EXHIBIT 10.1
EXECUTION COPY
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement is entered into as of October 6,
2003 by and between The BISYS Group, Inc. (the "Company") and Dennis R. Sheehan,
President and Chief Executive Officer of BISYS.
Whereas, Mr. Sheehan and the Company desire to provide for an orderly
transition of the duties and responsibilities of the Chief Executive Officer and
for the Company to obtain the benefit of Mr. Sheehan's experience as CEO of the
Company in connection with such transition and in recognition of the
circumstances that give rise to the transition
Now, therefore, the parties enter this Agreement on the following terms
and conditions:
1. ROLE. Effective with the start date of the successor CEO (the
"New CEO Start Date"), Mr. Sheehan shall resign as CEO and as
a Director of the Company and shall continue as a full-time
employee of the Company for the later of (i) six months from
such start date and (ii) December 31, 2004 to provide such
transition and other assistance as is requested from time to
time by the successor CEO and/or the Board of Directors (the
"Transition Period"). Mr. Sheehan's employment with the
Company shall terminate on the last day of such Transition
Period (the "Employment Termination Date").
2. COMPENSATION. During the Transition Period, Mr. Sheehan shall
be paid at the annual rate of $1 million (generally
representing his current annual target compensation, including
base salary of approximately $600,000 and "at plan" incentive
compensation of $400,000). In addition, Mr. Sheehan shall be
entitled to be paid, in cash, a pro rata portion of his
incentive compensation for fiscal year 2004 for the period
from July 1, 2003 through the New CEO Start Date as determined
by the Compensation Committee of the Board of Directors based
on Mr. Sheehan's achievement of his performance objectives
during such period, to be paid in the normal payment cycle for
fiscal year 2004 (i.e., in the first week of September 2004).
3. SEPARATION PAYMENT. Mr. Sheehan shall be paid a separation
payment of $1 million over the 12-month period following the
termination of his employment to be paid in the Company's
normal payroll cycle, less applicable withholdings.
4. STOCK OPTIONS/STOCK OWNERSHIP. The stock options previously
granted to Mr. Sheehan and outstanding as of the Employment
Termination Date shall continue in effect in accordance with
their terms; provided that the stock options previously
granted to Mr. Sheehan, including reload stock options, with
an exercise price greater than the fair market value of a
share of Common Stock of the Company based on the last sale
price of a share of Common Stock on October 3, 2003, as
reported by the New York Stock Exchange (i.e., $13.49) shall
(i) continue in effect following the termination of Mr.
Sheehan's employment at the end of the Transition Period, (ii)
shall continue to vest during their normal vesting cycle,
(iii) shall automatically vest in full to the extent not
vested upon a Change of Control (as defined in such
agreements), and (iv) shall be exercisable through the sooner
of (a) the expiration of the applicable 10-year term of an
option (and for reload options the 10-year term of the
underlying option), and (b) March 31, 2009, except as such
exercise period is otherwise provided by the terms of a Change
of Control transaction.
5. RESTRICTED STOCK. The Restricted Stock Agreement covering the
27,000 shares of Company restricted stock previously granted
to Mr. Sheehan shall continue in effect in accordance with its
terms. Accordingly, the shares will vest as of the Employment
Termination Date, if not sooner vested in accordance with the
terms of the Agreement.
6. RESTRICTIVE COVENANTS. The Restrictive Covenants Agreement
dated March 10, 1995 between the Company and Mr. Sheehan shall
remain in effect following his termination of employment
through September 30, 2010.
7. OUTSTANDING LOANS. The Executive Loan Agreement between the
Company and Mr. Sheehan dated September 9, 1999 in the
aggregate principal amount of $941,476.27 shall continue in
accordance with its terms. Accordingly, the outstanding
principal amount of the loans made thereunder shall be due and
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payable in full within 30 days following the Employment
Termination Date. The parties acknowledge and agree that the
terms of such loans shall not be extended or modified.
8. DEFERRED COMPENSATION PLAN. During the term of his employment
with the Company, Mr. Sheehan shall be eligible to continue to
participate as a Senior Participant in the Company's Deferred
Compensation Plan in accordance with its terms.
9. EMPLOYEE BENEFITS. During the term of his employment with the
Company, Mr. Sheehan shall be eligible to participate in all
benefit programs offered to employees of the Company,
including but not limited to the Company's health and medical
plans, 401(k) retirement plan and employee stock purchase
plan. Pursuant to Section 5 of the Key Executive Separation
Agreement between Mr. Sheehan and the Company dated June 12,
2003, Mr. Sheehan and his spouse, Dorann Sheehan, and his
eligible dependents will be eligible to continue their
participation in the Company health insurance plan available
to other BISYS employees for the period ending the earlier of
(i) five (5) years from the date of termination of employment,
or (ii) the date Mr. Sheehan is eligible to participate in an
alternative employer-provided group health insurance plan, and
in the event of Mr. Sheehan's death at a time that he and his
family are participating in the Company health insurance plan,
Dorann Sheehan may elect to continue such participation for
the remainder of the five-year period. During such period of
participation, Mr. Sheehan shall be responsible for the
"employee's" portion of such health insurance coverage
consistent with the portion that senior executive officers of
the Company are required to pay.
In addition, prior to the termination of his employment, the
Company will use all reasonable efforts to assist Mr. Sheehan,
at his request, in procuring a separate insurance policy to
provide health and medical coverage for the benefit of both
Mr. Sheehan and his wife, Dorann Sheehan, through age 65, in
lieu of their participation in the BISYS health insurance
plan, at a level comparable to the current coverage available
to Mr. Sheehan and his wife.
10. SPLIT-DOLLAR INSURANCE. The existing split-dollar life
insurance policy for the benefit of Mr. Sheehan's designated
beneficiary (ies) shall continue in effect in accordance with
its terms, subject to any limitations that may be imposed by
statute or regulatory action.
11. FINANCIAL PLANNING/TAX PREPARATION SERVICES. Mr. Sheehan shall
be eligible to continue to receive financial planning/tax
preparation services at the level currently available to him
for up to two years following the Employment Termination Date.
12. OFFICE/ADMINISTRATIVE SUPPORT. During the period that Mr.
Sheehan serves as CEO, he shall continue to use the office
currently provided to him by the Company at the corporate
headquarters. During the remaining period of his employment
with the Company, Mr. Sheehan shall be provided office space
and secretarial support as needed in the corporate
headquarters in connection with providing transition
assistance. Mr. Sheehan shall be reimbursed for all business
expenses in accordance with the Company's expense
reimbursement policy and shall have use of such services
customarily available to executives of the Company in
connection with the performance of his duties and
responsibilities during the term of his employment.
13. KEY EXECUTIVE SEPARATION AGREEMENT. The terms of this
Transition Services Agreement shall supersede and replace the
terms of the Key Executive Separation Agreement provided to
Mr. Sheehan by letter agreement dated June 12, 2003, except as
hereinafter provided. In the event of a Change of Control of
the Company (as defined in the Key Executive Separation
Agreement) prior to the New CEO Start Date, the terms of the
Key Executive Separation Agreement shall govern in all
respects and the terms of this Transition Services Agreement
shall be null and void. In the event of such a Change of
Control within six months following the New CEO Start Date and
as of the New CEO Start Date (i) the Board has engaged an
investment advisor in connection with a possible Change of
Control transaction and (ii) the Company is in active
negotiations with one or more potential acquirers, the terms
of the Transition Services Agreement shall apply, except that
(x) the termination of Mr. Sheehan's employment as of the
Employment Termination Date shall be considered a termination
of employment after a Change of Control of the Company as of
such date pursuant to Section 4(c) of the Key Executive
Separation Agreement, entitling Mr. Sheehan to a payment of $
3 million upon such termination (and no other or further
payments under the Transition Services Agreement), (y) all
unvested employer matching funds included in Mr. Sheehan's
deferred compensation account pursuant to the BISYS Deferred
Compensation Plan shall vest effective upon such Change of
Control. For the avoidance of doubt, the foregoing provisions
are intended
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to avoid any inadvertent duplication of benefits under both
the Transition Services Agreement and Key Executive Separation
Agreement where a Change of Control event occurs.
14. MISCELLANEOUS.
14.1 This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs,
legal representatives, successors and permitted
assigns.
14.2 If any provision of this Agreement shall be
determined by a court of competent jurisdiction to be
unenforceable for any reason, such provision shall be
deemed to be severable and this Agreement shall
otherwise continue in full force and effect.
14.3 The parties acknowledge that they have read this
Agreement, that they are relying solely upon the
terms and conditions set forth herein, and are not
relying upon any other representations, warranties or
inducements whatsoever as an inducement to enter into
this Agreement, other than those references herein
and acknowledge that no representations, warranties
or covenants have been made which are not referenced
in this Agreement.
14.4 The failure to enforce at any time any of the
provisions of this Agreement or the failure to
require at any time performance of any of the
provisions of this Agreement shall in no way be
construed to be a waiver of such provisions or to
affect either the validity of this Agreement or any
part hereof, or the right thereafter to enforce each
and every such provision in accordance with the terms
of this Agreement.
14.5 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an
original but all of which together shall constitute
one and the same document.
14.6 This Agreement constitutes the entire understanding
of the parties with respect to the subject matters
hereof and replaces and supersedes any and all prior
agreements, oral and written, between the parties
hereto with respect to the subject matter hereof,
except that the agreements referenced herein shall
continue in full force and effect other than as they
are specifically modified herein, and may not be
changed, modified, altered, or amended, nor any of
its provisions waived, except in a writing signed by
the parties hereto.
In witness whereof, the parties hereto hereby execute this Transition
Services Agreement as of the date first written above.
The BISYS Group, Inc.
By: /s/ Lynn J. Mangum
---------------------------
Lynn J. Mangum
Chairman of the Board
/s/ Dennis R. Sheehan
---------------------------
Dennis R. Sheehan
Approved by the Board of Directors pursuant to authority duly granted to
the Compensation Committee of the Board of Directors:
/s/ Robert A. Casale
---------------------------
Robert A. Casale
/s/ Joseph J. Melone
---------------------------
Joseph J. Melone
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