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OMB APPROVAL
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<S> <C>
UNITED STATES OMB NUMBER: 3235-0145
SECURITIES AND EXCHANGE COMMISSION EXPIRES: OCTOBER 31, 1997
WASHINGTON, D.C. 20549 ESTIMATED AVERAGE BURDEN
HOURS PER RESPONSE. . . . 14.90
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5 )*
---------
Cover-All Technologies, Inc.
--------------------------------------------------------
(Name of Issuer)
Common, $0.01 par value
--------------------------------------------------------
(Title of Class of Securities)
222892 10 1
--------------------------------------------------------
(CUSIP Number)
Randall G. Ray, Gardere & Wynne, L.L.P.
---------------------------------------------------------------------
1601 Elm Street, Suite 3000, Dallas, Texas 75201 (214) 999-3000
---------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 18, 1998
--------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person:(1) has a previous statement on
file reporting beneficial ownership or more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
<PAGE>
CUSIP No. 934467 10 1 13D Page 2 of 10 Pages
-----------
- -------------------------------------------------------------------------------
(1) Names of Reporting Persons.
S.S. or I.R.S. Identification Nos. of Above Persons
Software Investments Limited
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) / /
(b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
WC
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
British Virgin Islands
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned 2,673,458
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
--------------------------------------------------
(9) Sole Dispositive Power
2,673,458
--------------------------------------------------
(10) Shared Dispositive Power
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
2,673,458
- -------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
15.74%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 934467 10 1 13D Page 3 of 10 Pages
-----------
- -------------------------------------------------------------------------------
(1) Names of Reporting Persons.
S.S. or I.R.S. Identification Nos. of Above Persons
Care Corporation Limited
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) / /
(b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
WC
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
British Virgin Islands
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned 2,500,000
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
0
--------------------------------------------------
(9) Sole Dispositive Power
2,500,000
--------------------------------------------------
(10) Shared Dispositive Power
0
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
2,500,000
- -------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
14.72%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 934467 10 1 13D Page 4 of 10 Pages
-----------
- -------------------------------------------------------------------------------
(1) Names of Reporting Persons.
S.S. or I.R.S. Identification Nos. of Above Persons
Woodcombe Limited
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group* (a) / /
(b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
OO
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Isle of Man
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned 330,000
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting Power
0
--------------------------------------------------
(9) Sole Dispositive Power
330,000
--------------------------------------------------
(10) Shared Dispositive Power
0
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
330,000
- -------------------------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
1.94%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
ITEM 1. SECURITY AND ISSUER
This Amendment No. 5 ("Amendment No. 5") to the Statement on Schedule 13D
dated as of April 3, 1996 (the "Statement"), as amended by Amendment No. 1 to
the Statement dated as of April 30, 1996, Amendment No. 2 to the Statement dated
as of March 14, 1997, Amendment No. 3 to the Statement dated as of March 31,
1997, and Amendment No. 4 dated as of May 15, 1998, is being filed to reflect
the change in the beneficial ownership of certain shares of Common Stock, $0.01
par value (the "Common Stock"), of Cover-All Technologies, Inc., a Delaware
corporation formerly known as Warner Insurance Services, Inc. (the "Company"),
owned by Software Investments Limited ("SIL"), Care Corporation Limited
("Care"), and Woodcombe Limited ("Woodcombe").
ITEM 2. IDENTITY AND BACKGROUND
(a), (b) and (c): The following sets forth the information required by
Items 2(a), (b) and (c):
1. SIL, a British Virgin Islands corporation, is principally engaged
in the investment business. SIL is owned by the Mirror Trust, a
Jersey Discretionary Trust ("Mirror Trust"), the trustee of which
is Lambert Company Limited, a British Virgin Islands corporation
("Lambert"). The directors of SIL are Mark D. Johnston, Colin
Smartt, Clive Barton and Stephen Milsom. The business address of
SIL is Abbot Building, P.O. Box 3186, Main Street, Road Town,
Tortola, British Virgin Islands. The business address of Mirror
Trust and Lambert Company Limited is First Island House, Peter
Street, St. Helier, Jersey, Channel Islands. The beneficiary of
Mirror Trust is Bradbury Corporation, a British Virgin Islands
corporation ("Bradbury"), in its capacity as trustee for three
trusts, the beneficiaries of which are certain of the descendants
of Donald B. Johnston, including his son, Mark D. Johnston (a
director of SIL and Care and a director of the Company), and Mark
D. Johnston's children.
2. Care, a British Virgin Islands corporation, is principally
engaged in the investment business. Care is majority owned by
Mirror Trust, the trustee of which is Lambert. Anglo-Adriatic
Corporation, a British Virgin Islands corporation, owns a 22%
interest in Care. Anglo-Adriatic Corporation is controlled by
the BVI Bearer Trust for the benefit of the children of Ian J.
Meredith, a director of the Company. The directors of Care are
Mark D. Johnston, Colin Smartt, Clive Barton, Stephen Milsom,
and Ian J. Meredith. The trustee of the BVI Bearer Trust is
First Island Trustees Limited. The BVI Bearer Trust, First
Island Trustees Limited, and Ian J. Meredith disclaim beneficial
ownership of the shares of the Company's Common Stock owned by
Care. The business address of Care is Abbot Building, P.O. Box
3186, Main Street, Road Town, Tortola, British Virgin Islands.
The business address of Mirror Trust and Lambert Company Limited
is First Island House, Peter Street, St. Helier, Jersey, Channel
Islands.
3. Woodcombe, an Isle of Man company, is principally engaged in the
business of ferry financing. Woodcombe is owned (a) 98% by
Pualani Estates Pty Ltd, an Australian corporation, (b) 1% by
Spruce Investments Limited, a British Virgin
Page 5 of 10 Pages
<PAGE>
Islands corporation, and (c) 1% by Marijke Thomson. The
directors of Woodcombe are David Browning and Philip Hanna.
The business address of Woodcombe is Suite 1, 11 Myrtle St.,
Douglas, Isle of Man IMI 1ED. The business address of the
owners of Woodcombe are, respectively, (i) 26 St. George's
Terrace, Perth, Western Australia 6832, (ii) First Island
House, Peter Street, St. Helier, Jersey, Channel Islands
JE4 8SG, and (iii) 191 Falcon Cliff Apartments, Palace Road,
Douglas, Isle of Man. The ultimate beneficiaries of the
corporate owners of Woodcombe are descendants of Donald B.
Johnston, but excluding Mark D. Johnston and Mark D. Johnston's
children. Neither Lambert, Mirror Trust, nor Mark D. Johnston
exercise any voting or dispositive power with respect to the
shares of the Company's Common Stock held by Woodcombe.
(d) None of the directors or executive officers of SIL, Care, or Woodcombe
has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the directors or executive officers of SIL, Care, or Woodcombe
has, during the last five years, been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
(f) Clive Barton and Stephen Milsom are citizens of the United Kingdom and
residents of the British Channel Islands; Mark D. Johnston is a
citizen of Australia and a resident of Monaco; Colin Smartt and Philip
Hanna are citizens and residents of Australia; Ian J. Meredith is a
citizen of Australia and a resident of Hong Kong; and David Browning
is a citizen of the United Kingdom and a resident of Australia.
Neither SIL, Care, nor Woodcombe have separate executive officers.
ITEM 4. PURPOSE OF TRANSACTION.
SIL, Care and Woodcombe are holding their shares of the Company's Common
Stock for investment. SIL and Care have no present intentions, subject to the
conversion and option commitment described in the final two paragraphs of Item 6
of this Schedule 13D (Amendment No. 5), to transfer any of the shares of the
Company's Common Stock held by them. SIL and Care intend to be long-term
holders of the Company's Common Stock. Woodcombe may consider in the future
selling a portion or all of the shares of the Company's Common Stock it holds,
whether in connection with the pledge of shares described in the second
paragraph of Item 6 of this Schedule 13D (Amendment No. 5) or otherwise.
SIL, Care and Woodcombe have no present intentions to cause the Company to
engage in any extraordinary transactions; to sell or transfer any of the
Company's material assets or the assets of its subsidiary; to effect any change
of the Company's business, corporate structure, capitalization, dividend policy,
or certificate of incorporation; or to delist or terminate the registration of
any securities of the Company; but reserve the right to propose or undertake or
participate in any of the foregoing actions in the future.
Page 6 of 10 Pages
<PAGE>
Pursuant to Section 9.1 of the Stock Purchase Agreement, as amended, the
Company shall take all necessary action to cause a designee of SIL and Care
("Care Designee") which may be Mark D. Johnston or a successor designated to the
Company by SIL and Care to be included as one of the management nominees for
Director of the Company at each meeting of the stockholders, beginning with the
1996 meeting of stockholders. If the Care Designee is not elected at or any
annual meeting called for the purpose of reelecting or electing such class of
Directors, the Company shall elect the Care Designee to its Board of Directors,
and amend its By-Laws to create any vacancy if required, to serve for a period
equal to the remainder of the term of such class of Directors. If, at any time,
any Care Designee shall decline or be unable to serve as a Director of the
Company, another Care Designee shall be elected as a Director of the Company to
fill the vacancy thus created. Each Care Designee shall have all voting and
other rights provided to Directors of the Company generally. The Company shall
be required to comply with this Section 9.1 for as long as SIL and Care
collectively hold an aggregate of 20% or more of the issued and outstanding
shares of the Company's Common Stock. Mark D. Johnston was first elected as a
Director of the Company effective April 16, 1996.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b): The following sets forth the information required by Items
5(a) and (b):
SIL is the beneficial owner of 2,567,306 shares of the Company's Common
Stock and presently exercisable warrants to purchase 106,152 shares of Common
Stock over which SIL has sole voting and dispositive power. The total number of
shares of the Company's Common Stock beneficially owned by SIL is 2,673,458
shares, constituting 15.74% of the Company's Common Stock.
Care is the beneficial owner of 2,500,000 shares of the Company's Common
Stock, over which Care has sole voting and dispositive power. The 2,500,000
share of Common Stock owned by Care constitute 14.72% of the issued and
outstanding shares of Common Stock.
Woodcombe is the beneficial owner of 330,000 shares of the Company's Common
Stock, over which Woodcombe has sole voting and dispositive power. The 330,000
shares of Common Stock owned by Woodcombe constitute 1.94% of the issued and
outstanding shares of Common Stock.
(c) The only transactions in the Company's Common Stock effected by
or for SIL, Care or Woodcombe within the last 60 days are:
1. The following transactions were effected by SIL:
In May 1998, SIL transferred 330,000 shares of the Company's
Common Stock (the "Shares") to Lambert as trustee of Mirror
Trust in partial repayment of approximately $500,000 in loans
made by Mirror Trust to SIL in 1996. Lambert transferred the
Shares to the beneficiary of Mirror Trust, Bradbury, in
Bradbury's capacity as trustee. Bradbury, in its capacity as
trustee, transferred the Shares to Mark D. Johnston as a
beneficiary of Bradbury No. 5 Trust. Mr. Johnston donated the
Shares to Woodcombe, which transfer was registered in the stock
records of the Company on May 18, 1998.
2. The following transactions were reported by Care:
Page 7 of 10 Pages
<PAGE>
None.
3. The following transactions were reported by Woodcombe:
See paragraph number 1 above.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
On March 31, 1998, Care repurchased from the Company a software license
with respect to certain software. In consideration for the buyback, Care paid
the Company $500,000 in cash and a $4,500,000 non-interest bearing non-recourse
(except as to collateral) note on March 31, 1998. This note is payable in
semi-annual installments of $500,000. The note is secured by a pledge to the
Company of shares of the Company's Common Stock. The number of shares of
Common Stock required as collateral on the note will vary, so that the market
value of the shares held as collateral must equal 150% of the outstanding
balance, as determined initially and immediately following each semi-annual
payment. Care initially pledged 1,687,500 shares of Common Stock on March
31, 1998. Following the semi-annual payment of $500,000 made on the note on
September 30, 1998, Care pledged an additional 812,500 shares of Common
Stock, and SIL pledged 1,192,308 shares of Common Stock on behalf of Care, to
secure the Note.
Pursuant to a Mortgage of Shares made September 23, 1998, Woodcombe pledged
the Shares to Australia and New Zealand Banking Group Limited, a company
incorporated in Victoria, Australia ("ANZ Bank"), to secure payment by a
third-party debtor pursuant to a Shortfall Indemnity entered into between
such debtor and ANZ Bank.
On September 30, 1998, Care borrowed a total of $560,000 from a group of
persons and entities affiliated with Paradigm Group, L.L.C. Pursuant to the
Convertible Promissory Note issued by Care to each of these persons and
entities, the holder of the note has the right to convert the principal and
accrued and unpaid interest thereunder into shares of the Company's Common
Stock, which would be transferred by Care to the holder. The right to convert
may be exercised any time beginning December 14, 1998, and continuing through
September 30, 2000. The notes each bear interest at 9% per year, require
quarterly payments of accrued and unpaid interest, and require payment of the
principal balance on September 30, 2000, if not earlier converted. In
connection with this financing, Care also granted each of these persons and
entities an option to acquire additional shares of the Company's Common Stock,
which would be transferred by Care to the holder. The options were exercisable
beginning on September 30, 1998, for a two-year period. The obligations under
the notes and the stock options to transfer shares of Common Stock are solely
Care's obligations. None of these persons and entities are otherwise affiliated
with Care and are not affiliated with the Company.
If each person and entity exercises the conversion right in full as to the
original principal amount of its note and exercises the stock option in full,
Care would be required to transfer, or cause an affiliate such as SIL to
transfer, an aggregate of 551,103 shares of Common Stock. Such persons or
entities who would
Page 8 of 10 Pages
<PAGE>
own more than 1% of the issued and outstanding shares of Common Stock after
such an exercise include Paradigm Group, L.L.C., and Joseph A. Rosin. Each
person and entity could own additional shares of Common Stock if it (1)
elects to convert accrued and unpaid interest under the notes or (2) the
market price of the Common Stock is lower than $1.29 per share at the time of
any note conversion; the conversion price would be 80% of the lower market
price. The exercise price with respect to the options is $1.42 per share for
a total of 86,001 shares and $1.29 per share for a total of 31,000 shares.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement Regarding Filing of Schedule 13D
2. Pledge Agreement dated as of March 31, 1998, by and between Care and
the Company (incorporated by reference to Exhibit 10(bb)(iii) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997, and filed with the Commission on April 1, 1998)
3. Mortgage of Shares made September 23, 1998, between Woodcombe and ANZ
Bank
4. Convertible Promissory Note dated September 30, 1998, from Care in
favor of Paradigm Group, L.L.C., in the original principal amount of
$200,000 (as form of)
5. Stock Option Agreement dated as of September 30, 1998, by and among
Paradigm and Care (as form of)
Page 9 of 10 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
DATE: December 7, 1998
SOFTWARE INVESTMENTS LIMITED
By: /s/ Stephen Milsom
------------------------------------
Director
CARE CORPORATION LIMITED
By: /s/ Stephen Milsom
------------------------------------
Director
WOODCOMBE LIMITED
By: /s/ David R. A. Browning
------------------------------------
Director
Page 10 of 10 Pages
<PAGE>
EXHIBIT 1
AGREEMENTS REGARDING FILING SCHEDULE 13D
Each of the undersigned hereby agrees that the Schedule 13D to which this
agreement is filed as an exhibit be filed with the Securities and Exchange
Commission on behalf of the parties hereto, and hereby represents to each of the
other parties hereto that it is eligible to use Schedule 13D. Each of the
undersigned agrees that it is responsible for the timely filing of Schedule 13D
and any amendments thereto, and for the completeness and accuracy of the
information concerning itself contained therein, and that none of the parties
hereto are responsible for the completeness or accuracy of the information
concerning the other parties, unless it knows or has reason to believe that the
information concerning the other parties is inaccurate.
DATE: December 7, 1998
SOFTWARE INVESTMENTS LIMITED
By: /s/ Stephen Milsom
------------------------------------
Director
CARE CORPORATION LIMITED
By: /s/ Stephen Milsom
------------------------------------
Director
WOODCOMBE LIMITED
By: /s/ David R. A. Browning
------------------------------------
Director
<PAGE>
EXHIBIT 3
MORTGAGE OF SHARES made 23 September 1998
BETWEEN:
(1) WOODCOMBE LIMITED (Company Number 080002C) of Ground Floor, 19/21 Circular
Road, Douglas, Isle of Man (the "MORTGAGOR"); and
(2) AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED A.C.N. 005 357 522 a
company incorporated in Victoria, Australia of Level 17, 530 Collins
Street, Melbourne, Victoria, Australia (the "MORTGAGEE").
RECITALS:
A. At the request of the Mortgagor, the Mortgagee has agreed to enter into the
Residual Value Put Option Agreement in favour of the Owner.
B. The Mortgagor considers that by providing this Mortgage there will be a
commercial benefit flowing to the Mortgagor.
THE PARTIES AGREE AND DECLARE AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS
In this Mortgage, including the recitals, unless the context otherwise
requires:
"ARTICLES OF ASSOCIATION" means the constituent documents of the Company;
"ATTORNEY" means any attorney appointed under this Mortgage;
"AUTHORISATION" means any approval, authorisation, consent, exemption,
filing, licence, notarisation, registration or waiver, however described,
and any renewal of or variation to any of them;
"AUTHORISED REPRESENTATIVE" means:
(a) in respect of the Mortgagee:
(i) any company secretary or director of the Mortgagee or any
officer of the Mortgagee whose title or office includes the word
"manager" or "director" (or any cognate of either of those
words);
(ii) any person acting with any such title or in any such office; or
(iii) any person nominated by or on behalf of the Mortgagee as an
Authorised Representative by notice to the Mortgagor; and
(b) in respect of the Mortgagor, any person nominated by or an behalf of
the Mortgagor as an Authorised Representative by notice to the
Mortgagee,
<PAGE>
the notice being accompanied by and certifying the correctness of a
copy of the signature of any person so appointed;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
are open for general banking business, and the Mortgagee is open for
business, in Melbourne, Australia;
"CERTIFICATE" means the certificate and any other document of title to or
otherwise evidencing title to any Shares;
"COMPANY" means Cover-All Technologies Inc. a company incorporated in the
State of Delaware, United States of America;
"CONTROLLER" means, in relation to an entity's property:
(a) a receiver or receiver and manager of that property; or
(b) anyone else who (whether or not as agent for that entity) is in
possession, or has control of that property for the purposes of
enforcing a Security Interest;
"DEBTOR" means Makator Pty Ltd A.C.N. 083 530 232;
"DEPOSITED SHARES" means Shares, for which the Certificates and Share
Transfer are, at any time, deposited by the Mortgagor with the Mortgagee
under clause 2.4;
"EVENT OF DEFAULT" means any of the events described in clause 7.1;
"FINANCIAL INDEBTEDNESS" of a person means any obligation of that person,
whether present or future, actual or contingent, to pay or deliver any
money, currency or commodity, under or in respect of any financial
accommodation or arrangement including, without limitation, under or in
respect of any:
(a) moneys borrowed or raised by that person;
(b) Guarantee;
(c) bond, debenture, note, certificate, redeemable or repurchasable share
or stock, bill of exchange or any similar instrument (whether or not
transferable or negotiable);
(d) put option or buy back, or discounting arrangement in relation to any
property;
(e) lease, licence or other arrangement in respect of any property (real
or personal tangible or intangible) entered into primarily for the
purpose of raising finance or of financing the acquisition of the
property leased, licensed or subject to the relevant arrangement
(other than any lease,
<PAGE>
licence or arrangement which may be accounted for as an operating
lease under any applicable approved accounting standard in Australia);
(f) hire purchase or deferred payment obligation for any property acquired
or service employed;
(g) liability to meet calls in respect of the unpaid amount of any shares;
(h) interest or currency swap or hedge arrangement, financial option,
futures contract or analogous transaction; or
(i) arrangement which achieves the same commercial effect as any of the
above;
"GOVERNMENT AGENCY" means a government or government department, a
governmental semi-governmental or judicial person or a person (whether
autonomous or not) charged with the administration of any applicable law;
"GUARANTEE" means a guarantee, indemnity, letter of credit, performance
bond, acceptance or endorsement, or legally enforceable undertaking or
obligation:
(a) to pay or to provide funds (including by the purchase of any property)
in, or to enable payment or discharge of;
(b) to indemnify against the consequences of default in the payment of; or
(c) otherwise to be responsible for,
any obligation (whether or not it involves the payment of money) or
indebtedness, or otherwise to be responsible for the solvency or financial
condition, of any other person;
"GUARANTOR" mean any person giving a Guarantee to the Mortgagee of the
Mortgagor's or the Debtor's obligations in respect of the Secured Moneys;
"MATERIAL ADVERSE EFFECT" means, in respect of a person, a material adverse
effect on:
(a) its business, assets or financial condition; or
(b) its ability to perform its obligations under this Mortgage,
and, in respect of the Mortgaged Property, a material adverse effect on any
part of the Mortgaged Property;
"MORTGAGE" means as the context requires this document or the security
constituted by this document;
<PAGE>
"MORTGAGED PROPERTY" means all of the right, title and interest, both
present and future, in, to, under or derived from:
(c) the Present Shares;
(d) the Deposited Shares; and
(e) the New Rights;
"NEW RIGHTS" means any present or future right of the Mortgagor:
(a) to or in any money, dividend, interest, offer, bonus, option, Share,
debenture, debenture stock, bond, note or any security;
(b) resulting from any substitution, conversion, redemption, forfeiture,
cancellation, reclassification, consolidation or subdivision; or
(c) resulting from a reduction of capital, liquidation or scheme of
arrangement,
in connection with the Mortgaged Property;
"OWNER" means ANZ Leasing (Vic) Pty Ltd A.C.N. 006 362 474;
"POTENTIAL EVENT OF DEFAULT" means any event or circumstance which, with
the passage of time or the giving of notice or both, would become an Event
of Default;
"PRESENT SHARES" means the Shares in the Company specified in schedule 1;
"RECEIVER" means any receiver or receiver and manager appointed under this
Mortgage;
"RESIDUAL VALUE PUT OPTION AGREEMENT" means the Residual Value Put Option
Agreement to be entered into between the Mortgagee and the Owner;
"SECURED MONEYS" means all amounts which are payable, owing but not
payable, or contingently owing by the Debtor to the Mortgagee under the
Shortfall Indemnity or by the Mortgagor to the Mortgagee under this
Mortgage;
"SECURITY INTEREST" means:
(a) a mortgage, pledge, lien, charge, assignment, hypothecation, secured
interest, title retention arrangement, preferential right, trust
arrangement or other arrangement (including, without limitation, any
set-off or "flawed-asset" arrangement) having the same or equivalent
commercial effect as a grant of security; or
(b) an agreement to create or give any arrangement referred to in
paragraph (a) of this definition;
"SHARE TRANSFER" means in respect of a Share an executed document of
transfer sufficient to transfer all of the legal and beneficial ownership
of that Share to the Mortgagee or its nominee;
<PAGE>
"SHARE" means a share, stock or unit in the capital of a body corporate;
"SHORTFALL INDEMNITY" means the Shortfall Indemnity to be entered into
between the Debtor and the Mortgagee; and
"TAX" means a present or future tax, levy, impost, deduction, charge, duty,
compulsory loan or withholding (together with any related interest,
penalty, fine and expense in connection with any of them) levied or imposed
by any Government Agency, other than any imposed on overall net income.
1.2 GENERAL
In this Mortgage, including the recitals, unless the context otherwise
requires:
(a) a reference to any legislation or legislative provision includes any
statutory modification or re-enactment of, or any legislative
provision substituted for, and any subordinate legislation under, that
legislation or legislative provision;
(b) the singular includes the plural and vice versa;
(c) a reference to an individual or person includes a corporation, firm,
partnership, joint venture, association, authority, trust, state or
government and vice versa;
(d) a referral to any gender includes all genders;
(e) a reference to a recital, clause, schedule or annexure is to a
recital, clause, schedule. or annexure of or to this Mortgage;
(f) a schedule or annexure forms part of this Mortgage;
(g) a reference to any agreement or document is to that agreement or
document (and, where applicable, any of its provisions) as amended,
novated, restated or replaced from time to time;
(h) a reference to any party to the Mortgage or any other document or
includes that party's executors, administrators, substitutes,
permitted assigns;
(i) where an expression is defined, another part of speech or grammatical
form of that expression has a corresponding meaning;
(j) a reference to "BANKRUPTCY" or "WINDING UP" includes bankruptcy,
winding up, liquidation, dissolution, becoming an insolvent under
administration (as defined in section 9 of the Corporations Law) and
the occurrence of anything analogous or having a substantially similar
effect to any of those conditions or matters under the law of any
applicable jurisdiction, and to the procedures, circumstances and
events which constitute any of those conditions or matters; and
(k) a reference to a matter being "TO THE KNOWLEDGE" of a person means
that the matter is to the best of the knowledge and belief of that
person after
<PAGE>
making reasonable enquiries in the circumstances.
1.3 HEADINGS
In this Mortgage, including the recitals, headings are for convenience of
reference only and do not affect interpretation.
1.4 BENEFICIAL OWNER
By the use in this Mortgage of the words "AS BENEFICIAL OWNER", the
covenants implied by the relevant legislation under the governing law in
respect of a conveyance by a person expressed to convey by way of mortgage
as beneficial owner are incorporated in and form part of this Mortgage
insofar as they are applicable and are not inconsistent with the express
covenants of this Mortgage.
2. SECURITY
2.1 MORTGAGE
To secure the due and punctual payment of the Secured Moneys, the
Mortgagor, as beneficial owner, hereby mortgages, pledges and assigns to
the Mortgagee, and grants to the Mortgagee a security interest in, all of
its right, title and interest in and to the following whether now owned or
hereafter acquired:
(a) the Present Shares, on the date of this Mortgage;
(b) the New Rights, as the Mortgagor acquires them; and
(c) the Deposited Shares, when the Certificates and Share Transfers in
respect of those Shares are deposited in accordance with clause 2.3,
by way of equitable mortgage.
2.2 CERTIFICATES AND SHARE TRANSFERS FOR PRESENT SHARES
The Mortgagor shall deposit with the Mortgagee or its nominee, upon
execution of this Mortgage:
(a) all Certificates in respect of the Present Shares; and
(b) a Share Transfer or Share Transfers (in the form set out in schedule 2
and in number satisfactory to the Mortgagee) in respect of the Present
Shares, with the name of the transferee and the date left blank.
<PAGE>
2.3 DEPOSITED SHARES
The Mortgagor may at any time and in respect of any Shares deposit with the
Mortgagee the Certificates and Share Transfers in respect of those Shares.
2.4 DOCUMENTS RELATING TO NEW RIGHTS
The Mortgagor shall deposit with the Mortgagee or its nominee all
certificates, transfers and other agreements or documents evidencing title
to New Rights and sufficient to transfer all of the right, title and
interest of the Mortgagor in the New Rights to the Mortgagee or its
nominee.
2.5 DIVIDENDS AND VOTES
Until an Event of Default or a Potential Event of Default occurs, the
Mortgagor may:
(a) exercise all rights (including voting rights) in connection with the
mortgaged Property; and
(b) receive and retain all New Rights.
2.6 MORTGAGEE ENTITLED TO EXERCISE RIGHTS UPON DEFAULT
If an Event of Default or a Potential Event of Default occurs:
(a) the Mortgagor's rights under clause 2.5 immediately cease;
(b) the Mortgagee may exercise or refrain from exercising, in its sole
discretion, any rights in connection with the Mortgaged Property; and
(c) the Mortgagee may receive and retain all New Rights.
2.7 REGISTRATION UPON DEFAULT
If:
(a) an Event of Default or a Potential Event of Default occurs; and
(b) at any time afterwards, the Mortgagee gives notice to the Mortgagor
requiring it to do so,
the Mortgagor shall do all things necessary to ensure that the Mortgaged
Property is registered in the Mortgagee's name in accordance with any
directions contained in that notice including, without limitation,
obtaining any guarantee of the signature on the Share Transfer that may be
required by the Company.
3. REPRESENTATIONS AND WARRANTIES
<PAGE>
3.1 GENERAL REPRESENTATIONS AND WARRANTIES
The Mortgagor represents and warrants to the Mortgagee that:
(a) (STATUS) it is a company limited by shares incorporated, or taken to
be incorporated, and existing under the laws of the Isle of Man and is
not in liquidation, provisional liquidation or receivership, or under
administration;
(b) (POWER) it has full legal capacity and power:
(i) to own the Mortgaged Property and carry on its business as it is
now being conducted; and
(ii) to enter into, and exercise its rights and perform its
obligations under, this Mortgage;
(c) (AUTHORISATION) all conditions and things required by applicable law
to be fulfilled or done (including the obtaining of any necessary
Authorisations) in order:
(i) to enable it lawfully to enter into, and exercise its rights and
perform its obligations under, this Mortgage;
(ii) to ensure that its payment obligations under this Mortgage rank
and will continue to rank at all times in accordance with
paragraph (e) below; and
(iii) to make this Mortgage admissible in evidence in the courts
specified in clause 22.2,
have been fulfilled or done;
(d) (OBLIGATIONS BINDING) this Mortgage constitutes its valid and legally
binding obligations, enforceable against it in accordance with its
terms except to the extent limited by equitable principles and laws
affecting creditors' rights generally;
(e) (RANKING OF OBLIGATIONS) its payment obligations under this Mortgage
rank and will continue to rank at all times in priority to its present
and future unsecured and unsubordinated payment obligations
(including, without limitation, contingent obligations), other than
those which are mandatorily preferred by law;
(f) (NO CONTRAVENTION) neither its execution of, nor its exercise of its
rights or performance of its obligations under, this Mortgage does or
will:
(i) contravene any applicable law to which it or any of its property
is subject, or any order of any Government Agency binding on it
or any of its property;
(ii) contravene any Authorisation or require that any Authorisation
be
<PAGE>
obtained;
(iii) Contravene any undertaking or instrument binding on it or any of
its property;
(iv) contravene any provision of its constituent documents;
(v) require it to make any payment or delivery in respect of any
Financial Indebtedness before the scheduled date for that
payment or delivery; or
(vi) cause any limitation on its power to incur Financial
Indebtedness to be exceeded;
(g) (NO LITIGATION) no litigation, arbitration, mediation, conciliation or
administrative proceedings are taking place, pending or, to the
knowledge of any of its officers, threatened against it or any of its
property which, if adversely determined, could have a Material Adverse
Effect on it or the Mortgaged Property;
(h) (NO ENFORCEMENT OF SECURITY INTERESTS) no Controller is currently
appointed in relation to any of its property;
(i) (NO DEFAULTS) no Event of Default or Potential Event of Default has
occurred and is continuing; and
(m) (TRUST) in giving this Mortgage, it is not acting as trustee of any
bust or settlement.
3.2 REPRESENTATIONS AND WARRANTIES ABOUT MORTGAGED PROPERTY
The Mortgagor represents and warrants to the Mortgagee that:
(a) (TITLE TO MORTGAGED PROPERTY) at the time each part of the Mortgaged
Property is mortgaged in accordance with clause 2.1, it has good right
and title to, and full power to mortgage, that part in the manner
provided in this Mortgage, and that part is free from all Security
interests;
(b) (SHARES FULLY PAID) the Shares included in the Mortgaged Property are
fully paid up; and
(c) (NOT SUBJECT TO ESCROW) the Mortgaged Property is not subject to any
escrow or other conditions imposed by the Uniform Commercial Code
of the applicable states of the United States of America, the General
<PAGE>
Corporation Law of the State of Delaware, the Articles of Association
or under the rules of any stock exchange.
3.3 REPETITION OF REPRESENTATIONS AND WARRANTIES
(a) All representations and warranties In this clause are taken by the
Mortgagor on the date of each advance or accommodation made to the
Mortgagor or the Debtor with reference to the facts and circumstances
-subsisting on that date.
(b) The representations and warranties contained in clause 3.2 are taken
to be repeated by the Mortgagor on each date on which the Mortgagor
acquires Mortgaged Property or a deposit is made under clause 2.4.
3.4 RELIANCE ON REPRESENTATIONS AND WARRANTIES
The Mortgagor acknowledges that the mortgagee has taken this Mortgage and
has agreed or will agree to provide advances and accommodation to the
Mortgagor or the Debtor in reliance on the representations and warranties
in this clause.
4. MORTGAGOR'S UNDERTAKINGS.
4.1 GENERAL UNDERTAKINGS
The Mortgagor shall:
(a) (OBLIGATION TO PAY) punctually pay the Secured Moneys as and when they
become due and payable in accordance with the terms of the Shortfall
Indemnity or of any other agreement in writing between the Mortgagor
or the Debtor and the Mortgagee or in the absence of any such
agreement or after default under any such agreement on demand by the
Mortgagee;
(b) (INTEREST) on demand by the Mortgagee, pay interest on any part of the
Secured Moneys:
(i) which has become due and payable and remains unpaid, including
interest payable under this clause (without allowing for any
credit balance in any account of the Mortgagor or the Debtor
with the Mortgagee); and
(ii) on which neither the Mortgagor nor the Debtor is already
required to pay interest by the terms of any agreement in
writing between the Mortgagee and the Mortgagor or the Debtor
relating to those moneys,
such interest to be calculated at daily rests at whatever rate or
rates the Mortgagee may from time to time determine, without prior or
other notice to the Mortgagor or the Debtor and to accrue both before
and (as a separate and independent obligation) after judgment;
(c) (STATUTORY REQUIREMENTS) punctually comply with all statutes in force
now or in the future and all ordinances, regulations and by-laws
thereunder and
<PAGE>
all requirements and orders of any authority statutory
or otherwise, in all cases in which non-compliance would or might
impose some charge or liability or disability upon the Mortgaged
Property or any part of it or prejudicially affect the rights of the
Mortgagee under this Mortgage;
(d) (REGISTRATION) forthwith at its own cost and expense:
(i) lodge, or ensure that there are lodged, all certificates and
other materials necessary to ensure that this Mortgage is
registered (other than provisionally) pursuant to section 79
of the Companies Act 1931 of the Isle of Man; and
(ii) cause this Mortgage to be registered or recorded in such other
places as the Mortgagee may from time to time notify the
Mortgagor if the Mortgagee is reasonably satisfied that such
registration or recording is necessary or desirable to perfect
this Mortgage or to protect the rights of the Mortgagee under
this Mortgage;
(e) (COMPANY DOCUMENTS) provide the Mortgagee with copies of all reports,
balance sheets, accounts, notices, circulars and other documents which
the Company, or any other body corporate which has issued any of the
Deposited Shares, provides to its shareholders;
(f) (ACCOUNTS) at the same time as any document, notice, balance sheet or
accounts are required by the laws of the Isle of Man or any other
legislation, the rules of any stock exchange or the constitution of
the Mortgagor to be given to the members of the Mortgagor or any stock
exchange, forward to the Mortgagee a copy of such item; and
(g) (NO ADMINISTRATOR) not appoint an administrator without prior notice
to the Mortgagee.
4.2 UNDERTAKINGS RELATING TO MORTGAGED PROPERTY
The Mortgagor shall:
(a) (OUTGOINGS) punctually pay all outgoings (including Taxes) that are or
become due and payable on or in respect of the Mortgaged Property;
(b) (PRESERVE AND PROTECT SECURITY) promptly do everything necessary and
everything reasonably required by the Mortgagee to:
(i) preserve and protect the value of the Mortgaged Property; and
(ii) protect and enforce its title and the Mortgagee's title as
mortgagee to the Mortgaged Property;
(c) (LEGAL PROCEEDINGS) at the Mortgagee's request take or defend legal
<PAGE>
proceedings for the protection or recovery of the Mortgaged Property
or any rights of the Mortgagor under or in respect of any of it;
(d) (REGISTER) not request or consent to the removal of:
(i) any of the Present Shares from the register on which they are
recorded or registered as at the date of this Mortgage; or
(ii) any of the Deposited Shares from the register on which they are
recorded or registered at the date on which that Share is
mortgaged in accordance with clause 2.1,
without the prior consent of the Mortgagee;
(e) (NEW RIGHTS) provide to the Mortgagee immediately after becoming aware
of the New Rights, particulars of all New Rights and all documentary
or other evidence of New Rights;
(f) (TAKE UP) at the Mortgagee's request take up New Rights if, in the
Mortgagee's opinion, failure to do so could mean the Mortgaged
Property or this Mortgage may become materially lessened in value or
prejudicially affected;
5. RESTRICTIONS ON DEALING WITH MORTGAGED PROPERTY
The Mortgagor shall not:
(a) create or purport or attempt to create or suffer to subsist any
Security Interest in respect of the Mortgaged Property ranking in
priority to, equally with or after this Mortgage; or
(b) sell or otherwise dispose of, create or allow the creation of any
interest in, or part with possession of, any of the Mortgaged
Property,
without the prior consent of the Mortgagee.
6. MORTGAGEES RIGHT TO MAKE GOOD A DEFAULT
If the Mortgagor makes any default in duly performing any covenant or
agreement on the part of the Mortgagor contained or implied in this
Mortgage, the Mortgagee may in its discretion and without prejudice to its
other rights under this Mortgage do all things and pay all moneys necessary
or expedient in the opinion of the Mortgagee to make good or in attempting
to make good such default to the satisfaction of the Mortgagee.
7. ENFORCEMENT
7.1 EVENTS OF DEFAULT
The Secured Moneys shall at the option of the Mortgagee and notwithstanding
any delay or previous waiver of the right to exercise such option
immediately become payable without the necessity for any demand or notice,
and this Mortgage shall at
<PAGE>
the option of the Mortgagee become enforceable (whether or not the Secured
Moneys have become payable in this manner) in each of the following events:
(a) (NON-PAYMENT) if any part of the Secured Moneys is not paid when due
and payable;
(b) (OTHER OBLIGATIONS) if the Mortgagor fails to perform any provision of
this Mortgage requiring performance by it (other than a failure
referred to elsewhere in this clause) and that failure is incapable of
remedy or, if capable of remedy, continues for 7 Business Days after
the Mortgagor receives a notice from the Mortgagee requiring that the
failure be remedied;
(c) (MISREPRESENTATION) if any representation, warranty or statement made
or repeated in or in connection with this Mortgage is untrue or
misleading (whether by omission or otherwise) in any material respect
when so made or repeated;
(d) (INVOLUNTARY WINDING UP) if any application is made for the winding up
of the Mortgagor, the Debtor or any Guarantor and the application is
not dismissed or withdrawn within 21 Business Days, or an order is
made for the winding up of the Mortgagor, the Debtor or any Guarantor,
except for the purpose of a reconstruction, amalgamation, merger or
consolidation on terms approved by the Mortgagee before that
application or order is made where the reconstruction, amalgamation,
merger or consolidation is implemented in accordance with the terms of
that approval;
(e) (VOLUNTARY WINDING UP) if the Mortgagor, the Debtor or any Guarantor
passes a resolution for its winding up, except for the purpose of a
reconstruction, amalgamation, merger or consolidation on terms
approved by the Mortgagee before that resolution is passed where the
reconstruction, amalgamation, merger or consolidation is implemented
in accordance with the terms of that approval;
(f) (RECEIVER OR LIQUIDATOR) if a receiver, receiver and manager,
provisional liquidator, trustee for creditors or in bankruptcy or
analogous person is appointed to, or the holder of a Security Interest
takes (or appoints an agent or Controller to take) possession of, any
property of the Mortgagor, the Debtor or any Guarantor;
<PAGE>
(g) (ADMINISTRATOR) if the Mortgagor or any other person appoints an
administrator to the Mortgagor, the Debtor or any Guarantor, or takes
any step to do so;
(h) (INSOLVENCY) if the Mortgagor, the Debtor or any Guarantor:
(i) suspends payment of its debts;
(ii) ceases or threatens to cease to carry on all or a material part
of its business; or
(iii) is or states that it is, unable to pay its debts;
(i) (COMPROMISE OR ARRANGEMENTS) if the Mortgagor, the Debtor or any
Guarantor takes any step for the purpose of entering into a compromise
or arrangement with any of its members, or creditors, generally or any
class of them;
(j) (DISTRESS OR OTHER EXECUTION) if the process of any court or authority
is invoked against the Mortgagor, the Debtor or any Guarantor or any
of the Mortgagor's, the Debtor's or Guarantor's property to enforce
any judgment or order for the payment of money or the recovery of
property and the Mortgagor, the Debtor or Guarantor is unable, within
five Business Days, to satisfy the Mortgagee that there is no
substantial basis for the judgment or order in respect of which the
process was invoked;
(k) (MAINTENANCE OF CAPITAL) if the Mortgagor, the Debtor or any Guarantor
passes a resolution:
(i) to permit the giving of financial assistance, whether directly
or indirectly for the purpose of, or in connection with, an
acquisition or proposed acquisition by a person of shares or of
any right or interest in shares in the Mortgagor, Debtor or
Guarantor or any holding company of the Mortgagor, Debtor or
Guarantor;
(ii) for the reduction of its share capital;
(iii) to limit its ability to make calls on its uncalled share
capital; or
(iv) approving the purchase by the Mortgagor, Debtor or Guarantor of
any shares in itself other than redeemable preference shares;
(l) (MATERIAL ADVERSE EFFECT) if a change occurs which could, or could in
the opinion of the Mortgagee, have a Material Adverse Effect on the
Mortgagor, the Debtor or my Guarantor or the Mortgaged Property;
(m) (SECURITY INTERESTS) if the Mortgagor in contravention of clause 5
creates or permits to subsist any Security Interest relating to or
affecting the Mortgaged Property or any part of it;
(n) (COMPULSORY ACQUISITION) if all or a material part of the property of
the Mortgagor, the Debtor or any Guarantor is compulsorily acquired by
any
<PAGE>
Government Agency or the Mortgagor, the Debtor or any Guarantor sells
or divests itself of all or a material part of its property pursuant
to a binding order from a Government Agency, and the Mortgagor, the
Debtor, or any Guarantor does not receive compensation for the
acquisition, sale or disposal which is acceptable to the Mortgagee;
(o) (INABILITY TO PERFORM) if the Mortgagor ceases for any reason to be
able lawfully to carry out all the transactions which this Mortgage
contemplates may be carried out by it;
(p) (PROVISIONS VOID) if all or any material provision of this Mortgage:
(i) does not have effect or ceases to have effect in accordance with
its terms; or
(ii) is or becomes void, voidable, illegal, invalid or unenforceable
other than by reason of equitable principles or laws affecting
creditors' rights generally,
or the Mortgagor claims any of the matters referred to in
subparagraphs (i) and (ii) above to be the case; or
(q) (DE-LISTING) any part of Mortgaged Property which has an official
quotation on any stock exchange ceases to have an official quotation.
7.2 ENFORCEMENT NOTWITHSTANDING PRIOR PAYMENT
This Mortgage may be enforced notwithstanding acceptance of any payment of
interest or any other payment after any default and notwithstanding any
previous or other default and without the necessity of any notice to or of
any consent or concurrence on the part of the Mortgagor or any other
person.
8. POWERS OF MORTGAGEE ON ENFORCEMENT
8.1 POWERS
At any time after this Mortgage becomes enforceable and from time to time
thereafter the Mortgagee will have full power, without any consent on the
part of the Mortgagor, to do all or any of the following:
(a) (TAKE POSSESSION) to take possession of, collect and get in the
Certificates, the Share Transfers and the whole or any part of the
Mortgaged Property and for such purpose to take proceedings in the
name of the Mortgagor or otherwise;
(b) (REGISTRATION) to do everything necessary to obtain registration of
the Mortgaged Property in the Mortgagee's name or in the name of any
<PAGE>
nominee of the Mortgagee and to enable the Mortgagee or any nominee of
the Mortgagee to receive any New Rights;
(c) (EXERCISE RIGHTS) to exercise all or any of the rights, powers,
authorities and remedies conferred on the Mortgagee by this Mortgage
and exercisable by the Mortgagee under or by virtue of this Mortgage;
(d) (SELL) to sell or concur in selling, exchange or otherwise dispose of
absolutely or conditionally all or any part of the Mortgaged Property
either by public auction or private treaty or by tender for cash or on
credit and either in one lot or in parcels and either with or without
special conditions or stipulations as to title or time or mode of
payment of purchase money or otherwise and with power to allow the
whole or any part of the purchase money to remain outstanding on the
security of a mortgage over the property sold or over any other
property or to remain owing without any security and upon other terms
and conditions as the Mortgagee may consider expedient without being
responsible for any loss;
(e) (TRANSFER ON SALE) to execute Share Transfers and other transfers and
assignments of all or any of the Mortgaged Property in the name and on
behalf of the Mortgagor or otherwise, and to do all other acts and
things for completing any sale under the preceding paragraph which the
Mortgagee thinks necessary;
(f) (GIVE RECEIPTS) to give effectual receipts for all moneys and other
assets which may come into the hands of the Mortgagee in exercise of
any power conferred by this Mortgage, which receipts will exonerate
any person paying or handing over such moneys or other acts from all
liability to see to their application or to enquire whether the
Secured Moneys have become payable or otherwise as to the propriety or
regularity of the powers of the Mortgagee under this Mortgage;
(g) (RIGHTS OF A SHARE OWNER) to exercise all rights, actions and remedies
available to any owner or holder, whether beneficial or otherwise, of
any Shares included in the Mortgaged Property including, without
limitation, rights available to an owner of Shares under the laws of
the Isle of Man and the federal law and law of each state of the
United States of America or any statute, or under the rules of any
stock exchange;
(h) (NEW RIGHTS) to receive all New Rights;
(i) (ALL OTHER ACTS) to do or cause to be done all such other acts and
things without limitation as the Mortgagee thinks expedient in the
interests of the Mortgagee and to do anything incidental to the
exercise of any other power; and
(j) (DELEGATE) to delegate to any person any of the powers conferred upon
the Mortgagee by this subclause.
8.2 COMPLETION OF INSTRUMENTS
Upon this Mortgage becoming enforceable, the Mortgagee or any of its
Authorised
<PAGE>
Representatives may complete in favour of the Mortgagee or any appointee
of the Mortgagee or any purchaser, lessee or mortgagee under any power,
all Share Transfers and other transfers or instruments of whatever
nature executed by or on behalf of the Mortgagor in blank and deposited
with the Mortgagee as collateral security to this Mortgage.
9. APPOINTMENT OF RECEIVER
9.1 APPOINTMENT
At any time after this Mortgage becomes enforceable and from time to time
thereafter and whether the Mortgagee has entered into possession of all or
any of the Mortgaged Property or not, the Mortgagee or any Authorised
Representative of the Mortgagee may:
(a) appoint any person or any two or more persons jointly and severally to
be a receiver or receiver and manager (or an additional receiver or
receiver and manager) of all or any of the Mortgaged Property;
(b) remove any such Receiver and in case of the removal retirement or
death of any such Receiver appoint another as a replacement; and
(c) fix the remuneration of any such Receiver.
Subject to clause 9.2, every Receiver appointed in exercise of the power
conferred by this subclause, unless and until the Mortgagee by notice to
the Mortgagor and to the Receiver requires that such Receiver acts as agent
of the Mortgagee, will be the agent of the Mortgagor and the Mortgagor
alone win be liable for his acts and defaults and remuneration.
9.2 RECEIVER OTHER THAN AS AGENT OF MORTGAGOR
The power to appoint a Receiver under this clause 9 may be exercised
notwithstanding that at the time when this Mortgage becomes enforceable or
at the time when such an appointment is made, an order may have been made
or a resolution may have been passed for the winding up of the Mortgagor
and notwithstanding that a Receiver appointed in those circumstances may
not, or may not in some respects, act as the agent of the Mortgagor.
9.3 POWERS OF RECEIVER
The Receiver will have full power without any consent on the part of the
Mortgagor to do all or any of the following:
(a) perform all or any one or more of the acts and activities described in
clauses 8.1 and 8.2;
(b) perform all or any one or more of the acts and activities within the
authority
<PAGE>
of the attorney of the Mortgagor appointed pursuant to clause 14; and
(c) delegate to any person, for such time and upon such terms as the
Mortgagee may approve, any of the powers conferred on him under this
Mortgage.
10. PROTECTION OF THE MORTGAGEE AND OTHER PERSONS
10.1 PROTECTION OF MORTGAGEE AND RECEIVER
The Mortgagee is not obliged to give any notice of this Mortgage to any
debtor or member of the Mortgagor or to any other person or to enforce
payment of any moneys payable to the Mortgagor, or to take any steps or
proceedings for any such purpose, but the Mortgagee may do so if it thinks
fit. Neither the Mortgagee nor any of its Authorised Representatives nor
any Receiver will be answerable for any omission or delay in that behalf or
for any involuntary losses or irregularities which may happen in or about
the exercise or nonexercise of any powers, rights or remedies conferred on
the Mortgagee or Receiver by this Mortgage.
10.2 PROTECTION OF THIRD PARTIES
Upon any sale, disposal or dealing purporting to be made in exercise of the
powers contained in this Mortgage, no purchaser or other party to any
disposal or dealing is:
(a) bound to enquire whether any default has been made or as to the due
appointment of any Receiver or otherwise as to the propriety or
regularity of any such sale, disposal or dealing; or
(b) affected by notice that any such sale, disposal or dealing is
unnecessary or improper.
Notwithstanding any irregularity or impropriety in any such sale, disposal
or dealing it is to be treated, for the protection of the purchaser or
other party to such disposal or dealing, as being authorised by such powers
and will be valid and effectual accordingly.
10.3 CONFLICT OF INTERESTS
The Mortgagee, each Authorised Representative of the Mortgagee or other
Person appointed by the Mortgagee under this Mortgage, each administrator
of the Mortgagor appointed by the Mortgagee, each Attorney and each
Receiver may exercise the powers conferred by this Mortgage or by law even
though that person may have a conflict of interests in exercising those
powers or a direct or personal interest in the means or result of that
exercise of those powers.
11. APPLICATION OF MONEYS
11.1 MANNER AND ORDER
All moneys received by any Receiver or by the Mortgagee under or by virtue
of this Mortgage may be applied in the following manner and order.
<PAGE>
(a) (COSTS) first in payment of all costs, charges and expenses of the
Mortgagee and any Receiver incurred in or incidental to the exercise
or performance or attempted exercise or performance of any power or
otherwise in relation to this Mortgage;
(b) (OUTGOINGS) secondly in payment of such other outgoings as the
Mortgagee or the Receiver shall think fit to pay;
(c) (RECEIVER) thirdly in payment to the Receiver of any remuneration
whether by way of commission or otherwise;
(d) (INDEMNITIES) fourthly in payment to the Mortgagee and the Receiver of
all amounts necessary to give effect to any indemnity contained in
this Mortgage; and
(e) (SECURED MONEYS) fifthly in payment to the Mortgagee of the Secured
Moneys.
and the surplus (if any) will belong to the Mortgagor or other persons
entitled to it but:
(f) the surplus will not carry interest; and
(g) the Receiver or the Mortgagee may pay the surplus to the credit of a
bank account in the name of the Mortgagor or other persons entitled to
it and will then be under no further liability in respect of it.
11.2 ONLY ACTUAL RECEIPTS CREDITED
In applying any moneys towards satisfaction of the Secured Moneys the
account of the Mortgagor will be credited only with so much of the money
available for the purpose as is actually received by the Mortgagee, such
credit to date from the time of such receipt.
11.3 COMPENSATION
Any compensation which may become payable in respect of the Mortgaged
Property will at the option of the Mortgagee be applicable in or towards
repayment of the Secured Moneys. The Mortgagee is empowered to make any
claim for such compensation and alone to agree, compromise and settle any
such claim and to execute any necessary assurances and releases in the name
of the Mortgagor and the Mortgagee. If any compensation comes into the
hands
<PAGE>
of the Mortgagor before a final discharge of this Mortgage, the Mortgagor
shall forthwith pay it to the Mortgagee.
12. RECEIPTS
The receipt of the Mortgagee, or any of its Authorised Representatives for
any moneys payable to or receivable by the Mortgagee by virtue of this
Mortgage will exonerate the person paying those moneys from all liability
to enquire whether the Secured Moneys have become payable. Every such
receipt will, as to the moneys paid or expressed to be received in that
receipt, effectually discharge the person paying those moneys from its
liability to do so, and from being concerned to see to the application or
being answerable or accountable for any loss or misapplication of those
moneys.
13. POWER OF ATTORNEY
13.1 AUTHORITY
All acts and things which under all or any of the covenants and agreements
in this Mortgage contained or implied could or ought to be done by the
Mortgagor or which the Mortgagee is by virtue of this Mortgage or by
statute authorised or empowered to do may be done by any Attorney either in
the name of the Mortgagee or the Mortgagor or of such Attorney.
13.2 APPOINTMENT
For valuable consideration and as security for the performance of its
obligations under this Mortgage, the Mortgagor irrevocably appoints the
Mortgagee and each of its Authorised Representatives and as an independent
appointment appoints any Receiver severally the true and lawful attorney
of the Mortgagor for the purposes of clause 13.1 and also with full
licence, power and authority at any time at the cost of the Mortgagor;
(a) (ALL ACTS NECESSARY) to take all such steps and proceedings and to do
and execute all such acts, deeds and things as are necessary or as to
the Mortgagee or the Attorney seems expedient for securing or
perfecting this Mortgage and to execute in favour of the Mortgagee any
legal mortgages, Share Transfers, transfers, assignments and other
assurances of any part of the Mortgaged Property in accordance with
this Mortgage;
(b) (RECOVER MORTGAGED PROPERTY) in the name and on behalf of the
Mortgagor or in the name of the Mortgagee or the Attorney to ask,
demand, sue for, recover and receive from any person and give
effectual receipts for any part of the Mortgaged Property;
(c) (RIGHTS OF A SHARE OWNER) to exercise all rights, actions and remedies
available to any owner or holder, whether beneficial or otherwise, of
any Shares included in the Mortgaged Property including, without
<PAGE>
limitation, rights available to an owner of Shares under the laws of
the Isle of Man and the federal law and law of each state of the
United States of America or any other statute, or under the rules of
any stock exchange;
(d) (GENERAL) generally to do, perform and execute all such further and
other acts, deeds, Matters and things which become necessary or
regarded by the Mortgagee or the Attorney as necessary for more
satisfactorily securing the payment of the Secured Moneys as
effectually as the Mortgagor could or might do the same; and
(e) (APPOINT SUBSTITUTES) for all or any of the foregoing from time to
time to appoint any substitute or substitutes and substitutes at
pleasure to remove.
14. CONTINUING SECURITY AND THIRD PARTY PROVISIONS
14.1 NOTWITHSTANDING SETTLEMENT
This Mortgage is a continuing security notwithstanding any settlement of
account, intervening payment or other matter or thing whatever until a
final discharge of this Mortgage is given to the Mortgagor and will apply
to the present and future balance of the Secured Moneys.
14.2 PREFERENCE
If, after the Mortgagee applies any amount against any of the Secured
Moneys, it forms the view that it is obliged to make a payment in respect
of the amount so applied by it to any person under any law relating to
bankruptcy, winding up or the protection of creditors;
(a) the Mortgagee's rights are to be reinstated and will be the same in
respect of that amount or the relevant part of it, as if the
application, or the payment or transaction giving rise to it, had not
been made; and
(b) the Mortgagor shall immediately do anything (including the signing of
documents) required by the Mortgagee to restore to the Mortgagee any
Guarantee or Security Interest to-which it was entitled immediately
before the application or the payment or transaction giving rise to
it.
14.3 NATURE OF THIRD PARTY MORTGAGE
This Mortgage:
(a) is a principal obligation not ancillary or collateral to any other
right or obligations; and
(b) may be enforced against the Mortgagor without the Mortgagee first
being required to exhaust any remedy it may have against the Debtor or
to enforce any security it may hold with respect to the Secured
Moneys.
14.4 MORTGAGOR'S LIABILITY ABSOLUTE
<PAGE>
The liability of the Mortgagor is absolute and is not affected by any act,
omission, matter or thing which but for this subclause might operate to
release or otherwise exonerate it from its obligations in whole or in part
including, without limitations, any one or more of the following (whether
occurring with or without the consent of any person):
(a) the grant to the Debtor, the Mortgagor or any other person of any
time, waiver or other indulgence or concession or the whole or partial
discharge or release of the Debtor, the Mortgagor or any other person;
(b) any transaction or arrangement that may take place between the
Mortgagee and the Debtor, the Mortgagor or any other person;
(c) the winding up or bankruptcy or death of, or the appointment of an
administrator to, the Debtor, the Mortgagor or any other person;
(d) the fact that the Mortgagee or any other person takes or fails to take
any other Security Interest or Guarantee;
(e) the fact that the Mortgagee or any other person exercises or refrains
from exercising its rights under any other Security Interest or
Guarantee or any of the rights, powers or remedies conferred on it by
law or by any agreement or fails to recover, by exercise of any such
rights, any moneys owing to the Mortgagee by the Debtor;
(f) the variation (including a variation which increases the Secured
Moneys), replacement, extinguishment, loss, release, discharge,
abandonment or transfer either in whole or in part of any agreement or
document relating to the Secured Moneys including any other Security
Interest or Guarantee now or in the future held by the Mortgagee from
any person;
(g) the obligations of the Debtor or of any other person under any
agreement relating to the Secured Moneys, including any other Security
Interest or Guarantee, being or becoming wholly or partially illegal,
void, voidable, unenforceable or disclaimed by a liquidator;
(h) the failure by the Mortgagee to give notice to the Mortgagor of any
default by the Debtor or any other person;
(i) any legal limitation, disability, incapacity or other circumstances
related to the Debtor, the Mortgagor or any other person;
(j) the fact that any person who was intended to be bound as a surety in
respect of the Secured Moneys does not become bound or, having done
so, ceases to be so bound;
<PAGE>
(k) any laches, acquiescence, delay, acts, omission or mistake on the part
of or suffered by the Mortgagee or any other person in relation to
this Mortgage or any other Security Interest, Guarantee, agreement or
negotiable instrument;
(l) the Mortgagee's becoming a party to any compromise or scheme or
assignment of property by or relating to the Debtor or the Mortgagor
or the acceptance by the Mortgagee of any dividend or sum of money
under any such compromise or scheme;
(m) any judgment or rights which the Mortgagee may have or exercise
against the Debtor, the Mortgagor or any other person; or
(n) the opening of a new account by the Debtor with the Mortgagee or any
other person or the operation of that new account.
14.5 LIMITATIONS ON MORTGAGOR'S RIGHTS
Until the Secured Moneys have been discharged in full, the Mortgagor may
not:
(a) share in any security held or money received by the Mortgagee in
respect of the Secured Moneys or stand in the place of the Mortgagee
in respect of any such security or money;
(b) take any steps to enforce a right or claim against the Debtor in
respect of any money paid by the Mortgagor to the Mortgagee under this
Mortgage; or
(c) have or exercise any rights as surety in competition with the
Mortgagee.
14.6 NO MARSHALLING
The Mortgagee is not under any obligation to marshal in favour of the
Mortgagor any security now or in the future held by the Mortgagee or any
funds or assets that the Mortgagee may be entitled to receive or have a
claim upon.
14.7 WINDING UP OR BANKRUPTCY OF DEBTOR
If the Debtor is wound up or bankrupted, the Mortgagor irrevocably
authorises the Mortgagee to:
(a) prove for all Moneys which the Mortgagor has paid under this Mortgage;
and
(b) retain and carry into a suspense account and appropriate at the
discretion of the Mortgagee any dividends received and all moneys
received in respect of the Secured Moneys, until the Mortgagee has
been paid the Secured Moneys in full.
<PAGE>
15. NO MERGER
Nothing contained in this Mortgage will merge in, extinguish, postpone,
lessen or otherwise prejudicially affect any other security now or in the
future held by the Mortgagee or any right or remedy which the Mortgagee or
any person claiming through the Mortgagee now has or in the future may have
against the Mortgagor or any other person. No other security now or in the
future held by the Mortgagee will in any way prejudicially affect the
powers and provisions contained or implied in this Mortgage.
16. LIABILITY FOR LOSS
16.1 MORTGAGEE NOT ACCOUNTABLE
The Mortgagee will not be answerable or accountable for any loss of any
kind whatever which may happen in or about the exercise or attempted
exercise of, or failure to exercise, any of the powers contained in this
Mortgage.
16.2 MORTGAGEE OR RECEIVER NOT LIABLE
Neither the Mortgagee nor any of its Authorised Representatives nor any
Receiver is liable by reason of the Mortgagee's or such Receiver's entering
into possession of the Mortgaged Property or any part of it:
(a) to account as mortgagee in possession or for anything except actual
receipts; or
(b) for any loss upon realisation or for any default or omission for which
a mortgagee in possession might be liable.
Every Receiver under this Mortgage is deemed as regards responsibility for
loss, damage or misconduct to be the agent of the Mortgagor which will be
solely responsible for the Receiver's actions and default.
17. INDEMNITY
To the maximum extent permitted by applicable law, the Mortgagee, every
Authorised Representative of the Mortgagee and any Receiver, Attorney,
agent, administrator of the Mortgagor or other person appointed under this
Mortgage, or any applicable law, by or on behalf of the Mortgagee as
mortgagee under this Mortgage, is entitled to be indemnified by the
Mortgagor, and out of the Mortgaged Property, in respect of all liabilities
and expenses incurred by it or Such person in the execution or purported
execution of any of the powers, authorities or discretion vested in it or
such person under, or under such applicable law in respect of, this
Mortgage and against all actions, proceedings, costs, claims and demands in
respect of any matter or thing done or omitted in any way relating to the
Mortgaged Property. The Mortgagee or Receiver may obtain and pay out of
any moneys in its or his hands arising from the powers in this Mortgage all
sums necessary to give
<PAGE>
effect to this indemnity.
18. STATUTORY POWERS
18.1 MORTGAGEE'S POWERS
The powers conferred on a mortgagee by any statute are in addition to the
powers expressly conferred by this Mortgage and may be exercisable by the
Mortgagee immediately upon or at any time after any default by the
Mortgagor under this Mortgage without any notice or expiration of time
under the statute being necessary. All other provisions of any statute are
deemed to be negatived or varied only so far as they are inconsistent with
the terms and provisions expressed in this Mortgage.
18.2 EXCLUSION
Any statute, proclamation, order, regulation, ordinance or moratorium
whether now existing or to come into force in the future which operates
directly or indirectly so as to abrogate, extinguish, impair, diminish,
fetter, delay or otherwise prejudicially affect any rights, powers or
remedies given by this Mortgage or accruing to the Mortgagee, or to modify,
vary or affect in favour of the Mortgagor the obligations of the Mortgagor
under this Mortgage, is negatived and excluded to the full extend that the
Mortgagor may lawfully so agree.
19. FURTHER ASSURANCE
The Mortgagor shall, whenever requested by the Mortgagee and at the cost
and expense of the Mortgagor, do or cause to be done anything requested by
the Mortgagee:
(a) for more satisfactorily assuring or securing to the Mortgagee the
Mortgaged Property in a manner not inconsistent with any of the
provisions of this Mortgage; or
(b) for assisting in the execution or exercise of any power, including,
without limitation, the execution of any other document or agreement;
the delivery of documents or evidence of title including delivery of
all Certificates or other documents of title and execution and
delivery of blank Share Transfers or other transfers.
20. DISCHARGE
Subject to clause 14.2, when the Mortgagee is satisfied that all the
Secured Moneys have been paid in full or satisfied in accordance with the
provisions of this Mortgage and upon payment or retention of all costs,
charges and expenses incurred by or payable to the Mortgagee, its
Authorised Representatives or any Receiver or Attorney, the Mortgagee shall
at the request and cost of the Mortgagor reconvey, surrender or release
(whatever the case requires) to the Mortgagor or as it
<PAGE>
directs the Mortgaged Property or such part of it as then remains mortgaged
in favour of the Mortgagee, freed and discharged from this Mortgage and all
of its powers, authorities and provisions.
21. NOTICES
21.1 METHOD OF GIVING NOTICES
A notice, consent, approval or other communication (each a "NOTICE") under
this Mortgage shall be in writing signed by or on behalf of the person
giving it, addressed to the person to whom it is to be given and:
(a) delivered;
(b) sent by pre-paid mail; or
(c) transmitted by facsimile,
to that person's address.
21.2 TIME OF RECEIPT
A Notice given to a person m accordance with this clause is treated as
having been given and received:
(a) if delivered on the day of delivery if delivered before 4:00 pm (local
time in the place of receipt) an a Business Day, otherwise on the next
Business Day;
(b) if sent by pre-paid mail on the day of actual delivery if delivered
before 4:00 pm (local time in the place of receipt) on a Business Day,
otherwise on the next Business Day; and
(c) if transmitted by facsimile and the transmission report states that it
was sent in full and without error, on the day of transmission ff that
report states that the transmission was completed before 4:00 pm
(local time in the place oil receipt) on a Business Day (or the
equivalent in another time zone), otherwise on the next Business Day.
21.3 ADDRESS FOR NOTICES
For the purposes of this clause, a person (the "SENDER") may take the
address and facsimile number of another person (the "RECIPIENT") to be:
(a) the address and number set out below; or
(b) where the recipient notifies the sender of another address or number,
the last address or number so notified to it:
MORTGAGOR
<PAGE>
Attention: Woodcombe Limited
Mr. David Browning
Address: C/- 90 Marine Terrace
Fremantle, Western Australia 6160
Facsimile: (08) 9335 1233
MORTGAGEE
Attention: Manager - Specialised Leasing, Global Structured
Finance, ANZ Investment Bank
Address: Level 17, 530 Collins Street, Melbourne 3000
Facsimile: (03) 9273 1544
LAW AND JURISDICTION
22.1 GOVERNING LAW
This Mortgage is governed by the law in force in Victoria, Australia.
22.2 JURISDICTION
The parties submit to the non-exclusive jurisdiction of the courts
exercising jurisdiction in Victoria, Australia and any courts that may hear
appeals from those courts in respect of any proceedings in connection with
this Mortgage.
22.3 PROCESS AGENT
The Mortgagor appoints Thornycroft Maritime & Associates (Aust.) Pty Ltd of
90 Marine Terrace, Fremantle, Western Australia, 6160 as its agent for the
service of any writ, order or other legal process within Australia.
23. GENERAL
23.1 SET-OFF
If an Event of Default occurs, the Mortgagee may, without notice to the
Mortgagor, combine, consolidate, merge or apply all or any part of any
credit balance standing to any account of the Mortgagor with any office or
branch of the Mortgagee or any amount available to the Mortgagee by way of
set-off, lien or counterclaim in or towards satisfaction of the Secured
Moneys. The Mortgagee may for this purpose:
(a) redeem, vary the terms and conditions of, or appropriate all or any
part Mortgagor and the Mortgagee on or under which the Mortgagee may
be indebted to the Mortgagor, notwithstanding arty prior agreement to
the contrary or the fact that the respective liabilities may not be
expressed in the same currency;
<PAGE>
(b) effect any currency conversion the Mortgagee considers necessary or
desirable; and
(c) in the name of the Mortgagor, do all such acts and execute and deliver
all such documents as may be required to effect any combination,
consolidation, merger or application under this subclause.
23.2 WAIVER
The non-exercise of or delay in exercising any poster or right of a party
does not operate as a waiver of that power or right, nor does any single
exercise of a power or right preclude any other or further exercise of it
or the exercise of any other power or right. A power or right may only be
waived in writing, signed by the party to be bound by the waiver.
23.3 RIGHTS CUMULATIVE
The rights and remedies provided in this Mortgage are cumulative and do not
exclude any rights or remedies provided by law.
23.4 AMENDMENT
Except to the extent provided in clause 23.2, this Mortgage may only be
amended or supplemented in writing signed by the parties.
23.5 ASSIGNMENT
(a) The Mortgagor may not assign or transfer all or any part of its rights
or obligations under this Mortgage without the prior consent of the
Mortgagee.
(b) The Mortgagee may assign or transfer all or any part of its rights or
obligations under this Mortgage without the consent of the Mortgagor.
23.6 MORTGAGEE'S STATEMENT CONCLUSIVE
A statement, signed on behalf of the Mortgagee by any of its Authorised
Representatives, as to any matter or of any amount (including, without
limitation, the amount of the Secured Moneys) at the date specified in the
statement is conclusive in the absence of manifest error.
23.7 SEVERABILITY
Any provision in this Mortgage which is invalid or unenforceable in any
jurisdiction is to be read down for the purposes of that jurisdiction if
possible, so as to be valid and enforceable, and is Otherwise capable of
being severed to the extent of the invalidity or unenforceability, without
affecting the remaining provisions of this Mortgage or affecting the
validity or enforceability of that provision in any other jurisdiction.
23.8 COUNTERPARTS
This Mortgage may be executed in any number of counterparts and all of
those
<PAGE>
counterparts taken together constitute one and the same instrument.
This Mortgage is binding upon the Mortgagor whether or not it has been
executed by the Mortgagee.
23.9 ATTORNEYS
Each attorney who executes this Mortgage on behalf of a party declares that
the attorney has no notice of any revocation, suspension or variation of
the power of attorney under the authority of which the attorney executes
this Mortgage.
<PAGE>
SCHEDULE 1
PRESENT SHARES
Name of Company: Cover-All Technologies Inc. (formerly Warner
Insurance Services, Inc.)
No. of Shares: 330,000
Share Certificate Number: 22006
Par Value: $.01
Class: Common Stock
<PAGE>
SCHEDULE 2
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the Undersigned does hereby sell, assign and transfer to
________________________________________________________ (_____________) shares
of the Common Stock of Cover-All Technologies Inc., a Delaware corporation (the
"Corporation"), represented by Certificate No. __________, standing in the name
of the undersigned on the books of said Corporation.
The undersigned does hereby irrevocably constitute and appoint ________________
__________ attorney to transfer the said stock on the books of the Corporation,
with full power of substitution in the premises.
Dated:
WOODCOMBE LIMITED
By:
Name:
Title:
<PAGE>
EXECUTED as a deed.
SIGNED, SEALED and DELIVERED for
WOODCOMBE LIMITED under power of
attorney in the presence of: /s/ David R. A. Browning
--------------------------------
Signature of attorney
/s/ Julianne M. Fitzsimon David R. A. Browning
- ---------------------------------- --------------------------------
Signature of witness Name of attorney
Julianne M. Fitzsimon 10/9/98
- ---------------------------------- --------------------------------
Name of witness Date of power of attorney
SIGNED, SEALED and DELIVERED for
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED under
power of attorney in the presence of: /s/ Steven Mark Welsh
--------------------------------
Signature of attorney
/s/ Julianne M. Fitzsimon Steven Mark Welsh
- ---------------------------------- --------------------------------
Signature of witness Name of attorney
Julianne M. Fitzsimon 3/7/98
- ---------------------------------- --------------------------------
Name of witness Date of power of attorney
<PAGE>
Exhibit 4
CONVERTIBLE PROMISSORY NOTE
Amount: $200,000, plus accrued interest Date: September 30, 1998
Northbrook, Illinois
Due: September 30, 2000
For value received, the undersigned, CARE CORPORATION LIMITED, a British
Virgin Islands company (the "Company"), does hereby promise to pay to
PARADIGM GROUP, L.L.C., and/or any assignee (collectively, "Holder"), the
principal sum of $200,000 or such lesser amount as may be outstanding from
time to time. Said principal balance shall be payable on the earlier of (i)
the occurrence of a "Note Default" (as defined below), or (ii) September 30,
2000, or (iii) "Conversion," (as defined below), or (iv) the closing of a
merger, consolidation, or other reorganization in which the Company is not
the surviving entity, or a sale of all or substantially all of the Company's
assets (a "Merger or Sale"). For purposes hereof, the Company shall be
deemed not to be the surviving entity if the Shareholders of the Company
immediately before the closing of such transaction do not hold immediately
after the transaction and by virtue of securities issued as a result of the
transaction, 50% or more of the voting power of the surviving entity's equity
securities (or the equity securities of the parent of the surviving
corporation). The outstanding principal balance hereof shall bear interest
computed on the basis of a 360 day year of twelve 30-day months at a per
annum rate of nine percent (9%). Said interest shall be payable quarterly,
beginning with the first payment due on December 31, 1998. The principal
shall be payable at maturity or at such earlier time as the principal balance
may become due. Payment of principal and interest shall be made at the
principal office of the Holder, located at 3000 Dundee Rd., Suite 105,
Northbrook, IL 60062, or at such other address as shall be provided by the
Company.
Upon fifteen (15) days prior to written notice to Holder, at least six
months after closing and prior to Conversion (the date of the notice being
the "Notice Date"), the Company may prepay this Note, or any unconverted
portion thereof in whole or in part, without prior written consent of Holder,
together with accrued interest to the date of prepayment, at a twenty-eight
percent (28%) premium to the then value, as of the Notice Date, as determined
by reference to the Common Stock of CoverAll Technologies, Inc. ("COVR"),
closing bid price for any three days (selected by the Holder) within the five
trading days prior to the Notice Date. Such a prepayment would terminate the
Holder's Conversion rights, but not the Option Contract rights (as defined
below).
The Company for itself, and its legal representative, successors and
assigns, expressly waives presentment, demand, protest, notice of dishonor,
notice of nonpayment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence and collection, and the
benefit of any exemption or any insolvency laws.
The Holder of this Note may declare the unpaid principal amount of this
Note to be due and payable if one or more of the following events ("Note
Default") shall happen and be continuing at the time of such declaration:
<PAGE>
(a) a default in the due and punctual payment of all or any part of
the principal of this Note when and as the same shall become due
and payable, whether at the stated maturity thereof, acceleration
or otherwise, and such default shall have continued for more than
fifteen (15) business days;
(b) a default in the due and punctual payment of any interest on this
Note when and as such interest shall become due and payable and
such default shall have continued for more than fifteen (15)
business days;
(c) any material portion of the assets of the Company shall be
attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of the Company
and shall remain unstayed or undismissed for sixty (60)
consecutive days; or any person shall apply for the appointment
of a receiver, trustee or custodian for any material portion of
the assets of the Company and shall remain unstayed or
undismissed for sixty (60) consecutive days;
(d) a case or proceeding shall have been commenced against the
Company in a court having competent jurisdiction seeking a decree
or order in respect of the Company (i) under title 11 of the
United States Code, Canadian Companies or under the Creditors
Arrangement Act, as not constituted or hereafter amended or any
other applicable Federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of the
Company or of any substantial part of its properties, or (iii)
ordering the winding-up or liquidation of the affairs of the
Company, and such case or proceeding shall remain undismissed or
unstayed for forty-five (45) consecutive days or such court shall
enter a decree or order granting the relief sought in such case
or proceeding;
(e) the Company shall (i) file a petition seeking relief under the
Canadian Companies Creditors Arrangement Act or any other
applicable Federal, state or foreign bankruptcy or other similar
law, or (ii) consent to the institution or proceedings thereunder
or to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of the Company or
of any substantial part of its properties;
(f) the Company's failure or neglect to perform, keep or observe any
of the covenants, conditions, promises or agreements, other than
payment obligations, under this Note or in any agreement,
instrument, document or certificate executed in connection
herewith;
(g) a judgment or order in the amount of $100,000 or greater shall be
rendered against the Company;
<PAGE>
(h) the Company voluntarily or involuntarily dissolves or is
dissolved;
(i) the Company becomes insolvent or fails generally to pay its debts
as they become due;
(j) the Company is enjoined, restrained, or in any way prevented by
the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business affairs;
(l) a breach by the Company shall occur under any material agreement,
document or instrument (other than an agreement, document or
instrument evidencing the lending of money), whether heretofore,
now or hereafter existing between the Company and any other
person, and such breach shall continue beyond any applicable cure
period contained in such agreement, document or instrument;
(m) a breach by the Company shall occur under any agreement, document
or instrument evidencing the lending or borrowing of money
whether theretofore, now or hereafter existing between the
Company and any other person, and the effect thereof would be to
permit the acceleration of the indebtedness thereunder;
(n) a material and adverse change shall occur in the operations or
financial condition of the Company.
Upon the occurrence of any Note Default, the Holder of this Convertible
Promissory Note may proceed to protect and enforce its rights either by suit
in equity and/or by action at law, or by other appropriate proceedings, and
the Company shall pay and reimburse the Holder of this Convertible Promissory
Note for all costs and expenses (including reasonable attorneys' fees, legal
expenses and disbursements) incurred by such Holder in connection with its
exercise of any of its rights and remedies hereunder.
All the covenants, stipulations, promises and agreements in this
Convertible Promissory Note contained by, or on behalf of, the undersigned
shall bind its successors and assigns, whether so expressed or not.
No waiver of any default hereunder shall be construed as a waiver of any
subsequent default, and the exercise of any right hereunder shall not waive
the right to exercise the right thereafter.
This Note shall be construed in accordance with and governed by the laws
of the State of Illinois, which state is also designated as the place having
jurisdiction over any legal matters arising hereunder.
The Company also agrees to the following for the benefit of the Holder:
1. Conversion
<PAGE>
1.1. Right to Convert
The Holder of this Note shall have the right to convert the principal
balance and all accrued and unpaid interest thereon, or any portion thereof,
into COVR Common Stock at any time prior to or at maturity hereof. Subject
to Section 1.7, shares of freely tradable COVR Common Stock, shall be issued
to a holder upon any such holder's exercise of the right of conversion
("Conversion"). A holder may Convert, at holder's sole option, at any time
from a period commencing 75 days from the date of the Note (the "Initial
Issuance Date" or "Conversion Date") through September 30, 2000.
The number of shares issuable to a holder upon any such Conversion (an
"Applicable Issuance") will equal the amount paid by the holder, divided by
the lesser of "a", "b" or "c" (the "Conversion Price"):
(a) $1.30, or
(b) eighty percent (80%) of the average closing bid price for Common Stock
on the five trading days immediately prior to Closing of this transaction,
(the lesser of (a) and (b) being hereinafter referred to as the "Fixed
Price"), or
(c) eighty percent (80%) of the average of the closing bid prices for the
Common Stock for any three days (selected by the holder) within the
previous five trading days prior to the Conversion Date.
(the "Conversion Date Price").
eighty percent (80%) is hereinafter referred to as the "Applicable
Percentage."
If the Holder elects to receive the Common Stock in conversion of any
principal amount, but does not elect to convert all or part of the accrued
and unpaid interest, the Company shall pay any unpaid interest accruing from
the date of this Note until the Holder received said stock.
1.2. Mechanics of Conversion
Before the Holder shall be entitled to convert the Note or any portion
thereof into Common Stock, the Holder shall surrender such Note at the office
of the Company and shall give written notice to the Company at such office of
the election to convert the Note (or such portion), including any portion of
the accrued and unpaid interest, and shall state therein the name or names in
which the certificate or certificates for COVR Common Stock are to be issued.
The Company shall, as soon as thereafter practicable, issue and deliver to
the Holder or to the nominee or nominees of the Holder at its address set
forth herein, a certificate of certificates for the number of COVR Common
Stock shares to which the Holder shall be entitled as aforesaid.
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If the Note is converted in part only, the Company shall, upon such
conversion, execute and deliver to the holder thereof a new Note or Notes of
authorized denominations in principal amount equal to the unconverted portion
of such Note and bearing interest from the date to which interest has been
paid on the Note so surrendered. Such conversion of such Note portion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the Note, and the person or persons entitled to
receive the COVR Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such COVR Common Stock.
1.3. No Fractional Shares
No fractional shares shall be issuable upon conversion of the Note. If
any fractional interest in COVR Common Stock would, except for the provisions
of this Section, be deliverable upon conversion of a Note, the Company shall
pay to the Holder an amount in cash equal to the value of such fractional
interest (based upon the then Conversion Price).
1.4. Stock Splits; Stock Dividends
In the event the outstanding Common Stock shall be subdivided into a
greater or lesser number of shares of Common Stock, whether by Stock Split,
Stock Dividend, or the like:
there shall be a proportionate adjustment in the Conversion Price and
in the number of shares of Common Stock into which the Note is
convertible, and
there shall be a proportionate adjustment in the Option Contract
Exercise Price and in the number of shares of Common Stock into which
the Option Contract may be exercised.
1.5. Notice of Record Date
In the event of any taking by COVR of a record of the holders of any
class of Common Stock for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
COVR Common Stock of any class of any other securities or property, or
receive any other right, the Company shall use its best efforts to mail to
the Holder, prior to the date specified therein, a notice specifying the date
on which any such record to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such dividend,
distribution or right.
1.6. Holding of Shares of Common Stock Issuable Upon Conversion
The Company shall at all times hold and keep available a sufficient number
of shares of freely tradable COVR Common Stock, solely for the purpose of
affecting the conversion of the Note and the exercise of the Option Contract,
such number of shares as shall from time to time be sufficient to affect the
conversion of the Note, and if at any time the number of shares held by
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the Company shall not be sufficient to effect the conversion of the Note, the
Company will take such action as may, in the opinion of its counsel, be
necessary to satisfy its conversion obligation under the Note.
1.7. Registration of Shares
The shares of COVR Common Stock held by the Company as of the date of
the Note are "restricted securities" within the meaning of Rule 144 under the
Securities Act of 1933, as amended.
The Company will use its best efforts to cause COVR to: (i) within
thirty days following closing, prepare and file a registration statement to
register the resale of a sufficient number of shares of Common Stock to
accommodate all holder exercises and to register the resale of the shares of
Common Stock into which the Options are exercisable, as soon as practicable
following the date of the Note, and (ii) have the registration statement
declared effective by the first possible Conversion Date, and thereafter to
cause the registration statement to remain effective through September 30,
2000.
If the registration statement is not effective on the first possible
Conversion Date, then the Company shall refund to the holder an amount equal
to two percent (2%) of the amount invested by the holder. For each further
thirty day period thereafter until the registration statement is effective,
the Company shall refund to the holder an amount equal to two percent (2%) of
the amount invested by the holder. Any such refund shall not affect the
holder's rights or the number of shares or options to which the holder is
entitled.
1.8. Reorganization, Reclassification, Consolidation, Merger or Sale
If any capital reorganization or reclassification or change of the
outstanding Common Stock shall be effected in such a way that holders of said
stock shall be entitled to receive securities or assets with respect to or in
exchange for shares of Common Stock, then, as a result, as a condition of
such transaction, adequate provision shall be made whereby the Holder of this
Note shall thereafter have the right to receive upon the basis and upon the
terms and conditions specified herein and in lieu of Common Stock immediately
theretofore receivable upon the conversion of such Notes into shares of
Common Stock, such securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding equal to the number of
shares of Common stock immediately theretofore so receivable had such
reorganization, reclassification or change, not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interest of the Holder to the end that the provisions of the Note (including,
without limitation, provisions for adjustment of the Conversion Price) shall
thereafter applicable, as nearly as may be practicable, in relation to any
shares of Common Stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
1.9. No Impairment.
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The Company will not, through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid, frustrate or seek to avoid
the observance of performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Agreement and in taking of all
such action as may be necessary or appropriate in order to protect the
conversion and option rights of the Holder against impairment.
2. Limitation on Proceeding by the Holder
The Holder shall have no right, by virtue of or by availing of any
provision of this Agreement, to institute any suit, action or proceeding in
equity or at law, or for the appointment of a receiver of trustee, or for any
other remedy hereunder, unless the Company has failed to comply with the
terms of this Note and the Holder shall have previously given to the Company
written notice of default and of the continuance thereof, as hereinbefore
provided.
3. Option Coverage
The Holder will be issued an Option Contract ("Option Contract"). The
Holder will be entitled to purchase additional shares ("Options") at certain
fixed prices. The price at which 30,714 Options are exercisable will be 110%
of the Fixed Price. The price at which 22,143 Options are exercisable will
be 100% of the Fixed Price. Unexercised Options will expire September 30,
2000.
IN WITNESS WHEREOF, Care Corporation, Limited, has caused this
Convertible Promissory Note to be signed in its name by its duly authorized
representative and to be dated as of the date and year first above written.
Care Corporation, Limited
By: /s/ Ian Meredith
-------------------------------
Name: Ian Meredith, Director
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Exhibit 5
STOCK OPTION AGREEMENT
This Agreement is made as of September 30, 1998, by and among PARADIGM
GROUP, L.L.C. (the "Holder") and Care Corporation, Limited, a British Virgin
Islands company ("Care").
RECITALS
WHEREAS, Care is the owner of 2,500,000 common shares and its affiliates
own another 2,897,306 common shares of voting stock of Cover-All
Technologies, Inc. ("COVR" or the "Corporation"), a New Jersey corporation
(such common shares being hereinafter referred to as the "Common Stock");
WHEREAS, the Holder has loaned Care money in accordance with the
September 30, 1998 "CONVERTIBLE PROMISSORY NOTE" (the "Note"), attached
hereto and made a part hereof;
WHEREAS, the terms of the Note require that Care grant Holder an option
to acquire shares of Common Stock;
WHEREAS, Care is willing to grant to the Holder the option to purchase
Common Stock subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises of the parties to
each other and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
1. RECITALS INCORPORATED. The preceding recitals are herewith incorporated
into and made a part of this Agreement.
2. GRANT OF STOCK OPTION. In further consideration of the advance by the
Holder to or on behalf of Care pursuant to the Note, and as an inducement
therefor, Care does hereby grant to Holder an Option to acquire 52,857 shares
of Common Stock (the "Option").
3. OPTION PURCHASE PRICE. The purchase price ("Purchase Price") for the
Option shall be $0, the consideration for same being the loan pursuant to the
Note.
4. OPTION EXERCISE PRICE. The Option exercise price (the "Exercise
Price"), to acquire the Common Stock shall be $1.42 per share for 30,714
shares of Common Stock, and $1.29 per share for 22,143 shares of Common Stock.
5. TIME AND METHOD OF EXERCISE. The Option is exercisable by the Holder,
in whole and not in part, beginning on the date of this Agreement. The
Holder may exercise the Option by providing written notice to Care and
tendering the full Exercise Price to Care by cashier's check.
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Upon receipt of the notice and the Exercise Price, Care shall promptly tender
a certificate or certificates evidencing a sufficient number of shares of
Common Stock to COVR's transfer agent and cause the transfer agent to issue
in the name of and deliver to Holder a certificate or certificates evidencing
the number of shares of Common Stock subject to the Option. The
certificate(s) issued in the name of Holder shall bear the same restrictive
legends set forth on the certificate(s) tendered by Care.
6. TERM. The option granted herein shall expire on midnight September 30,
2000.
7. SECURITIES LAWS.
7.1 The rights granted hereunder, in accordance with this Option and the
underlying shares of Common Stock into which the Option is exercisable
have not been registered under the Securities Act of 1933, as amended
(the "Act") or under applicable state securities laws. Care shall use
its best efforts to register the underlying shares of Common Stock for
resale upon the same terms and conditions as set forth in Section 1.7
of the Note, which is incorporated herein by reference as if fully set
forth herein.
7.2 Holder recognizes that an investment in COVR involves substantial
risks. Holder has been given the opportunity to ask questions and
receive answers concerning the terms and conditions of the purchase,
COVR, Care and the businesses of each.
7.3 The Option hereunder is transferrable only pursuant to: (i) a public
offering registered under the Act; (ii) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule in force) if
such rule is available after the applicable holding period; or
(iii) any other legally available means of transfer.
7.4 There is no public market for the Option and there can be no assurance
that such public market will develop in the future or that Holder will
be able to sell or dispose of the Option. Moreover, no assignment,
sale, transfer, exchange or other disposition of the Option can be
made other than in accordance with the restrictions on transferability
set forth above.
7.5 Holder understands and agrees that the following restrictions and
limitations are applicable to this purchase and any resale or other
transfer Holder may make of the Option:
(i) A legend in substantially the following form may be placed on
any certificates evidencing the Option:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
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AS AMENDED OR UNDER ANY STATE SECURITIES LAW. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED
FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 AS AMENDED AND UNDER ANY APPLICABLE STATE SECURITIES
LAW OR AN OPINION OF COUNSEL TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(ii) Stop transfer instructions may be instituted with respect to
the Option so as to restrict resale or other transfer thereof
in accordance herewith and the provisions of the legend set
forth in subparagraph (i) above.
(iii) The legend and stop transfer instructions described in the
above subparagraphs way be placed on any new certificates
issued upon presentment by Holder of certificates for the
Option for transfer.
8. REPRESENTATIONS AND WARRANTIES OF CARE. Care hereby represents and
warrants to Holder as follows:
8.1 ORGANIZATION, REGISTRATION, AND CORPORATE POWER. To the best of
Care's knowledge, COVR is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New
Jersey. To the best of Care's knowledge, COVR has full corporate
power and authority to carry on the business in which it is engaged.
8.2 TITLE. Care owns all right, title, and interest in and to the shares
of Common Stock into which the Option is exercisable, free and clear
of all liens, claims, charges, security interests, options,
encumbrances, or restrictions whatsoever, except for a pledge to COVR
of the shares of Common Stock held by Care pursuant to that certain
Pledge Agreement, dated as of March 31, 1998, by and between Care and
COVR. Care's affiliates own all right, title, and interest in and to
1,374,998 shares or Common Stock, free and clear of all liens, claims,
charges, security interests, options, encumbrances, or restrictions
whatsoever.
8.3 RIGHT TO SELL. Care has the absolute and unrestricted right, title,
power, and authority to sell to Holder all right, title, and interest
in and to the Option pursuant to this Agreement, to execute this
Agreement, and to perform its obligations under this Agreement.
8.4 AGREEMENT BINDING. Care has duly executed this Agreement as its own
free act and deed, and this Agreement constitutes a valid and binding
obligation of Care and is enforceable in accordance with its
provisions except to the extent the same are limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
creditors rights generally or by general equitable principles. The
<PAGE>
execution of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with, violate, or result in a
breach of or acceleration of any payment under any of the terms and
provisions, of or constitute a default under, the Articles of
Incorporation or Association or by-laws of Care or under any
indenture, mortgage, contract, instrument, or arrangement to which
Care is a party or by which it or they are bound.
9. REPRESENTATION AND WARRANTIES OF HOLDER. Holder hereby represents and
warrants to Care as follows:
9.1 PURCHASER SOPHISTICATION. Holder has such knowledge and experience in
financial and business matters that Holder is capable of evaluating
the merits and risks of the prospective investment and has the
capacity to protect Holder's interest in this transaction.
9.2 INVESTMENT. The Securities are for Holder's own account, and not for
the account of any other person and not with a view to distribute to
others and that no other person has or will have a direct or indirect
beneficial interest in the Option.
9.3 AGREEMENT BINDING. Holder has duly executed this Agreement as
Holder's own free act and deed, and this Agreement constitutes the
valid and binding obligation of Holder and is enforceable in
accordance with its provisions, except to the extent the same are
limited by bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors rights generally or by general
equitable principles. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not conflict
with, violate, or result in a breach of or acceleration of any payment
under any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, contract, instrument, or arrangement
to which Holder is a party or by which Holder is bound.
10. SURVIVAL. All statements, representations, warranties or covenants and
the indemnification contained in this Agreement shall survive the termination
of this Agreement the exercise of the Option granted hereunder and any breach
hereof.
11. INDEMNIFICATION.
11.1 Care shall indemnify and hold Holder harmless from and against any and
all claims, demands, losses, judgments, causes of action, costs,
expenses (including attorneys' fees and litigation expenses), and
liabilities whatever arising out of or in connection with the breach
of any warranty, representation, or covenant of Care contained in this
Agreement.
11.2 Holder shall indemnify and hold Care harmless from and against any and
all claims, demands, losses, judgments, causes of action, costs,
expenses (including attorneys' fees and litigation expenses), and
liabilities whatsoever arising out of or
<PAGE>
in connection with the breach of any warranty, representation, or
covenant of Holder contained in this Agreement.
12. RESTRUCTURES. If any capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of COVR's assets is
effected in a way that holders of shares of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for such Common Stock, Holder will have
the right, prior to consummation of such transaction, to acquire and receive
(in lieu of or in addition to what Holder would have received upon exercise
of such holder's stock option), such securities or assets as may be issued or
payable with respect to the exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of such
holder's Option had such exchange not taken place.
13. ADDITIONALLY ACQUIRED STOCK. Care agrees that the term "Common Stock"
as used herein shall include any and all other shares of capital stock of
COVR, including voting, nonvoting, preferred or common acquired by Care at
anytime during the option period provided in this Agreement.
14. ENCUMBRANCES. Except as otherwise disclosed herein, Care agrees not to
encumber the Common Stock or Option, in any way, during the option period
provided in this Agreement, and other similar agreements resulting from the
Convertible Promissory Notes totaling $560,000, issued to others and to this
Holder collectively, all as of September 30, 1998.
15. TAX EFFECT. Care agrees to cooperate with Holder in structuring the
transactions contemplated herein to obtain the overall best tax effect for
the Holder.
16. ENTIRE AGREEMENT. This Agreement comprises the entire agreement of the
parties concerning the subject matter contained in this Agreement and
supersedes all previous understandings, negotiations, discussions and
agreements whether expressed in writing or orally.
17. GOVERNING LAW, JURISDICTION, VENUE. This Agreement shall be enforced and
construed according to the laws of the State of Illinois without taking into
account the impact of conflicts of laws as applied in Illinois. The Illinois
courts, Federal or State, will have personal jurisdiction over the parties
hereto for all claims, controversies or disputes arising out of or relating
to this Agreement and the agreements contemplated hereby and venue will be in
Cook County, Illinois.
18. NOTICES. All communications under this Agreement shall be in writing,
shall be sent by telex or facsimile transmission (and confirmed by certified
mail) or mailed by first class or express mail, postage prepaid to the
address specified below, and shall be deemed to have been given when received
or, if sent by prepaid certified mail, return receipt requested, within three
(3) business days of when so mailed:
If to Care: If to Holder:
Care Corporation PARADIGM GROUP, L.L.C.
c/o Moore Stephens 3000 Dundee Rd., Suite 105
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P.O. Box 236 Northbrook, IL 60062
1st Island House
Peter Street
St. Helier, Jersey JE4 8SG
Channel Islands
Attention: Mr. Stephen Milsom
with a copy to:
Gardere & Wynne, L.L.P.
1601 Elm Street, Suite 3000
Dallas, Texas 75201
Attention: Randall G. Ray, Esq.
19. ASSIGNMENT. This Agreement shall benefit only the parties to this
Agreement and may not be assigned without the prior written consent of the
other parties.
20. ACCEPTANCE BY FACSIMILE. A facsimile copy of this Agreement, which
includes the signature of all parties shall be legally binding and
enforceable as if it was an original document.
21. AMBIGUITIES. Each party to this Agreement waives any common law,
statutory, or equitable presumption against the drafter of contract
ambiguities in a document.
22. SEVERABILITY. If any covenant or other provision of this Agreement is
invalid, illegal or incapable of being enforced by reason of any rule of law,
administrative order, judicial decision or public policy, all other
conditions, covenants, and provisions of this Agreement shall, remain in full
force and effect, and no covenant or provision shall be deemed dependent upon
any other covenant or provision unless expressly stated. This Agreement, in
such circumstances, shall be deemed modified to the extent necessary to
render enforceable the provisions of this Agreement and the parties grant to
any court making a determination as to the illegality, invalidity or
enforceability of any provision contained in this Agreement, the power and
authority to modify the scope, duration or area, or all of them. Such
provision shall be applicable in its modified form.
23. COUNTERPART. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
24. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto to the same extent as if each
such successor and assign were, in each case, named a party to this Agreement.
Each of the undersigned understands and agrees to all of the provisions
above and acknowledges receipt of a copy of this Agreement.
<PAGE>
In Witness Whereof the Parties have executed this Agreement on the date
written above.
PARADIGM GROUP
Holder Care Corporation, Limited:
By: /s/ Aaron Fisher By: /s/ Ian Meredith
------------------------ ------------------------
Managing Director
Name: Ian Meredith
----------------------
Title: Director
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