holders of Series C Preferred Stock shall have the
right, at their option, at any time and from time to time, to convert their
shares of Series C Preferred Stock into fully paid and non-assessable shares of
Common Stock. The number of shares of Common Stock into which a share of Series
C Preferred Stock initially will be convertible will be determined by dividing
$1,000 by .8625 (the "Conversion Rate"). The holder of shares of Series C
Preferred Stock, exercising the aforesaid right, to convert such shares into
shares of Common Stock, shall be entitled to receive, in cash, an amount equal
to all declared but unpaid dividends on such shares of Series C Preferred Stock
up to and including the conversion date thereof.
(b) Before any holder of Series C Preferred Stock shall be
entitled to convert the same into shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent designated by the Corporation for
the Series C Preferred Stock, and shall give written notice to the Corporation
at its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series C Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been effected immediately prior to the close of business on the date of
surrender of the shares of Series C Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
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(c) In the event that the Corporation shall (i) pay a dividend
in shares of Common Stock to holders of Common Stock, (ii) make a distribution
in shares of Common Stock to holders of Common Stock, (iii) subdivide the
outstanding shares of Common Stock into a greater number of shares of Common
Stock or (iv) combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, the Conversion Rate in effect pursuant to
Section 5(a) immediately prior to such action shall be adjusted so that a holder
of shares of Series C Preferred Stock thereafter surrendered for conversion
pursuant to Section 5(a) shall be entitled to receive that number of shares of
Common Stock that he would have owned immediately following such action had such
shares of Series C Preferred Stock been converted immediately prior thereto.
Such adjustment shall be made whenever any event listed above shall occur and
shall become effective (A) immediately after the record date in the case of a
dividend or a distribution and (B) immediately after the effective date in the
case of a subdivision or combination. Notwithstanding the foregoing, no
adjustment to the Conversion Rate will be effectuated if such adjustment would
violate the rights of holders of Series A Preferred Stock or Series B Preferred
Stock with respect to dividends.
(d) In the event that the Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights, then, in each such case for the purpose of this Section 5(d)
and subject to any restrictions on such distribution under the terms of the
Series A Preferred Stock or the Series B Preferred Stock, the holders of Series
C Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series C Preferred Stock
were convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
(e) If at any time and from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in this Section 5),
provision shall be made so that the holders of Series C Preferred Stock shall
thereafter be entitled to receive upon conversion of Series C Preferred Stock
the number of shares of stock or other securities or property of the Corporation
or otherwise, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 5
with respect to the rights of the holders of Series C Preferred Stock after the
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recapitalization to the end that the provisions of this Section 5 (including
adjustment of the Conversion Price of the Series C Preferred Stock then in
effect and the number of shares issuable upon conversion of Series C Preferred
Stock) shall be applicable after that event in as nearly equivalent a manner as
is practicable.
(f) If any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of the Corporation
with and into another corporation, or the sale of all or substantially all of
its assets to another corporation, shall be effected while any shares of Series
C Preferred Stock are outstanding in such a manner that holders of shares of
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization or reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby each holder of Series C Preferred Stock
shall thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon conversion of Series C Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
so receivable had such reorganization or reclassification, consolidation, merger
or sale not taken place, and in such case appropriate provision shall be made
with respect to the rights and interests of the holders of Series C Preferred
Stock to the end that the provisions hereof (including, without limitation,
provisions for adjustment of the Conversion Price of the Series C Preferred
Stock and the number of shares of Common Stock issuable upon conversion thereof)
shall thereafter be applicable, as nearly as may be possible, in relation to any
shares of stock, securities or assets thereafter deliverable upon the conversion
of such shares of Series C Preferred Stock. Prior to or simultaneously with the
consummation or any such consolidation, merger or sale of the Corporation, the
survivor or successor corporation (if other than the Corporation) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed or delivered to each holder of
Series C Preferred Stock, the obligation to deliver to such holders of Series C
Preferred Stock such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder of Series C Preferred Stock may be
entitled to receive, and containing the express assumption of such successor
corporation of the due and punctual performance and observance of every
provision of this Certificate of Designation to be performed and observed by the
Corporation and of
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<PAGE>
all liabilities and obligations of the Corporation hereunder with respect to the
Series C Preferred Stock.
(g) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series C Preferred Stock pursuant to this Section 5, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof. The Corporation shall, upon
the written request at any time of any holder of Series C Preferred Stock,
furnish or cause to be furnished to such holder a certificate setting forth (A)
such adjustment and readjustment, (B) the Conversion Price for a share of Series
C Preferred Stock in effect prior to and upon such adjustment or readjustment,
and (C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series C Preferred Stock.
(h) In the event of any taking by the Corporation of a record
of the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to each
holder of Series C Preferred Stock, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(i) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of shares of Series C Preferred Stock,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series C
Preferred Stock; and if at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series C Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Series C Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to these provisions.
(j) The Corporation shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of
capital stock of the Corporation upon conversion of
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any shares of Series C Preferred Stock; provided, however, that the Corporation
shall not be required to pay any taxes that may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such shares
in a name other than that of the holder of the shares of Series C Preferred
Stock in respect of which such shares are being issued.
(k) All shares of Common Stock that may be issued in
connection with the conversion provisions set forth herein will, upon issuance
by the Corporation, be validly issued, fully paid and nonassessable and free
from all taxes, liens or charges with respect thereto.
(l) Any notice required by the provisions of this Section 5 to
be given to the holders of shares of Series C Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the stock books of the
Corporation.
(m) In the event any shares of Series C Preferred Stock shall
be converted pursuant to Section 5 hereof or otherwise reacquired by the
Corporation, the shares so converted or reacquired shall be cancelled. The
Certificate of Incorporation of the Corporation may be appropriately amended
from time to time to effect the corresponding reduction in the Corporation's
authorized capital stock.
This Certificate of Designation was signed by the President
and Secretary of the Corporation.
Dated: June 28, 1999
QUERYOBJECT SYSTEMS CORPORATION
By: /s/ Robert Thompson
------------------------------------
Name: Robert Thompson
Title: President
By: /s/ Daniel M. Pess
------------------------------------
Name: Daniel M. Pess
Title: Secretary
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, PLEDGED,
SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO, FILED AND MADE EFFECTIVE UNDER THE SECURITIES
ACT AND SUCH APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
Dated: June 28, 1999
WARRANT
To purchase up to WARRANT AMOUNTS shares of Common Stock of
QUERYOBJECT SYSTEMS CORPORATION
Expiring December 28, 2001
THIS IS TO CERTIFY THAT, for value received, NAME (the
"Holder"), is entitled, subject to certain conditions set forth in Sections 1.01
and 1.02 hereof, to purchase from QUERYOBJECT SYSTEMS CORPORATION, a Delaware
corporation (the "Company"), at the Company's principal executive office, at the
Exercise Price (as hereinafter defined), up to the number of shares of Common
Stock, par value $.001 per share (the "Common Stock") of the Company shown above
(the "Shares"), all subject to adjustment and upon the terms and conditions as
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described.
Certain terms used in this Warrant are defined in Article IV
hereof.
ARTICLE I
METHOD OF EXERCISE
1.01. Time of Exercise. Subject to the provisions of Sections
1.02 and 1.03 hereof, this Warrant may be exercised in whole or in part at any
time and from time to time after 5:00 p.m. Eastern Time on the date hereof and
prior to the Expiration Time.
<PAGE>
1.02. Method of Exercise. To exercise this Warrant in whole or
in part, the Holder must deliver to the Company, at the Company's principal
executive office (a) this Warrant, (b) a written notice of such Holder's
election to exercise this Warrant, which notice shall specify the number of
Shares to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to be
registered, and (c) payment of the Exercise Price with respect to such shares.
Such payment may be made, at the option of the Holder, in cash, by certified or
bank cashier's check, money order or wire transfer, in the manner specified in
the next succeeding paragraph, or in any other manner consented to in writing by
the Company, or any combination thereof.
The Company shall, as promptly as practicable after receipt of
the items required by the preceding paragraph of this Section 1.02, execute and
deliver or cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of Shares
specified in such notice. The share certificate or certificates so delivered
shall be in such denominations as shall be specified in such notice and shall be
issued in the name of the Holder or such other name as shall be designated in
such notice, provided the Holder delivers to the Company an opinion of counsel,
reasonably acceptable to the Company, that the share certificate or certificates
may be issued in such other name under the Securities Act and applicable state
securities laws. Such certificate or certificates shall be deemed to have been
issued, and such Holder or Holders or any other person so designated to be named
therein shall be deemed for all purposes to have become a Holder of record of
such Shares, as of the date the aforementioned notice and the other items
specified in the preceding paragraph of this Section 1.02 are received by the
Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or certificates, deliver to
the Holder a new Warrant evidencing the right to purchase the remaining Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notations may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share certificates and
new Warrants, except that, if share certificates or new Warrants are to be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes, if any, payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for such payment.
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<PAGE>
1.03. Shares To Be Fully Paid and Nonassessable. All Shares
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company covenants that it will at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares as shall then be issuable upon
the exercise of all outstanding Warrants.
1.04. No Fractional Shares To Be Issued. The Company shall not
be required to issue fractions of Shares upon exercise of this Warrant. If any
fractions of a Share would, but for this Section, be issuable upon any exercise
of this Warrant, in lieu of such fractional Share the Company shall pay to the
Holder, in cash, an amount equal to the same fraction of the Closing Price on
the date of exercise.
1.05. Share Legend. Each certificate for Shares issued upon
exercise of this Warrant, unless at the time of exercise such Shares are
registered under the Securities Act, shall bear a legend substantially as
follows:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE
SECURITIES LAW, SUPPORTED BY AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel reasonably acceptable to the Company, the securities represented thereby
need no longer be subject to restrictions on resale under the Securities Act.
ARTICLE II
EXCHANGES, TRANSFERS AND REPLACEMENTS OF WARRANT CERTIFICATES
2.01. Exchange and Registration or Transfer of Warrants. The
Holder may, at its option, surrender this Warrant at the principal executive
office of the Company and receive in exchange therefor a Warrant or Warrants for
the same aggregate number of Shares as the Warrant or Warrants so surrendered
for exchange and
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<PAGE>
registered to such person or persons as may be designated by such Holder,
provided that the Holder delivers to the Company an opinion of counsel,
reasonably acceptable to the Company, that such exchange is permitted under the
Securities Act and applicable state securities law.
This Warrant may be divided upon presentation hereof at the
principal executive office of the Company, together with a written notice
specifying the names and denominations in which the new Warrant or Warrants are
to be issued, signed by the Holder hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with the preceding
paragraph of this Section 2.01 as to any transfer that may be involved in the
division, the Company shall execute and deliver a new Warrant or Warrants to be
divided in accordance with such notice.
The Company shall keep, at its principal executive office, a
register in which, subject to such reasonable regulations as it may prescribe,
it shall register or cause to be registered the Warrants and shall register or
cause to be registered the transfer of the Warrants as provided in this Section
2.01. Such register shall be in written form. Upon due presentment for
registration of transfer of any Warrants at such office, the Company shall
execute and register or cause to be registered and deliver in the name of the
transferee or transferees a new Warrant or Warrants for an equal aggregate
number of Shares.
The Company shall pay any tax or other governmental charge
that may be imposed in connection with any exchange of Warrants not involving a
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with a
transfer of Warrants.
2.02. Loss, Theft or Destruction of Warrant Certificates. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of the
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares.
2.03. Change of Principal Executive Office. In the event the
Company shall change the address of its principal executive office, the Company
shall give the Holder notice of any such change.
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ARTICLE III
ANTIDILUTION PROVISIONS
3.01 Adjustments Generally. The Exercise Price and the number
of Shares (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events as provided in this Article III.
3.02 Common Stock Reorganization. If the Company shall
subdivide its outstanding Common Stock into a greater number of shares or
consolidate its outstanding Common Stock into a smaller number of shares (any
such event being called a "Common Stock Reorganization"), then (a) the Exercise
Price shall be adjusted, effective immediately after the record date at which
the holders of Common Stock are determined for purposes of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such record
date before giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization, and (b) the number of
shares of Common Stock subject to purchase upon exercise of this Warrant shall
be adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares of Common Stock then outstanding after giving effect to such
Common Stock Reorganization and the denominator of which shall be the number of
shares of Common Stock outstanding immediately before such Common Stock
Reorganization.
3.03 Special Dividends. If the Company shall issue or
distribute to all or substantially all holders of Common Stock evidences of
indebtedness, any other securities of the Company, or any cash, property or
other assets, and if such issuance or distribution does not constitute a cash
dividend or distribution out of surplus or net profits legally available
therefor, or a Common Stock Reorganization (any such nonexcluded event being
herein called a "Special Dividend"), the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Special Dividend, to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the Closing Price per share on such record date less
the then fair market value (as reasonably determined in good faith by the Board
of
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<PAGE>
Directors of the Company) of the evidences of indebtedness, securities or
property or other assets issued or distributed in such Special Dividend with
respect to one share of Common Stock, and the denominator of which shall be the
Closing Price per share of Common Stock on such record date.
3.04 Capital Reorganizations. If there shall be any capital
reorganization or any reclassification of the capital stock of the Company or in
case of any consolidation or merger to which the Company is a party, other than
a consolidation or a merger in which the Company is a continuing corporation and
that does not result in any reclassification of, or change (other than a Common
Stock Reorganization or a change in par value) in, shares of outstanding Common
Stock, or any sale or conveyance of the property of the Company as an entirety
or substantially as an entirety (any such event being called a "Capital
Reorganization"), then effective upon the effective date of such Capital
Reorganization, the Holder shall have the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) that the Holder would have owned or have been entitled
to receive after such Capital Reorganization if this Warrant had been exercised
immediately prior to such Capital Reorganization. As a condition to effecting
any Capital Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to each Holder an
agreement as to the Holder's rights in accordance with this Section 3.04,
providing for subsequent adjustments as nearly equivalent as may be practicable
to the adjustments provided for in this Article III. The provisions of this
Section 3.04 shall similarly apply to successive Capital Reorganizations.
3.05. Certain Other Events. If any event occurs as to which
the foregoing provisions of this Article III are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the Exercise Price or decreasing the number of Shares subject to
purchase upon exercise of this Warrant.
3.06. Adjustment Rules. (a) Any adjustments pursuant to this
Article III shall be made successively whenever an event referred to therein
shall occur.
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<PAGE>
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this Article
III in respect of such action.
(c) All calculations under this Article III shall be made to
the nearest cent or to the nearest one hundredth (1/100th) of a share, as the
case may be. Notwithstanding any provision of this Article III to the contrary,
no adjustment in the Exercise Price shall be made if the amount of such
adjustment would be less than $0.05, but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $0.05 or more.
(d) In any case in which the provisions of this Article III
shall require that an adjustment become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event (i)
issuing to the holder of any Warrant exercised after such record date and before
the occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount of cash in
lieu of a fractional Common Share pursuant to Section 1.04; provided that the
Company upon request shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's rights to receive such
additional shares, and such cash, upon the occurrence of the event requiring
such adjustment.
The Company will not by amendment of its certificate of
incorporation or through reorganization, consolidation, merger, dissolution,
issue or sale of securities, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance or any of the terms of the
warrants but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of the Warrants against
dilution or other impairment.
3.07 Proceedings Prior to Any Action Requiring Adjustment. As
a condition precedent to the taking of any action that would require an
adjustment pursuant to this Article III, the Company shall take any action that
may be necessary in order that the Company may thereafter validly and legally
issue as fully paid and nonassessable
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all shares of Common Stock that the holders of Warrants are entitled to receive
upon exercise thereof.
3.08 Statement Regarding Adjustment. Upon the happening of any
event requiring an adjustment of the Exercise Price hereunder, the Company shall
forthwith give written notice thereof to the Holder, stating the adjusted
Exercise Price and the adjusted number of Shares resulting from such event and
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the
following respective meanings:
"Capital Reorganization" shall have the meaning set forth in
Section 3.04.
"Closing Price" on any day means (a) if shares of Common Stock
are listed or admitted for trading on a national securities exchange, the last
sales price reported or, if no such reported sale occurs on such day, the
average of the closing bid and asked prices on such day, in each case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, (b) if shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the closing sale price, or if no
such closing sale occurs on such day, the average of the closing bid and asked
prices in the over-the-counter market on such day as reported by Nasdaq or any
comparable system or, if not so reported, as reported by any New York Stock
Exchange member firm selected by the Company for such purpose or (c) if no such
quotations are available on such day, the fair market value of one share of
Common Stock on such day as determined in good faith by the Board of Directors
of the Company.
"Common Stock" shall have the meaning set forth in the first
paragraph of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth
in Section 3.02.
"Company" shall have the meaning set forth in the first
paragraph of this Warrant.
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"Eastern Time" means Eastern Daylight Time or Eastern Standard
Time, whichever is in effect on the relevant date.
"Exercise Price" means $0.8625 per Share, subject to
adjustment pursuant to Article III hereof.
"Expiration Time" means 5:00 p.m. Eastern Time on December 28,
2001.
"Holder" shall have the meaning set forth in the first
paragraph of this Warrant and "Holders" shall include any and all successors and
assigns of the initial Holder with respect to this Warrant.
"Nasdaq" means The National Association of Securities Dealers,
Inc. Automated Quotation System.
"Redemption Date" shall have the meaning set forth in Section
5.02 hereof.
"Redemption Price" shall have the meaning set forth in Section
5.01 hereof.
"Securities Act" means the Securities Act of 1933, as amended,
and any similar or successor Federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
"Target Price" shall have the meaning set forth in Section
5.01 hereof.
"Trading Day" means (a) if shares of Common Stock are listed
or admitted to trading on a national securities exchange, a day on which the
principal national securities exchange on which such shares are listed or
admitted to trading is open for business or (b) if such Common Shares are not so
listed or admitted to trading, a day on which any New York Stock Exchange member
firm is open for business.
"Warrant" and "Warrants" shall mean this warrant and any
warrants issued upon the partial exercise of this warrant.
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ARTICLE V
REDEMPTION AND CANCELLATION OF WARRANTS
5.01 Redemption of Warrants. The Warrants may be redeemed at
the option of the Company, as a whole at any time prior to the Expiration Time,
upon giving of the notice referred to in Section 5.02 hereof at the price of
$.01 per Warrant (the "Redemption Price"), provided that the Closing Price of
the Common Stock shall be at least $1.20 adjusted as provided in Section 5.05
below (the "Target Price"), on 20 trading days during any 30 consecutive day
trading period ending not more than three days prior to the date such notice is
given.
5.02 Notice. If the conditions set forth in Section 5.01 are
met, and the Company desires to exercise its right to redeem the Warrants, it
shall mail a notice of redemption to each Holder of the Warrants to be redeemed,
first class, postage prepaid, not later than the 30th day before the date fixed
for redemption (the "Redemption Date"), at such Holder's last known address. Any
notice mailed in the manner provided herein shall be conclusively presumed to
have been duly given whether or not the Holder receives such notice.
The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the Warrant is
to be delivered and the redemption price paid and (iv) that the right to
exercise the Warrant shall terminate at 5:00 P.M. Eastern Time on the business
day immediately preceding the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption except as to a Holder (a) to whom notice was
not mailed or (b) whose notice was defective. An affidavit of the Secretary of
the Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
5.03 Termination. Any right to exercise the Warrant shall
terminate at 5:00 P.M. Eastern Time on the business day immediately preceding
the Redemption Date. On and after the Redemption Date, Holders of the Warrants
shall have no further rights except to receive, upon surrender of the Warrant,
the Redemption Price.
5.04 Payment. From and after the Redemption Date specified,
the Company shall, at the place specified in the notice of redemption, upon
presentation and surrender to the Company by or on behalf of the Holder thereof
of one or more Warrants to be redeemed, deliver or cause to be delivered to or
upon the written order of such
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<PAGE>
Holder a sum in cash equal to the redemption price of each such Warrant. From
and after the Redemption Date and upon the deposit or setting aside by the
Company of a sum sufficient to redeem the Warrants when called for redemption,
such Warrants shall expire and become void and all rights hereunder, except the
right to receive payment of the Redemption Price, shall cease.
5.05 Adjustment of Target Price. If a Common Stock
Reorganization is to occur, the Target Price shall be adjusted at the same time
and in the same manner as the Exercise Price would be adjusted pursuant to
Section 3.02 hereof.
5.06 Cancellation of Warrants. The Company shall cancel any
Warrant surrendered for redemption, transfer, exchange or exercise.
ARTICLE VI
MISCELLANEOUS
6.01 Registration Rights. The Holder of this Warrant and any
transferee hereof is entitled to the benefit of such registration rights in
respect of the Shares as are set forth in Section 4 of the Purchase Agreement.
The Company covenants and agrees that any Shares that are registered pursuant to
the Purchase Agreement shall be listed on each national securities exchange, if
any, or quoted on any national quotation system on which the other shares of
Common Stock of the Company are then listed or quoted.
6.02 Notices. All notices, requests and other communications
provided for herein shall be in writing, and shall be deemed to have been made
or given when delivered or mailed, first class, postage prepaid, or sent by
Federal Express or similar receipted delivery or by facsimile delivery. Such
notices and communications shall be addressed:
(a) if to the Company, to
60 Charles Lindbergh Blvd.
Uniondale, New York 11553
Attention: Daniel M. Pess
(b) if to the Holder, to its address as shown on the
registry books maintained pursuant to Section 2.01;
or at such other address as the Holder may hereafter
specify for such purpose by notice to the Company.
6.03 Waivers; Amendments. No failure or delay of the Holder in
exercising any right, power or privilege, hereunder shall
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operate as a waiver thereof, nor shall any single or partial exercise thereof,
or any abandonment or discontinuance of steps to enforce such a right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies of the Holder are
cumulative and not exclusive of any rights or remedies which it would otherwise
have. The provisions of this Warrant may be amended, modified or waived if, but
only if, such amendment, modification or waiver is in writing and is signed by a
majority of the Holders; provided that no amendment, modification or waiver may
change the exercise price of (including without limitation any adjustments or
any provisions with respect to adjustments, the expiration of or the manner of
exercising the Warrants) or Expiration Time without the consent in writing of
all of the Holders.
6.04 Governing Law. This Warrant shall be construed in
accordance with and governed by the laws of the State of New York, except that
body of law relating to choice of laws.
6.05 Survival of Agreements; Representations and Warranties,
etc. All warranties, representations and covenants made by the Company herein or
in any certificate or other instrument delivered by or on behalf of it in
connection herewith shall be considered to have been relied upon by the Holders
and shall survive the issuance and delivery of the Warrants and the Shares
issued upon exercise of this Warrant, and shall continue in full force and
effect so long as this Warrant is outstanding. All statements in any such
certificate or other instrument shall constitute representations and warranties
hereunder.
6.06 Covenants to Bind Successor and Assigns. All the
covenants, stipulations, promises and agreements in this Warrant contained by or
on behalf of the Company shall bind its successors and assigns, whether or not
so expressed.
6.07 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired in such jurisdiction and shall not invalidate or render illegal or une
nforceable such provision in any other jurisdiction.
6.08 Headings. The headings used herein are for convenience of
reference only and shall not be deemed to be a part of this Warrant.
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6.09 No Rights as Stockholder. This Warrant shall not entitle
the Holder to any rights as a stockholder of the Company.
6.10 Pronouns. The pronouns "it" and "its" herein shall be
deemed to mean "he" and "his" or "she" and "hers", as the context requires.
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IN WITNESS WHEREOF, QueryObject Systems Corporation has caused
this Warrant to be executed in its corporate name by one of its officers
thereunto duly authorized as of the day and year first above written.
QUERYOBJECT SYSTEMS CORPORATION
By:____________________________
Name:
Title:
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STOCK OPTION AGREEMENT
AGREEMENT made as of this 26th day of May, 1999, by and between
QUERYOBJECT SYSTEMS CORPORATION ("Grantor") and SEABOARD SECURITIES, INC.
("Optionee").
W I T N E S S E T H:
WHEREAS, the Grantor is offering up to $3,000,000 principal amount of
units (the "Units"). each consisting of 100 shares of Series C Convertible
Preferred Stock, par value $.001 per share, of the Grantor and a Common Stock
Purchase Warrant to purchase 100,000 shares of Common Stock, par value $.001 per
share, of the Grantor in a private placement (the "Offerng") pursuant to a
Confidential Term Sheet of even date herewith (the "Term Sheet"); and
WHEREAS, Grantor and Optionee are parties to that certain Selling Agent
Agreement, of even date, whereby Grantor has appointed Optionee as its exclusive
selling agent to utilize its best efforts to solicit subscriptions for Units on
behalf of Grantor in connection with the Grantor's offering of the Units in the
Offering, and Optionee has accepted such appointment (the "Selling Agent
Agreement"; capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Selling Agent Agreement); and
WHEREAS, in partial consideration of Optionee's role as exclusive
selling agent, the Grantor desires to grant to the Optionee an option to
purchase a certain number of shares of Common Stock as more fully described
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings herein contained, IT IS AGREED by and among the
parties hereto as follows:
<PAGE>
1. Grant of Option. For the consideration referred to above, the
receipt and sufficiency of which is hereby acknowledged by Grantor, Grantor
hereby grants to the Optionee, and the Optionee hereby accepts from Grantor, an
option (the "Option") to purchase that number of shares (the "Option Shares") of
Common Stock as equals eight percent (8%) of the number of shares of Common
Stock issuable (as of the time the Option is exercised) upon conversion of those
shares of Series C Convertible Preferred Stock sold by the Optionee in the
Offerng; provided, however, that if the Optionee sells in excess of $1,500,000
purchase price of Units, the Optionee shall have the right to purchase that
number of shares of Common Stock as equals ten percent (10%) of the total number
of shares of Common Stock issuable upon conversion of all shares of Series C
Convertible Preferred Stock sold, whether by Seaboard or otherwise, in the
Offering.
2. Option Price and Payment Terms. The consideration payable by
Optionee to Grantor upon each exercise of the Option granted by this Agreement
shall be the Fair Market Value (as defined in the Term Sheet) per share of the
Common Stock (the "Option Exercise Price"). The Option Exercise Price shall be
payable in full in cash on the date of each exercise of the Option. Grantor
shall deliver to Optionee against payment therefor any Option Shares purchased
by Optionee.
3. Duration of Option. The Option shall have a term of two and one-half
years from the Initial Closing Date ("Option Term"). The Option may be
exercised, in whole or in part, at any time or from time to time after the date
hereof, until expiration of the Option Term.
4. Registration Rights. The Grantor shall register the Option Shares in
accordance with the terms and conditions of Section 4.1 of the Purchase
Agreement annexed as Exhibit D to the Term Sheet as though such Option Shares
were "Registrsable Securities" as defined therein and Optionee shall be entitled
to all the rights and benefits set forth in such Section 4.1 as are applicable
to the holders of Registrable Securities.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective on the day, month and year above written.
QUERYOBJECT SYSTEMS CORPORATION
"Grantor"
By: /s/ Daniel Pess
-----------------------------
Name: Daniel Pess
Title: Executive VP - Finance
SEABOARD SECURITIES, INC.
"Optionee"
By: /s/ Joseph Zappaca
-----------------------------
Name: Joseph Zappaca
Title: Vice President
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 19, 1999 relating to the
financial statements, which appears in QueryObject Systems Corporation's Annual
Report on Form 10-KSB/A for the year ended December 31, 1998. We also consent to
the reference to us under the headings "Experts" in such Registration Statement.
/s/ PriceWaterhouseCoopers LLP
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PriceWaterhouseCoopers LLP
Melville, New York
October 1, 1999
