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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 8, 1996,
between POLICY MANAGEMENT SYSTEMS CORPORATION, a South Carolina
corporation (the "Company") and CONTINENTAL CASUALTY COMPANY, an
Illinois domestic insurance company ("CNA").
Pursuant to a Stock Purchase Agreement, dated as of the date
hereof, among GENERAL ATLANTIC PARTNERS 14, L.P., a Delaware limited
partnership ("GAP 14"), GAP COINVESTMENT, L.P., a New York limited
partnership (GAP Coinvestment") and CNA (the "Stock Purchase
Agreement"), CNA has agreed to purchase from GAP 14 and GAP Coinvestment
759,512 shares of Common Stock, par value $.01 per share, of the Company
("Common Stock," and such shares of Common Stock are referred to herein
as the "Purchased Common Stock").
In connection with the purchase of the Purchased Common
Stock by CNA pursuant to the Stock Purchase Agreement, CNA has entered
into a Shareholder's Agreement, dated as of the date hereof, between the
Company and CNA (the "Shareholder's Agreement"), pursuant to which CNA
has granted to the Company rights of first offer and certain other
rights, in each case, to the extent provided for therein.
In order to induce CNA to enter into the Shareholder's
Agreement, the Company has agreed to provide registration rights with
respect to the Registrable Securities (as hereinafter defined) as set
forth in this Agreement.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the
meanings indicated:
"Act" means the Securities Act of 1933, as amended.
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"Approved Underwriter" has the meaning assigned such
term in Section 3(e).
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in The City of New York
are authorized or required by law or executive order to close.
"Common Stock" has the meaning assigned such term in
the second paragraph of this Agreement.
"Company" has the meaning assigned such term in the
first paragraph of this Agreement.
"Company Approved Amount" has the meaning assigned
such term in Section 4(a).
"Company Underwriter" has the meaning assigned such
term in Section 4(a).
"Demand Registration" has the meaning assigned such
term in Section 3(a).
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"GAP 14" has the meaning assigned such term in the
second paragraph of this Agreement.
"GAP Coinvestment" has the meaning assigned such term
in the second paragraph of this Agreement.
"Holder" has the meaning assigned such term in Section
2(b).
"Holders' Counsel" means (a) with respect to any
Demand Registration that has been requested pursuant to Section 3,
counsel selected by the Initiating Holders holding a majority of the
Registrable Securities held by all Initiating Holders being registered
in such registration, and (b) with respect to a request for registration
of Registrable Securities pursuant to Section 4, counsel selected by the
Holders holding a majority of the Registrable Securities being
registered in such registration.
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"Indemnified Party" has the meaning assigned such term
in Section 8(c).
"Indemnifying Party" has the meaning assigned such
term in Section 8(c).
"Initiating Holders" has the meaning assigned such
term in Section 3(a).
"NASD" has the meaning assigned such term in Section
6(a)(xv).
"Person" means any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall include any
successor (by merger or otherwise) of any such entity.
"Purchased Common Stock" has the meaning assigned such
term in the second paragraph of this Agreement.
"Registrable Securities" means, subject to Section
2(a), (i) any shares of Purchased Common Stock, and (ii) any shares of
capital stock or any other security of a class which is listed on a
national securities exchange issued or issuable in respect of shares of
Purchased Common Stock or any other shares of Common Stock of the
Company acquired by CNA in a manner consistent with and subject to the
Shareholder's Agreement by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Registration Expenses" has the meaning assigned such
term in Section 7.
"SEC" means the Securities and Exchange Commission.
"Shareholder's Agreement" has the meaning assigned
such term in the third paragraph of this Agreement.
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"Stock Purchase Agreement" has the meaning assigned
such term in the second paragraph of this Agreement.
"Total Securities" has the meaning assigned such term
in Section 4(a).
2. Securities Subject to this Agreement.
(a) Registrable Securities. For the purposes of
this Agreement, Registrable Securities will cease to be Registrable
Securities (i) when a registration statement covering such Registrable
Securities has been declared effective under the Act by the SEC and such
Registrable Securities have been disposed of pursuant to such effective
registration statement, (ii) if such Registrable Securities have been
sold pursuant to Rule 144 or otherwise in a transaction in which such
shares may be resold in a transaction exempt from the registration
requirements of the Act and the legend on the certificates representing
such shares has been or is permitted to be removed or (iii) if such
Registrable Securities are otherwise transferable without restriction
under the Act.
(b) Holders of Registrable Securities. A Person is
deemed to be a holder of Registrable Securities (a "Holder") whenever
such Person (i) is a party to this Agreement or a permitted assign under
the Shareholder's Agreement (other than a Rule 144 purchaser) who agrees
to be bound in writing by the terms and provisions of this Agreement and
the Shareholder's Agreement and (ii) owns of record Registrable
Securities. If the Company receives conflicting instructions, notices
or elections from two or more persons with respect to the same
Registrable Securities, the Company shall act upon the basis of the
instructions, notice or election received from the registered owner of
such Registrable Securities.
3. Demand Registration.
(a) Request for Demand Registration. Subject to
Sections 3(b) and 3(d) hereof, the Holders holding at least a majority
of the Registrable Securities held by all of the Holders (the
"Initiating Holders") may
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request, at any time after April 1, 1997, registration (the "Demand
Registration") of Registrable Securities under the Act and under the
securities or blue sky laws of any United States jurisdiction reasonably
designated by the Holders that request to register Registrable
Securities in such registration (subject to Section 6(a)(iv) below);
provided, however, that the Company shall be obligated to effect no more
than three such Demand Registrations. Notwithstanding the foregoing,
the Company shall not be required to effect a Demand Registration
(i) within the period beginning forty-five (45) days before the
estimated filing date of a registration statement filed by the Company
on its own behalf covering a firm commitment underwritten public
offering and ending on the later of (A) one hundred and twenty (120)
days after the effective date of such registration statement and (B) the
expiration of any lock-up period reasonably required by the
underwriters, if any, in connection therewith; (ii) if such registration
is for less than 25% of the total number of shares of Registrable
Securities owned by the Holders; (iii) if, in the written opinion of
counsel to the Company, (A) the shares to be registered may be resold in
a transaction exempt from the Registration requirements of the Act, or a
no-action letter of the staff of the SEC has been obtained to that
effect, and (B) the shares are freed from any and all restrictions on
transfer under the Shareholder's Agreement; (iv) for a maximum of sixty
(60) days if the Company is contemplating a material plan of financing
or would be required to disclose information that it deems reasonably
advisable not to disclose in a registration statement; (v) for a maximum
of sixty (60) days if the Company cannot then comply with the financial
disclosure requirements of the SEC in connection with such registration.
Any request for a Demand Registration by the Initiating Holders shall
specify the amount of the Registrable Securities proposed to be sold,
the intended method of disposition thereof and whether the request is
for registration on Form S-3 (or any successor form thereto). Upon a
request for a Demand Registration, the Company shall promptly take such
steps as are reasonably necessary or appropriate to prepare for the
registration of the Registrable Securities to be registered. Within
fifteen (15) days after the receipt of such request, the Company shall
give written notice thereof to all other Holders and include in such
registration all Registrable Securities held
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by a Holder from whom the Company has received a written request for
inclusion therein at least ten (10) days prior to the filing of the
registration statement. Each such request will also specify the number
of Registrable Securities to be registered, the intended method of
disposition thereof and whether the request is for registration on Form
S-3 (or any successor form thereto). Unless the Initiating Holders
holding the majority of the Registrable Securities held by all
Initiating Holders to be included in any Demand Registration consent in
writing, no other party (other than the Company or any other Holder),
shall be permitted to offer securities under a Demand Registration.
(b) Effective Demand Registration. A registration
shall not constitute a Demand Registration until it has become effective
and remains continuously effective for not less than one hundred and
twenty (120) days or until the shares registered therein have been sold,
whichever is earlier. The Company shall use its reasonable best efforts
to cause a Demand Registration to become effective not later than one
hundred and twenty (120) days after it receives a request for a Demand
Registration under Section 3(a).
(c) Expenses. In any registration initiated as a
Demand Registration, the Company shall pay all reasonable Registration
Expenses (as defined herein) in connection therewith, whether or not
such requested Demand Registration becomes effective; provided, however,
that, if a registration initiated as a Demand Registration does not
become effective or remain effective for one hundred and twenty (120)
days as provided in section 3(b) above for reasons beyond the Company's
control and the Company pays such Registration Expenses, the Holders of
Registrable Securities included in any subsequent registration shall be
required to pay all Registration Expenses for the next Demand
Registration.
(d) Underwriting Procedures. If the Initiating
Holders holding a majority of the Registrable Securities held by all
Initiating Holders so elect, the offering of such Registrable Securities
pursuant to a Demand Registration shall be in the form of a firm
commitment
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underwritten offering and the managing underwriter or underwriters
selected for such offering shall be the Approved Underwriter selected in
accordance with Section 3(e). In such event, if the Approved
Underwriter advises the Company in writing that, in its opinion, the
aggregate amount of such Registrable Securities requested to be included
in such offering is sufficiently large to have a material adverse effect
on the success of such offering, then (i) the Company shall include in
the registration only the aggregate amount of the Registrable Securities
that in the opinion of the Approved Underwriter may be sold without any
such effect on the success of such offering and (ii) no Registrable
Securities other than those owned by the Initiating Holders shall be
included in such registration without the written consent of the
Initiating Holders and any further reduction in the shares to be
included in such registration shall be made pro rata among the
participating Holders in proportion to the number of shares they own as
of such date.
(e) Selection of Underwriters. If a Demand
Registration is in the form of an underwritten offering, the Initiating
Holders holding a majority of the Registrable Securities held by all
Initiating Holders to be included in a Demand Registration shall select
and obtain an investment banking firm of national reputation to act as
the managing underwriter of the offering (the "Approved Underwriter");
provided that the Approved Underwriter shall, in any case, be acceptable
to the Company in its reasonable judgment and shall undertake to comply
with Section 2.1(h) of the Shareholder's Agreement.
4. Piggy-Back Registration.
(a) Piggy-Back Rights. If the Company proposes to
file a registration statement under the Act with respect to an offering
by the Company for its own account of any class of security (other than
a registration statement on Form S-4 or S-8 (or any successor form
thereto) under the Act), then the Company shall give written notice of
such proposed filing to each of the Holders at least thirty (30) days
before the anticipated filing date, and such notice shall describe in
detail the proposed registration and distribution (including those
jurisdictions where
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registration under the securities or blue sky laws is intended) and
offer such Holders the opportunity to register the number of Registrable
Securities as each such Holder may request. The Company shall use its
reasonable best efforts to cause the managing underwriter or
underwriters of an underwritten offering proposed by the Company (the
"Company Underwriter") to permit the Holders who have requested to
participate in the registration for such offering to include such
Registrable Securities in such offering and, if the Company proposes to
register Common Stock or any other securities of which the Registrable
Securities are then comprised, such Registrable Securities shall be
included in such offering on the same terms and conditions as the
securities of the Company included therein. The Company Underwriter
shall undertake to comply with the requirements of Section 2.1(h) of the
Shareholder's Agreement. Notwithstanding the foregoing, if the Company
Underwriter delivers a written opinion to the Company (with a copy
provided to the Holders of Registrable Securities) that the total amount
of securities which such Holders and the Company intend to include in
such offering (the "Total Securities") is sufficiently large so as to
have a material adverse effect on the Company's offering, then the
Company shall include in such registration the securities proposed to be
offered for the account of the Company and, to the extent reasonably
feasible, the Registrable Securities requested to be included in such
registration (any such Registrable Securities to be registered for the
accounts of the Holders are hereinafter referred to as the "Company
Approved Amount"). Each Holder shall be entitled to have included in
such registration Registrable Securities equal to its pro rata portion
of the Company Approved Amount, as based on the amounts of Registrable
Securities sought to be registered by the Holders in their requests for
participation in such registration.
(b) Expenses. The Company shall bear all reasonable
Registration Expenses in connection with any registration pursuant to
this Section 4.
5. Holdback Agreements.
(a) Restrictions on Public Sale by Holders. In
order to participate in a registration effected hereby,
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to the extent not inconsistent with any law, rule or regulation
applicable to a Holder, each such Holder agrees not to effect any public
sale or distribution of any securities of the Company, including a sale
pursuant to Rule 144 under the Act, during the period commencing with
the notice of the proposed registration until one hundred and eighty
(180) days after the effective date of such registration statement
(except as part of such registration), if and to the extent requested by
the Company in the case of a non-underwritten public offering, or if and
to the extent requested by the Company Underwriter or the Approved
Underwriter in the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company. The
Company agrees not to effect any public sale or distribution of any of
its securities for its own account (except pursuant to registrations on
Form S-4 or S-8 (or any successor form thereto) under the Act or as
permitted pursuant to Section 3 above) during the ninety (90) day period
commencing on the effective date of a Demand Registration.
6. Registration Procedures.
(a) Obligations of the Company. Whenever
registration of Registrable Securities has been requested pursuant to
Section 3 or 4 of this Agreement, the Company shall use its reasonable
best efforts to effect the registration and sale of such Registrable
Securities in accordance with the intended method of distribution
thereof, and in connection with any such request, the Company shall, as
expeditiously as possible:
(i) use its reasonable best efforts within
ninety (90) Business Days to prepare and file with the SEC, after
receipt of a request to file a registration statement with respect to
Registrable Securities, a registration statement on Form S-3 or a
successor or, if the Company does not qualify for registration on such
form, then on any form on which registration is requested for which the
Company then qualifies, which counsel for the Company and Holders'
Counsel shall deem appropriate and which shall be available for the sale
of such Registrable Securities in
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accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such registration statement to become
effective; provided, however, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company shall (A) provide Holders' Counsel with an adequate and
appropriate opportunity to participate in the preparation of such
registration statement and each prospectus included therein (and each
amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review (but not right of clearance) of
Holders' Counsel, and (B) notify Holders' Counsel and each seller of
Registrable Securities pursuant to such registration statement of any
stop order issued or to the Company's knowledge threatened by the SEC
and take all reasonable action required to prevent the entry of such
stop order or to remove it if entered;
(ii) prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than one
hundred and twenty (120) days or such shorter period which will
terminate when all Registrable Securities covered by such registration
statement have been sold and comply with the provisions of the Act with
respect to the disposition of all Registrable Securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(iii) as soon as reasonably possible and
subject to a reasonably appropriate confidentiality agreement, furnish
to each seller of Registrable Securities, prior to filing a registration
statement, copies of such registration statement as it is proposed to be
filed, and thereafter such number of copies of such registration
statement, each amendment and supplement thereto (in each case including
all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as each such seller may reasonably request in order to
facilitate
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the disposition of the Registrable Securities owned by such seller;
(iv) use its reasonable best efforts to
register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions within the United
States as any seller of Registrable Securities may reasonably request,
and to continue such qualification in effect in each such jurisdiction
for as long as is permissible pursuant to the laws of such jurisdiction,
or for as long as any such seller reasonably requests or until all of
such Registrable Securities are sold, whichever is shortest, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable any such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 6(a)(iv), (B)
subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction;
(v) use its reasonable best efforts to
obtain all other approvals, covenants, exemptions or authorizations from
such governmental agencies or authorities as may be reasonably necessary
to enable the sellers of such Registrable Securities to consummate the
disposition of such Registrable Securities;
(vi) notify each seller of Registrable
Securities at any time when a prospectus relating thereto is required to
be delivered under the Act, upon discovery that, or upon the happening
of any event as a result of which, the prospectus included in such
registration statement contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and the Company shall promptly
prepare a supplement or amendment to such prospectus and furnish to each
such seller a reasonable number of copies of a supplement to or
amendment of such prospectus as may be necessary so that, after delivery
to the purchasers of such Registrable Securities, such
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prospectus shall not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(vii) enter into and perform customary
agreements (including an underwriting agreement in customary form with
the Approved Underwriter or Company Underwriter, if any, selected as
provided in Section 3 or 4) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities;
(viii) subject to a reasonably appropriate
confidentiality agreement and solely for the purpose of meeting their
legally required due diligence obligations, make available for
inspection by the managing underwriter participating in any disposition
pursuant to such registration statement, Holders' Counsel and any
attorney retained by the managing underwriter, each of which shall be
reasonably acceptable to the Company, such information as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility in connection with such registration statement;
(ix) obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by "cold comfort" letters,
as Holders' Counsel or the managing underwriter reasonably request;
(x) furnish, at the request of any seller
of Registrable Securities on the date such securities are delivered to
the underwriters for sale pursuant to such registration or, if such
securities are not being sold through underwriters, on the date the
registration statement with respect to such securities becomes
effective, an opinion, dated such date, of counsel representing the
Company for the purposes of such registration, addressed to the
underwriters, if any, and to the seller making such request, covering
such legal matters with respect to the registration in respect of which
such opinion is being given
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as such seller may reasonably request and as are customarily included in
such opinions;
(xi) otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC,
and make available to its security holders, as soon as reasonably
practicable but no later than fifteen (15) months after the effective
date of the registration statement, an earnings statement covering a
period of twelve (12) months beginning after the effective date of the
registration statement, in a manner which satisfies the provisions of
Section 11(a) of the Act;
(xii) cause all such Registrable Securities
to be listed on each securities exchange on which similar securities
issued by the Company are then listed, subject to the satisfaction of
the applicable listing requirements of each such exchange;
(xiii) keep each seller of Registrable
Securities advised, as they may reasonably request, as to the initiation
and progress of any registration under Section 3 or 4 hereunder;
(xiv) provide officers' certificates and
other customary closing documents;
(xv) cooperate with each seller of
Registrable Securities and each underwriter participating in the
disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD") or the New York
Stock Exchange, Inc.; and
(xvi) use its reasonable best efforts to take
all other steps reasonably necessary to effect the registration of the
Registrable Securities contemplated hereby.
(b) Seller Information. As a condition to
participation in any registration statement filed hereunder, the Company
may require each seller of Registrable Securities as to which any
registration is being effected to
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furnish to the Company in writing such information regarding the sellers
and the distribution of such securities as the Company may from time to
time reasonably request or as may reasonably be required by the Approved
Underwriter or the Company Underwriter, as the case may be, the SEC or
applicable requirements of the Act or the Exchange Act.
(c) Notice to Discontinue. Each Holder agrees that,
upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 6(a)(vi), such Holder shall
forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 6(a)(vi) and, if so directed by the
Company, such Holder shall deliver to the Company (at the Company's
expense) by certified or registered mail or overnight courier all
copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities which
is current at the time of receipt of such notice. If the Company shall
give any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective pursuant to
this Agreement (including, without limitation, the period referred to in
Section 6(a)(ii)) by the number of days during the period from and
including the date of the giving of such notice pursuant to Section
6(a)(vi) to and including the date when the Holder shall have received
the copies of the supplemented or amended prospectus contemplated by and
meeting the requirements of Section 6(a)(vi).
7. Registration Expenses. The Company shall pay all
reasonable out-of-pocket expenses (other than underwriting discounts and
commissions and the fees, charges and disbursements of Holders' Counsel)
arising from or incident to the performance of, or compliance with, this
Agreement, including, without limitation, (a) SEC, stock exchange and
NASD registration and filing fees, (b) all fees and expenses incurred in
complying with securities or blue sky laws (including, without
limitation, reasonable fees, charges and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities),
(c) all
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printing, messenger and delivery expenses, and (d) the fees, charges and
disbursements of counsel to the Company and of its independent public
accountants and any other accounting and legal fees, charges and
expenses incurred by the Company (including, without limitation, any
expenses arising from any special audits incident to or required by any
registration or qualification). All of the expenses described in this
Section 7 are referred to in this Agreement as "Registration Expenses."
8. Indemnification; Contribution.
(a) Indemnification by the Company. In connection
with any registration pursuant to Section 3 or 4 hereof, the Company
agrees to indemnify and hold harmless each Holder, its directors,
officers, partners, employees, advisors and agents, and each Person who
controls (within the meaning of the Act or the Exchange Act) such
Holder, to the extent permitted by law, from and against any and all
losses, claims, damages, expenses (including, without limitation,
reasonable costs of investigation and fees, disbursements and other
charges of counsel) or other liabilities resulting from or arising out
of or based upon any untrue, or alleged untrue, statement of a material
fact contained in any registration statement, prospectus or preliminary
prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such Holder expressly for use
therein. The Company shall also indemnify any underwriters of the
Registrable Securities, their officers, directors and employees, and
each Person who controls any such underwriter (within the meaning of the
Act and the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
(b) Indemnification by Holders. In connection with
any registration in which a Holder is participating pursuant to Section
3 or 4 hereof, each such
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Holder shall furnish to the company in writing such information with
respect to such Holder as the Company may reasonably request or as may
be required by law for use in connection with any registration statement
or prospectus to be used in connection with such registration and each
Holder agrees to indemnify and hold harmless the Company, any
underwriter retained by the Company and their respective directors,
officers, employees, advisors and agents and each Person who controls
(within the meaning of the Act and the Exchange Act) the Company or such
underwriter to the same extent as the foregoing indemnity from the
Company to the Holders (subject to the proviso to this sentence and
applicable law), but only with respect to any such information furnished
in writing by such Holder expressly for use therein; provided, however,
that the liability of any Holder under this Section 8(b) shall be
limited to the amount of the net proceeds received by such Holder in the
offering giving rise to such liability.
(c) Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder (the "Indemnified Party")
agrees to give prompt written notice to the indemnifying party (the
"Indemnifying Party") after the receipt by the Indemnified Party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which the
Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party hereunder unless the
Indemnifying Party is materially prejudiced by such failure to so
notify. The Indemnifying Party shall be entitled to participate in and,
to the extent it may wish, jointly with any other Indemnifying Party
similarly notified, to assume the defense of such action at its own
expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to employ
separate counsel in any such action and participate in the defense
thereof; provided, that, the Indemnifying Party will not be liable to
such Indemnified Party under this Section 8 for any legal or other
expenses subsequently incurred by such Indemnified Party in connection
with such participation other than reasonable costs of investigation
unless
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(i) the Indemnifying Party has not employed counsel to assume the
defense of such action within a reasonable time after receiving notice
of commencement of the action, (ii) the Indemnifying Party has agreed in
writing to pay such fees and expenses or (iii) representation of the
Indemnifying Party and the Indemnified Party by the same counsel would,
in the written opinion of such counsel, constitute a conflict of
interest (in which case, the Indemnifying Party shall not have the right
to assume the defense of such action on behalf of the Indemnified Party;
it being understood, however, that, with respect to clauses (i), (ii)
and (iii) of this proviso, the Indemnifying Party shall not be liable
for the fees and expenses of more than one separate firm of attorneys at
any time for all such Indemnified Parties, which firm shall be
designated in writing by such Indemnified Parties). No Indemnifying
Party shall be liable for any settlement entered into without its
written consent, which consent shall not be unreasonably withheld. The
rights accorded to any Indemnified Party hereunder shall be in addition
to any rights that such Indemnified Party may have at common law, by
separate agreement or otherwise.
(d) Contribution. If the indemnification provided
for in Section 8(a) and/or from the Indemnifying Party is unavailable to
an Indemnified Party in respect of any losses, claims, damages, expenses
or other liabilities referred to therein, then the Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages, expenses or other liabilities in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, expenses or other
liabilities, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material
fact, was made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the Indemnifying Party's
and Indemnified Party's relative intent, knowledge, access to
18
information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages, expenses or other liabilities referred to above shall be deemed
to include, subject to the limitations set forth in Sections 8(a), 8(b)
and 8(c), any legal or other fees, charges or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution pursuant to this Section 8(d).
9. Rule 144 and Rule 144A. The Company shall use its
reasonable best efforts to file any reports required to be filed by it
under the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and that it shall take such further action as each Holder
may reasonably request (including, but not limited to, providing any
information necessary to comply with Rule 144 or Rule 144A under the
Act), all to the extent required from time to time to enable such Holder
to sell Registrable Securities without registration under the Act within
the limitation of the exemptions provided by (a) Rule 144 or Rule 144A
under the Act, as such rules may be amended from time to time, or
(b) any similar rules or regulations hereafter adopted by the SEC. The
Company shall, upon the request of any Holder, deliver to such Holder a
written statement as to whether the Company has complied with such
requirements.
10. Miscellaneous.
(a) Recapitalizations; Exchanges; etc. The
provisions of this Agreement shall apply to any and all shares of
capital stock of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for or in substitution of, the
Purchased
19
Common Stock of any other shares of Common Stock of the Company acquired
by CNA that are acquired in a manner consistent with and subject to the
Shareholder's Agreement and that are not freely tradeable, and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date
hereof.
(b) Remedies. The Company and the Holders, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, shall be entitled to specific performance
of their rights under this Agreement.
(c) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions of such section may not be given without the prior written
consent of the Company and Holders holding at least a majority of the
Registrable Securities.
(d) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if telecopied or
delivered personally or mailed by registered or certified mail (return
receipt requested) to the following address (or at such other address as
shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof):
(i) if to CNA:
Continental Casualty Company
CNA Plaza
Chicago, Illinois 60685
Attention: Secretary
Telephone: 312-822-5158
Facsimile: 312-822-1297
20
(ii) if to the Company (two copies):
Policy Management Systems Corporation
One PMS Center
Blythewood, South Carolina 29016
Attention: President; General Counsel
Telephone: 803-735-4000
Facsimile: 803-735-5500
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Robert C. Myers, Esq.
Telephone: 212-259-8000
Facsimile: 212-259-6333
(iii) if to any other Holder, at its address as it
appears on the transfer books of the Company
Any notice given by telecopier or delivered personally shall
be deemed to have been received by the recipient thereof on the day
delivered if actually received during normal business hours on a
Business Day; otherwise, such notice shall be deemed received on the
next following Business Day if actually received on such day. All other
notices in accordance herewith shall be effective on the day actually
received by the Company. Any party hereto may, by notice to the other
parties hereto, change its address for receipt of notices hereunder.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. The registration rights and the other
obligations of the Company contained in this Agreement shall, with
respect to any Registrable Security, be automatically transferred from a
Holder to any subsequent holder of such Registrable Security (including
any pledgee), who or which consents in writing to the terms and
provisions of this Agreement and the Shareholder's Agreement, except to
a Holder of Registerable Securities (other than CNA or an affiliate of
CNA) whose shares would be transferable without restriction under the
21
Act, but for such Person's relationship with the Company. If the
Company receives conflicting instructions, notices or elections from two
or more persons with respect to the same Registrable Securities, the
Company shall act upon the basis of the instructions, notice or election
received from the registered owner of such Registrable Securities.
(f) Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such
State, without regard to the principles of conflicts of law of such
State.
(h) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(i) Jurisdiction. Each party to this Agreement
hereby irrevocably agrees that any legal action or proceeding arising
out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New
York and hereby expressly submits to the personal jurisdiction and venue
of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient
forum.
(j) Severability. If any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability
of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended
that all of the rights and privileges of the Company and the Holders
shall be enforceable to the fullest extent permitted by law.
22
(k) Rules of Construction. Unless the context
otherwise requires, "or" is not exclusive, and references to sections or
subsections refer to sections or subsections of this Agreement.
(l) Headings; References. The headings appearing in
this Agreement are for convenience of reference only and shall not
affect the interpretation of this Agreement. Except as otherwise
indicated herein, all references herein to Sections refer to the
Sections contained in this Agreement.
(m) Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions,
promises, warranties, covenants or understandings, other than those set
forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
subject matter.
(n) Further Assurances. Each of the parties shall
execute such documents and perform such further acts as may be
reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
(o) Effectiveness. This Agreement shall be
effective upon the purchase of the Purchased Common Stock by CNA
pursuant to the Stock Purchase Agreement, and if such purchase does not
occur or on before May 15, 1996, this Agreement shall terminate and be
of no force or effect.
23
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first above written.
POLICY MANAGEMENT SYSTEMS CORPORATION
By:
G. Larry Wilson
Chairman, President and Chief Executive
Officer
CONTINENTAL CASUALTY COMPANY
By:
Name:
Title:
24
REGISTRATION RIGHTS AGREEMENT
between
POLICY MANAGEMENT SYSTEMS CORPORATION
and
CONTINENTAL CASUALTY COMPANY
Dated as of March 8, 1996
25
TABLE OF CONTENTS
Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Securities Subject to this Agreement. . . . . . . . . . . . . 3
(a) Registrable Securities . . . . . . . . . . . . . . . . . 3
(b) Holders of Registrable Securities. . . . . . . . . . . . 4
3. Demand Registration . . . . . . . . . . . . . . . . . . . . . 4
(a) Request for Demand Registration. . . . . . . . . . . . . 4
(b) Effective Demand Registration. . . . . . . . . . . . . . 5
(c) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Underwriting Procedures. . . . . . . . . . . . . . . . . 5
(e) Selection of Underwriters. . . . . . . . . . . . . . . . 6
4. Piggy-Back Registration . . . . . . . . . . . . . . . . . . . 6
(a) Piggy-Back Rights. . . . . . . . . . . . . . . . . . . . 6
(b) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Holdback Agreements . . . . . . . . . . . . . . . . . . . . . 7
(a) Restrictions on Public Sale by Holders . . . . . . . . . 7
(b) Restrictions on Public Sale by the Company . . . . . . . 7
6. Registration Procedures . . . . . . . . . . . . . . . . . . . 8
(a) Obligations of the Company . . . . . . . . . . . . . . . 8
(b) Seller Information . . . . . . . . . . . . . . . . . . . 11
(c) Notice to Discontinue. . . . . . . . . . . . . . . . . . 11
7. Registration Expenses . . . . . . . . . . . . . . . . . . . . 12
8. Indemnification; Contribution . . . . . . . . . . . . . . . . 12
(a) Indemnification by the Company . . . . . . . . . . . . . 12
(b) Indemnification by Holders . . . . . . . . . . . . . . . 13
(c) Conduct of Indemnification Proceedings . . . . . . . . . 13
26
(d) Contribution . . . . . . . . . . . . . . . . . . . . . . 14
9. Rule 144 and Rule 144A . . . . . . . . . . . . . . . . . 15
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Recapitalizations; Exchanges; etc. . . . . . . . . . . . 15
(b) Remedies . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) Amendments and Waivers . . . . . . . . . . . . . . . . . 16
(d) Notices. . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Successors and Assigns . . . . . . . . . . . . . . . . . 17
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . 17
(g) Governing Law. . . . . . . . . . . . . . . . . . . . . . 17
(h) Headings . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 18
(j) Severability . . . . . . . . . . . . . . . . . . . . . . 18
(k) Rules of Construction. . . . . . . . . . . . . . . . . . 18
(l) Headings; References . . . . . . . . . . . . . . . . . . 18
(m) Entire Agreement . . . . . . . . . . . . . . . . . . . . 18
(n) Further Assurances . . . . . . . . . . . . . . . . . . . 18
(o) Effectiveness. . . . . . . . . . . . . . . . . . . . . . 18