PROMISSORY NOTE
$40,000,000 July 21, 1999
FOR VALUE RECEIVED, POLICY MANAGEMENT SYSTEMS CORPORATION, a South Carolina
corporation, and any other makers who from time to time execute a duplicate
signature page for delivery to the Bank (collectively, the "Borrower"), each
jointly and severally promises to pay to the order of FIRST UNION NATIONAL BANK,
a national banking association (the "Bank"), at the location of 201 College
Street, Charlotte, North Carolina 28288, or such other place as Bank may
designate in writing, the principal sum of Forty Million and No/00 Dollars
($40,000,000.00), or so much thereof as may be advanced under the terms and
conditions of this Promissory Note (including all renewals, extensions, or
modifications hereof, this "Note"), together with interest on the unpaid
principal balance from the date hereof, until paid, at a rate of interest per
annum equal to the LIBOR Market Interest Rate plus one-half percent (.50%) as
that rate may change from day to day in accordance with changes in the LIBOR
Market Interest Rate ("Interest"). For purposes hereof, "LIBOR Market Interest
Rate" for any day is the rate for one month U.S. Dollar deposits as reported on
Telerate Page 3750 as of 11:00 a.m. London time on such day, or if such day is
not a London business day, then the immediately preceding London business day
(or if not so reported, then as determined by Bank from another recognized
source or interbank quotation). The Bank's determination of such rate shall be
conclusive, absent manifest error. Provided no Default (as later defined) has
occurred, and provided the balance outstanding under the Note is not due and
payable by its terms, the Borrower may borrow and repay up to the maximum amount
of this Note on a revolving basis.
Interest accruing under this Note shall be paid monthly beginning August 1,
1999 and continuing on the same day of each calendar month thereafter until all
outstanding principal and interest is paid in full. This Note shall be payable
in full on the earlier of: (i) October 15, 1999, or (ii) the date the private
placement of debt on behalf of Borrower offered by Wachovia Bank, N.A. and
co-agented by Bank in the amount of $40,000,000 to $100,000,000 is closed.
Interest shall be computed on the basis of a 360-day year for the actual number
of days in the interest period ("Actual/360 Computation"). The Actual/360
Computation determines the annual effective interest yield by taking the stated
(nominal) interest rate for a year's period and then dividing said rate by 360
to determine the daily periodic rate to be applied for each day in the interest
period. Application of the Actual/360 Computation produces an annualized
effective interest rate exceeding that of the nominal rate.
The undersigned promises to pay to Bank or order, a late fee in the amount
of four percent (4%) of any installment past due for fifteen (15) or more days.
In addition, if payment of all sums due hereunder is accelerated under the terms
of the Note, the then remaining principal amount and accrued but unpaid interest
hereunder shall bear interest at a rate equal to the Prime Rate plus five
percent (5%) per annum until such principal and interest have been paid in full.
"Prime Rate" means the rate of interest per annum announced by Bank from time to
time to be its prime rate. The banks makes loans using indices other than the
Prime Rate and at rates above and below the Prime Rate.
No delay or omission on the part of the Bank or other holder in exercising
any right hereunder shall operate as a waiver of such right or of any other
right of such holder, nor shall any delay, omission or waiver on any one
occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. Every one of the undersigned and every endorser or guarantor
of this Note regardless of the time, order or place of signing waives
presentment, demand, protest and notices of every kind and assents to any one or
more extensions or postponements of the time of payment or any other
indulgences, to any substitutions, exchanges or releases of collateral if any
time there be available to the holder collateral for this Note, and to the
additions or releases of any other parties or persons primarily or secondarily
liable.
The following shall constitute an Event of Default hereunder: (i) in the
event any default is made in the payment of principal or interest as stipulated
above; (ii) Borrower files or has filed against it an insolvency or bankruptcy
proceeding and if an involuntary proceeding, such proceeding remains undismissed
or unstayed for sixty (60) or more days; (iii) failure to pay any other
indebtedness when due; (iv) any default in payment or performance of any
obligation, term or covenant of Borrower under the terms of the certain Credit
Agreement (the "Credit Agreement") dated August 8, 1997 by and among Borrower,
the Guarantors Party thereto (including, without limitation, Cybertek
Corporation, Policy Management Systems Investments, Inc., PMSI, L.P., and
Cybertek Solutions, L.P. and each other Person who has executed the Credit
Agreement as a guarantor), Bank of America National Trust and Savings
Association, as Agent, and the Other Financial Institutions Party Thereto.
Notwithstanding the above, any cure or grace period given the Borrower in the
Credit Agreement for the Events of Default described in Section (ii) and (iii)
above shall also apply to the provisions in Section (ii) and (iii) above. Upon
the occurrence of an Event of Default, the entire outstanding principal balance
of the indebtedness evidenced hereby, together with any other sums advanced
hereunder and/or under any other instrument or document now or hereafter
evidencing, securing or in any way relating to the indebtedness evidenced
hereby, together with all unpaid interest accrued thereon, shall, at the option
of Bank and upon notice to Borrower, at once become due and payable and may be
collected forthwith, regardless of the stipulated date of maturity. In
addition, upon an Event of Default, the balance due hereunder may be charged
against any obligation of the Bank to any party, including endorsers, sureties
or guarantors to this instrument.
Except as to Liens permitted by the terms of the Credit Agreement, Borrower
shall not incur, create, assume, or permit to exist any Lien, of any kind upon
any of its respective properties or assets of any character until this Note is
paid in full. The term "Liens" shall have the meaning given in the Credit
Agreement. The representations, warranties and covenants of the Borrower
contained in the Credit Agreement, including, without limitation, those
contained in Articles 4 and 5 of the Credit Agreement, are incorporated herein
and reaffirmed as true and correct and binding on the Borrower on the date
hereof. These representations, warranties and covenants are made by Borrower to
Bank as a material inducement to extend the credit evidenced by this Note.
If this Note is placed with an attorney for collection, the undersigned
agrees to pay all costs of collection, including but not limited to reasonable
attorneys' fees.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance
hereof or otherwise, shall the amount paid or agreed to be paid to Bank for the
use of the money advanced or to be advanced hereunder exceed the maximum rate of
interest allowed to be charged under applicable law (the "Maximum Legal Rate").
If, from any circumstances whatsoever, the fulfillment of any provision of this
Note or any other agreement or instrument now or hereafter evidencing, securing
or in any way relating to the indebtedness evidenced hereby shall involve the
payment of interest in excess of the Maximum Legal Rate, then, ipso facto, the
obligation to pay interest hereunder shall be reduced to the Maximum Legal Rate;
and if from any circumstance whatsoever, Bank shall ever receive interest, the
amount of which would exceed the amount collectible at the Maximum Legal Rate,
such amount as would be excessive interest shall be applied to the reduction of
the principal balance remaining unpaid hereunder and not to the payment of
interest. This provision shall control every other provision in any and all
other agreements and instruments existing or hereafter arising between Borrower
and Bank with respect to the indebtedness evidenced hereby.
Upon demand of any party hereto, whether made before or after institution
of any judicial proceeding, any claim or controversy arising out of or relating
to the Note between parties hereto (a "Dispute") shall be resolved by binding
arbitration conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and the Federal Arbitration Act. Disputes may include,
without limitation, tort claims, counterclaims, a dispute as to whether a matter
is subject to arbitration, claims brought as class actions, or claims arising
from documents executed in the future. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to swap
agreements.
All arbitration hearings shall be conducted in the city named in the
address of Bank first stated above. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of demand
for arbitration. These time limitations may not be extended unless a party
shows cause for extension and then for no more than a total of 60 days. The
expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000.00. Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA. The parties do not waive applicable Federal or state
substantive law except as provided herein.
Notwithstanding the preceding binding arbitration provisions, the parties
agree to preserve, without diminution, certain remedies that any party may
exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute.
The parties agree that they shall not have a remedy of punitive or
exemplary damages against other parties in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A
DISPUTE.
All rights and obligations hereunder shall be governed by the laws of the
State of South Carolina.
At the time of the execution of this Note, the Borrower shall pay the Bank
a non-refundable fee equal to $20,000.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed under
seal in its name by its duly authorized officer, and its seal affixed, as of the
date first above written, and pursuant to authority duly granted.
POLICY MANAGEMENT SYSTEMS
CORPORATION, a South Carolina corporation
By: /s/ G. Larry Wilson
----------------------
Its President
Attest
By: /s/ Lynn W. Dillard
----------------------
Title: Assistant Secretary
--------------------
[CORPORATE SEAL]