<PAGE> 1
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
IQ SOFTWARE CORPORATION
GEORGIA 7372 58-1614492
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Code Number)
or organization)
3295 RIVER EXCHANGE DRIVE, SUITE 550
NORCROSS, GEORGIA 30092
(404) 446-8880
(Address, Including Zip Code, and Telephone Number,
Including Area Code of Registrant's
Principal Executive Offices)
UGO F. IPPOLITO, ESQ.
GLASS, MCCULLOUGH, SHERRILL & HARROLD
1409 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 885-1500
(Address, Including Zip Code, and Telephone Number,
Including Area Code of Agent For Service)
______________
____________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
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 a continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest plans, check the following box. [x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES NUMBER OF SHARES OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON 118,083 $17.50 $2,066,452.50 $712.57
STOCK............
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 3
IQ SOFTWARE CORPORATION
CROSS REFERENCE SHEET PURSUANT TO RULE 404
<TABLE>
<CAPTION>
FORM S-3
ITEM NUMBER AND CAPTION PROSPECTUS CAPTION
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<S><C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus . . . . . . . . . . . . . . . Facing Page; Cross-Reference Sheet; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . Risk Factor
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . Plan of Distribution
6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . The Selling Shareholders
8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . Plan of Distribution
9. Description of Securities to be Registered . . . . . . . . . . . . . . . Not Applicable
10. Interests of Named Experts and Counsel . . . . . . . . . . . . . . . . . Legal Matters
11. Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
12. Incorporation of Certain Information by Reference . . . . . . . . . . . Available Information; Incorporation of
Certain Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities . . . . . . . . . . . Plan of Distribution
</TABLE>
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED JULY 11, 1996
PROSPECTUS
IQ SOFTWARE CORPORATION
118,083 SHARES COMMON STOCK
($0.0001/3 PAR VALUE)
The 118,083 shares ("Shares") of Common Stock, $0.000 1/3 par value
("Common Stock"), of IQ Software Corporation ("Company") offered hereby are
being offered for the account of 3i Group, plc, David A. Cormack, and Martyn
Adams, shareholders of the Company (individually "Selling Shareholder" and
collectively "Selling Shareholders"). The Company will not receive any proceeds
of the sale of the Shares. See "Selling Shareholders."
The Selling Shareholders, directly, or through agents, broker-dealers
or underwriters designated from time to time, may sell the Shares from time to
time on terms to be determined at the time of sale. The Selling Shareholders
reserve the sole right to accept or reject, in whole or in part, any proposed
purchase of the Shares to be made directly or through agents. The Company has
agreed to bear all expenses (other than commissions, underwriting discounts or
brokerage fees and fees and expenses for any counsel, accountants or other
experts of the Selling Shareholders) in connection with the registration and
sale of the Shares. See "Plan of Distribution."
The Common Stock of the Company is included in the NASDAQ National
Market System under the trading symbol "IQSW." On July 5, 1996, the closing
sale price of the Common Stock as reported on the NASDAQ National Market System
was $17.50 per share.
The Selling Shareholders, and any agents or broker-dealers that
participate with the Selling Shareholders in the distribution of the Shares,
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions received by them
and any profit on their resale of the Shares may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
herein for indemnification arrangements among the Company and the Selling
Shareholders.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
_____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_____________
The date of this Prospectus is July ___, 1996.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Incorporation of Certain Documents By Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can
be inspected and copied at the office of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at its Regional Offices located at 7
World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400, 500
West Madison Street, Chicago, Illinois 60661, and copies of such materials can
be obtained from the Public Reference Section of the Commission, at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
included in the NASDAQ National Market System and reports, proxy statements and
other information concerning the Company can also be inspected at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement as permitted by the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and related exhibits for
further information with respect to the Company and the securities offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with
the Commission and are hereby incorporated by reference in this Prospectus as
of their respective dates:
(a) Annual Report on Form 10-K for the fiscal year ended January
31, 1996;
(b) Quarterly Report on Form 10-Q for the quarter ended April 30,
1996; and
(c) The description of Common Stock in the Company's Registration
Statement on Form 8-A filed on April 16, 1992, and any
amendments or reports filed for the purpose of amending such
description.
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus
<PAGE> 7
and prior to the termination of the offering of the securities made hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statements
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide, upon request, without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference (other than certain exhibits to such documents
which are not specifically incorporated by reference in such documents).
Requests for such copies should be directed to: J. Kent Elmer, Controller, IQ
Software Corporation, 3295 River Exchange Drive, Suite 550, Norcross, Georgia
30092, (404) 446-8880.
_____________
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS
IN CONNECTION WITH THE OFFER MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THIS DATE.
_____________
THE COMPANY
The Company designs, develops, markets and supports a family of
business intelligence software products for data access, analysis and reporting
designed to facilitate decision support. The Company has licensed
approximately 500,000 copies of its software products. The Company has five
principal software products that can be licensed separately or in combination.
Its principal products, IQ/Objects and Intelligent Query (collectively "IQ")
are end user query and reporting tools that allows users to access data stored
in relational databases, data warehouses, and many legacy and non-relational
database file systems. The Company's principal customers include (i) vertical
market application software developers who integrate the Company's software
into their products for license to end users; (ii) large corporate customers;
and (iii) federal, state and
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<PAGE> 8
local governments.
The Company's executive offices are located at 3295 River Exchange
Drive, Suite 550, Norcross, Georgia 30092 and its telephone number is
770-446-8880. As used in this Prospectus, the term Company refers to IQ
Software Corporation and its subsidiaries, unless the context otherwise
requires.
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating the Company
and its business before purchasing shares of Common Stock offered hereby.
DEPENDENCE ON PRINCIPAL TECHNOLOGY AND PRODUCT LINE
The Company's revenues are derived principally from its IQ family of
products and related maintenance and support services. The Company's
dependence on a principal technology and a limited product line make it more
vulnerable to technological, marketing and other competitive factors than other
software companies with more diversified technologies or product lines.
Competitive pressures or other factors that might cause the Company to lose
market acceptance or result in significant price erosion would have a material
adverse effect on the Company's performance.
QUARTERLY FLUCTUATIONS OF OPERATING RESULTS
The operating results for future periods are subject to numerous
uncertainties and there can be no assurance that the Company will be able to
operate profitably in the future.
The Company operates without any backlog of product orders and a
majority of the revenues realized in a quarter results from orders received in
that quarter. The Company's quarterly results may also be affected by factors
such as customer order deferrals in anticipation of the introduction of new
products by the Company, the possible delay in the shipment of new products and
announcements by third parties of competitive products or technologies.
The Company typically realizes a larger percentage of its revenues in
the fourth quarter of each fiscal year. In addition, a disproportionate share
of each quarter's revenues is typically realized in the last month of the
quarter. This is due in part to the Company's sales commission plan, which
compensates sales personnel for achieving or exceeding quarterly and annual
quotas. Additionally, a high percentage of the Company's expenses are
relatively fixed, including costs of personnel, and are not susceptible to
rapid reduction. Therefore, delays in closing significant product licensing
transactions at or near the end of a quarter may cause net income for any given
quarter to fall significantly below anticipated levels.
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COMPETITION
The computer software industry is highly competitive. In addition to
price competition, the Company believes that functionality, performance, ease
of use, environments supported and customer services are primary competitive
factors. Some of the Company's existing competitors, as well as potential
competitors, have larger technical staffs, more established and larger
marketing and sales organizations and greater financial resources than the
Company.
The Company faces direct competition from a number of companies.
Direct competitors of the Company consist of companies that focus on and market
business intelligence software. The Company's principal competitors are Cognos
(Impromptu and PowerPlay), Business Objects, Inc. (Business Objects) and
Seagate Software (Crystal Reports). In addition, a number of other companies
offer products which are competitive to a lesser degree. The Company faces
indirect competition from developers of RDBMS and 4-GL products which offer
ancillary development tools capable of producing reports with their software.
These products are targeted principally at the professional programmer and
often fail to fully address the report writing needs of end users. Also, OEM
software developers who integrate the Company's software with their products
may develop their own data retrieval tools and report writers as a replacement
to the Company's products. There can be no assurance that competitors or OEM
customers will not develop products that are superior to the Company's products
or that achieve greater market acceptance than the Company's products.
TECHNOLOGICAL CHANGE AND NEW PRODUCT INTRODUCTION
The computer software industry is characterized by rapid technological
change and frequent introductions of product enhancements and new products.
Accordingly, the Company's future success will depend in large part on its
ability to enhance its existing products and to develop or acquire new products
which achieve significant market acceptance. The Company's growth requires it
to invest continually in research, development, and possibly the acquisition of
new products in varying stages of development. Additional products and new
versions of existing products that the Company plans to market in the future
are in various stages of development. There can be no assurance that the
Company will be able to continue to achieve the technological advances which
may be necessary to remain competitive or that enhancements to existing
products or the acquisition of new products will gain market acceptance.
DEPENDENCE ON KEY PERSONNEL; RAPID GROWTH OF COMPANY
The success of the Company is dependent in large part on certain key
personnel, particularly Charles R. Chitty, its President and Chief Executive
Officer. The Company does not have written employment agreements with any key
personnel, with the exception of David A. Cormack, Senior Vice President of
Sales ("Mr. Cormack"). The Company maintains keyman life insurance on Mr.
Chitty in the amount of $500,000. The loss of one or more key personnel could
have a material adverse effect on the Company.
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<PAGE> 10
The Company is experiencing rapid growth in its staff. A significant
training period of six to nine months is required before new sales, support,
professional services and development personnel can become fully productive.
If the Company's sales force and other new employees are unable to achieve
expected performance levels or if the Company experiences substantial turnover
in personnel, the Company's future operating results and rate of growth could
be materially adversely affected. There can be no assurance that the
management skills that have been appropriate for the Company in the past will
continue to be appropriate if the Company continues to grow.
INTERNATIONAL SALES
The percentage of the Company's revenues (approximately 29% in fiscal
1996 and 31% in fiscal 1995) is derived from international sales and is
therefore subject to risks attendant thereto. International sales are
principally conducted out of the U.S. headquarters and through the Company's
subsidiary in the United Kingdom. The Company's international business has
longer payment cycles, experiences greater difficulties in accounts receivable
collection and is subject to delays in shipments, increases in duties and
taxes, price controls, adverse changes in foreign regulations and the burden of
complying with a wide variety of foreign laws. Although approximately twenty
eight percent (28%) of revenues generated outside of the United States are paid
in U.S. dollars, the balance of international revenues are generated in foreign
currencies. If the U.S. dollar strengthens in relation to the international
currencies, the Company's revenues from international sales and the gains and
losses on the settlement of receivables of the Company from international
subsidiaries may be adversely affected.
PROPRIETARY RIGHTS
The Company regards it software programs as proprietary. The Company
enters into written license agreements with its customers which limit the use
and copying of its software. "Shrink Wrap" licenses are used in connection
with certain end user sales. The Company relies principally on copyright and
trade secret law to protect its proprietary property. Each employee of the
Company is required to enter into an agreement providing for the non-disclosure
of proprietary property and the assignment to the Company of all proprietary
property developed during the term of employment. There can be no assurances
that the steps taken by the Company to protect its proprietary property will be
adequate to prevent misappropriation or unlawful copying of its technology or
software programs. Copyright and trade secret laws do not limit the rights of
others to independently develop similar technology and software programs. In
addition, the laws of some foreign countries do not protect the Company's
proprietary property rights in its software to the same extent as do the laws
of the United States. Furthermore, "Shrink Wrap" licenses may not be
enforceable in all jurisdictions. Although the Company believes that its
software products do not infringe on any existing proprietary rights of others,
there can be no assurances that third parties will not assert infringement
claims in the future.
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ANTI-TAKEOVER MATTERS
The Company's Articles and Bylaws contain certain provisions that
could have the effect of delaying, deferring or preventing a change in control
of the Company. The Board of Directors is authorized to issue one or more
series of Preferred Stock with respect to which the Board, without shareholder
approval, may determine voting, conversion or other rights which could
adversely affect the rights of holders of Common Stock. Only shareholders
holding 25% of the outstanding Common Stock have the power to call a special
meeting. The affirmative vote of at least two-thirds of the outstanding voting
stock is necessary for shareholders to approve a merger or sale of all or
substantially all of the assets and to amend certain provisions of the Articles
of Incorporation and the Bylaws of the Company. Directors of the Company are
divided into three classes and are elected to serve staggered three-year terms.
Under the Bylaws, directors serving staggered terms can be removed from office
only for cause and upon an affirmative vote of at least two-thirds of the
outstanding Common Stock. One effect of the foregoing provisions would be to
make an acquisition of the Company significantly more difficult to achieve if
not approved by the Board of Directors, even though a majority of shareholders
may favor such action. Potential acquirors may be deterred due to the
anti-takeover provisions implemented by the Company and under Georgia law. The
Company has no present intention to adopt any other charter, bylaw or other
provisions which could have an anti-takeover effect.
POSSIBLE VOLATILITY OF SHARE PRICE
The Company believes factors, such as announcements of new products by
the Company or its competitors, market conditions in the computer software and
hardware industries generally and quarterly fluctuations in financial results,
could cause the market price of the Common Stock to vary substantially.
Moreover, sales of substantial amounts of Common Stock in the public market
after the offering made hereby could adversely effect the market price of the
Common Stock. The stock market has historically experienced price and volume
fluctuations, which have particularly affected the market prices for many high
technology companies and which, sometimes, have been unrelated to the operating
performance of such companies. Market volatility may adversely affect the
market price of the Company's Common Stock.
COMMON STOCK ELIGIBLE FOR FUTURE SALE
In addition to the 118,083 Shares of Common Stock offered hereby, upon
completion of this offering, a total of 130,000 Shares owned by the Selling
Shareholders will be Restricted Shares within the meaning of Rule 144
promulgated under the Securities Act, none of which are immediately available
for sale in the public market pursuant to Rule 144 absent the filing of a
registration statement covering those shares. Sales of substantial amounts of
Common Stock in the public market following the offering could adversely affect
the market price of the Company's Common Stock.
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<PAGE> 12
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. All of the proceeds from the sale of the Shares offered
hereby will be received by the Selling Shareholders.
THE SELLING SHAREHOLDERS
All of the Shares offered hereby are beneficially owned by the Selling
Shareholders and were acquired by the Selling Shareholders in connection with
the Company's acquisition of Soft Systems, Limited ("Soft Systems") by
agreement dated September 29, 1995. The acquisition of Soft Systems resulted
in the purchase by the Company of all of the issued and outstanding share
capital of Soft Systems from the Selling Shareholders and others, pursuant to a
certain Agreement Between The Shareholders of Soft Systems, Limited and IQ
Software Corporation ("Agreement"). As part of the consideration for the sale
of their share capital in Soft Systems, the Selling Shareholders received
unregistered Common Stock issued by the Company to them in the following
amounts:
<TABLE>
<CAPTION>
Shares Subject to
Total Shares Owned Registration
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<S> <C> <C>
David A. Cormack 180,000 50,000
Martyn Adams 14,328 14,328
3i Group, plc 53,755 53,755
</TABLE>
With the exception of Mr. Cormack, who desires to register for resale only
50,000 Shares of Common Stock, the remaining Selling Shareholders desire to
register for resale all Common Stock beneficially held by them. Since the
Selling Shareholders may sell all, or some or none of the Shares, no estimate
can be made of the aggregate number of Shares that are to be offered hereby or
that will be beneficially owned by each Selling Shareholder upon completion of
the offering contemplated by this Prospectus.
Pursuant to the Agreement, the Selling Shareholders received certain
registration rights covering the Shares of unregistered Common Stock received
in the Soft System acquisition ("Registration Rights"). In addition, Selling
Shareholder Mr. Cormack entered into a three-year employment agreement with the
Company, which commenced October 1, 1995, and which provides for an annual base
salary of $155,000 per year. Mr. Cormack is eligible for annual bonuses
subject to meeting mutually agreed upon business targets. Mr. Cormack's
employment contract includes payment of relocation expenses. He now serves as
the Senior Vice President of Sales for the Company and is an executive officer
of the Company and may be an affiliate of the Company as defined in Rule 144
under the Securities Act.
Selling Shareholder 3i Group, plc ("3i") is a United Kingdom-based
venture capital firm
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<PAGE> 13
listed on the London Stock Exchange and a leading specialist investor in United
Kingdom-based privately-held companies. 3i purchased certain share capital of
Soft Systems in April, 1995. On September 29, 1995, 3i received US $382,500 in
cash and 53,755 shares of unregistered Common Stock of the Company pursuant to
the Agreement for its ordinary shares of Soft Systems and L.240,000 for its
Preference Shares of Soft Systems.
Selling Shareholder, Martyn Adams ("Mr. Adams") was likewise a
shareholder in Soft Systems when it was acquired by the Company. In exchange
for all of his ordinary shares of Soft Systems, Mr. Adams received US $51,000
and 14,328 shares of unregistered Common Stock. Except as described herein and
above, the Selling Shareholders have no other material relationship with the
Company.
Pursuant to the Agreement, and the provisions contained therein with
respect to the Registration Rights, the Company has caused this Registration
Statement to be filed covering the Shares. Pursuant to the Registration
Rights, the Company upon receipt of a request by a Selling Shareholder, will
use all commercially reasonable efforts to effect the registration of the
Shares on March 31, 1996 or as soon as practicable thereafter. Notwithstanding
the foregoing, the Company has no obligation to effect a registration of the
Shares unless such Shares qualify for registration on Form S-3 and such Shares
cannot be sold in a brokerage transaction under Rule 144 promulgated under the
Securities Act. The Selling Shareholders, upon request by the Company, are
prohibited from a public sale of any of the Shares during a 30 day period
immediately prior to and during the 90 day period beginning on the effective
date of any underwritten public offering of securities conducted by the
Company, except to the extent the Shares are sold in connection with the
Company's offering. This limitation does not preclude the Selling Shareholders
from effecting sales of the Shares pursuant to Rule 144 or Section 4(2) of the
Securities Act, if available. The Registration Rights also require the Company
to keep the Registration Statement covering the Shares effective and current as
may be necessary to reflect the method of disposition of the Shares, but in no
event for more than six (6) months after the effective date thereof. The
Company has agreed to pay all registration and filing fees, reproduction costs
and fees and disbursements of counsel and accountants and listing fees
associated with registration of the Shares. The Selling Shareholders are
obligated to pay all underwriting discounts and selling commissions
attributable to the Shares.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders
on the NASDAQ National Market System or any national securities exchange or
automated interdealer quotation system on which shares of Common Stock are then
listed, through negotiated transactions or otherwise at prices and on terms
then prevailing or at prices related to the then current market price or at
negotiated prices. The Selling Shareholders may effect sales of the Shares
directly or by or through agents, brokers, dealers or underwriters and the
Shares may be sold by one or more of the following methods: (a) an
underwritten public offering; (b) in ordinary brokerage
-8-
<PAGE> 14
transactions; (c) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this Prospectus; (d) in "block"
sales; (e) through the writing of options on the Shares; and (f) through
transactions negotiated directly with purchasers. At the time a particular
offer is made, a Supplemental Prospectus, if required, will be distributed that
sets forth the name or names of any agents, broker-dealers or underwriters, any
commissions and other terms constituting compensation and any other required
information. Any such Supplemental Prospectus will be filed by the Company
with the Commission pursuant to Rule 424(c) under the Securities Act. In
effecting sales, broker-dealers engaged by the Selling Shareholders and/or the
purchasers of the Shares may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions, concessions or discounts from the
Selling Shareholders and/or the purchasers of the Shares in amounts to be
negotiated immediately prior to the sale. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Shareholders and any broker-dealer who acts in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any compensation
received by them and any profit on any resale of the Shares as principals might
be deemed to be underwriting discounts and commissions under the Securities
Act.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the Shares may not be sold unless
they have been registered or qualified for sale in such states or an exemption
from such registration or qualification requirement is available and is
complied with.
Pursuant to the Registration Rights between the Company and the
Selling Shareholders, the Company has filed the Registration Statement, of
which this Prospectus forms a part, with respect to the sale of the Shares.
The Company has agreed to use its reasonable efforts to keep the Registration
Statement continuously effective until the earlier of (i) the date on which all
the Shares have been sold pursuant thereto and (ii) six (6) months from the
date the Registration Statement becomes effective.
Pursuant to the Registration Rights, the Company and the Selling
Shareholders have agreed to enter into agreements to indemnify each other and
certain other parties, including underwriters, if any, for certain liabilities,
including liabilities under the Securities Act, in connection with the
registration of the Shares.
LEGAL MATTERS
The legality of the Shares offered hereby is being passed upon for the
Company by Glass, McCullough, Sherrill & Harrold, 1409 Peachtree Street, N.E.,
Atlanta, Georgia 30309. Ugo F. Ippolito, a director and Secretary of the
Company, is a partner of such firm. As of July 1, 1996, Mr. Ippolito
beneficially owned 28,261 Shares of Common Stock.
-9-
<PAGE> 15
EXPERTS
The consolidated financial statements of the Company appearing in IQ
Software Corporation's Annual Report (Form 10-K) for the fiscal year ended
January 31, 1996, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
-10-
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid in connection with the issuance and
distribution of the securities being registered, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . $ 713
Legal Fees and Expenses - estimated . . . . . . . $5,000
Miscellaneous - estimated . . . . . . . . . . . . $2,500
------
Total . . . . . . . . . . . . . . . . . $8,213
======
</TABLE>
All of the above items are estimates except the SEC Registration Fee. All of
such estimated expenses will be borne by the Company. Underwriting discounts
and selling commissions attributable to the Shares are to be paid by the
Selling Shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification of directors and officers of the Company is governed by
Sections 14-2-850 through 859 of the Official Code of Georgia as follows:
Section 14-2-850. PART DEFINITIONS.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation,
is or was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise. A director is considered to be serving an
employee benefit plan at the corporation's request if his duties to
the corporation also impose duties on, or otherwise involve services
by, him to the plan or to participants in or beneficiaries of the
plan. Director includes, unless the context requires otherwise, the
estate or personal representative of a director.
(3) "Expenses" include attorney's fees.
(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine
II-1
<PAGE> 17
(including an excise tax assessed with respect to an employee benefit
plan), or reasonable expenses incurred with respect to a proceeding.
(5) "Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal.
Section 14-2-851. AUTHORITY TO INDEMNIFY.
(a) Except as provided in subsections (d) and (e) of this Code
section, a corporation may indemnify or obligate itself to indemnify
an individual made a party to a proceeding because he is or was a
director against liability incurred in the proceeding if he acted in a
manner he believed in good faith to be in or not opposed to the best
interests of the corporation and, in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was
unlawful.
(b) A director's conduct with respect to an employee benefit plan
for a purpose he believed in good faith to be in the interests of the
participants in and beneficiaries of the plan is conduct that
satisfies the requirement of subsection (a) of this Code section.
(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not
meet the standard of conduct set forth in subsection (a) of this Code
section.
(d) A corporation may not indemnify a director
under this Code section:
(1) In connection with a proceeding by or
in the right of the corporation in which the director
was adjudged liable to the corporation; or
(2) In connection with any other
proceeding in which he was adjudged liable on the
basis that personal benefit was improperly received by
him.
(e) Indemnification permitted under this Code
section in connection with a proceeding by or in the right of
the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
II-2
<PAGE> 18
Section 14-2-852. MANDATORY INDEMNIFICATION.
Unless limited by its articles of incorporation, to
the extent that a director has been successful, on the merits
or otherwise, in the defense of any proceeding to which he was
a party, or in defense of any claim, issue, or matter therein,
because he is or was a director of the corporation, the
corporation shall indemnify the director against reasonable
expenses incurred by him in connection therewith.
Section 14-2-853. ADVANCE FOR EXPENSES.
(a) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding
if:
(1) The director furnishes the
corporation a written affirmation of his good faith
belief that he has met the standard of conduct set
forth in subsection (a) of Code Section 14-2-851; and
(2) The director furnishes the
corporation a written undertaking, executed personally
or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to
indemnification under this part.
(b) The undertaking required by paragraph (2) of
subsection (a) of this Code section must be an unlimited
general obligation of the director but need not be secured and
may be accepted without reference to financial ability to make
repayment.
Section 14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCE FOR
EXPENSES.
Unless a corporation's articles of incorporation provide
otherwise, a director of the corporation who is a party to a
proceeding may apply for indemnification or advances for
expenses to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application,
the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it
determines:
(1) The director is entitled to mandatory
indemnification under Code Section 14-2-852, in which
case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain
court ordered indemnification;
(2) The director is fairly and reasonably
entitled to
II-3
<PAGE> 19
indemnification in view of all the relevant
circumstances, whether or not he met the standard of
conduct set forth in subsection (a) of Code Section
14-2-851 or was adjudged liable as described in
subsection (d) of Code Section 14-2-851, but if he was
adjudged so liable his indemnification is limited to
reasonable expenses incurred unless the articles of
incorporation or a bylaw, contract, or resolution
approved or ratified by the shareholders pursuant to
Code Section 14-2-856 provides otherwise; or
(3) In the case of advances for expenses,
the director is entitled, pursuant to the articles of
incorporation, bylaws, or any applicable resolution or
agreement, to payment or reimbursement of his
reasonable expenses incurred as a party to a
proceeding in advance of final disposition of the
proceeding.
Section 14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director
under Code Section 14-2-851 unless authorized thereunder and a
determination has been made in the specific case that
indemnification of the director is permissible in the
circumstances because he has met the standard of conduct set
forth in subsection (a) of Code Section 14-2-851.
(b) The determination shall be made:
(1) By the board of directors by majority
vote of a quorum consisting of directors not at the
time parties to the proceeding;
(2) If a quorum cannot be obtained under
paragraph (1) of this subsection, by majority vote of
a committee duly designated by the board of directors
(in which designation directors who are parties may
participate), consisting solely of two or more
directors not at the time parties to the proceeding;
(3) By special legal counsel:
(A) Selected by the board of
directors or its committee in the manner
prescribed in paragraph (1) or (2) of this
subsection; or
(B) If a quorum of the board of
directors cannot be obtained under paragraph
(1) of this subsection and a committee cannot
be designated under paragraph (2) of this
subsection, selected by majority vote of the
full board of directors (in which selection
directors who are parties may participate);
or
II-4
<PAGE> 20
(4) By the shareholders, but shares owned
by or voted under the control of directors who are at
the time parties to the proceeding may not be voted on
the determination.
(c) Authorization of indemnification or an
obligation to indemnify and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization
of indemnification and evaluation as to reasonableness of
expenses shall be made by those entitled under paragraph (3) of
subsection (b) of this Code section to select counsel.
Section 14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.
(a) If authorized by the articles of
incorporation or a bylaw, contract, or resolution approved or
ratified by the shareholders by a majority of the votes
entitled to be cast, a corporation may indemnify or obligate
itself to indemnify a director made a party to a proceeding
including a proceeding brought by or in the right of the
corporation, without regard to the limitations in other Code
sections of this part.
(b) The corporation shall not indemnify a
director under this Code section for any liability incurred in
a proceeding in which the director is adjudged liable to the
corporation or is subjected to injunctive relief in favor of
the corporation:
(1) For any appropriation, in violation
of his duties, of any business opportunity of the
corporation;
(2) For acts or omissions which involve
intentional misconduct or a knowing violation of law;
(3) For the types of liability set forth
in Code Section 14-2-832; or
(4) For any transaction from which he
received an improper personal benefit.
(c) Where approved or authorized in the manner
described in subsection (a) of this Code section, a corporation
may advance or reimburse expenses incurred in advance of final
disposition of the proceeding only if:
(1) The director furnishes the
corporation a written affirmation of his good faith
belief that his conduct does not constitute behavior
of the
II-5
<PAGE> 21
kind described in subsection (b) of this Code section;
and
(2) The director furnishes the corporation
a written undertaking, executed personally or on his
behalf, to repay any advances if it is ultimately
determined that he is not entitled to indemnification
under this Code section.
Section 14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.
Unless a corporation's articles of incorporation
provide otherwise:
(1) An officer of the corporation who is
not a director is entitled to mandatory indemnification
under Code Section 14-2-852 and is entitled to apply
for court order indemnification under Code Section
14-2-854, in each case to the same extent as a
director; and
(2) A corporation may also indemnify and
advance expenses to an officer, employee, or agent who
is not a director to the extent, consistent with public
policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of
its board of directors, or contract.
Section 14-2-858. INSURANCE.
A corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer,
employee, or agent of the corporation or who, while a director,
officer, employee, or agent of the corporation, is or was
serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise against
liability asserted against or incurred by him in that capacity
or arising from his status as a director, officer, employee, or
agent, whether or not the corporation would have power to
indemnify him against the same liability under Code Section
14-2-851 or Code Section 14-2-852.
Section 14-2-859. APPLICATION OF PART.
(a) A provision treating a corporation's
indemnification of or advance for expenses to directors that is
contained in its articles of incorporation, bylaws, a
resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the
provision is consistent with this part. If articles of
incorporation limit indemnification or advance for expenses,
indemnification and advance for expenses are valid only to the
extent consistent with the articles.
II-6
<PAGE> 22
(b) This part does not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with his appearance as a witness in a proceeding at
a time when he has not been made a named defendant or
respondent to the proceeding.
The Bylaws of the Company provide that each director of the Company
and each person who has acted at its request, in any capacity, on behalf of the
Company, including as a director, officer, employee or agent of another
corporation, joint venture, trust or other enterprise, who was or is a party or
who is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (civil, criminal, administrative or investigative)
by reason of the fact that such person was serving in any such capacity, shall
be indemnified by the Company to the fullest extent permitted by the laws of
the State of Georgia. The Company may purchase indemnification insurance on
behalf of such persons against liability which may be asserted against them in
any such capacity regardless of whether the Company would have the power to
indemnify such persons against the liability asserted against them. Expenses
incurred in defending a civil or criminal action, suit or proceeding may be
paid by the Company in advance of the final disposition of such action, suit or
proceeding in the specific case upon authorization as required by the laws of
the State of Georgia.
The Articles further provide that the Company shall indemnify a
director made a party to a proceeding against liability incurred in the
proceeding, and shall advance and reimburse expenses incurred in the
proceeding, including a proceeding brought by or in the right of the Company,
without regard to limitations contained elsewhere under Georgia law; provided,
however, that the Company shall not indemnify a director for any liability
incurred in a proceeding in which the director is adjudged liable to the
Company or is subjected to injunctive relief in favor of the Company:
(i) For any appropriation, in violation of
his/her duties, of any business opportunity of the Company;
(ii) For acts or omissions which involve
intentional misconduct or a knowing violation of law;
(iii) For liability resulting from distributions of
assets in violation of Georgia law; or
(iv) For any transaction from which he/she received
an improper personal benefit.
II-7
<PAGE> 23
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
4.1 Agreement between the Shareholders of Soft Systems, Limited and IQ Software Corporation dated September
29, 1995 incorporated by references to the Report on Form 8K dated September 29, 1995, Exhibit 2.2.
5.1 Opinion of counsel.
23.1 Consent of Glass, McCullough, Sherrill & Harrold (contained in Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Powers of Attorney (see page II-10).
</TABLE>
ITEM 17. UNDERTAKINGS.
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration;
(b) 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;
(c) 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;
(d) 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.
2. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933 (the "1933 Act"),
each filing of the Registrant's Annual Report pursuant to Section 13(a) or
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 herein, and the offering of such
securities at that time
II-8
<PAGE> 24
shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
1933 Act 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 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
II-9
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Norcross, State of Georgia, on the 11th day of
July, 1996.
IQ SOFTWARE CORPORATION
By: /s/ Charles R. Chitty
-----------------------------------
Charles R. Chitty
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of IQ Software Corporation
do hereby constitute and appoint J. Kent Elmer and Ugo F. Ippolito and each and
any one of them, our true and lawful attorneys-in-fact and agents, to do any
and all acts and things in our names and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
name in the capacities indicated below, which said attorneys and agents, or any
of them, may deem necessary or advisable to enable the Company to comply with
the Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any
and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on July 11, 1996:
/s/ J. William Goodhew, III
- ----------------------------------
J. William Goodhew, III, Director /s/ Charles R. Chitty
-------------------------------------
/s/ Richard L. Jackson Charles R. Chitty, Chairman of the
- ---------------------------------- Board, President and Chief Executive
Richard L. Jackson, Director Officer (Principal Executive Officer)
/s/ J. Leland Strange /s/ J. Kent Elmer
- ---------------------------------- --------------------------------------
J. Leland Strange, Director J. Kent Elmer, Controller (Principal
Financial and Accounting Officer)
/s/ Ugo F. Ippolito
- ----------------------------------
Ugo F. Ippolito, Director
II-10
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
4.1 Agreement between the Shareholders of Soft Systems, Limited and
IQ Software Corporation dated September 29, 1995, incorporated
by reference to the Report on Form 8K dated September 29, 1995,
Exhibit 2.2.
5.1 Opinion of counsel.
23.1 Consent of Glass, McCullough, Sherrill & Harrold (contained in
Exhibit 5.1).
23.2 Consent of Independent Auditors.
24.1 Powers of Attorney (see page II-10).
</TABLE>
II-11
<PAGE> 1
EXHIBIT 5.1
July 11, 1996
IQ Software Corporation
3295 River Exchange Drive
Suite 550
Norcross, Georgia 30092
Gentlemen:
We have acted as counsel to IQ Software Corporation ("Company") in
connection with the proposed offering and sale by the 3i Group, plc, David A.
Cormack and Martyn Adams (collectively "Selling Shareholder"), of not more than
118,083 shares ("Shares") of the Company's common stock, par value $.0001/3 per
share ("Common Stock").
In the capacity described above, we have examined originals (or copies
certified or otherwise identified to our satisfaction) of the Company's
Registration Statement on Form S-3 ("Registration Statement"), the form of
Common Stock certificate, the Certificate of Incorporation and Bylaws of the
Company as in effect on the date hereof, the Agreement between the Shareholders
of Soft Systems, Limited (including the Selling Shareholder) and the Company
dated September 29, 1995 pursuant to which the Selling Shareholder acquired the
Shares and were granted registration rights, corporate and other documents,
records and papers, certificates of public officials and certificates of
officers of the Company. In such examination we have also assumed the
genuineness of all documents submitted to us and the genuineness and conformity
to original documents of documents submitted to us as certified or photostatic
copies.
On the basis of such examination, it is our opinion that the Shares
are duly and validly issued and outstanding, fully paid and non-assessable
shares of Common Stock of the Company.
We are members of the Bar of the State of Georgia. In expressing the
opinions set forth above, we are not passing on the laws of any jurisdiction
other than the laws of the State of Georgia and the Federal law of the United
States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the related prospectus.
Very truly yours,
/s/ GLASS, McCULLOUGH, SHERRILL & HARROLD
<PAGE> 1
EXHIBIT 23.2 - CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of IQ Software
Corporation for the registration of 118,083 shares of its common stock and to
the incorporation by reference therein of our report dated March 1, 1996
(except for the second paragraph of Note 4 as to which the date is April 18,
1996), with respect to the consolidated financial statements and schedule of IQ
Software Corporation included in its Annual Report (Form 10-K) for the year
ended January 31, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
July 9, 1996
