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