PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
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August 3, 2000, among POLICY MANAGEMENT SYSTEMS CORPORATION, a South Carolina
corporation (the "Borrower" or the "Pledgor") and BANK OF AMERICA, N.A.,
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formerly known as Bank of America National Trust and Savings Association, in its
capacity as administrative agent (in such capacity, the "Administrative Agent")
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for the 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
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, as amended by a Fourth Amendment to Credit Agreement dated as of April
24, 2000 and as further amended by a Consent, Waiver and Fifth Amendment to
Credit Agreement dated as of July 14, 2000 (as may be subsequently amended,
modified, extended, renewed or replaced from time to time, the "Revolving Credit
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Agreement"), among the Borrower, the Subsidiary Guarantors identified therein,
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the Lenders party thereto (the "Revolving Credit Lenders") and the
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Administrative Agent, the Revolving Credit Lenders have extended a revolving
credit facility (the "Revolving Loans") upon the terms and subject to the
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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, as 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 and as further amended by a Consent, Waiver and
Amendment dated as of June 19, 2000 (as may be subsequently amended, modified,
extended, renewed or replaced from time to time, the "Term Loan Agreement"),
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among the Borrower, the Subsidiary Guarantors identified therein, the Lenders
party thereto (the "Term Loan Lenders") and the Administrative Agent, the Term
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Loan Lenders have extended a term loan (the "Term Loan") upon the terms and
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subject to the conditions set forth therein; and
WHEREAS, pursuant to a Pledge Agreement dated as of April 28, 2000 (the
"Existing Pledge Agreement"), the Borrower pledged to the Administrative Agent
for the benefit of the Lenders, 65% of the stock of Mynd International, Ltd.
WHEREAS, pursuant to the terms of a Consent Letter dated as of May 11,
2000, the Required Lenders (as defined herein) consented to the limited pledge
of 65% of the stock of Mynd International Ltd. on the condition that if a sale
of the Borrower did not occur by July 15, 2000, the Borrower would pledge the
remaining 35% of Mynd International, Ltd. to the Administrative Agent for the
benefit of the Lenders.
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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 Borrower 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
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United States Code, as amended, modified, succeeded or replaced from
time to time.
"Collateral Effective Date" means the date on which there shall
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occur an Event of Default pursuant to which the Administrative Agent
or the Required Lenders have decided to exercise any rights or
remedies hereunder or under the Existing Pledge Agreement in respect
of the Pledged Collateral.
"Credit Documents": means a collective reference to the Revolving
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Credit Agreement, the Term Loan Agreement, the Security Agreement, the
Existing Pledge Agreement, this Pledge Agreement, the Mortgages and
all other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Event of Default": has the meaning set forth in Section 8
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hereof.
"Governmental Authority": means any nation or government, any
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state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Required Lenders" means the Banks as defined in the Term Loan
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Agreement or the Required Banks as defined in the Revolving Credit
Agreement.
"Revolving Loan Obligations": means the Borrower's obligations to
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the Revolving Credit Lenders arising under the Revolving Credit
Agreement, including without limitation all principal, interest, fees
and other charges in respect of the Revolving Loans.
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"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
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Term Loan Lenders arising under the Term Loan Agreement, including
without limitation all principal, interest, fees and other charges in
respect of the Term Loan.
2. Pledge and Grant of Security Interest. Subject to Section 27, to
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secure the prompt payment and performance in full when due, whether by lapse of
time or otherwise, of the Pledgor Obligations (as defined in Section 3 hereof),
the 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 the Pledgor in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Pledged
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Collateral"):
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(a) Pledged Shares. (i) 35% of the issued and outstanding shares of
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capital stock owned by the Pledgor of Mynd International, Ltd., as set
forth on Schedule 2(a) attached hereto together with the certificates (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) below, the "Pledged Shares"), including, but not limited to,
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the 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
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(z) without affecting the obligations of the Pledgor 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) 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 the 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 the 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.
3. Security for Pledgor Obligations. The security interest created
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hereby in the Pledged Collateral of the 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 Guarantor 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").
4. Delivery of the Pledged Collateral. The Pledgor hereby agrees that:
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(a) The 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 the Pledgor
and (ii) promptly upon the receipt thereof by or on behalf of the Pledgor,
all other certificates and instruments constituting Pledged Collateral of
the Pledgor. Prior to delivery to the Administrative Agent, all such
certificates and instruments constituting Pledged Collateral of the Pledgor
shall be held in trust by the 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 hereto.
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(b) Additional Securities. If the Pledgor shall receive by virtue of
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its 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 the Pledgor shall
receive such stock certificate, instrument, option, right or distribution
in trust for the benefit of the Administrative Agent, shall segregate it
from the 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 Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(c) Financing Statements. The 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 the Pledgor.
5. Representations and Warranties. The 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. The Pledgor has good and indefeasible title to the Pledged
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Collateral of the 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 the
Pledgor.
(c) Exercising of Rights. To the best of the 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 the Pledgor or any
of its property.
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(d) Pledgor's Authority. To the best of the 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 the Pledgor or for the granting
of the security interest by the 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.
6. Covenants. The Pledgor hereby covenants, that so long as any of 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, the Pledgor shall:
(a) Books and Records. Xxxx its books and records (and shall cause the
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issuer of the Pledged Shares of the Pledgor to xxxx 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 the 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 the Pledgor or any interest therein,
except as permitted under the Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its expense
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all 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 the 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 the 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 the
Pledgor.
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(d) Amendments. Not make or consent to any amendment or other
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modification or waiver with respect to any of the Pledged Collateral of the
Pledgor or enter into any agreement or allow to exist any restriction with
respect to any of the Pledged Collateral of the Pledgor other than pursuant
hereto or as may be permitted under the Credit Documents.
(e) Compliance with Securities Laws. File all reports and other
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information now or hereafter required to be filed by the 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 the Pledgor.
7. Advances by Lenders. On failure of the 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 Pledgor 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 the Pledgor, and no such advance or expenditure therefor,
shall relieve the Pledgor 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 xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such xxxx, 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 the
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
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Revolving 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 the 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.
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(b) Sale of Pledged Collateral. Upon the occurrence of an Event of
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Default 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.
The Pledgor agrees that, to the extent notice of sale shall be required by
law and has not been waived by the 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 the Pledgor, in accordance with the
notice provisions of Section 10.1 of the Revolving Credit Agreement at
least 10 days before the time of such sale. The Administrative Agent shall
not be obligated to make any sale of Pledged Collateral of the 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
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during the continuation thereof, the Pledgor recognizes 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. The 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. The 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.
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(d) Retention of Pledged Collateral. In addition to the rights and
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remedies 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
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or realization are insufficient to pay all amounts to which the
Administrative Agent or the Lenders are legally entitled, the Pledgor shall
be liable for the deficiency, together with interest thereon at the default
rate specified in Section 2.8(a) of the Revolving Credit Agreement for
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 Pledgor 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, the 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 the 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 the
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 the 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 the 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;
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(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 the Pledgor;
(vii) to sign and endorse any drafts, assignments, proxies, stock
powers, verifications, notices and other documents relating to the
Pledged Collateral of the 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 the 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 the
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 the 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 the 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.
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(b) Performance by the Administrative Agent of Pledgor's Obligations.
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If the 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
pursuant to Section 13 hereof.
(c) Assignment by the Administrative Agent. The Administrative Agent
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may 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 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
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of 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 Pledgor shall be responsible
for preservation of all rights in the Pledged Collateral of the 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 Pledgor. 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 the 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 the 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.
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(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, the 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 the 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
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) the 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 Pledgor agrees 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.
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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 Pledgor, 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 the 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 the Pledgor may not 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, the 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.
14
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.
-------------
(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, the Pledgor hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of such
courts. The 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 the Pledgor in any other
jurisdiction.
(b) The 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.
15
23. Entirety. This Pledge Agreement, the Existing 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 Pledgor 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 the
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. Intentionally Omitted.
---------------------
27. Effective Date. Notwithstanding anything in this Pledge Agreement to
--------------
the contrary, neither the pledges and grants of security interests pursuant to
Section 2 hereof, nor any of the covenants and other agreements contained
herein, shall become effective until the Collateral Effective Date; provided
--------
that on such Collateral Effective Date, such pledges, grants of security
interests, covenants and other agreements shall become effective immediately and
without any further action on the part of the parties hereto.
[remainder of page intentionally left blank]
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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/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Title: Exec. Vice President, General Counsel
------------------------------------------------
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /S/ Xxxxxxx X. XxXxxxxx
----------------------------------------
Name: Xxxxxxx X. XxXxxxxx
----------------------------------------
Title: Managing Director
----------------------------------------
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Schedule 2(a)
to
Pledge Agreement
dated as of July __, 2000
in favor of Bank of America, N.A.
as Administrative Agent
PLEDGED STOCK
-------------
PLEDGOR: Policy Management Systems Corporation
Number of Certificate Percentage
Name of Subsidiary Shares Number Ownership
------------------ ------ ------ ---------
Mynd International, Ltd. 35%
---------
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Exhibit 4(a)
-------------
to
Pledge Agreement
dated as of July __, 2000
in favor of Bank of America, N.A.
as Administrative Agent
Irrevocable Stock Power
----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
No. of Shares Certificate No.
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
_______________________________
By:____________________________
Name:__________________________
Title:_________________________
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