WCAS CAPITAL PARTNERS III, L.P.
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As of March 30, 2000
Politic Acquisition Corp.
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), between Policy Management Systems
Corporation, a South Carolina corporation (the "Company"), and Politic
Acquisition Corp., a South Carolina corporation ("Acquisition"). Capitalized
terms used and not otherwise defined herein have the meanings ascribed to them
in the Merger Agreement.
We agree that, at the Effective Time, subject to the satisfaction or
waiver (with our consent) of each of the conditions precedent set forth in
Sections 6.01 and 6.02 of the Merger Agreement, WCAS Capital Partners III, L.P.
("WCAS CP III") and certain affiliated investors (the "Investors") will purchase
for $175 million $175 million aggregate principal amount of subordinated notes
and 1,785,714 shares of common stock of the Surviving Corporation. A summary of
the terms of the subordinated notes are attached hereto as Exhibit A. The
proceeds of such financing will be used by Acquisition to consummate the Merger
and related transactions as set forth in the Merger Agreement and to provide
additional financing for the future working capital needs and general corporate
purpose of the Surviving Corporation and the Subsidiaries. The Inves-tors will
be under no obliga-tion under any circum-stances to purchase securities in an
amount greater than $175 million.
Notwithstanding anything that may be expressed or implied in this
letter agreement, the Company, by its acceptance of the benefits hereof,
covenants, agrees and acknowledges that, no Person other than WCAS CP III shall
have any obligation hereunder and that, notwithstanding that WCAS CP III and
certain of the other Investors are partnerships, no recourse hereunder or under
any documents or instruments delivered in connection herewith shall be had
against any current or future officer, agent or employee of WCAS CP III or of
any other Investor, against any current or future general or limited partner of
WCAS CP III or of any other Investor or against any current or future director,
officer, employee, general or limited partner, member, affiliate or assignee of
any of the foregoing, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of WCAS CP III or of any other
Investor or any current or future general or limited partner of WCAS CP III or
of any Investor or any current or future director, officer, employee, general or
limited partner, member, affiliate or assignee of any of the foregoing, as such
for any obligations of WCAS CP III or of any Investor under this letter
agreement or any documents or instruments delivered in connection herewith or
for any claim based on, in respect of or by reason of such obligations or their
creation.
Very truly yours,
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates LLC,
General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Managing Member
Exhibit A
SUMMARY OF TERMS OF SUBORDINATED DEBT FINANCING
Issuer: Policy Management Systems Corporation
Principal Amount: $175,000,000
Ranking: Subordinate in right of payment to all senior
obligations
Maturity: Earlier of eight years or six months after the
maturity of the Credit Facilities to be provided
by DLJ Capital Funding, Inc.
Optional Prepayment: Pre-payable by the Company at any time at par
Mandatory Prepayment: Change of Control
Interest Rate: 10% per annum
Form of Interest: Cash, payable in quarterly installments
Common shares: 1,785,714 shares
