EXHIBIT 10(Q)(5)
BORROWER SECURITY AGREEMENT
(WITH IP SCHEDULE)
This SECURITY AGREEMENT (this "Agreement"), dated as of June 28, 2001,
is entered into among COVER-ALL TECHNOLOGIES INC., a Delaware corporation
("Borrower"), RENAISSANCE US GROWTH & INCOME TRUST PLC ("RUSGIT"), BFSUS SPECIAL
OPPORTUNITIES TRUST PLC, a public limited company registered in England and
Wales ("BFSUS") (RUSGIT and BFSUS collectively referred to as "Lender"), and
RENAISSANCE CAPITAL GROUP, INC., a Texas corporation, as agent for the Lender
(the "Agent").
RECITALS
A. Lender, Borrower and Agent have entered into a Convertible Loan
Agreement of even date herewith (the "Loan Agreement"), pursuant to which Lender
will lend to Borrower the aggregate principal amount of $1,400,000 evidenced by
Borrower's 8.00% Convertible Debentures of even date herewith (the
"Debentures").
B. As a condition for entering into the Loan Agreement and providing the
Loan, Lender required that Borrower grant a security interest in its assets as
collateral for such Loan.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the parties agree as follows:
1. GRANT OF SECURITY INTEREST. (a) In order to secure payment when due of
the Obligations now existing or hereafter incurred, Borrower hereby irrevocably
grants to the Lender a first and prior security interest in the following
property of the Borrower (the "Collateral"), whether now owned or existing, or
hereafter acquired, owned, existing or arising (whether by contract or operation
of law), and wherever located, which shall be retained by Lender, until the
Obligations have been paid in full and the Loan Agreement has been terminated.
(i) All accounts (including inter-company receivables), contract
rights, chattel paper and rights of payment of every kind
(collectively, "Accounts") and instruments and general
intangibles of Borrower.
(ii) All bank accounts of Borrower.
(iii) All monies and property of any kind of Borrower, now or
hereafter in the possession or under the control of Lender, Agent
or a bailee of Lender.
(iv) All licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade names, assumed names,
service marks and service xxxx applications and other
intellectual property of Borrower, as more particularly described
on SCHEDULE 1 attached hereto and incorporated herein for all
purposes.
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(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 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
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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 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:
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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.
c. This Agreement shall be governed by and construed and enforced in
accordance with the substantive laws of the State of Texas, without regard
to the conflicts of laws provisions thereof, and the applicable laws of the
United States. Venue and jurisdiction shall be in the state or federal
courts in Dallas County, Texas.
d. Borrower hereby consents to the jurisdiction of the courts of the
State of Texas in any action or proceeding which may be brought against it
under or in connection with this Agreement or any transaction contemplated
hereby or to enforce any agreement contained herein and, in the event any
such action or proceeding shall be brought against it, Borrower agrees not
to raise any objection to such jurisdiction or to the laying of venue in
Dallas County, Texas or, if applicable, any other county in any state in
which Collateral is located.
e. All capitalized terms, unless otherwise specified, have the meanings
assigned to them in the Loan Agreement and the Debentures.
f. Any notices or other communications required or permitted to be given
by this Agreement or any other documents and instruments referred to herein
must be (i) given in writing and personally delivered, mailed by prepaid
certified or registered mail or sent by overnight service, such as FedEx,
or (ii) made by telex or facsimile transmission delivered or transmitted to
the party to whom such notice or communication is directed, with
confirmation thereupon given in writing and personally delivered or mailed
by prepaid certified or registered mail.
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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
If to Lender to:
Renaissance US Growth & Income Trust PLC
c/o Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BFSUS Special Opportunities Trust PLC
c/o Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Agent to:
Renaissance Capital Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attn.: Xxxx X. Xxxxxx
Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any notice delivered personally in the manner provided herein will be
deemed given to the party to whom it is directed upon the party's (or its
agent's) actual receipt. Any notice addressed and mailed in the manner
provided herein will be deemed given to the party to whom it is addressed
at the close of business, local time of the recipient, on the fourth
business day after the day it is placed in the mail, or, if earlier, the
time of actual receipt.
g. Capitalized terms used herein, unless otherwise defined herein,
have the definitions given them in the Loan Agreement among Borrower,
Lender and Agent.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
and year written above.
BORROWER:
COVER-ALL TECHNOLOGIES INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx, Chairman and CEO
LENDER:
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Director
BFSUS SPECIAL OPPORTUNITIES TRUST PLC
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Director
AGENT:
RENAISSANCE CAPITAL GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President and CEO
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