BORROWER SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as of June 28, 2001,
is entered into among COVER-ALL TECHNOLOGIES INC., a Delaware corporation
("Borrower"), RENAISSANCE US GROWTH & INCOME TRUST PLC ("RUSGIT"), BFSUS SPECIAL
OPPORTUNITIES TRUST PLC, a public limited company registered in England and
Wales ("BFSUS") (RUSGIT and BFSUS collectively referred to as "Lender"), and
RENAISSANCE CAPITAL GROUP, INC., a Texas corporation, as agent for the Lender
(the "Agent").
RECITALS
A. Lender, Borrower and Agent have entered into a Convertible Loan
Agreement of even date herewith (the "Loan Agreement"), pursuant to which Lender
will lend to Borrower the aggregate principal amount of $1,400,000 evidenced by
Borrower's 8.00% Convertible Debentures of even date herewith (the
"Debentures").
B. As a condition for entering into the Loan Agreement and providing the
Loan, Lender required that Borrower grant a security interest in its assets as
collateral for such Loan.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements set forth herein, the parties agree as follows:
1. GRANT OF SECURITY INTEREST. (a) In order to secure payment when
due of the Obligations now existing or hereafter incurred, Borrower hereby
irrevocably grants to the Lender a first and prior security interest in the
following property of the Borrower (the "Collateral"), whether now owned or
existing, or hereafter acquired, owned, existing or arising (whether by contract
or operation of law), and wherever located, which shall be retained by Lender,
until the Obligations have been paid in full and the Loan Agreement has been
terminated.
(i) All accounts (including inter-company receivables), contract
rights, chattel paper and rights of payment of every kind
(collectively, "Accounts") and instruments and general
intangibles of Borrower.
(ii) All bank accounts of Borrower.
(iii) All monies and property of any kind of Borrower, now or
hereafter in the possession or under the control of Lender,
Agent or a bailee of Lender.
(iv) All licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade names, assumed names,
service marks and service xxxx applications and other
intellectual property of Borrower.
(v) All inventory, equipment (including any and all computer
hardware and components), machinery and fixtures of Borrower in
all forms and wherever located, and all parts and products
thereof, all accessories thereto, and all documents therefor.
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(vi) All books and records (including, without limitation, customer
lists, credit files, tapes, ledger cards, computer software and
hardware, electronic data processing software, computer
programs, printouts and other computer materials and records) of
Borrower evidencing or containing information regarding or
otherwise pertaining to any of the foregoing.
(vii) All accessories to, substitutions for and all replacements,
products and proceeds of the foregoing, including, without
limitation, proceeds of insurance policies insuring the
Collateral (including, but not limited to, claims paid and
premium refunds).
2. INSURANCE ON COLLATERAL. Borrower further warrants and agrees
that it will pay for and maintain insurance in the amounts and of the types
required pursuant to Section 5.12 of the Loan Agreement.
3. DELIVERY OF RECEIVABLES. Upon Agent's request, upon the
occurrence and during the continuance of an Event of Default, Borrower will, at
any reasonable time and at Borrower's own expense, physically deliver to Agent,
all Accounts (including inter-company receivables) assigned to Agent at any
reasonable place or places designated by Agent. Failure to deliver any Account,
or failure to deliver physical possession of any instruments, documents or
writings in respect of any Account shall not invalidate Agent's Lien and
security interest therein, except to the extent that possession may be required
by applicable law for the perfection of said Lien or security interest, in which
latter case, the Account shall be deemed to be held by the Borrower as the
custodian agent of Agent, for the benefit of Lender. Failure of Agent to demand
or require Borrower to include any Account in any schedule, to execute any
schedule, to assign and deliver any schedule or to deliver physical possession
of any instruments, documents or writings related to any Account shall not
relieve Borrower of its duty so to do.
4. COLLECTION OF RECEIVABLES. Borrower hereby agrees that it shall
use commercially reasonable efforts, at its sole cost and expense and in its own
name, to promptly and diligently collect and enforce payment of all Accounts and
Borrower will defend and hold Lender and Agent harmless from any and all loss,
damage, penalty, fine or expense arising from such collection or enforcement.
5. FINANCING STATEMENTS. Borrower agrees to execute all financing
statements and amendments thereto as Agent, on behalf of the Lender, may request
from time to time to evidence the security interest granted to Agent hereunder
and will pay the cost of all filing fees and taxes, if any, necessary to effect
the filing thereof. Wherever permitted by law, during the term of this
Agreement, Borrower authorizes Agent to file financing statements with respect
to the Collateral without the signature of Borrower, and shall give notice
thereof to Borrower. Without the written consent of Agent, Borrower will not
allow any financing statement or notice of assignment to be on file in any
public office covering any Collateral, proceeds thereof or other matters subject
to the security interest granted to Agent herein, unless such financing
statement relates to a Permitted Lien.
6. LENDER'S PAYMENT OF CLAIMS. Lender may, in its sole discretion,
discharge or obtain the release of any Lien asserted by any Person against the
Collateral, other than a
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Permitted Lien which, in the Lender's judgment, may have a Material Adverse
Effect on the Lender's rights with respect to the Collateral. All sums paid by
Lender in respect thereof shall be payable, on demand, by Borrower to Lender and
shall be a part of the Obligations.
7. DEFAULT AND REMEDIES.
a. Borrower shall be in default hereunder upon the
occurrence and during the continuation of an Event of Default, as set
forth in the Loan Agreement.
b. Upon the occurrence and during the continuation of any
Event of Default (i) unless Lender or Agent shall elect otherwise, the
entire unpaid amount of the Obligations due under the Loan Agreement, as
are not then otherwise due and payable, shall become immediately due and
payable without notice to Borrower or demand by Lender or Agent and (ii)
either Lender or Agent may, at its or their option, exercise from time
to time any and all rights and remedies available to them under the
Uniform Commercial Code or otherwise, including the right to foreclose
or otherwise realize upon the Collateral and to dispose of any of the
Collateral at one or more public or private sales or other proceedings,
and Borrower agrees that any of Lender, Agent or their nominee may
become the purchaser at any such sale or sales. Borrower agrees that
twenty (20) days shall be reasonable prior notice of the date of any
public sale or other disposition of the same. All rights and remedies
granted Lender hereunder or under any other agreement between Lender and
Borrower shall be deemed concurrent and cumulative and not alternative,
and Lender, or Agent on its behalf, may proceed with any number of
remedies at the same time or at different times until all the
Obligations are fully satisfied. The exercise of any one right or remedy
shall not be deemed a waiver or release of, or an election against, any
other right or remedy. Borrower shall pay to Lender or Agent, on demand,
any and all expenses (including reasonable attorneys' fees and legal
expenses) which may have been incurred by Lender or Agent (i) in the
prosecution or defense of any action arising under this Agreement, the
Collateral or any of Lender's rights therein or thereto; or (ii) in
connection with the custody, preservation, use, operation, preparation
for sale or sale of the Collateral, the incurring of all of which are
hereby authorized to the extent Lender or Agent deem the same advisable.
Borrower's liability to Lender or Agent for any such payment shall be
included in the Obligations. The proceeds of any Collateral received by
Lender or Agent at any time before or after an Event of Default, whether
from a sale or other disposition of Collateral or otherwise, or the
Collateral itself, may be applied to the payment, in full or in part, of
such of the Obligations and in such order and manner as Lender or Agent
may elect.
8. REPRESENTATIONS AND COVENANTS OF BORROWER. Borrower hereby
represents to and agrees with Lender as follows:
a. Borrower owns the Collateral as sole owner, free and
clear of any Liens, other than Permitted Liens.
b. So long as any Obligations remain unpaid, Borrower
agrees not to sell, assign or transfer the Collateral, other than sales
of Collateral in the ordinary course of business, and to maintain it
free and clear of any Liens, other than Permitted Liens.
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9. MISCELLANEOUS.
a. This Agreement shall bind and inure to the benefit of
the parties and their respective heirs, personal representatives,
successors and assigns, except that Borrower shall not assign any of its
rights hereunder without the prior written consent of holders of more
than 50% of the principal amount of the then outstanding Debentures.
b. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without affecting the validity or enforceability of the remainder of
this Agreement or the validity or enforceability of such provision in
any other jurisdiction.
c. This Agreement shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Texas,
without regard to the conflicts of laws provisions thereof, and the
applicable laws of the United States. Venue and jurisdiction shall be in
the state or federal courts in Dallas County, Texas.
d. Borrower hereby consents to the jurisdiction of the
courts of the State of Texas in any action or proceeding which may be
brought against it under or in connection with this Agreement or any
transaction contemplated hereby or to enforce any agreement contained
herein and, in the event any such action or proceeding shall be brought
against it, Borrower agrees not to raise any objection to such
jurisdiction or to the laying of venue in Dallas County, Texas or, if
applicable, any other county in any state in which Collateral is
located.
e. All capitalized terms, unless otherwise specified, have
the meanings assigned to them in the Loan Agreement and the Debentures.
f. Any notices or other communications required or
permitted to be given by this Agreement or any other documents and
instruments referred to herein must be (i) given in writing and
personally delivered, mailed by prepaid certified or registered mail or
sent by overnight service, such as FedEx, or (ii) made by telex or
facsimile transmission delivered or transmitted to the party to whom
such notice or communication is directed, with confirmation thereupon
given in writing and personally delivered or mailed by prepaid certified
or registered mail.
If to Borrower to:
Cover-All Technologies Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxxx
Chairman and CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Lender to:
Renaissance US Growth & Income Trust PLC
c/o Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BFSUS Special Opportunities Trust PLC
c/o Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to Agent to:
Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any notice delivered personally in the manner provided herein
will be deemed given to the party to whom it is directed upon the
party's (or its agent's) actual receipt. Any notice addressed and mailed
in the manner provided herein will be deemed given to the party to whom
it is addressed at the close of business, local time of the recipient,
on the fourth business day after the day it is placed in the mail, or,
if earlier, the time of actual receipt.
g. Capitalized terms used herein, unless otherwise defined
herein, have the definitions given them in the Loan Agreement among
Borrower, Lender and Agent.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
and year written above.
BORROWER:
COVER-ALL TECHNOLOGIES INC.
By: _____________________________________
Xxxx X. Xxxxxx, Chairman and CEO
LENDER:
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: _____________________________________
Name: Xxxxxxx Xxxxxxxxx
Title: Director
BFSUS SPECIAL OPPORTUNITIES TRUST PLC
By: _____________________________________
Name: Xxxxxxx Xxxxxxxxx
Title: Director
AGENT:
RENAISSANCE CAPITAL GROUP, INC.
By: _____________________________________
Name: Xxxxxxx Xxxxxxxxx
Title: President and CEO
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