SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy [X] Definitive Proxy
Statement Statement
[ ] Definitive Additional [ ] Soliciting Materials
Materials Pursuant to
[ ] Confidential, for use of Section 240.14a-11(c)
the Commission Only or Section 240.14a-12
(as permitted by
Rule 14a-6(e)(2))
COVER-ALL TECHNOLOGIES INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
--------------------------
2) Aggregate number of securities to which transaction
applies:
---------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
amount on which the filing fee is calculated and state
how it was determined):
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4) Proposed maximum aggregate value of transaction:
-------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------
2) Form, Schedule or Registration Statement No:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
COVER-ALL TECHNOLOGIES INC.
BRIAN MAGOWAN
Chairman of the Board and Chief Executive Officer
April 30, 1998
To All Cover-All Stockholders:
I cordially invite you to attend the Annual Meeting of
Stockholders which will be held at the Marriott at Glenpointe
Hotel, 100 Frank W. Burr Boulevard, Teaneck, New Jersey 07666, on
Thursday, June 18, 1998 at 9:00 a.m., local time.
The annual election of directors will take place at the
Meeting. Personal information about the nominees for the Board
of Directors as well as information about the functions of the
Board and its committees are contained in the Proxy Statement.
Regardless of the number of shares you own or whether you
plan to attend, it is important that your shares be represented
and voted at the Meeting. You are requested to complete, sign,
date and mail the accompanying form of Proxy in the enclosed
envelope provided for that purpose (to which no postage need be
affixed if mailed in the United States) whether or not you expect
to attend the Meeting in person. The Proxy is revocable by you
at any time prior to its exercise and will not affect your right
to vote in person in the event you attend the Meeting. The
prompt return of the Proxy will be of assistance in preparing for
the Meeting and your cooperation in this respect will be greatly
appreciated.
Please read the formal notice of the Meeting and the Proxy
Statement carefully. For those of you who cannot be present at
the Meeting, I urge you to participate by completing, signing and
returning your Proxy in the enclosed envelope. Your vote is
important, and the management of Cover-All Technologies Inc.
appreciates the cooperation of stockholders in directing Proxies
to vote at the Meeting.
Sincerely,
BRIAN MAGOWAN,
Chairman of the Board and
Chief Executive Officer
<PAGE>
COVER-ALL TECHNOLOGIES INC.
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TO THE STOCKHOLDERS OF COVER-ALL TECHNOLOGIES INC.:
The Annual Meeting of Stockholders (the "Meeting") of Cover-
All Technologies Inc., a Delaware corporation (the "Company"),
will be held on June 18, 1998 at 9:00 a.m., local time, at the
Marriott at Glenpointe Hotel, 100 Frank W. Burr Boulevard,
Teaneck, New Jersey 07666, to consider and act upon the
following:
1. To elect a class of directors consisting of two directors
to serve for a term of three years or until their successors
shall have been duly elected and qualified ("Proposal No.
1").
2. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
Stockholders of record at the close of business on April 27,
1998, which is the record date for the Meeting, are entitled to
receive notice of, and to vote at, the Meeting and at any
adjournment thereof. A Proxy and a Proxy Statement for the
Meeting are enclosed.
All stockholders are cordially invited to attend the Meeting
in person. Whether or not you plan to attend the Meeting, please
complete, sign, date and return the enclosed Proxy, which is
solicited by the Board of Directors of the Company, to ensure
that your shares are represented at the Meeting. Stockholders
who attend the Meeting may revoke their Proxies and vote their
shares in person.
By Order of the Board of Directors
ANN F. MASSEY
Secretary
Date: April 30, 1998
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IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE.
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<PAGE>
COVER-ALL TECHNOLOGIES INC.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 18, 1998
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GENERAL
This Proxy Statement (the "Proxy Statement") is furnished in
connection with the solicitation of Proxies by the Board of
Directors of Cover-All Technologies Inc., a Delaware corporation
(the "Company"), to be voted at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at
the Marriott at Glenpointe Hotel, 100 Frank W. Burr Boulevard,
Teaneck, New Jersey 07666, on June 18, 1998 at 9:00 a.m., local
time, and at any adjournment thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders and
in this Proxy Statement.
The principal executive offices of the Company are located at
18-01 Pollitt Drive, Fair Lawn, New Jersey 07410. The
approximate date on which this Proxy Statement and accompanying
Proxy will first be sent or given to stockholders is April 30,
1998.
VOTING SECURITIES AND VOTE REQUIRED
Stockholders of record as of the close of business on April
27, 1998 (the "Record Date") will be entitled to notice of, and
to vote at, the Meeting or any adjournment or adjournments
thereof. As of the Record Date, there is only one class of
voting securities of the Company outstanding, that being Common
Stock. Each holder of Common Stock on the Record Date is
entitled to one vote for each share held by such holder. The
presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock is necessary to constitute
a quorum at the Meeting. Assuming a quorum is present, the
nominees for director receiving a plurality of the votes cast at
the Meeting shall be elected.
With regard to the election of directors, votes may be cast
in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect except that votes
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withheld will be counted toward determining the presence of a
quorum for the transaction of business.
Abstentions and broker "non-votes" will be counted toward
determining the presence of a quorum for the transaction of
business. Abstentions may be specified on all proposals except
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the election of directors. With respect to proposals other than
the election of directors, abstentions will have the effect of a
negative vote. A broker "non-vote" will have no effect on the
outcome of any other proposals. The treatment of abstentions and
broker "non-votes" is consistent with applicable Delaware law and
the Company's By-Laws.
As of April 27, 1998, 16,978,022 shares of the Company's
Common Stock were issued and outstanding.
<PAGE>
VOTING OF PROXIES
Proxies are solicited by the Board of Directors of the
Company in order to provide every stockholder with an opportunity
to vote on all matters that properly come before the Meeting,
whether or not the stockholder attends in person. When the
enclosed form of Proxy is properly signed, dated and returned,
the shares represented will be voted by the persons named as
Proxies in accordance with the stockholder's direction. If no
direction is indicated, the shares will be voted as recommended
by the Board of Directors. The enclosed Proxy confers
discretionary authority to vote with respect to the transaction
of such other business of a procedural nature or incidental to
the Meeting as may properly come before the Meeting. As of the
date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before
the Meeting. However, if any other matters not mentioned in the
Proxy Statement are properly brought before the Meeting or any
adjournment thereof, the persons named in the enclosed Proxy or
their substitutes will have discretionary authority to vote
Proxies given in said form, or otherwise act, in respect of such
matters in accordance with their best judgment. Any stockholder
executing a form of Proxy may revoke that Proxy or may submit a
revised form of Proxy at any time before it is voted. A
stockholder may also vote by ballot at the Meeting, thereby
canceling any Proxy previously returned.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information as of March 31, 1998
as to the number of shares of Common Stock beneficially owned by
(i) each person known by the Company to own beneficially more
than 5% of the Company's Common Stock, (ii) each person who is a
director of the Company, (iii) the executive officers for whom
information is included in the Summary Compensation Table, and
(iv) all persons as a group who are directors and executive
officers of the Company, and as to the percentage of outstanding
shares held by such persons on that date.
Amount
Status of Beneficially Percent
Name and Address Beneficial Owner Owned(1) of Class(2)
---------------- ---------------- ---------- -----------
Harvey Krieger Beneficial 1,115,878(3) 6.6%
12 Vaughn Drive Owner of more
Ramsey, NJ 07446 than 5% of
the Company's
Common Stock
James R. Stallard Director 10,000(4) *
1601 Chestnut Street
- TLP 44
Two Liberty Place
Philadelphia, PA
19192
Brian Magowan Chairman of the 310,000(5) 1.8%
18-01 Pollitt Drive Board and Chief
Fair Lawn, NJ 07410 Executive
Officer
Earl Gallegos Director 510,000(6) 3.0%
18-01 Pollitt Drive
Fair Lawn, NJ 07410
Ian Meredith Director 10,000(7) *
18-01 Pollitt Drive
Fair Lawn, NJ 07410
2
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Amount
Status of Beneficially Percent
Name and Address Beneficial Owner Owned(1) of Class(2)
---------------- ---------------- ---------- -----------
Mark D. Johnston Director 205,000(8)(12) 1.2%
P.O. Box 839
St. Helier, Jersey
Channel Islands,
JE4 9NZ
Steve Hough Director -- --
18-01 Pollitt Drive
Fair Lawn, NJ 07410
Peter C. Lynch President and 217,300(9) 1.3%
18-01 Pollitt Drive Chief Operating
Fair Lawn, NJ 07410 Officer of the
Company and
President and
Chief Operating
Officer of
COVER-ALL
Systems, Inc., a
Delaware
corporation and
the Company's
subsidiary
("COVER-ALL")
Raul F. Calvo Vice President 47,200(10) *
18-01 Pollitt Drive and Chief
Fair Lawn, NJ 07410 Accounting
Officer
Software Investments Beneficial 3,897,306(12) 23.1%
Limited Owner of more
Abbot Building than 5% of
P.O. Box 3186 the Company's
Main Street Common Stock
Road Town
Tortola, British
Virgin Islands
Care Corporation Beneficial 2,500,000(12) 14.8%
Limited Owner of more
Abbot Building than 5% of
P.O. Box 3186 the Company's
Main Street Common Stock
Road Town
Tortola, British
Virgin Islands
Atlantic Employers Beneficial 1,238,273 7.3%
Insurance Company Owner of more
1601 Chestnut Street than 5% of
Two Liberty Place the Company's
Philadelphia, PA Common Stock
19192
All directors and 1,309,500(11) 7.7%
executive
officers as a group
(consisting
of 8 persons)
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* Less than one percent.
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(1) Includes options exercisable within sixty (60) days of the
date as of which beneficial ownership is determined,
pursuant to Rule 13d-3 under the Securities Exchange Act of
1934, as amended.
(2) Based upon 16,907,522 total outstanding shares of Common
Stock on March 31, 1998.
(3) Includes 22,989 shares owned by Mr. Krieger's wife and minor
children, as to which Mr. Krieger disclaims beneficial
ownership.
(4) Represents options to purchase 10,000 shares at an exercise
price of $4.50 per share pursuant to the Company's 1994
Stock Option Plan for Independent Directors.
(5) Represents options to purchase 300,000 shares at an exercise
price of $1.25 per share pursuant to the Company's 1995
Employee Stock Option Plan and options to purchase 10,000
shares at an exercise price of $2.13 per share pursuant to
the Company's 1994 Stock Option Plan for Independent
Directors.
(6) Represents options to purchase 500,000 shares at an exercise
price of $1.25 per share pursuant to the Company's 1995
Employee Stock Option Plan and options to purchase 10,000
shares at an exercise price of $2.13 per share pursuant to
the Company's 1994 Stock Option Plan for Independent
Directors.
(7) Represents options to purchase 10,000 shares at an exercise
price of $1.94 per share pursuant to the Company's 1994
Stock Option Plan for Independent Directors.
(8) Represents options to purchase 10,000 shares at an exercise
price of $4.50 per share pursuant to the Company's 1994
Stock Option Plan for Independent Directors and options to
purchase 195,000 shares at an exercise price of $2.00 per
share pursuant to the Company's 1995 Employee Stock Option
Plan.
(9) Represents options to purchase 12,500 shares at an exercise
price of $2.25 per share pursuant to the Company's 1991 Key
Employee Stock Option Plan and options to purchase 5,000
shares at an exercise price of $1.75 per share, options to
purchase 30,000 shares at an exercise price of $5.00 per
share and options to purchase 24,800 shares at an exercise
price of $2.00 per share pursuant to the Company's 1995
Employee Stock Option Plan and options to purchase 145,000
shares at an exercise price of $1.5625 per share.
(10) Represents options to purchase 7,500 shares at an exercise
price of $2.25 per share pursuant to the Company's 1991 Key
Employee Stock Option Plan and options to purchase 5,000
shares at an exercise price of $1.75 per share, options to
purchase 15,000 shares at an exercise price of $5.00 per
share, and options to purchase 19,700 shares at an exercise
price of $2.00 per share pursuant to the Company's 1995
Employee Stock Options Plan.
(11) Represents 1,309,500 shares of Common Stock which may be
acquired pursuant to the exercise of outstanding stock
options.
(12) See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
4
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
There are six members of the Board of Directors of the
Company classified into three classes, with the three-year term
of office of each class expiring at the Meeting of Stockholders
in successive years, upon the election and qualification of
successor classes. The term of office of two directors will
expire at the Meeting. The Directors in the class subject to
election will be elected to serve for a term of three years or
until their successors shall have been elected and qualified.
The nominees for the class to be elected at the Meeting are
James R. Stallard and Ian J. Meredith. Mr. Stallard was named a
director of the Company in March 1996, and Mr. Meredith was named
a director of the Company in March 1997. In connection with the
issuance of the Company's 12 1/2% Convertible Debentures ("the
Debentures") in March 1997 to Tandem Capital, Inc. ("Tandem"), an
affiliate of Sirrom Capital Corporation, Tandem was provided with
the right to require that its nominee be elected to the Board of
Directors as a member of the class whose term expires in 1998.
As of the Record Date, Tandem had exercised such right with the
appointment of Steve Hough to the Board of Directors.
The Company's By-Laws provide for seven members of the Board
of Directors. There was one vacancy as of the Record Date.
Proxies may not be voted for a greater number of persons
than the two nominees named. Unless otherwise indicated, all
Proxies received will be voted in favor of the election to the
Board of Directors of the nominees named above. Should any of
the nominees not remain a candidate for election at the date of
the Meeting (which contingency is not now contemplated or
foreseen by the Board of Directors), Proxies solicited hereby
will be voted in favor of those nominees who do remain candidates
and may be voted for substitute nominees selected by the Board of
Directors. The nominees for director receiving a plurality of
the votes cast at the Meeting shall be elected. Shares
represented by Proxy as to which authority to vote for the named
nominee is properly "withheld" will not be counted either "for"
or "against" in determining a plurality for such nominee.
The following table lists the names of the directors and the
nominees for Director, their ages, their current positions with
the Company and the expiration date of their term as director of
the Company.
Term as
Director
Name Age Position Expires
---- --- -------- -------
Brian Magowan . . . . . . . 56 Chairman of the 2000
Board of
Directors and
Chief
Executive
Officer
Earl Gallegos . . . . . . . . 40 Director 1999
James R. Stallard . . . . . . 45 Director 1998*
Mark D. Johnston . . . . . . 40 Director 1999
Ian J. Meredith . . . . . . . 49 Director 1998*
Steve Hough . . . . . . . . . 54 Director 2000
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* Term of class expires at the Meeting. Director indicated is a
nominee for re-election.
5
<PAGE>
Brian Magowan has served as Chairman and Chief Executive
Officer of the Company since March 1997. From 1971 until August
1993, Mr. Magowan worked for the Unisys Corporation in various
capacities. In his last position with Unisys he was Vice
President and General Manager of the Software Products Group.
Between September 1993 and March 1997, Mr. Magowan has served as
Managing Partner of the consulting firm of Turnbury Associates
("Turnbury"). See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
Earl Gallegos was named a director of the Company in March
1997. Mr. Gallegos is a former Executive Vice President of
Operations for Pacific Rim Assurance Company. Mr. Gallegos spent
seven years working within all aspects of the workers'
compensation insurance company. Within the last three years, Mr.
Gallegos founded his own consulting firm in which he performs
management consulting within the insurance and software
industries. Some of his larger projects include implementation
and management of a software system to support a statewide
managed care program and the founding of a twenty-four hour
managed care company in the state of California. See
"COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS - EMPLOYMENT
AGREEMENTS WITH EXECUTIVE OFFICERS."
James R. Stallard was elected a director of the Company in
1996. Mr. Stallard joined CIGNA Property and Casualty in August
1994 as a Vice President. Mr. Stallard has held a variety of
management positions in underwriting, administration and systems
in the property and casualty insurance industry for nearly 25
years, and for 21 years was employed by Transamerica Insurance
Company (now known as TIG). Mr. Stallard was elected to the
Board of Directors of the Company pursuant to a Restructuring
Agreement dated as of March 1, 1996 among the Company and several
customers and parties to two lawsuits. Under the Restructuring
Agreement, the Company agreed to elect to its Board of Directors
one designee selected by a majority in amount of the settlement
shares issued pursuant to the Restructuring Agreement. Mr.
Stallard, as designee, was elected as a director in the Class of
1998 and will be subject to reelection at the Company's 1998
Annual Meeting of Stockholders. Beginning with the 1998 Annual
Meeting, the Company will include Mr. Stallard, or any successor
designee selected by a majority in amount of the settlement
shares issued pursuant to the Restructuring Agreement, as a
nominee in management's slate of directors for such annual
meeting, and the Company shall recommend to its stockholders the
election of such designee or successor as a director. In the
event that such designee is not elected as a director at the 1998
Annual Meeting, the Company shall, following said meeting, elect
the designee to its Board of Directors to serve for a period
equal to the remainder of the three-year period and amend its By-
Laws to create any vacancy, if required. The Company further
agreed that if the designee dies or resigns, his successor will
be designated a director. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
Mark D. Johnston was elected a director of the Company in
1996 and served as Chief Financial Officer in 1997 on an interim
basis until John R. Nobel was named Chief Financial Officer on
January 22, 1998. Mr. Johnston is an executive director of
Software Investments Limited ("SIL") and Care Corporation Limited
("Care"), both of which are British Virgin Islands companies.
For the past 6 years his responsibilities have been centered on
treasury operations, including currency management and management
of investments in international bonds, equities and derivatives.
Mr. Johnston has also been involved in the development of
educational software for use on multimedia personal computers for
the past five years and has gained considerable experience in the
rapid changes occurring in the computer industry. Mr. Johnston
is also a director of International Insurance Technologies, Inc.,
a software consulting company in Tampa, Florida. Mr. Johnston
was elected to the Board of Directors pursuant to the terms of a
Stock Purchase Agreement dated as of March 31, 1996 among the
Company, SIL and Care. Under the Stock Purchase Agreement, the
Company agreed to elect Mr. Johnston as a director in the Class
of 1996 as the designee of SIL and Care. The Company further
agreed that a designee, which may be Mr. Johnston or a successor
designated by SIL and Care, shall be included as one of the
management nominees for director of the Company at each meeting
of stockholders, beginning with the 1996 Annual Meeting, and that
if the designee is not elected at the 1996 Annual Meeting or any
subsequent annual meeting called for the purpose of reelecting or
electing such class of directors, the Company shall, following
such meeting, elect the designee to its Board of Directors to
serve for a period equal to the remainder of the term of such
class of directors and amend its By-Laws to create any vacancy,
if required. The Stock Purchase Agreement further stipulates
that if, at any time, any designee shall decline or be unable to
serve as a director of the Company, another designee shall be
elected as a director to fill the vacancy thus created. Each
6
<PAGE>
designee shall have all voting and other rights provided to
directors of the Company generally. The Company shall be
required to comply with the Stock Purchase Agreement 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.
See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
Ian J. Meredith was named a director of the Company in March
1997. Mr. Meredith is the Chief Executive Officer of
International Insurance Technologies, Inc., a software consulting
company headquartered in Tampa, Florida. His primary
responsibility is to promote marketing and sales of insurance
software internationally. Mr. Meredith is a director of Care
Systems Corporation, a Delaware corporation and an affiliate of
Care ("CSC"), specializing in software and services to the
workers' compensation industry in the United States. In 1992,
Mr. Meredith, as CEO and Chairman, founded CSC to develop
proprietary software for the insurance and employer markets.
Steve Hough was named a director of the Company in December
1997. Mr. Hough is President of Tennecom Holdings, Inc. ("THI"),
a company which serves as the management arm for several computer
sales and service companies and as an incubator for new business
ventures. Mr. Hough established and has run Tennecom, Inc., a
computer sales and service company, since 1982. From 1982 to
1997, Mr. Hough established several subsidiaries and sister
companies of THI that develop software, refurbish and resell IBM
computer equipment and provide professional services in AS/400
and Client Server systems. Prior to 1982, Mr. Hough set up a
computer leasing division for Pearl Equipment Co., created
Computer Marketing of America, a computer sales company which he
sold to a partner in 1982, and worked for IBM in various
capacities.
In addition to Mr. Magowan who is the Chief Executive Officer
of the Company, Peter C. Lynch is the President and Chief
Operating Officer of the Company and President and Chief
Operating Officer of COVER-ALL, John R. Nobel is the Chief
Financial Officer of the Company, Raul F. Calvo is the Vice
President and Chief Accounting Officer of the Company and Ann F.
Massey is the Secretary of the Company.
Peter C. Lynch (age 37) is presently the President and Chief
Operating Officer of the Company and the President and Chief
Operating Officer of COVER-ALL, and has served as such since June
1996. Mr. Lynch joined the Company as Vice President of Sales
and Marketing of COVER-ALL in July 1994. He was appointed
President and Chief Operations Officer of COVER-ALL in 1995.
Prior to joining the Company, Mr. Lynch held various sales and
operations positions within AT&T as part of their executive
development program.
John R. Nobel (age 44) has served as Chief Financial Officer
of the Company since January 22, 1998. From 1991 to December
1997, Mr. Nobel held controller positions with Chartwell Leisure,
Inc. and Prime Hospitality Company. Mr. Nobel is a Certified
Public Accountant and was employed by Arthur Young & Co. from
1983 to August 1986.
Raul F. Calvo (age 68) has served as the Company's Vice
President since March 1996. From 1989 until February 1996, Mr.
Calvo served as the Director of Operations and Vice President for
the JUA/MTF program, the automobile insurance assigned risk pool
of the State of New Jersey. In 1994, Mr. Calvo was appointed
Chief Financial Officer and Treasurer of COVER-ALL, and in August
1995 he was appointed Chief Accounting Officer for the Company.
Ann F. Massey (age 40) has served as the Company's Corporate
Secretary since April 1997. In March 1997, Ms. Massey was
appointed Controller of the Company and in March 1996, she was
appointed Assistant Treasurer of the Company. From 1994 until
February 1996, Ms. Massey served as Assistant Controller for the
insurance services division of the Company. Prior to 1994, Ms.
Massey served as the Company's Accounting Manager.
7
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
There were 14 meetings of the Board of Directors of the
Company held during the last fiscal year. All current directors
attended at least 75% of the total number of meetings of the
Board and all committee meetings of the Board on which the
director served. In addition, the Board acted by unanimous
written consent on two occasions.
The Board of Directors has standing Compensation and Audit
Committees. The full Board of Directors administers each of the
1994 Non-Qualified Stock Option Plan for Consultants, the 1994
Stock Option Plan for Independent Directors and the 1995 Employee
Stock Option Plan, as amended (collectively, the "Stock Option
Plans"). Although the Company is no longer granting options
under the 1991 Key Employee Stock Option Plan, there still remain
outstanding options under such plan. The Company does not have a
standing nominating committee.
The present members of the Compensation Committee are Messrs.
Magowan and Gallegos. The principal functions of the
Compensation Committee are to review current and proposed
employment arrangements with existing and prospective senior
employees. During the fiscal year ended December 31, 1997, the
Compensation Committee met on one occasion.
The present members of the Audit Committee are Messrs.
Stallard, Gallegos and Johnston. The Audit Committee's principal
functions are (i) to consider matters relating to the
administration and audit of the Company's accounts and its
financial affairs; (ii) to supervise the Company's relationship
with its independent auditors; (iii) to recommend the appointment
of independent auditors and (iv) to meet with Company personnel
as it deems appropriate to carry out its functions. During the
fiscal year ended December 31, 1997, the Audit Committee did not
meet.
In administering the Stock Option Plans, the Board of
Directors' principal function is to administer the respective
plans, including selecting the employees, consultants and
directors to whom options will be granted, determining the number
of options to be granted to any such employee, consultant or
director when options are to be granted, the terms of the options
and any conditions to be attached to the options and establishing
rules and regulations for the administration of the respective
plans.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
In March 1996, the Company entered into a series of
agreements which provided for the transfer and discontinuance of
its Insurance Services Division ("ISD") operations and the
issuance of the Company's Common Stock and warrants to purchase
Common Stock (the "Restructuring Warrants") to (i) certain
customers of the ISD business in exchange for the release of the
Company from its obligations to provide insurance services to ISD
customers and (ii) The Robert Plan Corporation in exchange for
the settlement and dismissal of lawsuits with The Robert Plan
Corporation.
As part of the restructuring transactions (the
"Restructuring"), the Company transferred certain assets,
employees, contracts and leased premises relating to its ISD
business to a subsidiary of The Robert Plan Corporation, which
has replaced the Company as the provider of insurance services to
the ISD customers. In exchange for settling the lawsuits,
releasing the Company's obligations to provide insurance services
under its contracts and executing the mutual releases, the
Company issued to certain of the ISD customers and certain
parties to the litigation: (a) a total of 3,256,201 shares of
the Company's Common Stock, (b) five-year Restructuring Warrants
to purchase up to an additional aggregate of 1,553,125 shares of
the Company's Common Stock at $2.00 per share, and (c) cash of
8
<PAGE>
$2.5 million. The Company had the option, exercisable for a
period of six months (from March 1, 1996), to (i) purchase 50% of
the aforementioned 3,256,201 shares at a cash price equal to the
greater of $3.00 or 50% of the then market price of a share of
the Company's Common Stock, and (ii) acquire 50% of the 1,553,125
Restructuring Warrants at a cash price equal to $1.00 per
Warrant. As discussed below, on March 31, 1996, the Company
assigned this purchase option to SIL, which SIL subsequently
exercised. As a result of the SIL and Care transactions of March
31, 1996 described below, the antidilution provisions of the
Restructuring Warrants required an adjustment of shares to
1,725,694 from 1,553,125 and a price adjustment to $1.80 from
$2.00 per share. Further, as a result of the issuance of the
Debentures to Tandem on March 31, 1997, the remaining
Restructuring Warrants required an adjustment of shares to
902,979 and a price adjustment to $1.72 per share.
As part of the restructuring, Atlantic Employers Insurance
Company ("AEIC"), a CIGNA Property and Casualty company and ISD
customer, initially acquired 2,476,547 shares of the Company's
Common Stock, Restructuring Warrants to purchase 1,181,250 shares
and $675,000 in cash as part of the Restructuring, and on the
Record Date held 1,238,273 of the shares and 656,250 of the such
warrants. James R. Stallard, Vice President of CIGNA Property
and Casualty, was designated as a director of the Company
pursuant to the terms of the Restructuring Agreement.
On March 31, 1996, the Company entered into a series of
transactions with SIL and Care whereby the Company: (A) sold to
SIL for total proceeds of $3,022,391: (i) 1,412,758 shares of the
Company's Common Stock for $2.00 per share, and (ii) five-year
warrants (the "SIL Warrants") to purchase an aggregate of 196,875
shares of the Company's Common Stock, exercisable at $2.00 per
share, for $1.00 per SIL Warrant ($196,875), and (B) assigned to
SIL the rights it retained in the Restructuring to repurchase
within six months 1,628,100 shares of the Company's Common Stock
for the greater of $3.00 per share or 50 percent of the then
market price of the Company's Common Stock and its rights to
purchase from the warrantholders for $1.00 per warrant,
Restructuring Warrants to acquire 776,562 shares of the Company's
Common Stock at $2.00 per share which was subsequently exercised
by SIL. As a result of the SIL investment, the antidilution
provisions of the Restructuring Warrants purchased by SIL
required an adjustment from 776,562 shares at $2.00 share to
862,847 shares at $1.80 per share. As a result of the issuance
of the Debentures to Tandem on March 31, 1997, the SIL Warrants
required an adjustment of shares to 206,152 and a price
adjustment to $1.91 per share.
On March 31, 1996, the Company was granted by Care the
exclusive license for the Care software systems for use in the
worker's compensation claims administration markets in Canada,
Mexico and Central and South America (the "Care Software
License"). In exchange for this license, the Company issued to
Care 2,500,000 shares of the Company's Common Stock at $2.00 per
share to value the license at $5,000,000 at March 31, 1996. The
license agreement was revised on March 14, 1997 to provide for
the engagement of Care as the Company's exclusive sales agent for
a monthly fee of $10,000 against commissions of 20%. In
accordance with such engagement of Care as the Company's
exclusive agent, the Company paid Care approximately $90,000 in
the 1997 Fiscal Year.
On March 31, 1998, as a result of a strategic decision by the
Company to allocate its future resources to its TAS 2000 and
Classic product line, the Company entered into a buy back of the
Care Software License while acquiring worldwide reseller rights
(excluding Australia, New Zealand and the United States). In
consideration for the buy back of the Care Software License by
Care, the Company received $500,000 on March 31, 1998 and a
$4,500,000 non-interest bearing note, payable in semi-annual
installments of $500,000 which, when discounted, results in a
principal amount of the note of $3,893,054. The discounted note
is collateralized by unencumbered Cover-All stock owned by Care.
The number of shares required as collateral will vary, such that
the market value of the shares held as collateral must equal 150%
of the outstanding balance. The number of shares required as
collateral will be adjusted at each payment date based on the
market price of the Company's shares and the balance outstanding
on the date. Based on the market price of the Company's stock on
March 30, 1998, approximately 1,700,000 shares were pledged as
collateral.
Pursuant to the terms of the agreement consummated in
connection with the buy back of the Care Software License, the
Company has retained nonexclusive rights as well as reseller
rights to the Care Software License, for which the Company is not
required to pay a license fee to Care. In addition, pursuant to
9
<PAGE>
the Care Software License buy back, the Company granted to Care
the non-exclusive right to sell its TAS 2000 software and Classic
product line outside of the United States, relieving the Company
of paying to Care an agency fee, as well as reducing marketing
expense to the Company.
Based on the above, and due to the related party nature of
the Care Software License buy back agreement, the Company
recorded the $1,143,054 difference between the carrying value of
the Care Software License of $3,250,000 at December 31, 1997, and
the discounted $4,393,054 buy back agreement to capital in excess
of par value in the first quarter of 1998.
SIL is controlled by The Software Trust, a Jersey, Channel
Islands Discretionary Settlement, which owns all of the issued
capital of SIL as its sole asset. The Care Trust, a Jersey,
Channel Islands Discretionary Settlement, owns a majority
interest in the issued capital of Care as its sole asset. The
beneficiaries of both The Software Trust and The Care Trust are
the family interests of Mark D. Johnston. Mr. Johnston is an
executive director of each of SIL and Care, but does not have a
direct interest in either The Software Trust or The Care Trust.
In March 1997, Mark D. Johnston was appointed Chief Financial
Officer of the Company on an interim basis, and served in such a
capacity until January 22, 1997. See "COMPENSATION OF EXECUTIVE
OFFICERS AND DIRECTORS - EMPLOYMENT AGREEMENTS OF EXECUTIVE
OFFICERS."
In March 1997, the Company engaged Brian Magowan as Chief
Executive Officer of the Company with compensation to be paid by
the Company to Turnbury, the consulting firm of which Mr. Magowan
is a managing partner. See "COMPENSATION OF EXECUTIVE OFFICERS
AND DIRECTORS - EMPLOYMENT AGREEMENTS OF EXECUTIVE OFFICERS."
In March 1997, the Company engaged Earl Gallegos, a director
of the Company, as a consultant. As of January 1998, Mr.
Gallegos is no longer a consultant of the Company. See
"COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS - EMPLOYMENT
AGREEMENTS OF EXECUTIVE OFFICERS."
The Company paid Turnbury, the consulting firm which Mr.
Magowan is a managing partner, approximately $82,000 in the 1997
Fiscal Year for professional services provided to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file
initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. The Company
believes that, during the fiscal year ended December 31, 1996,
its executive officers, directors and holders of more than 10% of
the Company's Common Stock complied with all Section 16(a) filing
requirements. In making these statements, the Company has relied
upon a review of reports on Forms 3, 4 and 5 furnished to the
Company during, or with respect to, its last fiscal year.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table summarizes all compensation earned or
paid to the Company's Chief Executive Officer and each of the
Company's other executive officers whose total annual salary and
bonus exceeded $100,000 for services rendered in all capacities
to the Company during the fiscal years ended December 31, 1997,
1996 and 1995.
ANNUAL COMPENSATION
----------------------------------
OTHER
ANNUAL
NAME AND COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION
------------------ ---- ------ ----- ------
Brian Magowan 1997 $ -- $ -- $235,800
Chairman of the 1996 -- -- 139,500(1)
Board and Chief 1995 -- -- 119,400(1)
Executive Officer
Mark D. Johnston 1997 -- -- 37,500
3,000 Board
Director and Former 1996 -- -- Fees
Interim Chief 1995 -- -- --
Financial Officer
Peter C. Lynch 1997 178,327 -- 17,452
President and Chief 1996 157,762 -- 53,510
Operating Officer of 1995 154,578 -- --
the Company and
President and Chief
Operating of
COVER-ALL
Raul F. Calvo 1997 131,250 5,000 24,486
Vice President 1996 136,800 -- --
1995 114,423 -- --
Alfred J. Moccia 1997 30,192 -- --
Former Chairman of 1996 120,000 -- --
the Board and 1995 45,385 -- --
Chief Executive
Officer
LONG TERM COMPENSATION(1)
-----------------------------------------
AWARDS PAYOUTS
--------------------- --------- ALL
RESTRICTED SECURITIES OTHER
NAME AND STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION YEAR AWARD(S) OPTIONS PAYOUTS SATION
------------------ ---- -------- ------- ------- ------
Brian Magowan 1997 -- 410,000 -- $ --
Chairman of the 1996 -- -- -- --
Board and Chief 1995 -- -- -- --
Executive Officer
Mark D. Johnston 1997 -- 195,000 -- --
Director and Former 1996 -- 10,000 -- --
Interim Chief 1995 -- -- -- --
Financial Officer
Peter C. Lynch 1997 -- 145,000 -- --
President and Chief 1996 -- 54,800 -- --
Operating Officer 1995 -- 55,000 -- --
of the Company and
President and Chief
Operating of
COVER-ALL
Raul F. Calvo 1997 -- -- -- --
Vice President 1996 -- 34,700 -- --
1995 -- 35,000 -- --
Alfred J. Moccia 1997 -- -- -- --
Former Chairman of 1996 -- -- -- --
the Board and 1995 -- -- -- --
Chief Executive
Officer
---------------
(1) Represents amounts paid to Turnbury, the consulting firm of
which Mr. Magowan is a manager partner, pursuant to
consulting arrangements between the Company and Turnbury
which were terminated as of March 14, 1997, the date on
which Mr. Magowan was engaged as Chief Executive Officer of
the Company.
11
<PAGE>
GRANTS AND EXERCISES OF STOCK OPTIONS
The following table sets forth certain information with
respect to stock options granted during the 1997 fiscal year to
the executive officers of the Company listed in the Summary
Compensation Table. The table also discloses the gain or
"spread" that would be realized if the options granted were
exercised on the expiration date assuming the Company's stock
price had appreciated by the percentage levels indicated annually
from the market price on the date of grant.
INDIVIDUAL GRANTS
------------------------------------
% OF TOTAL
OPTIONS
NUMBER OF GRANTED TO
SECURITIES EMPLOYEES
UNDERLYING IN
OPTIONS FISCAL EXERCISE EXPIRATION
NAME GRANTED YEAR PRICE DATE
---- ----------- ------ ----- ----------
Brian Magowan 400,000 28.4% $1.25 4/29/02
10,000 0.7% 2.13 3/14/02
Mark D. Johnston 195,000 13.8% 2.00 4/29/02
Peter C. Lynch 145,000 10.3% 1.56 4/29/02
Raul F. Calvo -- -- -- --
Alfred J. Moccia -- -- -- --
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION
FOR OPTION TERM
--------------------------------------
NAME 5% 10%
---- -- ---
Brian Magowan $140,000 $304,000
5,900 13,000
Mark D. Johnston 107,250 237,900
Peter C. Lynch 62,350 137,750
Raul F. Calvo --
Alfred J. Moccia -- --
The following table sets forth outstanding stock options held
by the executive officers of the Company listed in the Summary
Compensation Table at December 31, 1997.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL FISCAL YEAR-
NUMBER OF YEAR-END END(1)
SHARES (#) ($)
ACQUIRED - - - - - - - - - - - -
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- -------- ----------- --------------- ---------------
Brian Magowan -- -- 210,000/200,000 556,100/538,000
Mark D. Johnston -- -- 205,000/0 378,300/0
Peter C. Lynch -- -- 207,300/10,000 425,287/0
Raul F. Calvo -- -- 42,200/5,000 61,843/0
Alfred J. Moccia -- -- -- --
---------------
(1) Based upon the fair market value, $3.94, of the Company's
Common Stock on December 31, 1997 on The Nasdaq SmallCap
Market, options were "in the money."
12
<PAGE>
EMPLOYMENT AGREEMENTS OF EXECUTIVE OFFICERS
The Company entered into a new employment agreement with
Peter C. Lynch dated as of March 1, 1998, whereby the Company
agreed to continue to retain Peter C. Lynch as President of the
Company. The employment agreement expires on February 28, 1999
and provides for compensation of $190,000 plus bonus.
On April 1, 1996, the Company and COVER-ALL entered into an
employment agreement with Raul F. Calvo, Vice President and Chief
Accounting Officer of the Company. The employment agreement
expires on December 31, 1998 and provides for compensation at the
annual rate of $131,250. The employment agreement may be renewed
for successive one year terms jointly by the Company and Mr.
Calvo by providing written notice of renewal to each other at
least 90 days prior to the expiration of the then current term.
In March 1997, the Company engaged Brian Magowan as Chief
Executive Officer of the Company. Pursuant to a compensation
package amended by the Board of Directors on April 29, 1997, the
Company paid Turnbury, the consulting firm of which Mr. Magowan
is a managing partner, $12,500 per month, plus expenses, for
services rendered by Mr. Magowan. Additionally, the Company
granted Mr. Magowan five year options to purchase 400,000 shares
of Common Stock, exercisable at $1.25 per share. As of March 1,
1998, the Company entered into a services agreement with
Turnbury, whereby the Company, effective as of January 1, 1998,
agreed to continue to retain Mr. Magowan as Chief Executive
Officer of the Company. The services agreement expires on
December 31, 1998 and provides for a retention fee consisting of
an annual fee of $150,000, payable in equal monthly installments
plus a bonus based upon the financial results of the Company.
In March 1997, the Company engaged Mark D. Johnston as Chief
Financial Officer of the Company on an interim basis, and he
served in such a capacity until January 22, 1998. Pursuant to a
compensation package amended by the Board of Directors on April
29, 1997, as compensation for Mr. Johnston's services, the
Company granted Mr. Johnston five year options to purchase
195,000 shares of Common Stock, exercisable at $2.00 per share.
In March 1997, the Company engaged Earl Gallegos, a director
of the Company, as a consultant with an engagement period through
January 15, 1998. The engagement provides for Mr. Gallegos to
devote his full business time to performing consulting services
for the Company no less than eight days per month. Pursuant to a
compensation package amended by the Board of Directors on April
29, 1997, as compensation for Mr. Gallegos' services, the Company
granted Mr. Gallegos five year options to purchase 25,000 shares
of Common Stock, exercisable at $1.25 per share. Mr. Gallegos
also received a bonus consisting of five year options to purchase
an additional 250,000 shares of Common Stock, exercisable at
$1.25 per share as a result of the Company achieving certain
sales goals in fiscal 1997. Mr. Gallegos' engagement expired on
January 15, 1998.
In January 1998, the Company engaged Dalia Ophir as Chief
Technology Officer of the Company. The employment agreement
expires on December 31, 2000 and provides for compensation at the
annual rate of $180,000 plus bonus. The agreement provides Ms.
Ophir with incentive stock options to purchase 150,000 shares of
Common Stock, exercisable at $4.00 per share, pursuant to the
Company's 1995 Employee Stock Option Plan. The employment
agreement may be renewed for successive one year terms jointly by
the Company and Ms. Ophir by providing written notice of renewal
to each other at least thirty (30) days prior to the expiration
of the then current term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1997, the Compensation Committee
consisted of Alfred J. Moccia, Leonard Gubar and Peter R. Lasusa,
all of whom resigned as directors of the Company in March 1997.
Mr. Moccia also served as Chairman of the Board and Chief
Executive Officer of the Company until March 1997. Mr. Gubar is
a partner of Reid & Priest LLP, which performed legal services
for the Company during the fiscal year ended December 31, 1997
and the Company expects that such law firm will render legal
services to the Company in the future. During fiscal year 1997,
the Compensation Committee consisted of Messrs. Magowan and
13
<PAGE>
Johnston. The present compensation Committee consists of Messrs.
Magowan and Gallegos. Mr. Magowan serves as the Chairman of the
Board and Chief Executive Officer of the Company. Mr. Johnston
served as a director and as the Chief Financial Officer of the
Company on an interim basis until mid-January 1998. Mr. Johnston
is also an executive director of each of SIL and Care. Other
than as disclosed, no executive officer of the Company had any
relationship reportable under the Compensation Committee
Interlock regulations during 1997. Mr. Gallegos serves as a
director of the Company and also served as a consultant to the
Company during 1997.
COMPENSATION OF DIRECTORS
In 1997, the Company's outside directors received no
compensation for their services as directors of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation program developed by the Compensation
Committee has required management to set goals at the beginning
of each fiscal year for increasing income before taxes from the
previous year in order to evaluate management's performance.
Salary increases for each fiscal year have been based upon the
Company attaining the earnings performance targets for the
preceding fiscal year, unusual achievements, and cost of living.
Bonuses, if any, are divided among the executive group after
evaluation of each individual's performance, in consultation with
senior management. Option grants are similarly based. The
Chairman of the Board and Chief Executive Officer of the Company
is separately evaluated by the Committee which takes into
consideration overall Company performance in attaining
established targets for income before taxes and developing and
achieving short term and long term goals for the Company's
business. For the 1997 Fiscal Year, bonuses were paid to certain
employees and to the Chief Executive Officer on the basis of the
1997 performance of the Company.
In 1997, the full Board of Directors of the Company entered
into (i) a consulting agreement with Turnbury, to engage Mr.
Magowan as Chairman and Chief Executive Officer of the Company,
pursuant to which, the Company will pay Turnbury $12,500 per
month, plus expenses, five-year options to purchase 400,000
shares of Common Stock, exercisable at $1.25 per share and a
bonus payment of $100,000 if the Company achieves projected sales
goals for the 1997 Fiscal Year, (ii) an agreement to engage Mark
D. Johnston as Chief Financial Officer of the Company on an
interim basis by granting Mr. Johnston five-year options to
purchase 195,000 shares of Common Stock, exercisable at $2.00 per
share, representing 30,000 shares for each month during which Mr.
Johnston has been engaged to act as Chief Financial Officer
through the end of his engagement term of September 30, 1997, and
(iii) a consulting agreement with Earl Gallegos, a director of
the Company, with a term of engagement through January 15, 1998,
and providing compensation consisting of five-year option to
purchase 25,000 shares of Common Stock, exercisable at $1.25 per
share, with respect to each month during which Mr. Gallegos
performs consulting services and an additional 250,000 shares of
Common Stock, exercisable at $1.25 per share, as a result of the
Company achieving certain sales goals in the 1997 Fiscal Year.
This report was furnished by Messrs. Magowan and Gallegos,
members of the Compensation Committee.
14
<PAGE>
PERFORMANCE GRAPH
Displayed below is a graph which compares the cumulative
total stockholder returns (including reinvestment of dividends)
from the period from October 31, 1992 through December 31, 1997
on an investment of $100 in (i) the Company's Common Stock, (ii)
the Russell 2000 Index (an index of small capitalization
companies), and (iii) a peer group. Stockholders are advised
that historical results are not necessarily indicative of future
performance.
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
10/31/ 10/31/ 12/31/ 12/31/ 12/31/ 12/31/ 12/31/
92 93 93 94 95 96 97
COVER-ALL
TECHNOLOGIES
INC. COVR 100 66 59 28 18 18 47
Russell 2000 100 132 132 130 167 195 238
Peer Group 100 62 71 91 179 214 347
15
<PAGE>
AUDITORS
The Company's independent public auditors are Moore Stephens,
P.C., Cranford, New Jersey. A representative of Moore Stephens, P.C.
will be present at the Meeting and available to respond to
appropriate questions and, in addition, such representative will be
given an opportunity to make a statement at the Meeting if the
representative desires. At a meeting held on August 4, 1997, the
Board of Directors of the Company approved the engagement of Moore
Stephens, P.C. as its independent auditors for the fiscal year ending
December 31, 1997 to replace Ernst & Young LLP, who were dismissed as
auditors of the Company effective August 4, 1997. Proposals for
performing the audit services were received from both firms, and the
change was made for cost-saving reasons. The members of the
Company's audit committee approved the change.
The reports of Ernst & Young LLP on the Company's financial
statements for the past two fiscal years did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial
statements for each of the two fiscal years ended December 31, 1995
and 1996, and in the subsequent interim period, there were no
disagreements with Ernst & Young LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing
scope and procedure which, if not resolved to the satisfaction of
Ernst & Young LLP, would have caused Ernst & Young to make reference
to the matter in their report.
ANNUAL REPORT
All stockholders of record as of April 27, 1998 have or are
currently being sent a copy of the Company's Annual Report for the
fiscal year ended December 31, 1997 (the "Annual Report") which
contains audited financial statements of the Company and complies
with all of the disclosure requirements of the Company's 1997 Annual
Report on Form 10-K as filed with the Securities and Exchange
Commission ("SEC"). The Annual Report is deemed to be part of the
material for the solicitation of Proxies.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL
HOLDER OF ITS COMMON STOCK ON APRIL 27, 1998 WHO DID NOT RECEIVE A
COPY OF THE COMPANY'S ANNUAL REPORT, ON THE WRITTEN REQUEST OF ANY
SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997 AS FILED WITH THE SEC. ANY
SUCH REQUEST SHOULD BE MADE IN WRITING TO THE SECRETARY, COVER-ALL
TECHNOLOGIES INC., 18-01 POLLITT DRIVE, FAIR LAWN, NEW JERSEY 07410.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by December 31, 1998 in
order to be considered for inclusion in Proxy materials distributed
in connection with the next annual meeting of stockholders. All such
proposals should be in compliance with applicable SEC regulations.
MISCELLANEOUS
All of the costs and expenses in connection with the
solicitation of Proxies with respect to the matters described herein
will be borne by the Company. In addition to solicitation of Proxies
by use of the mails, directors, officers and employees (who will
receive no compensation therefor in addition to their regular
remuneration) of the Company may solicit the return of Proxies by
telephone, telegram or personal interview.
It is important that Proxies be returned promptly. Stockholders
are, therefore, urged to fill in, date, sign and return the Proxy
immediately. No postage need be affixed if mailed in the enclosed
envelope in the United States.
By Order of the Board of Directors
ANN F. MASSEY
Secretary
Date: April 30, 1998
16
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
COVER-ALL TECHNOLOGIES INC.
The undersigned, a stockholder of COVER-ALL TECHNOLOGIES
INC., a Delaware corporation (the "Company"), does hereby appoint
Brian Magowan and John Nobel and each of them as Proxies with
full power of substitution in each of them, in the name, place
and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of the Company to be held at the Marriott at
Glenpointe Hotel, 100 Frank W. Burr Boulevard, Teaneck, New
Jersey 07666, on June 18, 1998 at 9:00 a.m., local time, and at
any adjournment or adjournments thereof, all of the shares of the
Company's Common Stock that the undersigned would be entitled to
vote if personally present.
The undersigned hereby instructs said proxies or their
substitutes:
1. TO ELECT A CLASS OF DIRECTORS CONSISTING OF TWO DIRECTORS TO
SERVE FOR A TERM OF THREE YEARS AND UNTIL THEIR SUCCESSORS
SHALL HAVE BEEN DULY ELECTED AND QUALIFIED:
[ ] Vote FOR the [ ] WITHHOLD AUTHORITY to
nominees listed below vote for the nominees
listed below
NOMINEE: James R. Stallard, Ian J. Meredith
2. DISCRETIONARY AUTHORITY: TO VOTE WITH DISCRETIONARY
AUTHORITY WITH RESPECT TO ALL OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT
THEREOF.
(continued, and to be signed on reverse side)
<PAGE>
(continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED EXCEPT THAT IF NO
INSTRUCTIONS ARE INDICATED, IT WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as your name
appears hereon. If stock is held
jointly, signature should include
both names. Administrators,
Trustees, Guardians and others
signing in a representative
capacity, please give your full
titles.
Dated: , 1998
-----------------------
(L.S.)
-----------------------------
(L.S.)
-----------------------------
Signature(s)
Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
