POLICY MANAGEMENT SYSTEMS CORPORATION
WORKING CAPITAL PROMISSORY NOTE
$30,000,000 August 3, 2000
El Segundo, California
PAYMENT WITH RESPECT TO THIS NOTE IS SUBJECT TO A SUBORDINATION AGREEMENT (THE
"SUBORDINATION AGREEMENT"), DATED AS OF THE DATE HEREOF AMONG THE MAKER, THE
LENDER, AND BANK OF AMERICA, N.A., AS AGENT, AND EACH HOLDER OF THIS NOTE, BY
ITS ACCEPTANCE HEREOF SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
FOR VALUE RECEIVED, the undersigned, POLICY MANAGEMENT SYSTEMS CORPORATION,
a South Carolina corporation ("MAKER"), hereby promises to pay to the order of
Computer Sciences Corporation, a Nevada corporation ("LENDER"), at such address
as Lender may specify and in accordance with the terms of this Working Capital
Promissory Note (this "NOTE"), the sum of up to THIRTY MILLION DOLLARS
($30,000,000) (the "COMMITTED AMOUNT"), or so much of said sum as has been
advanced and is then outstanding hereunder, together with all accrued and unpaid
interest.
1. REQUEST FOR ADVANCE. This Note is a note under which one or more
advances may be made by the Lender to the Maker (each such advance an "Advance"
and collectively, the "Advances") from time to time until the Termination Date
(as defined in Section 3 below) for general working capital purposes of the
Maker in an aggregate principal amount at any time outstanding such that, after
giving effect to the application of the proceeds of any Advance made by the
Lender on any date, the aggregate principal amount of all Advances hereunder
does not exceed $30,000,000. Each Advance hereunder shall be in a minimum
aggregate principal amount of $1,000,000 and integral multiples of $100,000 in
excess thereof (or the remaining amount of the Committed Amount, if less).
Advances hereunder are not revolving in nature and may not be reborrowed.
Advances hereunder may be requested in the Maker's discretion by submission
to the Lender of a Request for Advance, in form annexed hereto as Exhibit "A",
at least three (3) business days prior to the Advance Date.
The Lender's obligation to fund is subject to the Agreement and Plan of
Merger dated as of June 20, 2000 by and among Maker, Lender and Patriot
Acquisition Corp, as the same may be amended from time to time.
2. INTEREST. Each Advance outstanding under this Note shall bear
interest from the date of such Advance until such date that such Advance has
been entirely repaid or converted, at a simple rate per annum equal to the
lesser of (a) the London Inter-Bank Offered Rate, adjusted for reserve
requirements, for three month U.S. Dollar deposits, as quoted by Bank of
America, N.A., plus two and three quarters percent (275 basis points) or (b) the
maximum rate permitted by applicable law. Interest shall not be due and payable
until the Termination Date.
3. REPAYMENT OF ADVANCES. The entire aggregate principal balance of the
Advances hereunder, together with all interest accrued thereon, will become
immediately due and payable upon the earlier to occur of any of the following
(the "Termination Date"):
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(i) July 3, 2001; or
(ii) Only to the extent permitted by the terms of the
subordination agreement by and among Lender, Maker and Bank of America, N.A. as
agent for the Senior Lenders (as defined therein) (the "Subordination
Agreement"), immediately prior to the occurrence of the "Event of Default" as
described and defined in Section 6.1(k) of the Credit Agreements (as the term
"Credit Agreements" is defined in the Subordination Agreement); or
(iii) Subject to the terms of the Subordination Agreement, upon
acceleration of this Note after the occurrence of any Event of Default (as
defined below).
4. DEFAULT AND ACCELERATION.
(a) Event of Default. "EVENT OF DEFAULT" means the occurrence of
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any of the following:
(i) the failure of Maker to punctually and faithfully
observe or perform any of the other covenants, conditions or obligations imposed
upon Maker by this Note, which failure is not remedied within 10 business days
following written notice thereof from Lender;
(ii) there is an assignment by Maker for the benefit of
creditors or a composition with creditors;
(iii) Maker petitions or applies to any tribunal for, or
consents to the appointment of, or the taking of possession by, a trustee,
receiver, custodian, liquidator or similar official of any substantial amount
of its assets, or commences any proceedings under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
other liquidation law of any jurisdiction;
(iv) an order for relief is entered in an involuntary
case under the bankruptcy laws of the United States, or an order, judgment or
decree is entered appointing a trustee, receiver, custodian, liquidator or
similar official or adjudicating Maker bankrupt or insolvent, or ordering or
approving Maker's liquidation or reorganization, or any significant modification
of the rights of its creditors or approving the petition in any such proceedings
and such order, judgment or decree remains in effect for 5 business days; or any
involuntary petition or complaint is filed against Maker under the bankruptcy
laws of the United States seeking the appointment of a trustee, receiver,
custodian, liquidator or similar official, and such petition or complaint has
not been dismissed within 10 business days of the filing thereof; or
(v) there is levied any writ of execution or other
judicial process upon any material portion of the property of Maker not released
within 5 business days thereafter.
(b) Acceleration. Subject to the terms of the Subordination
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Agreement, in the event any Event of Default has occurred and is continuing,
Lender may declare the unpaid aggregate balance of the Advances hereunder
immediately due and payable, whereupon this Note will forthwith mature and
become due and payable without presentment, demand, protest or other notice,
all of which are hereby waived, and Lender may proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any obligation herein contained, or for
an injunction against a violation of any of
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the terms or provisions hereof, or in aid of the exercise of any power granted
hereby or by equity or at law; provided, however, that upon the occurrence of
any Event of Default described in Section 3(a)(ii), (iii), (iv) or (v), the
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unpaid aggregate balance of the Advances hereunder will automatically become due
and payable without any action by Lender.
(c) Expenses. In the event any Event of Default has occurred, Maker shall
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pay to Lender such additional amount as will be sufficient to cover the actual
costs and expenses of enforcement and collection, including without limitation,
actual attorneys' fees, expenses and disbursements.
5. MISCELLANEOUS.
(a) Good Faith Best Efforts. Maker shall not take any action for
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the purpose of avoiding or seeking to avoid the observance or performance of any
of the terms to be observed or performed hereunder by Maker. Maker shall at all
times in good faith use its best efforts in carrying out all such action as may
be necessary or appropriate in order to make effective the transactions
contemplated by this Note.
(b) Amendment and Waiver. This Note may not be modified or
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amended, and the observance of any term of this Note may not be waived (either
generally or in a particular instance and either retroactively or prospectively)
, without the prior written consent of the Lender and the Senior Lenders.
(c) Rights, Powers, Privileges and Remedies. No delay or omission
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on the part of Lender in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any waiver or omission on the part of
Lender of any right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor will any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. All remedies, either under this Note or at law or otherwise afforded
to Lender, will be cumulative.
(d) Governing Law. This Note will be construed in accordance with,
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and the rights of the parties hereto will be governed by, the internal laws of
the State of California.
(e) Successors and Assigns. This Note will be binding upon and
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inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part by Maker to any person or entity without the prior written
consent of Lender.
(f) Replacement Notes. Upon receipt of evidence satisfactory to
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Maker of the loss, theft, destruction or mutilation of this Note, Maker shall
issue a new Note of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note.
(g) Notices. All notices and other communications required or
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permitted hereunder will be in writing and will be delivered by facsimile,
courier or nationally-recognized overnight delivery service addressed as
follows:
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if to Lender: with copies to:
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Computer Sciences Corporation Gibson, Dunn & Crutcher
2100 East Grand Avenue 333 South Grand Avenue
El Segundo, CA 90245 Los Angeles, CA 90071
Telecopy: (310) 322-9767 Telecopy: (213) 229-6236
Attention: Chief Financial Officer Attention: Brian D. Kilb
if to Maker: with copies to:
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Policy Management Systems Dewey Ballantine LLP
Corporation 1301 Avenue of the Americas
One PMSC Center New York, New York 10019-6092
Columbia, SC 29016 Telecopy: (212) 259-6333
Telecopy: (803) 333-4747 Attention: Richard D. Pritz
Attention: President
IN WITNESS WHEREOF, this Note has been duly executed and delivered as of
the date first above written.
MAKER:
POLICY MANAGEMENT SYSTEMS
CORPORATION
a South Carolina corporation
By: /S/ Stephen G. Morrison
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Name: Stephen G. Morrison
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Title: Exec. Vice President and General Counsel
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<PAGE>
EXHIBIT "A'
REQUEST FOR ADVANCE
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TO: __________________
___________, __ _______
Attention: _____________
The undersigned hereby requests an Advance under the Working Capital
Promissory Note dated _________ ___, 2000 (the "Note"), in the principal amount
of Thirty Million Dollars ($30,000,000) made by the undersigned to
______________________, pursuant to the following terms:
Advance Amount: $
Advance Date: ________, 2000
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Note.
Dated this _____ day of _____________, 2000.
POLICY MANAGEMENT SYSTEMS
CORPORATION
a South Carolina corporation
By:
Name:
Title:
