EXHIBIT 10(l)(10)
FIRST AMENDMENT
TO
CONVERTIBLE LOAN AGREEMENTS
This First Amendment ("Amendment") to Convertible Loan Agreements, dated
as of June 28, 2001, is made as of this 30th day of March, 2002, by and among
Cover-All Technologies Inc., a Delaware corporation (the "Company"), Renaissance
US Growth & Income Trust PLC, a public limited company registered in England and
Wales ("Renaissance PLC"), and BFSUS Special Opportunities Trust PLC, a public
limited company registered in England and Wales ("BFSUS") (Renaissance PLC and
BFSUS are collectively referred to as the "Renaissance Lenders"), and
Renaissance Capital Group, Inc., a Texas corporation, as agent for the
Renaissance Lenders (the "Agent").
WHEREAS, the Renaissance Lenders are the holders of not less than a
majority of the outstanding principal amount of the Renaissance Debentures
(as defined below) and not less than a majority of the outstanding
principal amount of the 2001 Debentures (as defined below) (the
"Holders"); and
WHEREAS, the Company, the Renaissance Lenders and the Agent are
parties to that certain Convertible Loan Agreement, dated as of June 28,
2001 (the "Renaissance Agreement"), pursuant to which the Renaissance
Lenders purchased 8% Convertible Debentures from the Company for an
aggregate principal amount of $1,400,000 (the "Renaissance Debentures");
and
WHEREAS, the Company and Xxxx Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxxx (collectively, the "Additional Lenders" and, together with the
Renaissance Lenders, the "Lenders"), and Xxxxxx Xxxxxxxxx, as agent for
the Additional Lenders, are parties to that certain Convertible Loan
Agreement, dated as of June 28, 2001 (the "Additional Lenders Agreement",
and together with the Renaissance Agreement, the "Agreements"), pursuant
to which the Additional Lenders purchased 8% Convertible Debentures from
the Company for an aggregate principal amount of $400,000 (the "Additional
Lenders Debentures" and, together with the Renaissance Debentures, the
"2001 Debentures"); and
WHEREAS, pursuant to Section 11.04 of each of the Agreements, the
parties desire to amend the Agreements as hereinafter set forth and the
action by the Holders as hereinafter set forth shall be deemed to amend
each of the Agreements;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agree as
follows:
1. Amendments. Each of the Agreements are hereby amended as follows:
a. the definition of "Registrable Securities" in Section 1.01
of each of the Agreements is amended by adding the following language to
the seventh line thereof after "assigned":
"; and (iii) the warrants issued to each of the Lenders on
March 31, 2002 and any security issued or issuable upon the
exercise of or with respect to such warrants."
b. Subsection (a) of Schedule 7.01 of each of the Agreements is
amended in its entirety to read as follows:
"(a) CURRENT RATIO. The Borrower will not permit its Current
Ratio as of September 30, 2001 and as of the end of each
fiscal quarter thereafter to be less than .5:1, provided
that as of December 31, 2002 and as of the end of each
fiscal quarter thereafter, the Borrower will not permit such
Current Ratio to be less than 1.25:1."
2. Warrants. To induce Lenders to enter into this Amendment, the
Company shall issue to Lenders on the date hereof an aggregate of 128,572
warrants to purchase such number of shares of the Company's Common Stock (each,
a "Warrant"). The Warrants shall become exercisable in equal installments on
each of March 31, 2002, June 30, 2002 and September 30, 2002, shall have an
exercise price equal to $0.22 per share, shall, if unexercised, expire five (5)
years from the date hereof, and shall be in the form of Exhibit A annexed
hereto. Notwithstanding anything contained in the Agreements or the 2001
Debentures to the contrary, neither the issuance of the Warrants nor the
subsequent exercise of the Warrants shall constitute or be deemed to constitute
an issuance of Additional Common Stock as that term is defined in the 2001
Debentures.
3. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
4. Reaffirmation. Except as specifically provided for herein, the
Agreements shall not be otherwise affected by this Amendment and shall continue
to be in full force and effect in accordance with their respective terms.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
[Remainder of page intentionally left blank.]
- 2 -
IN WITNESS WHEREOF, this Amendment is entered into as of the date set
forth above.
THE COMPANY:
COVER-ALL TECHNOLOGIES INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman of the Board of
Directors, President and Chief
Executive Officer
LENDERS:
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: RENAISSANCE CAPITAL GROUP, INC.,
its Agent
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Director
(holding 50% of the outstanding
principal amount of the Renaissance
Debentures and approximately 38.89%
of the outstanding principal amount
of the 2001 Debentures)
BFSUS SPECIAL OPPORTUNITIES TRUST PLC
By: RENAISSANCE CAPITAL GROUP, INC.,
its Agent
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Director
(holding 50% of the outstanding
principal amount of the Renaissance
Debentures and approximately 38.89% of
the outstanding principal amount of the
2001 Debentures)
EXHIBIT A
---------
FORM OF WARRANT
---------------
THIS WARRANT AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON MARCH 31, 2007, OR IF NOT A BUSINESS
DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING
BUSINESS DAY.
WARRANT TO PURCHASE
____________ Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
COVER-ALL TECHNOLOGIES INC.
TRANSFER RESTRICTED-- SEE SECTION 6.2
This certifies that, for good and valuable consideration, [Name of
Lender]] ("______"), and its registered, permitted assigns (collectively, the
"Warrantholder" or "Holder"), is entitled to purchase from Cover-All
Technologies Inc., a Delaware corporation (the "Company"), subject to the terms
and conditions hereof, at any time before 5:00 P.M., New York time, on March 31,
2007 (or, if such day is not a business day, at or before 5:00 P.M., New York
time on the next following business day), the number of fully paid and
non-assessable shares of common stock, par value $.01 per share, of the Company
(the "Common Stock") stated above (each a "Warrant Share" and collectively the
"Warrant Shares") at the exercise price of $0.22 per share (the "Exercise
Price"). The Exercise Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Article II hereof. This Warrant is issued
pursuant to a First Amendment, dated March 30, 2002, to Convertible Loan
Agreement, dated as of June 28, 2001 (the "Amendment"), by and among the
Company, the Holder and certain other parties.
ARTICLE I
DURATION AND EXERCISE OF WARRANT
--------------------------------
1.1 DURATION OF WARRANT. Subject to the terms contained herein, this
Warrant may be exercised at any time before 5:00 P.M., New York time, on March
31, 2007 (or, if such day is not a business day, at or before 5:00 P.M., New
York time, on the next following business day) (the "Expiration Date"). If this
Warrant is not exercised at or before 5:00 P.M., New York time, on the
Expiration Date, it shall become void, and all rights hereunder shall thereupon
cease.
1.2 EXERCISE OF WARRANT.
(a) The Warrantholder may exercise this Warrant, in whole or in
part, upon surrender of this Warrant with the Subscription Form hereon duly
executed, to the Company at its corporate office at 00-00 Xxxxxxx Xxxxx, Xxxx
Xxxx, Xxx Xxxxxx 00000, or to such office as duly designated by the Company to
the Warrantholder, together with the full Exercise Price for each Warrant Share
to be purchased by tendering in lawful money of the United States, or by
certified check or bank draft payable in United States Dollars to the order of
the Company. Notwithstanding anything contained to the contrary herein, this
Warrant shall become exercisable as to _____________ shares of Common Stock on
March 31, 2002, as to an additional _____________ shares of Common Stock on June
30, 2002, and as to an additional _____________ shares of Common Stock on
September 30, 2002.
(b) Upon receipt of this Warrant with the Subscription Form duly
executed and accompanied by payment of the aggregate Exercise Price for the
Warrant Shares for which this Warrant is then being exercised, the Company will
promptly cause to be issued certificates for the total number of whole shares of
Common Stock for which this Warrant is being exercised (adjusted to reflect the
effect of the provisions contained in Article II hereof, if any, and as provided
in Section 4.4) in such denominations as are required for delivery to the
Warrantholder, and the Company shall thereupon deliver such certificates to the
Warrantholder. If at the time this Warrant is exercised a registration statement
is not in effect to register under the Securities Act of 1933, as amended, the
Warrant Shares issuable upon exercise of this Warrant, the Company may place
such legends on certificates representing the Warrant Shares to indicate that
the Warrant Shares have not been registered and may not be transferred except
upon compliance with the registration requirements of the Securities Act and
applicable state securities laws or an opinion of counsel to the Company or of
counsel reasonably satisfactory to the Company that such registration is not
required, or such other legends as may be reasonably required in the opinion of
counsel to the Company to permit the Warrant Shares to be issued without such
registration. From and after receipt by the Company of the duly executed
Subscription Form and the aggregate exercise prices and notwithstanding that
certificates in respect of the Warrant Shares may not have been delivered, the
Warrantholder shall be considered a shareholder of the Company in respect of the
Warrant Shares for all intents and purpose.
(c) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company will
- 5 -
execute a new warrant in the form of this Warrant for the balance of such
Warrant Shares and deliver such new warrant to the Warrantholder.
(d) The Company covenants and agrees that it will pay when due
and payable any and all costs, expenses, charges and stock transfer and similar
taxes which may be payable in respect of the issue of this Warrant or in respect
of the issue of any Warrant Shares. The Company shall not, however, be required
to pay any tax imposed on income or gross receipts or any tax which may be
payable in respect of any transfer involved in the issuance or delivery of this
Warrant or at the time of surrender.
ARTICLE II
ADJUSTMENT OF WARRANT SHARES
----------------------------
PURCHASABLE AND OF EXERCISE PRICE
---------------------------------
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article II.
2.1 MECHANICAL ADJUSTMENTS.
(a) ANTI-DILUTION PROVISIONS; ADJUSTMENT OF EXERCISE PRICE. The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Exercise Price, the Warrantholder shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of Warrant Shares obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
(b) EXERCISE PRICE ADJUSTMENT FORMULAS. If and whenever after
the date of this Warrant, the Company shall issue or sell any shares of Common
Stock (except as provided in Section 2.1(h)) for a consideration per share less
than 95% of the Market Price (as hereinafter defined) on the date of such
issuance or sale, then forthwith the Exercise Price shall be reduced to the
prices (calculated to the nearest tenth of a cent) determined by multiplying the
Exercise Price in effect immediately prior to the time of such issuance or sale
by a fraction, the numerator of which shall be (i) the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
(assuming the conversion of all securities convertible into shares of Common
Stock) multiplied by the Market Price immediately prior to such issuance or
sale, and (B) the consideration, if any, received and deemed received by the
Company upon such issuance or sale, divided by (ii) the total number of shares
of Common Stock outstanding and deemed outstanding immediately after such
issuance or sale, and the denominator of which shall be the Market Price
immediately prior to such issuance or sale.
No adjustment of the Exercise Price, however, shall be made in an
amount less than $0.01 per share, but any such lesser adjustment shall be
carried forward and shall be made
- 6 -
at the time and together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to $0.01 per share or more.
(c) CONSTRUCTIVE ISSUANCES OF STOCK; Convertible Securities;
Rights and Options; Stock Dividends. For the purposes of Section 2.1(b) above,
the following provisions (i) to (viii), inclusive, shall also be applicable:
(i) In case at any time subsequent to the date hereof, the
Company shall in any manner grant any rights to subscribe for or to
purchase, or any options for the purchase of, shares of Common Stock
or any stock or securities convertible into or exchangeable for
shares of Common Stock (such convertible or exchangeable stock or
securities being hereinafter called "Convertible Securities"),
whether or not such rights or options or the right to convert or
exchange any such Convertible Securities are immediately
exercisable, and the consideration per share for which shares of
Common Stock are issued or sold upon the exercise of such
Convertible Securities (determined by dividing (A) the total amount,
if any, received or receivable by the Company as consideration for
the granting of such rights or options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of
any such rights or options which relate to such Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issuance or sale of such
Convertible Securities (and, if such convertible securities
constitute obligations of the Company, the principal amount of such
obligations so converted) and upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than 95%
of the Market Price determined as of the date of granting such price
or options, as the case may be, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or
options (or upon conversion or exchange of the total maximum amount
of such Convertible Securities issuable upon the exercise of such
rights or options) shall be deemed to be outstanding and to have
been issued for such price per share. Except as provided in Section
2.1(c)(iii) below, no further adjustments of the Exercise Price
shall be made upon the actual issuance of such shares of Common
Stock or of such Convertible Securities upon exercise of such rights
or options or upon the actual issuance of such shares of Common
Stock upon conversion or exchange of such Convertible Securities.
(ii) In case at any time the Company shall in any manner
issue or sell any Convertible Securities, whether or not the rights
to exchange or convert thereunder are immediately exercisable, and
the price per share for which shares of Common Stock are issuable
upon such conversion or exchange (determined by dividing (A) the
total amount received or receivable by the Company as consideration
for the issuance or sale of such Convertible Securities, plus the
- 7 -
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by
(B) the total maximum number of shares which would be issuable upon
the conversion or exchange of all such Convertible Securities) shall
be less than 95% of the Market Price determined as of the date of
such issuance or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issuance or sale
of such Convertible Securities) be deemed to be outstanding and to
have been issued for such price per share; except as otherwise
specified in Section 2.1(c)(iii) below, no further adjustments of
the Exercise Price shall be made upon the actual issuance of such
shares of Common Stock upon conversion or exchange of such
Convertible Securities.
(iii) If the purchase price provided for in any right or
option referred to in Section 2.1(c)(i), or the additional
consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in Section 2.1(c)(ii), or the
rate at which any Convertible Securities referred to in Sections
2.1(c)(i) or (ii) are convertible into or exchangeable for shares of
Common Stock, shall change or a different purchase price or rate
shall become effective at any time or from time to time (other than
under or by reason of provisions designed to protect against
dilution) then, upon such change becoming effective, the Exercise
Price then in effect at the time of such event shall forthwith be
increased or decreased to such Exercise Price as would have been
obtained had the rights, options or Convertible Securities still
outstanding provided for such changed purchase price, additional
compensation or rate of commission or exchange, as the case may be,
at the time initially granted, issued or sold. On the expiration of
any such option or right or the termination of any such right to
convert or exchange such Convertible Securities, the Exercise Price
then in effect hereunder shall forthwith be increased to such
Exercise Price as would have been obtained at the time of such
expiration or termination had such option, right or convertible
securities never been issued. If the purchase price provided for in
any right or option referred to in Section 2.1(c)(i), or the
additional consideration payable upon the exchange or conversion of
any Convertible Securities referred to in Sections 2.1(c)(i) or
(ii), or the rate at which any Convertible Securities referred to in
Sections 2.1(c)(i) or (ii) are convertible into or exchangeable for
shares of Common Stock, shall decrease at any time under or by
reason of provisions with respect thereto designed to protect
against dilution, then, in the case of the delivery of shares of
Common Stock upon the exercise of any such right or option or upon
conversion or exchange of any such right or option or upon
conversion or exchange of any such Convertible Securities, the
Exercise Price then in effect hereunder shall forthwith be decreased
to such Exercise Price as would have been obtained had the
adjustments made upon issuance of such right or option or
Convertible Securities been made upon the basis of the issuance of
(and the total consideration computed in accordance with Sections
2.1(c)(i) or (ii), as the case may be, received for) the shares of
Common Stock delivered as aforesaid.
- 8 -
(iv) In case of the issuance of shares of Common Stock or
Convertible Securities of the Company as a dividend or distribution
upon any shares of Common Stock of the Company, such shares of
Common Stock or Convertible Securities, as the case may be, issuable
in payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration.
(v) In case at any time any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such
shares of Common Stock or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed
to be the amount payable to the Company therefor, without deduction
therefrom of any expenses incurred or any underwriting or selling
commissions or concessions paid by the Company in connection
therewith or any underwriting or selling discounts allowed by the
Company in connection therewith. In case any shares of Common Stock
or Convertible Securities or any rights or options to purchase any
such shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount of
the consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as determined by
the Board of Directors of the Company, without deduction therefrom
of any expenses incurred or any underwriting or selling commissions
or concessions paid by the Company in connection therewith or any
underwriting or selling discounts allowed by the Company in
connection therewith. In case any shares of Common Stock or
Convertible Securities shall be issued in connection with any merger
of another corporation into the Company, the amount of consideration
therefor shall be deemed to be the fair value, as determined by the
Board of Directors of the Company, of such portion of the assets of
such merged corporation as such Board shall determine to be
attributable to such shares of Common Stock, Convertible Securities,
rights or options, as the case may be.
(vi) In case at any time the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in shares of
Common Stock or in Convertible Securities, or (B) to subscribe for
or purchase shares of Common Stock or Convertible Securities, then
such record date shall be deemed to be the date of the issuance or
sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
(vii) "Market Price" shall mean, as of any day, the closing
sale price of the shares of Common Stock on such day on the New York
Stock Exchange or the American Stock Exchange (or if the Common
Stock shall not then be listed on either such exchange, the closing
sale price on the principal (determined by the highest volume
averaged for a period of twenty consecutive business days prior to
- 9 -
the day as to which "Market Price" is being determined) national
securities exchange (as defined in the Securities Exchange Act of
1934, as amended) on which the Common Stock may then be listed) or,
if there shall have been no sales on such exchange or exchanges on
such day, the averages of the high and low sales prices of the
Common Stock on such day on the Nasdaq National Market System or, if
the Common Stock is not included in the Nasdaq National Market
System, the average of the bid and asked prices at the end of such
day or, if the Common Stock shall not be so listed, the average of
the bid and asked prices at the end of the day in the
over-the-counter market as reported by the Nasdaq Stock Market or,
if the Common Stock is not included on Nasdaq, as reported by the
National Quotation Bureau, Inc. or any successor organization, in
each such case, averaged for a period of twenty consecutive business
days prior to the day as to which "Market Price" is being
determined.
(viii) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall
be considered an issuance or sale of shares of Common Stock for the
purposes of Section 2.1(b).
(d) EFFECT OF CERTAIN DIVIDENDS. In case at any time the Company
shall declare a dividend upon the shares of Common Stock payable otherwise than
out of earnings or earned surplus (other than in a partial or total liquidation
or dissolution of the Company) and otherwise than in shares of Common Stock or
Convertible Securities, the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock or,
in the case of any other dividend, to the fair value thereof per share of Common
Stock as determined by the Board of Directors of the Company. For the purposes
of the foregoing, a dividend other than in cash shall be considered payable out
of earnings or earned surplus only to the extent that such earnings or earned
surplus are charged an amount equal to the fair value of such dividend as
determined by the Board of Directors of the Company. Such reductions shall take
effect as of the date on which a record is taken for the purpose of such
dividend, or if a record is not taken, the date as of which the holders of
record of shares of Common Stock entitled to such dividends are to be
determined. As used in this Section 2.1(d), the term "dividend" shall mean any
distribution to the holders of shares of Common Stock. Except as provided in
this Section 2.1(d), no adjustment in the Exercise Price and no change in the
number of Warrant Shares so purchasable shall be made pursuant to this Section
2.1 as a result of or by reason of any such dividend.
(e) STOCK SPLITS AND REVERSE SPLITS. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in case at any time the Company
shall combine its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the
- 10 -
number of shares of Common Stock purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately reduced. Except
as provided in this Section 2.1(e), no adjustment in the Exercise Price and no
exchange in the number of Warrant Shares so purchasable shall be made pursuant
to this Section 2.1 as a result of or by reason of any such subdivision or
combination.
(f) EFFECT OF REORGANIZATION AND ASSETS SALES. If any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation of the Company with or merger of the Company into another
corporation, or the sale of all or substantially all of its assets to another
corporation, shall be effected in such a way that holders of shares of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for shares of Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby each holder of Warrants 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 of the
Company immediately theretofore receivable upon the exercise of such Warrants,
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 Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable upon exercise had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of such holder
to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the Exercise Price and of the number of shares issuable upon
exercise) shall thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities or assets thereafter deliverable upon the
exercise of such Warrants. The Company shall not effect any such consolidation,
merger or sale unless prior to or simultaneously with the consummation thereof
the successor corporation (if other than the Company) resulting from such
consolidation or merger, or of the corporation purchasing such assets shall
assume by written instrument executed and mailed or delivered to each
Warrantholder, the obligation to deliver to such Warrantholder such shares of
stock, securities or assets as, in accordance with the foregoing provisions such
Warrantholder may be entitled to receive, and containing the express assumption
of such successor corporation of the performance and observance of the
provisions of this Warrant to be performed and observed by the Company and of
all liabilities and obligation of the Company hereunder.
(g) ACCOUNTANTS' CERTIFICATE. Upon each adjustment of the
Exercise Price and upon each change in the number of Warrant Shares, then and in
each such case, the Company will promptly obtain a certificate of a firm of
independent certified public accountants of recognized standing selected by the
Company's Board of Directors, who may be the regular auditors of the Company,
stating the adjusted Exercise Price and the new number of Warrant Shares so
issuable, or specifying the other shares of stock, securities or assets and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
accountant's certificate to the Warrantholders, which certificate shall be
conclusive evidence of the correctness of the computation with respect to any
such
- 11 -
adjustment of the Exercise Price and any such change in the number of such
Warrant Shares so issuable.
(h) NO ADJUSTMENTS REQUIRED. Notwithstanding anything herein to
the contrary, there shall be no adjustment in the Exercise Price in connection
with (i) the grant of any option, or the exercise of any option granted under
any employee benefit plan or stock option plan or (ii) upon the exercise of any
Convertible Security, in either case outstanding on the date of this Warrant
including this Warrant.
2.2 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the
Exercise Price is adjusted as herein provided, the Company shall prepare and
deliver to the Warrantholder a certificate signed by its Chairman of the Board,
President, any Vice President, Treasurer or Secretary, setting forth the
adjusted number of Warrant Shares purchasable upon the exercise of this Warrant
and the Exercise Price of such Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
2.3 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 2.1 of
this Agreement, no adjustment in respect of any cash dividends payable out of
earnings or earned surplus shall be made during the term of this Warrant or upon
the exercise of this Warrant.
2.4 FORM OF WARRANT AFTER ADJUSTMENTS. The form of this Warrant need not
be changed because of any adjustments in the Exercise Price or the number or
kind of the Warrant Shares, and any Warrant theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in this Warrant, as initially issued.
ARTICLE III
COMPLIANCE WITH THE SECURITIES ACT
The Holder acknowledges that the Warrant Shares, in its hands, will be
restricted securities which may not be sold or offered for sale in the absence
of an effective registration statement under the Securities Act or an opinion of
counsel satisfactory to the Company that such registration is not required. With
respect to any offer, sale or other disposition of any Warrant Shares, the
Holder will give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such Holder's counsel, to
the effect that such offer, sale or other distribution may be effected without
registration or qualification (under federal law and applicable state law then
in effect). Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company, as promptly as practicable,
shall notify such Holder that such Holder may sell or otherwise dispose of the
Warrant Shares, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this Article III that the
opinion of counsel for the Holder is not reasonably satisfactory to the Company,
the Company shall so notify the Holder promptly after such determination has
been made. Each certificate representing the Warrant
- 12 -
Shares thus transferred shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Securities Act, unless in
the opinion of counsel for the Company such legend is not required, in order to
ensure compliance with the Securities Act. The Company may issue stop transfer
instructions to its transfer agent and registrar in connection with such
restrictions. The Warrant Shares are entitled to certain rights of registration
as provided in the Convertible Loan Agreement.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
----------------------------------------------------
4.1 NO RIGHTS AS SHAREHOLDER; NOTICE TO WARRANTHOLDER. Nothing contained
in this Warrant shall be construed as conferring upon the Warrantholder or his
transferees the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company or of any other matter or any rights
whatsoever as shareholders of the Company, except to the extent specifically
provided for herein; provided, however that the Warrantholder shall be delivered
all notices and other communications sent by the Company to its shareholders.
Without limiting the foregoing, in case at any time: (1) the Company shall
declare any dividend payable in Common Stock or any distribution (other than
cash dividends) to the holders of the Common Stock; (2) the Company shall make
an offer for subscription pro rata to the holders of its Common Stock of any
additional shares of stock of any class or other rights; (3) there shall be any
capital reorganization, or reclassification of the capital stock of the Company,
or consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another corporation; or (4) there shall be a voluntary or
involuntary dissolution, liquidation or winding-up of the Company; then, in any
one or more of such cases, the Company shall give notice to the Warrantholder of
the date on which (a) the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights, or (b) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of Common Stock of records
shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up as the case may be. Such
written notice shall be given not less than 10 days and not more than 90 days
prior to the record date on which the Company's transfer books are closed in
respect thereto and such notice may state that the record date is subject to the
effectiveness of a registration statement under the Securities Act, or to a
favorable vote of stockholders, if either is required.
4.2 LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may in its reasonable discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
- 13 -
4.3 RESERVATION OF SHARES.
(a) The Company covenants and agrees that at all times it shall
reserve and keep available for the exercise of this Warrant such number of
authorized shares of Common Stock or other securities as are sufficient to
permit the exercise in full of this Warrant.
(b) The Company shall use its best efforts to maintain or secure
the listing of the Warrant Shares upon the securities exchange or automated
quotation system, if any, upon which shares of its Common Stock are then listed.
(c) The Company covenants that all shares of Common Stock issued
on exercise of this Warrant will be validly issued, fully paid, non-assessable
and free of preemptive rights.
4.4 NO FRACTIONAL SHARES. Anything contained herein to the contrary
notwithstanding, the Company shall not be required to issue any fraction of a
share in connection with the exercise of this Warrant. In any case where the
Warrantholder would, except for the provisions of this Section 4.4, be entitled
under the terms of this Warrant to receive a fraction of a share upon exercise
of this Warrant and receipt of the Exercise Price, the Company shall not be
required to issue any fraction of a share, but rather, will adjust the aggregate
Exercise Price for such fraction of a share to which the Warrantholder would
otherwise be entitled.
ARTICLE V
TREATMENT OF WARRANTHOLDER
--------------------------
Prior to due presentment for registration or transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
the purpose of any exercise hereof and for all other purposes of the Company
shall not be affected by any notice to the contrary.
ARTICLE VI
SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANT
-------------------------------------------------------
6.1 SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANT. Subject to
and limited by the provisions of Section 6.2 hereof, this Warrant may be split
up, combined or exchanged for another Warrant or Warrants containing the same
terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, he shall
make such request in writing delivered to the Company and shall surrender to the
Company this Warrant and any other Warrants to be so split up, combined or
exchanged. Upon any such surrender for a split-up, combination or exchange, the
Company
- 14 -
shall execute and deliver to the person entitled thereto a Warrant or Warrants,
as the case may be, as so requested. The Company shall not be required to effect
any split-up, combination or exchange which will result in the issuance of a
Warrant entitling the Warrantholder to purchase upon exercise a fraction of a
share of Common Stock or a fractional Warrant. The Company may require such
Warrantholder to pay a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any split-up, combination or exchange of
Warrants.
6.2 RESTRICTIONS ON TRANSFER. This Warrant may be exercised and this
Warrant and the Warrant Shares may not be sold, hypothecated, assigned or
transferred (a "Transfer"), except only in accordance with and subject to the
provisions of the Securities Act and the rules and regulations promulgated
thereunder. The Warrantholder shall have the benefit of the certain registration
rights for the Warrant Shares as provided in the Convertible Loan Agreement.
ARTICLE VII
OTHER MATTERS
7.1 SUCCESSORS AND ASSIGNS. All the covenants and provisions of this
Warrant shall be binding upon and inure to the benefit of the Company and the
Holder and their respective successors and assigns.
7.2 AMENDMENTS AND WAIVERS. The provisions of this Warrant, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of the Holder. The
Warrantholder shall be bound by any consent authorized by this Section whether
or not certificates representing his Warrant have been marked to indicate such
consent.
7.3 GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
7.4 SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provisions in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
7.5 INTEGRATION/ENTIRE AGREEMENT. This Warrant is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein other than as to registration
rights set forth in the Convertible Loan Agreement as to which the Warrant
Shares shall be entitled. This Warrant supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
- 15 -
7.6 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to be duly given if personally
delivered with receipt acknowledged, if mailed by registered or certified mail,
first class, postage prepaid, if delivered by a nationally recognized overnight
courier service or if transmitted by facsimile machine (with a confirmation copy
to be sent by first class mail) addressed as follows:
(i) if to the Company:
Cover-All Technologies Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address or such other person(s) as the Company may
designate by written notice to the other parties hereto.
(ii) if to the Warrantholder:
______________________________
______________________________
______________________________
______________________________
Attention: ______________________________
Tel: _________________________________
Fax: _________________________________
with a copy (which shall not constitute notice) to:
______________________________
______________________________
______________________________
______________________________
Attention: ______________________________
Tel: _________________________________
Fax: _________________________________
or to such other address or such other person(s) as the
Warrantholder may designate by written notice to the other parties
hereto.
- 16 -
7.7 HEADINGS. The Article and Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 17 -
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the 31st day of March, 2002.
COVER-ALL TECHNOLOGIES INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
- 18 -
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ________________________________________ hereby sells,
assigns and transfers unto ______________________________ the within Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _________________________ attorney, to
transfer said Warrant Certificate on the books of the within-named Company with
respect to the number of Warrants set forth below, with full power of
substitution in the premises:
Name(s) of
Assignee(s) Address No. of Warrants
_______________________________________________________________________
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants represented by said
Warrant Certificate.
Dated:____________________, 20__.
Note: The above signature should
correspond exactly with the name on the
face of this Warrant Certificate.
- 19 -
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
COVER-ALL TECHNOLOGIES INC.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, shares of Common Stock, as provided for therein, and tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $ .
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name: _______________________________
Address: _______________________________
Social Security No. or Tax
Identification No.:
- -
______ ______ _______
(Please Print)
Signature: _____________________________
Note: The above signature should
correspond exactly with the name on the
first page of this Warrant Certificate
or with the name of the assignee
appearing in the assignment form below.
And if said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder less any fraction of a share paid in cash.
- 20 -
