UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(AMENDMENT NO. 1)
_______________________
POLICY MANAGEMENT SYSTEMS CORPORATION
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
731108 10 6
(CUSIP Number)
_______________________
STEPHEN P. REYNOLDS
C/O GENERAL ATLANTIC SERVICE CORPORATION
3 PICKWICK PLAZA
GREENWICH, CONNECTICUT 06830
TEL. NO.: (203) 622-3050
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
_______________________
MARCH 14 , 1996
(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
statement because of Rule 13d-1(b)(3) or (4), check the following box <square>.
Check the following box if a fee is being paid with the statement <square>. (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 or 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
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
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
1,519,024
9 SOLE DISPOSITIVE POWER
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)
7.8%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP NO. 731108 10 6
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GAP COINVESTMENT PARTNERS, 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
New York
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
8 SHARED VOTING POWER
1,519,024
9 SOLE DISPOSITIVE POWER
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)
7.8%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
AMENDMENT NO. 1 TO SCHEDULE 13D
This Amendment No. 1 to Schedule 13D (this "Amendment") is filed by the
undersigned to amend and supplement the Schedule 13D, dated May 6, 1994
(the "Statement"), with respect to the shares of common stock, par value
$.01 per share (the "Common Stock"), of Policy Management Systems
Corporation, a South Carolina corporation (the "Company").
ITEM 1. SECURITY AND ISSUER
This Amendment relates to the Common Stock of the Company, whose principal
executive offices are at One PMSC Center, Blythewood, South Carolina 29106.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is hereby amended and restated in its entirety as follows:
This statement is being filed by a group, as defined in Rule 13d-5 of the
General Rules and Regulations of 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, L.P. ("GAP Coinvestment" and,
together with GAP 14, the "Reporting Persons"), both of whom are located
at 3 Pickwick Plaza, Greenwich, Connecticut 06830. 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, LLC, a Delaware limited
liability company ("GAP LLC"). The managing members of GAP LLC are Steven
A. Denning, David C. Hodgson, Stephen P. Reynolds, J. Michael Cline,
William O. Grabe and William E. Ford (collectively, the "GAP LLC Managing
Members"). GAP Coinvestment is a limited 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 LLC Managing Members.
None of the Reporting Persons or GAP LLC Managing Members has, 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
judgment, 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.
<PAGE>
CUSIP NO. 731108 10 6
ITEM 3.SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS
Unchanged.
ITEM 4. PURPOSE OF TRANSACTION
As more fully described in the press release of the Company, dated March
14, 1996, and filed as Exhibit 1 to this Amendment, the Reporting Persons
and Continental Casualty Company, an Illinois domestic insurance company
("CNA"), entered into a Stock Purchase Agreement, dated as of March 8, 1996
(the "CNA Stock Purchase Agreement"), pursuant to which CNA agreed to
purchase, and the Reporting Persons agreed to sell, an aggregate of 759,512
shares of Common Stock at a purchase price per share of $50.00. Such
shares of Common Stock represent 50% of the shares of Common Stock held by
the Reporting Persons. The CNA Stock Purchase Agreement is filed as
Exhibit 2 to this Amendment. The closing of the transactions contemplated
by the CNA Stock Purchase Agreement is subject to certain conditions, as
more fully described in Section 6 of such agreement, including, without
limitation, (i) the simultaneous closing of the purchase by the Company
from the Reporting Persons of an aggregate of 759,512 shares of Common
Stock, as described in the following paragraph, and (ii) the filing by all
applicable persons of the notification and report form with respect to the
transactions contemplated by the CNA Stock Purchase Agreement pursuant to,
and the expiration of the waiting period under, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
In addition, the Company and the Reporting Persons entered into a Stock
Purchase Agreement, dated as of March 8, 1996 (the "Company Stock Purchase
Agreement"), pursuant to which the Company agreed to purchase, and the
Reporting Persons agreed to sell, an aggregate of 759,512 shares of Common
Stock at a purchase price per share of $50.00. Such shares of Common Stock
represent 50% of the shares of Common Stock held by the Reporting Persons.
If the closing of the sale under the CNA Stock Purchase Agreement does not
occur on or before May 15, 1996 or the Reporting Persons and CNA have not
on or before May 15, 1996 delivered to the Company a notice of the
termination of the CNA Stock Purchase Agreement, then Company is required
to purchase from the Reporting Persons an aggregate of 1,519,024 shares of
Common Stock, which shares represent all of the shares of Common Stock held
by the Reporting Persons. The Company Stock Purchase Agreement is filed as
Exhibit 3 to this Amendment.
The closing of the transactions contemplated by the Company Stock Purchase
Agreement is subject to certain conditions, as more fully described in
Section 5 of such agreement, including, without limitation, (i) the
amendment of two credit agreements to which the Company is a party and (ii)
(x) the simultaneous closing of the purchase by CNA from the Reporting
Persons of an aggregate of 759,512 shares of Common Stock, as described
above, or (y) the termination of the agreement among CNA and the Reporting
Persons with respect to the purchase and sale of such shares of Common
Stock.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5(e) is amended and restated in its entirety as follows:
(e) On the closing date of the transactions contemplated by
the Company Stock Purchase Agreement and the CNA Stock Purchase Agreement,
based upon the amount of shares of Common Stock outstanding as of such
date as represented by the Company, the Reporting Persons will no longer
beneficially own in excess of five percent of the Common Stock.
ITEM 6. CONTRACTS, RELATIONSHIPS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER
Pursuant to Section 4(b) of the Company Stock Purchase Agreement, the
Reporting Persons have also agreed to certain restrictions relating to (i)
the percentage of voting securities of the Company that may be owned by the
Reporting Persons or their affiliates, (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, which restrictions
will be in effect until March 8, 1999.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits to this Amendment:
1. Press Release of Policy Management Systems Corporation,
dated March 14, 1996
2. Stock Purchase Agreement, dated as of March 8, 1996,
among General Atlantic Partners 14, L.P., GAP Coinvestment
Partners, L.P. and Continental Casualty Company
3. Stock Purchase Agreement, dated as of March 8, 1996,
among Policy Management Systems Corporation, GAP Coinvestment
Partners and General Atlantic Partners 14, L.P.
<PAGE>
CUSIP NO. 731108 10 6
SIGNATURES
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: March 20, 1996
GENERAL ATLANTIC PARTNERS 14, L.P.
By: General Atlantic Partners, LLC,
its General Partner
By: /S/ STEPHEN P. REYNOLDS
Name: Stephen P. Reynolds
Title: A Managing Member
GAP COINVESTMENT PARTNERS, L.P.
By: /S/ STEPHEN P. REYNOLDS
Name: Stephen P. Reynolds
Title: A General Partner
<PAGE>
CUSIP NO. 731108 10 6
EXHIBIT INDEX
NUMBER DOCUMENT PAGE ON WHICH
EXHIBIT APPEARS
[S] [C] [C]
1 Press Release of Policy Systems
Management Corporation, dated March
14, 1996 9
2 Stock Purchase Agreement, dated as
of March 8, 1996, among Continental
Casualty Corporation, GAP
Coinvestment Partners, L.P. and
General Atlantic Partners 14, L.P. 11
3 Stock Purchase Agreement, dated as
of March 8, 1996, among General
Atlantic Partners 14, L.P., GAP
Coinvestment Partners, L.P. and
Policy Management Systems
Corporation 23
POLICY MANGEMENT NEWS
SYSTEMS CORPORATION
P.O. Box Ten - Columbia, South Carolina 29202 USA
One PMSC Center - Blythewood, South Carolina 29016 USA
CONTACT: Timothy V. Williams
Executive Vice President &
Chief Financial Officer
(803) 735-5638
PMSC ANNOUNCES
AGREEMENT TO REPURCHASE 759,512 SHARES
Columbia, South Carolina, March 14, 1996 -- Policy Management
Systems Corporation (NYSE:PMS) (PMSC) announced that it has agreed to
repurchase 759,512 shares of PMSC common stock currently held by General
Atlantic Partners, LLC (General Atlantic Partners 14, L.P. and GAP
Coinvestment Partners, L.P.). The purchase price is $50.00 per share, the
closing market price on March 5, 1996. The Company also announced that
Continental Casualty Company (CNA), one of the nation's largest insurance
companies and a significant user of PMSC's Series III Solutions, is
purchasing the remaining 759,512 shares (approximately 4% of outstanding
shares) of PMSC common stock currently held by General Atlantic. Steven A.
Denning, Managing General Partner of General Atlantic, and Joe M. Henson,
co-investor with General Atlantic in this transaction, will resign their
seats on PMSC's Board of Directors upon closing of the stock sale.
G. Larry Wilson, CEO and Chairman of PMSC, said, "The sale of
General Atlantic Partners' shares provides PMSC with a unique opportunity
both to potentially improve
<PAGE>
earnings per share and return on equity by buying back stock and to allow
CNA, a significant Series III customer, to tangibly express its confidence
in our technology and in our future by becoming an investor in the Company.
I want to thank Steve Denning, Joe Henson, and General Atlantic for the
tremendous service they have given to PMSC as investors and as members of
our Board of Directors and for the opportunity they have given us today." Mr.
Wilson also noted that the Board seats to be vacated would remain unfilled
at this time.
Steve Denning also commented, "I have enjoyed very much my
affiliation with PMSC. I have great confidence in the long-term future of
the Company and I wish them every success. At this time, General Atlantic
Partners prefers to concentrate its investments in smaller, emerging growth
information technology companies. We have made an excellent return on our
investment. We are now pleased to be able to afford PMSC the opportunity
to reduce its number of outstanding shares and to allow an outstanding
customer like CNA to become an investor."
PMSC, headquartered in Columbia, South Carolina, is a leading
provider of software-related automation support and information services
designed to meet the needs of the global insurance and financial services
industries.
STOCK PURCHASE AGREEMENT
Dated as of March 8, 1996
among
GENERAL ATLANTIC PARTNERS 14, L.P.,
GAP COINVESTMENT PARTNERS, L.P.
and
CONTINENTAL CASUALTY COMPANY
<PAGE>
THIS STOCK PURCHASE AGREEMENT, dated as of March 8, 1996 (the
"Agreement"), is among General Atlantic Partners 14, L.P., a Delaware
limited partnership ("GAP 14"), GAP Coinvestment Partners, L.P., a New York
limited partnership, as successor to GAP Coinvestment Partners, a New York
general partnership ("GAP Coinvestment" and, together with GAP 14, the
"Sellers") and Continental Casualty Company, an Illinois domestic insurance
company ("CNA").
WHEREAS, Sellers are the record holders of an aggregate of
1,519,024 shares of Common Stock of Policy Management Systems Corporation,
a South Carolina corporation (the "Company"), $.01 par value per share (the
"Common Stock") as set forth in Schedule I hereto; and
WHEREAS, Sellers desire to sell and CNA desires to purchase
759,512 shares of the Common Stock (the "Purchased stock");
WHEREAS, Sellers desire to sell and the Company desires to
purchase 759,512 shares of Common Stock pursuant to a stock purchase
agreement (the "Company Agreement") between Sellers and the Company dated
as of the date hereof;
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Sellers hereby agree to sell, convey, transfer and
deliver to CNA, and CNA hereby agrees to purchase from Sellers, the
Purchased Stock for the purchase price set forth below (the "Purchase
Price").
(b) The "Purchase Price" shall be an aggregate of
$37,975,600. The number of shares of Purchased Stock to be sold by each of
GAP 14 and GAP Coinvestment to CNA at the Closing (as hereinafter defined)
and that portion of the aggregate Purchase Price therefor to be paid to
each of the Sellers are set forth on Schedule I hereto.
2. REPRESENTATIONS AND COVENANTS OF SELLERS. Each of the
Sellers hereby represents, warrants and covenants to CNA as follows as to
itself:
(a) ORGANIZATION AND GOOD STANDING. GAP Coinvestment is a
limited partnership duly organized and validly existing under the laws of
the State of New York. GAP 14 is a limited partnership duly organized and
validly existing under the laws of the State of Delaware.
(b) TITLE TO COMMON STOCK. Each of GAP 14 and GAP
Coinvestment is the record holder and sole beneficial owner of the
Purchased Stock being sold pursuant to this Agreement as set forth on
Schedule I hereto and such Purchased Stock is free and clear of any
<PAGE>
claim, lien, pledge, option, charge, security interest or encumbrance of any
nature whatsoever (collectively "Encumbrances") with respect to GAP 14 or
GAP Coinvestment, as the case may be.
(c) AUTHORITY; EXECUTION AND DELIVERY, ETC. Each of GAP 14
and GAP Coinvestment has full power and authority to enter into this
Agreement and the Company Agreement and to sell the Purchased Stock and the
shares of Common Stock to be sold pursuant to the Company Agreement in
accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement and the Company 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 and
the Company Agreement have been duly executed and delivered by GAP 14 and
GAP Coinvestment and constitute the legal, valid and binding obligation of
each of GAP 14 and GAP Coinvestment, enforceable against it in accordance
with its terms.
(d) CONSENTS, NO CONFLICTS, ETC. Except as contemplated by
Sections 5(a), 6(b), 6(c) and 6(e), none of the execution and delivery of
this Agreement, the consummation by GAP 14 or GAP Coinvestment of this
Agreement or the Company Agreement, or compliance by GAP 14 or GAP
Coinvestment with any of the provisions hereof or the Company Agreement
will (with or without the giving of notice or the passage of time) (i)
violate or conflict with any provision of the 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 court, arbitrator or governmental, administrative or self-
regulatory authority or any other third party whatsoever.
(e) 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 the Purchased Stock, this Agreement or the
Company Agreement which if adversely determined could prohibit or prevent
GAP 14 or GAP Coinvestment from consummating the transactions contemplated
hereby of thereby. There are no decrees, injunctions or orders of any
court or governmental department or agency outstanding against GAP 14 or
GAP Coinvestment with respect to the Purchased Stock or the Common Stock to
be sold pursuant to the Company Agreement.
(f) 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 CNA 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 CNA harmless from and
<PAGE>
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.
(g) NO PLEDGE; OTHER ACTIONS. Each of GAP 14 and GAP
Coinvestment agrees that prior to the Closing, it will not (i) sell,
transfer, pledge, hypothecate or otherwise dispose of or create any
Encumbrances on the Purchased Stock or make any agreement or commitment to
do any of the foregoing, (ii) take or omit to take any action which would
have the effect of preventing or disabling GAP 14 or GAP Coinvestment from
performing their respective obligations under this Agreement or (iii) take
any action which would make any of the representations and warranties
contained in this Section untrue in any material respect.
3. REPRESENTATIONS AND COVENANTS OF CNA. CNA hereby
represents, warrants and covenants to Sellers as follows:
(a) ORGANIZATION AND GOOD STANDING. CNA is an insurance
company duly authorized to conduct its appropriate business under the
insurance laws of the State of Illinois.
(b) AUTHORITY; EXECUTION AND DELIVERY, ETC. CNA has full
power and authority to enter into this agreement and to purchase the
Purchased Stock in accordance with the terms hereof. This Agreement has
been duly executed and delivered by CNA and constitutes the legal, valid
and binding obligation of CNA, enforceable against CNA in accordance with
its terms.
(c) CONSENTS, NO CONFLICTS, ETC. Except as contemplated by
Section 5(a), 6(b) and 6(e) hereof, neither the execution and delivery of
this Agreement, the consummation by CNA of the transactions contemplated
hereby, nor compliance by CNA 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 Articles of Incorporation or by-laws of
CNA or any agreement, instrument, judgment, decree, statute or regulation
applicable to CNA or any assets or properties of CNA, (ii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
CNA or any assets or properties of CNA 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 other than disclosure of the transactions
contemplated hereby in CNA's filings pursuant to the federal securities
laws and the rules of any stock exchange on which the Common Stock is
listed and the premerger requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
(d) LITIGATION. There is no litigation, proceeding,
arbitral action or government investigation pending or, so far as known to
CNA, threatened against CNA with respect to the Purchased Stock or this
Agreement which if adversely determined could prohibit or prevent CNA from
consummating the transactions contemplated hereby. There are no
<PAGE>
decrees, injunctions or orders of any court or governmental department or
agency outstanding against CNA with respect to the Purchased Stock.
(e) NO BROKERS. CNA 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 either or both of Sellers to
pay any finder's fee, brokerage commission or similar payment in connection
with the transactions contemplated hereby. CNA agrees to indemnify and
hold Sellers 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 CNA.
4. THE CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Section 6 hereof, the closing of the purchase and
sale of the Purchased Stock (the "Closing") shall take place at the offices
of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019,
simultaneously with and on the date of the closing under the Company
Agreement with respect to the Sellers' sale of 759,512 shares of Common
Stock to the Company (the "Closing Date"); provided that the Closing Date
shall not be later than May 15, 1996 unless agreed to in writing by CNA and
Sellers. At the Closing and subject to the conditions set forth in Section
6 of this Agreement, Sellers will make the delivery specified in clause (a)
and (b) below and CNA will make the deliveries specified in clause (c)
below.
(a) CERTIFICATES REPRESENTING THE STOCK. Each of the
Sellers will deliver to CNA certificates evidencing the number of shares of
Purchased Stock being sold by such Seller hereby, free and clear of
Encumbrances, duly endorsed for transfer to CNA's order or Accompanied by
stock powers duly executed to CNA's order and with all requisite
documentary or stock transfer tax stamps affixed.
(b) PROXIES. In the event that the Closing should take
place on or after the record date for the Company's 1996 annual meeting of
shareholders, Sellers shall deliver to CNA at the Closing irrevocable
proxies, in form and substance reasonably acceptable to CNA, allowing CNA
to vote at such meeting the shares of the Purchased Stock acquired by CNA
from Sellers at the Closing.
(c) CNA'S PERFORMANCE. CNA will pay to each of the Sellers
that portion of the Purchase Price to be paid to each of the Sellers as set
forth in Schedule I hereto by wire transfer of immediately available funds
to such bank accounts as the Sellers shall have designated in writing to
CNA at least three days prior to the Closing.
5. OTHER AGREEMENTS.
(a) CNA shall use its commercially reasonable efforts to
cause the "ultimate parent entity" of the "acquiring person" (as such terms
are used in the HSR Act) of the Purchased Stock to file with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department
of Justice (the "DOJ") on or before March 22, 1996 complete and
<PAGE>
accurate HSR Forms in respect of the transactions contemplated hereby and to
request early termination of the waiting period under the HSR Act.
(b) Each of the Sellers and CNA will each cooperate with
the others and use reasonable efforts consistent with their best judgment
to cause the fulfillment of the conditions to the others' obligations
hereunder. Without limiting the generality of the foregoing, if any order,
decree, preliminary or permanent injunction or restraining order shall have
been enacted, entered, promulgated or enforced by any court or other
governmental authority having jurisdiction which prohibits or restricts the
consummation of the transactions contemplated hereby or if any action,
suit, claim or proceeding before any court or governmental authority shall
be threatened or shall have been commenced and be pending which seeks to
prohibit or restrict the consummation of the transactions contemplated
hereby, each of the Sellers and CNA each shall use reasonable efforts
consistent with its best judgment and take such actions as may be
necessary, at its own expense, to have any such order, stay, judgment or
decree lifted or dismissed and any such suit, action or proceeding
dismissed or terminated.
(c)(i) CNA agrees and acknowledges that it has been given
the opportunity to meet with Company officials and to have representatives
of the Company answer questions regarding the Company's affairs and
condition. CNA acknowledges that it has undertaken its investigation and
evaluation of the Company independently of Sellers and for CNA's own
purposes.
(ii) Except with respect to the representations and
warranties made in Section 2 hereof, CNA has not relied in any way
whatsoever on Sellers in making its investment decision.
(iii) CNA agrees, to the full extent allowed by applicable
law, that it hereby waives all claims of whatever nature against Sellers or
their agents relating in any manner whatsoever to this stock sale, other
than claims arising out of Sellers' representations in Section 2. This
waiver of claims includes, without limitation, such claims in existence
which are unknown to CNA and all potential future such claims.
(iv) CNA acknowledges its status as an "accredited
investor" as such term is defined in Rule 501(a) under the Securities Act
of 1933, as amended. CNA acknowledges that it has been represented by
competent counsel sophisticated in transactions of this nature, has had
full opportunity to consult with and receive advice from such counsel, and
is relying on no other representations or statements (including omissions)
by Sellers, other than those set forth in Section 2 of this Agreement.
(v) All of these Sections shall apply to any assignees or
successors of CNA, should Sellers later consent to such.
<PAGE>
6. CONDITIONS TO THE CLOSING.
(a) It shall be a condition to CNA's obligation
to purchase the Purchased Stock at the Closing that (i) the
representations, warranties and covenants of Sellers shall be true and
correct in all material respects (and by tendering the Purchased Stock at
the Closing Sellers shall be deemed to have represented and warranted that
this is so), (ii) there is not in effect at the time any preliminary or
permanent injunction or other order by any court or governmental authority
having jurisdiction, or any law or regulation, which prevents or restrains
the purchase or sale and delivery of the Purchased Stock, (iii) all
actions, instruments and documents required to consummate the purchase of
the Purchased Stock provided for in this Agreement, and all other related
legal matters, shall be reasonably satisfactory to CNA and (iv) the Company
and Sellers shall have consummated the sale by Sellers to the Company of
759,512 shares of the Common Stock pursuant to the Company Agreement
simultaneously with the Closing under this Agreement.
(b) It shall be a condition to CNA's obligation to purchase
the Purchased Stock at the Closing that all applicable persons for the
stock sale to CNA shall have filed with the FTC and the DOJ, pursuant to
the HSR Act, a complete and accurate notification and report form with
respect to the transaction contemplated hereby, and the waiting period
required to expire under the HSR Act, including any extension thereof,
shall have expired prior to the Closing Date without the imposition by the
FTC or DOJ of any restriction upon CNA or the Company by reason of CNA's
purchase of the Purchased Stock hereunder.
(c) It shall be a condition to CNA's obligation to purchase
the Purchased Stock at the Closing that the Company shall have executed and
delivered a Shareholder's Agreement and a Registration Rights Agreement,
each dated the date hereof and each among the Company and CNA, and that
such agreements shall be in full force and effect on the Closing.
(d) It shall be a condition to the obligation of each of
the Sellers to sell the Purchased Stock to be sold by such Seller at the
Closing that (i) the representations, warranties and covenants of each of
CNA shall be true and correct in all material respects (and by tendering
the Purchase Price at the Closing CNA shall be deemed to have represented
and warranted that this is so), (ii) there is not in effect at the time any
preliminary or permanent injunction or other order by any court or
governmental authority having jurisdiction, or any law or regulation, which
prevents or restrains the purchase or sale and delivery of the Purchased
Stock, (iii) all actions, instruments and documents required to consummate
the transactions provided for in this Agreement, and all other related
legal matters, shall be reasonably satisfactory to the Sellers and (iv) the
Company and Sellers shall have consummated the sale by Sellers to the
Company of 759,512 shares of the Common Stock pursuant to the Company
Agreement simultaneously with the Closing under this Agreement.
(e) It shall be a condition to the obligation of each of
the Sellers to sell that portion of the Purchased Stock to be sold by such
Seller at the Closing that all applicable
<PAGE>
persons for the stock sale to CNA shall have filed with the FTC and the DOJ
pursuant to the HSR Act complete and accurate HSR Forms with respect to the
transaction contemplated hereby and the waiting period required to expire
under the HSR Act, including any extension thereof, shall have expired prior
to the Closing Date without the imposition by the FTC or DOJ of any
restriction upon either of the Sellers by reason of Sellers' sale of the
Purchased Stock hereunder.
7. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
money damages are an inadequate remedy for a breach of this Agreement which
would prevent consummation of the sale of the Purchased Stock to CNA
because of the difficulty of ascertaining the amount of damage that will be
suffered by the non-breaching party in such event. Therefore, each party
agrees that the nonbreaching party may obtain specific performance to
mandate sale and purchase of the Purchased Stock to CNA in accordance with
this Agreement in the event the other party's breach would otherwise
prevent consummation of the sale of the Purchased Stock to, and purchase of
the Purchased Stock by, CNA as set forth in this Agreement.
8. MISCELLANEOUS.
(a) EXPENSES. Each party shall be liable for its
own expenses in connection with the transactions contemplated by this
Agreement.
(b) AMENDMENTS, ETC. All amendments or waivers of any
provisions of this Agreement may only be made pursuant to a written
instrument executed by the parties hereto or their successors and assigns.
(c) SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Agreement contained by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the successors and assigns of such
party. PROVIDED, HOWEVER, that no party hereto may assign any of its
rights or obligations under this Agreement without the written consent of
the other parties hereto.
(d) NOTICES. All notices, requests and other
communications provided for hereunder shall be effective upon receipt,
shall be in writing and shall be deemed to have been duly given if
delivered in person or by courier, telegraph, telex or by facsimile
transmission with electromechanical report of delivery:
<PAGE>
If to CNA:
Continental Casualty Company
CNA Plaza
Chicago, Illinois 60685
Attention: Secretary
Telephone: (312) 822-5158
Telecopier: (312) 822-1297
If to Sellers:
c/o General Atlantic Service Corporation
125 East 56th Street
New York, New York 10022
Attention: Stephen P. Reynolds
Telephone: (212) 888-9191
Telecopier: (212) 593-5192
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
Telecopier: (212) 373-2377
or to such other address with respect to any party as such
party shall notify the others in writing.
(e) GOVERNING LAW AND JURISDICTION. This Agreement shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the State of New York (without regard to
the choice of law provisions thereof).
(f) HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
<PAGE>
(h) PUBLIC ANNOUNCEMENTS. Neither Sellers nor CNA will
issue any press release or public announcement of the transactions
contemplated hereby except (i) as they may mutually agree in writing with
the Company or (ii) as may be required in the opinion of counsel under
applicable law in which case the party so required to make such an
announcement shall provide a draft of the proposed announcement and a copy
of such opinion to the other party and the Company no less than two (2)
business days prior to the date of the proposed announcement (unless it is
unlawful or impracticable to do so).
(i) COMPLETE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof
and, except as provided herein, supersedes all previous negotiations,
commitments and writings. This Agreement is not intended to confer any
benefit upon any person other than the parties hereto.
(j) TERMINATION. This Agreement shall terminate if the
Closing contemplated hereby shall not have occurred on or prior to May 15,
1996. Notwithstanding the foregoing, the provisions of Sections 8(a) and
8(h) shall survive termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
GENERAL ATLANTIC PARTNERS 14, L.P.
By GENERAL ATLANTIC PARTNERS, LLC
By: /S/ STEVEN A. DENNING
Name: Steven A. Denning
Title: A Managing Member
GAP COINVESTMENT PARTNERS, L.P.
By: /S/ STEVEN A. DENNING
Name: Steven A. Denning
Title: A General Partner
CONTINENTAL CASUALTY COMPANY
By: /S/ PHILIP L. ENGEL
Name: Philip L. Engel
Title: President
<PAGE>
SCHEDULE I
SHARES OF PURCHASED AGGREGATE PURCHASE
SELLER STOCK TO BE SOLD PRICE TO BE PAID
GAP Partners 14, LP 683,561 $34,178,050
GAP Coinvestment Partners, L.P. 75,951 $3,797,550
Total 759,512 $37,975,600
STOCK PURCHASE AGREEMENT
among
POLICY MANAGEMENT SYSTEMS CORPORATION,
GAP COINVESTMENT PARTNERS, L.P.
and
GENERAL ATLANTIC PARTNERS 14, L.P.
_______________________
Dated as of March 8, 1996
_______________________
<PAGE>
THIS STOCK PURCHASE AGREEMENT, dated as of March 8, 1996 (the
"Agreement"), is among GAP COINVESTMENT PARTNERS, L.P., a New York limited
partnership, as successor to GAP Coinvestment Partners, a New York general
partnership ("GAP Coinvestment"), GENERAL ATLANTIC PARTNERS 14, L.P., a
Delaware limited partnership ("General Atlantic", and, together with GAP
Coinvestment, "Sellers"), and POLICY MANAGEMENT SYSTEMS CORPORATION, a
South Carolina corporation (the "Company").
WHEREAS, Sellers are the record holders of an aggregate of
1,519,024 shares of the Company's Common Stock, $.0l par value per share
(the "Stock"), as set forth in Schedule I hereto;
WHEREAS, Sellers desire to sell to the Company and the Company
desires to purchase from Sellers 759,512 shares of the Stock upon the terms
and conditions hereinafter provided;
WHEREAS, Sellers desire to sell, and Continental Casualty
Company, an Illinois corporation ("CNA"), desires to purchase from Sellers,
the remaining 759,512 shares of the Stock owned by Sellers, pursuant to a
Stock Purchase Agreement, dated as of the date hereof, among Sellers and
CNA (the "CNA Agreement"); and
WHEREAS, in the event that CNA does not consummate its proposed
purchase from Sellers of such remaining 759,512 shares of the Stock
pursuant to the CNA Agreement as provided herein, Sellers desire to sell,
and the Company desires to purchase from Sellers, such remaining 759,512
shares of the Stock.
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF COMMON STOCK; CLOSING.
(a) Subject to the satisfaction or waiver of the conditions
set forth in Section 5 hereof, Sellers hereby agree to sell, convey,
transfer and deliver to the Company, and the Company hereby agrees to
purchase from Sellers, for the Purchase Price per share, (i) 759,512 shares
of the Stock plus (ii) if a CNA Termination Event (as defined in Section 7
hereof) should occur, the remaining 759,512 shares of the Stock owned by
Sellers. The aggregate number of shares of the Stock to be repurchased by
the Company is hereinafter referred to as the "Repurchased Stock". The
"Purchase Price" per share shall be $50 per share, which shall be paid to
Sellers as more particularly set forth on Schedule I hereto.
(b) The closing of the purchase and sale of the Repurchased
Stock (the "Closing") shall take place at the offices of Dewey Ballantine,
1301 Avenue of the Americas, New York, New York 10019 at 10:00 a.m. New
York time on the business day following the satisfaction or waiver of the
conditions set forth in Section 5(a)(ii) and (iii) and 5(b)(ii) hereof or
at such other time as shall be agreed to in writing by the Company and
Sellers (the "Closing Date").
<PAGE>
(c) At the Closing, (i) Sellers will deliver to the
Company certificates evidencing the Repurchased Stock being purchased by
the Company hereby, free and clear of any claim, lien, pledge, option,
charge, security interest or encumbrance of any nature whatsoever
(collectively, "Encumbrances"), duly endorsed for transfer to the Company's
order or accompanied by stock powers duly executed to the Company's order
and with all requisite documentary or stock transfer tax stamps affixed and
(ii) the Company will pay to Sellers the Purchase Price for the Repurchased
Stock by a wire transfer of immediately available funds to such bank
accounts as Sellers shall have designated in writing to the Company at
least three days prior to the Closing.
2. REPRESENTATIONS AND COVENANTS OF SELLERS. Each of the
Sellers hereby represents, warrants and covenants to the Company as follows
as to itself:
(a) ORGANIZATION AND GOOD STANDING. GAP Coinvestment is a
limited partnership duly organized and validly existing under the laws of
the state of New York and is the successor to GAP Coinvestment Partners, a
New York general partnership. General Atlantic is a limited partnership
duly organized and validly existing under the laws of the state of
Delaware.
(b) TITLE TO REPURCHASED STOCK. Seller is the record
holder and sole beneficial owner of the Repurchased Stock being sold by it
pursuant to this Agreement and such Repurchased Stock is free and clear of
any Encumbrances.
(c) AUTHORITY: EXECUTION AND DELIVERY, ETC. Seller has
full power and authority to enter into this Agreement and to sell the
Repurchased Stock in accordance with the terms hereof. The execution,
delivery and performance of this Agreement have been duly authorized by
Seller and no other actions on the part of Seller are required. This
Agreement has been duly executed and delivered by Seller and constitutes
the legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.
(d) CONSENTS, NO CONFLICTS, ETC. Neither the execution and
delivery of this Agreement, the consummation by Seller of this Agreement
nor compliance by Seller 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 organizational documents of Seller or
any agreement, instrument, judgment, decree, statute or regulation
applicable to Seller or any assets or properties of Seller, (ii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable
to Seller or any assets or properties of Seller 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.
(e) LITIGATION. There is no litigation, proceeding, labor
dispute, arbitral action or government investigation pending or, so far as
known to Seller, threatened against Seller with respect to the Repurchased
Stock or this Agreement which if adversely determined
<PAGE>
could prohibit or prevent Seller from consummating the transactions
contemplated hereby. There are no decrees, injunctions or orders of any
court or governmental department or agency outstanding against Seller
with respect to the Repurchased Stock.
(f) NO BROKERS. Seller 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 the Company to pay any finder's
fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby. Seller agrees to indemnify and hold the
Company harmless from and against any and all claims, liabilities and
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 Seller.
(g) NO PLEDGE; OTHER ACTIONS. Seller agrees that prior to
the Closing, as hereinafter defined, it will not (i) sell, transfer,
pledge, hypothecate or otherwise dispose of or create any Encumbrances on
the Repurchased Stock or make any agreement or commitment to do any of the
foregoing, (ii) take or omit to take any action which would have the effect
of preventing or disabling Seller from performing its obligations under
this Agreement or (iii) take any action which would make any of the
representations and warranties contained in this Section untrue in any
material respect.
(h) ACCESS TO INFORMATION. Seller acknowledges that it
has been offered access to the business records of the Company and such
additional information as it has requested in order that Seller may make an
informed decision regarding the transactions contemplated hereby and has
been given the opportunity to meet with Company officials and to have
representatives of the Company answer questions regarding the Company's
affairs and condition. Seller is an experienced and sophisticated
participant in the transactions 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.
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
hereby represents, warrants and covenants to Seller 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 to purchase
the Repurchased Stock in accordance with the terms hereof. The execution,
delivery and performance of this Agreement have been duly authorized by the
Company and no other actions on the part of the Company are required. This
Agreement has been duly executed and delivered by the Company and
constitutes
<PAGE>
the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(c) CONSENTS, NO CONFLICTS, ETC. Neither the execution
and delivery of this Agreement, the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company 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 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 other than those necessary to implement
the amendments to Section 5.13 of the 364-day Credit Agreement dated as of
August 11, 1995, and Section 5.13 of the 3-Year Credit Agreement dated as
of August 11, 1995, as referred to in Section 5(a)(iii) and 5(a)(iv) of
this Agreement, and 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.
(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
Repurchased Stock or this Agreement which if adversely determined could
prohibit or prevent the Company from consummating the transactions
contemplated hereby. There are no decrees, injunctions or orders of any
court or governmental department or agency outstanding against the Company
with respect to the Repurchased Stock.
(e) 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 Seller 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
Seller harmless from and against any and all claims, liabilities and
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.
4. OTHER AGREEMENTS.
(a) Each Seller, on the one hand, and the Company, on
the other hand, hereby releases and forever discharges the other and their
respective present or former stockholders, general partners, limited
partners, members, employees, officers, directors, agents and
representatives, individually and in their capacities as such stockholders,
general partners, limited partners, members, employees, officers,
directors, agents and representatives, of and from all manner of actions,
causes of action, suits, debts, covenants, controversies, agreements,
damages, judgments, claims and demands whatsoever in law or in equity which
<PAGE>
either Sellers or the Company ever had, now has, or hereafter can, shall or
may have against any of them upon or by reason of (i) Seller's ownership on
or prior to the date hereof of capital stock of the Company, (ii) the
Shareholders' Agreement, dated April 26, 1994, among the Company, GAP
Coinvestment and General Atlantic or (iii) the Registration Rights
Agreement, dated April 26, 1994, among the Company, GAP Coinvestment and
General Atlantic, PROVIDED, HOWEVER, that the foregoing release and
discharge shall specifically exclude actions, causes of action, suits,
debts, covenants, controversies, agreements, damages, judgments, claims and
demands (including rights to indemnification pursuant to by-laws or
otherwise) whatsoever in law or in equity which arise from or relate to
Steven A. Denning's appointment, tenure or resignation from the Board of
Directors of the Company (the "Board").
(b) During the period (the "Standstill Period") commencing
on the date hereof and ending on the 3rd anniversary of the date hereof,
Sellers shall not, and will cause each of its respective affiliates (which
shall not be deemed to include the unaffiliated investors that are limited
partners of either of the Sellers or the individual limited partners of
either of the Sellers who are not members or employees of General Atlantic
Partners, L.L.C. or General Atlantic Service Corporation) 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 Securities Exchange Act of
1934, as amended (the "Exchange Act")), directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase, gift or otherwise, any of the
securities of the Company entitled to vote generally in the election of
directors of the Company or 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 succession beneficially owned by the
shareholders of the Company, 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 (collectively, "Voting
Securities"), if as a result of such acquisition, Seller and its affiliates
and associates would beneficially own in excess of 4.99% of the total
combined voting power in the general election of directors of the Company
of all Voting Securities then outstanding;
(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(b)(iii) shall not prohibit any such arrangement solely among General
Atlantic and any affiliated partnership;
<PAGE>
(iv) 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;
(v) 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;
(vi) 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(b)), except with the approval of the
Board;
(vii) 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;
(viii) 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;
(ix) request the Company (or its directors, officers,
employees or agents), directly or indirectly, to amend or waive any
provision of this Section 4(b) or otherwise seek any modification to or
waiver of any of General Atlantic's, GAP Coinvestment's or their affiliates
or associates' agreements or obligations under this Section 4(b); or
(x) 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(b).
(c) Sellers and the Company will each cooperate with the
other and use best efforts to cause the fulfillment of the conditions to
the other's obligations hereunder. Without limiting the generality of the
foregoing, (i) the Company will use its best efforts to obtain the
amendments to the Credit Agreements, as defined and as provided in Section
5(a), and (ii) if any order, decree preliminary or permanent injunction or
restraining order shall have been enacted, entered, promulgated or enforced
by any court or other governmental authority having jurisdiction which
prohibits or restricts the consummation of the transactions contemplated
hereby, or if any action, suit, claim or proceeding before any court or
governmental authority shall be threatened or shall have been commenced and
be pending which seeks
<PAGE>
to prohibit or restrict the consummation of the transactions contemplated
hereby, each of the Sellers and the Company shall use its best efforts and
take such actions as may be necessary, at its own expense, to have any such
order, stay, judgment or decree lifted or dismissed and any such suit,
action or proceeding dismissed or terminated.
5. CONDITIONS TO THE CLOSING.
(a) It shall be a condition to the Company's obligation to
purchase the Repurchased Stock at the Closing that (i) the representations,
warranties and covenants of Sellers shall be true and correct in all
material respects (and by tendering the Repurchased Stock at the Closing
Sellers shall be deemed to have represented and warranted that this is so),
(ii) there is not in effect at the time any preliminary or permanent
injunction or other order by any court or governmental authority having
jurisdiction which prevents or restrains the purchase or sale and delivery
of the Repurchased Stock, (iii) section 5.13 of the 364-Day Credit
Agreement dated as of August 11, 1995, and Section 5.13 of the 3-Year
Credit Agreement dated as of August 11, 1995 (hereinafter "Credit
Agreements") among the Company, Morgan Guaranty Trust Company of New York,
as Agent, the guarantors party thereto and the banks listed in the Credit
Agreements, be amended to provide that "Permitted Add Backs" shall be the
lesser of (a) $175,000,000 and (b) the sum of (x) the aggregate amount of
payments made by the Company to repurchase shares of its outstanding Common
Stock, including the Repurchased Stock, (y) the aggregate amount of
payments for inducements made in connection with long-term processing
contracts entered into by the Company or any subsidiary with a customer and
(z) the aggregate amount of goodwill and other intangibles acquired in
connection with any acquisition made after December 31, 1994, (iv) Steven
A. Denning shall have resigned as a director of the Company effective as of
the Closing Date and (v) (i) simultaneously with the Closing pursuant to
this Agreement, CNA and Sellers shall have consummated the sale by Sellers
to CNA of 759,512 shares of the stock pursuant to the CNA Agreement or (ii)
a CNA Termination Event (as defined in Section 7 of this Agreement) shall
have occurred. The conditions stated in this Section 5(a) may be waived by
the Company at any time in its sole discretion.
(b) It shall be a condition to the obligations of Sellers
to sell the Repurchased Stock at the Closing that (i) the representations,
warranties and covenants of the Company shall be true and correct in all
material respects (and by tendering the Purchase Price at the Closing the
Company shall be deemed to have represented and warranted that this is so)
and (ii) there is not in effect at the time any preliminary or permanent
injunction or other order by any court or governmental authority having
jurisdiction which prevents or restrains the purchase or sale and delivery
of the Repurchased Stock. The conditions stated in this Section 5(b) may
be waived by Sellers at any time in their sole discretion.
6. CNA TERMINATION EVENT. If (i) CNA and Sellers shall not
have consummated the sale by Sellers to CNA of 759,512 shares of the Stock
pursuant to the CNA Agreement on or before May 15, 1996, or (ii) Sellers
and CNA shall have at any time on or before May 15, 1996 delivered to the
Company a notice of the termination of the CNA Agreement in form and
substance satisfactory to the Company, a "CNA Termination Event"
<PAGE>
shall be deemed to have occurred. In such event, assuming satisfaction or
waiver of all other conditions to the Closing hereunder, the aggregate
number of shares of the Stock to be repurchased by the Company at the
Closing from Sellers shall be 1,519,024 and the aggregate Purchase Price
to be paid by the Company to Sellers shall be $75,951,200, as more
particularly set forth in Schedule I hereto.
7. SPECIFIC PERFORMANCE. Sellers acknowledge that money
damages are an inadequate remedy for a breach of this Agreement which would
prevent consummation of the sale of the Repurchased Stock to the Company
because of the difficulty of ascertaining the amount of damage that will be
suffered by the Company in such event. Therefore, Sellers agree that the
Company may obtain specific performance to mandate sale and purchase of the
Repurchased Stock to the Company in accordance with this Agreement in the
event a breach by one or both Sellers would otherwise prevent consummation
of the sale and purchase of the Repurchased Stock to the Company as set
forth in this Agreement.
8. MISCELLANEOUS.
(a) EXPENSES. Each party shall be liable for its own
expenses in connection with the transactions contemplated by this
Agreement.
(b) INDEMNIFICATION. The Company hereby agrees to
indemnify and hold harmless Sellers from and against any and all claims,
liabilities, losses, damages or injuries, together with reasonable costs
and expenses, including reasonable legal fees ("Losses"), arising out of
the sale of Stock by Sellers to CNA pursuant to the CNA Agreement, to the
extent such Losses arise out of or result from any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
of a material fact regarding the Company (i) in any documents filed by the
Company with the Securities and Exchange Commission during the period
January 1, 1995 through the date of the closing of such sale of Stock by
Sellers to CNA or (ii) made by the Company to CNA or its representatives in
connection with CNA's due diligence investigation with respect to the CNA
Agreement.
(c) AMENDMENTS, ETC. All amendments or waivers of any
provisions of this Agreement may only be made pursuant to a written
instrument executed by the parties hereto or their successors and assigns.
(d) SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Agreement contained by or on behalf of either of the parties hereto
shall bind and inure to the benefit of the respective successors and
assigns of Sellers and the Company, whether so expressed or not.
(e) NOTICES. All notices, requests and other
communications provided for hereunder shall be effective upon receipt,
shall be in writing and shall be deemed to have been duly given if
delivered in person or by courier, telegraph, telex or by facsimile
transmission with electromechanical report of delivery:
<PAGE>
If to the Company:
Policy Management Systems Corporation
1 PMS Center
Blythewood, South Carolina 29016
Attention: G. Larry Wilson
Chairman of the Board of Directors
Telephone: 803-735-4301
With a copy to:
Attention: Stephen G. Morrison, Esq.
Executive Vice President,
General Counsel and Corporate Secretary
Telephone: 803-735-6099
Telecopier: 803-735-5560
and to
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Robert C. Myers, Esq.
Telephone: 212-259-8000
Telecopier: 212-259-6333
If to Seller:
GAP Coinvestment Partners, L.P.
General Atlantic Partners 14, L.P
c/o General Atlantic Service Corporation
3 Pickwick Plaza
Greenwich, Connecticut 06830
Attention: Steven A. Denning
Executive Managing Member
Telephone: 203-622-3050
Telecopier: 203-622-4099
<PAGE>
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
Telecopier:212-373-2377
or to such other address with respect to any party as such party shall
notify the others in writing.
(f) GOVERNING LAW AND JURISDICTION. This Agreement shall be
construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the State of New York (without regard to
the choice of law provisions thereof).
(g) HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(i) PUBLIC ANNOUNCEMENTS. Neither Seller nor the Company
will issue any press release or public announcement of the transactions
contemplated hereby except (i) as they may mutually agree in writing or
(ii) as may be required in the opinion of counsel under applicable law in
which case the party so required to make such an announcement shall provide
a draft of the proposed announcement and a copy of such opinion to the
other party prior to the announcement (unless it is unlawful or
impracticable to do so).
(j) COMPLETE AGREEMENT. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and,
except as provided herein, supersedes all previous negotiations,
commitments and writings. This Agreement is not intended to confer any
benefit upon any person other than the parties hereto.
(k) TERMINATION. This Agreement shall terminate if the
Closing contemplated hereby shall not have occurred on or prior to April
15, 1996, PROVIDED that either the Sellers or the Company may by written
notice to the other extend this Agreement through May 16, 1996 if the
Closing shall not have occurred on or prior to April 15, 1996 if the
conditions required for Closing set forth in Section 5(a)(iii) or Section
5(a)(v) shall not have been satisfied prior to April 12, 1996.
Notwithstanding the foregoing, the provisions of Sections 8(a) and 8(i)
shall survive termination of this Agreement.
<PAGE>
(l) INTEREST PAYMENT. If the Closing occurs after April 15,
1996, the Company shall pay the Sellers interest at the Morgan Guaranty
Trust Company of New York prime rate on the aggregate Purchase Price for
the shares of
<PAGE>
Repurchased Stock acquired by the Company at the Closing for the period
commencing April 16, 1996 through the Closing Date.
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
GAP COINVESTMENT PARTNERS, L.P.
By: /S/ STEVEN A. DENNING
Name: Steven A. Denning
Title: A General Partner
GENERAL ATLANTIC PARTNERS 14, L.P.
By GENERAL ATLANTIC PARTNERS, LLC
By: /S/ STEVEN A. DENNING
Name: Steven A. Denning
Title: A Managing Member
POLICY MANAGEMENT SYSTEMS CORPORATION
By: /S/ G. LARRY WILSON
Name: G. Larry Wilson
Title: Chairman, President and
Chief Executive Officer
<PAGE>
SCHEDULE I
In Conjunction With a CNA Closing
SELLER SHARES TO BE PURCHASED BY AGGREGATE PURCHASE
COMPANY PRICE TO BE PAID
BY COMPANY
General Atlantic Partners 14, L.P. 683,561 $34,178,050
GAP Coinvestment Partners, L.P. 75,951 $ 3,797,550
Total 759,512 $37,975,600
In Conjunction With a CNA Termination Event
SELLER SHARES TO BE PURCHASED BY AGGREGATE PURCHASE
COMPANY PRICE TO BE PAID
BY COMPANY
General Atlantic Partners 14, L.P. 1,367,122 $68,356,100
GAP Coinvestment Partners, L.P. 151,902 $ 7,595,100
Total 1,519,024 $75,951,200
