AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1996
REGISTRATION NO. 333-6131
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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COVER-ALL TECHNOLOGIES INC.
(FORMERLY WARNER INSURANCE SERVICES, INC.)
(Exact name of Registrant as specified in its charter)
18-01 Pollitt Drive
Delaware Fair Lawn, New Jersey 07410
(State or other (201) 794-4800
jurisdiction (Address, including zip code, and 13-2698053
of telephone number, (I.R.S. Employer
incorporation or including area code, of Registrant's Identification
organization) principal executive offices) No.)
---------------
Alfred J. Moccia
Chairman of the Board and
Chief Executive Officer
Cover-All Technologies Inc.
Fair Lawn, New Jersey 07410
(201) 794-4800
(Name, address, including zip code, and telephone number,
including area code, of Registrant's agent for service)
---------------
Copies of all communications, including communications sent to agent for
service, should be sent to:
Leonard Gubar, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
(212) 603-2288
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions and other factors.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE>
COVER-ALL TECHNOLOGIES INC.
CROSS-REFERENCE SHEET
HEADING OR LOCATION IN
----------------------
FORM S-3 ITEM NUMBER AND HEADING PROSPECTUS
-------------------------------- ----------
1. Forepart of Registration
Statement and Outside
Front Cover Page of
Prospectus . . . . . . . . . . Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus. . . Inside Front and Outside
Back Cover Pages
of Prospectus; Available
Information; Additional
Information
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges . . . . . . . Prospectus Summary; Risk
Factors
4. Use of Proceeds . . . . . . . Use of Proceeds
5. Determination of Offering
Price . . . . . . . . . . . . Outside Front Cover Page
of Prospectus; Plan of
Distribution
6. Dilution . . . . . . . . . . . Not Applicable
7. Selling Securityholders . . . Selling Securityholders
8. Plan of Distribution . . . . . Plan of Distribution
9. Description of Securities to
be Registered . . . . . . . . Description of Securities-
Common Stock
10. Interests of Named Experts and
Counsel . . . . . . . . . . . Legal Matters; Experts
11. Material Changes . . . . . . . Prospectus Summary; Price
Range of Common Stock
12. Incorporation of Certain
Information by Reference . . . Incorporation of Certain
Documents by Reference
13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities . . . . . . . . . Not Applicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
Subject to Completion Dated July 10, 1996
PROSPECTUS
6,591,528 SHARES OF COMMON STOCK
COVER-ALL TECHNOLOGIES INC.
This Prospectus relates to an aggregate of 6,591,528 shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"),
of Cover-All Technologies Inc. (formerly Warner Insurance Services, Inc.)
(the "Company") held by four holders (the "Selling Securityholders"). Of
the aggregate number of Shares offered hereby, 5,531,806 are shares of
Common Stock held by the Selling Securityholders, 862,847 are shares of
Common Stock issuable upon exercise of certain warrants (the "Selling
Securityholder Warrants") held by certain of the Selling Securityholders
and 196,875 are shares of Common Stock issuable upon exercise of certain
additional warrants (the "Additional Warrants") held by one of the Selling
Securityholders. The Selling Securityholder Warrants are exercisable by
the holders thereof, at an exercise price of $1.80 per share of Common
Stock (subject to adjustment pursuant to the anti-dilution provisions of
the Selling Securityholder Warrants), at any time until February 28, 2001.
The Additional Warrants are exercisable by the holder thereof, at an
exercise price of $2.00 per share of Common Stock (subject to adjustment
pursuant to the anti-dilution provisions of the Additional Warrants), at
any time until March 30, 2001. See "Prospectus Summary-Recent
Developments," "Description of Securities" and "Selling Securityholders."
The Shares offered by the Selling Securityholders by this Prospectus
may be sold from time to time by the Selling Securityholders or by their
transferees. The distribution of the Shares offered hereby may be effected
in one or more transactions that may take place in the over-the-counter
market, including ordinary brokers' transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders. Sales of the
Shares may be made pursuant to this Prospectus or pursuant to Rule 144
under the Securities Act of 1933, as amended. See "Plan of Distribution."
The Common Stock is listed on the Nasdaq SmallCap Market SM under the
symbol "COVR." On July 8, 1996, the closing sale price of the Common Stock
was $5 1/4, according to the Nasdaq SmallCap Market SM. See "Price Range
of Common Stock."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholders.
-----------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" ON PAGE 12.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________________________
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
AVAILABLE INFORMATION
Cover-All Technologies Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. The
reports, proxy statements and other information filed by the Company with
the Securities and Exchange Commission (the "Commission") can be inspected
and copied at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also can be obtained by mail
from the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. See "Incorporation of
Certain Documents by Reference."
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), with the
Commission in Washington, D.C. with respect to the securities offered by
this Prospectus. This Prospectus does not contain all the information set
forth in or annexed as exhibits and schedules to the Registration
Statement. For further information with respect to the Company and the
securities offered by this Prospectus, reference is made to the
Registration Statement and to the financial statements, schedules and
exhibits filed as part hereof or incorporated by reference herein. Copies
of the Registration Statement, together with such financial statements,
schedules and exhibits, may be obtained from the public reference
facilities of the Commission at the addresses listed above, upon payment of
the charges prescribed therefor by the Commission. Statements contained in
this Prospectus as to the contents of any contract or other document
referred to are not necessarily complete and, in each instance, reference
is made to the copy of such contract or other documents, each such
statement being qualified in its entirety by such reference. Copies of
such contracts or other documents, to the extent that they are exhibits to
the Registration Statement, may be obtained from the public reference
facilities of the Commission, upon the payment of the charges prescribed
therefor by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following information, filed by the Company with the Commission
pursuant to the Exchange Act, is incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996; and
3. The Company's Proxy Statement dated May 6, 1996.
4. The Company's Current Report on Form 8-K filed on July 1, 1996.
5. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on May 22, 1996 under the Exchange
Act, including any amendment or report filed for the purpose of updating
such description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the
date of this Prospectus and prior to the termination of this offering,
shall be deemed to be incorporated by reference into this Prospectus and to
be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, including any beneficial owner, upon the written
or oral request of such person, a copy of any or all of the foregoing
documents incorporated herein by reference (other than the exhibits to such
documents). Requests should be directed to the Company, 18-01 Pollitt
Drive, Fair Lawn, New Jersey, Attention: Raul F. Calvo-Vice President,
telephone number (201) 794-4800.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to,
and should be read in conjunction with, the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in
this Prospectus and in the documents incorporated herein by reference.
Effective June 21, 1996, the Company changed its name from Warner
Insurance Services, Inc. to Cover-All Technologies Inc.
THE COMPANY
GENERAL
Cover-All Technologies Inc. (the "Company" or "Cover-All"), a Delaware
corporation formed in 1971, is a provider of software products for the
property/casualty and health care insurance industries through its wholly-
owned subsidiary, COVER-ALL Systems, Inc. ("CASI").
Historically, the Company also provided services to the automobile
insurance industry, including underwriting, policy maintenance and claims
adjustment, which was carried out by its Insurance Services Division
("ISD"). However, in March 1996, the ISD business was transferred to a
subsidiary of The Robert Plan Corporation in connection with the settlement
of two lawsuits between the Company and The Robert Plan Corporation and the
release of the Company from its obligations under long-term processing
contracts with the customers of ISD. See "Recent Developments."
OVERVIEW
Cover-All offers standard as well as customized software application
products, together with implementation support services, to the
property/casualty and health care insurance industries.
In December 1989, the Company purchased, through its wholly-owned
subsidiary, the assets related to the exclusive proprietary rights to a PC-
based software application for policy-rating and issuance for
property/casualty insurance companies. This acquired software has been
enhanced and is the Company's "Classic" product line, which is one of the
Company's two current product lines.
The Classic product line is a self-contained rating, issuance and
transaction management application system utilized in the property/casualty
insurance industry. This software was developed using the Microfocus COBOL
language, and the Company is currently upgrading this product line to be
used in the Windows operating system. The Company believes that this
software product provides cost-effectiveness and flexibility for self-
contained Local Area Network ("LAN") systems. The Classic product is in
use in over 40 property/casualty insurance companies.
Since 1993, Cover-All has been developing its second product line
entitled the Total Administrative Solution ("TAS 2000"). TAS 2000 is a
suite of computer applications for property/casualty and health care
insurers designed to enable a client-driven re-engineering of the insurer's
business processes. TAS 2000 applications run on commodity priced open
computer systems and use state-of-the-art client/server software technology
provided by Oracle Corporation ("Oracle").
PRODUCT DESCRIPTION
CLASSIC PRODUCT LINE
The Classic product line is a set of LAN-based PC software packages
designed to automate the rating and issuance tasks in the property and
casualty insurance industry. Functionality includes rating and issuance
for quoting new business, mid-term changes, cancellations, reinstatements
and renewals. Multiple recipient copies of all relevant documentation for
each of these transactions, including quote summaries, declaration pages
and mandatory and optional manuscript forms, are printed by the system's
print engine. This functionality is supported for property and casualty
lines of business in a user friendly system.
The Company believes that the Classic product line brings to the
customer certain useful functions, features and capabilities. Some are
line of business specific and some are line of business independent. These
include:
. Clear and comprehensive data collection
. Various on-line help screens
. On-line ISO Commercial Lines Manual Tables and
Footnotes
. Easy and direct system navigation
. Standard Bureau coverages and rates support
. Company customized coverages and rates support
. Fully automated recipient driven issuance of
declaration pages, worksheets, ID card, etc.
. Help Desk assistance
. Remote diagnostic and fix capabilities
The Classic products were originally brought to the marketplace in the
mid 1980's and subsequently have been enhanced to provide greater
functionality and to better utilize newer technology. The cost
effectiveness of the system rests on an inherent flexibility which can
accommodate specific customer requirements while retaining a single source
integrated core system. The Classic product line is based upon several
specific proprietary design features. Cover-All is currently working to
upgrade the Classic product line for use in the Windows operating system.
This will make it a Graphical User Interface ("GUI") application and is
expected to be completed by year-end 1996. This enhancement will increase
user friendliness and provide the customers with an easier integration of
peripheral support applications (e.g., imaging, work flow management,
etc.).
TAS 2000 PRODUCT LINE
The TAS 2000 product line was developed to be used as client/server
applications in the property/casualty and health care insurance industries.
Cover-All created the TAS 2000 product line to better position itself to
penetrate the larger customer market segment. The client/server
architectural concept allows companies to take advantage of the power of
distributed processing. The TAS 2000 product line includes the following
application modules:
. Client Management
. End User Tools
. Agency Profile Management
. Policy Administration
. Billing Management
. Claims Administration
. Statistical System
The TAS 2000 has Windows compliant GUI to enhance its user
friendliness. The TAS 2000 can be used on many different client/server
hardware platforms and offers capability to process the voluminous
transactions that are common to large scale insurance operations. The TAS
2000 is an architecture of open LAN and Wide Area Network ("WAN") based
modules possessing varying elements of interdependence.
TAS 2000's product design is distinguished from competitive offerings
by the integrated use of Oracle's relational database and the Designer 2000
and Developer 2000 tool sets. The underlying database and language used
for the TAS 2000 products are the Oracle Relational Database Management
System and the Oracle Cooperative Development Environment products. These
products provide an integrated application environment. Through Oracle's
tools, these new products take advantage of the power of Oracle Version 7
on over 90 different server platforms. This software allows processing to
be centralized, dedicated to specific server(s) or clients or distributed
across the network.
The changing of the century is an issue which has never been faced in
the computer industry and poses a massive problem for automation systems
previously designed and currently being used. Companies must modify their
systems to accommodate a four-digit year in order to properly affect the
calculations and sorting routines which provide the core of their data
processing accuracy. Although seemingly minor, this change requires
finding, analyzing, implementing and testing tens of thousands of isolated
incidents within millions of lines of source code. The cost for the
industry can reach into the millions of dollars to affect proper change.
Both Cover-All product lines already accommodate the advent of the new
century.
The TAS 2000 product line was developed with an emphasis on quality
from the conceptual design stage using Oracle CASE tools through to the
physical coding and testing phases. Cover-All intends to continue to
enhance both of its product lines based on customer needs and changes in
technology. Cover-All is also committed to maintaining a quality support
service program for its customers.
COMPETITIVE PRODUCTS
Cover-All's competitors for both of its product lines are in most
instances larger and financially stronger than the Company. The Classic
product line competes primarily with three competitors who hold leadership
positions for LAN-based policy rating and issuance software used by
property/casualty insurance companies. The TAS 2000 primary competitors
are also larger and financially stronger than the Company. The Company
believes, however, that its products offer customers certain advantages
not available from its competitors as to functionality and hardware
requirements.
MARKETING
The Company maintains a sales staff at its principal executive offices
in Fair Lawn, New Jersey. The Company also participates in and displays
its software products at trade shows organized by industry trade groups.
RESEARCH AND DEVELOPMENT
Cover-All's business is characterized by rapid technological change.
The Company's success will depend, in part, on its ability to keep its
products current based on new technologies. Accordingly, the Company must
maintain ongoing research and development programs to continually add value
to its suite of products, as well as any possible expansion of its suite of
products. The Company believes that research and development expenditures
will continue to constitute a significant percentage of revenues.
The Company has expensed for research and development $957,564,
$1,023,920, $1,932,920, $2,499,436, $533,260 and $805,563 for the three
months ended March 31, 1996 and 1995, the years ended December 31, 1995 and
1994, the two months ended December 31, 1993 and the year ended October 31,
1993, respectively.
BACKLOG
Backlog is not applicable to the business of the Company.
MAJOR CUSTOMERS
The Classic product line is in use in over forty property/casualty
insurance companies while the TAS 2000 product line is currently in use in
two property/casualty insurance companies. TAS 2000 was licensed to the
first health care insurer in 1996. The Company's revenues from major
customers (more than 10 percent of total revenues) for the years ended
December 31, 1995 and 1994 as a percentage of total revenue were as
follows:
YEAR ENDED YEAR ENDED
CUSTOMER DECEMBER 31, 1995 DECEMBER 31, 1994
-------- ----------------- -----------------
New Jersey State
Medical
Underwriters . . . . 18% -
Sun Alliance Management
Services . . . . . . 16% -
Secura, Inc. . . . . . 11% -
Empire Insurance
Company . . . . . . . - 17%
Millers Insurance
Group . . . . . . . . - 13%
No customer represented more than 10 percent of total revenues prior
to 1994. In 1995, export sales were made to a U.K. customer of
approximately $640,000.
EMPLOYEES
The Company had 80 employees at June 1, 1996. None of the Company's
employees are represented by a labor union, and the Company has not
experienced any work stoppages. The Company believes that relations with
its employees are good.
RECENT DEVELOPMENTS
INSURANCE SERVICES DIVISION
In March 1996, the Company entered into a series of agreements (the
"ISD Agreements") which provided for the transfer and discontinuance of its
Insurance Services Division ("ISD") operations. Pursuant to the ISD
Agreements (i) the Company issued an aggregate of 2,476,547 and 137,586
shares of its common stock, par value $0.01 per share (the "Common Stock"),
respectively, and 1,181,250 and 65,625 warrants (the "Selling
Securityholder Warrants"), respectively, to Atlantic Employers Insurance
Company ("Atlantic") and Electric Insurance Company ("Electric") (each of
which is a Selling Securityholder) in exchange for the release of the
Company from its obligations to provide insurance services to such
companies, and (ii) the Company issued to The Robert Plan Corporation
("RPC") (which is a Selling Securityholder) an aggregate of 642,068 shares
of Common Stock and 306,250 Selling Securityholder Warrants in exchange for
the settlement and dismissal of lawsuits with The Robert Plan Corporation.
Effective March 1, 1996, the Company has discontinued providing insurance
processing services to the automobile insurance industry. The 3,256,201
shares of Common Stock issued as provided in (i) and (ii) above are
referred to as the "Settlement Shares."
As a part of the restructuring transactions, the Company transferred
certain assets, employees, contracts and leased premises relating to its
ISD business to a subsidiary of The Robert Plan Corporation, which replaced
the Company as the provider of insurance services to the ISD customers.
Under the ISD Agreements, the Company also paid an aggregate of $887,500 to
Atlantic, Electric and RPC and an aggregate of $1.6 million to another of
the Company's former ISD customers to settle certain claims. Under the ISD
Agreements, the Company was granted the option (the "Repurchase Option"),
exercisable for a period of six months, to (i) purchase 50 percent of the
Settlement Shares at a cash price equal to the greater of $3.00 or 50
percent of the then-market price of a share of the Company's Common Stock,
and (ii) acquire 50 percent of the Selling Securityholder Warrants at a
cash price equal to $1.00 per Selling Securityholder Warrant.
On March 31, 1996, the Company entered into a series of agreements
(the "SIL/Care Agreements") with Software Investments Limited ("SIL"),
which is a Selling Securityholder, and Care Corporation Limited ("Care")
whereby the Company:
(A) sold to SIL for total proceeds of $3,022,391: (i) 1,412,758
shares of Common Stock (the "SIL Shares") for $2.00 per share, and
(ii) the Additional Warrants, (together with the SIL Shares, the "SIL
Securities") to purchase during a five-year period an aggregate of
196,875 shares of Common Stock exercisable at $2.00 per share, for
$1.00 per SIL Warrant; and
(B) assigned to SIL the Repurchase Option.
In addition, under the SIL/Care Agreements, the Company was granted by
Care the exclusive license for the Care software systems for use in the
workers' compensation and group health claims administration markets in
Canada, Mexico and Central and South America. In exchange for this
license, the Company issued to Care 2,500,000 shares of Common Stock (the
"Care Shares"). Pursuant to the SIL/Care Agreements, if during the three
years after closing, this license results in $5,000,000 or more in revenues
by the Company, then the Care Shares will be fully earned; otherwise,
depending upon the level of revenue reached, the Company will have the
right to repurchase portions of the Care Shares at $.01 per share based
upon the level of revenues actually achieved. Under certain circumstances,
based upon aggregate net sales in excess of $10,000,000 from a maximum of
two separate sales during such three-year period, the Company may be
required to grant to Care five-year Warrants to buy an additional 1,000,000
shares of Common Stock at $2.00 per share. Accordingly, the Company
recorded a $5,000,000 software license on the Consolidated Balance Sheet as
of March 31, 1996.
Pursuant to the terms of the SIL/Care Agreements, on May 1, 1996, SIL
exercised the Repurchase Option pursuant to which it (i) acquired 1,628,101
of the Settlement Shares at $3.00 per share, and (ii) at $1.00 per Warrant,
776,562 Selling Securityholder Warrants to acquire 776,562 shares of Common
Stock at $2.00 per share. SIL exercised these Selling Securityholder
Warrants on May 6, 1996, resulting in the Company receiving $1,553,124 in
additional equity.
As a result of the issuance of the SIL Securities and the Care Shares,
the anti-dilution provisions of the Selling Securityholder Warrants
required that certain adjustments be made to the exercise price thereunder
and the aggregate number of shares of Common Stock issuable. Pursuant to
such provisions, the exercise price of the Selling Securityholder Warrants
was reduced to $1.80 from $2.00 per share and the aggregate number of
shares of Common Stock issuable was increased to 1,725,694 from 1,553,125.
Of such increased number of shares of Common Stock, 86,285 were issued to
SIL in respect of its May 6, 1996 exercise of Selling Securityholder
Warrants referred to above.
ALERION INSURANCE COMPANY OF NEW JERSEY ("ALERION")
In late 1993, the Company established Alerion, a wholly-owned
property/casualty insurance subsidiary. In this connection, the Company
also changed to a calendar year for financial and tax reporting purposes to
bring the Company into line with the calendar year reporting requirements
of the insurance industry.
By early 1994, the Company had funded Alerion with approximately $10
million of cash and securities and Alerion entered into a reinsurance
agreement to reinsure a portion of the risk on certain insurance policies
written by a primary insurer. In late 1994, the Company decided that risk
taking, even as a reinsurer, was not an attractive business strategy. The
Company and the primary insurer agreed to end the reinsurance arrangement
in the fourth quarter of 1994 and "commute" all reinsurance interests and
liabilities back to the inception of the agreement, thus eliminating all
reinsurance activity of Alerion. Therefore, Alerion's operations for all
periods consisted of immaterial investment activity.
Alerion sold its securities and returned all of its remaining cash in
1996, having surrendered its Certificate of Authority to transact insurance
business in New Jersey.
PROPERTIES
The Company's principal headquarters are located in Fair Lawn, New
Jersey where it occupies approximately 36,000 square feet under a lease
which expires in 2000 at a current annual rental expense of approximately
$400,000.
In addition, the Company also leases a facility with approximately
22,000 square feet in Somerset, New Jersey. This lease expires in 2002
with an annual rental expense of approximately $270,000. This facility was
previously used by ISD, and the Company is currently exploring
opportunities to either continue utilizing this facility or transfer or
sell this lease to a third-party.
In connection with the ISD Agreements, the Company's lease for its
former principal headquarters has been transferred to The Robert Plan
Corporation.
The Company believes that these facilities are well maintained and
adequate to meet its needs in the foreseeable future.
LEGAL PROCEEDINGS
In March 1994, Material Damage Adjustment Corporation ("MDA"), a
subsidiary of The Robert Plan Corporation and a subcontractor for the
Company performing claims processing work, instituted an action in the
Superior Court of New Jersey seeking injunctive relief requiring that the
Company turn over to MDA in excess of $1 million that the Company had
withheld from certain claims fees allegedly owed to MDA. This action arose
out of the Company's servicing contract with the Market Transition Facility
of New Jersey ("MTF"). The Company had withheld the funds as a set off to
cover unpaid invoices for data processing services rendered by the Company
for MDA. MDA also added a claim for approximately $2.5 million of
surcharge fees paid to the Company by the MTF. The MTF was brought into
the case to resolve disputes between MTF and MDA over refunds of claims
fees paid on claims later closed without payment. The Company vigorously
contested MDA's claims and asserted counterclaims against MDA to establish
the Company's entitlement to the disputed sums.
In May 1994, the Company filed an action in the Superior Court of New
Jersey against Lion Insurance Company, National Consumer Insurance
Corporation and The Robert Plan Corporation seeking payment of unsatisfied
invoices under an April 1991 agreement totalling approximately $2.7
million. Under the agreement, the Company agreed to provide data
processing services for a three-year term in support of Lion Insurance
Company's "depopulation pool" automobile insurance business in New Jersey.
Lion Insurance Company is a subsidiary of The Robert Plan Corporation whose
affiliate, National Consumer Insurance Corporation, has taken over the
"depopulation pool" business. The Robert Plan Corporation guaranteed Lion's
performance and payment.
On March 1, 1996, in connection with the ISD Agreements, the two
lawsuits described above were settled as part of the overall settlement
with certain of the Company's insurance services customers.
On February 2, 1995, Sol M. Seltzer commenced an action in the Supreme
Court of New York against Mr. Krieger, a director and former President of
the Company, and each of the other members of the then Board of Directors
of the Company. The plaintiff, Sol M. Seltzer, who purports to sue
derivatively on behalf of the Company and CASI, was a vice president of the
Company and a director of CASI until he resigned from such positions in
late 1994. The plaintiff alleges, among other things, breach of fiduciary
duty, waste and mismanagement, as well as other alleged wrongful acts by
the Board and the former President, including among other things, self-
dealing and misuse of corporate funds by the former President. The
plaintiff seeks, among other things, compensatory damages in an amount to
be determined at trial and punitive damages in an aggregate amount of $12
million.
The Company, and the other defendants, are vigorously contesting
Mr. Seltzer's claims. The Company believes that this lawsuit lacks
substantial merit. A motion to dismiss the complaint has been filed and is
pending.
On February 6, 1995, the Company commenced an action in the Superior
Court of New Jersey against Sol M. Seltzer, a former vice president of the
Company and a director of CASI, alleging fraud, mismanagement, negligent
misrepresentation and breach of fiduciary duty with respect to the
development and implementation of the TAS 2000 software product. The
Company seeks compensatory and punitive damages in an amount to be
determined at trial. Discovery has not been completed in this case.
The Company's principal executive offices are located at 18-01 Pollitt
Drive, Fair Lawn, New Jersey 07410, and its telephone number is (201)
794-4800.
THE OFFERING
Securities offered hereby . . . . . 6,591,528 shares of Common Stock
(the "Shares")(1)
Shares of Common Stock outstanding
after this Offering . . . . . . . . 17,708,069 shares(2)
Nasdaq SmallCap Market SM symbol . COVR
Use of proceeds . . . . . . . . . . The Company will not receive any
proceeds from the sale of the
Shares by the holders thereof (the
"Selling Securityholders"). The
Company, however, will receive
aggregate proceeds of approximately
$1,947,000 upon the exercise of the
Selling Securityholder Warrants and
the Additional Warrants, although
there is no assurance that any of
such Selling Securityholder
Warrants or Additional Warrants
will be so exercised.
Risk factors . . . . . . . . . . . The securities offered hereby
involve a high degree of risk. See
"Risk Factors."
-------------------------------
(1) Of the aggregate number of Shares offered hereby, 5,531,806 are
shares of Common Stock held by the Selling Securityholders,
862,847 are shares of Common Stock issuable upon exercise of the
Selling Securityholder Warrants held by certain of the Selling
Securityholders and 196,875 are shares of Common Stock issuable
upon exercise of the Additional Warrants held by one of the
Selling Securityholders. See "Selling Securityholders."
(2) Includes an aggregate of 1,059,722 shares of Common Stock
issuable upon the exercise of currently outstanding Warrants, but
does not include an aggregate of 683,716 shares of Common Stock
issuable upon exercise of currently outstanding options under the
Company's option plans (collectively, the "Plans") and an
aggregate of 954,113 additional shares of Common Stock reserved
for issuance upon the exercise of options which may be granted
under the Plans.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS TWO MONTHS
ENDED YEAR ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, YEARS ENDED OCTOBER 31,
------------ ------------ ------------ -----------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA:
Software licensing,
maintenance and professional
services revenues........... $ 1,120 $ 1,054 $ 4,119 $ 1,927 $ 224 $ 1,740 $ 1,802 $ 1,317
Loss from continuing
operations(1)............... (798) (2,158) (3,544) (7,466) (781) (1,943) (850) (384)
Income (loss) from discontinued
operations less applicable
income taxes/(benefit)(2)... -- (1,330) (7,108) (6,754) 1,158 5,653 4,116 2,034
Loss on disposal of discontinued
operations including $1,000 for
anticipated losses in 1996 prior
to sale, no tax benefit provided -- -- (750) -- -- -- -- --
Net income (loss)............ (798) (3,488) (11,402) (14,220) 377 3,710 3,266 1,650
Loss per share from
continuing operations....... (.07) (.25) (.41) (.84) (.09) (.21) (.09) (.04)
Net income (loss)
per share(3)................ (.07) (.41) (1.33) (1.60) .04 .40 .36 .19
Cash dividends per
share....................... -- -- -- $.02 $.01 $.03 -- --
BALANCE SHEET DATA:
Working capital
(deficiency)................ $ 209 $ 162 $(8,717) $ 3,110 $12,475 $12,843 $17,102 $12,386
Total assets................. 14,331 15,279 8,369 18,795 22,748 22,443 18,544 14,451
Short-term debt.............. -- -- -- 2,000 -- -- -- --
Stockholders' equity
(deficit)................... 8,266 1,901 (6,013) 5,376 20,574 20,541 17,637 13,302
</TABLE>
------------------
(1) Includes a $1,165 ($.14 per share) special charge in the three
months ended 1995 and the year ended December 31, 1995 and
$3,373 ($.25 per share net of tax) special charge in the year
ended December 31, 1994.
(2) Revenues of the discontinued operations (ISD) were none, $6,868,
$20,228, $32,893, $8,589, $68,515, $88,858 and $53,541,
respectively, for each of the periods above.
(3) All per share amounts are based on the increased number of
shares giving retroactive effect to the impact of the five-
for-four stock split by way of a twenty-five percent (25%)
stock dividend declared on March 18, 1993 and the five percent
(5%) stock dividend declared on December 19, 1991.
RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prior to acquiring any of the securities offered hereby, prospective
purchasers should carefully consider the following factors, as well as
other information described elsewhere in this Prospectus.
Recent Losses; Historical Losses for Cover-All. The Company has
experienced losses from continuing operations of $798,000, $3,544,000,
$7,466,000, $781,000 and $1,943,000 for the three months ended March 31,
1996, the years ended December 31, 1995 and 1994, the two months ended
December 31, 1993 and the year ended October 31, 1993. There can be no
assurance that the Company will ever operate profitably.
Need For Additional Financing. The Company will need significant
additional financing in order to continue to fund the research and
development of its software products and to generally expand and grow its
business. At December 31, 1995, the Company had a stockholders'
deficit of $6,013,000 and a working capital deficiency of approximately
$8,717,000. As a result of the cumulative benefit to the equity of the
Company by virtue of the transactions described under the caption
"Prospectus Summary-Recent Developments," the Company had stockholders'
equity of $8,266,000 and working capital of $209,000 at March 31, 1996. To
the extent that the Company continues to be required to fund operating
losses, the Company's financial position would deteriorate. There can be
no assurance that the Company will be able to find significant additional
financing at all or on terms favorable to the Company.
Dependence on Product Development. The Company is currently investing
significant resources in product development and expects to continue to do
so in the future. The Company's future success will depend on its ability
to continue to enhance its current product line and to continue to develop
and introduce new products that keep pace with competitive product
introductions and technological developments, satisfy diverse and evolving
insurance industry requirements and otherwise achieve market acceptance.
There can be no assurance that the Company will be successful in continuing
to develop and market on a timely and cost-effective basis product
enhancements or new products that respond to technological advances by
others, or that these products will achieve market acceptance. In
addition, the Company has in the past experienced delays in the
development, introduction and marketing of new and enhanced products, and
there can be no assurance that the Company will not experience similar
delays in the future. Any failure by the Company to anticipate or respond
adequately to changes in technology and insurance industry preferences, or
any significant delays in product development or introduction, would have a
material adverse effect on the Company's business, operating results and
financial condition.
No Assurance of Market Acceptance of Company Products. The future
success of the Company will be dependent upon the Company's ability to
increase significantly the number of insurance companies that purchase the
Company's software products. As a result of the intense competition in the
Company's industry and the rapid technological changes which characterize
it, there is no assurance that the Company's products will achieve
significant market acceptance. Further, insurance companies are typically
characterized by slow decision-making and numerous bureaucratic and
institutional obstacles which will make the Company's efforts to
significantly expand its customer base difficult.
Rapid Technological Change. The demand for the Company's products is
impacted by rapid technological advances, evolving industry standards in
computer hardware and software technology, changing insurance industry
requirements and frequent new product introductions and enhancements that
address the evolving needs of the insurance industry. The process of
developing software products such as those offered by the Company is
extremely complex and is expected to become increasingly complex and
expensive in the future with the introduction of new platforms and
technologies. The introduction of products embodying new technologies and
the emergence of new industry standards and practices can render existing
products obsolete and unmarketable. The Company's future success depends
upon its ability to anticipate or respond to technological advances,
emerging industry standards and practices in a timely, cost-effective
manner. There can be no assurance that the Company will be successful in
developing and marketing new products or enhancements to existing products
that respond to technological changes or evolving industry standards. The
failure to successfully respond to such changes and evolving standards on a
timely basis, or at all, could have a material adverse effect upon the
Company's business, operating results and financial condition.
Competition. Both the computer software and the insurance software
systems industries are highly competitive. There are a number of larger
companies, including computer manufacturers, computer service and software
companies and insurance companies, that have greater financial resources
than the Company that currently offer and have the technological ability to
develop software products similar to those offered by the Company. Very
large insurers, which internally develop systems similar to those of the
Company, may or may not become major customers of the Company for software.
These companies present a significant competitive challenge to the
Company's business. The Company competes on the basis of its service,
price, system functionality and performance and technological advances.
Dependence on Key Personnel. The Company's success depends to a
significant extent upon a limited number of members of senior management
and other key employees, including Peter C. Lynch, the President and Chief
Operating Officer of both the Company and CASI. The Company does not
maintain key man life insurance on any such persons. The loss of the
service of one or more key managers or other employees could have a
material adverse effect upon the Company's business, operating results or
financial condition. In addition, the Company believes that its future
success will depend in large part upon its ability to attract and retain
additional highly skilled technical, management, sales and marketing
personnel. Competition for such personnel in the computer software
industry is intense. There can be no assurance the Company will be
successful in attracting and retaining such personnel, and, the failure to
do so, could have a material adverse effect on the Company's business,
operating results or financial condition.
Dependence Upon Proprietary Technology; Risk of Third Party Claims of
Infringement. The Company's success and ability to compete is dependent in
part upon its proprietary software technology. The Company also relies on
certain software that it licenses from others. The Company relies on a
combination of trade secret, copyright and trademark laws, nondisclosure
and other contractual agreements and technical measures to protect its
proprietary rights. The Company currently has no patents or patent
applications pending. Despite the Company's efforts to protect is
proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that the Company
regards as proprietary. There can be no assurance that the steps taken by
the Company to protect its proprietary technology will prevent
misappropriation of such technology, and such protection may not preclude
competitors from developing products with functionality or features similar
to the Company's products. While the Company believes that its products
and trademarks do not infringe upon the proprietary rights of third
parties, there can be no assurance that the Company will not receive future
communications from third parties asserting that the Company's products
infringe, or may infringe, the proprietary rights of third parties. Any
such claims, with or without merit, could be time-consuming, result in
costly litigation and diversion of technical and management personnel,
cause product shipment delays or require the Company to develop non-
infringing technology or enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company or at all. In the event of a successful claim of
product infringement against the Company and failure or inability of the
Company to develop non-infringing technology or license the infringed or
similar technology, the Company's business, operating results and financial
condition could be materially adversely affected.
Dependence on Major Customers. In 1994 and 1995, the Company's
software products operations were dependent on certain major customers, two
of which accounted for approximately 30% of total revenues in 1994 and
three of which accounted for approximately 45% of total revenues in 1995.
The Company anticipates that its operations will continue to be
characterized by dependence on the continuing business of major customers.
As a result, the loss of any such major customer or the Company's inability
to continue to attract new major customers could have a material adverse
effect upon the Company's business, operating results and financial
condition.
Shares Eligible For Resale. This Prospectus covers the sale by the
Selling Securityholders of an aggregate of 6,591,528 shares of Common
Stock. Although the Selling Securityholders may sell the Shares from time
to time under this Prospectus, to the extent that a significant number of
the Shares are sold during a short period of time, the market price of the
Common Stock could be adversely impacted. Further, the prospect of the
Shares being sold into the market (the so-called "over-hang") may in and of
itself create continuing pressures on the price of the Common Stock. In
addition, there are an aggregate of 1,621,875 shares of Common Stock
issuable under the Plans which are registered for resale under Form S-8
under the Securities Act.
No Assurance of Continued Quotation on the Nasdaq SmallCap Market SM.
The Company's Common Stock is listed on the Nasdaq SmallCap Market SM.
However, no assurance can be given that the Company will be able to satisfy
the criteria for continued listing on the Nasdaq SmallCap Market SM. For
continued listing on the Nasdaq SmallCap Market SM, a company must, among
other things, have $2,000,000 in total assets, $1,000,000 in total capital
and surplus, $1,000,000 in market value of public float and a minimum bid
price of $1.00 per share. If the Company is unable to satisfy the
requirements for continued listing on the Nasdaq SmallCap Market SM,
trading, if any, in the Common Stock would be conducted in the over-the-
counter market in what are commonly referred to as the "pink sheets" or on
the NASD OTC Electronic Bulletin Board. In such an event, an investor may
find it more difficult to dispose of, or to obtain accurate price
quotations as to the market value of, the securities offered hereby.
"Penny Stock" Regulations May Impose Certain Restrictions on
Marketability of Securities. The Securities and Exchange Commission (the
"Commission") has adopted regulations which generally define "penny stock"
to be an equity security that has a market price (as defined) of less than
$5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exceptions. Because the Common Stock is currently listed on the
Nasdaq SmallCap Market SM, such securities are exempt from the definition
of "penny stock." However, if the Common Stock is removed from listing by
the Nasdaq SmallCap Market SM at any time, the Common Stock may become
subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess
of $1,000,000 or annual incomes exceeding $200,000 or $300,000 together
with their spouse). For transactions covered by these rules, the broker-
dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction
(other than exempt transactions) involving a penny stock, the rules require
the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The broker-
dealer also must disclose the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities
and, if the broker-dealer is the sole market-maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's securities and
may affect the ability of investors to sell the Company's securities in the
secondary market. Furthermore, if the securities offered hereby are
removed from listing by the Nasdaq SmallCap Market SM, trading, if any, in
the Common Stock would be conducted in the over-the-counter market in what
are commonly referred to as the "pink sheets" or on the NASD OTC Electronic
Bulletin Board. In such an event, an investor may find it more difficult
to dispose of, or to obtain accurate price quotations as to the market
value of, the securities offered hereby.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
securities offered by this Prospectus. The Company, however, will receive
aggregate proceeds of approximately $1,947,000 upon the exercise of the
Selling Securityholder Warrants and Additional Warrants, although there is
no assurance that any of such Selling Securityholder Warrants or Additional
Warrants will be so exercised.
DIVIDEND POLICY
The Company does not anticipate paying cash dividends in the
foreseeable future. The Company currently intends to retain all earnings,
if any, for use in the expansion of the Company's business. The
declaration and payment of future dividends, if any, will be at the sole
discretion of the Board of Directors and will depend upon the Company's
profitability, financial condition, cash requirements, future prospects and
other factors deemed relevant by the Board of Directors. The Company paid
quarterly cash dividends of $0.01 per share from the first quarter of 1993
through the second quarter of 1994 but discontinued this policy in the
third quarter of 1994.
PRICE RANGE OF COMMON STOCK
Prior to March 4, 1996, the Common Stock was traded on the New York
Stock Exchange (the "NYSE"). Upon the Common Stock's delisting from the
NYSE, commencing March 8, 1996, the Common Stock was traded in the over-
the-counter market and, as of March 15, 1996, the Common Stock was quoted
on the NASD OTC Bulletin Board. On May 23, 1996, the Common Stock was
listed on the Nasdaq SmallCap Market SM under the symbol "WISI." Effective
July 1, 1996, the symbol was changed to "COVR" in connection with the
change of the Company's name. The following chart sets forth (i) the high
and low sales prices of the Common Stock on the NYSE in 1994 and 1995 and
in the first quarter of 1996 through March 4, 1996, (ii) the high and low
last sales prices of the Common Stock on the NASD OTC Bulletin Board from
March 15, 1996 through May 22, 1996 as reported by the National Quotation
Bureau, Inc., and (iii) the high and low last sale prices of the Common
Stock on the Nasdaq SmallCap Market SM as reported by the Nasdaq SmallCap
Market SM from May 23, 1996 through June 30, 1996.
HIGH LOW
---- ---
1994
----
1st Quarter . . . . . . . $5.25 $4.125
2nd Quarter . . . . . . . 4.25 2.375
3rd Quarter . . . . . . . 4.25 2.25
4th Quarter . . . . . . . 4.125 2.125
1995
----
1st Quarter . . . . . . . $3.00 $1.50
2nd Quarter . . . . . . . 1.75 0.875
3rd Quarter . . . . . . . 2.25 1.25
4th Quarter . . . . . . . 1.625 1.00
1996
----
January 1 to March 4 . . . $3.50 $1.625
March 15 to May 22(1) . . 7.375 2.75
May 23 to June 30 . . . . 6.875 4.125
-----------------------
(1) These last sales quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not necessarily
represent actual transactions.
As of June 30, 1996, there were approximately 811 holders of record of
the Common Stock. This number does not include beneficial owners who may
hold their shares in street name.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, par value $0.01 per share. As of May 31, 1996,
there were 16,648,347 shares of Common Stock outstanding.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted on by stockholders. The holders of shares
of Common Stock are not entitled to cumulate their votes in elections for
directors, which means that holders of more than half the outstanding
shares of Common Stock can elect all of the directors of the Company
standing for election.
The holders of shares of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors in
its discretion from any assets legally available therefor. In the event of
the dissolution of the Company, whether voluntary or involuntary, the
holders of Common Stock are entitled to share ratably in the assets of the
Company legally available for distribution to its stockholders. The
holders of Common Stock have no preemptive, subscription, conversion or
redemption rights and are not subject to further calls or assessments or
rights of redemption by the Company.
WARRANTS
Selling Securityholder Warrants. As of the date hereof, an aggregate
of 862,847 Selling Securityholder Warrants to purchase an aggregate of
862,847 shares of Common Stock at $1.80 per share are issued and are
outstanding. The exercise price of the Selling Securityholder Warrants was
originally $2.00 per share, but has been reduced to $1.80 as a result of
the anti-dilution provisions of the Selling Securityholder Warrants which
required such adjustment upon the issuance of the SIL Securities and the
Care Shares. Holders of unexercised Selling Securityholder Warrants are
not entitled to receive dividends or other distributions, receive notice of
any meeting of stockholders, the right to vote or to consent to any action
of the stockholders, or to any other rights of stockholders. The exercise
price and number of shares of Common Stock issuable upon exercise of the
Selling Securityholder Warrants will be adjusted in the event that the
Company (i) issues or sells any (A) shares of Common Stock, or (B) rights
to subscribe for, options to purchase, or any securities convertible into
or exchangeable for, shares of Common Stock, in either case for a
consideration less than 95% of the "Market Price" (as defined), (ii) pays a
dividend or makes any other distribution with respect to the Common Stock
in shares of any class or series of its capital stock, (iii) subdivides its
outstanding Common Stock, (iv) combines its outstanding Common Stock into a
smaller number of shares, (v) effects a reclassification of the Common
Stock, or (vi) merges, consolidates or sells all or substantially all of
its properties and assets to a buyer under specified circumstances. The
Selling Securityholder Warrants expire on February 28, 2001.
Additional Warrants. As of the date hereof, an aggregate of 196,875
Additional Warrants to purchase an aggregate of 196,875 shares of Common
Stock at $2.00 per share are issued and outstanding. All of the Additional
Warrants are currently owned by SIL. The terms of the Additional Warrants
are substantially identical to those of the Selling Securityholder
Warrants, except for the $2.00 exercise price and that the Additional
Warrants expire on March 30, 2001.
CLASSIFICATIONS OF THE BOARD OF DIRECTORS
The Certificate of Incorporation also provides that the members of the
Board of Directors of the Company will be classified into three classes,
with the term of each class to run for three years and expire at successive
annual meetings of stockholders. Thus, it would take a minimum of two
annual meetings of stockholders to change the majority of the Board of
Directors. Vacancies on the Board of Directors that may occur between
annual meetings may be filled only by the Board of Directors. In addition,
this provision specifies that any director elected to fill a vacancy on the
Board will serve for the balance of the term of the replaced director.
STOCKHOLDER RIGHTS PLAN
On November 17, 1989, the Company adopted a Stockholder Rights Plan
and declared a dividend distribution of one Right for each outstanding
share of Common Stock. Under certain conditions, each Right shall
initially entitle the registered holder thereof to purchase one-fifth of
one share of Common Stock at a purchase price of $10.00, subject to
adjustment. The Rights will be exercisable only if (i) a person or group
has acquired, or obtained the right to acquire, 15% or more of the
outstanding shares of Common Stock (other than a person that acquires the
stock directly from the Company in a transaction that the Company's
independent Directors determine to be in the best interests of the Company
and its stockholders) or (ii) following the commencement of a tender offer
or exchange offer for 15% or more of the then outstanding shares of Common
Stock. Each Right will entitle its holder to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property, or other
securities of the Company) having a value equal to two times the purchase
price of the Right under certain circumstances, including the acquisition
of 20% of the outstanding Common Stock. All rights holders, except the
acquiror, may purchase a number of shares of Common Stock equal to $10.00
(subject to adjustment under the terms of the Rights Plan) divided by 50%
of the market price of the Company's Common Stock on the date which is ten
days after a public announcement by the Company that a person or group has
acquired, or obtained the right to acquire, 15% or more of the outstanding
shares of Common Stock. In the event that the Company is acquired in a
merger or other business combination transaction in which the Company is
not the surviving corporation, the rights holders may purchase the
acquiror's shares at the similar discount.
The Company may redeem the Rights at $0.01 each until ten days
following the date on which a person or group of affiliated persons has
acquired, or obtained the right to acquire, the beneficial ownership of 15%
or more of the outstanding shares of Common Stock. The Rights will expire
on December 4, 1999 unless earlier redeemed by the Company.
CERTAIN PROVISIONS IN THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's Certificate contains certain provisions that would have
an effect of delaying, deferring or preventing a change of control of the
Company in connection with certain business combinations. Article Seventh
provides that the affirmative vote of not less than 80% of the outstanding
shares of voting stock is required to approve (i) the sale (or similar
transfer) of all or substantially all of the assets of the Company to a
"related corporation," (ii) the consolidation of the Company with or its
merger into a "related corporation," (iii) the merger into the Company of a
"related corporation," (iv) any agreement relating to the transactions
referred to in (i) through (iii), and (v) any amendment to said Article
Seventh. A "related corporation" is any corporation which, together with
its affiliated and associated persons (as such terms are defined) owns of
record or beneficially more than 5% of the Company's outstanding voting
stock entitled to vote on the subject transaction. The foregoing
provisions, however, do not apply if a majority of the Company's
disinterested directors approve the subject transaction, in which event
approval of such transaction shall require only such affirmative vote as is
otherwise required by law.
In addition, Article Fifth of the Certificate requires the approval of
80% of the voting stock to remove a director without cause, to alter,
repeal or modify those provisions of the Company's By-Laws relating to the
number, election and terms of directors, newly created directorships and
vacancies and removal of directors, and to amend said Article Fifth
(relating generally to the Company's Board of Directors).
TRANSFER AGENT
First Union National Bank is the Transfer Agent and Registrar for the
Company's Common Stock.
SELLING SECURITYHOLDERS
Pursuant to the ISD Agreements and the SIL/Care Agreements, the
Company has obligated itself to file and cause to become effective a
registration statement covering the Shares, Selling Securityholder Warrants
and Additional Warrants issued to the respective Selling Securityholders
thereunder. This Registration Statement is filed pursuant to such
Agreements.
An aggregate of 6,591,528 Shares are being offered by the Selling
Securityholders pursuant to this Prospectus. Of the aggregate number of
Shares offered hereby, 5,531,806 are shares of Common Stock held by the
Selling Securityholders, 862,847 are shares of Common Stock issuable upon
exercise of the Selling Securityholders Warrants and 196,875 are shares of
Common Stock issuable upon exercise of the Additional Warrants.
The Selling Securityholders are expected to sell their Shares on a
delayed or continuous basis. As a result, the Registration Statement of
which this Prospectus forms a part has been filed pursuant to Rule 415
under the Securities Act to afford holders of the Shares the opportunity to
sell them in public transactions rather than pursuant to exemptions from
the registration and prospectus delivery requirements of the Securities
Act.
The following table set forth certain information with respect to each
Selling Securityholder for whom the Company is registering the Shares for
resale to the public. The Company will not receive any of the proceeds
from the sale of such securities. Except as otherwise described under the
caption "Prospectus Summary-Recent Developments," to the Company's
knowledge there are no material relationships between any of the Selling
Securityholders and the Company, nor have any such material relationships
existed within the past three years.
COMMON STOCK COMMON STOCK
OWNED OWNED
PRIOR TO SHARES AFTER
NAME OF SELLING SECURITYHOLDER OFFERING OFFERED OFFERING
------------------------------ ------------ ------- ------------
Software Investments Limited 4,100,581(1) 4,100,581(1) 0
Atlantic Employers Insurance 1,894,523(2) 1,894,523(2) 0
Company
The Robert Plan Corporation 491,173(3) 491,173(3) 0
Electric Insurance Company 105,251(4) 105,251(4) 0
----------
(1) Includes an aggregate of 196,875 Shares issuable upon exercise of the
Additional Warrants. See "Prospectus Summary-Recent Developments."
(2) Includes an aggregate of 656,250 Shares issuable upon exercise of the
Selling Securityholder Warrants. See "Prospectus Summary-Recent
Developments."
(3) Includes an aggregate of 170,139 Shares issuable upon exercise of the
Selling Securityholder Warrants. See "Prospectus Summary-Recent
Developments."
(4) Includes an aggregate of 36,458 Shares issuable upon exercise of the
Selling Securityholder Warrants. See "Prospectus Summary-Recent
Developments."
PLAN OF DISTRIBUTION
The securities offered hereby may be sold from time to time directly
by the Selling Securityholders. Alternatively, the Selling Securityholders
may from time to time offer such securities through underwriters, dealers
or agents. The distribution of securities by the Selling Securityholders
may be effected in one or more transactions that may take place on the
over-the-counter market, including ordinary brokers' transactions,
privately-negotiated transactions or through sales to one or more broker-
dealers for resale of such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. Sales of the
Shares may be made pursuant to this Prospectus or pursuant to Rule 144
under the Securities Act of 1933, as amended.
At the time a particular offer of securities is made by or on behalf
of a Selling Securityholder, to the extent required, a Prospectus will be
distributed which will set forth the number of shares and warrants being
offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for shares and warrants purchased from the Selling
Securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
Under the Exchange Act, and the regulations thereto, any person
engaged in a distribution of the securities of the Company offered by this
Prospectus may not simultaneously engage in market-making activities with
respect to such securities of the Company during the applicable "cooling
off" period (nine days) prior to the commencement of such distribution. In
addition, and without limiting the foregoing, the Selling Securityholders
will be subject to applicable provisions of the Exchange Act and the rules
and regulations thereunder, including without limitation, Rule 10b-7, in
connection with transactions in such securities, which provisions may limit
the timing of purchases and sales of such securities by the Selling
Securityholders.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed
upon for the Company by Reid & Priest LLP, New York, New York. Leonard
Gubar, a partner in such firm, is a Director of the Company. In addition,
Mr. Gubar owns 3,547 shares of Common Stock and holds options to purchase
an aggregate of 10,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1995,
have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
<PAGE>
===========================================================================
No dealer, salesperson or any other person has been authorized to
give any information or to make any representation not contained in this
Prospectus in connection with the offer made hereby, and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Common Stock offered hereby
in any jurisdiction to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information contained herein is correct as
of any time subsequent to the date hereof, or that there has been no change
in the affairs of the Company since the date hereof.
-----------------
TABLE OF CONTENTS PAGE
----
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Price Range of Common Stock . . . . . . . . . . . . . . . . . . . . . . 15
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . 16
Selling Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 18
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
===========================================================================
6,591,528 SHARES OF COMMON STOCK
COVER-ALL TECHNOLOGIES INC.
----------
PROSPECTUS
----------
===========================================================================
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be borne by the Company
in connection with the sale and distribution of the Common Stock offered
hereby. All of the amounts shown are estimates, except the SEC filing fee.
SEC filing fee . . . . . . . . . . . . . . . . . . . . . . $12,643.24
Legal fees and expenses . . . . . . . . . . . . . . . . . $40,000.00
Accounting fees and expenses . . . . . . . . . . . . . . . $10,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . $ 5,000.00
----------
Total fees and expenses . . . . . . . . . . . . . . . $67,643.24
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(i) The Registrant's Amended Certificate of Incorporation includes a
provision that eliminates the personal liability of its directors to the
Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director to the maximum extent permitted by the Delaware General
Corporation Law ("DGCL"). The DGCL does not permit liability to be
eliminated (i) for any breach of a director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions, as provided in Section 174 of the DGCL, or (iv) for any
transaction for which the director derived an improper personal benefit.
(ii) Article X of the Company's By-Laws provides generally for
indemnification of all officers and directors to the fullest extent
permitted under the above-referenced Delaware statute. Section 145 of the
DGCL provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at its request in
such capacity in another corporation or business association, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
(iii) The Company also has a policy insuring it and its directors
and officers against certain liabilities.
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
2 Certificate of Merger of Warner Computer Systems, Inc. (a
New York corporation) into the Registrant, filed on June 11,
1985 [incorporated by reference to Exhibit 2 to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on January 29, 1986].
3(a) Certificate of Incorporation of the Registrant filed on
April 22, 1985 [incorporated by reference to Exhibit 3(a) to
the Registrant's Annual Report on Form 10-K (Commission File
No. 0-13124) filed on January 29, 1986].
3(b) Certificate of Amendment of Certificate of Incorporation of
the Registrant filed on May 6, 1987 [incorporated by
reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 (Commission File No. 33-17533) filed
on September 29, 1987].
3(c) Certificate of Amendment of Certificate of Incorporation of
the Registrant filed on March 26, 1990 [incorporated by
reference to Exhibit 3(d) to the Registrant's Quarterly
Report on Form 10-Q (Commission File No. 0-13124) filed on
June 14, 1990].
3(d) Certificate of Amendment of Certificate of Incorporation of
the Registrant filed on March 18, 1992 [incorporated by
reference to Exhibit 1 to the Registrant's Current Report on
Form 8-K (Commission File No. 0-13124) filed on March 30,
1992].
3(e)* Certificate of Amendment of Certificate of Incorporation of
the Registrant filed on June 21, 1996.
3(f) Bylaws of the Registrant, as amended [incorporated by
reference to Exhibit 3(e) to the Registrant's Annual Report
on Form 10-K (Commission File No. 0-13124) filed on April
11, 1996].
3(g)* Bylaws of the Registrant, as amended.
4 Form of Common Stock Certificate of the Registrant
[incorporated by reference to Exhibit 4(a) to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on January 29, 1986].
5* Opinion of Reid & Priest LLP as to the legality of the
securities being registered hereby.
10(a) Partnership Agreement, dated December 7, 1978, by and among
the Registrant, James R. Poole, Ira M. Cantor and Stanley A.
Rothenberg [incorporated by reference to Exhibit 10(a) to
the Registrant's Registration Statement on Form S-18
(Commission File No. 2-88695-NY) filed on December 30,
1983].
10(b) Employment Agreement, dated as of August 1, 1990, between
the Registrant and Bradley J. Hughes [incorporated by
reference to Exhibit 10(h) to the Registrant's Annual Report
on Form 10-K (Commission File No. 0-13124) filed on January
24, 1991].
10(c) Employment Agreement, dated as of July 11, 1990, between the
Registrant and Theodore I. Botter [incorporated by reference
to Exhibit 10(j) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on January 24,
1991].
10(e)(1) Employment Agreement, dated as of November 1, 1992, between
the Registrant and Harvey Krieger [incorporated by reference
to Exhibit 10(h) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on January 28,
1993].
10(e)(2) Amendment to Employment Agreement, dated June 7, 1995,
between the Registrant and Harvey Krieger [incorporated by
reference to Exhibit 10(e)(2) to the Registrant's Annual
Report on Form 10-K (Commission File No. 0-13124) filed on
April 11, 1996].
10(e)(3)+ Consulting Agreement, dated as of June 1, 1996, between the
Registrant and Harvey Krieger.
10(f)(1) Employment Agreement, dated as of March 22, 1994, among
COVER-ALL Systems, Inc., Michael G. Repoli and the
Registrant [incorporated by reference to Exhibit 10(f)(1) to
the Registrant's Annual Report on Form 10-K (Commission File
No. 0-13124) filed on April 17, 1995].
10(f)(2) Amendment to Employment Agreement, dated August 10, 1994,
among COVER-ALL Systems, Inc., Michael G. Repoli and the
Registrant [incorporated by reference to Exhibit 10(f)(2) to
the Registrant's Annual Report on Form 10-K (Commission File
No. 0-13124) filed on April 17, 1995].
10(f)(3) Amendment to Employment Agreement, dated January 11, 1995,
among COVER-ALL Systems, Inc., Michael G. Repoli and the
Registrant [incorporated by reference to Exhibit 10(f)(3) to
the Registrant's Annual Report on Form 10-K (Commission File
No. 0-13124) filed on April 17, 1995].
10(g) Employment Agreement, dated as of January 24, 1996, among
COVER-ALL Systems, Inc., the Registrant and Peter C. Lynch
[incorporated by reference to Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on April 11, 1996].
10(h) Warner Insurance Services, Inc. Tax Saver 401(k) Salary
Reduction Plan adopted May 31, 1985 and restated as of
August 11, 1992 [incorporated by reference to Exhibit 10(k)
to the Registrant's Annual Report on Form 10-K (Commission
File No. 0-13124) filed on January 28, 1993].
10(i) Incentive Stock Option Plan adopted by the Board of
Directors of the Registrant on February 22, 1982, and
approved by the stockholders in February 1983 as amended on
December 16, 1983 and March 31, 1988 [incorporated by
reference to Exhibit 10(b) to the Registrant's Annual Report
on Form 10-K (Commission File No. 0-13124) filed on January
24, 1989].
10(j) Stock Option Agreement, dated March 22, 1990, between the
Registrant and Harvey Krieger [incorporated by reference to
Exhibit 10(q) to the Registrant's Annual Report on Form 10-K
(Commission File No. 0-13124) filed on January 24, 1991].
10(k) Stock Option Agreement, dated August 15, 1990, between the
Registrant and Bradley J. Hughes [incorporated by reference
to Exhibit 10(t) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on January 24,
1991].
10(l) Stock Option Agreement, dated August 15, 1990, between the
Registrant and Theodore I. Botter [incorporated by reference
to Exhibit 10(u) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on January 24,
1991].
10(m)(1) The 1991 Key Employee Stock Option Plan, adopted by the
Board of Directors of the Registrant on June 18, 1991, as
amended on September 6, 1991 and November 19, 1991 and
approved by stockholders on March 18, 1992 [incorporated by
reference to Exhibit 4(a) to the Registrant's Registration
Statement on Form S-8 (Commission File No. 33-44270) filed
on November 26, 1991].
10(m)(2) Form of Incentive Stock Option Agreement under the 1991 Key
Employee Stock Plan [incorporated by reference to Exhibit
4(b) to the Registrant's Registration Statement on Form S-8
(Commission File No. 33-44270) filed on November 26, 1991].
10(m)(3) Form of Non-Qualified Stock Option Agreement under the 1991
Key Employee Stock Option Plan [incorporated by reference to
Exhibit 4(c) to the Registrant's Registration Statement on
Form S-8 (Commission File No. 33-44270) filed on November
26, 1991].
10(m)(4) Form of Stock Option Agreement under the 1991 Key Employee
Stock Option Plan dated as of June 21, 1991, between the
Registrant and each of Theodore I. Botter, Thomas F.
Rocchio, and Harvey Krieger [incorporated by reference to
Exhibit 4(d) to the Registrant's Registration Statement on
Form S-8 (Commission File No. 33-44270) filed on November
26, 1991].
10(m)(5) Stock Option Agreement, dated as of November 20, 1992,
between the Registrant and Bradley J. Hughes [incorporated
by reference to Exhibit 10(x)(vi) to the Registrant's Annual
Report on Form 10-K (Commission File No. 0-13124) filed on
January 28, 1993].
10(n)(1) 1994 Stock Option Plan for Independent Directors adopted by
the Board of Directors of the Registrant on November 10,
1994 [incorporated by reference to Exhibit 10(n)(1) to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on April 17, 1995].
10(n)(2) Form of Stock Option Agreement under the 1994 Stock Option
Plan for Independent Directors [incorporated by reference to
Exhibit 10(n)(2) to the Registrant's Annual Report on Form
10-K (Commission File No. O-13124) filed on April 17, 1995].
10(o)(1) The 1995 Employee Stock Option Plan, adopted by the Board of
Directors of the Registrant on March 22, 1995 [incorporated
by reference to Exhibit 10(o)(1) to the Registrant's Annual
Report on Form 10-K (Commission File No. O-13124) filed on
April 17, 1995].
10(o)(2) Form of Incentive Stock Option Agreement under the 1995
Employee Stock Option Plan [incorporated by reference to
Exhibit 10(o)(2) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on April 17, 1995].
10(o)(3) Form of Non-Qualified Stock Option Agreement under the 1995
Employee Stock Option Plan [incorporated by reference to
Exhibit 10(o)(3) to the Registrant's Annual Report on Form
10-K (Commission File No. 0-13124) filed on April 17, 1995].
10(p)(1) Indenture of Lease, dated as of July 1, 1994, between Fair
Lawn Industrial Park, Inc. and the Registrant for premises
located at 17-01 Pollitt Drive, Fair Lawn, New Jersey
[incorporated by reference to Exhibit 10(p)(1) to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on April 17, 1995].
10(p)(2) Termination Agreement, dated as of June 30, 1994, among Fair
Lawn Industrial Park, Inc., Symtron Systems, Inc., and the
Registrant [incorporated by reference to Exhibit 10(p)(2) to
the Registrant's Annual Report on Form 10-K (Commission File
No. 0-13124) filed on April 17, 1995].
10(q) Lease Agreement, dated as of March 2, 1990, between the
Registrant and Polevoy Associates for premises located at
18-01 Pollitt Drive, Fair Lawn, New Jersey [incorporated by
reference to Exhibit 10(z) to the Registrant's Annual Report
on Form 10-K (Commission File No. 0-13124) filed on
January 24, 1991].
10(r) Lease Agreement, dated as of December 11, 1991, between the
Registrant and Aetna Life Insurance Company for premises
located at 125 Belmont Drive, Somerset, New Jersey
[incorporated by reference to Exhibit 10(ee) to the
Registrant's Annual Report on Form 10-K (Commission File No.
0-13124) filed on January 24, 1992].
10(s) Rights Agreement, dated November 17, 1989, between the
Registrant and First Fidelity Bank, N.A., as Rights Agent
[incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A (Commission File No. 13-
2698053) filed on October 20, 1989].
10(t)(i) Severance Agreement, dated as of November 28, 1989, between
the Registrant and Harvey Krieger [incorporated by reference
to Exhibit 1 to the Registrant's Form 8-K (Commission File
No. 0-13124) filed on December 6, 1989].
10(t)(ii) Severance Agreement, dated August 15, 1990, between the
Registrant and Bradley J. Hughes [incorporated by reference
to Exhibit 10(o)(i) to the Registrant's Annual Report on
Form 10-K (Commission File No. 0-13124) filed on January 24,
1991].
10(t)(iii) Severance Agreement, dated August 15, 1990, between the
Registrant and Theodore I. Botter [incorporated by reference
to Exhibit 10(t)(i) to the Registrant's Annual Report on
Form 10-K (Commission File No. 0-13124) filed on January 24,
1991].
10(u)(i) Restructuring Agreement, dated as of March 1, 1996, by and
among the Registrant, Atlantic Employers Insurance Company,
Pacific Employers Insurance Company, Electric Insurance
Company, The Robert Plan Corporation, Material Damage
Adjustment Corporation, Lion Insurance Company, and National
Consumer Insurance Company [incorporated by reference to
Exhibit 10.1 to the Registrant's Form 8-K (Commission File
No. 0-13124) filed on March 7, 1996].
10(u)(ii) Form of Warrant issued by the Registrant pursuant to the
Restructuring Agreement listed as Exhibit 10(x)(i) above
[incorporated by reference to Exhibit 10.2 to the
Registrant's Form 8-K (Commission File No. 0-13124) filed on
March 7, 1996].
10(u)(iii) Asset Purchase Agreement, dated as of March 1, 1996, by and
among the Registrant, MDA Services, Inc. and The Robert Plan
Corporation [incorporated by reference to Exhibit 10.3 to
the Registrant's Form 8-K (Commission File No. 0-13124)
filed on March 7, 1996].
10(v)(i) Stock Purchase Agreement, dated as of March 31, 1996, by and
among the Registrant, Software Investments Limited and Care
Corporation Limited [incorporated by reference to Exhibit
10.1 to the Registrant's Form 8-K (Commission File No. 0-
13124) filed on April 8, 1996].
10(v)(ii) Repurchase Rights Assignment, dated as of March 31, 1996,
between the Registrant and Software Investments Limited
[incorporated by reference to Exhibit 10.2 to the
Registrant's Form 8-K (Commission File No. 0-13124) filed on
April 8, 1996].
10(v)(iii) Warrant, dated as of March 31, 1996, issued by the
Registrant to Software Investments Limited [incorporated by
reference to Exhibit 10.3 to the Registrant's Form 8-K
(Commission File No. 0-13124) filed on April 8, 1996].
10(v)(iv) Exclusive Software License Agreement, dated as of March 31,
1996, by and among the Registrant, Care Corporation Limited
and COVER-ALL Systems, Inc. [incorporated by reference to
Exhibit 10.4 to the Registrant's Form 8-K (Commission File
No. 0-13124) filed on April 8, 1996].
10(w) Settlement Agreement dated April 1, 1996 between the
Registrant and Clarendon National Insurance Company
[incorporated by reference to Exhibit 10.5 to the
Registrant's Form 8-K (Commission File No. 0-13124) filed on
April 8, 1996].
21 Subsidiaries of the Registrant [incorporated by reference to
Exhibit 21 to the Registrant's Annual Report on Form 10-K
(Commission File No. 0-13124) filed on April 11, 1996].
23(a)* Consent of Ernst & Young LLP.
23(b)* Consent by Reid & Priest LLP (included in Exhibit 5).
24+ Power of Attorney (included on the signature page).
----------
* Filed herewith.
+ Previously filed.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change
to such information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act which is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised, that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by any director, officer or controlling person in
connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against the public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fair Lawn, State of
New Jersey, on the 9th day of July, 1996.
COVER-ALL TECHNOLOGIES INC.
By:/s/ ALFRED J. MOCCIA*
---------------------
Alfred J. Moccia,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities
designed and on the 9th day of July, 1996.
SIGNATURES TITLE
---------- -----
/s/ ALFRED J. MOCCIA* Chairman of the Board and
--------------------- Chief Executive Officer
Alfred Moccia (Principal Executive Officer)
/s/ RAUL F. CALVO* Vice President
------------------ (Principal Financial Officer
Raul F. Calvo and Principal Accounting Officer)
/s/ HARVEY KRIEGER* Director
-------------------
Harvey Krieger
/s/ LEONARD GUBAR Director
-----------------
Leonard Gubar
/s/ PETER R. LASUSA* Director
--------------------
Peter R. Lasusa
--------------------- Director
Pamela J. Newman
/s/ JAMES R. STALLARD* Director
----------------------
James R. Stallard
/s/ MARK D. JOHNSTON* Director
---------------------
Mark D. Johnston
*By /s/ LEONARD GUBAR
-----------------
Leonard Gubar
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3(e) Certificate of Amendment of Certificate of
Incorporation of the Registrant as filed on June 21,
1996.
3(g) Bylaws of the Registrant, as amended.
5 Opinion of Reid & Priest LLP.
10(e)(3)+ Consulting Agreement, dated as of June 1, 1996,
between the Registrant and Harvey Krieger.
23(a) Consent of Ernst & Young LLP, independent auditors of
the Company.
23(b) Consent of Reid & Priest LLP (included in Exhibit 5).
24+ Power of Attorney (included on the signature page)
----------
+ Previously Filed
Exhibit 3(e)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WARNER INSURANCE SERVICES, INC.
(PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
WARNER INSURANCE SERVICES, INC., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the
-----
Corporation duly adopted resolutions setting forth proposed
amendments to the Certificate of Incorporation of the
Corporation, declaring said amendments to be advisable and
calling for the submission of said amendments to the stockholders
of the Corporation pursuant to Section 242(b)(2) of the General
Corporation Law of the State of Delaware, and stating that such
amendments will be effective only after approval thereof by the
holders of a majority of the outstanding shares of Common Stock
of the Corporation entitled to vote thereon.
SECOND: That thereafter, pursuant to resolutions of
------
the Board of Directors of the Corporation, said amendments were
submitted to the holders of all of the stock of the Corporation,
and a majority of such holders at the annual meeting of
stockholders, adopted the following resolutions to amend the
Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of
Incorporation be, and it hereby is, amended
by deleting in its entirety the present
Article FIRST and substituting in lieu
thereof the following new Article FIRST:
"FIRST: Name. The name of the
----
Corporation shall be Cover-All Technologies
Inc. (hereinafter referred to as the
"Corporation")"
; and be it further
RESOLVED, that the Certificate of
Incorporation be, and it hereby is, amended
by deleting in its entirety the present
Article FOURTH and substituting in lieu
thereof the following new Article FOURTH:
"FOURTH: Capital Stock. The aggregate
-------------
number of shares which the Corporation shall
have authority to issue shall be thirty
million (30,000,000) shares of common stock,
par value $.01 per share ("Common Stock")."
THIRD: That said amendments were duly adopted in
-----
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said WARNER INSURANCE SERVICES,
INC. has caused this certificate to be signed by Alfred J.
Moccia, its President and Chief Executive Officer, and attested
by Leonard Gubar, its Assistant Secretary, as of the 20th day of
June, 1996.
WARNER INSURANCE SERVICES, INC.
By: /s/ Alfred J. Moccia
---------------------------
Alfred J. Moccia
President and Chief
Executive Officer
ATTEST:
By: /s/ Leonard Gubar
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Leonard Gubar, Assistant Secretary
Exhibit 3(g)
BY-LAWS OF
COVER-ALL TECHNOLOGIES INC.
(A Delaware corporation)
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ARTICLE I
Meetings of Stockholders
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SECTION 1. Annual Meeting. The annual meeting of the
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stockholders of COVER-ALL TECHNOLOGIES INC. (hereinafter referred
to as the "Corporation") for the election of directors and for
the transaction of such other business as may properly come
before the meeting shall be held on such date and at such time as
may be fixed by the Board of Directors (hereinafter referred to
as the "Board") or if no date and time are so fixed on the last
Tuesday in February of each year, if not a legal holiday, and if
a holiday, then on the next succeeding day not a legal holiday,
at the office of the Corporation or at such other place and at
such hour as shall be designated by the Board, or, if no such
time be fixed, then at 10:00 o'clock in the forenoon.
SECTION 2. Special Meetings. Special meetings of the
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stockholders, unless otherwise prescribed by statute, may be
called at any time by the Chairman of the Board, the President or
the Board pursuant to a resolution approved by a majority of the
entire Board.
SECTION 3. Notice of Meetings. Notice of the place,
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date and hour of holding each annual and special meeting of the
stockholders and the purpose or purposes thereof shall be given
personally or by mail in a postage prepaid envelope, not less
than ten nor more than fifty days before the date of such
meeting, to each stockholder entitled to vote at such meeting,
and, if mailed, it shall be directed to such stockholder at his
address as it appears on the record of stockholders, unless he
shall have filed with the secretary of the Corporation a written
request that notices to him be mailed to some other address. Any
such notice for any meeting other than the annual meeting shall
indicate that it is being issued at the direction of the Chairman
of the Board, the President or of the Board. Notice of any
meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy
and shall not, prior to the conclusion of such meeting, protest
the lack of notice thereof, or who shall, either before or after
the meeting, submit a signed waiver of notice, in person or by
proxy. Unless the Board shall fix a new record date for an
adjourned meeting, notice of such adjourned meeting need not be
given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment
is taken.
SECTION 4. Quorum. At all meetings of the
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stockholders the holders of the majority of the shares of Common
Stock of the Corporation, issued and outstanding and entitled to
vote, shall be present in person or by proxy to constitute a
quorum for the transaction of business. In the absence of a
quorum, the holders of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote may adjourn
the meeting from time to time. At any such adjourned meeting at
which a quorum may be present any business may be transacted
which might have been transacted at the meeting as originally
called.
SECTION 5. Organization. At each meeting of the
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stockholders, the Chairman of the Board, or in his absence the
President of the Corporation, shall act as chairman of the
meeting or, if no one of the foregoing officers is present, a
chairman shall be chosen at the meeting by the stockholders. The
Secretary, or in his absence or inability to act, the person whom
the chairman of the meeting shall appoint secretary of the
meeting, shall act as secretary of the meeting and keep the
minutes thereof.
SECTION 6. Order of Business. The order of business
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at all meetings of the stockholders shall be as determined by the
chairman of the meeting.
SECTION 7. Voting. Except as otherwise provided by
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statute or the Certificate of Incorporation, each holder of
record of shares of stock of the Corporation having voting power
shall be entitled at each meeting of the stockholders to one vote
for every share of such stock standing in his name on the record
of stockholders of the Corporation:
(a) on the date fixed pursuant to the provisions
of Section 5 of Article V of these By-Laws as the
record date for the determination of the stockholders
who shall be entitled to notice of and to vote at such
meeting; or
(b) if such record date shall not have been so
fixed, then at the close of business on the day next
preceding the day on which notice thereof shall be
given.
Each stockholder entitled to vote at any meeting of stockholders
may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. Any such
proxy shall be delivered to the secretary of such meeting at or
prior to the time designated in the order of business for so
delivering such proxies. Except as otherwise required by statute
or by the Certificate of Incorporation, any corporate action to
be taken by vote of the stockholders shall require the vote of a
majority of the votes cast at a meeting of the holders of the
Common Stock of the Corporation entitled to vote thereon. Unless
required by statute, or determined by the chairman of the meeting
to be advisable, the vote on any question need not be by ballot.
On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
SECTION 8. List of Stockholders. A list of
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stockholders as of the record date, certified by the Secretary of
the Corporation or by the transfer agent for the Corporation,
shall be produced at any meeting of the stockholders upon the
request of any stockholder made at or prior to such meeting.
SECTION 9. Inspectors. The Board may, in advance of
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any meeting of stockholders, appoint one or more inspectors to
act at such meeting or any adjournment thereof. If the
inspectors shall not be so appointed or if any of them shall fail
to appear or act, the chairman of the meeting shall appoint
inspectors. Each inspector, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality
and according to the best of his ability. The inspectors shall
determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all stockholders. On
request of the chairman of the meeting or any stockholder
entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No
director or candidate for the office of director shall act as an
inspector of an election of directors. Inspectors need not be
stockholders.
SECTION 10. Stockholder Action; How Taken. Any action
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required or permitted to be taken by the stockholders must be
effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such
holders.
ARTICLE II
Board of Directors
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SECTION 1. General Powers. The business and affairs
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of the Corporation shall be managed under the direction of the
Board. The Board may exercise all such authority and powers of
the Corporation and do all such lawful acts and things as are not
by statute or the Certificate of Incorporation directed or
required to be exercised or done by the stockholders.
SECTION 2. Number, Increase or Decrease Thereto and
----------------------------------------
Term of Office. The Board shall consist of at least three (3),
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but no more than seven (7) Directors, as determined by a majority
vote of the entire Board, which number may be increased and
decreased as provided in this Section 2. The Directors shall be
classified, with respect to the term for which they severally
hold office, into three classes, as nearly equal in number as
possible, as determined by the Board, one class to hold office
initially for a term expiring at the annual meeting of
stockholders to be held in 1986, another class to hold office
initially for a term expiring at the annual meeting of
stockholders to be held in 1987, and another class to hold office
initially for a term expiring at the annual meeting of
stockholders to be held in 1988, with the members of each class
to hold office until their successors are elected and qualified.
At each annual meeting of stockholders, the successors of the
class of Directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of
their election.
The term "entire Board" as used in these By-Laws means
the total number of Directors which the Corporation would have if
there were no vacancies. Nominations for the election of
Directors may be made by the Board or a committee appointed by
the Board or by any stockholder entitled to vote in the election
of Directors generally. However, any stockholder entitled to
vote in the election of Directors generally may nominate one or
more persons for election as Directors at a meeting only if
written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid to the
Secretary of the Corporation not later than (i) with respect to
an election to be held at an annual meeting of stockholders,
ninety days prior to the anniversary date of the immediately
preceding annual meeting, and (ii) with respect to an election to
be held at a special meeting of stockholders for the election of
Directors, the close of business on the tenth day following the
date on which notice of such meeting is first given to
stockholders. Each such notice shall set forth: (a) the name
and address of the stockholder who intends to make the nomination
and the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are
to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission; and
(e) the consent of each nominee to serve as a Director of the
Corporation if so elected. The presiding officer of the meeting
may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
The Board, by the vote of a majority of the entire
Board, may increase the number of Directors. Newly created
directorships resulting from any increase in the number of
Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal or other cause shall be
filled solely by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a
quorum of the Board. Any Director elected in accordance with the
preceding sentence shall hold office for the remainder of the
full term of the class of Directors in which the new directorship
was created or the vacancy occurred and until such Director's
successor shall have been elected and qualified. No decrease in
the number of Directors constituting the Board shall shorten the
term of any incumbent Director.
SECTION 3. Place of Meeting. Meetings of the Board
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shall be held at the principal office of the Corporation in the
State of Delaware or at such other place, within or without such
state, as the Board may from time to time determine or as shall
be specified in the notice of any such meeting.
SECTION 4. Annual Meeting. The Board shall meet for
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the purpose of organization, the election of officers and the
transaction of other business, as soon as practicable after each
annual meeting of the stockholders, on the same day and at the
same place where such annual meeting shall be held. Notice of
such meeting need not be given. Such meeting may be held at any
other time or place (within or without the State of Delaware)
which shall be specified in a notice thereof given as hereinafter
provided in Section 7 of this Article II.
SECTION 5. Regular Meetings. Regular meetings of the
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Board shall be held at such time as the Board may fix. If any
day fixed for a regular meeting shall be a legal holiday at the
place where the meeting is to be held, then the meeting which
would otherwise be held on that day shall be held at the same
hour on the next succeeding business day. Notice of regular
meetings of the Board need not be given except as otherwise
required by statute or these By-Laws.
SECTION 6. Special Meetings. Special meetings of the
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Board may be called by the Chairman of the Board, the President
or by a majority of the entire Board.
SECTION 7. Notice of Meetings. Notice of each special
------------------
meeting of the Board (and of each regular meeting for which
notice shall be required) shall be given by the Secretary as
hereinafter provided in this Section 7, in which notice shall be
stated the time and place of the meeting. Except as otherwise
required by these By-Laws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be
mailed, postage prepaid, to each director, addressed to him at
his residence or usual place of business, by first-class mail, at
least two days before the day on which such meeting is to be
held, or shall be sent addressed to him at such place by
telegraph, telex, cable or wireless, or be delivered to him
personally or by telephone, at least 24 hours before the time at
which such meeting is to be held. A written waiver of notice,
signed by the director entitled to notice, whether before or
after the time stated therein shall be deemed equivalent to
notice. Notice of any such meeting need not be given to any
director who shall, either before or after the meeting, submit a
signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice
to him.
SECTION 8. Quorum and Manner of Acting. Except as
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hereinafter provided, a majority of the entire Board shall be
present in person or by means of a conference telephone or
similar communications equipment which allows all persons
participating in the meeting to hear each other at the same time
at any meeting of the Board in order to constitute a quorum for
the transaction of business at such meeting; and, except as
otherwise required by statute or the Certificate of
Incorporation, the act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the
Board. In the absence of a quorum at any meeting of the Board, a
majority of the directors present thereat may adjourn such
meeting to another time and place. Notice of the time and place
of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless such
time and place were announced at the meeting at which the
adjournment was taken, to the other directors. At any adjourned
meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as
originally called. The directors shall act only as a Board and
the individual directors shall have no power as such.
SECTION 9. Action Without a Meeting. Any action
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required or permitted to be taken by the Board at a meeting may
be taken without a meeting if all members of the Board consent in
writing to the adoption of the resolutions authorizing such
action. The resolutions and written consents thereto shall be
filed with the minutes of the Board.
SECTION 10. Telephonic Participation. One or more
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members of the Board may participate in a meeting by means of a
conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at
the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 11. Organization. At each meeting of the
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Board, the Chairman of the Board or, in his absence, the
President or another director chosen by a majority of the
directors present shall act as chairman of the meeting and
preside thereat. The Secretary (or, in his absence, any person
-- who shall be an Assistant Secretary, if any of them shall be
present at such meeting -- appointed by the chairman) shall act
as secretary of the meeting and keep the minutes thereof.
SECTION 12. Resignations. Any director of the
------------
Corporation may resign at any time by giving written notice of
his resignation to the Board, the Chairman of the Board, the
President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it
shall become effective shall not be specified therein,
immediately upon its receipt, and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 13. Vacancies. Vacancies and newly created
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directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole
remaining director. If there are no directors in office, then a
special meeting of stockholders for the election of directors may
be called and held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship,
the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application
of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election
to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the
directors then in office, in the manner provided by statute.
When one or more directors shall resign from the Board, effective
at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and
each director so chosen shall hold office until the next
election of directors and until their successors shall be
elected and qualified.
SECTION 14. Removal of Directors. Any Director may be
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removed from office, without cause, only by the affirmative vote
of the holders of 80% of the combined voting power of the then
outstanding shares of stock entitled to vote generally in the
election of Directors, voting together as a single class.
SECTION 15. Compensation. The Board shall have
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authority to fix the compensation, including fees and
reimbursement of expenses, of directors for services to the
Corporation in any capacity.
ARTICLE III
Executive and Other Committees
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SECTION 1. Executive and Other Committees. The Board
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may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of
two or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at
any meeting of the committee. Any such committee, to the extent
provided in the resolution shall have and may exercise the powers
of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; provided, however,
that in the absence or disqualification of any member of such
committee or committees, the member or members thereof present
at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of any
such absent or disqualified member. Each committee shall keep
written minutes of its proceedings and shall report such minutes
to the Board when required. All such proceedings shall be
subject to revision or alteration by the Board; provided,
however, that third parties shall not be prejudiced by such
revision or alteration.
SECTION 2. General. A majority of any committee may
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determine its action and fix the time and place of its meetings,
unless the Board shall otherwise provide. Notice of such
meetings shall be given to each member of the committee in the
manner provided for in Article II, Section 7. The Board shall
have any power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee. Nothing herein
shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such
committee shall have or may exercise any authority of the Board.
SECTION 3. Action Without a Meeting. Any action
------------------------
required or permitted to be taken by any committee at a meeting
may be taken without a meeting if all of the members of the
committee consent in writing to the adoption of the resolutions
authorizing such action. The resolutions and written consents
thereto shall be filed with the minutes of the committee.
SECTION 4. Telephone Participation. One or more
-----------------------
members of a committee may participate in a meeting by means of a
conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at
the same time. Participation by such means shall constitute
presence in person at the meeting.
ARTICLE IV
Officers
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SECTION 1. Number and Qualifications. The officers of
-------------------------
the Corporation shall include the Chairman of the Board, the
President, one or more Vice Presidents, the Treasurer, and the
Secretary. Any two or more offices may be held by the same
person; except the offices of (i) Chairman of the Board and
Secretary and (ii) President and Secretary; provided that when
all of the issued and outstanding stock of the Corporation is
held by one person, such person may hold all or any combination
of offices. Such officers shall be elected from time to time by
the Board, each to hold office until the meeting of the Board
following the next annual meeting of the stockholders, or until
his successor shall have been duly elected and shall have
qualified or until his death, or until he shall have resigned, or
have been removed, as hereinafter provided in these By-Laws.
The Board may from time to time elect, or delegate to the
Chairman of the Board or the President the power to appoint, such
other officers (including one or more Assistant Treasurers and
one or more Assistant Secretaries) and such agents, as may be
necessary or desirable for the business of the Corporation. Such
other officers and agents shall have such duties and shall hold
their offices for such terms as may be prescribed by the Board or
by the appointing authority.
SECTION 2. Resignations. Any officer of the
------------
Corporation may resign at any time by giving written notice of
his resignation to the Board, the President or the Secretary.
Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not
be specified therein, immediately upon its receipt; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 3. Removal. Any officer or agent of the
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Corporation may be removed, either with or without cause, at any
time, by the Board at any meeting of the Board or, except in the
case of an officer or agent elected or appointed by the Board, by
the President.
SECTION 4. Vacancies. A vacancy in any office,
---------
whether arising from death, resignation, removal or any other
cause, may be filled for the unexpired portion of the term of the
office which shall be vacant, in the manner prescribed in these
By-Laws for the regular election or appointment to such office.
SECTION 5. The Chairman of the Board. The Chairman of
-------------------------
the Board shall be the chief executive officer of the Corporation
and shall have general and active responsibility for and
authority over the general and active management of the business
of the Corporation and general and active supervision and
direction over the other officers, agents and employees and shall
see that their duties are properly performed. He shall, if
present, preside at each meeting of the stockholders and of the
Board and shall be an ex-officio member of all committees of the
Board. He shall perform all duties incident to the office of
Chairman of the Board and chief executive officer and such other
duties as may from time to time be required of him by the Board.
SECTION 6. The President. The President shall be the
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chief operating officer of the Corporation and shall have general
and active responsibility for and authority over supervision and
direction of the business and affairs of the Corporation and over
its several officers, subject, however, to the direction of the
Chairman of the Board and the control of the Board. At the
request of the Chairman of the Board, or, if the President is a
member of the Board at such time, in the case of the Chairman of
the Board's absence or inability to act, the President shall
perform the duties of the Chairman of the Board and when so
acting shall have all the powers of, and be subject to all the
restrictions upon, the Chairman of the Board. He shall perform
all duties incident to the office of President and such other
duties as from time to time may be assigned to him by the Board,
the Chairman of the Board or these By-Laws.
SECTION 7. Vice Presidents. Each Vice President,
---------------
including any Executive Vice President, shall perform all such
duties as from time to time may be assigned to him by the Board.
SECTION 8. The Treasurer. The Treasurer shall
-------------
(a) have charge and custody of, and be
responsible for, all the funds and securities of the
Corporation;
(b) keep full and accurate accounts of receipts
and disbursements in books belonging to the
Corporation;
(c) deposit all monies and other valuables to the
credit of the Corporation in such depositaries as may
be designated by the Board;
(d) receive, and give receipts for, monies due
and payable to the Corporation from any source
whatsoever;
(e) disburse the funds of the Corporation and
supervise the investment of its funds as ordered or
authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident
to the office of Treasurer and such other duties as
from time to time may be assigned to him by the Board,
the Chairman of the Board or the President.
SECTION 9. The Secretary. The Secretary shall
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(a) keep or cause to be kept in one or more books
provided for the purpose, the minutes of all meetings
of the Board, the committees of the Board and the
stockholders;
(b) see that all notices are duly given in
accordance with the provisions of these By-Laws and as
required by law;
(c) be custodian of the records and the seal of
the Corporation and affix and attest the seal to all
stock certificates of the Corporation (unless the seal
of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and
attest the seal to all other documents to be executed
on behalf of the Corporation under its seal;
(d) see that the books, reports, statements,
certificates and other documents and records required
by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident
to the office of Secretary ad such other duties as from
time to time may be assigned to him by the Board or the
President.
SECTION 10. Officers' Bonds or Other Security. If
---------------------------------
required by the Board, any officer of the Corporation shall give
a bond or other security for the faithful performance of his
duties, in such amount and with such surety or sureties as the
Board may require.
SECTION 11. Compensation. The compensation of the
------------
officers of the Corporation for their services as such officers
shall be fixed from time to time by the Board; provided, however,
that the Board may delegate to the Chairman of the Board or the
President the power to fix the compensation of officers and
agents appointed by the Chairman of the Board or the President,
as the case may be. An officer of the Corporation shall not be
prevented from receiving compensation by reason of the fact that
he is also a director of the Corporation, but any such officer
who shall also be a director (except in the event that there is
only one director of the Corporation) shall not have any vote in
the determination of the amount of compensation paid to him.
ARTICLE V
Shares, etc.
------------
SECTION 1. Stock Certificates. Each owner of stock of
------------------
the Corporation shall be entitled to have a certificate, in such
form as shall be approved by the Board, certifying the number of
shares of stock of the Corporation owned by him. The
certificates representing shares of stock shall be signed in the
name of the Corporation by the Chairman of the Board, the
President or a Vice President and by the Secretary, Treasurer or
an Assistant Secretary and sealed with the seal of the
Corporation (which seal may be a facsimile, engraved or
printed). In case any officer who shall have signed such
certificates shall have ceased to be such officer before such
certificates shall be issued, they may nevertheless be issued by
the Corporation with the same effect as if such officer were
still in office at the date of their issue.
SECTION 2. Books of Account and Record of
------------------------------
Stockholders. There shall be kept correct and complete books and
------------
records of account of all the business and transactions of the
Corporation. The stock record books and the blank stock
certificate books shall be kept by the Secretary or by any other
officer or agent designated by the Board.
SECTION 3. Transfers of Shares. Transfers of shares
-------------------
of stock of the Corporation shall be made on the stock records of
the Corporation only upon authorization by the registered holder
thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a
transfer agent or transfer clerk, and on surrender of the
certificate or certificates for such shares properly endorsed or
accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. The person in whose name shares of
stock shall stand on the record of stockholders of the
Corporation shall be deemed the owner thereof for all purposes as
regards the Corporation. Whenever any transfers of shares shall
be made for collateral security and not absolutely and written
notice thereof shall be given to the Secretary or to such
transfer agent or transfer clerk, such fact shall be stated in
the entry of the transfer.
SECTION 4. Regulations. The Board may make such
-----------
additional rules and regulations, not inconsistent with these
By-Laws, as it may deem expedient concerning the issue, transfer
and registration of certificates for shares of stock of the
Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all
certificates for shares of stock to bear the signature or
signatures of any of them.
SECTION 5. Fixing of Record Date. The Board may fix,
---------------------
in advance, a date not more than fifty nor less than ten days
before the date then fixed for the holding of any meeting of the
stockholders or before the last day on which the consent or
dissent of the stockholders may be effectively expressed for any
purpose without a meeting, as the time as of which the
stockholders entitled to notice of and to vote at such meeting or
whose consent or dissent is required or may be expressed for any
purpose, as the case may be, shall be determined, and all persons
who were shareholders of record of voting stock at such time,
and no others, shall be entitled to notice of and to vote at such
meeting or to express their consent or dissent, as the case may
be. The Board may fix, in advance, a date not more than fifty
nor less than ten days preceding the date fixed for the payment
of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidence of rights or
evidences of interest arising out of any change, conversion or
exchange of capital stock or other securities, as the record
date for the determination of the stockholders entitled to
receive any such dividend, distribution, allotment, rights or
interests, and in such case only the stockholders of record at
the time so fixed shall be entitled to receive such dividend,
distribution, allotment, rights or interests.
SECTION 6. Lost, Destroyed or Mutilated Certificate.
----------------------------------------
The holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of such certificate, and the
Corporation may issue a new certificate of stock in the place of
any certificate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which shall have
been mutilated, and the Board may, in its discretion, require
such owner or his legal representative to give to the Corporation
a bond in such sum, limited or unlimited, and in such form and
with such surety or sureties as the Board in its absolute
discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged
loss or destruction of any such certificate, or the issuance of
such new certificate. Anything herein to the contrary
notwithstanding, the Board, in its absolute discretion, may
refuse to issue any such new certificate, except pursuant to
legal proceedings under the laws of the State of Delaware.
ARTICLE VI
Contracts, Checks, Drafts, Bank Accounts, Etc.
----------------------------------------------
SECTION 1. Execution of Contracts. Except as
----------------------
otherwise required by statute, the Certificate of Incorporation
or these By-Laws, any contract or other instrument may be
executed and delivered in the name and on behalf of the
Corporation by such officer of officers (including any assistant
officer) of the Corporation as the Board may from time to time
direct. Such authority may be general or confined to specific
instances as the Board may determine. Unless authorized by the
Board or expressly permitted by these By-Laws, no officer or
agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit
or to render it pecuniarily liable for any purpose or to any
amount.
SECTION 2. Loans. Unless the Board shall otherwise
-----
determine, the Chairman of the Board, the President or any
Vice-President may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or
from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes, bonds or
other certificates or evidences of indebtedness of the
Corporation, but no officer or officers shall mortgage, pledge,
hypothecate or transfer any securities or other property of the
Corporation other than in connection with the purchase of
chattels for use in the Corporation's operations, except when
authorized by the Board.
SECTION 3. Checks, Drafts, etc. All checks, drafts,
-------------------
bills of exchange or other orders for the payment of money out of
the funds of the Corporation, and all notes or other evidence of
indebtedness of the Corporation, shall be signed in the name and
on behalf of the Corporation by such persons and in such manner
as shall from time to time be authorized by the Board.
SECTION 4. Deposits. All funds of the Corporation not
--------
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositaries as the Board may from time to time designate or as
may be designated by any officer or officers of the Corporation
to whom such power of designation may from time to time be
delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, checks,
drafts and other orders for the payment of money which are
payable to the order of the Corporation may be endorsed, assigned
and delivered by any officer or agent of the Corporation.
SECTION 5. General and Special Bank Accounts. The
---------------------------------
Board may from time to time authorize the opening and keeping of
general and special bank accounts with such banks, trust
companies or other depositaries as the Board may designate or as
may be designated by any officer or officers of the Corporation
to whom such power of designation may from time to time be
delegated by the Board. The Board may make such special rules
and regulations with respect to such bank accounts, not
inconsistent with the provisions of these By-Laws, as it may deem
expedient.
ARTICLE VII
Offices
-------
SECTION 1. Registered Office. The registered office
-----------------
of the Corporation shall be in the City of Wilmington, County of
New Castle, State of Delaware, and the registered agent of the
Corporation shall be The Corporation Trust Company, whose
address is Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801.
SECTION 2. Other Offices. The Corporation may also
-------------
have such offices, both within or without the State of Delaware,
as the Board may from time to time determine or the business of
the Corporation may require.
ARTICLE VIII
Fiscal Year
-----------
The fiscal year of the Corporation shall be determined
by the Board.
ARTICLE IX
Seal
----
The seal of the Corporation shall be circular in form,
shall bear the name of the Corporation and shall include the
words and numbers "Corporate Seal," "Delaware" and the year of
incorporation.
ARTICLE X
Indemnification
---------------
Any person made a party to any action or proceeding
(whether or not by or in the right of the Corporation to procure
a judgment in its favor or by or in the right of any other
corporation) by reason of the fact that he, his testator or
intestate, is or was a director, officer or employee of the
Corporation, or of any corporation which he served as such at the
request of the Corporation, shall be indemnified by the
Corporation against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him in connection with the defense of or
as a result of such action or proceeding, or in connection with
any appeal therein, to the full extent permitted under the laws
of the State of Delaware from time to time in effect. The
Corporation shall have the power to purchase and maintain
insurance for the indemnification of such directors, officers and
employees to the full extent permitted under the laws of the
State of Delaware from time to time in effect. Such right of
indemnification shall not be deemed exclusive of any other rights
of indemnification to which such director, officer or employee
may be entitled.
ARTICLE XI
Amendment
---------
The Board shall have power to make, alter, amend and
repeal the By-Laws (except so far as the By-Laws adopted by the
stockholders shall otherwise provide). Any By-Laws made by the
Directors under the powers conferred hereby may be altered,
amended or repealed by the Directors or by the stockholders.
Notwithstanding the foregoing and anything contained in this
Certificate of Incorporation to the contrary, those provisions of
the By-Laws relating to the number, election and terms of the
Directors, newly created Directorships and vacancies or removal
of Directors shall not be altered, amended or repealed and no
provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least 80% of the combined
voting power of the then outstanding shares of stock entitled to
vote generally in the election of Directors, voting together as a
single class.
Exhibit 5
REID & PRIEST LLP
40 West 57th Street
New York, NY 10019-4097
Telephone 212 603-2000
Fax 212 603-2001
New York, New York
July 8, 1996
Cover-All Technologies Inc.
18-01 Pollitt Drive
Fair Lawn, New Jersey 07410
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as your counsel in connection with
the filing of a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange
Commission relating to the registration under the
Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder (the "Securities Act"),
of an aggregate of 6,591,528 shares of Common Stock, par
value $0.01 per share (the "Offered Shares") of Cover-All
Technologies Inc. (formerly Warner Insurance Services,
Inc.) (the "Company") on behalf of certain Selling
Securityholders named in the Registration Statement.
Capitalized terms used herein but not otherwise defined
shall have the respective meanings set forth in the
Registration Statement.
In connection with the foregoing, we have
examined copies of the Company's Certificate of
Incorporation and By-Laws, each as amended through the date
hereof, the minutes of various meetings or unanimous
written consents of the Board of Directors of the Company
related to the Offering and the transactions contemplated
thereby and originals or copies, satisfactory to us, of all
such corporate records, agreements, certificates and other
documents of the Company as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed.
In such examination, we have assumed the genuineness of all
signatures, the authenticity and accuracy of all documents
submitted to us as originals and the conformity to the
original documents of all documents submitted to us as
copies. As to questions of fact material to such opinion,
we have relied upon certificates of public officials and
certificates to officers or other representatives of the
Company.
Based upon the foregoing and subject to the
qualifications and limitations stated herein, we are of the
opinion that the 5,531,806 Offered Shares currently
outstanding are validly issued, fully paid and non-
assessable and that the 1,059,722 Offered Shares underlying
outstanding warrants (the "Warrants"), upon issuance in
accordance with the terms of the Warrants, will be validly
issued, fully paid and non-assessable.
We are members of the Bar of the State of New
York and are not licensed or admitted to practice law in
any other jurisdiction. Accordingly, we express no opinion
with respect to the laws of any jurisdiction other than the
State of New York.
Our opinion and the matters expressed herein are
as of the date hereof and we assume no obligation to advise
you of any change in any matter set forth herein after the
date hereof.
We hereby consent to the use of this opinion as
an exhibit to the Registration Statement and to the use of
our name under the caption "Legal Matters" in the
Prospectus forming a part of the Registration Statement.
In giving such consent, we do not thereby concede that we
are in the category of persons whose consent is required
under Section 7 of the Securities Act, or that we are
experts" within the meaning of the Securities Act.
Very truly yours,
/s/ Reid & Priest LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in Amendment No. 1 to the Registration Statement
(Form S-3 No. 333-6131) and related Prospectus of Cover-All
Technologies Inc. (formerly Warner Insurance Services, Inc.)
for the registration of 6,591,528 shares of its common stock
and to the incorporation by reference therein of our report
dated April 4, 1996, with respect to the consolidated financial
statements and schedule of Warner Insurance Services, Inc.
included in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Hackensack, New Jersey
July 9, 1996
