EXHIBIT 99.2
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COVER-ALL TECHNOLOGIES, INC.
CONVERTIBLE NOTE
PURCHASE AGREEMENT
As of March 14, 1997
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TABLE OF CONTENTS
PAGE
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1. Purchase and Sale of Notes. . . . . . . . . . . . . 1
1.1. Purchase and Sale. . . . . . . . . . . . . . . 1
2. Closing . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Closing. . . . . . . . . . . . . . . . . . . . 1
2.2. Deliveries . . . . . . . . . . . . . . . . . . 1
3. Representations and Warranties of the Company . . . 1
3.1. Organization and Standing;
Certificate and Bylaws. . . . . . . . . . . . 2
3.2. Corporate Power. . . . . . . . . . . . . . . . 2
3.3. Capitalization . . . . . . . . . . . . . . . . 2
3.4. Authorization. . . . . . . . . . . . . . . . . 2
3.5. Compliance with Other Instruments;
No Violation. . . . . . . . . . . . . . . . . 3
3.6. Governmental Consents. . . . . . . . . . . . . 3
3.7. Securities Law Exemption . . . . . . . . . . . 3
4. Representations and Warranties of the Purchasers. . 4
4.1. Experience . . . . . . . . . . . . . . . . . . 4
4.2. Investment . . . . . . . . . . . . . . . . . . 4
4.3. Restriction on Transferability . . . . . . . . 4
4.4. Access to Data . . . . . . . . . . . . . . . . 4
4.5. Corporate Power; Authorization . . . . . . . . 5
4.6. Corporate Power and Authorization as
to Release Agreement. . . . . . . . . . . . . 5
5. Deliveries at Closing . . . . . . . . . . . . . . . 5
5.1. Company's Deliveries . . . . . . . . . . . . . 5
5.2. Purchasers' Deliveries . . . . . . . . . . . . 6
6. Restrictions on Transferability of Securities;
Compliance with Securities Act. . . . . . . . . . . 6
6.1. Restrictions on Transferability. . . . . . . . 6
6.2. Restrictive Legends. . . . . . . . . . . . . . 6
6.3. Notice of Proposed Transfers . . . . . . . . . 7
6.4. Removal of Restrictions on Transfer
of Securities . . . . . . . . . . . . . . . . 7
7. Agreements Relating to Tandem Capital Financing . . 7
7.1. Exclusive Engagement . . . . . . . . . . . . . 7
7.2. Actions to Occur at Consummation of Tandem
Financing. . . . . . . . . . . . . . . . . . . 7
8. Miscellaneous . . . . . . . . . . . . . . . . . . . 8
8.1. Governing Law. . . . . . . . . . . . . . . . . 8
8.2. Survival . . . . . . . . . . . . . . . . . . . 8
8.3. Finder's Fee . . . . . . . . . . . . . . . . . 8
8.4. Successors and Assigns . . . . . . . . . . . . 8
8.5. Entire Agreement . . . . . . . . . . . . . . . 8
8.6. Severability . . . . . . . . . . . . . . . . . 8
8.7. Amendment and Waiver . . . . . . . . . . . . . 9
8.8. Delays or Omissions. . . . . . . . . . . . . . 9
8.9. Notices. . . . . . . . . . . . . . . . . . . . 9
8.10. Titles and Subtitles. . . . . . . . . . . . . 9
8.11. Counterparts. . . . . . . . . . . . . . . . . 10
TABLE OF EXHIBITS
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Exhibit A Form of Convertible Note
Exhibit B Schedule of Exceptions
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of License Amendment
Exhibit E Form of Purchase Agreement Amendment
Exhibit F Form of Release Agreement
Exhibit G Wire Transfer Instructions
CONVERTIBLE NOTE
PURCHASE AGREEMENT
This Agreement is made as of March 14, 1997, by and between
Cover-All Technologies, Inc., a Delaware corporation (the
"Company"), and Software Investments Limited, a British Virgin
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Island corporation ("SIL"), Atlantic Employers Insurance Company,
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a New Jersey corporation ("AEIC"), and Xxxxx X. Xxxxxx ("Xxxxxx"
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and, together with SIL and AEIC, the "Purchasers").
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R E C I T A L S
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WHEREAS, the Purchasers and the Company desire to set forth
the terms and conditions upon which each of the Purchasers will
purchase from the Company a convertible note in the aggregate
principal amount of $250,000.00.
NOW, THEREFORE, based upon the foregoing premises and
subject to the terms and conditions hereinafter set forth, the
parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF NOTES.
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1.1. Purchase and Sale. Subject to the terms and
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conditions hereof, concurrent with the execution and delivery
hereof the Company is issuing and selling to each of the Purchasers,
and each Purchaser is purchasing from the Company, the Company's
convertible note in the principal amount of $250,000.00 in the
form set forth as Exhibit A annexed hereto (collectively, the
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"Notes"), for an aggregate purchase price of $750,000.
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2. CLOSING.
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2.1. Closing. The closing of the sale and purchase of the
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Notes (the "Closing") is occurring concurrently with the
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execution and delivery of this Agreement.
2.2. Deliveries. Concurrent with the execution and
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delivery of this Agreement, the Company and the Purchasers are
delivering those documents, instruments and other items set forth
in Section 5 hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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Except as otherwise set forth on the Schedule of Exceptions
attached as Exhibit B (the "Schedule of Exceptions"),
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specifically identifying the relevant paragraph contained in this
Section 3 to which such exception relates, the Company represents
and warrants to the Purchasers as follows:
3.1. Organization and Standing; Certificate and Bylaws.
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The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to own
and operate its properties and assets and to carry on its
business as presently conducted. The Company is duly qualified
or licensed and in good standing as a foreign corporation in each
jurisdiction in which the property owned, leased or licensed by
it or the nature of the business conducted by it makes such
qualification or licensure necessary, except where the failure to
be so qualified or licensed will not have a material adverse
effect on the Company. The Company has furnished the Purchaser
with copies of its Certificate of Incorporation and Bylaws. Said
copies are true, correct and complete and contain all amendments
through the date hereof.
3.2. Corporate Power. The Company has all requisite
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corporate power to (i) execute and deliver (A) this Agreement,
(B) the Registration Rights Agreement dated of even date herewith
between the Company, SIL and AEIC in the form set forth as
Exhibit C annexed hereto (the "Registration Agreement"), (C) the
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Amendment to Exclusive Software License Agreement dated of even
date herewith between the Company and Care Corporation Limited, a
British Virgin Island corporation ("Care"), in the form set forth
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as Exhibit D annexed hereto (the "License Amendment"), and (D)
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the Amendment to Stock Purchase Agreement dated of even date
herewith between the Company, SIL and Care in the form set forth
as Exhibit E annexed hereto (the "Purchase Agreement Amendment"),
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(ii) sell and issue the Notes hereunder, (iii) issue the shares
of the Company's common stock, par value $0.01 per share (the
"Common Stock"), issuable upon conversion of the Notes (the
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"Conversion Stock"), and (iv) carry out and perform its
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obligations under the terms of this Agreement, the Notes, the
Registration Agreement and the License Amendment and the Purchase
Agreement Amendment.
3.3. Capitalization. The authorized capital stock of the
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Company and the outstanding capital stock of the Company, as of
the date hereof (but immediately prior to giving effect to the
transactions contemplated hereby), is as follows: authorized --
20,000,000 shares of Common Stock; outstanding -- 17,351,883
shares of Common Stock. All issued and outstanding shares of the
Company's Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable, and were issued in full
compliance with applicable federal and state securities laws.
3.4. Authorization. All corporate action on the part of the
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Company necessary for the authorization, execution and delivery
by the Company of this Agreement, the Notes, the Registration
Agreement, the License Amendment and the Purchase Agreement
Amendment, the authorization, issuance, sale and delivery of the
Notes and the Conversion Stock, and the performance of all of the
Company's obligations hereunder and under the Notes, the
Registration Agreement, the License Amendment and the Purchase
Agreement Amendment, has been taken. Each of this Agreement, the
Notes, the Registration Agreement, the License Amendment and the
Purchase Agreement Amendment constitutes a valid and legally
binding obligation of the Company enforceable in accordance with
its respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or
other equitable remedies. The Conversion Shares, when issued in
compliance with the provisions of this Agreement and the Notes,
will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the respective Purchaser;
provided, however, that the Notes and the Conversion Stock may be
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subject to restrictions on transfer under applicable securities
laws as set forth herein. The issuance of the Conversion Stock
is not subject to any preemptive rights or right of first
refusal. The Conversion Stock has been duly and validly reserved
for issuance. The Conversion Shares to be issued to the
Purchasers will be entitled to the benefits of the Registration
Rights Amendment.
3.5. Compliance with Other Instruments; No Violation. The
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Company is not in violation of any term of (i) its Certificate of
Incorporation or Bylaws, or (ii) any material contract,
instrument, judgment, decree or order, or any statute, rule or
regulation applicable to the Company that would have a material
adverse effect on the Company. No event or failure of
performance has occurred which, with the passage of time or the
giving of notice or both, would constitute such a violation. The
execution, delivery and performance of and compliance with this
Agreement, the Notes, the Registration Rights Amendment, the
License Amendment and the Purchase Agreement Amendment and the
consummation of the transactions contemplated hereby and thereby,
have not resulted and will not result in any such violation, or
be in conflict with or constitute (with or without the passage of
time or giving of notice or both) a default under any such
material contract, instrument, judgment, decree or order, or any
statute, rule or regulation applicable to the Company, or result
in the creation of any lien, mortgage, pledge, encumbrance or
charge upon any of the properties or assets of the Company.
3.6. Governmental Consents. No consent, approval or
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authorization of or designation, declaration or filing with any
governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this
Agreement, the Notes, the Registration Rights Amendment, the
License Amendment or the Purchase Agreement Amendment, or the
offer, sale or issuance of the Note or the Conversion Stock, or
the consummation of any other transaction contemplated hereby or
thereby.
3.7. Securities Law Exemption. Subject to the accuracy of
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the Purchasers' representations in Section 4 of this Agreement,
the offer, sale and issuance of the Notes and the issuance of the
Conversion Stock constitute transactions exempt from the
registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Securities Act" or the
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"Act"), and have been registered or qualified (or are exempt from
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registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities
laws.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
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Each Purchaser represents and warrants, on its or his own
behalf and not on behalf of any of the other Purchasers, to the
Company as follows:
4.1. Experience. The Purchaser, as a principal stockholder
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of the Company and, in the case of SIL and AEIC, whose
representative is a member of the Company's Board of Directors,
acknowledges that it is fully familiar with the Company, and its
business, financial condition and prospects. In addition, the
Purchaser has sufficient experience in evaluating and investing
in private placement transactions of securities in companies
similar to the Company so that it is capable of evaluating the
merits and risks of its investment in the Company and has the
capacity to protect its own interests. The Purchaser is an
"accredited investor" as defined in Rule 501(a) under the Act.
4.2. Investment. The Purchaser is acquiring the Note to be
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issued to such Purchaser and the Conversion Stock issuable upon
conversion thereof for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. The Purchaser under-
stands that the sale of the Note to be issued to such Purchaser
and the Conversion Stock issuable upon conversion thereof have
not been registered under the Securities Act or any state
securities laws by reason of a specific exemption from the
registration provisions of the Securities Act and such securities
laws, the availability of which depends upon, among other things,
the bona fide nature of the investment intent and the accuracy of
such Purchaser's representations as expressed herein.
4.3. Restriction on Transferability. The Purchaser
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acknowledges that the Note to be issued to such Purchaser and the
Conversion Stock issuable upon conversion thereof must be held
indefinitely unless subsequently registered under the Securities
Act and the applicable state securities laws or unless an
exemption from such registration is available.
4.4. Access to Data. The Purchaser has had an opportunity
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to discuss the Company's business, management and financial
affairs with the Company's management and has also had an
opportunity to ask questions of the Company's officers, which
questions were answered to its satisfaction. The Purchaser
acknowledges that the Company has fully provided the Purchaser or
its counsel with (i) all material information which the Purchaser
has requested for deciding whether to purchase the Note to be
issued to such Purchaser, and (ii) all material information which
the Purchaser believes is reasonably necessary to enable the
Purchaser to make such decision.
4.5. Corporate Power; Authorization. Each Purchaser which
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is a corporation has all requisite corporate power and authority
to execute and deliver this Agreement. Each Purchaser who is an
individual has full power and authority and legal capacity to
execute and deliver this Agreement. All corporate action on the
part of each Purchaser which is a corporation necessary for the
authorization, execution and delivery by such Purchaser of this
Agreement and the performance of all of such Purchaser's
obligations hereunder has been taken. This Agreement constitutes
a valid and legally binding obligation of each Purchaser
enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
5. DELIVERIES AT CLOSING.
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5.1. Company's Deliveries. Concurrent with the execution
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and delivery hereof, at the Closing of the sale and purchase of
the Notes, the Company is delivering or causing to be delivered
to the indicated Purchaser, the following:
(a) To each Purchaser, a Note in the aggregate
principal amount of $250,000.00.
(b) To each Purchaser, a certified copy of resolutions
adopted by the Company's Board of Directors with respect to the
sale of the Notes, the reservation for issuance of the Conversion
Stock, and the execution and delivery of the Registration
Agreement, License Amendment and Purchase Agreement Amendment.
(c) To each Purchaser, an executed Registration
Agreement.
(d) To SIL (on behalf of Care), an executed License
Amendment.
(e) To SIL (on its own behalf and on behalf of Care),
an executed Purchase Agreement Amendment.
(f) To each Purchaser, the resignation of Xxxxxx
Xxxxxx as Chairman of the Board and Chief Executive Officer of
the Company to become effective immediately after the Closing.
(g) To each Purchaser, a certified copy of resolutions
adopted by the Company's Board of Directors expanding the number
of members constituting the Board of Directors to eight (8)
members and electing Messrs. Xxxx Xxxxxxxx and Xxxxx XxXxxxx as
directors of the Company.
(h) To each Purchaser, a certified copy of resolutions
adopted by the Company's Board of Directors electing Xx. Xxxxx
XxXxxxx as Chairman of the Board and Chief Executive Officer of
the Company and Mr. Xxxx Xxxxxxxx as Chief Financial Officer of
the Company, in each case to become effective immediately after
the Closing.
5.2. Purchasers' Deliveries. Concurrent with the execution
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and delivery hereof, at the Closing of the sale and purchase of
the Notes, the indicated Purchaser is delivering or causing to be
delivered to the Company, the following:
(a) By each Purchaser, the $250,000 purchase price for
each Purchaser's respective Note, paid by wire transfer pursuant
to those wire transfer instruction set forth on Exhibit G annexed
hereto. ---------
(b) By each Purchaser, an executed Registration
Agreement.
(c) By SIL, a License Amendment executed by Care.
(d) By SIL, an executed Purchase Agreement Amendment
(which shall also be executed by Care).
(e) By SIL, an executed Release and Discharge
Agreement in the form set forth as Exhibit F annexed hereto
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(which shall also be executed by Care).
6. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT.
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6.1. Restrictions on Transferability. The Note and the
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Conversion Stock shall not be sold, assigned, transferred or
pledged except upon the conditions specified in this Section 6,
which conditions are intended to ensure compliance with the
provisions of the Securities Act and the applicable state
securities laws. Each Purchaser will cause any proposed
purchaser, assignee, transferee or pledgee of such Purchaser's
Note or the Conversion Stock held by such Purchaser to agree to
take and hold such securities subject to the provisions and upon
the conditions specified in this Section 6.
6.2. Restrictive Legends.
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Each Note and each certificate representing the
Conversion Stock (and any other securities issued in respect of
the Conversion Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event) shall
(unless otherwise permitted by the provisions of Section 6.3
below) be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend
required under applicable state securities laws):
[THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE/THIS NOTE HAS]
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER
[THE SHARES REPRESENTED BY THIS CERTIFICATE/THIS NOTE] NOR ANY
INTEREST THEREIN MAY BE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT OR SUCH LAWS
AND RULES AND REGULATIONS THEREUNDER.
6.3. Notice of Proposed Transfers. The holder of each Note
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and each certificate representing the Conversion Stock by
acceptance thereof agrees to comply in all respects with the
provisions of this Section 6.3. Prior to any proposed sale,
assignment, transfer or pledge of any Note and/or Conversion
Stock, unless there is in effect a registration statement under
the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's
intention to effect such transfer, sale, assignment or pledge.
Each such notice shall describe the manner and circumstances of
the proposed transfer, sale, assignment or pledge in sufficient
detail, and shall be accompanied, at such holder's expense, by an
unqualified written opinion of legal counsel who shall, and whose
legal opinion shall be, reasonably satisfactory to the Company
addressed to the Company, to the effect that the proposed
transfer of any Note and/or Conversion Stock may be effected
without registration under the Securities Act, whereupon the
holder of such Note and/or Conversion Stock shall be entitled to
transfer such Note and/or Conversion Stock, as the case may be,
in accordance with the terms of the notice delivered by the
holder to the Company; provided, that AEIC may transfer the Notes
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or Conversion Stock to any other wholly owned subsidiary of Cigna
Corporation without delivering such legal opinion.
6.4. Removal of Restrictions on Transfer of Securities. Any
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legend referred to in Section 6.2 hereof shall be removed and the
Company shall issue a certificate without such legend to the
holder of such security if, unless otherwise required by state
securities laws, (a) such security is sold pursuant to
registration under the Securities Act, or (b) such holder
provides the Company with an opinion of counsel reasonably
acceptable to the Company to the effect that such legend may be
removed otherwise than pursuant to Section 6.4(a).
7. AGREEMENTS RELATING TO TANDEM CAPITAL FINANCING.
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7.1. Exclusive Engagement. Until May 31, 1997 the Company
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covenants that it will exclusively negotiate with Tandem Capital,
a wholly owned subsidiary of Sirrom Capital Corporation
("Tandem"), with respect to Tandem's providing "permanent
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financing" (as such term is defined in the Notes); provided, that
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the Company shall no longer be required to so exclusively
negotiate with Tandem if, prior to May 31, 1997: (i) Tandem
withdraws from negotiating to provide permanent financing for the
Company, or (ii) the Company determines in its reasonable opinion
that Tandem is no longer actively and in good faith negotiating
to provide permanent financing for the Company.
7.2. Actions to Occur at Consummation of Tandem Financing.
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If a permanent financing arranged by Tandem shall close on or
prior to May 31, 1997, then the Company agrees to cause the
following to occur concurrent with such closing:
(a) Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxx and Xxxxxxx Xxxxx shall resign as directors
of the Company;
(b) Xx. Xxx Xxxxxxxx, an individual selected by Tandem
and an individual selected by the mutual agreement
of SIL, AEIC and Xxxxxx (who shall not be
affiliated with any of SIL or AEIC) shall be named
to replace the directors so resigning; and
(c) The number of members constituting the Company's
Board of Directors shall be reduced from eight (8)
to seven (7).
8. MISCELLANEOUS.
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8.1. Governing Law. This Agreement shall be governed by and
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construed under the laws of the State of Delaware, without regard
to the conflict of laws rules.
8.2. Survival. The representations, warranties, covenants
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and agreements made herein shall survive any investigation made
by the Purchasers and the Closing of the transactions
contemplated hereby. All statements as to factual matters
contained in any exhibit, certificate or other instrument
delivered by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company
hereunder as of the date of such certificate or instrument or, in
the case of an exhibit, the date hereof.
8.3. Finder's Fee. Each party represents that it neither is
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nor will be obligated for any finder's fee or commission in
connection with this transaction. The Purchasers and the Company
agree to indemnify and hold harmless the other party from any
liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Purchasers or
the Company, as the case may be, is responsible.
8.4. Successors and Assigns. Except as otherwise expressly
----------------------
provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
8.5. Entire Agreement. This Agreement, the exhibits and the
----------------
other documents delivered pursuant to this Agreement constitute
the full and entire understanding and agreement among the parties
with regard to the subject matter hereof and no party shall be
liable or bound to any other party in any manner by any
representations, warranties, covenants or agreements, except as
specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto and their respective heirs,
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as
expressly provided herein.
8.6. Severability. In case any provision of this Agreement
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becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in
full force and effect without said provision; provided, however,
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that no such severability shall be effective if it materially
changes the economic benefit of this Agreement to any party.
8.7. Amendment and Waiver. This Agreement may be amended
--------------------
and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively),
only with the written consent of the Company and the Purchaser
against whom enforcement is sought. Any amendment or waiver
effected in accordance with this Section 8.7 shall be binding
upon each holder of the Notes or any Conversion Stock at the time
outstanding, each future holder of all such securities and the
Company.
8.8. Delays or Omissions. No delay or omission to exercise
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any right, power or remedy accruing to the Purchasers upon any
breach, default or noncompliance of the Company under this
Agreement shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar
breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of
any kind or character on the Purchasers' part of any breach,
default or noncompliance under this Agreement or any waiver on
the Purchasers' part of any provisions or conditions of this
Agreement must be in writing, must be signed by all of the
Purchasers and shall be effective only to the extent specifically
set forth in such writing, and that all remedies, either under
this Agreement, by law or otherwise afforded to the Purchasers,
shall be cumulative and not alternative.
8.9. Notices. All notices and other communications required
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or permitted hereunder shall be in writing and shall be deemed
effectively given upon personal delivery or four days after
deposit with the United States Post office, by first class mail,
postage prepaid, addressed: (a) if to the Purchasers, at each
Purchaser's address as set forth at the end of this Agreement, or
at such other address as such Purchaser shall have furnished to
the Company in writing, or (b) if to the Company, at its address
as set forth at the end of this Agreement, or at such other
address as the Company shall have furnished to the Purchasers in
writing.
8.10. Titles and Subtitles. The titles of the
--------------------
paragraphs and subparagraphs of this Agreement are for
convenience of reference only and are not to be considered in
construing this Agreement.
8.11. Counterparts. This Agreement may be executed in
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any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one
instrument.
The foregoing Agreement is executed as of the date first
above written.
COVER-ALL TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Authorized Officer
Address: 00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
SOFTWARE INVESTMENTS LIMITED
By: /s/ Xxxx X. Xxxxxxxx
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Authorized Officer
Address: First Floor Offices
00 Xxxxxx Xxxxxx
Xx. Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx
ATLANTIC EMPLOYERS INSURANCE
COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
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Authorized Officer
Address: 0000 Xxxxxxxx Xxxxxx
- TLP44
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX
00000
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
Address: 00 Xxxxx Xxxxx
Xxx Xxx, XX 00000
The following directors of the Company are executing this
Agreement solely for the purposes of agreeing to be bound by
Section 7.2(a) hereof:
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx
EXHIBIT A
FORM OF CONVERTIBLE NOTE
------------------------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW
---
AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN MAY BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR SUCH LAWS AND RULES
AND REGULATIONS THEREUNDER.
COVER-ALL TECHNOLOGIES, INC.
CONVERTIBLE NOTE
New York, New York
$250,000.00 March 14, 1997
FOR VALUE RECEIVED, Cover-All Technologies, Inc.,
a Delaware corporation (the "Company"), hereby promises to
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pay to Atlantic Employers Insurance Company, a New Jersey
corporation, or its registered assigns (the "Holder"), the
------
principal sum of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000.00), together with interest thereon from the date
hereof (computed on the basis of a 360-day year and actual
days elapsed) at the rate of 12.5% per annum (but in no
event to exceed the maximum rate permitted under applicable
provisions of law). Subject to the prior automatic
conversion of this Note pursuant to Section 2 hereof, the
principal of and accrued interest on this Note shall be due
and payable on the earlier to occur of (i) the closing of a
"permanent financing" (as defined in Section 5.6 hereof) by
the Company, and (ii) when declared due and payable by the
Holder, or when this Note automatically becomes due and
payable, upon the occurrence of an Event of Default (as
defined below); provided, that the Holder shall, in either
--------
event, have the option to convert this Note pursuant to
Section 2.2 hereof in lieu of the repayment by the Company
of the principal and accrued interest due hereunder. The
date on which this Note becomes due and payable is referred
to herein as the "Maturity Date." The payment of principal
-------------
and interest shall be made in such coin or currency of the
United States of America as at the time of payment shall be
legal tender for the payment of public and private debts.
Principal and interest on this Note shall be paid by wire
transfer in accordance with the written instructions of the
Holder or, in the absence of such instructions, by check
mailed to the Holder's address set forth in the Purchase
Agreement (as defined below). This Note may be prepaid at
any time, in whole or in part, without premium or penalty,
and the amount of the prepayment shall be applied first to
accrued interest and the remainder to the unpaid principal
balance hereof. This Note is issued pursuant to that
certain Convertible Note Purchase Agreement between the
Company, the Holder and certain other purchasers of similar
notes, dated as of the date hereof (the "Purchase
--------
Agreement"), and the Holder of this Note is entitled to
---------
certain rights and privileges set forth in the Purchase
Agreement.
1. EVENTS OF DEFAULT.
-----------------
1.1 If any of the following events specified
in this Section 1 shall occur (herein individually referred
to as an "Event of Default"), then (i) with respect to the
----------------
Events of Default set forth in clauses (i), (ii), (iii),
(iv) and (v), the Holder of this Note may, so long as such
condition exists, declare the entire principal and unpaid
accrued interest hereunder to be immediately due and
payable, by notice in writing to the Company, and (ii) with
respect to the Events of Default set forth in clauses (vi)
and (vii), this Note shall automatically become immediately
due and payable:
(i) default in the payment of the
principal of or accrued interest on this Note when
due and payable, whether on the Maturity Date, by
acceleration or otherwise;
(ii) any representation or warranty made
by the Company in the Purchase Agreement shall
have been incorrect in any material respect when
made;
(iii) the Company shall default in the
performance or observance of any term, covenant,
condition or agreement contained in this Note
(other than the payment of principal or interest
hereunder) or in the Purchase Agreement and, if
capable of being remedied, such default shall
continue unremedied for a period of twenty (20)
days after written notice shall have been given by
the Holder to the Company;
(iv) this Note or the Purchase Agreement
shall cease to be enforceable in accordance with
its terms against the Company, or the Company
shall so state in writing;
(v) the Company shall default beyond
any period of grace provided with respect thereto
in the payment of principal of, premium, if any,
or interest on any obligation in an amount in
excess of $50,000 in respect of borrowed money
when due, whether by acceleration or otherwise; or
the Company shall default in the performance or
observance of any other agreement under which any
such obligation is created, if the effect of any
such default is to cause or permit the holder or
holders of such obligation (or a trustee on behalf
of such holder or holders) to cause such
obligation to become due prior to the date of its
stated maturity, unless such holder or holders or
trustee shall have waived such default after its
occurrence or unless such holder or holders or
trustee shall have failed to give any notice
required to create an event of default thereunder;
(vi) the institution by the Company of
proceedings to be adjudicated as bankrupt or
insolvent, or the consent by it to the institution
of bankruptcy or insolvency proceedings against
it, or the filing by it of a petition or answer or
consent seeking reorganization or release under
the Federal Bankruptcy Act or any other applicable
federal or state law, or the consent by it to the
filing of any such petition or the appointment of
a receiver, liquidator, assignee, trustee or other
similar official of the Company, or the making by
it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company
in furtherance of any such action; or
(vii) if, within sixty (60) days after
the commencement of an action against the Company
seeking any bankruptcy, insolvency,
reorganization, liquidation, dissolution or
similar relief under any present or future
statute, law or regulation, such action shall not
have been resolved in favor of the Company or all
orders or proceedings thereunder affecting the
operations or the business of the Company stayed,
or if the stay of any such order or proceeding
shall thereafter be set aside, or if, within sixty
(60) days after the appointment, without the
consent or acquiescence of the Company, of any
trustee, receiver or liquidator of the Company or
of all or any substantial part of its properties,
such appointment shall not have been vacated.
1.2 In the case any one or more of the
Events of Default specified in Section 1.1 hereof shall have
occurred and be continuing, the Holder may, subject to the
provisions of Section 1.3 hereof, proceed to protect and
enforce its rights hereunder, either by suit in equity
and/or by action at law, whether for the specific
performance of any covenant or agreement contained in this
Note, or the Holder may proceed to enforce the payment of
all sums due upon this Note or to enforce any other legal or
equitable right of the Holder. If an Event of Default shall
have occurred and the Holder shall employ attorneys, or
incur other costs and expenses for the collection of
payments due or to become due, or for the enforcement or
performance or observance of any obligation or agreement of
the Company under this Note, the Company agrees that it will
pay to the Holder, on demand, the fees of such attorney
together with all other costs and expenses incurred by the
Holder.
1.3 No remedy herein conferred upon the
Holder is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or
otherwise.
1.4 No course of dealing between the Company
and the Holder or any delay on the part of the Holder hereof
in exercising any rights hereunder shall operate as a waiver
of any rights of the Holder hereof.
2. CONVERSION.
----------
2.1 Automatic Conversion. Unless this Note
--------------------
shall have been previously paid in full or converted
pursuant to Section 2.2, the outstanding principal amount of
this Note and accrued and unpaid interest thereon
automatically shall be converted into fully paid and
nonassessable shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock"), on the close of
------------
business on May 31, 1997. The number of shares of Common
Stock into which this Note will be so converted shall be
determined by dividing the aggregate principal amount and
interest to be converted by the Conversion Price (as defined
below) in effect at the time of such conversion. The
conversion price (the "Conversion Price") initially shall
----------------
equal $1.00, and shall be subject to adjustment as provided
in Section 3.
2.2 Optional Conversion on Maturity Date.
------------------------------------
On the Maturity Date and at the Holder's option, the Holder
may elect to convert this Note into shares of Common Stock
in lieu of the repayment by the Company of the principal and
accrued interest due hereunder. The number of shares into
which this Note will be so converted will be determined by
reference to the Conversion Price in effect on the Maturity
Date. In order to so convert this Note, the Holder shall
notify the Company of its election to do so three (3) days
prior to the closing of a permanent financing or promptly
upon Holder's receiving notification of the occurrence of an
Event of Default, as the case may be.
2.3 Mechanics and Effect of Conversion. No
----------------------------------
fractional shares of Common Stock will be issued upon
conversion of this Note. In lieu of any fractional shares
to which the Holder would otherwise be entitled, the Company
will pay to the Holder the cash value of any fractional
share. Upon conversion of this Note into Common Stock
pursuant to Sections 2.1 or 2.2, the Holder shall surrender
this Note at the principal executive offices of the Company,
together with a written notice stating the name or names
(with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued. At its
expense, the Company will, as soon as practicable after
receipt of this Note, issue and deliver to such Holder at
such principal executive office, a certificate or
certificates for the number of shares of Common Stock to
which such Holder is entitled upon such conversion, together
with any other securities and property to which the Holder
is entitled upon such conversion under the terms of this
Note, including a check payable to the Holder for any cash
amounts payable in respect of fractional shares. Whether or
not the Holder so delivers this Note and such notice as
aforesaid, such conversion shall be deemed to have been made
on the close of business on the date set forth in Section
2.1 on which this Note automatically converts, or on the
close of business on the Maturity Date, as the case may be,
and the Holder shall be treated for all purposes as the
record holder of such shares of Common Stock as of such
date.
3. ANTI-DILUTION AND OTHER PROVISIONS.
----------------------------------
3.1 Adjustments for Stock Dividends,
--------------------------------
Subdivisions, Combinations and Reclassifications. If the
------------------------------------------------
Company shall (i) pay a stock dividend or make a
distribution to holders of Common Stock in shares of its
Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock any shares of
capital stock of the Company, then (A) the Conversion Price
----
shall be increased or decreased, as the case may be, to an
amount which shall bear the same relation to the Conversion
Price in effect immediately prior to such action as the
total number of shares of Common Stock outstanding
immediately prior to such action shall bear to the total
number of shares of Common Stock outstanding immediately
after such action, and (B) this Note automatically shall be
adjusted so that it thereafter shall be convertible into the
kind and number of shares of Common Stock or other
securities which the Holder would have owned and would have
been entitled to receive after such action if this Note had
been converted immediately prior to such action or any
record date with respect thereto. An adjustment made
pursuant to this Section 3.1 shall become effective
retroactively immediately after the record date in the case
of a dividend or distribution of Common Stock and shall
become effective immediately after the effective date in the
case of a subdivision, combination or reclassification.
3.2 Adjustment for Certain Distributions.
------------------------------------
If the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including,
without limitation, any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing corporation) of (i) assets (including cash
dividends), (ii) equity or debt securities of the Company
(except for the Common Stock of the Company) or evidences of
indebtedness of the Company, (iii) equity or debt securities
of any corporation other than the Company or evidences of
indebtedness of any such corporation, or (iv) subscription
rights, options or warrants to purchase any of the foregoing
assets or securities, whether or not such rights, options or
warrants are immediately exercisable (hereinafter
collectively called "Distributions on Common Stock"), the
-----------------------------
Company shall make provisions for the Holder to receive upon
conversion of this Note a proportional amount (depending
upon the extent to which this Note is converted) of such
assets, equity or debt securities, evidences of indebtedness
or such other rights, as if such Holder had converted this
Note on or before such record date.
3.3 Adjustment for Consolidations and
---------------------------------
Mergers. In case of any consolidation or merger of the
-------
Company with or into another corporation or the sale of all
or substantially all of the assets of the Company to another
corporation, this Note thereafter shall be convertible into
the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of
Common Stock issuable upon conversion of this Note would
have been entitled upon such consolidation, merger or sale;
and, in such case, appropriate adjustment (as determined in
good faith by the Board of Directors of the Company) shall
be made in the application of the provisions in this Section
3, to the end that the provisions set forth in this Section
3 (including provisions with respect to changes in and
adjustments of the number of shares of Common Stock into
which this Note is convertible) shall thereafter be
applicable, as nearly as reasonably may be, in relation to
any shares of stock or other securities or property
thereafter deliverable upon the conversion of this Note.
3.4 Other Dilutive Events. If any event
---------------------
shall occur as to which the provisions of this Section 3
shall not be strictly applicable, but with respect to which
the failure to make any adjustment to the Conversion Price
and the number of shares of Common Stock issuable upon
conversion of this Note would not fairly protect the
conversion rights contained in this Note in accordance with
the intent and principles of this Section 3, upon request of
the Holder, the Company shall appoint a firm of independent
public accountants reasonably acceptable to the Holder which
shall give its opinion upon the adjustments, if any,
consistent with the intent and principles established in
this Section 3 necessary to preserve without dilution the
conversion rights represented by this Note. Upon receipt of
such opinion, the Company will promptly mail a copy thereof
to the Holder and shall make the adjustments described
therein.
3.5 No Impairment. The Company will not, by
-------------
amendment of its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of
this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the
conversion rights of the Holder against impairment.
3.6 Notices to Holder.
-----------------
If at any time,
(a) the Company shall take any action which
would require an adjustment pursuant to this
Section 3 in the Conversion Price or in the number
of shares of Common Stock issuable upon conversion
of this Note; or
(b) the Company shall authorize the making
to the holders of its Common Stock of any
Distributions on Common Stock as set forth in
Section 3.2; or
(c) the Company shall issue any additional
shares of Common Stock or declare any dividend (or
any other distribution) on its Common Stock; or
(d) there shall be any capital
reorganization or reclassification of the Common
Stock, or any consolidation or merger to which the
Company is a party, or any sale or transfer of all
or substantially all of the assets of the Company;
or
(e) 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 written notice to the Holder, not less than twenty (20)
days before any record date or other date set for definitive
action, or of the date on which such reorganization,
reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up shall take place, as the case may
be. Such notice also shall set forth such facts as shall
indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the
current Conversion Price and the kind and amount of Common
Stock and other securities and property deliverable upon
conversion of this Note. Such notice also shall specify the
date as of which the holders of the Common Stock of record
shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation,
merger, dissolution, liquidation or winding up, as the case
may be.
3.7 Reservation of Stock. The Company
--------------------
covenants that it will at all times reserve and keep
available, solely for issuance upon conversion of this Note,
such number of shares of Common Stock as shall then be
sufficient to effect conversion of this Note. If at any
time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of
this Note, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose;
provided, however, that the Company will not take any action
-------- -------
which results in any adjustment of the Conversion Price if
the total number of shares of Common Stock issued and
issuable after such action upon conversion of this Note
would exceed the total number of shares of Common Stock then
authorized by the certificate of incorporation of the
Company.
3.8 Notice of Adjustment of Conversion
----------------------------------
Price. Upon any adjustment of the Conversion Price, then
-----
and in each such case the Company shall give notice thereof
to the Holder, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable
detail the method of calculation and the facts upon which
such calculation is based.
3.9 Closing of Books. The Company will at
----------------
no time close its transfer books against the transfer of any
shares of Common Stock issued or issuable upon the
conversion of this Note in any manner which interferes with
the timely conversion of this Note.
4. EXCHANGE OR REPLACEMENT OF NOTE.
-------------------------------
4.1 The Holder, at its option, may in person
or by duly authorized attorney surrender this Note for
exchange, at the principal executive offices of the Company,
and, at the expense of the Company, receive in exchange
therefor a new Note in the same aggregate principal amount
as the aggregate unpaid principal amount of the Note so
surrendered, bearing interest at the same annual rate as the
Note so surrendered and otherwise in substantially the form
of the Note so surrendered.
4.2 Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or
mutilation of this Note, and (in case of loss, theft or
destruction) of an indemnity reasonably satisfactory to it,
and upon surrender and cancellation of this Note, if
mutilated, the Company, upon reimbursement to it of
reasonable expenses incidental thereto, will make and
deliver a new Note, of like tenor, in lieu of this Note.
4.3 Any Note made and delivered in
accordance with the provisions of this Section 5 shall be
dated as of the original issuance date.
5. MISCELLANEOUS.
-------------
5.1 The Company hereby waives presentment
for payment, demand, notice of non-payment, protest and
notice of protest.
5.2 This Note shall be binding upon the
Company and its successors and assigns and shall inure to
the benefit of the Holder and its successors, assigns and
transferees.
5.3 All headings used herein are for
convenience only and shall not be used to construe or
interpret this Note.
5.4 All notices required or permitted under
this Note shall be given in writing and shall be sent in
accordance with the provisions of Section 8.9 of the
Purchase Agreement.
5.5 THIS NOTE SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE. ANY JUDICIAL PROCEEDING INVOLVING
ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING
TO THIS NOTE SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE
STATE OF DELAWARE AND EACH OF THE PARTIES HERETO (I)
UNCONDITIONALLY ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH
COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLE
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY, AND
(II) IRREVOCABLY WAIVES ANY OBJECTION SUCH PARTY MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
5.6 For purposes hereof, the term "permanent
---------
financing" means a transaction (whether or not arranged by
---------
Tandem (as defined in the Purchase Agreement)) pursuant to
which the Company receives no less than $2.5 million of
proceeds from an institutional investor (or investors),
which transaction may either be in the form or the sale of
Company equity or the incurrence by the Company of
indebtedness (or both), and, if the transaction is the
incurrence of debt (in whole or in part), such indebtedness
is due no less than one (1) year from the date of its
incurrence.
IN WITNESS WHEREOF, the Company has executed this
Note on the date specified above.
COVER-ALL TECHNOLOGIES, INC.
By: _____________________________
Authorized Officer
EXHIBIT B
SCHEDULE OF EXCEPTIONS
----------------------
None
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement")
---------
is made this _____ day of March, 1997, among Cover-All Technologies,
Inc. (the "Company"), Software Investments Limited, a British
-------
Virgin Islands corporation ("SIL"), Atlantic Employers Insurance
---
Company, a New Jersey corporation ("AEIC"), and Xxxxx X. Xxxxxx
----
("Xxxxxx" and, together with SIL and AEIC, the "Purchasers").
------ ----------
WHEREAS, this Agreement is being entered into pursuant
to the terms of a certain Convertible Note Purchase Agreement,
dated of even date herewith, among the Company and the Purchasers
(the "Note Purchase Agreement");
-----------------------
WHEREAS, the Company, SIL and Care Corporation Limited,
a British Virgin Islands corporation, are parties to a certain
Stock Purchase Agreement, dated March 31, 1996 (the "SIL
---
Agreement"), pursuant to which the Company, pursuant to
---------
Section 9.2 of the SIL Agreement, granted to SIL certain registration
rights with respect to certain Company securities, and now the
Company wishes to extend those registration rights to apply
to any "Conversion Stock" (as defined in the Note Purchase
Agreement) hereafter held by SIL;
WHEREAS, the Company, AEIC and certain other parties
named therein are parties to a certain Restructuring Agreement,
dated as of March 1, 1996 (the "Restructuring Agreement"),
------------------------
pursuant to which the Company, pursuant to Section 7.2 of the
Restructuring Agreement, granted to AEIC certain registration
rights with respect to certain Company securities, and now the
Company wishes to extend those registration rights to apply to
any "Conversion Stock" hereafter held by AEIC; and
WHEREAS, the Company wishes to grant to Xxxxxx the same
registration rights with respect to any "Conversion Stock"
hereafter held by Xxxxxx as SIL and AEIC are being granted
hereby.
NOW, THEREFORE, in consideration of the benefits to be
realized by the parties hereto under the Note Purchase Agreement
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. SIL. The Company hereby grants to SIL, with
---
respect to any Conversion Stock hereafter held by SIL, those
registration rights contained in Section 9.2 of the SIL Agreement,
and the provisions of said Section 9.2 shall be deemed to be
incorporated herein by this reference as though included herein in
their entirety, mutatis mutandis, subject, however, to Section 4
below. References to "Warner" in said Section 9.2 shall refer to
the Company.
2. AEIC. The Company hereby grants to AEIC, with
----
respect to any Conversion Stock hereafter held by AEIC, those
registration rights contained in Section 7.2 of the Restructuring
Agreement, and the provisions of said Section 7.2 shall be deemed
to be incorporated herein by this reference as though included
herein in their entirety, mutatis mutandis, subject, however, to
Section 4 below.
3. Xxxxxx. The Company hereby grants to Xxxxxx, with
------
respect to any Conversion Stock hereafter held by Xxxxxx, the
same registration rights as granted above to SIL and AEIC, and
all Conversion Stock held by Xxxxxx shall be afforded the full
benefits of the terms of such registration rights to the same
extent as if Xxxxxx had originally been a party to the SIL
Agreement and/or the Restructuring Agreement.
4. Notwithstanding anything contained herein to the
contrary or the provisions of Sections 9.2.1 and 7.2.1 of the SIL
Agreement and Restructuring Agreement, respectively, the Company
shall not be required to file a registration statement upon the
demand of one or more of the Purchasers unless the Company shall
receive a written request from one or more of the Purchasers
requesting registration of at least 30% of the aggregate number
of shares of Conversion Stock initially issued upon conversion of
the Notes (as defined in the Note Purchase Agreement).
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first written above.
COVER-ALL TECHNOLOGIES, INC.
By:_________________________
Authorized Officer
SOFTWARE INVESTMENTS LIMITED
By:_________________________
Authorized Officer
ATLANTIC EMPLOYERS INSURANCE
COMPANY
By:_________________________
Authorized Officer
____________________________
Xxxxx X. Xxxxxx
EXHIBIT D
FORM OF LICENSE AMENDMENT
-------------------------
AMENDMENT TO EXCLUSIVE SOFTWARE LICENSE AGREEMENT
-------------------------------------------------
This is an amendment (the "Amendment") to that certain
---------
Exclusive Software License Agreement dated as of March 31, 1996
by and between Care Corporation Limited, a company incorporated
in the British Virgin Islands, Warner Insurance Service, Inc., a
Delaware corporation whose name has been changed to Cover-All
Technologies, Inc., and, for certain limited purposes set forth
therein, Cover-All Systems, Inc., a Delaware corporation and a
wholly owned subsidiary of Cover-All Technologies, Inc. (the
"Original Agreement"). Capitalized terms utilized in this Amendment
------------------
and not defined herein shall have the meanings ascribed to them
in the Original Agreement.
WHEREAS, this Amendment is being entered into pursuant
to the terms of a certain Convertible Note Purchase Agreement,
dated of even date herewith, among Cover-All Technologies, Inc.,
Software Investments Limited, a British Virgin Islands
corporation, Atlantic Employers Insurance Company, a New Jersey
corporation, and Xxxxx X. Xxxxxx (the "Note Purchase Agreement").
-----------------------
NOW THEREFORE, in consideration of the benefits to be
realized by the parties hereto under the Note Purchase Agreement
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. For purposes of consistency, references to
"WARNER" in Section 2 below are being utilized notwithstanding
that Warner Insurance Services, Inc. has changed its name to
Cover-All Technologies, Inc.
2. Section 4 of the Original Agreement is deleted in
its entirety and the following text is hereby substituted as a
new Section 4 of the Original Agreement:
"4. AGREEMENTS RELATING TO MARKETING EFFORTS. To the
extent set forth in this Section 4, WARNER, Cover-All
and CCL agree to use their commercially reasonable best
efforts to (i) develop and market CARE Software in the
Licensed Territory and (ii) generate License Revenue
and Net Sales. Without limiting the foregoing, WARNER
hereby engages CCL to act as its sales agent with
respect to the CARE Software in the Licensed Territory
until March 31, 1999 (the "Term"). WARNER agrees that
----
CCL shall act as its exclusive sales agent during the
Term with respect to (a) the current marketing and
sales prospects identified by letter of even date
herewith from CCL to WARNER, and (b) any prospect with
respect to which CCL engages in marketing and sales
efforts pursuant to this Section 4 and provides prior
written notice thereof to WARNER. WARNER agrees to pay
CCL a sales commission equal to twenty percent (20%) of
Net Sales derived from CCL's efforts as sales agent
during the Term. As a draw against any commissions
payable to CCL, WARNER agrees, during the Term, to pay
CCL, an amount equal to $10,000 per month (which amount
includes all of CCL's costs and expenses), payable no
later than by the 10th day of each such month. The
failure by WARNER to pay such monthly amount, which
failure is not promptly cured by WARNER after notice
thereof from CCL, shall constitute a breach of this
Section 4, which breach shall result in WARNER having a
nonexclusive license of the Licensed Rights thereafter.
CCL shall have the right, as determined in its sole
discretion, to utilize its subsidiaries, other
affiliates, or agents in the performance of its
marketing and sales efforts pursuant to this Section 4.
3. Except as specifically provided herein, the
Original Agreement shall not be otherwise affected by this
Amendment and shall continue to be in full force and effect in
accordance with its terms.
4. Care Corporation Limited ("CCL") represents and
---
warrants to Cover-all Technologies, Inc. that (i) CCL has all
requisite corporate power to execute and deliver this Amendment,
(ii) all corporate action on the part of CCL necessary for the
authorization, execution and delivery by CCL of this Amendment
and the performance of all of CCL's obligations hereunder has
been taken, and (iii) this Amendment constitutes a valid and
legally binding obligation of CCL enforceable in accordance with
its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other
equitable remedies.
IN WITNESS WHEREOF, the undersigned have entered into
this Amendment as of the ___ day of March, 1997.
CARE CORPORATION LIMITED COVER-ALL TECHNOLOGIES, INC.
(formerly Warner Insurance
Services, Inc.)
By:_______________________ By:_______________________
Authorized Officer Authorized Officer
COVER-ALL SYSTEMS, INC.
By: _______________________
Authorized Officer
EXHIBIT E
FORM OF PURCHASE AGREEMENT AMENDMENT
------------------------------------
AMENDMENT TO STOCK PURCHASE AGREEMENT
-------------------------------------
This is an amendment (the "Amendment") to that certain
---------
Stock Purchase Agreement dated as of March 31, 1996 by and among
Warner Insurance Services, Inc., a Delaware corporation whose
name has been changed to Cover-All Technologies, Inc., Software
Investments Limited, a British Virgin Islands corporation, and
Care Corporation Limited, a British Virgin Islands corporation
(the "Original Agreement"). Capitalized terms utilized in this
------------------
Amendment and not defined herein shall have the meanings ascribed
to them in the Original Agreement.
WHEREAS, this Amendment is being entered into pursuant
to the terms of a certain Convertible Note Purchase Agreement,
dated of even date herewith, among Cover-All Technologies, Inc.,
Software Investments Limited, Atlantic Employers Insurance
Company, a New Jersey corporation, and Xxxxx X. Xxxxxx (the "Note
Purchase Agreement"). ----
------------------
NOW, THEREFORE, in consideration of the benefits to be
realized by the parties hereto under the Note Purchase Agreement
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. For purposes of consistency, references to
"Warner" in Sections 2 and 3 below are being utilized
notwithstanding that Warner Insurance Services, Inc. has changed
its name to Cover-All Technologies, Inc.
2. A new subsection 5(l) is hereby added to the
Original Agreement as follows:
"(l) Commencing March __, 1997, notwithstanding
anything to this contrary provided in this Section 5 or
elsewhere herein, the number of License Shares subject
to repurchase by Warner shall be reduced by an
aggregate of 500,000 License Shares for each $1,000,000
of cumulative Net Sales earned on and after such date
by Warner, such reduction to be effective when each
such $1,000,000 of Net Sales is actually earned by the
Company."
3. Subsections 5(b), 5(c), 5(d) and 5(e) of the
Original Agreement are deleted in their entirety and the
following text is hereby substituted as new subsections 5(b),
5(c), 5(d) and 5(e) of the Original Agreement:
"(b) If during the period ending three (3) years
after the Closing Date Warner recognizes cumulative Net
Sales from $1,000,000 to $1,999,999, then, to the
extent that the number of License Shares subject to
repurchase shall not have been previously reduced
pursuant to subsection 5(l) below, Warner shall have
the right to repurchase 2,000,000 of the License Shares
at a price of $.01 per share, provided, however, that
the License Shares repurchasable by Warner shall be
reduced by 1 share for each $2.00 of Net Sales in
excess of $1,000,000.
(c) If during the period ending three (3) years
after the Closing Date Warner recognizes cumulative Net
Sales from $2,000,000 to $2,999,999, then, to the
extent that the number of License Shares subject to
repurchase shall not have been previously reduced
pursuant to subsection 5(l) below, Warner shall have
the right to repurchase 1,500,000 of the License Shares
at a price of $.01 per share, provided, however, that
the License Shares repurchasable by Warner shall be
reduced by 1 share for each $2.00 of Net Sales in
excess of $2,000,000.
(d) If during the period ending three (3) years
after the Closing Date Warner recognizes cumulative Net
Sales from $3,000,000 to $3,999,999, then, to the
extent that the number of License Shares subject to
repurchase shall not have been previously reduced
pursuant to subsection 5(l) below, Warner shall have
the right to repurchase 1,000,000 of the License Shares
at a price of $.01 per share, provided, however, that
the License Shares repurchasable by Warner shall be
reduced by 1 share for each $2.00 of Net Sales in
excess of $3,000,000.
(e) If during the period ending three (3) years
after the Closing Date Warner recognizes cumulative Net
Sales from $4,000,000 to $4,999,999, then, to the
extent that the number of License Shares subject to
repurchase shall not have been previously reduced
pursuant to subsection 5(l) below, Warner shall have
the right to repurchase 500,000 of the License Shares
at a price of $.01 per share, provided, however, that
the License Shares repurchasable by Warner shall be
reduced by 1 share for each $2.00 of Net Sales in
excess of $4,000,000.
4. Except as specifically provided herein, the
Original Agreement shall not be otherwise affected by this
Amendment and shall continue to be in full force and effect in
accordance with its terms.
5. Each of Software Investments Limited and Care
Corporation Limited represents and warrants, on its own behalf
and not on behalf of the other, to Cover-All Technologies, Inc.
that (i) it has all requisite corporate power to execute and
deliver this Amendment, (ii) all corporate action on its part
necessary for the authorization, execution and delivery by it of
this Amendment and the performance of all of its obligations
hereunder has been taken, and (iii) this Amendment constitutes
its valid and legally binding obligation enforceable in
accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or
other equitable remedies.
IN WITNESS WHEREOF, the undersigned have entered into
this Amendment as of the ____ day of March, 1997.
COVER-ALL TECHNOLOGIES, INC.
By:_________________________
Authorized Officer
SOFTWARE INVESTMENTS LIMITED
By:__________________________
Authorized Officer
CARE CORPORATION LIMITED
By:__________________________
Authorized Officer
EXHIBIT F
FORM OF RELEASE AGREEMENT
-------------------------
RELEASE AND DISCHARGE AGREEMENT
-------------------------------
RELEASE AND DISCHARGE AGREEMENT, dated as of March 14, 1997
among COVER-ALL TECHNOLOGIES, INC., a Delaware corporation (the
"Company"); each of those individuals listed on the signature
-------
page hereto who are current and former directors of the Company
(collectively, the "Directors" and, together with the Company,
---------
the "Releasees"); SOFTWARE INVESTMENTS LIMITED, a British Virgin
---------
Islands corporation ("SIL"); and CARE CORPORATION LIMITED, a
---
British Virgin Islands corporation ("Care" and, together with
SIL, the "Releasors"). ----
---------
R E C I T A L S
WHEREAS, the Company, SIL and Care are parties to that
certain Stock Purchase Agreement dated as of March 31, 1996 (the
"Purchase Agreement");
------------------
WHEREAS, concurrent with the execution hereof SIL and the
Company are entering into a certain Note Purchase Agreement in
the form annexed hereto as Exhibit A (the "Note Agreement") which
--------- --------------
provides that it is a condition to consummating the transactions
thereunder that this Agreement be delivered by SIL and Care;
WHEREAS, the Releasors and Releasees desire to settle all
liabilities, claims, losses, demands, actions and causes of
action whatsoever which Releasors against Releasees had, now
have, or may hereafter have on account of any matter or thing
whatsoever from the beginning of time to the date of this
Agreement relating to, arising under or in any way respecting (i)
the Purchase Agreement, any document entered into in connection
with or pursuant to the Purchase Agreement (including, without
limitation, the Exclusive Software License Agreement) and any
information provided or statements made by any of the Releasees
(whether written or oral) in connection with the negotiation and
execution of the Purchase Agreement or any such document entered
into in connection therewith, (ii) the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 (whether or not
relating to the Purchase Agreement or the transactions
contemplated thereby), (iii) any information provided or
statements made by any of the Releasees in any other public
document and/or press release or otherwise which cover the same
or similar matters contained in the Form 10-K described above,
(iv) any information provided or statements made by any of the
Releasees (whether to Releasors or in any public document and/or
press release or otherwise), with respect to the continuing
impact of discontinued operations, funds needed and available for
continuing operations or the uses of the Company's working
capital, and (v) the fiduciary duty of the Directors as such duty
relates to any of the matters include in the foregoing clauses
(i), (ii), (iii) and (iv) (collectively, the "Released Claims");
and ---------------
WHEREAS, the Releasors desire to release and forever
discharge Releasees and the Releasees' respective successors,
assigns and Affiliates (as defined herein) and, with respect to
the Directors, their respective heirs, executors, distributees
and administrators (collectively, the "Releasee Related Parties")
of and from any Released Claims. ------------------------
NOW, THEREFORE, in consideration of the foregoing premises,
the entering into of the Note Agreement and the performance
thereunder of the obligations of the parties thereto and for
other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereby agree as
follows:
1. GENERAL RELEASE. The Releasors, on their own behalf
---------------
and on behalf of their respective employees, shareholders,
partners, officers and directors and any and all Affiliates of
the foregoing (collectively, the "Releasor Related Parties")
------------------------
hereby release and forever discharge the Releasees and the
Releasee Related Parties of and from any and all Released Claims.
2. INDEMNITY. In the event that any Releasor or any
---------
Releasor Related Party takes any action in violation of the
general release and discharge provided in paragraph 1 hereof, the
Releasors, jointly and severally, agree to indemnify and hold
harmless the Releasees and the Releasee Related Parties from and
against any and all liabilities, claims, losses, demands,
actions, causes of action and expenses (including reasonable
attorneys' fees, which fees and other costs shall be paid as
incurred and regardless of the outcome of any proceeding) arising
out of or in connection with any asserted, alleged, threatened or
litigated claim, lawsuit, arbitration or other proceeding
asserted or brought by any Releasor or any Releasor Related Party
with respect to the matters released pursuant to paragraph 1
hereof.
3. COVENANT NOT TO XXX. The Releasors will not file,
-------------------
initiate, commence, institute, maintain, prosecute, aid, assist
or voluntarily participate in any way in any action at law, suit
in equity or other proceeding, whether administrative, judicial
or otherwise, or voluntarily appear, testify or produce documents
in any such action, suit or proceeding against the Releasees or
any Releasee Related Party concerning any act or omission of any
such person occurring prior to the date of this Agreement, which
act or omission is the subject of the general release provided in
paragraph 1 hereof. The foregoing notwithstanding, the Releasors
may be compelled by legal process in connection with a proceeding
not initiated by the Releasors to produce documents, participate
in depositions or provide testimony.
4. NO ADMISSION OF LIABILITY. The parties hereto
-------------------------
acknowledge that this Agreement is being executed in order to
settle and forever set at rest all controversies of whatsoever
nature which may exist among the parties in connection with the
Released Claims, and that neither this Agreement nor the releases
contained herein constitute an acknowledgment or admission of
liability in any way on the part of any party hereto or its
successors, assigns, agents, officers, directors or employees,
all of whom expressly deny any liability for any and all claims
of whatsoever nature.
5. NO SUBROGATION. The Releasors warrant and represent to
--------------
the Releasees that they have not made or suffered any assignment,
subrogation, hypothecation or other disposition by operation of
law or otherwise, of any claim, right, interest, demand,
obligation or cause of action among them stated to have been
released pursuant to paragraph 1 hereof. The Releasors, jointly
and severally, agree to indemnify and hold harmless the Releasees
and the Releasee Related Parties from any such claim asserted by
any person or entity claiming to be an assignee or subrogee of
any claim, right, interest, obligation, demand or cause of action
among the parties that has been released pursuant to paragraph 1
hereof.
6. NO PRIOR AGREEMENTS. Other than with respect to the
-------------------
Purchase Agreement, the undersigned represent that no promises,
inducements or agreements not herein expressed have been made to
the undersigned, that neither party has any right to rely on any
other prior or contemporaneous representation by any one
concerning this Agreement, and that this Agreement contains the
complete and entire Agreement between the parties hereto with
respect to the matters described herein, which may not be
terminated, amended, modified or changed except in a writing
signed by all parties to this Agreement. Each of the undersigned
has read the foregoing Agreement, has had it explained to it or
him by its attorney, fully appreciates and understands this
Agreement and freely and of its or his own accord is executing
this Agreement.
7. MISCELLANEOUS.
-------------
(a) Binding Effect. This Agreement shall be binding
--------------
upon and inure to the benefit of the parties hereto and the
Releasee Related Parties and the Releasor Related Parties, as the
case may be.
(b) Notices. Any notice provided for herein shall be
-------
in writing and shall be given or made (i) when personally
delivered; (ii) when sent by a telecopier and confirmed within
forty eight (48) hours by letter mailed or delivered to the party
to be notified at its or his address set forth herein; (iii)
three (3) days following deposit for mailing by first class
registered or certified mail, return receipt requested; or (iv)
one day following deposit for delivery through an overnight
express mail service providing next-day delivery, to the address
of the other party set forth herein:
If to the Company:
Cover-All Technologies, Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Releasors:
Software Investments Limited
Care Corporation Limited
c/o Moore Xxxxxxxx International Services
(BVI) Limited
Xxxxxx Building
P.O. Box 3186
Main Street
Road Town
Tortola, British Virgin Islands
Attention: Xxxxx Raward
Fax: (000) 000-0000
and
Software Investments Limited
First Floor Offices
17 Queens Street
St. Helier
Jersey, Channel Islands
Attention: Xxxxx Xxxxxxx or
Xxxxxxx XxXxxxxxx
Fax: (000) 00-000-000000
With a copy to:
Gardere & Xxxxx, L.L.P.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(c) Severability. If any provision of this Agreement,
------------
or portion hereof, shall be held invalid or unenforceable by a
court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion
thereof, and this Agreement shall be carried out as if any such
invalid or unenforceable provision or portion thereof were not
contained herein. In addition, any such invalid or unenforceable
provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or
limited to the extent necessary to render the same valid and
enforceable.
(d) Waiver. No waiver by a party hereto of a breach
------
or default hereunder by the other party shall be considered valid
unless in writing signed by such first party, and no such waiver
shall be deemed a waiver of any subsequent breach or default of
the same or any other nature.
(e) Titles. The titles of the Sections and paragraphs
------
of this Agreement are inserted merely for convenience and ease of
reference and shall not affect or modify the meaning of any of
the terms, covenants or conditions of this Agreement.
(f) Definition of Affiliate. For purposes of this
-----------------------
Agreement, an "Affiliate" of a specified person is a person that
---------
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the
person specified.
(g) APPLICABLE LAW. THIS AGREEMENT, AND ALL OF THE
--------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS
OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO PRINCIPLES
RELATING TO CONFLICTS OF LAW.
(h) Representations and Warranties of Releasors. Each
-------------------------------------------
of SIL and Care represents and warrants, on its own behalf and
not on behalf of the other, to the Releasees that (i) it has all
requisite corporate power to execute and deliver this Agreement,
(ii) all corporate action on its part necessary for the
authorization, execution and delivery by it of this Agreement and
the performance of all of its obligations hereunder has been
taken, and (iii) this Agreement constitutes its valid and legally
binding obligation enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable
remedies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first written above.
RELEASORS:
SOFTWARE INVESTMENTS LIMITED
By:__________________________
Authorized Officer
CARE CORPORATION LIMITED
By:___________________________
Authorized Officer
RELEASEES:
COVER-ALL TECHNOLOGIES, INC.
By:___________________________
Authorized Officers
______________________________
XXXXXX XXXXXX
______________________________
XXXXXX XXXXXXX
______________________________
XXXXXXX XXXXX
______________________________
XXXXX X. XXXXXX
______________________________
XXXXXX X. XXXXXX
______________________________
XXXXX X. XXXXXXXX
EXHIBIT A
---------
FORM OF NOTE PURCHASE AGREEMENT
-------------------------------
EXHIBIT G
WIRE INSTRUCTIONS
-----------------
Title of Account: Xxxx & Priest Special Account
Bank: Citibank
ABA No.: 000-000-000
Acct. No.: 09322946
Attn.: Xxxxxx Xxxxxxxxxx
