EXHIBIT 10(o)(1)
SECOND AMENDMENT
TO
THE CONVERTIBLE LOAN AGREEMENTS
AND
FIRST AMENDMENT
TO
INTERCREDITOR AGREEMENT
This Second Amendment to the Convertible Loan Agreements and First
Amendment to Intercreditor Agreement (this "AMENDMENT"), is made as of this 21st
day of August, 2002, by and among Cover-All Technologies Inc., a Delaware
corporation (the "COMPANY"), Renaissance US Growth & Income Trust PLC, a public
limited company registered in England and Wales ("RENAISSANCE PLC"), and BFSUS
Special Opportunities Trust PLC, a public limited company registered in England
and Wales ("BFSUS") (Renaissance PLC and BFSUS are collectively referred to as
the "RENAISSANCE LENDERS"), and Renaissance Capital Group, Inc., a Texas
corporation, as agent for the Lenders (the "RENAISSANCE AGENT"). All capitalized
terms used, but not defined, herein shall have the meanings given to them in the
Loan Agreements (as defined below).
WHEREAS, the Company, the Renaissance Lenders and the Renaissance
Agent are parties to the Convertible Loan Agreement, dated as of June 28,
2001, as amended pursuant to the First Amendment to Convertible Loan
Agreements as of March 30, 2002 (the "RENAISSANCE LOAN AGREEMENT"),
pursuant to which the Renaissance Lenders purchased 8.00% Convertible
Debentures (the "RENAISSANCE DEBENTURES") from the Company for an
aggregate principal amount of One Million Four Hundred Thousand Dollars
($1,400,000);
WHEREAS, the Company and Xxxx Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxxx (collectively, the "ADDITIONAL LENDERS" and, together with the
Renaissance Lenders, the "LENDERS"), and Xxxxxx Xxxxxxxxx, as agent for
the Additional Lenders, are parties to the Convertible Loan Agreement,
dated as of June 28, 2001, as amended pursuant to the First Amendment to
Convertible Loan Agreements as of March 30, 2002 (the "ADDITIONAL LOAN
AGREEMENT" and, together with the Renaissance Loan Agreement, the "LOAN
AGREEMENTS"), pursuant to which the Additional Lenders purchased 8.00%
Convertible Debentures (the "ADDITIONAL DEBENTURES" and, together with the
Renaissance Debentures, the "2001 DEBENTURES") from the Company for an
aggregate principal amount of Four Hundred Thousand Dollars ($400,000);
WHEREAS, the Lenders are parties to an Intercreditor Agreement,
dated as of June 28, 2001 (the "INTERCREDITOR AGREEMENT"), and, pursuant
to Section 3 of the Intercreditor Agreement, the prior written
consent of the holders of 66-2/3% of the outstanding 2001 Debentures is
required to modify or amend the 2001 Debentures or any related loan
documents; and
WHEREAS, pursuant to Section 12.02 of the Loan Agreements, the
Company, the Lenders, and the Renaissance Agent desire to amend the Loan
Agreements to provide for the issuance to, and purchase by, the
Renaissance Lenders of additional 8.00% Convertible Debentures from the
Company for an aggregate principal amount of Seven Hundred Thousand
Dollars ($700,000) (the "ADDITIONAL RENAISSANCE DEBENTURES") and the
action by the Lenders as hereinafter set forth shall be deemed to amend
the Loan Agreements and the Intercreditor Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agree as
follows:
1. AMENDMENTS TO LOAN AGREEMENTS. Each of the Loan Agreements is hereby
amended as follows:
a. The definition of "Debentures" in Section 1.01 of each of the
Loan Agreements is amended in its entirety to read as follows:
"Debentures" shall mean the Debentures executed by Borrower
and delivered pursuant to the terms of this Agreement, together with
any amendments, renewals, extensions or modifications to this
Agreement.
b. The definition of "Loan" in Section 1.01 of each of the Loan
Agreements is amended in its entirety to read as follows:
"Loan" shall mean the money lent to Borrower pursuant to this
Agreement (along with any amendments hereto), along with any
accrued, unpaid interest thereon.
c. Section 2.01(a) of the Renaissance Loan Agreement is hereby
amended by deleting the phrase "One Million Four Hundred Thousand Dollars
($1,400,000)" and replacing it with the phrase "Two Million One Hundred
Thousand Dollars ($2,100,000)".
d. Section 2.03 of each of the Loan Agreements is amended in its
entirety to read as follows:
INTEREST RATE AND INTEREST PAYMENTS. Interest on the Principal
Amount outstanding from time to time shall accrue at the rate of
8.00% per annum, with the first installment of accrued, unpaid
interest being due and payable in accordance with the terms of the
Debentures and
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subsequent payments of accrued, unpaid interest being due and
payable on the first day of each month thereafter. Overdue principal
and interest on the Debentures shall bear interest at the rate of
18% per annum. Interest on the Principal Amount of the Debentures
shall be calculated, from time to time, on the basis of the actual
days elapsed in a year consisting of 365 days.
e. Section 2.04 of each of the Loan Agreements is amended in its
entirety to read as follows:
MATURITY. If not sooner redeemed or converted, the Debentures
shall mature on the date specified in the Debentures, at which time
all the remaining unpaid principal, interest and any other charges
then due under this Agreement shall be due and payable in full. The
Debentures shall be prepaid PRO RATA with any prepayments of
Indebtedness.
f. Section (a) of Schedule 7.01 to each of the Loan Agreements
shall be amended in its entirety to read as follows:
CURRENT RATIO. The Borrower will not permit its Current Ratio as of
September 30, 2001, and as of the end of each fiscal quarter thereafter,
to be less than .5:1, provided that, as of December 31, 2002, and at the
end of each fiscal quarter thereafter, the Borrower will not permit such
Current Ratio to be less than 1:1.
2. AMENDMENT TO INTERCREDITOR AGREEMENT. The Intercreditor Agreement is
hereby amended as follows:
Paragraph A is amended by deleting the following phrase:
"the aggregate principal amount of $1,400,000 evidenced by
Borrower's 8.00% Convertible Debentures of even date herewith,"
and replacing it with
"the aggregate principal amount of $2,100,000 evidenced by
Borrower's $1,400,000 principal amount 8.00% Convertible Debentures
of even date herewith and Borrower's $700,000 principal amount 8.00%
Convertible Debentures of August 21, 2002,"
3. FEES AND EXPENSES. Borrower shall reimburse the Renaissance Agent
for its legal fees and expenses incurred in connection with this Amendment and
the issuance and purchase of the Additional Renaissance Debentures; provided,
that, such reimbursement shall not exceed $7,000.
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4. LEGAL OPINION. The parties acknowledge and agree that the
effectiveness of the terms of this Amendment and the purchase of the Additional
Renaissance Debentures by the Renaissance Lenders is subject to the receipt by
the Renaissance Lenders of a legal opinion from the Company and its U.S.
subsidiaries in the form and substance satisfactory to the Renaissance Lenders
as attached hereto as EXHIBIT A.
5. ACKNOWLEDGMENT, AGREEMENT, AND REAFFIRMATION OF GUARANTORS. The
parties acknowledge and agree that the effectiveness of the terms of this
Amendment and the purchase of the Additional Renaissance Debentures by the
Renaissance Lenders is subject to the receipt by the Renaissance Lenders of an
executed Acknowledgment, Agreement, and Reaffirmation of Guarantors (the
"ACKNOWLEDGMENT"). The fully executed Acknowledgment shall be attached hereto as
EXHIBIT B.
6. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7. REAFFIRMATION. Except as specifically provided for herein, the Loan
Agreements and the Intercreditor Agreement shall not be otherwise affected by
this Amendment and shall continue to be in full force and effect in accordance
with its terms. Notwithstanding the generality of the foregoing, the Company
reaffirms and acknowledges the accuracy, in all material respects, as of the
date hereof, of the representations and warranties contained in Article IV of
the Loan Agreements subject to the schedules attached hereto which schedules
amend and restate the corresponding numbered schedules delivered by the Company
to the Lenders in connection with the Loan Agreements; provided, that such
reaffirmation shall not reflect the issuance by the Company to the Lenders of
$1,800,000 principal amount 8% Convertible Debentures and the documents,
agreements and instruments entered into in connection therewith or contemplated
thereby.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original, but all
together, only one agreement.
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IN WITNESS WHEREOF, this Amendment is entered into as of the date set
forth above.
THE COMPANY:
COVER-ALL TECHNOLOGIES INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman of the Board of
Directors, President and
Chief Executive Officer
LENDERS:
RENAISSANCE US GROWTH
& INCOME TRUST PLC
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxxx, Director
BFSUS SPECIAL OPPORTUNITIES
TRUST PLC
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxxx, Director
AGENT:
RENAISSANCE CAPITAL GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxxx
President and CEO
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