SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE BISYS GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No:
3) Filing Party:
4) Date Filed:
[LOGO]
THE BISYS GROUP, INC.
150 CLOVE ROAD
LITTLE FALLS, NEW JERSEY 07424
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1997
-------------------------
The Annual Meeting of Stockholders of The BISYS Group, Inc. ("BISYS" or the
"Company") will be held at the executive offices of the Company at 150 Clove
Road, Little Falls, New Jersey 07424, on November 13, 1997, at 9:00 a.m., for
the following purposes:
1. to elect seven directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors shall have been
duly elected and qualified;
2. to consider and vote upon a proposal to approve the Company's 1998
Employee Stock Purchase Plan;
3. to consider and vote upon a proposal to amend the Company's 1996 Stock
Option Plan;
4. to consider and vote upon a proposal to amend the Company's
Non-Employee Directors' Stock Option Plan;
5. to consider and vote upon a proposal to ratify the selection of
Coopers & Lybrand L.L.P., independent public accountants, as the
auditors of the Company for the fiscal year ending June 30, 1998; and
6. to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 18,
1997 as the record date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Annual Meeting of Stockholders. Each
share of the Company's Common Stock outstanding on the record date is entitled
to one vote on all matters presented at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND
THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
Kevin J. Dell
Secretary
October 1, 1997
THE BISYS GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1997
This Proxy Statement is being furnished to stockholders of record of The
BISYS Group, Inc. ("BISYS" or the "Company") as of September 18, 1997 (the
"Record Date") in connection with the solicitation by the Board of Directors of
BISYS of proxies for the 1997 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Company's corporate headquarters at 150 Clove Road,
Little Falls, New Jersey 07424, on November 13, 1997 at 9:00 a.m., or at any
adjournments thereof, for the purposes stated in the Notice of Annual Meeting.
The approximate date of mailing of this Proxy Statement and enclosed form of
proxy to stockholders is October 1, 1997.
As of the Record Date, the Company had outstanding 26,123,039 shares of
Common Stock, $.02 par value ("Common Stock"). Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters presented
at the Annual Meeting. A majority of the outstanding shares entitled to vote at
the Annual Meeting will constitute a quorum. Abstentions and broker non-votes
are counted as present for purposes of determining whether a quorum is present.
Directors are elected by a plurality of votes cast. All other matters to
properly come before the Annual Meeting require the approval of a majority of
shares of Common Stock present and entitled to vote with respect to such
matters. Abstentions and broker non-votes have no impact on the election of
directors except to reduce the number of votes for the nominee(s). With respect
to all other proposals, abstentions as to particular proposals will have the
same effect as votes against such proposals, while broker non-votes are not
counted as votes and are not included in calculating the number of votes
necessary for approval.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Shares represented by duly executed proxies in the accompanying form will
be voted in accordance with the instructions indicated on such proxies, and, if
no such instructions are indicated thereon, will be voted in favor of the
nominees for election as directors named below and for the other proposals
referred to below. If any other matters properly come before the Annual
Meeting, it is intended that the persons named as proxies will vote such shares
in accordance with their own judgment.
1. ELECTION OF DIRECTORS
In August 1997, the size of the Board of Directors of the Company was
increased from six to eight directors and two new non-employee directors joined
the Board. Seven directors are standing for re-election to the Board at the
Annual Meeting for terms expiring at the 1998 Annual Meeting and upon such
re-election the size of the Board will be seven directors. Accordingly, proxies
may not be voted for a greater number of persons than the seven nominees named
herein. The directors will continue to serve until their respective successors
are duly elected and qualified.
Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the seven nominees for the Board of Directors
named below. If any (or all) such persons should be unable to serve, the
persons named in the enclosed proxy will vote the shares of Common Stock covered
thereby for such substitute nominee (or nominees) as the Board of Directors may
select. Stockholders may withhold authority to vote for any nominee by entering
the name of such nominee in the space provided for such purpose on the proxy
card.
NOMINEES FOR ELECTION AS DIRECTOR
NAME PRINCIPAL OCCUPATION SERVED AS DIRECTOR SINCE
- ---- -------------------- ------------------------
Lynn J. Mangum Chairman of the Board and Chief Executive Officer of BISYS. 1989
Robert J. Casale Until retirement, Group President, Brokerage Information 1997
Services, Automatic Data Processing, Inc.
Thomas A. Cooper Chairman, TAC Associates, a financial advisory and 1997
investment firm.
Jay W. DeDapper Until retirement, Executive Vice President (Operations) 1989
NL Industries, Inc., a metal, chemical and petroleum company.
John J. Lyons President and Managing Principal, Lyons Advisors, Inc., 1992
a New York-based bank and thrift consulting firm.
Neil P. Marcous Vice President/General Manager of the Electronic Commerce 1994
Division of Electronic Data Systems, Inc., an information
technologies company.
Thomas E. McInerney General Partner of Welsh, Carson, Anderson & Stowe, a 1989
New York investment firm.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the nominees
for the office of director and each other executive officer of BISYS:
NOMINEES
Mr. Mangum, 55, has served as a Director and as Chairman of the Board and
Chief Executive Officer of the Company since August 1989. Prior to that time,
he served as a Corporate Vice President of Automatic Data Processing, Inc.
("ADP") and as Division President of ADP's Employer Services National Accounts
Division since December 1988. Prior thereto, he served for 22 years in various
capacities in ADP's Financial Services Group including, among other positions,
Division President of the predecessor company of the Company since 1983.
Mr. Casale, 58, has served as a Director of the Company since August 1997.
Mr. Casale is the former Group President, ADP, Brokerage Information Services, a
position in which he served from 1988 to 1997. His experience also includes
serving as Managing Director, Mergers & Acquisitions/Corporate Finance of the
High Technology Group of Kidder, Peabody & Co. and more than 10 years in various
executive positions with AT&T, including President-elect of AT&T's Special
Markets Group, responsible for major joint ventures and partnerships. He is a
member of the Board of Directors of The Provident Mutual Life Insurance Company
and the Quantum Corporation, a publicly held disc drive manufacturer.
Mr. Cooper, 61, has served as a Director of the Company since August 1997.
Mr. Cooper is Chairman of TAC Associates, a financial advisory and investment
firm, since 1996, and Chairman of Flatiron Credit Company, a finance company,
since 1997. He previously served since its formation and until 1996 as Chairman
of TAC Bancshares, Inc., a holding company formed in 1991 to acquire and operate
financial service institutions. From August 1993 to August 1996, he served as
Chairman, President and Chief Executive Officer of Chase Federal Bank, Florida,
following the acquisition and merger of Chase Federal Bank and Financial Federal
Bank by TAC Bancshares in August 1993. Mr. Cooper has over 30 years of broad
experience in financial services which include serving as Chief Executive
Officer of Goldome, one of the nation's largest thrift institutions, from 1988
to 1991; as Chairman
2
and Chief Executive Officer of INVEST/ISFA Corporation, a provider of brokerage,
investment, insurance, and related services from 1987 to 1988; and as President
and Chief Operating Officer of Bank of America, and President of BankAmerica
Corporation from 1985 to 1987.
Mr. DeDapper, 73, has served as a Director of the Company since 1989. Mr.
DeDapper is retired. Prior to his retirement, he served for more than five
years as Executive Vice President (Operations) of NL Industries, Inc., a metal,
chemical and petroleum company and served on its Board of Directors.
Mr. Lyons, 57, has served as a Director of the Company since 1992. Since
April 1997, Mr. Lyons has been President and Managing Principal of Lyons
Advisors, Inc., a New York-based bank and thrift consulting firm. From August
1996 to April 1997 Mr. Lyons served as President and Chief Executive Officer of
Regent National Bank, Philadelphia, Pennsylvania. From April 1995 to August
1996, he served as President and Chief Executive Officer and a Director of
Monarch Savings Bank, FSB, Clark, New Jersey. From December 1993 until April
1995, he was President and Chief Executive Officer of Jupiter Tequesta National
Bank, a national bank headquartered in Tequesta, Florida. From 1980 until
December 1993, he was President and Chief Executive Officer of Lyons, Zomback &
Ostrowski, Inc., a New York-based bank and thrift consulting firm. That firm
became a subsidiary of Advest Group, Inc., a holding company with a brokerage
firm as its principal subsidiary. Mr. Lyons was Vice Chairman of Advest, Inc.
during 1993 and from 1989 through 1993 was a member of its Board of Directors.
He is a director of Regent Bancshares Corp., a publicly held bank holding
company.
Mr. Marcous, 49, has served as a Director of the Company since 1994. Mr.
Marcous has been Vice President/General Manager of the Electronic Commerce
Division of Electronic Data Systems, Inc. ("EDS"), a provider of information
technologies services including electronic funds transfer services, since he
joined EDS in May 1989. From May 1984 to April 1989, Mr. Marcous was employed
in various positions with the Electronic Financial Services Division of ADP, and
served as Senior Vice President/Division General Manager at the time he left to
join EDS.
Mr. McInerney, 56, has served as a Director of the Company since 1989.
From September 1987 to the present time, Mr. McInerney has been a general
partner of Welsh, Carson, Anderson & Stowe, a venture capital and buyout firm
specializing in the information processing and healthcare industries, and is a
general partner of the respective sole general partners of its associated
limited partnerships. He is also a director of Aurora Electronics, Inc., a
publicly held spare parts and maintenance provider for computer manufacturers.
All directors are elected annually and hold office until the next annual
meeting of stockholders and until their successors are duly elected and
qualified. Each of the non-employee directors (i.e., other than Mr. Mangum)
receive a $15,000 annual retainer and a $1,000 fee for their personal attendance
at each meeting, including committee meetings held other than the day of a Board
meeting. Mr. Mangum does not receive any compensation for his services as a
director, but is reimbursed for expenses. In addition to the cash compensation
paid to the Company's non-employee directors, each non-employee director elected
at the 1996 Annual Meeting of Stockholders received an immediately exercisable
stock option to purchase 1,200 shares of Common stock at an exercise price of
$39.00 per share, pursuant to the Company's Non-Employee Directors' Stock Option
Plan. Subject to stockholder approval of the proposed amendments to such Plan
at the Annual Meeting, each non-employee director elected by stockholders at the
Annual Meeting and each non-employee director elected by stockholders for the
first time thereafter will receive an option to purchase 25,000 shares of Common
Stock upon such election. The options will have an exercise price equal to the
fair market value on the date of grant and will be exercisable to the extent
vested. The options will vest 20% on the date of grant and 20% upon each
re-election to the Board by stockholders at subsequent annual meetings until
such option is vested in full. A new stock option for an additional 25,000
shares will be granted to each non-employee director upon re-election by
stockholders at the next annual meeting following the annual meeting at which
the prior option became fully vested. See Proposal No. 4 "Approval of
Amendments to Non-employee Directors' Stock Option Plan." In the event such
amendments are not approved by Stockholders, each non-employee director elected
at the Annual Meeting will receive an immediately exercisable stock option to
purchase 1,200 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date of grant.
3
During fiscal 1997, the Board of Directors of the Company held six
meetings. The standing committees of the Board of Directors are the Audit
Committee, whose current members are Messrs. Cooper, DeDapper and Marcous, and
the Compensation Committee, whose current members are Messrs. Casale, Lyons and
McInerney. The Audit Committee periodically consults with the Company's
management and independent public accountants on financial matters, including
the Company's internal financial controls and procedures. The Audit Committee
held six meetings in fiscal 1997. The Compensation Committee reviews and makes
recommendations with respect to the salary and incentive compensation of the
Chief Executive Officer and his direct reports, and certain other employees of
the Company and its subsidiaries whose salaries are in excess of specified
levels; administers the Company's stock option plans, including the granting of
stock options and rights to purchase Common Stock; and administers the Company's
annual Employee Stock Purchase Plans, as approved by the stockholders. During
fiscal 1997, the Compensation Committee held five meetings. The Board of
Directors of the Company does not have a standing Nomination Committee. During
fiscal 1997, all of the Company's directors attended more than 75% of the
meetings of the Board of Directors and all committees on which they served.
OTHER EXECUTIVE OFFICERS
Paul H. Bourke, 51, has served as a Director and as President and Chief
Operating Officer of the Company since August 1989. Prior to that time, Mr.
Bourke served as Senior Vice President/General Manager of the predecessor
company of the Company since June 1987, and as Senior Vice President/ Operations
Executive since July 1982. Mr. Bourke has decided not to stand for re-election
to the Board of Directors at the Annual Meeting.
Robert J. McMullan, 43, has served as Executive Vice President and Chief
Financial Officer of the Company since 1995. He joined the Company as a Vice
President and Chief Financial Officer in November 1990.
J. Robert Jones, 44, serves as Senior Vice President, Business Development
of the Company, which became an executive officer position in 1996. He
previously served in a similar position within the BISYS organization since
1991. From March 1989 to June 1991, Mr. Jones served as Vice President, Sales
and Marketing.
Mark J. Rybarczyk, 42, has served as Senior Vice President, Human Resources
of the Company since 1993. He has also served as Vice President, Human
Resources of the Company and its predecessor company since June 1987 and
Director, Human Resources since October 1984.
Dennis R. Sheehan, 41, serves as Senior Vice President, Finance of the
Company, which became an executive officer position in 1997. He previously
served in a similar position within the BISYS organization since joining BISYS
in connection with its acquisition of Concord Holding Corporation ("Concord") in
March 1995. Since 1992, he served in various executive officer positions with
Concord, including Executive Vice President and Chief Financial Officer at the
time of the Company's acquisition of Concord.
Kevin J. Dell, 41, has served as Vice President, General Counsel and
Secretary since joining the Company in 1996. From 1993 until he joined the
Company, he served as Vice President, General Counsel and Secretary of
Concurrent Computer Corporation, a supplier of real-time computer systems, which
he joined in 1987 as senior corporate counsel.
Executive officers serve at the discretion of the Board of Directors.
4
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of Forms 3, 4 and 5 submitted to the Company during and
with respect to fiscal 1997, all statements of beneficial ownership required to
be filed with the Securities and Exchange Commission (the "Commission") were
timely filed, with the exception of one Form 4 for Mr. Mangum, reporting the
exercise of a stock option and the purchase of 30,000 shares of Common Stock
upon exercise of a stock option and the sale of an equivalent aggregate number
of shares in six separate sales transactions over a three-day period, which was
filed three days late.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of September 18, 1997, certain
information with respect to the shares of Common Stock beneficially owned by
stockholders known to the Company, based on filings with the Securities and
Exchange Commission, to own beneficially more than 5% of the outstanding shares
of Common Stock:
BENEFICIAL OWNER NUMBER OF SHARES BENEFICIALLY OWNED PERCENT OF CLASS
- ---------------- ----------------------------------- ----------------
T. Rowe Price Associates, Inc. 2,403,600(1) 9.2%
100 East Pratt Street
Baltimore, Maryland 21202
Wellington Management Company, LLP 1,636,145(2) 6.3%
75 State Street
Boston, Massachusetts 02109
Warburg Pincus & Co. 1,607,704(3) 6.2%
466 Lexington Avenue
New York, NY 10017
Michigan (State of) Pension Fund System 1,500,000(4) 5.7%
c/o State Treasurer
Treasury Building
425 West Allegan Rd.
Lansing, Michigan 48902
(1) These securities are owned by various individual and institutional
investors for which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements
of the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
The stockholder has sole investment power with respect to the shares shown
as beneficially owned, and sole voting power with respect to 172,600 shares
and no voting power with respect to the remaining shares shown as
beneficially owned by it.
(2) The stockholder has sole investment power with respect to 1,324,523 shares
and shared investment power with respect to the remaining 301,622 shares
shown as beneficially owned by it; and sole voting power with respect to
610,947 shares, shared voting power with respect to 251,622 shares, and no
voting power with respect to the remaining 773,576 shares shown as
beneficially owned by it.
5
(3) The stockholder has sole investment power with respect to 1,537,120 shares
and shared investment power with respect to the remaining 70,584 shares
shown as beneficially owned by it; and sole voting power with respect to
940,300 shares, shared voting power with respect to 632,704 shares and no
voting power with respect to the remaining 34,700 shares shown as
beneficially owned by it.
(4) Stockholder has sole voting and investment power with respect to the shares
shown as beneficially owned by it.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 18, 1997, certain
information with respect to the shares of Common Stock beneficially owned by (i)
each director, (ii) each of the Company's executive officers for whom
compensation information is disclosed below under the heading "Executive
Compensation" and (iii) all the Company's directors and executive officers as a
group:
============================================================================================
BENEFICIAL OWNER NO. OF SHARES BENEFICIALLY OWNED(1) PERCENT OF CLASS
============================================================================================
Lynn J. Mangum 346,492(2) 1.3%
- --------------------------------------------------------------------------------------------
Robert J. Casale 0 *
- --------------------------------------------------------------------------------------------
Thomas A. Cooper 0 *
- --------------------------------------------------------------------------------------------
Jay W. DeDapper 4,100(3) *
- --------------------------------------------------------------------------------------------
John J. Lyons 5,600(3) *
- --------------------------------------------------------------------------------------------
Neil P. Marcous 3,700(3) *
- --------------------------------------------------------------------------------------------
Thomas E. McInerney 42,723(3) *
- --------------------------------------------------------------------------------------------
Paul H. Bourke 213,536(4) *
- --------------------------------------------------------------------------------------------
Robert J. McMullan 123,310(5) *
- --------------------------------------------------------------------------------------------
J. Robert Jones 127,524(6) *
- --------------------------------------------------------------------------------------------
Dennis R. Sheehan 60,352(7) *
- --------------------------------------------------------------------------------------------
All directors and executive
officers as a group (13) persons) 1,037,403(8) 4.0%
============================================================================================
* Less than 1.0%.
(1) Each person has sole voting and investment power with respect to the shares
shown as beneficially owned by him.
(2) Includes an aggregate 216,191 shares subject to stock options exercisable
as of November 17, 1997 (60 days from the record date for the Annual
Meeting).
(3) Includes an aggregate 3,600 shares subject to presently exercisable stock
options.
(4) Includes an aggregate 194,294 shares subject to stock options exercisable
as of November 17, 1997.
(5) Includes an aggregate 122,000 shares subject to stock options exercisable
as of November 17, 1997.
(6) Includes an aggregate 101,277 shares subject to stock options exercisable
as of November 17, 1997.
(7) Includes an aggregate 45,881 shares subject to stock options exercisable as
of November 17, 1997.
(8) Includes an aggregate 784,440 shares subject to stock options exercisable
as of November 17, 1997.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended June 30, 1997, 1996,
and 1995, certain compensation information as to the Chief Executive Officer and
each of the four most highly compensated executive officers of the Company who
served as executive officers during the fiscal year ended June 30, 1997 ("Named
Executive Officers").
============================================================================================================================
Long Term Compensation
Annual ------------------------------------------
Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (f) (g) (h) (i)
- ----------------------------------------------------------------------------------------------------------------------------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/ LTIP Compensa-
Position Year Salary ($) Bonus ($) Awards ($) SARs(#) Payouts ($) tion(1)($)
- ----------------------------------------------------------------------------------------------------------------------------
Lynn J. Mangum 1997 389,154 375,000 -- 65,000 -- 7,873
Chairman of the Board 1996 323,612 300,000 -- 120,000 -- 5,660
and Chief Executive 1995 292,557 290,000 -- -- -- 8,820
Officer
- ----------------------------------------------------------------------------------------------------------------------------
Paul H. Bourke 1997 276,076 200,000 -- 45,000 -- 8,256
President and Chief 1996 250,565 200,000 -- 90,000 -- 5,660
Operating Officer 1995 221,731 160,000 -- -- -- 8,820
- ----------------------------------------------------------------------------------------------------------------------------
Robert J. McMullan 1997 277,231 300,000 -- 50,000 -- 6,123
Executive Vice 1996 230,903 260,000 -- 80,000 -- 5,660
President and 1995 187,385 213,000 -- -- -- 7,620
Chief Financial
Officer
- ----------------------------------------------------------------------------------------------------------------------------
J. Robert Jones(2) 1997 199,711 180,000 -- 30,000 -- 8,496
Senior Vice President, 1996 156,538 220,000 -- 60,000 -- 5,660
Business Development
- ----------------------------------------------------------------------------------------------------------------------------
Dennis R. Sheehan(3) 1997 169,956 165,000 -- 25,000 -- 8,121
Senior Vice President,
Finance
============================================================================================================================
(1) For each named individual, $3,123 of the disclosed amount for 1997, $3,260
of the disclosed amount for 1996, and $1,920 of the disclosed amount for
1995 represents the difference between the actual purchase price of shares
purchased pursuant to the Company's Employee Stock Purchase Plan for each
such year and the fair market value of such shares on the date purchased;
the remainder of the disclosed amount for 1997 and 1996, and $2,400 of the
disclosed amount for 1995, represents the Company's matching contribution
under the Company's 401(k) plan; and the remainder of the disclosed amount
for 1995, if any, represents an annual car allowance discontinued in 1995.
(2) Mr. Jones became an executive officer of the Company during the fiscal year
ended June 30, 1996.
(3) Mr. Sheehan became an executive officer of the Company during the fiscal
year ended June 30, 1997.
7
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options to the Named Executive Officers during the fiscal year ended June 30,
1997.
OPTION GRANTS IN LAST FISCAL YEAR
===================================================================================================================
% OF POTENTIAL
NUMBER OF TOTAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO EXERCISE OF STOCK PRICE
OPTIONS EMPLOYEES OR BASE APPRECIATION FOR
GRANTED(1) IN PRICE EXPIRATION OPTION TERM
NAME (#) FISCAL YEAR ($/SH) DATE 5%($)(2) 10%($)(2)
- -------------------------------------------------------------------------------------------------------------------
Lynn J. Mangum 65,000 7.74% 36.50 8/15/06 1,544,992 3,865,451
- -------------------------------------------------------------------------------------------------------------------
Paul H. Bourke 45,000 5.36% 36.50 8/15/06 1,069,610 2,676,081
- -------------------------------------------------------------------------------------------------------------------
Robert J. McMullan 50,000 5.96% 36.50 8/15/06 1,188,455 2,973,424
- -------------------------------------------------------------------------------------------------------------------
J. Robert Jones 30,000 3.57% 36.50 8/15/06 713,073 1,784,054
- -------------------------------------------------------------------------------------------------------------------
Dennis R. Sheehan 15,000 1.79% 36.50 8/15/06 356,537 892,027
10,000 1.19% 39.00 11/14/06 231,016 598,864
===================================================================================================================
(1) Options granted pursuant to the Company's Stock Option Plans, with an
exercise price equal to the fair market value as of the date of grant and
vesting over a five year period, 20% on each anniversary of the date of
grant.
(2) The dollar amounts under these columns are based on the assumed
appreciation rates of 5% and 10% prescribed by the Commission. These
amounts are not intended to forecast possible future appreciation, if any,
of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held at the end of the fiscal year ended June 30,
1997 based on the last sale price of a share of Common Stock on June 30, 1997 of
$41.75.
===================================================================================================================
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
on Options at Fiscal In-the-Money Options at
Exercise Value Year End (#) Fiscal Year End
Name (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------------
Lynn J. Mangum 30,000 $1,065,000 155,191 209,000 $4,332,842 $3,011,250
- -------------------------------------------------------------------------------------------------------------------
Paul H. Bourke 3,000 $ 99,750 149,294 153,000 $4,557,437 $2,238,750
- -------------------------------------------------------------------------------------------------------------------
Robert J. McMullan -- -- 82,000 150,000 $1,886,910 $2,177,440
- -------------------------------------------------------------------------------------------------------------------
J. Robert Jones 2,400 $ 79,800 73,277 98,000 $2,102,011 $1,405,000
- -------------------------------------------------------------------------------------------------------------------
Dennis R. Sheehan -- -- 32,597 48,679 $1,031,821 $ 743,593
===================================================================================================================
8
EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of its executive
officers.
In May 1995, the Company entered into Letter Agreements with Messrs.
Mangum, Bourke and McMullan providing, among other things, that each such
executive would receive a lump sum severance payment equal to one and one-half
times the sum of the executive's then current base salary plus the greater of
the executive's then current fiscal year's "At Plan" annual incentive target
amount or the immediately prior fiscal year's annual incentive settlement
amount, in the event his employment is terminated other than for cause or after
a change in control of the Company. In the event of a change in control of the
Company, the executive may terminate unilaterally his employment with the
Company for any reason for the first 12 months after the change in control and
during the 13th through 36th month after the change in control under certain
circumstances and, in the event of such termination of employment, the executive
would receive a lump sum severance payment equal to two times the sum of the
executive's then current base salary plus the greater of the executive's then
current fiscal year's "At Plan" annual incentive target amount or the
immediately prior fiscal year's annual incentive settlement amount. The
agreements do not provide any guarantee of employment or any other terms and
conditions of employment.
In the event of a change in control of the Company, all option shares then
granted to the executive officers of the Company and such other senior employees
of the Company, who in the opinion of the Committee would be adversely affected
in their employment by a change in control of the Company are automatically
vested, to the extent not previously vested, as of the effective date of such
change in control.
REPORT ON EXECUTIVE COMPENSATION
All issues relating to executive officer compensation are addressed by the
Board of Director's Compensation Committee. The Compensation Committee, which
for fiscal 1997 was comprised of Messrs. McInerney and Lyons, approves base
salary and incentive compensation plans for executive officers reporting to the
chief executive officer and other senior executives with a base salary in excess
of a designated amount, and reviews and recommends base salary and incentive
compensation plans for executive officers who are also directors for final
approval by the Board of Directors. Mr. Mangum, the Company's Chairman and
Chief Executive Officer, does not participate in decisions of the Board
regarding his compensation. The Compensation Committee also establishes stock
option plan participation levels for all employees, including executive
officers. This report is submitted by the Compensation Committee.
The components of the Company's executive compensation program consist of
base salaries, annual cash incentive plans and stock options. The Company's
compensation program, with Committee review, is intended to provide executive
officers with overall levels of compensation opportunity that are competitive
within the information and investment services industries, as well as within a
broader spectrum of companies of comparable size and complexity. The Company's
compensation program is structured and administered to support the Company's
business mission and to generate favorable returns for its stockholders.
BASE SALARY. Each executive officer's and senior executive's base salary
is derived primarily through an analysis prepared at the direction of the
Committee, of appropriate industry and competitive labor markets for executive
officer services. Other factors in formulating base salary recommendations
include the level of an executive's compensation in relation to other executives
in the Company with the same, more and less responsibilities, the performance of
the particular executive's business unit or department in relation to
established strategic plans, the Company's operating budget for the year and the
overall financial and strategic performance of the Company compared to target
objectives.
9
INCENTIVE COMPENSATION PLAN. For each executive officer and senior
executive, a cash incentive compensation plan is established at the beginning of
each fiscal year in connection with the establishment of the Company's strategic
plans and annual operating budgets. The plan establishes a potential range of
incentive compensation and a number of performance objectives. The performance
objectives generally include operating earnings per share growth, the financial
performance of an executive's business unit, and various other measurable
financial and non-financial objectives. Incentive compensation earned is
determined following completion of the fiscal year based on performance compared
to objectives. Incentive compensation in excess of the established range may be
paid where outstanding accomplishments have been achieved by the executive
during the fiscal year. For fiscal year 1997, the Company and each of the Named
Executive Officers met or exceeded established performance objectives resulting
in the bonus compensation set forth in the summary Compensation Table.
STOCK OPTION AWARDS. The Company maintains stock option plans that are
designed to align executive employees' and stockholders' interests in the
enhancement of stockholder value. In formulating recommendations for stock
option awards, the Compensation Committee evaluates the dilutive impact of
additional stock options, the Company's overall financial performance for the
year, the desirability of long-term service from an executive officer or senior
executive and the number of options held by other executives of the Company with
the same, more and less responsibility than the executive under consideration.
To encourage long-term performance, executive options typically vest over a five
year period and remain exercisable for ten years.
CEO COMPENSATION. Compensation for Mr. Mangum, the Company's Chairman and
Chief Executive Officer, is based on the same criteria used for executive
officers generally, including an analysis of chief executive compensation of
comparable companies. Mr. Mangum's incentive compensation for fiscal 1997
reflects favorable achievement of the established performance objectives,
particularly operating earnings per share growth and the strategic positioning
of the Company, the key determinants of Mr. Mangum's incentive compensation.
August 14, 1997 John J. Lyons
Thomas E. McInerney
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during fiscal year 1997
were John J. Lyons and Thomas E. McInerney, each of whom are directors but are
not current or former employees of the Company. There were no Compensation
Committee interlocks or insider participation during fiscal 1997.
10
COMPARISON OF TOTAL CUMULATIVE RETURN ON THE COMMON STOCK AMONG THE BISYS GROUP,
INC., VALUE LINE INVESTMENT SURVEY'S COMPUTER SOFTWARE AND SERVICES GROUP
("INDUSTRY INDEX") AND THE NASDAQ MARKET INDEX.
Assumes $100 invested on June 30, 1992 in BISYS Common Stock, the Industry
Index, and the NASDAQ Market Index.
================================================================================
6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
- --------------------------------------------------------------------------------
BISYS $100.00 $156.99 $176.34 $191.40 $324.73 $359.14
- --------------------------------------------------------------------------------
INDUSTRY INDEX $100.00 $129.30 $145.56 $225.72 $297.75 $407.52
- --------------------------------------------------------------------------------
NASDAQ $100.00 $122.76 $134.61 $157.88 $198.73 $239.40
================================================================================
The above report of the Compensation Committee and the Stock Performance
Graph is not deemed to be soliciting material or to be filed with or
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates such report or graph by
reference.
2. APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
On August 14, 1997, the Board of Directors of the Company adopted, subject
to stockholder approval, The BISYS Group, Inc. 1998 Employee Stock Purchase Plan
(the "1998 Plan"). Under the 1998 Plan, which is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Code, options to
purchase shares of Common Stock (hereinafter, "Employee Options") will be
granted to eligible employees of the Company. The Board of Directors believes
that the grant of Employee Options is an important incentive for attracting,
retaining and motivating employees through the opportunity of equity
participation. The 1998 Plan is intended to serve this function.
11
An aggregate of 125,000 shares of Common Stock have been reserved for
issuance upon the exercise of Employee Options granted under the 1998 Plan,
subject to stockholder approval of the 1998 Plan. If approved by stockholders,
the 1998 Plan will become effective on January 1, 1998. The 1998 Plan will
terminate on December 31, 1998, unless it is earlier terminated by the Board of
Directors. The approximately 2,000 employees who are regularly scheduled to
work for the Company, or its subsidiaries, at least 20 hours per week and who
shall have completed one month of employment as of January 1, 1998 for the
Company, or its subsidiaries, will be eligible to receive Employee Options. The
maximum number of shares that may be purchased by any participant under the 1998
Plan will be equal to the lesser of 10% of base pay or $15,000, divided by 85%
of the fair market value of the Company's Common Stock on January 1, 1998 based
upon the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1997. No employee shall be granted an Employee Option if (i)
immediately after such grant such employee would own stock possessing 5% or more
(including stock subject to outstanding options) of the total combined voting
power or value of all classes of stock of the Company, or (ii) if the exercise
of such Employee Option would result in the employee acquiring a cumulative
total of more than 700 shares of Common Stock under the 1998 Plan. In the event
that any outstanding Employee Option expires or is terminated for any reason,
the shares allocable to the unexercised portion of such Employee Option may
again be subject to an Option granted under the 1998 Plan.
A copy of the 1998 Plan is attached to this Proxy Statement as EXHIBIT A.
The principal features of the 1998 Plan are summarized below.
The 1998 Plan will be administered by a committee of the Board of Directors
(the "Committee"). The Committee shall consist of no less than two persons and
all members shall be "Non-Employee Directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934. The Committee's authority to
administer the 1998 Plan includes the authority (i) to interpret the 1998 Plan
and decide any matters arising thereunder and (ii) to adopt such rules and
regulations, not inconsistent with the provisions of the 1998 Plan, as it may
deem advisable to carry out the purpose of the 1998 Plan.
Under the 1998 Plan, the exercise price of an Employee Option will be the
lesser of (a) 85% of the fair market value of a share of Common Stock on January
1, 1998 based upon the closing price of the Common Stock on the Nasdaq National
Market on December 31, 1997 or (b) 85% of the fair market value of a share of
Common Stock on December 31, 1998 based upon the closing price of the Common
Stock on the Nasdaq National Market on December 31, 1998.
Members of the Committee may vote on any matter affecting the
administration of, or the granting of Employee Options under, the 1998 Plan.
All expenses and liabilities incurred by the Board of Directors or the Committee
in administering the 1998 Plan are to be borne by the Company.
The 1998 Plan provides that Employee Options are not transferable other
than by will or by the laws of descent and distribution, and during an
optionee's lifetime an Employee Option is exercisable only by an optionee.
In the event that after the adoption of the 1998 Plan the outstanding
shares of the Company's Common Stock are increased or decreased or changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock, the
number of shares of Common Stock (and the price per share) subject to the
unexercised portion of any outstanding Employee Option and the number of shares
for which Employee Options may be granted under the 1998 Plan will be
appropriately adjusted (to the nearest possible full share) by the Board of
Directors, and such adjustment shall be effective and binding for all purposes.
The market value of the Common Stock as of the close of business on
September 18, 1997, as reflected by the closing price of the Common Stock on the
Nasdaq National Market, was $32.125 per share.
12
The decision whether to participate in the 1998 Plan, and the extent of
such participation, is in the discretion of each eligible employee and, thus,
the amount of Employee Options to be granted is presently not determinable. To
date, no Employee Options have been granted.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of the Employee Options issuable under the 1998 Plan
are complex. Therefore, the description of tax consequences set forth below is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. The tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Employee Options granted pursuant to the 1998 Plan are intended to qualify
as options issued under an "employee stock purchase plan" within the meaning of
Section 423 of the Code. If an optionee makes no disposition of the shares
acquired pursuant to exercise of an Employee Option within one year after the
transfer of shares to such optionee and within two years from grant of the
option, then, (i) such optionee will realize no taxable income as a result of
the grant or exercise of such Employee Option, and (ii) on the subsequent
disposition of the shares received upon exercise of the Employee Option or the
death of the optionee, the optionee generally will realize ordinary compensation
income equal to the lesser of (a) the excess of the fair market value of the
shares at the time of such disposition or death over the exercise price, or (b)
15% of the fair market value of the shares at the time the Employee Option was
granted. In the case of such a disposition, the optionee's basis in the shares
will be increased by the amount of ordinary compensation so realized, with the
result that the optionee generally will realize long-term capital gain or loss
equal to the difference, if any, between the proceeds realized from the
disposition over the sum of (x) the exercise price and (y) the amount of
ordinary compensation income realized. Under these circumstances, the Company
will not be entitled to a deduction for federal income tax purposes with respect
to either the issuance of the Employee Options, the transfer of shares upon
their exercise or the disposition of those shares.
If shares subject to an Employee Option are disposed of prior to the
expiration of the above time periods, the optionee will recognize ordinary
income in the year in which the disqualifying disposition occurs, the amount of
which will generally be the lesser of (i) the excess of the fair market value of
the shares on the date of exercise over the exercise price, or (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by
the Company for federal income tax purposes in the same year, provided that the
Company satisfies certain federal income tax withholding requirements. In
addition, the excess, if any, of the amount realized on a disqualifying
disposition over the fair market value of the shares on the date of exercise
generally will be treated as short-term capital gain.
VOTE REQUIRED FOR APPROVAL
The 1998 Plan will be submitted to stockholders for their approval at the
Annual Meeting. The proposal to adopt the 1998 Plan must be approved by the
holders of a majority of the shares of Common Stock present or represented and
entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE
1998 PLAN.
13
3. APPROVAL OF AMENDMENT TO 1996 STOCK OPTION PLAN
At the Annual Meeting, stockholders will be asked to approve an amendment
to the Company's 1996 Stock Option Plan (the "1996 Option Plan") to increase by
2,000,000 the number of shares reserved for issuance under the 1996 Option Plan
to an aggregate of 3,000,000 shares. The amendment and the 1996 Option Plan are
summarized below. A copy of the 1996 Option Plan is available upon a
stockholder's written request to the Company, 150 Clove Road, Little Falls, New
Jersey 07424, Attention: Secretary.
DESCRIPTION OF THE AMENDMENT
The amendment increases by 2,000,000 the number of shares of Common Stock
reserved for issuance under the 1996 Option Plan to an aggregate of 3,000,000
shares. If approved by the stockholders, the amendment shall be effective
immediately.
REASONS FOR THE AMENDMENT
The Board of Directors believes that stock options are an important
incentive for motivating employees and officers through the opportunity of
equity participation. In the view of the Board of Directors, stock options
uniquely focus the attention of officers and employees on the Company's goal of
increasing shareholder value, since the options only provide a reward to the
extent that stock price grows. The Board of Directors further believes that
stock option grants have been a key element in the Company's successful growth.
The Company has relied and continues to rely on stock options as an incentive to
recruit and retain talented officers and employees and to assist in the
implementation of its strategic acquisition program. The amendment is intended
to enable the Company to continue to have an adequate number of shares of Common
Stock available for stock options.
Through June 30, 1997, stock options to purchase more than 1 million shares
of Common Stock had been granted under the Company's stock option plans to
persons who became employees of the Company as a result of corporate
acquisitions. In addition, a total of 427,526 shares have been reserved for
issuance under the Company's stock option plans for the exercise of stock
options granted or assumed by the Company in connection with acquisitions
completed from July 1 to September 18, 1997.
As of September 18, 1997, 618,253 shares of Common Stock remained available
for the grant of stock options under the 1996 Option Plan. Based on shares
reserved for issuance under the Company's stock option plans for options granted
or assumed in connection with recent acquisitions, together with shares
anticipated to be needed for the granting of options in connection with future
acquisitions and to attract and retain key employees, sufficient shares are not
expected to be available for the grant of stock options without increasing the
number of shares available under the 1996 Option Plan. Accordingly, in order to
continue its strategic use of stock options, on August 14, 1997, the Board of
Directors unanimously adopted the amendment, subject to stockholder approval.
DESCRIPTION OF THE 1996 OPTION PLAN
The 1996 Option Plan was adopted by the Board of Directors on August 15,
1996 and approved by the stockholders at the 1996 Annual Meeting. The 1996
Option Plan provides for the granting of "non-qualified stock options" and
"incentive stock options" to acquire Common Stock (collectively, "Options") to
employees. An aggregate of 3,000,000 shares of Common Stock have been reserved
for issuance under the 1996 Option Plan, subject to stockholder approval of the
amendment. In the event that any outstanding Options expire or are terminated,
the shares allocable to such expired or terminated Options shall again become
available for the granting of Options. If any shares acquired pursuant to the
exercise of Options are repurchased by the Company, such shares shall again
become available for the granting of Options.
The terms and conditions of individual option agreements may vary, subject
to the following guidelines: (i) the option price of incentive stock options
may not be less than market value on the date of grant, (ii) the term of all
14
incentive stock options may not exceed ten years from the date of grant; the
term of all non-qualified stock options may exceed ten years, and (iii) no
Options may be granted after November 14, 2006.
The 1996 Option Plan is administered by the Compensation Committee of the
Board of Directors (the "Committee"). Under the 1996 Option Plan, the Committee
must consist of two or more persons, each of whom shall be "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and "Outside Directors" as defined for
purposes of Section 162(m) ("Section 162(m)") of the Internal Revenue Code of
1986, as amended (the "Code"). The Committee determines (i) which officers and
employees of the Company and its subsidiaries shall be granted Options; (ii) the
number of shares subject to each such Option; (iii) the amount to be paid by a
grantee upon exercise of Options; (iv) the time or times and the conditions
subject to which Options may be exercised; and (v) the form of consideration
that may be used to pay for shares issued upon exercise of such Options. The
Committee is also responsible for the administration and interpretation of the
1996 Option Plan.
The 1996 Option Plan provides that the maximum number of shares of Common
Stock for which Options may be granted to any employee during any fiscal year of
the Company shall not exceed 500,000 shares of Common Stock, less the aggregate
number of shares of Common Stock with respect to which stock options, restricted
stock awards or stock appreciation rights have been granted to such person
during such fiscal year under all other compensatory plans of the Company.
The Board of Directors has the authority to amend the 1996 Option Plan at
any time, provided that stockholder approval is required to increase the
aggregate number of shares of Common Stock as to which Options may be granted
(except for increases due to certain adjustments), to increase materially the
benefits accruing to participants under the 1996 Option Plan or to change the
class of employees eligible to receive Options under the 1996 Option Plan.
The Board of Directors may terminate the 1996 Option Plan at any time. The
1996 Option Plan will terminate on, and Options may not be granted after,
November 14, 2006, unless terminated by the Board of Directors prior thereto.
The termination of the 1996 Option Plan will not alter or impair any rights or
obligations under any Options previously granted under the 1996 Option Plan.
The 1996 Option Plan provides that incentive stock options granted
thereunder will not be transferrable other than by will or by laws of descent
and distribution, and during an optionee's lifetime, Options will be exercisable
only by an optionee. Non-qualified stock options may be transferable or
non-transferable in the discretion of the Committee under such conditions as may
be established by the Committee or by the Board of Directors.
As of September 18, 1997, options to purchase a total of 381,747 shares of
Common Stock have been granted to all employees as a group under the 1996 Stock
Option Plan, none of which have been granted to any of the Named Executive
Officers. Future grants of options under the 1996 Option Plan are in the
discretion of the Committee and, thus, the amount of such grants, if any, are
not presently determinable.
The market value of the Company's Common Stock as of the close of business
on September 18, 1997, as reflected by the closing price of the Common Stock on
the Nasdaq National Market, was $32.125 per share.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of incentive stock options and non-qualified options
are complex. Therefore, the description of tax consequences set forth below is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. The tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
15
Incentive stock options granted pursuant to the 1996 Option Plan are
intended to qualify as "Incentive Stock Options" within the meaning of Section
422 of the Code. If an optionee makes no disposition of the shares acquired
pursuant to exercise of an incentive stock option within one year after the
transfer of shares to such optionee and within two years from grant of the
option, such optionee will realize no taxable income as a result of the grant or
exercise of such option; any gain or loss that is subsequently realized may be
treated as long-term capital gain or loss, as the case may be. Under these
circumstances, the Company will not be entitled to a deduction for federal
income tax purposes with respect to either the issuance of such incentive stock
options or the transfer of shares upon their exercise.
If shares subject to incentive stock options are disposed of prior to the
expiration of the above time periods (a "disqualifying disposition"), the
optionee will recognize ordinary income in the year in which the disqualifying
disposition occurs, the amount of which will generally be the lesser of (i) the
excess of the market value of the shares on the date of exercise over the option
price, or (ii) the gain recognized on such disposition. Such amount will
ordinarily be deductible by the Company for federal income tax purposes in the
same year, provided that the Company satisfies certain federal income tax
reporting requirements. In addition, the excess, if any, of the amount realized
on a disqualifying disposition over the market value of the shares on the date
of exercise will be treated as capital gain.
Non-qualified options may also be granted under the 1996 Option Plan. An
optionee who exercises a non-qualified option will recognize as taxable ordinary
income, at the time of exercise, an amount equal to the excess of the fair
market value of the shares on the date of exercise over the exercise price.
Such amount will ordinarily be deductible by the Company in the same year,
provided that the Company satisfies certain federal income tax withholding
requirements that may be applicable.
The discussion above pertaining to a deduction for the Company is qualified
by the application of Section 162(m) of the Code. Pursuant to Section 162(m),
the maximum allowable deduction for compensation paid or accrued by the Company
with respect to the chief executive officer of the Company or any of the four
most highly compensated officers of the Company (other than the chief executive
officer) is limited to $1 million per year. However, compensation is tax
deductible without regard to such limitations if the compensation satisfies the
"performance-based" requirements of the rules and regulations under Section
162(m). The 1996 Option Plan is intended to meet the requirements of Section
162(m), and, if stockholder approval is obtained, the Company expects that
deductions will not be limited thereby.
VOTE REQUIRED FOR APPROVAL
The amendment to the 1996 Option Plan will be submitted to stockholders for
their approval at the Annual Meeting. The proposal to adopt the amendment to
the 1996 Option Plan must be approved by the holders of a majority of the shares
of Common Stock present or represented and entitled to vote at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE
AMENDMENT TO THE 1996 OPTION PLAN.
4. APPROVAL OF AMENDMENTS TO NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
At the Annual Meeting, stockholders will be asked to approve amendments to
the Company's Non-Employee Directors' Stock Option Plan (the "Directors' Stock
Option Plan"). The amendments are intended to (i) increase by 200,000 the
number of shares of Common Stock reserved for issuance under the Directors'
Stock Option Plan, to an aggregate of 275,000 shares, and (ii) modify the
formula for the automatic grant of options to eligible non-employee directors.
The amendments and the Directors' Stock Option Plan are summarized below.
A copy of the Directors' Stock Option Plan is available upon a stockholder's
written request to the Company, 150 Clove Road, Little Falls, New Jersey 07424,
Attention: Secretary.
16
DESCRIPTION OF THE AMENDMENTS
The amendments increase by 200,000 the number of shares of Common Stock
reserved for issuance under the Directors' Stock Option Plan to an aggregate of
275,000 shares.
The amendments further provide for the modification of the formula for the
automatic grant of options to eligible non-employee directors to equity
participation opportunities consistent with non-employee director compensation
which the Board believes are offered by comparable companies competing for
talented directors. The new formula provides that each non-employee director
elected by stockholders at the 1997 Annual Meeting and each non-employee
director elected by stockholders for the first time thereafter will receive a
grant to purchase 25,000 shares of Common Stock upon such election. The options
will have an exercise price equal to the fair market value on the date of grant
and will be exercisable to the extent vested. The options will vest 20% on the
date of grant and 20% upon each re-election to the Board of Directors by
stockholders at subsequent annual meetings until such option is vested in full.
A new stock option for an additional 25,000 shares will be granted to each
director upon re-election by stockholders at the next annual meeting following
the annual meeting at which the prior option became fully vested.
REASONS FOR THE AMENDMENTS
The Board of Directors believes that plans such as the Directors' Stock
Option Plan are an important incentive for attracting, retaining and motivating
non-employee directors through the opportunity of equity participation. As of
September 18, 1997, only 60,600 shares remained available for the grant of stock
options under the Directors' Stock Option Plan. The increase in the number of
shares reserved for issuance is intended to enable the Company to continue this
function and is necessary in order to implement the new formula for stock option
grants.
The Board of Directors believe the new formula for stock option grants to
non-employee directors represents an incentive to become and remain a director
of the Company and is competitive with the equity participation opportunities
which the Board believes are offered by comparable companies competing for
talented directors. The Board of Directors believes that such an increase in
equity participation opportunities is necessary to attract and retain talented
non-employee directors.
DESCRIPTION OF THE DIRECTORS' STOCK OPTION PLAN
The Directors' Stock Option Plan was previously approved by stockholders at
the 1994 Annual Meeting. Under the Directors' Stock Option Plan, options to
purchase shares of Common Stock ("Director Options") are granted to eligible
non-employee Directors of the Company. The Directors' Stock Option Plan is a
fixed formula based plan and determinations as to eligibility to participate and
the timing, size and exercise price of Director Options are fixed by the terms
of such plan and are not within the discretion of the Board of Directors or any
committee thereof. The Directors' Stock Option Plan currently provides for the
automatic annual grant to each of the Company's eligible non-employee directors
of non-qualified stock options to purchase 1,200 shares of Common Stock upon
election (or re-election) by stockholders at each annual meeting. The options
are exercisable upon grant at an exercise price equal to the fair market value
of the Common Stock on the date of grant. An aggregate of 75,000 shares have
been reserved for issuance upon the exercise of Director Options under the Plan.
Director Options to purchase an aggregate of 3,600 shares of Common Stock have
been granted to each of Messrs. DeDapper, Lyons, Marcous and McInerney (14,400
shares as a group) pursuant to such Plan upon their re-election as a Director of
the Company at each of the 1994, 1995 and 1996 Annual Meetings of Stockholders.
17
On August 14, 1997, the Board of Directors unanimously approved the
amendments to the Directors' Stock Option Plan, subject to stockholder approval
at the 1997 Annual Meeting, to increase the aggregate number of shares reserved
for issuance under the Plan by 200,000 shares to 275,000 shares and to modify
the formula for the automatic grant of Director Options to eligible non-employee
Directors to equity participation opportunities consistent with non-employee
director compensation for comparable companies in the businesses in which the
Company competes.
The Directors' Stock Option Plan is administered by the Board of Directors
of the Company, however, decisions with respect to eligibility to participate in
the Plan and the timing, size and exercise price of Director Option grants are
fixed by the Plan, as amended, and are not within the discretion of the Board of
Directors. The Board of Directors has the authority to interpret the provisions
of the Directors' Stock Option Plan and to make other determinations that may be
required.
The Board of Directors has the authority to amend the Directors' Stock
Option Plan at any time, provided that (i) the formula contained in the Plan
regarding the number of shares subject to Director Options to be granted in each
year, and the timing and exercise price of such grants, may not be amended more
than once every six months other than to comport with changes in the Code, ERISA
or the rules thereunder; and (ii) the Board of Directors may not amend the
Directors' Stock Option Plan in any manner that requires the approval of
stockholders pursuant to Rule 16b-3 under the Securities Exchange Act of 1934,
as amended, unless the required approval is obtained. Currently, stockholder
approval would be required for any amendment to the Directors' Stock Option Plan
that would (i) materially increase benefits accruing under such plan, (ii)
materially increase the aggregate number of shares of Common Stock as to which
Director Options may be granted (except for increases due to certain
adjustments), or (iii) materially modify the requirements for eligibility to
participate in such plan.
The Board of Directors may terminate the Directors' Stock Option Plan at
any time. Unless earlier terminated by the Board of Directors, the Directors'
Stock Option Plan will terminate on, and Director Options may not be granted
after, the earlier to occur of November 15, 2004 and the date on which the
number of shares of Common Stock reserved for issuance under the Directors'
Stock Option Plan shall be insufficient to allow the grant of Director Options
as described above. The termination of the Directors' Stock Option Plan will
not alter or impair any rights or obligations under any Director Options
previously granted under the Directors' Stock Option Plan.
The Directors' Stock Option Plan provides that Director Options will not be
transferrable other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or ERISA
or the rules thereunder.
In the event that, after the adoption of the Directors' Stock Option Plan,
the outstanding shares of the Company's Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of the company or of another corporation through
reorganization, merger or consolidation, recapitalization, stock split,
split-up, combination or exchange of shares or declaration of any dividends
payable in Common Stock, the number of shares of Common Stock (and the price per
share) subject to the unexercised portion of any outstanding Director Option,
the number of shares for which Director Options may be granted under the
Directors' Stock Option Plan and the number of shares subject to Director
Options to be granted as of each annual meeting date will be appropriately
adjusted (to the nearest possible full share) by the Board of Directors, and
such adjustment shall be effective and binding for all purposes.
In the event the amendments to the Directors' Stock Option Plan are
approved by the stockholders at the Annual Meeting, each non-employee nominee
for director elected as a director at the Annual Meeting will be granted stock
options to purchase 25,000 shares of Common Stock (150,000 shares as a group if
all non-employee nominees for director are elected), as described above. In the
event the amendments to the Directors' Stock Option Plan are not approved by the
stockholders at the Annual Meeting, each non-employee nominee for director
elected as a director at the Annual Meeting will be granted options to purchase
1,200 shares of Common Stock as described above.
The market value of the Company's Common Stock as of the close of business
on September 18, 1997, as reflected by the closing price of the Common Stock on
the Nasdaq National Market, was $32.125 per share.
18
FEDERAL INCOME TAX CONSEQUENCES
Director Options granted under the Directors' Stock Option Plan are
"non-qualified" stock options. An optionee who exercises a non-qualified option
will recognize as taxable ordinary income, at the time of exercise, the amount
equal to the excess of the fair market value of the shares on the dare of
exercise over the exercise price. Such amount will ordinarily be deductible by
the Company in the same year, provided that the Company satisfies certain
federal income tax withholding requirements that may be applicable.
VOTE REQUIRED FOR APPROVAL
The amendments to the Directors' Stock Option Plan will be submitted to
stockholders for their approval at the Annual Meeting. The proposal to adopt
the amendment must be approved by the holders of a majority of the shares of
Common Stock present or represented and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE
AMENDMENTS TO THE DIRECTORS' STOCK OPTION PLAN.
5. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P.,
independent public accountants, as the auditors of the Company for the fiscal
year ending June 30, 1998, subject to the ratification of such appointment by
stockholders at the Annual Meeting. Coopers & Lybrand L.L.P. has audited the
Company's financial statements since the Company's inception in 1989.
If the foregoing appointment of Coopers & Lybrand L.L.P. is not ratified by
stockholders, the Board of Directors will appoint other independent accountants
whose appointment for any period subsequent to the 1998 Annual Meeting of
Stockholders will be subject to the approval of stockholders at that meeting. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting and will have an opportunity to make a statement should he so
desire and to respond to appropriate questions.
VOTE REQUIRED FOR RATIFICATION
The proposal to ratify the appointment of Coopers & Lybrand L.L.P. as the
auditors of the Company for fiscal 1998 must be approved by the holders of a
majority of the shares of Common Stock present or represented and entitled to
vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF THE FIRM OF COOPERS & LYBRAND L.L.P.
OTHER MATTERS
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting other than those stated in the Notice of Annual
Meeting and referred to in this Proxy Statement. If any other matters should
properly come before the Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine in
their discretion.
The Company's Annual Report to Stockholders for the year ended June 30,
1997 is being mailed to stockholders together with this Proxy Statement.
19
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefor) and Corporate Investors Communications, Inc. a proxy
solicitor (for an estimated total cost to the Company of $4,500) may solicit the
return of proxies by telephone, telegram or personal interview. Arrangements
have also been made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial owners
of stock held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.
STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the 1998 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 150 Clove Road, Little
Falls, New Jersey 07424, Attention: Secretary, not later than June 2, 1998.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 1997, FILED BY THE COMPANY WITH THE COMMISSION, WILL BE
FURNISHED, WITHOUT EXHIBITS, WITHOUT CHARGE TO ANY PERSON REQUESTING A COPY
THEREOF IN WRITING AND STATING THAT SUCH PERSON IS A BENEFICIAL HOLDER OF SHARES
OF COMMON STOCK OF THE COMPANY ON SEPTEMBER 18, 1997, THE RECORD DATE FOR THE
ANNUAL MEETING OF STOCKHOLDERS. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO
THE BISYS GROUP, INC., 150 CLOVE ROAD, LITTLE FALLS, NEW JERSEY 07424,
ATTENTION: SECRETARY.
By Order of the Board of Directors
Kevin J. Dell
Secretary
20
EXHIBIT A
THE BISYS GROUP, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
Section 1. PURPOSE. The purpose of The BISYS Group, Inc. 1998 Employee
Stock Purchase Plan (the "Plan") is to promote the interests of The BISYS Group,
Inc., a Delaware corporation (the "Company") and any Subsidiary thereof (as
hereinafter defined), and its stockholders by providing an opportunity to
certain current employees of the Company or any Subsidiary thereof to purchase
Common Stock of the Company. By encouraging such stock ownership, the Company
seeks to attract, retain and motivate such employees and to encourage such
employees to devote their best efforts to the business and financial success of
the Company. It is intended that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed so as to extend and
limit participation in a manner consistent with the requirements of Section 423.
Section 2. DEFINITIONS. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.01. "BASE PAY" shall be determined as of the first business day of
December 1997 by multiplying the normal biweekly rate of a salaried Employee by
26 or the hourly rate of an hourly Employee by 2,080; PROVIDED, THAT, in the
case of a part-time hourly Employee, the Employee's Base Pay shall be determined
by multiplying such Employee's hourly rate by the number of regularly scheduled
hours of work for such Employee during the one-year period beginning on the
first business day of December 1997. The calculation of Base Pay shall be made
without regard to payments for overtime, shift premium, bonuses and other
special payments, commissions and other marketing incentive payments.
2.02. "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
2.03. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.04. "COMMON STOCK" shall mean the Common Stock, $.02 par value, of the
Company.
2.05. "EMPLOYEE" shall mean any person, including an officer or director
of the Company or a Subsidiary of the Company, who is customarily employed on a
full-time or part-time basis by the Company or a Subsidiary of the Company and
is regularly scheduled to work at least 20 hours per week.
2.06. "OFFERING" shall have the meaning described in Section 4.01.
2.07. "OPTION" shall mean any option to purchase Common Stock granted to
an Employee pursuant to this Plan.
2.08. "PARTICIPANT" shall mean any Employee that is eligible to
participate in the Plan and who elects to participate in the Plan.
2.09. "PARENT OF THE COMPANY" shall have the meaning set forth in
Section 424(e) of the Code.
2.10. "SUBSIDIARY OF THE COMPANY" shall have the meaning set forth in
Section 424(f) of the Code.
Section 3. ELIGIBILITY AND PARTICIPATION. The following provisions shall
govern the eligibility of Employees to participate in the Plan.
3.01. INITIAL ELIGIBILITY. Any Employee who shall have completed one (1)
month of employment as of January 1, 1998 shall be eligible to participate in
the Offering.
3.02. RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of
the Plan to the contrary, no Employee shall be granted an Option under the Plan
(1) if, immediately after such grant, such Employee would own stock
possessing 5% or more of the total combined voting power or value of all classes
of stock of any of the Company, a Subsidiary of the Company or the Parent of the
Company, such ownership to be determined by applying the rules of Section 424(d)
of the Code and treating stock which the Employee may purchase under outstanding
options as stock owned by the Employee; or
(2) which would permit his rights to purchase stock under the Plan
(and under any other plans of the Company qualifying under Section 423 of the
Code) to accrue at a rate which exceeds the lesser of (i) $15,000 or (ii) 10% of
the Employee's Base Pay of fair market value of the stock (determined at the
time such Option is granted) for each calendar year in which such Option is
outstanding; or
(3) if the exercise of such Option would result in the Employee
acquiring a cumulative total of more than 700 shares of Common Stock under the
Plan.
3.03. COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
Participant in the Plan by completing an authorization for a payroll deduction
on the form provided by the Company
2
and filing it with the office of the Senior Vice President of Human Resources of
the Company on or before the date set therefor by the Committee which date shall
be prior to January 1, 1998. Payroll deductions shall be made from a
Participant's 1998 Base Pay and shall commence on the first regularly scheduled
payday after January 1, 1998 and shall terminate on the last regularly scheduled
payday on or before December 31, 1998, unless sooner terminated by the
Participant pursuant to Section 9.01.
Section 4. COMMON STOCK SUBJECT TO THE PLAN.
4.01. NUMBER OF SHARES. The total number of shares of Common Stock for
which Options may be granted under this Plan shall not exceed in the aggregate
one hundred twenty-five thousand (125,000) shares of Common Stock. The Plan
will be implemented by an Offering of shares of Common Stock (the "Offering").
The Offering shall begin on January 1, 1998 and shall terminate on December 31,
1998.
4.02. REISSUANCE. The shares of Common Stock that may be subject to
Options granted under this Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as treasury stock as the
Committee may determine. In the event that any outstanding Option expires or is
terminated for any reason, the shares allocable to the unexercised portion of
such Option may again be subject to an Option granted under this Plan.
Section 5. ADMINISTRATION OF THE PLAN.
5.01. COMMITTEE. The Plan shall be administered by a committee (the
"Committee") which shall be established by the Board of Directors and shall
consist of no less than two persons. All members of the Committee shall be
"Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934. The Committee shall be appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors.
5.02. INTERPRETATION. The Committee shall be authorized (i) to interpret
the Plan and decide any matters arising thereunder and (ii) to adopt such rules
and regulations, not inconsistent with the provisions of the Plan, as it may
deem advisable to carry out the purpose of this Plan.
5.03. FINALITY. The interpretation and construction by the Committee of
any provision of the Plan, any Option granted hereunder or any agreement
evidencing any such Option shall be final and conclusive upon all parties.
5.04. VOTING BY COMMITTEE MEMBERS. Only members of the Committee shall
vote on any matter affecting the administration of the Plan or the granting of
Options under the Plan.
3
5.05. EXPENSES, ETC. All expenses and liabilities incurred by the Board
of Directors or the Committee in the administration of the Plan shall be borne
by the Company. The Committee may employ attorneys, consultants, accountants or
other persons in connection with the administration of the Plan. The Company,
and its officers and directors, shall be entitled to rely upon the advice,
opinions or valuations of any such persons. No member of the Board of Directors
or the Committee shall be liable for any action, determination or interpretation
taken or made in good faith with respect to the Plan or any Option granted
hereunder.
Section 6. PAYROLL DEDUCTIONS.
6.01. AMOUNT OF DEDUCTION. At the time a Participant files his
authorization for payroll deduction pursuant to Section 3.03, he shall elect to
have deductions made from his pay on each payday during the time he is a
Participant in the Offering at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of
his Base Pay, as determined as of the first business day of December 1997.
6.02. PARTICIPANT'S ACCOUNT; NO INTEREST. All payroll deductions made for
a Participant shall be credited to his account under the Plan. A Participant
may not make any separate cash payment into such account. No interest shall
accrue on amounts credited to a Participant's account under the Plan, regardless
of whether or not the funds in such account are ultimately used to acquire
shares of Common Stock.
6.03. CHANGES IN PAYROLL DEDUCTIONS. A Participant may discontinue his
participation in the Plan pursuant to Section 9.01, but no other change can be
made during the Offering and, specifically, a Participant may not alter the
amount of his payroll deductions for the Offering.
6.04. USE OF FUNDS. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
Section 7. GRANT OF OPTION.
7.01. TERMS AND CONDITIONS. A description of the terms and conditions of
this Plan shall be made available to the Participants in such form and manner as
the Committee shall approve. Such description shall be consistent with this
Plan and with the treatment of Options as being issued under an "employee stock
purchase plan" under Section 423 of the Code.
7.02. NUMBER OF OPTION SHARES; PRO RATA ALLOCATION.
(a) On January 1, 1998, each Participant shall be deemed to have been
granted an Option, subject to the limitations of
4
Section 3.02, to purchase a maximum number of shares of Common Stock equal to
the number obtained by multiplying (i) the percentage of the Employee's Base Pay
which he has elected to have withheld pursuant to Section 6.01 by (ii) the
Employee's Base Pay and dividing the resulting product by (iii) 85% of the fair
market value of a share of Common Stock of the Company on January 1, 1998 based
upon the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1997; PROVIDED, HOWEVER, that in no event shall the total number of
shares of Common Stock for which Options are granted exceed 125,000 shares.
(b) If the total number of shares of Common Stock for which Options would
have been granted pursuant to Section 7.02(a) would have exceeded 125,000 shares
(absent the proviso to that section), the Company shall make a pro rata
allocation of the Options available for grant in as nearly a uniform manner as
shall be practicable and as it shall determine to be equitable.
7.03. OPTION PRICE. The Option price of shares of Common Stock subject to
an Option shall be the lower of:
(a) 85% of the fair market value of the shares of Common Stock subject to
the Option on January 1, 1998 based upon the closing price of the Common Stock
on the Nasdaq National Market on December 31, 1997; or
(b) 85% of the fair market value of the shares of Common Stock subject to
the Option on December 31, 1998 based upon the closing price of the Common Stock
on the Nasdaq National Market on December 31, 1998.
7.04. FAIR MARKET VALUE. For purposes of this Plan, the fair market value
per share of Common Stock as of any day shall mean the average of the closing
prices of sales of shares of Common Stock on all national securities exchanges
on which the Common Stock may at the time be listed or, if there shall have been
no sales on any such day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day the Common Stock
shall not be so listed, the average of the representative bid and asked prices
quoted in the Nasdaq system as of 3:30 p.m., New York time, on such day, or, if
on any day the Common Stock shall not be quoted in the Nasdaq system, the
average of the high and low bid and asked prices on such day in the
over-the-counter market as reported by National Quotation Bureau Incorporated,
or any similar successor organization. If at any time the Common Stock is not
listed on any national securities exchange or quoted in the Nasdaq system or the
over the-counter market, the fair market value of the shares of Common Stock
subject to an Option on the date the Option is granted shall be the fair market
value thereof determined in good faith by the Board of Directors.
5
7.05. INTEREST IN OPTION STOCK. A Participant shall have no interest in
shares of Common Stock covered by his Option until such Option has been
exercised.
7.06. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor Options shall be transferable otherwise than by will
or the laws of descent and distribution, and, during an Optionee's lifetime, an
Option shall be exercisable only by the Optionee.
7.07 TAX WITHHOLDING. In the event that the Company or any Parent or
Subsidiary of the Company is required to withhold any Federal, state or local
taxes in respect of any compensation income realized by the Participant as a
result of any "disqualifying disposition" of any shares of Common Stock acquired
upon exercise of an Option granted hereunder, the Company shall be entitled to
deduct from any payments of any kind otherwise due to such Participant the
aggregate amount of such Federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such Federal, state or
local taxes, such Participant will be required to pay to the Company, or make
other arrangements satisfactory to the Company regarding payment to the Company
of, the aggregate amount of any such taxes. All matters with respect to the
total amount of taxes to be withheld in respect of any such compensation income
shall be determined by the Committee in its sole discretion.
Section 8. EXERCISE OF OPTIONS.
8.01. AUTOMATIC EXERCISE. Unless a Participant gives written notice to
the Company of withdrawal pursuant to Section 9.01, his Option to acquire Common
Stock with payroll deductions made during any Offering will be deemed to have
been exercised automatically on December 31, 1998 for the purchase of the number
of full shares of Common Stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable Option price (but not in
excess of the number of shares of Common Stock for which Options have been
granted to the Employee pursuant to Section 7.02), and any excess in his account
at that time will be returned to him.
8.02. FRACTIONAL SHARES. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any Employee promptly following
the termination of the Offering.
8.03. DELIVERY OF STOCK. As promptly as practicable after December 31,
1998, the Company will deliver to each Participant, in such Participant's name,
the shares of Common Stock purchased upon exercise of such Participant's Option.
6
Section 9. WITHDRAWAL.
9.01. IN GENERAL. A Participant may withdraw payroll deductions credited
to his account under the Plan at any time by giving written notice to the Vice
President of Human Resources of the Company. All of the Participant's payroll
deductions credited to his account will be paid to him within 30 days after
receipt of his notice of withdrawal, and no further payroll deductions will be
made from his pay; PROVIDED, THAT, the Participant gives notice of withdrawal
sufficiently prior to the next scheduled payroll deduction.
9.02. CESSATION OF EMPLOYEE STATUS. In the event a Participant shall
cease to be an Employee, as defined in Section 2.05, for any reason, other than
as a result of his death, the payroll deductions credited to his account will be
returned to him.
9.03. TERMINATION DUE TO DEATH. In the event a Participant shall cease to
be an Employee, as defined in Section 2.05, by reason of his death, his legal
representative shall have the right to elect, by written notice given to the
Senior Vice President of Human Resources of the Company prior to December 31,
1998 either:
(a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan, or
(b) to exercise the Participant's Option granted under Section 7.02 for
the purchase of shares of Common Stock on December 31, 1998 for the purchase of
the number of full shares of Common Stock which the accumulated payroll
deductions in the Participant's account will purchase at the applicable Option
price, and any excess in such account will be returned to the Participant's
legal representative.
In the event that no such written notice of election shall be duly received
by the office of the Senior Vice President of Human Resources of the Company,
the Participant's legal representative shall automatically be deemed to have
elected, pursuant to paragraph (b), to exercise the Participant's Option.
Section 10. ADJUSTMENTS.
(a) In the event that after the adoption of the Plan by the Board of
Directors, the outstanding shares of the Company's Common Stock shall be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, split-up, combination or exchange of shares or
declaration of any dividends payable in Common Stock, the Board of Directors
shall appropriately adjust (i) the
7
number of shares of Common Stock (and the Option price per share) subject to the
unexercised portion of any outstanding Option (to the nearest possible full
share); PROVIDED, HOWEVER, that the limitations of Section 424 of the Code shall
apply with respect to such adjustments; (ii) the number of shares of Common
Stock for which Options may be granted under this Plan, as set forth in Section
4.01 hereof, and such adjustment shall be effective and binding for all purposes
of this Plan.
(b) Notwithstanding the foregoing, in the event of (i) any offer to
holders of the Company's Common Stock generally relating to the acquisition of
their shares, including, without limitation, through purchase, merger or
otherwise, or (ii) any transaction generally relating to the acquisition of
substantially all of the assets or business of the Company, the Board of
Directors may make such adjustment as it deems equitable in respect of
outstanding Options including, without limitation, the revision or cancellation
of any outstanding Options. Any such determination by the Committee shall be
effective and binding for all purposes of this Plan.
Section 11. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP.
Neither this Plan nor any Option granted hereunder to a Participant shall
be construed as conferring upon such Participant any right to continue in the
employ of the Company or any Subsidiary as the case may be, or limit in any
respect the right of the Company or any Subsidiary to terminate such
Participant's employment or other relationship with the Company or any
Subsidiary, as the case may be, at any time.
Section 12. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable; PROVIDED, HOWEVER, that, without
the approval of the holders of a majority of the outstanding stock of the
Company entitled to vote thereon at a meeting, the Board of Directors may not
amend the Plan (i) to increase materially the benefits accruing to Participants
under the Plan, (ii) to increase materially (except for increases due to
adjustments in accordance with Section 10 hereof) the aggregate number of shares
of Common Stock for which Options may be granted hereunder or (iii) to modify
materially the requirements as to eligibility for participation in the Plan.
Section 13. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate one year after its effective
date. No Option may be granted hereunder after termination of the Plan. The
termination or amendment of the Plan shall not alter or impair any rights or
obligations under any Option theretofore granted under the Plan.
8
Section 14. EFFECTIVE DATE OF THE PLAN. This Plan shall be effective as
of January 1, 1998, subject to approval by the holders of the majority of the
Common Stock present and represented at a special or annual meeting of the
shareholders held on or before December 31, 1997. If the Plan is not so
approved, the Plan shall not become effective.
9
APPENDIX A
(As amended effective November 13, 1997,
subject to stockholder approval)
THE BISYS GROUP, INC.
1996 STOCK OPTION PLAN
----------------------
Section 1. PURPOSE. The purpose of The BISYS Group, Inc. 1996 Stock
Option Plan (the "Plan") is to promote the interests of The BISYS Group, Inc., a
Delaware corporation (the "Company"), and any Subsidiary thereof, and its
stockholders by providing an opportunity to selected employees and officers of
the Company or any Subsidiary thereof as of the date of the adoption of this
Plan or at any time thereafter to purchase Common Stock of the Company. By
encouraging such stock ownership, the Company seeks to attract, retain and
motivate such employees and persons and to encourage such employees and persons
to devote their best efforts to the business and financial success of the
Company. It is intended that this purpose will be effected by the granting of
"non-qualified stock options" and/or "incentive stock options" to acquire the
common stock of the Company. Under this Plan, a committee of the Board of
Directors shall have the authority (in its sole discretion) to grant "incentive
stock options" within the meaning of Section 422A(b) of the Code or "non
qualified stock options" as described in Treasury Regulation Section 1.83-7 or
any successor regulation thereto.
Section 2. DEFINITIONS. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.1. "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
2.2. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.3. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.4. "COMMON STOCK" shall mean the Common Stock, $.02 par value, of the
Company.
2.5. "EMPLOYEE" shall mean (i) with respect to an ISO, any person
including an officer or employee-director of the Company, who, at the time an
ISO is granted to such person hereunder, is employed on a full-time basis by the
Company or any Subsidiary of the Company, and (ii) with respect to a
Non-Qualified Option, any person employed by or performing services for the
Company or any Subsidiary of the Company, including, without limitation,
employee-directors and officers.
2.6. "ISO" shall mean an Option granted under the Plan which constitutes
and shall be treated as an "incentive stock option" as defined in
Section 422A(b) of the Code.
2.7. "NON-QUALIFIED OPTION" shall mean an Option granted to a Participant
pursuant to the Plan which is intended to be, and qualifies as, a
"non-qualified stock option" as described in Treasury Regulation Section 1.83-7
and which shall not constitute nor be treated as an ISO.
2.8. "OPTION" shall mean any ISO or Non-Qualified Option granted to an
Employee pursuant to this Plan.
2.9. "PARTICIPANT" shall mean any Employee to whom an Option is granted
under this Plan.
2.10. "PARENT OF THE COMPANY" shall have the meaning set forth in
Section 425(e) of the Code.
2.11. "SECTION 162(M)" shall mean Section 162(m) of the Code including the
rules and regulations promulgated by the Internal Revenue Service thereunder.
2.12. "SUBSIDIARY OF THE COMPANY" shall have the meaning set forth in
Section 425(f) of the Code.
Section 3. ELIGIBILITY. Options may be granted to any Employee. The
Committee shall have the sole authority to select the persons to whom Options
are to be granted hereunder, and to determine whether a person is to be granted
a Non-Qualified Option or an ISO or any combination thereof. No person shall
have any right to participate in the Plan. Any person selected by the Committee
for participation during any one period will not by virtue of such participation
have the right to be selected as a Participant for any other period.
Section 4. COMMON STOCK SUBJECT TO THE PLAN.
4.1. The total number of shares of Common Stock for which Options may be
granted under this Plan shall not exceed in the aggregate three million
(3,000,000) shares of Common Stock.
4.2. The shares of Common Stock that may be subject to Options granted
under this Plan may be either authorized and unissued shares or shares
reacquired at any time and now or hereafter held as treasury stock as the
Committee may determine. In the event that any outstanding Option expires or is
terminated for any reason, the shares allocable to the unexercised portion of
such Option may again be subject to an Option granted under this Plan. If any
shares of Common Stock acquired pursuant to the exercise of an Option shall have
been repurchased by the
2
Company, then such shares shall again become available for issuance pursuant to
the Plan.
4.3. SPECIAL ISO LIMITATIONS.
(a) The aggregate fair market value (determined as of the date an ISO is
granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all Incentive Stock Option Plans of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 425(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, unless the option price is at least 110% of the fair market value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and the ISO by its terms is not exercisable more than five
years from the date it is granted.
4.4. Notwithstanding any other provision of the Plan, the provisions of
Sections 4.3(a) and (b) shall not apply, nor shall be construed to apply, to any
Non-Qualified Option granted under the Plan.
Section 5. ADMINISTRATION OF THE PLAN.
5.1 The Plan shall be administered by a committee (the "Committee") which
shall be established by the Board of Directors and shall consist of no less than
two persons. All members of the committee shall be both "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 and "Outside Directors" as defined for purposes of Section 162(m). The
Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors.
5.2. The Committee shall have the sole authority and discretion to grant
Options under this Plan and, subject to the limitations set forth in Section 6
hereof, to determine the terms and conditions of all Options, including, without
limitation, (i) selecting the Participants who are to be granted Options
hereunder; (ii) designating whether any Option to be granted hereunder is to be
an ISO or a Non-Qualified Option; (iii) establishing the number of shares of
Common Stock that may be issued under each Option; (iv) determining the time and
the conditions subject to which Options may be exercised in whole or in part;
(v) determining the form of the consideration that may be used to purchase
shares of Common Stock upon exercise of any Option (including the circumstances
under which the Company's issued and outstanding shares of Common Stock may be
used by a
3
Participant to exercise an Option); (vi) imposing restrictions and/or conditions
with respect to shares of Common Stock acquired upon exercise of an Option;
(vii) determining the circumstances under which shares of Common Stock acquired
upon exercise of any Option may be subject to repurchase by the Company;
(viii) determining the circumstances and conditions subject to which shares
acquired upon exercise of an Option may be sold or otherwise transferred,
including without limitation, the circumstances and conditions subject to which
a proposed sale of shares of Common Stock acquired upon exercise of an Option
may be subject to the Company's right of first refusal (as well as the terms and
conditions of any such right of first refusal); (ix) establishing a vesting
provision for any Option relating to the time (or the circumstance) when the
Option may be exercised by a Participant, including vesting provisions which may
be contingent upon the Company meeting specified financial goals;
(x) accelerating the time when outstanding Options may be exercised, PROVIDED,
HOWEVER, that any ISOs shall be "accelerated" within the meaning of
Section 425(h) of the Code, and (xi) establishing any other terms, restrictions
and/or conditions applicable to any Option not inconsistent with the provisions
of this Plan.
5.3. The Committee shall be authorized to interpret the Plan and may, from
time to time, adopt such rules and regulations, not inconsistent with the
provisions of the Plan, as it may deem advisable to carry out the purpose of
this Plan.
5.4. The interpretation and construction by the Committee of any provision
of the Plan, any Option granted hereunder or any agreement evidencing any such
Option shall be final and conclusive upon all parties.
5.5 Only members of the Committee shall vote on any matter affecting the
administration of the Plan or the granting of Options under the Plan.
5.6. All expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons in connection with
the administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No member of the Board of Directors (or the Committee) shall be liable
for any action, determination or interpretation taken or made in good faith with
respect to the Plan or any Option granted hereunder.
5.7. Notwithstanding anything contained herein to the contrary, the
maximum number of shares of Common Stock for which Options may be granted to any
Employee during any fiscal year of the Company shall not exceed 500,000 shares
of Common Stock, less the aggregate number of shares of Common Stock with
respect to
4
which stock options, restricted stock awards or stock appreciation rights have
been granted to such Employee during such fiscal year under all other
compensatory plans of the Company.
Section 6. TERMS AND CONDITIONS OF OPTIONS.
6.1. ISOS. The terms and conditions of each ISO granted under the Plan
shall be specified by the Committee and shall be set forth in an ISO agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each ISO shall be such that each ISO
issued hereunder shall constitute and shall be treated as an "incentive stock
option" as defined in Section 422A of the Code. The terms and conditions of any
ISO granted hereunder need not be identical to those of any other ISO granted
hereunder.
The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Committee but shall in no event
be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the fair market value of the shares of Common Stock
subject to the ISO on the date the ISO is granted. For purposes of this Plan,
the fair market value per share of Common Stock as of any day shall mean the
average of the closing prices of sales of shares of Common Stock on all national
securities exchanges on which the Common Stock may at the time be listed or, if
there shall have been no sales on any such day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock shall not be so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of 3:30 p.m.,
New York time, on such day, or, if on any day the Common Stock shall not be
quoted in the NASDAQ system, the average of the high and low bid and asked
prices on such day in the over-the-counter market as reported by National
Quotation Bureau Incorporated, or any similar successor organization. If at any
time the Common Stock is not listed on any national securities exchange or
quoted in the NASDAQ system or the over the-counter market, the fair market
value of the shares of Common Stock subject to an Option on the date the ISO is
granted shall be the fair market value thereof determined in good faith by the
Board of Directors.
(b) ISOs, by their terms, shall not be transferable otherwise than by will
or the laws of descent and distribution, and, during an Optionee's lifetime, an
ISO shall be exercisable only by the Optionee.
5
(c) The Committee shall fix the term of all ISOs granted pursuant to the
Plan (including the date on which such ISO shall expire and terminate),
PROVIDED, HOWEVER, that such term shall in no event exceed ten years from the
date on which such ISO is granted (or, in the case of an ISO granted to an
Employee referred to in Section 4.3(b) hereof, such term shall in no event
exceed five years from the date on which such ISO is granted). Each ISO shall
be exercisable in such amount or amounts, under such conditions and at such
times or intervals or in such installments as shall be determined by the
Committee in its sole discretion.
(d) In the event that the Company or any Parent or Subsidiary of the
Company is required to withhold any Federal, state or local taxes in respect of
any compensation income realized by the Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. A Participant may use issued and outstanding Common Stock for the
payment of taxes. All matters with respect to the total amount of taxes to be
withheld in respect of any such compensation income shall be determined by the
Committee in its sole discretion.
(e) In the sole discretion of the Committee the terms and conditions of
any ISO may (but need not) include any of the following provisions:
(i) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis for
any reason other than as a result of his death or "disability" (within the
meaning of Section 22(e)(3) of the Code), the unexercised portion of any
ISO held by such Participant at that time may only be exercised within one
month after the date on which the Participant ceased to be so employed, and
only to the extent that the Participant could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(ii) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis by
reason of his "disability" (within the meaning of Section 22(e)(3) of the
Code), the unexercised portion of any ISO held by such Participant at that
time may only be exercised within one year after the date on which the
Participant ceased to be so employed, and
6
only to the extent that the Optionee could have otherwise exercised such
ISO as of the date on which he ceased to be so employed.
(iii) In the event a Participant shall die while in the full-time employ
of the Company or a Parent or Subsidiary of the Company (or within a period
of one month after ceasing to be an Employee for any reason other than such
"disability" or within a period of one year after ceasing to be an Employee
by reason of such "disability"), the unexercised portion of any ISO held by
such Participant at the time of his death may only be exercised within one
year after the date of such Participant's death, and only to the extent
that the Participant could have otherwise exercised such ISO at the time of
his death. In such event, such ISO may be exercised by the executor or
administrator of the Participant's estate or by any person or persons who
shall have acquired the ISO directly from the Participant by bequest or
inheritance.
6.2. NON-QUALIFIED OPTIONS. The terms and conditions of each
Non-Qualified Option granted under the Plan shall be specified by the Committee,
in its sole discretion, and shall be set forth in a written option agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each Option will be such that each Option
issued hereunder shall not constitute nor be treated as an "incentive stock
option" as defined in Section 422A of the Code and will be a "non-qualified
stock option" for federal income tax purposes. The terms and conditions of any
Option granted hereunder need not be identical to those of any other Option
granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement shall
include the following:
(a) The option (exercise) price shall be fixed by the Committee and may be
equal to, more than or less than 100% of the fair market value of the shares of
Common Stock subject to the Non-Qualified Option on the date such Non-Qualified
Option is granted.
(b) The Committee shall fix the term of all Non-Qualified Options granted
pursuant to the Plan (including the date on which such Non-Qualified Option
shall expire and terminate). Such term may be more than ten years from the date
on which such Non-Qualified Option is granted. Each Non-Qualified Option shall
be exercisable in such amount or amounts, under such conditions, and at such
times or intervals or in such installments as shall be determined by the
Committee in its sole discretion.
7
(c) Non-Qualified Options may be transferable or nontransferable otherwise
than by will or the laws of descent and distribution, in the discretion of the
Committee and under such conditions as the Committee may establish with respect
to any Non-Qualified Options.
(d) In the event that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of a Non-Qualified Option granted hereunder or in respect
of any shares of Common Stock acquired upon exercise of a Non-Qualified Option,
the Company shall deduct from any payments of any kind otherwise due to such
Participant the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such Federal,
state or local taxes, or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to the Company, or
make other arrangements satisfactory to the Company regarding payment to the
Company of, the aggregate amount of any such taxes. All matters with respect to
the total amount of taxes to be withheld in respect of any such compensation
income shall be determined by the Committee in its sole discretion.
Section 7. ADJUSTMENTS. (a) In the event that after the adoption of the
Plan by the Board of Directors, the outstanding shares of the Company's Common
Stock shall be increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation through reorganization, merger or consolidation,
recapitalization, reclassification, stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock, the
Board of Directors shall appropriately adjust (i) the number of shares of Common
Stock (and the option price per share) subject to the unexercised portion of any
outstanding Option (to the nearest possible full share), PROVIDED, HOWEVER, that
the limitations of Section 425 of the Code shall apply with respect to
adjustments made to ISOs and (ii) the number of shares of Common Stock for which
Options may be granted under this Plan, as set forth in Section 4.1 hereof, and
such adjustments shall be effective and binding for all purposes of this Plan.
(b) Notwithstanding the foregoing, in the event of (i) any offer to
holders of the Company's Common Stock generally relating to the acquisition of
their shares, including, without limitation, through purchase, merger or
otherwise, or (ii) any transaction generally relating to the acquisition of
substantially all of the assets or business of the Company, the Committee may
make such adjustment as it deems equitable in respect of outstanding Options
including, without limitation, the revision or cancellation of any outstanding
Options. Any such
8
determination by the Committee shall be effective and binding for all purposes
of this Plan.
Section 8. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP.
Neither this Plan nor any Option granted hereunder to a Participant shall
be construed as conferring upon such Participant any right to continue in the
employ of the Company or the service of the Company or any Subsidiary as the
case may be, or limit in any respect the right of the Company or any Subsidiary
to terminate such Participant's employment or other relationship with the
Company or any Subsidiary, as the case may be, at any time.
Section 9. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable; PROVIDED, HOWEVER, that, without
the approval of the holders of a majority of the outstanding stock of the
Company present or represented and entitled to vote thereon at a meeting, the
Board of Directors may not amend the Plan (i) to increase materially the
benefits accruing to participants under the Plan or the rules and regulations
thereunder, (ii) to increase materially (except for increases due to adjustments
in accordance with Section 8 hereof) the aggregate number of shares of Common
Stock for which Options may be granted hereunder or (iii) to modify materially
the requirements as to eligibility for participation in the Plan.
Section 10. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
initial approval by the stockholders of the Company. No Option may be granted
hereunder after termination of the Plan. The termination or amendment of the
Plan shall not alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
Section 11. EFFECTIVE DATE OF THE PLAN. This Plan shall be effective as
of November 14, 1996, the date on which the Plan was approved by the vote of the
holders of a majority of the shares of common stock present or represented and
entitled to vote at the 1996 Annual Meeting of the Stockholders held on November
14, 1996.
* * * * *
9
APPENDIX B
As amended effective November 13, 1997,
subject to stockholder approval)
THE BISYS GROUP, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
SECTION 1. PURPOSE. The purpose of The BISYS Group, Inc. Non-Employee
Directors' Stock Option Plan (the "Plan") is to promote the interests of The
BISYS Group, Inc., a Delaware corporation (the "Company"), and its stockholders
by providing a means to attract and retain highly-qualified non-employee
directors through the grant of options to purchase Common Stock of the Company.
By encouraging such stock ownership, the Company also seeks to develop in its
non-employee directors a sense of personal involvement in the business and
financial success of the Company, and to align the interests of such directors
with those of the Company's stockholders. It is intended that this purpose will
be effected by the granting of "non-qualified stock options" to acquire the
Common Stock of the Company. Under the Plan and subject to the restrictions
contained therein, the Board of Directors shall have the authority to grant
"non-qualified stock options" as described in Treasury Regulation 1.83-7 of any
successor regulation thereto. The Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERlSA"). In addition, it is
intended that the grant of options pursuant to the Plan shall not affect the
status of the Company's non-employee directors as "disinterested persons" within
the meaning of Rule 16b-3(a)(2)(i).
SECTION 2. DEFINITIONS. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.1. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company.
2.2. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.3. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.4. "COMMON STOCK" shall mean the common stock, $.02 par value, of the
Company.
2.5. "NON-EMPLOYEE DIRECTOR" shall mean a duly elected and serving member
of the Board of Directors who is not also, and who, for a period of at least one
year has not been, an employee of the Company or of any parent or subsidiary of
the Company.
2.6. "OPTION" shall mean any stock option granted to a Non-Employee
Director pursuant to this Plan.
1
SECTION 3. PARTICIPATION. Each Non-Employee Director shall participate in
the Plan.
SECTION 4. COMMON STOCK SUBJECT TO THE PLAN.
4.1. NUMBER OF SHARES. Subject to Section 7 hereof, the total number of
shares of Common Stock for which Options may be granted under this Plan shall
not exceed in the aggregate 275,000 shares of Common Stock.
4.2. SOURCE OF SHARES. The Shares of Common Stock that may be subject to
Options granted under this Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as treasury stock as the
Board of Directors may determine. In the event that any outstanding Option
expires or is terminated for any reason, the shares allocable to the unexercised
portion of such Option shall again become available for issuance pursuant to the
Plan. If any shares of Common Stock acquired pursuant to the exercise of an
Option shall have been repurchased or reacquired by the Company, then such
shares shall again become available for issuance pursuant to the Plan.
SECTION 5. ADMINISTRATION OF THE PLAN.
5.1. COMMITTEE. The Plan shall be administered by the Board of Directors
or, if established at any time by the Board of Directors, by a committee thereof
(the "Committee") consisting of members of the Board of Directors who are not
Non-Employee Directors. The Committee may be appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. Notwithstanding any
other provision of the Plan, Options may only be granted under this Plan in
compliance with Section 5.6 hereof, and the Board of Directors (or the
Committee) may not exercise any discretion with respect thereto.
5.2. INTERPRETATIONS. The Board of Directors (or the Committee) shall be
authorized to interpret the Plan and may, from time to time, adopt such rules
and regulations, not inconsistent with the provisions of the Plan, as it may
deem advisable to carry out the purpose of the Plan.
5.3. INTERPRETATIONS CONCLUSIVE. The interpretation and construction by
the Board of Directors (or the Committee) of any provision of the Plan, any
Option granted hereunder or any agreement evidencing any such Option shall be
final and conclusive upon all parties.
5.4. VOTING. Subject to Section 5.6 hereof, if a Committee shall not then
be constituted for purposes of administering the Plan, Non-Employee Directors
may vote on any matter affecting the administration of the Plan or the granting
of Options under the Plan; PROVIDED, HOWEVER, THAT no Non-Employee Director
shall vote upon the granting of an Option to himself, but any such Non-Employee
Director may be counted in determining the existence of a quorum at any meeting
of the Board of Directors at which the Plan is administered or action is taken
with respect to the granting of any Option.
5.5. EXCULPATION. All expenses and liabilities incurred by the Board of
Directors (or the
2
Committee) in the administration of the Plan shall be borne by the Company. The
Board of Directors (or the Committee) may employ attorneys, consultants,
accountants or other persons in connection with the administration of the Plan.
The Company, and its officers and directors, shall be entitled to rely upon the
advice, opinions or valuations of any such persons. No member of the Board of
Directors (or the Committee) shall be liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan or any
Option granted hereunder.
5.6. GRANTING OF OPTIONS; EXERCISE PRICE; VESTING. Effective with the 1997
Annual Meeting of Stockholders, each Non-Employee Director elected by
stockholders at the 1997 Annual Meeting and each Non-Employee Director elected
by stockholders for the first time thereafter will receive an option to purchase
25,000 shares of Common Stock (subject to adjustment in the same manner as
provided in Section 7 hereof with respect to shares of Common Stock subject to
Options then outstanding) upon such election. The options will have an exercise
price equal to the fair market value of a share of Common Stock on the date of
grant and will be exercisable to the extent vested. The options will vest 20%
on the date of grant and 20% upon each re-election to the Board by stockholders
at subsequent annual meetings until such option is vested in full. A new stock
option for an additional 25,000 shares (subject to adjustment in the same manner
as provided in Section 7 hereof with respect to shares of Common Stock subject
to Options then outstanding) will be granted to each Non-Employee Director upon
re-election by stockholders at the next annual meeting following the annual
meeting at which the prior option became fully vested. For purposes of the
Plan, the fair market value of the Common Stock shall mean, as of any date, the
closing price of the Common Stock as reported on the NASDAQ National Market
System or on the principle national securities exchange on which the Common
Stock shall then be listed or, if no prices shall be reported on such date, on
the last preceding date on which such prices are reported. The provisions of
this paragraph 5.6 may not be amended more than once every six months, other
than to comport with changes in the Code, ERISA, or the rules thereunder.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS. The terms and conditions of
each Option granted under the Plan shall be specified by the Board of Directors
(or the Committee) and shall be set forth in an agreement between the Company
and the Non-Employee Director in such form as the Board of Directors (or the
Committee) shall approve.
The terms and conditions of each Option agreement shall include the
following:
(a) The exercise price and vesting of Options shall be as determined in
accordance with Section 5.6 hereof
(b) Options shall expire and terminate on the date that is the tenth
anniversary of the date of grant.
(c) Options shall not be transferable otherwise than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined by the Code or Title-I
3
of ERISA or the rules thereunder.
SECTION 7. ADJUSTMENTS. In the event that, after the adoption of the Plan
by the Board of Directors and the stockholders of the Company, the outstanding
shares of the Company's Common Stock shall be increased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other
securities of the Company or if another corporation through reorganization,
merger or consolidation, recapitalization, reclassification, stock split,
split-up, combination or exchange of shares or declaration of any dividends
payable in Common Stock or in any other manner effected without the receipt of
consideration by the Company, the Board of Directors shall appropriately adjust
(i) the number of shares of Common Stock subject to Options to be granted in
accordance with Section 5.6 hereof, (ii) the number of shares of Common Stock
(and the option price per share) subject to the unexercised portion of any
outstanding Option, and (iii) the number of shares of Common Stock for which
Options may be granted under this Plan as set forth in Section 4.1 hereof, in
each case, to the nearest possible full share, and such adjustments shall be
effective and binding for all purposes of this Plan.
SECTION 8. AMENDMENT OF THE PLAN. Subject to the restrictions contained in
Section 5.6 hereof, the Board of Directors may amend the Plan from time to time
as it deems desirable; PROVIDED, HOWEVER, that, the Board of Directors shall not
amend the Plan in any manner that requires the approval of stockholders of the
Company pursuant to Rule 16b-3 unless the required approval of stockholders is
obtained. In any event, no amendment made after the date an Option is granted
shall adversely affect any right of any Non-Employee Director with respect to
such Option without the written consent of such Non-Employee Director.
SECTION 9. COMPLIANCE WITH RULE 16B-3. The Company shall use its best
efforts to maintain this Plan, and to assure the Options are granted and
exercised under this Plan, in accordance with Rule 16b-3 (to the extent Rule
16b-3 could be applicable to any transaction in securities arising in connection
with this Plan), and any and all successor statutes and regulations of said Rule
16b-3, including, without limitation, the seeking of any appropriate amendments
to this Plan and all requisite approvals and consents of such amendments;
PROVIDED, HOWEVER, THAT except as otherwise set forth in the Plan, the Company
shall take no action that adversely affects Options then outstanding under this
Plan without the prior written consent of the holders of such Options.
SECTION 10. EFFECT OF THE PLAN ON NON-EMPLOYEE DIRECTORS. Neither the
Plan nor any Option granted hereunder to a Non-Employee Director shall be
construed as conferring upon such Non-Employee Director any right to remain a
member of the Board of Directors or to be nominated for reelection as a member
of the Board of Directors.
SECTION 11. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
approval by vote of stockholders of the Company, or on such earlier date as the
number of shares of Common Stock available for issuance pursuant to Section 4. 1
hereof shall be insufficient to allow the grant of Options as
4
provided in Section 5.6 hereof. No Option may be granted hereunder after
termination of the Plan. The termination or amendment of the Plan shall not
alter or impair any rights or obligations under any Option theretofore granted
under the Plan.
SECTION 12. EFFECTIVE DATE OF THE PLAN. This Plan shall be effective as
of November 15, 1994, the date on which the Plan was approved by the
stockholders of the Company.
5
THE BISYS GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
Thursday, November 13, 1997
The undersigned stockholder of THE BISYS GROUP, INC., a Delaware
corporation, hereby appoints Robert J. McMullan and Kevin J. Dell or either of
them, voting singly in the absence of the other, attorneys and proxies, with
full power of substitution and revocation, to vote, as designated below, all
shares of Common Stock of The BISYS Group, Inc., that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of said corporation to be
held at 150 Clove Road, Little Falls, New Jersey 07424 on November 13, 1997, at
9:00 a.m. (local time) or any adjournment thereof, in accordance with the
instructions on the reverse side.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED "FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2, "FOR"
PROPOSAL NO. 3, "FOR" PROPOSAL NO. 4, AND "FOR" PROPOSAL NO. 5. The proxies are
authorized to vote as they may determine in their discretion upon such other
business as may properly come before the meeting.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY USING
THE ENCLOSED ENVELOPE.
THE BISYS GROUP, INC.
P. O. BOX 11357
NEW YORK, NY 10203-0357
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL NO. 1
AND "FOR" PROPOSALS NO. 2, NO. 3, NO. 4 AND NO. 5.
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below / / for all nominees listed below / / / /
Nominees: Lynn J. Mangum, Robert J. Casale, Thomas A. Cooper, Jay W. DeDapper, John J. Lyons, Neil P. Marcous and
Thomas E. McInerney
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions _________________________________________________________________________________________________________________
2. The proposal to approve the Company's 1998 Employee Stock Purchase Plan.
FOR / / AGAINST / / ABSTAIN / /
3. The proposal to amend the Company's 1996 Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
4. The proposal to amend the Company's Non-Employee Directors' Stock Option
Plan.
FOR / / AGAINST / / ABSTAIN / /
5. The proposal to ratify the appointment of Coopers & Lybrand L.L.P. as
auditors for the fiscal year ending June 30, 1998.
FOR / / AGAINST / / ABSTAIN / /
6. The proxies are authorized to vote as they may determine in their
discretion upon such other business as may properly come before the
meeting.
Change of Address and
or Comments Mark Here / /
Please sign exactly as name appears hereon.
When shares are held in name of joint
holders, each should sign. When signing as
attorney, executor, trustee, guardian, etc.
please so indicate. If a corporation, please
sign in full corporate name by an authorized
officer. If a partnership, please sign in
partnership name by an authorized person.
Date _________________________________, 1997
Signature __________________________________
Signature (if held jointly)_________________
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY VOTES MUST BE INDICATED
USING THE ENCLOSED ENVELOPE (X) IN BLACK OR BLUE INK. / /