STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made as of June 9, 2000, by
and between COVER-ALL TECHNOLOGIES INC., a Delaware corporation (hereinafter
called "COVR"), and VAULT MANAGEMENT LIMITED, a British Virgin Islands
corporation (hereinafter called "Vault").
WHEREAS, COVR is a provider of software products for the property and
casualty insurance industry;
WHEREAS, Vault desires to make an investment in COVR in accordance with
the terms herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and the
representations, warranties and covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Sale of Shares and Warrants.
1.1 Initial Sales. On the Initial Closing Date (as hereinafter
defined), COVR agrees to issue and sell to Vault and Vault agrees to pay for and
acquire from COVR, 320,000 units (each a "Unit"), each of which shall consist of
one share of COVR Common Stock, $0.01 par value (the "COVR Common Stock") and
one warrant to purchase one share of COVR Common Stock (each a "Warrant"), at a
price of $0.625 per Unit (the "Purchase Price Per Unit"), the closing sale price
of the COVR Common Stock on May 30, 2000, for an aggregate purchase price of
$200,000. On the Second Closing Date (as hereinafter defined), COVR agrees to
issue and sell to Vault and Vault agrees to pay for and acquire from COVR,
320,000 Units for an aggregate purchase price of $200,000. The Purchase Price
Per Unit shall be allocated $0.135 to each share of COVR Common Stock and $0.49
to each Warrant.
1.2 Additional Sales. At the option of Vault, COVR agrees to issue
and sell to Vault and Vault agrees to pay for and acquire from COVR, up to an
additional 960,000 Units at the Purchase Price Per Unit for an aggregate
purchase price of $1,000,000 through the sale and purchase of 320,000 shares on
each of the Subsequent Closing Dates (as hereinafter defined) for an aggregate
purchase price of $200,000 on each such Subsequent Closing Date.
1.3 Warrants. The Warrants shall have an exercise price per share
equal to $0.625 per share, and shall, if unexercised, expire five years after
the date of their respective issuance, and shall be in the form of Exhibit A
annexed hereto.
1.4 Issuance. Within seven days of each Closing Date, COVR agrees to
issue to Vault the number of shares of COVR Common Stock (the "COVR Shares") and
the number of Warrants set forth in this Section 1 with respect to each Closing
Date.
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2. Use of Proceeds. COVR shall use the proceeds from the sale of the Units
for general working capital purposes, and shall not use such proceeds to repay
any existing indebtedness or to repay any existing indebtedness or other
obligations to any insider.
3. Closing and Closing Date. The closing of the transactions herein
contemplated (each a "Closing") shall take place on June 2, 2000 (the "Initial
Closing Date"), on July 1, 2000 (the "Second Closing Date"), and on each of
August 31, 2000, October 31, 2000, and November 30, 2000 (each a "Subsequent
Closing Date" and, together with the Initial Closing Date and the Second Closing
Date, collectively the "Closing Dates" and each individually a "Closing Date").
Each of the Closings shall take place at 10:00 A.M. on the respective Closing
Date at the offices of Piper Marbury Rudnick & Wolfe LLP, 1251 Avenue of the
Americas, New York, New York 10020 or such other date and time as the parties
may mutually agree upon.
4. Representations and Warranties of COVR. In order to induce Vault to
enter into this Agreement and to consummate the transactions contemplated
hereunder, COVR hereby represents and warrants to Vault as follows:
4.1 Due Incorporation and Power. COVR is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to carry on its
business as now being conducted and to own, lease and operate its properties as
and in the places where such business is now conducted and such properties are
now owned, leased or operated. COVR has all requisite corporate power to execute
and deliver this Agreement and the Warrants, and to perform its obligations
under each such agreement.
4.2 Capitalization. The authorized capital stock of COVR as of the
date of this Agreement consists of 30,000,000 shares of COVR Common Stock, $0.01
par value. As of the date hereof, 17,041,172 shares of COVR Common Stock are
issued and outstanding. Except as set forth on Schedule 4.2 annexed hereto,
there are no other outstanding rights, options or convertible securities giving
any party the right to acquire equity securities of COVR. The COVR Shares to be
issued by COVR hereunder shall, upon issuance thereof, be duly authorized,
validly issued, fully paid and non-assessable. A sufficient number of shares of
COVR Common Stock has been reserved for issuance pursuant to Section 1. The
Warrants have been duly authorized by COVR and a sufficient number of shares of
COVR Common Stock has been reserved for issuance upon exercise of the Warrants,
and when shares of COVR Common Stock are issued and paid for in accordance with
the terms of the Warrants, such shares of COVR Common Stock shall be duly
authorized, validly issued, fully paid and non-assessable.
4.3 Authorization of Agreements; Validity. The execution and
delivery by COVR of this Agreement and the Warrants, and the consummation by
COVR of the transactions contemplated hereby, have been duly authorized by all
requisite corporate action on behalf of COVR. This Agreement has been duly
executed and delivered by COVR, and this Agreement constitutes, and, when
executed, the Warrants will constitute, the legal, valid and binding obligations
of COVR, enforceable against COVR in accordance with their respective terms,
except to the extent that such validity, binding effect and enforceability may
be limited by applicable bankruptcy, reorganization,
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insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect and by general equitable principles.
4.4 Effect of Agreements. Except as set forth on Schedule 4.4,
neither the execution and delivery of this Agreement or the Warrants, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by COVR with the provisions of this Agreement or the Warrants, (i) violates or
will violate, conflicts or will conflict with, or results or will result in a
breach of any provision, term or condition of, or constitutes or will constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default), under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of a lien upon any of the properties or assets
of COVR or any subsidiary of COVR under the terms, conditions or provisions of
(x) the Certificate of Incorporation, as amended, or the By-Laws, as amended, of
COVR, or of any of its subsidiaries, or (y) any other agreement or instrument to
which COVR or any subsidiary of COVR is a party, or by which any of them is
bound, or any of their respective properties or assets, may be subject, or (ii)
violates any judgment, ruling, order, writ, injunction, decree, law, statute,
ordinance, rule or regulation, domestic or foreign, applicable to COVR or any
subsidiary of COVR or any of their respective properties or assets, except in
the case of each of clauses (i) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, which, in
the aggregate, would not have any material adverse effect on the condition
(financial or otherwise) or the operations or business of COVR and its
subsidiaries taken as a whole, or on the ability of the parties to consummate
the transactions contemplated hereby.
4.5 Private Sale. COVR has not, either directly or through an agent,
offered the COVR Shares to or solicited any offer to acquire any of such
securities from, or otherwise approached, negotiated or communicated in respect
of such securities with, any person so as to require that any of such securities
be registered pursuant to the provisions of Section 5 of the Securities Act of
1933, as amended (the "Securities Act") or any applicable state securities law.
4.6 Filings, Notices, Consents and Approvals. No notice to, filing
with, or authorization, consent, or approval of, any domestic or foreign
governmental or public body, agency, or authority, or any person not a party to
this Agreement, is necessary in connection with the execution, delivery and
performance of this Agreement or the Warrants, or the consummation by COVR of
the transactions contemplated hereby, except where failure to give such notice,
make such filings, or obtain such authorizations, consents or approvals would,
in the aggregate, not have material adverse effect on the condition (financial
or otherwise) or operations of COVR and its subsidiaries taken as a whole, or on
the ability of the parties to consummate the transactions contemplated hereby.
4.7 SEC Filings. COVR has filed with the Securities and Exchange
Commission (the "Commission") all material forms, statements, reports, and
documents required to be filed by it prior to the date hereof under each of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the respective rules and regulations thereunder, (i) all of which, as
amended, if applicable, complied when filed in all material respects with all
applicable requirements of the appropriate Act and the rules and regulations
thereunder, and (ii) none of which,
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as amended, if applicable, contains any untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made and at the time when they were made, not misleading.
4.8 Untrue Statements. This Agreement and the Schedules hereto do
not contain any untrue statements of material facts with respect to COVR and its
subsidiaries, taken as a whole, or omit to state any material facts necessary to
make the statements herein and therein contained with respect to COVR and its
subsidiaries, taken as a whole, not misleading.
5. Representations And Warranties of Vault. In order to induce COVR to
enter into this Agreement and to consummate the transactions contemplated
hereunder, Vault hereby represents and warrants to COVR as follows:
5.1 Corporate Existence And Qualification. Vault is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted and to own, lease and
operate its properties as and in the places where such business is now conducted
and such properties are now owned, leased or operated. Vault has all requisite
power to execute and deliver this Agreement and to perform its obligations
hereunder.
5.2 Authorization of Agreements. The execution and delivery by Vault
of this Agreement, and the transactions contemplated hereby, have been duly
authorized by all requisite corporate action on its behalf. This Agreement has
been duly executed and delivered by Vault, and this Agreement constitutes the
legal, valid and binding obligations of Vault, enforceable against Vault in
accordance with its terms except to the extent that such validity, binding
effect and enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and by general equitable
principles.
5.3 Securities Laws.
(a) Vault acknowledges and understands that the securities of
COVR to be acquired by it hereunder have not been registered under the
Securities Act, or the securities laws of any state, and that such securities
may not be offered or sold unless first registered under the Securities Act and
any applicable state securities laws, or unless such offer or sale is exempt
from registration.
(b) Vault is purchasing the securities of COVR hereunder for
investment purposes, has no intention, subject to the subsequent exercise of
registration rights provided for hereunder, to sell any of such securities and
will not sell or dispose of any of such securities in violation of applicable
United States federal and state securities laws.
(c) Vault has received a copy of COVR's most recent annual
report on Form 10-K and COVR's most recent quarterly report on Form 10-Q, and is
aware that COVR
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suffered significant losses in the year ended December 31, 1999, and the three
months ended March 31, 2000, and has had serious cash flow problems.
(d) Vault agrees that the following legend may be placed on
any certificates evidencing the securities issued pursuant to this Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT
TO ANY STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL TO THE COMPANY OR OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
Vault understands that, so long as the above legend remains on any certificates,
COVR may maintain appropriate "stop transfer" orders with respect to such
securities on its books and records and with its registrar and transfer agent.
Vault agrees that prior to any proposed transfer of any such securities and as a
condition thereto, if such transfer is not made pursuant to an effective
Registration Statement under the Securities Act or an opinion of counsel to COVR
(or other counsel reasonably acceptable to COVR and its counsel) that the
securities may be sold publicly without registration under the Securities Act,
Vault will, if requested by COVR, deliver to COVR (i) an undertaking by the
proposed transferee to execute and deliver any and all documentation that may
from time to time be requested by COVR with respect to the matters covered by
this subsection (d), (ii) an investment covenant signed by the proposed
transferee, (iii) an agreement by such transferee to the impression of the
restrictive legend set forth above on the securities, (iv) an agreement by such
transferee that COVR may place a "stop transfer" order with COVR's transfer
agent and registrar consistent with this subsection (d), and (v) an agreement by
the transferee to indemnify COVR to the same extent as set forth in the
immediately succeeding sentence of this Section. Vault acknowledges that it
understands the legal consequences of the representations and warranties
contained in this Section and agrees to indemnify COVR against any and all
losses, claims, damages, expenses or liabilities to which COVR may become
subject under any federal or state securities law, at common law, or otherwise,
insofar as such losses, claims, damages, expenses or liabilities arise out of or
based upon (A) any transfer of the securities owned by it in violation of the
Securities Act, the Exchange Act or the rules and regulations promulgated under
either of such Acts and applicable state Blue Sky laws, or (B) any untrue
statement of a material fact or omission to state any material fact in
connection with its representations pursuant to this Section.
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6. Covenants of COVR.
6.1 Registration Rights.
6.1.1 Registration Statement. COVR shall use its best efforts
to prepare and file within 135days of the date of the Agreement a Registration
Statement to register a sufficient number of shares of COVR Common Stock to
accommodate the issuance of the COVR Shares and registration of shares of COVR
Common Stock into which the Warrants are exercisable. COVR shall use its best
efforts to have the Registration Statement remain effective through the
expiration date of the last of the Warrants to be issued hereunder.
6.1.2 Piggy Back Registration Rights.
(a) If the COVR Shares or shares of COVR Common Stock
acquired or to be acquired upon exercise of the Warrants (collectively, the
"Registrable Shares") are not already covered by an effective Registration
Statement pursuant to this Section 6, COVR shall send written notice to the
holders (the "Holders") then owning Registrable Shares at least 30 days prior to
the filing of each and every Registration Statement filed by COVR, whether or
not pursuant to this Agreement (other than a Registration Statement covering
exclusively securities issued under an employee option or stock purchase plan,
or pursuant to a merger, acquisition or similar transaction) and give to such
Holders the right to have included therein any Registrable Shares then held by
the Holders. Such notice must specify the proposed offering price and the plan
of distribution. COVR must receive written notice from such Holders within 15
days after the date of COVR's written notice, indicating the full name and
address of each Holder desiring to have Registrable Shares included for sale in
such Registration Statement and the number of Registrable Shares requested to be
covered.
(b) If the registration of which COVR gives notice is
for a registered public offering involving an underwriting, COVR shall so advise
the Holders as a part of the written notice given pursuant to Section 6.1.2(a).
In such event the rights of any Holder to registration pursuant to Section 6.1.2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of Registrable Shares in the underwriting to the extent provided
in this Section 6.1.2(b).
(c) All Holders proposing to distribute their
Registrable Shares through such underwriting shall, together with COVR, enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by COVR. COVR shall use its reasonable best
efforts to cause the managing underwriter of such proposed underwritten offering
to permit the Registrable Shares proposed to be included in such registration to
be included in the Registration Statement for such offering on the same terms
and conditions as any similar securities of COVR included therein.
Notwithstanding any other provision of this Section 6.1.2, the Holders shall be
entitled to include in the Registration Statement all of the shares which they
desire to sell for their own account, and if the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the similar securities of COVR
to be included in such registration.
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(d) If any Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
COVR and the managing underwriter. Any Registrable Shares excluded or withdrawn
from such underwriting also shall be withdrawn from such registration, and shall
not be transferred prior to such period after the effective date of the
Registration Statement relating thereto, as the underwriters may require all
principal shareholders and directors of COVR to agree to.
6.1.3 Miscellaneous Registration Provisions.
(a) In connection with any Registration Statement filed
pursuant to Sections 6.1.1 or 6.1.2 hereof:
(i) COVR's obligations under this Agreement to
include Registrable Shares in a Registration Statement shall mean shares of COVR
Common Stock or any security received by a Holder in exchange or upon
reclassification of the COVR Common Stock;
(ii) the Holders of Registrable Shares registering
shares pursuant to Sections 6.1.1 or 6.1.2 hereof (herein "Registering Holders")
shall furnish to COVR in writing such appropriate information (relating to the
intention of such Holders as to proposed methods of sale or other disposition of
the Registrable Shares) and the identity of and compensation to be paid to any
proposed underwriters to be employed in connection therewith as COVR, any
underwriter, or the Commission or any other regulatory authority may request;
(iii) the Registering Holders and COVR shall enter
into the usual and customary form of underwriting agreement agreed to by COVR
and any underwriter with respect to any such offering, if required, and such
underwriting agreement shall contain the customary reciprocal rights of
indemnity and contribution between COVR, the underwriters, and the selling
shareholders, including the Registering Holders, to the extent set forth in
Subsection (h) herein;
(iv) the Registering Holders shall agree that they
shall execute, deliver and/or file with or supply to COVR, any underwriters, the
Commission and/or any state or other regulatory authority such information,
documents, representations, undertakings and/or agreements necessary to carry
out the provisions of the registration covenants contained in this Agreement
and/or to effect the registration or qualification of their Registrable Shares
under the Securities Act and/or any of the laws and regulations of any state or
governmental instrumentality;
(v) the Registering Holders shall furnish COVR
with such questionnaires and other documents regarding their identity and
background as COVR may reasonably request; and
(vi) COVR's obligation to include the Registering
Holders' Registrable Shares in a Registration Statement pursuant to Section
6.1.2 shall be subject to the written agreement of the Holders to offer the
Registrable Shares in the same manner and on the same
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terms and conditions as the other securities of the same class are being offered
pursuant to the Registration Statement, if such shares are being underwritten.
(b) If and whenever COVR is required to effect the
registration of any Registrable Shares pursuant to Sections 6.1.1 or 6.1.2, COVR
will use its best efforts to effect such registration to permit the sale of such
Registrable Shares in accordance with the intended method or methods of
disposition thereof, and pursuant thereto it will, as promptly as is practicable
and in accordance with the Securities Act and all applicable rules and
regulations:
(i) prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such Registration Statement until the earlier of
such time as all of such Registrable Shares have been disposed of in accordance
with the intended methods of disposition set forth in such Registration
Statement or the expiration of 180 days after such Registration Statement
becomes effective;
(ii) prepare and file with the Commission any
amendment or supplement to such Registration Statement or prospectus as may be
necessary to correct any statement or omission, if at any time when a prospectus
relating to any security included in such registration is required to be
delivered under the Securities Act, any event shall have occurred as a result of
which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(iii) notify the Registering Holders of the time
when such Registration Statement, amendment, supplement or prospectus has been
filed with the Commission;
(iv) furnish to the Holders and to any underwriter
of Registrable Shares such number of conformed copies of such Registration
Statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such Registration Statement (including each preliminary prospectus and any
summary prospectus) and any amendment or supplement thereto, in conformity with
the requirements of the Securities Act, such documents incorporated by reference
in such Registration Statement or prospectus, and such other documents, as the
Holders or such underwriter may reasonably request, and a copy of any and all
transmittal letters or other correspondence to, or received from, the Commission
or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering;
(v) notify the Registering Holders after receipt
of any request by the Commission to amend or supplement such Registration
Statement or prospectus or for additional information;
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(vi) advise the Registering Holders after it shall
receive notice or obtain knowledge thereof of the issuance of any order by the
Commission suspending the effectiveness of the Registration Statement or of the
limitation or threatening of any proceeding for that purpose and make every
reasonable effort to prevent the issuance of any such order or to obtain the
withdrawal of any such order; and
(vii) use its best efforts to list all such
Registrable Shares covered by such Registration Statement on the principal
securities exchange and inter-dealer quotation system on which a class of common
equity securities of COVR is then listed, and to pay all fees and expenses in
connection therewith.
(c) COVR shall pay all out-of-pocket expenses and
disbursements incurred by COVR and the Registering Holders in connection with
the Registration Statements filed by it pursuant to Sections 6.1.1 or 6.1.2,
including, without limitation, all legal and accounting fees, Commission filing
fees, Exchange, Nasdaq Stock Market or NASD filing fees, printing costs,
registration or qualification fees and expenses to comply with state Blue Sky or
other state securities laws, the fees of other experts, and any expenses or
other compensation paid to the underwriters; provided, however, that such
registration expenses shall not include underwriting commissions and discounts
and transfer taxes, if any.
(d) COVR shall be obligated to keep any Registration
Statement filed by it under Sections 6.1.1 or 6.1.2 effective under the
Securities Act for a period of 180 days after the actual effective date of such
Registration Statement and to prepare and file such supplements and amendments
necessary to maintain an effective Registration Statement for such period. As a
condition to COVR's obligation under this Subsection (d), the Registering
Holders will execute and deliver to COVR such written undertakings as COVR and
its counsel may reasonably require in order to assure full compliance with
relevant provisions of the Securities Act.
(e) COVR shall use its best efforts to register or
qualify the Registrable Shares under such securities or Blue Sky laws in such
jurisdictions within the United States as the Registering Holders may reasonably
request; provided, however, that COVR reserves the right, in its sole
discretion, not to register or qualify such Registrable Shares in any
jurisdiction where such Registrable Shares do not meet with the requirements of
such jurisdiction after having taken reasonable steps to meet such requirements
or where COVR is required to qualify as foreign corporation to do business in
such jurisdiction and is not so qualified therein or is required to file any
general consent to service of process.
(f) In the event all the Registrable Shares have not
been sold on or prior to the expiration of the period specified in Subsection
(d) above, the Registering Holders hereby agree that COVR may deregister by
post-effective amendment any shares covered by the Registration Statement, but
not sold on or prior to such date. COVR agrees that it will notify the
Registering Holders of the filing and effective date of such post-effective
amendment.
(g) The Registering Holders agree that upon notification
by COVR that the prospectus in respect to any public offering covered by the
provisions hereof is in need of
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revision, they shall immediately upon receipt of such notification (i) cease to
offer or sell any securities of COVR which must be accompanied by a prospectus;
(ii) return all such prospectuses in their hands to COVR; and (iii) shall not
offer or sell any securities of COVR until they have been provided with a
current prospectus and COVR has given them notification permitting them to
resume offers and sales.
(h) As a condition to the filing of a Registration
Statement pursuant to this Agreement, COVR shall indemnify and hold harmless the
Registering Holders and the underwriter(s) and controlling person(s) of such
underwriter(s) who may purchase from or sell for the Registering Holders, any
shares of COVR Common Stock, from and against any and all losses, claims,
damages, expenses or liabilities caused by any failure of COVR to comply with
the Securities Act or any rule or regulation promulgated thereunder in
connection with the registration of the shares of COVR Common Stock or any
untrue statement of a material fact contained in the Registration Statement, any
post-effective amendment to such Registration Statement, or any prospectus
included therein required to be filed or furnished by reason of this Agreement
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make any material fact therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statements or alleged untrue statements or omissions
based upon information furnished or required to be furnished in writing to COVR
by the party seeking indemnification expressly for use therein; which
indemnification shall include each person, if any, who controls any such
underwriter within the meaning of the Securities Act and each officer, director,
employee and agent of such underwriter; provided, however, that COVR shall not
be obligated to so indemnify the Registering Holders or any such underwriter or
other person referred to above unless the Registering Holders or underwriter or
other person, as the case may be, shall at the same time or prior thereto
indemnify COVR, its directors, each officer signing the Registration Statement
and each person, if any, who controls COVR within the meaning of the Securities
Act, from and against any and all losses, claims, damages and liabilities caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, any post-effective amendment to such Registration
Statement or any prospectus or prospectus supplement required to be filed or
furnished by reason of this Agreement or caused by any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or alleged untrue statement or
omission based upon information furnished in writing to COVR by the Registering
Holder or underwriter expressly for use therein.
(i) Each party entitled to indemnification under
paragraph (h) above (the "Indemnified Party") shall, promptly after receipt of
notice of any claim or the commencement of any action against such Indemnified
Party in respect of which indemnity may be sought, notify the party required to
provide indemnification (the "Indemnifying Party") in writing of the claim or
the commencement thereof; provided that the failure of the Indemnified Party to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability which it may have to an Indemnified Party pursuant to the provisions
of Subsection (h), unless the Indemnifying Party was materially prejudiced by
such failure, and in no event shall such failure relieve the Indemnifying Party
from any other liability which it may have to such Indemnified Party. If any
such claim or action shall be brought against an Indemnified Party, it shall
notify the Indemnifying Party
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thereof and the Indemnifying Party shall be entitled to participate therein,
and, to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable (except to the extent the
proviso to this sentence is applicable, in which event it will be so liable) to
the Indemnified Party under Subsection (h) for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided that each
Indemnified Party shall have the right to employ separate counsel to represent
it and assume its defense (in which case, counsel to the Indemnifying Party
shall not represent it) if (i) upon the advice of counsel, the representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party will not have the right to assume the defense of such claim or action on
behalf of such Indemnified Party), or (ii) in the event the Indemnifying Party
has not assumed the defense thereof within ten days of receipt of notice of such
claim or commencement of action, in which case the fees and expenses of one such
separate counsel shall be paid by the Indemnifying Party. If any Indemnified
Party employs such separate counsel it will not enter into any settlement
agreement which is not approved by the Indemnifying Party, such approval not to
be unreasonably withheld. If the Indemnifying Party so assumes the defense
thereof (and by so assuming shall be solely responsible for liabilities relating
to such claim or action, and shall release the Indemnified Party from such
liabilities to the extent permitted by law, except to the extent the Indemnified
Party is not entitled to be indemnified pursuant to Subsection (h)), it may not
agree to any settlement of any such claim or action as the result of which any
remedy or relief, other than monetary damages for which the Indemnifying Party
shall be responsible hereunder, shall be applied to or against the Indemnified
Party, without the prior written consent of the Indemnified Party. No
Indemnified Party will consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or action. In any action hereunder as to
which the Indemnifying Party has assumed the defense thereof with counsel
satisfactory to the Indemnified Party, the Indemnified Party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the Indemnifying Party shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
(j) If for any reason the indemnification provided for
above is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, claim, damage, liability or expense
referred to therein, then the Indemnifying Party in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
the Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the Indemnified Party and the Indemnifying Party, but also the
relative fault of the Indemnified Party and the Indemnifying Party, as well as
any other relevant equitable considerations.
6.2 Listing of Additional Shares. COVR shall use its best efforts to
cause the COVR Shares and the shares of COVR Common Stock that may be issued
upon exercise of the
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Warrants to be listed on the Nasdaq Stock Market or such securities exchange or
trading market that shares of COVR Common Stock may be listed or traded upon
from time to time after the date of this Agreement.
6.3 Access to Records and Operations of COVR. Pending the closing of
all of the transactions contemplated by this Agreement, Vault shall have the
right to designate a representative who shall have access to the premises of
COVR for the purpose of reviewing records and operations of COVR. All such
information shall be deemed confidential information of COVR and shall not be
used by Vault for any other purpose other than to evaluate COVR and carry out
due diligence activities and if the transaction is not consummated for any
reason, all information shall be returned to COVR and shall not be used by Vault
for any purpose.
7. Conditions to Obligations of COVR. This Agreement and the obligations
of COVR to perform hereunder are subject to the satisfaction by Vault, or a
waiver in writing by COVR, of the following conditions, each of which is
individually hereby deemed material, at or prior to each Closing:
7.1 Representations, Warranties and Obligations. All representations
and warranties of Vault contained in this Agreement and in the Exhibits hereto
shall be true and correct commencing as of the date hereof and ending with and
on each Closing Date as though made on and as of such Closing Date. Vault shall
have performed and complied with all of its respective covenants and obligations
under this Agreement in all material respects.
7.2 Corporate Authorization. On each Closing Date, Vault shall have
delivered to COVR certified copies of the resolution(s) adopted by the Board of
Directors of Vault authorizing the execution, delivery and performance by Vault
of this Agreement, and the consummation of the transactions contemplated hereby.
8. Conditions to Obligations of Vault. This Agreement and the obligations
of Vault to perform hereunder are subject to the satisfaction by COVR, or a
waiver in writing by Vault, of the following conditions, each of which is
individually hereby deemed material, at or prior to each Closing:
8.1 Corporate Authorization. On each Closing Date, COVR shall have
delivered to Vault certified copies of the resolution(s) of the Board of
Directors of COVR authorizing the execution, delivery and performance by COVR of
this Agreement, and the consummation of the transactions contemplated hereby.
8.2 Representations, Warranties And Obligations. All representations
and warranties of COVR contained in this Agreement and in the Exhibits hereto
shall be true and correct in all material respects commencing as of the date
hereof and ending with and on each Closing Date as though made on and as of such
Closing Date. COVR shall have performed and complied with all of its respective
covenants and obligations under this Agreement in all material respects.
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8.3 Issuance and Delivery of Securities. COVR shall issue and
deliver certificates to Vault representing the COVR Common Stock issuable
pursuant hereto in connection with such Closing.
9. Survival; Indemnification. The representations, warranties, covenants
and agreements of COVR on the one hand, and Vault on the other hand, contained
in this Agreement and the Exhibits hereto, shall survive and remain operative
and in full force following the execution and delivery of this Agreement. The
following provisions are applicable to claims made under this Agreement:
9.1 Obligation of COVR to Indemnify. COVR hereby agrees to
indemnify, defend and hold harmless Vault (and its directors, officers,
employees, affiliates and assigns) from and against all losses, suits,
proceedings, demands, judgments, damages, expenses and costs (including
reasonable attorneys' fees and disbursements) (collectively, "Losses") which
they may incur arising from any material inaccuracy in, or any material breach
of, any representation, warranty, covenant or agreement of COVR contained in
this Agreement or the Exhibits hereto.
9.2 Obligation of Vault to Indemnify. Vault agrees to indemnify,
defend and hold harmless COVR (and its directors, officers, employees,
affiliates and assigns) from and against any Losses which it may incur arising
from any material inaccuracy in, or any material breach of, any representation,
warranty, covenant or agreement of it contained in this Agreement or the
Exhibits hereto.
9.3 Notice to Indemnitor. Promptly after any party hereto (i)
receives notice of any claim or the commencement of any action or proceeding
against it, (ii) has knowledge of any claim, action or proceeding against it, or
(iii) has knowledge of any matter for which it intends to seek indemnification
hereunder, the party seeking indemnification (the "Indemnitee") shall, if a
claim for reimbursement with respect thereto is to be made against any party
hereto obligated to provide indemnification under Sections 9.1 or 9.2 hereof
(the "Indemnitor"), give the Indemnitor written notice of such claim or the
commencement of such action or proceeding, in all cases within sufficient time
to respond to such claim or to answer or otherwise plead in any such action.
Such notice shall be a condition precedent to the Indemnitor's obligation to
provide indemnification under this Section 9.
9.4 Right to Defend; Compromise of Claims. The Indemnitor shall have
the right to compromise or defend, at its own expense and by its own counsel,
any matter involving the asserted liability of any Indemnitee; provided,
however, that no compromise of any claim shall be made without the consent of
the Indemnitee unless such compromise results in the full and unconditional
release of all claims against the Indemnitee by the party asserting such claim.
The opportunity to compromise or defend as herein provided shall be a condition
precedent to any liability of an Indemnitor under the provisions of this Section
10.4. If any Indemnitor shall undertake to compromise or defend any such
asserted liability, it shall promptly notify the Indemnitee of its intention to
do so. The Indemnitee shall cooperate with the Indemnitor and its counsel, at
the Indemnitor's sole cost and expense, in the defense against any such asserted
liability and in any compromise thereof. Such cooperation shall include, but not
be limited to, furnishing the Indemnitor
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with any books, records or information reasonably requested by the Indemnitor
and taking such action as the Indemnitor may reasonably request to mitigate or
reduce any claim. After an Indemnitor has notified an Indemnitee of its
intention to undertake to compromise or defend any asserted liability, the
Indemnitor shall not be liable for any additional legal expenses incurred by the
Indemnitee, except for costs and expenses incurred in cooperating with the
Indemnitor and its counsel as herein provided, unless the Indemnitor fails to
prosecute the defense of such claim. If the Indemnitor shall desire to
compromise any such asserted liability by the payment of a liquidated amount
which the party asserting such liability is willing to accept in exchange for
fully and unconditionally releasing all claims against the Indemnitee, and the
Indemnitee shall refuse to consent to such compromise, then the Indemnitor's
liability under this Section 10 with respect to such asserted liability shall be
limited to the amount so offered in compromise. Under no circumstances shall the
Indemnitee compromise any asserted liability without the written consent of the
Indemnitor.
10. Miscellaneous.
10.1 Entire Agreement. This Agreement, and the Exhibits and
Schedules annexed hereto and made a part hereof, contain the entire agreement
among COVR and Vault with respect to the matters set forth herein and supersede
all prior agreements and understandings among them as to the subject matter
thereof. No party shall be bound by nor shall be deemed to have made any
representations, warranties or covenants except those contained herein.
10.2 Benefits; Assignments. All of the terms and provisions of this
Agreement shall bind and inure to the benefit of COVR and Vault and their
respective successors and assigns.
10.3 Notices, Etc. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to be duly
given if personally delivered with receipt acknowledged, if mailed by registered
or certified mail, first class, postage prepaid, if delivered by a nationally
recognized overnight courier service or if transmitted by facsimile machine
(with a confirmation copy to be sent by first class mail) addressed as follows:
(i) if to COVR:
Cover-All Technologies Inc.
18-01 Pollitt Drive
Fair Lawn, New Jersey 07410
Attention: President
Tel: (201) 794-4800
Fax: (201) 791-9113
with a copy (which shall not constitute notice) to:
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Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020
Attention: Leonard Gubar, Esq.
Tel: (212) 835-6000
Fax: (212) 835-6001
or to such other address or such other person(s) as COVR may
designate by written notice to the other parties hereto.
(ii) if to Vault:
Vault Management Limited
P.O. Box 839
St. Helier, Jersey
Channel Islands, JE49NZ
Attention: Mark D. Johnston
Tel: 011-44-1534-880-088
Fax: 011-44-1534-880-099
with a copy (which shall not constitute notice) to:
Gardere & Wynne, L.L.P.
1601 Elm Street, Suite 3000
Dallas, Texas 75201
Attention: Randall G. Ray, Esq.
Tel: (214) 999-4544
Fax: (214) 999-3544
or to such other address or such other person(s) as Vault may
designate by written notice to the other parties hereto.
10.4 Governing Law. This Agreement is being executed in the State of
New Jersey and shall be construed in accordance with and governed by the
internal laws of the State of Delaware.
10.5 Severability. If any provision of this Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
were not contained herein.
10.6 Modification, Waivers, Etc. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by an instrument in writing
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signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
10.7 Captions. The captions of sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
10.8 Further Assurances. At any time and from time to time, upon the
reasonable request of any party hereto, the requested party shall execute,
deliver and acknowledge, or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and things as the
requesting party may reasonably request in order to fully effect the purposes of
this Agreement and the transactions contemplated hereby.
10.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument. Facsimile
transmission of any signed original document or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At
the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their respective names as of the date and year first
above written.
COVER-ALL TECHNOLOGIES INC.
By: ______________________________________
Name: ______________________________________
Title:______________________________________
VAULT MANAGEMENT LIMITED
By: ______________________________________
Mark D. Johnston, Director
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