SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934 (Amendment No. 2)
POLICY MANAGEMENT SYSTEMS CORPORATION
------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
------------------------------------------------------------
(Title of Class of Securities)
731108 10 6
------------------------------------------------------------
(CUSIP Number)
Donald D. Westfall
Associate General Counsel
International Business Machines Corporation
MD 105
Armonk, NY 10504
(914) 765-4478
------------------------------------------------------------
(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
this statement [ ]. (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
<PAGE>2
reporting beneficial ownership of less than five
percent 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).
CUSIP No. 731108 10 6
(1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
International Business Machines Corporation
13-0871985
------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
------------------------------------------------------------
(3) SEC Use Only
------------------------------------------------------------
(4) Source of Funds
N/A
------------------------------------------------------------
<PAGE>3
(5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
------------------------------------------------------------
(6) Citizenship or Place of Organization
New York
------------------------------------------------------------
Number of (7) Sole Voting Power 1,560,524
Shares Bene-
ficially (8) Shared Voting Power 0
Owned by
Each Report- (9) Sole Dispositive Power 1,560,524
ing Person
With (10) Shared Dispositive Power 0
------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each
Reporting Person
1,560,524
------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares
[ ]
------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
7.7%
------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
CO
<PAGE>4
This Report relates to the common stock, par value
$.01 per share (the "Common Stock"), of Policy Management
Systems Corporation (the "Company"). The Report on
Schedule 13D filed by International Business Machines
Corporation ("IBM") dated August 31, 1989 (the "Original
Report"), as amended by IBM on November 9, 1989 ("Amendment
No. 1"), is hereby amended and supplemented as set forth
below. The Original Report, as amended by Amendment No. 1
is hereinafter referred to as "Schedule 13D". All
capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in Schedule 13D.
Pursuant to Section 232.101 of Regulation S-T,
which provides that an amendment to a paper format
Schedule 13D filed by a registrant that has become subject
to mandated electronic filing shall be in electronic format
and the first such amendment shall restate the entire text
of the Schedule 13D, the Original Report and Amendment No. 1
are being filed as part of this Report as Attachment 1 and
Attachment 2 respectively, hereto and are hereby
incorporated by reference herein for all purposes. Because
previously filed paper exhibits to a Schedule 13D are not
required to be restated electronically, exhibits to the
Original Report and Amendment No. 1 are not being refiled
with this Report.
<PAGE>5
The descriptions contained in this Report of
certain agreements and documents are qualified in their
entirety by reference to the complete texts of such
agreements and documents, which have been filed as exhibits
to the Schedule 13D, as amended by this Report, and
incorporated by reference herein.
Item 4. Purpose of Transaction
Item 4 of the Schedule 13D is hereby amended by
deleting the last two paragraphs thereto and replacing it
with the following:
On April 26, 1994, IBM and the Company entered
into a Stock Purchase Agreement, in which IBM agreed to sell
and the Company agreed to buy, subject to customary closing
conditions, 2,278,537 shares of Common Stock for the sum of
$56,439,361.49 ($24.77 per share) subject to certain
adjustments (the "Company Repurchase"). On May 16, 1994,
the Company Repurchase was consummated for an adjusted
aggregate amount of $56,299,082.62 (approximately $24.71 per
share). Additionally, on April 26, 1994, IBM, General
Atlantic Partners 14, L.P. ("GAP 14") and GAP Coinvestment
Partners ("GAP Coinvestment"; and together with GAP 14, the
"Investors") entered into a Stock Purchase Agreement, in
which IBM agreed to sell and GAP 14 and GAP Coinvestment
<PAGE>6
agreed to buy, 1,367,122 and 151,902 shares of Common Stock,
respectively, for an aggregate amount of $37,626,224.48
($24.77 per share) subject to certain adjustments (the
"Investor Sale"). The closing of the Investor Sale is
subject to certain closing conditions including i) the
consummation of the sale of 2,278,537 shares of Common Stock
by IBM to the Company, ii) the expiration of any applicable
waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, iii) the execution and delivery by
the Company of a Shareholders' Agreement and Registration
Rights Agreement to the Investors and iv) certain other
customary conditions to closing. After the closing of the
Company Repurchase and the Investor Sale (3,797,561 shares
of Common Stock in the aggregate), IBM will cease to
beneficially own any shares of Common Stock other than
41,500 shares of Common Stock held by an IBM pension fund.
Except as set forth in the preceding paragraphs,
IBM does not have any plans or proposals which relate to
(a) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company
or any of its subsidiaries; (b) a sale or transfer of a
material amount of assets of the Company or any of its
subsidiaries; (c) any change in the present management of
the Company or the present Board of Directors of the
<PAGE>7
Company; (d) any material change in the present
capitalization or dividend policy of the Company; (e) any
other material change in the Company's business or corporate
structure; (f) changes in the Company's charter or By-laws
or other actions which may impede the acquisition of control
of the Company by any person; (g) causing a class of
securities of the Company to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association; (h) a class of equity
securities of the Company becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or (i) any action similar
to any of the foregoing actions.
Item 5. Interest in Securities of Company
Item 5 is amended by deleting the entire text
thereof and adding the following:
Except for 41,500 shares of Common Stock (or 0.2%
of the outstanding Common Stock) owned indirectly through a
pension fund, the only shares of Common Stock that IBM
beneficially owns are 1,519,024 shares of Common Stock (or
7.5% of the outstanding Common Stock) that were issued on
conversion of shares of Series A Preferred Stock that IBM
acquired under the Agreement. IBM possesses the sole power
<PAGE>8
to vote or to direct the vote and to dispose of or direct
the disposition of all shares of Common Stock beneficially
owned by it, subject to its obligations under the Agreement.
On October 25, 1989, all the shares of Series A
Preferred Stock held by IBM were automatically converted
into an equal number of shares of Common Stock. The
Agreement required the Company to use its best efforts to
obtain shareholder approval under the South Carolina Control
Share Acquisitions Act of voting rights for IBM's Voting
Securities, in the event that such Voting Securities
represent one-fifth or more of all the voting power of the
Company (within the meaning of such Act), but only to the
extent that such Voting Securities represent no more than
30% of the Outstanding Voting Power of the Company. Upon
the granting of such approval, as provided in the Agreement,
all the Series A Preferred Stock was deemed converted into
Common Stock.
On April 26, 1994, IBM and the Company agreed to
the terms of a Stock Purchase Agreement, in which IBM will
sell 2,278,537 shares of Common Stock to the Company for the
sum of $56,439,361.49 ($24.77 per share) subject to certain
adjustments. On May 16, 1994, the Company Repurchase was
consummated for an adjusted aggregate amount of
$56,299,082.62 (approximately $24.71 per share).
<PAGE>9
Additionally, on April 26, 1994, IBM, GAP 14 and GAP
Coinvestment agreed to the terms of a Stock Purchase
Agreement, in which IBM will sell 1,367,122 and 151,902
shares of Common Stock to GAP 14 and GAP Coinvestment,
respectively, for an aggregate amount of $37,626,224.48
($24.77 per share) subject to certain adjustments. As a
result of the Company Repurchase and the Investor Sale which
is expected to occur on or prior to June 30, 1994 (3,797,561
shares of Common Stock in the aggregate), IBM will cease to
beneficially own any shares of Common Stock other than
41,500 shares of Common Shares held by an IBM pension fund.
Except as described above and except as set forth
in Schedule A, neither IBM nor, to the best of IBM's
knowledge, any person named on Schedule A beneficially owns
any shares of Common Stock or has effected any transactions
in Common Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
The information set forth under Item 4 and
Exhibits 2 and 3 hereto is incorporated herein by reference.
Item 7. Material To Be Filed as Exhibits
Item 7 of the Schedule 13D is hereby supplemented
and amended to include the following information:
<PAGE>10
Exhibit 2. Stock Purchase Agreement dated as of
April 26, 1994, between International Business Machines
Corporation and Policy Management Systems Corporation.
Exhibit 3. Stock Purchase Agreement dated as of
April 26, 1994, among International Business Machines
Corporation, General Atlantic Partners 14, L.P. and GAP
Coinvestment Partners.
<PAGE>11
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 25, 1994
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
by
/s/ John E. Hickey
Name: John E. Hickey
Title: Secretary
See Schedule B hereto for
evidence of signing authorization
<PAGE>12
SCHEDULE A
Each of the persons beside whose name an asterisk
appears is a director of IBM. Each of the persons named
below is a citizen of the United States of America, except
Fritz Gerber (Switzerland), John M. Thompson (Canada) and
Lodewijk C. van Wachem (Netherlands). The business address
of each person whose principal employment is with IBM is Old
Orchard Road, Armonk, New York 10504.
Business address and principal
Name occupation or employment
Louis V. Gerstner* Chairman of the Board, IBM.
Harold Brown* Counselor, Center for Strategic
and International Studies,
(CSIS), Suite 400, 1800 K
Street NW, Washington D.C.
20006
James E. Burke* Retired Chairman of the Board,
Johnson & Johnson,
317 George Street, Plaza 2,
Suite 200, New Brunswick, NJ
08933-7006.
Fritz Gerber* - Chairman and Chief Executive Of
Switzerland officer, Roche Holding Ltd.,
Zurich Insurance Company, P.O.
Box Ch-8022 Zurich, Switzerland
<PAGE>13
Nannerl O. Keohane* President, Duke University
Office of the President
207 Allen Building, Box 90001
Duke University
Durham, North Carolina 27708-
0038
Charles F. Knight* Chairman of the Board,
Emerson Electric Co.,
8000 W. Florissant Avenue,
P.O. Box 4100, St. Louis,
MO 63136-8506
Thomas S. Murphy* Chairman of the Board,
Capital Cities/ABC, Inc.,
77 W. 66th Street, New York,
NY 10023-6298
Paul J. Rizzo* Vice Chairman of the Board,
IBM.
John B. Slaughter* President,
Occidental College,
1600 Campus Road
Los Angeles, CA 90041
Lodewijk C. van Wachem* - Chairman of the Supervisory
Netherlands Board, Royal Dutch Petroleum
Company, Box 162, 2501 AN,
The Hague,
Netherlands
Edgar S. Woolard, Jr.* Chairman of the Board
and Chief Executive Officer,
E.I. du Pont
de Nemours & Co., Inc.,
1007 Market Street,
Wilmington, DE 19898
James A. Cannavino Senior Vice President, IBM.
Donato A. Evangelista - Senior Vice President, IBM.
Ellen M. Hancock Senior Vice President, IBM.
Robert J. LaBant Senior Vice President, IBM.
Ned C. Lautenbach Senior Vice President, IBM.
<PAGE>14
G. Richard Thoman Senior Vice President, IBM.
John M. Thompson - Canada Senior Vice President, IBM.
Patrick A. Toole Senior Vice President, IBM.
Richard F. Wallman, Controller, IBM
Jerome B. York Senior Vice President and Chief
Financial Officer, IBM
Frederick W. Zuckerman Vice President and Treasurer,
IBM
<PAGE>15
Schedule B
Excert from IBM By-laws with respect to Signature Authority
of Officers.
ARTICLE VI
Contracts, Checks, Drafts,
Bank Accounts, Etc.
SECTION 1. Execution of Contracts. Except as
otherwise required by law or these By-laws, any contract or
other instrument may be executed and delivered in the name
of the Corporation by any officer (including any assistant
officer) of the Corporation. The Board or the Executive
Committee may authorize any agent or employee to execute and
deliver any contract or other instrument in the name and on
behalf of the Corporation, and such authority may be general
or confined to specific instances as the Board or such
Committee, as the case may be, may by resolution determine.
<PAGE>16
ATTACHMENT 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934 (Amendment No. )
POLICY MANAGEMENT SYSTEMS CORPORATION
------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
------------------------------------------------------------
(Title of Class of Securities)
731108 10 6
------------------------------------------------------------
(CUSIP Number)
Donald Westfall, Associate General Counsel
International Business Machines Corporation
Room 1E-73, 2000 Purchase Street, Purchase, New York 10577
------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 24, 1989
------------------------------------------------------------
(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
this statement [X]. (A fee is not required only if the
reporting person: (1) has a previous statement on file
<PAGE>17
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).
CUSIP No. 731108 10 6
(1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
INTERNATIONAL BUSINESS MACHINES CORPORATION
13-0871985
------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
------------------------------------------------------------
(3) SEC Use Only
------------------------------------------------------------
<PAGE>18
(4) Source of Funds
WC
------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
------------------------------------------------------------
(6) Citizenship or Place of Organization
New York
------------------------------------------------------------
Number of (7) Sole Voting Power 3,804,261
Shares Bene- (see text of Item 4)
ficially
Owned by (8) Shared Voting Power 0
Each Report-
ing Person (9) Sole Dispositive Power 3,804,261
With
(10) Shared Dispositive Power 0
------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each
Reporting Person
3,804,261
------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares
[ ]
------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
19.8%
------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
CO
<PAGE>19
Item 1. Security and Issuer
This statement relates to the Common Stock, par
value $.01 per share (the "Common Stock"), of Policy
Management Systems Corporation (the "Company"), a South
Carolina corporation with its principal executive offices at
1 PMS Center, Blythewood, South Carolina 29016.
Item 2. Identity and Background
International Business Machines Corporation
("IBM") is a New York corporation with its principal office
at Old Orchard Road, Armonk, New York, 10504. The
operations of IBM are principally in the field of
information processing systems, software, communications
systems and other products and services.
The attached Schedule I is a list of the executive
officers and directors of IBM which contains the following
information with respect to each such person:
(a) name;
(b) business address;
(c) present principal occupation or employment
and the name, principal business and address of any
corporation or other organization in which such
employment is conducted; and
(d) citizenship.
<PAGE>20
During the last five years, neither IBM nor, to
the best of IBM's knowledge, any person named in Schedule I
has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which such
person 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.
Item 3. Source and Amount of Funds and Other Consideration
Funds for the purchase of 3,797,561 shares issued
by the Company pursuant to the Agreement described in Item 4
in the amount of $116,775,001 were provided from IBM's own
funds.
Item 4. Purpose of Transaction
On July 26, 1989, IBM entered into a Stock
Purchase Agreement (the "Agreement") with the Company,
pursuant to which the Company issued and IBM acquired, on
August 24, 1989, 3,797,561 shares of Series A Convertible
Special Stock, par value $.01 per share (the "Series A
Preferred Stock"). Those shares were purchased for
investment.
<PAGE>21
The Series A Preferred Stock is convertible into
Common Stock at a one-to-one conversion ratio, subject to
customary anti-dilution adjustments. The Series A Preferred
Stock will have one vote per share and will vote together
with the Common Stock as one class. Therefore, if all the
Series A Preferred Stock is outstanding, IBM will have
3,797,561 votes on all matters submitted to a vote of
stockholders of the Company, including the election of
directors.
In addition, the Series A Preferred Stock will
entitle IBM, at its option, to cause the Board of Directors
of the Company to be increased by one director and permit
IBM to elect such additional director, so long as IBM owns
Series A Preferred Stock representing at least 10% of the
Outstanding Voting Power of the Company (as defined in the
Agreement). "Outstanding Voting Power" of the Company for
purposes of the Agreement means the total number of votes
which may be cast in the election of directors if all Voting
Securities then outstanding were present and voted, other
than votes that may be cast only by one class or series of
stock (other than Common Stock) or upon the happening of a
contingency. "Voting Securities" of the Company for
purposes of the Agreement are the Common Stock, any other
securities having a right to vote generally for directors
<PAGE>22
and any securities, rights or options convertible into, or
exchangeable or exercisable for, such securities.
The Agreement contains a "standstill" provision
which prohibits IBM from acquiring any Voting Securities
without the consent of the Company if such acquisition would
cause IBM to own more than 30% of the Outstanding Voting
Power of the Company. However, IBM may acquire Voting
Securities without regard to the standstill provision (1) in
response to a tender offer for 35% or more of the
Outstanding Voting Power of the Company or (2) if any other
person or group acquires 20% or more of the Outstanding
Voting Power of the Company.
Although the standstill provision permits IBM to
acquire in the open market and from the Company additional
Voting Securities that would bring its holdings up to and
including 30% of the Outstanding Voting Power of the
Company, certain provisions of Title 35, Chapter 2 of the
1976 Code of South Carolina would deprive IBM of the right
to vote any and all shares of capital stock of the Company
in the event that, without previously obtaining appropriate
stockholder approval, IBM acquired one-fifth or more of "all
voting power" of the Company (as defined in such Code).
Therefore, the Agreement requires the Company to use its
best efforts to obtain no later than March 15, 1990, the
<PAGE>23
approval by its stockholders of voting rights for IBM in the
event that IBM acquires one-fifth or more of the voting
power of the Company for purposes of such Code but not more
than 30% of the Outstanding Voting Power of the Company.
Upon approval of such voting rights, all the Series A
Preferred Stock will be automatically converted into Common
Stock.
IBM is required under the Agreement to vote all
its Voting Securities for the nominees to the Board of
Directors of the Company of a committee of independent
Directors not employed by the Company, so long as (1) the
standstill provision is in effect and (2) IBM is entitled to
elect a director as the holder of the Series A Preferred
Stock or to designate nominees to the Board of Directors
under the Agreement, as described in the next paragraph.
The Company is required to include in the slate of
nominees recommended to holders of Common Stock and to
otherwise use its best efforts to cause the election to the
Board of Directors of a specified number of persons
designated by IBM: two persons if IBM owns at least 16% of
the Outstanding Voting Power of the Company (but only one if
IBM, as the holder of the Series A Preferred Stock, is to
elect a director); and one person if IBM owns at least 10%,
but less than 16%, of the Outstanding Voting Power of the
<PAGE>24
Company (but none if IBM, as the holder of the Series A
Preferred Stock, is to elect a director).
So long as IBM owns more than 10% of the
Outstanding Voting Power of the Company, IBM will be
entitled, at the sole option of the Company, to designate an
observer to attend meetings of the Board of Directors. The
parties have agreed that the Company may withhold from any
such observer, any director elected solely by the holders of
the Series A Preferred Stock and any director designated by
IBM under the Agreement, any information which would, if
disclosed to IBM, result in a competitive disadvantage to
the Company.
IBM is also required, so long as the standstill
provision and the development and marketing agreement
described below are in effect and IBM owns at least 16% of
the Outstanding Voting Power of the Company, to vote its
Voting Securities on all matters other than the election of
directors in the same proportion as the votes cast by other
holders of Voting Securities, except that IBM may vote its
Voting Securities in its sole discretion with respect to
specified material matters and with respect to any action
that is materially adverse to IBM and except that IBM may
vote all or a greater portion of its Voting Securities in
<PAGE>25
favor of any matter that is recommended favorably by the
Board of Directors.
So long as IBM owns 5% or more of the Outstanding
Voting Power of the Company, IBM is required not to transfer
any Series A Preferred Stock and not to transfer any other
Voting Securities (including Common Stock issued on
conversion of the Series A Preferred Stock), except (1) to a
person approved by the Company, (2) in a privately
negotiated transaction exempt from registration under the
Securities Act of 1933 or pursuant to Rule 144 under such
Act, (3) pursuant to an underwritten public offering
registered under such Act or (4) in response to a tender
offer which is approved or not opposed by the Board of
Directors or which is for more than 35% of the Outstanding
Voting Power of the Company. So long as IBM owns 5% or more
of the Outstanding Voting Power of the Company, IBM is
required not to (a) privately sell Voting Securities
representing 5% or more of the Outstanding Voting Power of
the Company to any person or group or (b) privately sell any
Voting Securities to any person or group who has on file
with the Securities and Exchange Commission a current
statement on Schedule 13D under the Securities Exchange Act
of 1934 reporting its ownership of 5% or more of the
Outstanding Voting Power of the Company.
<PAGE>26
With limited exceptions, so long as IBM owns 5% or
more of the Outstanding Voting Power of the Company, IBM has
a right of first refusal on any Voting Securities which the
Company is proposing to sell. IBM may exercise its right of
first refusal to bring its holdings up to, but not in excess
of, (1) 30% of the Outstanding Voting Power of the Company
or (2) the percentage interest in the Company which would be
held after the proposed sale of Voting Securities by the
proposed buyer of such Voting Securities, whichever is
greater. The Company has a right of first refusal, as long
as IBM owns 5% or more of the Outstanding Voting Power of
the Company, on any Voting Securities which IBM is proposing
to sell privately, pursuant to Rule 144 under the Securities
Act of 1933 or in response to a tender offer for more than
35% of the Outstanding Voting Power of the Company.
IBM has certain rights under the Agreement to
cause the Company to register under the Securities Act of
1933 the Common Stock into which the Series A Preferred
Stock is convertible. IBM is required, prior to requesting
the Company to effect any such registration, to give the
Company the opportunity to purchase the Common Stock to be
registered at the Average Market Price (defined as the 20-
day trailing average price).
<PAGE>27
In the event of any issuance of Voting Securities
(including upon the exercise, but not upon the issuance, of
employee stock options), IBM has the right, so long as IBM
owns 5% or more of the Outstanding Voting Power of the
Company, to preserve its percentage interest in the
Outstanding Voting Power of the Company by purchasing Common
Stock at the Average Market Price.
IBM and the Company entered into a development and
marketing agreement dated July 26, 1989. The agreement
provides for IBM's assistance to the Company in its
development of insurance applications for IBM's systems
application architecture. In addition, IBM and the Company
will establish marketing programs for certain of the
Company's insurance applications.
Except as set forth in the preceding paragraphs,
IBM does not have any plans or proposals which relate to (a)
an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any
of its subsidiaries; (b) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries;
(c) any change in the present management of the Company or
the present Board of Directors of the Company; (d) any
material change in the present capitalization or dividend
policy of the Company; (e) any other material change in the
<PAGE>28
Company's business or corporate structure; (f) changes in
the Company's charter or By-laws or other actions which may
impede the acquisition of control of the Company by any
person; (g) causing a class of securities of the Company to
cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities
association; (h) a class of equity securities of the Company
becoming eligible for termination of registration pursuant
to Section 12(g)(4) of the Securities Exchange Act of 1934;
or (i) any action similar to any of the foregoing actions.
IBM reserves the right, based on its continuing
review of its investment in the Company and subject to its
obligations under the Agreement, to dispose of any or all
the shares of Series A Preferred Stock owned by it (or
Common Stock into which such shares may be converted) and
otherwise to change its intentions with respect to any or
all of the matters referred to in this Item 4. Depending on
market conditions, IBM may acquire additional securities of
the Company up to and including 30% of the Outstanding
Voting Power of the Company.
<PAGE>29
Item 5. Interest in Securities and the Company
Except for 6,700 shares of Common Stock (or .03%
of the outstanding Common Stock) owned indirectly through a
pension fund, the only shares of Common Stock that IBM
beneficially owns are 3,797,561 shares of Common Stock (or
19.8% of the outstanding Common Stock) that will be issuable
on conversion of the 3,797,561 shares of Series A Preferred
Stock that IBM acquired under the Agreement. IBM possesses
the sole power to vote or to direct the vote and to dispose
of or direct the disposition of all shares of Common Stock
beneficially owned by it, subject to its obligations under
the Agreement.
Except as described above and except as set forth
in Schedule I, neither IBM nor, to the best of IBM's
knowledge, any person named in Schedule I beneficially owns
any shares of Common Stock or has effected any transactions
in Common Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Company
The information set forth under Item 4 and in
Exhibit 1 hereto is incorporated herein by reference.
Item 7. Material To Be Filed as Exhibits
<PAGE>30
Exhibit 1. Stock Purchase Agreement dated
July 26, 1989, between International Business Machines
Corporation and Policy Management Systems Corporation.
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: August 31, 1989
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
by /S/ Donald D. Westfall
Name: Donald D. Westfall
Title: Associate General
Counsel
<PAGE>31
SCHEDULE I
Each of the persons against whose name an asterisk
appears is a director of IBM. Each of the persons named
below is a citizen of the United States of America, except
Hans-Olaf Henkel, Ennio Presutti, Renato Riverso, Takeo
Shiina, Helmut Sihler and John M. Thompson. The business
address of each person whose principal employment is with
IBM is Old Orchard Road, Armonk, New York 10504.
Business address and principal
Name occupation or employment
John F. Akers* Chairman of the Board, IBM.
Stephen D. Bechtel, Jr* Chairman, Bechtel Group, Inc.,
50 Beale St., San Francisco,
California 94105.
Harold Brown* Chairman, The Johns Hopkins
University, 1619 Massachusetts
Ave., N.W., Washington, D.C.
20036.
James E. Burke* Chairman, Strategic Planning
Committee, Johnson & Johnson,
One Johnson & Johnson Plaza,
New Brunswick, N.J. 08933-7006.
Frank T. Cary* Retired Chairman of the Board,
IBM, 2000 Purchase Street,
Purchase, N.Y. 10577.
William T. Coleman, Jr.* Partner in the law firm of
O'Melveny & Meyers, Suite 500
West, 555 13th Street, N.W.,
Washington, D.C. 20004-1109.
Thomas F. Frist, Jr.* Chairman of the Board, HCA, One
Park Plaza, P.O. Box 550,
Nashville, Tennessee 37202-
0550.
<PAGE>32
Nicholas deB. Katzenbach* Retired Senior Vice President,
IBM; partner in the law firm of
Riker, Danzig, Scherer &
Hyland, Headquarters Plaza, One
Speedwell Avenue, Morristown,
New Jersey 07960.
Nannerl O. Keohane* President, Wellesley College,
106 Central Street, Wellesley,
Mass. 02181.
Jack D. Kuehler* President, IBM.
Richard W. Lyman* Director, Institute for
International Studies, Stanford
University, GSB-LC Building,
Rm. 14, Stanford, Calif. 94305.
J. Richard Munro* Chairman of the Board and Chief
Executive Officer, Time, Inc.,
Time & Life Building, 34th Fl.,
1271 Avenue of the Americas,
New York, N.Y. 10020.
Thomas S. Murphy* Chairman of the Board and Chief
Executive Officer, Capital
Cities/ABC, Inc., 77 West 66th
Street, New York, N.Y. 10023-
6298.
John R. Opel* Chairman of the Executive
Committee, IBM, 590 Madison
Avenue, 40th Fl., New York,
N.Y. 10022.
Helmut Sihler* President, Henkel KGaA.
John B. Slaughter* President, Occidental College
1600 Campus Road, Los Angeles,
Calif. 90041.
Edgar S. Woolard, Jr.* Chairman of the Board and Chief
Executive Officer, E.I. duPont
de Nemours & Co., Inc., 1007
Market Street, Wilmington,
Delaware 19898.
<PAGE>33
C. Michael Armstrong Senior Vice President, IBM.
Walton E. Burdick Senior Vice President,
Personnel, IBM.
George H. Conrades Senior Vice President, IBM.
Carl J. Conti Senior Vice President, IBM.
Terry R. Lautenbach Senior Vice President, IBM.
David E. McKinney Senior Vice President, IBM.
Frank A. Metz, Jr. Senior Vice President, Finance
and Planning, IBM.
Patrick A. Toole Senior Vice President, IBM.
Ray S. AbuZayyad Vice President, IBM.
John A. Armstrong Vice President, IBM.
Michael J. Attardo Vice President, IBM.
James A. Cannavino Vice President, IBM.
Ralph W. Clark Vice President, IBM.
Robert J. Corrigan Vice President, IBM.
Kenneth W. Dam Vice President, IBM.
James E. Dezell, Jr. Vice President, IBM.
Nicholas M. Donofrio Vice President, IBM.
Gerald W. Ebker Vice President, IBM.
Donato A. Evangelista Vice President and General
Counsel, IBM.
Howard C. Figueroa Vice President, IBM.
Lucie J. Fjeldstad Vice President, IBM.
Larry J. Ford Vice President, IBM.
<PAGE>34
James J. Forese Vice President, IBM.
Heinz K. Fridrich Vice President, IBM.
Richard T. Gerstner Vice President, IBM.
Victor J. Goldberg Vice President, IBM.
William O. Grabe Vice President, IBM.
Joseph M. Guglielmi Vice President, IBM.
Luiz F. Hahne Vice President, IBM.
Hans-Olaf Henkel Vice President, IBM.
Ellen M. Hancock Vice President, IBM.
Arthur J. Hedge, Jr. Vice President, IBM.
Harry L. Kavetas Vice President, IBM.
Edward J. Kfoury Vice President, IBM.
Robert J. LaBant Vice President, IBM.
Ned C. Lautenbach Vice President, IBM.
Paul R. Low Vice President, IBM.
Edward E. Lucente Vice President, IBM.
Marvin L. Mann Vice President, IBM.
David E. McDowell Vice President, IBM.
Charles E. McKittrick, Jr. Vice President, IBM.
Ennio Presutti Vice President, IBM.
M. Bernard Puckett Vice President, IBM.
Michael J. Quinlan Vice President, IBM.
Renato Riverso Vice President, IBM.
<PAGE>35
Peter R. Schneider Vice President, IBM.
Stephen B. Schwartz Vice President, IBM.
Takeo Shiina Vice President, IBM.
Robert M. Stephenson Vice President, IBM.
Nancy H. Teeters Vice President, IBM.
John M. Thompson Vice President, IBM.
H. Mitchell Watson, Jr. Vice President, IBM.
Earl F. Wheeler Vice President, IBM.
John P. Cunningham Vice President and Controller,
IBM.
William W. K. Rich Secretary, IBM.
Robert M. Ripp Treasurer, IBM.
Michael H. Van Vranken Assistant Controller, IBM.
Joe Grills Assistant Treasurer, IBM.
Ira D. Hall Assistant Treasurer, IBM.
Robert N. Mattson Assistant Treasurer, IBM.
John H. Stewart Assistant Treasurer, IBM.
<PAGE>36
ATTACHMENT 2
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, $.01 PAR VALUE
------------------------------------------------------------
(Title of Class of Securities)
731108 10 6
------------------------------------------------------------
(CUSIP Number)
Donald Westfall, Associate General Counsel
International Business Machines Corporation
Room 1E-73, 2000 Purchase Street, Purchase, New York 10577
------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 25, 1989
------------------------------------------------------------
(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
this statement [ ]. (A fee is not required only if the
reporting person: (1) has a previous statement on file
<PAGE>37
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).
CUSIP No. 731108 10 6
(1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
INTERNATIONAL BUSINESS MACHINES CORPORATION
13-0871985
------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
------------------------------------------------------------
(3) SEC Use Only
------------------------------------------------------------
(4) Source of Funds
WC
<PAGE>38
------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
------------------------------------------------------------
(6) Citizenship or Place of Organization
New York
------------------------------------------------------------
Number of (7) Sole Voting Power 3,804,261
Shares Bene-
ficially (8) Shared Voting Power 0
Owned by
Each Report- (9) Sole Dispositive Power 3,804,261
ing Person
With (10) Shared Dispositive Power 0
------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each
Reporting Person
3,804,261
------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares
[ ]
------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
19.8%
------------------------------------------------------------
(14) Type of Reporting Person (See Instructions)
CO
<PAGE>39
Item 4. Purpose of Transaction
Item 4 is amended by deleting the entire text
thereof and adding the following:
On July 26, 1989, IBM entered into a Stock Pur-
chase Agreement (the "Agreement") with the Company, pursuant
to which the Company issued and IBM acquired, on August 24,
1989, 3,797,561 shares of Series A Convertible Special
Stock, par value $.01 per share (the "Series A Preferred
Stock"). Those shares were purchased for investment. On
October 25, 1989, such shares were automatically converted
into an equal number of shares of Common Stock pursuant to
the Agreement and the Articles of Amendment to the Articles
of Incorporation of the Company containing the terms of the
Series A Preferred Stock.
The Agreement contains a "standstill" provision
which prohibits IBM from acquiring any Voting Securities (as
defined in the Agreement) without the consent of the Company
if such acquisition would cause IBM to own more than 30% of
the Outstanding Voting Power of the Company. However, IBM
may acquire Voting Securities without regard to the stand-
still provision (1) in response to a tender offer for 35% or
more of the Outstanding Voting Power of the Company or (2)
if any other person or group acquires 20% or more of the
Outstanding Voting Power of the Company (as defined in the
<PAGE>40
Agreement). "Outstanding Voting Power" of the Company for
purposes of the Agreement means the total number of votes
which may be cast in the election of directors if all Voting
Securities then Outstanding were present and voted, other
than votes that may be cast only by one class or series of
stock (other than Common Stock) or upon the happening of a
contingency. "Voting Securities" of the Company for purpo-
ses of the Agreement are the Common Stock, any other securi-
ties having a right to vote generally for directors and any
securities, rights or options convertible into, or exchange-
able or exercisable for, such securities.
IBM is required under the Agreement to vote all
its Voting Securities for the nominees to the Board of
Directors of the Company of a committee of independent
directors not employed by the Company, so long as (1) the
standstill provision is in effect and (2) IBM is entitled to
designate nominees to the Board of Directors under the
Agreement, as described in the next paragraph.
The Company is required to include in the slate of
nominees recommended to holders of Common Stock and to
otherwise use its best efforts to cause the election to the
Board of Directors of a specified number of persons desig-
nated by IBM: two persons if IBM owns at least 16% of the
outstanding Voting Power of the Company; and one person if
<PAGE>41
IBM owns at least 10%, but less than 16%, of the Outstanding
Voting Power of the Company.
The Company was required, upon request of IBM
after the closing of the purchase and sale of the Series A
Preferred Stock, to cause a person designated by IBM to be
elected to the Board of Directors. At a meeting of the
Board of Directors of the Company held on October 17, 1989,
Lutz F. Hahne, Vice President, IBM, was elected a director
of the Company.
So long as IBM owns more than 10% of the
Outstanding Voting Power of the Company, IBM will be
entitled, at the sole option of the Company, to designate an
observer to attend meetings of the Board of Directors. The
parties have agreed that the Company may withhold from any
such observer and any director designated by IBM under the
Agreement, any information which would, if disclosed to IBM,
result in a competitive disadvantage to the Company. At a
meeting of the Board of Directors of the Company held on
October 17, 1989, Marvin L. Mann, Vice President, IBM, was
approved as IBM's designated observer.
IBM is also required, so long as the standstill
provision and the development and marketing agreement
described below are in effect and IBM owns at least 16% of
the Outstanding Voting Power of the Company, to vote its
<PAGE>42
Voting Securities on all matters other than the election of
directors in the same proportion as the votes cast by other
holders of Voting Securities, except that IBM may vote its
Voting Securities in its sole discretion with respect to
specified material matters and with respect to any action
that is materially adverse to IBM and except that IBM may
vote all or a greater proportion of its Voting Securities in
favor of any matter that is recommended favorably by the
Board of Directors.
So long as IBM owns 5% or more of the Outstanding
Voting Power of the Company, IBM is required not to transfer
any Voting Securities (including its Common Stock), except
(1) to a person approved by the Company, (2) in a privately
negotiated transaction exempt from registration under the
Securities Act of 1933 or pursuant to Rule 144 under such
Act, (3) pursuant to an underwritten public offering regis-
tered under such Act or (4) in response to a tender offer
which is approved or not opposed by the Board of Directors
or which is for more than 35% of the Outstanding Voting
Power of the Company. So long as IBM owns 5% or more of the
Outstanding Voting Power of the Company, IBM is required not
to (a) privately sell Voting Securities representing 5% or
more of the Outstanding Voting Power of the Company to any
person or group or (b) privately sell any Voting Securities
<PAGE>43
to any person or group who has on file with the Securities
and Exchange Commission a current statement on Schedule 13D
under the Securities Exchange Act of 1934 reporting its
ownership of 5% or more of the Outstanding Voting Power of
the Company.
With limited exceptions, so long as IBM owns 5% or
more of the Outstanding Voting Power of the Company, IBM has
a right of first refusal on any Voting Securities which the
Company is proposing to sell. IBM may exercise its right of
first refusal to bring its holdings up to, but not in excess
of, (1) 30% of the Outstanding Voting Power of the Company
or (2) the percentage interest in the Company which would be
held after the proposed sale of Voting Securities by the
proposed buyer of such Voting Securities, whichever is
greater. The Company has a right of first refusal, as long
as IBM owns 5% or more of the Outstanding Voting Power of
the Company, on any Voting Securities which IBM is proposing
to sell privately, pursuant to Rule 144 under the Securities
Act of 1933 or in response to a tender offer for more than
35% of the Outstanding Voting Power of the Company.
IBM has certain rights under the Agreement to
cause the Company to register under the Securities Act of
1933 its Common Stock. IBM is required, prior to requesting
the Company to effect any such registration, to give the
<PAGE>44
Company the opportunity to purchase the Common Stock to be
registered at the Average Market Price (defined as the
20-day trailing average price).
In the event of any issuance of Voting Securities
(including upon the exercise, but not upon the issuance, of
employee stock options), IBM has the right, so long as IBM
owns 5% or more of the Outstanding Voting Power of the
Company, to preserve its percentage interest in the Out-
standing Voting Power of the Company by purchasing Common
Stock at the Average Market Price.
IBM and the Company entered into a development and
marketing agreement dated July 26, 1989. The agreement
provides for IBM's assistance to the Company in its
development of insurance applications for IBM's systems
application architecture. In addition, IBM and the Company
will establish marketing programs for certain of the
Company's insurance applications.
Except as set forth in the preceding paragraphs,
IBM does not have any plans or proposals which relate to
(a) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company
or any of its subsidiaries; (b) a sale or transfer of a
material amount of assets of the Company or any of its
subsidiaries; (c) any change in the present management of
<PAGE>45
the Company or the present Board of Directors of the
Company; (d) any material change in the present
capitalization or dividend policy of the Company; (e) any
other material change in the Company's business or corporate
structure; (f) changes in the Company's charter or By-laws
or other actions which may impede the acquisition of control
of the Company by any person; (g) causing a class of
securities of the Company to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association; (h) a class of equity
securities of the Company becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or (i) any action similar
to any of the foregoing actions.
IBM reserves the right, based on its continuing
review of its investment in the Company and subject to its
obligations under the Agreement, to dispose of any or all
the shares of Common Stock owned by it and otherwise to
change its intentions with respect to any or all of the
matters referred to in this Item 4. Depending on market
conditions, IBM may acquire additional securities of the
Company up to and including 30% of the Outstanding Voting
Power of the Company.
<PAGE>46
Item 5. Interest in Securities of the Company
Item 5 is amended by deleting the entire text
thereof and adding the following:
Except for 6,700 shares of Common Stock (or .03%
of the outstanding Common Stock) owned indirectly through a
pension fund, the only shares of Common Stock that IBM
beneficially owns are 3,797,561 shares of Common Stock (or
19.8% of the outstanding Common Stock) that were issued on
conversion of the 3,797,561 shares of Series A Preferred
Stock that IBM acquired under the Agreement. IBM possesses
the sole power to vote or to direct the vote and to dispose
of or direct the disposition of all shares of Common Stock
beneficially owned by it, subject to its obligations under
the Agreement.
On October 25, 1989, all the shares of Series A
Preferred Stock held by IBM were automatically converted
into an equal number of shares of Common Stock. The Agree-
ment required the Company to use its best efforts to obtain
shareholder approval under the South Carolina Control Share
Acquisitions Act of voting rights for IBM's Voting Securi-
ties, in the event that such Voting Securities represent
one-fifth or more of all the voting power of the Company
(within the meaning of such Act), but only to the extent
that such Voting Securities represent no more than 30% of
<PAGE>47
the Outstanding Voting Power of the Company. Upon the
granting of such approval, as provided in the Agreement, all
the Series A Preferred Stock was deemed converted into
Common Stock.
Except as described above and except as set forth
in Schedule I, neither IBM nor, to the best of IBM's knowl-
edge, any person named in Schedule I beneficially owns any
shares of Common Stock or has effected any transactions in
Common Stock during the past 60 days.
<PAGE>48
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: November 09, 1989
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
by /S/ Donald D. Westfall
Name: Donald D. Westfall
Title: Associate General
Counsel
<PAGE>49
EXHIBIT INDEX
Page on which
Exhibit Appears
Number Document Status
1 Stock Purchase Agreement dated <FN1>
July 26, 1969, between
International Business
Machines Corporation and
Policy Management Systems
Corporation
2 Stock Purchase Agreement dated <FN2>
April 26, 1994, between Inter-
national Business Machines
Corporation and Policy
Management Systems Corporation
3 Stock Purchase Agreement dated <FN2>
April 26, 1994, among Inter-
national Business Machines
Corporation, General Atlantic
Partners 14, L.P. and GAP
Coinvestment partners.
[FN]
<FN1> This Exhibit was filed with the Original Report.
Pursuant to Rule 13d-2(c), such previously filed
Exhibits are not required to be restated
electronically.
<FN2> Filed electronically herewith.
EXHIBIT 2
STOCK PURCHASE AGREEMENT
Dated as of April 26, 1994
between
INTERNATIONAL BUSINESS MACHINES CORPORATION
and
POLICY MANAGEMENT SYSTEMS CORPORATION
<PAGE>2
THIS STOCK PURCHASE AGREEMENT, dated as of April
26, 1994 (the "Agreement"), is between INTERNATIONAL
BUSINESS MACHINES CORPORATION, a New York corporation
("Seller"), and POLICY MANAGEMENT SYSTEMS CORPORATION, a
South Carolina corporation (the "Company").
WHEREAS, Seller is the record holder of 3,797,561
shares of the Company's Common Stock, $.01 par value per
share (the "Common Stock"); and
WHEREAS, Seller and the Company entered into a
Stock Purchase Agreement dated July 26, 1989 (the "1989
Agreement"); and
WHEREAS, Seller desires to sell and the Company
desires to purchase 2,278,537 shares of the Common Stock
(the "Repurchased Stock") upon the terms and conditions
hereinafter provided; and
WHEREAS, Seller desires to sell and General
Atlantic Partners 14, L.P., a Delaware limited partnership
and GAP Coinvestment Partners, a New York general
partnership (collectively referred to as the "Investor"),
desires to purchase 1,519,024 shares of Common Stock
pursuant to a Stock Purchase Agreement (the "Investor
Agreement") between Seller and Investor;
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Seller hereby agrees to sell, convey,
transfer and deliver to the Company, and the Company hereby
agrees to purchase from Seller, the Repurchased Stock for
the purchase price set forth below (the "Purchase Price").
(b) The "Purchase Price" shall be fifty-six
million four hundred thirty-nine thousand three hundred
sixty-one and 49/100 dollars ($56,439,361.49).
(c) If the Closing Date (as hereinafter defined)
occurs prior to the fortieth (40th) day following execution
of this Agreement (the "40th Day"), the Purchase Price
shall be reduced by an amount calculated by determining the
interest on the Purchase Price for the number of calendar
days from and including the Closing Date until and including
the 40th Day using the most recent interest rate on 90-day
Treasury bills published in the Wall Street Journal, Eastern
<PAGE>3
Edition on the date three (3) business days prior to the
Closing Date.
2. REPRESENTATIONS AND COVENANTS OF SELLER.
Seller hereby represents, warrants and covenants to the
Company as follows:
(a) Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New York.
(b) Title to Common Stock. Seller is the record
holder and sole beneficial owner of the Repurchased Stock
being sold pursuant to this Agreement and such Repurchased
Stock is free and clear of any claim, lien, pledge, option,
charge, security interest or encumbrance of any nature
whatsoever (collectively "Encumbrances") with respect to
Seller.
(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 or the Investor Agreement nor
compliance by Seller with any of the provisions hereof or of
the Investor Agreement will (with or without the giving of
notice or the passage of time) (i) violate or conflict with
any provision of the Certificate of Incorporation or By-Laws
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
<PAGE>4
governmental, administrative or self-regulatory authority or
any other third party whatsoever, other than disclosure of
the transactions contemplated hereby in the Seller's filings
pursuant to the federal securities laws and the rules of any
stock exchange on which the Common Stock is listed or on
which stock of Seller is listed.
(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 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 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 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 it 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
<PAGE>5
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. Seller acknowledges that the
Investor has been offered access to the business records of
the Company and such additional information as the Investor
has requested in order that the Investor make an informed
decision regarding the transactions contemplated by the
Investor Agreement. Seller acknowledges that the Investor
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 acknowledges that the Investor has undertaken its
investigation and evaluation of the Company independently of
Seller and for the Investor's own purposes. Seller has not
relied in any way whatsoever on Investor's investigation of
the Company in (i) declining the opportunity to have access
to information regarding the Company or the opportunity to
meet with Company officials and to have representatives of
the Company answer questions regarding the Company's affairs
and condition or (ii) making its investment decision with
respect to the Common Stock.
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 the legal,
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
<PAGE>6
(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 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 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.
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 Repurchased Stock
<PAGE>7
(the "Closing") shall take place at the offices of Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York
10019, at 10:00 AM New York Time on (x) the earlier to occur
of (i) the thirtieth calendar day following the expiration
or termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended,
relating to Investor's filing of a Notification and a Report
Form with respect to Investor's purchase of Common Stock
pursuant to the Investor Agreement, or (ii) June 30 , 1994,
or (y) such other date not later than ninety days following
execution of this Agreement as shall be agreed to in
writing by the Company and Seller (the "Closing Date").
Subject to the satisfaction or waiver of the conditions set
forth in Section 6 hereof, the Company 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. At the Closing and subject to the
conditions set forth in Section 6 of this Agreement, Seller
will make the delivery specified in clause (a) below and the
Company will make the deliveries specified in clause (b)
below.
(a) Certificate Representing the Stock. The
Seller will deliver to the Company a certificate or
certificates evidencing the Repurchased Stock being
purchased by the Company hereby, free and clear of
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.
(b) The Company's Performance. The Company will
pay to the Seller the Purchase Price for the
Repurchased Stock by a wire transfer of immediately
available funds to such bank account as the Seller
shall have designated in writing to the Company at
least three days prior to the Closing.
5. OTHER AGREEMENTS.
(a) Seller and the Company each hereby releases,
remises and forever discharges the other and their
respective present or former stockholders, employees,
officers, directors, agents and representatives,
individually and in their capacities as such stockholders,
employees, officers, directors, agents and representatives,
<PAGE>8
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 either Seller 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 or (ii) the 1989
Agreement (except as it relates to ownership of Common Stock
after the date hereof for acts or omissions occurring after
the date of this Agreement). Provided, however, the
foregoing shall specifically exclude actions, causes of
action, suits, debts, covenants, controversies, agreements,
damages, judgments, claims and demands whatsoever in law or
in equity which arise from or relate to Lutz F. Hahne's
appointment, tenure or resignation from the Board of
Directors of the Company.
(b) Seller and the Company agree to negotiate
over the ninety days following the Closing Date, or such
longer period as may be mutually acceptable, proposed future
contractual relationships between Seller and the Company,
as described in the letter attached hereto as Exhibit A, and
hereby acknowledge that they are under no obligation to
reach agreement relating thereto. Seller and the Company
agree that this Agreement supersedes the letter attached
hereto as Exhibit A. The contractual relationships between
the parties referenced in Exhibit A are hereby modified as
follows: (i) the amendment dated August 23, 1991 to the
July 26, 1989 Development and Marketing Agreement, (said
amendment known as the "INSERV Agreement" and said 1989
Development and Marketing Agreement is referred to as the
"D&M Agreement") is hereby cancelled effective April 13,
1994 (the parties having waived the six month notice period)
; and (ii) Section 4.B of the D&M Agreement is hereby
deleted, and (iii) subsequent amendments to the D&M
Agreement which added the Company's life and health
insurance industry products to the scope of Section 4.B of
the D&M Agreement are all hereby terminated. To the extent
Seller's affiliate ISSC must also agree to the
aforementioned modifications, Seller represents that by
Seller signing below, Seller is acting on behalf of ISSC
with respect to approval of said modifications. Provided,
however, the amendments set forth in (ii) and (iii) in the
foregoing sentence shall not apply to any other agreements
between Seller and Company, and their respective affiliates,
relating to territories outside of the United States. In
addition, except with respect to the specific geographical
territories outside of the United States of the U.K., France
<PAGE>9
and Austria for which Seller and the Company or their
respective affiliates may have specifically agreed in
writing to cooperate in developing and/or marketing their
respective products and services , all other provisions in
all other agreements between Seller and the Company which
restrict either from seeking and obtaining business in the
insurance information processing industry are hereby
terminated. The Company shall receive, effective upon the
Closing, a credit having a value of $2,000,000 (Two Million
Dollars) to be used by the Company in its sole discretion to
be applied against any invoice from Seller or for the
Company's purchase, lease or license of hardware which is to
be installed at the Company's facilities, hardware
maintenance, software or services of Seller.
(c) Seller and the Company hereby consent and
agree to the sale by Seller and purchase by the Company of
the Repurchased Stock and the sale by Seller and purchase by
Investor of the remaining Common Stock owned by Seller, as
set forth in the Investor Agreement substantially in the
form of Exhibit B (said sales by Seller to the Company and
to Investor are collectively referred to as the
"Contemplated Transactions"). In furtherance of and without
limiting the generality of the foregoing, Seller and the
Company consent, agree and acknowledge that: (i) a
majority of the Board of Directors of the Company has
approved the Contemplated Transactions in accordance with
Section 6(b)(v)(A)of the 1989 Agreement, (ii) the Investor
Agreement contains or shall contain an investment
representation in accordance with Section 6(b)(v)(C) of the
1989 Agreement; and (iii) Seller waives any notice required
by Section 7(h) of the 1989 Agreement as a result of the
sale contemplated by the Investor Agreement and the Company
waives any notice required by Section 13(C) of the 1989
Agreement as a result of the sale contemplated by the
Investor Agreement. Except as expressly provided in this
Agreement, the 1989 Agreement shall continue in full force
and effect in accordance with its terms.
(d) Seller and the Company agree to execute on or
prior to the Closing Date a release in substantially the
form set forth in Exhibit C regarding Mutual of Omaha. The
Company agrees to cooperate in good faith with Seller in
obtaining the release from Mutual of Omaha contemplated by
the release set forth in Exhibit C.
(e) Seller and the Company will each cooperate
with the other and use best efforts to cause the fulfillment
<PAGE>10
of the conditions to the other's 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 Contemplated Transactions 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 Contemplated Transactions,
each of Seller 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.
6. 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
Seller shall be true and correct in all material respects
(and by tendering the Repurchased Stock at the Closing
Seller 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) all actions,
instruments and documents required to consummate the
purchase of the Repurchased Stock as provided for in this
Agreement, and all other related legal matters, shall be
reasonably satisfactory to the Company.
(b) It shall be a condition to the obligations of
Seller 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), (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) all actions, instruments and
documents required to consummate the sale of the
Repurchased Stock as provided for in this Agreement, and all
<PAGE>11
other related legal matters, shall be reasonably
satisfactory to the Seller.
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 Repurchased Stock to the Company 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 non-breaching party
may obtain specific performance to mandate sale and purchase
of the Repurchased Stock to the Company in accordance with
this Agreement in the event the other party's breach 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) 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
either of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of Seller
and the Company, whether so expressed or not.
(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>12
If to the Company:
Policy Management Systems Corporation
1 PMS Center
Blythewood, South Carolina 29016
Attention: Mr. G. Larry Wilson
Telephone: 803-735-4301
With a copy to:
Attention: General Counsel
Telephone: 803-735-6099
Telecopier: 803-735-5560
If to Seller:
International Business Machines Corporation
Old Orchard Road
Armonk, New York, 10504
Attention: Michael W. Szeto, IBM Director of
Business Development, Room 2C-99
Telephone: 914-765-4200
Telecopier: 914-765-4206
With a copy to:
Attention: Gregory C. Bomberger, Esq., Room
1C-61 Telephone:914-765-7392
Telecopier: 914-765-6006
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.
<PAGE>13
(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.
(h) 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
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>14
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 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 ninety days following execution of this
Agreement. Notwithstanding the foregoing, the provisions of
Section 8(h) shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date first above written.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By____________________________
Name:
Title:
POLICY MANAGEMENT SYSTEMS
CORPORATION
By____________________________
Name:
Title:
EXHIBIT 3
____________________________________________________________
____________________________________________________________
STOCK PURCHASE AGREEMENT
Dated as of April 26, 1994
among
INTERNATIONAL BUSINESS MACHINES CORPORATION,
GENERAL ATLANTIC PARTNERS 14, L.P.
and
GAP COINVESTMENT PARTNERS
___________________________________________________________
___________________________________________________________
<PAGE>2
THIS STOCK PURCHASE AGREEMENT,
dated as of April 26, 1994 (the "Agreement"),
is among International Business Machines
Corporation, a New York corporation
("Seller"), General Atlantic Partners 14,
L.P., a Delaware limited partnership ("GAP
14"), and GAP Coinvestment Partners, a New
York general partnership ("GAP Coinvestment"
and, together with GAP 14, the "Purchasers").
WHEREAS, Seller is the record holder of 3,797,561
shares of Common Stock of Policy Management Systems
Corporation, a South Carolina corporation (the "Company"),
$.01 par value per share (the "Common Stock"); and
WHEREAS, Seller desires to sell and GAP 14 and
GAP Coinvestment desire to purchase 1,367,122 and 151,902
shares, respectively, of the Common Stock (all of such
shares are referred to herein as the "Purchased Stock");
WHEREAS, Seller desires to sell and the Company
desires to purchase 2,278,537 shares of Common Stock
pursuant to a Stock Purchase Agreement (the "Company
Agreement") between Seller and the Company;
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Seller hereby agrees to sell, convey,
transfer and deliver to the Purchasers, and the Purchasers
hereby agree to purchase from Seller, the Purchased Stock
for the purchase price set forth below (the "Purchase
Price").
b. The "Purchase Price" shall be $37,626,224.48.
The number of shares of Purchased Stock to be sold by the
Seller to each of the Purchasers at the Closing (as
hereinafter defined) and that portion of the aggregate
Purchase Price therefor to be paid by each of the Purchasers
are set forth on Schedule I hereto. The Purchasers may, at
any time prior to the five days preceding the Closing
reallocate the number of shares of Purchased Stock to be
sold by the Seller to each of the Purchasers at the Closing,
and the portion of the aggregate Purchase Price therefor to
be paid by each of the Purchasers; provided, however, that
if such reallocation is made, then the Purchasers shall
provide the Seller with a revised Schedule I no later than
<PAGE>3
the fifth day preceding the date of the Closing; and,
provided further, that in no event shall the aggregate
number of shares of Purchased Stock to be sold by the Seller
to the Purchasers differ from the aggregate number of such
shares set forth in Schedule I.
c. If the Closing Date (as hereinafter defined)
occurs prior to the fortieth (40th) day following the
execution of this Agreement (the "40th Day"), the Purchase
Price shall be reduced by an amount calculated by
determining the interest on the Purchase Price for the
number of calendar days from and including the Closing Date
until and including the 40th Day using the most recent
interest rate on 90-day Treasury bills published in the Wall
Street Journal, Eastern Edition on the date three (3)
business days prior to the Closing Date.
2. REPRESENTATIONS AND COVENANTS OF SELLER.
Seller hereby represents, warrants and covenants to the
Purchasers as follows:
a. Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of New York.
b. Title to Common Stock. Seller is the record
holder and sole beneficial owner of the Purchased Stock
being sold pursuant to this Agreement and such Purchased
Stock is free and clear of any claim, lien, pledge, option,
charge, security interest or encumbrance of any nature
whatsoever (collectively "Encumbrances") with respect to
Seller.
c. Authority; Execution and Delivery, Etc.
Seller 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 Seller and no other actions on the
part of Seller are required. This Agreement and the Company
Agreement have been duly executed and delivered by Seller
and constitute the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its
terms.
<PAGE>4
d. Consents, No Conflicts, Etc. Except as
contemplated by Sections 5(a), 6(c) and 6(f), neither the
execution and delivery of this Agreement, the consummation
by Seller of this Agreement or the Company Agreement, nor
compliance by Seller 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 Certificate of Incorporation or By-Laws
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, other than disclosure of
the transactions contemplated hereby in the Seller's filings
pursuant to the federal securities laws and the rules of any
stock exchange on which the Common Stock is listed or on
which stock of Seller is listed.
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 Purchased
Stock, this Agreement or the Company Agreement which if
adversely determined could prohibit or prevent Seller 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 Seller with respect to the Purchased Stock or the
Common Stock to be sold pursuant to the Company Agreement.
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 either or both of the Purchasers 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 Purchasers 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 Seller.
<PAGE>5
g. No Pledge; Other Actions. Seller 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 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.
3. REPRESENTATIONS AND COVENANTS OF THE
PURCHASERS. Each of the Purchasers hereby represents,
warrants and covenants to Seller as follows:
a. Organization and Good Standing. Such
Purchaser is a partnership duly organized and validly
existing under the laws of its jurisdiction of organization.
b. Authority; Execution and Delivery, Etc. Such
Purchaser 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 such Purchaser and constitutes the
legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its
terms.
c. Consents, No Conflicts, Etc. Except as
contemplated by Section 5(a), 6(c) and 6(f) hereof, neither
the execution and delivery of this Agreement, the
consummation by such Purchaser of the transactions
contemplated hereby, nor compliance by such Purchaser 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 any agreement, instrument,
judgment, decree, statute or regulation applicable to such
Purchaser or any assets or properties of such Purchaser,
(ii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to such Purchaser or any
assets or properties of such Purchaser 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 the Company's filings
<PAGE>6
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, arbitral action or government investigation
pending or, so far as known to such Purchaser, threatened
against such Purchaser with respect to the Purchased Stock
or this Agreement which if adversely determined could
prohibit or prevent such Purchaser from consummating the
transactions contemplated hereby. There are no decrees,
injunctions or orders of any court or governmental
department or agency outstanding against such Purchaser with
respect to the Purchased Stock.
(e) No Brokers. Such Purchaser 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. Such Purchaser agrees to
indemnify and hold Seller 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 such Purchaser.
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, at 10:00 AM New York Time on (x) the earlier to occur
of (i) the thirtieth 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 ninety days
following execution of this Agreement as shall be agreed to
in writing by the Purchasers and Seller (the "Closing
Date"). Subject to the satisfaction or waiver of the
conditions set forth in Section 6 hereof, 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
<PAGE>7
business days before the date so designated. At the Closing
and subject to the conditions set forth in Section 6 of this
Agreement, Seller will make the delivery specified in
clause (a) below and the Purchasers will make the deliveries
specified in clause (b) below.
(a) Certificate Representing the Stock. The
Seller will deliver to each Purchaser certificates
evidencing the number of shares of Purchased Stock
being purchased by such Purchaser hereby, free and
clear of Encumbrances, duly endorsed for transfer to
such Purchaser's order or accompanied by stock powers
duly executed to such Purchaser's order and with all
requisite documentary or stock transfer tax stamps
affixed.
(b) Purchasers' Performance. Each Purchaser will
pay to the Seller that portion of the Purchase Price to
be paid by such Purchaser as set forth in Schedule I
hereto by wire transfer of immediately available funds
to such bank account as the Seller shall have
designated in writing to the Purchasers at least three
days prior to the Closing.
<PAGE>8
5. OTHER AGREEMENTS.
a. The Purchasers shall use their best 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") complete and accurate HSR Forms in
respect of the transactions contemplated hereby.
b. Seller and each of the Purchasers 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, Seller and each of the Purchasers 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. (1) The Purchasers agree and acknowledge
that Seller may be in possession of material information
which is not being made available to Purchasers and which
may be viewed as relevant by Purchasers. Such information
may include, without limitation, the future plans of Seller
for product solutions in the insurance industry, including
modifications of any current relationship between Seller and
the Company.
(2) The Purchasers agree and acknowledge
that they have 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. The Purchasers acknowledge that they have
undertaken their investigation and evaluation of the Company
independently of Seller and for the Purchasers' own
purposes. The Purchasers agree and acknowledge that they
<PAGE>9
have relied upon General Atlantic Partners as an investment
advisor for this investment. To the extent that the
Purchasers have not made their own investigation of the
Company as set forth above, General Atlantic Partners agrees
that it has made such investigation for the Purchasers and
that the Purchasers are relying upon General Atlantic
Partners' investigation in making their investment decision.
(3) The Purchasers have not relied in any
way whatsoever on Seller in making this investment decision.
The Purchasers and General Atlantic Partners agree and
acknowledge that Seller did not avail itself of any
opportunity to have access to information regarding the
Company or the opportunity to meet with Company officials or
to have representatives of the Company answer questions
regarding the Company's affairs and condition.
(4) The Purchasers agree, to the full extent
allowed by applicable law, that they hereby waive all claims
of whatever nature against Seller or its agents relating in
any manner whatsoever to this stock sale, other than claims
arising out of Seller's representations in Section 2. This
waiver of claims includes, without limitation, such claims
in existence which are unknown to the Purchasers and all
potential future such claims. General Atlantic Partners
hereby agrees to indemnify Seller from and against any and
all claims of whatever nature, including costs and
attorney's fees, against Seller or its agents by the
Purchasers or their agents and affiliates, relating in any
manner whatsoever to this stock sale, other than claims
arising out of Seller's representations set forth in Section
2.
(5) Both of the Purchasers acknowledge their
status as "accredited investors" as such term is defined in
Rule 501(a) under the Act. Purchasers acknowledge that they
have been represented by competent counsel sophisticated in
transactions of this nature, have had full opportunity to
consult with and receive advice from such counsel, and are
relying on no other representations or statements (including
omissions) by Seller, other than those set forth in Section
2 of this Agreement.
(6) All of these Sections shall apply to any
assignees or successors of the Purchasers, should Seller
later consent to such. The parties hereto hereby
acknowledge that General Atlantic Partners is a party to
<PAGE>10
this Agreement only with respect to this Section 5(c) and
Section 8.
6. CONDITIONS TO THE CLOSING.
a. It shall be a condition to each Purchaser's
obligation to purchase that portion of the Purchased Stock
to be purchased by such Purchaser at the Closing and a
condition of Seller to sell the Purchased Stock at the
Closing that the Company shall, prior thereto or
simultaneously therewith, purchase 2,278,537 shares of
Common Stock pursuant to the Repurchase Agreement between
Seller and the Company.
b. It shall be a condition to each Purchaser's
obligation to purchase that portion of the Purchased Stock
to be purchased by such Purchaser at the Closing that (i)
the representations, warranties and covenants of Seller
shall be true and correct in all material respects (and by
tendering the Purchased Stock at the Closing Seller 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 Purchased
Stock, and (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 the Purchasers.
c. It shall be a condition to each Purchaser's
obligation to purchase that portion of the Purchased Stock
to be purchased by such Purchaser at the Closing that all
applicable persons for the respective stock sale to such
Purchaser 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.
d. It shall be a condition to each Purchaser's
obligation to purchase that portion of the Purchased Stock
to be purchased by such Purchaser at the Closing that, the
Company shall have executed and delivered a Shareholders'
Agreement and a Registration Rights Agreement, each dated
the date hereof and each among the Company and the
<PAGE>11
Purchasers, and that such agreements shall be in force and
effect on the Closing.
e. It shall be a condition to the obligation of
Seller to sell the Purchased Stock at the Closing that (i)
the representations, warranties and covenants of each of the
Purchasers shall be true and correct in all material
respects (and by tendering the Purchase Price at the Closing
each of the Purchasers 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 Purchased Stock, and (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 Seller.
f. It shall be a condition to the obligation of
the Seller to sell the Purchased Stock at the Closing that
all applicable persons for the respective stock sale to such
Purchaser 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.
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 each of the Purchasers
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 non-
breaching party may obtain specific performance to mandate
sale and purchase of the Purchased Stock to each of the
Purchasers 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, each of the Purchasers
as set forth in this Agreement.
8. MISCELLANEOUS.
<PAGE>12
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:
If to either of the Purchasers or General
Atlantic Partners:
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) 373-3990
<PAGE>13
If to Seller:
International Business Machines Corporation
Old Orchard Road
Armonk, New York 10504
Attention: Michael W. Szeto, IBM Director of
Business Development, Room 2C-99
Telephone: (914) 765-4200
Telecopier: (914) 765-4206
with a copy to:
Attention: Gregory C. Bomberger, Esq., Room 1C-61
Telephone: (914) 765-7392
Telecopier: (914) 765-6006
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.
h. Public Announcements. Neither Seller nor the
Purchasers 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).
<PAGE>14
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 the date that is ninety days following
execution of this Agreement. Notwithstanding the foregoing,
the provisions of Section 8(h) shall survive termination of
this Agreement.
<PAGE>15
IN WITNESS WHEREOF, the parties have duly executed
and delivered this Agreement as of the date first above
written.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By:____________________________
Michael W. Szeto
IBM Director of Business
Development
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
Accepted and Agreed to
With Respect to Section 5(c)
and Section 8:
GENERAL ATLANTIC PARTNERS
By:____________________________
Steven A. Denning
Managing General Partner
SCHEDULE I
Shares of Purchased Portion of Purchase
Purchaser Stock to be Purchased Price to be Paid
General Atlantic Partners 1,367,122 $33,863,611.94
14, L.P.
GAP Coinvestment Partners 151,902 $3,762,612.54
Total 1,519,024 $37,626,224.48
