UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION OMB Number: 3235-0145
Washington, D.C. 20549 Expires: October 31, 1994
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Policy Management Systems Corporation
(Name of Issuer)
Common Stock, $.01 par value per share
(Title of Class of Securities
731108 10 6
(CUSIP Number)
Stephen P. Reynolds, General Partner, General Atlantic Partners
125 East 56th Street, New York, New York 10022
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
April 26, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box __ .
Check the following box if a fee is being paid with the statement X.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
of less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 731108 10 6 Page 2 of 53 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GAP Coinvestment Partners
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) X
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,519,024
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH
10 SHARED DISPOSITIVE POWER
1,519,024
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,519,024
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5
14 TYPE OF REPORTING PERSON*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 731108 10 6 Page 3 of 53 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
General Atlantic Partners 14, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) X
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,519,024
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
10 SHARED DISPOSITIVE POWER
1,519,024
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,519,024
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5
14 TYPE OF REPORTING PERSON*
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 731108 10 6 Page 4 of 53 Pages
Item 1. Security and Issuer
The title of the class of equity securities of
Policy Management Systems Corporation, a South Carolina
corporation (the "Company"), to which this statement relates
is the Company's common stock, $.01 par value per share (the
"Common Stock"). The address of the principal executive
offices of the Company is One PMS Center, Blythewood, South
Carolina 29016.
Item 2. Identity and Background
This statement is being filed by a group, as
defined in Rule 13d-5 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended. The
members of the group are General Atlantic Partners 14, L.P.
("GAP 14") and GAP Coinvestment Partners ("GAP Coinvestment"
and, together with GAP 14, the "Reporting Persons"), both of
whom are located at 125 East 56th Street, New York, New York
10022. Both GAP 14 and GAP Coinvestment are engaged in
acquiring, holding and disposing of interests in various
companies for investment purposes. GAP 14 is a limited
partnership organized under the laws of the State of
Delaware. The general partner of GAP 14 is General Atlantic
Partners ("GAP"), a New York general partnership. The
general partners of GAP are Steven A. Denning, Edwin C.
Cohen, David C. Hodgson, Stephen P. Reynolds, J. Michael
Cline, William O. Grabe and William E. Ford (collectively,
the "GAP General Partners"). GAP Coinvestment is a general
partnership organized under the laws of the State of New
York. The partners of GAP Coinvestment who are authorized
and empowered to vote and dispose of the securities held by
GAP Coinvestment are the GAP General Partners.
Neither GAP 14 nor GAP Coinvestment have, during
the last five years, been convicted in a criminal proceeding
or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgement,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect
to such laws.
Item 3. Source and Amount of Funds or Other Considerations
This statement is being filed as a result of the
Reporting Persons entering into a Stock Purchase Agreement
(the "Agreement"), dated as of April 26, 1994, with
International Business Machines Corporation, a New York
corporation ("IBM" or "Seller"), whereby IBM has agreed to
sell and the Reporting Persons have agreed to purchase an
aggregate of 1,519,024 shares of the Common Stock in
<PAGE>
CUSIP No. 731108 10 6 Page 5 of 53 Pages
exchange for an aggregate of $37,626,224.48, to be paid on
the Closing Date (as described in Item 5 below) by wire
transfer of immediately available funds.
Item 4. Purpose of Transaction
The Reporting Persons have acquired the Common
Stock for investment purposes. From time to time the
Reporting Persons may acquire additional shares of Common
Stock of the issuer and/or under certain circumstances, the
Reporting Persons may dispose of some or all of the Common
Stock owned by them.
Pursuant to Section 3 of a Shareholders'
Agreement, dated as of April 26, 1994, among the Company and
the Reporting Persons, (the "Shareholders' Agreement"), the
Company has agreed to use its reasonable best efforts to
cause the Board of Directors (the "Board") of the Company to
promptly appoint a designee of the Reporting Persons to fill
a vacancy on the Board (which the Reporting Persons agree
shall be Steven A. Denning or another GAP General Partner
reasonably acceptable to the Company).
Item 5. Interest in Securities of the Issuer
(a) Subject to the conditions to the closing set
forth in Section 6 of the Agreement, the closing is to occur
on (x) the earlier to occur of (i) the 30th calendar day
following the expiration or termination of the waiting
periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), relating to the
filings of Notification and Report Forms (each an "HSR
Form") with respect to the Purchasers' purchases of
Purchased Stock, or (ii) June 30, 1994, or (y) such other
date not later than 90 days following the execution of the
Agreement as shall be agreed to in writing by the Purchasers
and Seller ("the Closing Date"). Subject to the
satisfaction or waiver of conditions set forth in Section 6
of the Agreement, the Purchasers shall have the right to
cause the Closing Date to be a date prior to the date
determined pursuant to the foregoing sentence by providing a
notice to Seller designating the Closing Date, which notice
shall be delivered at least three business days before the
date so designated.
Pursuant to the Agreement, the allocation of
the number of shares of Purchased Stock to be purchased by
GAP 14 and GAP Coinvestment has been initially proposed as
1,367,122 shares and 151,902 shares, respectively. However,
the Reporting Persons may reallocate the number of shares to
be purchased by each Reporting Person by delivering written
notice to IBM at any time prior to the fifth day preceding
the Closing Date, provided that under no circumstance may
<PAGE>
CUSIP No. 731108 10 6 Page 6 of 53 Pages
the Reporting Persons alter the aggregate number of shares
of Purchased Stock. By virtue of the fact that the general
partners of the general partner of GAP 14 (the GAP General
Partners) are also the general partners authorized and
empowered to vote and dispose of the securities held by GAP
Coinvestment, GAP 14 and GAP Coinvestment may be deemed to
share voting power and the power to direct the disposition
of the shares of the Common Stock which each partnership
owns of record. Accordingly, as of April 26, 1994, each of
GAP 14 and GAP Coinvestment may be deemed to own
beneficially an aggregate of 1,519,024 shares of the
Company's Common Stock, or 7.5% or the issued and
outstanding shares of Common Stock.
(b) Each of GAP 14 and GAP Coinvestment have the
shared power to direct the vote and the shared power to
direct the disposition of the 1,519,024 shares of Common
Stock that may be deemed to be beneficially owned by each of
them.
(c) Prior to April 26, 1994, neither GAP 14 nor
GAP Coinvestment owned beneficially and of record any shares
of the Company's Common Stock. However, Steven A. Denning,
the Managing General Partner of GAP, has held 4,000 shares
of the Company's Common Stock in his personal capacity since
April of 1993. Purchases made by the Reporting Persons
pursuant to the Agreement on the Closing Date will result in
the Reporting Persons owning shares that may be deemed to
constitute beneficial ownership of shares in excess of 5% of
the issued and outstanding shares of the Common Stock.
(d) No person other than those listed is known to
have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, any
securities owned by any member of the group.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to the Issuer
Pursuant to the Shareholders' Agreement with the
Company, the Reporting Persons have (a) granted to the
Company certain rights of first offer over the shares of
capital stock of the Company owned by the Reporting Persons;
(b) agreed to certain restrictions relating to (i) the
percentage of voting securities of the Company (the "Voting
Securities") that may be owned by the Reporting Persons,
(ii) participation by the Reporting Persons in any
solicitation of proxies with respect to the Company and
(iii) certain other actions with respect to the Company; and
(c) agreed to vote all Voting Securities owned by the
<PAGE>
CUSIP No. 731108 10 6 Page 7 of 53 Pages
Reporting Persons in the manner recommended by the Board.
The foregoing rights and restrictions are set forth in the
Shareholders' Agreement, which is included as Exhibit 1 to
this statement.
As partial consideration for the obligations of
the Reporting Persons under the Shareholders' Agreement, the
Company has agreed to use its reasonable best efforts to
cause the Board to promptly appoint a designee of the
Reporting Persons to fill a vacancy on the Board, as
described in Item 4 above. As further consideration for the
obligations of the Reporting Persons under the Shareholders'
Agreement, the Company has also agreed to provide certain
registration rights to the Reporting Persons pursuant to a
Registration Rights Agreement, dated as of April 26, 1994,
among the Reporting Persons and the Company, which
Registration Rights Agreement is included as Exhibit 2 to
this statement.
As noted in Item 2 and Item 5(a), the general
partners of the general partner of GAP 14 (the GAP General
Partners) are the partners authorized and empowered to vote
and dispose of the securities held by GAP Coinvestment.
Accordingly, the GAP General Partners may, from time to
time, consult among themselves and coordinate the voting and
disposition of the Company's Common Stock as well as such
other action taken on behalf of the Reporting Persons with
respect to the Company's Common Stock as they deem to be in
the collective interests of the Reporting Persons.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Shareholders Agreement, dated as of
April 26, 1994, among Policy
Management Systems Corporation,
General Atlantic Partners 14, L.P.
and GAP Coinvestment Partners.
Exhibit 2: Registration Rights Agreement,
dated as of April 26, 1994, among
Policy Management Systems
Corporation, General Atlantic 14,
L.P. and GAP Coinvestment Partners.
<PAGE>
CUSIP No. 731108 10 6 Page 8 of 53 Pages
Signature
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: May 6, 1994
GENERAL ATLANTIC PARTNERS 14, L.P.
By: General Atlantic Partners
Its: General Partner
By: /s/ Stephen P. Reynolds
Stephen P. Reynolds
General Partner
GAP COINVESTMENT PARTNERS
By: /s/ Stephen P. Reynolds
Stephen P. Reynolds
General Partner
<PAGE>
CUSIP No. 731108 10 6 Page 9 of 53 Pages
EXHIBIT INDEX
Number Document Page on which
Exhibit Appears
1 Shareholders Agreement, dated
as of April 26, 1994, among
Policy Management Systems
Corporation, General Atlantic
Partners 14, L.P. and GAP
Coinvestment Partners.
2 Registration Rights Agreement,
dated as of April 26, 1994,
among Policy Management
Systems Corporation, General
Atlantic 14, L.P. and GAP
Coinvestment Partners.
</TEXT
Page 10 of 53 Pages
___________________________________________________________
REGISTRATION RIGHTS AGREEMENT
among
POLICY MANAGEMENT SYSTEMS CORPORATION
GENERAL ATLANTIC PARTNERS 14, L.P.
and
GAP COINVESTMENT PARTNERS
__________________________
Dated as of April 26, 1994
__________________________
___________________________________________________________
<PAGE>
Page 11 of 53 Pages
TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . 12
2. Securities Subject to this Agreement . . . . . . . . 14
(a) Registrable Securities. . . . . . . . . . . . . 14
(b) Holders of Registrable Securities . . . . . . . 14
3. Demand Registration. . . . . . . . . . . . . . . . . 15
(a) Request for Demand Registration . . . . . . . . 15
(b) Effective Demand Registration . . . . . . . . . 16
(c) Expenses. . . . . . . . . . . . . . . . . . . . 16
(d) Underwriting Procedures . . . . . . . . . . . . 16
(e) Selection of Underwriters . . . . . . . . . . . 17
4. Piggy-Back Registration. . . . . . . . . . . . . . . 17
(a) Piggy-Back Rights . . . . . . . . . . . . . . . 17
(b) Expenses. . . . . . . . . . . . . . . . . . . . 18
5. Holdback Agreements. . . . . . . . . . . . . . . . . 18
(a) Restrictions on Public Sale by Holders. . . . . 18
(b) Restrictions on Public Sale by the Company. . . 18
6. Registration Procedures. . . . . . . . . . . . . . . 18
(a) Obligations of the Company. . . . . . . . . . . 18
(b) Seller Information. . . . . . . . . . . . . . . 22
(c) Notice to Discontinue . . . . . . . . . . . . . 22
7. Registration Expenses. . . . . . . . . . . . . . . . 22
8. Indemnification; Contribution. . . . . . . . . . . . 23
(a) Indemnification by the Company. . . . . . . . . 23
(b) Indemnification by Holders. . . . . . . . . . . 23
(c) Conduct of Indemnification Proceedings. . . . . 23
(d) Contribution. . . . . . . . . . . . . . . . . . 24
9. Rule 144 . . . . . . . . . . . . . . . . . . . . . . 25
10. Miscellaneous. . . . . . . . . . . . . . . . . . . . 25
(a) Recapitalizations, Exchanges, etc . . . . . . . 25
(b) Remedies. . . . . . . . . . . . . . . . . . . . 25
(c) Amendments and Waivers. . . . . . . . . . . . . 26
(d) Notices . . . . . . . . . . . . . . . . . . . . 26
(e) Successors and Assigns. . . . . . . . . . . . . 27
(f) Counterparts. . . . . . . . . . . . . . . . . . 27
(g) Governing Law . . . . . . . . . . . . . . . . . 27
(h) Headings. . . . . . . . . . . . . . . . . . . . 27
(i) Jurisdiction. . . . . . . . . . . . . . . . . . 28
(j) Severability. . . . . . . . . . . . . . . . . . 28
(k) Rules of Construction . . . . . . . . . . . . . 28
(l) Headings; References. . . . . . . . . . . . . . 28
(m) Entire Agreement. . . . . . . . . . . . . . . . 28
(n) Further Assurances. . . . . . . . . . . . . . . 28
(o) Effectiveness . . . . . . . . . . . . . . . . . 28
<PAGE>
Page 12 of 53 Pages
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 26,
1994, among POLICY MANAGEMENT SYSTEMS CORPORATION, a South
Carolina corporation (the "Company"), GENERAL ATLANTIC PARTNERS
14, L.P., a Delaware limited partnership ("GAP 14"), and GAP
COINVESTMENT PARTNERS, a New York general partnership ("GAP
Coinvestment").
Pursuant to a Stock Purchase Agreement, dated as of the
date hereof, among GAP 14, GAP Coinvestment and INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York corporation ("IBM")
(the "Stock Purchase Agreement"), GAP 14 and GAP Coinvestment
have agreed to purchase from IBM 1,519,024 shares of Common
Stock, par value $.01 per share, of the Company ("Common Stock,"
and such shares of Common Stock are referred to herein as the
"Purchased Common Stock").
In connection with the purchase of the Purchased Common
Stock by GAP 14 and GAP Coinvestment pursuant to the Stock
Purchase Agreement, each of them has entered into a Shareholders'
Agreement, dated as of the date hereof, among the Company, GAP 14
and GAP Coinvestment (the "Shareholders' Agreement"), pursuant to
which GAP 14 and GAP Coinvestment have granted to the Company
rights of first offer and certain other rights, in each case, to
the extent provided for therein.
In order to induce GAP 14 and GAP Coinvestment to enter
into the Shareholders' Agreement, the Company has agreed to
provide registration rights with respect to the Registrable
Securities (as hereinafter defined) as set forth in this
Agreement.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following
terms have the meanings indicated:
"Act" means the Securities Act of 1933, as
amended.
"Approved Underwriter" has the meaning assigned
such term in Section 3(e).
"Business Day" means any day other than a Satur-
day, Sunday or other day on which commercial banks in the City of
New York are authorized or required by law or executive order to
close.
<PAGE>
Page 13 of 53 Pages
"Common Stock" has the meaning assigned such term
in the second paragraph of this Agreement.
"Company" has the meaning assigned such term in
the first paragraph of this Agreement.
"Company Approved Amount" has the meaning assigned
such term in Section 4(a).
"Company Underwriter" has the meaning assigned
such term in Section 4(a).
"Demand Registration" has the meaning assigned
such term in Section 3(a).
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"GAP 14" has the meaning assigned such term in the
first paragraph of this Agreement.
"GAP Coinvestment" has the meaning assigned such
term in the first paragraph of this Agreement.
"Holder" has the meaning assigned such term in
Section 2(b).
"Holders' Counsel" means (a) with respect to any
Demand Registration that has been requested pursuant to
Section 3, counsel selected by the Initiating Holders holding a
majority of the Registrable Securities held by all Initiating
Holders being registered in such registration, and (b) with
respect to a request for registration of Registrable Securities
pursuant to Section 4, counsel selected by the Holders holding a
majority of the Registrable Securities being registered in such
registration.
"IBM" has the meaning assigned such term in the
second paragraph of this Agreement.
"Indemnified Party" has the meaning assigned such
term in Section 8(c).
"Indemnifying Party" has the meaning assigned such
term in Section 8(c).
"Initiating Holders" has the meaning assigned to
such term in Section 3(a).
"NASD" has the meaning assigned such term in
Section 6(a)(xv).
"Person" means any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or
<PAGE>
Page 14 of 53 Pages
political subdivision thereof) or other entity of any kind, and
shall include any successor (by merger or otherwise) of any such
entity.
"Purchased Common Stock" has the meaning assigned
such term in the second paragraph of this Agreement.
"Registrable Securities" means, subject to
Section 2(a), (i) any shares of Purchased Common Stock, and
(ii) any other shares of Common Stock of the Company acquired by
GAP 14 and/or GAP Coinvestment in a manner consistent with and
subject to the Shareholders' Agreement and (iii) any shares of
capital stock issued or issuable in respect of shares of
Purchased Common Stock or any other shares of Common Stock of the
Company acquired by GAP 14 and/or GAP Coinvestment in a manner
consistent with and subject to the Shareholders' Agreement by way
of a stock dividend or stock split or in connection with a com-
bination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.
"Registration Expenses" has the meaning assigned
such term in Section 7.
"SEC" means the Securities and Exchange
Commission.
"Shareholders' Agreement" has the meaning assigned
such term in the third paragraph of this Agreement.
"Stock Purchase Agreement" has the meaning
assigned such term in the second paragraph of this Agreement.
"Total Securities" has the meaning assigned such
term in Section 4(a).
2. Securities Subject to this Agreement.
(a) Registrable Securities. For the purposes of
this Agreement, Registrable Securities will cease to be Regis-
trable Securities (i) when a registration statement covering such
Registrable Securities has been declared effective under the Act
by the SEC and such Registrable Securities have been disposed of
pursuant to such effective registration statement or (ii) if such
Registrable Securities have been sold pursuant to Rule 144 or
otherwise in a transaction in which such shares may be resold in
a transaction exempt from the registration requirements of the
Act and the legend on the certificates representing such shares
has been or is permitted to be removed.
(b) Holders of Registrable Securities. A Person
is deemed to be a holder of Registrable Securities (a "Holder")
whenever such Person (i) is a party to this Agreement or a
permitted assign under the Shareholders' Agreement (other than a
Rule 144 purchaser) who agrees to be bound in writing by the
terms and provisions of this Agreement and the Shareholders'
<PAGE>
Page 15 of 53 Pages
Agreement and (ii) owns of record Registrable Securities. If the
Company receives conflicting instructions, notices or elections
from two or more persons with respect to the same Registrable
Securities, the Company shall act upon the basis of the
instructions, notice or election received from the registered
owner of such Registrable Securities.
3. Demand Registration.
(a) Request for Demand Registration. Subject to
Sections 3(b) and 3(d) hereof, the Holders holding at least a
majority of the Registrable Securities held by all of the Holders
(the "Initiating Holders") may request one registration (the
"Demand Registration") of Registrable Securities under the Act
and under the securities or blue sky laws of any United States
jurisdiction designated by the Holders that request to register
Registrable Securities in such registration. Notwithstanding the
foregoing, the Company shall not be required to effect the Demand
Registration (i) within the period beginning forty five (45) days
before the estimated filing date of a registration statement
filed by the Company on its own behalf covering a firm commitment
underwritten public offering and ending on the later of (A) one
hundred and twenty (120) days after the effective date of such
registration statement and (B) the expiration of any lock-up
period reasonably required by the underwriters, if any, in
connection therewith; (ii) if such registration is for the lesser
of 350,000 shares of Common Stock (appropriately adjusted for
stock dividends, stock splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof)
or 25% of the total number of shares of Registrable Securities
owned by the Holders; (iii) if, in the written opinion of counsel
to the Company, the shares to be registered may be resold in a
transaction exempt from the Registration requirements of the Act,
or a no-action letter of the staff of the SEC has been obtained
to that effect, and the shares are freed from any and all
restrictions on transfer under the Shareholders' Agreement;
(iv) for a maximum of sixty (60) days if the Company is
contemplating a material plan of financing or would be required
to disclose information that it deems advisable not to disclose
in a registration statement; (v) for a maximum of sixty (60) days
if the Company cannot then comply with the financial disclosure
requirements of the SEC in connection with such registration;
provided that (recognizing that the Company is not on the date
hereof in compliance with the SEC's financial reporting
requirements) no Demand Registration will be initiated until
three years of financial statements meeting such requirements
have been filed with the SEC and the Company is otherwise in
compliance with applicable SEC requirements. Any request for the
Demand Registration by the Initiating Holders shall specify the
amount of the Registrable Securities proposed to be sold, the
intended method of disposition thereof and whether the request is
for registration on Form S-3 (or any successor form thereto).
Upon a request for the Demand Registration, the Company shall
promptly take such steps as are reasonably necessary or
appropriate to prepare for the registration of the Registrable
<PAGE>
Page 16 of 53 Pages
Securities to be registered. Within fifteen (15) days after the
receipt of such request, the Company shall give written notice
thereof to all other Holders and include in such registration all
Registrable Securities held by a Holder from whom the Company has
received a written request for inclusion therein at least ten
(10) days prior to the filing of the registration statement.
Each such request will also specify the number of Registrable
Securities to be registered, the intended method of disposition
thereof and whether the request is for registration on Form S-3
(or any successor form thereto). Unless the Initiating Holders
holding the majority of the Registrable Securities held by all
Initiating Holders to be included in the Demand Registration
consent in writing, no other party (other than the Company or any
other Holder), shall be permitted to offer securities under the
Demand Registration. If the Company notifies the Initiating
Holders that it intends to offer securities under the Demand
Registration, the Demand Registration shall be deemed to be a
Company-initiated registration statement with the Holders
participating pursuant to their "piggy-back" rights under Section
4 hereof, and the right of the Holders to make a Demand
Registration shall be restored.
(b) Effective Demand Registration. A registra-
tion shall not constitute the Demand Registration until it has
become effective and remains continuously effective for not less
than one hundred and twenty (120) days or until the shares
registered therein have been sold, whichever is earlier. If a
requested Demand Registration does not constitute the Demand
Registration, the Holders shall continue to be entitled to
request one Demand Registration under Section 3(a) hereof. The
Company shall use its reasonable best efforts to cause the Demand
Registration to become effective not later than ninety (90) days
after it receives a request for the Demand Registration under
Section 3(a).
(c) Expenses. In any registration initiated as a
Demand Registration, the Company shall pay all reasonable
Registration Expenses in connection therewith, whether or not
such requested Demand Registration becomes effective; provided,
however, that, if a registration initiated as a Demand
Registration does not become effective or remain effective for
one hundred and twenty (120) days as provided in Section 3(b)
above for reasons beyond the Company's control and the Company
pays such Registration Expenses, the Holders of Registrable
Securities included in any subsequent registration shall be
required to pay all Registration Expenses for the next Demand
Registration.
(d) Underwriting Procedures. If the Initiating
Holders holding a majority of the Registrable Securities held by
all Initiating Holders so elect, the offering of such Registrable
Securities pursuant to the Demand Registration shall be in the
form of a firm commitment underwritten offering and the managing
underwriter or underwriters selected for such offering shall be
the Approved Underwriter selected in accordance with Sec-
<PAGE>
Page 17 of 53 Pages
tion 3(e). In such event, if the Approved Underwriter advises
the Company in writing that, in its opinion, the aggregate amount
of such Registrable Securities requested to be included in such
offering is sufficiently large to have a material adverse effect
on the success of such offering, then (i) the Company shall
include in the registration only the aggregate amount of the
Registrable Securities that in the opinion of the Approved
Underwriter may be sold without any such effect on the success of
such offering and (ii) no Registrable Securities other than those
owned by the Initiating Holders shall be included in such
registration without the written consent of the Initiating
Holders and any further reduction in the shares to be included in
such registration shall be made pro rata among the participating
Holders in proportion to the number of shares they own as of such
date.
(e) Selection of Underwriters. If the Demand
Registration is in the form of an underwritten offering, the
Initiating Holders holding a majority of the Registrable
Securities held by all Initiating Holders to be included in the
Demand Registration shall select and obtain an investment banking
firm of national reputation to act as the managing underwriter of
the offering (the "Approved Underwriter"); provided, that, the
Approved Underwriter shall, in any case, be acceptable to the
Company in its reasonable judgment and shall undertake to comply
with Section 2.1(h) of the Shareholders' Agreement.
4. Piggy-Back Registration.
(a) Piggy-Back Rights. If the Company proposes
to file a registration statement under the Act with respect to an
offering by the Company for its own account of any class of
security (other than a registration statement on Form S-4 or S-8
(or any successor form thereto) under the Act), then the Company
shall give written notice of such proposed filing to each of the
Holders at least thirty (30) days before the anticipated filing
date, and such notice shall describe in detail the proposed
registration and distribution (including those jurisdictions
where registration under the securities or blue sky laws is
intended) and offer such Holders the opportunity to register the
number of Registrable Securities as each such Holder may request.
The Company shall use its reasonable best efforts to cause the
managing underwriter or underwriters of an underwritten offering
proposed by the Company (the "Company Underwriter") to permit the
Holders who have requested to participate in the registration for
such offering to include such Registrable Securities in such
offering and, if the Company proposes to register Common Stock or
any other securities of which the Registrable Securities are then
comprised, such Registrable Securities shall be included in such
offering on the same terms and conditions as the securities of
the Company included therein. The Company Underwriter shall
undertake to comply with the requirements of Section 2.1(h) of
the Shareholders' Agreement. Notwithstanding the foregoing, if
the Company Underwriter delivers a written opinion to the Company
(with a copy provided to the Holders of Registrable Securities)
<PAGE>
Page 18 of 53 Pages
that the total amount of securities which such Holders and the
Company intend to include in such offering (the "Total
Securities") is sufficiently large so as to have a material
adverse effect on the Company's offering, then the Company shall
include in such registration the securities proposed to be
offered for the account of the Company and, to the extent
reasonably feasible, the Registrable Securities requested to be
included in such registration (any such Registrable Securities to
be registered for the accounts of the Holders are hereinafter
referred to as the "Company Approved Amount"). Each Holder shall
be entitled to have included in such registration Registrable
Securities equal to its pro rata portion of the Company Approved
Amount, as based on the amounts of Registrable Securities sought
to be registered by the Holders in their requests for participa-
tion in such registration.
(b) Expenses. The Company shall bear all
reasonable Registration Expenses in connection with any
registration pursuant to this Section 4.
5. Holdback Agreements.
(a) Restrictions on Public Sale by Holders. In
order to participate in a registration effected hereby, to the
extent not inconsistent with applicable law, each Holder agrees
not to effect any public sale or distribution of any securities
of the Company, including a sale pursuant to Rule 144 under the
Act, during the period commencing with the notice of the proposed
registration until one hundred and twenty (120) days after the
effective date of such registration statement (except as part of
such registration), if and to the extent requested by the Company
in the case of a non-underwritten public offering, or if and to
the extent requested by the Company Underwriter or the Approved
Underwriter in the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company.
The Company agrees not to effect any public sale or distribution
of any of its securities for its own account (except pursuant to
registrations on Form S-4 or S-8 (or any successor form thereto)
under the Act) during the ninety (90) day period commencing on
the effective date of any registration statement in which the
Holders are participating.
6. Registration Procedures.
(a) Obligations of the Company. Whenever regis-
tration of Registrable Securities has been requested pursuant to
Section 3 or 4 of this Agreement, the Company shall use its
reasonable best efforts to effect the registration and sale of
such Registrable Securities in accordance with the intended
method of distribution thereof as quickly as practicable, and in
connection with any such request, the Company shall, as
expeditiously as possible:
<PAGE>
Page 19 of 53 Pages
(i) prepare and file with the SEC (in any
event not later than sixty (60) Business Days after receipt of a
request to file a registration statement with respect to
Registrable Securities) a registration statement on Form S-3 or a
successor, or if the Company does not qualify for registration on
such form, then on any form on which registration is requested
for which the Company then qualifies, which counsel for the
Company and Holders' Counsel shall deem appropriate and which
shall be available for the sale of such Registrable Securities in
accordance with the intended method of distribution thereof, and
use its reasonable best efforts to cause such registration
statement to become effective; provided, however, that before
filing a registration statement or prospectus or any amendments
or supplements thereto, the Company shall (A) provide Holders'
Counsel with an adequate and appropriate opportunity to
participate in the preparation of such registration statement and
each prospectus included therein (and each amendment or supple-
ment thereto) to be filed with the SEC, which documents shall be
subject to the review (but not right of clearance) of Holders'
Counsel, and (B) notify Holders' Counsel and each seller of
Registrable Securities pursuant to such registration statement of
any stop order issued or to the Company's knowledge threatened by
the SEC and take all reasonable action required to prevent the
entry of such stop order or to remove it if entered;
(ii) prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not
less than six (6) months or such shorter period which will
terminate when all Registrable Securities covered by such
registration statement have been sold (but not before the expira-
tion of the ninety (90) day period referred to in Section 4(3) of
the Act and Rule 174 thereunder, if applicable), and comply with
the provisions of the Act with respect to the disposition of all
Registrable Securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
(iii) as soon as reasonably possible and
subject to a reasonably appropriate confidentiality agreement,
furnish to each seller of Registrable Securities, prior to filing
a registration statement, copies of such registration statement
as it is proposed to be filed, and thereafter such number of
copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as each
such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(iv) use its reasonable best efforts to
register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions within the
<PAGE>
Page 20 of 53 Pages
United States as any seller of Registrable Securities may
request, and to continue such qualification in effect in each
such jurisdiction for as long as is permissible pursuant to the
laws of such jurisdiction, or for as long as any such seller
requests or until all of such Registrable Securities are sold,
whichever is shortest, and do any and all other acts and things
which may be reasonably necessary or advisable to enable any such
seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided, however,
that the Company shall not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 6(a)(iv), (B) subject
itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction;
(v) use its reasonable best efforts to
obtain all other approvals, covenants, exemptions or
authorizations from such governmental agencies or authorities as
may be reasonably necessary to enable the sellers of such Regis-
trable Securities to consummate the disposition of such Regis-
trable Securities;
(vi) notify each seller of Registrable
Securities at any time when a prospectus relating thereto is
required to be delivered under the Act, upon discovery that, or
upon the happening of any event as a result of which, the
prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circum-
stances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and
furnish to each such seller a reasonable number of copies of a
supplement to or amendment of such prospectus as may be necessary
so that, after delivery to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were
made;
(vii) enter into and perform customary
agreements (including an underwriting agreement in customary form
with the Approved Underwriter or Company Underwriter, if any,
selected as provided in Section 3 or 4) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities;
(viii) subject to a reasonably appropriate
confidentiality agreement and solely for the purpose of meeting
their legally required due diligence obligations, make available
for inspection by the managing underwriter participating in any
disposition pursuant to such registration statement, Holders'
Counsel and any attorney retained by the managing underwriter,
each of which shall be reasonably acceptable to the Company, such
<PAGE>
Page 21 of 53 Pages
information as shall be reasonably necessary to enable them to
exercise their due diligence responsibility in connection with
such registration statement;
(ix) obtain a "cold comfort" letter from
the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by
"cold comfort" letters, as Holders' Counsel or the managing
underwriter reasonably request;
(x) furnish, at the request of any seller
of Registrable Securities on the date such securities are
delivered to the underwriters for sale pursuant to such regis-
tration or, if such securities are not being sold through under-
writers, on the date the registration statement with respect to
such securities becomes effective, an opinion, dated such date,
of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the
seller making such request, covering such legal matters with
respect to the registration in respect of which such opinion is
being given as such seller may reasonably request and as are
customarily included in such opinions;
(xi) otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of
the SEC, and make available to its security holders, as soon as
reasonably practicable but no later than fifteen (15) months
after the effective date of the registration statement, an earn-
ings statement covering a period of twelve (12) months beginning
after the effective date of the registration statement, in a
manner which satisfies the provisions of Section 11(a) of the
Act;
(xii) cause all such Registrable Securities
to be listed on each securities exchange on which similar securi-
ties issued by the Company are then listed, subject to the satis-
faction of the applicable listing requirements of each such
exchange;
(xiii) keep each seller of Registrable
Securities advised as to the initiation and progress of any
registration under Section 3 or 4 hereunder;
(xiv) provide officers' certificates and
other customary closing documents;
(xv) cooperate with each seller of
Registrable Securities and each underwriter participating in the
disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the
"NASD"); and
<PAGE>
Page 22 of 53 Pages
(xvi) use its reasonable best efforts to
take all other steps reasonably necessary to effect the
registration of the Registrable Securities contemplated hereby.
(b) Seller Information. As a condition to
participation in any registration statement filed hereunder, the
Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the
Company in writing such information regarding the sellers and the
distribution of such securities as the Company may from time to
time reasonably request or as may reasonably be required by the
Approved Underwriter or the Company Underwriter as the case may
be, the SEC or applicable requirements of the Act or the Exchange
Act.
(c) Notice to Discontinue. Each Holder agrees
that, upon receipt of any notice from the Company of the happen-
ing of any event of the kind described in Section 6(a)(vi), such
Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Sec-
tion 6(a)(vi) and, if so directed by the Company, such Holder
shall deliver to the Company (at the Company's expense) by
certified or registered mail or overnight courier all copies,
other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securi-
ties which is current at the time of receipt of such notice. If
the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be
maintained effective pursuant to this Agreement (including,
without limitation, the period referred to in Section 6(a)(ii))
by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 6(a)(vi) to
and including the date when the Holder shall have received the
copies of the supplemented or amended prospectus contemplated by
and meeting the requirements of Section 6(a)(vi).
7. Registration Expenses. The Company shall pay all
reasonable out-of-pocket expenses (other than underwriting
discounts and commissions and the fees and charges of Holders'
Counsel) arising from or incident to the performance of, or
compliance with, this Agreement, including, without limitation,
(a) SEC, stock exchange and NASD registration and filing fees,
(b) all fees and expenses incurred in complying with securities
or blue sky laws (including, without limitation, reasonable fees,
charges and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (c) all printing,
messenger and delivery expenses, and (d) the fees, charges and
disbursements of counsel to the Company and of its independent
public accountants and any other accounting and legal fees,
charges and expenses incurred by the Company (including, without
limitation, any expenses arising from any special audits incident
to or required by any registration or qualification). All of the
<PAGE>
Page 23 of 53 Pages
expenses described in this Section 7 are referred to in this
Agreement as "Registration Expenses."
8. Indemnification; Contribution.
(a) Indemnification by the Company. In
connection with any registration pursuant to Section 3 or 4
hereof, the Company agrees to indemnify and hold harmless each
Holder, its directors, officers, partners, employees, advisors
and agents, and each Person who controls (within the meaning of
the Act or the Exchange Act) such Holder, to the extent permitted
by law, from and against any and all losses, claims, damages,
expenses (including, without limitation, reasonable costs of
investigation and fees, disbursements and other charges of
counsel) or other liabilities resulting from or arising out of or
based upon any untrue, or alleged untrue, statement of a material
fact contained in any registration statement, prospectus or
preliminary prospectus or notification or offering circular (as
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or arising out of or based
upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to
the Company by such Holder expressly for use therein. The
Company shall also indemnify any underwriters of the Registrable
Securities, their officers, directors and employees, and each
Person who controls any such underwriter (within the meaning of
the Act and the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Holders of
Registrable Securities.
(b) Indemnification by Holders. In connection
with any registration in which a Holder is participating pursuant
to Section 3 or 4 hereof, each such Holder shall furnish to the
Company in writing such information with respect to such Holder
as the Company may reasonably request or as may be required by
law for use in connection with any registration statement or
prospectus to be used in connection with such registration and
each Holder agrees to indemnify and hold harmless the Company,
any underwriter retained by the Company and their respective
directors, officers, employees, advisors and agents and each
Person who controls (within the meaning of the Act and the
Exchange Act) the Company or such underwriter to the same extent
as the foregoing indemnity from the Company to the Holders
(subject to the proviso to this sentence and applicable law), but
only with respect to any such information furnished in writing by
such Holder expressly for use therein; provided, however, that
the liability of any Holder under this Section 8(b) shall be
limited to the amount of the net proceeds received by such Holder
in the offering giving rise to such liability.
(c) Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder (the "Indemnified
Party") agrees to give prompt written notice to the indemnifying
<PAGE>
Page 24 of 53 Pages
party (the "Indemnifying Party") after the receipt by the
Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof
made in writing for which the Indemnified Party intends to claim
indemnification or contribution pursuant to this Agreement;
provided, that, the failure so to notify the Indemnifying Party
shall not relieve the Indemnifying Party of any liability that it
may have to the Indemnified Party hereunder. The Indemnifying
Party shall be entitled to participate in and, to the extent it
may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall
be paid by the Indemnified Party unless (i) the Indemnifying
Party agrees to pay the same, (ii) the Indemnifying Party fails
to assume the defense of such action with counsel reasonably
satisfactory to the Indemnified Party in its reasonable judgment,
(iii) the named parties to any such action (including any
impleaded parties) have been advised by such counsel that either
(A) representation of such Indemnified Party and the Indemnifying
Party by the same counsel would be inappropriate under applicable
standards of professional conduct or (B) there may be one or more
legal defenses available to it which are different from or addi-
tional to those available to the Indemnifying Party. In either
of such cases the Indemnifying Party shall not have the right to
assume the defense of such action on behalf of such Indemnified
Party. No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not
be unreasonably withheld. The rights accorded to any Indemnified
Party hereunder shall be in addition to any rights that such
Indemnified Party may have at common law, by separate agreement
or otherwise.
(d) Contribution. If the indemnification
provided for in Section 8(a) and/or from the Indemnifying Party
is unavailable to an Indemnified Party in respect of any losses,
claims, damages, expenses or other liabilities referred to
therein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses,
claims, damages, expenses or other liabilities in such proportion
as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the
actions which resulted in such losses, claims, damages, expenses
or other liabilities, as well as any other relevant equitable
considerations. The relative faults of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, was made by, or
relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the Indemnifying Party's and Indemnified
Party's relative intent, knowledge, access to information and
<PAGE>
Page 25 of 53 Pages
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages,
expenses or other liabilities referred to above shall be deemed
to include, subject to the limitations set forth in
Sections 8(a), 8(b) and 8(c), any legal or other fees, charges or
expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable con-
siderations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution pursuant to this Section 8(d).
9. Rule 144. The Holders acknowledge that the
Company is not as of the date hereof in compliance with its
reporting requirements under the Exchange Act and rules and
regulations adopted by the SEC thereunder. After the Company has
come into compliance with such reporting requirements, the
Company covenants that it shall from that date forward use its
reasonable best efforts to file any reports required to be filed
by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and that it shall take such
further action as each Holder may reasonably request (including,
but not limited to, providing any information necessary to comply
with Rules 144 and 144A under the Act), all to the extent
required from time to time to enable such Holder to sell
Registrable Securities without registration under the Act within
the limitation of the exemptions provided by (a) Rule 144 or
Rule 144A under the Act, as such rules may be amended from time
to time, or (b) any similar rules or regulations hereafter
adopted by the SEC. The Company shall, upon the request of any
Holder, deliver to such Holder a written statement as to whether
the Company has complied with such requirements.
10. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The
provisions of this Agreement shall apply to any and all shares of
capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for or
in substitution of, the Purchased Common Stock of any other
shares of Common Stock of the Company acquired by GAP 14 and/or
GAP Coinvestment that are acquired in a manner consistent with
and subject to the Shareholders' Agreement and that are not
freely tradeable, and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof.
(b) Remedies. The Company and the Holders, in
addition to being entitled to exercise all rights granted by law,
<PAGE>
Page 26 of 53 Pages
including recovery of damages, shall be entitled to specific
performance of their rights under this Agreement.
(c) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions of such section may not be given
unless the Company has obtained the prior written consent of
Holders holding at least a majority of the Registrable
Securities.
(d) Notices. All notices and other communi-
cations hereunder shall be in writing and shall be deemed given
if telecopied or delivered personally or mailed by registered or
certified mail (return receipt requested) to the following
address (or at such other address as shall be specified by like
notice; provided, that notice of a change of address shall be
effective only upon receipt thereof):
(i) if to GAP 14 or GAP Coinvestment:
c/o GAP 14 Service Corporation
125 East 56th Street
New York, New York 10022
Attention: Steven A. Denning
Telephone: (212) 888-9191
Facsimile: (212) 644-8339
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Matthew Nimetz, Esq.
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
(ii) if to the Company (two copies):
Policy Management Systems Corporation
One PMS Center
Blythewood, South Carolina 29016
Attention: President; General Counsel
Telephone: 803-735-4000
Facsimile: 803-735-5500
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Robert C. Myers, Esq.
Telephone: 212-259-8000
Facsimile: 212-259-6000
<PAGE>
Page 27 of 53 Pages
(iii) if to any other Holder, at its
address as it appears on the
transfer books of the Company
Any notice given by telecopier or delivered personally
shall be deemed to have been received by the recipient thereof on
the day delivered if actually received during normal business
hours on a Business Day; otherwise, such notice shall be deemed
received on the next following Business Day if actually received
on such day. All other notices in accordance herewith shall be
effective on the day actually received by the Company. Any party
hereto may, by notice to the other parties hereto, change its
address for receipt of notices hereunder.
Each Holder hereby designates General Atlantic Service
Corporation ("GASC") as its representative to receive any notice
hereunder and to communicate with the Company on its behalf. The
Company hereby acknowledges the designation of GASC as the
representative of each Holder for purposes of this Section 10(e).
Any notice given by the Company to GASC shall be deemed given to
the Party to whom it is addressed, and any notice given to the
Company by GASC on behalf of any Holder shall have the same
effect as if given to the Company by such Party.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. The registration rights
and the other obligations of the Company contained in this
Agreement shall, with respect to any Registrable Security, be
automatically transferred from a Holder to any subsequent holder
of such Registrable Security (including any pledgee), who or
which consents in writing to the terms and provisions of this
Agreement and the Shareholders' Agreement. If the Company
receives conflicting instructions, notices or elections from two
or more persons with respect to the same Registrable Securities,
the Company shall act upon the basis of the instructions, notice
or election received from the registered owner of such
Registrable Securities.
(f) Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed to be an original, but all of which taken together
shall constitute one and the same instrument.
(g) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be
performed entirely within such State, without regard to the
principles of conflicts of law of such State.
(h) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
<PAGE>
Page 28 of 53 Pages
(i) Jurisdiction. Each party to this Agreement
hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement or any agreements or
transactions contemplated hereby may be brought in the courts of
the State of New York or of the United States of America for the
Southern District of New York and hereby expressly submits to the
personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any
claim that such courts are an inconvenient forum.
(j) Severability. If any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability
of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being
intended that all of the rights and privileges of the Company and
the Holders shall be enforceable to the fullest extent permitted
by law.
(k) Rules of Construction. Unless the context
otherwise requires, "or" is not exclusive, and references to
sections or subsections refer to sections or subsections of this
Agreement.
(l) Headings; References. The headings appearing
in this Agreement are for convenience of reference only and shall
not affect the interpretation of this Agreement. Except as
otherwise indicated herein, all references herein to Sections
refer to the Sections contained in this Agreement.
(m) Entire Agreement. This Agreement embodies
the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no
restrictions, promises, warranties, covenants or understanding,
other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(n) Further Assurances. Each of the parties
shall execute such documents and perform such further acts as may
be reasonably required or desirable to carry out or to perform
the provisions of this Agreement.
(o) Effectiveness. This Agreement shall be
effective upon the purchase of the Purchased Common Stock by
GAP 14 and GAP Coinvestment pursuant to the Stock Purchase
Agreement, and if such purchase does not occur or on before
September 30, 1994, this Agreement shall terminate and be of no
force or effect.
<PAGE>
Page 29 of 53 Pages
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as of the date first above written.
POLICY MANAGEMENT SYSTEMS CORPORATION
By:
G. Larry Wilson
Chairman, President and Chief
Executive Officer
GENERAL ATLANTIC PARTNERS 14, L.P.
By: GENERAL ATLANTIC PARTNERS
Its General Partner
By:
Steven A. Denning
Managing General Partner
GAP COINVESTMENT PARTNERS
By:
Steven A. Denning
Managing Partner
</TEXT
Page 30 of 53 Pages
_______________________________________________________
SHAREHOLDERS' AGREEMENT
among
POLICY MANAGEMENT SYSTEMS CORPORATION,
GENERAL ATLANTIC PARTNERS 14, L.P.
and
GAP COINVESTMENT PARTNERS
__________________________
Dated as of April 26, 1994
__________________________
_______________________________________________________
<PAGE>
Page 31 of 53 Pages
TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 32
2. Transfers of Capital Stock . . . . . . . . . . . . . . . . . . 35
2.1 Right of First Offer . . . . . . . . . . . . . . . . . . 35
2.2 Right of First Offer in Respect of Proposed
Transactions Under Rule 144. . . . . . . . . . . . . . . 38
3. Board of Directors . . . . . . . . . . . . . . . . . . . . . . 40
3.1 General Atlantic Board Representative. . . . . . . . . . 40
4. Voting and Stand-still Agreement . . . . . . . . . . . . . . . 41
4.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.2 Restrictions on Certain Actions by GAP 14 and
GAP Coinvestment.. . . . . . . . . . . . . . . . . . . . 41
4.3 Stop Transfer Instructions . . . . . . . . . . . . . . . 44
4.4 Voting . . . . . . . . . . . . . . . . . . . . . . . . . 44
5. Representations and Warranties . . . . . . . . . . . . . . . . 45
5.1 Representations and Warranties of GAP 14 and
GAP Coinvestment . . . . . . . . . . . . . . . . . . . . 45
5.2 Representations and Warranties of the
Company. . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3 Indemnification. . . . . . . . . . . . . . . . . . . . . 48
6. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Duration . . . . . . . . . . . . . . . . . . . . . . . . 49
6.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.3 Successors and Assigns.. . . . . . . . . . . . . . . . . 49
6.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 50
6.5 Severability.. . . . . . . . . . . . . . . . . . . . . . 51
6.6 Counterparts.. . . . . . . . . . . . . . . . . . . . . . 51
6.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . 51
6.8 Amendments and Waivers.. . . . . . . . . . . . . . . . . 52
6.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . 52
6.10 Rules of Construction. . . . . . . . . . . . . . . . . . 52
6.11 Headings; References.. . . . . . . . . . . . . . . . . . 52
6.12 Further Assurances.. . . . . . . . . . . . . . . . . . . 52
6.13 Effectiveness. . . . . . . . . . . . . . . . . . . . . . 52
<PAGE>
Page 32 of 53 Pages
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT, dated as of April 26,
1994, by and among POLICY MANAGEMENT SYSTEMS CORPORATION, a
South Carolina corporation (the "Company"), GENERAL
ATLANTIC PARTNERS 14, L.P., a Delaware limited partnership
("GAP 14"), and GAP COINVESTMENT PARTNERS, a New York
general partnership ("GAP Coinvestment").
Pursuant to a Stock Purchase Agreement, dated as
of the date hereof, among GAP 14, GAP Coinvestment and
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York
corporation ("IBM") (the "Stock Purchase Agreement"), GAP 14
and GAP Coinvestment have agreed to purchase in the
aggregate 1,519,024 shares of common stock, par value $.01
per share, of the Company ("Common Stock," and such
1,519,024 shares of Common Stock are referred to herein as
the "Purchased Common Stock") from IBM. Simultaneously with
or prior to such purchase, the Company acquired an
additional 2,278,537 shares of Common Stock from IBM.
As more fully provided for herein, GAP 14 and GAP
Coinvestment have granted to the Company certain rights of
first offer over the shares of capital stock of the Company
owned by GAP 14 and GAP Coinvestment and their affiliates
and associates and certain stand-still rights. As partial
consideration for the rights granted to the Company
hereunder, GAP 14 and GAP Coinvestment have been granted the
right to designate a director of the Company and certain
other rights, in each case as more fully provided for
herein.
As further consideration for the obligations of
GAP 14 and GAP Coinvestment hereunder, the Company has
agreed to provide registration rights to GAP 14 and GAP
Coinvestment, as provided for in the Registration Rights
Agreement, dated as of date hereof, among GAP 14, GAP
Coinvestment and the Company (the "Registration Rights
Agreement").
For good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Definitions. As used herein, the following
terms shall have the meanings set forth below:
An "affiliate" of a Shareholder means any
individual, partnership, corporation, group, trust or other
entity that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under
common control with, such Shareholder. The affiliates of
GAP 14 shall include, without limitation, (i) any general or
limited partner of GAP 14, (ii) any current or former
<PAGE>
Page 33 of 53 Pages
partner, controlling person, shareholder, director, officer
or employee of such partner and (iii) any partnership,
corporation, group or trust that directly or indirectly
controls, or is controlled by, or is under common control
with, a general or limited partner of GAP 14. The parties
agree and acknowledge that GAP Coinvestment is an affiliate
of GAP 14 and that the partners of GAP Coinvestment are
affiliates of GAP Coinvestment.
An "associate" has the meaning assigned such term
in Rule 12b-2 under the Exchange Act.
"Beneficial owner" (including correlative forms of
such term such as "beneficially own," "beneficial ownership"
and "beneficially owned") has the meaning assigned such term
in Rule 13d-3 under the Exchange Act.
"Board" has the meaning assigned such term in
Section 3.1 of this Agreement.
"Business Day" means any day other than a Satur-
day, Sunday or other day on which commercial banks in the
City of New York are authorized or required by law or execu-
tive order to close.
"Common Stock" has the meaning assigned such term
in the second paragraph of this Agreement.
"Company" has the meaning assigned such term in
the first paragraph of this Agreement.
"Company Acceptance" has the meaning assigned such
term in Section 2.2(b) of this Agreement.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"IBM" has the meaning assigned such term in the
second paragraph of this Agreement.
"GAP 14" has the meaning assigned such term in the
first paragraph of this Agreement.
"GAP" has the meaning assigned such term in the
first paragraph of this Agreement.
"GASC" has the meaning assigned such term in
Section 6.4(c) of this Agreement.
"Offered Shares" has the meaning assigned such
term in Section 2.1(a) of this Agreement.
<PAGE>
Page 34 of 53 Pages
"Person" means any individual, corporation,
limited liability company, partnership, association, trust
or other entity or organization.
"Purchased Common Stock" has the meaning assigned
such term in the second paragraph of this Agreement, and
shall include any shares of capital stock of the Company or
any successor or assign thereof (whether by merger,
consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for or in substitution of
shares of Purchased Common Stock and shall be appropriately
adjusted for any stock splits, reverse stock splits, combi-
nations, recapitalizations and the like occurring after the
date hereof.
"Registration Rights Agreement" has the meaning
assigned such term in the fourth paragraph of this
Agreement.
"Rule 144 Price" has the meaning assigned such
term in Section 2.2(b) of this Agreement.
"Rule 144 Offered Shares" has the meaning assigned
such term in Section 2.2(a) of this Agreement.
"Rule 144 Shareholder" has the meaning assigned
such term in Section 2.2(a) of this Agreement.
"Rule 144 Shareholder Offer" has the meaning
assigned such term in Section 2.2(a) of this Agreement.
"Securities Act" means the Securities Act of 1933,
as amended.
"Selling Shareholder" has the meaning assigned
such term in Section 2.1(a) of this Agreement.
"Selling Shareholder Offer" has the meaning
assigned such term in Section 2.1(a) of this Agreement.
"Shareholder" means GAP 14, GAP Coinvestment and
their respective successors and permitted assigns, to the
extent provided for in Section 6.3 hereof.
"Stock Purchase Agreement" has the meaning
assigned such term in the second paragraph of this
Agreement.
"Successor" means any corporation or other entity
succeeding to the Company, the majority of the voting shares
or other voting interests of which are at the time of such
<PAGE>
Page 35 of 53 Pages
succession beneficially owned by the shareholders of the
Company.
"Term" has the meaning assigned such term in
Section 4.1 of this Agreement.
"Total Voting Power" has the meaning assigned such
term in Section 4.1 of this Agreement.
"Voting Securities" has the meaning assigned such
term in Section 4.1 of this Agreement.
2. Transfers of Capital Stock.
2.1 Right of First Offer.
(a) If any Shareholder (a "Selling
Shareholder") desires to sell, give, transfer, distribute,
assign or otherwise dispose of all or any portion of the
Purchased Common Stock (other than (i) to an affiliate of a
Shareholder who has agreed with the Company in writing to be
bound by the provisions of this Agreement, including without
limitation, in connection with the termination or amendment
of a Shareholder's partnership agreement (provided that the
availability of the exception to the right of first offer
provided by this clause (i) shall be subject to Section
2.1(e)) or (ii) in a sale under Rule 144 under the
Securities Act), then such Selling Shareholder shall first
make a written offer (a "Selling Shareholder Offer") (for
purposes of this Agreement, a request for registration
pursuant to the Registration Rights Agreement shall be
deemed to constitute a Selling Shareholder Offer) to sell,
transfer or assign such shares of Purchased Common Stock
(the "Offered Shares") to the Company. The Selling
Shareholder Offer shall state (i) the number of Offered
Shares, (ii) the proposed cash sale price therefor and
(iii) any other material terms and conditions of the Selling
Shareholder Offer.
A Selling Shareholder Offer shall constitute an
irrevocable offer by such Selling Shareholder to sell to the
Company the Offered Shares at the proposed cash sale price
in cash unless the closing does not occur for any reason
whatsoever within 60 days following receipt of the Selling
Shareholder Offer. For purposes of this Section 2.1(a), the
proposed cash sale price for any Purchased Common Stock
which a Selling Shareholder desires to give or distribute to
another Person (other than an affiliate acquiring pursuant
to clause (i) of the first sentence of this Section 2.1(a)
in a transaction exempt from the right of first offer
provided in this Section 2.1) shall be deemed to be the
<PAGE>
Page 36 of 53 Pages
closing price of the Common Stock on the principal exchange
on which the Common Stock is listed on the day the Selling
Shareholder Offer is received by the Company.
(b) Upon receipt of a Selling
Shareholder Offer, the Company shall have the right to
purchase, upon the terms and conditions of the Selling
Shareholder Offer, all, but not less than all, of the
Offered Shares, which right shall be exercisable by
irrevocable written notice to the Selling Shareholder given
within 5 Business Days after the Selling Shareholder Offer
is received by the Company.
(c) The closing of any sale to the
Company pursuant to this Section 2.1 shall be held at the
principal office of the Company on the 30th Business Day
after the Selling Shareholder Offer is received by the
Company, or at such other time and place as the Company and
the Selling Shareholder may agree upon; provided that if
there is any litigation or governmental requirements
relating to such purchase and sale, the closing date shall
be postponed until a date not more than 10 days after the
termination of such litigation or satisfaction of such
governmental requirements. At such closing, the Selling
Shareholder shall deliver to the Company certificates
representing the Offered Shares duly endorsed for transfer
and accompanied by all requisite stock transfer taxes, and
such Offered Shares shall be free and clear of any liens,
claims, options, charges, encumbrances, or rights of others.
The Company shall deliver to the Selling Shareholder at the
closing, by certified check or wire transfer, the purchase
price for the Offered Shares being sold by the Selling
Shareholder. The Company and the Selling Shareholder shall
execute such documents as are otherwise customary and
appropriate.
(d) If the Company does not elect to
purchase all of the Offered Shares as set forth above, then,
during the 120 days following the date on which the Company
shall cease to be entitled to elect to purchase the Offered
Shares (or shall have waived in writing its right to do so),
the Selling Shareholder may dispose of all, but not less
than all, of the Offered Shares upon terms that, in the
aggregate, are no more favorable to the purchaser thereof
than those stated in the Selling Shareholder Offer. If such
disposition is not consummated within such 120 days, the
restrictions provided for herein shall again become effec-
tive.
(e) Notwithstanding clause (i) of the
second parenthetical contained in Section 2.1(a), any sale,
gift, transfer, assignment or other disposition of shares of
<PAGE>
Page 37 of 53 Pages
Purchased Common Stock to an affiliate of a Selling
Shareholder shall be subject to the right of first offer
provided for in this Section 2.1 if (i) such sale, transfer,
assignment or other disposition is to occur prior to the
third anniversary of this Agreement or (ii) prior to such
sale, gift, transfer, assignment or other disposition, a
total of ten transfers which were exempt from the right of
first offer provided for in this Section 2.1 by virtue of
clause (i) of the second parenthetical contained in Section
2.1(a) were made.
(f) Notwithstanding the foregoing, not
less than 15 days prior to any proposed sale by a Selling
Shareholder of Voting Securities pursuant to this
Section 2.1 constituting 1% or more of the Total Voting
Power to any Restricted Person (as defined below) the
Selling Shareholder shall give notice of the identity of
such Restricted Person to the Company and the Company shall
have the right, exercisable by delivery of a written
election notice to the Selling Shareholder within 10 days of
receipt of the notice from the Selling Shareholder of the
proposed sale, to purchase all of the Offered Shares at the
price specified in the Selling Shareholder's Offer. If the
Company fails to purchase the Offered Shares within such 10-
day period, the Selling Shareholder shall be permitted to
proceed with its or their sale to such Restricted Person in
accordance with Section 2.1(d). "Restricted Person" shall
mean a person who is a material competitor of the Company or
any material subsidiary of the Company. The affiliates of
GAP 14 and GAP Coinvestment shall not be deemed Restricted
Persons by virtue of any ownership interest they may have in
other companies.
(g) No transfer of Offered Shares to a
third party (including, without limitation, any assignee of
a party entitled to purchase such shares) pursuant to
Section 2.1(d) shall be consummated or recorded in the
Company's stock transfer books unless (i) the transferee of
such Offered Shares shall have furnished the Company a
written opinion of counsel reasonably satisfactory to
counsel for the Company that the proposed transfer may be
effected without registration under the Securities Act, and
(ii) the transferee of such Offered Shares shall have
furnished the Company a written instrument to the effect
that (A) it is acquiring such shares for its own account,
for investment, and not with a view to, or for sale in
connection with, the distribution thereof, and (B) it
understands that such shares have not been registered under
the Securities Act by reason of their issuance in a
transaction exempt from the requirements of the Securities
Act and that such shares must be held indefinitely unless a
<PAGE>
Page 38 of 53 Pages
subsequent disposition thereof is registered under the
Securities Act or is exempt from such requirements.
(h) Any underwriters participating in a
distribution of Voting Securities beneficially owned by a
Selling Shareholder or its affiliates or associates pursuant
to this Agreement, including without limitation any
distribution referred to in Section 2.1(a) hereof, shall use
all reasonable efforts to effect as wide a distribution as
is reasonably practicable, and in no event shall any sale
(other than a sale to underwriters making such a
distribution) of shares of Voting Securities be made
knowingly to any Person (including its affiliates or
associates and any group in which that Person or its
affiliates or associates shall be a member if the Selling
Shareholder or such underwriters know of the existence of
such a group or affiliate or associate) that, after giving
effect to such sale, would beneficially own Voting
Securities representing three percent (3%) or more of the
Total Voting Power. The Selling Shareholder shall use
reasonable best efforts to secure the agreement of the
underwriters, in connection with any underwritten offerings
of its Voting Securities, to comply with the foregoing.
2.2 Right of First Offer in Respect of
Proposed Transactions Under Rule 144.
(a) If, during any given 30-day period,
any Shareholder (a "Rule 144 Shareholder") contemplates the
sale of all or any portion of the Purchased Common Stock
beneficially owned by the Rule 144 Shareholder in a sale
under Rule 144 under the Securities Act, then, at least five
Business Days before the commencement of such period, the
Rule 144 Shareholder shall notify the Company in writing
that it is contemplating the sale of shares of Purchased
Common Stock in such manner and the maximum number of such
shares that the Rule 144 Shareholder contemplates the sale
of during such 30-day period; provided, however that the
Rule 144 Shareholder shall not give such notice more than
once during any 30-day period. If the Rule 144 Shareholder
thereafter decides to sell shares of Purchased Common Stock,
such Rule 144 Shareholder shall first make a written offer
(a "Rule 144 Shareholder Offer") to sell such shares of
Purchased Common Stock (the "Rule 144 Offered Shares") to
the Company. The Rule 144 Shareholder Offer shall be
provided to the Company no later that 4:30 p.m., local time,
on the Business Day preceding such contemplated sale and
shall set forth the number of shares of Rule 144 Offered
Shares.
(b) Upon receipt of the Rule 144
Shareholder Offer, the Company shall have the right to
<PAGE>
Page 39 of 53 Pages
purchase all or any portion of the Rule 144 Offered Shares
at the closing price of the Common Stock on the principal
exchange on which the Common Stock is listed on the date on
which such notice is given (the "Rule 144 Price"), which
right shall be exercisable by written notice to the Rule 144
Shareholder (the "Company Acceptance") given by 8:00 a.m.
local time on the Business Day immediately following the
Business Day on which the Rule 144 Shareholder Offer is
received.
(c) If the Company Acceptance is
delivered by the Company to the Rule 144 Shareholder in
accordance with the preceding paragraph, the closing of the
sale of the Rule 144 Offered Shares to be sold to the
Company shall be held at the principal office of the Company
on or before the first Business Day following the date on
which bond settlements are made by brokers in the ordinary
course for bonds sold on the date of the Company Acceptance
or at such time and place as the Company and the Rule 144
Shareholder shall agree upon. At such closing, the Rule 144
Shareholder shall deliver to the Company certificates
representing such Rule 144 Offered Shares, duly endorsed for
transfer and accompanied by all requisite stock transfer
taxes, and such Rule 144 Offered Shares shall be free and
clear of any liens, claims, options, charges, encumbrances,
or rights of others. The Company shall deliver at the
closing, by certified check or wire transfer, the Rule 144
Price multiplied by the number of Rule 144 Offered Shares
purchased by the Company. The Company and the Rule 144
Shareholder shall execute such documents as are otherwise
customary and appropriate.
(d) If the Company does not elect to
purchase all of the Rule 144 Offered Shares, or fails to
deliver the Company Acceptance in accordance with Section
2.2(b) above, then, during the ten Business Days following
the date on which the Rule 144 Notice was given, the Rule
144 Shareholder may dispose of the Rule 144 Offered Shares
which the Company has elected not to purchase in one or more
market transactions under Rule 144 under the Securities Act.
If such disposition is not consummated within such ten
Business Days, the restrictions provided for herein shall
again become effective.
(e) Failure by the Company to exercise
its right to purchase Rule 144 Shares held by the Selling
Shareholder pursuant to this Section 2.2 shall not affect
the Company's right to purchase Rule 144 Shares pursuant to
this Section 2.2 in any subsequent instance.
(f) Section 2.2(a) through (e) shall be
unavailable to the Shareholders during any period in which
<PAGE>
Page 40 of 53 Pages
the conditions contained in Rule 144 have not been
satisfied. The Shareholders acknowledge that the conditions
contained in Rule 144, including Section (c)(1) thereof have
not been satisfied as of the date hereof. The Shareholders
agree to be bound by the requirements of Rule 144 applicable
to "affiliates" as defined therein as long as they meet the
definition of "affiliates" set forth therein.
3. Board of Directors.
3.1 General Atlantic Board Representative.
(a) The Company shall use its
reasonable best efforts to cause the Board of Directors of
the Company (the "Board") to promptly, but in no event later
than 15 Business Days after the effective date hereof,
appoint a designee of GAP 14 and GAP Coinvestment to fill a
vacancy on the Board (which GAP 14 and GAP Coinvestment
agrees shall be Steven A. Denning or another general partner
of the general partner of GAP 14 reasonably acceptable to
the Company). The Company represents and warrants that on
the date of such appointment there shall be a vacancy on the
Board. Thereafter, for so long as GAP 14 and GAP
Coinvestment and their affiliates and associates shall
together beneficially own shares of capital stock of the
Company representing at least 5% of the Total Voting Power
of the Company, and subject to the further provisions
hereof, the Company's nominating committee (or any other
committee exercising a similar function) shall recommend to
the Board that such individual be included in the slate of
nominees recommended by the Board to shareholders for
election as a director at each annual meeting of
shareholders of the Company at which directors of the class
of which the nominee of GAP 14 and GAP Coinvestment is a
member are elected, commencing with the next annual meeting
of shareholders after the effective date hereof.
(b) Notwithstanding the provisions of
this Section 3.1, GAP 14 and GAP Coinvestment shall not be
entitled to designate any individual to the Board if such
designation would result in any violation of applicable law
or order. The Company shall not be obligated to elect to
its Board any individual who would cause or be reasonably
likely to cause the Company to be unable in any material
respect to conduct its business. If any such individual has
been designated by GAP 14 and GAP Coinvestment and rejected
by the Company, GAP 14 and GAP Coinvestment shall be
permitted to designate a substitute designee for such
individual in accordance with this Section 3.1.
<PAGE>
Page 41 of 53 Pages
4. Voting and Stand-still Agreement.
4.1 Term. The term (the "Term") of the
obligations set forth in this Article 4 shall commence on
the date hereof and shall continue until the date on which
the Voting Power of the Voting Securities, on a fully
diluted basis, beneficially owned by GAP 14 and GAP
Coinvestment and their affiliates and associates shall
represent less than 1.5% of the Total Voting Power. For the
purposes of this Agreement (i) the term "Voting Securities"
shall mean any securities entitled to vote generally in the
election of directors of the Company or any Successor, or
any direct or indirect rights or options to acquire any such
securities or any securities convertible or exercisable into
or exchangeable for such securities, (ii) the term "Voting
Power" shall mean the voting power in the general election
of directors of the Company, and (iii) the term "Total
Voting Power" shall mean the total combined Voting Power of
all of the Voting Securities then outstanding. For purposes
of this Article 4, in the event that GAP 14 or GAP
Coinvestment, an affiliate or associate of GAP 14 or GAP
Coinvestment is, or has a representative or designee who is,
a member of the Board of Directors or other governing entity
of a corporation, partnership or other entity, a rebuttable
presumption shall be created that such corporation,
partnership or other entity is controlled by GAP 14 or GAP
Coinvestment or such affiliate and is an affiliate of GAP 14
or GAP Coinvestment.
4.2 Restrictions on Certain Actions by
GAP 14 and GAP Coinvestment.
(a) During the Term, GAP 14 and GAP
Coinvestment will not, and will cause each of its affiliates
and associates not to, singly or as part of a partnership,
limited partnership, syndicate or other group (as those
terms are used in Section 13(d)(3) of the Exchange Act),
directly or indirectly:
(i) acquire, offer to acquire, or
agree to acquire, directly or indirectly, by purchase, gift
or otherwise, any Voting Securities if, as a result of such
acquisition, GAP 14 and GAP Coinvestment and their
affiliates and associates would beneficially own in excess
of (A) at any time that the Company's directors' and
officers' liability insurance excludes claims in respect of
any director that is an affiliate of the beneficial owner of
15% or more of the Voting Securities, 14.99% of the Total
Voting Power or (B) at any other time, 19.99% of the Total
Voting Power;
<PAGE>
Page 42 of 53 Pages
(ii) make, or in any way
participate in any "solicitation" of "proxies" to vote (as
such terms are defined in Rule 14a-1 under the Exchange
Act), solicit any consent or communicate with or seek to
advise or influence any person or entity with respect to the
voting of any Voting Securities or become a "participant" in
any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to the
Company;
(iii) form, join or encourage the
formation of, any "person" or "group" within the meaning of
Section 13(d)(3) of the Exchange Act with respect to any
Voting Securities provided that this Section 4.2(a)(iii)
shall not prohibit any such arrangement solely among GAP 14
and any of its wholly-owned subsidiaries;
(iv) deposit any Voting Securities
into a voting trust or subject any such Voting Securities to
any arrangement or agreement with respect to the voting
thereof, provided that this Section 4.2(a)(iv) shall not
prohibit any such arrangement solely among GAP 14 and GAP
Coinvestment and any of their wholly-owned subsidiaries;
(v) initiate, propose or otherwise
solicit stockholders for the approval of one or more
stockholder proposals with respect to the Company as
described in Rule 14a-8 under the Exchange Act, or induce or
attempt to induce any other person to initiate any
stockholder proposal;
(vi) except for this Agreement,
seek election to or seek to place a representative on the
Board or, except with the approval of the Board, seek the
removal of any member of the Board;
(vii) except with the approval of
the Board, call or seek to have called any meeting of the
stockholders of the Company;
(viii) except through their
representative on the Board, otherwise act, directly or
indirectly, alone or in concert with others, to seek to
control, disrupt or influence the Board, policies or affairs
of the Company (including by means of providing or arranging
financing or providing financial advisory services for any
proposal or action referred to in this Section 4.2), except
with the approval of the Board;
(ix) sell or otherwise transfer in
any manner any Voting Securities to any "person" (within the
meaning of Section 13(d)(3) of the Exchange Act) who
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Page 43 of 53 Pages
beneficially owns, or who as a result of such sale or
transfer will beneficially own, more than three percent (3%)
of any class of Voting Securities or who, without the
approval of the Board, has proposed a business combination
or similar transaction with, or a change of control of, the
Company or who has proposed a tender offer for Voting
Securities or who has discussed the possibility of proposing
a business combination or similar transaction with, or a
change in control of, the Company with GAP 14 or GAP
Coinvestment or any of their respective affiliates or
associates;
(x) solicit, propose, seek to
effect, negotiate with or provide any information to any
other party with respect to, or make any statement or
proposal, whether written or oral, to the Board or any
director or officer of the Company or otherwise make any
public announcement or proposal whatsoever with respect to,
the Company, including, without limitation, a merger,
exchange offer or liquidation of the Company's assets, or
any restructuring, recapitalization or similar transaction
with respect to the Company;
(xi) instigate or encourage any
third party to do any of the foregoing, including any
statement or proposal that is conditioned on or would
require the Company to waive the benefit of or amend any
provision hereof, or assist, participate in, facilitate,
encourage any effort or attempt by any person to do or seek
to do any of the foregoing;
(xii) request the Company (or its
directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this Section
4.2(a) or otherwise seek any modification to or waiver of
any of GAP 14's, GAP Coinvestment's or their affiliates' or
associates' agreements or obligations under this Section
4.2(a); or
(xiii) encourage or render advice
to or make any recommendation or proposal to any person or
other entity to engage in any of the actions covered by this
Section 4.2(a).
(b) If, as a result of any repurchase
of Voting Securities by the Company, the percentage of Total
Voting Power to be held by a Shareholder together with its
affiliates and associates would exceed the percentage of
Total Voting Power permitted to be held by such Shareholder
and its affiliates and associates pursuant to clause (A) or
(B) of Section 4.2(a)(i) above, as applicable, such
Shareholder shall, and shall cause each of its affiliates
and associates to, sell to the Company (x) its pro rata
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Page 44 of 53 Pages
portion of the total number of Voting Securities
representing such excess to be repurchased by the Company or
(y) any percentage of the total number of Voting Securities
to be offered to the Company by such Shareholder and its
affiliates and associates as they and the Company shall each
agree. Such Voting Securities shall be offered to the
Company at a price per share equal to the average of the
closing price of the Common Stock of the Company on the
principal exchange on which such class of stock is then
listed for the ten trading days preceding the date on which
the requirement to make such offer to sell arose. If any of
the Shareholders or any of its affiliates or associates
beneficially owns or acquires any Voting Securities in
violation of this Agreement, such Voting Securities shall be
disposed of to persons who are not affiliates or associates
thereof but only in compliance with the provisions of this
Section 4.2; provided, however, that the Company may also
pursue any other available remedy to which it may be
entitled as a result of such violation. Nothing contained
in this Agreement shall prohibit GAP 14 or GAP Coinvestment
or any of their affiliates or associates from selling shares
of Common Stock to the Company in any Company-initiated
share tender.
4.3 Stop Transfer Instructions. The
certificates representing the Purchased Common Stock shall
have placed thereon a legend evidencing the foregoing
restrictions. Each Shareholder consents to the entry of a
stop transfer order with respect to any purported transfer
of Purchased Common Stock or Voting Securities in
contravention of the restrictions contained in this
Agreement.
4.4 Voting. During the Term, whenever a
Shareholder or any of its affiliates or associates shall
have the right to vote such Voting Securities, it shall and
shall cause its affiliates and associates to (a) be present,
in person or represented by proxy, at all shareholder
meetings of the Company so that all Voting Securities
beneficially owned by it and its affiliates and associates
shall be counted for the purpose of determining the presence
of a quorum at such meetings, and (b) vote or cause to be
voted, or consent with respect to, all Voting Securities
beneficially owned by it and its affiliates and associates
in the manner recommended by the Board, except that during
any period or at any time when there shall be in full force
and effect a valid order or judgment of a court of competent
jurisdiction or a ruling, pronouncement or requirement of
the New York Stock Exchange, Inc. (the "NYSE") to the effect
that the foregoing provision of this Section 4.4 is invalid,
void, unenforceable or not in accordance with NYSE policy,
then, such Shareholder shall, and shall cause its affiliates
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Page 45 of 53 Pages
and associates to, if so requested by the Board, vote or
cause to be voted all of its Voting Securities beneficially
owned by it and its affiliates and associates in the same
proportion as the votes cast by or on behalf of all the
other holders of the Company's Voting Securities.
5. Representations and Warranties.
5.1 Representations and Warranties of GAP 14
and GAP Coinvestment. Each of GAP 14 and GAP Coinvestment
hereby represents, warrants and covenants to the Company as
follows:
(a) Organization and Good Standing.
GAP 14 is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of
Delaware. GAP Coinvestment is a general partnership duly
organized and validity existing under the laws of the State
of New York.
(b) Authority; Execution and Delivery,
etc. Each of GAP 14 and GAP Coinvestment has full power and
authority to enter into this Agreement and to perform its
obligations in accordance with the terms hereof. The
execution, delivery and performance of this Agreement have
been duly authorized by each of GAP 14 and GAP Coinvestment
and no other actions on the part of GAP 14 or GAP
Coinvestment are required. This Agreement has been duly
executed and delivered by each of GAP 14 and GAP
Coinvestment and constitutes the legal, valid and binding
obligation of each of GAP 14 and GAP Coinvestment,
enforceable against it in accordance with its terms.
(c) Consents, No Conflicts, etc.
Neither the execution and delivery of this Agreement, the
consummation by GAP 14 or GAP Coinvestment of the
transactions contemplated hereby, nor compliance by GAP 14
or GAP Coinvestment with any of the provisions hereof will
(with or without the giving of notice or the passage of
time) (i) violate or conflict with any provision of the
general or limited partnership agreement (or equivalent
organizational documents) of GAP 14 or GAP Coinvestment or
any agreement, instrument, judgment, decree, statute or
regulation applicable to GAP 14 or GAP Coinvestment or any
assets or properties of GAP 14 or GAP Coinvestment, (ii)
violate any order, writ, injunction, decree, statute, rule
or regulation applicable to GAP 14 or GAP Coinvestment, or
any of the respective assets or properties of GAP 14 or GAP
Coinvestment, or (iii) require the consent, approval,
permission or other authorization of or by, or designation,
declaration, filing, registration or qualification with, any
<PAGE>
Page 46 of 53 Pages
court, arbitrator or governmental, administrative or self-
regulatory authority or any other third party whatsoever
other than disclosure of the transactions contemplated
hereby in the filings of GAP 14, GAP Coinvestment or in the
filings of either of their respective affiliates, pursuant
to the federal securities laws and the rules of any stock
exchange on which the securities of GAP 14, GAP Coinvestment
or any of their respective affiliates are listed.
(d) Litigation. There is no
litigation, proceeding, labor dispute, arbitral action or
government investigation pending or, so far as known to
GAP 14 or GAP Coinvestment, threatened against GAP 14 or GAP
Coinvestment with respect to this Agreement which if
adversely determined could prohibit or prevent GAP 14 or GAP
Coinvestment from consummating the transactions contemplated
hereby. There are no decrees, injunctions or orders of any
court or governmental department or agency outstanding
against GAP 14 or GAP Coinvestment.
(e) No Brokers. Neither GAP 14 nor GAP
Coinvestment has entered into and neither will enter into
any agreement, arrangement or understanding with any person
or firm which will result in the obligation of the Company
to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated
hereby. Each of GAP 14 and GAP Coinvestment agrees to
indemnify and hold the Company harmless from and against any
and all claims, liabilities or obligations with respect to
any finder's fees, brokerage commissions or similar payments
asserted by any person on the basis of any act or statement
alleged to have been made by GAP 14 or GAP Coinvestment.
(f) Access to Information. Each of
GAP 14 and GAP Coinvestment acknowledges that it has been
furnished access to the business records of the Company and
such additional information as it has requested in order
that it make an informed decision regarding the transactions
contemplated hereby and the acquisition of the Purchased
Common Stock and has been given the opportunity to meet with
representatives of the Company and to have them answer
questions regarding the Company's affairs and condition.
Each of GAP 14 and GAP Coinvestment is an experienced and
sophisticated participant in transactions of the kind
contemplated hereby, is capable of evaluating the merits and
risks of transactions of the kind contemplated hereby, is
experienced in the evaluation of enterprises such as the
Company and has undertaken such investigation and evaluated
such information regarding the Company as it has deemed
necessary to make an informed and intelligent decision with
respect to the execution and performance of this Agreement
and the acquisition of the Purchased Common Stock. Each of
<PAGE>
Page 47 of 53 Pages
GAP 14 and GAP Coinvestment acknowledges that the Company
makes no representation and warranty as to the Company's
financial condition, results of operations, business, assets
or prospects, except as set forth in Section 5.2(e) hereof.
Each of GAP 14 and GAP Coinvestment is acquiring the
Purchased Common Stock for investment only and not with a
view to the distribution of the Purchased Common Stock or
any interest therein.
5.2 Representations and Warranties of the
Company. The Company hereby represents, warrants and
covenants to GAP 14 and GAP Coinvestment as follows:
(a) Organization and Good Standing. The
Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of South
Carolina.
(b) Authority; Execution and Delivery,
etc. The Company has full power and authority to enter into
this Agreement and the Registration Rights Agreement and to
perform its obligations in accordance with the terms hereof
and thereof. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement have
been duly authorized by the Company and no other actions on
the part of the Company are required. This Agreement and
the Registration Rights Agreement have been duly executed
and delivered by the Company and constitute the legal, valid
and binding obligation of the Company, enforceable against
the Company in accordance with their respective terms except
for Section 8 of the Registration Rights Agreement, as to
which no representation is made.
(c) Consents, No Conflicts, etc.
Neither the execution and delivery of this Agreement nor the
Registration Rights Agreement, the consummation by the
Company of the transactions contemplated hereby and thereby,
nor compliance by the Company with any of the provisions
hereof or thereof will (with or without the giving of notice
or the passage of time) (i) violate or conflict with any
provision of the Articles of Incorporation or By-Laws of the
Company or any agreement, instrument, judgment, decree,
statute or regulation applicable to the Company or any
assets or properties of the Company, (ii) violate any order,
writ, injunction, decree, statute, rule or regulation
applicable to the Company or any assets or properties of the
Company or (iii) require the consent, approval, permission
or other authorization of or by, or designation,
declaration, filing, registration or qualification with, any
court, arbitrator or governmental, administrative or self-
regulatory authority or any other third party whatsoever,
<PAGE>
Page 48 of 53 Pages
other than disclosure of the transactions contemplated
hereby in the Company's filings pursuant to the federal
securities laws and the rules of any stock exchange on which
the Common Stock is listed except, in the case of clauses
(i), (ii) and (iii) above, for Section 8 of the Registration
Rights Agreement, as to which no representation is made.
(d) Litigation. There is no
litigation, proceeding, labor dispute, arbitral action or
government investigation pending or, so far as known to the
Company, threatened against the Company with respect to the
transactions contemplated by this Agreement or the
Registration Rights Agreement which if adversely determined
could prohibit or prevent the Company from consummating the
transactions contemplated hereby or thereby. There are no
decrees, injunctions or orders of any court or governmental
department or agency outstanding against the Company with
respect to the transactions contemplated hereby or by the
Registration Rights Agreement.
(e) Accuracy of Disclosure. To the
best knowledge of the Company, all of the information
provided to GAP 14 and GAP Coinvestment in connection with
the transactions contemplated hereby, by the Stock Purchase
Agreement and by the Registration Rights Agreement is true
and accurate in all material respects; provided, that, the
Company does not make any representations or warranties as
to the truth, completeness or accuracy of any projections or
other forward-looking information provided to GAP 14 and/or
GAP Coinvestment or any financial statements in respect of
any financial period of the Company that are to be restated.
(f) No Brokers. The Company has not
entered into and will not enter into any agreement,
arrangement or understanding with any person or firm which
will result in the obligation of GAP 14 or GAP Coinvestment
to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated
hereby. The Company agrees to indemnify and hold GAP 14 or
GAP Coinvestment harmless from and against any and all
claims, liabilities or obligations with respect to any
finder's fees, brokerage commissions or similar payments
asserted by any person on the basis of any act or statement
alleged to have been made by the Company.
5.3 Indemnification.
The representations and warranties of the
parties made in this Agreement will survive for a period
ending on the first anniversary of the date of this
Agreement.
<PAGE>
Page 49 of 53 Pages
(a) The Company agrees to indemnify,
defend and hold harmless the Shareholders from and against
all losses, liabilities, damages and deficiencies, based
upon, arising out of, or otherwise in respect of, any
inaccuracy in or any breach of any representation or
warranty contained in Section 5.2 of this Agreement.
(b) The Shareholders agree to
indemnify, defend and hold harmless the Company from and
against all losses, liabilities, damages and deficiencies
based upon, arising out of, or otherwise in respect of, any
inaccuracy in or any breach of any representation or
warranty contained in Section 5.1 of this Agreement.
6. Miscellaneous.
6.1 Duration. This Agreement shall continue
in full force and effect until terminated by mutual
agreement between the Company and the Shareholders or until
the signatories hereto and each of the Persons who has
agreed in writing to be bound hereby cease to beneficially
own shares of capital stock of the Company.
6.2 Legend. Each certificate representing
shares of capital stock acquired from the Company by any
Shareholder shall, for as long as this Agreement is
effective, bear the legend set forth below (or such other
legend deemed to be appropriate by the Company and counsel
to the Shareholder beneficially owning the shares of capital
stock represented by such certificate):
"The securities represented by this Certificate
have not been registered under the Securities Act
of 1933, as amended, and are subject to a
Shareholders' Agreement, dated as of April 26,
1994, and may not be sold, assigned, transferred,
pledged or otherwise disposed of except in
compliance with applicable law and such
Shareholders' Agreement."
6.3 Successors and Assigns. This Agreement
shall inure to the benefit of and be binding upon the
successors and "permitted assigns" of the Company. For
purposes of this Agreement, permitted assigns means the
signatories hereto and each of the Persons who has agreed in
writing to be bound by the provisions hereof. This
Agreement shall inure to the benefit of and be binding upon
(i) the successors of GAP 14, GAP Coinvestment and their
respective affiliates and (ii) the permitted assigns of
GAP 14, GAP Coinvestment and their respective affiliates to
the extent that the assignee is an affiliate of such
<PAGE>
Page 50 of 53 Pages
assignor. Except as expressly otherwise provided herein,
this Agreement may not be assigned by any party hereto
without the prior written consent of the other parties
hereto.
6.4 Notices.
(a) All notices and other communi-
cations hereunder shall be in writing and shall be deemed
given if telecopied or delivered personally or mailed by
registered or certified mail (return receipt requested) to
the following address (or at such other address as shall be
specified by like notice; provided, that, notice of a change
of address shall be effective only upon receipt thereof):
(i) if to GAP 14 or GAP Coinvestment:
General Atlantic Service Corporation
125 East 56th Street
New York, New York 10022
Attention: Steven A. Denning
Telephone: (212) 888-9191
Facsimile: (212) 644-8339
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Matthew Nimetz, Esq.
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
(ii) if to the Company (two copies):
Policy Management Systems Corporation
One PMS Center
Blythewood, South Carolina 29016
Attention: President; General Counsel
Telephone: (803) 735-4000
Facsimile: (803) 735-5560
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Robert C. Myers, Esq.
Telephone: (212) 259-8000
Facsimile: (212) 259-6333
<PAGE>
Page 51 of 53 Pages
(iii) if to any other Shareholder, at
its address as it appears on the
transfer books of the Company.
(b) Any notice given by telecopier or
delivered personally shall be deemed to have been received
by the recipient thereof on the day delivered if actually
received during normal business hours on a Business Day;
otherwise, such notice shall be deemed received on the next
following Business Day if actually received on such day.
All other notices in accordance herewith shall be effective
on the day actually received by the Company. Any party
hereto may, by notice to the other parties hereto, change
its address for receipt of notices hereunder.
(c) GAP 14 and GAP Coinvestment each
hereby designates General Atlantic Service Corporation
("GASC") as its representative to receive any notice
hereunder and to communicate with the Company on its behalf.
The Company hereby acknowledges the designation of GASC as
the representative of each of GAP 14 and GAP Coinvestment
for purposes of this Section 6.4. Any notice given by the
Company to GASC shall be deemed given to the Shareholder to
whom it is addressed, and any notice given to the Company by
GASC on behalf either GAP 14 and GAP Coinvestment shall have
the same effect as if given to the Company by such
Shareholder.
6.5 Severability. If any one or more of the
provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any
way impaired, it being intended that all of the rights and
privileges of the Shareholders shall be enforceable to the
fullest extent permitted by law.
6.6 Counterparts. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
6.7 Entire Agreement. This Agreement
embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties,
covenants or understandings, other than those set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with
respect to such subject matter.
<PAGE>
Page 52 of 53 Pages
6.8 Amendments and Waivers. Except as
otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given unless such amendment, modification, supplement or
waiver has been consented to in writing by the Company and
the holders of a majority of the Voting Securities held of
record by the Shareholders.
6.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of South Carolina applicable to agreements made and to
be performed entirely within such State, without regard to
the principles of conflicts of law of such State.
6.10 Rules of Construction. Unless the
context otherwise requires, "or" is not exclusive, and
references to sections or subsections refer to sections or
subsections of this Agreement.
6.11 Headings; References. The headings
appearing in this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agree-
ment. Except as otherwise indicated herein, all references
herein to Sections refer to the Sections contained in this
Agreement.
6.12 Further Assurances. Each of the parties
shall execute such documents and perform such further acts
as may be reasonably required or desirable to carry out or
to perform the provisions of this Agreement.
6.13 Effectiveness. This Agreement shall be
effective upon the purchase of the Purchased Common Stock by
GAP 14 and GAP Coinvestment pursuant to the Stock Purchase
Agreement, and if such purchase does not occur on or before
September 30, 1994, this Agreement shall terminate and be of
no force or effect.
<PAGE>
Page 53 of 53 Pages
IN WITNESS WHEREOF, the undersigned have duly
executed this Agreement as of the date first above written.
POLICY MANAGEMENT SYSTEMS CORPORATION
By: /s/ G. Larry Wilson
G. Larry Wilson
Chairman, President and Chief
Executive Officer
GENERAL ATLANTIC PARTNERS 14, L.P.
By: GENERAL ATLANTIC PARTNERS
Its General Partner
By: /s/ Steven A. Denning
Steven A. Denning
Managing General Partner
GAP COINVESTMENT PARTNERS
By: __________________________________
Steven A. Denning
Managing Partner
