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CHAR1\529464_ 4
CHAR1\529464_ 4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of April
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28, 2000 among POLICY MANAGEMENT SYSTEMS CORPORATION, a South Carolina
corporation (the "Borrower"), certain subsidiaries of the Borrower as identified
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on the signature pages hereto and such other subsidiaries of the Borrower as may
from time to time become a Pledgor hereunder by execution of a Joinder Agreement
(individually, a "Subsidiary Guarantor" and collectively, the "Subsidiary
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Guarantors"; together with the Borrower, individually, a "Pledgor" and
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collectively, the "Pledgors") and BANK OF AMERICA, N.A., formerly known as Bank
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of America National Trust and Savings Association, in its capacity as
administrative agent (in such capacity, the "Administrative Agent") for the
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respective Lenders from time to time party to the Revolving Credit Agreement and
the Term Loan Agreement described below (collectively, the "Lenders").
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RECITALS
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WHEREAS, pursuant to that certain Credit Agreement, dated as of August 8,
1997 as amended by a First Amendment to Credit Agreement dated as of November 5,
1999, as amended by a Second Amendment to Credit Agreement dated as of February
10, 2000, as amended by a Third Amendment to Credit Agreement dated as of March
30, 2000 and as further amended by a Fourth Amendment to Credit Agreement dated
as of April 24, 2000 (as may be subsequently amended, modified, extended,
renewed or replaced from time to time, the "Revolving Credit Agreement"), among
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the Borrower, the Subsidiary Guarantors, the Lenders party thereto (the
"Revolving Credit Lenders") and the Administrative Agent, the Revolving Credit
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Lenders have extended a revolving credit facility (the "Revolving Loans") upon
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the terms and subject to the conditions set forth therein; and
WHEREAS, pursuant to that certain Term Loan Agreement dated as of November 5,
1999, as amended by a First Amendment to Term Loan Agreement dated as of
February 10, 2000 and as further amended by a Second Amendment to Term Loan
Agreement dated as of March 30, 2000, as amended by a Third Amendment to Term
Loan Agreement dated as of April 24, 2000 (as may be subsequently amended,
modified, extended, renewed or replaced from time to time, the "Term Loan
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Agreement"), among the Borrower, the Subsidiary Guarantors, the Lenders party
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thereto (the "Term Loan Lenders") and the Administrative Agent, the Term Loan
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Lenders have extended a term loan (the "Term Loan") upon the terms and subject
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to the conditions set forth therein; and
WHEREAS, it is a requirement of each of the Revolving Credit Agreement and the
Term Loan Agreement and the continuing obligations of the Lenders to make their
respective Loans under the Revolving Credit Agreement and the Term Loan
Agreement, as applicable, that the Pledgors shall have executed and delivered
this Pledge Agreement to the Administrative Agent for the ratable benefit of the
Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
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(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Revolving Credit Agreement
or the Term Loan Agreement, as applicable.
(b) In addition, the following terms shall have the following meanings:
"Bankruptcy Code": means the Bankruptcy Code in Title 11 of the United
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States Code, as amended, modified, succeeded or replaced from time to time.
"Credit Documents": means a collective reference to the Revolving Credit
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Agreement, the Term Loan Agreement, the Security Agreement, this Pledge
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Agreement, the Mortgages and all other related agreements and documents issued
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or delivered hereunder or thereunder or pursuant hereto or thereto.
"Event of Default": has the meaning set forth in Section 8 hereof.
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"Governmental Authority": means any nation or government, any state or other
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political subdivision thereof and any entity exercising executive, legislative,
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judicial, regulatory or administrative functions of or pertaining to government.
"Revolving Loan Obligations": means the Borrower's obligations to the Revolving
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Credit Lenders arising under the Revolving Credit Agreement, including without
limitation all principal, interest, fees and other charges in respect of the
Revolving Loans.
"Secured Obligations": the collective reference to the following:
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(i) The Revolving Loan Obligations, including without limitation, all unpaid
principal of and interest on (including interest accruing after maturity and
after the commencement of bankruptcy or insolvency proceedings) the Revolving
Loans and other obligations owing under the Revolving Credit Agreement, and all
other indebtedness, liabilities and obligations owing thereunder, whether now
existing or hereafter arising, and whether primary, secondary, direct,
contingent, or joint and several; including without limitation, all liabilities
and obligations incurred in connection with collecting and enforcing the
foregoing.
(ii) The Term Loan Obligations, including without limitation all unpaid
principal of and interest on (including interest accruing after maturity and
after the commencement of bankruptcy or insolvency proceedings) the Term Loans
and other obligations owing under the Term Loan Agreement, whether now existing
or hereafter arising, and whether primary, secondary, direct, contingent, or
joint and several; including without limitation, all liabilities and obligations
incurred in connection with collecting and enforcing the foregoing.
(iii) all indebtedness, liabilities and obligations of any kind or nature,
now existing or hereafter arising, owing by the Obligors to the Lenders, arising
under the Credit Documents.
"Term Loan Obligations": means the Borrower's obligations to the Term Loan
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Lenders arising under the Term Loan Agreement, including without limitation all
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principal, interest, fees and other charges in respect of the Term Loan.
2. Pledge and Grant of Security Interest. To secure the prompt payment
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and performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Administrative Agent, for the benefit of the Lenders,
and grants to the Administrative Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and interest of such
Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Pledged Collateral"):
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(a) Pledged Shares. (i) 100% (or, if less, the full amount owned by
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such Pledgor) of the issued and outstanding shares of capital stock owned by
such Pledgor of each directly owned Domestic Subsidiary of such Pledgor set
forth on Schedule 2(a) attached hereto (except for those shares of Mynd
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International, Ltd., in which case, 65% shall be pledged) and (ii) 65% (or, if
less the full amount owned by such Pledgor) of the issued and outstanding shares
of each class of capital stock or other ownership interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Voting Equity") and
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100% (or, if less, the full amount owned by such Pledgor) of the issued and
outstanding shares of each class of capital stock or other ownership interests
not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
("Non-Voting Equity") owned by such Pledgor of each Foreign Subsidiary set forth
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on Schedule 2(a) attached hereto, in each case together with the certificates
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(or other agreements or instruments), if any, representing such shares, and all
options and other rights, contractual or otherwise, with respect thereto
(collectively, together with the shares of capital stock described in Section
2(b) and 2(c) below, the "Pledged Shares"), including, but not limited to, the
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following:
(y) all shares or securities representing a dividend on any of the
Pledged Shares, or representing a distribution or return of capital upon or in
respect of the Pledged Shares, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any subscriptions, warrants,
rights or options issued to the holder of, or otherwise in respect of, the
Pledged Shares; and
(z) without affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under the other Credit Documents, in the
event of any consolidation or merger involving the issuer of any Pledged Shares
and in which such issuer is not the surviving corporation, all shares of each
class of the capital stock of the successor corporation formed by or resulting
from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full amount owned by such
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Pledgor) of the issued and outstanding shares of capital stock owned by such
Pledgor of any Person which hereafter becomes a Domestic Subsidiary and 65% (or,
if less, the full amount owned by such Pledgor) of the Voting Equity and 100%
(or, if less, the full amount owned by such Pledgor) of the Non-Voting Equity
owned by such Pledgor of any Person which hereafter becomes a Foreign
Subsidiary, including, without limitation, the certificates representing such
shares.
(c) Proceeds. All proceeds and products of the foregoing, however and
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whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that a Pledgor may from time to time hereafter deliver
additional shares of stock to the Administrative Agent as collateral security
for the Pledgor Obligations. Upon delivery to the Administrative Agent, such
additional shares of stock shall be deemed to be part of the Pledged Collateral
of such Pledgor and shall be subject to the terms of this Pledge Agreement
whether or not Schedule 2(a) is amended to refer to such additional shares.
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3. Security for Pledgor Obligations. The security interest created hereby
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in the Pledged Collateral of each Pledgor constitutes continuing collateral
security for all of the Secured Obligations, now existing or hereafter arising
pursuant to the Credit Documents, owing from the Borrower or any other Pledgor
to any Lender, any Affiliate of a Lender or the Administrative Agent, howsoever
evidenced, created, incurred or acquired, whether primary, secondary, direct,
contingent, or joint and several, including, without limitation, all obligations
and liabilities incurred in connection with collecting and enforcing the
foregoing (collectively, the "Pledgor Obligations").
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4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
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(a) Each Pledgor shall deliver to the Administrative Agent (i)
simultaneously with or prior to the execution and delivery of this Pledge
Agreement, all certificates representing the Pledged Shares of such Pledgor and
(ii) promptly upon the receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral of a Pledgor.
Prior to delivery to the Administrative Agent, all such certificates and
instruments constituting Pledged Collateral of a Pledgor shall be held in trust
by such Pledgor for the benefit of the Administrative Agent pursuant hereto.
All such certificates shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, substantially in the form provided in Exhibit 4(a) attached
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hereto.
(b) Additional Securities. If such Pledgor shall receive by virtue of its
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being or having been the owner of any Pledged Collateral, any (i) stock
certificate, including without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock splits, spin-off or
split-off, promissory notes or other instrument; (ii) option or right, whether
as an addition to, substitution for, or an exchange for, any Pledged Collateral
or otherwise; (iii) dividends payable in securities; or (iv) distributions of
securities in connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then such Pledgor
shall receive such stock certificate, instrument, option, right or distribution
in trust for the benefit of the Administrative Agent, shall segregate it from
such Pledgor's other property and shall deliver it forthwith to the
Administrative Agent in the exact form received together with any necessary
endorsement and/or appropriate stock power duly executed in blank, substantially
in the form provided in Exhibit 4(a), to be held by the Administrative Agent as
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Pledged Collateral and as further collateral security for the Pledgor
Obligations.
(c) Financing Statements. Each Pledgor shall execute and deliver to the
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Administrative Agent such UCC or other applicable financing statements as may be
reasonably requested by the Administrative Agent in order to perfect and protect
the security interest created hereby in the Pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
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warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Pledgor Obligations remain outstanding or any Credit Document
is in effect or any Loan under the Revolving Credit Agreement or the Term Loan
Agreement shall remain outstanding, and until all of the Commitments under the
Revolving Credit Agreement and the Term Loan Agreement shall have been
terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are duly
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authorized and validly issued, are fully paid and nonassessable and are not
subject to the preemptive rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and validly issued,
fully paid and nonassessable and not subject to the preemptive rights of any
Person.
(b) Title. Each Pledgor has good and indefeasible title to the Pledged
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Collateral of such Pledgor and will at all times be the legal and beneficial
owner of such Pledged Collateral free and clear of any Lien, other than Liens
permitted under the Revolving Credit Agreement and the Term Loan Agreement.
There exists no "adverse claim" within the meaning of Section 8-302 of the
Uniform Commercial Code as in effect in the State of New York as of the date
hereof (the "UCC") with respect to the Pledged Shares of such Pledgor.
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(c) Exercising of Rights. To the best of such Pledgor's knowledge, the
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exercise by the Administrative Agent of its rights and remedies hereunder will
not violate (i) any law or governmental regulation or (ii) any material
contractual restriction binding on or affecting a Pledgor or any of its
property.
(d) Pledgor's Authority. To the best of such Pledgor's knowledge, no
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authorization, approval or action by, and no notice or filing with any
Governmental
Authority or with the issuer of any Pledged Shares are required either (i) for
the pledge made by a Pledgor or for the granting of the security interest by a
Pledgor pursuant to this Pledge Agreement or (ii) for the exercise by the
Administrative Agent or the Lenders of their rights and remedies hereunder
(except as may be required by laws affecting the offering and sale of
securities).
(e) Security Interest/Priority. This Pledge Agreement creates a valid
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security interest in favor of the Administrative Agent for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Administrative
Agent of the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will perfect and
establish the first priority of the Administrative Agent's security interest in
the Pledged Shares and, when properly perfected by filing or registration, in
all other Pledged Collateral represented by such Pledged Shares and instruments
securing the Pledgor Obligations. Except as set forth in this Section 5(e), no
action is necessary to perfect or otherwise protect such security interest.
(f) No Other Shares. No Pledgor owns any shares of stock other than as set
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forth on Schedule 2(a) attached hereto or as otherwise permitted by the Credit
Agreement.
6. Covenants. Each Pledgor hereby covenants, that so long as any of
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the Pledgor Obligations remain outstanding or any Credit Document is in effect
or any Loan shall remain outstanding, and until all of the Commitments under the
Revolving Credit Agreement and the Term Loan Agreement shall have been
terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall cause the
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issuer of the Pledged Shares of such Pledgor to mark its books and records) to
reflect the security interest granted to the Administrative Agent, for the
benefit of the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of the
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Pledged Collateral of such Pledgor at its own expense against the claims and
demands of all other parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Liens permitted under the Credit
Documents, and not sell, exchange, transfer, assign, lease or otherwise dispose
of Pledged Collateral of such Pledgor or any interest therein, except as
permitted under the Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its expense all
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further instruments and documents and take all further action that may be
necessary and desirable or that the Administrative Agent may reasonably request
in order to (i) perfect and protect the security interest created hereby in the
Pledged Collateral of such Pledgor (including without limitation any and all
action necessary to satisfy the Administrative Agent that the Administrative
Agent has obtained a first priority perfected security interest in any capital
stock); (ii) enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder in respect of the Pledged Collateral of such Pledgor; and
(iii) otherwise effect the purposes of this Pledge Agreement, including, without
limitation and if requested by the Administrative Agent, delivering to the
Administrative Agent irrevocable proxies in respect of the Pledged Collateral of
such Pledgor.
(d) Amendments. Not make or consent to any amendment or other modification
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or waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of such Pledgor other than pursuant hereto or as may be
permitted under the Credit Documents.
(e) Compliance with Securities Laws. File all reports and other information
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now or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged Collateral of such
Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
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covenants and agreements contained herein, the Administrative Agent may, at its
sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Administrative Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Administrative Agent or the Lenders may
make for the protection of the security hereof or which may be compelled to make
by operation of law. All such sums and amounts so expended shall be repayable
by the Pledgors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Pledgor Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 2.8(a) of the Revolving Credit Agreement for overdue Base
Rate Committed Loans. No such performance of any covenant or agreement by the
Administrative Agent or the Lenders on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgors of any default under
the terms of this Pledge Agreement or the other Credit Documents. The Lenders
may make any payment hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax lien,
title or claim except to the extent such payment is being contested in good
faith by a Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Revolving
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Credit Agreement or the Term Loan Agreement would constitute an Event of Default
(which has not otherwise been cured or waived in accordance with the provisions
thereof) shall be an Event of Default hereunder (an "Event of Default").
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9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
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during the continuation thereof, the Administrative Agent and the Lenders shall
have, in respect of the Pledged Collateral of any Pledgor, in addition to the
rights and remedies
provided herein and in the Credit Documents or by law, the rights and remedies
of a secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default
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and during the continuation thereof, without limiting the generality of this
Section and without notice, the Administrative Agent may, in its sole
discretion, sell or otherwise dispose of or realize upon the Pledged Collateral,
or any part thereof, in one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or prices and on such
other terms as the Administrative Agent may deem commercially reasonable, for
cash, credit or for future delivery or otherwise in accordance with applicable
law. To the extent permitted by law, any Lender may in such event, bid for the
purchase of such securities. Each Pledgor agrees that, to the extent notice of
sale shall be required by law and has not been waived by such Pledgor, any
requirement of reasonable notice shall be met if notice, specifying the place of
any public sale or the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to such Pledgor, in accordance
with the notice provisions of Section 10.1 of the Revolving Credit Agreement at
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least 10 days before the time of such sale. The Administrative Agent shall not
be obligated to make any sale of Pledged Collateral of such Pledgor regardless
of notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and during the
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continuation thereof, the Pledgors recognize that the Administrative Agent may
deem it impracticable to effect a public sale of all or any part of the Pledged
Shares or any of the securities constituting Pledged Collateral and that the
Administrative Agent may, therefore, determine to make one or more private sales
of any such securities to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities for their own account,
for investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the foregoing, agrees that
such private sale shall be deemed to have been made in a commercially reasonable
manner and that the Administrative Agent shall have no obligation to delay sale
of any such securities for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act of 1933. Each Pledgor further acknowledges and agrees that any offer to
sell such securities which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Act of 1933), or (ii) made
privately in the manner described above shall be deemed to involve a "public
sale" under the UCC, notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, and the Administrative Agent may, in
such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to the rights and remedies
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hereunder, upon the occurrence of an Event of Default, the Administrative Agent
may, after providing the notices required by Section 9-505(2) of the UCC or
otherwise complying with the requirements of applicable law of the relevant
jurisdiction, retain all or any portion of the Pledged Collateral in
satisfaction of the Pledgor Obligations. Unless and until the Administrative
Agent shall have provided such notices, however, the Administrative Agent shall
not be deemed to have retained any Pledged Collateral in satisfaction of any
Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale, collection or
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realization are insufficient to pay all amounts to which the Administrative
Agent or the Lenders are legally entitled, the Pledgors shall be jointly and
severally liable for the deficiency, together with interest thereon at the
default rate specified in Section 2.8(a) of the Revolving Credit Agreement for
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overdue Base Rate Committed Loans, together with the costs of collection and the
reasonable fees of any attorneys employed by the Administrative Agent to collect
such deficiency. Any surplus remaining after the full payment and satisfaction
of the Pledgor Obligations shall be returned to the Pledgors or to whomsoever a
court of competent jurisdiction shall determine to be entitled thereto.
10. Rights of the Administrative Agent.
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(a) Power of Attorney. In addition to other powers of attorney
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contained herein, each Pledgor hereby designates and appoints the Administrative
Agent, on behalf of the Lenders, and each of its designees or agents as
attorney-in-fact of such Pledgor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuance of an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give discharges
and releases concerning the Pledged Collateral of such Pledgor, all as the
Administrative Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral of such Pledgor and enforcing any other
right in respect thereof;
(iii) to defend, settle or compromise any action brought regarding the
Pledged Collateral and, in connection therewith, give such discharge or release
as the Administrative Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against the Pledged Collateral of
such Pledgor;
(v) to direct any parties liable for any payment under any of the Pledged
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;
(vi) to receive payment of and receipt for any and all monies, claims, and
other amounts due and to become due at any time in respect of or arising out of
any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral of
such Pledgor;
(viii) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges or
releases as the Administrative Agent may deem reasonably appropriate;
(ix) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the Administrative Agent
may determine necessary in order to perfect and maintain the security interests
and liens granted in this Pledge Agreement and in order to fully consummate all
of the transactions contemplated therein;
(x) to exchange any of the Pledged Collateral of such Pledgor or other
property upon any merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof and, in connection therewith, deposit
any of the Pledged Collateral of such Pledgor with any committee, depository,
transfer agent, registrar or other designated agency upon such terms as the
Administrative Agent may determine;
(xi) to vote for a shareholder resolution, or to sign an instrument in
writing, sanctioning the transfer of any or all of the Pledged Shares of such
Pledgor into the name of the Administrative Agent or one or more of the Lenders
or into the name of any transferee to whom the Pledged Shares of such Pledgor or
any part thereof may be sold pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and things as the Administrative
Agent may reasonably deem to be necessary, proper or convenient in connection
with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain outstanding
or any Credit Document is in effect or any Loan shall remain outstanding and
(ii) until all of the Commitments under the Revolving Credit Agreement and the
Term Loan Agreement shall have been terminated. The Administrative Agent shall
be under no duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Administrative Agent in this Pledge Agreement, and shall not be liable for
any failure to do so or any delay in doing so. The Administrative Agent shall
not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Administrative
Agent solely to protect, preserve and realize upon its security interest in
Pledged Collateral.
(b) Performance by the Administrative Agent of Pledgor's Obligations.
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If any Pledgor fails to perform any agreement or obligation contained herein,
the Administrative Agent itself may perform, or cause performance of, such
agreement or obligation, and the expenses of the Administrative Agent incurred
in connection therewith shall be payable by the Pledgors on a joint and several
basis pursuant to Section 13 hereof.
(c) Assignment by the Administrative Agent. The Administrative Agent may
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from time to time assign the Pledgor Obligations and any portion thereof and/or
the Pledged Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Administrative Agent under
this Pledge Agreement in relation thereto provided, however that any such
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assignment shall not violate the Revolving Credit Agreement or the Term Loan
Agreement.
(d) The Administrative Agent's Duty of Care. Other than the exercise of
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reasonable care to assure the safe custody of the Pledged Collateral while being
held by the Administrative Agent hereunder, the Administrative Agent shall have
no duty or liability to preserve rights pertaining thereto, it being understood
and agreed that Pledgors shall be responsible for preservation of all rights in
the Pledged Collateral of such Pledgor, and the Administrative Agent shall be
relieved of all responsibility for Pledged Collateral upon surrendering it or
tendering the surrender of it to the Pledgors. The Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Administrative Agent accords its
own property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Administrative
Agent shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not the Administrative Agent has
or is deemed to have knowledge of such matters; or (ii) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
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(i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may exercise any and
all voting and other consensual rights pertaining to the Pledged Collateral of
such Pledgor or any part thereof for any purpose not inconsistent with the terms
of this Pledge Agreement or the other Credit Documents; and
(ii) Upon the occurrence and during the continuance of an Event of Default,
all rights of a Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to paragraph (i) of this
Section shall cease and all such rights shall thereupon become vested in the
Administrative Agent which shall then have the sole right to exercise such
voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be
continuing and subject to Section 4(b) hereof, each Pledgor may receive and
retain any and all dividends (other than stock dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove) or interest
paid in respect of the Pledged Collateral to the extent they are allowed under
the Revolving Credit Agreement and the Term Loan Agreement.
(ii) Upon the occurrence and during the continuance of an Event of Default
pursuant to which the Administrative Agent or the Required Lenders have decided
to exercise any rights or remedies granted thereto in the Revolving Credit
Agreement or the Term Loan Agreement:
(A) all rights of a Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to paragraph (i) of this Section shall cease and all such rights shall thereupon
be vested in the Administrative Agent which shall then have the sole right to
receive and hold as Pledged Collateral such dividends and interest payments; and
(B) all dividends and interest payments which are received by a Pledgor
contrary to the provisions of paragraph (A) of this Section shall be received in
trust for the benefit of the Administrative Agent, shall be segregated from
other property or funds of such Pledgor, and shall be forthwith paid over to the
Administrative Agent as Pledged Collateral in the exact form received, to be
held by the Administrative Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(g) Release of Pledged Collateral. The Administrative Agent may
--------------------------------
release any of the Pledged Collateral from this Pledge Agreement or may
substitute any of the Pledged Collateral for other Pledged Collateral without
altering, varying or diminishing in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any Pledged Collateral not
expressly released or substituted, and this Pledge Agreement shall continue as a
first priority lien on all Pledged Collateral not expressly released or
substituted.
11. Rights of Required Lenders. All rights of the Administrative Agent
-----------------------------
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders under the Revolving Credit Agreement and the Term Loan
Agreement.
12. Application of Proceeds. Upon the occurrence and during the
-------------------------
continuance of an Event of Default, all amounts collected or received in respect
of the Pledged Collateral, when received by the Administrative Agent or any of
the Lenders in cash or its equivalent, shall be paid over or delivered as
follows:
(a) FIRST, to the payment of all reasonable, documented out-of-pocket
costs and expenses (including without limitation reasonable, documented
attorneys' fees) of the Administrative Agent or any Lender in connection with
enforcing the rights of the Lenders under the Credit Documents in respect of the
Pledged Collateral and any protective advances made by the Administrative Agent
or any Lender with respect to the Pledged Collateral under or pursuant to the
terms of the Collateral Documents, pro rata as set forth below;
(b) SECOND, to the payment of all accrued fees and interest payable to the
Administrative Agent and the Lenders under the Credit Documents, pro rata as set
forth below;
(c) THIRD, to the payment of the outstanding principal amount of the Secured
Obligations, pro rata, as set forth below; and
(d) FOURTH, to all other obligations which shall have become due and payable
under the Credit Documents and not repaid pursuant to clauses "FIRST" through
"THIRD" above, pro rata, as set forth below; and
(e) FIFTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount under the
applicable category equal to its pro rata share of amounts available to be
applied above (based on the proportion that the then outstanding obligations
owed by the Borrower to such Lender under the Credit Documents with respect to
the applicable category bears to the aggregate outstanding obligations of the
Borrower to the Lenders under the Credit Documents with respect to the
applicable category); and (iii) each Pledgor irrevocably waives the right to
direct the application of such payments and proceeds and acknowledges and agrees
that the Administrative Agent shall have the continuing and exclusive right to
apply and reapply any and all such payments and proceeds in the Administrative
Agent's sole discretion, notwithstanding any entry to the contrary upon any of
its books and records.
13. Costs of Counsel. At all times hereafter, the Pledgors agree to
------------------
promptly pay upon demand any and all reasonable costs and expenses of the
Administrative Agent or the Lenders, (a) as required under the Credit Documents
and (b) as necessary to protect the Pledged Collateral
or to exercise any rights or remedies under this Pledge Agreement or with
respect to any Pledged Collateral. All of the foregoing costs and expenses
shall constitute Pledgor Obligations hereunder.
14. Continuing Agreement.
---------------------
(a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the Pledgor
Obligations remain outstanding or any Credit Document is in effect or any Loan
under the Revolving Credit Agreement or the Term Loan Agreement shall remain
outstanding, and until all of the Commitments under the Revolving Credit
Agreement and the Term Loan Agreement thereunder shall have terminated (other
than any obligations with respect to the indemnities and the representations and
warranties set forth in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically terminated and the
Administrative Agent and the Lenders shall, upon the request and at the expense
of the Pledgors, forthwith release all of its liens and security interests
hereunder and shall executed and deliver all UCC termination statements and/or
other documents reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing all releases and indemnities
provided hereunder shall survive termination of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Pledgor Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, all as
though such payment had not been made; provided that in the event payment of all
or any part of the Pledgor Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Administrative Agent or
any Lender in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Pledgor Obligations.
15. Amendments; Waivers; Modifications. This Pledge Agreement and the
------------------------------------
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in each of Section 10.5 of the Revolving Credit
------------
Agreement and Section 10.5 of the Term Loan Agreement.
-------------
16. Successors in Interest. This Pledge Agreement shall create a continuing
----------------------
security interest in the Collateral and shall be binding upon each Pledgor, its
successors and assigns and shall inure, together with the rights and remedies of
the Administrative Agent and the Lenders hereunder, to the benefit of the
Administrative Agent and the Lenders and their successors and permitted assigns;
provided, however, that none of the Pledgors may assign its rights or delegate
- -------- -------
its duties hereunder without the prior written consent of each Lender or the
Required Lenders, as required by each of the Revolving Credit Agreement and the
Term Loan Agreement. To the fullest extent permitted by law, each Pledgor
hereby releases the Administrative Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to this Pledge
Agreement or the Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Administrative Agent, or such Lender, or
its officers, employees or agents.
17. Notices. All notices required or permitted to be given under this
-------
Pledge Agreement shall be in conformance with Section 10.1 of the Revolving
Credit Agreement.
18. Counterparts. This Pledge Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are
--------
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
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(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with respect
to this Security Agreement may be brought in the courts of the State of New
York, or of the United States for the Eastern District of New York, and, by
execution and delivery of this Security Agreement, each Pledgor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Pledgor further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address for notices
pursuant to Section 10.1 of the Revolving Credit Agreement, such service to
-------------
become effective 30 days after such mailing. Nothing herein shall affect the
right of the Administrative Agent to serve process in any other manner permitted
by law or to commence legal proceedings or to otherwise proceed against any
Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Pledge Agreement brought
in the courts referred to in subsection (a) hereof and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
----------------------
EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Pledge Agreement is
------------
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Pledge Agreement and the other Credit Documents
--------
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
24. Survival. All representations and warranties of the Pledgors hereunder
--------
shall survive the execution and delivery of this Pledge Agreement and the other
Credit Documents, the delivery of the Notes and the making of the Loans under
the Revolving Credit Agreement and the Term Loan Agreement.
25. Other Security. To the extent that any of the Pledgor Obligations are
---------------
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Administrative Agent and the Lenders shall have the right to proceed against
such other property, guarantee or endorsement upon the occurrence of any Event
of Default, and the Administrative Agent and the Lenders have the right, in
their sole discretion, to determine which rights, security, liens, security
interests or remedies the Administrative Agent and the Lenders shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Administrative Agent's
and the Lenders' rights or the Pledgor Obligations under this Pledge Agreement
or under any other of the Credit Documents.
26. Joint and Several Obligations of Pledgors.
----------------------------------------------
(a) Each of the Pledgors is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided by the
respective Lenders under the Revolving Credit Agreement and the Term Loan
Agreement, as applicable, for the mutual benefit, directly and indirectly, of
each of the Pledgors and in consideration of the undertakings of each of the
Pledgors to accept joint and several liability for the obligations of each of
them.
(b) Each of the Pledgors jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Pledgors with respect to the payment and
performance of all of the Pledgor Obligations arising under this Pledge
Agreement and the other Credit Documents, it being the intention of the parties
hereto that all the Pledgor Obligations shall be the joint and several
obligations of each of the Pledgors without preferences or distinction among
them.
(c) Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, the obligations of each respective Guarantor
under the
Revolving Credit Agreement the Term Loan Agreement and the other Credit
Documents shall be limited to an aggregate amount equal to the largest amount
that would not render such obligations subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any applicable state law.
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CHAR1\529464_ 4
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
BORROWER:
- --------
POLICY MANAGEMENT SYSTEMS CORPORATION,
a South Carolina corporation
By: /S/
---
Name: Stephen G. Morrison
---------------------
Title: Executive Vice President and General Counsel
-------------------------------------------------
SUBSIDIARY
- ----------
GUARANTORS:
- ----------
MYND CORPORATION
f/k/a The Leverage Group, Inc.,
a Connecticut corporation
MYND INTERNATIONAL, LTD.,
a Delaware corporation
MYND CORPORATION
f/k/a DORN Technology Group, Inc.,
a Michigan corporation
MYND CORPORATION
f/k/a CYBERTEK Corporation,
a Texas corporation
MYND PARTNERS, L.P.,
f/k/a Cybertek Solutions, L.P.,
a Texas limited partnership
By: /S/
---
Name: Stephen G. Morrison
---------------------
Title: Secretary
---------
of each of the foregoing
Subsidiary Guarantors
POLICY MANAGEMENT SYSTEMS
INVESTMENTS, INC.,
a Delaware corporation
By: /S/
---
Name: Elizabeth Powers
-----------------
Title: President
---------
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /S/
---
Name: Michael J. McKenney______
---------------------------
Title:_______________________________