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                                                                EXHIBIT 10(Q)(3)

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THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR APPLICABLE STATE SECURITIES LAWS ("STATE ACTS"), AND SHALL
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, UNLESS
SUCH TRANSFER IS MADE IN COMPLIANCE WITH THE ACT AND THE STATE ACTS.
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                           COVER-ALL TECHNOLOGIES INC.



                           8.00% CONVERTIBLE DEBENTURE

$700,000                                                                   NO. 2

                          DATE OF ISSUE: JUNE 28, 2001

     COVER-ALL TECHNOLOGIES INC., a Delaware corporation (the "Company" or
"Borrower"), for value received, promises to pay to:

       HSBC GLOBAL CUSTODY NOMINEE (U.K.) LIMITED, DESIGNATION NO. 896414

or to its order, (together with any assignee, jointly or severally, the "Holder"
or "Lender") on or before July 1, 2008 (the "Due Date") (unless this Debenture
shall have been sooner called for redemption or presented for conversion as
herein provided), the sum of Seven Hundred Thousand Dollars ($700,000) (the
"Principal Amount") and to pay interest on the unpaid Principal Amount at the
rate of 8.00% per annum. All payments of both principal and interest shall be
made at the address of the Holder hereof as it appears in the books and records
of the Borrower, or at such other place as may be designated by the Holder
hereof. This Debenture is one of the 8.00% Convertible Debentures of the Company
in the aggregate principal amount of $1,400,000 issued under, and pursuant to,
the terms and provisions of the Convertible Loan Agreement, dated as of June 28,
2001, by and among Cover-All Technologies Inc. as Borrower and Renaissance US
Growth & Income Trust PLC and BFSUS Special Opportunities Trust PLC as Lender
and Renaissance Capital Group, Inc. as Agent for the Lender ("Loan Agreement").

     1. INTEREST. Interest on the Principal Amount outstanding from time to time
shall be payable in monthly installments commencing August 1, 2001, and
subsequent payments shall be made on the first day of each month thereafter
until the Principal Amount and all accrued and unpaid interest shall have been
paid in full. Overdue principal and interest on the Debenture shall bear
interest at the rate of 18% per annum.

     2. MATURITY. If not sooner paid, redeemed or converted, this Debenture
shall mature on July 1, 2008 at which time the remaining unpaid Principal
Amount, and all accrued and unpaid interest and any other charges then due under
the Loan Agreement, shall be due and payable in full. This Debenture shall be
prepaid PRO RATA with any prepayments of Indebtedness. This Debenture shall be
senior in right of payment to all other Indebtedness of the Company.

<PAGE>

     3. MANDATORY PRINCIPAL INSTALLMENTS. If this Debenture is not sooner
redeemed or converted as provided hereunder, Borrower shall pay to Holder,
commencing on July 1, 2004 and continuing on the first day of each successive
month thereafter prior to maturity, mandatory principal redemption installments,
each of such installments to be in the amount of Ten Dollars ($10) per Thousand
Dollars ($1,000) of the then remaining Principal Amount, and further, at
maturity, Borrower shall pay to Holder a final installment of the remaining
unpaid Principal Amount, and all accrued and unpaid interest and any other
charges then due under the Loan Agreement.

     4. OPTIONAL REDEMPTION BY HOLDER.

        (a)    If at any time after the date hereof (i) a "person" or "group"
     within the meaning of Sections 13(d) and 14(d)(2) of the Securities
     Exchange Act of 1934, as amended, acquires more than 35% of the Company's
     voting securities, (ii) John W. Roblin resigns as CEO of the Borrower,
     prior to the expiration of his current employment term pursuant to his
     then-current employment agreement, (iii) all or substantially all of the
     assets or capital stock of the Company or its Subsidiaries are sold, or
     (iv) the Company or its Subsidiaries are merged or consolidated with or
     into unaffiliated entities, in any case without the written consent of
     Holder, the Holder shall have the right to require this Debenture to be
     redeemed by the Company at the sum equal to the Principal Amount, together
     with an amount equal to an 18% annual yield from the date hereof on the
     Principal Amount (calculated after giving effect to any and all payments
     made by Borrower to Lender under the Debenture) through the date of
     redemption (the "Redemption Date").

        (b)    The Holder may exercise its right to require that the Company
     redeem this Debenture pursuant to Section 4(a) prior to maturity by giving
     written notice thereof to the Company, which notice shall specify the terms
     of redemption (including the place at which the Holder may obtain payment),
     the total redemption payment and the Redemption Date, which Redemption Date
     shall be within thirty (30) days of the date of such notice.

     5. OPTIONAL REDEMPTION BY COMPANY.

        (a)    On any interest payment date, and after receipt of irrevocable
     notice from the Borrower as provided for below, this Debenture is
     redeemable, in whole but not in part, at 101% of the Principal Amount,
     together with accrued and unpaid interest through the Redemption Date, by
     the Company, if all of the following conditions are satisfied: (i) the
     average closing bid price for the Common Stock for the 20 consecutive
     trading days prior to the date of notice exceeds an amount equal to three
     times the Conversion Price then in effect, and the Common Stock is listed
     or quoted on the Nasdaq, the Nasdaq SmallCap System, American Stock
     Exchange or New York Stock Exchange; (ii) the average daily trading volume
     for the Common Stock for the 20 consecutive trading days prior to the date
     of the irrevocable notice shall be no less than 50,000 shares; (iii) the
     market price for the Common Stock at the time of notice reflects a
     price-to-earnings ratio of no greater than 25 times fully-diluted earnings
     per share, excluding any extraordinary

                                       2
<PAGE>

     gains; and (iv) the shares of Common Stock issuable upon conversion of this
     Debenture shall have been fully registered under applicable U.S. securities
     laws. The Company's right of redemption is subject to the Holder's prior
     right of conversion of the Debenture.

        (b)    Upon the Holder's notification to the Company in writing of its
     intent to sell, assign or transfer the Debenture pursuant to Section 14
     hereof, this Debenture is redeemable at the Borrower's option, in whole but
     not in part, at 101% of the Principal Amount, together with accrued and
     unpaid interest through the Redemption Date, by the Company for a period of
     up to 30 days after the date of notice.

        (c)    The Company may exercise its right to redeem this Debenture
     pursuant to Sections 5(a) and (b) prior to maturity by giving notice
     thereof to the Holder of this Debenture as such name appears on the books
     of the Borrower, which notice shall specify the terms of redemption
     (including the place at which the Holder may obtain payment), the total
     redemption payment and the Redemption Date.

     6. CONVERSION RIGHT.

        (a)    The Holder of this Debenture shall have the right, at Holder's
     option, at any time, to convert all, or, in multiples of $100,000, any part
     of this Debenture into such number of fully paid and nonassessable shares
     of Common Stock as provided herein. The Holder of this Debenture may
     exercise the conversion right by giving written notice (the "Conversion
     Notice") to Borrower of the exercise of such right and stating the name or
     names in which the stock certificate or stock certificates for the shares
     of Common Stock are to be issued and the address to which such certificates
     shall be delivered. The Conversion Notice shall be accompanied by the
     Debenture. The number of shares of Common Stock that shall be issuable upon
     conversion of the Debenture shall equal the outstanding Principal Amount of
     the Debenture divided by the Conversion Price (as defined below) and in
     effect on the date the Conversion Notice is given; provided, however, that
     in the event that this Debenture shall have been partially redeemed, shares
     of Common Stock shall be issued pro rata, rounded to the nearest whole
     share. Conversion shall be deemed to have been effected on the date the
     Conversion Notice is received (the "Conversion Date"). In the case of any
     Debenture called for redemption, the conversion rights will expire at the
     close of business on the Redemption Date. Within 20 business days after
     receipt of the Conversion Notice, Borrower shall issue and deliver by hand
     against a signed receipt therefor or by United States registered mail,
     return receipt requested, to the address designated in the Conversion
     Notice, a stock certificate or stock certificates of Borrower representing
     the number of shares of Common Stock to which Holder is entitled and a
     check or cash in payment of all interest accrued and unpaid on the
     Debenture up to and including the Conversion Date. The conversion rights
     will be governed by the following provisions:

        (b)    CONVERSION PRICE. On the issue date hereof and until such time as
     an adjustment shall occur, the Conversion Price shall be $0.50 per share;
     provided, however, that the Conversion Price shall be subject to adjustment
     at the times and in accordance with the provisions set forth below.

                                       3
<PAGE>

               (i)   ADJUSTMENT  FOR ISSUANCE OF SHARES AT LESS THAN THE
        CONVERSION  PRICE.  If and  whenever  any  AdditionalCommon  Stock
        (as defined below) shall be issued by Borrower (the "Stock Issue Date")
        for a consideration per share less than the Conversion Price, then in
        each such case the initial Conversion Price shall be reduced to a new
        Conversion Price in an amount equal to the price per share for the
        Additional Common Stock then issued, if issued in connection with a sale
        of shares, or the value of the Additional Common Stock then issued, as
        determined in accordance with generally accepted accounting principles,
        if issued other than for cash, and the number of shares issuable to
        Holder upon conversion shall be proportionately increased; and, in the
        case of Additional Common Stock issued without consideration, the
        initial Conversion Price shall be reduced in amount and the number of
        shares issued upon conversion shall be increased in an amount so as to
        maintain for the Holder the right to convert the Debenture into shares
        equal in amount to the same percentage interest in the Common Stock of
        the Company as existed for the Holder immediately preceding the Stock
        Issue Date.

               (ii)  SALE OF SHARES.  In case of the issuance of Additional
        Common Stock for a consideration part or all of which shall be cash, the
        amount of the cash consideration therefor shall be deemed to be the
        gross amount of the cash paid to Borrower for such shares, before
        deducting any underwriting compensation or discount in the sale,
        underwriting or purchase thereof by underwriters or dealers or others
        performing similar services or for any expenses incurred in connection
        therewith. In case of the issuance of any shares of Additional Common
        Stock for a consideration part or all of which shall be other than cash,
        the amount of the consideration therefor, other than cash, shall be
        deemed to be the then fair market value of the property received.

               (iii) STOCK SPLITS, SUBDIVISIONS OR COMBINATIONS. In the event of
        a stock split or subdivision of shares of Common Stock into a greater
        number of shares, the Conversion Price shall be proportionately
        decreased and the number of shares of Common Stock which shall be issued
        upon such conversion shall be proportionally increased, and in the event
        of a combination of shares of Common Stock into a smaller number of
        shares, the Conversion Price shall be proportionately increased and the
        number of shares of Common Stock which shall be issued upon such
        conversion shall be proportionally decreased, such increase or decrease,
        as the case may be, becoming effective at the record date.

               (iv)  STOCK  DIVIDENDS.  Shares of Common Stock issued as a
        dividend or other distribution on any class of capital stock of Borrower
        shall be deemed to have been issued without consideration.

               (v)   EXCEPTIONS. The term "Additional Common Stock" herein shall
        mean all shares of Common Stock or securities convertible or exercisable
        into shares of Common Stock hereafter issued by Borrower (including
        Common Stock held in the treasury of Borrower), except (A) Common Stock
        issued upon the

                                       4
<PAGE>

        conversion of any of the Debentures; (B) Common Stock issuable upon
        exercise of presently outstanding warrants or employee or director stock
        options; or (C) Common Stock issuable upon exercise of stock options to
        be granted in the future to employees or directors pursuant to its
        existing stock option plans.

        (c) ADJUSTMENT FOR MERGERS AND CONSOLIDATIONS. In the event of any
     consolidation or merger of the Company with or into, or the sale of all or
     substantially all of the properties and assets of the Company, to any
     person, and in connection therewith, consideration is payable to holders of
     Common Stock in cash, securities or other property, then as a condition of
     such consolidation, merger or sale, lawful provision shall be made, and
     duly executed documents evidencing the same shall be delivered to the
     Holder, so that the Holder shall have the right at any time prior to the
     maturity of this Debenture to purchase, at a total price equal to the
     Conversion Price immediately prior to such event, the kind and amount of
     cash, securities or other property receivable in connection with such
     consolidation, merger or sale, by a holder of the same number of shares of
     Common Stock as were convertible by the Holder immediately prior to such
     consolidation, merger or sale. In any such case, appropriate provisions
     shall be made with respect to the rights and interest of the Holder so that
     the provisions hereof shall thereafter be applicable with respect to any
     cash, securities or property deliverable upon exercise hereof.
     Notwithstanding the foregoing, (i) if the Company merges or consolidates
     with, or sells all or substantially all of its property and assets to, any
     other person, and consideration is payable to holders of Common Stock in
     exchange for their Common Stock in connection with such merger,
     consolidation or sale which consists solely of cash, or (ii) in the event
     of the dissolution, liquidation or winding up of the Company, then the
     Holder shall be entitled to receive distributions on the date of such event
     on the same basis with holders of Common Stock as if this Debenture had
     been converted immediately prior to such event, less the Conversion Price.
     Upon receipt of such payment, if any, the rights of the Holder shall
     terminate and cease and this Debenture shall expire. In case of any such
     merger, consolidation or sale of assets, the surviving or acquiring person
     and, in the event of any dissolution, liquidation or winding up of the
     Company, the Company shall promptly, after receipt of this surrendered
     Debenture, make payment by delivering a check in such amount as is
     appropriate (or, in the case of consideration other than cash, such other
     consideration as is appropriate) to such person as it may be directed in
     writing by the Holder surrendering this Debenture.

        (d) DISTRIBUTIONS. In the event of distribution to all Common Stock
     holders of any securities, cash or properties or assets or other rights to
     purchase securities or assets, then, after such event, this debenture will
     also be convertible into the kind and amount of securities, cash and other
     property which the Holder would have been entitled to receive if the Holder
     owned the Common Stock issuable upon conversion of the Debenture
     immediately prior to the occurrence of such event.

        (e) CAPITAL REORGANIZATION AND RECLASSIFICATION. In case of any capital
     reorganization or reclassification of the Common Stock of Borrower (other
     than a change in par value or as a result of a stock dividend, subdivision,
     split up or combination of shares), this Debenture shall be convertible
     into the kind and number of shares of stock or

                                       5
<PAGE>

     other securities or property of Borrower to which the Holder of the
     Debenture would have been entitled to receive if the Holder owned the
     Common Stock issuable upon conversion of the Debenture immediately prior to
     the occurrence of such event. The provisions of the immediately foregoing
     sentence shall similarly apply to successive reorganizations,
     reclassifications, consolidations, exchanges, leases, transfers or other
     dispositions or other share exchanges.

        (f) NOTICE. In the event Borrower shall propose to take any action which
     shall result in an adjustment in the Conversion Price, Borrower shall give
     notice to the Holder of this Debenture, which notice shall specify the
     record date, if any, with respect to such action and the date on which such
     action is to take place. Such notice shall be given on or before the
     earlier of 10 days before the record date or the date which such action
     shall be taken. Such notice shall also set forth all facts (to the extent
     known) material to the effect of such action on the Conversion Price and
     the number, kind or class of shares or other securities or property which
     shall be deliverable or purchasable upon the occurrence of such action or
     deliverable upon conversion of this Debenture.

        (g) CERTIFICATE. Following completion of an event which results in an
     adjustment to the Conversion Price, Borrower shall furnish to the Holder of
     this Debenture a statement, signed by the Chief Financial Officer and the
     Secretary of the Borrower, of the facts creating such adjustment and
     specifying the resultant adjusted Conversion Price then in effect, which
     statement shall constitute an amendment to this Debenture.

        (h) In the event of an adjustment to the Conversion Price due to a sale
     of securities by the Borrower below the Conversion Price which would result
     in the holders of all debentures evidencing the Loan having the right to
     acquire more than 20% of the then outstanding shares of Common Stock, on a
     fully-diluted basis, the Borrower agrees to hold a vote of the shareholders
     within 150 days to authorize such an adjustment; provided such approval is
     required by Nasdaq. In the event the shareholders reject the authorization,
     the Holder shall have the right to cause the Company to redeem the
     Debenture in accordance with the provisions of Section 4.

     7. ONE-TIME ADJUSTMENT TO CONVERSION PRICE.

        (a) Notwithstanding the provisions of Section 6 hereof, if the Company
     does not achieve $3,000,000 of Trailing Twelve Months EBITDA at the end of
     fiscal year 2002, and the market price of the Common Stock is below the
     Conversion Price at the time of publication of the Company's results for
     that period, then the Conversion Price shall be automatically adjusted
     downward to an amount equal to average closing bid price of the Common
     Stock, as reported in THE WALL STREET JOURNAL, for the ten consecutive
     trading days (the "Trading Period") following Borrower's public press
     release of its fiscal year 2002 financial results. If an adjustment occurs
     pursuant to this Section 7, then the Borrower shall furnish to the holder
     of this Debenture a statement, within ten days of the occurrence thereof,
     signed by the Chief Financial Officer and the Secretary of Borrower, of the
     facts creating such adjustment and specifying the adjusted

                                       6
<PAGE>

     Conversion Price then in effect. The Holder shall not convert this
     Debenture or sell any shares of Common Stock during the Trading Period.

        (b) Under no circumstance will this adjustment to the Conversion Price
     cause the holders of all debentures evidencing the Loan to acquire greater
     than 20% of the Borrower's then outstanding shares of Common Stock. In the
     event that this adjustment to the Conversion Price allows the holders of
     all debentures evidencing the Loan to acquire greater than 20% of the
     Borrower's then outstanding share of Common Stock, then the debenture
     holders will be entitled to decrease the Conversion Price, so that their
     potential and actual ownership is equal to twenty percent (20%) of the
     issued and outstanding Common Stock, on a fully-diluted basis, at the time
     this adjustment becomes effective.

     8. RESERVATION OF SHARES. Borrower warrants and agrees that it shall at all
times reserve and keep available, free from preemptive rights, sufficient
authorized and unissued shares of Common Stock or treasury shares of Common
Stock necessary to effect conversion of this Debenture.

     9. TAXES. The Company shall pay any documentary or other transactional
taxes attributable to the issuance or delivery of this Debenture or the shares
of Common Stock issued upon conversion by the Holder (excluding any federal,
state or local income taxes and any franchise taxes or taxes imposed upon the
Holder by the jurisdiction, or any political subdivision thereof, under which
such Holder is organized or is qualified to do business).

     10. DEFAULT.

         (a) EVENT OF DEFAULT. An "Event of Default" shall exist if an "Event of
     Default" (as defined in the Loan Agreement) shall occur and be continuing.

         (b) REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
     occurred and be continuing, then the Holder may exercise any one or more of
     the rights and remedies provided in the Loan Documents, as the Holder, in
     its sole discretion, may deem necessary or appropriate.

         (c) REMEDIES NONEXCLUSIVE. Each right, power or remedy of the Holder
     hereof upon the occurrence of any Event of Default as provided for in this
     Debenture or now or hereafter existing at law or in equity or by statute
     shall be cumulative and concurrent and shall be in addition to every other
     right, power or remedy provided for in this Debenture or now or hereafter
     existing at law or in equity or by statute, and the exercise or beginning
     of the exercise by the Holder or transferee hereof of any one or more of
     such rights, powers or remedies shall not preclude the simultaneous or
     later exercise by the Holder of any or all such other rights, powers or
     remedies.

         (d)  EXPENSES. Upon the occurrence of a Default or an Event of Default,
     which occurrence is not cured within the notice provisions, if any provided
     therefore, Borrower agrees to pay and shall pay all reasonable costs and
     expenses (including attorneys' fees and expenses) incurred by the Holder in
     connection with the preservation and

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     enforcement of Holder's rights under the Loan Agreement, the Debenture, or
     any other Loan Document.

     11. FAILURE TO ACT AND WAIVER. No failure or delay by the Holder hereof to
require the performance of any term or terms of this Debenture or not to
exercise any right or any remedy shall constitute a waiver of any such term or
of any right or of any default, nor shall such delay or failure preclude the
Holder hereof from exercising any such right, power or remedy at any later time
or times. By accepting payment after the due date of any amount payable under
this Debenture, the Holder hereof shall not be deemed to waive the right either
to require payment when due of all other amounts payable, or to later declare a
default for failure to effect such payment of any such other amount. The failure
of the Holder of this Debenture to give notice of any failure or breach of the
Borrower under this Debenture shall not constitute a waiver of any right or
remedy in respect of such continuing failure or breach or any subsequent failure
or breach.

     12. CONSENT TO JURISDICTION. The Company hereby agrees and consents that
any action, suit or proceeding arising out of this Debenture may be brought in
any state or federal court in the State of Texas, including the United States
District Court for the Northern District of Texas, or in any other court having
jurisdiction over the subject matter, all at the sole election of the Holder
hereof, and by the issuance and execution of this Debenture, the Borrower
irrevocably consents to the jurisdiction of each such court. The Company hereby
irrevocably appoints CT Corporation System, Dallas, Texas, as agent for the
Borrower to accept service of process for and on behalf of the Borrower in any
action, suit or proceeding arising out of this Debenture. Except for default in
payment of interest or principal when and as they become due, and except as
otherwise specifically set forth herein or otherwise agreed to in writing by the
parties, any action, dispute, claim or controversy (all such herein called
"Dispute") between or among the parties as to the facts or the interpretation of
the Debenture shall be resolved by arbitration as set forth in the Loan
Agreement.

     13. HOLDER'S RIGHT TO REQUEST MULTIPLE DEBENTURES. The Holder shall, upon
written request and presentation of the Debenture, have the right, at any
interest payment date, to request division of this Debenture into two or more
instruments, each of such to be in such amounts as shall be requested; provided
however, that no Debenture shall be issued in denominations of face amount less
than $100,000.

     14. TRANSFER. Subject to Section 12.07 of the Loan Agreement, this
Debenture may be transferred on the books of the Borrower by the registered
Holder hereof, or by Holder's attorney duly authorized in writing, in multiples
of $100,000 only upon (i) delivery to the Borrower of a duly executed assignment
of the Debenture, or part thereof, to the proposed new Holder, as well as an
executed investor representation letter signed by the proposed transferee and
such other transfer documents and instruments as the Company may reasonably
request, along with a current notation of the amount of payments received and
the Principal Amount yet unfunded, and presentment of such Debenture to the
Borrower for issue of a replacement Debenture, or Debentures, in the name of the
new Holder, (ii) the designation by the new Holder of the Lender's agent for
notice, such agent to be the sole party to whom Borrower shall be required to
provide notice when notice to Holder is required hereunder and who shall be the
sole party

                                       8
<PAGE>

authorized to represent Lender in regard to modification or waivers under the
Debenture, the Loan Agreement, or other Loan Documents; and any action, consent
or waiver (other than a compromise of principal and interest) when given or
taken by Lender's agent for notice, shall be deemed to be the action of the
holders of a majority in amount of the Principal Amount of the Debenture, as
such holders are recorded on the books of the Borrower, and (iii) in compliance
with the legend to read as follows:

         "This Debenture has not been registered under the Securities Act of
         1933, as amended ("Act"), or applicable state securities laws ("State
         Acts"), and shall not be offered, sold, pledged, hypothecated, or
         otherwise transferred, unless such transfer is made in compliance with
         the Act and the State Acts."

     Holder shall notify the Company in writing of its intent to sell, assign or
transfer the Debenture prior to any such sale, assignment or transfer.

     The Company shall be entitled to treat any holder of record of the
Debenture as the Holder in fact thereof and of the Debenture and shall not be
bound to recognize any equitable or other claim to or interest in this Debenture
in the name of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by applicable law.

     15. NOTICES. All notices and communications under this Debenture shall be
in writing and shall be either delivered in person or by overnight service, such
as FedEx, and accompanied by a signed receipt therefor; or mailed first-class
United States certified mail, return receipt requested, postage prepaid, and
addressed as follows: (i) if to the Borrower at its address for notice as stated
in the Loan Agreement; and (ii) if to the Holder of this Debenture, to the
address (a) of such Holder as it appears on the books of the Borrower or (b) in
the case of a partial assignment to one or more Holders, to the Lender's agent
for notice, as the case may be. Any notice of communication shall be deemed
given and received as of the date of such delivery if delivered; or if mailed,
then three days after the date of mailing.

     16. MAXIMUM INTEREST RATE.

         (a) Regardless of any provision contained in this Debenture, Lender
     shall never be entitled to receive, collect or apply as interest on the
     Debenture any amount in excess of interest calculated at the Maximum Rate
     (as defined below), and, in the event that Lender ever receives, collects
     or applies as interest any such excess, the amount which would be excessive
     interest shall be deemed to be a partial prepayment of principal and
     treated hereunder as such; and, if the principal amount of the Debenture is
     paid in full, any remaining excess shall forthwith be paid to Borrower. In
     determining whether or not the interest paid or payable under any specific
     contingency exceeds interest calculated at the Maximum Rate, Borrower and
     Lender shall, to the maximum extent permitted under applicable law, (i)
     characterize any non principal payment as an expense, fee or premium rather
     than as interest, (ii) exclude voluntary prepayments and the effects
     thereof, and (iii) amortize, pro rate, allocate and spread, in equal parts,
     the total amount of interest throughout the entire contemplated term of the
     Debenture; provided that, if the Debenture is paid and performed in full
     prior to the end of the full contemplated term

                                       9
<PAGE>

     thereof, and if the interest received for the actual period of existence
     thereof exceeds interest calculated at the Maximum Rate, Lender shall
     refund to Borrower the amount of such excess or credit the amount of such
     excess against the principal amount of the Debenture and, in such event,
     Lender shall not be subject to any penalties provided by any laws for
     contracting for, charging, taking, reserving or receiving interest in
     excess of interest calculated at the Maximum Rate.

         (b) "Maximum Rate" shall mean, on any day, the highest nonusurious rate
     of interest (if any) permitted by applicable law on such day that, at any
     time or from time to time, may be contracted for, taken, reserved, charged
     or received on the Indebtedness evidenced by the Debenture under the laws
     which are presently in effect of the United States of America or by the
     laws of any other jurisdiction which are or may be applicable to the
     Holders of the Debenture and such Indebtedness or, to the extent permitted
     by law, under such applicable laws of the United States of America or by
     the laws of any other jurisdiction which are or may be applicable to the
     Holder of the Debenture and which may hereafter be in effect and which
     allow a higher maximum nonusurious interest rate than applicable laws now
     allow.

     17. LOAN AGREEMENT, GUARANTY AND SECURITY AND PLEDGE AGREEMENTS. This
Debenture is issued pursuant to the Loan Agreement dated of even date herewith
among the Company and the other parties thereto, and the Holder is entitled to
all the rights and benefits thereunder. Both Borrower and the Holder have
participated in the negotiation and preparation of the Convertible Loan
Agreement and of this Debenture. Borrower agrees that a copy of the Loan
Agreement with all amendments, additions and substitutions therefor shall be
available to the Holder at the offices of Borrower. The indebtedness evidenced
by this Debenture is secured pursuant to the Security and Pledge Agreements
dated of even date herewith among the Company, its subsidiaries and the Holder,
and the Holder is entitled to all rights and benefits of a secured party
thereunder. The payment and performance of this Debenture is guaranteed by the
Company's subsidiaries pursuant to their Guaranty dated of even date herewith.

     18. DEFINED TERMS. Capitalized terms used but not defined herein shall have
the meaning given them in the Loan Agreement.

     19. GOVERNING LAW. This Debenture shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Texas, without
regard to the conflicts of laws provisions thereof, and the applicable laws of
the United States. Venue and jurisdiction shall lie in the federal or state
courts of Dallas County, Texas.

                            [SIGNATURE PAGE FOLLOWS.]


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<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
issued, executed and delivered on the date and year above stated.

                                       COVER-ALL TECHNOLOGIES INC.



                                       By:  /s/ John W. Roblin
                                            --------------------------------
                                            John W. Roblin, Chairman and CEO

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