-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oiBnL8ZjQBBQHnRqRcbxynRo8YQu1iZXBX5PrC/NNz+CRBg0/B7TtNJD3xJzbAQ4 b+huz0ar2heZFNths0vtpQ== 0000950157-94-000065.txt : 19940526 0000950157-94-000065.hdr.sgml : 19940526 ACCESSION NUMBER: 0000950157-94-000065 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19940525 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: POLICY MANAGEMENT SYSTEMS CORP CENTRAL INDEX KEY: 0000356226 STANDARD INDUSTRIAL CLASSIFICATION: 6411 IRS NUMBER: 570723125 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-35824 FILM NUMBER: 94530339 BUSINESS ADDRESS: STREET 1: ONE PMS CTR STREET 2: PO BOX TEN CITY: COLUMBIA STATE: SC ZIP: 29202 BUSINESS PHONE: 8037354000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL BUSINESS MACHINES CORP CENTRAL INDEX KEY: 0000051143 STANDARD INDUSTRIAL CLASSIFICATION: 3570 IRS NUMBER: 130871985 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: OLD ORCHARD RD CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 9147651900 SC 13D 1 SCHEDULE 13D 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 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 ------------------------------------------------------------ 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 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. 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 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 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 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). 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: 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. 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 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 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. 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 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. 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 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 ------------------------------------------------------------ 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 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. 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. 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 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 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 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 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. 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). 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 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. 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 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 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. 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. 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. 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. 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. 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 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 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 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 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 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 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 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 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 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. 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 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. 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 49 EXHIBIT INDEX Page on which Exhibit Appears Number Document Status 1 Stock Purchase Agreement dated July 26, 1969, between International Business Machines Corporation and Policy Management Systems Corporation 2 Stock Purchase Agreement dated April 26, 1994, between Inter- national Business Machines Corporation and Policy Management Systems Corporation 3 Stock Purchase Agreement dated April 26, 1994, among Inter- national Business Machines Corporation, General Atlantic Partners 14, L.P. and GAP Coinvestment partners. [FN] 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. Filed electronically herewith. EX-99 2 EXHIBIT 2 - STOCK PURCHASE AGREEMENT EXHIBIT 2 STOCK PURCHASE AGREEMENT Dated as of April 26, 1994 between INTERNATIONAL BUSINESS MACHINES CORPORATION and POLICY MANAGEMENT SYSTEMS CORPORATION 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 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 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 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. 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 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, 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 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 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 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: 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. 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.] 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: EX-99 3 EXHIBIT 3 -- STOCK PURCHASE AGREEMENT 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 ___________________________________________________________ ___________________________________________________________ 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 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. 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. 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 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 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. 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 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 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 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. 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 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). 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. 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 -----END PRIVACY-ENHANCED MESSAGE-----